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Organizational Culture

In any organization, there are the ropes


to skip and the ropes to know.
-- R. Ritti and
G. Funkhouser

Environment and Corporate Culture


GENERAL
ENVIRONMENT

SOCIAL

OPERATING
ENVIRONMENT

ECONOMIC

NEW ENTRANTS
INTERNAL
ENVIRONMENT

SUBSTITUTES
POLITICAL

PRODUCTION
TECHNOLOGY
STRUCTURE
INPUTS

CULTURE
CUSTOMER

LEGAL

SUPPLIER

COMPETITION
TECHNOLOGY

What is Organizational Culture?


A system of meaning shared by the
organizations members
Cultural values are collective beliefs,
assumptions, and feelings about what things are
good, normal, rational, valuable, etc.

Examples of Organizational Culture


Innovation and risk taking (3M)
Outcome orientation (Bausch & Lomb)
Aggressiveness (Microsoft)
Continuous learning and innovation (Nokia)

Characteristics of Organizational Culture


Observed
behavioral
regularities

Organizational
Culture

Norms

Dominant
values

Philosophy
on treatment
of employees/
customers

Organizational
climate

Rules of
employee
behavior

Elements of Organizational Culture


Physical Structures

Artifacts of
Organizational
Culture

Rituals/ Ceremonies
Stories
Language

Organizational
Culture

Artifacts: Organizational Stories


Social prescriptions of desired behavior
Demonstrate that organizational objectives
are attainable
Most effective stories:
Describe real people
Assumed to be true
Known throughout the organization
Are prescriptive

Artifacts: Rituals and Ceremonies


Rituals
programmed routines
e.g., conducting meetings, employee forums, x-mas parties

Ceremonies
planned activities for an audience
e.g., award ceremonies

Heroes
Figure who exemplifies character and deed
E.g. founders as Tom Watson of IBM, Bill Gates of Microsoft

Artifacts: Organizational Language


Words used to address people, describe clients,
etc.
e.g. sir/maam, first name calling

Leaders use phrases and metaphors as cultural


symbols
e.g.. General Electrics grocery store

Language also found in subcultures


e.g.. Whirlpools PowerPoint culture

Slogans
E.g. Nokia Connecting People

Organizational Subcultures
Located throughout the
organization
Can support or oppose
(countercultures) firms
dominant culture
Two functions of
countercultures:
provide surveillance and evaluation
source of emerging values

E. M. Samelson/Orlando Sentinel

Artifacts: Physical Structures/Space


Oakley, Inc.s protective and competitive
corporate culture is apparent in its building
design and workspace. The building looks
like a vault to protect its cherished product
designs (eyewear, footwear, apparel and
watches).

Courtesy of Oakley, Inc.

Courtesy of Oakley, Inc.

Artifacts - Industry

Information technology

Advertising and Media

Call Centers

How Organizational Cultures Form

Top
Management

Philosophy
of the
Organizations
Founders:
Bill Hewlett &
Dave Packard
John Gokongwei
Bill Gates

Organizational
Culture

Selection

Socialization

Do Organizations Have Uniform


Cultures?

Dominant
Culture

Subcultures
Core
Values

Stories
Stories

Rituals
Rituals

How
How Employees
Employees
Learn
Learn Culture/
Culture/
How
How it
it is
is reinforced
reinforced
Language
Language

Material
Material
Symbols
Symbols

Benefits of Strong Corporate Cultures


Social
Control
Strong
Organizational
Culture

Social
Glue
Aids
Sense-Making

Organizational Culture
Functions

Liabilities

Controlling behavior

Blocking mergers

Defining boundaries

Inhibiting diversity

Conveying identity

Inhibiting change

Promoting commitment

Blocking acquisitions

Managing, Changing, and


Merging Cultures
Managing through stories, heroes, symbols and
ceremonies
Culture often need to be changed to ensure
organizational success
Merging cultures through symbolic leaders

Adaptive Organizational Cultures


External focus -- firms
success depends on
continuous change
Focus on processes more
than goals
Strong sense of ownership
Proactive --seek out
opportunities
AP/Wide World

Bicultural Audit
Part of due diligence in merger
Minimizes risk of cultural collision by diagnosing
companies before merger
Three steps in bicultural audit:
1. Collect artifacts
2. Analyze data for cultural conflict/compatibility
3. Recommend solutions

Merging Organizational Cultures


Acquired company embraces
acquiring firms culture

Assimilation

Acquiring firm imposes its culture on


unwilling acquired firm

Deculturation

Integration

Both cultures combined into a new


composite culture

Separation

Merging companies remain


separate with their own culture

Strengthening Organizational Culture


Founders
and leaders
Selection
and
socialization

Strengthening
Organizational
Culture

Managing the
cultural
network

Culturally
consistent
rewards

Stable
workforce

Intensity
Intensity of
of
Core
Core Values
Values

Commitment
Commitment to
to
Core
Core Values
Values
(widely
(widely shared)
shared)

Strong
Strong Versus
Versus
Weak
Weak Cultures
Cultures
High
High Behavioral
Behavioral
Control
Control

Low
Low Employee
Employee
Turnover
Turnover

Studies show that culture is closely


related to the effectiveness of
organizations.

Effectiveness depends on . . .
the core values and beliefs of the members of
the organization.
the policies and practices used by the
organization.
the success in translating the core values and
beliefs into policies and practices.
the match between values, beliefs, policies,
practices, and the organizations environment.

Effectiveness is related to . . .
involvement = participation.
consistency = shared beliefs and values.
adaptability = ability to recognize the need for
change and the willingness to change
mission = shared purpose.

Model of Organizational Culture Types

Four Culture Types

Studies on Culture Types


Deshpande, Farley, and Webster (1993) found
that competing values of the market culture
outperform those of the clan culture.
Those of the adhocracy culture outperformed
those of the diagonally opposing hierarchy
culture.
The speed of response to environmental
changes which determine a higher performance
is thus culturally dependent.

EXERCISEOrganizational Culture Assessment


Instrument (OCAI)

Adhocracy

Clan

5
4
3

2
1

1
2

4
5

Hierarchy
Market

Case Study: Organizational Culture and


Performance

Adhocracy

Clan

5 Hierarchy

Adhocracy

Clan

1
4

Market

5 Hierarchy

Market

Cultural Change
Conduct a cultural analysis to identify cultural elements
needing change
Make it clear to employees that the organizations
survival is legitimately threatened if change is not
forthcoming
Appoint new leadership with new vision
Introduce new stories and rituals to convey new vision
Change the selection and socialization process and
reward systems to support new values From
From Management by Robbins and Coulter
Recognizing the
need for change

Diagnosing and
planning change

Managing the
transition

Measuring results
Maintaining change

Motivation and
Organizational Culture Types

The Learning Organization:


Management Approach in New Millenium
Environment in the millenium
Information and electronic age
Information and knowledge is going to be readily
available to us all
Information speed through Internet
The future is going to be dominated by our need to
understand systems.
The learning organization approach to management
is the management approach based on an
organization anticipating change faster than its
counterparts to have an advantage in the market
over its competitors.

Learning Organization Culture


Has a culture that values sharing knowledge to
adapt to the changing environment and
continuously improve
From Management Fundamentals by Lussier

Adhocracy

Clan

INTERNAL

5 Hierarchy

Market

EXTERNAL

When Companies Seek to Foster Certain


Culture Types
Clan culture needs the five leadership practices
Adhocrarcy culture needs enabling others to act and
encouraging the heart
Hierarchy culture should not use enabling others to act
and encouraging the heart;
Market culture should consider alternatives to leadership
practices.

Culture and
Organization Growth Stages
REINVENT

INVENT

ORGANIZATIONAL
CHANGES

ORGANIZATIONAL
CHANGES

Case Study: Culture and


Organization Growth Stages
14

Adhocracy

Clan

12

MSubs

10
8
6
4

5 Hierarchy

PLDT
Acquires
Smart

NTT Docom
of Japan
Invests in
Smart
Market

Continuous
innovation

2
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

Expand
geographic
coverage

Culture and Motivation


The need for achievement (nAch) the desire to do something
better or more efficiently than it has ever been done before.
The need for power (nPower) the desire to control, influence,
or be responsible for others.
The need for affiliation (nAff) the desire to maintain close,
friendly, personal relationship.

10

What is the Organizational Culture in


the Philippines?

Philippine Organizational Culture


Espouses a reorientation in the organization to three
values, namely:
Adhocracy
Clan
5
kaugnayan (identity),
karangalan (pride)
katapatan (commitment).

To accentuate these core values,


leaders emphasize

5 Hierarchy

corporate
Market

paternalism (pagbabahala and pananagutan),


personalism or pakikipagkapwa (treating a person as a fellow
human being),
familism (giving importance to the family as a social unit).

End