Organizational Culture

Organizational Culture Organization culture refers to a system of shared meaning held by members that distinguishes from other organizations .

Organization culture refers to a system of shared meaning held by members that distinguishes from other organizations .

Seven common elements/characteristics Innovation & risk taking : the degree to which employees are expected to be creative and take risks. Stability : degree to which activities focus on the status quo rather than change. Attention to detail : degree to which there is concern for precision and detail. Outcome orientation : degree to which management emphasizes results. People orientation : degree to which management decisions are sensitive to individual. Team orientation : degree to which work activities are organized around teams rather than individuals. Aggressiveness : degree to which employees are expected to be competitive than easy going.

Innovation & risk taking : the degree to which employees are expected to be creative and take risks.

Stability : degree to which activities focus on the status quo rather than change.

Attention to detail : degree to which there is concern for precision and detail.

Outcome orientation : degree to which management emphasizes results.

People orientation : degree to which management decisions are sensitive to individual.

Team orientation : degree to which work activities are organized around teams rather than individuals.

Aggressiveness : degree to which employees are expected to be competitive than easy going.

Functions of Culture Defines the boundary between one organization and others. Conveys a sense of identity for its members. Facilitates the generation of commitment to something larger than self-interest. Acts as social glue that helps to hold the organization together by providing appropriate standards for employees to follow. Serves as a sense-making and control mechanism for fitting employees in the organization

Defines the boundary between one organization and others.

Conveys a sense of identity for its members.

Facilitates the generation of commitment to something larger than self-interest.

Acts as social glue that helps to hold the organization together by providing appropriate standards for employees to follow.

Serves as a sense-making and control mechanism for fitting employees in the organization

Culture as a liability Dysfunctions of culture: especially applicable in strong culture Barrier to change : occurs when organization’s environment is dynamic & organization has strong culture that worked well in past. Barrier to diversity: strong cultures put considerable pressure on employees to conform. Diverse behaviors are likely to diminish in strong cultures as people attempt to fit in. Barrier to acquisition & merger: related to financial advantage and product synergy but cultural compatibility is the primary concern.

Dysfunctions of culture: especially applicable in strong culture

Barrier to change : occurs when organization’s environment is dynamic & organization has strong culture that worked well in past.

Barrier to diversity: strong cultures put considerable pressure on employees to conform. Diverse behaviors are likely to diminish in strong cultures as people attempt to fit in.

Barrier to acquisition & merger: related to financial advantage and product synergy but cultural compatibility is the primary concern.

Creating culture Organization culture does not pop out of thin air. It takes time to develop and also difficult to fade away. Organization’s current customs, traditions, and general way of doing things start with founders, success and achievement. Culture creation occurs in 3 ways: Hiring and keeping employees who think and feel the way founders do. Socialize employees to the founder’s way of thinking and feeling. Founder’s own behavior acts as a role model.

Organization culture does not pop out of thin air.

It takes time to develop and also difficult to fade away.

Organization’s current customs, traditions, and general way of doing things start with founders, success and achievement.

Culture creation occurs in 3 ways:

Hiring and keeping employees who think and feel the way founders do.

Socialize employees to the founder’s way of thinking and feeling.

Founder’s own behavior acts as a role model.

Sustaining culture Organization culture is kept alive by: Selection : the main theme behind selection is to identify and hire a person of knowledge, skill and abilities who could perform job one after matching the need of the organization with that of an individual well without creating any problem. It is a two way street. Applicants also learn about organization. Top Management : Top manager’s behavior reflect on organization culture. Well behaved, dress, right judgment on performance by the managers, filter down to organization as to whether risk taking is desirable. So as others do. Socialization : It is a process which help the employees to adapt to the culture of the organization. It is a process of adaptation. New employees are to be fully indoctrinated in the culture of organization through socialization.

Organization culture is kept alive by:

Selection : the main theme behind selection is to identify and hire a person of knowledge, skill and abilities who could perform job one after matching the need of the organization with that of an individual well without creating any problem. It is a two way street. Applicants also learn about organization.

Top Management : Top manager’s behavior reflect on organization culture. Well behaved, dress, right judgment on performance by the managers, filter down to organization as to whether risk taking is desirable. So as others do.

Socialization : It is a process which help the employees to adapt to the culture of the organization. It is a process of adaptation. New employees are to be fully indoctrinated in the culture of organization through socialization.

Stages of socialization Pre-arrival stage : It is the period of learning in the socialization process that occurs before the new employee joins the organization. Employees come with different value and norms. Requirements to be fulfilled for the job along with other behavior leaves tremendous impression on the new comers. Encounter stage : New comers confronts expectation and reality diverge. Proper attention by means of induction program, social get-together etc helps to get them adapt to new culture. Metamorphosis stage : It is the time for the new employees to be changed and get adjusted to the job, work group and organization.

Pre-arrival stage : It is the period of learning in the socialization process that occurs before the new employee joins the organization. Employees come with different value and norms. Requirements to be fulfilled for the job along with other behavior leaves tremendous impression on the new comers.

Encounter stage : New comers confronts expectation and reality diverge. Proper attention by means of induction program, social get-together etc helps to get them adapt to new culture.

Metamorphosis stage : It is the time for the new employees to be changed and get adjusted to the job, work group and organization.

Sources of Organisational Culture Organisational culture Characteristics of people within the organisation Organisational structure Property right system Organisational ethics For details, refer to seminar slides

Typologies of Culture Power culture Leadership in few, entrepreneurial in nature Role culture Clearly defined roles and rules, power balanced between the leadership and structure Achievement culture Stress on motivation, commitment and action Support culture Mutuality, trust, relationships, solidarity Person culture Individual as the central point

Power culture

Leadership in few, entrepreneurial in nature

Role culture

Clearly defined roles and rules, power balanced between the leadership and structure

Achievement culture

Stress on motivation, commitment and action

Support culture

Mutuality, trust, relationships, solidarity

Person culture

Individual as the central point

Generic Corporate Culture Source of values Charismatic leadership Organisational traditions Focus of values Functional Elitist Entrepreneurial (external, short term) Strategic (external, long term) Chauvinistic (internal, short term) Exclusive (internal, long term)

The Entrepreneurial Culture Source - a charismatic leader Basis for strong corporate culture Initial value orientation of the founder: functional and externally oriented (to create value for customers) Good chance for success because of commitment to satisfying the changing needs of the environment Unstable, risky and chance of turning elitist

Source - a charismatic leader

Basis for strong corporate culture

Initial value orientation of the founder: functional and externally oriented (to create value for customers)

Good chance for success because of commitment to satisfying the changing needs of the environment

Unstable, risky and chance of turning elitist

The Strategic Culture Institutionalisation of functional values Source – organisational traditions and multiple role models External and long run focus Relatively rational culture without excessive dependence on charismatic leadership Focus on preserving corporate identity while still adapting to changes

Institutionalisation of functional values

Source – organisational traditions and multiple role models

External and long run focus

Relatively rational culture without excessive dependence on charismatic leadership

Focus on preserving corporate identity while still adapting to changes

The Chauvinistic Culture More internally focused, blind loyalty to corporate leadership and an overriding concern for institutional superiority We – they orientation Susceptible to the development of “groupthink”, illusion of invulnerability, self- righteousness and stereotyping

More internally focused, blind loyalty to corporate leadership and an overriding concern for institutional superiority

We – they orientation

Susceptible to the development of “groupthink”, illusion of invulnerability, self- righteousness and stereotyping

The Exclusive Culture Institutionalisation of elitist value orientation Elitist but club like orientation independent of charismatic leadership Elitist orientation anchored in well entrenched organisational traditions

Institutionalisation of elitist value orientation

Elitist but club like orientation independent of charismatic leadership

Elitist orientation anchored in well entrenched organisational traditions

Organisational Subcultures Values shared by a group rather than an organisation as a whole Exist in large organisations without a dominant central corporate culture May be divisive in the absence of a unifying corporate culture

Values shared by a group rather than an organisation as a whole

Exist in large organisations without a dominant central corporate culture

May be divisive in the absence of a unifying corporate culture

Positive Culture People-centred (value on professional and personal development) Performance driven (value on performance based rewards) Goal oriented (promotion of a clear sense of direction) Innovation inclined (stimulation of creative behaviours) Client committed (value on serving the needs of the customers) Quality obsessed (striving to do better all the time)

People-centred (value on professional and personal development)

Performance driven (value on performance based rewards)

Goal oriented (promotion of a clear sense of direction)

Innovation inclined (stimulation of creative behaviours)

Client committed (value on serving the needs of the customers)

Quality obsessed (striving to do better all the time)

Cultural Transformation Not easy –but possible Identify the “culture now” – culture analysis Articulate “culture alternative” – culture visioning Identify “culture gaps” – culture planning Introduce “culture change” - culture support and reinforcement

Not easy –but possible

Identify the “culture now” – culture analysis

Articulate “culture alternative” – culture visioning

Identify “culture gaps” – culture planning

Introduce “culture change” - culture support and reinforcement

Cultural Change Strategies Develop self awareness by leadership Avoid equating personal identity with that of the organisation Avoid elitist trap Steps to be followed: Discourage the development of personality cult or hero worshipping Practice delegation and participation to encourage the development of enduring management structures independent of the influence of an individual leader

Develop self awareness by leadership

Avoid equating personal identity with that of the organisation

Avoid elitist trap

Steps to be followed:

Discourage the development of personality cult or hero worshipping

Practice delegation and participation to encourage the development of enduring management structures independent of the influence of an individual leader

Cultural Change Strategies Steps to be followed: Encourage constructive dissent to take decision makers away from the influence of charismatic leader Promote functional values (cooperation , discipline, fairness, initiatives) Be willing to step aside or move on if the staying involved inhibits the transition to a more stable and strategic culture Recruit and select people with values congruent with functional organizational values

Steps to be followed:

Encourage constructive dissent to take decision makers away from the influence of charismatic leader

Promote functional values (cooperation , discipline, fairness, initiatives)

Be willing to step aside or move on if the staying involved inhibits the transition to a more stable and strategic culture

Recruit and select people with values congruent with functional organizational values

Cultural Change Strategies Steps to be followed: Institutionalise the proper functional values by extensive socialisation Prevent the development of counter-cultures by a strong central culture Remove the charismatic leader if he/ she is blocking the effective transformation of the entrepreneurial organization into a strategic culture

Steps to be followed:

Institutionalise the proper functional values by extensive socialisation

Prevent the development of counter-cultures by a strong central culture

Remove the charismatic leader if he/ she is blocking the effective transformation of the entrepreneurial organization into a strategic culture

Cultural Change Strategies Deliberate role modelling, teaching and coaching by leaders Criteria for allocation of rewards and status Criteria for recruitment, selection, promotion and commitment Promotion of functional values Socialisation programmes

Deliberate role modelling, teaching and coaching by leaders

Criteria for allocation of rewards and status

Criteria for recruitment, selection, promotion and commitment

Promotion of functional values

Socialisation programmes

Creating an Ethical Organizational Culture Characteristics of organizations that develop high ethical standards High tolerance for risk Low to moderate in aggressiveness Focus on means as well as outcomes Managerial practices promoting an ethical culture Being a visible role model. Communicating ethical expectations. Providing ethical training. Rewarding ethical acts and punishing unethical ones. Providing protective mechanisms.

Characteristics of organizations that develop high ethical standards

High tolerance for risk

Low to moderate in aggressiveness

Focus on means as well as outcomes

Managerial practices promoting an ethical culture

Being a visible role model.

Communicating ethical expectations.

Providing ethical training.

Rewarding ethical acts and punishing unethical ones.

Providing protective mechanisms.

Creating a Customer-Responsive Culture Key variables shaping customer-responsive cultures The types of employees hired by the organization. Low formalization: the freedom to meet customer service requirements. Empowering employees with decision-making discretion to please the customer. Good listening skills to understand customer Role clarity that allows service employees to act as “boundary spanners.” Employees who engage in organizational citizenship behaviors.

Key variables shaping customer-responsive cultures

The types of employees hired by the organization.

Low formalization: the freedom to meet customer service requirements.

Empowering employees with decision-making discretion to please the customer.

Good listening skills to understand customer

Role clarity that allows service employees to act as “boundary spanners.”

Employees who engage in organizational citizenship behaviors.

Creating a Customer-Responsive Culture Managerial Actions : Select new employees with personality and attitudes consistent with high service orientation. Train and socialize current employees to be more customer focused. Change organizational structure to give employees more control. Empower employees to make decision about their jobs.

Managerial Actions :

Select new employees with personality and attitudes consistent with high service orientation.

Train and socialize current employees to be more customer focused.

Change organizational structure to give employees more control.

Empower employees to make decision about their jobs.