Organizational Culture Theory by Erlan Bakiev, Ph. D. Zirve University Spring 2012

Organizational Culture What is organizational culture? When is organizational culture functional? Dysfunctional? How do employees learn about the culture of their organization?

Henry Mintzberg on Culture “Culture is the soul of the organization — the beliefs and values, and how they are manifested. I think of the structure as the skeleton, and as the flesh and blood. And culture is the soul that holds the thing together and gives it life force.”

What is Organizational Culture? A system of meaning shared by the organization ’ s members Cultural values are collective beliefs, assumptions, and feelings about what things are good, normal, rational, valuable, etc.

Organizational Culture The pattern of shared values, beliefs and assumptions considered to be the appropriate way to think and act within an organization. Culture is shared Culture helps members solve problems Culture is taught to newcomers Culture strongly influences behaviour

Where Does Culture Come From? Organization founder Vision and mission Past practices Top management behavior Socialization - The process that helps employees adapt to the organization’s culture.

Exhibit 9-1 Layers of Culture Artifacts of Organizational Culture Material Symbols Language Rituals Stories Organizational Culture Beliefs Values Assumptions

Culture ’ s Overall Function Culture is the social glue that helps hold an organization together by providing appropriate standards for what employees should say or do.

Characteristics of Organizational Culture Innovation and risk-taking The degree to which employees are encouraged to be innovative and take risks. Attention to detail The degree to which employees are expected to exhibit precision, analysis, and attention to detail. Outcome orientation The degree to which management focuses on results or outcomes rather than on technique and process. People orientation The degree to which management decisions take into consideration the effect of outcomes on people within the organization.

Characteristics of Organizational Culture Team orientation The degree to which work activities are organized around teams rather than individuals. Aggressiveness The degree to which people are aggressive and competitive rather than easygoing. Stability The degree to which organizational activities emphasize maintaining the status quo in contrast to growth.

Cultural Artifacts Stories Rituals Material Symbols Language

How Employees Learn Culture/ How it is “ reinforced ” How Employees Learn Culture/ How it is “ reinforced ” MaterialSymbolsMaterialSymbolsLanguageLanguage StoriesStoriesRitualsRituals

Organizational Culture v Controlling behavior v Defining boundaries v Conveying identity v Promoting commitment v Blocking mergers v Inhibiting diversity v Inhibiting change v Blocking acquisitions FunctionsLiabilities

Do Organizations Have Uniform Cultures? Organizational culture represents a common perception held by the organization members. Core values or dominant (primary) values are accepted throughout the organization. Dominant culture Expresses the core values that are shared by a majority of the organization ’ s members. Subcultures Tend to develop in large organizations to reflect common problems, situations, or experiences.

Exhibit 9-3 How Organizational Culture Forms Selection criteria Socialization Organization's culture Philosophy of organization's founders Top management

Keeping a Culture Alive Selection Identify and hire individuals who will fit in with the culture Top Management Senior executives establish and communicate the norms of the organization Socialization Organizations need to teach the culture to new employees

Exhibit 9-5 A Socialization Model PrearrivalEncounterMetamorphosis Socialization ProcessOutcomes Commitment Productivity Turnover

Entry Socialization Options Formal vs. Informal Individual vs. Collective Fixed vs. Variable Serial vs. Random Investiture vs. Divestiture

Exhibit 9-7 Culture Typology Fragmented Networked Low High Solidarity Mercenary Low High Communal Sociability

Culture ’ s Functions Social glue that helps hold an organization together Provides appropriate standards for what employees should say or do Boundary-defining Conveys a sense of identity for organization members

Culture ’ s Functions Facilitates commitment to something larger than one ’ s individual self-interest Enhances social system stability Serves as a “ sense-making ” and control mechanism Guides and shapes the attitudes and behaviour of employees

Culture as a Liability Culture can have dysfunctional aspects in some instances Culture as a Barrier to Change When organization is undergoing change, culture may impede change Culture as a Barrier to Diversity Strong cultures put considerable pressure on employees to conform Culture as a Barrier to Mergers and Acquisitions Merging the cultures of two organizations can be difficult, if not impossible

How to Change Culture Have top-management people become positive role models, setting the tone through their behaviour. Create new stories, symbols, and rituals to replace those currently in vogue. Select, promote, and support employees who espouse the new values that are sought. Redesign socialization processes to align with the new values.

How to Change Culture Change the reward system to encourage acceptance of a new set of values. Replace unwritten norms with formal rules and regulations that are tightly enforced. Shake up current subcultures through transfers, job rotation, and/or terminations. Work to get peer group consensus through utilization of employee participation and creation of a climate with a high level of trust.

Summary and Implications Employees form an overall subjective perception of the organization based on such factors as degree of risk tolerance, team emphasis, and support of people. This overall perception becomes, in effect, the organization ’ s culture or personality. These favourable or unfavourable perceptions then affect employee performance and satisfaction, with the impact being greater for stronger cultures. Just as people ’ s personalities tend to be stable over time, so too do strong cultures. This makes strong cultures difficult for managers to change.

Summary and Implications One of the more important managerial implications of organizational culture relates to selection decisions. Hiring individuals whose values don't align with those of the organization is not good. An employee's performance depends to a considerable degree on knowing what he should or should not do.

Point-CounterPoint Why Culture Doesn ’ t Change s Culture develops over many years, and becomes part of how the organization thinks and feels s Selection and promotion policies guarantee survival of culture s Top management chooses managers likely to maintain culture When Culture Can Change s There is a dramatic crisis s There is a turnover in leadership s The organization is young and small s There is a weak culture

Organizational Culture Theory Move from systemic and structural issues to... Culture Theory Understanding organizations through a cultural lens with a focus on values, attitudes and beliefs of members

“ Organizational Culture ” FOCUS Changes in Global Marketplace Intense Competition Reconsider Traditional Management Practices Shift from traditional, highly rationale theories to more fluid and irrational Societal consciousness-raising regarding oppressive atmosphere in organizations for workers, women, and minorities Inequities and Oppressive Circumstances

Organizational Culture Theory Fenerbahce vs. GS Attempts to explain behavior within organizations Attempts to account for differences among organizations Description of how members of a group live and make sense of their world together Culture provides a lens through which its members interpret, interact with, and make sense of reality Culture helps to explain patterns of behavior and thought that characterize individuals and the groups with which they are associated Focus on VALUES, ATTITUDES, and BELIEFS of members

Different concepts of culture, stemming from two distinct disciplines (anthropology and sociology), have been applied to organizational studies since the early 1980s. These two underlying disciplines represent different paradigms in Burrell and Morgan’s (1979) framework, and have contributed to the emergence of the different theories and frameworks of organizational culture in the academic literature. Organizational Culture Theory

Anthropology takes the interpretivist view and sees culture as a metaphor for organizations, defining organizations as being cultures. On the other hand, sociology takes on the functionalist view and defines culture, as something an organization possesses. Despite the separate definitions of organizational culture, there seems to be a movement towards a general consensus. Organizational Culture Theory

The most widely used organizational culture framework is that of Edgar Schein (1988), who adopts the functionalist view and described culture as a pattern of basic assumptions, invented, discovered, or developed by a given group, as it learns to cope with its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore is to be taught to new members as the correct way to perceive, think, and feel in relation to those problems. Organizational Culture Theory

In Schein’s (1988) model, culture exists on three levels: 1. Artifacts – Artifacts are difficult to measure and they deal with organizational attributes that can be observed, felt and heard as an individual enters a new culture. 2. Values – This level deals with the espoused goals, ideals, norms, standards, and moral principles and is usually the level that is usually measured through survey questionnaires. Organizational Culture Theory

3. Underlying assumptions – This level deals with phenomena that remain unexplained when insiders are asked about the values of the organizational culture. Information is gathered in this level by observing behavior carefully to gather underlying assumptions because they are sometimes taken for granted and not recognized. According to Schein, the essence of organizational culture lies in this level. Organizational Culture Theory

Diagram/schematic of theory

Organizational Culture Theory Organizational culture provides meanings for routine organizational events, thereby reducing the amount of cognitive processing and energy members need to expend throughout the day.

Misunderstandings and Organizational Culture Cultural variations are often the cause of major and minor misunderstandings as groups come into contact with one another Value of cultural perspective is in illustrating the misunderstandings that occur within an organization Culture may hinder organizations from progress in the future Organizations consist of “ subcultures ” Mergers and International Mergers are also a source of misunderstandings

Two Competing Perspectives on Organizational Culture Culture as Variable Something an organization “ has ” By-product of organizational activities Stories, rites, rituals, and heroes Culture is changeable by management Organizational “ tool ” for enhancing organizational effectiveness In Search of Excellence (Peters and Waterman) Corporate Cultures: The Rites and Rituals of Corporate Life (Deal & Kennedy) Strong cultures have four key components Values - basic beliefs and concepts (concrete guidelines for success) Heroes - personify cultural values Rites and rituals - public performances that display and enact values Cultural network - primary carrier of cultural information (stories, myths, legends, jokes, and gossip) Criticisms: shortsighted, more than strategy, not just a skill; culture is a complex, communicative phenomenon rooted in the history of the organizations events.

Two Competing Perspectives on Organizational Culture Culture as Root Metaphor Something an organization “ is ” as opposed to something it “ has ” Organizations as expressive forms, manifestations of human consciousness Culture is the process of sense-making created and sustained through communication and interactions Rituals and stories are ‘ generative processes ’ the yield and shape meanings Provides deep understanding of the way members of a particular organization make sense of the world around them The essence of an organization is culture Three Primary Elements Complex (multi-level construction of values, beliefs and attitudes) Communicative Construction (constructed and reconstructed through interaction) Subcultures and Countercultures Differential interaction Shared experiences Similar personal characteristics

Comparison of Two Competing Perspectives on Organizational Culture VARIABLE Something the organization “ has ” ; a tool, skill, or lever Inform workplace of values Change occurs through management directive and intervention ROOT METAPHOR Something the organization “ is ” ; expressive form Create sustain and influence culture Change occurs through natural evolution; all members influence culture

Multi-level Perspective on Culture Schein ’ s Model of Organizational Culture Three Interrelated Levels of Culture Artifacts and Creations tangible, physical, or hearable things in the environment of the organization Important to connect artifacts to values Values Sense of what “ ought ” to be, as distinct from what is Common basis for operating together Cognitive constructions Basic Assumptions - represent the essence of culture FIVE BASIC ASSUMPTIONS Humanity ’ s relationship to nature The nature of reality and truth - is truth real or discovered? The nature of human nature The nature of human activity The nature of human relationships

Critical Perspectives on Culture Critical Perspectives... Reject the notion that organizations are value-free sites Organizations are sites of struggle between management and workers resulting in domination and oppression of the powerless by the powerful. Critical Theory Roots in the Institute for Social Research in Frankfurt (Frankfurt School) Knowledge is not objective; tainted by personal interests and the power structure Involvement in the inner workings of society to reveal contradictions associated with the imbalance of power Provide critique that allows for the reversal of oppressive conditions in the future Research goal: reveal how social and technological structures within the organization serve to oppress workers Researchers must engage in consciousness-raising among organizational members