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. © 2009 Cengage Learning. All rights reserved. Learning Objective Identify the three levels of culture and the roles they play in an organization. 1

4. 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

5. 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

6. © 2009 Cengage Learning. All rights reserved. Beyond the Book: Making Coffee, Making Coffee Matter Caribou Coffee’s culture is based on its founders’ dreams of bringing people an inspiring and beneficial product Caribou’s core values encourage innovation, excellence, and positive involvement in the world, and are reflected in its lodge-style store designs and hourly-worker title “vice president of smiles and service”

7. © 2009 Cengage Learning. All rights reserved. Learning Objective Evaluate the four functions of culture within an organization. 2

8. © 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

9. © 2009 Cengage Learning. All rights reserved. Beyond the Book: Values that Benefit New Balance Athletic Shoe empowers its US employees to compete against low-wage suppliers overseas The company shares competitive information with them and offers extensive training on- and off-the-job New Balance’s dedication to employees has a payoff: its US workers can produce a pair of shoes over 6 times as quickly as its overseas competitors

10. © 2009 Cengage Learning. All rights reserved. Learning Objective Explain the relationship between organizational culture and performance. 3

11. © 2009 Cengage Learning. All rights reserved. Adaptive Perspective Theories about the relationship between organizational culture and performance Strong Culture Perspective Fit Perspective

12. © 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

13. © 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

14. © 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

15. © 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

16. © 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.

17. © 2009 Cengage Learning. All rights reserved. Learning Objective Describe five ways leaders reinforce organizational culture. 4

18. © 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

19. © 2009 Cengage Learning. All rights reserved. Learning Objective Describe the three stages of organizational socialization and how culture is communicated in each step. 5

20. 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

21. © 2009 Cengage Learning. All rights reserved. Organizational Socialization The process by which newcomers are transformed from outsiders to participating, effective members of the organization

22. © 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 ]

23. © 2009 Cengage Learning. All rights reserved. Learning Objective Discuss how managers assess their organization’s culture. 6

24. © 2009 Cengage Learning. All rights reserved. Assessing Organizational Culture Organizational Culture Inventory focuses on behaviors that help employees fit into the organization and meet coworker expectations Kilman-Saxton Culture-Gap Survey focuses on the expectations of others in the organization

25. © 2009 Cengage Learning. All rights reserved. Triangulation the use of multiple methods to measure organizational culture

26. © 2009 Cengage Learning. All rights reserved. Learning Objective Explain actions managers can take to change organizational culture. 7

27. © 2009 Cengage Learning. All rights reserved. Cultural Changes  Merger or acquisition  Employment of people from different countries Situations That May Require Cultural Change

28. © 2009 Cengage Learning. All rights reserved. Reasons that Change Is Difficult Assumptions are often unconscious Culture is deeply ingrained and behavioral norms and rewards are well learned

29. Hiring and socializing members who fit in with the new culture Removing members who reject the new culture Culture Cultural communication Changing behavior Examining justifications for changed behavior 2 1 5 3 4 Interventions for Changing Organizational Culture Reprinted with permission from Vijay Sathe “How to Decipher & Change Corporate Culture,” Copyright © 1985 Jossey-Bass Inc, Reprinted by permission Of Jossey-Bass, Inc., a subsidiary of John Wiley & Sons, Inc..

30. © 2009 Cengage Learning. All rights reserved. Cultural Modifications in the Current Business Environment Support for a global view of business Reinforcement of ethical behavior Empowerment of employees to excel in product and service quality

31. © 2009 Cengage Learning. All rights reserved. Learning Objective Identify the challenges organizations face developing positive, cohesive cultures. 8

32. © 2009 Cengage Learning. All rights reserved. Support for a Global View of Business Create a clear and simple mission statement Create systems that ensure effective information flow Create “matrix minds” among managers Develop global career paths Use cultural differences as major assets Implement worldwide management education and team development programs

33. © 2009 Cengage Learning. All rights reserved. Beyond the Book: Six Guidelines to Creating a Global Culture 1.Create a clear and simple mission statement 2.Create systems that ensure an effective flow of information 3.Broaden managers’ minds to allow them to think globally 4.Develop global career paths 5.Use cultural differences as a major asset 6.Implement worldwide management education and team development programs

34. © 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

35. © 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

36. © 2009 Cengage Learning. All rights reserved. Beyond the Book: Six Guidelines to Creating a Global Culture John Friel, CEO of medical device manufacturer Medrad, Inc., is committed to continued improvement, quality, and employee empowerment Friel spends at least one day a month in company shop floor operations—performing the same customer-service and general operations tasks as his workers The company’s commitment to excellence earned it the 2003 Malcolm Baldridge Award for quality in manufacturing