BA9265 ORGANISATIONAL THEORY DESIGN AND DEVELOPMENT

Unit III Organizational Culture Definition: The set of shared values and norms that controls organizational members interactions with each other and outside the organization.
Organizational Values

Terminal Value

Instrument al Value

Specific norms, rules and Standard Operating Procedures SOP!

Values: General criteria, standards or guiding principles that people use to determine which types of behaviours, events, situations and outcomes are desirable or undesirable. Terminal Value: A desired end state or outcome that people seek to achieve. Eg., high uality, e!cellence. Instrumental Value: A desired mode or pattern of behaviour. Eg., being helpful, working hard. Strong and Weak Culture Strong Culture: "idely

shared

and

deeply

held

cultures

are

called

as

strong

culture.

Weak Culture: #arrowly shared and shallowly held cultures can be said to be weak culture.

Mr.M.Arivazhagan,Asst Professor,Shivani School of Business Management

Page 1

BA9265 ORGANISATIONAL THEORY DESIGN AND DEVELOPMENT

Importance of Organizational Culture Continuity of the organization as the social system is maintained through the process of transmission, socialization and revitalization of ideas, norms and behaviour. Culture makes predicta ility of responses possi le y esta lishing common codes of conduct , acceptable standards, formal and informal norms, symbols and distinguishes between desirable and undesirable behaviour. Thought! feeling and action are integrated y demanding conformity to dominant patterns of thought and developing socially desirable ways of e!pressing feelings and action. $t facilitates development of normati"e orientation through an e"olution of shared "alue systems! ethical standards and differentiated oundaries# $t provides for regulatory mechanisms including self%regulation by inculcating in the humans collectively the feeling of guilt! shame! fear of social disappro"al! humiliation on the one hand and a continuous search for tacit and e!plicit approval on the other. Dimensions of Organizational Culture &. Indi"idual Initiati"e' The degree of responsibility, freedom and independence that individuals have. (. $isk Tolerance' The degree to which employees are encouraged to be aggressive, innovative and risk% seeking. ). Direction: The degree to which the organization creates clear ob*ectives and performance e!pectations. +. Integration: The degree to which units within the organization are encouraged to operate in a coordinated manner. ,. %anagement Support' The degree to which managers provide clear communication, assistance and support to their subordinates. -. Control: The number of rules and regulations and the amount of direct supervision that are used to oversee and control employee behaviour. .. Identity: the degree to which members identify with the organization as a whole rather than with their particular workgroup or field of professional e!pertise. /. $e&ard System: The degree to which reward allocations 0promotions, salary increase1 are based on employee performance criteria in contrast to seniority, favoritism and so on. 2. Conflict tolerance' The degree to which employees are encouraged to air conflicts and criticisms openly. &3. Communication 'atterns: The degree to which organizational communications are restricted to the formal hierarchy of authority.

Types of Culture
Mr.M.Arivazhagan,Asst Professor,Shivani School of Business Management Page 2

BA9265 ORGANISATIONAL THEORY DESIGN AND DEVELOPMENT

4n the basis of the following dimensions culture has been classified into $. 5alue 6imension &. Entrepreneurial 7ulture (. 8trategic 7ulture ). 7hauvinistic 7ulture +. E!clusive 7ulture $$. #ature of environment and strategic focus &. 7lan 7ulture (. Entrepreneurial 7ulture ). 9ureaucratic 7ulture +. :arket 7ulture $$$. 8pread and $ntensity I# Value Dimension ;iemann and "iener have identified four types of generic culture They define culture in terms of shared values e!pressed in a two dimensional matri!. Sources of Values 7harismatic 4rganizational <eadership Traditions =unctional Entrepreneurial 8trategic 0e!ternal, short%term1 0e!ternal, long%term1 7hauvinistic 0internal, short%term1 (ocus of Values Elitist (ocus and Content of core "alues =unctional' =ocusing on organizational goals, functions or styles of operations. Eg.,:aruti >dyog <td,s value statement ?7ount 4n >s@ Elitist' 5alues focusing on the status or superiority of members or products of the organization. Eg.,5ideocon ?#o.& $ndian :ultinational@. Sources of "alues 4rganizational Traditions' Aredominant value is passed from one generation to another through role models, folk lore and prime movers. Eg., T$874 7harismatic <eadership' The organization members accept and internalize the values of a charismatic leader through the process of identification. Eg., :r.#arayanamurthy of $nfosys. )ntrepreneurial Culture &. The focus of values is functional and with charismatic leadership as the source. (. The orientation is short%term and e!ternal.
Mr.M.Arivazhagan,Asst Professor,Shivani School of Business Management Page 3

E!clusive 0internal, long%term1

BA9265 ORGANISATIONAL THEORY DESIGN AND DEVELOPMENT

). :a*or concern' realization of organizational goals and short%term perspective. +. 4rganizations in its formative stage usually have this kind of culture ,. The charismatic leader, espouses, functional values which are shared by loyal employees. -. Eg., ;eliance group of $ndustries. Strategic Culture &. =ocuses on functional values and is rooted in the organizations traditions. (. :a*or concern' Alignment with e!ternal environment and long%term sustainability. ). Eg., Tata B 8ons. Chau"inistic Culture &. This culture has an elitist value orientation rooted in a strong charismatic leader. (. =ocus is on internal efficiency and short term perspective. ). The charismatic leader adheres to and advocates elitist values. +. Eg., 8hehnaz Cussein 9eauty Aarlour 7linics. )*clusi"e Culture &. ;epresents elitist value rooted in tradition. (. Eg., 6r.;eddys <aboratory, Apollo group of hospitals and some e!clusive public schools. II# +ature of en"ironment and strategic focus This model is significant as it focuses on values. =le!ibl 7lan 7ulture Entrepreneurial 7ulture e

9ureaucratic 7ulture

:arket culture

(ormal control orientation 8table $nternal (orms of attention ,ureaucratic Culture &. 4rganization chooses to operate in an environment which is stable and focus is on internal processes. (. 8uch an organization will have high degree of formalization, standardization, rules and procedures. ). The coordination of different functions is achieved through hierarchical level with varying degree of authority to control and coordinate activities. +. =ocus' Aredictability, efficiency and stability. ,. The organization design is likely to be bureaucratic with clearly defined hierarchy, narrow span of control. Eg., Govt 6epartments. Clan Culture &. <oyalty, convention. Teamwork and social influence are attributes of clan culture.
Mr.M.Arivazhagan,Asst Professor,Shivani School of Business Management Page 4

E!ternal

BA9265 ORGANISATIONAL THEORY DESIGN AND DEVELOPMENT

(. 4rganization members e!tend their obligation beyond the simple employment contract and invariably contribute to the organization beyond the re uirements of contractual agreements. ). <ong time clan members serve as mentors and role models for new members.

Mr.M.Arivazhagan,Asst Professor,Shivani School of Business Management

Page 5

BA9265 ORGANISATIONAL THEORY DESIGN AND DEVELOPMENT

)ntrepreneurial Culture &. 7haracterized by strategic focus on the e!ternal environment through fle!ibility and change to meet customer needs. (. This culture enables the organization to detect, interpret and translate cues from the environment into adaptive responses. ). The strategy centers around proactive rather than reactive responses to environmental change. +. E!perimentation, risk taking and innovation are highly valued. ,. $ndividual initiative, creativity and autonomy are encouraged and rewarded. -. Associated with small to medium size companies that continue to run by their founders. %arket Culture &. 7haracterized by high degree of service orientation to customers in the e!ternal environment. (. Emphasis on achievement of goals such as sales growth, profitability or market share to enable the organization realize its vision and purpose. ). 7ompetitiveness and profit orientation prevail throughout the organization. +. 6irect relationship between performance and reward for individuals and groups tent to be emphasized. ,. $ncreased level of performance is e!changed for increased rewards in return, as agreed upon between employee and the organization. -. ;elationship between the employees and organization is strictly contractual. III# Spread and Intensity 4rganization cultures differ in terms of spread that is, the organization space covered and the intensity with which underlying values and beliefs are imbibed by their members. 6eep +arro&ly shared! Deeply held Widely shared! Deeply held 0violations in this cell usually result 0violations in this cell usually in informal but sometimes result in formal and significant significant punishments1 punishments1 +arro&ly shared! Shallo&ly held Widely shared! Shallo&ly held 0violations in this cell usually do 0violations in this cell usually not result in uniform reactions but result in minor punishments or instead are more idiosyncratic1 sometimes second chances1 Intensity

8hallow #arrow Spread "ide

Creating and Sustaining Culture Culture Creation &. =ounders hire and keep only employees who think and feel the same way they do. (. They indoctrinate and socialize these employees to their way of thinking and feeling.

Mr.M.Arivazhagan,Asst Professor,Shivani School of Business Management

Page 6

BA9265 ORGANISATIONAL THEORY DESIGN AND DEVELOPMENT

). The founders own behavior acts as a role model that encourages employees to identify with them and thereby internalize their beliefs, values and assumptions. Eg., 9illGates of :8.

-o& organization cultures form

Top Management Philosoph# of Organization$ s %ounders Organization "ulture Socialisation

Selection "riteria

Sustaining Organizational Culture Three forces play a particularly important part in sustaining a culture' Selection 'ractices The e!plicit goal of the selection process is to identify and hire individuals who have the knowledge, skills and abilities to perform the *obs within the organization successfully. Typically, more than one candidate will be identified who meets any given *obs re uirements. "hen that point is reached, it would be naDve to ignore the fact that the final decision as to who is hired will be significantly influenced by the decision%makers *udgement of how well the candidates will fit into the organization. $n this way, the selection process sustains an organizations culture by selecting out those individuals who might attack or undermine its core values. Top %anagement The actions of top management also have a ma*or impact on the organizations culture. Through what they say and how they behave, senior e!ecutives establish norms that filter down through the organization as to whether risk%taking is desirableE how much freedom managers should give their employeesE what is appropriate dressE what actions will payoff in terms of pay raises, promotions and other rewards.

Mr.M.Arivazhagan,Asst Professor,Shivani School of Business Management

Page 7

BA9265 ORGANISATIONAL THEORY DESIGN AND DEVELOPMENT

Socialization A process that adapts employees to the organizations culture.

're.arri"al stage The period of learning in the socialization process that occurs before a new employee *oins the organization. )ncounter stage The stage in the socialization process in which a new employee sees what the organization is really like and confronts the possibility that e!pectations and reality may diverge. %etamorphosis Stage The stage in the socialization process in which a new employee changes and ad*usts to the *ob, work group and organization. )ntry Socialization Options &. =ormal 5s $nformal (. $ndividual 5s 7ollective ). =i!ed 5s 5ariable +. 8erial 5s ;andom ,. $nvestiture 5s 6ivestiture (ormal Vs Informal: The more a new employee is segregated from the ongoing work setting and differentiated in some way to make e!plicit his or her newcomers role, the more formal socialization is. Eg., training programs. $nformal socialization puts the new employee directly into the *ob, with little or no special attention.

Mr.M.Arivazhagan,Asst Professor,Shivani School of Business Management

Page 8

BA9265 ORGANISATIONAL THEORY DESIGN AND DEVELOPMENT

Indi"idual Vs Collecti"e: #ew members can be socialized individually. Eg., Arofessional 4ffices. They can also be grouped together and processed through an identical set of e!periences. Eg., :ilitary 9oot 7amp.

(i*ed Vs Varia le: A fi!ed schedule establishes standardized stages of transition. 5ariable schedules give no advance notice of their transition table.

Serial Vs $andom: 8erial socialization is characterized by the use of role models who train and encourage the newcomer. Eg., Apprenticeship and :entoring programs. $n random socialization, role models are deliberately withheld. #ew employees are left on their own to figure things out.

In"estiture Vs Di"estiture: $nvestiture socialization assumes that the newcomers ualities and ualifications are the necessary ingredients for *ob success, so these ualities and ualifications are confirmed and supported. 6ivestiture socialization tries to strip away certain characteristics of the recruit.

Culture and Strategy

The cultural We The Aaradigm ;ituals and ;outines 8tories 8ymbols Aower structures 4rganizational 8tructures 7ontrol 8ystems

$elating culture to strategy

/# Implementing strategy ignoring corporate culture

Mr.M.Arivazhagan,Asst Professor,Shivani School of Business Management

Page 9

BA9265 ORGANISATIONAL THEORY DESIGN AND DEVELOPMENT

"hen a strong and aggressive leader implements a strategy, heFshe 0and hisFher team1 may have to ignore some of the e!isting procedures, norms and values for the sake of success of the strategy. 0# )*isting culture fits perfectly &ith strategy implementation This can happen when implementation of strategy fits perfectly well with the e!isting culture of the organization. $n many organizations, strategy formulation and implementation initiatives are based on the e!isting culture, particularly in companies with strong and progressive culture. Eg., GE.

1# 2dapting strategy implementation to suit corporate culture $f organizational culture is very deep rooted and the management and leadership are fully committed to uphold the culture, functions, operations and systems will conform to the cultural pattern. This applies to the strategy implementation also. Eg., <BT 3# Changing strategy to fit corporate culture There may be occasions when not strategy implementation, but, the strategy itself may have to be changed to fit the culture. 8trategy implementation can be adapted to cultural re uirements to some e!tent, but, beyond a point, too much change in the implementation programme or process may disrupt the strategy itself. 8o, under cultural compulsions, strategy may have to be changed during implementation.

4# Changing corporate culture to suit strategy implementation 8ometimes, it may happen the other way round, that is, culture has to suit re uirements of strategy. Although it is difficult to change culture, it may be necessary because of change of environment. Eg., Aost%<iberalization business environment in $ndia.

Creating Strategy.supporti"e cultureThe following are the elements which can facilitate creation of a strategy%supportive culture'

&. 7lear statements of organizational philosophy, mission, goals and ob*ectives. (. 4rganizational design, structure and hierarchy. ). 4rganizational systems and procedures. +. 6esigning of physical spaces, facades and buildings.
Mr.M.Arivazhagan,Asst Professor,Shivani School of Business Management Page 10

BA9265 ORGANISATIONAL THEORY DESIGN AND DEVELOPMENT

,. 7riteria used for selection, recruitment, promotion, leveling off and retirement of people. -. :otivation, compensation and reward systems. .. 8tories, legends and myths about key people and events. /. ;ole modeling, teaching and coaching by leaders. 2. "hat leaders pay attention to, measure and control. &3. <eaders reactions to critical incidents and organizational crisis. Implications for %anagers The summary of this unit indicates the following'
S#r( g#) O&'ective factors or (imensions of organizational culture I $/a#!$ a 0 R!.1 #a1! g

H!g) Orga !"a#!$ a% &'%#'r(

P(r+$r,a -(

A##( #!$ #$ D(#a!% O'#-$,( Or!( #a#!$ P($2%( Or!( #a#!$ T(a, Or!( #a#!$ Aggr(..!/( (.. Sa#!.+a-#!$ L$*

As managers, &. 8hape the work environment (. 7reate an ethical culture, spirituality and a positive organizational culture. ). 8hape the organizational culture as the culture of the organization shapes you.

Mr.M.Arivazhagan,Asst Professor,Shivani School of Business Management

Page 11