CHAPTER 17 ORGANIZATIONAL CULTURE LEARNING OBJECTIVES

After studying this chapter, students should be able to: 1. Describe institutionalization and its relationship to organizational culture. 2. Define the common characteristics making up organizational culture. 3. Contrast strong and weak cultures. 4. Identify the functional and dysfunctional effects of organizational culture on people and the organization. 5. Explain the factors determining an organizations culture. 6. List the factors that maintain an organizations culture. 7. Clarify how culture is transmitted to employees. 8. Outline the various socialization alternatives available to management.

TEXT OUTLINE
I. Introduction A. Mitsubishi Motors 1. Lost 846 million for the fiscal year a) In contrast to competitors like Honda and DaimlerChrysler b) The companys heavy reliance on weak truck and bus markets in Asia, etc., contributed to its financial losses. 2. But the real culprit is the deeply rooted Mitsubishi culture. a) A tradition-based culture b) Better suited for the 1970s automobile industry B. Katsuhiko Kawasoe, Mitsubishi Motors new president 1. Hes got to try to change this culture. 2. The automobile division of Mitsubishi Heavy Industries has cloistered itself from real-world competition. 3. Other Japanese firms have broken from long-held beliefs on the importance of tradition and history. 4. Mitsubishi continues to move at it own pace. a) Most other Japanese companies have discarded lifetime employment. b) Not Mitsubishi 5. The chairman of the Mitsubishi Heavy Industries says a) Employment is more important than profits! b) We are not concerned with return on equity. 6. A consultant for Mitsubishi thinks that: a) the company is being held back by the lack of incentives. b) nobody is holding management accountable. 7. The future doesnt look better. Company executives continue to talk about Mitsubishis special place in history and duty to country. 8. A strong organizational culture provides employees with a clear understanding of the way things are done around here. a) It provides stability to an organization. b) But, as evidenced at Mitsubishi, it can also be a major barrier to change. Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ II. Institutionalization: A Forerunner of Culture A. Introduction 1. Viewing organizations as cultureswhere there is a system of shared meaning among membersis a relatively recent phenomenon.
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2. Until the mid-1980s, organizations were rational means by which to coordinate and control people. 3. But organizations have personalities too, just like individuals. a) They can be rigid or flexible, unfriendly or supportive, innovative or conservative. b) General Electric offices and people are different from the offices and people at General Mills. c) Harvard and MIT are in the same businesseducationbut each has a unique character. 4. The origin of culture as an independent variable affecting an employees attitudes and behavior can be traced back more than 50 years ago to the notion of institutionalization. B. Institutionalization 1. When an organization becomes institutionalized, it takes on a life of its own. a) Ross Perot created Electronic Data Systems (EDS) in the early 1960s, but EDS has continued to thrive despite the departure of its founder. b) Sony, Eastman Kodak, Gillette, McDonalds, and Disney are other examples. 2. When an organization becomes institutionalized, it is valued for itself, not merely what it produces. a) It acquires immortality. b) It redefines itself. 3. When the demand for Timexs watches declined, the Timex Corporation merely redirected itself into the consumer electronics business. a) Timex took on an existence that went beyond its original mission to manufacture low-cost mechanical watches. 4. Institutionalization produces common understandings about what is appropriate and, fundamentally, meaningful behavior. a) Acceptable modes of behavior become largely self-evident to its members. b) This is essentially the same thing that organizational culture does. Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ III. What Is Organizational Culture? A. A Definition 1. Organizational culturea system of shared meaning held by members that distinguishes the organization from other organizations. a) This system of shared meaning is a set of key characteristics that the organization values. 2. The research suggests seven primary characteristics. a) Innovation and risk taking b) Attention to detail c) Outcome orientation d) People orientation e) Team orientation f) Aggressiveness g) Stability 3. Each exists on a continuum from low to high. a) Appraising the organization on these gives a composite picture of the organizations culture. b) This is the basis for (1) shared understanding that members have. (2) how things are done. (3) the way members are supposed to behave. c) See Exhibit 17-1. Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________
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B. Culture Is a Descriptive Term 1. Organizational culture is concerned with how employees perceive its characteristics, not if they like them. a) Research on organizational culture has sought to measure how employees see their organization: 2. Job satisfaction seeks to measure affective responses to the work environment. a) How employees feel about the organizations expectations, reward practices, and the like 3. Organizational culture is descriptive, while job satisfaction is evaluative. C. Do Organizations Have Uniform Cultures? 1. Individuals with different backgrounds or at different levels in the organization will tend to describe the organizations culture in similar terms. 2. There can be subcultures. Most large organizations have a dominant culture and numerous sets of subcultures. 3. A dominant culture expresses the core values that are shared by a majority. a) An organizations culture is its dominant culture. b) This macro view of culture that gives an organization its distinct personality. 4. Subcultures tend to develop in large organizations to reflect common problems, situations, or experiences that members face. a) Defined by department designations and geographical separation b) It will include the core values plus additional values unique to members of the subculture. c) The core values are essentially retained but modified to reflect the subculture. 5. If organizations had no dominant culture and were composed only of numerous subcultures, the value of organizational culture as an independent variable would be significantly lessened. a) It is the shared meaning aspect of culture that makes it such a potent device for guiding and shaping behavior. b) We cannot ignore the reality that many organizations also have subcultures that can influence the behavior of members. Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ D. Strong vs. Weak Cultures 1. The argument is that strong cultures have a greater impact on employee behavior and are more directly related to reduced turnover. a) The organizations core values are both intensely held and widely shared. b) A strong culture will have a great influence on the behavior of its members because the high degree of sharedness and intensity creates an internal climate of high behavioral control. 2. One specific result of a strong culture should be lower employee turnover. a) A high agreement about what the organization stands for builds cohesiveness, loyalty, and organizational commitment. FROM CONCEPTS TO SKIILS How to Read an Organizations Culture SUMMARY The ability to read and assess an organizations culture can be a valuable skill. If you can accurately assess a prospective employers culture before accepting an offer, you may be able to save yourself a lot of grief. Also, when trying to sell a product or service, negotiate a contract, arrange a joint venture, etc., the ability to assess another organizations culture can be a definite plus in successfully completing these pursuits. Heres a list of things you can do to help learn about a potential employers culture: 1. Do your homework ahead of time. 2. Observe the physical surroundings. 3. Whom did you meet with? How did they expect to be addressed? 4. How would you characterize the style of the people you met?
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5. Does the organization have formal rules and regulations printed in a personnel policy manual? If so, how detailed are these policies? 6. Ask questions of the people with whom you meet. The most valid and reliable information tends to come from asking the same questions of many people, such as: y Whats the background of the founders? y Whats the background of current senior managers? What are their functional specializations? Were they promoted from within or hired from outside? y How does the organization integrate new employees? Is there an orientation program? Training? If so, could you describe these features? y How does your boss define his/her job success? (Amount of profit? Serving customers? Meeting deadlines? Acquiring budget increases?) y How would you define fairness in terms of reward allocations? y Can you identify some people here who are on the fast track? What do you think has put them on the fast track? y Can you identify someone who seems to be considered a deviant in the organization? How has the organization responded to this person? y Can you describe a decision that someone made here that was well received? y Can you describe a decision that didnt work out well? What were the consequences for the decision maker? y Could you describe a crisis or critical event that has occurred recently in the organization? How did top management respond? What was learned from this experience? Teaching notes 1. Assign the students to conduct an information interview with a middle- or higher-level manager in a company of their choice during break. y Using relatives, their own research for internships or jobs, or alumni, they should find a friendly candidate. y Their approach should be that they are learning to network and are seeking information about: working in a company like this one, working in a career/job like this one, etc., and could the person give them 3060 minutes on such and such a date and time. y You might consider discussing with a few students in class what questions are most relevant and why, as an example to the entire class. y They should identify to you, in writing, the most relevant questions from the above, in priority order. y Caution students to dress and conduct themselves as if this were a job interview. They should maintain a professional demeanor at all times. They should also avoid meal-time interviews, because some of them will get stuck with the tabprobably the ones that can least afford it. 2. During the semester, they should identify the company (find a contact person and phone number within the company) and report them to you. 3. During break, they should spend 3060 minutes with the companys manager and ask the most relevant of the above questions. 4. As a class, process the learnings. y What was their experience? y Did they get the information they wanted? y Did they learn something new about the job, career, or company? E. Culture vs. Formalization 1. A strong organizational culture increases behavioral consistency. a) A strong culture can act as a substitute for formalization. 2. In Chapter 14, we discussed formalization. a) High formalization in an organization creates predictability, orderliness, and consistency. 3. A strong culture achieves the same end without the need for written documentation. a) Therefore, formalization and culture are two different roads to a common destination. F. Organizational Culture vs. National Culture 1. The opening example showed how Japans national culture was closely intertwined with corporate culture.
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a) National cultures must be taken into account if accurate predictions are to be made about organizational behavior in different countries. 2. Does national culture override an organizations culture? 3. The research indicates that national culture has a greater impact on employees than does their organizations culture. 4. This has to be qualified to reflect the self-selection that goes on at the hiring stage. a) The employee selection process will be used by multinationals to find and hire job applicants who are a good fit with their organizations dominant culture. Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ IV. What Do Cultures Do? A. Cultures Functions 1. It has a boundary-defining role. It creates distinctions between one organization and others. 2. It conveys a sense of identity for organization members. 3. Culture facilitates commitment to something larger than ones individual self-interest. 4. It enhances social system stability. Culture is the social glue that helps hold the organization together. 5. Culture serves as a sense-making and control mechanism that guides and shapes the attitudes and behavior of employees. a) This last function is of particular interest to us. (1) Culture by definition is elusive, intangible, implicit, and taken for granted. (2) But every organization develops a core set of assumptions, understandings, and implicit rules that govern day-to-day behavior in the workplace. 6. The role of culture in influencing employee behavior appears to be increasingly important. a) The shared meaning of a strong culture ensures that everyone is pointed in the same direction. 7. Who receives a job offer to join the organization, who is appraised as a high performer, and who gets the promotion are strongly influenced by the individual-organization fit. 8. Disney theme parks example B. Culture as a Liability 1. We are treating culture in a nonjudgmental manner. 2. Culture enhances organizational commitment and increases the consistency of employee behavior. 3. But there are potentially dysfunctional aspects of culture, especially a strong one. 4. Barrier to change a) Culture is a liability when the shared values are not in agreement with those that will further the organizations effectiveness. (1) This is most likely to occur when an organizations environment is dynamic. b) This helps to explain the challenges that executives at companies like Mitsubishi, General Motors, Eastman Kodak, Kellogg, and Boeing have had in recent years in adapting to upheavals in their environment. Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________
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MYTH OR SCIENCE? Success Breeds Success SUMMARY Generally speaking, success creates positive momentum. People like being associated with it. Microsofts incredible success in the 1990s made it a highly desirable place to work. But success often breeds failure, especially in organizations with strong cultures. Organizations that have tremendous successes begin to believe in their own invulnerability. The corporate highway is littered with companies that let arrogance undermine previous successes. JC Penney and Sears once ruled the retail department-store market. Wal-Mart did a pretty effective job of humbling them. General Motors executives ignored the aggressive efforts by Japanese auto firms to penetrate its markets. The result? GMs market share has been in a free fall for three decades. Toyota, once one of those aggressive Japanese firms, itself became a casualty of its own successes. Motorola dominated world markets for semiconductors and analog cellular phones, but the company became arrogant. It stumbled badly in the digital market and took a $1.95 billion writeoff and cut its workforce by 15,000. Teaching notes 1. Assign an outside research project. 2. Divide the class into teams, and assign each team a company that was successful and that failed [some should be companies that then recovered from failure]. Some suggestions: y Texas Instruments y Woolworth y Chrysler y American Motors y Sears y K-Mart 3. Students should prepare a 10-to 15-minute oral report that summarizes: y the key success factors that made the companies powerful leaders. y 35 major events or factors that changed or reshaped these companies business environment. y the key or major mistakes the company made in dealing with these changes. y where the company is today. If it failed, why did it fail; if it recovered, what did it do to recover? 4. After students present their reports, discuss the commonalities in these various situations. 5. Barrier to diversity a) Hiring new employees who, because of race, gender, disability, or other differences, are not like the majority of the organizations members creates a paradox. (1) Management wants new employees to accept the organizations core cultural values but, at the same time, they want to support the differences that these employees bring to the workplace. b) Strong cultures put considerable pressure on employees to conform. c) They limit the range of values and styles that are acceptable. d) Texaco case example e) Organizations seek out and hire diverse individuals because of their alternative strengths. f) Yet these diverse behaviors and strengths are likely to diminish in strong cultures. g) Strong cultures, therefore, can be liabilities when: (1) they effectively eliminate the unique strengths that diverse people bring to the organization. (2) they support institutional bias or become insensitive to people who are different. 6. Barrier to acquisitions and mergers a) Historically, the key factors that management looked at in making acquisition/merger decisions: (1) financial advantages (2) product synergy b) Cultural compatibility has become the primary concern. (1) Whether the acquisition actually works seems to have more to do with how well the two organizations cultures match up. c) A number of 1990s acquisitions have already failed, largely due to conflicting cultures. (1) AT&Ts 1991 acquisition of NCR was a disaster. (2) WordPerfect Corporation bought Novell Inc. in 1994 but employees and managers from the two organizations could never see eye to eye on important issues.
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(3) When WordPerfect was sold to Corel Corp. in 1996, Novell got $1 billion less than it had paid just two years earlier. d) Sometimes, astute executives can see the culture problems during the dating stage and cancel the marriage before tying the knot. (1) Thats what happened with American Home Products and Monsanto. Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ V. Creating and Sustaining Culture A. How a Culture Begins 1. An organizations culture comes from what it has done before and the degree of success it has had. 2. The ultimate source of an organizations culture is its founders. 3. The founders of an organization traditionally have a major impact on that organizations early culture. a) They had the vision; they are unconstrained by previous customs or ideologies. b) The small size of new organizations facilitates the founders imposition of the vision on all organizational members. 4. Culture creation occurs in three ways. a) First, founders hire and keep only employees who think and feel the way the way they do. b) Second, they indoctrinate and socialize these employees to their way of thinking and feeling. c) The founders own behavior acts as a role model that encourages employees to identify with them and thereby internalize their beliefs, values, and assumptions. 5. When the organization succeeds, the founders entire personality becomes embedded in the culture of the organization. a) The culture at Hyundai is largely a reflection of its founder Chung Ju Yung. b) Other contemporary examples include Bill Gates at Microsoft, Akio Morita at Sony, David Packard at Hewlett-Packard, Herb Kelleher at Southwest Airlines, Fred Smith at Federal Express, Mary Kay at Mary Kay Cosmetics, and Richard Branson at the Virgin Group. Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ OB IN THE NEWS Learning the Disney Culture SUMMARY The Walt Disney Company has an employee development group that puts on programs for all employees. The foundation of the Disney programs are two courses: Welcome to DisneyAct I, an orientation program introducing new employees to the companys traditions, activities, and goals, and Welcome to DisneyAct II, Working With Integrity, covering the topics: (1) Standards of Business Conduct and (2) Respect: Disneys Key to Success. In addition to these two programs, the company offers others on planning and time management, writing skills, behavioral style, and communication. Teaching notes: 1. Have students research Disney by going to its web site as well as going to commercial information sites. y Disneys home pagehttp://disney.go.com/home/homepage/today/html/index.html?clk=1004399 y www.quicken.com is a financial information site. Students should go to Quotes and Research on the top right of the page and type in DISthe stock symbol for Disney. Once the Disney stock page comes up, they can select news links, company profile, etc. for information on the company. 2. After students have visited these sites, lead a class discussion on Disney culture as students see it from the information they have gathered.
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B. Keeping a Culture Alive 1. There are practices within the organization that act to maintain it by giving employees a set of similar experiences. 2. Three forces play a particularly important part in sustaining a culture: selection practices, the actions of top management, and socialization methods. 3. Selection a) The explicit goal of the selection process is to identify and hire individuals who have the knowledge, skills, and abilities to perform the jobs within the organization successfully. b) The final decision as to who is hired will be significantly influenced by the decision makers judgment of how well the candidates will fit into the organization. c) This results in the hiring of people who have values consistent with those of the organization. d) Additionally, the selection process provides information to applicants about the organization. (1) Selection, therefore, becomes a two-way street. e) Exampleapplicants for entry-level positions in brand management at Procter & Gamble (P&G) (1) Each encounter seeks corroborating evidence of the traits that the firm believes correlate highly with what counts for success at P&G. f) ExampleApplicants for positions at Compaq Computer are carefully chosen for their ability to fit into the companys teamwork-oriented culture. (1) Its not unusual for an applicant to be interviewed by 15 people, who represent all departments of the company and a variety of seniority levels. Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ 4. Top management a) The actions of top management, what they say and how they behave, establish norms that filter down through the organization as to (1) risk taking. (2) how much freedom managers should give their employees. (3) what is appropriate dress. (4) what actions will pay off in terms of pay raises, promotions, and other rewards. b) ExampleXerox Corporation chief executive from 1961 to 1968Joseph C. Wilson (1) Under Wilson, Xerox had an entrepreneurial environment, with an informal, highcamaraderie, innovative, bold, risk-taking culture. (2) Wilsons replacement as CEO was C. Peter McColough, a Harvard MBA with a formal management style. (a) He instituted bureaucratic controls and a major change in Xeroxs culture. (b) When McColough stepped down in 1982, Xerox had become stodgy and formal, with lots of politics and turf battles and layers of watchdog managers. (3) His replacement was David T. Kearns. (a) He believed the culture he inherited hindered Xeroxs ability to compete. (b) Kearns trimmed Xerox jobs, delegated decision making downward, and refocused the organizations culture around a simple theme: boosting the quality of Xerox products and services. (4) The next CEO, Paul Allaire, again sought to reshape Xeroxs culture. (a) Specifically, he reorganized the corporation around a worldwide marketing department, unified product development and manufacturing divisions, and replaced half of the companys top-management team with outsiders. (5) The present CEO, G. Richard Thoman (a) Thomans focus is on technology. He envisions reshaping Xerox into a fast-moving provider of high-tech services all built around digital documents.
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Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ 5. Socialization a) New employees are not fully indoctrinated in the organizations culture. (1) They are unfamiliar with the organizations culture and are potentially likely to disturb the beliefs and customs that are in place. b) Socialization is the organization helping new employees adapt to its culture. c) All Marines must go through boot camp, where they prove their commitment. (1) At the same time, the Marine trainers are indoctrinating new recruits in the Marine way. d) New Sanyo employees go through an intensive five-month training program where they learn the Sanyo way of doing everything. e) At Starbucks, all new employees go through 24 hours of training covering everything necessary to make them brewing consultants. (1) They learn the Starbucks philosophy, the company jargon, and even how to help customers make decisions about beans, grind, and espresso machines. f) The most critical socialization stage is at the time of entry into the organization. (1) This is when the organization seeks to mold the outsider into an employee. (2) The organization socializes every employee throughout his/her entire career. 6. Socialization is a process made up of three stages: prearrival, encounter, and metamorphosis. a) The first stage encompasses all the learning that occurs before a new member joins. b) In the second stage, the new employee sees what the organization is really like and confronts the possibility that expectations and reality may diverge. c) In the third stage, the relatively long-lasting changes take place. The new employee masters the skills required for his/her job, successfully performs his/her new roles, and makes the adjustments to his/her work groups values and norms. d) Exhibit 17-2 depicts this process. e) The prearrival stage recognizes that each individual arrives with a set of values, attitudes, and expectations about both the work to be done and the organization. (1) In many jobs, particularly professional work, new members will have undergone a considerable degree of prior socialization in training and in school. (2) The selection process informs prospective employees about the organization as a whole and acts to ensure the inclusion of the right typethose who will fit in. f) Upon entry into the organization, the new member enters the encounter stage. (1) The individual confronts the possible dichotomy between his/her expectationsabout his/her job, coworkers, boss, and the organization in generaland reality. (2) If expectations are accurate, this stage merely reaffirms them. (3) Where expectations and reality differ, the new employee must undergo socialization that will detach him/her from his/her previous assumptions and replace them with another set that the organization deems desirable. (4) At the extreme, a new member may become totally disillusioned and resign. g) Finally, the new member must work out any problems discovered during the encounter stage the metamorphosis stage. (1) Exhibit 17-3 presents alternatives designed to bring about the desired metamorphosis. (2) The more management relies on socialization programs that are formal, collective, fixed, serial, and emphasize divestiture, the greater the likelihood that newcomers differences and perspectives will be stripped away and replaced by standardized and predictable behaviors. (3) Metamorphosis and the entry socialization process is complete when the new member has become comfortable with the organization and his job. (a) He has internalized the norms of the organization and his work group and understands and accepts these norms.
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(b) Exhibit 17-2 shows successful metamorphosis should have a positive impact on the new employees productivity and his commitment to the organization, and reduce his propensity to leave the organization. C. Summary: How Cultures Form 1. Exhibit 17-4 summarizes how an organizations culture is established and sustained. Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ CONSIDER THE WEB This commercial site, http://www.hcgnet.com/index.html, belongs to the Hagberg consulting company specializing in organizational consulting. Of particular value here is their cultural assessment instrument and the article on a specific strategy for organizational change. VI. How Employees Learn Culture A. Stories 1. During the days when Henry Ford II was chairman of the Ford Motor Co., the message was Henry Ford II ran the company. 2. Nordstrom employees are fond of the story when Mr. Nordstrom instructed the clerk to take the tires back and provide a full cash refund. After the customer had received his refund and left, the perplexed clerk looked at the boss. But, Mr. Nordstrom, we dont sell tires! I know, replied the boss, but we do whatever we need to do to make the customer happy. 3. Stories such as these typically contain a narrative of events about the organizations founders, rule breaking, rags-to-riches successes, reductions in the workforce, relocation of employees, reactions to past mistakes, and organizational coping. 4. They anchor the present in the past and provide explanations and legitimacy for current practices. a) For the most part, these stories develop spontaneously. b) But some organizations actually try to manage this element of culture learning. B. Rituals 1. Rituals are repetitive sequences of activities that express and reinforce the key values of the organization, what goals are most important, which people are important and which are expendable. 2. College faculty members undergo a lengthy ritual in their quest for permanent employmenttenure. a) Explained b) The astute faculty member will assess early on in the probationary period what attitudes and behaviors his or her colleagues want and will then proceed to give them what they want. 3. One of the best-known corporate rituals is Mary Kay Cosmetics annual award meeting. a) A cross between a circus and a Miss America pageantthe meeting takes place over a couple of days in a large auditorium, on a stage in front of a large, cheering audience, with all the participants dressed in glamorous evening clothes b) The ritual aspect reinforces Mary Kays personal determination and optimism, which enabled her to overcome personal hardships, found her own company, and achieve material success. c) It conveys that reaching the sales quota is important and that hard work and encouragement leads to success. C. Material Symbols
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1. The headquarters of Alcoa doesnt look like your typical head office operation. a) There are few individual offices. b) The informal corporate headquarters conveys to employees that Alcoa values openness, equality, creativity, and flexibility. 2. Some corporations provide their top executives with a variety of expensive perks. 3. Others provide fewer and less elaborate perks. 4. The layout of corporate headquarters, the types of automobiles top executives are given, and the presence or absence of corporate aircraft are a few examples of material symbols. 5. These material symbols convey to employees who is important, the degree of egalitarianism desired by top management, and the kinds of behavior that are appropriate. D. Language 1. Many organizations and units use language as a way to identify members of a culture or subculture. 2. By learning this language, members attest to their acceptance of the culture and help to preserve it. 3. Examples of terminology: a) Employees at Dialog 4. Organizations, over time, often develop unique terms to describe equipment, offices, key personnel, suppliers, customers, or products that relate to its business. 5. New employees are frequently overwhelmed with acronyms and jargon that, after six months on the job, have become fully part of their language. 6. Once assimilated, this terminology acts as a common denominator that unites members of a given culture or subculture. Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ VII. Matching People with Cultures A. Introduction 1. Organizations attempt to select new members who fit well with the organizations culture. 2. Most job candidates similarly try to find organizations where their values and personality will fit in. 3. Recent research by Goffee and Jones identified four distinct cultural types. a) Goffee and Jones argue that two dimensions underly organizational culture. 4. The first they call sociabilitya measure of friendliness. a) High sociability means people do kind things for one another without expecting something in return and relate to each other in a friendly, caring way. b) Sociability is consistent with a high people orientation, high team orientation, and focus on processes rather than outcomes. 5. The second is solidarity. Its a measure of task orientation. a) High solidarity means people can overlook personal biases and rally behind common interests and common goals. b) Solidarity is consistent with high attention to detail and high aggressiveness. 6. Exhibit 17-6 illustrates a matrix with these two dimensions rated as either high or low. They create four distinct culture types: B. Four Distinct Cultures 1. Networked culture (high on sociability; low on solidarity) a) These organizations view members as family and friends. People know and like each other. b) People willingly give assistance to others and openly share information. c) The major negative is that the focus on friendships can lead to a tolerance for poor performance and creation of political cliques.
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2. Mercenary culture (low on sociability; high on solidarity) a) These organizations are fiercely goal-focused. People are intense and determined to meet goals. b) They have a zest for getting things done quickly and a powerful sense of purpose. c) Mercenary cultures focus on goals and objectivity also leads to a minimal degree of politicking. d) The downside is that it can lead to an almost inhumane treatment of low performers. 3. Fragmented culture (low on sociability; low on solidarity). a) These organizations are made up of individualists. Commitment is first and foremost to individual members and their job tasks. b) There is little or no identification with the organization. c) Employees are judged solely on their productivity and the quality of their work. d) The major negatives are excessive critiquing of others and an absence of collegiality. 4. Communal culture (high on sociability; high on solidarity). a) People have a feeling of belonging but there is still a ruthless focus on goal achievement. b) Leaders of these cultures tend to be inspirational and charismatic, with a clear vision of the organizations future. c) The downside is that they often consume ones total life. d) Their charismatic leaders frequently look to create disciples rather than followers. 5. Unilever and Heineken are examples of networked cultures. 6. Mars, Campbell Soup, and Japanese heavy-equipment manufacturer Komatsu are classic mercenary cultures. 7. Most top-tier universities and law firms take on the properties of fragmented cultures. 8. Examples of communal cultures would include Hewlett-Packard, Johnson & Johnson, and consulting firm Bain & Co. Hewlett-Packard is large and very goal-focused. Teaching Notes ___________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________

SUMMARY AND IMPLICATIONS FOR MANAGERS

Exhibit 17-7 depicts organizational culture as an intervening variable. Employees form an overall subjective perception of the organization based on such factors as degree of risk tolerance, team emphasis, and support of people. This overall perception becomes, in effect, the organizations culture or personality. These favorable or unfavorable perceptions then affect employee performance and satisfaction, with the impact being greater for stronger cultures. Just as peoples personalities tend to be stable over time, so too do strong cultures. This makes strong cultures difficult for managers to change. When a culture becomes mismatched to its environment, management will want to change it. But, as the Point-Counterpoint debate for this chapter demonstrates, changing an organizations culture is a long and difficult process. The result, at least in the short term, is that managers should treat their organizations culture as relatively fixed. One of the more important managerial implications of organizational culture relates to selection decisions. Hiring individuals whose values dont align with those of the organization is likely to lead to employees who lack motivation and commitment and who are dissatisfied with their jobs and the organization. Not surprisingly, employee misfits have considerably higher turnover rates than individuals who perceive a good fit. We should also not overlook the influence socialization has on employee performance. An employees performance depends to a considerable degree on knowing what he should or should not do. Understanding the right way to do a job indicates proper socialization. Furthermore, the appraisal of an individuals performance includes how well the person fits into the organization. Can he or she get along with coworkers? Does he/she have acceptable work habits and demonstrate the right attitude? These qualities differ between jobs and organizations. For instance, on some jobs, employees will be evaluated more favorably if they are aggressive and outwardly indicate that they are ambitious. On another job, or on the same job in another organization, such an approach may be evaluated negatively. As a result, proper socialization becomes a significant factor in influencing both actual job performance and how its perceived by others.
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QUESTIONS FOR REVIEW

1. Whats the difference between job satisfaction and organizational culture? Answer Organizational culture is concerned with how employees perceive the characteristics of an organizations culture, not with whether or not they like them. That is, its a descriptive term. This is important because it differentiates this concept from that of job satisfaction. Research on organizational culture has sought to measure how employees see their organization: Does it encourage teamwork? Does it reward innovation? Does it stifle initiative? In contrast, job satisfaction seeks to measure affective responses to the work environment. Its concerned with how employees feel about the organizations expectations, reward practices, and the like. Although the two terms undoubtedly have overlapping characteristics, keep in mind that the term organizational culture is descriptive, while job satisfaction is evaluative. 2. Can an employee survive in an organization if he/she rejects its core values? Explain. Answer Organizational culture is a system of shared meaning held by members that distinguishes the organization from other organizations. This system of shared meaning is a set of key characteristics that the organization values. Organizational culture is concerned with how employees perceive its characteristics, not if they like them. Job satisfaction seeks to measure affective responses to the work environmenthow employees feel about the organizations expectations, reward practices, and the like. Therefore, if an individual does not fit the organizations culture, the individual will have some significant difficulty in surviving, let alone growing. The dominant culture expresses the core values that are shared by a majority. Not sharing those values places the employee on the outside socially and organizationally. 3. How can an outsider assess an organizations culture? Answer The ability to read and assess an organizations culture can be a valuable skill. Heres a list of things you can do to help learn about a potential employers culture. 1. Do your homework ahead of time. 2. Observe the physical surroundings. 3. Whom did you meet with? How did they expect to be addressed? 4. How would you characterize the style of the people you met? 5. Does the organization have formal rules and regulations printed in a personnel policy manual? If so, how detailed are these policies? 6. Ask questions of the people with whom you meet. The most valid and reliable information tends to come from asking the same questions of many people, such as: y Whats the background of the founders? y Whats the background of current senior managers? What are their functional specializations? Were they promoted from within or hired from outside? y How does the organization integrate new employees? Is there an orientation program? Training? If so, could you describe these features? y How does your boss define his/her job success? (Amount of profit? Serving customers? Meeting deadlines? Acquiring budget increases?) y How would you define fairness in terms of reward allocations? y Can you identify some people here who are on the fast track? What do you think has put them on the fast track? y Can you identify someone who seems to be considered a deviant in the organization? How has the organization responded to this person? y Can you describe a decision that someone made here that was well received? y Can you describe a decision that didnt work out well? What were the consequences for the decision maker? y Could you describe a crisis or critical event that has occurred recently in the organization? How did top management respond? What was learned from this experience? 4. What defines an organizations subcultures? Answer Subcultures tend to develop in large organizations to reflect common problems, situations, or experiences that members face. They are defined by department designations and geographical separation. It
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will include the core values plus additional values unique to members of the subculture. The core values are essentially retained but modified to reflect the subculture. Many organizations also have subcultures that can influence the behavior of members. 5. Contrast organizational culture with national culture. Answer The opening example in the text showed how Japans national culture was closely intertwined with corporate culture. National cultures must be taken into account if accurate predictions are to be made about organizational behavior in different countries. The research indicates that national culture has a greater impact on employees than does their organizations culture. This has to be qualified to reflect the self-selection that goes on at the hiring stage. The employee selection process will be used by multinationals to find and hire job applicants who are a good fit with their organizations dominant culture. National culture is ones primary culture, the way one was raised, and generally has deep roots. Organizational culture is something one subscribes to and may adapt to, and even be somewhat affected by, but only to the degree it fits ones own national culture. 6. How can culture be a liability to an organization? Answer While organizational culture enhances organizational commitment and increases the consistency of employee behavior, there are potentially dysfunctional aspects of culture, especially a strong one. It can be a barrier to change when the shared values are not in agreement with those that will further the organizations effectiveness. This is most likely to occur when an organizations environment is dynamic. It is inherently a barrier to diversity because hiring new employees who (because of race, gender, disability, or other differences) are not like the majority of the organizations members creates a paradox. Management wants new employees to accept the organizations core cultural values but, at the same time, they want to support the differences that these employees bring to the workplace. Strong cultures, therefore, can be liabilities when they effectively eliminate the unique strengths that diverse people bring to the organization or if they support institutional bias or become insensitive to people who are different. Finally, strong cultures can be a barrier to acquisitions and mergers. Historically, the key factors that management looked at in making acquisition/merger decisions were financial advantages and product synergy. Cultural compatibility has become the primary concern. Whether the acquisition actually works seems to have more to do with how well the two organizations cultures match up. 7. How does a strong culture affect an organizations efforts to improve diversity? Answer It is inherently a barrier to diversity because hiring new employees who (because of race, gender, disability, or other differences) are not like the majority of the organizations members creates a paradox. Management wants new employees to accept the organizations core cultural values but, at the same time, they want to support the differences that these employees bring to the workplace. Strong cultures put considerable pressure on employees to conform. They limit the range of values and styles that are acceptable. An organization can use its strong culture to enhance diversity if it seeks out and hires diverse individuals because of their alternative strengths. If they effectively encourage the unique strengths that diverse people bring to the organization, they eliminate any institutional bias or insensitivity to people who are different. 8. What benefits can socialization provide for the organization? For the new employee? Answer Most of the benefits are mutual rather than distinct. New employees are not fully indoctrinated in the organizations culture. They are unfamiliar with the organizations culture and are potentially likely to disturb the beliefs and customs that are in place. Socialization is the organization helping new employees adapt to its culture. Metamorphosis and the entry socialization process is complete when the new member has become comfortable with the organization and his job. Exhibit 17-2 shows successful metamorphosis should have a positive impact on the new employees productivity and his commitment to the organization, and reduce his propensity to leave the organization. 9. How is language related to organizational culture? Answer Many organizations and units within organizations use language as a way to identify members of a culture or subculture. By learning this language, members attest to their acceptance of the culture and, in so doing, help to preserve it. Organizations, over time, often develop unique terms to describe equipment,
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offices, key personnel, suppliers, customers, or products that relate to their business. New employees are frequently overwhelmed with acronyms and jargon that, after six months on the job, have become fully part of their language. Once assimilated, this terminology acts as a common denominator that unites members of a given culture or subculture. 10. Describe four cultural types and the characteristics of employees who fit best with each. Answer Networked culture (high on sociability; low on solidarity). These organizations view members as family and friends. People know and like each other. People willingly give assistance to others and openly share information. The best fit are employees who possess good social skills and empathy; like to forge close, work-related friendships; thrive in a relaxed and convivial atmosphere; and are not obsessed with efficiency and task performance. Mercenary culture (low on sociability; high on solidarity). These organizations are fiercely goal-focused. People are intense and determined to meet goals. They have a zest for getting things done quickly and a powerful sense of purpose. The best fit are employees who are goal-oriented; thrive on competition; like clearly structured work tasks; enjoy risk-taking; and are able to deal openly with conflict. Fragmented culture (low on sociability; low on solidarity). These organizations are made up of individualists. Commitment is first and foremost to individual members and their job tasks. There is little or no identification with the organization. In fragmented cultures, employees are judged solely on their productivity and the quality of their work. The best fit are employees who are independent; have a low need to be part of a groupatmosphere; are analytical rather than intuitive; and have a strong sense of self that is not easily undermined by criticism. Communal culture (high on sociability; high on solidarity). This final category values both friendship and performance. People have a feeling of belonging but there is still a ruthless focus on goal achievement. The best fit are employees who have a strong need to identify with something bigger than yourself; enjoy working in teams; and are willing to put the organization above family and personal life.

QUESTIONS FOR CRITICAL THINKING

1. Contrast individual personality and organizational culture. How are they similar? How are they different? Answer They are very similar; the primary difference is that one applies to a person, the other to an assembly of people, so the personality is effected by the group. Central to both is the individual. An organization takes most of its personality from a central personality, the founder, or strong leader. Both are relatively unchanging; both can be influenced. 2. Is socialization brainwashing? Explain. Answer Yes and no. Yes, in that it is helping or coercing the individual into adjusting his/her behavior to match the expectations of the organization. On the other hand, socialization is necessary in order to work together. Imagine a kindergarten class if the students werent socialized. No matter how good a job the organization does in recruiting and selection, new employees are not fully indoctrinated in the organizations culture. Maybe most important, because they are unfamiliar with the organizations culture, new employees are potentially likely to disturb the beliefs and customs that are in place. The organization will, therefore, want to help new employees adapt to its culture. 3. If management sought a culture characterized as innovative and autonomous, what might its socialization program look like? Answer Southwests. They would encourage risk taking, provide a maximum of freedom to managers and employees, and tie rewards, raises, promotions to innovative behavior, initiative, and innovation. 4. Can you identify a set of characteristics that describes your colleges culture? Compare your assessment with those of several of your peers. How closely do they agree? Answer The answer will vary by school. The key is conducting an open discussion and not reacting to students assessments, yet making them defend them with some objective evidence, not just subjective experience.
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5. We should be opposed to the manipulation of individuals for organizational purposes, but a degree of social uniformity enables organizations to work better. Do you agree or disagree with this statement? What are its implications for organizational culture? Discuss. Answer Students responses will vary.

POINT-COUNTERPOINT Organizational Cultures Cant Be Changed

Point SUMMARY An organizations culture is made up of relatively stable characteristics. There are a number of forces continually operating to maintain a given culture. These would include written statements about the organizations mission and philosophy, the design of physical spaces and buildings, the dominant leadership style, hiring criteria, past promotion practices, entrenched rituals, popular stories about key people and events, the organizations historic performance evaluation criteria, and the organizations formal structure. Selection and promotion policies are particularly important devices that work against cultural change. Employees chose the organization because they perceived their values to be a good fit with the organization. They become comfortable with that fit and will strongly resist efforts to disturb the equilibrium. Our argument should not be viewed as saying that culture can never be changed. However, anything less than a crisis is unlikely to be effective in bringing about cultural change. CounterPoint Changing an organizations culture is extremely difficult, but cultures can be changed. y A dramatic crisis. This is the shock that undermines the status quo and calls into question the relevance of the current culture. y Turnover in leadership. New top leadership, which can provide an alternative set of key values, may be perceived as more capable of responding to the crisis. y Young and small organizations. The younger the organization is, the less entrenched its culture will be. y Weak culture. The more widely held a culture is and the higher the agreement among members on its values, the more difficult it will be to change. Conversely, weak cultures are more amenable to change than strong ones. If the above conditions exist, the following actions may lead to change. New stories and rituals need to be set in place by top management; employees should be selected and promoted who espouse the new values; the reward system needs to be changed to support the new values; and current subcultures need to be undermined through transfers, job rotation, and terminations. Teaching notes 1. You can relate this debate to the case exercise regarding P &G. 2. As a class, discuss and decide which of the four cultures most closely fits your college or university. Students may have a very different perspective than you do as faculty, so choose which organization you are assessing, the one visible to students or to faculty. 3. Once the culture is identified, discuss with students what would be involved in changing the culture of your college or university. Explain to students, for the sake of the exercise, they should consider that the culture is in need of change in order to deal with the new dynamics facing institutions of higher education. You choose a contrasting culture to the one identified in the students earlier discussion. 4. This discussion should consider: y the current culture and target culture. y what change techniques could be used. y what elements of culture maintenance need to be addressed in the change effort. y who would resist this change and why. 5. The discussion should help students realize the effort involved in changing organization culture and help them decide which side of this debate they most identify with.

TEAM EXERCISE Rate Your Classroom Culture

Purpose: This exercise will raise students awareness of the elements of organizational culture and increase their sensitivity to the issues involved in evaluating it. Time: 30 minutes
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Instructions: 1. Listed here are 14 statements. Using the five-item scale (from Strongly Agree to Strongly Disagree), respond to each statement by circling the number that best represents your opinion. Strongly Strongly Agree Agree Neutral Disagree Disagree 1. I feel comfortable challenging statements made by my instructor. 2. My instructor heavily penalizes assignments that are not turned in on time. 3. My instructor believes that its final results that count. 4. My instructor is sensitive to my personal needs and problems. 5. A large portion of my grade depends on how well I work with others in the class. 6. I often feel nervous and tense when I come to class. 7. My instructor seems to prefer stability over change. 8. My instructor encourages me to develop new and different ideas. 9. My instructor has little tolerance for sloppy thinking. 10. My instructor is more concerned with how I came to a conclusion than the conclusion itself. 11. My instructor treats all students alike. 12. My instructor frowns on class members helping each other with assignments. 13. Aggressive and competitive people have a distinct advantage in this class. 14. My instructor encourages me to see the world differently. 5 5 5 5 5 5 5 5 5 5 5 5 5 5 4 4 4 4 4 4 4 4 4 4 4 4 4 4 3 3 3 3 3 3 3 3 3 3 3 3 3 3 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Instructions (continued): 2. Calculate your total score by adding up the numbers you circled. 3. Your score will fall between 14 and 70. y A high score (49 or above) describes an open, risk-taking, supportive, humanistic, team-oriented, easygoing, growth-oriented culture. y A low score (35 or below) describes a closed, structured, task-oriented, individualistic, tense, and stability-oriented culture. y Note that differences count. y So, a score of 60 is a more open culture than one that scores 50. 4. Also, realize that one culture isnt preferable over the other. 5. The right culture depends on you and your preferences for a learning environment. 6. Form teams of 57 members each. Compare your scores. y How closely do they align? Discuss and resolve discrepancies. y Based on your teams analysis, what type of student do you think would perform best in this class?

CASE EXERCISE Shaking Up P&G

Durk Jager is a man on a mission. As the newly appointed CEO of Procter & Gamble, he is determined to make P&G a more conflict-friendly organization. Jager has some ambitious goals for P&G. At the top of the list is to significantly boost sales volume. But the companys strong cult-like culture tends to Procter-ize people, says Jager. P&G people are too insular, risk-averse, and slow to make decisions. The company recruits job candidates from a variety of backgrounds, puts them through a relatively standardized training program, and then insulates them at company headquarters. After awhile, they begin to sound alike, think alikeeven look alike, he says. Jagers career path is unusual for P&G. While hes been with the company for nearly 30 years, hes spent most of his time outside Cinncinati. After 12 years, he was transferred to Japan as an advertising manager, and was later promoted to general manager. So, inspite of all his years with the company, he has an outsiders perspective. He has a reputation for shaking things up. As such, he might be just the right man for his new job. P&G is a company where managers have a passion for memo-writing, and dissent is rarely tolerated. Jager is determined to change P&Gs culture. He wants to make the company faster on its feet, more innovative, and more conflict-friendly.
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Great ideas generally come from conflicta dissatisfaction with the status quo. Id like to have an organization where there are rebels. Questions 1. How was the P&G culture shaped? Answer Experience, history, and what worked in the past. The character of the founders and early CEOs also influenced the culture. 2. Using the four-culture typology described in this chapter, what type of culture do you think P&G is currently? What type is Jager trying to change it to? Answer Networked culture (high on sociability; low on solidarity), view members as family and friends. People know and like each other. People willingly give assistance to others and openly share information. The major negative is that the focus on friendships can lead to a tolerance for poor performance and creation of political cliques. Mercenary culture (low on sociability; high on solidarity). These organizations are fiercely goal-focused. People are intense and determined to meet goals. They have a zest for getting things done quickly and a powerful sense of purpose. Mercenary cultures focus on goals and objectivity also leads to a minimal degree of politicking. 3. If you were Jager, what would you do to change this culture? Be specific. Answer There needs to be a sense of urgency and a massive change in staffing, probably at the executive level. He needs to promote people like himself, those in the company but on the outside, as well as bringing in outsiders with the talents he needs. He needs to rebuild the reward and compensation systems to reinforce this orientation. 4. Do you think Jager will succeed? Explain your position. Answer It depends entirely on the sense of urgency the organization feels, his support from his board of directors, and his persistence. If he succeeds, P & G will no longer exist in the sense it does today.
[Source: T. Parker-Pope, New CEO Preaches Rebellion for P&Gs Cult, Walt Street Journal, December 11, 1998, p. B1; and K. Brooker, Can Procter & Gamble Change Its Culture, Protect Its Market Share, and Find the Next Tide? Fortune, April 26, 1999, pp. 14652.]

MODEL RESPONSES FOR INTERNET SEARCH EXERCISES

1. Identify a merger or acquisition which has run into trouble (or been dissolved) in the past year in which the primary problem identified was incompatible cultures. Describe and discuss what specific elements of the cultures led to the problem. Answer The purpose of this question is for students to understand that integrating the cultures of merging companies can be critical to the success of the merger. In answering this question students will need to do a web search using key terms such as merger and fail and culture. If students are having difficulty finding a specific article that meets the needs of this question, you might broaden the range of acceptable articles to include those that are more than a year old and/or those that have anything to do with mergers and culture. There are actually quite a few good web sites that deal with these topics. There is an excellent article at Semiconductor Super Site Network http://techjobs.supersites.net/channelh2/9808/merger1.htm that covers this topic. 2. Provide examples of jargon used at two U.S., Australian, and Canadian firms. In each case, describe how that jargon helps members of these organizations to learn their culture. Answer Student answers will vary widely on this question and will range from examples of techno-jargon such as the term hacker and other terms found at http://tbtf.com/jargon-scout.html to terms that are industry- and/or country-specific. Try http://www.duesouth.net/dfolsom/bjquotes.html for an interesting business jargon website. To aid students in finding international businesses, you might direct them to The Internationalist at http://www.internationalist.com/business/.

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ETHICAL DILEMMA EXERCISE Cultural Factors and Unethical Behavior

An organizations culture socializes people. It subtly conveys to members that certain actions are acceptable, even though they are illegal. For instance, when executives at General Electric, Westinghouse, and other manufacturers of heavy electrical equipment illegally conspired to set prices in the early 1960s, the defendants invariably testified that they came new to their jobs, found price fixing to be an established way of life, and simply entered into it as they did into other aspects of their job. One GE manager noted that every one of his bosses had directed him to meet with the competition: It had become so common and gone on for so many years that I think we lost sight of the fact that it was illegal. The strength of an organizations culture has an influence on the ethical behavior of its managers. A strong culture will exert more influence on managers than a weak one. If the culture is strong and supports high ethical standards, it should have a very powerful positive influence on a managers ethical behavior. However, in a weak culture, managers are more likely to rely on subculture norms to guide their behavior. So work groups and departmental standards will more strongly influence ethical behavior in organizations that have weak overall cultures. It is also generally acknowledged that the content of a culture affects ethical behavior. Assuming this is true, what would a culture look like that would shape high ethical standards? What could top management do to strengthen that culture? Do you think its possible for a manager with high ethical standards to uphold those standards in an organizational culture that tolerates, or even encourages, unethical practices?
[As described in P.C. Yeager, Analyzing Corporate Offenses: Progress and Prospects, in W.C. Frederick and L.E. Preston (eds.), Business Ethics: Research Issues and Empirical Studies (Greenwich, CT: JAI Press, 1990), p. 174.]

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