ORGANIZATIONAL CULTURE

Organizational Behavior Term Paper

Submitted by:

Nikhil Soni – 91038

Lakshmi Sravani. Ch – 91028

Batch: FMG 18

Section: A
 INDEX

1. What is Organizational Culture

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a. Culture
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b. Organizational Culture 3
c. Primary Characteristics 3
2. Researches, Surveys and Findings
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a. Edward Schein’s theory 4
b. Factors influenced by strong organizational culture 4
c. Mergers and Organizational Culture 5
d. Organizational Culture and Project Management 6
3. Case Study and Analysis
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a. GM sees culture change 9
b. Lutz’ own and recommended changes and their impact 10
4. References
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 MOHAN AND ORGANIZATIONAL CULTURE

As a young employee Mohan was transferred to work in an office tower in Nehru Place, Delhi. He wasn’t the
only person to arrive in this new office space – the group had changed significantly due to reorganization and
many of them were working together for the first time. His boss asked Mohan to help him with some unusual
projects. First, he was to organize an ugly tie contest. Next, they created a puzzle where everyone told Mohan
their fantasy identity (who they would be if they could be anyone) and he created a quiz. People had several
days to try to figure out who was who. This culminated in a party and the revealing of all the secret identities.

They eventually instituted the first casual Friday party in this company. This was in the year 1997. At the time
Mohan knew what was happening and why it was important to the development of the culture in this
organization. But he admits he did not realize how to go about it as well as he can now. For a whole variety of
reasons, organizational culture is important to the health or viability of any organization. It is one thing to know
something is important. It is another thing entirely to know what to do about it.

WHAT IS ORGANIZATIONAL CULTURE

Organizational culture and identity are important to contemporary organizations because they provide an
understanding of how and why an organization does things, the way the people within the organization
behave, and the perceptions that are held by stakeholders of the organization.

Culture is an abstraction, yet the forces that are created in social and organizational situations that derive from
culture are powerful. If we don’t understand the operations of these forces we become victim to them.

Organizational culture is an idea in the field of Organizational studies and management which describes the
psychology, attitudes, experiences, beliefs and values (personal and cultural values) of an organization. It has
been defined as "the specific collection of values and norms that are shared by people and groups in an
organization and that control the way they interact with each other and with stakeholders outside the
organization."

Organizational culture could also be defined as a system of shared meaning held by members that distinguishes
the organization from other organizations.

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This system of shared meaning is a set of key characteristics that the organization values. Windsor and
Ashkanasy (1996) suggest seven primary characteristics of organizational culture

(i) Innovation and risk taking – Being action oriented, not being constrained by many rules and
taking risks and innovating

(ii) Attention to detail – Being careful, oriented and precise

(iii) Outcome orientation – Being competitive, achievement oriented, result oriented and anlytical

(iv) People orientation – Being fair, tolerating and socially responsible

(v) Team orientation – Being team oriented and working in collaboration with others

(vi) Aggressiveness – People are aggressive and competitive rather than easygoing

(vii) Stability – Security of employment and stability in job

RESEARCHES, SURVEYS AND FINDINGS

Edward Schein’s Theory

Schein’s articulation of corporate culture recognises that there are three levels at which to diagnose an
organization’s culture (Schein, 1992). Schein expresses the levels and explains them by way of a model
of organizational culture that shows the three levels of culture that interact within a hierarchy (Schein,
1992).

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Factors influenced by strong organizational culture

Seven important factors have been identified that are directly impacted by strong organizational culture
practices.

(i) Talent-attractor: Organizational culture is part of the package that prospective employees look at when
assessing your organization. Gone are the days of selecting the person you want from a large eager pool. The
talent market is tighter and those looking for a new organization are more selective than ever. The best people
want more than a salary and good benefits. They want an environment they can enjoy and succeed in.

(ii) Talent-retainer: How likely are people to stay if they have other options and don’t love where they are?
Organizational culture is a key component of a person’s desire to stay. Good practices and a healthy
environment are now more important factors than salary and perks for an employee who has multiple options in
his hands.

(iii) Engages people: People want to be engaged in their work. According to a Gallup survey at least 22 million
American workers are extremely negative or “actively disengaged” – this loss of productivity is estimated to be
worth $250 to $300 billion annually. Culture can engage people. Engagement creates greater productivity,
which can impact profitability.

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(iv) Creates energy and momentum: A culture that is vibrant and allows people to be valued and express
themselves will create real energy. That positive energy will permeate the organization and create a new
momentum for success. Energy is contagious and will build on itself, reinforcing the culture and the
attractiveness of the organization.

(v) Changes the view of “work”: Most people have a negative connotation of the word “work”. With the
creation of a culture that is attractive, people’s view of “going to work” will change. They see work as joy
rather as drudgery.

(vi) Creates greater synergy. A strong culture brings people together. When people have the opportunity to
(and are expected to) communicate and get to know each other better, they will find new connections. These
connections will lead to new ideas and greater productivity – in other words, you will be creating synergy.

(vii) Makes everyone more successful. Any one of the other six reasons should be reason enough to focus on
organizational culture. But the bottom line is that an investment of time, talent and focus on organizational
culture will give all of the above benefits. Not only is creating a better culture a good thing to do for the human
capital in the business, it makes good business sense too.

Mergers and Organizational Culture

Mergers and acquisitions are a common sight today in almost every public or private sector. Mergers
have a great impact on organizational culture. The impact can be seen in three ways:

a. Over-your-shoulder effect - This is the anxiety people experience as they wonder about
the effect the merger will have on their position in the organization. In a business when
mergers take place there is an assumption that increased size will bring greater
effectiveness. Usually employees will be terminated to reduce costs and increase
efficiency. As changes begin to take place the anxiety builds.

b. Winners and losers effect – What most people experience during a merger is that one
organization has won and the other has lost. While there are obvious issues of position and
status, organizational culture also comes into picture. In most cases, after several years, the
culture of the bigger organization takes over. If the two firms are at par, there is likely to be
more problems as two different cultures collide.

c. Cultural Isolation Effect - The cultural ways and assumptions that come into play as a
result of a merger will vary from one case to another. Even if there is a high degree of
cultural alignment in many areas, there is likely to be tension in areas with less alignment.

As we try to find out possible ways to avoid such issues in a merger, there are a few steps we see that
should be taken to avoid the bad impact. They are as follows:

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 a. Pre-merger steps
i. Assessments of organizational cultures and the place of each organization in the their
field and the community
ii. Building trust within each existing organization and between the organizations
iii. Identify the best processes, structures and climate of each of the organization; decide
to use the best, develop something new from combining the ways of each, or create a
new and better way.
iv. Identify and begin to develop the leadership competencies that will be needed in the
integrated organization

b. Post-merger steps
i. Assessment of emerging results
ii. Additional intervention to enhance results
iii. Refine, innovate and redesign

Organizational Culture and Project Management

After a survey conducted by Morison, Brown and Smit (2008) on managers belonging to different levels
in different organizations, they were able to define dimensions belonging to two categories, an
organizational culture construct and a project management effectiveness construct. These points
indicate the implementation of good organizational culture practices in the organization and how well an
organization is following project management.

The definition of the organizational culture construct is given below:

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The definition of project management effectiveness construct is given below:

The research was aimed at finding the average scores for the top 3 and the bottom 3 organizations and
also the average scores on the whole for the above given dimensions. The graph above indicates the
findings for organizational culture construct.

Almost all companies perform similarly in the organizational culture construct. The graph above
indicates the organizational culture scores.

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Findings indicate that clearly the top organizations score highly on all dimensions of the organizational
culture construct with respect to the project management whereas it is the opposite for lower level firms.

While communication, resource availability and customer integration are good for the bottom three, the
operational targets are not well defined; nor are the strategic benefits project management will bring to
the organization. With regards to the organizational culture, improper delegation of authority and
extremely poor people orientation makes matters worse. As a result we see that in weak organizations,
the problems with meeting delivery targets appear to flow more from the interface between the
organization and project management than from how the project management process is conducted once
the team is put together. As a result, these organizations are the least satisfied with the strategic benefits
they gain from project management and with how project management is integrated into the general
workflow.

Our analysis of results for the project management effectiveness construct, as given above, indicate that
in top organizations, operational targets more clearly written down and the with the help of greater
rational decision making and more appropriate project management systems and tools, employed with
more care and precision, large focus on proper information flow and cross functional integration, they
achieve high quality results in projects and as are able to realize the importance of project management
being successfully integrated with the organization’s culture.

The findings clearly indicate that the relation between an organization’s culture and their project
management implementation is highly positive. How well an organization implements good
organizational culture practices, the better results project management tasks execution will yield.

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 CASE STUDY AND ANALYSIS

GM goes through cultural change

Here we take the case of the automobile giant General Motors or GM, which had a real rough time
adapting to a changing environment. Many experts consider the company as a perfect example of
corporate entrenchment. As far back as the 1960s, it was pretty well known in the market that GM’s way
of operating—slow, deliberate decision making; layer-upon-layer of hierarchy; focus on cost-cutting
rather than on new product design; and management-by-committee - was failing. From a U.S.
automobile market share of nearly 50 percent in the late 1950s, the company was down to under 30
percent by the year 2000. GM’s rigid and insular culture, driven by financial considerations, allowed
both foreign and domestic competitors to steal away customers with new products.

There is sound explanation for GM’s culture. The company’s historic selection and promotion policies,
like hiring its future executives fresh out of school and then molding them according to their own rigid
culture and mentality. The company resisted ideas and innovations that were “not developed by them.”
Executives firmly believed, sometimes arrogantly, that the GM system was superior to all others.
Promotions favored financial and engineering types, and individuals with these backgrounds rose to fill
the company’s top spots. GM rarely hired senior executives from outside the company ranks. In
addition, GM encouraged its executives to socialize off the job with other GM people. This further
insulated top executives and resulted in a senior management team that saw the world through similar
lenses.

In 2001, the then GM CEO Rick Wagoner hired former Chrysler executive Robert Lutz as vice
chairman. His primary task was to change GM’s organizational culture. Wagoner was probably the first
GM executive till then to acknowledge that GM’s culture - dominated by finance-types, engineers, and
manufacturing personnel - was content to turn out unimaginative cars. The committee system (stacked to
favor the company’s accounting mentality) further hindered creative endeavors. For instance, whenever
designers and engineers would disagree about a design, the engineers (and their obsession with cost
minimization) would always win. This largely explained why the company’s cars looked boxy and so
similar. In this case, Wagoner had more or less given Lutz a free hand to do whatever he needs to
change tradition-bound GM and was willing to assist him in every possible way.

Lutz’ own and other recommended changes and their impact

Lutz chose an incremental strategy for implementing change. He was going to rely on the designers and
engineers who have been turning out duds for years, rather than hiring new staff. He was giving more
clout to the designers and marketing people. He during this tenure saw a reorganization that had
engineering and design divisions now reporting to just one person.

He encouraged people to question past practices, to speak out on issues, and challenge company
doctrine. By implementing these practices he can make sure that people who do not gel well with GM
policies would come out and speak without fear of job loss. Creativity and innovation is a must for

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someone manufacturing cars and only an environment free of such restricting and political policies like
GM’s could allow a design engineer to create new designs and encourage further innovation.

Autonomy, which was just not a part of GM culture, could have been and was introduced by Lutz as freedom in
taking decisions at various levels without the intervention of senior management was critical to rational decision
making and risk taking. Lutz also encouraged risk taking and aggressiveness by convincing people not to isolate
any individual in case of a failure but take combined responsibility. This helps as when any employee is
convinced by his team that he is not alone, he will be more willing to take calculated risks, hence increasing
chances of making newer models.

He could have tried to arrange cultural events which would encourage more interaction between the top brass
and the engineers and designers of the company. This, we believe actively helps as knowing people more than
just by name helps in the flow of ideas and the acceptance of the required changes. He could have held special
training programs for the top executives. In doing this he could educate them about how the management is
responsible for an employee’s success or failure and how their handling of their own tasks makes a big impact
on their subordinates.

One very important thing that we notice in Lutz’ success is that he was not at any stage willing to get employees
fired. This was helpful in building the trust in the employees about his intentions and plans. As more and more
people, at all levels of hierarchy, begin to realize the importance of his tasks, more cooperation he will receive
and the easier it becomes for him to bring that change that GM so desperately needed.

“My success secret that there were thousands of employees in TISCO & I knew all of them with their
first name.” Sir Roussie Modi

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 REFERENCES

Eikenberry, Kevin, Seven Ways to Enhance Organizational Culture, The Kevin Eikenberry Group
2. Schein, Edgar, Organizational culture and Leadership, Jossey Bass , A Wiley Imprint
3. Gallagher, Robert A., Organizational development: mergers and organizational culture(2000)
4. Morrison, J.M., Brown, C.J. and Smit, E.v.d.M, Impact of organizational culture on project management in
matrix organizations, University of Stellenbosch Business School, Republic of South Africa
5. Haimes, Gervase A., Organizational Culture and Identity: A case sudy from the Australian Football
League, Victoria University, Victoria, Autralia
6. Robbins, Stephens P., Judge, Timothy A. and Sanghi, Seema, Organizational Behavior, Pearson Education
7. Baird, Kevin, Harrison, Graeme and Reeve, Robert, The Culture of Australian Organizations and its
relation with strategy, International Journal of Business Studies, Vol 15, NO1, June 2007:
pages 15 of 41
8. Ogbonna Emmanuel and Harris Lloyd C., Organizational Culture: A ten year, two phase study of change in
the U.K. Food retailing sector, Cardiff Business School, U.K.
9. Cameron, Kim S. and Quinn, Robert E., Diagnosing and Changing Organizational Culture, Upper Saddle
River, NJ: Prentice Hall Series in Organizational Development (1999)
10. Wikipedia – www.wikipedia.org
11. Google – www.google.com

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