Organizational culture 

refers to a system of shared meaning held by members that

distinguishes the organization from other organizations. It  describes how employees
perceive the characteristics of an organization’s culture, not whether or not they like
those characteristics.   The dominant culture is the overall organizational culture as
expressed by the core values held by the majority of the organization's members.
Subsets of the overall culture, or subcultures, tend to develop in larger organizations
to reflect the common problems, situations, or experiences that are unique to members
of certain departments or geographical areas. 
A  strong culture exists when an organization's core values are both intensely held and
widely shared.  Strong culture achieves the same ends as formalization, but without
the need for written documentation.  They are two means to the same ends:
predictability, orderliness, and consistency. Since strong organizational culture
increases behavioral consistency, strong culture can act as a substitute for
formalization.
There are seven key characteristics of organization values. They are
1. Innovation and risk taking - the degree to which employees are encouraged to
be innovative and take risks.
2. Attention to detail - the degree to which employees are expected to exhibit
precision, analysis, and attention to detail.
3. Outcome orientation - the degree to which management focuses on results or
outcomes rather than on the techniques and processes used to achieve those
outcomes.
4. People orientation - the degree to which management decisions take into
consideration the effect of outcomes on people within the organization.
5. Team orientation - the degree to which work activities are organized around
teams rather than individuals.
6. Aggressiveness - the degree to which people are aggressive and competitive
rather than easygoing.
7. Stability - the degree to which organizational activities emphasize maintaining
the status quo in contrast to growth. 
There are five basic functions of culture:
 Defines boundaries - culture creates distinctions between one organization and
another.
 Identity - culture conveys a sense of identity for its members.
 Commitment - culture generates commitment to something that is larger than
one's own self-interest.
 Social stability - culture is the social glue that helps hold the organization
together by providing appropriate standards for socially acceptable employee
behavior.
 Control mechanism - culture serves as a sense-making and control mechanism
that guides and shapes the attitudes and behavior of employees. 
There are some potentially dysfunctional aspects of culture, especially a strong one,
on an organization’s effectiveness that need to be noted. They are
 Institutionalization: When an organization undergoes institutionalization and
becomes institutionalized, that is it is valued for itself and not for the goods or
services it produces, it takes on a life of its own. Behaviors and habits that
should be questioned and analyzed become taken for granted, which can stifle
innovation and make maintaining the organization’s culture an end in itself.
 Barriers to change: Culture is a liability when the shared values are not in
agreement with those that further the organization’s effectiveness.
 Barriers to diversity: Hiring new employees who differ from the majority in
race, age, gender, disability, or other characteristics creates a paradox. Since 
diverse behaviors and unique strengths are likely to diminish as people attempt
to assimilate, strong cultures can become liabilities when they effectively
eliminate these advantages.   A strong culture that condones prejudice, supports
bias, or becomes insensitive to people who are different can even undermine
formal corporate diversity policies.
 Barriers to acquisitions and mergers:  All things being equal, whether the
acquisition actually works seems to have more to do with how well the two
organizations’ cultures match up.
The ultimate source of an organization's culture is its founders who have a vision of
what the organization should be.  A new organization's small size facilitates the
founder’s imposition of his or her vision on all organizational members.  Founders
create culture in three ways:
1.
o Employee selection - founders hire and keep only those employees who
think and feel the same way the founders do.
o Socialization - founders indoctrinate and socialize their employees
toward the founders’ way of thinking and feeling.
o Modeling - the founder acts as a role model and encourages employees
to identify with him or her and to internalize the founder’s beliefs,
values, and assumptions. Any organizational success is attributed to the
founder’s vision, attitudes, and behavior. 
The selection process of an organization needs to identify and hire employees with
relevant knowledge, skills, and abilities. One of the more critical facets of this process
is ensuring that those selected have values that are consistent with those of the
organization.  The verbal messages and actions of top management also establish
norms of behavior throughout the organization.

Socialization is the process by which new employees adapt to the organization culture.
There are three stages in the initial socialization of an employee in an organization.
 Prearrival stage: This encompasses all the learning that occurs before a new
member joins the organization. Each individual arrives with his or her own
 unique set of values, attitudes, and expectations both surrounding the work and
the organization. That knowledge, combined with how proactive their
personality is, are the two critical predictors of how well the new employees
will adjust to the new culture. The perception of being able to “fit in” is critical
in the hiring process.
 Encounter stage: This is when the new employee sees what the organization is
really like and confronts the possibility that expectations and reality may
diverge. If the employee's expectations prove to be reasonably accurate, the
encounter stage merely provides a reaffirmation of the perceptions gained
earlier. But when expectations and reality differ, new employees must undergo
socialization that will detach them from their previous assumptions and replace
them with another set the organization deems desirable.
 Metamorphosis stage:  In this final stage, relatively long-lasting changes take
place as the employee has adjusted to the work itself and internalized the work
group’s values and norms. Successful metamorphosis should have a positive
effect on new employee productivity, organizational commitment, and turnover
as the employee would have internalized the norms of the organization and
their work group.

There are various options for socializations.

 Formal versus Informal:  Formal programs segregate the employees from
ongoing work and differentiate them in some way as a newcomer.  Informal
programs simply put the new employee to work.
 Individual versus Collective: Socialization can occur on an individual or group
basis.
 Fixed versus Variable: refers to the time scheduled when newcomers make the
transition from outsider to insider.  A fixed schedule establishes standardized
stages of transition, such as probationary periods.  Variable schedules give no
advance notice of transition timetables.
 Serial versus Random:  Serial programs use role models to train and encourage
the newcomer, such as in apprenticeship programs.  In random programs, role
models are deliberately withheld and employees must learn to figure things out
on their own.
 Investiture versus Divestiture:  Investiture socialization assumes and confirms that
newcomers have the necessary qualities and qualifications for success. 
Divestiture programs try to strip away certain characteristics of the recruits to
reshape them into the proper role.
Setting a positive ethical organizational climate starts at the top of the organization.
When top management emphasizes strong ethical values, supervisors are more likely
to practice ethical leadership. This positive ethical attitude transfers down to line
employees, who show lower levels of deviant behavior and higher levels of
cooperation and assistance. Employees whose ethical values are similar to those of
their department are more likely to be promoted, so we can think of ethical culture as
flowing from the bottom up as well.