Chapter Fourteen Organization Culture

Chapter Objectives Define organization culture and explain how it affects employee behavior. Explain how to create an organization culture. Discuss two different approaches to describing culture in organizations. Identify important emerging issues in organization culture. Discuss the key elements of managing the organization culture. Copyright © Houghton Mifflin Company. All rights reserved.

The Nature of Organization Culture The set of shared values, often taken for granted and communicated through stories and other symbolic means These help the organization’s employees understand which actions are considered acceptable and which unacceptable. Copyright © Houghton Mifflin Company. All rights reserved.

Historical Foundations Anthropological Contributions The study of human cultures and cultural phenomena. Anthropologists seek to understand how the values and beliefs that make up a society’s culture affect the structure and functioning of that society. Sociological Contributions The study of people in social systems such as organizations and societies. Sociologists have long been interested in the causes and consequences of culture. Copyright © Houghton Mifflin Company. All rights reserved.

Historical Foundations (continued) Social Psychology Contributions A branch of psychology that includes the study of groups and the influence of social factors on individuals. Economics Contributions The study of organization culture that attempts to link the cultural attributes of firms with their performance rather than simply describing the cultures of companies as the sociological and anthropological perspectives do. Copyright © Houghton Mifflin Company. All rights reserved.

Culture Versus Climate Organizational Climate Refers to current situations in the organization and the linkages among work groups, employees, and work performance Organizational Culture Refers to the historical context within which a situation occurs and the impact of this context on the behavior of employees Copyright © Houghton Mifflin Company. All rights reserved.

Creating an Organization Culture Step 1: Formulate Strategic Values Strategic values – the basic beliefs about an organization’s environment that shape its strategy Step 2: Develop Cultural Values Cultural values – the values that employees need to have and act on for the organization to implement its strategic values Step 3: Create A Vision Vision – a picture of what an organization will look like at some point in the future Copyright © Houghton Mifflin Company. All rights reserved.

Creating an Organization Culture (continued) Step 4: Initiate Implementation Strategies Implementation Strategies – many factors, including developing organization design to recruiting and training employees who share the values and will carry them out Step 5: Reinforce Cultural Behaviors The act of monitoring and encouraging these behaviors of employees as they act out the cultural values and implement the organization’s strategies Copyright © Houghton Mifflin Company. All rights reserved.

Ouchi formulated the notion of the “Type Z” firm. The Ouchi Framework Ouchi formulated the notion of the “Type Z” firm. Ouchi argued that the cultures of typical Japanese firms and U.S. Type Z firms are very different from those of typical U.S. firms, and that these differences explain the success of many Japanese firms and U.S. Type Z firms and the difficulties in typical U.S. firms. Copyright © Houghton Mifflin Company. All rights reserved.

Table 14.2: The Ouchi Framework Copyright © Houghton Mifflin Company. All rights reserved.

The Peters and Waterman Approach In their bestseller In Search of Excellence, Tom Peters and Robert Waterman focused even more explicitly than Ouchi on the relationship between organizational culture and performance. They chose a sample of highly successful U.S. firms and sought to describe the management practices that led to their success. Copyright © Houghton Mifflin Company. All rights reserved.

Table 14.3: The Peters and Waterman Framework Copyright © Houghton Mifflin Company. All rights reserved.

Emerging Issues in Organizational Culture Innovation The process of creating and doing new things that are introduced into the marketplace as products, processes, or services. It involves every aspect of the organization, from research through development, manufacturing, and marketing. Copyright © Houghton Mifflin Company. All rights reserved.

Types of Innovation Radical Innovation Systems Innovation A major breakthrough that changes or creates whole industries Systems Innovation Functionality created by assembling parts in new ways Incremental Innovation Continued technical improvements and an extension of the applications of radical systems innovations Copyright © Houghton Mifflin Company. All rights reserved.

Entrepreneurship – can occur inside or outside large organizations New Ventures New ventures based on innovation require entrepreneurship and good management to work. Entrepreneurship – can occur inside or outside large organizations Intrapreneurship – entrepreneurial activity within the organization Copyright © Houghton Mifflin Company. All rights reserved.

Corporate Research Corporate Research The most common means of developing innovation in the traditional organization It is set up to: support existing businesses provide incremental innovations in the organization’s business explore potential new technology bases The corporate culture can be instrumental in fostering an environment in which creativity and innovation occur. Copyright © Houghton Mifflin Company. All rights reserved.

Procedural Justice Procedural Justice The extent to which the dynamics of an organization’s decision making processes are judged to be fair by those most affected by them. Especially in the U.S., employees are demanding more say in determining work rules and in matters pertaining to health and safety on the job and the provision of certain benefits for all employees. The lack of procedural justice may lead to less compliant attitudes on the part of lower-level managers. Copyright © Houghton Mifflin Company. All rights reserved.

Managing Organization Culture Two Key Fact About Culture: Organizational cultures differ among firms Different organizational cultures affect a firm’s performance Three Elements of Managing Organizational Culture: Taking advantage of the existing culture Teaching organization culture Changing the organization culture Copyright © Houghton Mifflin Company. All rights reserved.

Taking Advantage of the Existing Culture To take advantage of an existing cultural system, managers must be fully aware of the culture’s values and what behaviors or actions those values support. This understanding can be used to evaluate the performance of others in the firm. Articulating organizational values can be useful in managing others’ behaviors. Copyright © Houghton Mifflin Company. All rights reserved.

Teaching the Organization Culture: Socialization The process through which individuals become social beings Organizational Socialization The process through which employees learn about the firm’s culture and pass their knowledge and understanding on to others. Employees are socialized into organizations just as people are socialized into societies; they come to know over time what is acceptable in the organization and what is not, how to communicate with their feelings, and how to interact with others. Copyright © Houghton Mifflin Company. All rights reserved.

Changing the Organization Culture Managing Symbols Research suggests that organization culture is understood and communicated through the use of stories and other symbolic media. If this is correct, managers interested in changing cultures should attempt to substitute stories and myths that support new cultural values for those that support old ones. The Difficulty of Change Changing a firm’s culture is a long and difficult process. Copyright © Houghton Mifflin Company. All rights reserved.

Changing the Organization Culture (continued) The Stability of Change The process of changing a firm’s culture starts with a need for change and moves through a transition period in which efforts are made to adopt new values and beliefs. In the long run, a firm that successfully changes its culture will find the new values and beliefs are as stable and influential as the old ones. Copyright © Houghton Mifflin Company. All rights reserved.