Chapter 18: Organizational Culture

What are you expected to learn?

• Describe institutionalization and its relationship to organizational culture
• Define the common characteristics making up organizational culture
• Contrast strong and weak cultures
• Identify the functional and dysfunctional effects of organizational culture on people and the organization
• Explain the factors determining an organization’s culture
• List the factors that maintain an organization’s 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

What is Institutionalization? What is Organizational Culture?

Institutionalization = when an organization takes on a life of its own, apart from any of its members, and acquires immortality. The org is valued for itself, not just for what it produces or sells. (Ex: Disney, McDonalds, Sony)

Organizational culture = A system of shared meaning held by members that distinguishes the organization from other organizations.

Key Characteristics of an Organizational Culture:

• Innovation and risk taking. The degree to which employees are encouraged to be innovative and take risks.
• Attention to detail. The degree to which employees are expected to exhibit precision, analysis, and attention to detail.
• Outcome orientation. The degree to which management focuses on results or outcomes rather than on technique and process.
• People orientation. The degree to which management decisions take into consideration the effect of outcomes on people within the organization.
• Team orientation. The degree to which work activities are organized around teams rather than individuals.
• Aggressiveness. The degree to which people are aggressive and competitive rather than easygoing.
• Stability. The degree to which organizational activities emphasize maintaining the status quo in contrast to growth.

*Culture is a descriptive term, that is, it is not evaluative. Organizational culture is concerned with how the characteristics of the company/organization are perceived – NOT if they are liked or disliked.* It is not about job satisfaction.

Do Organizations Have Uniform Cultures?

Organizational culture represents a common perception held by the organization members.

• Dominant culture expresses the core values that are shared by a majority of the organization’s members.
• Subcultures are “minicultures” which tend to develop in large organizations to reflect common problems, situations, or experiences. These usually are defined by department or geographical separations.
• Core Values or dominant (primary) values are accepted throughout the organization.

Strong vs. Weak Cultures

Strong = cultures in which the core values are intensely held and widely shared

Culture vs. Formalization

· Often, rules and regulations re: performance are transmitted through culture – they do NOT need to be formally (explicitly) written in order to function. Thus, culture can act like formalization in some ways.

Org Culture vs. National Culture

· National culture has more influence on employees than org culture – so, for multinational orgs, the goal could be to hire applicants who fit the organizational (dominant) culture

What do Cultures “Do”?.....Culture’s Functions

Culture is the social glue that helps hold an organization together by providing appropriate standards for what employees should say or do.

· It has a boundary-defining role.

· It conveys a sense of identity for organization members.

· It facilitates the generation of commitment to something larger than one’s individual self-interest.

· It enhances social system stability.

· It serves as a "sense-making" and control mechanism that guides and shapes the attitudes and behavior of employees.

Culture as a Liability

· Barrier to change

· Barrier to diversity

· Barrier to acquisitions and mergers

Creating & Sustaining Culture

• How a culture begins: founders, vision set the pace. First – hire and keep employees who match the vision – then socialize individuals – then the founders’ behavior acts as a role model and the “personality” of the organization (ex: David Packard of Hewlett-Packard, Bill Gates of Microsoft, Herb Kelleher of Southwest Airlines, Mary Kay of Mary Kay Cosmetics, etc)
• How to keep it alive?: There are many ways…First, it’s reflected and sustained via HR policies – selection (after minimum qualifications are established, then hire for “fit”), perf evaluations, training and career development, promotions, reward those who support culture, remove those who do not. Next, top management behavior exemplifies culture (norms filter down – is risk taking desirable? How much freedom do managers give employees to make decisions? What should we wear to work? What behaviors get rewarded and lead to promotions?, etc). Finally, socialization methods (the process that adapts employees to the organization’s culture) are key (pre-arrival, encounter, metamorphosis stages).

How Employees Learn Culture

• Stories – (ex. Nordstrom and car tires, Microsoft and “calling in rich”, and Krispy Kreme’s “minister of culture”)
• Rituals – repetitive sequence of activities expressing and reinforcing key values (ex. Getting tenure, Mary Kay cosmetics annual award meeting)
• Material Symbols – convey to employees what is important, who holds power and what kinds of behavior are appropriate (ex. Limousines, jets, offices, dress)
• Language – identifies members of cultures or subcultures, if used by all then it’s accepted and preserved (ex. Slang used by companies like Boeing)

Matching People With Cultures

• Sociability (friendliness) and solidarity (task orientation) dimensions can be used to understand different “types” of culture: networked, mercenary, fragmented or communal. Note: Recall the managerial grid???

Creating an Ethical Organizational Culture

• Be a visable role model
• Communicate ethical expectations
• Provide ethical training
• Visibly reward ethical acts and punish ethical ones
• Provide protective mechanisms

Creating a Customer-Responsive Culture

• Select “customer” focused individuals
• Use a structure with a low level of formalization (flexibility to deal w/customers)
• Use empowerment
• Use good listening skills
• Role clarity
• Display “helping” or Organizational Citizenship Behavior (OCB)

Spirituality and Organizational Culture

Workplace spirituality: The recognition that people have an inner life that nourishes and is nourished by meaningful work that takes place in the context of community. Ex) strong sense of purpose, individual development, trust and openness, employee empowerment, tolerance of expression.

Summary and Implications for Managers

• 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 organization’s culture or personality.
• These favorable or unfavorable perceptions then affect employee performance and satisfaction, with the impact being greater for stronger cultures.
• Just as people’s personalities tend to be stable over time, so too do strong cultures. This makes strong cultures difficult for managers to change.
• One of the more important managerial implications of organizational culture relates to selection decisions. Hiring individuals whose values don't align with those of the organization is not effective for long term objectives.
• An employee's performance depends to a considerable degree on knowing what he should or should not do – socialization provides much of this type of information