Copyright © 2016 Pearson Canada Inc. CHAPTER 10 Organizational Culture.

Copyright © 2016 Pearson Canada Inc.

CHAPTER

10Organizational Culture


Organizational Culture

• Refers to a system of shared meaning held by members that distinguishes the organization from other organizations


Characteristics of Organizational Culture

• Innovation and risk-taking– The degree to which employees are encouraged to be innovative

and take risks.• Attention to detail

– The degree to which employees are expected to exhibit precision, analysis, and attention to detail.

• Outcome orientation– The degree to which management focuses on results or

outcomes rather than on technique and process.• People orientation

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


Characteristics of Organizational Culture

• Team orientation– The degree to which work activities are organized around

teams rather than individuals.• Aggressiveness

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

• Stability– The degree to which organizational activities emphasize

maintaining the status quo in contrast to growth.


Exhibit 10-1 Contrasting Organizational Cultures


Levels of Culture

• Artifacts– Aspects of an organization’s culture that you see, hear,

and feel.• Beliefs

– The understandings of how objects and ideas relate to each other.

• Values– The stable, long-lasting beliefs about what is important.

• Assumptions– The taken-for-granted notions of how something should

be in an organization.


Exhibit 10-2 Layers of Culture


Culture’s Functions

• Social glue that helps hold an organization together.

– Enhances social system stability and provides appropriate standards for what employees should say or do.

– Boundary-defining.– Conveys a sense of identity for organization members.– Facilitates commitment to something larger than one’s

individual self-interest.– Guides and shapes the attitudes and behaviour of

employees and serves as a “sense-making” and control mechanism.


Decentralized Organizations & Culture

• Today’s trend toward decentralized organizations makes culture more important than ever, but it also also makes establishing a strong culture more difficult. – Employees organized in teams may show greater

allegiance to their team and its values than to the values of the organization as a whole.

– In virtual organizations, the lack of frequent face-to-face contact makes establishing a common set of norms very difficult.

• Strong leadership that communicates frequently about common goals and priorities is especially important in innovative organizations.


Culture Creates Climate

• Organizational climate – refers to the shared perceptions organizational

members have about their organization and work environment.

– team spirit at the organizational level• When everyone has the same general feelings

about what is important or how well things are working, the effect of these attitudes will be more than the sum of the individual parts.


Ethical Dimension of Culture

• Organizational cultures are not ethically neutral

• Ethical work climate (EWC)– Forms over time as part of the organizational

climate– Shared concept of right and wrong behaviour in

the workplace


Ethical Dimension of Culture

• Ethical climate theory (ECT) and Ethical climate index (ECI)– Categorize and measure the ethical dimensions of

organizational cultures– Ethical climate reflects the true values of the organization

and shapes the ethical decision-making of its members• Five climate categories most prevalent:

– Instrumental– Caring– Independence– Law and code– Rules


Do Organizations Have Uniform Cultures?

• Organizational culture represents a common perception held by the organization members.

• Core values or dominant (primary) values are accepted throughout the organization.– Dominant culture

• Expresses the core values that are shared by a majority of the organization’s members.

– Subcultures • Tend to develop in large organizations to reflect common

problems, situations, or experiences.


Strong vs. Weak Cultures

• Strong Cultures– the organization’s core values are both intensely

held and widely shared.– have a great influence on the behaviour of its

members– builds cohesiveness, loyalty, and organizational

commitment


Reading an Organization’s Culture

• Stories

• Rituals

• Material Symbols

• Language


Exhibit 10-3 How Organizational Cultures Form


Keeping a Culture Alive

• Selection– Identify and hire individuals who will fit in with the

culture.• Top Management

– Senior executives establish and communicate the norms of the organization.

• Socialization– Organizations need to teach the culture to new

employees.


A Socialization Model

• Prearrival stage– explicitly recognizes that each individual arrives with a set of

values, attitudes, and expectations about both the work to be done and the organization.

• Encounter Stage– confronts the possibility that expectations—of the job, co-

workers, and the organization in general—may differ from reality.

• Metamorphosis Stage– the new employee changes or goes through the metamorphosis

stage. Outcomes: Productivity, Commitment, Turnover


Exhibit 10-4 A Socialization Model


The Liabilities of Organizational Culture

• Culture can have dysfunctional aspects in some instances.– Barrier to Change

• When organization is undergoing change, culture may impede change.

– Barrier to Diversity• Strong cultures put considerable pressure on

employees to conform.– Barrier to Mergers and Acquisitions

• Merging the cultures of two organizations can be difficult, if not impossible.


Strategies For Merging Cultures

• Assimilation– The entire new organization is determined to take

on the culture of one of the merging organizations.

• Separation– Organizations remain separate and cultures are

maintained.• Integration

– A new hybrid culture is formed.


Changing Organizational Culture

• Trying to change the culture of an organization is quite difficult and requires that many aspects of the organization change at the same time, especially the reward structure.

• Culture is such a challenge to change because it often represents the established mindset of employees and managers.


Changing Organizational Culture

Change is most likely when most or all of the following conditions exist:

• A dramatic crisis• Turnover in leadership• Young and small organizations• Weak culture


Creating an Ethical Culture

• Be a visible role model. – Employees will look to the actions of top management as a

benchmark for appropriate behaviour. • Communicate ethical expectations.

– Minimize ethical ambiguities by creating and disseminating an organizational code of ethics.

• Provide ethics training. – Set up seminars, workshops, and similar ethics training programs.

• Visibly reward ethical acts and punish unethical ones.– Include in managers’ performance appraisals a point-by-point

evaluation of how their decisions measured against the organization’s code of ethics.

• Provide protective mechanisms. – Provide formal mechanisms so employees can discuss ethical

dilemmas and report unethical behaviour without fear of reprimand.


Creating a Positive Organizational Culture

• Building on employee strengths

• Rewarding more than punishing.

• Emphasizing vitality and growth.

• Limits of positive culture.


Summary

1. Reward systems generally signal the parts of the organization that are valued.

2. Culture can have both positive and negative effects on organizations.

3. Organizational culture can make change difficult, if not impossible.


OB at Work: For Review

1. What is organizational culture, and what are its common characteristics?

2. What are the functional effects of organizational culture on people and the organization?

3. What factors create and sustain an organization’s culture?

4. How is culture transmitted to employees?5. What are the liabilities of organizational culture?6. How can an ethical organizational culture be

created?7. What is a positive organizational culture?


OB at Work: For Managers

■ Realize that an organization’s culture is relatively fixed in the short term. To effect change, involve top management and strategize a long-term plan.

■ Hire individuals whose values align with those of the organization; these employees will tend to remain committed and satisfied. Not surprisingly, “misfits” have considerably higher turnover rates.


OB at Work: For Managers

■ Understand that employees’ performance and socialization depend to a considerable degree on their knowing what to do and not do. Train your employees well and keep them informed of changes to their job roles. ■ Be aware that your company’s organizational culture may not be “transportable” to other countries. Understand the cultural relevance of your organization’s norms before introducing new plans or initiatives overseas.

Copyright © 2016 Pearson Canada Inc. CHAPTER 10 Organizational Culture.

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