MNO1706 Organizational Behavior

Lesson 6: Organizational Culture

Instructor: A/P Lim Ghee Soon

 Lesson 6: Organizational Culture
• Reading for Lesson 6: R & J, Chapter 16
– Chapter 16 (Creating and Sustaining Culture)
• Organization culture: A system of shared meaning held by
members within an organization
– May increase stability but may also become a barrier to change
– Deeply held values such as innovation, risk taking, attention to detail,
outcome, people, team, aggressiveness, stability
– Subcultures may exist within a department/location of a larger
organization; may weaken the dominant culture of the organization
– Strong culture (more intensely and widely shared values) leads to
lower turnover, greater behavioral control, higher profitability, better
moods, higher cohesiveness, loyalty, & organizational commitment
– Strong culture reduces the need for formal rules and regulations
• Functions of organizational culture
– Defines organizational boundary
– Sense of identity
– Facilitates commitment to beyond individual self-interest
– Stability of social system
– Sense-making and control mechanism to shape attitudes/behavior
» Virtual and team-based organization may have weak culture
» Strong leadership needed to emphasize common goals/priorities
» Individual-organization fit important to build and sustain a strong
culture, so select people that match the organization’s values
• Organizational climate
– shared perceptions held by members about the organization and the
work environment
» Like team spirit at the organizational level
» Positive climatesatisfaction, involvement, commitment,
motivation, customer satisfaction, financial performance
» Facets include innovation, creativity, communication, warmth,
support, justice, diversity, customer service
• Culture as a liability:
– Institutionalization: Culture as an end in itself; innovation stifled
– Barriers to change: Entrenched culture in a changing environment a death knell for
many organizations
– Barriers to diversity: Strong culture entails assimilation of new employees especially
if they are diverse, eliminates the advantages of diversity, and undermines formal
diversity policies
– Barriers to M&A: When two cultures do match, M&A failed despite potential gains
via financial and product synergy
• Creating and Sustaining Culture
– Founders typically impose their visions via:
» Selecting employees who think/feel the same way
» Indoctrinate and socialize employees to their ways
» Behaviors that reinforce their beliefs/values/assumptions
– Keeping a Culture Alive
» Employee selection, performance appraisal, training and development,
promotion procedures
» Top management actions
» Socialization: Prearrival, Encounter, Metamorphosis (change to fit expected
role)
• Metamorphosis:
• Individuals practices (informal, individual, variable schedule, random
(no role model), investiture) good for creative roles
• Institutional practices (formal, collective, fixed schedule, serial (role
model), divestiture) good for standard predictable behaviors
• How Employees Learn Culture
– Stories
– Rituals
– Symbols
– Language (acronym, jargon)
• Creating and Ethical Organizational Culture
– Visible role model
– Communicate ethical expectations
– Ethical training
– Reward ethical behaviors and punish unethical ones
– Protect employees who speak up on ethical matters
» Top management ethical valuessupervisory ethical leadershipless
employee deviant behavior
» Leadership pressure to behave unethicallysubordinate unethical
practices
» Employees ethical values matching department’smore like to be
promoted
– Creating a Positive Organizational Culture: builds on employee strengths,
rewards more than punishing, emphasizes employee vitality & growth
• National culture may affect corporate culture; corporate culture
develops over time within a firm; cultural intelligence or cross-
cultural sensitivity is crucial for international management success