Organizational Culture

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Chapter Outline

• What is Organizational Culture?


• What do Cultures do?
• Creating and Sustaining Culture:
• How Employees Learn Culture?
• Creating an Ethical Organizational Culture:
• Creating a Positive Organizational Culture:
• Spirituality and Organizational Culture:
• Global Implications:
16.1. What is Organizational Culture?
Definition:
It refers to system of shared meaning held by members that distinguishes
the organization from the other organization.
Seven primary characteristics which take part in developing
organizational culture are:
• Innovation and risk taking:
Whether the employees are encouraged or discouraged to be
innovative and take risks.
• Attention to detail:
To which extent employees are expected to exhibit analysis,
precision and attention to details.
• Outcome orientation:
Do management focusses on results or outcomes rather than the
processes and techniques used to achieve them.
• People Orientation:
What is the effect of outcomes on the people of organization?
• Team Orientation:
Do the tasks are organized around teams rather than individuals.
• Aggressiveness:
Do the people are easygoing or aggressive and competitive.
• Stability:
The degree to which organizational activities emphasizes on
maintaining the status quo in contrast to growth.

Some other researchers have described culture into four different types
based on competitive values, i.e.,
• Clan: the collaborative and cohesive.
• Adhocracy: Innovative and adaptable
• Hierarchy: Controlled and consistent.
• Market: competitive and customer focused.

Studies have shown that positive job attitude was high in clan culture,
innovation was strong in market culture and financial performance was
good in market cultures.

Culture is a Descriptive Term:


It is a descriptive because employees perceive the characteristics of
organizational culture for example, does organization encourage
teamwork, does it reward innovation.
In contrast job satisfaction is evaluative, i.e., how employees feel about the
organizations’ expectations, reward practices etc.

Do Organizations have Uniform Cultures?


Organizational culture represents the common perception, that the
organization’ members hold.
In most of the large organizations, there is a Dominant culture and
subcultures as well.
Dominant Culture: Represents the core values shared by majority of
organizational members and gives organizations a distinctive personality.
Subculture: it’s a departmental wise culture, which includes the problems
and experiences faced within the department or location.

Strong vs Weak Cultures:


Strong Culture: if the organization’ mission and core values of
organization are widely shared among majority of employees, then the
Culture is Strong.
Weak Culture: If opinions of employees vary widely about organization’
mission and its core values then the culture is weak.

Culture vs Formalization:
High formalization in any organization brings predictability, consistency
and orderliness.

Culture and formalization are two road for the same destination, as if
culture is strong and widely accepted then organizations less need to be
concerned with developing formal rules and regulations to guide
employee’s behavior.
16.2. What do Cultures do?
Culture Functions:
Culture defines the rules of game.

• Culture defines boundaries, it differentiates one organization from


another.
• It provides identity to organization’ members.
• Culture serves the purpose which is larger than the individual’ self-
interest.
• It improves the stability of social system. It sets standards for what
employees should say and do.
• It is sense-making and control mechanism that guides and shape
employee’ behavior and attitude.

Implementation of Culture in decentralized organizations is so important but


as there is less interaction and face to face contact so, it’s difficult to implement
proper cultural practices in such organizations.
Individual-Organization Fit: it is to say that the employee or job applicant’
behavior and attitude is compatible with organization’ culture. That means,
companies put their maximum effort while selecting the employee who they
think is suitable and can maintain that image of the company.

Culture Creates Climate:


The shared perceptions organizational members have about their
organization and work environment is termed as organizational climate.
Analysis have shown that psychological climate is strongly related with job
satisfaction, involvement, motivation and commitment and a positive
workplace climate is directly linked with higher customer satisfaction.
A person who encounters positive climate for performance will try to perform
better on job and will believe that other employees support his or her success.
Similarly, if a person encounters positive climate for diversity, then he will
interact with everyone in the company without thinking about their
demographic background.
Culture as a Liability:
Strong culture in company can enhance commitment and increase the
consistency of employee’s behavior. But it can affect organization in negative
way.

Institutionalization:
When organization becomes institutionalized, that means, it is valued for itself
and not for its products and services. It becomes rigid.
Companies don’t come out of their original goals even if the goal is no longer
relevant in the industry.

Barriers to change:
As if there is strong culture in the organization and employees are stick with
the rituals and its norms, then it becomes difficult for organizations to adopt
change.
An asset in a stable environment may burden the organization and make it
difficult to respond to changes.

Barriers to Diversity:
In an organization who support bias or becomes insensitive to people who are
different often undermine the formal corporate diversity policies.
In such organizations every new employee, to fit in the organization must
accept the existing norms and behaviors.

Barriers to acquisitions and mergers:


In earlier times, financial advantage and product synergy were considered
when management go for mergers or acquisitions, but in recent years cultural
compatibility is now a primary concern.
As per a survey by consulting firm A.T. Kearney, 58% of mergers failed to reach
financial goals, and experts have commented that it is because of conflicting
organizational culture.

Example: the merger of American Online and Time Warner in 2001 was the
disastrous failure of US corporate history was due to cultural differences.
16.3. Creating and Sustaining Culture:
Culture does not develop unexpectedly or in a sudden way but once it is
established it rarely fades away.

How a Culture Begins:


Culture creation occurs in three ways:
• First, founders hire the employees who they think are alike.
• Second, they indoctrinate and socialize these employees to their way of
thinking and feeling.
• Lastly, owner’ own behavior encourages employees to identify their
beliefs, values and assumptions.
When the organization succeeds, the founder’ personality becomes embedded
in the culture.

Keeping Culture Alive:


Once a culture is in place, employee practices within the organization keeps it
alive, i.e., the selection process, training and development programs,
evaluation criteria, reward those who support the culture and penalize those
who don’t.

Selection:
While selecting employees, selectors need to keep the most significant point
in mind, whether the candidate will fit into the organization. Identify
candidates, whose values must match a good portion of organizational culture.
In order to avoid a big mismatch, companies should provide complete
requirements in the advertisement, so that the person find himself as misfit
for the job should not apply.

Top Management:
Top management can impact organization’ culture through their actions,
words and behavior.
Whether managers support innovative ideas, what actions result in pay rise,
rewards and promotions, office dress code etc.

Socialization:
An employee, who join a new company, he needs assistance to learn the
prevailing culture. This help or assistance is called as socialization.

Socialization is a 3 steps process, which are Prearrival stage, Encounter, and


Metamorphosis. Each step has an impact over new employees’ performance,
commitment to organization’ objectives and eventual decision to stay with the
organization.
• Prearrival stage:
At this stage it is believed that new employee arrives in the organization
with set of values, attitude and expectations about both the organization
and work. The most important predictor of future behavior of employee
or a person is his past behavior.
To find the best suitable employee, while posting job advertisement,
mention the skills which an organization is looking for and inform people
about the organization as whole, so that, if a person finds himself as misfit,
will probably not apply.

• Encounter:
When an employee enters the organizations, then he experiences the
encounter stage, i.e., the difference between the expectations and reality
about jobs and environment of organization.
If the expectation and reality are fairly accurate, then it would be easier
for employee to settle, which is not often the case. In other case employee
may opt to resign and recruitment and selection process should reduce
this outcome.
New comers work more passionately when colleagues become friends
and help him to learn the things quickly.

• Metamorphosis:
There are two types of practices used to bring in order the differences
found in newcomers in comparison with the organization’ environment,
first is institutional and second is individual.
Institutional practices are more formal, collective, sequential, fixed and
serial socialization programs and emphasize divesture. This improves
employee’s commitment for the organization. This is commonly used in
police department or fire department etc.

Institutional practices are informal, individual, random variable and


disjunctive (lack consistency) and emphasize investiture. This makes
employees more innovative. It is commonly used in research base firms’
development, advertising and filmmaking etc.
Original culture derives from the philosophy of Organization’ founders. And
this philosophy greatly influences the hiring criteria.
Top management’ actions and socialization also play a great part in the
development of culture as new and old employees learn what is expected from
them and what is not.

Through socialization it is made sure that the behaviors and attitudes of new
employees are now matching with prevailing organizational norms.
16.4. How Employees Learn Culture?
Culture is transmitted to employees through stories, rituals material symbols
and language etc.

Stories:
Stories are told in the organizations to make the employees learn culture.
These stories connect the present with the past.
Stories about the founder’s hardships from the beginning till date, how they
manage to develop the set of rules, how some employee was awarded, and on
which bases an employee was fired from job, etc.,

Rituals:
Rituals are repetitive sequence of activities that express and reinforce the key
values of the organization. Design a rite of passage, celebrate business success,
encourage people to take side, celebrate failure, build a sense of belonging, etc.,

Material symbols:
International firms are now transferring from closed room offices to open
halls, meeting tables This shows, company prefers openness, creativity,
innovation, and still there are companies who provide closed offices to its
employees.
In some companies, senior executives are given chauffeur-driven cars and in
some companies, executives drive cars themselves.
These are the examples of material symbols, which tells what is more
important to the company, the type of behavior top management desires such
as participation, risk taking conservative, individual or social.

Language:

Different acronyms and jargons are used in the organizations and among
different departments to help members identify with the culture.
16.5. Creating an Ethical Organizational Culture:
Organizations with ethical organizational culture are be like high in risk
tolerance, low to moderate in aggressiveness and focused on means as well as
results. This type of culture takes a long-term perspective and balances the
rights of multiple stakeholders, including employees, community and
stockholders.
Organizations with high ethical standards should have a powerful and positive
impact on employee’s behavior. Following are the ways to develop ethical
culture:

Be a visible role model:


Actions of top management sets bench mark for appropriate behavior.

Communicate ethical expectations:


Tell employees clearly what type of behavior is expected from them

Provide ethical training:


Conduct seminar, workshops and training programs to make the employees
learn ethical values and behaviors.

Visibly reward ethical acts and punish unethical ones:


Reward those employees who show positive attitude towards ethical
organizational culture and punish those who violate it.

Provide protective mechanisms:

Provide protection to employees who report unethical practices happening in


the organizations.
16.6. Creating a Positive Organizational Culture:
Positive organizational culture can be created by putting emphasis on building
employees’ strengths, reward more than it punishes, and emphasize
individual vitality and growth.

Building on Employee Strengths:


Most of the people don’t know about their strengths. Its better if you find a
chance to work in an organizational culture that helps you to discover your
strengths and learn how to make the most out of them.
Larry Hammond (CEO of Auglaize Provico, an agribusiness company) says “if
you really want to excel you have to know yourself, you have to know what
you are good at, and you have to know what you are not so good at”

Rewarding more than Punishing:


Rewarding is not only pay rise or promotions, and managers often ignore the
power of smaller and cheaper rewards such as praise.
It’s about “catching employees doing something right.”
Employees don’t ask for it and managers often don’t realize the costs of failing
to give it.
Emphasizing Vitality and Growth:
Organizations with positive culture recognizes the difference between a job
and a career. They support employee’ contribution to organizational
effectiveness but also help them become more effective both personally and
professionally.

Limits of positive culture:


Is positive culture a cure-all?

If a positive culture is introduced in the organization, employees are given


chance to find their best strengths, rewarding employees performing well
supporting employee in becoming more effective, but what about those
employees, who fail to take part in it?
16.7. Spirituality and Organizational Culture:
What is workplace spirituality?
Workplace spirituality is to say, that, people have an inner life, which
nourishes and is nourished by meaningful work in the context of
community. People find meaning and purpose in their work and want
to connect with other human beings as a part of community.
Job design and transformational leadership are much related concepts.

Why workplace spirituality?


Study of emotions improves our understanding of organizational
behavior, so the study of workplace spirituality can help better
understand employee behavior in the future.

• Spirituality can counterbalance the stress and pressure of a


turbulent pace of life.
• People who lack in faith, want to fill the growing feeling of
emptiness.
• People want to integrate professional life values with their
personal life.
• Job demands have made the workplace dominant in many
employees’ lives, still they don’t find the meaning of their work.
• Many people find that their desire for material acquisitions leaves
them unfilled.

Characteristics of a Spiritual Organization:


Characteristics which differentiate spiritual organization from non-
spiritual counterparts are:

Benevolence:
Spiritual organizations promote the happiness of employees and other
organizational stakeholders and value showing kindness toward
others.

Strong sense of purpose:


These organizations design cultures around a meaningful purpose.
Profits are important but are not of primarily value of organization.

Trust and respect:


Organizations treat employees with esteem and value, mutual trust,
honesty and openness.

Open-mindedness:
These organizations promote and support creative minds.

Achieving a spiritual organization:


Many organizations want to go spiritual but find difficulty when it
implementing its principles into practice.

Actions which can help organizations to become spiritual may be:


• Facilitating employees with work-life balance.
• Managers can demonstrate values, attitudes and behavior that can
trigger intrinsic motivation.
• Tell employees how their work provides a sense of purpose
through community building.
• Group counselling and organizational development will also play
important role in making organizations spiritual.

16.8. Global Implications:


Organizational culture reflect national culture and it is so powerful that it often
goes beyond the national boundaries.
Culture varies from country to country.

For example, AirAsia, a Malaysian-based airline enforces informal dresses to


avoid status differences, they hold parties, participative management and no
private offices, Malaysia’ culture is collectivistic.
The culture at US Airways don’t have the same culture of informality as in
AirAsia.
Now if US Airways want to start operations in Malaysia or merge with AirAsia,
it will have to take these cultural differences into account.
J

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