Organization Culture

August 19, 2009

Group 4
Organizational Culture
Introduction

Basically, organizational culture is the personality of the organization. Culture is

comprised of the assumptions, values, norms and tangible signs (artifacts) of
organization’s members and their behaviors. Members of an organization soon
come to sense the particular culture of an organization. Culture is one of those
terms that are difficult to express distinctly, but everyone knows it when they sense
it. For example, the culture of a large, profit corporation is quite different than that
of a hospital which is quite different than that of a university. You can tell the
culture of an organization by looking at the arrangement of furniture, what they
brag about, what members wear, etc. -- similar to what you can use to get a feeling
about someone's personality.

Corporate culture can be looked at as a system. Inputs include feedback from, e.g.,
society, professions, laws, stories, heroes, values on competition or service, etc. The
process is based on our assumptions, values and norms, e.g., our values on money,
time, facilities, space and people. Outputs or effects of our culture are, e.g.,
organizational behaviors, technologies, strategies, image, products, services,
appearance, etc.

The concept of culture is particularly important when attempting to manage

organization-wide change. Practitioners are coming to realize that, despite the best-
laid plans, organizational change must include not only changing structures and
processes, but also changing the corporate culture as well.

There's been a great deal of literature generated over the past decade about the
concept of organizational culture -- particularly in regard to learning how to change
organizational culture. Organizational change efforts are rumored to fail the vast
majority of the time. Usually, this failure is credited to lack of understanding about
the strong role of culture and the role it plays in organizations. That's one of the
reasons that many strategic planners now place as much emphasis on identifying
strategic values as they do mission and vision.

Key Characteristics of Corporate Culture

Innovation and Risk Taking: The degree to which employees are encouraged
to be innovative and take risks.
 Attention to Detail: The degree to which employees are expected exhibit
precision, analysis and attention to detail.
Outcome Orientation: The degree to which management focuses on results or
outcomes rather than on the techniques and processes used to achieve those
outcomes.
People Orientation: The degree to which management decisions are take into
consideration and the effect of outcomes on people within the organization.
Team Orientation: The degree to which work activities are organized around
teams rather than individuals.
Aggressiveness: The degree to which people are aggressive and competitive
rather easy going
Stability: The degree to which organizational activities emphasize maintaining
the status quo in contrast to growth.

Some Types of Culture

There are different types of culture just like there are different types of personality.

Authoritarian Culture
There is centralization of power with the leader and obedience to orders and
discipline are stressed. Any disobedience is punished severely to set an example to
others. The basic assumption is that the leader always acts in the interests of the
organization.

Participative Culture
Participative culture tends to emerge where most organizational members see
themselves as equals and take part in decision-making.

Mechanistic Culture
The mechanistic culture exhibits the values of bureaucracy. Organizational jobs are
created around narrow specializations and people think of their careers mainly
within these specializations. There is a great deal of departmental loyalty and inter-
departmental animosity. This sort of culture resists change and innovation.

Organic Culture
In this case, authority hierarchy, departmental boundaries, rules and regulations,
etc. are all frowned up. The main emphasis is on task accomplishment, team work
and free flow of communication. The culture stresses flexibility, consultation,
change and innovation.
Sub-cultures and Dominant culture
Each department of an organization may have its own culture representing a sub-
culture of the system. An organizational culture emerges when there is integration
of all the departments into a unified whole.

Researcher Jeffrey Sonnenfeld identified the following four types of

cultures.

Academy Culture
Employees are highly skilled and tend to stay in the organization, while working
their way up the ranks. The organization provides a stable environment in which
employees can develop and exercise their skills. Examples are universities,
hospitals, large corporations, etc.

Baseball Team Culture

Employees are "free agents" who have highly prized skills. They are in high demand
and can rather easily get jobs elsewhere. This type of culture exists in fast-paced,
high-risk organizations, such as investment banking, advertising, etc.

Club Culture
The most important requirement for employees in this culture is to fit into the
group. Usually employees start at the bottom and stay with the organization. The
organization promotes from within and highly values seniority. Examples are the
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. There are many opportunities for those with timely,
specialized skills. Examples are savings and loans, large car companies, etc.

Importance of Organizational Culture

Employees should to be engaged in their work. They yearn for work that is
enjoyable, meaningful and engaging. When they are engaged they are safer on the
job, more productive and more willing and able to delight customers. It is for these
basic reasons that organizational culture matters. It is the right thing for an
organization to do - to think about the work environment, working relationships and
“how employees do things here.”
Focusing on building and sustaining an organizational culture is one way of showing
that people are the organization’s most valuable asset.
A strong culture is a talent-attractor - The organizational culture is part of the
package that prospective employees look at when assessing the organization. Gone
are the days of selecting the person you want from a large eager pool. The talent
market is tighter and those looking for a new organization are more selective than
ever. The best people want more than a salary and good benefits. They want an
environment they can enjoy and succeed in.
A strong culture is talent-retainer - How likely are people to stay if they have
other options and don’t love where they are? The organizational culture is a key
component of a person’s desire to stay.
A strong culture engages people - People want to be engaged in their work. The
culture can engage people. Engagement creates greater productivity, which can
impact profitability.
A strong culture creates energy and momentum - Build a culture that is
vibrant and allows people to be valued and express themselves and it will create a
very real energy. That positive energy will permeate the organization and create a
new momentum for success. Energy is contagious and will build on itself, reinforcing
the culture and the attractiveness of the organization.
A strong culture changes the view of “work” - Most people have a negative
connotation of the word ‘work’. When the organization creates a culture that is
attractive, people’s view of “going to work” will change.
A strong culture creates greater synergy - A strong culture brings people
together. When people have the opportunity to (and are expected to) communicate
and get to know each other better, they will find new connections. These
connections will lead to new ideas and greater productivity - in other words, it will
be creating synergy. Literally, 1 + 1 + right culture = more than 10.
A strong culture makes everyone more successful - Any one of the other six
reasons should be reason enough to focus on organizational culture. But the bottom
line is that an investment of time, talent and focus on organizational culture will
give all of the above benefits. Not only is creating a better culture a good thing to
do for the human capital in the business, it makes good business sense too.
Culture – Input and Output
Culture is learned. It is both a product of action and a conditioning element of future
action, an input and an output. The internal environment consists of the social and
technical systems of the organization. Thus, in part, culture is the product of these
socio-technical systems. They consist of the decision-making, planning and control
procedures of the organization, its technology, and the procedures for recruitment,
selection and training; and are influenced by the common beliefs, attitudes and
values of the members of the organization.
The strategies, structures, procedures and behaviors adopted by management
create a work environment. However, if managers have been members of the
organization for some time they are themselves a product of the culture.
As culture is both an input and an output, it is likely to be self-perpetuating and
highly resistant to change. Figure 7.2 demonstrates how culture is both an input
and output.
Figure 7.2
(Adapted from Williams et al 1989)

Organizational Culture vs. National Culture

Based on the research of Dr. Geert Hofstede, There are differences between
national and organizational cultures. For global companies it is important to
understand both, organizational and national culture, in order to impact
organizational performance.
In a recent ITAP seminar, Dr. Geert Hofstede discussed “Integrating Corporate
Practices and National Cultural Values.” The topic is highly relevant to
organizations operating in a volatile global economic environment. While economic
turmoil creates challenges and failures, it also creates opportunities as evidenced in
a large number of mergers and takeovers: Doosan and Bobcat, Lloyds and HBOS,
Barclays and Lehman Brothers, Citigroup and Wachovia. The list is long. Many of
these names have strong national brand identity. They are goliaths (giants) with
offices in many economic centers around the world. How should they integrate to
become one organization?
Our national culture relates to our deeply held values regarding, for example, good
vs. evil, normal vs. abnormal, safe vs. dangerous, and rational vs. irrational.
National cultural values are learned early, held deeply and change slowly over the
course of generations.
Organizational culture, on the other hand, is comprised of broad guidelines which
are rooted in organizational practices learned on the job. Experts agree that
changing organizational culture is difficult and takes time. What is often overlooked
or at least underestimated when two or more companies merge is how the
underlying personal values of employees impact how they perceive the corporate
culture, etc. A person can learn to adapt to processes and priorities, and a person
can be persuaded to follow the exemplar behaviors of leaders in an organization.
But if these priorities and leadership traits go against the deeply held national
cultural values of employees, corporate values (processes and practices) will be
undermined. What is appropriate in one national setting is wholly offensive in
another. What is rational in one national setting is wholly irrational in another. And,
corporate culture never trumps (outdoes) national culture.
The answer, then, lies not in abandoning efforts to unify organizations after a
merger or cancelling efforts to build high performance culture, but in overlaying and
harmonizing local interpretations of corporate practices to cultural norms.
In organizational theory, culture is a commonly researched subject matter. A link is
often drawn between a strong organizational culture and dominance in the market
place. Culture is shaped by an organization’s unique history and situational growth.
It can be defined as the values, beliefs, and expectations more or less shared by the
organization’s members. It affects the way a company does business and makes
known relevant employees, customers, suppliers, and competitors. Managers and
upper level executives are responsible for instilling the values and norms into
employees so they not only know what is expected of them, but are eager to
perform in such a way as to benefit the company.
“A top-rate administrator is able to create sources of meaning and identification by
providing an atmosphere that is rewarding for its employees and customers.” Scott
and Davis, 2007
A nation’s culture, similar to that of an organization, is comprised of the symbols,
values, rituals, and traditions of the people living in a particular region. Language,
food, and family traditions are all rooted in national culture. How people behave in
public verse, how they behave within their own home is also associated with values
and standards of their nation. Cultures usually differ in relationships between the
individual and society, ways of dealing with conflict, relationships to authority, and
conceptions of class and gender. All of these things are comparable to
organizational culture, just on a grander scale.
Of Hamburger and Social Space: Consuming McDonald’s in Beijing - The article
reviewed the development of the Western fast-food sector and the local responses
of people in Beijing. The Chinese are recognized for their great traditions and rich
culture and so, it was questioned whether McDonald’s would be able to translate its
well established business model from the West into something suitable for people in
the East. Even with all the doubt, McDonald’s was able to take Asia by storm with
irrefutable success, but how? When globalizing the golden arches, did management
try and adapt to the local culture or were they dependent on the locals adapting to
its established organizational culture; which way did the flow of information go?

Creation of a Culture
The founders of an organization generally tend to have a large impact on
establishing the early culture. The organization’s culture results from the interaction
between the founder(s) biases and assumptions and what the original members of
the organization learn from their own experiences.
1. 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.
2. 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.
1. Culture creation occurs in three ways:
• First, founders hire and keep only employees who think and feel 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.
1. When the organization succeeds, the founders’ entire personality
becomes embedded in the culture of the organization.

Keeping a Culture Alive

There are practices within the organization that act to maintain it by giving
employees a set of similar experiences. Three forces play a particularly important
part in sustaining a culture: selection practices, the actions of top management, and
socialization methods.
1. 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.
1. Top management
The actions of top management, what they say and how they behave,
establish norms that filter down through the organization as to:
○ Risk-taking.
○ How much freedom managers should give their employees.
 ○ What is appropriate dress?
○ What actions will pay off in terms of pay raises, promotions, and
other rewards?

1. 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

The process through which the employees are proselytized about the customs and
traditions of the organization is known as socialization. It is the process of
adaptation by which new employees are to understand the basic values and norms
for becoming ‘accepted’ members of the organization. Socialization is a process
made up of three stages: pre-arrival, encounter, and metamorphosis.

• The first stage, pre-arrival, encompasses all the learning that

occurs before a new member joins.
• In the second stage, encounter, the new employee sees what the
organization is really like and confronts the possibility that
expectations and reality may diverge.
• In the third stage, metamorphosis, the relatively long-lasting
changes take place. The new employee masters the skills required
for his/her job, successfully performs his/her new roles, and makes
the adjustments to his/her work group’s values and norm.

How Employees Learn Culture

Stories
Stories 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. 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

Rituals
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.

Material Symbols
The material symbols convey to employees who is important, the degree of
egalitarianism desired by top management, and the kinds of behavior that are
appropriate.

Language
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.

New employees are frequently overwhelmed with acronyms and jargon that, after
six months on the job, have become fully part of their language.

Culture is transmitted to employees in a number of ways; for example, through

stories, rituals, material symbols and language. The process of developing and
sustaining organizational culture is illustrated by the following figure by Robbins:
Figure 7.1
(Adapted from Robbins 1989, page 479)

Conclusion
The future holds promise for companies that understand and nurture their cultures.
Cultures are not only able to create an environment, but they also adapt to diverse
and changing circumstances. As organizations begin to experience a revolution in
structures, the study of culture and the implications for change will become more
important. Understanding of work group subcultures within an organization’s culture
will influence strategies for changing organizational culture and overcoming
resistance to change programs.
Changing an organization’s culture may be extremely difficult, as the processes that
support a particular organization or a departmental method of working are both
interrelated and varied. Organizational culture is self-perpetuating and highly
resistant to change. Changes may cause confusion, conflict and resistance.
Managers need to understand the nature and role of culture and how it may be
altered. When the role of culture is more clearly defined, managers can better
understand its importance in managing organizational change and its impact on
day-to-day decision-making.