1. M A N A G E M E N T M A N A G E M E N T 1 st E D I T I O N 1 st E D I T I O N Gulati | Mayo | Nohria Gulati | Mayo | Nohria Chapter 8 Chapter 8 ORGANIZATIONAL ORGANIZATIONAL CULTURE CULTURE ©South-Western, a part of Cengage Learning PowerPoint Presentation by Charlie Cook ORGANIZATIONAL PERSPECTIVE

2. Learning Objectives Explain the ways in which culture provides the framework and foundation for how work is accomplished and what activities and practices are valued in a firmExplain the ways in which culture provides the framework and foundation for how work is accomplished and what activities and practices are valued in a firm Differentiate between the three levels of culture: (1) artifacts, (2) values and beliefs, and (3) assumptionsDifferentiate between the three levels of culture: (1) artifacts, (2) values and beliefs, and (3) assumptions Discuss the ways in which culture is developed, influenced, and socialized in a firmDiscuss the ways in which culture is developed, influenced, and socialized in a firm © South-Western, a part of Cengage Learning8–2

3. Learning Objectives Explain how a firm’s culture can impact organizational performanceExplain how a firm’s culture can impact organizational performance Explain the role that culture plays when a firm is acquired or when a firm must adapt to new environmental challengesExplain the role that culture plays when a firm is acquired or when a firm must adapt to new environmental challenges © South-Western, a part of Cengage Learning8–3

4. 6–4 What Is Culture? The way individuals in an organization uniquely and collectively think, feel, and act

5. Understanding Culture © South-Western, a part of Cengage Learning8–5 An understanding of its work rules and norms An understanding of the group’s boundaries Deciphering the roots of a firm’s culture: An appreciation of its values and philosophy or purpose An understanding of its power structure An evaluation of its reward and punishment system

6. Levels of Organizational Culture © South-Western, a part of Cengage Learning8–6 Visible organizational structures, processes, and languages Artifacts The meanings that members of an organization attach to artifacts Beliefs and values A behavior stemming that stemmed from a belief held by a group that is no longer visible, but has become deeply embedded in the organization Assumptions

7. How Do/Should Leaders Affect Culture? © South-Western, a part of Cengage Learning8–7 Create a challenging work environment Reward achievement with non-pay perks such as new assignments and employee recognition Inspire all managers and employees to do their best A leader’s role in shaping culture Establish and abide by a clear set of values Empower employees and managers to make independent decisions and to find ways to improve operations Reward achievement with pay based on performance and continue raising the bar

8. Role of Teams © South-Western, a part of Cengage Learning8–8 Teams directly impact culture by the manner in which they:Teams directly impact culture by the manner in which they: –Encounter big problems –Solve those problems –Perceive the effects of their solutions A course of action prescribed by a founder has to be tried and tested by employees before it becomes an integral part of an organization’s cultureA course of action prescribed by a founder has to be tried and tested by employees before it becomes an integral part of an organization’s culture

9. Cultural Socialization © South-Western, a part of Cengage Learning8–9 The process of understanding how work gets done and how individuals should interact in an organization Socialization The desired end result of socialization whereby employees become committed to the organization and its goals Organizational commitment Organizational commitment

10. The Process of Cultural Socialization © South-Western, a part of Cengage Learning8–10

11. How Does Culture Affect Performance? A strong culture:A strong culture: –Can lead to better levels of performance, higher financial metrics, and distinctive competitive advantage –Promotes ethical guidelines that define acceptable and unacceptable behavior, helping the organization require less coordination and monitoring –Clarifies roles by being explicit about what is expected in an organization Subcultures: Cultures that form around geographic or organizational units in a companySubcultures: Cultures that form around geographic or organizational units in a company © South-Western, a part of Cengage Learning8–11

12. Culture and Crucial Moments Evaluating culture in mergers and acquisitionsEvaluating culture in mergers and acquisitions –Understanding the acquiring and acquired firm’s culture –Combining the two cultures Where are the similarities and differences?Where are the similarities and differences? What needs to change?What needs to change? How to ensure that the value of both cultures is maximized?How to ensure that the value of both cultures is maximized? –Key point for managers to keep in mind is that much of the value of an acquired firm may be in its culture © South-Western, a part of Cengage Learning8–12

13. Culture and Crucial Moments Adapting culture to a new contextual landscapeAdapting culture to a new contextual landscape –Culture can be a competitive differentiator and a strong inhibitor to change –Culture can be changed smoothly by paying attention to the task that is performed on a continuous basis –At the time of crisis company culture changes more quickly Employees should be willing to embrace new valuesEmployees should be willing to embrace new values Leader should provide clear and compelling case for changeLeader should provide clear and compelling case for change © South-Western, a part of Cengage Learning8–13

14. Strategic Change and Culture © South-Western, a part of Cengage Learning8–14 How work is accomplished in a firm Internal integration How environmental changes impact a firm’s strategy External adaptation

15. KEY TERMS © South-Western, a part of Cengage Learning8–15 ArtifactsAssumption Beliefs and values Culture External adaptation Internal integration Organizational commitment SocializationSubcultures