CHAPTER SEVEN

CULTURE AND DIVERSITY

7.1 Culture and cultural diversity
Culture refers to values, beliefs, customs, capabilities and habit that exist in a society. Culture is
also the total way of life and thinking patterns that are passed from generations to generation.
Diversity is Visible and non-visible differences which will include sex, age, background, race,
disability, personality and work style. Diversity is the vast array of physical and cultural
differences that constitute the spectrum of human attributes. Six core dimensions of diversity
exist: age, ethnicity, gender, physical attributes, race, and sexual/affectional orientation. These
are the core elements of diversity that have a lifelong effect on behavior and attitudes.

7.1.1 Characteristics of culture

 Inclusive: it includes so many elements like belief, custom, norm, value etc.
 Prescriptive: Culture prescribes the kinds of behavior considered acceptable in a society.
 Socially shared: It must be shared by members of a society , thus acting to reinforce
culture’s prescriptive nature.
 Facilitates communication: U sually it imposes common habits of thought and feeling
among people. Thus, within a given group, culture makes it easier for people to
communicate with one another. Yet culture may also impede communication across
groups due to a lack of shared common cultural values.
 Learned: Culture is not inherited genetically it must be learned and acquired.
Socialization or enculturation occurs when a person absorbs or learns the culture in
which he or she is raised. In contrast, if a person learns the culture of a society other than
the one in which he or she was raised, the process of acculturation occurs.
 Subjective: People in different cultures often have different ideas about the same object.
What is acceptable in one culture may not necessarily be so in another.
 Enduring: Because culture is shared and passed down from generation to generation, it is
relatively stable and somewhat permanent.
 Cumulative: Culture is based on hundreds or even thousands of years of accumulated
circumstances.
 Dynamic: culture is constantly changing–it adapts itself one was situations and new

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 sources of knowledge. The dynamic aspect of culture can make some products obsolete
and can ushering new buying habits.
7.1.2 Cultural diversity
Cultural diversity refers to the difference in culture. Cultures vary in their underlying patterns of
values and attitudes. The way people think about such matters as achievement, wealth and
material gain, risk and change, may influence how they approach work and their relationships
with organizations. Organization culture is receiving considerable attention from researchers and
managers alike who consider it to be a socializing and creator of organizational climate. They
assume that organizational culture can override national culture and in a multinational
organization, people belonging to different cultures can assimilate. What we find is that the
makeup of organizations is changing to reflect the increasing heterogeneity of the overall
population. Moreover, work force diversity is bringing to organizations people with skills,
experiences, and outlooks that, in the past, were frequently excluded or underutilized. Those
organizations that learn to effectively manage diversity-gender, race, ethnicity, age, sexual
preferences, and the like-will win the competition to hire and keep those individuals who are
different.

To work well with people from different cultures, you must first understand your own culture.
We are usually unaware of our own culture until we come into contact with a very different one.
Knowing your own culture will help guard you against two problems that frequently arise in
international dealings.
 One is the danger of parochialism assuming that the ways of your culture are the only
ways of doing things.
 The other is the danger of ethnocentrism assuming that the ways of your culture are the
best ways of doing things.
It is parochial for a traveling American businesswoman to insist that all of her business contacts
speak English, whereas it is ethnocentric for her to think that anyone who dines with a spoon
rather than a knife and fork lacks proper table manners.

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Four dimensions of culture influence employee job behaviors, attitudes, well-being, motivation,
leadership, negotiations, and many other aspects of organizational behavior.
1. Individualism-Collectivism
Individualistic cultures are cultures in which people define themselves as an individual and
form looser ties with their groups. These cultures value autonomy and independence of the
person, self-reliance, and creativity. Countries such as the United States, United Kingdom, and
Australia are examples of individualistic cultures. In contrast, collectivistic cultures are cultures
where people have stronger bonds to their groups and group membership forms a person’s self-
identity. Countries like Ethiopia, Asian countries such as China and Japan, as well as countries in
Latin America are higher in collectivism.

In collectivistic cultures, people define themselves as part of a group. Collectivistic societies

emphasize conformity to the group. The Japanese saying “the nail that sticks up gets hammered
down” illustrates that being different from the group is undesirable. Collectivist cultures may
have a greater preference for team-based rewards as opposed to individual-based rewards.
2. Power Distance
Power distance refers to the degree to which the society views an unequal distribution of power
as acceptable. Simply put, some cultures are more egalitarian than others. In low power distance
cultures, egalitarianism is the norm. In high power distance cultures, people occupying more
powerful positions such as managers, teachers, or those who are older are viewed as more
powerful and deserving of a higher level of respect. High power distance cultures are
hierarchical cultures where everyone has their place. Powerful people are supposed to act
powerful, while those in inferior positions are expected to show respect. For example, Thailand
is a high power distance culture and, starting from childhood; people learn to recognize who is
superior, equal, or inferior to them.

One of the most important ways in which power distance is manifested in the workplace is that
in high power distance cultures, employees are unlikely to question the power and authority of
their manager, and conformity to the manager will be expected. Managers in these cultures may
be more used to an authoritarian style with lower levels of participative leadership demonstrated.

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People will be more submissive to their superiors and may take orders without questioning the
manager.
3. Uncertainty Avoidance
Uncertainty avoidance refers to the degree to which people feel threatened by ambiguous,
risky, or unstructured situations. Cultures high in uncertainty avoidance prefer predictable
situations and have low tolerance for ambiguity. Employees in these cultures expect a clear set of
instructions and clarity in expectations. Therefore, there will be a greater level of creating
procedures to deal with problems and writing out expected behaviors in manuals. Cultures high
in uncertainty avoidance prefer to avoid risky situations and attempt to reduce uncertainty.

Companies operating in high uncertainty avoidance cultures also tend to avoid risky endeavors
such as entering foreign target markets unless the target market is very large. Germany is an
example of a high uncertainty avoidance culture where people prefer structure in their lives and
rely on rules and procedures to manage situations. In contrast, cultures such as Iran and Russia
are lower in uncertainty avoidance, and companies in these regions do not have rule-oriented
cultures.
4. Masculinity–Femininity
Masculine cultures are cultures that value achievement, competitiveness, and acquisition of
money and other material objects. Ethiopia, Japan and Hungary are examples of masculine
cultures. Masculine cultures are also characterized by a separation of gender roles. In these
cultures, men are more likely to be assertive and competitive compared to women. In contrast,
feminine cultures are cultures that value maintaining good relationships, caring for the weak,
and emphasizing quality of life. In these cultures, values are not separated by gender, and both
women and men share the values of maintaining good relationships. Sweden and the Netherlands
are examples of feminine cultures.

The level of masculinity inherent in the culture has implications for the behavior of individuals
as well as organizations. The femininity of a culture affects many work practices, such as the
level of work/life balance. In cultures high in femininity such as Norway and Sweden, work
arrangements such as telecommuting seem to be more popular compared to cultures higher in

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masculinity like Italy and the United Kingdom.
7.1.3 Managing Cultural Diversity
Managing diversity means enabling diverse workforce to perform its full potential in an
equitable work environment where no one group has an advantage or disadvantage. Cultural
diversity is a part of organizational life. In the present business environment, it cannot be
ignored. The question arises’ how to manage it?’ When a manager focuses attention on cultural
differences, it causes problems as it is often confused with evaluation of a culture.

With the increasing importance of international business as well as the culturally diverse
domestic workforce, what can organizations do to manage cultural diversity?

A. Help Employees Build Cultural Intelligence

Cultural intelligence is a person’s capability to understand how a person’s cultural background
influences one’s behavior. Employees should have the ability to work with people from many
diverse backgrounds all at the same time. For these types of assignments, employees will need to
develop an awareness of overall cultural differences and learn how to recognize cultural
principles that are operating in different situations.
B. Avoid Ethnocentrism
Ethnocentrism is the belief that one’s own culture is superior to other cultures one comes across.
Ethnocentrism leads organizations to adopt universal principles when doing business around the
globe and may backfire. Ignoring cultural differences, norms, and local habits may be costly for
businesses and may lead to unmotivated and dissatisfied employees. Successful global
companies modify their management styles, marketing, and communication campaigns to fit
with the culture in which they are operating.
C. Listen to Locals
When doing cross-cultural business, locals are a key source of information. To get timely and
accurate feedback, companies will need to open lines of communication and actively seek
feedback.
D. Recognize That Culture Changes
Cultures are not static; they evolve over the years. A piece of advice that was true 5 years ago

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may no longer hold true. For example, showing sensitivity to the Indian caste system may be
outdated advice for those internationals doing business in India today.
E. Do Not Always Assume That Culture Is the Problem
When doing business internationally, failure may occur due to culture as well as other problems.
Attributing all misunderstandings or failures to culture may enlarge the cultural gap and shift the
blame to others. In fact, managing people who have diverse personalities or functional
backgrounds may create misunderstandings that are not necessarily due to cultural differences.
7.2 Concepts of Organizational Culture
We define organizational culture as the shared social knowledge within an organization
regarding the rules, norms, and values that shape the attitudes and behaviors of its employees. It
is the shared and learned values, beliefs, and attitudes of its members in the organization.
This definition helps highlight a number of facets of organizational culture. First, culture is social
knowledge among members of the organization. Employees learn about most important aspects
of culture through other employees. Second, culture tells employees what the rules, norms,and
values are within the organization. What are the most important work outcomes to focus on?
What behaviors are appropriate or inappropriate at work? How should a person act or dress while
at work? Indeed, some cultures even go so far as to say how employees should act when they
aren’t at work. Third, organizational culture shapes and reinforces certain employee attitudes and
behaviors by creating a system of control over employees.

Research suggests the following seven primary characteristics that, in aggregate, capture the
essence of an organization’s culture:
 Innovation and risk taking:-The degree to which employees are encouraged to be
innovative and to take risks.
 Outcome orientation:-The degree to which managers’ focus on results or outcomes rather
than on how these outcomes is achieved.
 People orientation:-The degrees to which management decisions take into account the
effects of outcomes on people in the organization. People-oriented cultures value fairness,
supportiveness, and respect for individual rights.
 Team orientation:-The degree to which work is organized around teams rather than

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 individuals.Companies with team-oriented cultures are collaborative and emphasize
cooperation among employees.
 Aggressiveness:The degree to which employees are aggressive and competitive rather than
easygoing.Companies with aggressive cultures value competitiveness and outperforming
competitors.
 Stability: The degree to which organizational decisions and actions emphasize maintaining
the status quo in contrast to growth.Stable cultures are predictable, rule-oriented, and
bureaucratic. These organizations aim to coordinate and align individual effort for greatest
levels of efficiency.
 Attention to detail: is the degree to which employees are expected to exhibit precision,
analysis, and attention to detail
Figure 7.1 Dimensions of Organizational Culture Profile (OCP).

A clear picture of an organization’s culture can be obtained from evaluating all these
characteristics. This picture is the foundation for feelings of shared understanding that the
organizational members associate with the organization, how things are accomplished in it, and
the way the members are expected to behave. Each of these characteristics exists on a continuum
from low to high. Apprising the organization on them, then, gives a composite picture of its
culture and a basis for the shared understanding members have about the organization, how
things are done in it, and the way they are supposed to behave is essential.

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Let us contrast two organizational cultures to examine some of the aforementioned
characteristics.
Do some organizations have different cultures than others?
Organization A
This organization is a manufacturing firm. Managers are expected to fully document all
decisions, and “good managers” are those who can provide detailed data to support their
recommendations. Creative decisions that incur significant change or risk are not encouraged.
Because managers of failed projects are openly criticized and penalized, managers try not to
implement ideas that deviate much from the status quo. There are extensive rules and regulations
in this firm that employees are required to follow. Managers supervise employees closely to
ensure there are no deviations. Management is concerned with high productivity, regardless of
the impact on employee morale or turnover. Work activities are designed around individuals.
There are distinct departments and lines of authority, and employees are expected to minimize
formal contact with other employees outside their functional area or line of command.
Performance evaluations and rewards emphasize individual effort, although seniority tends to be
the primary factor in the determination of pay raises and promotions.
Organization B
This organization is also a manufacturing firm. Here, however, management encourages and
rewards risk taking and change. Decisions based on intuition are valued as much as those that are
well rationalized. Management prides itself on its history of experimenting with new
technologies and its success in regularly introducing innovative products. Managers or
employees who have a good idea are encouraged to “run with it.” In addition, failures are treated
as “learning experiences.” The company prides itself on being market driven and rapidly
responsive to the changing needs of its customers. There are few rules and regulations for
employees to follow, and supervision is loose because management believes that its employees
are hardworking and trustworthy. Management is concerned with high productivity but believes
that this comes through treating its people right. The company is proud of its reputation as being
a good place to work. Job activities are designed around work teams, and team members are
encouraged to interact with people across functions and authority levels. Employees talk
positively about the competition between teams. Individuals and teams have goals, and bonuses

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are based on achievement of these outcomes. Employees are given considerable autonomy in
choosing the means by which the goals are attained.

Organizations will have different cultures than others.

Do Organizations Have a Single Culture?

So far, we have assumed that a company has a single culture that is shared throughout the
organization. However, you may have realized that this is an oversimplification. In reality there
might be multiple cultures within any given organization. For example, people working on the
sales floor may experience a different culture from that experienced by people working in the
warehouse. A culture that emerges within different departments, branches, or geographic
locations is called a subculture. Subcultures may arise from the personal characteristics of
employees and managers, as well as the different conditions under which work is performed.
Within the same organization, marketing and manufacturing departments often have different
cultures such that the marketing department may emphasize innovativeness, whereas the
manufacturing department may have a shared emphasis on detail orientation.

Sometimes, a subculture may take the form of a counterculture. Defined as shared values and
beliefs that are in direct opposition to the values of the broader organizational
culture,countercultures are often shaped around a charismatic leader. For example, within a
largely bureaucratic organization, an enclave of innovativeness and risk taking may emerge
within a single department. A counterculture may be tolerated by the organization as long as it is
bringing in results and contributing positively to the effectiveness of the organization. However,
its existence may be perceived as a threat to the broader organizational culture. In some cases
this may lead to actions thatwould take away the autonomy of the managers and eliminate the
counterculture.
7.2.1 Organizational Culture components
There are three major components to any organization’s culture: observable artifacts, espoused
values, and basic underlying assumptions. You can understand the differences among these
three components if you view culture like an onion. Some components of an organization’s

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culture are readily apparent and observable, like the skin of an onion. However, other
components are less observable to organizational outsiders or newcomers. Such outsiders can
observe, interpret, and make conclusions based on what they see on the surface, but the inside
remains a mystery until they can peel back the outside layers to gauge the values and
assumptions that lie beneath. The sections that follow review the culture components in more
detail.
1. Observable artifacts: Artifacts are the visible and tangible aspects of an organization that
people hear, see or feel. Artifacts supply the primary means of transmitting an organization’s
culture to its workforce. It’s difficult to overestimate the importance of artifacts, because they
help show not only current employees but also potential employees, customers, shareholders, and
investors what the organization is all about. There are six major types of artifacts: symbols,
physical structures, language, stories, rituals, and ceremonies.
 Symbols can be found throughout an organization, from its corporate logo to the images
it places on its website to the uniforms its employees wear.
 Physical structures also say a lot about a culture. Is the workplace open? Does top
management work in a separate section of the building? Is the setting devoid of anything
unique, or can employees express their personalities?
 Language reflects the jargon, slang, and slogans used within the walls of an organization.
 Stories consist of anecdotes, accounts, legends, and myths that are passed down from
cohort to cohort within an organization. Telling stories can be a major mechanism
through which leaders and employees describe what the company values or finds
important.
 Rituals are the daily or weekly planned routines that occur in an organization. That ritual
sends a message that “when workers steal from you, they are stealing from themselves
and their colleagues.”
 Ceremonies are formal events, generally performed in front of an audience of
organizational members.
2. Espoused values: Espoused values are the beliefs, philosophies, and norms that a company
explicitly states. Espoused values can range from published documents, such as a company’s
vision or mission statement, to verbal statements made to employees by executives and managers

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3. Basic underlying assumptions: Basic underlying assumptions are the taken-forgranted
beliefs and philosophies that are so ingrained those employees simply act on them rather than
questioning the validity of their behavior in a given situation. These assumptions represent the
deepest and least observable part of a culture and may not be consciously apparent, even to
organizational veterans. Whatever a company’s underlying assumptions are, its hidden beliefs
are those that are the most likely to dictate employee behavior and affect employee attitudes.
They’re also the aspects of an organizational culture that are the most long-lasting and difficult
to change.
7.2.2 Function of organizational culture
Culture performs a number of functions within an organization.
1.It has a boundary-defining role; that is it creates distinctions between one organization and
others.
2.It conveys a sense of identity for organization members.
3. Third, culture facilitates the generation of commitment to something larger than one's
individual self-interest.
4.It enhances social system stability. Culture is the social glue that helps hold the organization
together by providing appropriate standards for what employees should say and do.
5.Culture serves as a sense making and control mechanism that guides and shapes the attitudes
and behavior of employees. It is this last function that is of particular interest to us.
7.2.3 Culture as a Liability
Culture can enhance organizational commitment and increase the consistency of employee
behavior, clearly benefits to an organization. Culture is valuable to employees too, because it
spells out how things are done and what is important. However, we should not ignore the
potentially dysfunctional aspects of culture, especially a strong one, on an organization’s
effectiveness. Culture will be liability for an organization because; it could be barrier to change,
barrier to diversity and barrier to acquisitions and mergers
A. Barriers to change: Culture is a liability when the shared values do not agree with those that
further the organization’s effectiveness. This is most likely when an organization’s environment
is undergoing rapid change, and its entrenched culture may no longer be appropriate.
Consistency of behavior, an asset in a stable environment, may then burden the organization and

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make it difficult to respond to changes.
B. Barriers to diversity: Hiring new employees who differ from the majority in race, age,
gender, disability, or other characteristics creates a paradox: management wants to demonstrate
support for the differences these employees bring to the workplace, but newcomers who wish to
fit in must accept the organization’s core cultural values. Because diverse behaviors and unique
strengths are likely to diminish as people attempt to assimilate, strong cultures can become
liabilities when they effectively eliminate these advantages.
C. Barriers to acquisition and mergers: historically, when management looked at acquisition
or merger decisions, the key factors were financial advantage and product synergy. In recent
years, cultural compatibility has become the primary concern. All things being equal, whether
the acquisition actually works seems to have more to do with how well the two organizations’
cultures match up.
7.2.4 Types of Organizational Culture
It is important to note that there is not just one organizational culture. It is widely recognized by
the academic literature that different organizations have distinctive cultures.
Cultural elements and their relationships create a pattern that is distinct to an organization. These
differences or similarities may be assessed in relation to various factors. One proposed
framework is presented in Figure 7.3. The vertical axis reflects the relative control orientation of
an organization, ranging from stable to flexible. The horizontal axis reflects the relative focus of
attention of an organization, ranging from internal functioning to external functioning. The
extreme corners of the four quadrants represent four pure types of organizational culture:
bureaucratic, clan, entrepreneurial, and market.

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As is true of organization designs, different organizational cultures may be appropriate under
different conditions. There is no one type of cultural ideal for every situation. Of course, some
employees may prefer one culture to others. Employees who work in an organization with a
culture that fits their own view of an ideal culture tend to be committed to the organization and
optimistic about its future. We recognize that many new employees do not have predetermined
ideas of their ideal organizational culture. Through seeing who gets promoted, large raises, or
important assignments, they will come to understand their organization’s culture. Also, a culture
should reflect the organization’s goals.
A. Bureaucratic Culture
An organization that emphasizes rules, policies, procedures, chain of command, and
centralized decision making has a bureaucratic culture. The goals of a bureaucracy are
predictability, efficiency, and stability. Its members highly value standardized goods and
customer service. Behavioral norms support formality over informality. Leaders view their roles
as being good coordinators, organizers, and enforcers of written rules and standards. Tasks,
responsibilities, and authority for all employees are clearly defined. The organization’s many
rules and processes are spelled out in thick manuals, and employees believe that their duty is to
“go by the book” and follow legalistic procedures.
B. Clan Culture
Tradition, loyalty, personal commitment, extensive socialization, teamwork, self-management,
and social influence are attributes of a clan culture. Its members recognize an obligation beyond
the simple exchange of labor for a salary. They understand that contributions to the organization
(e.g., hours worked per week) may exceed any contractual agreements. The individual’s long-
term commitment to the organization (loyalty) is exchanged for the organization’s long-term
commitment to the individual (security). Because individuals believe that the organization will
treat them fairly in terms of salary increases, promotions, and other forms of recognition, they
hold themselves accountable to the organization for their actions.
C. Entrepreneurial Culture
Innovation, creativity, risk taking, and aggressively seeking opportunities illustrate an
entrepreneurial culture. There is a commitment to experimentation, innovation, and being on the
leading edge. This culture doesn’t just quickly react to changes in the environment—it creates

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change. Many of today’s hi-tech companies, such as Apple, Google, and Nintendo, have
developed entrepreneurial cultures. Effectiveness means providing new and unique products and
rapid growth. Individual initiative, flexibility, and freedom foster growth and are encouraged and
well rewarded.
D. Market Culture
An emphasis on sales growth, increased market share, financial stability, and profitability
are attributes of a market culture. In a market culture, the relationship between individual and
organization is contractual. That is, the obligations of each party are agreed on in advance. In this
sense, the control orientation is formal and quite stable. The individual is responsible for some
level of performance, and the organization promises a specified level of rewards in return.
7.3 Globalization and People at Work
Globalization involves growing worldwide interdependence of resource suppliers, product
markets, and business competition.
OB scholars are increasingly sensitive to the need to better understand how management and
organizational practices vary among the world’s cultures. In this sense, we must be familiar with
the importance of multinational employers, the diversity of multicultural workforces, and the
special demands of international work assignments.
Multinational Employers
A true multinational corporation, or MNC, is a business firm that has extensive international
operations in more than one foreign country. MNCs are more than just companies that “do
business abroad;”they are global concerns—exemplified by Ford, Royal-Dutch Shell, Sony, and
many others. The missions and strategies of MNCs are worldwide in scope. In the public sector,
multinational organizations (MNOs) are those with nonprofit missions whose operations also
span the globe. Examples are Amnesty International, the International Red Cross, the United
Nations, and the World Wildlife Fund. The truly global organization operates with a total
worldview and does not have allegiance to any one national “home.
Multicultural Workforces
What is the best way to deal with a multicultural workforce? There are no easy answers. Styles
of leadership, motivation, decision making, planning, organizing, leading, and controlling vary
from country to country. Managing a construction project in Saudi Arabia with employees from

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Asia, the Middle East, Europe, and North America working side by side will clearly present
challenges different from those involved in a domestic project. Similarly, establishing and
successfully operating a joint venture in Kazakhstan, Nigeria, or Vietnam will require a great
deal of learning and patience. In these and other international settings, political risks and
bureaucratic difficulties further complicate the already difficult process of working across
cultural boundaries. The challenges of managing across cultures, however, are not limited to
international operations. In this connection, a new term has been coined—domestic
multiculturalism, which describes cultural diversity within a given national population: This
diversity will be reflected in the workforces of local organizations. Los Angeles, for example, is
a popular home to many immigrant groups
Expatriate Work Assignments
People who work and live abroad for extended periods of time are referred to as expatriates. The
cost of an expatriate worker can be very expensive for the employer. They carefully recruit
employees who have the right sensitivities and skills, provide them with good training and
orientation to the foreign culture, actively support them while working abroad, give extra
attention to the needs of the expatriate’s family members, and pay careful attention to relocation
when the expatriate and family return home. Expatriates usually face their greatest problems
when entering and working in a foreign culture, and when experiencing repatriation on the return
home.

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