Professional Documents
Culture Documents
CHAPTER SUMMARY
This chapter examines organizational culture, which includes ethics. Organizational culture controls behavior and plays a role in organizational effectiveness. Organizational culture is the set of values that controls behavior, determines how organizational members interpret the environment, and helps achieve a competitive advantage. An organization has two types of values: terminal and instrumental. Members learn values indirectly or through a formal socialization process. Van Mannen and Scheins model of socialization tactics distinguishes between institutionalized and individualized role orientations. For newcomers to develop an institutionalized orientation, company tactics include: collective, formal, sequential, fixed, serial, and divestiture. For an individualized orientation, company tactics include: individual, informal, random, variable, disjunctive, and investiture. Cultural values are transmitted through stories, ceremonies, language, and four rites: passage, integration, enhancement, and degradation. The sources of culture include the characteristics of the people (particularly the founder), organizational ethics, property rights, and structure. Organizational ethics is a product of societal, professional, and individual ethics. Property rights outline the rights and responsibilities of stakeholder groups. Shareholders enjoy the greatest property rights. Rights given to managers include: a golden parachute, stock options, large salaries, and control over organizational resources. Rights given to employees include long-term employment, pension and benefits, and employee stock ownership. Structure impacts culture; a mechanistic structure produces a predictable culture. An organic structure encourages an innovative culture. Managers must examine the interaction of all four sources. Social responsibility refers to a managers duty to make decisions regarding the welfare and well-being of the stakeholders and society. The strength of an organizations commitment to social responsibility is on a continuum. It has been shown that managers who behave in a socially responsible fashion will, in the long run, most benefit all stakeholders including shareholders.
People are a companys most valuable resource. A company can control and motivate its people through organizational culture. Q. What is organizational culture? A. Organizational culture is the set of shared values that control interactions among company members and with external stakeholders. An organization usually has two types of values: terminal and instrumental. (Fig. 7.1) Q. What is the difference between a terminal and an instrumental value? A. A terminal value is a desired outcome or end state, whereas an instrumental value is a desired behavior; instrumental values accomplish terminal values. Employee risk-taking (an instrumental value) helps achieve innovation (a terminal value). Terminal values are written in the mission statement and official goals, but instrumental values are conveyed through rules, norms, and standard operating procedures (SOPs). The most influential values are unwritten and reflected in shared beliefs and norms, acceptable standards of behavior. Over time, rules, SOPs, and norms are internalized.
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The method of conveying values influences the culture to motivate employees and increase organizational effectiveness. Q. How can culture can be communicated to new organizational members? A. Newcomers learn values from formal socialization and informal stories, ceremonies, and language. Socialization and Socialization Tactics Newcomers become insiders when they internalize organizational values. Q. How does a newcomer learn values? A. Watching existing members and determining appropriate behavior lets newcomers learn indirectly, but they also learn unacceptable practices. Socialization, the process of learning and internalizing norms, assures that members learn appropriate values. A socialization model by Van Mannen and Schein, suggests that structuring socialization teaches newcomers key values. Role orientation is the characteristic way newcomers respond to a situation. (Table 7.1) Q. Name two types of role orientations. A. Institutionalized role orientation. Newcomers respond the same way as existing members do. Individualized role orientation. Newcomers respond creatively and experiment with changing norms and values. Differences between the two include: 1. Collective vs. Individual. Collective tactics consist of common experiences to generate standard responses. Individual tactics allow newcomers to learn new responses. 2. Formal vs. Informal. Formal tactics separate newcomers during learning; informal tactics encourage learning on the job. 3. Sequential vs. Random. Sequential tactics establish a sequence for activities; random tactics are based on newcomer interests and needs. 4. Fixed vs. Variable. Fixed tactics provide a specific timetable for each stage; variable tactics set no timetable. 5. Serial vs. Disjunctive. Serial tactics use existing members as role models and mentors; disjunctive processes develop individual behavior. 6. Divestiture vs. Investiture. Divestiture gives members negative social support (neglect) until they conform to norms. Investiture gives positive support immediately. These tactics influence role orientation; military-style socialization leads to an institutional orientation.
Q. What are the dangers of institutionalized socialization? A. It produces sameness among members, making it hard to adapt to changes. An organization chooses institutionalized or individualized tactics based on goals. For predictability and standardization, institutionalized tactics fit; for innovation, individualized tactics fit. Notes________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ Stories, Ceremonies, and Organizational Language Stories, ceremonies, and organizational language convey cultural values. (Table 7.2) There are four organizational rites: 1. Rites of passage signify entry to, promotion in, and departure from the organization. 2. Rites of integration build bonds between members (an office party or cookout). 3. Rites of enhancement are public recognition of employees (news releases and awards dinners). 4. Rites of degradation denote involuntary departure, allowing a change or reaffirmation of values.
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Organizations have different cultures due to the interaction of four factors: people, ethics, property rights given to employees, and structure. (Fig. 7.2) Characteristics of People within the Organization Companies attract, hire, and retain people with different values, personalities, and ethics. People are drawn to companies with values similar to their own. As people and values become more similar, organizational culture becomes more unique. The founder impacts the culture by setting the initial values and hiring the first employees.
A. GMs managers had different behavioral expectations. They received straight salaries without performance based rewards, whereas EDSs employees received stock options based on contract profits. GMs managers refused to have EDSs managers, also GM employees, benefit from markups on contracts with them. Top Management and Property Rights Top managers determine their own property rights: terms of their employment, salaries, benefits, pension, and termination agreements. Because top managers decide how property rights are distributed to others, they influence culture.
Organizational Structure Organizational structure, the formal system of rules and task and authority relationships, is a source of culture. Different structures lead to different cultures.
A. A mechanistic structure results in predictability and stability. Q. What terminal values will an organic structure achieve? A. An organic structure leads to innovation and flexibility. Structure can promote cooperative norms and values that improve integration and coordination. Teams in a product team or matrix structure have shared cultural values, thus product development time is short. The choice between centralization and decentralization promotes different cultural values.
Q. What values does decentralization promote? What values does centralization promote? A. Decentralization promotes creativity and innovation; centralization promote obedience, stability, and accountability. Notes________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________
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Managers must examine the interaction of the sources of culture: the characteristics of organizational members, organizational ethics, the property rights system, and organizational structure. These factors interact, and only major modifications change values, making cultural change difficult. An organization might need to change its structure, its people, or its property rights system. A larger and more complex organization with a successful culture can decrease effectiveness. To avoid negative cultural change, managers must design a structure to handle control problems. Refer to discussion question 3 here to emphasize the fit between organizational culture and design.___________________________________________________________________________ _________________________________________________________________________________
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An organization can take several approaches to social responsibility. The following approaches are on a continuum from low to high. The Obstructionist Approach Managers choose to behave unethically and illegally, and do all they can to prevent knowledge of their behavior from reaching stakeholders. The Defensive Approach Defensive managers stay within the law, but make no attempt beyond this to behave socially responsibly. The Accommodative Approach Accommodative managers recognize the need to behave responsibly, and focus on balancing the interests of the many different stakeholders.
The people within an organization are the primary source of culture; companies attract those with similar values, and over time culture becomes more distinct. The founder establishes culture by setting values and hiring the first members. The second source of culture is ethics, a product of societal, professional, and individual ethics. Ethics can control behavior. The third source is property rights, given to members to receive and use organizational resources. The distribution of property rights motivates employees. Organizational structure influences culture. A mechanistic structure promotes a conservative, stable culture, and an organic structure promotes an innovative culture. Each companys pattern of interaction among these four variables sets its culture apart.
Organizational culture arises from four sources: (1) the characteristics of its people, (2) organizational ethics, (3) property rights, and (4) organizational structure.
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Culture increases effectiveness through motivation. Culture motivates employees because norms and values encourage behavior for goal achievement. Culture uses incentives to reward behavior resulting in core competences and a competitive advantage. Culture improves structure. Structure and culture must fit because different structures promote different behaviors. Structure can help achieve terminal values. A mechanistic structure, tall and centralized, is appropriate for a company that desires predictability. An organic structure fits innovation and flexibility.
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An organization should always adopt a broad stance on social responsibility. Explain why you agree or disagree with this statement.
Others may disagree and state that sometimes moral actions reduce profits. They will not support unethical behavior, but state that a company is responsible only for complying with laws and conforming to societys ethical customs and practices. Organizations are free to do as they wish if they obey the law.
The answer to this question will vary. Some will argue that an organization should examine every situation from a moral perspective. An organization should act to produce the greatest good for its stakeholders, whether or not laws exist. For clear-cut situations, there is the golden rule. In ambiguous situations, a company should act to produce the greatest benefit for the majority. Supporters of the broad stance argue that ethical and moral behavior pays off long-term and that employees should use judgment instead of relying solely on laws and standards.
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TEACHING SUGGESTIONS
1. A role-play illustrates how socialization tactics encourage an institutionalized orientation. Two volunteers are new military recruits, one volunteer is a drill sergeant, and others refuse to help the recruits. The two recruits are in the same platoon (a collective tactic). Newcomers are separated (a formal procedure). Boot camp (a fixed procedure), lasts six weeks; the drill sergeant trains newcomers to march and do specific drills (sequential procedures). The drill sergeant is a role
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