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Creating and Managing

Organizational Culture

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Learning Objectives
1. Differentiate between values and norms and understand
the way culture is shared by an organization’s members
2. Describe how individuals learn culture both formally and
3. Identify the four building blocks or foundations of an
organization’s culture
4. Understand how an organization’s culture, like its
structure, can be designed or managed
5. Discuss an important outcome of an
organization’s culture: corporate social responsibility

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What is Organizational Culture?

 Organizational culture: the set of

shared values and norms that
controls organizational members’
interactions with each other and with

outside the organization
Can be a source of competitive advantage

Can be used to increase organizational

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Organizational (Corporate)

A pattern of basic assumptions that are considered

valid and that are taught to new members as
the way to perceive, think, and
feel in the organization
Artifacts - symbols of
culture in the physical
and social work environment

Espoused: what members of Levels of
an organization say they value Organizational
Enacted: reflected in the way Culture
individuals actually behave

Assumptions - deeply held

beliefs that guide behavior and tell
members of an organization how
to perceive and think about things
Artifacts Organizational
Personal enactment Culture Levels
Ceremonies and rites
Stories Visible, often not
Ritual decipherable

Testable in physical environment Greater level
Testable only by social consensus of awareness

Relationship to environment Taken for granted
Nature of reality, time, and space Invisible
Nature of human nature Preconscious
Nature of human activity Reprinted with permission from Edgar H. Schein, Organizational
Culture and Leadership: A Dynamic View. Copyright © 1985 Jossey-Bass
Nature of human relationships Inc, asubsidiary of John Wiley & Sons, Inc.
Four Functions of Organizational Culture


Sense-making Organizational Collective

device culture commitment

Social system
Functions of Organizational Culture

 Culture provides a sense of identity to members and

increases their commitment to the organization
 Culture is a sense-making device
for organization members
 Culture reinforces the values
in the organization
 Culture serves as a control
mechanism for shaping
Theories about the
relationship between Strong
organizational culture
and performance

Adaptive Perspective
An organizational culture
with a consensus on the
values that drive the company Strong
and with an intensity that is Culture
recognizable even to outsiders Perspective

Strong cultures facilitate performance because

• They are characterized by goal alignment

• They create a high level of motivation because
of shared values by the members
• They provide control without the oppressive
effects of bureaucracy
Argument that a culture is good
only if it fits the industry’s or the
firm’s strategy. Fit

Organizational characteristics that may affect culture

 Customer requirements
 Competitive environment
 Societal expectations
An organizational culture that
encourages confidence and risk
taking among employees, has Adaptive
leadership that produces change, and
focuses on the changing needs of Perspective

Adaptive Nonadaptive
Most managers care Most managers care
Core Values about customers, about themselves,
stockholders, and their work group, or
employees an associated product
Managers pay close Managers tend to
Common attention to all behave somewhat
Behavior their constituencies, insularly, politically,
esp. customers and bureaucratically
Reprinted with the permission of The Free Press, a Division of Simon & Schuster, Inc. from Corporate Culture and Performance by
John P. Kotter and James L Heskett. Copyright © 1992 by Kotter Associates, Inc. and James L. Heskett.
Types of Organizational Culture –

Belief Characteristics
Achievement Goal and achievement oriented

Self-actualizing Value self-development and creativity

Humanistic- Participative, employee encouraging

centered, and supportive
Affiliative High priority on constructive interpersonal
relationships, and focus on work group
Types of Organizational Culture –
Passive - Aggressive
Belief Characteristics
Approval Avoid conflict, strive to be liked by others, and
approval oriented

Conventional Conservative, bureaucratic, and people follow the


Dependent Non-participative, centralized decision making, and

employees do what they are told

Avoidance Negative reward system and avoidance of

Types of Organizational Culture –
Aggressive - Defensive

Belief Characteristics
Oppositional Confrontation and negativism rewarded

Power Non-participative, take charge of subordinates and

responsive to superiors

Competitive Winning is valued and a win-lose approach is used.

Perfectionistic Perfectionistic, persistent, and hard-working

Five Most Important Elements
in Managing Culture

 What leaders pay attention to

 How leaders react to crises
 How leaders behave
 How leaders allocate rewards
 How leaders hire and fire individuals
Culture and Leadership
 Leadership and culture must be looked at collectively – neither
can be understood by itself
 Leaders should be conscious of culture otherwise it will manage
 Cultural understanding is essential if leaders are to lead:
 When leaders create groups and organizations they create
 Once cultures exist, leaders determine criteria for leadership
(who will and will not be a leader)
 Dysfunction = requirement of leaders to identify the
functional and dysfunctional elements and manage evolution
and change in order to survive
 A strong organizational culture controls organizational
behavior and can block an organization from making
necessary changes for adapting to a changing environment
Organizational Socialization

The process by which newcomers are

transformed from outsiders to
participating, effective members of the
1. Anticipatory Realism Congruence

Job demands
2. Encounter •Task

3. Change and

Outcomes of Socialization Performance

Stages of Mutual influence
Socialization Low levels of distress
From “An Ethical Weather Repart: Assessing the Organizaiton’s Ethical Climate” by John B. Cullen, et
Intent to remain
al. In Organizational Dynamics, Autumn 1989. Copyright © 1989 American Management Asociation
International. Reprinted by permission of American Management Association International, New York, N.Y.
All rights reserved. Http://www.amanet. Org.
1. Anticipatory Socialization - the first socialization
stage--encompasses all of the learning that takes
place prior to the newcomer’s first day on the job

2. Encounter - the second socialization stage-- the

newcomer learns the tasks associated with the job,
clarifies roles, and establishes new relationships at

3. Change & Acquisition - the third socialization

stage—the newcomer begins to master the demands
of the job
Socialization as
Cultural Communication

Core values are transmitted to new organization

members through

 the role models they interact with

 the training they receive
 the behavior they observe being rewarded and
Assessing Organizational
 Organizational Culture Inventory focuses on
behaviors that help employees fit into the
organization & meet coworker expectations
 Kilman-Saxton Culture-Gap Survey focuses on the
expectations of others in the organization
 Triangulation - the use of multiple methods to
measure organizational culture
Situations That May Require
Cultural Changes

 Merger or acquisition
 Employment of people from different countries

Reasons That Change Is Difficult

 Assumptions are often unconscious
 Culture is deeply ingrained and behavioral norms
and rewards are well learned
Hiring and Removing
socializing Culture members who
members who reject the
fit in with the new culture
4 new culture 5

Cultural Changing
3 communication behavior

Interventions for
for changed
Reprinted with permission from Vijay Sathe “How to Decipher & Change
Culture 2 Corporate Culture,” Copyright © 1985 Jossey-Bass Inc, Reprinted by permission
Of Jossey-Bass, Inc., a subsidiary of John Wiley & Sons, Inc..
Cultural Modifications in the
Current Business Environment

Support for a global Empowerment of

view of business employees to excel
in product and
service quality
Reinforcement of
ethical behavior
Support for a global
view of business

 Create a clear and simple mission statement

 Create systems that ensure effective information
 Create “matrix minds” among managers
 Develop global career paths
 Use cultural differences as major assets
 Implement worldwide management education and
team development programs
Reinforcement of
ethical behavior

 Clear communication of the boundaries of ethical

 Selection of employees who support the ethical
 Reward of ethical behavior
 Conspicuous punishment of members who engage
in unethical behavior
Empowerment of employees to
excel in product and service quality

 Empowerment unleashes employees’ creativity

 Empowerment requires eliminating traditional
hierarchical notions of power
 Involve employees in decision making

 Remove obstacles to their performance

 Communicate the value of product and service