Organizational Culture

Presented by: Alland Agaloos

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

³Culture is the soul of the organization ² 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 communicating  Norms shared by individuals and teams  Dominant values held by an organization  Guiding philosophy for management·s policies and decision

making 
Rules of the game for getting along in the organization  Climate of the organization

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 (Cont.) 

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.

Methods of Maintaining Organizational 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

Recruitment of employees who fit the culture

Organizational Culture

Removal of employees who deviate from the culture

Organizational Rites and Ceremonies
POSSIBLE CONSEQUENCES Facilitate transition into new roles; minimize differences in way roles are carried out Reduce power and identity; reaffirm proper behavior Enhance power and identity; emphasize value of proper behavior Encourage common feelings that bind members together

TYPE Rites of passage

EXAMPLE Basic training, U.S. Army

Rites of degradation Firing a manager Rites of enhancement Rites of integration Mary Kay Cosmetics Company ceremonies Office party

Framework of Types of Cultures

Flexible

Clan Culture

Entrepreneurial

Culture

Bureaucratic

Stable

Culture

Market Culture External

Internal

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

environment³it 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 performance²reward agreements and/or evaluating requests for resource allocations Has a weak socialization process Few economic incentives are tied directly to cooperating with peers Often 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 ´strongµ culture that encourages and rewards diversity and principled dissent Provide training on adopting and implementing the organization·s values

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