Organizational Culture
LEARNING OBJECTIVES
Upon completion of this chapter, the students should be able to:
1. Define organizational culture.
2. Describe how organizational culture is transmitted.
3. Describe national, regional, and industry determinants of culture.
4. Describe effective organizational cultures.
5. Describe characteristics of high-ethics cultures and multicultural organizations.
6. Identify a cultural change process.
7. Discuss a process for leading cultural change.
LECTURE NOTES (Keyed to Learning Objectives)
I. Organizational culture is a powerful force in influencing how the organization operates and how organization members behave. In this chapter, we will examine the nature, sources, and effects of organizational culture. We will pay particular attention to effective cultures, high-ethics cultures, and multicultural organizations, as well as to the implementation of cultural change.
II. Learning objective: Define organizational culture.
A. Organizational culture can be described in several different ways.
1. Organizational culture refers to the shared values, beliefs, norms, expectations, and assumptions that bind people and systems.
2. Organizational culture provides people with a sense of identity; facilitates commitment, communication, and initiative; and provides a basis for stability, control, and direction.
3. Organizational culture helps members adapt to and integrate internal and external environments and stakeholders.
4. As shown in Figure 12-1 of the text, organizational culture has both visible (i.e., physical setting, language, stories, legends and myths, dress, heroes and heroines, ceremonies, rites and rituals, and behaviors) and invisible elements (i.e., values, beliefs, feelings, attitudes, norms, and assumptions).
a. The invisible elements may be difficult to identify even though many organizations publish a values statement along with their vision and mission statements. Of course, having a published values statement does not ensure that organizational members actually behave consistently with the stated values.
III. Learning objective: Describe how organizational culture is transmitted.
A. Organizational culture is transmitted through the organization’s socialization process––that is, the ways employees learn, adopt, and pass on knowledge and culture.
B. A key part of the socialization process consists of various organizational rites of passage.
1. Rites of passage refer to designated occasions that reinforce particular values and create a bond among employees and between them and the organization.
2. As shown in Table 12-1 of the text, different rights of passage occur as the socialization process progresses.
a. The passage rite facilitates the transition of people into new social roles and statuses.
b. The enhancement rite strengthens social identities and increases the status of employees.
c. The renewal rite revitalizes social structures and improves organizational functioning.
d. The integration rite encourages and revives shared feelings that bind members together and commit them to the organization.
IV. Learning objective: Describe national, regional, and industry determinants of culture.
A. Organizational culture is influenced by various internal and external factors, including founders and CEOs, the national culture, the regional culture, and industry characteristics.
B. Founders and CEOs.
1. The philosophies, examples, and stories of an organization’s founders and CEOs exert strong influence on the formation and conditioning of organizational culture.
2. While most organizations have a dominant culture that likely reflects the founders and CEOs, subcultures and countercultures may also exist.
a. Subcultures have their own values, heroes and heroines, and norms. Subcultures usually revolve around the localized needs of employees who interact on a daily basis and are separated from the organization’s dominant culture.
b. Countercultures refer to subgroups that strongly reject the organization’s values and what it is trying to accomplish.
C. The national culture: national ideology influences how members of a culture view the role of business.
D. The regional culture.
1. Regional (and local) cultures are important determinants of organizational culture for two reasons:
a. Local and regional cultures have direct historical, political, and economic effects on individual and group values which, in turn, influence management practices and outcomes.
b. Organizations are decentralizing and integrating more into their local and regional environments.
2. An example of how regional cultures influence corporate cultures is provided by California’s Silicon Valley. Its regional culture has encouraged openness to creative and changing ideas, innovation, lack of hierarchical structure; continuous, informal, and internal networking; individualism, short-term wealth creation practices, and decentralized structures. This regional culture helps to explain the current success of Internet start-ups and the flow of venture capital.
E. Industry characteristics.
1. Figure 12-2 from the textbook indicates that an organization’s assumptions about the industry’s competitive environment, customer requirements, and societal expectations influence its culture and ultimately its strategies, structures, processes, performance, and survival.
a. Managerial assumptions about the competitive environment reflect the extent of competition.
b. Managerial assumptions about customer requirements are concerned with customer demands for reliability and novelty.
c. Managerial assumptions about societal expectations reflect the nature of and changes in societal values.
V. Learning objective: Describe effective organizational cultures.
A. Effective organizational cultures can be described from several different, though not unrelated, perspectives. The chapter explores three broad categories of perspectives on effective organizational cultures. These categories are:
1. The strategic cultural response.
2. Two complementary cultural effectiveness approaches.
3. Other measures of organizational effectiveness, including various output measures, legal and ethical obligations toward stakeholders, and strong versus weak organizational cultures.
B. The strategic cultural response.
1. An effective organizational culture will adjust and adapt to its changing internal and external environments.
2. As shown in Figure 12-3 of the text, different organizational cultures are effective depending on the organization’s strategic emphasis and the needs of the environment.
a. An adaptability culture is appropriate where the strategic emphasis is on flexibility, change, and quick, varied responses to meet customer and environmental demands.
b. An involvement culture is appropriate where the strategic focus is on involving employees; gaining their commitment; and increasing participation, a sense of ownership, and responsiveness in order to meet changing environmental demands.
c. A mission culture is appropriate where a shared vision and a sense of organizational purpose is emphasized, along with clear direction, and carefully defined roles and jobs.
d. A consistency culture is appropriate where the strategic focus is less on participation and involvement and more on consistency of methods, establishment of systematic policies and procedures, and conformity and membership collaboration.
C. Complementary cultural effectiveness approaches
1. The effectiveness of an organization’s culture can also be viewed in the context of two complementary approaches: the contingency theory approach and the goal-attainment approach.
2. The contingency theory approach.
a. This approach states that organizational cultures are effective to the extent that different organizational dimensions are congruent among themselves and enable the organization to respond effectively to environmental demands.
b. In the contingency theory approach, effectiveness is a function of:
(1) The values and beliefs held by members of an organization.
(2) The policies and practices used by an organization.
(3) Translating the core values and beliefs into policies and practices in a consistent manner.
(4) The interrelationships of core values and beliefs, organizational policies and practices, and the organization’s business environment.
3. The goal-attainment (or resource-allocation) approach.
a. In this approach, an organizational culture is effective to the extent that its stated goals are accomplished from the input to the transformation to the output phases of the organization’s operations.
D. Other measures of organizational effectiveness.
1. Various output measures can be used to assess effectiveness at the following three levels:
a. Enterprise level––organizational and cultural effe
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