1. Introduction to Organizational Cultures © Ed Green Penn State University All Rights Reserved

2. 4/18/2015Introduction to Organizational Cultures2 Topics Organizations – what are they? Definition Kinds of organizations Organizational culture – what is it? Definition Categories About organizational culture Importance Need to manage Effect of change

3. 4/18/2015Introduction to Organizational Cultures3 Organizations – What are they? “an administrative and functional structure (as a business or political party); the personnel of such a structure”* Societal construct that exists in order to meet the vision and fulfill the mission of an enterprise Types of organizations Formal – defined by the enterprise Informal – created by the personnel * Webster/s Ninth New Collegiate Dictionary, Merriam-Webster, 1987, page 831

4. 4/18/2015Introduction to Organizational Cultures4 Organizations – mission & vision Vision – brief statement of purpose Why the enterprise exists Mission – brief statement of fulfilling vision How the enterprise will conduct its business to be what it wants to be

5. 4/18/2015Introduction to Organizational Cultures5 Enterprise – What is it? “a unit of business activity”* An entity constituted to serve the needs of an identified constituency Types * Webster/s Ninth New Collegiate Dictionary, Merriam-Webster, 1987, page 415 Profit Non-profit Public Private Industrial Financial Government Service Medical Social

6. 4/18/2015Introduction to Organizational Cultures6 Formal organizations Established by management Structure and definition Responsibilities Accountabilities Reflect the market space What is the “business”? Established to perform Deliver goods and or services to customers When needed Affordable cost Types Departmental Product Project Matrix

7. 4/18/2015Introduction to Organizational Cultures7 Types of organizations Applies to – Department Product Project Characteristics – Formally structured Direct reporting lines clearly defined Each “box” represents managerial responsibility  Individual contributors assigned below lowest “box” IC1 IC2 IC3 IC4 IC5

8. 4/18/2015Introduction to Organizational Cultures8 Types of organizations – Matrix Combination of Departmental and Project organization Two leadership alignments Professional/technical growth and development Work product Emerging organizational philosophy Influences design of information systems

9. 4/18/2015Introduction to Organizational Cultures9 Informal organizations Created by employees Think “clique” Situation based – workplace conditions and/or problems “Off the books” (Generally) not recognized by formal organization Significant influence

10. 4/18/2015Introduction to Organizational Cultures10 Organizational culture Commonly held and subscribed set of values, goals, expectations, processes, and rules that govern the operation of and relationships within an enterprise Exists within the broader realm of societal culture Driven by internal and external forces

11. 4/18/2015Introduction to Organizational Cultures11 Organization culture Factors What is valued Dominant leadership styles Language Symbols Procedures Routines Influences Economy Market Technology Political Process

12. 4/18/2015Introduction to Organizational Cultures12 Meaning of organizational culture Every culture characterized by Unique language Symbols Rules Ethnocentricity Organizational culture refers to values, assumptions, expectations, knowledge, and definitions

13. 4/18/2015Introduction to Organizational Cultures13 Categories of organizational culture Hierarchy – focus on structure Clan – focus on relationships Market – focus on customers Adhocracy – focus on innovation

14. 4/18/2015Introduction to Organizational Cultures14 Importance of organizational culture Consistency – of values Cohesiveness – of communication Change – because it happens

15. 4/18/2015Introduction to Organizational Cultures15 Importance of organizational cultures Characteristics of successful enterprises High barriers of entry Non-substitutable products/services Large market share Limited bargaining power for consumers Rivalry among competitors Success exists because of organizational culture, not in spite of it Characterized by a distinctive culture Sometimes emerges over time (evolutionary) Consciously developed

16. 4/18/2015Introduction to Organizational Cultures16 Need for an organizational culture” Successful companies have “something special” Supercedes and transcends  Corporate strategy  Market presence  Technical advantage Existence of a strong, unique culture to  Reduce collective uncertainty  Create social order  Create collective identity  Create collective commitment  Elucidate a common vision of the future Organizational culture can offset Burnout Employee loyalty (erosion) Loss of intellectual capital Absence Lawsuits

17. 4/18/2015Introduction to Organizational Cultures17 Change “the act of transforming from one state to another, including the substitution of artifacts” Root cause – world is dynamic; driven by kinetic energy Effect – need to respond to external and internal influences Impact – enterprise modification

18. 4/18/2015Introduction to Organizational Cultures18 Change Change is constant Change is rapid-fire causing vacillation and uncertainty Political Technical Economic Sociological Cultural Successful organizations manage change rather then being managed by it

19. 4/18/2015Introduction to Organizational Cultures19 Factors About Change Stability – often interpreted as stagnation rather than steadiness Organizations that do not change with events eventually fail Change is difficult, unpredictable, alarming and unremitting but... Predicting the future is difficult Change is the only constant

20. 4/18/2015Introduction to Organizational Cultures20 Need for Changing Organizational Culture Organizational change is pervasive Degree and speed of change in the external environment Brought about by evolution from industrial age to information age  Amount of information available doubles every five years Exacerbated by ubiquity and effect of information devices Organizational survival necessitates change Organizational challenge is not whether to change but how to change most effectively