ORGANIZATIONAL CULTURE LEARNING OBJECTIVES After studying this chapter, students should be able to: 1. ture. 2. 3. 4. ure on 5. 6. 7. 8. 9. 10.

Describe institutionalization and its relationship to organizational cul Define the common characteristics making up organizational culture. Contrast strong and weak cultures. Identify the functional and dysfunctional effects of organizational cult people and the organization. Explain the factors determining an organizations culture. List the factors that maintain an organizations culture. Clarify how culture is transmitted to employees. Outline the various socialization alternatives available to management. Describe a customer-responsive culture. Identify characteristics of a spiritual culture.

CHAPTER OVERVIEW Exhibit 18-7 depicts organizational culture as an intervening variable. Employee s form an overall subjective perception of the organization based on such factor s as degree of risk tolerance, team emphasis, and support of people. This overal l perception becomes, in effect, the organizations culture or personality. These favorable or unfavorable perceptions then affect employee performance and satisf action, with the impact being greater for stronger cultures. Just as peoples personalities tend to be stable over time, so too do strong cultu res. This makes strong cultures difficult for managers to change. When a culture becomes mismatched to its environment, management will want to change it. Howev er, as the Point-Counterpoint debate for this chapter demonstrates, changing an organizations culture is a long and difficult process. The result, at least in th e short term, is that managers should treat their organizations culture as relati vely fixed. One of the more important managerial implications of organizational culture rela tes to selection decisions. Hiring individuals whose values do not align with th ose of the organization is likely to lead to employees who lack motivation and c ommitment and who are dissatisfied with their jobs and the organization. Not sur prisingly, employee misfits have considerably higher turnover rates than individua ls who perceive a good fit. We should also not overlook the influence socialization has on employee performa nce. 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 prop er socialization. Furthermore, the appraisal of an individuals performance includ es 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 att itude? These qualities differ between jobs and organizations. For instance, on s ome 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 i n another organization, such an approach may be evaluated negatively. As a resul t, proper socialization becomes a significant factor in influencing both actual job performance and how it is perceived by others. WEB EXERCISES

At the end of each chapter of this instructors manual, you will find suggested ex ercises and ideas for researching the WWW on OB topics. The exercises Exploring OB Topics on the Web are set up so that you can simply photocopy the pages, distr ibute them to your class, and make assignments accordingly. You may want to ass ign the exercises as an out-of-class activity, or as lab activities with your cl ass. Within the lecture notes the graphic will note that there is a WWW activity to support this material.

CHAPTER NOTES Institutionalization: A Forerunner of Culture Notes: 1. Viewing organizations as cultureswhere there is a system of shared meaning a mong membersis a relatively recent phenomenon. Until the mid-1980s, organizations were rational means by which to coordinate and control people. 2. ive. Organizations have personalities too, just like individuals: They can be rigid or flexible, unfriendly or supportive, innovative or conservat

General Electric offices and people are different from the offices and people at General Mills.

Harvard and MIT are in the same businesseducationbut each has a unique character.

3. The origin of culture as an independent variable affecting an employees atti tudes and behavior can be traced back more than 50 years ago to the notion of in stitutionalization. 4. When an organization becomes institutionalized, it is valued for itself, no t merely what it produces: It acquires immortality. It redefines itself.

5. Institutionalization produces common understandings about what is appropria te and, fundamentally, meaningful behavior. 6. Acceptable modes of behavior become largely self-evident to its members. Th is is essentially the same thing that organizational culture does. What Is Organizational Culture? Notes: 1. Organizational culturea system of shared meaning held by members that disting uishes the organization from other organizations. 2. This system of shared meaning is a set of key characteristics that the orga nization values. The research suggests seven primary characteristics: Innovation and risk taking Attention to detail Outcome orientation People orientation Team orientation Aggressiveness Stability

3. Each exists on a continuum from low to high. Appraising the organization on these gives a composite picture of the organizations culture. This is the basis for: Shared understanding that members have. How things are done. The way members are supposed to behave.

A. Culture Is a Descriptive Term Notes: 1. Organizational culture is concerned with how employees perceive its charact eristics, not if they like them. Research on organizational culture has sought t o measure how employees see their organization. 2. Job satisfaction seeks to measure affective responses to the work environme nt, such as how employees feel about the organizations expectations, reward pract ices, etc. 3. . Organizational culture is descriptive, while job satisfaction is evaluative

B. Do Organizations Have Uniform Cultures? 1. Individuals with different backgrounds or at different levels in the organi zation 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: An organizations culture is its dominant culture. This macro view of culture that gives an organization its distinct personality.

4. Subcultures tend to develop in large organizations to reflect common proble ms, situations, or experiences that members face: Defined by department designations and geographical separation It 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. 5. If organizations had no dominant culture and were composed only of numerous subcultures, the value of organizational culture as an independent variable wou ld be significantly lessened:

It is the shared meaning aspect of culture that makes it such a potent device for guiding and shaping behavior. We cannot ignore the reality that many organizations also have subcultures that can influence the behavior of members. C. Strong vs. Weak Cultures 1. The argument is that strong cultures have a greater impact on employee beha

vior and are more directly related to reduced turnover: The organizations core values are both intensely held and widely shared.

A strong culture will have a great influence on the behavior of its members beca use the high degree of shared-ness and intensity creates an internal climate of high behavioral control. 2. One specific result of a strong culture should be lower employee turnover. A high agreement about what the organization stands for builds cohesiveness, loy alty, and organizational commitment.

D. Culture vs. Formalization Notes: 1. A strong organizational culture increases behavioral consistency. A strong culture can act as a substitute for formalization. 2. High formalization in an organization creates predictability, orderliness, and consistency. 3. A strong culture achieves the same end without the need for written documen tation. Therefore, formalization and culture are two different roads to a common destination. E. Organizational Culture vs. National Culture 1. 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? The research indic ates that national culture has a greater impact on employees than does their org anizations culture. 3. 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 f ind and hire job applicants who are a good fit to their organizations dominant cu lture. What Do Cultures Do? Notes: A. Cultures Functions 1. It has a boundary-defining role. It creates distinctions between one organi zation 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. Culture is the social glue that helps hold the organization together. It en hances social system stability. 5. Culture serves as a sense-making and control mechanism that guides and shap

es the attitudes and behavior of employees. This last function is of particular interest to us: Culture by definition is elusive, intangible, implicit, and taken for granted. Every organization develops a core set of assumptions, understandings, and impli cit rules that govern day-to-day behavior in the workplace. 6. The role of culture in influencing employee behavior appears to be increasi ngly important. 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 hi gh performer, and who gets the promotion is strongly influenced by the individua l-organization fit.

Instructor Note: At this point in the lecture you may want to introduce the TEA M EXERCISE: Rate Your Classroom Culture found in the text and at the end of the chapter notes. B. Culture as a Liability Notes: 1. We are treating culture in a nonjudgmental manner. 2. Culture enhances organizational commitment and increases the consistency of employee behavior, but there are potentially dysfunctional aspects of culture. 3. Barrier to change:

Culture is a liability when the shared values are not in agreement with those th at will further the organizations effectiveness. This is most likely to occur whe n an organizations environment is dynamic. This helps to explain the challenges that executives at companies like Mitsubish i, General Motors, Eastman Kodak, Kellogg, and Boeing have had in recent years i n adapting to upheavals in their environment. 4. Barrier to diversity:

Hiring new employees who, because of race, gender, disability, or other differen ces, are not like the majority of the organizations members creates a paradox. Management wants new employees to accept the organizations core cultural values b ut, 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 th e range of values and styles that are acceptable. Organizations seek out and hire diverse individuals because of their alternative strengths, yet these diverse behaviors and strengths are likely to diminish in strong cultures. Strong cultures, therefore, can be liabilities when:

b. They effectively eliminate the unique strengths that diverse people brin g to the organization.

b. They support institutional bias or become insensitive to people who are different. 5. Barrier to acquisitions and mergers:

Historically, the key factors that management looked at in making acquisition/me rger decisions: a. b. Financial advantages Product synergy

Cultural compatibility has become the primary concern. Whether the acquisition a ctually works seems to have more to do with how well the two organizations cultur es match up. Instructor Note: At this point in the lecture you may want to introduce the MYT H OR SCIENCE: Success Breeds Success found in the text and below. A suggestion f or a class exercise follows.

MYTH OR SCIENCE? Success Breeds Success Generally speaking, success creates positive momentum. People like being associa ted with it. Microsofts incredible success in the 1990s made it a highly desirabl e place to work, but success often breeds failure, especially in organizations w ith strong cultures. Organizations that have tremendous successes begin to belie ve in their own invulnerability. The corporate highway is littered with companie s that let arrogance undermine previous successes. JC Penney and Sears once rule d the retail department-store market. Wal-Mart did a pretty effective job of hum bling 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 market s for semiconductors and analog cellular phones, but the company became arrogant . In the first quarter of 2001 it lost $206 million and was cutting 22,000 jobs. Class Exercise: 1. Assign as an outside research project: 2. Divide the class into teams, and assign each team a company that was suc cessful and that failed [some should be companies that then recovered from failu re]. Some suggestions: Texas Instruments Woolworth Chrysler American Motors Sears K-Mart 3. Students should prepare a 10-to 15-minute oral report that summarizes: The key success factors that made the companies powerful leaders. Three-to-five major events or factors that changed or reshaped these companies bu siness environment. The key or major mistakes the company made in dealing with these changes. 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 va rious situations.

Creating and Sustaining Culture Notes: A. How a Culture Begins 1. An organizations culture comes from what it has done before and the degree o f success it has had. The ultimate source of an organizations culture is its foun ders. 2. The founders of an organization traditionally have a major impact on tha t organizations early culture: They had the vision; they are unconstrained by previous customs or ideologies.

The small size of new organizations facilitates the founders imposition of the vi sion on all organizational members. 3. Culture creation occurs in three ways:

First, founders hire and keep only employees who think and feel the way the way they do.

A. How a Culture Begins (cont.) Notes: Second, they indoctrinate and socialize these employees to their way of thinking and feeling. The founders own behavior acts as a role model that encourages employees to ident ify with them and thereby internalize their beliefs, values, and assumptions. 4. When the organization succeeds, the founders entire personality becomes embe dded in the culture of the organization. B. Keeping a Culture Alive 1. There are practices within the organization that act to maintain it by givi ng employees a set of similar experiences. 2. Three forces play a particularly important part in sustaining a culture: se lection practices, the actions of top management, and socialization methods. 3. Selection

The explicit goal of the selection process is to identify and hire individuals w ho have the knowledge, skills, and abilities to perform the jobs within the orga nization successfully. The final decision as to who is hired will be significantly influenced by the de cision makers judgment of how well the candidates will fit into the organization. This results in the hiring of people who have values consistent with those of th e organization. Additionally, the selection process provides information to applicants about the

organization. Selection, therefore, becomes a two-way street. Exampleapplicants for entry-level positions in brand management at Procter & Gamb le (P&G). Each encounter seeks corroborating evidence of the traits that the fi rm believes correlate highly with what counts for success at P&G. 4. Top management

The actions of top management, what they say and how they behave, establish norm s that filter down through the organization as to: a. Risk taking. b. How much freedom managers should give their employees. c. What is appropriate dress. d. What actions will pay off in terms of pay raises, promotions, and other rew ards. 5. Socialization

New employees are not fully indoctrinated in the organizations culture. They are unfamiliar with the organizations culture and are potentially likely to disturb t he beliefs and customs that are in place. Socialization is the organization helping new employees adapt to its culture.

B. Keeping a Culture Alive (cont.) Notes: All Marines must go through boot camp, where they prove their commitment. At the ame time, the Marine trainers are indoctrinating new recruits in the Marine way. At Starbucks, all new employees go through 24 hours of training covering everyth ing necessary to make them brewing consultants. In addition, they learn the Star bucks philosophy, the company jargon, and even how to help customers make decisi ons about beans, grind, and espresso machines. ion: The most critical socialization stage is at the time of entry into the organizat

a. This is when the organization seeks to mold the outsider into an employee. b. The organization socializes every employee throughout his/her entire car eer. 6. Socialization is a process made up of three stages: pre-arrival, encounter, and metamorphosis. The first stage, pre-arrival, encompasses all the learning that occurs before a new member joins. The pre-arrival stage recognizes that each individual arrives with a set of valu es, attitudes, and expectations about both the work to be done and the organizat ion: a. In many jobs, particularly professional work, new members will have undergo ne a considerable degree of prior socialization in training and in school. b. 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.

 In the second stage, encounter, the new employee sees what the organization is r eally like and confronts the possibility that expectations and reality may diver ge. a. The individual confronts the possible dichotomy between his/her expectation sabout his/her job, coworkers, boss, and the organization in generaland reality. b. If expectations are accurate, this stage merely reaffirms them. c. Where expectations and reality differ, the new employee must undergo social ization that will detach him/her from his/her previous assumptions and replace t hem with another set that the organization deems desirable. d. At the extreme, a new member may become totally disillusioned and resign. In the third stage, metamorphosis, the relatively long-lasting changes take plac e. The new employee masters the skills required for his/her job, successfully pe rforms his/her new roles, and makes the adjustments to his/her work groups values and norms. a. The more management relies on socialization programs that are formal, colle ctive, fixed, serial, and emphasize divestiture, the greater the likelihood that newcomers differences and perspectives will be stripped away and replaced by sta ndardized and predictable behaviors.

B. Keeping a Culture Alive (cont.) Notes: b. Metamorphosis and the entry socialization process is complete when the new member has become comfortable with the organization and his job. He has internalized the norms of the organization and his work group and underst ands and accepts these norms. Exhibit 18-4 shows successful metamorphosis should have a positive impact on the new employees productivity and his commitment to the organization, and reduce hi s propensity to leave the organization. How Employees Learn Culture Notes: 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, M r. Nordstrom, we dont sell tires!, I know, replied the boss, but we do whatever we ne ed to do to make the customer happy. 3. Stories such as these typically contain a narrative of events about the org anizations founders, rule breaking, rags-to-riches successes, reductions in the w orkforce, relocation of employees, reactions to past mistakes, and organizationa l coping. 4. They anchor the present in the past and provide explanations and legitimacy for current practices: For the most part, these stories develop spontaneously. Some organizations actually try to manage this element of culture learning.

B. Rituals 1. Rituals are repetitive sequences of activities that express and reinforce t he key values of the organization, what goals are most important, which people a re important, and which are expendable. 2. College faculty members undergo a lengthy ritual in their quest for permane nt employmenttenure. The astute faculty member will assess early on in the probat ionary period what attitudes and behaviors his or her colleagues want and will t hen proceed to give them what they want. 3. One of the best-known corporate rituals is Wal-Marts company chant. W-A-L sq uiggle M-A-R-T! was Sam Waltons way to motivate his workforce. Instructor Note: At this point in the lecture you may want to introduce the POI NTCOUNTER POINT: Organizational Cultures Cant Be Changed found in the text and at the end of these chapter notes. A suggestion for a class exercise follows.

C. Material Symbols Notes: 1. The headquarters of Alcoa does not look like your typical head office opera tion: There are few individual offices. The informal corporate headquarters conveys to employees that Alcoa values openn ess, equality, creativity, and flexibility. 2. Some corporations provide their top executives with a variety of expensive perks. Others provide fewer and less elaborate perks. 3. The layout of corporate headquarters, the types of automobiles top executiv es that are given, and the presence or absence of corporate aircraft are a few e xamples of material symbols. 4. These material symbols convey to employees who is important, the degree of egalitarianism desired by top management, and the kinds of behavior that are app ropriate. D. Language 1. Many organizations and units use language as a way to identify members of a culture or subculture. By learning this language, members attest to their accep tance of the culture and help to preserve it. 2. Organizations, over time, often develop unique terms to describe equipment, offices, key personnel, suppliers, customers, or products that relate to its bu siness. 3. New employees are frequently overwhelmed with acronyms and jargon that, aft er six months on the job, have become fully part of their language. 4. Once assimilated, this terminology acts as a common denominator that unites members of a given culture or subculture. Creating an Ethical Organizational Culture Notes:

1. The content and strength of a culture influences an organizations ethical cl imate and the ethical behavior of its members. 2. An organizational culture most likely to shape high ethical standards is on e thats high in risk tolerance, low to moderate in aggressiveness, and focuses on means as well as outcomes. 3. If the culture is strong and supports high ethical standards, it should hav e a very powerful and positive influence on employee behavior. 4. What can management do to create a more ethical culture?

5. Be a visible role model. Employees will look to top-management behavior as a benchmark for defining appropriate behavior. 6. Communicate ethical expectations. Ethical ambiguities can be minimized by c reating and disseminating an organizational code of ethics. 7. Provide ethical training. Use training sessions to reinforce the organizat ions standards of conduct; to clarify what practices are and are not permissible; and to address possible ethical dilemmas. 8. Visibly reward ethical acts and punish unethical ones. Performance appraisa ls of managers should include a point-by-point evaluation of how his or her deci sions measure against the organizations code of ethics.

Creating an Ethical Organizational Culture (cont.) Notes: 9. Provide protective mechanisms. The organization needs to provide formal mec hanisms so that employees can discuss ethical dilemmas and report unethical beha vior without fear of reprimand. This might include creation of ethical counselor s, ombudsmen, or ethical officers. Instructor Note: At this point in the lecture you may want to introduce the OB IN THE NEWS: Enron and the Creation of an Unethical Culture found in the text a nd below. A suggestion for a class exercise follows. OB IN THE NEWS Enron and the Creation of an Unethical Culture Enron Corp., which in December 2001 became the largest-ever US bankruptcy, did n ot fail solely because of improper accounting practices, although that was certa inly a major contributor. It also failed because it had a culture that pushed ex ecutives into unethical behavior. During Enrons heyday in the late 1990s, the press regularly praised the company f or its entrepreneurial culture: smart, sassy, creative, and risk-taking. A postmortem analysis reveals a different culturean unrelenting emphasis on earnings gr owth and individual initiative. Instead of rewarding new ideas, the company enco uraged unethical corner-cutting. How? First, it pressured executives to make the ir numbers. Second, it instilled lax controls over how those numbers were create d. Third, it bred a yes-man culture among executives. People were afraid to speak out on questionable practices for fear that it would adversely affect their perf ormance evaluations and the size of their bonuses. Fourth, bonuses and money bec ame the Almighty God. The company sought out and rewarded people who placed a hi gh value on money. Jeff Skilling, the CEO who created Enrons in-your-face culture , is quoted as saying all that matters is money. You can buy loyalty with money. F ifth, although managers were supposed to be graded on teamwork, the culture was

heavily built around star players, with little value attached to team-building. The organization rewarded highly competitive people who were less likely to shar e power, authority, or information. Finally, the company continually set itself wildly optimistic expectations for growth and then drove executives to find ways to meet them. Youve got someone at the top saying the stock price is the most imp ortant thing, which is driven by earnings, said one insider. Whoever could provide earnings quickly would be promoted. One former Enron employee summed up the Enron culture this way: If your boss was [fudging], and you have never worked anywhere else, you just assume that everybo dy fudges earnings. Once you get there and you realized how it was, do you stand up and lose your job? It was scary. It was easy to get into Well, everybody else is doing it, so maybe it isnt so bad. Sources: Based on W. Zellner, Jeff Skilling: Enrons Missing Man, Business Week, Feb ruary 11, 2002, pp. 3840; and J. A. Byrne, The Environment Was Ripe for Abuse, Busi ness Week, February 25, 2002, pp. 11820.

Class Exercise: 1. Organize students into small discussion groups or assign this as a journal activity. 2. Ask students to review the case and develop a list of strategies that, if h ad they been an Enron employee, they could have employed to not allow themselves to be caught up in the unethical behavior. 3. Have students be specificit is not enough to say, It will never happen to me. Some strategies might include: Learn how to talk with superiors about these matters in a professional manner. Recognizing when I disagree with superiors and my value system is threatened Acknowledge red-flags when they appear. Do not accept rationalizations such as rybody is doing it. Develop a close confident outside the organization who I can do an ethical audit ith whom would I not be immediately impacted should I lose my job. Example: mi nister, trusted friend. Develop relationships with others in the organization who think like I do in the se matters so I do not feel isolated in my feelings. Take a class or read about ethical issues to better frame my thoughts. Always have three months expenses in savings so I have the freedom to leave at a moments notice. 4. Put the responses on the board and discuss with the students how difficult these situations can be and how important it is to have a plan. Creating a Customer-Responsive Culture Most organizations are attempting to create a customer-responsive culture becaus e they recognize that this is the path to customer loyalty and long-term profita bility. Notes: A. Key Variables Shaping Customer-Responsive Cultures 1. A review of the evidence finds that half-a-dozen variables are routinely ev ident in customer-responsive cultures. 2. First is the type of employees themselves. Successful, service-oriented org anizations hire employees who are outgoing and friendly. 3. Second is low formalization. Service employees need to have the freedom to meet changing customer service requirements. Rigid rules, procedures, and regula tions make this difficult. 4. Third is an extension of low formalizationit is the widespread use of empowe

rment. Empowered employees have the decision discretion to do what is necessary to please the customer. 5. Fourth is good listening skills. Employees in customer-responsive cultures have the ability to listen to and understand messages sent by the customer. 6. Fifth is role clarity. Service employees act as boundary spanners between the organization and its customers. They have to acquiesce to the demands of both t heir employer and the customer. 7. Finally, customer-responsive cultures have employees who exhibit organizati onal citizenship behavior. They are conscientious in their desire to please the customer.

B. Managerial Action 1. There are a number of actions that management can take if it wants to make its culture more customer-responsive. 2. Selection

The place to start in building a customer-responsive culture is hiring service-c ontact people with the personality and attitudes consistent with a high service orientation. Studies show that friendliness, enthusiasm, and attentiveness in service employe es positively affect customers perceptions of service quality. Managers should lo ok for these qualities in applicants. 3. Training and Socialization

Management is often faced with the challenge of making its current employees mor e customer-focused. In such cases, the emphasis will be on training rather than hiring. The content of these training programs will vary widely but should focus on impr oving product knowledge, active listening, showing patience, and displaying emot ions. All new service-contact people should be socialized into the organizations goals and values. Regular training updates in which the organizations customer focused values are r estated and reinforced is an important strategy.

B. Managerial Action (cont.) Notes: 4. Structural Design Organization structures need to give employees more control. This can be achieve d by reducing rules and regulations. Employees are better able to satisfy custom ers when they have some control over the service encounter. 5. Empowerment Empowering employees with the discretion to make day-to-day decisions about job-

related activities 6. Leadership

Effective leaders in customer-responsive cultures deliver by conveying a custome r-focused vision and demonstrate by their continual behavior that they are commi tted to customers. 7. Performance Evaluation

Evidence suggests that behavior-based performance evaluations are consistent wit h improved customer service. Behavior-based evaluations appraise employees on the basis of how they behave or acton criteria such as effort, commitment, teamwork, friendliness, and the abili ty to solve customer problemsrather than on the measurable outcomes they achieve. Behavior based evaluations give employees the incentive to engage in behaviors t hat are conducive to improved service quality and gives employees more control o ver the conditions that affect their performance evaluations. 8. Reward Systems

If management wants employees to give good service, it has to reward good servic e. It should include ongoing recognition and it needs to make pay and promotions contingent on outstanding customer service.

Instructor Note: At this point in the lecture you may want to introduce the CAS E EXERCISE: Trying to do the Impossible at GM found in the text and at the end of the chapter notes. A suggestion for a class exercise follows. Spirituality and Organizational Culture Notes: A. What is Spirituality? 1. Workplace spirituality is not about organized religious practices. It is no t about God or theology. 2. Workplace spirituality recognizes that people have an inner life that nouri shes and is nourished by meaningful work that takes place in the context of comm unity.

B. Why Spirituality Now? Notes: 1. Historical models of management and organizational behavior had no room for spirituality. The myth of rationality assumed that the well-run organization el iminated feelings. 2. An awareness of spirituality can help you to better understand employee beh avior. C. Characteristics of a Spiritual Organization

1. Spiritual organizations are concerned with helping people develop and reach their full potential. 2. Organizations that are concerned with spirituality are more likely to direc tly address problems created by work/life conflicts. 3. What differentiates spiritual organizations from their non-spiritual counte rparts? 4. Strong Sense of Purpose

Spiritual organizations build their cultures around a meaningful purpose. For ex ample, Ben & Jerrys Homemade has closely intermeshed socially responsible behavio r into its producing and selling of ice cream. 5. Focus on Individual Development

Spiritual organizations recognize the worth and value of people. They are not ju st providing jobs. They seek to create cultures in which employees can continual ly learn and grow. ty. 6. Recognizing the importance of people, they also try to provide employment securi

Trust and Openness

Spiritual organizations are characterized by mutual trust, honesty, and openness . Managers arent afraid to admit mistakes. s. 7. They tend to be extremely up front with their employees, customers, and supplier Employee Empowerment

Managers in spiritually based organizations are comfortable delegating authority to individual employees and teams. They trust their employees to make thoughtfu l and conscientious decisions. 8. Toleration of Employee Expression

They allow people to be themselvesto express their moods and feelings without gui lt or fear of reprimand.

D. Criticisms of Spirituality Notes: 1. Critics of the spirituality movement in organizations have focused on two i ssues: First is the question of legitimacy. Specifically, do organizations have the rig ht to impose spiritual values on their employees? Second is the question of economics. Are spirituality and profits compatible?

2. This criticism is undoubtedly valid when spirituality is defined as bringin g religion and God into the workplace. However, the goal is limited to helping

employees find meaning in their work lives and to use the workplace as a source of community. 3. The issue of whether spirituality and profits are compatible objectives is certainly relevant for managers and investors in business. A recent research stu dy by a major consulting firm found that companies that introduced spiritually b ased techniques improved productivity and significantly reduced turnover. 4. Another study found that organizations that provide their employees with op portunities for spiritual development outperformed those that did not. 5. Other studies also report that spirituality in organizations was positively related to creativity, employee satisfaction, team performance, and organizatio nal commitment.

QUESTIONS FOR REVIEW 1. Whats the difference between job satisfaction and organizational culture? Answer Organizational culture is concerned with how employees perceive the chara cteristics of an organizations culture, not with whether or not they like them. T hat is, it is a descriptive term. This is important because it differentiates th is concept from that of job satisfaction. Research on organizational culture has sought to measure how employees see their organization: Does it encourage teamw ork? Does it reward innovation? Does it stifle initiative? In contrast, job sati sfaction seeks to measure affective responses to the work environment. It is con cerned with how employees feel about the organizations expectations, reward pract ices, and the like. Although the two terms undoubtedly have overlapping characte ristics, 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 value s? 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 characterist ics, not if they like them. Job satisfaction seeks to measure affective response s to the work environmenthow employees feel about the organizations expectations, reward practices, and the like. Therefore, if an individual does not fit the org anizations culture, the individual will have some significant difficulty in survi ving, 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 outsi de socially and organizationally. 3. What defines an organizations subcultures? Answer Subcultures tend to develop in large organizations to reflect common prob lems, situations, or experiences that members face. They are defined by departme nt designations and geographical separation. It will include the core values plu s additional values unique to members of the subculture. The core values are ess entially retained but modified to reflect the subculture. Many organizations als o have subcultures that can influence the behavior of members. 4. Contrast organizational culture with national culture. Answer The opening example in the text showed how Japans national culture was clo

sely intertwined with corporate culture. National cultures must be taken into ac count if accurate predictions are to be made about organizational behavior in di fferent countries. The research indicates that national culture has a greater im pact 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 se lection process will be used by multinationals to find and hire job applicants w ho are a good fit with their organizations dominant culture. National culture is ones primary culture generally has deep roots. Organizational culture is something one subscribes to and may adapt to, and even be somewhat a ffected by, but only to the degree it fits ones own national culture. 5. How can culture be a liability to an organization? Answer While organizational culture enhances organizational commitment and incre ases the consistency of employee behavior, there are potentially dysfunctional a spects of culture. It can be a barrier to change when the shared values are not in agreement with those that will further the organizations effectiveness. This i s most likely to occur when an organizations environment is dynamic. It is inhere ntly a barrier to diversity because hiring new employees who (because of race, g ender, disability, or other differences) are not like the majority of the organi zations members creates a paradox. Management wants new employees to accept the o rganizations core cultural values but, at the same time, wants to support the dif ferences that these employees bring to the workplace. Strong cultures, therefore , can be liabilities when they effectively eliminate the unique strengths that d iverse 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 manag ement looked at in making acquisition/merger decisions were financial advantages and product synergy. Cultural compatibility has become the primary concern. Whe ther the acquisition actually works seems to have more to do with how well the t wo organizations cultures match up. 6. How does a strong culture affect an organizations efforts to improve dive rsity? 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 maj ority of the organizations members creates a paradox. Management wants new employ ees 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. Str ong cultures put considerable pressure on employees to conform. They limit the r ange 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 ef fectively encourage the unique strengths that diverse people bring to the organi zation, they eliminate any institutional bias or insensitivity to people who are different. 7. What benefits can socialization provide for the organization? For the new e mployee? Answer Most of the benefits are mutual rather than distinct. New employees are n ot fully indoctrinated in the organizations culture. They are unfamiliar with the organizations culture and are potentially likely to disturb the beliefs and cust oms that are in place. Socialization is the organization helping new employees a dapt to its culture. Metamorphosis and the entry socialization process is comple te when the new member has become comfortable with the organization and his job. Exhibit 18-2 shows how successful metamorphosis should have a positive impact o n the new employees productivity and his commitment to the organization, and redu ce his propensity to leave the organization.

8. How is language related to organizational culture? Answer Many organizations and units within organizations use language as a way t o identify members of a culture or subculture. By learning this language, member s attest to their acceptance of the culture and, in so doing, help to preserve i t. Organizations, over time, often develop unique terms to describe equipment, o ffices, key personnel, suppliers, customers, or products that relate to their bu siness. New employees are frequently overwhelmed with acronyms and jargon that, after six months on the job, have become fully part of their language. Once assi milated, this terminology acts as a common denominator that unites members of a given culture or subculture. 9. How can management create an ethical culture? Answer An organizational culture most likely to shape high ethical standards is one that is high in risk tolerance, low to moderate in aggressiveness, and focus es on means as well as outcomes. If the culture is strong and supports high ethi cal standards, it should have a very powerful and positive influence on employee behavior. An organization can create an ethical culture by doing the following: Be a visible role model. Employees will look to top-management behavior as a ben chmark for defining appropriate behavior. Communicate ethical expectations. Ethical ambiguities can be minimized by creati ng and disseminating an organizational code of ethics. Provide ethical training. Use training sessions to reinforce the organizations s tandards of conduct, to clarify what practices are and are not permissible, and to address possible ethical dilemmas. Visibly reward ethical acts and punish unethical ones. Performance appraisals of managers should include a point-by-point evaluation of how his or her decisions measured against the organizations code of ethics. Provide protective mechanisms. The organization needs to provide formal mechanis ms so that employees can discuss ethical dilemmas and report unethical behavior without fear of reprimand. This might include creation of ethical counselors, om budsmen, or ethical officers. 10. What criticisms have been targeted against bringing spirituality to the work place? Answer Critics of the spirituality movement in organizations have focused on two issues: 1) Do organizations have the right to impose spiritual values on their employees? and 2) Are spirituality and profits compatible? This criticism is und oubtedly valid when spirituality is defined as bringing religion and God into th e workplace. However, the goal is limited to helping employees find meaning in their work lives and to use the workplace as a source of community. The issue of whether spirituality and profits are compatible objectives is certainly relevan t for managers and investors in business. A recent research study by a major con sulting firm found that companies that introduced spiritually based techniques i mproved productivity and significantly reduced turnover.

QUESTIONS FOR CRITICAL THINKING 1. Is socialization brainwashing? Explain. Answer Yes and no. Yes, in that it is helping or coercing the individual into ad justing his/her behavior to match the expectations of the organization. On the o ther hand, socialization is necessary in order to work together. Imagine a kinde rgarten class if the students were not socialized. No matter how good a job the organization does in recruiting and selection, new employees are not fully indoctrinated in the organizations culture. Most importan tly, because they are unfamiliar with the organizations culture, new employees ar

e potentially likely to disturb the beliefs and customs that are in place. The o rganization will, therefore, want to help new employees adapt to its culture. 2. 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, and promotions to innovativ e behavior, initiative, and innovation. 3. Can you identify a set of characteristics that describes your colleges cultu re? Compare your assessment with those of several of your peers. How closely do t hey 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 o bjective evidence, not just subjective experience. 4. Todays workforce is increasingly made up of part-time or contingent employee s. Is organizational culture really important if the workforce is mostly compri sed of temporaries? Answer It can be argued that organizational culture is particularly important wi th a temporary or contingent workforce because it helps to convey a sense of ide ntity for organization members. It is the social glue that helps hold the organ ization together and it enhances social system stability. The shared meaning of a strong culture ensures that everyone is pointed in the same direction. 5. We should be opposed to the manipulation of individuals for organizational p urposes, but a degree of social uniformity enables organizations to work better. Do you agree or disagree with this statement? What are its implications for orga nizational culture? Discuss. Answer Students responses will vary.

POINT-COUNTERPOINT Organizational Cultures Cant Be Changed POINT An organizations culture is made up of relatively stable characteristics. There a re a number of forces continually operating to maintain a given culture. These w ould include written statements about the organizations mission and philosophy, t he design of physical spaces and buildings, the dominant leadership style, hirin g 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 pa rticularly important devices that work against cultural change. Employees chose the organization because they perceived their values to be a good fit with the org anization. They become comfortable with that fit and will strongly resist effort s to disturb the equilibrium. Our argument should not be viewed as saying that c ulture can never be changed. However, anything less than a crisis is unlikely to be effective in bringing about cultural change. COUNTER POINT Changing an organizations culture is extremely difficult, but cultures can be cha nged. A dramatic crisis. This is the shock that undermines the status quo and calls in to question the relevance of the current culture. 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. Young and small organizations. The younger the organization is, the less entrenc hed its culture will be. Weak culture. The more widely held a culture is and the higher the agreement amo ng members on its values, the more difficult it will be to change. Conversely, w

eak cultures are more amenable to change than strong ones. If the above conditions exist, the following actions may lead to change. New sto ries and rituals need to be set in place by top management; employees should be selected and promoted by those who espouse the new values; the reward system nee ds to be changed to support the new values; and current subcultures need to be u ndermined through transfers, job rotation, and terminations. Class Exercise: 1. As a class, discuss and decide what the culture is of your college or unive rsity. Students may have a very different perspective than you do as faculty, so choose which organization you are assessingthe one visible to students or to facul ty. 2. Once the culture is identified, discuss with students what would be involve d in changing the culture of your college or university. Explain to students, fo r the sake of the exercise, that they should consider that the culture is in nee d of change in order to deal with the new dynamics facing institutions of higher education. You should choose a contrasting culture to the one identified in the students earlier discussion. 3. This discussion should consider: The current culture and target culture. What change techniques could be used. What elements of culture maintenance need to be addressed in the change effort. Who would resist this change and why. 3. The discussion should help students realize the effort involved in chang ing organization culture and help them decide which side of this debate they mos t identify with.

TEAM EXERCISE Rate Your Classroom Culture Purpose: This exercise will raise students awareness of the elements of organizat ional culture and increase their sensitivity to the issues involved in evaluatin g it. Time: 30 minutes Instructions: 1. Listed here are 14 statements. Using the five-item scale (from Strongly Agr ee to Strongly Disagree), respond to each statement by circling the number that best represents your opinion. Strongly Agree Strongly Agree Neutral Disagree Disagree 5 5 5 5 5 4 4

a. I feel comfortable challenging statements made by my instructor. 4 3 2 1 b. My instructor heavily penalizes assignments that are not turned 4 3 2 1 in on time. c. My instructor believes that its final results that count. 3 2 1 d. My instructor is sensitive to my personal needs and problems. 4 3 2 1 e. A large portion of my grade depends on how well I work with 4 3 2 1 others in the class. f. I often feel nervous and tense when I come to class. 5 3 2 1

g. My instructor seems to prefer stability over change. 5 3 2 1 h. My instructor encourages me to develop new and different ideas. 4 3 2 1 i. My instructor has little tolerance for sloppy thinking. 5 3 2 1 j. My instructor is more concerned with how I came to a conclusion than the conclusion itself. 5 4 3 2 1 k. My instructor treats all students alike. 5 4 3 1 l. My instructor frowns on class members helping each other with 4 3 2 1 assignments. m. Aggressive and competitive people have a distinct advantage in 4 3 2 1 this class. n. My instructor encourages me to see the world differently. 5 3 2 1 Instructions (continued):

4 5 4

2 5 5 4

2. Calculate your total score by adding up the numbers you circled. 3. Your score will fall between 14 and 70. A high score (49 or above) describes an open, risk-taking, supportive, humanisti c, team-oriented, easy-going, growth-oriented culture. A low score (35 or below) describes a closed, structured, task-oriented, individ ualistic, tense, and stability-oriented culture. Note that differences count. So, a score of 60 is a more open culture than one that scores 50. 4. Also, realize that one culture is not preferable over the other. 5. The right culture depends on you and your preferences for a learning environm ent. 6. Form teams of five-to-seven members each. Compare your scores. How closely do they align? Discuss and resolve discrepancies. Based on your teams analysis, what type of student do you think would perform bes t in this class?

CASE EXERCISE Trying to Do the Impossible at GM Few companies have had a rougher time adapting to a changing environment than Ge neral Motors. The company is truly a textbook example of corporate entrenchment. As far back as the 1960s, the writing was on the wall that GMs way of operatingsl ow, deliberate decision making; layer-upon-layer of hierarchy; focus on cost-cut ting rather than on new product design; and management-by-committeewas failing. F rom a U.S. automobile market share of nearly 50 percent in the late 1950s, the c ompany was down to under 30 percent by the year 2000. GMs rigid and insular cultu re, driven by financial considerations, allowed both foreign and domestic compet itors to steal away customers with new productslike fuel-efficient compacts, mini vans, SUVs, and eye-catching roadsters. A good part of GMs culture can be explained by the companys historic selection and promotion policies. It hired its future executives fresh out of school. They th en shaped these recruits into the GM mentality. The company resisted ideas and i nnovations that were not developed here. Executives firmly believed, to the point of arrogance, that the GM system was superior to all others. Promotions favored financial and engineering types, and individuals with these backgrounds rose to fill the companys top spots. GM rarely hired senior executives from outside the c ompany ranks. In addition, GM encouraged its executives to socialize off the job with other GM people. This further insulated top executives and resulted in a s

enior management team that saw the world through similar lenses. In the fall of 2001 GM Chief Executive Richard Wagoner hired former Chrysler exe cutive Robert Lutz as vice chairman. His primary task was to change GMs organizat ional culture. Wagoner acknowledged that GMs culturedominated by finance-types, en gineers, and manufacturing personnelwas content to turn out unimaginative cars. T he committee system (stacked to favor the companys accounting mentality) further hindered creative endeavors. For instance, whenever designers and engineers woul d disagree about a design, the engineers (and their obsession with cost minimiza tion) would always win. This largely explained why the companys cars looked boxy and so similar. Wagoner has essentially given Lutz a free hand to do whatever he needs to change tradition-bound GM. Lutz faces a formidable task. This is a huge company. Sales are $180 billion a y ear. It employs 363,000 people. This is also the place where the GM nod is endemic : GM lifers usually just nod at the new guy and go on doing things as they were, but Lutz has the advantage of coming to GM with a sterling reputation. He is a true car guy, who single-handedly pushed through exciting new products at Chrysler like the Viper, the Prowler, and the PT Cruiser. Lutz has chosen an incremental strategy for implementing change. He is not chopp ing heads and bringing in loyalists. Rather, he is relying on the same designers and engineers who have been turning out duds for years. He is giving more clout to the designers and marketing people. Hes overseen a reorganization that has en gineering and design divisions now reporting to just one person. Hes encouraging people to question past practices, to speak out on issues, and challenge company doctrine. And GM brass is now spending more time driving competitors cars than t heir ownwhile Lutz points out how most of them best GM. Class Exercise: Divide students into groups to answer the following questions found at the end o f the case: 1. Describe the old GM culture. Answer Slow, deliberate decision making; layer-upon-layer of hierarchy; focus on cost-cutting rather than on new product design; and management-by-committee. 2. What specific forces created this culture? Answer Executives believed that the GM system was superior to all others. Top ex ecutives were insulated, which resulted in a senior management team that saw the world through similar lenses. 3. Describe the new culture that Lutz is trying to create. Answer Hes encouraging people to question past practices, to speak out on issues, and challenge company doctrine. 4. Do you think Lutz will succeed or fail in his effort to change GMs culture? Why? Answer Students answers will vary. Source: Parts of this case are based on R. Meredith, Car Guy, Forbes, January 21, 2002, pp. 5051. Exploring OB Topics on the World Wide Web Search Engines are our navigational tool to explore the WWW. Some commonly used search engines are: www.goto.com www.excite.com www.hotbot.com www.google.com www.lycos.com www.looksmart.com

1. What do you think it would be like working for the Happiest Place on Eart h? Of course, it is Disney Land! Disney is hugeso much more than theme parks. G o to: http://disney.go.com/disneycareers/index.html to get a flavor of what thei r corporate culture might be like. Click on the links found at the bottom of the page. One even references culturebut it is not necessarily referring to corpora te culture. Be prepared to talk about what you learned about the Disney corpora tion in class. 2. Take a web walk and learn about organizational culture. It can be found a t: http://www.oise.utoronto.ca/~vsvede/culture.htm . There are a variety of lin kspick topics that are of interest to you and explore. Write a short two page re action paper about what you learned on your journey and bring it to class for mo re discussion. 3. How does a change agent go about changing the corporate culture? The ta sk, no doubt, is never easy, but the following web site offers a process to fol low at: http://www.hcgnet.com/html/articles/changingCulture.html . Read throug h the article and try to think of a time when an organization you were involved with underwent change. Take the steps outlined in the article and apply them to your experience. Write a brief commentary on each step would apply to your sit uation. Bring it to class and be prepared to discuss your case. 4. How does one differentiate between a strong and a weak culture? The Deni son Organizational Culture Survey can be found at: http://www.denisonculture.com /culture/culture_main.html . It is an internal tool used by organizations. The page provides information about the survey and a model of strong vs. weak organ izational cultures. Write a paragraph or two on how you think this information might be helpful to organizations. 5. Career Bliss. Really? Go to: http://www.spiritualityofwork.com/organiza tion.html to learn more about Spirituality at Work. While there take the 10 Step s to Career Bliss survey and see what results you obtain. Also on the page is a list of benefits to employers who incorporate spirituality principles into the c orporate culture. Write a short paper of the concept of Spirituality at Work. What do you think managers have to gain? Employees? Is there a downside? Use ideas from the website as a start for organizing your paper. Bring it to class for further discussion. 6. Becoming a more customer-responsive organization can be a difficult cult ure change. Learn how CRHC did it at: http://www.cio.com/archive/051501/change_ content.html . This organization featured in this article demonstrates how diff icult the process can be, but also how rewarding the changes eventually can be. Look at the model of key variables to creating a more customer responsive corpo rate culture found in the text. In the article, find examples of those variable s as CRHC underwent the change process and list. Bring it to class for further discussion.