1. Chapter 16 Organizational Culture and Development How Individuals Work, Live, and Achieve Together

2. Copyright © 2008 John Wiley & Sons, Inc.16-2 Chapter 16 Study Questions What is organizational culture? How do you understand an organizational culture? How can the organizational culture be managed? How can you use organizational development to improve the firm?

3. Copyright © 2008 John Wiley & Sons, Inc.16-3 What is organizational culture? Organizational culture –The system of shared actions, values, and beliefs that develops within an organization and guides the behavior of its members

4. Copyright © 2008 John Wiley & Sons, Inc.16-4 What is organizational culture? External adaptation –Involves reaching goals and dealing with outsiders regarding tasks to be accomplished –methods used to achieve the goals –methods of coping with success and failure.

5. Copyright © 2008 John Wiley & Sons, Inc.16-5 What is organizational culture? Important aspects of external adaptation –Separating eternal forces based on importance –Developing ways to measure accomplishments –Creating explanations for not meeting goals

6. Copyright © 2008 John Wiley & Sons, Inc.16-6 What is organizational culture? External adaptation involves answering important goal-related questions regarding coping with reality –What is the real mission? –How do we contribute? –What are our goals? –How do we reach our goals? –What external forces are important? –How do we measure results? –What do we do if specific targets are not met? –How do we tell others how good we are? –When do we quit?

7. Copyright © 2008 John Wiley & Sons, Inc.16-7 What is organizational culture? Internal integration –Deals with the creation of a collective identity and with finding ways of matching methods of working and living together

8. Copyright © 2008 John Wiley & Sons, Inc.16-8 What is organizational culture? Important aspects of working together –Deciding who is a member and who is not –Developing an informal understanding of acceptable and unacceptable behavior –Separating friends from enemies

9. Copyright © 2008 John Wiley & Sons, Inc.16-9 What is organizational culture? Internal integration involves answering important questions associated with living together –What is our unique identity? –How do we view the world? –Who is a member? –How do we allocate power, status, and authority? –How do we communicate? –What is the basis for friendship?

10. Copyright © 2008 John Wiley & Sons, Inc.16-10 What is organizational culture? Subculture –A group of individuals with a unique pattern of values and philosophy that are not inconsistent with the organization’s dominant values and philosophy

11. Copyright © 2008 John Wiley & Sons, Inc.16-11 What is organizational culture? Counterculture –A groups where the pattern of values and philosophies outwardly reject those of the larger organization or social system

12. Copyright © 2008 John Wiley & Sons, Inc.16-12 What is organizational culture? Problems associated with subcultural divisions within the larger culture –Subordinate groups are likely to form into a counterculture pursuing self-interests –The firm may encounter extreme difficulty in coping with broader cultural changes –Embracing natural divisions from the larger culture may lead to difficulty in international operations

13. Copyright © 2008 John Wiley & Sons, Inc.16-13 What is organizational culture? Developing the multicultural organization Step 1: The organization should develop pluralism Step 2: The organization should fully integrate its structure Step 3: The organization must integrate the informal networks Step 4: The organization should break the linkage between naturally occurring group identity and organizational identity Step 5: The organization must actively work to eliminate identity-based interpersonal conflict

14. Copyright © 2008 John Wiley & Sons, Inc.16-14 Figure 16.1

15. Copyright © 2008 John Wiley & Sons, Inc.16-15 How do you understand an organizational culture? Layers of cultural analysis First – observable culture Second – recognizes that shared values can play a critical part in linking people together Third – common cultural assumptions

16. Copyright © 2008 John Wiley & Sons, Inc.16-16 How do you understand an organizational culture? Sagas –Heroic accounts of organizational accomplishments Rites –Standardized and recurring activities that are used at special times to influence organizational members

17. Copyright © 2008 John Wiley & Sons, Inc.16-17 How do you understand an organizational culture? Rituals –Systems of rites Cultural symbols –Any object, act, or event that serves to transmit cultural meaning

18. Copyright © 2008 John Wiley & Sons, Inc.16-18 How do you understand an organizational culture? Shared values –Help turn routine activities into valuable and important actions –Tie the organization to the important values of society –May provide a very distinctive source of competitive advantage

19. Copyright © 2008 John Wiley & Sons, Inc.16-19 How do you understand an organizational culture? Characteristics of strong corporate cultures –A widely shared real understanding of what the firm stands for, often embodied in slogans –A concern for individuals over rules, policies, procedures, and adherence to job duties –A recognition of heroes whose actions illustrate the company’s shared philosophy and concerns

20. Copyright © 2008 John Wiley & Sons, Inc.16-20 How do you understand an organizational culture? Characteristics of strong corporate cultures –A belief in ritual and ceremony as important to members and to building a common identity –A well-understood sense of the informal rules and expectations so that employees and managers know what is expected of them –A belief that what employees and managers do is important and that it is essential to share information and ideas

21. Copyright © 2008 John Wiley & Sons, Inc.16-21 How do you understand an organizational culture? Organizational myths –Unproven and often unstated beliefs that are accepted uncritically

22. Copyright © 2008 John Wiley & Sons, Inc.16-22 How can the organizational culture be managed? Strategies for managing corporate culture –Managers help modify observable culture, shared values, and common assumptions directly –Use of organizational development techniques to modify specific elements of the culture

23. Copyright © 2008 John Wiley & Sons, Inc.16-23 How can the organizational culture be managed? Management philosophy –links key goal-related strategic issues with key collaboration issues and comes up with a series of general ways by which the firm will manage its affairs

24. Copyright © 2008 John Wiley & Sons, Inc.16-24 How can the organizational culture be managed? Why a well-developed management philosophy is important –Establishes generally understood boundaries on all members of the firm –Provides a consistent way for approaching new and novel situations –Helps hold individuals together by showing them a known path to success

25. Copyright © 2008 John Wiley & Sons, Inc.16-25 How can the organizational culture be managed? Strategies for building, reinforcing, and changing organizational culture –Directly modifying the visible aspects of culture –Changing the lessons to be drawn from common stories –Setting the tone for a culture and for cultural change –Fostering a culture that addresses questions of external adaptation and internal integration

26. Copyright © 2008 John Wiley & Sons, Inc.16-26 How can the organizational culture be managed? Mistakes that managers can make in changing culture –Trying to change people’s values from the top down without also changing how the organization operates –Attempting to revitalize an organization by dictating major changes and ignoring shared values

27. Copyright © 2008 John Wiley & Sons, Inc.16-27 How can you use organization development to improve the firm? Organization development (OD) –The application of behavioral science knowledge in a long-range effort to improve an organization’s ability to cope with change in its external environment and to increase its internal problem-solving capabilities

28. Copyright © 2008 John Wiley & Sons, Inc.16-28 How can you use organization development to improve the firm? Underlying assumptions of OD Individual level –guided by principles that reflect an underlying respect for people and their capabilities

29. Copyright © 2008 John Wiley & Sons, Inc.16-29 How can you use organization development to improve the firm? Group level –Guided by principles that reflect a belief that groups can be good for both people and organizations

30. Copyright © 2008 John Wiley & Sons, Inc.16-30 How can you use organization development to improve the firm? Organizational level –Guided by principles that show a respect for the complexity of an organization as a system of interdependent parts.

31. Copyright © 2008 John Wiley & Sons, Inc.16-31 How can you use organization development to improve the firm? Outcome goals –Mainly deal with issues of external adaptation Process goals –Mainly deal with issues of internal integration

32. Copyright © 2008 John Wiley & Sons, Inc.16-32 How can you use organization development to improve the firm? OD helps organizations by: –Creating an open problem solving climate –Supplementing formal authority with knowledge and competence –Moving decision making where relevant information is available –Building trust and maximizing collaboration –Increasing the sense of organizational ownership –Allowing people to exercise self-direction and self- control

33. Copyright © 2008 John Wiley & Sons, Inc.16-33 How can you use organization development to improve the firm? Action research –The process of systematically collecting data on an organization, feeding it back to the members for action planning, and evaluating results by collecting and reflecting on more data after the planned actions have been taken.

34. Copyright © 2008 John Wiley & Sons, Inc.16-34 Figure 16.2

35. Copyright © 2008 John Wiley & Sons, Inc.16-35 How can you use organization development to improve the firm? Survey feedback –Collection of data via questionnaire response from organization members or sample of such responses Confrontation meetings –Designed to help determine how an organization may be improved and to take initial actions to better the situation

36. Copyright © 2008 John Wiley & Sons, Inc.16-36 How can you use organization development to improve the firm? Structural redesign –Realigning the structure of the organization or major subsystems to improve performance Collateral organization –Pulling a representative set of members out of the formal organization structure to engage in periodic small-group problem-solving sessions

37. Copyright © 2008 John Wiley & Sons, Inc.16-37 How can you use organization development to improve the firm? Team building –Activities designed to help examine how the group functions and how it can function better Process consultation –Activities that are facilitated by an OD practitioner and designed to improve group functioning

38. Copyright © 2008 John Wiley & Sons, Inc.16-38 How can you use organization development to improve the firm? Intergroup team building –Designed to help groups improve working relationships and experience improved group effectiveness

39. Copyright © 2008 John Wiley & Sons, Inc.16-39 How can you use organization development to improve the firm? Role negotiation –Clarifying expectations in working relationships Job redesign –Creating long-term congruence between individual goals and organizational career opportunities