TOPIC 2

ORGANISATIONAL CULTURE

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Organisational Culture

Organisational Culture refers to a system of shared meaning held by the members that distinguishes the organisation from other organisations Seven primary characteristics
1. 2. 3. 4. 5. 6. 7.

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Innovation and risk taking Attention to detail Outcome orientation People orientation Team orientation Aggressiveness Stability

Organisational Culture (cont.)
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Each of these characteristics exists on a continuum from low to high Appraising the organisational on these 7 characteristics, then, gives a composite picture of the organisation’s culture

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Do Organisations Have Uniform Cultures? Organisational culture is concerned with how employee perceive the characteristics of an organisational’s culture. not with whether they like them – that is. typically defined by department designations and geographical separation 4 . it’s a descriptive term Dominant Culture – Expresses the core values that are shared by a majority of the organisation’s members Subcultures – Minicultures within an organisation.

)   Core Values – The primary or dominant values that are accepted throughout the organisation Strong Culture – A culture in which the core values are intensely held and widely shared 5 .Do Organisations Have Uniform Cultures? (Cont.

4.What Do Cultures Do?  Functions of Organisational Cultures: 1. 5. 3. Defines the boundary between one organisation and others Conveys a sense of identity for its members Facilitates the generation of commitment to something larger than self-interest Enhances the stability of the social system Serves as a sense-making and control mechanism for fitting employees in the organisation 6 . 2.

1. – Institutionalisation refers to the condition that occurs when an organisation take on a life of its own. Institutionalisation – A company can become institutionalised where it is valued for itself and not for the goods or services it provides. apart from its founders or any of its members.Culture as a Liability Culture enhances organisational commitment and increases consistency of employee behaviour. but we should not ignore the potential dysfunctional aspects of culture can lead to serious challenges. 7 .

3. Airbus Barrier to diversity – Strong cultures put considerable pressure on employees to conform. Yahoo. which may lead lost of diverse behaviours and unique strengths – Eg: Texaco Inc.400 employees .) 2. 8 Barrier to change – Occurs when culture’s values are not aligned with the values necessary for rapid change in the organisation’s environment – Eg: challenges executives have recently faced at Citigroup.Culture as a Liability (Cont. was sued for racial discrimination in Nov 1996 – settled for $176m for 1.

Incompatible cultures can destroy an otherwise successful merger. Barrier to acquisitions and mergers – Acquisition or merger decisions could bring financial advantages and product synergy. Time Warner’s share price was $25 per share in late 2009 vs. – Eg: $183 billion merger between American Online and Time Warner in 2001 was a disaster. $200 before merger 9 .Culture as a Liability (Cont.) 4.

How Culture Begins  Stems from the actions of the founders: – Founders hire and keep only employees who think and feel the same way they do. – – 10 . The founders’ own behavior acts as a role model that encourages employees to identify with them and thereby internalise their beliefs. values. Founders indoctrinate and socialise these employees to their way of thinking and feeling. and assumptions.

Pre-arrival – The period of learning prior to a new employee joining the organisation. Encounter – When the new employee sees what the organisation is really like and confronts the possibility that expectations and reality may diverge.Stages in the Socialisation Process Socialisation is the process that helps new employees adapt to the prevailing culture. 11 .

Stages in the Socialisation Process  Metamorphosis – When the new employee changes and adjusts to the work. and organisation 12 . work group.

They are sustained through managerial action.Summary: How Organisational Cultures Form   Organisational cultures are derived from the founder. 13 .

How Employees Learn Culture   Stories – Anchor the present into the past and provide explanations and legitimacy for current practices Rituals – Repetitive sequences of activities that express and reinforce the key values of the organisation. 14 .

opulence of the office furnishings.How Employees Learn Culture (Cont.)   Material Symbols – Acceptable attire. and executive perks that convey to employees who is important in the organisation Language – Jargon and special ways of expressing one’s self to indicate membership in the organisation. 15 . office size.

Creating an Ethical Organisational Culture  Characteristics of organisations that develop high ethical standards – High tolerance for risk – Low to moderate in aggressiveness – Focus on means as well as outcomes 16 .

)  Managerial practices promoting an ethical culture – Being a visible role model – Communicating ethical expectations – Providing ethical training – Rewarding ethical acts and punishing unethical ones – Providing protective mechanisms 17 .Creating an Ethical Organisational Culture (cont.

Creating a Positive Organisational Culture  Positive organisational culture – 18 A culture that:  Builds on employee strengths – Focus is on discovering. and building on the strengths of individual employees  Rewards more than it punishes – Articulating praise and “catching employees doing something right”  Emphasises individual vitality and growth – Helping employees learn and grow in their jobs and careers . sharing.

Creating a Positive Organisational Culture (Cont.)  Limits of positive culture: – May not work for all organisations or everyone within them 19 .

meaningful work that takes place in the context of the community NOT about organised religious practices  20 People seek to find meaning and purpose in their work.Spirituality and Organisational Culture  Workplace Spirituality – – The recognition that people have an inner life that nourishes. . and is nourished by.

21 .Why Spirituality Now? – – As a counterbalance to the pressures and stress of a turbulent pace of life. Contemporary lifestyles (eg: single-parent families. new technologies. the temporary nature of jobs) creates distance between people and the lack of community many people feel. and their increased need for involvement and connection. Job demands have made the workplace dominant in many people’s lives. yet they continue to question the meaning of work.

22 . An increasing number of people are finding that the pursuit of more material acquisitions leaves them unfulfilled.Why Spirituality Now? (cont.) – – – Formalised religion hasn’t worked for many people. The desire to integrate personal life values with one’s professional life. and they continue to look for anchors to replace lack of faith and to fill a growing feeling of emptiness.

3. 4. 23 Strong sense of purpose Trust and respect Humanistic work practices Toleration of employee expression . 2.Characteristics of a Spiritual Organisation    Concerned with helping people develop and reach their full potential Directly addresses problems created by work/life conflicts Four characteristics of spiritual organisations: 1.

Criticisms of Spirituality   What is the scientific foundation? – It is still pending: needs more research Are spiritual organisations legitimate? Do they have the right to impose values on employees? – – Spirituality is not about God or any religious values It is an attempt to help employees find meaning and value in their work 24 .

)  Are spirituality and profits compatible? – – Initial evidence suggests that they are Spirituality may result in greater productivity and dramatically lower employee turnover 25 .Criticisms of Spirituality (Cont.

S. while strong.Global Implications   Organisational cultures. can’t ignore local culture Managers should be more culturally sensitive by: – – – Adjusting speech to cultural norms Listening more Avoiding discussions of controversial topics  26 All global firms (not just U. firms) need to be more culturally sensitive .

27 .is somewhat crude. unsophisticated and touching only on the surface manifestations of organisational life.Can culture be managed as a means of control?   It seems that cultures can be managed only to a limited extent Many of the prescriptions for cultural control through creating ‘strong’ cultures as a means of manipulating members .

commitment. strong cultures should be considered fixed Selecting new hires that fit well in the organisational culture is critical for motivation.Summary and Managerial Implications   Strong cultures are difficult for managers to change – In the short run. and turnover 28 . job satisfaction.

)   Socialisation into the corporate culture is important A manager’s actions as a role model help create the cultural values of ethics. and a positive culture 29 .Summary and Managerial Implications (cont. spirituality.

Cost‐volume‐profit (CVP)  analysis 30 .

Cost volume profit (CVP) analysis    A technique used to determine the effects of changes in an organisation’s sales volume on its costs. revenue and profit Can be used in profit-seeking organisations and not-for-profit organisations CVP model is usually use in the context of a short-term (or tactical) decision tool view 31 .

production technology and market conditions do not change  There are no capacity changes during the period under consideration 32 .CVP assumptions  The behaviour of total revenue is linear  The behaviour of total costs is linear over a relevant range  Costs can be categorised as fixed. variable or semivariable  Labour productivity.

sales volume is the only cost driver  In manufacturing firms. the levels of inventory at the beginning and end of the period are the same  Thus.CVP assumptions (cont)  For both variable and fixed costs. the number of units produced and sold during a period are equal 33 .

Cost volume profit (CVP) analysis  Please refer to lecture illustration 34 .