Organizational Culture

Instructor: Pham Thi Bich Ngoc, PhD

Chapter Learning Objectives
Define organization culture, explain how it affects
employee behavior, and understand its historical roots.
Describe how to create organization culture.
Describe different types of culture
Describe two different approaches to culture in
organizations.
Discuss the important elements of managing the
organizational culture
Identify emerging issues in organization culture.
The Nature of Organization Culture
Why Study Culture?
It is assumed that organizations with a
strong culture perform at higher levels
than those without a strong culture
Organizational Culture
A set of values held by individuals in a
firm that help employees understand
acceptability of actions

The Nature of Organization Culture
Culture Values
Are often taken for granted (implicit) ;The conscious, affective
desires or wants of people that guide their behavior; A societys
ideas about what is right or wrong
May not be made explicit (i.e., not written down)
Are communicated through symbolic means; Are passed from
one generation to the next
Organizations are able to operate efficiently only when
shared values exist among the employees.
An individuals personal values guide behavior on and
off the job.

18.1 Definitions of Organization Culture
Definition Source
A belief system shared by an organizations members J. C. Spender, Myths, Recipes and Knowledge-Bases in Organizational Analysis
(Unpublished manuscript, Graduate School of Management, University of California
at Los Angeles, 1983), p. 2.
Strong, widely shared core values C. OReilly, Corporations, Cults, and Organizational Culture: Lessons from Silicon
Valley Firms (Paper presented at the Annual Meeting of the Academy of
Management, Dallas, Texas, 1983), p. 1.
The way we do things around here T. E. Deal and A. A. Kennedy, Corporate Cultures: The Rites and Rituals of
Corporate Life (Reading, MA: Addison-Wesley, 1982), p. 4.
The collective programming of the mind G. Hofstede, Cultures Consequences: International Differences in Work-Related
Values (Beverly Hills, CA: Sage, 1980), p. 25.
Collective understandings J. Van Maanen and S. R. Barley, Cultural Organization: Fragments of a Theory
(Paper presented at the Annual Meeting of the Academy of Management, Dallas,
Texas, 1983), p. 7.
A set of shared, enduring beliefs communicated through a
variety of symbolic media, creating meaning in peoples
work lives
J. M. Kouzes, D. F. Caldwell, and B. Z. Posner, Organizational Culture: How It Is
Created, Maintained, and Changed (Presentation at OD Network National
Conference, Los Angeles, October 9, 1983).
A set of symbols, ceremonies, and myths that
communicates the underlying values and beliefs of that
organization to its employees
W. G. Ouchi, Theory Z: How American Business Can Meet the Japanese Challenge
(Reading, MA: Addison-Wesley, 1981), p. 41.
A dominant and coherent set of shared values conveyed by
such symbolic means as stories, myths, legends, slogans,
anecdotes, and fairy tales
T. J. Peters and R. H. Waterman Jr., In Search of Excellence: Lessons from
Americas Best-Run Companies (New York: Harper & Row, 1982), p. 103.
The pattern of basic assumptions that a given group has
invented, discovered, or developed in learning to cope with
its problems of external adaptation and internal integration
E. H. Schein, The Role of the Founder in Creating Organizational Culture,
Organizational Dynamics, Summer 1985, p. 14.
Examples of Cultural Attributes
Documents
Physical layouts
Furnishings
Language
Jargon
Work ethic and practice
Fair days work for a fair
days pay
Loyalty
Commitment
Helping others
Performance leads to
rewards
Management equity
Competency counts
Organizational Cultures Demonstration
Visible but often not
decipherable
Greater level of
awareness
Taken for granted,
invisible, preconscious
Layer III: Basic Assumptions
Relationship to environment
Nature of reality, time, &
space
Nature of human nature
Nature of human activity
Nature of human relations
Layer I: Artifacts & Creations
Technology
Art
Visible and audible behavior patterns
Layer II: Values
Testable in the physical environment
Testable only by social consensus
Scheins Three-Layer Organizational Model
Do Organizations Have Uniform Cultures?
Culture is a descriptive term: it may act as a substitute
for formalization
Dominant Culture
Expresses the core values that are shared by a majority of the
organizations members
Subcultures
Minicultures within an organization, typically defined by
department designations and geographical separation
Core Values
The primary or dominant values that are accepted throughout
the organization
Strong Culture
A culture in which the core values are intensely held and
widely shared

What Do Cultures Do?
Cultures Functions
1. Defines the boundary between one organization
and others
2. Conveys a sense of identity for its members
3. Facilitates the generation of commitment to
something larger than self-interest
4. Enhances the stability of the social system
5. Serves as a sense-making and control
mechanism for fitting employees in the
organization

Culture as a Liability
Barrier to change
Occurs when cultures values are not aligned with the values
necessary for rapid change
Barrier to diversity
Strong cultures put considerable pressure on employees to
conform, which may lead to institutionalized bias
Barrier to acquisitions and mergers
Incompatible cultures can destroy an otherwise successful
merger
The Nature of Organization Culture
Historical
Foundations
Anthropology
Social
Psychology
Sociology
Economics
The Nature of Organization Culture
Anthropological Contributions.
Anthropologists study human cultures in terms of the values, symbols, and stories
that people in society use to bring order and meaning to their lives. A description of
the values and beliefs of one organization is not transferable to those of other
organizations; each culture is unique
Sociological Contributions.
Sociologists have centered on the categorization of social system structure through
systematic interviews, questionnaires, and other quantitative research methods.
This sociological tradition was used in the major recent studies of organization
culture, including Ouchis Theory Z, Deal and Kennedys Corporate Culture, and
Peters and Watermans In Search of Excellence.
Social Psychology Contributions.
Social psychologists have concentrated on the creation and manipulation of
symbols and stories in the development of organization culture. The impact of
stories on decision making suggests an important reason that organization culture
has such a powerful influence on the people in an organization.
Economics Contributions.
Economic contributions have been based on the economic performance of a firm.
Researchers have attempted to link organization culture to economic performance.
The relationship between culture and performance depends, to some extent, on the
values expressed in the organizations culture.
Organization Culture Versus Climate
Organization Culture and Climate
Refer to the overall work atmosphere of
an organization,
Deal with the social context in an
organization,
Affect the behavior of people in the
organization.
Organization Culture Versus Climate
Organization Culture
The study of culture is
based in anthropology
and sociology.
Refers to the historical
context within which a
situation occurs.
Deals with the way that
people in the
organization learn and
communicate what is
acceptablein other
words, its norms and
values
Organization Climate

The study of climate is based in
psychology
Is based on individual
perceptions and is often defined
as the recurring patterns of
behavior, attitudes, and feelings
that characterize life in the
organization and
Refers to current situations in
an organization and the linkages
among work groups, employees,
and work performance
Climate is usually assumed to be
more easily changed or
manipulated by management.
18.2 Creating Organization Culture
Creating Organization Culture
Step 1Formulate Strategic Values
Step 2Develop Cultural Values
Step 3Create Vision
Step 4Initiate Implementation
Strategies
Step 5Reinforce Cultural Behaviors
Creating the Organization Culture
Establish Values
Strategic values
The basic beliefs about an organizations
environment that shape its strategy.
Cultural values
The values that employees need to have and act on
for the organization to act on the strategic values.
Create Vision
Create a picture of the organization that portrays how the
strategic and cultural values will combine to create the
future.
Creating the Organization Culture (contd)
Initiate Implementation Strategies
Take actions founded on the strategic and cultural values to
accomplish the vision.
Reinforce Cultural Behaviors
Use formal reward systems to encourage desired employee
behaviors
Tell stories that epitomizing cultural values
Conduct ceremonies and rituals that emphasize right actions
by employees

Creating an Ethical Organizational Culture
Characteristics of Organizations that Develop High
Ethical Standards
High tolerance for risk
Low to moderate in aggressiveness
Focus on means as well as outcomes
Managerial Practices Promoting an Ethical Culture
Being a visible role model
Communicating ethical expectations
Providing ethical training
Rewarding ethical acts and punishing unethical ones
Providing protective mechanisms
Creating a Positive Organizational Culture
Positive Organizational Culture
A culture that:
Builds on employee strengths
Focus is on discovering, sharing, and building on the
strengths of individual employees
Rewards more than it punishes
Articulating praise and catching employees doing
something right
Emphasizes individual vitality and growth
Helping employees learn and grow in their jobs and
careers
Limits of Positive Culture:
May not work for all organizations or everyone within them
TYPES OF CULTURE
Power culture
Based on personalities
Adaptable and
informal
Small size
Good personal
relations

Role culture
Roles, not personalities
Not entrepreneurial
Stability
Slow to change

Task culture
Team based
Get the job done
Expertise
Results-oriented
Costly, because of
variety
Job satisfaction

Person culture


Types of Culture
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C
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O
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Flexible
Internal External
Stable
Clan Culture
Entrepreneurial
Culture
Bureaucratic
Culture
Market Culture
Forms of Attention
Types of Cultures
The Clan Culture
A very friendly place to
work where people share a
lot of themselves. It is like
an extended family.
Being part of a working
family, following tradition
and rituals, teamwork and
spirit, self-management, and
social influence
Example: Nordstroms

Types of Cultures
The Hierarchy /Bureaucratic
Culture
A very formalized structured
place to work. Procedures
govern what people do.
Emphasizes rules, policies,
procedures, chain of
command, and central
decision making
Example: government
agencies, the military, firms
managed by autocratic
managers


Types of Cultures
The Adhocracy/ Entrepreneurial
Culture
A dynamic entrepreneurial, and
creative place to work. People
stick their necks out and take
risks.
Innovation, creativity, risk
taking, and aggressively
seeking opportunities
Employees understand that
dynamic change, individual
initiatives, and autonomy are
standard practices
Example: 3M

Types of Cultures
The Market Culture
A results oriented organization whose
major concern is with getting the job
done. People are competitive and goal-
oriented.
Emphasis on increased sales growth,
increased market share, financial stability,
and profitability.
Employees have contractual relationship
with firm
Little feeling of teamwork and
cohesiveness
Example: Nike, Citigroup, Wells Fargo,
Allstate

Approaches to Describing Organization Culture:
The Ouchi Framework
Typical
United States
firms
Typical
Japanese
firms
Type Z
United States
firms
The Ouchi Framework
18.3 The Ouchi Framework
18.4 The Peters and Waterman Framework
Attributes of an Excellent Firm
1. Bias for action: managers are not reluctant to make decisions even if all
the facts arent in.
2. Stay close to the customer
3. Autonomy and entrepreneurship
4. Productivity through people
5. Hands-on management
6. Stick to the knitting: Successful firms do not diversify into businesses
outside their expertise
7. Simple form, lean staff
8. Simultaneously loose and tight organization: tightness comes from
the commitment of all organization members to the firms core values ; less
administrative overhead, smaller staff, and fewer rules and regulations
Managing Organization Culture
Taking
advantage of
existing culture
Teaching
organization
culture
Changing
organization
culture
Elements of Managing
Organization Culture
Managing Organization Culture (contd)
Taking Advantage of the Existing Culture
Easier and faster to alter employee behaviors within the
existing culture than it is to change existing history,
traditions, and values
Managers must be aware and understand the organizations
values
Managers can communicate their understanding to lower-
level individuals
Managing Organization Culture (contd)
Teaching Organization Culture
Organizational socialization
Is the process through which employees learn about the firms
culture and pass their knowledge and understanding on to
others
Organizational mechanisms
Are examples of organization culture that employees see in
more experienced employees behaviors
Corporate pamphlets and formal training sessions
How Employees Learn Culture
Stories
Anchor the present into the past and provide explanations
and legitimacy for current practices
Rituals
Repetitive sequences of activities that express and reinforce
the key values of the organization
Material Symbols
Acceptable attire, office size, opulence of the office
furnishings, and executive perks that convey to employees
who is important in the organization
Language
Jargon and special ways of expressing ones self to indicate
membership in the organization
Managing Organization Culture (contd)
Changing the Organization Culture
Managing symbols
Substituting stories and myths that support the new cultural
values for those that support old ones
Culture can be difficult to change when upper management
inadvertently reverts to old behaviors
The Stability of Change
New values and beliefs must be seen as stable and influential
as old ones
Changing value systems requires enormous effort because
value systems tend to be self-reinforcing
Changing culture
Culture can be changed, but
Need time
Support from top managers
Other resources
How to make culture change
Change people
Change corporate vision and mission
Change organizational policies and
system: reward system, recruitment and
selection policies, technology

Emerging Issues in Organization Culture:
Innovation
Innovation
The process of creating and doing new things that are
introduced into the marketplace as products, processes, or
services
Radical
Innovation
Systems
Innovation
Incremental
Innovation
Types of Innovation
Emerging Issues in Organization Culture:
Innovation
Radical innovation:
represents a major breakthrough that changes or
creates whole industries.
Systems innovation:
creates a new functionality by assembling parts in new
ways.
Incremental innovation:
continues the technical improvement and extends the
applications of radical and systems innovations
Emerging Issues in Organization Culture:
Innovation (contd)
New Ventures
Require entrepreneurship and good management
Intrapreneurship
Entrepreneurial activity that takes place within the
context of a large organization
Entrepreneurs profile
Need for achievement
Desire to assume responsibility
Willing to take risks
Focus on concrete results
Emerging Issues in Organization Culture:
Innovation (contd)
Corporate Research
Supports existing businesses to provide incremental
innovations and to explore potential new technology bases
Is responsible for keeping the companys products and
processes technologically advanced
Corporate culture can be instrumental in fostering environment
for creativity and innovation

Emerging Issues in Organization Culture
(contd)
Empowerment
Is enabling workers to set their own work goals, make
decisions, solve problems within their sphere of responsibility
and authority
Appropriate Cultures (Goffee and Jones)
Factors that may determine the appropriate type of culture
appropriate for an organization:
The nature of the value chain
The dynamism of the environment