Presented by: Alland Agaloos

Organizational Culture

What is Organizational Culture?

The set of values that helps the organization’s employees understand which actions are considered acceptable and which actions are considered unacceptable.

Henry Mintzberg on Culture

“Culture is the soul of the organization — the beliefs and values, and how they are manifested. I think of the structure as the skeleton, and as the flesh and blood. And culture is the soul that holds the thing together and gives it life force.”

Organizational Culture

The pattern of shared values, beliefs and assumptions considered to be the appropriate way to think and act within an organization.

Culture is shared

Culture helps members solve problems

Culture is taught to newcomers

Culture strongly influences behavior

How Cultures Emerge?

Top Management

• Agrees on shared assumptions of human behavior

• Develops a shared vision of cultural values

Behaviors

• Employees behave in ways that are consistent with shared values and assumptions

Results

• Financial performance

• Market share

• Employee commitment

Culture

• Strong culture emerges

• Traditions are maintained

• Socialization practices for new employees

Components of Organizational Culture

Routine ways of communicatingNorms shared by individuals and teamsDominant values held by an organizationGuiding philosophy for management’s

policies and decision makingRules of the game for getting along in the

organizationClimate of the organization

Characteristics of Organizational Culture

Innovation and risk-takingThe degree to which employees are encouraged to be innovative and take risks.

Attention to detailThe degree to which employees are expected to exhibit precision, analysis, and attention to detail.

Outcome orientationThe degree to which management focuses on results or outcomes rather than on technique and process.

People orientationThe degree to which management decisions take into consideration the effect of outcomes on people within the organization.

Characteristics of Organizational Culture (Cont.)

Team orientationThe degree to which work activities are organized around teams rather than individuals.

AggressivenessThe degree to which people are aggressive and competitive rather than easygoing.

StabilityThe degree to which organizational activities emphasize maintaining the status quo in contrast to growth.

Methods of Maintaining Organizational Culture

Recruitment ofemployees whofit the culture

OrganizationalCulture

Removal of employees whodeviate from the culture

Methods of Maintaining Organizational Culture•What managers and teams pay attention to•Reactions to organizational crises•Managerial role modeling•Criteria for rewards•Criteria for selection and promotion•Organizational rites, ceremonies, stories

Organizational Rites and Ceremonies

Rites of passage

TYPE

Basic training, U.S. Army Facilitate transition into newroles; minimize differences inway roles are carried out

Reduce power and identity;reaffirm proper behavior

Enhance power and identity;emphasize value of properbehavior

Encourage common feelingsthat bind members together

EXAMPLEPOSSIBLE

CONSEQUENCES

Firing a manager

Mary Kay CosmeticsCompany ceremonies

Office party

Rites of degradation

Rites of enhancement

Rites of integration

Framework of Types of Cultures

Flexible

Stable

Internal External

ClanCulture

BureaucraticCulture

MarketCulture

Entrepreneurial

Culture

Attributes of a Bureaucratic Culture

Long-term concerns are predictability, efficiency, and stability

Members value standardized goods and services

Managers view their roles as being good coordinators, organizers, and enforcers of written rules and standards

Tasks, responsibilities, authority, rules, and processes are clearly defined

Attributes of a Clan Culture

Members understand that contributions to the organization exceed any contractual agreements

A clan culture achieves unity with a long and thorough socialization process

Members share feelings of pride in membership, as well as feelings of personal ownership of a business, a product, or an idea.

Attributes of a Clan Culture (Cont.)

Peer pressure to adhere to important norms is strong

Success is assumed to depend substantially on sensitivity to customers and concern for people

Teamwork, participation, and consensus decision making are believed to lead to success

Attributes of an Entrepreneurial Culture

This culture does not just quickly react to changes in the environment—it creates change

There is a commitment to experimentation, innovation, and being on the leading edge

Effectiveness depends on providing new and unique products and rapid growth

Individual initiative, flexibility, and freedom foster growth and are encouraged and well rewarded

Attributes of a Market Culture

Contractual relationship between individual and organization

Independence and individuality are valued and members are encouraged to pursue their own financial goals

Does not exert much social pressure on an organization’s members, but when it does, members are expected to conform

Attributes of a Market Culture

Superiors’ interactions with subordinates largely consist of negotiating performance–reward agreements and/or evaluating requests for resource allocations

Has a weak socialization processFew economic incentives are tied directly to

cooperating with peersOften tied to monthly, quarterly, and annual

performance goals based on profits

Organizational Uses of Culture

Organizational culture has the potential to enhance organizational performance, individual satisfaction, and a variety of expectations, attitudes, and behaviors in organizations

If an organization’s culture is not aligned with the changing expectations of internal and/or external stakeholders, the organization’s effectiveness can decline

Organizational Uses of Culture

Organizational culture and performance are related, although the evidence regarding the exact nature of this relationship is mixed

Organizational culture affects employee behavior and performance

Assessing which attributes of an organization’s culture need to be preserved and which ones need to be modified is a constant organization need

Relationship Between Culture and Performance

Organizational culture can have a significant

impact on a firm’s long-term economic

performance

Organizational culture will probably be an

even more important factor in determining

success or failure of firms during the next

decade

Relationship Between Culture and Performance

Organizational cultures that inhibit strong long-term financial performance are not rare; they develop easily, even in firms that are filled with reasonable and intelligent people

Although tough to change, organizational cultures can be made more performance enhancing if managers understand what sustains a culture

Effects of Organizational Culture on Employee Behavior and Performance

Allows employees to understand the firm’s history and current methods of operation

Fosters commitment to corporate philosophy and values

Serves as a control mechanism for employee behaviors

Certain cultural types may produce greater effectiveness and productivity

Effects of Organizational Culture on Ethical Behavior

A culture emphasizing ethical norms

provides support for ethical behavior

Top managers play a key role in fostering

ethical behavior by exhibiting correct

behavior

The presence or absence of ethical behavior

in managerial actions both influences and

reflects the culture

How Employees Can Change Unethical Behavior

Secretly or publicly reporting unethical actions to a higher level within the organization

Secretly or publicly reporting unethical actions to someone outside the organization

Secretly or publicly threatening an offender or responsible manager with reporting unethical actions

Quietly or publicly refusing to implement an unethical order or policy

Creating a Culture that Encourages Ethical behavior

Be realistic in setting values and goals regarding employee relationships

Encourage input from organization members regarding appropriate values and practices for implementing the culture

Opt for a “strong” culture that encourages and rewards diversity and principled dissent

Provide training on adopting and implementing the organization’s values