2Organizational Culture A set of values, beliefs, & assumptions shared by members of an organizationCulture influences employee attitudes & behaviorCulture can be a source of sustainable competitive advantageManagers can influence (but not control) culture
3Where does culture come from? Founder’s valuesIndustry dynamicsNational cultureAttraction – Selection – Attrition cycle
4Understanding Organizational Culture AntecedentsOrganizational CultureObservable artifactsEspoused valuesBasic assumptionsOrganizational Structure & PracticesReward systemsOrganizationaldesignGroup & Social ProcessesFounder’s valuesIndustry & businessenvironmentNational cultureSenior leaders’vision and behaviorSocializationMentoringDecisionmakingGroupdynamicsCommunicationInfluence &empowermentLeadershipThis figure shows the importance of organizational culture on individual, group and organizational behavior. The roots of an organization’s culture are driven by the founder’s and senior leaders’ values, the culture of the nation, and the particular industry and business environment.Now, let’s look at the organizational culture box specifically to understand what it is comprised of.Collective Attitudes & BehaviorWork attitudesJob satisfactionMotivationOrganizational OutcomesEffectivenessInnovation &stress
5Layers of Organizational Culture Observable ArtifactsPhysical manifestation of values:AcronymsManner of dressStoriesRituals, etc.
7Layers of Culture (continued) Espoused Values: explicitly stated set of preferred valuesConcepts or beliefsPertain to desirable end-states or behaviorsTranscend situationsGuide the behaviors and decision-makingOrdered by relative importanceEnacted values: values that actually exist
8Layers of Culture (continued) Basic AssumptionsUnobservable underlying assumptionsTaken for granted – not explicitly stated or analyzedPeople may not be conscious of themResistant to changeInconsistent behavior is hard to imagine
9Four Functions of Organizational Culture The four functions of organizational culture are to establish who the company is and what it stands for, to drive energy around what is really important, to promote social system stability, and to shape behavior by helping members make sense of their surroundings. Decisions made by the company that are consistent with the culture are easy for employees to understand.Give members an organizational identity. Culture helps to establish who the company is and what is stands for. Ideally, employees should be proud to belong to a company who shares their values.Facilitate collective commitment – drive energy around what is really important. At Southwest, employees know they’ll be taken care of if they take care of their customers.Promote social system stability – a positive culture is more likely to be able to resolve conflict using a problem-focused approach rather than person-focused or blaming mentality.Shape behavior by helping members make sense of their surroundings. Decisions made by the company that are consistent with the culture are easy for employees to understand. Performance is rewarded that is aligned with that corporate strategy and values.3-9
10Four Functions of Org. Culture Organizational IdentityEstablishes the company’s business philosophyIdeally, employees will share the valuesFacilitate Collective CommitmentEveryone knows what’s really importantPeer pressureSocial System StabilityHelps you know what to expect from othersSensemakingHelps individuals make sense of novel situations
11Competing Values Framework The Competing Values Framework is a framework for categorizing organizational culture.As you can see, this framework is based on two continuum’s of organizational effectiveness. One axis pertains to whether an organization focuses its attention and efforts on internal dynamics and employee or outward toward its external environment and its customers and shareholders.The second axes shows an organization’s preference for flexibility or control and stability. These axes create four types of organizational cultures that are based on different core values and criteria for assessing organizational effectiveness.The first is the clan culture. This culture is characterized has having an internal focus and valuing flexibility. This type of organization encourages collaboration between employees and is committed to having a cohesive work group and high job satisfaction.The adhocracy culture has an external focus and values flexibility. This type of culture fosters creation of innovative products and services by being adaptable, creative, and fast to respond to changes in the market place. Centralized power and authority would not be effective structures in an adhocracy. These organizations promote creativity, innovation, and knowledge sharing.The market culture has a strong external focus and values stability and control. This type of culture focuses on the customer over employee development and satisfaction because the goal of managers is to drive towards productivity, profits, and customer satisfaction. This culture rewards employees who deliver results.The hierarchy culture has an internal focus and a formalized, structured work environment. It will tend to have reliable internal processes and control mechanisms (e.g., Dell whose focus is on cost-cutting and efficiency.)This categorization shows how an organization’s core values affect it’s culture. Many companies struggle with attempting to embody conflicting values (e.g., Ritz Carlton values both employees and customers by empowering employees and providing high quality customer service)3-11
12Opposing/Competing Values One company can have aspects of all four CVF culture typesThe CVF culture types compete or contradict each otherCreate paradoxesToo much (too little) of any one culture type can create weaknessesManaging the paradoxes is the key
14Changing Culture Changing people’s minds & values Can target artifacts, values, or assumptionsMust be aligned with vision & strategic plan“Culture eats strategy for breakfast. You can have the best plan in the world, and if the culture isn’t going to let it happen, it’s going to die on the vine”Mark Fields, President, The Americas, Ford Motor Co.
15Culture Change Mechanisms Formal statementsDesign of physical work spaceSlogansTrainingRewardsStoriesMeasurement & ControlLeader reactions to crisisOrganizational Structure
16Organizational Socialization Process by which new employees learn an organization’s cultureThree-Phase Model of Organizational Socialization
17Phase I: Anticipatory Socialization Occurs before you join the companyPerceptions about different companies or different industriesUnrealistic expectations are a dangerRealistic Job Preview (RJP)RJP is related to lower expectations, higher performance, and less turnover.
18Phase II: Encounter Once you start the new job Orientation programs TrainingOrg. policies & proceduresNorms, values, culture, expectations
19Phase III: Change & Acquisition New employee masters their new jobRequires a good understanding of expectationsConfidence
20Mentoring A good tool to ingrain the culture in new employees Gives new employees a social connection to the organizationWhat mentors do:Coach, give exposure, protect, get challenging assignments, role model
21Developing Networks Diversity of development relationships The number of different people that you’re networked withThe various social systems from which the relationships comei.e., work, school, family, etc.Developmental relationship strengthThe quality of those relationships
22Developmental Networks Associated with Mentoring Developmental Relationship StrengthWeak TiesStrong TiesLow Range• D2• D2Key:D = developerP = protegeD1 •D1 •• P• PDevelopmental Relationship DiversityReceptiveTraditionalMentoring is not a one-person function but rather a multi-person function.This figure describes mentoring relationships based on two dimensions—the diversity of the relationship and the strength of the relationship. The diversity dimension has to do with the number of different people the person is networked with as well as the variety of social systems from which the networked relationship stem. The strength dimension reflects the quality of relationships among the individual and those involved in his or her developmental network.A receptive network is composed of a few weak ties from one social system such as an employer or professional association. A traditional network is made up of a few strong ties between an employee and developer that all come from one social system. The opportunistic network is characterized by weak ties with a diverse set of developers. And the entrepreneurial network is characterized by strong ties with a diverse set of developers.People who have an entrepreneurial network tend to change their careers and benefit from personal learning more than people with receptive, traditional, or opportunistic networks.D1 •• D2D1 •• D2High Range•P•PD3 •• D4D3 •• D43-22OpportunisticEntrepreneurial
23Importance of Social Networks Mentored employees have:Higher pay, more promotions, more organizational knowledge, better job performance, more skilledPeople with the broadest digital networks were 7% more productive than those without such networks