Organizational Culture I. Definition of Organizational Culture Some definitions include: “the accepted way of thinking, feeling, and acting in an organization” “shared beliefs about what is important and how things are done” “an interdependent set of values and ways of behaving that are common in an organization” “social forces through which people learn norms and values. They are rewarded when they accept them and ostracized when they do not. “social glue that binds members of the organization together through shared values, symbolic devices, and shared ideals” “what goes on around here”

II. Function of culture – what does it do to benefit the organization? A. Establishes Organizational Identity – Timberland, Southwest, “Hey, I work for one of the Big 5 Accounting firms.” B. Fosters Commitment – Sense of loyalty especially if rewards support ownership C. Promotes Stability – Not inertia, but a culture of expectations (norms and rules) and what to anticipate and how to behave D. Allows sense making – existing cultural practices allow for interpretation and anticipation of consequences and behaviors.

III. How do you develop culture III. How do you develop culture? You can get a competitive advantage by developing a strong culture. A. History – how it’s been in the past influences the future. B. Observation – people observe and consequently behave in a manner similar to current members’ behaviors and practices. Use modeling and communication to foster the environment you want to create C. Membership – Staffing!!! MARINERS ARTICLE Internal staffing improves positive expectations regarding future relationships with the organization. “People first values” from Fed Ex D. Interaction – socialization techniques and allowances regarding decision making can lead to a culture which enhances satisfaction consequently improving productivity E. Stories and rites – Hazing at SMU where student had to drink water. MBWA? Heroes, stories, slogans, symbols, ceremonies.

IV. Levels of Culture A. Behavior – Observable, visible things done by people as well as tangible artifacts. Heroes, stories, slogans, symbols, and ceremonies are part of behavior-level culture. B. Values and Beliefs – Provide the operating principle for guiding behavior. The mission statement is a slogan that conveys values and beliefs. C. Assumptions – understanding based on perception of, “That’s just the way it’s done around here!”

V. Values – organization cultures include 2 kinds of values: 1) terminal value – a desired goal the organization seeks to achieve e.g. excellence, profitability, quality, morality (NATD), economy (UPS), innovation (3M, Apple); 2) instrumental values – a desired mode of behavior the organization wants members to observe to achieve terminal values e.g. respecting authority and tradition (military), being conservative and cautious (Prudential), being honest, taking risks (3M), etc. What might be some terminal/instrumental values for SU and UW?

VI. Strong versus Weak cultures Strong cultures have: A. cohesive sets of values and norms that binds members together and fosters commitment from employees to achieve organizational goals. B. employees who share assumptions, know values and beliefs, and behave as expected. Weak cultures have: A. little guidance about how employees should behave. B. rigid organizational structures that may substitute for a lack of implicit values and norms. One way to facilitate a strong culture is to obtain a good match between individual employees and organizational values.

VII. Types of cultures – An organization can develop some kinds of cultural values to shape the way its members behave. A. entrepreneurial culture (Fedex) B. conservative culture (BofA; Prudential) C. ethical culture (Guardsmark) D. professional culture – avoid layoffs, invest in employees for future service to the company E. production culture – (UPS) short term employment, little investment, focus on costs F. personal wealth and little control

VIII. Merging cultures? HP and Compaq

IX. Measuring culture? - Employees could help develop it. - Is it static or dynamic? - Is there one best culture? - How can we measure it? Some instruments in “Gaining Control of the Corporate Culture” book - Kilmann-Saxton Culture Gap Survey for $6.50. - Do “cultural audits” which Bonneville Power Administration did with an OD consultant. - Sears did it; In 1992 they had worst financial performance for some time. “We had lost sight of our customers and employees” It was the revitalization of the Sears culture that has played a major role in the return to profitability.

- standards of right and wrong that influence behavior Ethics - standards of right and wrong that influence behavior 1. The golden rule – Act in a way you would expect others to act toward you. 2. The utilitarian principle – Act in a way that results in the greatest good for the greatest number of people. 3. The professional ethic – Take actions that would be viewed as proper by a disinterested panel of professional peers.

4. The TV test – Managers should always ask, “Would I feel comfortable explaining to a national TV audience why I took this action?” 5. The legal test – Is the proposed action or decision legal? Established laws are generally considered minimum standards for ethics. 6. The four- way test – Managers can feel confident that a decision is ethical if they can answer “yes” to the following questions: Is the decision truthful? Is it fair to all concerned? Will it build goodwill and friendship? Will it be beneficial to all concerned?

Social Responsibility What’s social responsibility? - Go beyond the law to act responsibly for social concerns. What’s the difference between social obligations vs. social responsiveness? - Responsiveness is guided by social norms that can provide managers with a meaningful guide for decision making.

How do managers become more socially responsible? - Ethics- understood set of rules or principles that define right and wrong conduct. - Use a code of ethics? - Document of primary values and ethical rules the organization expects managers and employees to follow. In isolation, they do little, but if management considers them important and reaffirms their content, ethics can provide foundation for effective program.