Week 2: Chapter Ten

Organizational Culture
and Ethical Values

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 Purpose
• Culture, its origins
• Components of culture
• Effect of culture on strategy and
structural design; and
• Association of culture with ethics

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 What is culture?
• Culture is the set of values and,
norms, guiding beliefs, and
understandings that is shared by
members of an organization and is
taught to new members.

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Levels of Corporate Culture

Observable Symbols
Ceremonies, Stories,
Slogans,
Behaviors, Dress,
Physical Settings

Underlying
Values,
Assumptions,
Beliefs, Attitudes,
Feelings

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 Culture and Integration
• Internal Integration: Helps with
forming a group or collective identity

• External integration: Helps with

setting goals and practices to
respond to outsiders (e.g. customer
needs)

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 Interpreting Org Culture
• Look at observables from above or
below the water level in an iceberg
– Rites & Ceremonies
– Stories
– Symbols
– Language
Which one is this?

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 A Typology of Organizational Rites and
Their Social Consequences
Type of Rite Example Social Consequences

Passage Induction and basic training; Facilitate transition of

US Army person into new social roles
Orientation and statuses

Enhancement Annual awards night Enhance social identities

and increase status of
members
Renewal Organizational development Refurbish social structures
activities and improve organization
Auditorium functioning

Integration Office holiday party Encourage and revive

common feelings that bind
members together and
commit them to the
organization
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Source: Adapted from Harrison M. Trice and Janice M. Beyer, “Studying Organizational Cultures through Rites and Ceremonials,” Academy of Management Review 9 (1984), 653-659.
Used with permission.
Symbols: Organizational Chart for
Nordstrom

Customers Most important

Sales & Sales Support

Dept Managers

Store Mgrs, Buyers, Merch Mgrs

Board of Directors
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 More Examples of symbols
• Corporate Language:
– iPhone, iPod, …

• Corporate Stories:
– IBM Chairman entering restricted area

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Relationship of Environment and Strategy
to Corporate Culture

Needs of the Environment

Flexibility Stability
External
Adaptability
Strategic Focus

Culture Mission
Culture

Clan Bureaucratic
Culture Culture
Internal
Sources: Based on Daniel R. Denison and Aneil K. Mishra,
“Toward a Theory of Organizational Culture and Effectiveness,”
Organization Science 6, no. 2 (March-April 1995): 204-23; R.
Hooijberg and F. Petrock, “On Culture Change: Using the Company
Values Framework to Help Leaders Execute a Transformational
Study,” Human Resource Management 32 (1993): 29-50; and
R. E. Quinn, Beyond Rational Management: Mastering the Paradoxes 10
And Competing Demands of High Performance (San Francisco:
Jossey-Bass, 1988).
 Organizational Design and
Culture
• Adaptability Culture
• Mission Culture
• Clan Culture
• Bureaucratic Culture
• Culture Strength and Organizational
Subcultures

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 Org Culture, Learning &
Performance
• Emphasizing cultural values can improve learning and
performance
• Success of values and practices could bring inertia
• Values of an adaptive culture (what to do to prevent
inertia from stronger culture):
1. The whole is more important than the part and
boundaries between parts are minimized
2. Equality and trust are primary values
3. The culture encourages risk taking, change , and
improvement

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Org Culture & Ethical Values
• Why do organizations need to pay
attention to ethical values and social
responsibility?

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Forces That Shape Managerial
Ethics
Personal Ethics Organizational Culture

Beliefs and Values Rituals, Ceremonies

Moral Development Stories, Heroes
Ethical Framework Language, Slogans
Is Symbols
Decision Founder, History
or Behavior
Ethical and
Socially
Responsible?
Organizational Systems External Stakeholders

Structure Government Regulations

Policies, Rules Customers
Code of Ethics Special Interest Groups
Reward System Global Market Forces
Selection, Training
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 Sources of Ethical Values in
Organizations
• Personal Ethics

• Organizational Culture

• Organizational Systems

• External Stakeholders

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Shaping Culture and Ethics in Orgs
• Values-Based Leadership
– Case: Does this milkshake taste funny?

• Formal Structure and Systems

– Disclosure Mechanisms

– Code of Ethics

– Training programs

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 Exercise: Design your
Organization’s Culture
• Today you will design the culture of your
organization. You will begin by meeting as a
group and deciding upon your organization’s
name and core values. You will then split into
your departments, and each one will design a
key part of your organization’s culture. The
first group will work on the group’s
performance appraisal. The second group will
compose your organization’s mission
statement. The third group will design a rite
of integration that your entire organization will
go through at the end of the class

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