Organizational Culture

Charles Handy – “The way we do things

around here”
 Introduction
 Organizational culture.
– The system of shared actions, values, and beliefs
that develops within an organization and guides
the behavior of its members.
– Called corporate culture in the business setting.
– No two organizational cultures are identical.
 External adaptation.
– Involves reaching goals and dealing with outsiders
regarding tasks to be accomplished, methods used
to achieve the goals, and methods of coping with
success and failure.
– Important aspects of external adaptation.
• Separating eternal forces based on importance.
• Developing ways to measure accomplishments.
• Creating explanations for not meeting goals.
 Internal integration.
– Deals with the creation of a collective identity and
with finding ways of matching methods of working
and living together.
– Important aspects of working together.
• Deciding who is a member and who is not.
• Developing an understanding of acceptable and
unacceptable behavior.
• Separating friends from enemies.
 Subculture.
– A group of individuals with a unique pattern of
values and philosophy that are not inconsistent
with the organization’s dominant values and
philosophy.
 Counterculture.
– A group of individuals with a pattern of values and
philosophy that outwardly reject the surrounding
culture.
Charles Handy Model
 Artifacts – symbols of
culture in the physical
and social work environment

Values
Espoused: what members of Levels of
an organization say they value Organizational
Enacted: reflected in the way Culture
individuals actually behave

Assumptions – deeply held

beliefs that guide behavior and tell
members of an organization how
to perceive and think about things
 Artifacts – symbols of Organizational Culture
culture in the physical Visible, often not
and social work environment decipherable

Values
Espoused: what members of Greater level
an organization say they value of awareness
Enacted: reflected in the way
individuals actually behave

Assumptions – deeply held Taken for granted,

beliefs that guide behavior and tell Invisible, Preconscious
members of an organization how
to perceive and think about things
 Types of Artifacts
• Personal Enactment
• Ceremonies and Rites
• Stories
– About the boss
– About getting fired
– About relocating
– About promotions
– About crisis situations
– About status considerations
• Rituals
• Symbols
 Theories on the relationship
between organizational culture
and performance

Strong Culture Perspective

Fit Perspective
Adaptive Perspective
 Strong Culture

An organizational culture with a consensus on

the values that drive the company and with an
intensity that is recognizable even to outsiders
 Strong Cultures Facilitate Performance

BECAUSE
• They are characterized by goal alignment
• They create a high level of motivation because of shared
values by the members
• They provide control without the oppressive effects of
bureaucracy
 Fit Perspective

A culture is good only if it fits the industry or

the firm’s strategy
 Fit Perspective

Three particular industry characteristics affect

culture:

• Competitive environment
• Customer requirements
• Societal expectations
 Adaptive Culture

An organizational culture that encourages

confidence and risk taking among employees,
has leadership that produces change, and
focuses on the changing needs of customers
Adaptive vs. Nonadaptive Cultures
Gary C. Kelly
Enron
Perhaps the best example of how a toxic culture can
ultimately lead to the collapse of an organization. In Enron's
case, this collapse was one of the biggest corporate scandals
of all time and much of it can be directly traced to the culture
of greed, aggression and plain illegal behavior that was
encouraged and tolerated by the senior management team.
Functions of Organizational Culture
• Culture provides a sense of identity to members and increases
their commitment to the organization
• Culture is a sense-making device for organization members
• Culture reinforces the values of the organization
• Culture serves as a control mechanism for shaping
behavior