Organizational Culture

In any organization, there are the ropes to skip and the ropes to know. -- R. Ritti and G. Funkhouser

Environment and Corporate Culture

GENERAL ENVIRONMENT ECONOMIC

SOCIAL

OPERATING ENVIRONMENT

NEW ENTRANTS INTERNAL ENVIRONMENT PRODUCTION TECHNOLOGY STRUCTURE INPUTS SUPPLIER

SUBSTITUTES POLITICAL

CULTURE
CUSTOMER

COMPETITION TECHNOLOGY

LEGAL

What is Organizational Culture?

A system of meaning shared by the organizations members

Cultural values are collective beliefs, assumptions, and feelings about what things are good, normal, rational, valuable, etc.

Examples of Organizational Culture

Innovation and risk taking (3M) Outcome orientation (Bausch & Lomb) Aggressiveness (Microsoft) Continuous learning and innovation (Nokia)

Characteristics of Organizational Culture

Observed behavioral regularities Philosophy on treatment of employees/ customers

Norms

Organizational Culture

Rules of employee behavior

Dominant values

Organizational climate

Elements of Organizational Culture

Physical Structures

Artifacts of Organizational Culture

Rituals/ Ceremonies Stories

Language

Organizational Culture
Beliefs Values Assumptions

Artifacts: Organizational Stories

Social prescriptions of desired behavior

Demonstrate that organizational objectives are attainable

Most effective stories:
Describe real people Assumed to be true Known throughout the organization Are prescriptive

Artifacts: Rituals and Ceremonies

Rituals
programmed routines e.g., conducting meetings, employee forums, x-mas parties

Ceremonies
planned activities for an audience e.g., award ceremonies

Heroes
Figure who exemplifies character and deed E.g. founders as Tom Watson of IBM, Bill Gates of Microsoft

Artifacts: Organizational Language

Words used to address people, describe clients, etc.
e.g. sir/maam, first name calling

Leaders use phrases and metaphors as cultural symbols

e.g.. General Electrics grocery store

Language also found in subcultures

e.g.. Whirlpools PowerPoint culture

Slogans
E.g. Nokia Connecting People

Organizational Subcultures
Located throughout the organization Can support or oppose (countercultures) firms dominant culture Two functions of countercultures:
provide surveillance and evaluation source of emerging values
E. M. Samelson/Orlando Sentinel

Artifacts: Physical Structures/Space

Oakley, Inc.s protective and competitive corporate culture is apparent in its building design and workspace. The building looks like a vault to protect its cherished product designs (eyewear, footwear, apparel and watches).

Courtesy of Oakley, Inc.

Courtesy of Oakley, Inc.

Artifacts - Industry

Information technology

Advertising and Media

Call Centers

How Organizational Cultures Form

Philosophy of the Organizations Founders: Bill Hewlett & Dave Packard John Gokongwei Bill Gates

Top Management

Selection

Organizational Culture

Socialization

Do Organizations Have Uniform Cultures?

Dominant Culture Core Values

Subcultures

Stories

Rituals

How Employees Learn Culture/ How it is reinforced

Material Symbols

Language

Benefits of Strong Corporate Cultures

Social Control Strong Organizational Culture

Social Glue

Aids Sense-Making

Organizational Culture

Functions

Liabilities

Controlling behavior
Defining boundaries Conveying identity Promoting commitment

Blocking mergers
Inhibiting diversity Inhibiting change Blocking acquisitions

Managing, Changing, and Merging Cultures

Managing through stories, heroes, symbols and ceremonies Culture often need to be changed to ensure organizational success Merging cultures through symbolic leaders

Adaptive Organizational Cultures

External focus -- firms success depends on continuous change Focus on processes more than goals Strong sense of ownership Proactive --seek out opportunities
AP/Wide World

Bicultural Audit
Part of due diligence in merger Minimizes risk of cultural collision by diagnosing companies before merger

Three steps in bicultural audit:

1. Collect artifacts 2. Analyze data for cultural conflict/compatibility 3. Recommend solutions

Merging Organizational Cultures

Assimilation
Acquired company embraces acquiring firms culture Acquiring firm imposes its culture on unwilling acquired firm Both cultures combined into a new composite culture

Deculturation

Integration

Separation

Merging companies remain separate with their own culture

Strengthening Organizational Culture

Founders and leaders
Selection and socialization Culturally consistent rewards

Strengthening Organizational Culture

Managing the cultural network

Stable workforce

Intensity of Core Values

Commitment to Core Values (widely shared)

Strong Versus Weak Cultures

High Behavioral Control Low Employee Turnover

Studies show that culture is closely related to the effectiveness of organizations.

Effectiveness depends on . . .
the core values and beliefs of the members of the organization. the policies and practices used by the organization. the success in translating the core values and beliefs into policies and practices. the match between values, beliefs, policies, practices, and the organizations environment.

Effectiveness is related to . . .
involvement = participation. consistency = shared beliefs and values. adaptability = ability to recognize the need for change and the willingness to change mission = shared purpose.

Model of Organizational Culture Types

Four Culture Types

Studies on Culture Types

Deshpande, Farley, and Webster (1993) found that competing values of the market culture outperform those of the clan culture. Those of the adhocracy culture outperformed those of the diagonally opposing hierarchy culture. The speed of response to environmental changes which determine a higher performance is thus culturally dependent.

EXERCISEOrganizational Culture Assessment Instrument (OCAI)

Clan

Adhocracy

5 4 3 2 1
B

1
D

3
4 5
Hierarchy Market

Case Study: Organizational Culture and Performance

Clan

Adhocracy

Clan

Adhocracy

4 3 2 1 1 2 3 4 5 Hierarchy
Market

4 3 2 1 1 2 3 4 5 Hierarchy
Market

Cultural Change
Conduct a cultural analysis to identify cultural elements needing change Make it clear to employees that the organizations survival is legitimately threatened if change is not forthcoming Appoint new leadership with new vision Introduce new stories and rituals to convey new vision Change the selection and socialization process and reward systems to support new values
From Management by Robbins and Coulter

Recognizing the need for change

Diagnosing and planning change

Managing the transition

Measuring results Maintaining change

Motivation and Organizational Culture Types

The Learning Organization: Management Approach in New Millenium

Environment in the millenium
Information and electronic age Information and knowledge is going to be readily available to us all Information speed through Internet The future is going to be dominated by our need to understand systems. The learning organization approach to management is the management approach based on an organization anticipating change faster than its counterparts to have an advantage in the market over its competitors.

Learning Organization Culture

Has a culture that values sharing knowledge to adapt to the changing environment and continuously improve
From Management Fundamentals by Lussier
Clan Adhocracy

1
INTERNAL

EXTERNAL

4 5 Hierarchy

Market

When Companies Seek to Foster Certain Culture Types

Clan culture needs the five leadership practices Adhocrarcy culture needs enabling others to act and encouraging the heart Hierarchy culture should not use enabling others to act and encouraging the heart; Market culture should consider alternatives to leadership practices.

Culture and Organization Growth Stages

REINVENT
ORGANIZATIONAL CHANGES

INVENT

ORGANIZATIONAL CHANGES

Case Study: Culture and Organization Growth Stages

14 12 10
Clan Adhocracy

4 3

2
1 1 NTT Docom of Japan Invests in Smart Market

PLDT Acquires Smart

MSubs

8 6 4 2 0

2
3 4 5 Hierarchy

Continuous innovation

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Expand

Year

geographic coverage

Culture and Motivation

The need for achievement (nAch) the desire to do something better or more efficiently than it has ever been done before. The need for power (nPower) the desire to control, influence, or be responsible for others. The need for affiliation (nAff) the desire to maintain close, friendly, personal relationship.

10

What is the Organizational Culture in the Philippines?

Philippine Organizational Culture

Espouses a reorientation in the organization to three values, namely: Adhocracy Clan 5
kaugnayan (identity), karangalan (pride) katapatan (commitment).
1 2 1

To accentuate these core values, corporate leaders emphasize

5 Hierarchy

Market

paternalism (pagbabahala and pananagutan), personalism or pakikipagkapwa (treating a person as a fellow human being), familism (giving importance to the family as a social unit).

End