Chapter # 2 - 1Copyright © 2013 Pearson Canada Inc. Chapter # Copyright © 2013 Pearson Canada Inc. 10

Copyright © 2013 Pearson Canada Inc Chapter Outline What Is Organizational Culture? – Definition of Organizational Culture – Levels of Culture – Culture’s Functions – Culture Creates Climate – Do Organizations Have Uniform Cultures? – Strong vs. Weak Cultures Reading an Organization’s Culture – Stories – Rituals – Material Symbols – Language

Copyright © 2013 Pearson Canada Inc Chapter Outline Creating and Sustaining Culture – How a Culture Begins – Keeping a Culture Alive The Liabilities of Organizational Culture – Barrier to Change – Barrier to Diversity – Barrier to Mergers and Acquisitions Changing Organizational Culture – Creating an Ethical Culture – Creating a Positive Organizational Culture

Copyright © 2013 Pearson Canada Inc Learning Outcomes 1.What is the purpose of organizational culture? 2.How do you read an organization’s culture? 3.How do you create and maintain organizational culture? 4.Can organizational culture have a downside? 5.How do you change organizational culture?

Copyright © 2013 Pearson Canada Inc Henry Mintzberg on Culture “Culture is the soul of the organization — the beliefs and values, and how they are manifested. I think of the structure as the skeleton, and as the flesh and blood. And culture is the soul that holds the thing together and gives it life force.”

Copyright © 2013 Pearson Canada Inc Organizational Culture Refers to a system of shared meaning held by members that distinguishes the organization from other organizations

Copyright © 2013 Pearson Canada Inc Organizational Culture Seven primary characteristics of an organization’s culture: – Innovation and risk-taking. – Attention to detail. – Outcome orientation. – People orientation. – Team orientation. – Aggressiveness. – Stability.

Copyright © 2013 Pearson Canada Inc Characteristics of Organizational Culture Innovation and risk-taking – The degree to which employees are encouraged to be innovative and take risks. Attention to detail – The degree to which employees are expected to exhibit precision, analysis, and attention to detail. Outcome orientation – The degree to which management focuses on results or outcomes rather than on technique and process. People orientation – The degree to which management decisions take into consideration the effect of outcomes on people within the organization.

Copyright © 2013 Pearson Canada Inc Characteristics of Organizational Culture Team orientation – The degree to which work activities are organized around teams rather than individuals. Aggressiveness – The degree to which people are aggressive and competitive rather than easygoing. Stability – The degree to which organizational activities emphasize maintaining the status quo in contrast to growth.

Copyright © 2013 Pearson Canada Inc Exhibit 10-1 Contrasting Organizational Cultures

Copyright © 2013 Pearson Canada Inc Levels of Culture Artifacts – Aspects of an organization’s culture that you see, hear, and feel. Beliefs – The understandings of how objects and ideas relate to each other. Values – The stable, long-lasting beliefs about what is important. Assumptions – The taken-for-granted notions of how something should be in an organization.

Copyright © 2013 Pearson Canada Inc Exhibit 10-2 Layers of Culture

Copyright © 2013 Pearson Canada Inc Culture’s Functions Social glue that helps hold an organization together. – Enhances social system stability and provides appropriate standards for what employees should say or do. – Boundary-defining. – Conveys a sense of identity for organization members. – Facilitates commitment to something larger than one’s individual self-interest. – Guides and shapes the attitudes and behaviour of employees and serves as a “sense-making” and control mechanism.

Copyright © 2013 Pearson Canada Inc Decentralized Organizations & Culture Today’s trend toward decentralized organizations makes culture more important than ever, but it also also makes establishing a strong culture more difficult. – Employees organized in teams may show greater allegiance to their team and its values than to the values of the organization as a whole. – In virtual organizations, the lack of frequent face-to-face contact makes establishing a common set of norms very difficult. Strong leadership that communicates frequently about common goals and priorities is especially important in innovative organizations.

Copyright © 2013 Pearson Canada Inc Culture Creates Climate Organizational climate – refers to the shared perceptions organizational members have about their organization and work environment. – team spirit at the organizational level When everyone has the same general feelings about what is important or how well things are working, the effect of these attitudes will be more than the sum of the individual parts.

Copyright © 2013 Pearson Canada Inc Do Organizations Have Uniform Cultures? Organizational culture represents a common perception held by the organization members. Core values or dominant (primary) values are accepted throughout the organization. – Dominant culture Expresses the core values that are shared by a majority of the organization’s members. – Subcultures Tend to develop in large organizations to reflect common problems, situations, or experiences.

Copyright © 2013 Pearson Canada Inc Strong Vs. Weak Cultures Strong Cultures – the organization’s core values are both intensely held and widely shared. – have a great influence on the behaviour of its members – builds cohesiveness, loyalty, and organizational commitment

Copyright © 2013 Pearson Canada Inc Reading an Organization’s Culture Stories Rituals Material Symbols Language

Copyright © 2013 Pearson Canada Inc Exhibit 10-3 How Organizational Cultures Form

Copyright © 2013 Pearson Canada Inc Creating & Sustaining Culture: Keeping a Culture Alive Selection – Identify and hire individuals who will fit in with the culture. Top Management – Senior executives establish and communicate the norms of the organization. Socialization – Organizations need to teach the culture to new employees.

Copyright © 2013 Pearson Canada Inc A Socialization Model Prearrival stage – explicitly recognizes that each individual arrives with a set of values, attitudes, and expectations about both the work to be done and the organization. Encounter Stage – confronts the possibility that expectations—of the job, co- workers, and the organization in general—may differ from reality. Metamorphosis Stage – the new employee changes or goes through the metamorphosis stage. Outcomes: – Productivity – Commitment – Turnover

Copyright © 2013 Pearson Canada Inc Exhibit 10-5 A Socialization Model

Copyright © 2013 Pearson Canada Inc Exhibit 10-6 Entry Socialization Options Formal vs. Informal Individual vs. Collective Fixed vs. Variable Serial vs. Random Investiture vs. Divestiture

Copyright © 2013 Pearson Canada Inc Exhibit 10-6 Entry Socialization Options

Copyright © 2013 Pearson Canada Inc The Liabilities of Organizational Culture Culture can have dysfunctional aspects in some instances. – Barrier to Change When organization is undergoing change, culture may impede change. – Barrier to Diversity Strong cultures put considerable pressure on employees to conform. – Barrier to Mergers and Acquisitions Merging the cultures of two organizations can be difficult, if not impossible.

Copyright © 2013 Pearson Canada Inc Strategies For Merging Cultures Assimilation – The entire new organization is determined to take on the culture of one of the merging organizations. Separation – Organizations remain separate and cultures are maintained. Integration – A new hybrid culture is formed.

Copyright © 2013 Pearson Canada Inc Key Steps Before a Merger Potential merger partners could conduct a bicultural audit. The management team could bridge existing culture gaps by: – Defining a structure that is appropriate for both teams. – Implementing an appropriate management style. – Reinforcing internal communication to ensure employees are aware of changes that will occur. – Getting agreement on performance criteria and evaluations.

Copyright © 2013 Pearson Canada Inc Changing Organizational Culture Trying to change the culture of an organization is quite difficult and requires that many aspects of the organization change at the same time, especially the reward structure. Culture is such a challenge to change because it often represents the established mindset of employees and managers.

Copyright © 2013 Pearson Canada Inc Creating an Ethical Culture Be a visible role model. – Employees will look to the actions of top management as a benchmark for appropriate behaviour. Communicate ethical expectations. – Minimize ethical ambiguities by creating and disseminating an organizational code of ethics. Provide ethics training. – Set up seminars, workshops, and similar ethics training programs. Visibly reward ethical acts and punish unethical ones. – Include in managers’ performance appraisals a point-by-point evaluation of how their decisions measured against the organization’s code of ethics. Provide protective mechanisms. – Provide formal mechanisms so employees can discuss ethical dilemmas and report unethical behaviour without fear of reprimand.

Copyright © 2013 Pearson Canada Inc Creating a Positive Organizational Culture Building on employee strengths Rewarding more than punishing. Emphasizing vitality and growth. Limits of positive culture.

Copyright © 2013 Pearson Canada Inc Global Implications Organizational cultures often reflect national culture. When an organization opens up operations in another country, it ignores the local culture at its own risk. Management of ethical behaviour is one area where national culture can rub up against corporate culture. – Many strategies for improving ethical behaviour are based on the values and beliefs of the host country.

Copyright © 2013 Pearson Canada Inc Summary and Implications 1.What is the purpose of organizational culture? – Organizational culture provides stability and gives employees a clear understanding of “the way things are done around here.” 2.How do you read an organization’s culture? – Artifacts, such as stories, rituals, material symbols, and language, can be used to help read an organization’s culture. 3.How do you create and maintain culture? – An organization’s culture is derived from the philosophy of its founders. It is communicated by managers and employees are socialized into it. 4.Can organizational culture have a downside? – A strong culture can have a negative effect, including “pressure- cooker” cultures, barriers to change, difficulty in creating an inclusive environment, and hindering mergers and acquisitions. 5.How do you change organizational culture? – It is important to change the reward structure and to work carefully to change employee beliefs.

Copyright © 2013 Pearson Canada Inc OB at Work: For Review 1.What are the levels of organizational culture? 2.Why do subcultures develop in an organization? 3.Can an employee survive in an organization if he or she rejects its core values? Explain. 4.How can an outsider assess an organization’s culture? 5.How is language related to organizational culture?

Copyright © 2013 Pearson Canada Inc OB at Work: For Review 6.What benefits can socialization provide for the organization? For the new employee? 7.How does a strong culture affect an organization’s efforts to improve diversity? 8.Identify the steps a manager can take to implement culture change in an organization. 7.What is a positive organizational culture?

Copyright © 2013 Pearson Canada Inc OB at Work: For Critical Thinking 1.Is socialization brainwashing? Explain. 2.If management sought a culture characterized as innovative and autonomous, what might its socialization program look like? 3.Can you identify a set of characteristics that describes your college’s or university’s culture? Compare them with what several of your peers have noted. How closely do they agree? 4.“We should be opposed to the manipulation of individuals for organizational purposes, but a degree of social uniformity enables organizations to work better.” Do you agree or disagree with this statement? What are its implications for organizational culture? Discuss. 5.Today’s workforce is increasingly made up of part-time or contingent employees. Is organizational culture really important if the workforce is mostly temporary employees?

Copyright © 2013 Pearson Canada Inc Point-CounterPoint Why Culture Doesn’t Change sCulture develops over many years, and becomes part of how the organization thinks and feels. sSelection and promotion policies guarantee survival of culture. sTop management chooses managers who are likely to maintain culture. When Culture Can Change sThere is a dramatic crisis. sThere is a turnover in leadership. sThe organization is young and small. sThere is a weak culture.

Copyright © 2013 Pearson Canada Inc Breakout Group Exercises Form small groups to discuss the following: 1. Choose two courses that you are taking this term, ideally in different faculties, and describe the culture of the classroom in each. What are the similarities and differences? What values about learning might you infer from your observations of culture? 2. Identify artifacts of culture in your current or previous workplace. From these artifacts, would you conclude that the organization had a strong or weak culture? 3. Have you or someone you know worked somewhere where the culture was strong? What was your reaction to that strong culture? Did you like that environment, or would you prefer to work where there is a weaker culture? Why?