C H A P T E R 16

Managing
Organizational Culture
 What is Organizational Culture?
• Organization Culture is:
 Dominant values adopted by an organization
 The philosophy that guides an organization’s policy towards
employees and customers
The way things are done around an organization
 The basic assumptions and beliefs that are shared by
members of an organization
• Organizational Culture refers to a system of shared meaning. In
every organization there are patterns of beliefs, symbols, rituals,
myths, and practices that have evolved over time.
These create common understandings among members to what
the organization is and how its members should behave.
 The Key Characteristics along which
Organizational Cultures Differ.
• Organizational Culture maybe different from the summation of its parts,
the following represent the key characteristics along which organizational
cultures differ.
1. Individual Initiative: The degree of responsibility, freedom &
independence the individuals have.
2. Risk Tolerance: The degree to which employees are encouraged to be
aggressive, innovative & risk-seeking.
3. Direction: The degree to which organization creates clear objectives &
performance expectations.
4. Integration: The degree to which units within the organization are
encouraged to operate in a coordinated manner.
5. Management Support: The degree to which managers provide clear
communication, assistance & support to their subordinates.
The Key Characteristics along which Organizational
Cultures Differ (Contd.)
6. Control: The number of rules & regulations and the amount of direct
supervision that are used to oversee and control employee behaviour.
7. Identity: The degree to which members identify with the organization
as a whole rather than with their particular work group or field of
professional expertise.
8. Reward System: The degree to which reward allocations (salary
increases, promotions, etc.) are based on employee performance
criteria in contrast to seniority, favouritism, etc.
9. Conflict Tolerance: The degree to which employees are encouraged
to express conflicts and criticisms openly.
10.Communication Pattern: The degree to which organizational
communications are restricted to the formal hierarchy of authority.
 Do Organizations have Uniform Cultures?
Organizational culture represents a common perception held by the
organization’s members.
• A dominant culture expresses the core values that are shared by a
majority of the organization’s members.
 It is this macro view of culture that gives an organization its distinct personality.
When we talk about an organization’s culture, we are referring to its dominant
culture.
• Subcultures tend to develop in large organizations to reflect common
problems, situations, or experiences that members face.
 These subcultures can form vertically or horizontally.
 When one product division of a corporation has a culture unique from that of
other divisions of the corporation, a vertical subculture exists.
When a specific set of functional specialist, such as accountants or purchasing
personnel, have a set of common shared understandings, a horizontal subculture is
formed.
Any group in an organization can develop a subculture.
 Culture and Organizational Effectiveness
• If organizations had no dominant culture and were comprised
of numerous subcultures, the influence of culture on
organizational effectiveness would be far more unclear and
vague.
• A strong culture is characterized by the organization’s core
values being intensely held, clearly ordered and widely shared.
The more members that accept the core values, agree on their
order of importance, and are highly committed to them, the
stronger the culture is.
• Effectiveness requires that an organizations culture, strategy,
environment, and technology be aligned. The stronger an
organizations culture, the more important it is that the culture
fit properly with these variables
 Southwest Airlines Culture... hires service-minded,
fun-loving individuals
• Southwest Airlines began flying with just four planes in 1971, and has
grown to employ more than 52,000. Based on the U.S. Department of
Transportation’s most recent data, Southwest Airlines is the nation’s
largest carrier in terms of originating domestic passengers boarded.
The company has been profitable for 43 consecutive years, and its
legendary culture is one of its greatest assets. Founder Herb Kelleher
is credited with instilling the idea that happy employees create happy
customers, and profitability follows.
• With core values of a “Warrior Spirit,” “Servant’s Heart” and “Fun-
Loving Attitude,” Southwest asks employees to embody hard work,
perseverance, proactive customer service and lighthearted fun in
everything they do. Managers are encouraged to hire for attitude and
train for skill.
 Southwest Airlines Culture – Contd.
• Southwest’s culture of service thrives on appreciation, recognition, and
celebration. The company works to appreciate every employee through
local and companywide culture committees. Southwest employees take
time to recognize each other through formal and informal ways, including
internal awards and programs, such as the Winning Spirit Award. The
company has several prestigious corporate awards employees can be
nominated to receive, like the President’s Award, and recognizes service
through milestone anniversary celebrations.
• Celebrating is something that Southwest is known for. The company’s
history is full of fun and creative events, and employees enjoy annual
companywide celebrations such as Spirit Parties, Chili Cookoff and
Southwest Rallies. On top of company-sponsored events, employees enjoy
participating in locally-hosted celebrations and recognition for life events
and milestones.
• Because of this employee-focused culture, Southwest employees are often
featured in the airline’s commercials, ads, and in Southwest: The Magazine:
 Culture: A Substitute for
Formalization?
• A strong culture increases behavioral consistency. It conveys to
employees what behaviors they should engage in. It tells
employees things like the acceptability of absenteeism
• A strong culture may be more potent than any formal structural
controls because culture controls the mind and soul as well as
the body.
• Some organizations encourage employees to use their sick days
and do little to discourage absenteeism. Such organizations have
much higher absenteeism rate than those organizations where
not showing for work is seen as letting your co-workers down.
• The stronger an organization’s culture, the less management
need to be concerned with developing formal rules & regulations
to guide employee behaviour.
Creating, Sustaining and Transmitting Culture
How a Culture Begins
The founders have a major impact on establishing the early culture.
They have a mission or vision of what the organization should be.
The organization’s culture results from the interaction between:
1. The founders’ thinking and assumptions.
2. What the original members whom the founder initially employ
learn subsequently from their own experiences?
Creating, Sustaining and Transmitting Culture –
Contd.
Keeping a Culture Alive
• Once a culture is in place, there are forces within the organization
that act to maintain it by giving employees a set of similar
experiences.
• The three factors that play a very important part in sustaining a
culture are:
1. The Organization’s Selection Practices
2. The Actions of Top Management
3. The Organization’s Socialization Methods
 Three factors that play a very important part in
sustaining a culture
1. Selection Practices
• The explicit goal of the selection process is to identify and hire
individuals who have the knowledge, skills, and abilities to perform
the jobs within the organization successfully.
• Those people are hired who have common values that are
consistent with those of the organization or at least a good portion
of those values.
• The final decision as to who is hired will be significantly influenced
by the decision maker’s judgment of how well the candidates will fit
into the organization culture.
 Three factors that play a very important part in
sustaining a culture – Contd.
2. Top Management
• The actions of top management also have a major impact on the
organization’s culture. Employees observe management’s behavior,
“such as the time when someone was reprimanded for doing a
good job just because he was not asked to do it beforehand or the
time when someone was fired because she publicly disagreed with
the company’s position.”
• These factors establish norms of the company over a period and
filter down through the organization. They convey:
 whether risk taking is desirable
 how much freedom managers should give their subordinates
what is the appropriate dress
and so on………
 Three factors that play a very important part in
sustaining a culture – Contd.
3. Socialization
• No matter how good a job the organization does in recruiting and
selection, new employees are not fully transformed in the
organization’s culture. Socializations helps in the process of learning the
organization culture, values, beliefs and customs that are in place.
• An organization socializes every employee throughout his or her career
in that organization, but it is most essential when a new employee
enters an organization.
• New employees normally undergo some form of orientation and then
once on-the-job, the manager or senior colleague often becomes a
coach or mentor to guide and mold the new entrant.
 How Employees Learn Culture
How Employees Learn Culture
In addition to explicit orientation and training programs, culture is
transmitted to employees in a number of other forms. The most potent being
through:
a) Stories
• a narrative of events are told about the organization’s founders, key decisions
that affect the organization’s future course and the present top management.
b) Rituals
• activities such as recognition & award ceremonies, year-end parties, and
annual company picnics.
c) Material Symbols
• the design and physical layout of spaces & buildings, furniture, executive perks
and dress attire are material symbols that convey to the employee that who is
important, the degree of equality desired by the top management and kind of
required behaviours.
d) Language
• many organizations and units within use language as a way to identify various
explanations, e.g. terms used for different technical explanations or details.
When Cultures Collide: Mergers & Acquisitions
• If the organizations being merged have a strong culture, the
potential for culture clash becomes more and the merger is
likely to become a disaster.
• In a merger, if one or both of the organizations have weak
cultures, the marriage is more likely to work. This is because
weak cultures are more flexible and adaptable.
• If two strong cultures are highly similar, the merger does not
present problems.