ORGANIZATIONAL CULTURE

ORGANIZATIONAL CULTURE
THE GLUING FACTOR

SUBMITTED TO:
Prof. Mousami Bhattacharya&Dr. Nilanjan Sengupta

SUBMITTED BY:
Group No. 6
Arun Aggarwal(6)
Krishna Kant(12)
Nithya Sridhar(18)
Preeti Jaiswal(24)
Sachin.V(30)
Shashank(36)
Sobhonson(42)
Swagatika(48)
V.Deepika(54)
Yatindra(60)

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ACKNOWLEDGEMENT

We wish to convey our heartiest thanks to Prof.Mousumi Bhattacharya & Dr.

Nilanjan sengupta who has given us all an opportunity to work on this project. We
are grateful to them for their constant guidance throughout the project. It was a
fight in the beginning to gather all the information from various organizations
about their cultures; however, through the constant efforts of our team members,
we made this project a success. Working on this project has given us an insight
about how the various organizations formulate their cultural values. We have been
able to connect our theoretical knowledge with the practical working conditions of
various organizations. It has been a boon working on the following project and we
once again wish to thank our faculty members and the team, without whom this
project would not have been a success.

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ORGANIZATIONAL CULTURE:
Organizational culture is defined as a pattern of basic assumptions invented, discovered or
developed by a given group, as it learns to cope with the problems of external adaption and
internal investigation that has worked well enough to be considered valid and therefore is to be
taught to the new members as the correct way to perceive, think, and feel in relation to those
problems. Organizational culture is a set of shared understandings, norms, values, attitudes and
beliefs of an organization which can foster or impede change.

When people join an organization, they bring with them the values and beliefs that they have
been taught. Quite often, however these values and beliefs are insufficient for helping the
individual succeed in the organization. The person needs to learn how the particular enterprise
does things.

A common misconception is that an organization has a uniform culture. However, at least as

anthropology uses the concept; it is probably more accurate to treat organizations “as if” they had
a uniform culture. “All organizations have culture, in the sense that they are embedded in specific
societal cultures and are part of them.” According to this view, organization culture is a common
perception held by the organization’s members. Everyone in the organization would have to
share this perception. However, all may not do so to the same degree. As a result, there can be a
dominant culture as well as subcultures throughout a typical organization.

A dominant culture is a set of core values shared by a majority of the organization’s members.
The values that create dominant cultures in organizations help guide the day-to-day behavior of
the employees. Important, but often overlooked, are the subcultures in an organization. A
subculture is a set of values shared by a minority, usually a small minority of the organization’s
members. Subcultures typically are a result of problems or experiences that are shared by
members of a department or unit. Subcultures can weaken and undermine an organization if they
are in conflict with the dominant culture and overall objectives. Successful firms, however find
that this is not the case always. Most subcultures are formed to help the members of a particular
group deal with the specific day-to-day problems with which they are confronted. The members
may also support many, if not all, of the core values of the dominant culture.

A NEW CONCEPT: WHISTLE BLOWING

Whistle blowing is commonly defined as "the disclosure by organization members (former or
current) of illegal, immoral, or illegitimate practices under the control of their employers, to
persons or organizations that may be able to effect action". While whistleblowing includes
disclosures both internal and external to the organization, organizations benefit when employees
choose to report internally. Internal reporting facilitates early detection of misconduct and creates
opportunity for timely investigation and corrective action. Internal reporting also positions
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organizations to proactively manage, or even avoid public embarrassment, government scrutiny,

costly fines, and litigation.

To encourage internal reporting organizational ethics and compliance programs often include the
availability of an anonymous or confidential reporting channel that enables employees the
opportunity to report, without fear of retaliation, their concerns regarding organizational conduct
ranging from slight indiscretions and unprofessional behaviors to criminal acts warranting felony
convictions. Employee utilization of these reporting channels, however, is limited, and it has
been found that the majorities of employees who become aware of individual or corporate
wrongdoing never report or disclose their observations to anyone.

Numerous variables have been studied in the literature for their relationship to whistleblowing.
An employee's decision to report individual or organizational misconduct is a complex
phenomenon that is based upon organizational, situational, and personal factors.

A FEW DIMENSIONS OF ORGANIZATIONAL CULTURE

VIGILANCE
Prior to pondering whether or not to communicate an ethical, compliance, or legal concern, an
employee must first be in a position to detect violations. "What are the standards in this
organization?" "What is my role in upholding these standards?" Accordingly, the first step in
supporting employee communication and reporting behaviors is to influence a culture that
promotes not only awareness of an organization's commitment to integrity, but a shared
understanding of organizational standards. A look out for threats to organizational integrity also
must be cultivated among organization members.

Thoughtful attention to training employees on the values and standards outlined in the
organization's code of conduct will facilitate awareness building. However, the most fundamental
and powerful values of an organization are not written down and exist only in the shared norms,
beliefs, and assumptions reflected in the organization's culture. These norms, beliefs, and
assumptions guide how organization members think and act. The organizational culture informs
members how to relate to each other and to outsiders, how to analyze problems, and how to
respond to situations encountered in the organization. To promote a shared understanding of
which "code" to follow, the formal code of conduct or the unwritten code of culture, the
dynamics of organizational culture on an employee's ability to accurately interpret the ethical
standards of the organization must be addressed.

To support a culture of vigilance, employees also must be educated on the relationship between
organizational integrity and the organization's strategic positioning. Employees who observe
wrongdoing may not report it because they cannot fully estimate the resulting damage. Therefore,

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the organization should ensure employees are in a position to identify the potential consequences
of ethical, compliance, and legal breaches, including opportunity costs and harm to the
organization, its reputation, and stakeholders.

ENGAGEMENT
The cultural dimension of engagement is multifaceted and complex. Engagement is concerned
with organizational and individual factors that contribute to a personal state of authentic
involvement in the organization. Organizational processes used to recruit, orient, socialize, and
manage employees influence engagement. Employee’s sense making, psychological contracts,
and perceptions of fairness in organizational dealings influence the degree of authentic
involvement by them. Managing these organizational processes and individual perceptions to
facilitate high degrees of organizational commitment and identification encourages a culture of
engagement that supports internal whistle blowing.

If an organization member is not committed to high ethical standards there may be a tendency to
rationalize questionable behavior as a common or even necessary practice in performing job
duties. On the other hand, if an employee has high ethical standards that are not supported by the
organization, there is a tendency for the employee to experience internal conflict. Such conflict
will arise when organizational demands on employees are inconsistent with personal or
professional values. The result is decreased commitment and an unwillingness to exert effort on
behalf of the organization.

Once employees enter the organization, socialization methods, including training on ethical
standards can be used to deepen employee commitment to organizational values and norms.

CREDIBILITY
A culture of engagement that supports organizational commitment and identification, however,
may not be sufficient for prompting employee disclosures. An employee will also seek to "test"
the organization's commitment to integrity. Leadership behavior is a key determinant of
employee perceptions and beliefs.

The most powerful strategy that can be relied upon to facilitate credibility is employee belief in
espoused ethics and values including organizational expectations for employee disclosure,
attending to and monitoring congruence in the organizational culture. The role of leadership is
central to this strategy.

Aligning leadership behaviors with formal policies and consistent modeling of espoused values
are important practices for fostering credibility. Demonstrating personal commitment to
organizational values builds trust and creates a safe environment for employees to come forward
and report concerns.
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ACCOUNTABILITY
Accountability for communicating knowledge of wrongdoing will be carefully judged by
employees. "Is it my job to report?" "Isn't this someone else's responsibility?" "Why should I get
involved? After all, I am not the only one aware of what is going on here." Again, values, beliefs,
and norms embedded in the organizational culture and picked up by employees will influence
employee reflections.

HOW DID ORGANIZATIONAL CULTURE START

While organizational cultures developed in different ways, the process usually involves some
version of the following steps:

A single person (founder) has an idea for a new enterprise

The founder brings in one or more other key people and creates a core group that shares a
common vision with the founder
The founding core group begins to act in concert to create an organization by raising
funds, obtaining patents, incorporating, locating space, building and so on
At this point, others are brought into the organization and a common history begins to be
built
Most of today’s successful corporate giants in all industries basically followed these steps. Three
well-known representative examples are Motorola, McDonald’s and Wal-Mart.

McDonald’s: Ray Kroc worked for many years as a salesperson for a food supplier. He learned
how retail food operations were conducted. He also had an entrepreneurial streak and began a
sideline business with a partner. They sold multimixers, machines that were capable of mixing up
to six frozen shakes at a time. One day Kroc received a large order for multimixers from the
McDonald brothers. The order intrigued Kroc and he decided to look in on the operation the next
time he was in their area. When he did, Kroc became convinced that the McDonald’s fast food
concept would sweep the nation. He bought the rights to franchise McDonald’s units and
eventually bought out the brothers. At the same time, he built the franchisee on four basic
concepts: quality, cleanliness, service and price. In order to ensure that each unit offers the
customer the best product at the best price franchisees are required to attend McDonald
University, where they are taught how to manage their business. Here they learn the McDonald
cultural values and the proper way to run the franchisee. This training ensures that the franchisees
all over the world are operating their units in the same way. Kroc died several years ago, but the
culture he left behind is still very much alive in McDonald’s franchisees across the globe. In fact,
new employees receive videotaped messages from the late Mr. Kroc.

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Wal-Mart: Sam Walton, founder of Wal-Mart Stores, Inc., opened his first Wal-Mart store in
1962. Focusing on the sale of discounted name brand merchandise in small town markets, he
began to set up more and more stores in the Sun Belt. At the same time, he began developing
effective inventory control systems and marketing techniques. Today, Wal-Mart has not only
become the largest retailer but also one of the biggest firms in the country. Although Sam died a
few years ago, his legacy and cultural values continue. To ensure that these values get out to all
the associates, the company has a communication network worthy of the Pentagon. It includes
everything from a six-channel satellite system to a private air force of numerous planes.
Everyone is taught this culture and is expected to operate according to the core cultural values of
hard work, efficiency and customer service.

LEVELS OF CULTURE:
ARTIFACTS
VALUES
BASIC ASSUMPTIONS

ARTIFACTS:
Artifacts are the most visible and accessible level of culture. It is symbol of culture in the
physical and social work environment of the organization.

Artifacts of culture are:

PERSONAL ENACTMENT
RITES AND CEREMONIES
STORIES AND LEGENDS
RITUALS
SYMBOLS

PERSONAL ENACTMENT:
Personal enactment is a behavior that reflects the value of organization, through the examination
of the behavior of organization members.

CEREMONIES AND RITES:

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Set of activities that are enacted time and again on important occasion.It provides the opportunity
to reward and recognize the employees whose behaviors are according to the values of the
organization.

Rites to the employees can be awarded as

Rites of passage
rites of renewal
Rites of integration
Rites of conflict reduction
Rites of degradations

RITES OF PASSES:
Rites of passes show the changed status of individuals in the respected organization.

Retirement dinner

RITES OF RENEWAL:
Rites of renewal show the holistic changing in organization by enhancing the dedication towards
learning and growth.

RITES OF INTEGRATION:
It emphasize on the commitment of the employees by uniting diverse group within the
organization.Company function, annual picnic, cultural fest are the rites of integration in the
organization.

RITES OF COFLICT REDUCTION:

Its primal objective is to dwindle the disagreements and keep up with the positive environment
inside the organization by satisfying the tangible and intangible needs of the employee.

Grievance hearing, negotiation of union contracts isrite of conflict reduction.

RITES OF DEGRADATION:
It is basically punishment oriented and organization people may be punished visibly if they don’t
follow the organizational norms.

Ribbon of shame, demotion in the organizational post, reduction in salary can be under the rites
of degradation.
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STORIES AND LEGENDS:

Stories are the most effective way to reinforce the organizational values. it give meaning and
identity to the organizations and very helpful in orienting new employees.

Stories can be delivered in different ways

Stories about the boss

Stories about getting fired
Stories about company details
Stories about employees
Stories about rules

RITUALS:
Rituals are unwritten and shows the way the employee follow the things to be done in the
organization. These are the everyday organizational practices repeated over and over.

SYMBOLS:
Symbols are again one important artifact of the organization which communicates about the
organizational culture by unspoken messages.

VALUES:
Values reflect a person’s underling believes in the organization, it is often consciously articulated
both in conversation and the company’s mission statement or annual report. a firm’s values and
how it promotes and publicizes them can also affect workers feeling about their job and
themselves.

ASSUMPTIONS:
Assumptions are deeply held believes that guide behavior and awakens the members of the
organization how to perceive and go about the things.

FUNCTIONS OF ORGANIZATIONAL CULTURE:

These are the functions being served by the organization

Sense of identity
Sense – making device
Reinforcing the values in organization

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Control mechanism for shaping behavior

SENE OF IDENTITY:
Culture provides a sense of identity to the members and enhances their commitment towards the
organization.

SENSE MAKING DEVICE:

Culture in the organization provides the employees to interpret the meaning of the organizational
events.

VALUE REINFORCEMENT:
Values in the organization can be reinforced by the cultural activities.

CONTROL MECHANISM:
In shaping the behavior of members in the organization culture plays the big role.

CULTURAL PERPECTIVES:
THE STRONG PERSPECTIVE
THE FIT PERSPECTIVE
THE ADAPTATION PERSPECTIVE

THE STRONG PERSPECTIVE:

The strong culture facilitates performance with the intensity visible to the outsiders.It states that
organization with strong culture performs better than other organizations.

THE FIT PERSPECTIVE:

Fit perspective argues that the culture of the organization is valid, if it fits the industry or firm’s
strategies. It is useful in explaining short term performances.

THE ADAPTATION PERSPECTIVE:

The cultures that help organizations adapt to environmental change are deeply associated with
excellent performance. It encourages confidence and risk taking capacity among the employees.
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LEADERS ROLE IN SHAPING CULTURE:

WHAT LEADERS PAY ATTENTION TO
HOW LEADERS REACT TO THE CRISES
HOW LEARERS BEHAVE
HOW LEADERS ALLOCATE REWARDS
HOW LEADERS HIRE AND FIRE PEOPLE

ORGANIZATIONAL SOCIALIZATION:
Another process that perpetuates culture is the way it is handed down from generation of
employees. Newcomers learn the culture through organizational socialization – “The process by
which newcomers are transformed from outsiders to participating, effective members of the
organizations”. The process is also a vehicle for bringing newcomers into the organizational
culture.

STAGES OF THE SOCIALIZATION PROCESS

The organizational socialization process is generally described as having three stages:

Anticipatory Socialization.
Encounter.
Change and Acquisition.

ANTICIPATORY SOCIALIZATION
The first stage encompasses all of the learning that takes place prior to the newcomer’s first day
on the job. It includes the newcomer’s expectations. The two concerns at this stage are:

Realism.
Congruence.

Realism is the degree to which a newcomer holds realistic expectations about the job and about
the organization. One thing newcomers should receive information about during entry into the
organization is the culture. Information about values at this stage can help newcomers begin to
construct a scheme for interpreting their organizational experiences.

There are two types of Congruence between an individual and an organization:

Congruence between the individual’s abilities and the demand of the job, and the fit between the
organization’s values and the individual’s values. Value Congruence is particularly important for
organizational culture. It is also important in terms of newcomer adjustment.

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ENCOUNTER
The second stage of socialization, encounter, is when newcomers learn the tasks associated with
the job, clarify their roles, and establish new relationships at work. This stage commences on the
first day at work and is thought to encompass the first six to nine months on the new job.

TASK DEMAND
Task demand involves the actual work performed. Learning to perform tasks is related to the
organization’s culture. In some organization’s, newcomers are given considerable latitude to
experiment with new ways to do the job, and creativity is valued.

ROLE DEMAND
Role demand involves the expectations placed on newcomers. Newcomers may not know exactly
what is expected of them or may receive conflicting expectations from other individuals. The
way newcomers approach these demand depends in part on the culture of the organization.

INTERPERSONAL DEMAND
Interpersonal demand arises from relationships at work. Politics, Leadership style, and group
pressure are interpersonal demand. All of them reflect the values and assumptions that operate
within the organization.

CHANGE AND ACQUISITION

In the third and final stage of socialization, change and acquisition, newcomers begin to master
the demands of the job. They become proficient at managing their tasks, clarifying and
negotiating their roles, and engaging in relationship at work. The end of the process is signaled
by newcomers being considered by themselves and others as organizational insiders.

OUTCOMES OF SOCIALIZATION
Newcomers who are successful socialized exhibit good performance, high job satisfaction, and
the intention to stay with the organization. In addition, they should exhibit low levels of distress
symptoms. High levels of organizational commitment are also marks of successful socialization.
Successful Socialization is also signaled by mutual influences.

When socialization is effective, newcomers understand and adopt the

organizations values and norms. This provides employees a context for interpreting and
responding to things that happen at work.

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Newcomers adopt the company’s norms and values more quickly when they
receive positive support from organizational insiders.

SOCIALIZATION AS CULTURAL COMMUNICATION

Socialization is a powerful cultural communication tool. While the transmission of information
about cultural artifacts is relatively easy, the transmission of value is more difficult. The
communication of organizational assumption is almost impossible.

The primary purpose of socialization is the transmission of core values to new

organization members. Newcomers are exposed to these values through the role models they
interact with, the training they receive, and the behavior they observe being rewarded and
punished.

ACCESSING ORGANIZATIONAL CULTURE

Although some organizational scientists argue for assessing organizational culture with
quantitative methods, others say qualitative methods yield better results. Quantitative methods
such as questionnaires are valuable because of their precision, comparability and objectivity.

ORGANIZATIONAL CULTURE INVENTORY

The OCI focuses on behaviors that help employees fit into the organization and meet the
expectations of coworkers. Using Maslow’s motivational need hierarchy as its basis, it measures
twelve cultural styles. The two underlying dimensions of the OCI are task/people and
security/satisfaction. There are four satisfaction cultural styles and eight securities cultural styles.

KILMANN-SAXTON CUKTURE-GAP SURVEY

The kilmann- saxton culture-gap survey focuses on what actually happens and on the
expectations of others in the organization. Its two underlying dimensions are technical/human
and time. With these two dimensions, the actual operating norms and the ideal norms in four
areas are assessed. The areas are task support task innovation social relationships and personal
freedom.

TRIANGULATION
A study of a rehabilitation centre in a 400-bed hospital incorporated triangulation to improve
inclusiveness and accuracy in measuring the organizational culture. Triangulation has been used
by anthropologists, sociologists and other behavioral scientists to study organizational culture. Its
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name comes from the navigational technique of using multiple reference points to locate an
object.

CHANGING ORGANIZATIONAL CULTURE

Changing situation may require changes in the existing culture of an organization. With rapid
environmental changes such as globalization, workforce diversity and technological innovation,
the fundamental assumptions and basic values that drive the organization may need to be altered.
One particular situation that may require cultural change is a merger or acquisition.

Copyright ©2006
by South-Western, a division of Thomson Learning.
All rights reserved

EMPOWERMENT OF EMPLOYEE TO EXCEL IN PRODUCT AND

SERVICE QUALITY
Empowerment unleashes employees’ creativity
Empowerment requires eliminating traditional hierarchical notions of power

 Involve employees in decision making

 Remove obstacles to their performance

 Communicate the value of product and service quality

CISCO CULTURE CASE STUDY

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ABSTRACT:
The case focuses on Cisco's organization culture, which many feel, was responsible for Cisco
bouncing back to profit after recording losses during the tech meltdown of 2001. The case looks
at Cisco's growth through the years, the drivers of Cisco culture, and the characteristics of work
culture at Cisco. Incorporated in 1984, Cisco had a culture based on the principles of customer
focus, transparent communication, employee empowerment, integrity, and frugality. The work
culture, which epitomized fun and fostered a spirit of employee involvement, ensured that
employee turnover was way below industry norms. Continuous Learning, an element of the
Cisco culture, was taken care of even through acquisition and partnerships. The case also looks
into the role played by the company's CEO, John Chambers, in the evolution of the Cisco culture.

CASE:
Cisco Systems Inc. (Cisco), the leader in Internet Protocol (IP)-based networking technologies
and networking gear, recorded $2.2 billion in revenues and a market capitalization of $9 billion
in 1995. By March 2000, market capitalization went up to $ 531 billion while revenues in 2000
were $19 billion. In 1995, Cisco accounted for 15% of the networking industry's profit and this
figure went up to 50% in 2000. But with the tech meltdown of 2000-01, telecom companies and
Internet service providers stopped purchasing telecom equipments from Cisco. Cisco was thus on
a free fall, a situation the top management did not expect. "If somebody would've told me then
that we'd go from 70% growth to minus 30% growth in 45 days, I'd have said it was
mathematically impossible," said John T. Chambers (Chambers), President and CEO, Cisco
Systems Inc.5

Though the company recorded losses in 2001, it bounced back with net profits the next year.
Cisco's net sales for fiscal 2004 were $22.0 billion, an increase of 16.8 percent from the $18.9
billion for fiscal 2003, while net income for fiscal 2004 was $4.4 billion or $0.62 per share,
compared with $3.6 billion or $0.50 per share for fiscal 2003 (Refer Exhibit I for stock market
movement of Cisco between 1990 and 2005). Industry observers were quick to point out that it
was the organization culture of Cisco that helped it survive the tough periods of meltdown. Cisco
was founded on a culture based on the principles of customer focus, open communication,
empowerment, trust, integrity, and giving back to the community.

This culture ensured that Cisco was on the list of the Fortune magazine's '100 best places to work'
for eight consecutive years, starting 1998.

BACKGROUND NOTE

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Headquartered at San Jose, California, US, Cisco was incorporated on December 10, 1984. The
company was founded by a group of computer scientists, who designed software named IOS
(Internet Operating System), which could send streams of data from one computer to
another. This was loaded into a box containing microprocessors specially designed for routing. In
1985, the company started a customer support site from where customers could download
software over FTP6 and also upgrade the downloaded software. Cisco, on its site, also provided a
database that contained information about potential software problems to help customers and
developers.

By 1991, Cisco's support centre was receiving around 3,000 calls a month, which increased to
12,000 by 1992. To deal with the large volume of transactions, it built an online customer
support system on its site.

In 1993, Cisco installed an Internet-based system for large multinational corporate customers.
The system allowed customers to post queries related to their problems. Cisco also installed a
trigger function called the 'Bug Alert' on its website. The 'Bug Alert' sent e-mails on software
problems within 24 hours of their discovery. 

Encouraged by the success of its customer support site, in 1994, Cisco launched Cisco
Information Online, a public website that offered not only company and product information but
also technical and customer support to customers.

In 1995, it introduced applications for selling products or services on its website. This was done
mainly to transfer paper, fax, and e-mails to the web to save time for employees, customers, and
trading partners, besides broadening Cisco's market reach. In 1996, the company introduced a
new Internet initiative, 'Networked Strategy' to leverage on its enterprise network to foster
interactive relationships with prospective customers, partners, suppliers, and employees.

In August 1996, Cisco launched transactional facilities including product configuration and
online order placement connected to Cisco's ERP systems.
In 1997, it introduced the dial-in access from desktop computers that enabled customers to place
orders without accessing the Internet. In the same year, it also introduced customized business
applications for its customers' corporate Intranets and automated the ordering process by linking
directly to Cisco's internal systems. Commenting on the growth of Cisco in the late 1990s,
Jeremy Duke, analyst at market research firm In-Stat7 said, "They are entering into the zone of
the great phone companies, as moneymakers and as builders of infrastructure. There's nobody
like them.

WHAT DRIVES CISCO'S CULTURE?

CUSTOMERS FIRST

Cisco's success has been attributed to its relationship with its

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customers. Cisco professed a 'worship of customers', which was a

part of the company's culture right from its inception. "This is a
culture where the customer comes first. If the customer has a
problem, we drop everything," said Pete Solvik (Solvik), Senior
Vice President and Chief Information Officer (CIO), Cisco. Cisco
viewed the assessment of customer satisfaction as a continuous
process. One of the elements of this assessment was getting regular
customer feedback, which helped Cisco employees to be proactive
in identifying problem areas, rather than waiting for an annual
customer satisfaction survey. Cisco's field teams designed the
questionnaires that were used to assess customer satisfaction.

THE WORK CULTURE

The organizational structure of Cisco fostered a spirit of employee involvement. "Very often it's
most efficient to just work with the person involved, without the formality of passing through
every layer of management. But that requires a level of trust that not all organizations have,"
mentioned Solvik. If a Cisco employee wanted the top management support for an innovative
idea, he had to discuss the idea with an employee decision-making team and get its assent. If the
decision-making team accepted the idea, the top management gave the green signal. "They (the
decision-making teams) are empowered to make that decision because we put the authority, the
responsibility, and the accountability at the same layer.

RECRUITMENT AT CISCO
Cisco's recruitment practices reflected the company culture. Cisco's recruiting team
identified candidates whom they felt the company 'should hire' and then designed its hiring
processes to attract them to the company. In the late 1990s, the company was hiring at a rate
which averaged 1000 new employees every month. For recruiting candidates who fit into the
culture of Cisco, a selection criterion was developed which targeted candidates who were
frugal, enthusiastic about the future of the Internet, and were not obsessed with status - all
hallmarks of the Cisco culture.

'BUILT TO LAST'
According to some analysts, Cisco faced the risk of diluting its culture due to the influences of
new recruits who brought in behaviors from past job experiences. "We're focusing on what it will
take to communicate the culture and preserve it. That's another learning experience: Culture is
not automatic.

That it follows a principle of customer focus, transparent communication, employee

empowerment, integrity and fragility.

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It is the culture where customer comes first but in CISCO it’s also the product that works and
matters. Here engineer counts as much as culture. So CISCO’s betting big on collaboration that
draws manager input from all levels as the main drivers for its strategy to grab new market. Its
taking a decentralized form, rather than working on a single leader decision making.

In conclusion, Cisco Systems appeals to businesses and employees in similar ways by offering a
standard to be the best provider and staying ahead of the competition. Their cultural presence is
felt by worldwide leadership in technology by bringing jobs, as well as, communications to
countries and government structures. Cisco offers a strong customer-responsive organization that
blends with cultural needs and service to its employees.

Thus it has a fit culture perspective where customer and competitors comes first.

Although customer is the top priority in CISCO’s culture but it gives equal importance to its
employees. Its decentralized system of decision making & futuristic approach are the major
gluing factor in retaining employees.

3M CASE STUDY

ABSTRACT:

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The case examines the organizational culture at 3M and the way in which it facilitated
innovation at 3M. The policies and mechanisms adopted by 3M's management to
encourage the spirit of innovation in its employees are also discussed. 

The case takes a close look at 3M's environment of innovation; the culture of
knowledge sharing; and the reward system. It also discusses the steps implemented by
the new CEO, James McNerney, to accelerate growth at 3M. The impact of cultural
change at 3M on the spirit of innovation is also discussed.

ONE HUNDRED YEARS OF SUCCESSFUL INNOVATION

It was celebration time at 3M! The company completed 100 years in business in 2002.
For many, 3M represented the house of innovation. For 100 years, 3M formula for
growth - recruit the right people, provide them with the right environment to work and let
them do their things - resulted in around 55,000 products and over thousands of patents
for the company. Analysts attributed 3M's success to its commitment to innovation. They
pointed out that 3M gave its employees the freedom to conduct research in areas of their
choice even if that research was not related to their official projects.

By thus nurturing the talents of its employees and fostering a climate of innovation, 3M became
one of the most innovative companies in the world.

In 2001, James McNerney Jr. (McNerney) took over as Chairman and CEO of 3M and
announced several initiatives to revive the stagnating growth rate of the company. He initiated
cost cutting measures, rationalized purchases, and implemented process improvement programs
in the company. He gave a centralized direction to the company from its earlier laissez-faire
working style. Analysts cautioned that the changes brought about by McNerney might harm the
100-year old culture at 3M that fostered innovation and sustained its growth over the years.
However, McNerney pointed out that the changes brought about in 3M would provide the
company a strategic direction in a volatile business environment without harming its
organizational culture.

INVENTING 3M
In 1902, five businessmen founded Minnesota Mining and Manufacturing
(popularly referred to as 3M) in Two Harbors, US. The new company was in the
business of mining corundum, a mineral best suited for making sandpaper and
grinding wheels. In 1904, when an artificial abrasive replaced corundum, 3M
decided to manufacture sandpaper. Edgar Ober (Ober), one of the founding
members of 3M, approached his friend Lucius Ordway (Ordway), a successful
businessman for funds for the new venture. Ordway agreed to invest $25,000 in the
company, on condition that he won't be involved in the day-to-day affairs of the
company.

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However, by 1906, Ordway had invested around $200,000 in 3M and had become involved in the
day-to-day affairs of the company. In the same year he became the President of the company.

When 3M realized that the corundum owned by it was a low-grade anorthosite, it decided to shut
down the mine and shift to Duluth in 1905. In the same year, 3M decided to import garnet 5from
Spain. 3M received its first shipment of garnet in 1907 and started producing sandpaper. By
1911, 3M reported sales of $212, 898 and in the same year Ober appointed William L. McKnight
(McKnight), who joined the company in 1907 as assistant bookkeeper as sales manager. In 1911,
3M brought out its first breakthrough product, Three-M-ite cloth. Three-M-ite became the
company's first profitable product. The Carborundum Company, which had developed artificial
abrasive coated emery cloth before 3M, filed a patent infringement suit against the company.

3M hired Paul Carpenter; a Chicago based lawyer and expert in patent law, and won the case
against Carborundum. Due to Three-M-ite's success, 3M became debt free and announced its first
dividend of 6 cents per share in 1916. In the same year, McKnight became vice-president. In the
1920s, 3M recruited people with diverse backgrounds and expanded its product portfolio. It also
introduced two breakthrough products, waterproof sandpaper and Scotch masking tape, invented
by Francis Okie (Okie) and Dick Drew (Drew) respectively. In 1922, 3M entered the English
market and reported sales of $68,000 in the first year of its operations. In order to consolidate its
presence in global markets, 3M established research laboratories, and a sales and marketing
network across Europe.

EXPERTS

FOSTERING INNOVATION
From its early days, 3M fostered a culture of innovation in its organization. McKnight tried to
create an organization that would encourage its employees to take the initiative and come up with
new ideas.

RECRUITING AND RETAINING TALENT

3M recruited people who were creative and had a broad range of interests. According to company
sources people who had a broad range of interests were willing to learn and explore new ideas. In
addition, they brought a multi-disciplinary approach to their work. To make it easy for recruiters,
3M codified the six traits of innovative people in its recruiting brochure:

• Creativity
• Broad interests
• Self motivated
• Resourceful
• Hard working
• Problem solvers

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CREATING A CHALLENGING ENVIRONMENT

Initially 3M was organized into various product divisions. As these divisions increased in size,
McKnight noticed that there was a slowdown in innovation; not much time was devoted to new
product development.

To increase the pace of new product launches, McKnight introduced the philosophy of divide
and grow. In line with this philosophy, new businesses were spun off and new management
teams were devoted to the spun off units. As a result, these new units were able to grow
quickly. When these new businesses were spun off, the established divisions had to develop
new products and find new markets to achieve their growth objectives to make up for
contributions from the businesses that had become independent. This mechanism, which
analysts called 'Renewal,' resulted in increased diversification at 3M.

KNOWLEDGE SHARING
In addition to providing an environment that stimulated innovation, 3M also took steps to
encourage knowledge sharing among its employees. According to analysts, innovation could
flourish in 3M because the management encouraged its employees to talk. 3M employees never
experienced any communication barriers.

REWARDING INNOVATION
In addition to recruiting innovative people, creating a challenging environment for
employees, and encouraging a culture of knowledge sharing, 3M also focused on
rewarding employees. To encourage the spirit of innovation among employees 3M
realized it was necessary to reward them appropriately. The dual ladder career path
adopted by 3M, created two career ladders - technical and management. This
approach allowed even a technical person to get promoted to the vice-president
level without taking on managerial and administrative responsibilities.
From the 3M case we reach at the conclusion that though McNerney wanted to make the
decision system a bit centralized but he preferred employees taking initiatives. Creativity, hard
work & problem solving attitude are given importance at 3M. It focused on rewarding
employees and there was not any communication barrier which encouraged the process of
knowledge sharing. It basically followed an adaptive culture where employees were the main
priority.

3M recognized that a strategic commitment to innovative products would pay off if it were tied to
creating a culture that allowed its employees to be innovative and creative. When an employee at
3M made a mistake or had an idea that didn't work, he or she discussed it at a team meeting and
the entire team celebrated the learning experience.  Over time, a culture evolved where risk and
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innovation were viewed as necessary and complementary.  3M managed to link strategies to

management and employee actions.  It successfully linked corporate success to the development
of new products and a lesser dependence on mature products.  It linked its HR systems to its
strategic framework by creating a set of HR strategies that provided; innovative compensation
and reward systems, creative organizational structures, training and development plans tied to
strategic outcomes, and targeted employee skills. Through over 90 years of trial and error, 3M
has developed a culture that effectively supports both quality and innovation. 

So there was a cultural overhaul in the 3M system with the entry of McNerney which resulted in:
CULTURE OVERHAUL
By the late 1990s, 3M's growth rate started slowing down. According to reports, the stock price
of 3M dropped from $83.00 in 1996 to $71.13 in 1998 and the price-earning ratio (P/E ratio) of
the company also declined considerably.

It was reported that during 1995-2000, earnings per share grew at an average of only 8.8%
and shareholder returns fell far behind Dow and the S&P 500. Analysts felt that 3M was
unable to respond to market conditions. Commenting on 3M's performance during the
decade, Bob Burgstahler (Burgstahler), chief of Business development, said, "We have not
produced elite results that correspond to the view that this is an elite organization." In
December 2000, 3M announced the appointment of James McNerney Jr. (McNerney) of
General Electric as its CEO. For the first time, an outsider was appointed as CEO of 3M.
The stock markets responded positively to the appointment of McNerney and 3M's stock
price closed at $120.50, the highest in the decade.

3M has been encouraging a culture of innovation from the very beginning where employees
are given freedom to work without any pressure. They are given full freedom to implement
new ideas with no or very less questioning. There is no communication barrier in the
organization. These are the major gluing factor in 3M which has retained its employees since
so long.

SOUTHWEST AIRLINES
Southwest Airlines was incorporated in Texas and commenced Customer Service on June 18,
1971, with three Boeing 737 aircraft serving three Texas cities - Houston, Dallas, and San
Antonio. Today, Southwest operates more than 500 Boeing 737 aircraft between 67 cities.
Southwest topped the monthly domestic originating passenger rankings for the first time in May
2003. Yearend results for 2008 marked Southwest’s 36th consecutive year of profitability.

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Southwest became a major airline in 1989 when it exceeded the billion-dollar revenue mark.
Southwest is the United States’ most successful low-fare, high frequency, point-to-point carrier.

More than 38 years ago, Rollin King and Herb Kelleher got together and decided to start a
different kind of airline. They began with one simple notion: If you get your passengers to their
destinations when they want to get there, on time, at the lowest possible fares, and make darn
sure they have a good time doing it, people will fly your airline.

CULTURE DONE DIFFERENTLY

For more than 38 years, the Southwest Culture has thrived, but it hasn’t been easy. The longevity
has been both their biggest accomplishment and their most significant challenge.

At Southwest, They think of Their Culture in a positive light, but every company has a culture,
whether that culture is supportive or stifling, active or passive, fun or discouraging. The way they
keep their Culture supportive, active, and fun is by making Southwest’s Culture everyone’s
responsibility. In fact, they ask everyone to “own it.”

The Culture Committees are just the beginning of what separates them from the way other
companies approach their culture. One of the most significant “Southwest differences” in their
pursuit to preserve and promote their Culture is the way it is embedded in every aspect of the
Company. Hardly any company make having a “Fun-Loving Attitude” a key pillar of their
leadership expectations. Those same expectations include “The Golden Rule” and possessing a
“Servant’s Heart.” The annual Performance Appraisal for all of their Employees includes
asection on Southwest Culture. From an Employee’s initial interview until the day he or she
retires, the Southwest Culture is an ingrained part of daily life.

And finally, their Culture encourages celebration. First, they celebrate their Veterans on the
month of Nov. America would be a much different place without the courage of their Veterans.
They then celebrate the blessings of the past year on Thanksgiving.

Southwest's no-layoff response to September 11 was a reminder to its employees of the

organization's tradition of caring for its people. When asked to comment on this, an official
explained, "Its part of our culture. We've always said we'll do whatever we can to take care of our
people. So that's what we've tried to do."1

Southwest's organizational culture was shaped by Kelleher's leadership. Kelleher's personality

had a strong influence on the culture of Southwest, which epitomized his spontaneity, energy and
competitiveness. Southwest's culture had three themes: love, fun and efficiency. Kelleher treated
all the employees as a "lovely and loving family". Kelleher knew the names of most employees
and insisted that they referred to him as Herb or Herbie. Kelleher's personality charmed workers

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and they reciprocated with loyalty and dedication. Friendliness and familiarity also characterized
the company's relationships with its customers...

BUILDING RELATIONSHIPS
Since its inception, Southwest attempted to promote a close-knit, supportive and enduring
family-like culture The Company initiated various measures to foster intimacy and informality
among employees. Southwest encouraged its people to conduct business in a loving manner.
Employees were expected to care about people and act in ways that affirmed their dignity and
worth.

ARTIFACTS
The artifacts which are the symbols of culture in the physical and social work environment can
be seen in the way the Southwest Company treats its employees. To help keep the Culture at the
forefront, they have two groups: Local Culture Committees and the Corporate Culture
Committee. Both groups put on low-cost Employee events throughout the year.

The Employees roll up their sleeves to help out their area Ronald McDonald Houses at
Thanksgiving.
Colleen Barrett who is the former President of southwest airlines sent cards to all
employees on their birthdays...
The CEO joins with the Employees to wish Happy Thanksgiving.
Instead of decorating the wall of its headquarters with paintings, the company hung
photographs of its employees taking part at company events, news clippings, letters,
articles and advertisements.
Customers are not assigned seats; rather, they are assigned to one of three "boarding
groups" depending on their check-in time (earlier check-ins get to board earlier), and are
left to choose their own seats on the plane, which helps the airline to board passengers
faster

VALUES
Company Values ... Core Values
LUV
Code word for treating individuals, employees, customers
Dignity, respect and caring loving attitude.
Appeared on banners and posters at company facilities
Fun
Entertaining behavior of employees in performing their jobs.
The ongoing pranks and jokes.
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Frequent company-sponsored parties and celebrations.

Charity benefit games, chili cook-offs, Halloween parties

THRIVING UNDER PRESSURE

Post-September11, 2001, when most airlines in the US went in for massive layoffs, Southwest
avoided laying off any employee. Even before the September 11 crisis hit, Kelleher had
explained his philosophy regarding layoffs in an interview to Fortune magazine. He said,
"Nothing kills your company's culture like layoffs. Nobody has ever been furloughed [at
Southwest], and that is unprecedented in the airline industry. It's been a huge strength of ours. It's
certainly helped us negotiate our union contracts. One of the union leaders….came in to
negotiate one time, and he said, "We know we don't need to talk with you about job security."
We could have furloughed at various times and been more profitable, but I always thought that
was shortsighted.
You want to show your people that you value them and you're not going to hurt them just to get a
little more money in the short term. Not furloughing people breeds loyalty. It breeds a sense of
security. It breeds a sense of trust. So in bad times you take care of them, and in good times
they're thinking, perhaps, "We've never lost our jobs. That's a pretty good reason to stick
around."...

Southwest was the only airline to remain profitable in every quarter since the September 11
attack. (Refer Exhibit VIII for financial position of Southwest.) Although its stock price dropped
25% since September 11, it was still worth more than all the others big airlines combined. Its
balance sheet looked strong with a 43% debt-to-equity ratio and it had a cash of $1.8 billion with
an additional $575million in untapped credit lines. The company left no stone unturned to boost
employee loyalty and morale.

South West Airlines has follows a fun loving attitude. Their culture is all about care, friendliness
and familiarity this resulted in the thinking of the employees that “they value us” and thus we
need to stick around. This is the main gluing factor of the organizations culture.

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CONCLUSION
Organizational culture is a pattern of basic assumptions that are taught to
the personnel as the correct way to perceive, think and act on a day-
To-day basis. Some of the important characteristics of organizational
culture are observed behavioral regularities, norms, values, rules,
philosophy and so on. While everyone in the organization will share the
organization's culture, not all may do so to the same degree. There can
be a dominant culture, but also a number of subcultures. Some
organizations have strong cultures and others have weak cultures. The
strength of the culture will depend on sharedness and intensity. In some
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cases organizations find that they must change their culture in order to
remain competitive and even survive in their environment. With
reference to the cases in this project, we had analyzed the value system
of the organization like CISCO, 3M and SOUTH WEST AIRLINES. 3M
has built its organizational culture which holds its employees
together in line with the vision and mission of the organization-
southwest airlines has built an organization of repute - an enterprise that
stands apart which even during the last economic downturn was
unshaken. While CISCO has given its culture an innovative and
futuristic approach with customer as the top priority.

BIBLOGRAPHY:
www.icmrindia.org
Organizational Behavior by Nelson Quick
Organizational Behavior by K.Aswathappa

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