1. Organizational Culture
Content…
 Define organizational culture
 Characteristics.
 Types of culture
 Compare the functional and dysfunctional effects of
organizational culture on people and the organization.
 Culture Formation
 Is culture is uniform?
 Importance
 Change
 Show how culture is transmitted to employee
 Creating an Ethical Organizational Culture
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2. Meaning
Organizational culture—―a system of shared meaning held by members that
distinguishes the organization from other organizations.‖ An Organizational culture is
the basic pattern of shared assumptions, values, and beliefs considered to be the
correct way of thinking about and acting on problems and opportunities facing the
organization.
Definition
The deeper level of basic assumptions and beliefs that are: learned responses to the
group’s problems of survival in its external environment and its problems of internal
integration:
Culture is the social glue that helps hold an organization together by providing
appropriate standards for what employees should say or do.
According to Deal and Kennedy, a strong culture is. "a system of informal rules that
spells out how people have to behave most of the time".
Schein defines organizational culture as the pattern of basic assumptions that a given
group has invented, discovered and developed while learning to cope with its problems
of external adaptation and internal integration.
BASIC ELEMENTS OF CULTURE
1) Artifacts: It is the first level of organizational culture. It is observable symbols
and signs of the organizations. It includes visible parts of organization e.g.,
structures, processes etc. Artifacts are hard to decipher.
2) Values: These are the reasons (e.g., strategies, goals, philosophies) given by an
organization for the way things are done. It is the second level of organizational
culture.
3) Basic Assumptions: Basic assumptions are the beliefs that are taken for
granted by the members of an organization. These are ultimate source of values
and action that include: unconscious, perceptions, taken for-granted beliefs,
thoughts, feelings etc. It is the third level of organizational culture.
Characteristics
1. Innovation and risk taking- The degree of responsibility, freedom and
independence that individuals have and employee are encouraged to be
aggressive, innovative and risk seeking.
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3. 2. Direction - The degree to which the organization create clear objectives and
performance expectation.
3. Management support - The degree to which managers provide clear
communication, assistant and support to there subordinates.
4. Control – The number of rules and regulations, and the amount of direct
supervision that is used to oversee and control human behaviour.
5. Reward system- The degree to which rewards allocation are based on
employee performance criteria in contrast to seniority, favoritism and so on.
6. Integration - The degree to which units within the organization are encouraged
to operate in a coordinated manner.
7. Stability-. Job satisfaction seeks to measure affective responses to the work
environment, such as how employees feel about the organization’s expectations,
reward practices, etc.
Types of culture
There are different types of culture just like there are different types of personality.
 Academy Culture (highly skilled and tend to stay in the organization) Eg
:universités, hospitals, large corporations, etc.
 Baseball Team Culture (Employees are "free agents" who have highly prized
skills, high demands) Eg : Investment banking, advertising, etc.
 Club Culture (Requirement for employees in this culture is to fit into the group)
Eg : Military, some law firms, etc
 Fortress Culture (Employees don't know if they'll be laid off or not. These
organizations often undergo massive reorganization) Eg : savings and loans,
large car companies, etc.
Functional effect of culture
1) Controlling behavior - Culture serves as a sense-making and control
mechanism that guides and shapes the attitudes and behavior of employees.
This last function is of particular interest to us:
Culture by definition is elusive, intangible, implicit, and taken for granted.
Every organization develops a core set of assumptions, understandings, and
implicit rules that govern day-to-day behavior in the workplace.
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4. 2) Defining boundaries- It has a boundary-defining role. It creates distinctions
between one organization and others.
3) Conveying identity- . It conveys a sense of identity for organization members.
Who receives a job offer to join the organization, who is appraised as a high
performer, and who gets the promotion is strongly influenced by the individual-
organization ―fit.‖
4) Promoting commitment - . Culture facilitates commitment to something larger
than one’s individual self-interest.
Culture as a Liability
We are treating culture in a nonjudgmental manner. Culture enhances
organizational commitment and increases the consistency of employee behavior, but
there are potentially dysfunctional aspects of culture.
1 Barrier to change:
Culture is a liability when the shared values are not in agreement with those that
will further the organization’s effectiveness. This is most likely to occur when an
organization’s environment is dynamic.
This helps to explain the challenges that executives at companies like Mitsubishi,
General Motors, Eastman Kodak, Kellogg, and Boeing have had in recent years
in adapting to upheavals in their environment.
2. Barrier to diversity:
Hiring new employees who, because of race, gender, disability, or other
differences, are not like the majority of the organization’s members creates a
paradox.
Management wants new employees to accept the organization’s core cultural
values but, at the same time, they want to support the differences that these
employees bring to the workplace.
Strong cultures put considerable pressure on employees to conform. They limit
the range of values and styles that are acceptable.
Organizations seek out and hire diverse individuals because of their alternative
strengths, yet these diverse behaviors and strengths are likely to diminish in
strong cultures.
Strong cultures, therefore, can be liabilities when:
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5. b. They effectively eliminate the unique strengths that diverse people bring to
the organization.
b. They support institutional bias or become insensitive to people who are
different.
3. Barrier to acquisitions and mergers:
Historically, the key factors that management looked at in making
acquisition/merger decisions:
a. Financial advantages
b. Product synergy
Cultural compatibility has become the primary concern. Whether the acquisition
actually works seems to have more to do with how well the two organizations’
cultures match up.
Culture Formation
An organization’s culture comes from what it has done before and the degree of
success it has had. The ultimate source of an organization’s culture is its founders.
The founders of an organization traditionally have a major impact on that
organization’s early culture:
They had the vision; they are unconstrained by previous customs or ideologies.
The small size of new organizations facilitates the founders’ imposition of the
vision on all organizational members.
Culture creation occurs in three ways:
First, founders hire and keep only employees who think and feel the way the way
they do.
Second, they indoctrinate and socialize these employees to their way of thinking
and feeling.
The founders’ own behavior acts as a role model that encourages employees to
identify with them and thereby internalize their beliefs, values, and assumptions.
When the organization succeeds, the founders’ entire personality becomes
embedded in
the culture of the organization.
1. There are practices within the organization that act to maintain it by giving
employees a set of similar experiences.
2. Three forces play a particularly important part in sustaining a culture: selection
practices, the actions of top management, and socialization methods.
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6. 3. Selection
The explicit goal of the selection process is to identify and hire individuals who
have the knowledge, skills, and abilities to perform the jobs within the
organization successfully.
The final decision as to who is hired will be significantly influenced by the
decision maker’s judgment of how well the candidates will fit into the
organization.
This results in the hiring of people who have values consistent with those of the
organization.
Additionally, the selection process provides information to applicants about the
organization. Selection, therefore, becomes a two-way street.
Example—applicants for entry-level positions in brand management at Procter &
Gamble (P&G). Each encounter seeks corroborating evidence of the traits that
the firm believes correlate highly with ―what counts‖ for success at P&G.
4. Top management
The actions of top management, what they say and how they behave, establish
norms that filter down through the organization as to:
a. Risk taking.
b. How much freedom managers should give their employees.
c. What is appropriate dress.
d. What actions will pay off in terms of pay raises, promotions, and other
rewards.
5. Socialization
New employees are not fully indoctrinated in the organization’s culture. They are
unfamiliar with the organization’s culture and are potentially likely to disturb the
beliefs and customs that are in place.
Socialization is the organization helping new employees adapt to its culture.
Do Organizations Have Uniform Cultures?
1 Individuals with different backgrounds or at different levels in the organization will tend
to describe the organization’s culture in similar terms. There can be subcultures.
Most large organizations have a dominant culture and numerous sets of subcultures.
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7. An organization’s culture is its dominant culture.
This macro view of culture that gives an organization its distinct personality.
4 Subcultures tend to develop in large organizations to reflect common problems,
situations, or experiences that members face:
Defined by department designations and geographical separation
It will include the core values plus additional values unique to members of the
subculture.
The core values are essentially retained but modified to reflect the subculture.
5. If organizations had no dominant culture and were composed only of numerous subcultures,
the value of organizational culture as an independent variable would be significantly
lessened:
It is the ―shared meaning‖ aspect of culture that makes it such a potent device for
guiding and shaping behavior.
We cannot ignore the reality that many organizations also have subcultures that
can influence the behavior of members.
Importance
Effective Control – Culture serves as a control mechanism that shapes behaviors of
employees. As strong culture seeps through the organization, people register do’s and don’t.
When employees do not act in accordance with beliefs and values of the culture, managers and
colleagues are likely to intervene and initiate corrective actions.
Promotions of innovation – Innovation and creativity are emerging issues in the domain of
organizational culture. The organizational culture contributes to creativity and innovation by the
development of norms that support such a process.
Strategy Formation and implementation – orgaqnisational culture has considerable
influence on strategy formulation and implementation, particularly on the latter. Culture
provides inputs to the company to adopt a particular strategy.
E.g. Motorola’s culture is built around high investment in R&D, quality & customer care.
This culture has bolstered the strategy of the company, providing the impetus for the
development of new products- e.g. lightweight cellular phones and wristwatch pagers.
Strong Commitment form Employees – culture provides a sense of identity to
members and increase their commitment to the organization. When employees
internalize the values of the company, they find their work intrinsically rewarding and
identify with their fellow workers. Motivation is enhanced , morale boosts.
Commitment is said to go through three phases-
1) Compliance- people conform in order to obtain same material benefit.
2) Identification- the demand of culture are accepted in order to maintain the good
relationships with colleagues.
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8. 3) Internalization- people find the adoption of the culture values of the organization
produces intrinsic satisfaction.
Performance & Satisfaction- culture has a performance – enhancement quality for at
least 4 reasons-
1) Strategy implementation is made easy through culture
2) Strong culture is characterized by goal alignment that is employment share
common goal.
3) Strong culture creates a high level of motivation
4) Strong culture provides control mechanism without the oppressive effect of
bureaucracy.
Cultural Change
For cultural chance there is Lewin’s Three-Step Change Model. Its include 3 steps.
Those are following-
Lewin’s Three-Step Change Model
1- Unfreezing: means getting ready for change. Its include following activities-
 Arouse dissatisfaction with the current state
 Activate and strengthen top management support
 Use participation in decision making
 Build in rewards
2- Moving: means making the change. Its include following activities-
 Establish goals
 Institute smaller, acceptable changes that reinforce and support change
 Develop management structures for change
 Maintain open, two-way communication
3- Refreezing: means stabilizing the change. Its include following steps-
 Build success experiences.
 Reward desired behaviour
 Develop structures to institutionalize the change
 Make change work
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9. Overcoming Resistance to Change- following ways are helpful to overcoming
resistance to change-
 Education and communication
 Participation and involvement
 Facilitation and support
 Negotiation and agreement
How Employees Learn Culture
A- Stories
1. During the days when Henry Ford II was chairman of the Ford Motor Co., the
message was Henry Ford II ran the company.
2. Nordstrom employees are fond of the story when Mr. Nordstrom instructed the clerk
to take the tires back and provide a full cash refund. After the customer had received his
refund and left, the perplexed clerk looked at the boss. ―But, Mr. Nordstrom, we don’t
sell tires!,‖ ―I know,‖ replied the boss, ―but we do whatever we need to do to make the
customer happy.
3. Stories such as these typically contain a narrative of events about the organization’s
founders, rule breaking, rags-to-riches successes, reductions in the workforce,
relocation of employees, reactions to past mistakes, and organizational coping.
4. They anchor the present in the past and provide explanations and legitimacy for
current practices.-
For the most part, these stories develop spontaneously.
Some organizations actually try to manage this element of culture learning
B- Rituals
1. Rituals are repetitive sequences of activities that express and reinforce the key values of the
organization, what goals are most important, which people are important, and which are
expendable.
2. College faculty members undergo a lengthy ritual in their quest for permanent
employment—tenure. The astute faculty member will assess early on in the probationary
period what attitudes and behaviors his or her colleagues want and will then proceed to give
them what they want.
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10. 3. One of the best-known corporate rituals is Wal-Mart’s company chant. W-A-L squiggle M-A-
R-T! was Sam Walton’s way to motivate his workforce.
C- Material Symbols
1. The headquarters of Alcoa does not look like your typical head office operation:
 There are few individual offices.
 The informal corporate headquarters conveys to employees that Alcoa
values openness, equality, creativity, and flexibility.
2. Some corporations provide their top executives with a variety of expensive perks.
Others provide fewer and less elaborate perks.
3. The layout of corporate headquarters, the types of automobiles top executives that
are given, and the presence or absence of corporate aircraft are a few examples of
material symbols.
4. These material symbols convey to employees who is important, the degree of
egalitarianism desired by top management, and the kinds of behavior that are
appropriate.
D- Language
1. Many organizations and units use language as a way to identify members of a
culture or subculture. By learning this language, members attest to their acceptance
of the culture and help to preserve it.
2. Organizations, over time, often develop unique terms to describe equipment, offices,
key personnel, suppliers, customers, or products that relate to its business.
3. New employees are frequently overwhelmed with acronyms and jargon that, after
six months on the job, have become fully part of their language.
4. Once assimilated, this terminology acts as a common denominator that unites
members of a given culture or subculture
E- Ceremonies- ceremonies are more formal artifacts than rituals elaborate sets of
activities that are enacted time and again on important occasions are known as
organizational ceremonies. Ceremonies send a message that individuals who
both espouse and exhibit corporate values are heroes to be admired.
E.g. publically rewarding employees
F- Statement of principles- yet another artifact of culture is the direct statement of
principles. Some organizations have explicitly written principles for all to see.
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11. some companies make explicit the moral aspect of their culture by publishing
codes of ethics- specific statement of a company’s ethical values. This enable
the newly hired employees to understand the organizational culture.
Creating an Ethical Organizational Culture
The content and strength of a culture influences an organization’s ethical climate and
the ethical behavior of its members. An organizational culture most likely to shape high
ethical standards is one that’s high in risk tolerance, low to moderate in aggressiveness,
and focuses on means as well as outcomes. If the culture is strong and supports high
ethical standards, it should have a very powerful and positive influence on employee
behavior.
 Managerial Practices Promoting an Ethical Culture
 Being a visible role model- Employees will look to top-management behavior as a
benchmark for defining appropriate behavior.
 Communicating ethical expectations- Ethical ambiguities can be minimized by
creating and disseminating an organizational code of ethics.
 Providing ethical training- Use training sessions to reinforce the organization’s
standards of conduct; to clarify what practices are and are not permissible; and to
address possible ethical dilemmas.
 Rewarding ethical acts and punishing unethical ones-. Performance appraisals
of managers should include a point-by-point evaluation of how his or her decisions
measure against the organization’s code of ethics
 Providing protective mechanisms- The organization needs to provide formal
mechanisms so that employees can discuss ethical dilemmas and report unethical
behavior without fear of reprimand. This might include creation of ethical counselors,
ombudsmen, or ethical officers.
Text question-
1- Explain the concept of culture? Enumerate the advantages and disadvantages of
culture at organizational levels?
2- What is culture? Explain the functions of culture and why it is so important in an
organization?
3- What do you mean by Organisational Culture ? Discuss the main characteristics
of organizational culture?
4- How does organizational culture create its impact on work place? Suggest
measures for developing organizational culture?
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12. 5- Describe the basic elements and levels of organizational culture? Do
organization have uniform culture?
6- What is cultural change? Process of culture change and how can we effectively
change the culture?
7- what is the process of creating culture?
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