Organizational Culture McGraw-Hill/Irwin McShane/Von Glinow OB 5e Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Re-aligning Dell’s Organizational Culture Dell’s “winning” culture, which emphasized cost efficiency and competitiveness, became more of a liability as the market moved toward a preference for style and innovation.

Organizational Culture Defined The basic pattern of shared values and assumptions governing the way employees within an organization think about and act on problems and opportunities.

Elements of Organizational Culture Artifacts of organizational culture Elements of Organizational Culture Organizational culture 14-4

Content of Organizational Culture The relative ordering of values. A few dominant values Example: Dell -- efficiency and competitiveness Problems with measuring org culture Oversimplifies diversity of possible values Ignore shared assumptions Adopts an “integration” perspective An organization’s culture is fuzzy: Diverse subcultures (“fragmentation”) Values exist within individuals, not work units

Organizational Culture Profile Org Culture Dimensions Dimension Characteristics Innovation Experimenting, opportunity seeking, risk taking, few rules, low cautiousness Stability Predictability, security, rule-oriented Respect for people Fairness, tolerance Outcome orientation Action oriented, high expectations, results oriented Attention to detail Precise, analytic Team orientation Collaboration, people-oriented Aggressiveness Competitive, low emphasis on social responsibility Source: O’Reilly et al (1991)

Organizational Subcultures Dominant culture -- most widely shared values and assumptions Subcultures Located throughout the organization Can enhance or oppose (countercultures) firm’s dominant culture Two functions of countercultures: provide surveillance and critique, ethics source of emerging values

Cirque du Soleil’s Risky Culture Cirque du Soleil’s founders promote a risk-taking and creative corporate culture. They frequently take gambles on new forms of creativity and initiatives.

Artifacts in Organizational Culture Observable symbols and signs of culture Physical structures, ceremonies, language, stories Maintain and transmit organization’s culture Not easy to decipher artifacts -- need many of them

Artifacts: Stories and Legends Social prescriptions of desired (undesired) behavior Provides a realistic human side to expectations Most effective stories and legends: Describe real people Assumed to be true Known throughout the organization Are prescriptive

Artifacts: Rituals and Ceremonies programmed routines (eg., how visitors are greeted) Ceremonies planned activities for an audience (eg., award ceremonies)

Artifacts: Organizational Language Words used to address people, describe customers, etc. Leaders use phrases and special vocabulary as cultural symbols Language also found in subcultures

Artifacts: Physical Structures/Symbols Building structure -- may shape and reflect culture Office design conveys cultural meaning Furniture, office size, wall hangings Courtesy of Microsoft Corp.

Organizational Culture Strength How widely and deeply employees hold the company’s dominant values and assumptions Strong cultures exist when: most employees understand/embrace the dominant values values and assumptions are institutionalized through well-established artifacts culture is long lasting -- often traced back to founder

Functions of Strong Corporate Cultures Culture strength advantages depend on: Environment fit Not cult-like Adaptive culture Functions of Strong Cultures Control system Social glue Sense-making Organizational Outcomes Org performance Employee well-being

Contingencies of Org Culture & Performance Effect of organizational culture strength on organizational performance is moderate Need to consider contingencies: Ensure culture-environment fit Avoid strength to level of corporate cult Cults restrict mental models, suppress subcultures Create an adaptive culture External focus, process focus, ownership, proactive

Merging Cultures: Bicultural Audit Part of due diligence in merger Minimizes risk of cultural collision by diagnosing companies before merger Three steps in bicultural audit: 1. Examine artifacts 2. Analyze data for cultural conflict/compatibility 3. Identify strategies and action plans to bridge cultures

Merging Organizational Cultures Assimilation Acquired company embraces acquiring firm’s cultural values Deculturation Acquiring firm imposes its culture on unwilling acquired firm Integration Cultures combined into a new composite culture Separation Merging companies remain separate with their own culture

Changing/Strengthening Organizational Culture

Changing/Strengthening Organizational Culture Actions of Founders/Leaders Org culture sometimes reflects the founder’s personality Transformational Leaders can reshape culture -- organizational change practices Aligning Artifacts Artifacts keep culture in place e.g., building structure, communicating stories, transferring culture carriers

Changing/Strengthening Organizational Culture Introducing Culturally Consistent Rewards Rewards are powerful artifacts – reinforce culturally-consistent behavior Attracting, Selecting, Socializing Employees Attraction-selection-attrition theory Socialization practices

Attraction-Selection-Attrition Theory Organizations become more homogeneous (stronger culture) through: Attraction -- applicants self-select and weed out companies based on compatible values Selection -- Applicants selected based on values congruent with organization’s culture Attrition -- Employee quite or are forced out when their values oppose company values

Lindblad’s Shipshape Socialization Lindblad Expeditions can’t afford to have crew members jump ship soon after starting the job, so the adventure cruise company gives applicants a DVD showing a realistic picture of what it’s like to work on board. This realistic job preview is one part of the company’s socialization process.

Organizational Socialization Defined The process by which individuals learn the values, expected behaviors, and social knowledge necessary to assume their roles in the organization.

Socialization: Learning & Adjustment Learning Process Newcomers make sense of the organization’s physical, social, and strategic/cultural dynamics Adjustment Process Newcomers need to adapt to their new work environment New work roles New team norms New corporate cultural values

Stages of Socialization Pre-Employment Stage Outsider Gathering information Forming psychological contract Encounter Stage Newcomer Testing expectations Role Management Insider Changing roles and behavior Resolving conflicts

Improving Organizational Socialization Realistic job preview (RJP) A balance of positive and negative information about the job and work context Socialization agents Supervisors– technical information, performance feedback, job duties Coworkers – ideal when accessible, role models, tolerant, and supportive

Organizational Culture McGraw-Hill/Irwin McShane/Von Glinow OB 5e Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. 14-28