Module-4

ORGANIZATIONAL CULTURE

Basic Nature of Organizational Culture:

Organizational culture is the cognitive framework consisting of attitudes, values, behavioral norms, and
expectations shared by organization members; a set of basic assumptions shared by members of an
organization (Greenberg). Organizational culture sometimes is referred to as corporate culture
Organizational culture refers to a system of shared meaning held by members that distinguishes the
organization from other organizations. Seven primary characteristics seem to capture the essence of an
organization’s culture:
1. Innovation and risk taking: The degree to which employees are encouraged to be innovative and take
risks.
2. Attention to detail: The degree to which employees are expected to exhibit precision, analysis, and
attention to detail.
3. Outcome orientation: The degree to which management focuses on results or outcomes rather than on
the techniques and processes used to achieve them.
4. People orientation: The degree to which management decisions take into consideration the effect of
outcomes on people within the organization.
5. Team orientation: The degree to which work activities are organized around teams rather than
individuals.
6. Aggressiveness: The degree to which people are aggressive and competitive rather than easy-going.
7. Stability: The degree to which organizational activities emphasize maintaining the status quo in contrast
to growth.

Core Cultural Characteristics:

Fundamental to any organization’s culture is a set of six core characteristics that are valued
collectively by its members.
1. SENSITIVITY TO OTHERS- Years ago, the culture at UPS was relatively rigid and inflexible with
respect to customer needs. With some arrogance, it operated however it thought best, and forced
customers to adjust to its ways. No more. Today, UPS’s culture places high value on service and
satisfaction. UPS now strives to suit the needs of its customers; changes are driven by better
opportunities to serve
2. INTEREST IN NEW IDEAS- Walt Disney Co. employees or “cast members,” traditionally have had
lengthy orientation programs to ensure that they know exactly what to say and how to behave
toward guests. For the most part, their behavior is scripted. By contrast, people working at
Southwest Airlines are encouraged to be unique and to bring fresh ideas to their work. In fact,
company founder Herb Kelleher is so adamant about this that managerial training is geared toward
hiring people who bring to the job an orientation toward openness and fun.
3. WILLINGNESS TO TAKE RISKS- At some companies, such as the Bank of America, the culture is very
conservative, and employees make only the safest investments. By contrast, buyers at The Limited
are discouraged from making too many “safe” choices. Taking risks in the purchasing of fashion
merchandise is valued.

4. THE VALUE PLACED ON PEOPLE-Some companies consider their employees as valuable only
insofar as they contribute to production, much as they view machinery. Such organizations, where
people do not feel valued, are considered to have toxic organizational cultures. A survey found that
48 percent of people believe they work in toxic cultures. Organizations like these tend to lose good
employees, and struggle to be profitable as a result.
By contrast, organizations that treat people well and that inspire employees—said to have healthy
organizational cultures—tend to have very low turnover, and generally thrive.
Toxic organizational cultures; Organizational cultures in which people feel that they are not
valued.
Healthy organizational cultures; Organizational cultures in which people feel that they are valued.
The characteristics of healthy organizational cultures are;
 Everyone in the organization is open and humble. Arrogance is absent. This is good because
it encourages people to learn from everyone else.
 Individuals are held accountable and accept personal responsibility for their actions. Denial,
blame, and excuses are absent. By accepting responsibility, conflict is lowered and
opportunities for success are raised.
 Within appropriate limits, people are free to take risks. Neither reckless risk-taking nor
stiflingly high levels of control are found. Hence, freedom exists to follow new ideas.
 The commitment to doing things well is very high. Mediocrity is not tolerated. Everyone is
expected to do things appropriately, not taking shortcuts to quality.
 Mistakes are tolerated because they are considered learning opportunities. Attempts at
innovation assist the organization, but some failures are inevitable. These are accepted
because they provide opportunities to learn how to improve things next time.
 Integrity is unquestioned. Dishonesty undermines trust, which is essential to success. As a
result, efforts to promote integrity, such as being transparent about decisions and following
up on promises, are key.
 Collaboration and integration between units is ongoing. Turf wars and narrow thinking are
discouraged. Instead, people work together in open, friendly, collaborative environments.
 Courage and persistence are encouraged. Work often is challenging. In healthy cultures
everyone is encouraged to persist even in the face of failure, so long as they remain realistic
about what can be accomplished.

5. OPENNESS OF AVAILABLE COMMUNICATION OPTIONS- At some companies, such as Yahoo!,

employees are expected to make decisions freely and to communicate with whoever is needed to
get the job done—even if it means going right to the CEO. At IBM, however, the culture has called
for working within the proper communication channels and to vest power in the hands of only a
few key individuals, although this has been changing in recent years.

6. FRIENDLINESS AND CONGENIALITY- At some companies, such as Nokia Corp., the employees tend
to get along well. Friendships often run deep, and employees see each other outside of work. At
 the toymaker Mattel, however, the culture has been depicted as being far more cutthroat and
competitive.

Strength of Organizational Culture: Strong and

Weak
Organizations differ in many key ways with respect to their cultures. They also vary in the degree to which
their cultures impact employees. In some businesses, there is widespread agreement concerning the
elements of organizational culture, paving the way for culture to exert major influences on the way people
behave. An organization of this type may be said to have a strong culture. By contrast, other organizations
may be characterized as having weaker agreement with respect to the various elements of organizational
culture, thereby giving its culture only limited impact on the way people behave. An organization described
in this manner may be said to have a weak culture.
Strong culture- An organization in which there is widespread agreement with respect to the core elements
of culture, making it possible for culture to exert major influences on the way people behave.
Weak culture- An organization in which there is limited agreement with respect to the core elements of
culture, giving culture little influence on the way people behave.
In an organization with a strong culture, the core values are held intensely and shared widely. The more
members accept these values and the greater their commitment to those concepts, the stronger a culture
may be said to be. Specifically, organizations with strong cultures are characterized in the following ways.
 A clear philosophy exists about how business is to be conducted.
 Considerable time is spent communicating values and beliefs.
 Explicit statements are made that describe the organization’s values.
 A set of values and norms exists that is shared widely and rooted deeply.
 New employees are screened carefully to ensure fit with the culture.
Stronger organizational cultures are likely to be found in companies that are newer and that have fewer
employees. This suggests that perhaps as organizations grow older and larger in size, the effects of culture
become diffused. Also, organizations are more successful financially when their leaders hold views that are
in keeping with the organizational culture than when leaders’ personal perspectives are at odds with the
prevailing culture. This makes sense given that workers may find themselves responding to inconsistent
and competing messages. Together, these findings suggest that strong cultures shape the preferences and
actions of people in the organizations that have them.

Cultures Within Organizations

It is implied that each organization has only a single, uniform culture—one set of shared values, beliefs,
and expectations. In fact, this is rarely the case. Instead, organizations, particularly large ones, typically
have several cultures operating within them.
People generally have attitudes and values that are more in common with others in their own fields or
work units than they do with those in other parts of the organization. These various groups may be said to
have several different subcultures—cultures existing within parts of organizations rather than entirely
through them. These typically are distinguished with respect to either functional differences or geographic
distances. Research suggests that several subcultures based on occupational, professional, or functional
divisions usually exist within any large organization.
 There also may not be a dominant culture, a distinctive, overarching “personality” of an organization. An
organization’s dominant culture reflects its core values, the prevailing perceptions that are generally
shared throughout the organization. Typically, members of subcultures who share additional sets of values
also usually accept the core values of their organizations as a whole. Thus, subcultures should not be
thought of as a bunch of totally separate cultures but, rather, as “mini” cultures operating within a larger,
dominant one.

The Role of Culture in Organizations:

Culture is an intangible force—albeit one with far-reaching consequences. Indeed, culture plays several
important roles in organizations.
 CULTURE PROVIDES A SENSE OF IDENTITY- An organization’s shared perceptions and values are
defined, the more strongly people can associate with its mission and feel a vital part of it. E.g.
Employees at Southwest Airlines feel special because of their company’s emphasis on having fun
and joking around on the job, a widespread practice initiated by founder Herb Kelleher.
Southwest’s employees feel strongly connected to the company, believing that they belong there.
As a result, they only infrequently resign to take other positions in the airline industry.

 CULTURE GENERATES COMMITMENT TO AN ORGANIZATION’S MISSION- Sometimes it’s difficult

for people to go beyond thinking of their own interests. When there is a strong, overarching
culture, however, people feel that they are part of that larger, well-defined whole and involved in
the entire organization’s work. Bigger than any one individual’s interests, culture reminds people of
what their organization is all about.
 CULTURE CLARIFIES AND REINFORCES STANDARDS OF BEHAVIOR- Culture guides employee’s
words and deeds, making it clear what they should do or say in a given situation, which is especially
useful to newcomers. In this sense, culture provides stability to behavior, both with respect to what
an individual might do at different times, but also with what various employees may do at the same
time. E.g. In a company with a culture that strongly supports customer satisfaction, workers will
have clear guidance as to how they are expected to behave: doing whatever it takes to please the
customer.
By serving these three important roles, it is clear that culture is an important force influencing behavior
in organizations.

Forms of Organizational Culture:

As there are many different organizations, there also are many different organizational cultures. Although
each organization may be unique in several ways, key similarities may be noted. Fortunately, scientists
have developed useful ways of organizing and identifying these cultures. One of the most popular
approaches is known as the competing values framework. A conceptualization of organizational culture
that specifies that cultures of organizations differ with respect to two sets of opposite values:
 Valuing flexibility and discretion as opposed to stability, order, and control.
 Valuing internal affairs as opposed to what’s going on in the external environment.
By combining both dimensions, scientists have been able to identify the four unique types of organizational
culture;
1. HIERARCHY CULTURE- Organizations described as having a hierarchy culture have an internal focus
and emphasize stability and control. Here, the most effective leaders are good coordinators of
projects and emphasize smooth running procedures, often relying on formal rules and policies to do
 so. Governmental agencies and large corporations tend to fall into this category. Sometimes,
because organizations with hierarchy cultures are so attuned to internal concerns at the expense of
external ones, and so focused on stability as opposed to making necessary changes, serious
problems result.
As a large government agency, the National Aeronautics and Space Administration (NASA) has a
hierarchy culture. Its sharp focus on stability created a culture that was blind to the threat posed by
foam debris on its space shuttles. Furthermore, its attention to internal issues as opposed to
external matters reinforced employees’ convictions that the agency was far more attuned to
making decisions based on safety than was the case in reality.
2. MARKET CULTURE- The term market culture describes organizations that are concerned with
stability and control but that are external in their orientation. In such organizations, the core values
emphasize competitiveness and productivity, focusing on bottom-line results. They do this by
carefully identifying the markets in which they are going to compete and then taking a very hard-
driving, results-oriented approach to getting things done.
3. CLAN CULTURE- An organization is said to have a clan culture when it has a strong internal focus
along with a high degree of flexibility and discretion. With goals that are highly shared by members
of the organization and high levels of cohesiveness such organizations feel more like extended
families than economic entities. Given their highly friendly nature, it’s not surprising that most
people prefer clan cultures to any of the other forms of organizational culture.
In the clan culture, the predominant focus is on flexibility when it comes to external needs.
This is attained by concentrating on the excellence of the employees, which reflects the internal
focus. An example of a company that fits the clan culture is the Finnish conglomerate Nokia, best
known for its cellular phones.
Of importance, clan cultures often are characterized as enjoyable places to work, organizations in
which a great deal of attention is paid to doing things to make work fun for employees. Although
this makes life pleasant, of course, it’s important to note that cultures in which having fun is
stressed also must pay serious attention to meeting business objectives.
4. ADHOCRACY CULTURE- Organizations that have an adhocracy culture emphasize flexibility while
also paying a great deal of attention to the external environment. As defined by management
consultant Robert H. Waterman, Jr., an adhocracy is a form of organization that cuts across normal
bureaucratic lines to capture opportunities, solve problems, and get results. The term adhocracy is
a reference to the absence of hierarchy, making it the opposite of bureaucracy. Typical of
contemporary companies, which often have to make rapid changes in the way they operate, the
adhocracy culture is characterized by recognition that, to succeed, organizations need to be highly
innovative and constantly assess what the future requires for survival, let alone growth.
Typical of companies with adhocracy cultures are those in the software development and
filmmaking businesses, where it is widely recognized that highly innovative products and services
are essential to success. To promote the innovative spirit at 3M, one of its earliest presidents,
William McKnight, recognized the importance of a culture in which people were respected and felt
free to take risks. Consider the three principles he articulated back in 1948, which describe an
adhocracy culture; (1) Delegate responsibility to encourage people to take initiative; (2) expect
mistakes to be made, so be tolerant of them; and (3) criticize in a constructive, not destructive,
manner.

How Employees Learn Culture:

Culture is transmitted to employees in a number of forms, the most potent being stories, rituals, material
symbols, and language.
 1. STORIES
A number of senior Nike executives spend much of their time serving as corporate storytellers. When they
tell how co-founder Bill Bowerman went to his workshop and poured rubber into his wife’s waffle iron to
create a better running shoe, they’re talking about Nike’s spirit of innovation. When new hires hear tales of
Oregon running star Steve Prefontaine’s battles to make running a professional sport and attain better
performance equipment, they learn of Nike’s commitment to helping athletes.
Stories such as these circulate through many organizations, anchoring the present in the past and
legitimating current practices. They typically include narratives about the organization’s founders, rule
breaking, rags-to-riches successes, reductions in the workforce, relocation of employees, reactions to past
mistakes, and organizational coping.
Employees also create their own narratives about how they came to either fit or not fit with the
organization during the process of socialization, including first days on the job, early interactions with
others, and first impressions of organizational life.
2. RITUALS
Rituals are repetitive sequences of activities that express and reinforce the key values of the organization—
what goals are most important and which people are important and which are expendable. One of the best
known rituals is Walmart’s company chant. Begun by the company’s founder, the late Sam Walton, as a
way to motivate and unite his workforce, “Gimme a W, gimme an A, gimme an L, gimme a squiggle, give
me an M, A, R, T!” has become a ritual that bonds workers and reinforces Walton’s belief in the
contribution his employees made to the company’s success. Similar corporate chants are used by IBM,
Ericsson, Novell, Deutsche Bank, and PricewaterhouseCoopers.
3. MATERIAL SYMBOLS
Alcoa headquarters doesn’t look like your typical head-office operation. There are few individual offices,
even for senior executives. The space is essentially made up of cubicles, common areas, and meeting
rooms. This informality conveys to employees that Alcoa values openness, equality, creativity, and
flexibility. Some corporations provide their top executives with chauffeur-driven limousines and a
corporate jet. Other CEOs drive the company car themselves and travel in the economy section.
The layout of corporate headquarters, the types of automobiles top executives are given, and the
presence or absence of corporate aircraft are a few examples of material symbols. Others include the size
of offices, the elegance of furnishings, executive perks, and attire. These convey to employees who is
important, the degree of egalitarianism top management desires, and the kinds of behavior that are
appropriate, such as risk taking, conservative, authoritarian, participative, individualistic, or social.
4. LANGUAGE
Many organizations and subunits within them use language to help members identify with the culture,
attest to their acceptance of it, and help preserve it. Unique terms describe equipment, officers, key
individuals, suppliers, customers, or products that relate to the business. New employees may at first be
overwhelmed by acronyms and jargon, that, once assimilated, act as a common denominator to unite
members of a given culture or subculture.

Creating a Positive Organizational Culture:

At first blush, creating a positive culture may sound hopelessly naïve or like a Dilbert-style conspiracy. The
one thing that makes us believe this trend is here to stay, however, are signs that management practice
and OB research are converging.
A positive organizational culture emphasizes building on employee strengths, rewards more than it
punishes, and emphasizes individual vitality and growth. The areas are;

1. Building on Employee Strengths

Although a positive organizational culture does not ignore problems, it does emphasize showing workers
how they can capitalize on their strengths.
Hammond is CEO of Auglaize Provico, an agribusiness company based in Ohio. In the midst of the firm’s
worst financial struggles, when it had to lay off one-quarter of its workforce, Hammond decided to try a
different approach. Rather than dwell on what was wrong, he took advantage of what was right. “If you
really want to [excel], you have to know yourself—you have to know what you’re good at, and you have to
know what you’re not so good at,” says Hammond. With the help of Gallup consultant Barry Conchie,
Hammond focused on discovering and using employee strengths and helped the company turn itself
around. “You ask Larry what the difference is, and he’ll say that it’s individuals using their natural talents,”
says Conchie.

2. Rewarding More Than Punishing

Although most organizations are sufficiently focused on extrinsic rewards such as pay and promotions,
they often forget about the power of smaller (and cheaper) rewards such as praise. Part of creating a
positive organizational culture is “catching employees doing something right.” Many managers withhold
praise because they’re afraid employees will coast or because they think praise is not valued. Employees
generally don’t ask for praise, and managers usually don’t realize the costs of failing to give it.

3. Emphasizing Vitality and Growth

No organization will get the best from employees who see themselves as mere cogs in the machine. A
positive culture recognizes the difference between a job and a career. It supports not only what the
employee contributes to organizational effectiveness but also how the organization can make the
employee more effective—personally and professionally. Although it may take more creativity to
encourage employee growth in some types of industries, consider the food industry.

4. Limits of Positive Culture

Though companies such as GE, Xerox, Boeing, and 3M have embraced aspects of a positive organizational
culture, it is a new enough idea for us to be uncertain about how and when it works best.
Not all cultures value being positive as much as U.S. culture does, and, even within U.S. culture, there
surely are limits to how far we should go to preserve a positive culture. For example, Admiral, a British
insurance company, has established a Ministry of Fun in its call centers to organize poem writings, foosball,
conker (a British game involving chestnuts), and fancy-dress days. As one critic notes, “Promoting a social
orthodoxy of positiveness focuses on a particular constellation of desirable states and traits but, in so
doing, can stigmatize those who fail to fit the template.” There may be benefits to establishing a positive
culture, but an organization also needs to be objective and not pursue it past the point of effectiveness.