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)
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-2
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-3
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-4
What Is Organizational
Culture?
Organizational Culture Characteristics
Characteristics
A common 1.1. Innovation
Innovationandandrisk
risk
perception held by taking
taking
the organization’s 2.2. Attention
Attentiontotodetail
detail
members; a system 3.3. Outcome
of shared meaning Outcomeorientation
orientation
4.4. People
Peopleorientation
orientation
5.5. Team
Teamorientation
orientation
6.6. Aggressiveness
Aggressiveness
7.7. Stability
Stability
Copyright 2004 Prentice Hall 5
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.
6
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.
7
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-5
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-6
Figure 7.1 - Terminal and
Instrumental Values in an
Organization’s Culture
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-7
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-8
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-9
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-10
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
Copyright 2004 Prentice Hall 15
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
Copyright © 2013 Pearson Education, Inc. Publishing as
Copyright Prentice
2004 Hall
Prentice Hall 2-16
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
Copyright 2004 Prentice Hall 17
What Do Cultures Do?
Culture’s
Culture’sFunctions
Functions
1.1. Defines
Definesthe
theboundary
boundarybetween
betweenone
oneorganization
organizationand
and
others
others
2.2. Conveys
Conveysaasense
senseofofidentity
identityfor
forits
itsmembers
members
3.3. Facilitates
Facilitatesthe
thegeneration
generationofofcommitment
commitmenttoto
something
somethinglarger
largerthan
thanself-interest
self-interest
4.4. Enhances
Enhancesthe
thestability
stabilityofofthe
thesocial
socialsystem
system
5.5. Serves
Servesas asaasense-making
sense-makingandandcontrol
controlmechanism
mechanism
for
forfitting
fittingemployees
employeesininthe
theorganization
organization
Copyright 2004 Prentice Hall 18
What Do Cultures Do?
Culture
Cultureas
asaaLiability
Liability
1.1. Barrier
Barriertotochange
change
2.2. Barrier
Barriertotodiversity
diversity
3.3. Barrier
Barriertotoacquisitions
acquisitionsand
and
mergers
mergers
Copyright 2004 Prentice Hall 19
How Organization Cultures
Form
Copyright 2004 Prentice Hall 20
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
Copyright © 2013 Pearson Education, Inc. Publishing as
Copyright Prentice
2004 Hall
Prentice Hall 2-21
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-11
Table 7.1 - How Socialization
Tactics Shape Employees’ Role
Orientation
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-12
How is an Organization’s Culture
Transmitted to its Members? (cont.)
Collective vs. individual
Collective tactics: provide newcomers with
common learning experiences designed to
produce a standardized response to a situation
Individual tactics: each newcomer’s learning
experiences are unique, and newcomers can
learn new, appropriate responses for each
situation
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 24
How is an Organization’s Culture
Transmitted to its Members? (cont.)
Formal vs. informal
Formal tactics: segregate newcomers from
existing organizational members during the
learning process
Informal tactics: newcomers learn on the job, as
members of a team
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 25
How is an Organization’s Culture
Transmitted to its Members? (cont.)
Sequential vs. random
Sequential tactics: provide newcomers
with explicit information about the
sequence in which they will perform new
activities or occupy new roles as they
advance in an organization
Random tactics: training is based on the
interests and needs of individual
newcomers because there is no set
sequence to the newcomers’ progress in
the organization
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 26
How is an Organization’s Culture
Transmitted to its Members? (cont.)
Fixed vs. variable
Fixed tactics: give newcomers precise
knowledge of the timetable associated with
completing each stage in the learning
process
Variable tactics: provide no information
about when newcomers will reach a certain
stage in the learning process
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 27
How is an Organization’s Culture
Transmitted to its Members? (cont.)
Serial vs. disjunctive
Serial tactics: employed, existing organizational
members act as role models and mentors for
newcomers
Disjunctive processes: require newcomers to
figure out and develop their own way of behaving
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 28
How is an Organization’s Culture
Transmitted to its Members? (cont.)
Divestiture vs. investiture
Divestiture: newcomers receive negative
social support and existing organizational
members withhold support until newcomers
learn the ropes and conform to established
norms
Investiture: newcomers immediately
receive positive social support from other
organizational members and are
encouraged to be themselves
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 29
Stories, Ceremonies, and
Organizational Language
Organization rites
Rites of passage: mark an individual’s
entry to, promotion in, and departure from
the organization
Rites of integration: shared
announcements of organizational success,
office parties, and cookouts
Rites of enhancement: public recognition
and reward for employee contributions
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 30
How Employees Learn
Culture
•• Stories
Stories
•• Rituals
Rituals
•• Material
MaterialSymbols
Symbols
•• Language
Language
Copyright 2004 Prentice Hall 31
Table 7.2 - Organizational
Rites
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-13
Figure 7.2 - Where an
Organization’s Culture Comes
From
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-14
Figure 7.3 - Factors Influencing
the Development of
Organizational Ethics
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-15
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-16
Table 7.3 - Common Property
Rights Given to Managers and
the Workforce
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-17
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-18
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-19
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-20
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
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)
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
The organization as a brain
The organization as a brain
Processes information
Can learn and change
Is rational if it has enough information
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
The organization as an
organism
The organization as an
organism
Adapts to its environment
Works to satisfy human needs (Maslow)
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
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)
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
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
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
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
______?
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior written permission of the
publisher. Printed in the United States of America.
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice
Hall
7-26