Creating and
Managing
Organizational
Culture
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 7-1
Learning Objectives
Differentiate between values and norms,
understand the way culture is shared by an
organization’s members, and why
organizations have different types of culture
Describe how individuals learn culture both
formally (that is, the way an organization
intends them to learn it) and informally (that is,
by seeing what goes on in the organization)
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Learning Objectives
Identify the four building blocks or
foundations of an organization’s culture
that account for cultural differences among
organizations
Understand how an organization’s culture,
like its structure, can be designed or
managed
Discuss an important outcome of an
organization’s culture: its stance on
corporate social responsibility
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What is Organizational Culture?
Organizational culture: The set of shared
values and norms that controls
organizational members’ interactions with
each other and with people outside the
organization
Can be a source of competitive advantage
Can be used to increase organizational
effectiveness
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What Is Organizational Culture?
Organizational Culture Characteristics
A common 1. Innovation and risk
perception held by taking
the organization’s 2. Attention to detail
members; a system 3. Outcome orientation
of shared meaning
4. People orientation
5. Team orientation
6. Aggressiveness
7. Stability
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Contrasting Organizational Cultures
Organization A
This organization is a manufacturing firm. Managers are expected to fully document all
decisions; and “good managers” are those who can provide detailed data to support their
recommendations. Creative decisions that incur significant change or risk are not
encouraged. Because managers of failed projects are openly criticized and penalized,
managers try not to implement ideas that deviate much from the status quo. One lower-
level manager quoted an often used phrase in the company: “If it ain’t broke, don’t fix it.”
There are extensive rules and regulations in this firm that employees are required to
follow. Managers supervise employees closely to ensure there are no deviations.
Management is concerned with high productivity, regardless of the impact on employee
morale or turnover.
Work activities are designed around individuals. There are distinct departments and
lines of authority, and employees are expected to minimize formal contact with other
employees outside their functional area or line of command. Performance evaluations
and rewards emphasize individual effort, although seniority tends to be the primary factor
in the determination of pay raises and promotions.
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Contrasting Organizational Cultures
(cont’d)
Organization B
This organization is also a manufacturing firm. Here, however, management
encourages and rewards risk taking and change. Decisions based on intuition are
valued as much as those that are well rationalized. Management prides itself on its
history of experimenting with new technologies and its success in regularly
introducing innovation products. Managers or employees who have a good idea are
encouraged to “run with it.” And failures are treated as “learning experiences.” The
company prides itself on being market-driven and rapidly responsive to the changing
needs of its customers.
There are few rules and regulations for employees to follow, and supervision is
loose because management believes that its employees are hardworking and
trustworthy. Management is concerned with high productivity, but believes that this
comes through treating its people right. The company is proud of its reputation as
being a good place to work.
Job activities are designed around work teams, and team members are
encouraged to interact with people across functions and authority levels. Employees
talk positively about the competition between teams. Individuals and teams have
goals, and bonuses are based on achievement of these outcomes. Employees are
given considerable autonomy in choosing the means by which the goals are attained.
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What is Organizational Culture?
Values: General criteria, standards, or
guiding principles that people use to
determine which types of behaviors, events,
situations, and outcomes are desirable or
undesirable
Terminal value: A desired end state or outcome
that people seek to achieve
Instrumental value: A desired mode of behavior
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Organization’s Values Embedded in
Formal and Informal Structure
Norms: Standards or styles of behavior that
are considered acceptable or typical for a
group of people
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Figure 7.1 - Terminal and Instrumental
Values in an Organization’s Culture
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Organizational Culture
Based on enduring values embodied in
organizational norms, rules, standard
operating procedures, and goals
People draw on these cultural values to
guide their actions and decisions when
faced with uncertainty and ambiguity
Important influence on members’ behavior
and response to situations
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Differences in Global Values
and Norms
A country’s culture can affect the values and
norms of a company or a company’s culture
Differences in communication styles,
attitude toward competing tasks, and
different approaches to decision making
can impact a company’s culture
Executives working abroad need to be
sensitive to both the country’s culture and
the company’s culture
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Recognizing Differences in
Organizational Cultures
Many mergers between companies have
failed because of differences in their
organizational cultures
Merger teams now exist to help smooth the
transition between the two cultures
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Do Organizations Have Uniform
Cultures?
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
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Strong Cultures
Can be disastrous when managers or owners
behave unethically
Can also be a source of competitive
advantage
Facilitators of mutual adjustment in the
organization
Is also a form of informal organization that
facilitates working of the organizational structure
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Do Organizations Have Uniform
Cultures?
Dominant Culture
Expresses the core values that
are shared by a majority of the
organization’s members
Subcultures
Minicultures within an
organization, typically defined by
department designations and
geographical separation
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What Do Cultures Do?
Culture’s 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
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What Do Cultures Do?
Culture as a Liability
1. Barrier to change
2. Barrier to diversity
3. Barrier to acquisitions and
mergers
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How Organization Cultures Form
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Keeping Culture Alive
Selection
Concern with how well the candidates
will fit into the organization
Provides information to candidates
about the organization
Top Management
Senior executives help establish
behavioral norms that are adopted by
the organization
Socialization
The process that helps new
employees adapt to the
organization’s culture
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Copyright 2004 Prentice Hall 21
How is an Organization’s Culture
Transmitted to its Members?
Socialization: Members learn and internalize
the values and norms of an organization’s
culture
Role orientation: The characteristic way in
which newcomers respond to a situation
Institutionalized role orientation
Individualized role orientations
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Table 7.1 - How Socialization Tactics
Shape Employees’ Role Orientation
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Table 7.2 - Organizational Rites
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How Employees Learn Culture
• Stories
• Rituals
• Material Symbols
• Language
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Figure 7.2 - Where an
Organization’s Culture Comes From
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Figure 7.3 - Factors Influencing the
Development of Organizational Ethics
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Where Does Organizational Culture
Come From?
Property rights: Rights that an organization
gives to members to receive and use
organizational resources
The distribution of property rights to
different stakeholders determines:
How effective an organization is
The culture that emerges in the organization
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Table 7.3 - Common Property Rights
Given to Managers and the Workforce
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Where Does Organizational Culture
Come From? (cont.)
Top managers are in a strong position to
establish the terms of their own
employment and the property rights
received by others
Changing property rights changes the
corporate culture by changing the
instrumental values that motivate and
coordinate employees
Strong property rights may harm the
organization
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Where Does Organizational Culture
Come From? (cont.)
Organizational structure
Mechanistic vs. Organic
Mechanistic – Predictability and stability are desired
goals
Organic – Innovation and flexibility are desired end
states
Centralized vs. Decentralized
Decentralized – Encourages and rewards creativity
and innovation
Centralized – Reinforces obedience and
accountability
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Can Organizational Culture be
Managed?
Some ways culture can be changed:
Redesign structure
Revise property rights used to motivate people
Change the people – especially top management
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Images of Organizations
Gareth Morgan in Images of Organizations
- we use metaphors to understand how
organizations work
Each metaphor provides insights, tells a
certain kind of story
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Metaphors
“Metaphors used by executives and other
members of an organization are windows into
the soul, if not collective unconscious, of the
social system.” (Burke, 1992)
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The organization as a machine
Classic
management theory
and ‘scientific
management’
The organization as a machine
Operate as bureaucracies
Orderly relations between clearly defined
parts
Routinized, efficient, reliable and
predictable
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The organization as a brain
The organization as a brain
Processes information
Can learn and change
Is rational if it has enough information
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The organization as an
organism
The organization as an organism
Adapts to its environment
Works to satisfy human needs (Maslow)
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The organization as a psychic
prison
The organization as a psychic prison
Organization seen as having an existence
and power beyond our control
Trapped by our subconscious (fear, envy,
persecutory anxieties)
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The organization as a political
system
System of government – exercise of power,
authority and control
Competing interests cause conflict
Conflicts resolved by exercise of power
No clear definition of power
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Answer the following questions in
groups:
If _____ were an animal, it would be a ___
because _______.
If _____ were a food, it would be a ___
because _______.
If _____ were a place, it would be a ___
because _______.
If _____ were a season, it would be a ___
because _______.
If _____ were a TV show/movie, it would be a
___ because _______.
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
Discuss:
How easy was it for your group to reach
consensus regarding these metaphors?
What does that imply about the culture of
______?
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photocopying, recording, or otherwise, without the prior written permission of the
publisher. Printed in the United States of America.
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