1. Chapter 18
Organization Culture

2. Chapter Learning Objectives
After studying this chapter you should be able to:
Define organization culture, explain how it affects employee behavior, and understand its historical roots.
Describe how to create organization culture.
Describe two different approaches to culture in organizations.
Identify emerging issues in organization culture.
Discuss the important elements of managing the organizational culture.
© 2012 South-Western, a part of Cengage Learning

3. The Nature of Organization Culture
Why Study Culture?
It is assumed that organizations with a strong culture perform at higher levels than those without a strong culture
Organizational Culture
A set of values held by individuals in a firm that help employees understand acceptability of actions
Culture Values
Are often taken for granted (implicit)
May not be made explicit (i.e., not written down)
Are communicated through symbolic means
© 2012 South-Western, a part of Cengage Learning

4. 18.1 Definitions of Organization Culture
Source
“A belief system shared by an organization’s members”
J. C. Spender, “Myths, Recipes and Knowledge-Bases in Organizational Analysis” (Unpublished manuscript, Graduate School of Management, University of California at Los Angeles, 1983), p. 2.
“Strong, widely shared core values”
C. O’Reilly, “Corporations, Cults, and Organizational Culture: Lessons from Silicon Valley Firms” (Paper presented at the Annual Meeting of the Academy of Management, Dallas, Texas, 1983), p. 1.
“The way we do things around here”
T. E. Deal and A. A. Kennedy, Corporate Cultures: The Rites and Rituals of Corporate Life (Reading, MA: Addison-Wesley, 1982), p. 4.
“The collective programming of the mind”
G. Hofstede, Culture’s Consequences: International Differences in Work-Related Values (Beverly Hills, CA: Sage, 1980), p. 25.
“Collective understandings”
J. Van Maanen and S. R. Barley, “Cultural Organization: Fragments of a Theory” (Paper presented at the Annual Meeting of the Academy of Management, Dallas, Texas, 1983), p. 7.
“A set of shared, enduring beliefs communicated through a variety of symbolic media, creating meaning in people’s work lives”
J. M. Kouzes, D. F. Caldwell, and B. Z. Posner, “Organizational Culture: How It Is Created, Maintained, and Changed” (Presentation at OD Network National Conference, Los Angeles, October 9, 1983).
“A set of symbols, ceremonies, and myths that communicates the underlying values and beliefs of that organization to its employees”
W. G. Ouchi, Theory Z: How American Business Can Meet the Japanese Challenge (Reading, MA: Addison-Wesley, 1981), p. 41.
“A dominant and coherent set of shared values conveyed by such symbolic means as stories, myths, legends, slogans, anecdotes, and fairy tales”
T. J. Peters and R. H. Waterman Jr., In Search of Excellence: Lessons from America’s Best-Run Companies (New York: Harper & Row, 1982), p. 103.
“The pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration”
E. H. Schein, “The Role of the Founder in Creating Organizational Culture,” Organizational Dynamics, Summer 1985, p. 14.
© 2012 South-Western, a part of Cengage Learning

5. The Nature of Organization Culture (cont’d)
Historical Foundations
Anthropology
Social Psychology
Sociology
Economics
© 2012 South-Western, a part of Cengage Learning

6. Organization Culture Versus Climate
The historical context within which a situation occurs and the impact of this context on the behaviors of employees
Difficult to alter in the short-run
Means through which people in the organization learn and communicate organization acceptability (values and norms)
Organization Climate
The current situations in an organization and the linkages among work groups, employees, and work performance
Easier for management to manipulate in order to directly affect the behavior of employees
© 2012 South-Western, a part of Cengage Learning

7. 18.2 Creating Organization Culture
Step 1—Formulate Strategic Values
Step 2—Develop Cultural Values
Step 3—Create Vision
Step 4—Initiate Implementation Strategies
Step 5—Reinforce Cultural Behaviors
© 2012 South-Western, a part of Cengage Learning

8. Creating the Organization Culture
Establish Values
Strategic values
The basic beliefs about an organization’s environment that shape its strategy.
Cultural values
The values that employees need to have and act on for the organization to act on the strategic values.
Create Vision
Create a picture of the organization that portrays how the strategic and cultural values will combine to create the future.
© 2012 South-Western, a part of Cengage Learning

9. Creating the Organization Culture (cont’d)
Initiate Implementation Strategies
Take actions founded on the strategic and cultural values to accomplish the vision.
Reinforce Cultural Behaviors
Use formal reward systems to encourage desired employee behaviors
Tell stories that epitomizing cultural values
Conduct ceremonies and rituals that emphasize right actions by employees
© 2012 South-Western, a part of Cengage Learning

10. Approaches to Describing Organization Culture: The Ouchi Framework
Typical United States firms
Typical Japanese firms
Type Z United States firms
The Ouchi Framework
© 2012 South-Western, a part of Cengage Learning

11. 18.3 The Ouchi Framework
© 2012 South-Western, a part of Cengage Learning

12. 18.4 The Peters and Waterman Framework
Attributes of an Excellent Firm
Bias for action
Stay close to the customer
Autonomy and entrepreneurship
Productivity through people
Hands-on management
Stick to the knitting
Simple form, lean staff
Simultaneously loose and tight organization
© 2012 South-Western, a part of Cengage Learning

13. Emerging Issues in Organization Culture: Innovation
The process of creating and doing new things that are introduced into the marketplace as products, processes, or services
Radical Innovation
Systems Innovation
Incremental Innovation
Types of Innovation
© 2012 South-Western, a part of Cengage Learning

14. Emerging Issues in Organization Culture: Innovation (cont’d)
New Ventures
Require entrepreneurship and good management
Intrapreneurship
Entrepreneurial activity that takes place within the context of a large organization
Entrepreneur’s profile
Need for achievement
Desire to assume responsibility
Willing to take risks
Focus on concrete results
© 2012 South-Western, a part of Cengage Learning

15. Emerging Issues in Organization Culture: Innovation (cont’d)
Corporate Research
Supports existing businesses to provide incremental innovations and to explore potential new technology bases
Is responsible for keeping the company’s products and processes technologically advanced
Corporate culture can be instrumental in fostering environment for creativity and innovation
© 2012 South-Western, a part of Cengage Learning

16. Emerging Issues in Organization Culture (cont’d)
Empowerment
Is enabling workers to set their own work goals, make decisions, solve problems within their sphere of responsibility and authority
Appropriate Cultures (Goffee and Jones)
Factors that may determine the appropriate type of culture appropriate for an organization:
The nature of the value chain
The dynamism of the environment
© 2012 South-Western, a part of Cengage Learning

17. Managing Organization Culture
Taking advantage of existing culture
Teaching organization culture
Changing organization culture
Elements of Managing Organization Culture
© 2012 South-Western, a part of Cengage Learning

18. Managing Organization Culture (cont’d)
Taking Advantage of the Existing Culture
Easier and faster to alter employee behaviors within the existing culture than it is to change existing history, traditions, and values
Managers must be aware and understand the organization’s values
Managers can communicate their understanding to lower-level individuals
© 2012 South-Western, a part of Cengage Learning

19. Managing Organization Culture (cont’d)
Teaching Organization Culture
Organizational socialization
Is the process through which employees learn about the firm’s culture and pass their knowledge and understanding on to others
Organizational mechanisms
Are examples of organization culture that employees see in more experienced employees’ behaviors
Corporate pamphlets and formal training sessions
© 2012 South-Western, a part of Cengage Learning

20. Managing Organization Culture (cont’d)
Changing the Organization Culture
Managing symbols
Substituting stories and myths that support the new cultural values for those that support old ones
Culture can be difficult to change when upper management inadvertently reverts to old behaviors
The Stability of Change
New values and beliefs must be seen as stable and influential as old ones
Changing value systems requires enormous effort because value systems tend to be self-reinforcing
© 2012 South-Western, a part of Cengage Learning

21. Organizational Behavior in Action
After reading the chapter:
Why do organizations lose the innovative aspects of their organizational culture?
What should managers do to turn climate into culture in new organizations?
What are the effects of technology on culture in organizations?
© 2012 South-Western, a part of Cengage Learning