1. However, the culture of many U.S. airlines does not reflect the same degree of
informality.
2. If U.S. airlines were to merge with AirAsia, they would need to take these cultural
differences into account.
B. One of the primary things U.S. managers can do is to be culturally sensitive.
1. The United States is a dominant force in business and in culture, and with that
influence comes a reputation.
2. Some ways in which U.S. managers can be culturally sensitive include talking in a
low tone of voice, speaking slowly, listening more, and avoiding discussions of
religion and politics.
C. The management of ethical behavior is one area where national culture can rub up against
corporate culture.
1. Many strategies for improving ethical behavior are based on the values and beliefs of
the host country.
2. U.S. managers endorse the supremacy of anonymous market forces and implicitly or
explicitly view profit maximization as a moral obligation for business organizations.
3. This worldview sees bribery, nepotism, and favoring personal contacts as highly
unethical.
4. That means doing special favors for family and friends is not only appropriate but
also may even be an ethical responsibility.
5. Managers in many nations also view capitalism skeptically and believe the interests
of workers should be put on a par with the interests of shareholders.
D. U.S. employees are not the only ones who need to be culturally sensitive.
II. Summary and Implications for Managers
A. Exhibit 16-6 depicts organizational culture as an intervening variable.
B. Employees form an overall subjective perception of the organization based on factors
such as degree of risk tolerance, team emphasis, and support of people.
C. This overall perception becomes, in effect, the organization’s culture or personality and
affects employee performance and satisfaction, with stronger cultures having greater
impact. Specific implications for managers are below:
1. Realize that an organization’s culture is relatively fixed in the short term. To affect
change, involve top management and strategize a long-term plan.
2. Hire individuals whose values align with those of the organization; these employees
will tend to remain committed and satisfied. Not surprisingly, “misfits” have
considerably higher turnover rates.
3. Understand that employees’ performance and socialization depend, to a considerable
degree, on their knowing what to do and not do. Train your employees well and keep
them informed of changes to their job roles.
4. As a manager, you can shape the culture of your work environment, sometimes as
much as it shapes you. All managers can especially do their part to create an ethical
culture and to consider spirituality and its role in creating a positive organizational
culture.
5. Be aware that your company’s organizational culture may not be “transportable” to
other countries. Understand the cultural relevance of your organization’s norms
before introducing new plans or initiatives overseas.
EXPANDED CHAPTER OUTLINE
I. What Is Organizational Culture?
A. Definition of Organizational Culture
1. Organizational culture refers to a system of shared meaning held by members that
distinguishes the organization from other organizations.
2. Research identifies seven primary characteristics that capture the essence of an
organization’s culture:
a. Innovation and risk taking.
i. The degree to which employees are encouraged to do both.
b. Attention to detail.
i. Degree to which employees are expected to exhibit precision, analysis, and
attention to detail.
c. Outcome orientation.
i. Degree to which management focuses on results rather than on processes used
to achieve them.
d. People orientation.
i. Degree to which management decisions consider the effect of outcomes on
people within the organization.
e. Team orientation.
i. Degree to which work activities are organized around teams rather than
individuals.
f. Aggressiveness.
i. Degree to which people are aggressive and competitive.
g. Stability.
i. Degree to which activities emphasize maintaining the status quo.
3. Each of the characteristics exists on a continuum from low to high.
a. Exhibit 16-1 shows how companies can be very different along these dimensions.
B. Culture Is a Descriptive Term
1. Organizational culture is concerned with employees’ perception of the characteristics
of the culture—not whether they like them.
2. Research has sought to measure how employees see their organization.
a. Does it encourage teamwork?
b. Does it reward innovation?
c. Does it stifle initiative?
3. Organizational culture differs from job satisfaction.
a. Job satisfaction is evaluative.
b. Organizational culture is descriptive.
C. Do Organizations Have Uniform Cultures?
1. Most organizations have a dominant culture and numerous sets of subcultures.
2. Dominant culture expresses the core values that are shared by a majority of the
organization’s members.
3. Subcultures tend to develop in large organizations to reflect common problems,
situations, or experiences that members face.
a. If organizations were composed only of numerous subcultures, organizational
culture as an independent variable would be significantly less powerful. It is the
“shared meaning” aspect of culture that makes it such a potent device for guiding
and shaping behavior.
b. That’s what allows us to say, for example, that the Zappos culture values customer
care and dedication over speed and efficiency and to use that information to better
understand the behavior of Zappos executives and employees.
D. Strong Versus Weak Cultures
1. Strong culture: core values are intensely held and widely shared.
2. The more members who accept core values and the greater their commitment to those
values, the stronger the culture is.
3. A strong culture should reduce employee turnover because it demonstrates high
agreement about what the organization represents.
4. Such unanimity of purpose builds cohesiveness, loyalty, and organizational
commitment.
a. These qualities, in turn, lessen employees’ propensity to leave.
E. Culture Versus Formalization
1. High formalization creates predictability, orderliness, and consistency.
2. Formalization and culture are two different roads to a common destination.
a. The stronger an organization’s culture, the less management needs to develop
formal rules and regulations.
b. Employees internalize guides when they accept the organization’s culture.
II. What Do Cultures Do?
A. Cultures can be positive or negative for organizations.
1. The Functions of Culture:
a. Boundary-defining role.
b. Conveys a sense of identity for members.
c. Facilitates the generation of commitment.
d. Enhances the stability of the social system.
e. Culture serves as a sense-making and control mechanism; guides and shapes
attitudes and behavior of employees.
2. Today’s trend toward decentralized organizations makes culture more important than
ever, but ironically it also makes establishing a strong culture more difficult.
3. When formal authority and control systems are reduced, culture’s shared meaning
points everyone in the same direction.
4. Employees organized in teams may show greater allegiance to their team and its
values than to the values of the organization as a whole.
5. In virtual organizations, the lack of frequent face-to-face contact makes establishing a
common set of norms very difficult.
6. Strong leadership that communicates frequently about common goals and priorities is
especially important in innovative organizations.
7. Individual–organization “fit”—that is, whether the applicant’s or employee’s attitudes
and behavior are compatible with the culture—strongly influences who gets a job
offer, a favorable performance review, or a promotion.
B. Culture Creates Climate
1. Organizational climate refers to the shared perceptions organizational members
have about their organization and work environment.
a. This aspect of culture is like team spirit at the organizational level.
b. When everyone has the same general feelings about what’s important or how well
things are working, the effect of these attitudes will be more than the sum of the
individual parts.
2. The same appears true for organizations.
a. One meta-analysis found that across dozens of different samples, psychological
climate was strongly related to individuals’ level of job satisfaction, involvement,
commitment, and motivation.
b. A positive overall workplace climate has been linked to higher customer
satisfaction and financial performance.
3. Dozens of dimensions of climate have been studied, including safety, justice,
diversity, and customer service, to name a few.
4. A person who encounters a positive climate for performance will think about doing a
good job more often and will believe others support his or her success.
5. Someone who encounters a positive climate for diversity will feel more comfortable
collaborating with coworkers regardless of their demographic background.
6. Climates can interact with one another to produce behavior.
a. For example, a positive climate for worker empowerment can lead to higher
levels of performance in organizations that also have a climate for personal
accountability.
7. Climate also influences the habits people adopt.
a. If the climate for safety is positive, everyone wears safety gear and follows safety
procedures even if individually they wouldn’t normally think very often about
being safe—indeed, many studies have shown that a positive safety climate
decreases the number of documented injuries on the job.
C. The Ethical Dimension of Culture
1. Organizational cultures are not neutral in their ethical orientation, even when they are
not openly pursuing ethical goals.
2. Over time, the ethical work climate (EWC), or the shared concept of right and
wrong behavior in that workplace, develops as part of the organizational climate.
a. The ethical climate reflects the true values of the organization and shapes the
ethical decision making of its members.
3. Researchers have developed ethical climate theory (ECT) and the ethical climate
index (ECI) to categorize and measure the ethical dimensions of organizational
cultures.
4. Of the nine identified climate categories, five are found to be most prevalent in
organizations: instrumental, caring, independence, law and code, and rules.
a. Each explains the general mindset, expectations, and values of the managers and
employees in relationship to their organization.
b. Organizations often progress through different categories as they move through
their business life cycle.
5. An organization’s ethical climate powerfully influences the way its individual
members feel they should behave, so much so that researchers have been able to
predict organizational outcomes from the climate categories.
a. Instrumental climates are negatively associated with employee job satisfaction
and organizational commitment, even though those climates appeal to self-interest
(of the employee and the company).
b. They are positively associated with turnover intentions, workplace bullying, and
deviant behavior.
c. Caring and rules climates have a positive association with job satisfaction.
d. Caring, independence, rules, and law and code climates also reduce employee
turnover intentions, workplace bullying, and dysfunctional behavior.
6. Studies of ethical climates and workplace outcomes suggest that some climate
categories are likely to be found in certain organizations.
a. Industries with exacting standards such as engineering, accounting, and law tend
to have a rules or a law and code climate.
b. Industries that thrive on competitiveness such as financial trading often have an
instrumental ethical climate.
c. Industries with missions of benevolence are likely to have a caring climate, even
if they are for-profit as in an environmental protection firm.
7. Research is exploring why organizations tend to fall into certain climate categories by
industry, especially successful organizations.
a. We cannot conclude that instrumental climates are always bad, or that caring
climates are always good.
b. Instrumental cultures may foster the individual success their companies need to
thrive, for example, and they may help under-performers to recognize their
self-interest is better served elsewhere.
c. Managers in caring cultures may be thwarted from making the best decisions
when only choices that serve the greatest number of employees are acceptable.
8. The Ethical Climate Index (ECI) is one new way researchers are seeking to
understand the context of ethical drivers in organizations.
a. By measuring the collective levels of moral sensitivity, judgment, motivation, and
character of our organizations, we may be able to judge the strength of the
influence our ethical climates have on us.
D. Culture and Sustainability
1. As the name implies, sustainability refers to practices that can be maintained over
very long periods of time because the tools or structures that support the practices are
not damaged by the processes.
a. One survey found that a great majority of executives saw sustainability as an
important part of future success.
2. Social sustainability practices address the ways social systems are affected by an
organization’s actions over time, and in turn, how changing social systems may affect
the organization.
a. For example, farmers in Australia have been working collectively to increase
water use efficiency, minimize soil erosion, and implement tilling and harvesting
methods that ensure long-term viability for their farm businesses.
b. In a very different context, 3M has an innovative pollution-prevention program
rooted in cultural principles of conserving resources, creating products that have
minimal effects on the environment, and collaborating with regulatory agencies to
improve environmental effects.
3. Sustainable management doesn’t need to be purely altruistic.
4. To create a truly sustainable business, an organization must develop a long-term
culture and put its values into practice.
a. In other words, there needs to be a sustainable system for creating sustainability!
b. In one workplace study, a company seeking to reduce energy consumption found
that soliciting group feedback reduced energy use significantly more than simply
issuing reading materials about the importance of conservation.
c. In other words, talking about energy conservation and building the value into the
organizational culture resulted in positive employee behavioral changes.
5. Like other cultural practices we’ve discussed, sustainability needs time and nurturing
to grow.
E. Culture and Innovation
1. The most innovative companies are often characterized by their open,
unconventional, collaborative, vision-driven, accelerating cultures.
2. Startup firms often have innovative cultures by definition since because they are
usually small, agile, and focused on solving problems in order to survive and grow.
F. Culture as an Asset
1. Culture can also significantly contribute to an organization’s bottom line in many
ways.
2. There are many more cases of business success stories due to excellent organizational
cultures than there are of success stories despite bad cultures, and almost no success
stories because of bad ones.
G. Culture as a Liability
1. Introduction
a. Culture enhances organizational commitment and increases the consistency of
employee behavior.
2. Institutionalization
a. When an organization undergoes institutionalization and becomes
institutionalized—that is, it is valued for itself and not for the goods or services it
produces—it takes on a life of its own, apart from its founders or members.
b. It doesn’t go out of business even if its original goals are no longer relevant.
c. Acceptable modes of behavior become largely self-evident to members, and
although this isn’t entirely negative, it does mean behaviors and habits that should
be questioned and analyzed become taken for granted, which can stifle innovation
and make maintaining the organization’s culture an end in itself.
3. Barriers to change
a. Culture is a liability when the shared values are not in agreement with those that
will further the organization’s effectiveness.
b. Most likely to occur when the environment is dynamic.
c. Where there is rapid change, an entrenched culture may no longer be appropriate.
4. Barriers to diversity
a. Diverse behaviors and strengths are likely to diminish in strong cultures as people
attempt to fit in.
b. Strong culture can be liabilities when they effectively eliminate the unique
strengths that people of different backgrounds bring to the organization.
c. Strong cultures can also be liabilities when they support institutional bias or
become insensitive to people who are different.
5. Strengthening Dysfunctions
a. Coherence around negativity and dysfunctional management systems in a
corporation can produce downward forces that are equally powerful.
i. One study of thousands of hospitality-industry employees in hundreds of
locations found that local organizational cultures marked by low or decreasing
job satisfaction had higher levels of turnover.
b. As we know from this text, low job satisfaction and high turnover indicate
dysfunction on the organization’s part.
c. Negative attitudes in groups add to negative outcomes, suggesting a powerful
influence of culture on individuals.
6. Barriers to acquisitions and mergers
a. Cultural compatibility has become the primary concern when considering
acquisitions and/or mergers.
b. A survey by Bain and Company revealed that 70 percent of mergers failed to
increase shareholder values.
i. The $183 billion merger between America Online (AOL) and Time Warner in
2001 was the largest in U.S. corporate history.
ii. It was also a disaster. Only 2 years later, the stock had fallen an astounding 90
percent, and the new company reported what was then the largest financial
loss in U.S. history.
III. Creating and Sustaining Culture
A. Introduction
1. Once an organization’s culture is established it rarely fades away.
B. How a Culture Begins
1. Ultimate source of an organization’s culture is its founders.
2. Founders have a vision of what the organization should be.
3. Unconstrained by previous ideologies or customs.
4. New organizations are typically small; facilitates the founders’ imparting of their
vision on all organizational members.
5. Culture creation occurs in three ways:
a. Founders hire employees who think and feel the way they do.
b. Employees are indoctrinated and socialized into the founders’ way of thinking.
c. Founders’ behavior acts as a role model.
C. Keeping a Culture Alive
1. Selection
a. The explicit goal of the selection process is to identify and hire individuals with
the knowledge, skills, and abilities to perform successfully.
b. The final decision, because it’s significantly influenced by the decision maker’s
judgment of how well the candidates will fit into the organization, identifies
people whose values are essentially consistent with at least a good portion of the
organization’s.
c. Selection also provides information to applicants.
d. Those who perceive a conflict between their values and those of the organization
can remove themselves from the applicant pool.
e. Selection thus becomes a two-way street, allowing employer or applicant to avoid
a mismatch and sustaining an organization’s culture by selecting out those who
might attack or undermine its core values.
2. Top management
a. The actions of top management also have a major impact on the organization’s
culture.
i. Through words and behavior, senior executives establish norms that filter
through the organization about, for instance, whether risk taking is desirable,
how much freedom managers give employees, what is appropriate dress, and
what actions earn pay raises, promotions, and other rewards.
3. Socialization (Exhibit 16-2)
a. The process of helping new employees adapt to the organization’s culture is called
socialization.
b. Three stage process:
i. Pre-arrival
(a) Recognizes that each individual arrives with a set of values, attitudes, and
expectations.
ii. Encounter
(a) Individual confronts the possible dichotomy between expectations and
reality.
(b) If expectations were fairly accurate, the encounter stage merely cements
earlier perceptions.
(c) However, this is often not the case.
(d) At the extreme, a new member may become disillusioned enough to
resign.
(e) Proper recruiting and selection should significantly reduce that outcome,
along with encouraging friendship ties in the organization—newcomers
are more committed when friends and coworkers help them “learn the
ropes.”
iii. Metamorphosis (Exhibit 16-3)
(a) Process of working out any problems discovered during the encounter
stage.
(b) The options presented in Exhibit 16-3 are alternatives designed to bring
about the desired metamorphosis.
(c) Most research suggests there are two major “bundles” of socialization
practices.
(i) The more management relies on formal, collective, sequential, fixed,
and serial socialization programs and emphasize divestiture, the more
likely newcomers’ differences will be stripped away and replaced by
standardized predictable behaviors.
a. These institutional practices are common in police departments,
fire departments, and other organizations that value rule following
and order.
(ii) Programs that are informal, individual, random, variable, and
disjunctive and emphasize investiture are more likely to give
newcomers an innovative sense of their role and methods of working.
a. Creative fields, such as research and development, advertising, and
filmmaking, rely on these individual practices.
(d) Most research suggests high levels of institutional practices encourage
person–organization fit and high levels of commitment, whereas
individual practices produce more role innovation.
c. The three-part entry socialization process is complete when:
i. New members have internalized and accepted the norms of the organization
and their work group, are confident in their competence, and feel trusted and
valued by their peers.
ii. They understand the system—not only their own tasks but the rules,
procedures, and informally accepted practices as well.
iii. They know what is expected of them and what criteria will be used to measure
and evaluate their work.
d. As Exhibit 16-2 showed, successful metamorphosis should have a positive impact
on new employees’ productivity and their commitment to the organization and
reduce their propensity to leave the organization.
e. Researchers have begun to examine how employee attitudes change during
socialization by measuring them at several points over the first few months.
i. One study has documented patterns of “honeymoons” and “hangovers” for
new workers, showing that the period of initial adjustment is often marked by
decreases in job satisfaction as their idealized hopes come into contact with
the reality of organizational life.
ii. Other research suggests that role conflict and role overload for newcomers
rise over time, and that workers with the largest increases in these role
problems experience the largest decreases in commitment and satisfaction.
iii. It may be that the initial adjustment period for newcomers presents increasing
demands and difficulties, at least in the short term.
D. Summary: How Cultures Form (Exhibit 16-4)
1. Exhibit 16-4 summarizes how an organization’s culture is established and sustained.
2. The original culture derives from the founder’s philosophy and strongly influences
hiring criteria as the firm grows.
3. Top managers’ actions set the general climate, including what is acceptable behavior
and what is not.
4. The way employees are socialized will depend both on the degree of success achieved
in matching new employees’ values to those of the organization in the selection
process, and on top management’s preference for socialization methods.
IV. How Employees Learn Culture
A. Introduction
1. Culture is transmitted to employees through stories, rituals, material symbols, and
language.
B. Stories
1. Stories such as these circulate through many organizations, anchoring the present in
the past and legitimating current practices.
2. They typically include narratives about the organization’s founders, rule breaking,
rags-to-riches successes, reductions in the workforce, relocation of employees,
reactions to past mistakes, and organizational coping.
3. Employees also create their own narratives about how they came to either fit or not fit
with the organization during the process of socialization, including first days on the
job, early interactions with others, and first impressions of organizational life.
C. Rituals
1. Repetitive sequences of activities that express and reinforce the key values of the
organization are rituals.
D. Symbols
1. Layout of corporation headquarters, types of automobiles top executives are given,
aircraft, size of offices, executive perks, etc. are examples of material symbols.
2. These convey to employees who is important, the degree of egalitarianism top
management desires, and the kinds of behavior that are appropriate, such as risk
taking, conservative, authoritarian, participative, individualistic, or social.
E. Language
1. Many organizations and subunits within them use language to help members identify
with the culture, attest to their acceptance of it, and help preserve it.
2. Unique terms describe equipment, officers, key individuals, suppliers, customers, or
products that relate to the business.
3. New employees may at first be overwhelmed by acronyms and jargon, that, once
assimilated, act as a common denominator to unite members of a given culture or
subculture.