Organizational Culture

In any organization, there are the ropes

to skip and the ropes to know.
-- R. Ritti and
G. Funkhouser
Environment and Corporate Culture
GENERAL
ENVIRONMENT

ECONOMIC
SOCIAL OPERATING
ENVIRONMENT
NEW ENTRANTS
SUPPLIER
INTERNAL
ENVIRONMENT
PRODUCTION
TECHNOLOGY
STRUCTURE
SUBSTITUTES INPUTS
POLITICAL COMPETITION
CULTURE
TECHNOLOGY

CUSTOMER

LEGAL
 What is Organizational Culture?

A system of meaning shared by the

organization’s members
Cultural values are collective beliefs,
assumptions, and feelings about what things are
good, normal, rational, valuable, etc.
Characteristics of Organizational Culture

Philosophy
Observed
on treatment
behavioral
of employees/
regularities
customers

Rules of
Organizational
Norms employee
Culture
behavior

Dominant
Organizational
values
climate
 Elements of Organizational Culture

Physical Structures
Artifacts of Rituals/ Ceremonies
Organizational Stories
Culture
Language

Organizational
Culture

Beliefs

Values

Assumptions
Artifacts: Organizational Stories
Social prescriptions of desired behavior
Demonstrate that organizational objectives
are attainable
Most effective stories:
Describe real people
Assumed to be true
Known throughout the organization
Are prescriptive
 Artifacts: Rituals and Ceremonies

Rituals
programmed routines
e.g., conducting meetings, employee forums, x-mas parties
Ceremonies
planned activities for an audience
e.g., award ceremonies
Heroes
Figure who exemplifies character and deed
E.g. founders as Tom Watson of IBM, Bill Gates of Microsoft
 Artifacts: Organizational Language

Words used to address people, describe clients,

etc.
e.g. sir/ma’am, first name calling
Leaders use phrases and metaphors as cultural
symbols
e.g.. General Electric’s “grocery store”
Language also found in subcultures
e.g.. Whirlpool’s “PowerPoint culture”
Slogans
E.g. Nokia Connecting People
 Organizational Subcultures
Located throughout the
organization

Can support or oppose

(countercultures) firm’s
dominant culture

Two functions of
countercultures:
provide surveillance and evaluation
source of emerging values E. M. Samelson/Orlando Sentinel
 Artifacts: Physical Structures/Space
Oakley, Inc.’s protective and competitive
corporate culture is apparent in its building
design and workspace. The building looks
like a vault to protect its cherished product
designs (eyewear, footwear, apparel and
watches).

Courtesy of Oakley, Inc.

Courtesy of Oakley, Inc.

 Artifacts - Industry

Information technology Advertising and Media Call Centers

 How Organizational Cultures Form

Philosophy Top
of the Management
Organization’s
Founders:
Organizational
Bill Hewlett &
Selection Culture
Dave Packard
John Gokongwei
Bill Gates
Socialization
 Do Organizations Have Uniform
Cultures?

Dominant Subcultures
Culture
Core
Values
 Stories Rituals

How Employees
Learn Culture/
How it is “reinforced”

Material
Language
Symbols
Benefits of Strong Corporate Cultures

Social
Control

Strong
Organizational Social
Culture Glue

Aids
Sense-Making
 Organizational Culture

Functions Liabilities

 Controlling behavior  Blocking mergers

 Defining boundaries  Inhibiting diversity

 Conveying identity  Inhibiting change

 Promoting commitment  Blocking acquisitions

 Managing, Changing, and
Merging Cultures
Managing through stories, heroes, symbols and
ceremonies
Culture often need to be changed to ensure
organizational success
Merging cultures through symbolic leaders
Adaptive Organizational Cultures

External focus -- firm’s

success depends on
continuous change
Focus on processes more
than goals
Strong sense of ownership
Proactive --seek out
opportunities
AP/Wide World
 Bicultural Audit

Part of “due diligence” in merger

Minimizes risk of cultural collision by diagnosing
companies before merger
Three steps in bicultural audit:
1. Collect artifacts
2. Analyze data for cultural conflict/compatibility
3. Recommend solutions
 Merging Organizational Cultures
Acquired company embraces
Assimilation acquiring firm’s culture

Acquiring firm imposes its culture on

Deculturation unwilling acquired firm

Both cultures combined into a new

Integration composite culture

Merging companies remain

Separation separate with their own culture
Strengthening Organizational Culture

Founders
and leaders

Selection Culturally
and Strengthening consistent
socialization Organizational rewards
Culture
Managing the
Stable
cultural
workforce
network
 Commitment to
Intensity of
Core Values
Core Values
(widely shared)

Strong Versus
Weak Cultures

High Behavioral Low Employee

Control Turnover
Studies show that culture is closely
related to the effectiveness of
organizations.
 Effectiveness depends on . . .

the core values and beliefs of the members of

the organization.
the policies and practices used by the
organization.
the success in translating the core values and
beliefs into policies and practices.
the match between values, beliefs, policies,
practices, and the organization’s environment.
 Effectiveness is related to . . .

involvement = participation.
consistency = shared beliefs and values.
adaptability = ability to recognize the need for
change and the willingness to change
mission = shared purpose.
Model of Organizational Culture Types
Four Culture Types
 Studies on Culture Types

Deshpande, Farley, and Webster (1993) found

that competing values of the market culture
outperform those of the clan culture.
Those of the adhocracy culture outperformed
those of the diagonally opposing hierarchy
culture.
The speed of response to environmental
changes which determine a higher performance
is thus culturally dependent.
 EXERCISE-
Organizational Culture Assessment
Instrument (OCAI)
 Clan Adhocracy
5
4
3
2
1

1
2
3
4
5 Hierarchy
Market
Case Study: Organizational Culture and
Performance

Clan Adhocracy Clan Adhocracy

5 5
4 4
3 3
2 2
1 1

1 1
2 2
3 3
4 4
5 Hierarchy Market
5 Hierarchy Market
 Case Study: Organizational Culture
and Performance

•Started GSM 1999 •Started GSM 1994 •Started GSM 2002

•5000+ cellsites
•25 Million subscribers
•58% market share
•Net Income 2003 – P16.1B
•Net Income 2002 – P6.2B
•3000+ cellsites • 2 million subscribers
•14 Million subscribers
•40% market share
•Net Income 2003 – P10.3B
•Net Income 2002 – P6.9B

Clan Adhocracy Clan Adhocracy Clan Adhocracy

5 5 5
4 4 4
3 3 3
2 2 2
1 1 1

1 1 1
2 2 2
3 3 3
4 4 4
5 Hierarchy Market 5 Hierarchy Market 5 Hierarchy Market
Case Study: Organizational Culture
and Performance

Clan Adhocracy
5 Clan Adhocracy
5
4 4
3 3
2 2
1 1
1 1
2 2
3 3
4 4
5 Hierarchy Market 5 Hierarchy Market
 Case Study: Merging Cultures

Clan Adhocracy Clan Adhocracy

Clan Adhocracy
5 5 5
4 4 4
3 3 3
2 2 2
1 1 1

1 1 1
2 2 2
3 3 3
4 4 4
5 Hierarchy Market 5 Hierarchy 5
Market
Hierarchy Market
Leadership Practices and Culture Types
 The Learning Organization:
Management Approach in New Millenium
Environment in the millenium
•Information and electronic age
•Information and knowledge is going to be readily
available to us all
•Information speed through Internet
•The future is going to be dominated by our need to
understand systems.
The learning organization approach to management
is the management approach based on an
organization anticipating change faster than its
counterparts to have an advantage in the market
over its competitors.
 Learning Organization Culture

Has a culture that values sharing knowledge to

adapt to the changing environment and
continuously improve
» From “Management Fundamentals” by Lussier

Clan Adhocracy
5
4
3
2
1
INTERNAL EXTERNAL
1
2
3
4
5 Hierarchy Market
When Companies Seek to Foster Certain
Culture Types
Clan culture needs the five leadership practices
Adhocrarcy culture needs enabling others to act and
encouraging the heart
Hierarchy culture should not use enabling others to act
and encouraging the heart;
Market culture should consider alternatives to leadership
practices.
What is the Organizational Culture in
the Philippines?
 Philippine Organizational Culture

Espouses a reorientation in the organization to three

values, namely: Clan Adhocracy
5
kaugnayan (identity), 4
3
2
karangalan (pride) 1
katapatan (commitment). 1
2
To accentuate these core values, 4
3 corporate
leaders emphasize 5 Hierarchy Market

paternalism (pagbabahala and pananagutan),

personalism or pakikipagkapwa (treating a person as a fellow
human being),
familism (giving importance to the family as a social unit).