ORGANIZATIONAL CULTURE

What is Organizational Culture?

Shared values, ways of thinking, attitudes, and guiding beliefs
That are relevant to, and supportive of, the organization and its goals.
Unfortunately many organizational cultures are not the most appropriate ones for the organization and its situation.

The Purpose of Culture

To help integrate organizational members so that they know how to relate and work together effectively. To help the organization to best adapt to its mission and to its environment.

John Chambers: CEO of Cisco Systems

(June 2010 interview)
When I started (At Cisco in 1995), I viewed my job as three main areas: vision and strategy of the company, development and recruitment of the team to implement that vision and strategy, and the need to communicate all of the above. Within four or five years I realized there was something that many of us do not understand when we take a leadership role: culture. Great companies have very strong and great cultures. A huge part of a leadership role is to drive the culture of the company and to reinforce it.

EFFECTS OF CULTURE
Determines how people communicate Determines how people interact Determines how people relate to one another Guides day-to-day working relationships Determines what is appropriate behavior Determines how power and status are allocated

Levels of Corporate Culture

The Iceberg Analogy
Observable Symbols Ceremonies, Stories, Slogans, Behaviors, Dress, Physical Settings

Invisible Aspects Underlying Values, Assumptions, Beliefs, Attitudes, Feelings

Rites and Ceremonies

Rites of Passage
Facilitates transition into or out of the organization EG: freshman week and senior week

Rites of Integration
Encourages common feelings of group identity EG: homecoming / sporting events

Rites of Renewal
Improve organizational functioning EG: team building

Rites of Enhancement
Enhance social identities common feelings EG: Student awards and recognition / deans list

Organizational Rites and Their Social Consequences

Type of Rite Passage Example Induction and basic training; US Army Annual awards night Organizational development activities Social Consequences Facilitate transition of person into new social roles and statuses Enhance social identities and increase status of members Refurbish social structures and improve organization functioning Encourage and revive common feelings that bind members together and commit them to the organization

Enhancement

Renewal

Integration

Office holiday party

Source: Adapted from Harrison M. Trice and Janice M. Beyer, Studying Organizational Cultures through Rites and Ceremonials, Academy of Management Review 9 (1984), 653-659. Used with permission.

Stories, Symbols, & Language

They reinforce existing culture, but they dont create culture by themselves. Employees learn more from observed behavior. Slogans, stories and symbols are useful in reinforcing desired behaviors. The really important thing is for managers to display the desired values and beliefs in their day-to-day behaviors.

Organizational Chart for Nordstrom

Customers

Sales & Sales Support

Dept Managers
Store Mgrs, Buyers, Merchandise Mgrs.
Directors

Determinants of Culture
NEEDS based on the environment

Stability External focus

Stable but with a clear external vision and orientation.
MISSION Internal efficiency & stability. Mechanistic, conformity, high integration, collaboration BUREAUCRACTIC

Flexibility
Highly organic and focused on adapting to the external environment.
ADAPTABILITY People oriented, family atmosphere dealing with external change. Clan controls. CLAN CULTURE

STRATEGY
Internal focus

Stable ENVIRONMENT

Dynamic

The Learning Organizations Culture

Each employee considers how his or her actions will affect others and the organization.
A culture of equality: All employees are treated equally without status differences. A culture of risk-taking, adaptation, and continual improvement. The status quo is always being questioned.

SUB CULTURES
Organizations can have different sub cultures just as they have different sub structures. Organic departments/divisions may well have different cultures than mechanistic ones.
EG: The culture of accounting students versus the culture of art students.

Cultural Strength
Measured by the degree of agreement about shared values. A strong culture is associated with increased frequency of the visible elements. A strong culture can be very hard to change unless it is a culture of change.
The Learning Organization must have a strong culture that is supportive of risk taking, adaptation, improvement and change

Environment - Strategy - Culture

The match between strategy, environment, and culture is very important.

Corporate culture should embody what the organization needs to be effective within its environment.

Environment

Culture Strategy

Since we have little, if any, influence on the external environment, we need to create an organizational culture that fits with the strategy and environment.

ETHICS versus MORALS

Ethics: A system of moral principles.
Morals: Have to do with right and wrong behavior. (Our principles and values governing right and wrong behavior.)
Ethics

Laws

(moral principles)

QUIZ
Your Friend has an open box of cookies sitting out, but he or she is not there to offer you one. Would you eat one? Two? Three? The entire box?

QUIZ
Have you ever said I love you. when you didnt mean it? Never Once Twice All the time

QUIZ
A very good friend asks you if you think she is attractive. You think she is ugly as a wart. What would you say?

You find a bag with $1000 in unmarked bills. No one saw you pick it up. There is a receipt inside with the owners name and address. What would you do?

Ethical Conundrums
Is ethics a matter of degree? Can the same behavior be ethical in one situation and unethical in another? Should everyone have the same ethics?

Forces That Shape Managerial Ethics

Personal Ethics
Beliefs and Values Moral Development Ethical Framework

Organizational Culture
Rituals, Ceremonies Stories, Heroes Language, Slogans Symbols Founder, History

Is a Decision or Behavior Ethical and Socially Responsible?

Organizational Systems
Structure Policies, Rules Code of Ethics Reward System Selection, Training

External Stakeholders
Government Regulations Customers Special Interest Groups Global Market Forces

Formal Structure and Systems of the Organization

Ethics committee: A cross-functional
oversight group.

Chief Ethics Officer: Oversees ethics

programs.

Code of ethics: A formal statement of the

organizations values regarding ethics and social responsibility

Training programs

How Leaders Shape Culture

By what they do.
The examples they set The types of people they hire

By what they say.

Formal policies, codes of ethics, etc.

By what the organization does.

Ethical training, ethics committees

VALUE-BASED LEADERSHIP

Managerial work can be viewed as managing myth, symbols, and labels because managers traffic so often in images, the appropriate role for the manager may be evangelist rather than accountant. Karl Weick

Ralph Davis CEO, Travel Insurance Services Many years ago, I came back to my office after a seven week absence, having entrusted the business to those I hired. It was a mess. Cliques; infighting; no more family team that I had developed. I called each individual into my office and asked what happened. Every person pointed to someone else. Essentially, everyone was at fault for participating, yet no one took responsibility for their individual actions. So, I fired them all! Best thing I ever did.

Travel Insurance Services - The Aftermath

A conversation with the CEO

Next morning, I walked in and found a banner with everyone's signature and apology...and a request to be rehired. I accepted the apologies, rehired everyone. A few week's later I let go the office manager who was the chief culprit. One quit because of the manager's firing. Two years later, the quitter called me and took me to lunch. She apologized for quitting, realized she'd backed the wrong horse. Wasn't asking for her job, but wanted me to know about her conclusion. Never had the problem again. Some of the people are still with my old company.
Davis sold the company and retired in 2004

Update:Travel Insurance Services

The NASDAQ listed company that ultimately purchased my business told everyone two months later: Your business is about revenue, THEN relationships. So much for today's MBAs running corporate America. When I was asked to produce my legacy notes, i.e. explain how I got to run a profitable company, my first sentence was, "It's all about relationships. Revenue will come later. By relationships, I mean (1) take care of the employees; (2) help them take care of the prospect and client; (3) then the shareholders will be taken care of. That's what made my company successful; that's why you're happy with your profitable purchase".

Never again heard from them. They've refused to use me as a consultant, which has led them to lose major business unnecessarily, and 25% of the seasoned employees have left.