Organizational Culture

Organizational Culture

Organization culture refers to a system of shared meaning held by members that distinguishes from

other organizations.

Seven common elements/characteristics

1. Innovation & risk taking: the degree to which employees are expected to be creative and take risks.

2. Stability: degree to which activities focus on the status quo rather than change.

3. Attention to detail: degree to which there is concern for precision and detail.

4. Outcome orientation: degree to which management emphasizes results.

5. People orientation: degree to which management decisions are sensitive to individual.

6. Team orientation: degree to which work activities are organized around teams rather than individuals.

7. Aggressiveness: degree to which employees are expected to be competitive than easy going.

Functions of Culture

• Defines the boundary between one organization and others.

• Conveys a sense of identity for its members.• Facilitates the generation of commitment to

something larger than self-interest.• Acts as social glue that helps to hold the

organization together by providing appropriate standards for employees to follow.

• Serves as a sense-making and control mechanism for fitting employees in the organization

Culture as a liability

Dysfunctions of culture: especially applicable in strong culture

Barrier to change: occurs when organization’s environment is dynamic & organization has strong culture that worked well in past.

Barrier to diversity: strong cultures put considerable pressure on employees to conform. Diverse behaviors are likely to diminish in strong cultures as people attempt to fit in.

Barrier to acquisition & merger: related to financial advantage and product synergy but cultural compatibility is the primary concern.

Creating culture

• Organization culture does not pop out of thin air.• It takes time to develop and also difficult to fade away.• Organization’s current customs, traditions, and general

way of doing things start with founders, success and achievement.

Culture creation occurs in 3 ways:1. Hiring and keeping employees who think and feel the way

founders do.

2. Socialize employees to the founder’s way of thinking and feeling.

3. Founder’s own behavior acts as a role model.

Sustaining culture

Organization culture is kept alive by:Selection: the main theme behind selection is to identify and hire a

person of knowledge, skill and abilities who could perform job one after matching the need of the organization with that of an individual well without creating any problem. It is a two way street. Applicants also learn about organization.

Top Management: Top manager’s behavior reflect on organization culture. Well behaved, dress, right judgment on performance by the managers, filter down to organization as to whether risk taking is desirable. So as others do.

Socialization: It is a process which help the employees to adapt to the culture of the organization. It is a process of adaptation. New employees are to be fully indoctrinated in the culture of organization through socialization.

Stages of socializationPre-arrival stage: It is the period of learning in the socialization

process that occurs before the new employee joins the organization. Employees come with different value and norms. Requirements to be fulfilled for the job along with other behavior leaves tremendous impression on the new comers.

Encounter stage: New comers confronts expectation and reality diverge. Proper attention by means of induction program, social get-together etc helps to get them adapt to new culture.

Metamorphosis stage: It is the time for the new employees to be changed and get adjusted to the job, work group and organization.

Sources of Organisational Culture

Organisational culture

Characteristics of people within the organisation

Organisational structure

Property right system

Organisational ethics

For details, refer to seminar slides

Typologies of CulturePower culture

– Leadership in few, entrepreneurial in nature

Role culture – Clearly defined roles and rules, power balanced between

the leadership and structure

Achievement culture– Stress on motivation, commitment and action

Support culture– Mutuality, trust, relationships, solidarity

Person culture– Individual as the central point

Generic Corporate CultureSource of values

Charismatic leadership

Organisational traditions

Focus of values

Functional

Elitist

Entrepreneurial

(external, short term)

Strategic

(external, long term)

Chauvinistic

(internal, short term)

Exclusive

(internal, long term)

The Entrepreneurial Culture

• Source - a charismatic leader

• Basis for strong corporate culture

• Initial value orientation of the founder: functional and externally oriented (to create value for customers)

• Good chance for success because of commitment to satisfying the changing needs of the environment

• Unstable, risky and chance of turning elitist

The Strategic Culture

• Institutionalisation of functional values

• Source – organisational traditions and multiple role models

• External and long run focus

• Relatively rational culture without excessive dependence on charismatic leadership

• Focus on preserving corporate identity while still adapting to changes

The Chauvinistic Culture

• More internally focused, blind loyalty to corporate leadership and an overriding concern for institutional superiority

• We – they orientation

• Susceptible to the development of “groupthink”, illusion of invulnerability, self- righteousness and stereotyping

The Exclusive Culture• Institutionalisation of elitist value orientation

• Elitist but club like orientation independent of charismatic leadership

• Elitist orientation anchored in well entrenched organisational traditions

Organisational Subcultures

• Values shared by a group rather than an organisation as a whole

• Exist in large organisations without a dominant central corporate culture

• May be divisive in the absence of a unifying corporate culture

Positive CulturePeople-centred (value on professional and personal

development)

Performance driven (value on performance based rewards)

Goal oriented (promotion of a clear sense of direction)

Innovation inclined (stimulation of creative behaviours)

Client committed (value on serving the needs of the customers)

Quality obsessed (striving to do better all the time)

Cultural Transformation

• Not easy –but possible

• Identify the “culture now” – culture analysis

• Articulate “culture alternative” – culture visioning

• Identify “culture gaps” – culture planning

• Introduce “culture change” - culture support and reinforcement

Cultural Change Strategies• Develop self awareness by leadership

– Avoid equating personal identity with that of the organisation

– Avoid elitist trap

• Steps to be followed:– Discourage the development of personality cult or

hero worshipping– Practice delegation and participation to encourage

the development of enduring management structures independent of the influence of an individual leader

Cultural Change Strategies

• Steps to be followed:– Encourage constructive dissent to take decision

makers away from the influence of charismatic leader– Promote functional values (cooperation , discipline,

fairness, initiatives)– Be willing to step aside or move on if the staying

involved inhibits the transition to a more stable and strategic culture

– Recruit and select people with values congruent with functional organizational values

Cultural Change Strategies• Steps to be followed:

– Institutionalise the proper functional values by extensive socialisation

– Prevent the development of counter-cultures by a strong central culture

– Remove the charismatic leader if he/ she is blocking the effective transformation of the entrepreneurial organization into a strategic culture

Cultural Change Strategies

• Deliberate role modelling, teaching and coaching by leaders

• Criteria for allocation of rewards and status

• Criteria for recruitment, selection, promotion and commitment

• Promotion of functional values

• Socialisation programmes

Creating an Ethical Organizational Culture

• Characteristics of organizations that develop high ethical standards– High tolerance for risk– Low to moderate in aggressiveness– Focus on means as well as outcomes

• Managerial practices promoting an ethical culture– Being a visible role model.– Communicating ethical expectations.– Providing ethical training.– Rewarding ethical acts and punishing unethical ones.– Providing protective mechanisms.

Creating a Customer-Responsive Culture

• Key variables shaping customer-responsive cultures– The types of employees hired by the organization.

– Low formalization: the freedom to meet customer service requirements.

– Empowering employees with decision-making discretion to please the customer.

– Good listening skills to understand customer

– Role clarity that allows service employees to act as “boundary spanners.”

– Employees who engage in organizational citizenship behaviors.

Creating a Customer-Responsive Culture

Managerial Actions :– Select new employees with personality and

attitudes consistent with high service orientation.

– Train and socialize current employees to be more customer focused.

– Change organizational structure to give employees more control.

– Empower employees to make decision about their jobs.