10 th Edition
© 2012 South-Western, a part of Cengage Learning
All rights reserved.
Prepared by Charlie Cook
The University of West Alabama

After studying this chapter you should be able to:
• Define organization culture, explain how it affects employee behavior, and understand its historical roots.
• Describe how to create organization culture.
• Describe two different approaches to culture in organizations.
• Identify emerging issues in organization culture.
• Discuss the important elements of managing the organizational culture.
© 2012 South-Western, a part of Cengage Learning 18 –2

• Why Study Culture?
–It is assumed that organizations with a strong culture perform at higher levels than those without a strong culture
• Organizational Culture
–A set of values held by individuals in a firm that help employees understand acceptability of actions
• Culture Values
–Are often taken for granted (implicit)
–May not be made explicit (i.e., not written down)
–Are communicated through symbolic means
© 2012 South-Western, a part of Cengage Learning 18 –3

18.1
Definitions of Organization Culture
Definition
“A belief system shared by an organization’s members”
“Strong, widely shared core values”
“The way we do things around here”
“The collective programming of the mind”
“Collective understandings”
“A set of shared, enduring beliefs communicated through a variety of symbolic media, creating meaning in people’s work lives”
“A set of symbols, ceremonies, and myths that communicates the underlying values and beliefs of that organization to its employees”
Source
J. C. Spender, “Myths, Recipes and Knowledge-Bases in Organizational Analysis”
(Unpublished manuscript, Graduate School of Management, University of California at Los Angeles, 1983), p. 2.
C. O’Reilly, “Corporations, Cults, and Organizational Culture: Lessons from Silicon
Valley Firms” (Paper presented at the Annual Meeting of the Academy of
Management, Dallas, Texas, 1983), p. 1.
T. E. Deal and A. A. Kennedy, Corporate Cultures: The Rites and Rituals of
Corporate Life (Reading, MA: Addison-Wesley, 1982), p. 4.
G. Hofstede, Culture’s Consequences: International Differences in Work-Related
Values (Beverly Hills, CA: Sage, 1980), p. 25.
J. Van Maanen and S. R. Barley, “Cultural Organization: Fragments of a Theory”
(Paper presented at the Annual Meeting of the Academy of Management, Dallas,
Texas, 1983), p. 7.
J. M. Kouzes, D. F. Caldwell, and B. Z. Posner, “Organizational Culture: How It Is
Created, Maintained, and Changed” (Presentation at OD Network National
Conference, Los Angeles, October 9, 1983).
W. G. Ouchi, Theory Z: How American Business Can Meet the Japanese Challenge
(Reading, MA: Addison-Wesley, 1981), p. 41.
“A dominant and coherent set of shared values conveyed by such symbolic means as stories, myths, legends, slogans, anecdotes, and fairy tales”
“The pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration”
T. J. Peters and R. H. Waterman Jr., In Search of Excellence: Lessons from
America’s Best-Run Companies (New York: Harper & Row, 1982), p. 103.
E. H. Schein, “The Role of the Founder in Creating Organizational Culture,”
Organizational Dynamics, Summer 1985, p. 14.
© 2012 South-Western, a part of Cengage Learning 18 –4

Anthropology Sociology
Historical
Foundations
Social
Psychology
© 2012 South-Western, a part of Cengage Learning
Economics
18 –5

• Organization Culture
–The historical context within which a situation occurs and the impact of this context on the behaviors of employees
• Difficult to alter in the short-run
• Means through which people in the organization learn and communicate organization acceptability (values and norms)
• Organization Climate
–The current situations in an organization and the linkages among work groups, employees, and work performance
• Easier for management to manipulate in order to directly affect the behavior of employees
© 2012 South-Western, a part of Cengage Learning 18 –6

18.2
Creating Organization Culture
Creating Organization Culture
Step 1 —Formulate Strategic Values
Step 2 —Develop Cultural Values
Step 3 —Create Vision
Step 4 —Initiate Implementation Strategies
Step 5 —Reinforce Cultural Behaviors
© 2012 South-Western, a part of Cengage Learning 18 –7

• Establish Values
–Strategic values
• The basic beliefs about an organization’s environment that shape its strategy.
–Cultural values
• The values that employees need to have and act on for the organization to act on the strategic values.
• Create Vision
–Create a picture of the organization that portrays how the strategic and cultural values will combine to create the future.
© 2012 South-Western, a part of Cengage Learning 18 –8

• Initiate Implementation Strategies
–Take actions founded on the strategic and cultural values to accomplish the vision.
• Reinforce Cultural Behaviors
–Use formal reward systems to encourage desired employee behaviors
–Tell stories that epitomizing cultural values
–Conduct ceremonies and rituals that emphasize right actions by employees
© 2012 South-Western, a part of Cengage Learning 18 –9

The Ouchi Framework
Typical
United States firms
© 2012 South-Western, a part of Cengage Learning
Typical
Japanese firms
Type Z
United States firms
18 –10

18.3
The Ouchi Framework
© 2012 South-Western, a part of Cengage Learning 18 –11

18.4
The Peters and Waterman Framework
Attributes of an Excellent Firm
1. Bias for action
2. Stay close to the customer
3. Autonomy and entrepreneurship
4. Productivity through people
5. Hands-on management
6. Stick to the knitting
7. Simple form, lean staff
8. Simultaneously loose and tight organization
© 2012 South-Western, a part of Cengage Learning 18 –12

• Innovation
–The process of creating and doing new things that are introduced into the marketplace as products, processes, or services
Types of Innovation
Radical
Innovation
© 2012 South-Western, a part of Cengage Learning
Systems
Innovation
Incremental
Innovation
18 –13

• New Ventures
–Require entrepreneurship and good management
–Intrapreneurship
• Entrepreneurial activity that takes place within the context of a large organization
–Entrepreneur’s profile
• Need for achievement
• Desire to assume responsibility
• Willing to take risks
• Focus on concrete results
© 2012 South-Western, a part of Cengage Learning 18 –14

• Corporate Research
–Supports existing businesses to provide incremental innovations and to explore potential new technology bases
–Is responsible for keeping the company’s products and processes technologically advanced
–Corporate culture can be instrumental in fostering environment for creativity and innovation
© 2012 South-Western, a part of Cengage Learning 18 –15

• Empowerment
–Is enabling workers to set their own work goals, make decisions, solve problems within their sphere of responsibility and authority
• Appropriate Cultures (Goffee and Jones)
–Factors that may determine the appropriate type of culture appropriate for an organization:
• The nature of the value chain
• The dynamism of the environment
© 2012 South-Western, a part of Cengage Learning 18 –16

Elements of Managing
Organization Culture
Taking advantage of existing culture
Teaching organization culture
Changing organization culture
© 2012 South-Western, a part of Cengage Learning 18 –17

• Taking Advantage of the Existing Culture
–Easier and faster to alter employee behaviors within the existing culture than it is to change existing history, traditions, and values
–Managers must be aware and understand the organization’s values
–Managers can communicate their understanding to lower-level individuals
© 2012 South-Western, a part of Cengage Learning 18 –18

• Teaching Organization Culture
–Organizational socialization
• Is the process through which employees learn about the firm’s culture and pass their knowledge and understanding on to others
–Organizational mechanisms
• Are examples of organization culture that employees see in more experienced employees’ behaviors
– Corporate pamphlets and formal training sessions
© 2012 South-Western, a part of Cengage Learning 18 –19

• Changing the Organization Culture
–Managing symbols
• Substituting stories and myths that support the new cultural values for those that support old ones
–Culture can be difficult to change when upper management inadvertently reverts to old behaviors
• The Stability of Change
–New values and beliefs must be seen as stable and influential as old ones
–Changing value systems requires enormous effort because value systems tend to be self-reinforcing
© 2012 South-Western, a part of Cengage Learning 18 –20

• After reading the chapter:
–Why do organizations lose the innovative aspects of their organizational culture?
–What should managers do to turn climate into culture in new organizations?
–What are the effects of technology on culture in organizations?
© 2012 South-Western, a part of Cengage Learning 18 –21