Organizational Culture and Development

How Individuals Work, Live, and Achieve

Together

Questions

• What is organizational culture?• How do you understand an organizational

culture?• How can the organizational culture be

managed?• How can you use organizational

development to improve the firm?

What is organizational culture?

• Organizational culture– The system of shared actions, values, and

beliefs that develops within an organization and guides the behavior of its members

What is organizational culture?

• IF YOU DO NOT KNOW ANORGANIZATION’S CULTUREYOU WILL NEVER KNOW THEORGANIZATION’S BEHAVIOR

Institutionalization: A Forerunner of Culture

Institutionalization

When an organization takes on a life of its own, apart from any of its founders or any of its members, becomes valued for itself, and acquires immortality.

How Organizational Culture Forms

Selectioncriteria

Socialization

Organization'sculture

Philosophyof

organization'sfounders

Topmanagement

Layers of Culture(Iceberg Model)

Artifacts of Organizational

Culture

Material SymbolsLanguage

RitualsStories

Organizational Culture

BeliefsValues

Assumptions

Organizational Culture Assumptions,values and Artifacts

Artifacts•Stories/Legends•Ritual/ceremonies•Organizational language•Physical structures/decor

Shared Values•Conscious beliefs•Evaluate what is good or bad•Right or wrong

Shared AssumptionsUnconscious ,taken-for –granted perception and beliefsMental models of ideals

Visible

Invisible

What Is Organizational Culture?

Characteristics:1. Innovation and risk

taking2. Attention to detail3. Outcome orientation4. People orientation5. Team orientation6. Aggressiveness7. Stability

Organizational Culture refers to a system of shared meaning held by members that distinguishes the organization from other organizations

Contrasting Organization Cultures

Organization A Organization B

• Managers must fully document all decisions.

• Creative decisions, change, and risksare not encouraged.

• Extensive rules and regulations exist for all employees.

• Productivity is valued over employee morale.

• Employees are encouraged to stay within their own department.

• Individual effort is encouraged.

• Management encourages and rewards risk-taking and change.

• Employees are encouraged to “ run with ” ideas, and failures are treated as “ learning experiences.”

• Employees have few rules and regulations to follow.

• Productivity is balanced with treating its people right.

• Team members are encouraged to interact with people at all levels and functions.

• Many rewards are team based.

Dimensions of Organisational CultureResearch suggests that the following dimensions of organisational culture separate companiesfrom one another:

Routine ways of communicating, such as organisational rituals and ceremonies andlanguage commonly used.

The norms shared by individuals and teams throughout the organisation; like ‘do not do toomuch; do not do too little’.

The dominant values help by the organisation such as high product quality, lowabsenteeism, high efficiency, etc.

The philosophy that guides management’s policies and decision-making.

The rules of the game for getting along in the organisation; or the ropes that a new recruitmust learn in order to be accepted as a full-fledged member of the group.

The feeling or climate conveyed in an organisation by the physical layout and the way inwhich managers and employees interact with customers, suppliers and other outsiders.

(J. Martin, Culture in Organizations, New York, Oxford University Press, 1996)

Dimensions of culture :Cross Cultural ResearchesValues across Cultures• The world has become a new global village-

managers have to become capable of working with people from different cultures

• Values differ across cultures-understanding these differences helpful in predicting behavior of employees from different countries

National and Global Culture• National Culture –National culture like

organizational culture provides basic assumptions that legitimate and guide behavior

• Global Culture

Dimensions of culture :Cross Cultural Researches• Hall has highlighted difference between

high –context cultures and low context cultures

• High context cultures depend on external situation and environment-use of non verbal clues exchanging and interpreting communications-Arabic , Chinese, Japanese

• Low Context-Direct and blunt communication

Dimensions of culture :Cross Cultural ResearchesPanda and Gupta identified seven pan –

Indian cultural preferences(a)Collectivist orientation(b)Respect for status and power(c)Primacy of personalized relationship(d) Desire to be embedded in an in-group(e)Familism(f)context-sensitive(situational behavior)

Dimensions of culture :Cross Cultural Researches(g)Cynical view about others which are similar

to individualism, power distance, uncertainty avoidance and masculinity dimensions of Hofstede

1. Individualism2. Power distance Orientation3. Uncertainty avoidance4. Masculinity

Organizational Culture

• The pattern of shared values, beliefs and assumptions considered to be the appropriate way to think and act within an organization.– Culture is shared– Culture helps members solve problems– Culture is taught to newcomers– Culture strongly influences behaviour

Do Organizations Have Uniform Cultures?• Core values or dominant (primary) values

are accepted throughout the organization.– Dominant culture– Subcultures

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.

Do Organizations Have Uniform Cultures? (cont’d)

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.

Strong vs. Weak Organisation Cultures

Elements of strong cultures Elements of weak cultures

1. Values widely shared

2. Members know what is important

3. Most employees can tell stories about company history/heroes

4. Employees strongly identify with culture

5. Strong linkage between shared values and behaviour

1. Values shared by a few, usually top management

2. Members not very clear about what is important

3. Employees possess little knowledge of company history or heroes

4. Employees have little identification with culture

5. Little connection between shared values and behaviours

(Source : S.P.Robbins and M.Coulter, Management, New Delhi, Pearson, 2008)

The Basic Functions of Organizational Culture

OrganizationalCulture/basic functions

Provides asense of

identity formembers

Enhancescommitment

to the organization’s

mission

Clairifiesand

reinforcesstandardsof behavior

What Do Cultures Do?• The Function of Culture• Organizational culture produces functional

behavior that contribute to organizational goal achievement

• It also is a source if dysfunctional behaviors

Culture’s Functions

• Social glue that helps hold an organization together

• Boundary-defining• Conveys a sense of identity for organization

members

Culture’s Functions

• Facilitates commitment to something larger than one’s individual self-interest

• Enhances social system stability• Serves as a “sense-making” and control

mechanism

Culture as a Liability

• Culture can have dysfunctional aspects in some instances– Culture as a Barrier to:

• Change• Diversity• Mergers and Acquisitions

Keeping Culture Alive• Selection

– Concerned 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.

Stages in the Socialization Process

A Socialization Model

What Do Cultures Do?Organizations solve two important survival issues

(1)External adaption-what needs to be accomplished and how it can be done

(2)Internal integration-• External adaptation

– Involves reaching goals and dealing with outsiders regarding tasks to be accomplished

– methods used to achieve the goals– methods of coping with success and failure.

What is organizational culture?

• Important aspects of external adaptation– Separating external forces based on

importance– Developing ways to measure accomplishments– Creating explanations for not meeting goals

What is organizational culture?External adaptation involves answering important

goal-related questions regarding coping with reality– What is the real mission?– How do we contribute?– What are our goals?– How do we reach our goals?– What external forces are important?– How do we measure results?– What do we do if specific targets are not met?– How do we tell others how good we are?– When do we quit?

What is organizational culture?

• Internal integration– Deals with the creation of a collective identity

and with finding ways of matching methods of working and living together

What is organizational culture?

• Important aspects of working together– Deciding who is a member and who is not– Developing an informal understanding of

acceptable and unacceptable behavior– Separating friends from enemies

What is organizational culture?Internal integration involves answering

important questions associated with living together– What is our unique identity?– How do we view the world?– Who is a member?– How do we allocate power, status, and

authority?– How do we communicate?– What is the basis for friendship?

What is organizational culture?

• Subculture– A group of individuals with a unique pattern of

values and philosophy that are not inconsistent with the organization’s dominant values and philosophy (strong subcultures are often found in high performance task forces, teams and special project groups in organization )

What is organizational culture?

• Counterculture– A groups where the pattern of values and

philosophies outwardly reject those of the larger organization or social system(Stephen jobs reentered Apple computer as its CEO formed a counterculture within Apple –clashes occurred as followers of the old CEO (Gil Amelio) fought to maintain their place and old culture-Jobs won and Apple won –his counterculture became dominant

What is organizational culture?

• Problems associated with subcultural divisions within the larger culture– Subordinate groups are likely to form into a

counterculture pursuing self-interests– The firm may encounter extreme difficulty in

coping with broader cultural changes– Embracing natural divisions from the larger

culture may lead to difficulty in international operations

What is organizational culture?• Developing the multicultural organization

Step 1: The organization should develop pluralismStep 2: The organization should fully integrate its

structureStep 3: The organization must integrate the

informal networksStep 4: The organization should break the linkage

between naturally occurring group identity and organizational identity

Step 5: The organization must actively work to eliminate identity-based interpersonal conflict

Creating An Ethical Organizational Culture• Characteristics of Organizations that Develop High Ethical

Standards– High tolerance for risk– Low to moderate in aggressiveness– Focus on means as well as outcomes

• Managerial Practices Promoting an Ethical Culture– Being a visible role model.– Communicating ethical expectations.– Providing ethical training.– Visibly rewarding ethical acts and punishing unethical

ones.– Provide protective mechanisms

Creating a Customer-Responsive Culture• Key Variables Shaping Customer-Responsive Cultures

1. The types of employees hired by the organization.2. Low formalization: the freedom to meet customer

service requirements.3. Empowering employees with decision-making

discretion to please the customer.4. Good listening skills to understand customer

messages.5. Role clarity that allows service employees to act as

“boundary spanners.”6. Employees who engage in organizational citizenship

behaviors.

Creating a Customer-Responsive Culture

Managerial Actions:

• Select new employees with personality and attitudes consistent with high service orientation.

• Train and socialize current employees to be more customer focused.

• Change organizational structure to give employees more control.

• Empower employees to make decision about their jobs.

Creating a Customer-Responsive Culture

Managerial Actions (cont’d) :

• Lead by conveying a customer-focused vision and demonstrating commitment to customers.

• Conduct performance appraisals based on customer-focused employee behaviors.

• Provide ongoing recognition for employees who make special efforts to please customers.

Spirituality and Organizational Culture

Characteristics:

• Strong sense of purpose• Focus on individual

development• Trust and Respect• Humanistic work

practices• Toleration of employee

expression

How do you understand an organizational culture?• Characteristics of strong corporate cultures

– A widely shared real understanding of what the firm stands for, often embodied in slogans

– A concern for individuals over rules, policies, procedures, and adherence to job duties

– A recognition of heroes whose actions illustrate the company’s shared philosophy and concerns

How do you understand an organizational culture?• Characteristics of strong corporate cultures

– A belief in ritual and ceremony as important to members and to building a common identity

– A well-understood sense of the informal rules and expectations so that employees and managers know what is expected of them

– A belief that what employees and managers do is important and that it is essential to share information and ideas

How can the organizational culture be managed?• Strategies for managing corporate culture

– Managers help modify observable culture, shared values, and common assumptions directly(external adaption)

– Use of organizational development techniques to modify specific elements of the culture(both external and internal adaption)

How can the organizational culture be managed?• Management philosophy

– links key goal-related strategic issues with key collaboration issues and comes up with a series of general ways by which the firm will manage its affairs

How can the organizational culture be managed?Why a well-developed management philosophy is

important –links strategy to-understanding how a firm will manage its affairs– Establishes generally understood boundaries

on all members of the firm– Provides a consistent way for approaching new

and novel situations– Helps hold individuals together by showing

them a known path to success

How can the organizational culture be managed?• Strategies for building, reinforcing, and

changing organizational culture– Directly modifying the visible aspects of

culture(language, stories, rites, rituals sagas)– Changing the lessons to be drawn from

common stories– Setting the tone for a culture and for cultural

change– Fostering a culture that addresses questions of

external adaptation and internal integration

How can the organizational culture be managed?Mistakes that managers can make in

changing culture– Trying to change people’s values from the top

down without also changing how the organization operates

– Attempting to revitalize an organization by dictating major changes and ignoring shared values

How can you use organization development to improve the firm?

• Organization development (OD)-is a comprehensive approach to planned change that is designed to improve the overall effectiveness of organizations– The application of behavioral science

knowledge in a long-range effort to improve an organization’s ability to cope with change in its external environment and to increase its internal problem-solving capabilities

How can you use organization development to improve the firm?

Underlying assumptions of OD• Individual level

– guided by principles that reflect an underlying respect for people and their capabilities

How can you use organization development to improve the firm?

• Group level– Guided by principles that reflect a belief that

groups can be good for both people and organizations

How can you use organization development to improve the firm?

• Organizational level– Guided by principles that show a respect for the

complexity of an organization as a system of interdependent parts.

How can you use organization development to improve the firm?

OD Values and PrinciplesOD offers a systematic approach to planned change in organizations that addresses two main goals:-

• Outcome goals– Mainly deal with issues of external adaptation

• Process goals– Mainly deal with issues of internal integration

How can you use organization development to improve the firm?

• OD helps organizations by:– Creating an open problem solving climate– Supplementing formal authority with knowledge and

competence– Moving decision making where relevant information

is available– Building trust and maximizing collaboration– Increasing the sense of organizational ownership– Allowing people to exercise self-direction and self-

control

How can you use organization development to improve the firm?

• Action research Foundations of ODOD practitioners refer to Action Research as– The process of systematically collecting data

on an organization, feeding it back to the members for action planning, and evaluating results by collecting and reflecting on more data after the planned actions have been taken.

Copyright © 2008 John Wiley & Sons, Inc.

How can you use organization development to improve the firm?OD Interventions-consultants facilitate change –help in developing problem solving capabilities

• Survey feedback– Collection of data via questionnaire response

from organization members or sample of such responses

• Confrontation meetings– Designed to help determine how an

organization may be improved and to take initial actions to better the situation

How can you use organization development to improve the firm?

• Structural redesign– Realigning the structure of the organization or

major subsystems to improve performance• Collateral organization

– Pulling a representative set of members out of the formal organization structure to engage in periodic small-group problem-solving sessions

How can you use organization development to improve the firm?

Group and Intergroup Interventions• Team building

– Activities designed to help examine how the group functions and how it can function better

• Process consultation– Activities that are facilitated by an OD

practitioner and designed to improve group functioning

How can you use organization development to improve the firm?

• Intergroup team building• Designed to help groups improve working

relationships and experience improved group effectiveness

• Appreciative Inquiry-Positive perspective-Discovery-Dreaming-Design-Destiny

How can you use organization development to improve the firm?

Individual Interventions• Role negotiation

– Clarifying expectations in working relationships• Job redesign

– Creating long-term congruence between individual goals and organizational career opportunities