Chapter Fourteen
Organization
Culture
Chapter Objectives
• Define organization culture and explain how it
affects employee behavior.
• Explain how to create an organization culture.
• Discuss two different approaches to
describing culture in organizations.
• Identify important emerging issues in
organization culture.
• Discuss the key elements of managing the
organization culture.
Copyright © Houghton Mifflin Company. All rights reserved.
14-2
The Nature of Organization Culture
• Organization Culture
– The set of shared values, often taken for
granted and communicated through stories
and other symbolic means
– These help the organization’s employees
understand which actions are considered
acceptable and which unacceptable.
Copyright © Houghton Mifflin Company. All rights reserved.
14-3
Historical Foundations
• Anthropological Contributions
– The study of human cultures and cultural
phenomena.
– Anthropologists seek to understand how the
values and beliefs that make up a society’s culture
affect the structure and functioning of that society.
• Sociological Contributions
– The study of people in social systems such as
organizations and societies.
– Sociologists have long been interested in the
causes and consequences of culture.
Copyright © Houghton Mifflin Company. All rights reserved.
14-4
Historical Foundations (continued)
• Social Psychology Contributions
– A branch of psychology that includes the study of
groups and the influence of social factors on
individuals.
• Economics Contributions
– The study of organization culture that attempts to
link the cultural attributes of firms with their
performance rather than simply describing the
cultures of companies as the sociological and
anthropological perspectives do.
Copyright © Houghton Mifflin Company. All rights reserved.
14-5
Culture Versus Climate
• Organizational Climate
– Refers to current situations in the
organization and the linkages among work
groups, employees, and work performance
• Organizational Culture
– Refers to the historical context within which
a situation occurs and the impact of this
context on the behavior of employees
Copyright © Houghton Mifflin Company. All rights reserved.
14-6
Creating an Organization Culture
• Step 1: Formulate Strategic Values
– Strategic values – the basic beliefs about an
organization’s environment that shape its strategy
• Step 2: Develop Cultural Values
– Cultural values – the values that employees need
to have and act on for the organization to
implement its strategic values
• Step 3: Create A Vision
– Vision – a picture of what an organization will look
like at some point in the future
Copyright © Houghton Mifflin Company. All rights reserved.
14-7
Creating an Organization Culture
(continued)
• Step 4: Initiate Implementation Strategies
– Implementation Strategies – many factors,
including developing organization design to
recruiting and training employees who share the
values and will carry them out
• Step 5: Reinforce Cultural Behaviors
– The act of monitoring and encouraging these
behaviors of employees as they act out the
cultural values and implement the organization’s
strategies
Copyright © Houghton Mifflin Company. All rights reserved.
14-8
The Ouchi Framework
• Ouchi formulated the notion of the “Type
Z” firm.
– Ouchi argued that the cultures of typical
Japanese firms and U.S. Type Z firms are
very different from those of typical U.S.
firms, and that these differences explain
the success of many Japanese firms and
U.S. Type Z firms and the difficulties in
typical U.S. firms.
Copyright © Houghton Mifflin Company. All rights reserved.
14-9
Table 14.2: The Ouchi Framework
Copyright © Houghton Mifflin Company. All rights reserved.
14-10
The Peters and Waterman Approach
• In their bestseller In Search of
Excellence, Tom Peters and Robert
Waterman focused even more explicitly
than Ouchi on the relationship between
organizational culture and performance.
– They chose a sample of highly successful
U.S. firms and sought to describe the
management practices that led to their
success.
Copyright © Houghton Mifflin Company. All rights reserved.
14-11
Table 14.3: The Peters and Waterman
Framework
Copyright © Houghton Mifflin Company. All rights reserved.
14-12
Emerging Issues in Organizational Culture
• Innovation
– The process of creating and doing new
things that are introduced into the
marketplace as products, processes, or
services.
– It involves every aspect of the organization,
from research through development,
manufacturing, and marketing.
Copyright © Houghton Mifflin Company. All rights reserved.
14-13
Types of Innovation
• Radical Innovation
– A major breakthrough that changes or creates
whole industries
• Systems Innovation
– Functionality created by assembling parts in new
ways
• Incremental Innovation
– Continued technical improvements and an
extension of the applications of radical systems
innovations
Copyright © Houghton Mifflin Company. All rights reserved.
14-14
New Ventures
• New ventures based on innovation
require entrepreneurship and good
management to work.
• Entrepreneurship – can occur inside or
outside large organizations
• Intrapreneurship – entrepreneurial
activity within the organization
Copyright © Houghton Mifflin Company. All rights reserved.
14-15
Corporate Research
• Corporate Research
– The most common means of developing
innovation in the traditional organization
– It is set up to:
• support existing businesses
• provide incremental innovations in the organization’s
business
• explore potential new technology bases
– The corporate culture can be instrumental in
fostering an environment in which creativity and
innovation occur.
Copyright © Houghton Mifflin Company. All rights reserved.
14-16
Procedural Justice
• Procedural Justice
– The extent to which the dynamics of an
organization’s decision making processes are
judged to be fair by those most affected by them.
• Especially in the U.S., employees are demanding more
say in determining work rules and in matters pertaining to
health and safety on the job and the provision of certain
benefits for all employees.
– The lack of procedural justice may lead to less
compliant attitudes on the part of
lower-level managers.
Copyright © Houghton Mifflin Company. All rights reserved.
14-17
Managing Organization Culture
• Two Key Fact About Culture:
– Organizational cultures differ among firms
– Different organizational cultures affect a firm’s
performance
• Three Elements of Managing Organizational
Culture:
– Taking advantage of the existing culture
– Teaching organization culture
– Changing the organization culture
Copyright © Houghton Mifflin Company. All rights reserved.
14-18
Taking Advantage of the Existing Culture
• To take advantage of an existing cultural
system, managers must be fully aware of the
culture’s values and what behaviors or
actions those values support.
• This understanding can be used to evaluate
the performance of others in the firm.
• Articulating organizational values can be
useful in managing others’ behaviors.
Copyright © Houghton Mifflin Company. All rights reserved.
14-19
Teaching the Organization Culture:
Socialization
• Socialization
– The process through which individuals become
social beings
• Organizational Socialization
– The process through which employees learn about
the firm’s culture and pass their knowledge and
understanding on to others.
• Employees are socialized into organizations just as
people are socialized into societies; they come to know
over time what is acceptable in the organization and
what is not, how to communicate with their feelings, and
how to interact with others.
Copyright © Houghton Mifflin Company. All rights reserved.
14-20
Changing the Organization Culture
• Managing Symbols
– Research suggests that organization culture is
understood and communicated through the use of
stories and other symbolic media.
• If this is correct, managers interested in changing
cultures should attempt to substitute stories and myths
that support new cultural values for those that support old
ones.
• The Difficulty of Change
– Changing a firm’s culture is a long and difficult
process.
Copyright © Houghton Mifflin Company. All rights reserved.
14-21
Changing the Organization Culture
(continued)
• The Stability of Change
– The process of changing a firm’s culture
starts with a need for change and moves
through a transition period in which efforts
are made to adopt new values and beliefs.
– In the long run, a firm that successfully
changes its culture will find the new values
and beliefs are as stable and influential as
the old ones.
Copyright © Houghton Mifflin Company. All rights reserved.
14-22