• Chapter 13Organizational Culture

  • Building a ConstructiveOrganizational CultureOrganizational culture consists of values, symbols, stories, heroes, and rites that have special meaning for a companys employees.Culture represents the emotional, intangible part of the organization. If structure is the organizations skeleton, culture is its soul.Many firms are trying to develop cultures that will motivate their employees and keep them committed to the firm.47% of 400 CEOs in North America and Europe said that reshaping culture and related employee behavior took up a great deal of their time and was as important as monitoring financial information.A recent study of 200 mergers found incompatible cultures to be the primary cause of failures.

  • Functions of Organizational Culture(Figure 13-1)CULTURE

  • Elements of Organizational CultureOrganizationalCulture

  • Focus on Management:Organizational Culture at Quad/GraphicsSelected as one of the 100 Best Companies to Work for in America,Quad/Graphics is a remarkable success story.The companys philosophy is Have fun, make money, and dont do business with anyone you dont like.The late Harry Quadracci, who has been called the P. T. Barnum of Printing, described the company as a circus, a continuous performance of highly creative and individualistic troupes.Employees at Quad/Graphics are empowered, dont sign time cards, are continually learning, and receive a variety of unique benefits.

  • Organizational ValuesOrganizational values are beliefs held by an individual or group that speak to the actions and ends that organizations ought to or should pursue.

  • The Importance of Values Every excellent company we studied is clear on what it stands for, and takes the process of value shaping seriously. In fact, we wonder whether it is possible to be an excellent company without clarity on values and without having the right sorts of values. Peters & Waterman, In Search of Excellence

  • Focus on Management: Values at Hewlett-PackardThe HP Way:We have trust and respect for individualsWe focus on a high level of achievement and contributionWe conduct our business with uncompromising integrityWe achieve our common objectives through teamworkWe encourage flexibility and innovation

  • SymbolsSymbols are things that stand for or suggest something else.As examples:office assignments signal statusdress codes suggest the level of formalitylogos can influence customer and employee perceptionsan action can be symbolic, as in the case of the Lambeau Leap

  • Some Forms of Symbols

  • Web Wise: The Land OLakes LogoThe importance of company symbols to those outside the firm is seen in a study of customers ratings of 47 firms on things such as quality and reputation.600 customers were asked to rate the firms on the basis of their names, and another 600 were also provided with the company logo.The logo had a strong influence on ratings. For example, Motorolas score rose by 55%. Land OLakes kneeling native American woman logo dropped the companys rating by 12%.

  • Forms of NarrativesStories dramatize relatively ordinary, everyday events within organizations in order to convey important cultural meanings.Legends are more uplifting than stories and portray events that defy explanation by ordinary circumstances.Myths are dramatic, unquestioned narratives about imagined events.Sagas describe heroic exploits performed in the face of adversity.

  • Recurring Story ThemesEquality. These recognize that members must deal with status inequalities in organizations.Security. These recognize that members desire security, but that organizations can threaten their security.Control. These recognize tensions between members desire to control events and their realization that they cant always do so.

  • Focus on Management:Stories at 3MThe importance of innovation as a 3M value is supported by a story often repeated throughout the firm concerning transparent tape.According to the story, an employee accidentally developed cellophane tape but was unable to get superiors to accept the idea.The employee was able to sneak into the corporate boardroom and tape down the board members copies of the minutes with the transparent tape.The board was impressed enough with the novelty to give it a try, and the product was incredibly successful.The story reinforces the importance of innovation and encourages 3M employees who believe in their ideas to never take no as a final answer.

  • HeroesHeroes are company role models. In their performance of deeds, embodiment of character, and support of the existing organizational culture, they highlight the values a company wishes to reinforce. Heroes are the main characters in the stories relayed throughout an organization.

  • RitesRites combine cultural forms into a public performance.Some forms of rites include:Rites of Passage (completion of Army basic training) Rites of Enhancement (awards ceremony)Rites of Integration (company Christmas party)

  • RitualsRituals are relatively simple combinations of repetitive behaviors, often carried out without much thought, and often brief in duration. For example:how members greet one anotherhow visitors are met at airportswho eats where and with whomhow a phone conversation should proceedRituals are often more important for their expressive, emotional consequences than for more practical reasons

  • Focus on Management: Herb Kelleherof Southwest AirlinesHerb Kelleher is cofounder, chairman of the board, and former CEO of Southwest Airlines.Under Kellehers guidance, Southwest has been remarkably successful. It has been profitable every year since 1973 yet maintains the lowest fares. It is the safest airline in the world and ranks number one in the industry for service, on-time performance, and lowest employee turnover rate.Fortune magazine named it the most admired airline and best place to work in the United States. Kelleher has created a unique culture at Southwest Airlines through a mix of humor, altruism, concern for others, and straight talk.

  • Focus on Management:Culture at Walt Disney CompanyEmployees -- primarily high school and college students -- are critical to Disneys success.Employees must convey the Disney fantasy and create happiness while carrying out repetitive work at low pay.Disney is heavily unionized, with 24 unions at Disneyland alone.To deal with this, Disney pays close attention to organizational culture.

  • Focus on Management:Culture atWalt Disney Company (Continued)Selection. Disneys clean-cut and conservative image attracts the kind of employees it wants. A film shows prospective employees the sort of discipline, grooming, and dress code the company demands. Socialization. Cast members participate in an ongoing program that continually reinforces Disneys values, philosophies, and guest service standards.Language. Employees are cast members and they are cast in roles. Cast members work onstage or backstage and they wear uniforms. Ceremonies. Service recognition awards, peer recognition awards, banquets, and informal recognition parties help boost morale.

  • Web Wise: Harley Owners Group (HOG)A good example of rites of integration is the meetings of Harley-Davidsons HOG (Harley-Owners Group) chapters, where the bond is metal as hundreds of Harley riders hit the road together to help out worthy causes of just share the awareness.

  • Some Guidelines for Assessing Organizational CultureLook around -- what do the headquarters and other buildings look like? How are people dressed? How much interaction is there? Who is talking with whom? How does the place feel?Ask to see newsletters and other internal documents. What values are emphasized? Who are the heroes held up for praise? Are parties, celebrations, or other ceremonies mentioned? What sorts of things are discussed?Look at annual reports or other communications to those outside the firm. What face is being presented to the world?

  • Guidelines for Assessing Organizational Culture (Cont.)Ask, Can you tell me anything about what the culture is like here? Are there stories that people here tell about X? Ask, What values are stressed in X? How are they communicated? How are they reinforced?Ask, Who is looked up to in X?See what you can learn about rites and ceremonies in the organization. What happens when people accomplish something? Are there rites of passage such as promotion ceremonies and retirement parties? Are there regular get-togethers such as holiday parties, social events, and company softball games?

  • Guidelines for Assessing Organizational Culture (Continued)Ask, What sorts of behaviors are expected and rewarded here? What sorts of behaviors are punished? Ask people outside the firm what they think of it.Check magazines, newspapers, and other sources to get clues about the culture of the organization.As appropriate, use quantitative measures of organizational culture.

  • Some Guidelines for AssessingOrganizational Culture (Cont.)Overall, how salient is culture?Do leaders mention culture, values, and heroes in their messages?Do organizational members talk much about culture and its elements?What primary themes emerge?Are responses consistent across people, levels, and units?How does everything fit together?Are valued behaviors rewarded?Are symbols, stories, heroes, and ceremonies consistent?

  • SubculturesSubcultures are distinctive clusters of ideologies, cultural forms, and other practices within the larger culture.Subcultures may develop among organization members with similar training or duties or personal characteristics, frequent interaction, or shared experiences.Subcultures may lead to conflict and misunderstanding.Potential benefits of subcultures include:accomplish certain tasks while permitting the primary culture to present a certain face to the worldprovide diversity of views, assumptions, and valuesserve as seeds for desired change

  • CounterculturesCountercultures are subcultures that contradict the dominant culture.Countercultures help clarify the bounds between acceptable and unacceptable behavior.Countercultures may arise:to provide a safe haven for the development of innovative encourage the questioning of old, and perhaps outmoded, handle severe, shared employee discontents.because of mergers or acquisitions of firms with differing cultures.

  • Four Views of How OrganizationalCulture Affects Performance(Figure 13-2) PERFORMANCE

  • Theory ZIn his book, Theory Z, William Ouchi presented comparative studies of Japanese and American management techniques.He identified three types of organizations:Typical Japanese (Type J)Typical American (Type A)Ideal Hybrid (Type Z)The Type Z organization:Emphasis on group decision making and consensusLong-term employmentIndividual achievement and advancement

  • Type A, Type J, and Type Z Organizations (Figure 13-3)


    U.S. (TYPE A)


    U.S. (TYPE Z)

    Commitment to Employees

    Short-term employment

    Lifetime employment

    Long-term employment

    Decision Making


    Group and consensus

    Group and consensus






    Rapid and quantitative

    Slow and qualitative

    Slow and qualitative


    Explicit and formal

    Implicit and informal

    Implicit and informal

    Career paths



    Moderately broad

    Concern for people




  • In Search of ExcellenceThe most popular writing on the relationship between organizational culture and effectiveness was presented by Tom Peters and Robert Waterman in In Search of Excellence.Based on their observation of 62 successful firms, including Hewlett-Packard, McDonalds, Disney Productions, Levi Strauss, and Johnson & Johnson, Peters and Waterman concluded that eight key attributes of the organizational culture contributed to their success.

  • Attributes of Effective Organizational Culture (Peters & Waterman)EXCELLENCE

  • Reactions to In Search of ExcellenceThere have been several challenges to the conclusions of In Search of Excellence. Excellence was based on financial performance. Were the firms also successful in terms of social responsibility and social responsibility?In the years following publication of In Search of Excellence, several of the excellent companies suffered financially.One study found no significant performance differences between a subset of the Peters and Waterman excellent companies and a set of firms representative of the Fortune 1,000 industrials. There were also no differences between the two groups of firms in the extent to which they adhered to the Peters and Waterman attributes of excellent companies.

  • Strong CulturesStrong culture is variously defined in terms of:degree to which values and ideologies are widely shared and clearly ordered in terms of their relative importancedegree of extremity of values; strength of commitment to valuesIt seems simplistic to assume that having a strong culture would necessarily lead to success. There are certainly some strong cultures that are inconsistent with demands of the environment, and a strong culture may discourage change.Having a strong culture may not be enough; it also has to be right

  • Strategically Appropriate CultureFor culture to be effective, it must:be distinctivebe valuablebe hard to imitateCourt ruling: that there may be instances in which the law might recognize a perceived threat to a corporate culture that is shown to be palpable (for lack of a better word), distinctive, and advantageous.

  • Neurotic Leaders and Their Firms(Figure 13-4)EXECUTIVECULTUREDramaticNeeds attention,Dependency needs ofexcitement, feels a subordinates complementsense of entitlementstrong leader tendenciesof chief executive

    SuspiciousVigilantly preparedFight or flight culture,to counter attacks including dependency,and personal threatsfear of attack, lack of trust

    DetachedWithdrawn and notLack of warmth or emotions;involved; lacksconflicts; jockeying for power;interest in presentinsecurityor future

  • Neurotic Leaders and Their Firms(Figure 13-4) (Cont.)EXECUTIVECULTUREDepressedLacks self-esteem,Lack of initiative; passivity;self-confidence, ornegativity; lack of motivation;initiative; fearsignorance of markets; success and toleratesleadership vacuummediocrity or failureCompulsiveTends to dominateRigid, inward-directed, insular;organization fromsubordinates are submissive,top to bottom; uncreative, insecuredogmatic or obstinate;perfectionist

  • The Bottom Line: Developing an Effective Organizational CultureDevelop aMissionStatement forthe Firm

  • Guidelines for Culture ChangeUnderstand the current culture.Change at the right time.Value diversity.Understand resistance to culture change.Recognize the importance of implementation.Use appropriate cultural forms.Give it some time.

  • The Bottom Line: Changing the Cultureof an OrganizationDefine the Elements of theNew Culture