ORGANIZATIONAL CULTURE
Institutionalization: A Forerunner of Culture
Institutionalization
When an organization takes on a life of its own,
apart from any of its members, becomes valued for
itself, and acquires immortality.
What Is Organizational Culture?
Characteristics:
1. Innovation and risk
taking
Organizational Culture
A common perception
held by the organization’s
members; a system of
shared meaning.
2. Attention to detail
3. Outcome orientation
4. People orientation
5. Team orientation
6. Aggressiveness
7. Stability
Contrasting Organizational Cultures
Organization A
This organization is a manufacturing firm. Managers are expected to fully document all
decisions; and “good managers” are those who can provide detailed data to support
their recommendations. Creative decisions that incur significant change or risk are not
encouraged. Because managers of failed projects are openly criticized and penalized,
managers try not to implement ideas that deviate much from the status quo. One lowerlevel manager quoted an often used phrase in the company: “If it ain’t broke, don’t fix
it.”
There are extensive rules and regulations in this firm that employees are required to
follow. Managers supervise employees closely to ensure there are no deviations.
Management is concerned with high productivity, regardless of the impact on employee
morale or turnover.
Work activities are designed around individuals. There are distinct departments and
lines of authority, and employees are expected to minimize formal contact with other
employees outside their functional area or line of command. Performance evaluations
and rewards emphasize individual effort, although seniority tends to be the primary
factor in the determination of pay raises and promotions.
Contrasting Organizational Cultures
Organization B
This organization is also a manufacturing firm. Here, however, management
encourages and rewards risk taking and change. Decisions based on intuition are
valued as much as those that are well rationalized. Management prides itself on its
history of experimenting with new technologies and its success in regularly
introducing innovation products. Managers or employees who have a good idea are
encouraged to “run with it.” And failures are treated as “learning experiences.” The
company prides itself on being market-driven and rapidly responsive to the changing
needs of its customers.
There are few rules and regulations for employees to follow, and supervision is
loose because management believes that its employees are hardworking and
trustworthy. Management is concerned with high productivity, but believes that this
comes through treating its people right. The company is proud of its reputation as
being a good place to work.
Job activities are designed around work teams, and team members are
encouraged to interact with people across functions and authority levels. Employees
talk positively about the competition between teams. Individuals and teams have
goals, and bonuses are based on achievement of these outcomes. Employees are
given considerable autonomy in choosing the means by which the goals are attained.
Do Organizations Have Uniform Cultures?
Dominant Culture
Expresses the core values that
are shared by a majority of
the organization’s members.
Subcultures
Mini
cultures
within
an
organization, typically defined
by department designations
and geographical separation.
Do Organizations Have Uniform Cultures?
Core Values
The primary or dominant values that are accepted
throughout the organization.
Strong Culture
A culture in which the
core values are intensely
held and widely shared.
What Is Organizational Culture?
 Culture Versus Formalization
– A strong culture increases behavioral consistency and
can act as a substitute for formalization.
 Organizational Culture Versus National Culture
– National culture has a greater impact on employees
than does their organization’s culture.
– Nationals selected to work for foreign companies may
be atypical of the local/native population.
What Do Cultures Do?
Culture’s Functions:
1. Defines the boundary between one organization
and others.
2. Conveys a sense of identity for its members.
3. Facilitates the generation of commitment to
something larger than self-interest.
4. Enhances the stability of the social system.
5. Serves as a sense-making and control mechanism
for fitting employees in the organization.
What Do Cultures Do?
Culture as a Liability:
1. Barrier to change.
2. Barrier to diversity
3. Barrier to acquisitions and mergers
How Culture Begins
 Founders
 Founders hire and keep only employees who think
and feel the same way they do.
 Founders indoctrinate and socialize these employees
to their way of thinking and feeling.
 The founders’ own behavior acts as a role model that
encourages employees to identify with them and
thereby internalize their beliefs, values, and
assumptions.
Keeping Culture Alive
 Selection
– Concern with how well the candidates will fit into the
organization.
– Provides information to candidates about the
organization.
 Top Management
– Senior executives help establish behavioral norms that
are adopted by the organization.
 Socialization
– The process that helps new employees adapt to the
organization’s culture.
Stages in the Socialization Process
Prearrival Stage
The period of learning in the socialization process that occurs
before a new employee joins the organization.
Encounter Stage
The stage in the socialization process in which a new employee
sees what the organization is really like and confronts the
possibility that expectations and reality may diverge.
Metamorphosis Stage
The stage in the socialization process in which a new employee
changes and adjusts to the work, work group, and organization.
A Socialization Model
Entry Socialization Options
• Formal versus Informal
• Individual versus Collective
• Fixed versus Variable
• Serial versus Random
• Investiture versus Divestiture
How Organization Cultures Form
How Employees Learn Culture
• Stories
• Rituals
• Material Symbols
• Language
Creating An Ethical Organizational Culture
 Characteristics of Organizations that Develop High
Ethical Standards
– High tolerance for risk
– Low to moderate in aggressiveness
– Focus on means as well as outcomes
 Managerial Practices Promoting an Ethical Culture
–
–
–
–
–
Being a visible role model.
Communicating ethical expectations.
Providing ethical training.
Rewarding ethical acts and punishing unethical ones.
Providing protective mechanisms.
Creating a Customer-Responsive Culture
 Key Variables Shaping Customer-Responsive
Cultures
1. The types of employees hired by the organization.
2. Low formalization: the freedom to meet customer
service requirements.
3. Empowering
employees
with
decision-making
discretion to please the customer.
4. Good listening skills to understand customer
messages.
5. Role clarity that allows service employees to act as
“boundary spanners.”
6. Employees who engage in organizational citizenship
behaviors.
Creating a Customer-Responsive Culture
Managerial Actions :
• Select new employees with personality and
attitudes consistent with high service orientation.
• Train and socialize current employees to be more
customer focused.
• Change
organizational
employees more control.
structure
to
give
• Empower employees to make decision about their
jobs.
Creating a Customer-Responsive Culture
Managerial Actions:
• Lead by conveying a customer-focused vision
and demonstrating commitment to customers.
• Conduct performance appraisals based
customer-focused employee behaviors.
on
• Provide ongoing recognition for employees who
make special efforts to please customers.
Spirituality and Organizational Culture
Workplace Spirituality
The recognition that people have an inner life that
nourishes and is nourished by meaningful work that
takes place in the context of the community.
Characteristics:
• Strong sense of purpose
• Focus on individual development
• Trust and openness
• Employee empowerment
• Toleration of employee expression
Reasons for the Growing Interest in Spirituality

As a counterbalance to the pressures and stress of a turbulent
pace of life and the lack of community many people feel and
their increased need for involvement and connection.


Formalized religion hasn’t worked for many people.

The desire to integrate personal life values with one’s
professional life.

Job demands have made the workplace dominant in many
people’s lives, yet they continue to question the meaning of
work.
An increasing number of people are finding that the pursuit of
more material acquisitions leaves them unfulfilled.
How Organizational Cultures Have an
Impact on Performance and Satisfaction
Hofstede Cultural Framework
Culture is more often a source of conflict than of synergy.
Cultural differences are a nuisance at best and often a
disaster."
Prof. Geert Hofstede
Hofstede Cultural Framework
 National cultures can be described according to the
analysis of Geert Hofstede.
 These ideas were first based on a large research project
into national culture differences across subsidiaries of a
multinational corporation (IBM) in 64 countries.
 Subsequent studies by others covered students in 23
countries, elites in 19 countries, commercial airline pilots in
23 countries, up-market consumers in 15 countries, and
civil service managers in 14 countries.
 Together these studies identified and validated four
independent dimensions of national culture differences,
with a fifth dimension added later.
The drawbacks of applying the Hofstede Model
 Firstly, the averages of a country do not relate to
individuals of that country. One must be aware that not all
individuals or even regions with subcultures fit into the
mould. It is to be used as a guide to understanding the
difference in culture between countries, not as law set in
stone. As always, there are exceptions to the rule.
 Secondly, how accurate is the data? The data has been
collected through questionniares, which have their own
limitations.
 Lastly, is the data up to date? How much does the culture
of a country change over time, either by internal or
external influences?
Hofstede Cultural Framework
1.
2.
3.
4.
5.
Power Distance
Individualism vs. Collectivism
Masculinity vs. Femininity
Uncertainty Avoidance
Long Term Orientation
Power Distance
 “...the extent to which the
less powerful members of
institutions
and
organizations within a
country expect and accept
that power is distributed
unequally.”
PD
P.R.C
Russia
West Africa
Indonesia
Hong Kong
Netherlands
France
Japan
Germany
Canada
U.S.A.
100
90
80
70
60
50
40
30
20
10
0
Power Distance at Work






Hierarchy
Centralization
Salary range
Participation
Ideal Boss
Privilege & status symbols
Individualism vs. Collectivism
 Individualist societies: ties
are loose and everyone
looks out for himself or
herself.
 Collectivist
societies:
people
integrated
into
strong, cohesive groups;
protection is exchanged
for loyalty.
ID
P.R.C
Russia
West Africa
Indonesia
Hong Kong
Netherlands
France
Japan
Germany
Canada
U.S.A.
100
90
80
70
60
50
40
30
20
10
0
Individualism / Collectivism at Work
 Employee-employer
relationship
 Hiring and promotion
decisions
 Managerial focus
 Task vs. relationship
priority
Masculinity vs. Femininity
 Masculine societies: social
gender roles are distinct
(men focus on material
success;
women
on
quality of life).
 Feminine societies: social
gender roles overlap (both
quality of life).
MA
P.R.C
Russia
West Africa
Indonesia
Hong Kong
Netherlands
France
Japan
Germany
Canada
U.S.A.
100
90
80
70
60
50
40
30
20
10
0
Masculinity / Femininity at Work
 Centrality of work
 Ways of managing &
decision making
 Fem: equality, solidarity,
quality of work life
 Mas:
equity,
compete,
performance
 Conflict resolution
Uncertainty Avoidance
 “…the extent to which the
members of a culture feel
threatened by uncertain or
unknown situations.”
 NOT the same as risk
avoidance
 Presence of rules
UA
P.R.C
Russia
West Africa
Indonesia
Hong Kong
Netherlands
France
Japan
Germany
Canada
U.S.A.
100
90
80
70
60
50
40
30
20
10
0
Uncertainty Avoidance at Work




Necessity of rules
Time orientation
Precision & punctuality
Interpretation of “What is
different…”
 Appropriateness of
emotional displays
Long term orientation (Confucian Dynamism)
 The ‘newest’ dimension
 three universal
dimensions and two fourth
dimensions
 Truth vs. Virtue: What one
believes vs. What one
does
LT
P.R.C
Russia
West Africa
Indonesia
Hong Kong
Netherlands
France
Japan
Germany
Canada
U.S.A.
120
100
80
60
40
20
0
Confucian Dynamism
 Short-term orientation
 Long-term orientation
 Social pressure to ‘keep up
with the Joneses’
 small savings
 expect quick results
 concern with possessing
Truth
 Thrift: being sparing with
resources
 large savings
 perseverance toward slow
results
 concern with respecting the
demands of Virtue
Hofstede Framework Comparisons
140
120
100
U.S.A.
80
Canada
Japan
Netherlands
60
P.R.C
40
20
0
PD
ID
MA
UA
LT
Long term orientation at Work
 Stress on Market
Processes
 Stress on the Individual
 Stress on Managers rather
than Workers
The GLOBE framework for assessing cultures
 In 1993, the Global Leadership and Organizational
Behavior Effectiveness (GLOBE) research program
is an ongoing cross-cultural investigation of leadership
and national culture. Using data from 825
organizations in 62 countries, the GLOBE team
identified nine dimensions on which national culture
differs. Some of these are:
–
–
–
–
–
–
–
Power distance
Individualism/ collectivism
Uncertainty avoidance
Gender differentiation
Future orientation
Humane orientation
Performance orientation
Edgar H Schein
Organizational Culture & Leadership
A professor at the MIT Sloan School of Management, is one of the
most well known theorists working with organizational culture.
"Some are born great,
some achieve greatness,
and some have greatness thrust upon 'em"
Shakespeare, Twelfth Night
Edgar H. Schein and Culture
 He developed a model to explain the basic elements of
cultures. Edgar Schein's model resembles the
functionalistic models put forward by cultural theorists
such as Geert Hofstede and Fons Trompenaars, and
can be used to analyze all kinds of cultures
including corporate and national cultures. The models
put forward by Hofstede, Trompenaars and Schein all
presumes that cultures can be explained and
understood by looking at the core values and
assumptions of a given culture. Core values will shape
the visible elements within cultures such as e.g.
behaviors, expected behaviors, dress codes etc. Edgar
Schein defines these visible elements of cultures as
espoused values and artifacts.
Defining Organizational Culture
 Culture is customs and rights.
 Good managers must work from a more anthropological
model.
 Each organization has its own way and an outsider brings
his/her baggage as observer.
 Understand new environment and culture before change
or observation can be made.
A pattern of shared basic assumptions that the group
learned as it solved its problems of external
adaptation and internal integration, that has worked
well enough to be considered valid and, therefore, to
be taught to new members as the correct way you
perceive, think, and feel in relation to those problems.
Levels of Culture
 Artifacts
 On surface
– sees
– hears
– feels
 Visible products
–
–
–
–
Language
technology products
creations
style: clothing, manners of address, myths, stories
 Easy to observe
 Difficult to decipher symbols are ambiguous
 Problems in classification
Edgar Schein's model of culture contains the
following layers:
Artifacts
They are the visible elements in a culture. Artifacts can be
recognized by people not part of the culture. Artifacts can
e.g. be dress codes, furniture, art, work climate, stories,
work processes, organizational structures etc. The outsider
might easily see these artifacts, but might not be able to
fully understand why these artifacts have been established.
To understand this, outsiders can look at the espoused
values in the culture.
Edgar Schein's model of culture contains the
following layers:
Espoused values
They are the values normally espoused by the leading
figures of a culture. Espoused values could e.g. be
represented by the philosophies, strategies and goals
sought realized by e.g. leaders. However, the values
sought by leaders should be supported by some general
and shared assumptions about e.g. how a company should
be run, or how employees should be managed. If
espoused values by leaders are not in line with the general
assumptions of the culture, this might signal trouble.
Edgar Schein's model of culture contains
the following layers:
Assumptions
They reflects the shared values within the specific culture.
These values are often ill-defined, and will oftentimes not
be especially visible to the members of the
culture. Assumptions and espoused values are possibly not
correlated, and the espoused values may not at all be
rooted in the actual values of the culture. This may cause
great problems, where the differences between espoused
and actual values may create frustrations, lack of morale
and inefficiency. Core assumptions can e.g. be assumptions
regarding the human nature, human relationships etc.
Why to Study Shein?
 By using Edgar Schein's model, leaders will be able to
understand cultural elements, and be able to analyze
the relationship between deep rooted assumptions
and common business practices within the company.
 Likewise, leaders can try to change the basic
assumptions of a given culture, and hence maybe
improve the effectiveness of the company. The latter
can therefore be seen as a cultural change process,
where basic assumptions are sought changed to fit
the wanted espoused values and artifacts of a
company.
Why to Study Shein?
 Cultural change may be needed when the environment
of the company changes.
 Competition or new regulations may require a new
organizational culture, in which whole new sets of
organizational values may be needed.
 Accordingly, assumptions may have to be changed, so
that the company can survive and develop, and so that
the values pursued by business leaders will get
accepted by the members of the culture.