This document discusses the concept of organizational culture, emphasizing its role as the soul of an organization through shared values and norms that influence employee behavior and interactions. It identifies the characteristics of culture, its functions and liabilities, and how it can be transmitted to members as well as managed during organizational changes. Additionally, it highlights the importance of ethics and social responsibility within organizational culture and outlines managerial practices to promote these values.

1. Chapter 5
Creating and
Managing Organizational
Culture

2. Henry Mintzberg on Culture
• “Culture is the soul of the organization —
the beliefs and values, and how they are
manifested.
• I think of the structure as the skeleton,
and as the flesh and blood.
• And culture is the soul that holds the
thing together and gives it life force.”

3. Learning Objectives
1. Differentiate between values and norms and
understand the way culture is shared by an
organization’s members
2. Describe how individuals learn culture both
formally and informally
3. Identify the four building blocks or foundations
of an organization’s culture

4. Cont....
4. Understand how an organization’s culture,
like its structure, can be designed or
managed
5. Discuss an important outcome of an
organization’s culture: corporate social
responsibility

5. What is Organizational culture?
• Organizational culture: the set of shared values
and norms that controls organizational
members’ interactions with each other and
with people outside the organization
– Can be a source of competitive advantage
– Can be used to increase organizational effectiveness

6. Dimensions /Characteristics of
Organizational Culture

7. Cont...
 There are seven primary characteristics that capture the essence of an
organization's culture. These characteristics are measured on a scale
of high to low and provide a composite picture of an organization's
culture.
 Innovation and risk-taking
– The degree to which employees are encouraged to be innovative
and take risks.
• Attention to detail
– The degree to which employees are expected to exhibit precision,
analysis, and attention to detail.
• Outcome orientation
– The degree to which management focuses on results or outcomes
rather than on technique and process.
• People orientation
– The degree to which management decisions take into consideration
the effect of outcomes on people within the organization.

8. Cont...
• Team orientation
– The degree to which work activities are organized around teams rather
than individuals.
• Aggressiveness
– The degree to which people are aggressive and competitive rather
than easygoing.
• Stability
– The degree to which organizational activities emphasize maintaining
the status quo in contrast to growth.

9. Organizational Culture and Change
• In order to survive, organizations and their
cultures must continuously evolve and change.
– Conditions promoting change include:
• Economic crises
• Changes in laws or regulations
• Social developments
• Global competition
• Unstable technological changes
– Cultures change when an organization discovers,
invents or develops solutions to problems it faces.

10. Functions and Liabilities of
organizational culture
The Functions of Organizational Culture. Overall, culture benefits
organizations by increasing organizational commitment and the
consistency of employee behavior. It also aids employees by reducing
ambiguity. There are five basic functions of culture that help achieve
these benefits:
– Defines Boundaries. Culture creates distinctions between one
organization and another.
– Identity. Culture conveys a sense of identity for its members.
– Commitment. Culture generates commitment to something that is
larger than one's own self-interest.

11. Cont....
• Social Stability. Culture is the social glue that helps
hold the organization together by providing appropriate
standards for socially acceptable employee behavior.
 Control Mechanism. Culture serves as a control mechanism
that guides and shapes the attitudes and behavior of
employees. It helps employees make sense of the work
environment: it defines the rules of the game.

12. Cont....
• Culture as a Liability. Because culture is difficult to change in the
short run and defines proper behavior, it may create barriers in the
organization.
– Barrier to Change. When the cultural values are not aligned with those
that will increase an organization’s effectiveness in dynamic
environments, they can create a barrier to implementing the necessary
organizational changes.
– Barrier to Diversity. There is a managerial conflict that exists because of
culture. Organizations seek to hire people of diverse backgrounds in
order to increase the quality of decision-making and creativity. But
strong cultures, by their very nature, often seek to minimize diversity.
– Barrier to Acquisitions and Mergers. One of the primary concerns in
mergers and acquisitions in recent years has been the cultural
compatibility between the joining firms as the main cause for the failure
of these combinations has been cultural conflict.

13. The Impact of Culture on Organizations
• Strong Cultures
– Positive
• Shared values and beliefs create a setting in which people
are committed to one another and share an dominant sense
of mission.
– Negative
• A strong culture can cause a resistance to change by
reinforcing a singular view of the organization and the
environment.

14. Organization Culture Issues
• Three important issues in an organization’s
culture:
– Ethics
– Diversity of employees
– Leadership behavior
• How does all this fit together?
– Managers and leaders must use good leadership
practices to be sure to introduce, develop, reward,
and “strengthen” ethical practices and positive
ways of working with diversity into the organization
culture.

15. How is an Organization’s Culture
Transmitted to its Members?
• Socialization: the process by which
members learn and internalize the values
and norms of an organization’s culture

16. Cont...
• Collective vs. individual
– Collective tactics: provide newcomers with
common learning experiences designed to
produce a standardized response to a situation
– Individual tactics: each newcomer’s learning
experiences are unique, and newcomers can learn
new, appropriate responses for each situation

17. Cont....
• Formal vs. informal
– Formal tactics: separate newcomers from existing
organizational members during the learning
process
– Informal tactics: newcomers learn on the job, as
members of a team

18. Cont....
• Sequential vs. random
– Sequential tactics: provide newcomers with
explicit information about the sequence in
which they will perform new activities or occupy
new roles as they advance in an organization
– Random tactics: training is based on the
interests and needs of individual newcomers
because there is no set sequence to the
newcomers’ progress in the organization

19. Cont....
• Fixed vs. variable
– Fixed tactics: give newcomers precise
knowledge of the timetable associated
with completing each stage in the learning
process
– Variable tactics: provide no information
about when newcomers will reach a
certain stage in the learning process

20. Cont....
• Serial vs. disjunctive
– Serial tactics: employed, existing organizational
members act as role models and mentors for
newcomers
– Disjunctive processes: require newcomers to
figure out and develop their own way of behaving

21. Cont...
• Divestiture vs. investiture
– Divestiture: newcomers receive negative social
support and existing organizational members
withhold support until newcomers learn the ropes
and conform to established norms
– Investiture: newcomers immediately receive
positive social support from other organizational
members and are encouraged to be themselves

22. Stories, Ceremonies, and
Organizational Language
• Organization rites
– Rites of passage: mark an individual’s entry to, promotion
in, and departure from the organization(Induction and
basic training)
– Rites of integration: shared announcements of
organizational success, office parties, and cookouts

23. Cont...
• Rites of enhancement: public recognition and reward for
employee contributions(Presentation of annual award)

24. Where Does Organizational Culture
Come From?
• OC..Comes from interaction of four
factors:
 The personal and professional characteristics
of people within the organization
 The property rights that the organization
gives to employees
 Organizational ethics
 The structure of the organization

25. Cont....
• Characteristics of people within the
organization
– Through a process of hiring people that match
existing culture and attrition, people become more
and more similar over time
• Organizational ethics
– The moral values, beliefs, and rules that establish
the appropriate way for organizational stakeholders
to deal with one another and with the environment
• Derived from the personality and beliefs of the founder
and top management

26. Cont...
• Property rights: rights that an organization
gives to members to receive and use
organizational resources
• The distribution of property rights to different
stakeholders determines:
• How effective an organization is and
• The culture that emerges in the organization

27. Cont....
• Organizational structure
– Mechanistic vs. Organic
• Mechanistic – predictability and stability are desired
goals
• Organic – innovation and flexibility are desired end
states
– Centralized vs. Decentralized
• Decentralized – encourages and rewards creativity and
innovation
• Centralized – reinforces obedience and accountability

28. Managerial Decisions Affected by Culture
Planning
The degree of risk that plans should contain
Whether plans should be developed by individuals or teams
The degree of environmental scanning in which management
will engage
Organizing
How much autonomy should be designed into employees’
jobs
Whether tasks should be done by individuals or in teams
The degree to which department managers interact with
each other

29. Cont....
Leading
The degree to which managers are concerned with
increasing employee job satisfaction
What leadership styles are appropriate
Whether all disagreements should be eliminated
Controlling
Whether to impose external controls or to allow employees
to control their own actions
What criteria should be emphasized in employee
performance evaluations

30. Can Organizational Culture be
Managed?
• Some ways culture can be changed:
– Redesign structure
– Revise property rights used to motivate people
– Change the people – especially top management

31. The Leadership Challenge of Organizational
Change
• Organizational Change
– Any alteration of activities in an organization.
• Alterations can involve:
– The structure of the organization
– The transfer of work tasks
– The introduction of new products, systems, or
technologies or behavior among members.

32. Targets for Change
• Individuals
• Groups
• The Organization
• The Environment

33. Individual Targets
• Involves human resource changes
– Changes in this area are triggered by new staffing
strategies or by an effort to enhance workforce
diversity.
• The number and skills of the human resource
component.
• Improving levels of employee motivation and
performance.

34. Group Targets
• Involves changes in the nature of the
relationship between managers and
subordinates or the relationships within work
groups.

35. Organizational Targets
• Changes in any of the following areas:
– Basic goals and strategies of the organization
– Products, quality, or services offered
– Organizational structure
– The composition of work units
– Organizational processes such as reward,
communication, or information processing system
– The culture

36. Environmental Targets
• Involves changing sectors of an organization’s
environment
– For example, changes in products or services
offered may require new technology or a new
distribution system.

37. 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.

38. Cont...
Communicating ethical expectations.
Providing ethical training.
Rewarding ethical acts and punishing unethical
ones.
Providing protective mechanisms so employees can
discuss ethical dilemmas and report unethical
behavior without fear.

39. Social Responsibility
• Social responsibility: refers to a manager’s
duty or obligation to make decisions that
nurture, protect, enhance, and promote
the welfare and well-being of stakeholders
and society as a whole

40. Approaches to Social Responsibility
1. Obstructionist approach: the low end of the organization’s
commitment to social responsibility
– Managers choose to behave unethically and illegally
2. Defensive approach: a minimal commitment to ethical
behavior
– Managers attempt to stay within the law but do not
attempt social responsibility beyond what is required
by law

41. Cont...
3. Accommodative approach: the acknowledgment of the
need to support social responsibility
– Managers want to make the right choices when called on to do so
4. Proactive approach: actively embrace the need to behave in
socially responsible ways
– Managers go out of their way to learn about the needs of different
stakeholder groups
– Willing to utilize organizational resources to promote the interests
not only of stockholders, but of other stakeholders

42. 42
Approaches to Social Responsibility

43. Why Be Socially Responsible?
• Workers and society benefit directly because
organizations bear some of the costs of helping
workers
• Quality of life as a whole would be higher as a
climate of caring is encouraged
• It is the right thing to do
• Companies that act responsibly toward their
stakeholders benefit from increasing business
and see their profits rise

44. Cont...
• Evidence suggests that managers who behave
socially responsibly will, in the long run, benefit
all organizational stakeholders

45. Thank You