Culture and Organizations

Class Outline

• The importance of culture

• Societal cultures and organizations

• Internal culture of organizations

• Video

Definitions of Culture

• National culture is defined as the values, beliefs, and assumptions learned in early childhood that distinguish one group of people from another

• Organizational culture is similarly defined as the values, beliefs and assumptions that distinguish members of one organization from those of another

Why is Culture Important?• Culture is the ‘software of the mind’

• Societal culture is an important aspect of an organization’s environment

• external culture determines:– acceptable behaviors for an organization– acceptable behaviors of individuals

• internal culture determines– who will be hired and retained– how individuals behave within the organization– whether an organization achieves its goals

The ‘External’ Culture• National/regional cultures can be characterized in

terms of five dimensions– power-distance– uncertainty avoidance– individualism-collectivism– masculinity-femininity– time orientation

• Variations in these dimensions have a direct impact upon the success or failure of specific management practices

Power-Distance

• Meaning:– The extent to which power is distributed equally in society

– the extent to which this is accepted as appropriate

– the extent to which people are willing to interact across status levels

• Low in the US - High in Asia and parts of Europe• influences: hierarchy, centralization, participation

Uncertainty Avoidance

• Meaning:– the extent to which people are threatened by

uncertain and unstructured situations– high levels lead to greater reliance upon rules

and procedures

• US is low; France and Latin Europe are high• influences: levels of formalization and

bureaucracy

Individualism-Collectivism

• Meaning:– The extent to which identity is derived from the self or the

group– The extent to which the needs of the individual or group are

prioritized

• US (and all Anglo countries) highly individualistic; East Asian countries are very collectivist

• Influences: emphasis on individual responsibility, and rewards

Masculinity-Femininity

• Meaning:– masculine orientation is doing/acquiring and values

success

– feminine orientation is thinking observing and values affiliation

• US, Japan, and Germany are masculine; Nordic countries are feminine

• Influences: merit based pay versus quality of work life and interpersonal relations

Time Orientation

• Meaning– long term orientation values patience, perseverance,

and respect for ancestors

– short-term orientation emphasizes immediate rewards, de-emphasizes history

• US,UK, short term; East Asian countries long term

• influence: time frame used for problem solving and organizational goals

External Culture - Summary

• Culture represents an important aspect of the organization’s task environment

• Culture determines values and beliefs

• Therefore it determines what management techniques are acceptable

• Work units managed in ways that are congruent with national culture perform better

Internal Culture

• The values and beliefs shared among employees of an organization

• As with national culture, this determines acceptable and unacceptable behavior

• Transmitted through war stories, myths, and rituals

• The dominant sources are the founder(s) and of course the external environment

Attraction-Selection-Attrition Process• The organization’s values attract likeminded

individuals• Existing managers select those who are similar to

themselves in their beliefs• People who’s values do not fit with the dominant

culture will ultimately feel discomfort and leave• The result is a more culturally homogeneous

workforce

Internal Cultures and Performance• Organizational performance requires that the

culture be consistent with the goals of an organization

• Internal consistency of strategy and culture:– low-cost strategy may be supported by willingness

to follow rules in exchange for security– innovation strategy may be supported by culture

emphasizing individual thought and freedom, risk taking

Summary

• Culture adds another dimension that managers must consider

• fit includes external consistency of management practices with societal culture and internal consistency of organizational strategy and culture

• fit results in performance and survival