ORGANIZATIONAL CULTURE

What is Culture?

Organizational culture: the set of shared values and norms that controls organizational members’ interactions with each other and with people outside the organization

Taught to new members as the correct way to think, feel and behave

“The way we do things here” (McKinsey)

What is Culture? (cont.)

Organizational culture exists at two levels

Observable symbols Underlying values

Levels of Corporate Culture

Observable SymbolsCeremonies, Stories, Slogans,

Behaviors, Dress, Physical Settings

Underlying Values,

Assumptions,Beliefs, Attitudes,

Feelings

Organizational culture

Characteristics Culture represent a true “way of life” for

organizational members, who often takes its influence for granted. an organization’s culture become obvious only when it

is contrasted with that of other organization or when it undergoes change

Because culture involves basic assumptions, values and beliefs, it tends to be fairly stable over time. once a culture is well established, it can persist

despite turnover among organizational personnel, providing social continuity

Companies with Strong Cultures

Wal-Mart – Associates—not employees—are recognized as the primary interface for customers at Wal-Mart. This concern for great customer service, combined with the hard work, produces strong loyalty and great performance.

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Companies with Strong Cultures

Proctor & Gamble - P&G values staying focused on the customer and the firm revels in listening well to customers.

McDonald’s - Consistency in food and service; was a first in the fast-food industry and is now imitated by many others.

Nucor Corporation – This large U.S. steel producer is known for its concern for all employees, offering employees and senior executives alike the same perquisites and privileges.

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Infosys The values that drive us: C-LIFE

Customer Delight: A commitment to surpassing our customer expectations.

Leadership by Example: A commitment to set standards in our business and transactions and be an exemplar for the industry and our own teams.

Integrity and Transparency: A commitment to be ethical, sincere and open in our dealings.

Fairness: A commitment to be objective and transaction-oriented, thereby earning trust and respect.

Pursuit of Excellence: A commitment to strive relentlessly, to constantly improve ourselves, our teams, our services and products so as to become the best.

Emergence of Culture

Emergence of culture is generally from a founder or early leader who articulates and implements certain values as a vision or business philosophy.

◦ When these ideas and values led to success they become institutionalized and an organizational culture emerges that reflects the vision of the leader

“Organizational culture, is the pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with the problems of external adaptation and internal integration – a pattern of assumptions that has worked well enough to be considered valid and therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to these problems” (Schein, 1983)

Emergence and Purpose of Culture

Provides sense of organizational identity

Two critical functions in organizations:1. To integrate members so they know how to relate to

one another2. To help organization adapt to external environment

Internal Integration – collective identity and know how to work together

External Integration – how the organization meets goals and deals with outsiders

How do you read a culture?

Symbols Objects, Physical artifacts, uniforms that

convey some larger meaning What meaning Google Headquarter

Convey?

How do you read a culture?

Google had an informal work culture at Googleplex (its headquarters)

Both Larry and Sergey wanted to make Google a fun place to work

Believe in open communication across the organization

“We try to provide an environment where people are going to be happy”

How do you read a culture?

Language Words or phrases that are commonly used to

remind those inside and outside the firm – to emphasize its main value

Disney carefully chooses the words it uses to describe nearly everything No customers, only “guests” “cast members” – not employees “Go on stage” (to work) “costumes” (not uniforms) Helps convey to cast members that they’re in the

entertainment business

How do you read a culture?

Rites and Ceremonies

Rites and rituals are set of activities that are used over and over again at special times to emphasize key organizational values

Organizational Rites

How do you read a culture?

Stories ◦ Stories about the boss, the founder of the

company, a crisis –the firm overcame, employees getting fired and new ones being hired

◦ Particular set of stories can reveal a great deal about its values and assumptions

◦ Stories keep alive the primary values of the organization and provide shared understanding among all employees

Organizational Chart for Nordstrom

Nordstrom’s structure reflects the emphasis the department store chain puts on Nordstrom’s structure reflects the emphasis the department store chain puts on empowering and supporting lower-level employees.empowering and supporting lower-level employees.

How Do You Keep A Culture Going?

Selection of New People Socialization: Learning the Ropes Evaluation/Rewards: Putting Your Money

Where your Culture is Culture by example: Behavior can speak

louder than visions

How Do You Keep A Culture Going? Selection of New People

◦ Concerned with how well the candidates will fit into the organization.

◦ Provides information to candidates about the organization.

◦ Procter & Gamble requires an intense and exhaustive screening process even for entry level positions. The interviewers are carefully chosen and highly trained. Core values are the theme in interviews and applications

face an extensive battery of employees meeting and general tests. The idea is to compare notes with others to see if the candidate is P & G Material

Top Reasons to work For Google

Hot award winning technology Intelligent, fun, high-energy teammates Great culture and amazing perks such as massage

therapy and all the snacks you can eat Free lunches served daily Start-up environment with excellent benefits Stock options Spacious, colorful, fun work environment Located in the heart of Silicon valley Millions use Google- your ideas will make a

difference

Qualities Sought in Googlers People with broad knowledge and expertise in many

different areas of computer science and mathematics

People with world-class programming skills

People with excellent communication and organizational skills

People who are passionate about their work and great colleagues

People who enjoy working in a high-energy, unstructured environment on very small project team to build amazing product used by millions of people every day

People with diverse interest and skills

How Do You Keep A Culture Going?

Socialization: Learning the Ropes

the process by which members learn and internalize the values and norms of an organization’s culture

Steps in Socialization

1. Careful selection

2. Challenging early work assignments

3. Training to develop capabilities consistent with culture

4. Rewards that sustain the culture

5. Adoption of cultural value policies

6. Rituals, taboos, rites, and stories to reinforce culture

7. Role model to sustain culture

Removal of employees who deviate from culture

Removal of candidates who do not “fit” culture

Evaluation/Rewards: Putting Your Money Where your Culture is

Changes in reward system leads to change in culture of org;

Mgrs consciously & unconsciously disseminate values by the choice they make concerning

what kinds of performance to reward and how generously to reward it;

Relationship of Environment and Strategy to Corporate Culture

Corporate culture should reinforce the strategy and structural design that the organization needs to be effective within its environment.

A complementary relationship among cultural values, organizational strategy and structure, and the environment can enhance organizational performance.

Relationship of Environment and Strategy to Corporate Culture

Needs of the EnvironmentS

trate

gic

Focu

s

AdaptabilityCulture

ClanCulture

BureaucraticCulture

MissionCulture

Flexibility

External

Internal

Stability

Sources: Based on Daniel R. Denison and Aneil K. Mishra, “Toward a Theory of Organizational Culture and Effectiveness,”Organization Science 6, no. 2 (March-April 1995): 204-23; R. Hooijberg and F. Petrock, “On Culture Change: Using the CompanyValues Framework to Help Leaders Execute a TransformationalStudy,” Human Resource Management 32 (1993): 29-50; and R. E. Quinn, Beyond Rational Management: Mastering the ParadoxesAnd Competing Demands of High Performance (San Francisco:Jossey-Bass, 1988).

Relationship of Environment and Strategy to Corporate Culture

The Adaptability / Entrepreneurial Culture

the company actively creates change. Innovation and risk-taking are rewarded.

Success means having unique and new products or services and being a product and market service leader

Relationship of Environment and Strategy to Corporate Culture

The Mission/Market Culture

The organization is very results orientated. A major concern is getting on with the job.

Success is defined in terms of market share and penetration

Relationship of Environment and Strategy to Corporate Culture

The Clan Culture Need of employees as a route to high

performance

Important value – team work, participation and consensus

The organization defines success on the basis of the development of human resources, teamwork, employee commitment and concern for people.

Relationship of Environment and Strategy to Corporate Culture

The Bureaucratic Culture/Hierarchy Culture Long-term concerns are stability,

predictability and efficiency

Formal rules and policies hold the organization members together

The organization defines success on the basis of efficiency. Dependable delivery, smooth scheduling