Organizational Culture

Chapter 5

Sreenath B.

Organizational Culture
• Organizational culture is the set of values that controls behavior, determines how organizational members interpret the environment, and helps achieve a competitive advantage. • An organization has two types of values: terminal and instrumental. 1. A terminal value is a desired outcome or end state, whereas an instrumental value is a desired behavior; instrumental values accomplish terminal values. 2. Employee risk-taking (an instrumental value) helps achieve innovation (a terminal value). 3. Terminal values are written in the mission statement & official goals, but instrumental values are conveyed through rules, norms, & standard operating procedures (SOPs).

Organizational Culture
• The most influential values are unwritten and reflected in shared beliefs and norms, acceptable standards of behavior. • Over time, rules, SOPs, and norms are internalized. How Is an Organization’s Culture Transmitted to Its Members? • The method of conveying values influences the culture to motivate employees and increase organizational effectiveness. • Newcomers learn values from formal socialization and informal stories, ceremonies, and language. • Socialization and Socialization Tactics • Newcomers become insiders when they internalize organizational values.

Newcomer learn values by:• Watching existing members and determining appropriate behavior lets newcomers learn indirectly, but they also learn unacceptable practices. • Socialization, the process of learning and internalizing norms, assures that members learn appropriate values. • A socialization model by Van Mannen & Schein, suggests that structuring socialization teaches newcomers key values. • Role orientation is the characteristic way newcomers respond to a situation.

Newcomer learn values by:• Two types of role orientations:1.Institutionalized role orientation. Newcomers respond the same way as existing members do. 2.Individualized role orientation. Newcomers respond creatively and experiment with changing norms and values. Differences between the two are: • 1. Collective vs. Individual. Collective tactics consist of common experiences to generate standard responses. Individual tactics allow newcomers to learn new responses. • 2. Formal vs. Informal. Formal tactics separate newcomers during learning; informal tactics encourage learning on the job. • 3. Sequential vs. Random. Sequential tactics establish a sequence for activities; random tactics are based on newcomer interests and needs.

Newcomer learn values by:• 4. Fixed vs. Variable. Fixed tactics provide a specific timetable for each stage; variable tactics set no timetable. • 5. Serial vs. Disjunctive. Serial tactics use existing members as role models and mentors; disjunctive processes develop individual behavior. • 6. Divestiture vs. Investiture. Divestiture gives members negative social support (neglect) until they conform to norms. Investiture gives positive support immediately. • These tactics influence role orientation; military-style socialization leads to an institutional orientation.


Dangers of institutionalized socialization. • It produces sameness among members, making it hard to adapt to changes. • An organization chooses institutionalized or individualized tactics based on goals. • For predictability & standardization, institutionalized tactics fit; for innovation, individualized tactics fit.

Stories, Ceremonies, and Organizational Language
• There are four organizational rites: • 1. Rites of passage signify entry to, promotion in, and departure from the organization. • 2. Rites of integration build bonds between members (an office party or cookout). • 3. Rites of enhancement are public recognition of employees (news releases and awards dinners). • 4. Rites of degradation denote involuntary departure, allowing a change or reaffirmation of values. • Stories, ceremonies, and organizational language convey cultural values.

• Stories and language reveal the type of behaviors the company values and those that are frowned upon. • Language includes not only speech, but also what people wear, their offices, their company cars, and a formal manner of addressing each other. • Technical language facilitates mutual adjustment (sports team). • Symbols also reveal an organization’s values; office size, location, and luxury communicate images about an organization’s values. • Isolating the corporate office conveys the image of a hierarchical and status-conscious organization. • A building design can be a symbol; Team Disney Building has offices, a restaurant, & a patio connected to a garden to show the value Disney places on imagination and creativity.

• Organizations have different cultures due to the interaction of four factors: people, ethics, property rights given to employees, and structure. 1.Characteristics of People within the Organization • Companies attract, hire, and retain people with different values, personalities, and ethics. • People are drawn to companies with values similar to their own. • As people and values become more similar, organizational culture becomes more unique. • The founder impacts the culture by setting the initial values and hiring the first employees.

Organizational Culture Come From:-

Organizational Culture Come From:2. Organizational Ethics
• The cultural values of the founder and the top managers are beyond an organization’s control. • Yet an organization can cultivate ethical values to control employees through guidelines for appropriate behavior. • Ethical values are an inseparable part of organizational culture. 3. Personal ethics influence organizational ethics. • Personal ethics stem from societal ethics and an individual’s upbringing. 4. Property Rights • Cultural values arise from property rights, the rights given to stakeholders to receive and use organizational resources. • Shareholders have the greatest property rights, because they own the resources and share in profits.

Property rights given to managers and employees. • Managers receive golden parachutes, stock options, large salaries, control over resources, and decisionmaking authority. • Employees receive notification of layoffs, severance payments, lifetime or long-term employment, pension and benefits, stock ownership plans, and decisionmaking opportunities. • Employees’ rights may be limited to wages, health insurance, and pensions. • Property rights shape employee behavior and determine organizational effectiveness. • Strong property rights at Southwest Airlines’ result in employee loyalty.

Cont’d.. Top Management and Property Rights • Top managers determine their own property rights: terms of their employment, salaries, benefits, pension, and termination agreements. • Because top managers decide how property rights are distributed to others, they influence culture. • Organizations must assign property rights based on performance and continually evaluate the property rights system.

Can Organizational Culture Be Managed?
• Managers must examine the interaction of the sources of culture: the characteristics of organizational members, organizational ethics, the property rights system, and organizational structure. • These factors interact, and only major modifications change values, making cultural change difficult. • An organization might need to change its structure, its people, or its property rights system. • A larger and more complex organization with a successful culture can decrease effectiveness. • To avoid negative cultural change, managers must design a structure to handle control problems.


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