1. © 2009 Cengage Learning. All rights reserved. Chapter 16 Organizational Culture Learning Outcomes 1 Identify the three levels of culture and the roles they play in an organization. 2 Evaluate the four functions of culture within an organization. 3 Explain the relationship between organizational culture and performance. 4 Describe five ways leaders reinforce organizational culture. 5 Describe the three stages of organizational socialization and how culture is communicated in each step. 6 Discuss how managers assess their organization’s culture. 7 Explain actions managers can take to change organizational culture. 8 Identify the challenges organizations face developing positive, cohesive cultures.

2. © 2009 Cengage Learning. All rights reserved. Organizational (Corporate) Culture A pattern of basic assumptions that are considered valid and that are taught to new members as the way to perceive, think, and feel in the organization

3. Levels of Organizational Culture s Artifacts – symbols of culture in the physical and social work environment Values Espoused: what members of an organization say they value Enacted: reflected in the way individuals actually behave Assumptions – deeply held beliefs that guide behavior and tell members of an organization how to perceive and think about things

4. Organizational Culture Levels Visible, often not decipherable Greater level of awareness Taken for granted, Invisible, Preconscious Reprinted with permission from Edgar H. Schein, Organizational Culture and Leadership: A Dynamic View. Copyright © 1985 Jossey-Bass Inc, a subsidiary of John Wiley & Sons, Inc. Artifacts Personal enactment Ceremonies and rites Stories Ritual Symbols Values Testable in the physical environment Testable only by social consensus Basic Assumptions Relationship to environment Nature of reality, time, and space Nature of human nature Nature of human activity Nature of human relationships

5. © 2009 Cengage Learning. All rights reserved. Functions of Organizational Culture Culture provides a sense of identity to members and increases their commitment to the organization Culture is a sense-making device for organization members Culture reinforces the values in the organization Culture serves as a control mechanism for shaping behavior

6. © 2009 Cengage Learning. All rights reserved. Adaptive Perspective Theories about the relationship between organizational culture and performance Strong Culture Perspective Fit Perspective

7. © 2009 Cengage Learning. All rights reserved. Strong Culture An organizational culture with a consensus on the values that drive the company and with an intensity that is recognizable even to outsiders

8. © 2009 Cengage Learning. All rights reserved. BECAUSE They are characterized by goal alignment They create a high level of motivation because of shared values by the members They provide control without the oppressive effects of bureaucracy Strong cultures facilitate performance

9. © 2009 Cengage Learning. All rights reserved. Argument that a culture is good only if it fits the industry’s or the firm’s strategy. Organizational characteristics that may affect culture  Customer requirements  Competitive environment  Societal expectations Fit Perspective

10. © 2009 Cengage Learning. All rights reserved. Adaptive Culture An organizational culture that encourages confidence and risk taking among employees, has leadership that produces change, and focuses on the changing needs of customers

11. © 2009 Cengage Learning. All rights reserved. Adaptive Perspective AdaptiveNonadaptive Most managers care about themselves, their work group, or an associated product Most managers care about customers, stockholders, and employees Managers tend to behave somewhat insularly, politically, and bureaucratically Managers pay close attention to all their constituencies, esp. customers Core Values Common Behavior Reprinted with the permission of The Free Press, a Division of Simon & Schuster, Inc. from Corporate Culture and Performance by John P. Kotter and James L Heskett. Copyright © 1992 by Kotter Associates, Inc. and James L. Heskett.

12. © 2009 Cengage Learning. All rights reserved. Five Most Important Elements in Managing Culture What leaders pay attention to How leaders react to crises How leaders behave How leaders allocate rewards How leaders hire and fire individuals 5

13. Stages of Socialization Realism Congruence 1. Anticipatory Socialization 2. Encounter Job demands Task Role Interpersonal 3. Change and Acquisition Mastery Performance Satisfaction Mutual influence Low levels of distress Intent to remain From “An Ethical Weather Repart: Assessing the Organization's Ethical Climate” by John B. Cullen, et al. In Organizational Dynamics, Autumn 1989. Copyright © 1989 American Management Association International. Reprinted by permission of American Management Association International, New York, N.Y. All rights reserved. Http://www.amanet. Org. Outcomes of Socialization

14. © 2009 Cengage Learning. All rights reserved. Organizational Socialization The process by which newcomers are transformed from outsiders to participating, effective members of the organization

15. © 2009 Cengage Learning. All rights reserved. 1. [Anticipatory Socialization] – first socialization stage—encompasses all of the learning that takes place prior to the newcomer’s first day on the job 2. [Encounter] – the second socialization stage— the newcomer learns the tasks associated with the job, clarifies roles, and establishes new relationships at work 3. [Change and Acquisition] – the third socialization stage—the newcomer begins to master the demands of the job [ Socialization Process ]

16. © 2009 Cengage Learning. All rights reserved. Cultural Changes  Merger or acquisition  Employment of people from different countries Situations That May Require Cultural Change

17. © 2009 Cengage Learning. All rights reserved. Clear communication of the boundaries of ethical conduct Selection of employees who support the ethical culture Reward of ethical behavior Conspicuous punishment of members who engage in unethical behavior ETHICAL BEHAVIOR REINFORCE

18. © 2009 Cengage Learning. All rights reserved. Empowerment unleashes employees’ creativity Empowerment requires eliminating traditional hierarchical notions of power –Involve employees in decision making –Remove obstacles to their performance –Communicate the value of product and service quality Empowerment