I. Influencing an Organizational Culture
A. An Ethical Culture
1. How can management create a more ethical culture?
a. Be a visible role model.
i. Employees look to top management behavior as a benchmark.
b. Communicate ethical expectations.
i. Code of ethics can minimize ethical ambiguities.
c. Provide ethical training.
i. Training sessions that reinforce standards of conduct and clarify
permissible practices.
d. Visibly reward ethical acts and punish unethical ones.
i. Performance appraisal of managers should include analysis of
behavior against code of ethics.
e. Provide protective mechanisms.
i. Creation of ethical counselors, ombudsmen, or ethical officers.
2. The work of setting a positive ethical climate has to start at the top of the
organization.
a. One study demonstrated that when top management emphasizes strong
ethical values, supervisors are more likely to practice ethical leadership.
i. Positive ethical attitudes transfer down to line employees, who show
lower levels of deviant behavior and higher levels of cooperation and
assistance.
b. A study involving auditors found perceived pressure from organizational
leaders to behave unethically was associated with increased intentions to
engage in unethical practices.
c. Clearly the wrong type of organizational culture can negatively influence
employee ethical behavior.
d. Finally, employees whose ethical values are similar to those of their
department are more likely to be promoted, so we can think of ethical
culture as flowing from the bottom up as well.
II. Creating a Positive Organizational Culture
A. Introduction
1. There is a trend today for organizations to attempt to create a positive
organizational culture.
2. A positive organizational culture emphasizes building on employee
strengths, rewards more than it punishes, and emphasizes individual vitality
growth.
B. Building on Employee Strengths
1. Although a positive organizational culture does not ignore problems, it does
emphasize showing workers how they can capitalize on their strengths.
C. Rewarding More Than Punishing
1. Although most organizations are sufficiently focused on extrinsic rewards
such as pay and promotions, they often forget about the power of smaller (and
cheaper) rewards such as praise.
2. Part of creating a positive organizational culture is “catching employees doing
something right.”
3. Many managers withhold praise because they’re afraid employees will coast
or because they think praise is not valued.
4. Employees generally don’t ask for praise, and managers usually don’t realize
the costs of failing to give it.
D. Emphasizing Vitality and Growth
1. No organization will get the best from employees who see themselves as mere
cogs in the machine.
2. A positive culture recognizes the difference between a job and a career. It
supports not only what the employee contributes to organizational
effectiveness but also how the organization can make the employee more
effective—personally and professionally.
3. Although it may take more creativity to encourage employee growth in some
types of industries, consider the food industry.
E. Limits of Positive Culture
1. Not a panacea for all companies.
2. All cultures don’t value being positive.
3. There may be benefits to establishing a positive culture, but an organization
also needs to be careful to be objective and not pursue it past the point of
effectiveness.
III. Spirituality and Organizational Culture
A. What Is Spirituality?
1. Workplace spirituality is not about organized religious practices. It is not
about God or theology.
2. Workplace spirituality recognizes that people have an inner life that
nourishes and is nourished by meaningful work that takes place in the context
of community.
B. Why Spirituality Now? (Exhibit 16-5)
1. As we noted in our discussion of emotions in Chapter 4, the myth of
rationality assumed the well-run organization eliminated feelings.
2. Concern about an employee’s inner life had no role in the perfectly rational
model.
3. But just as we’ve now come to realize that the study of emotions improves our
understanding of organizational behavior, an awareness of spirituality can help
us better understand employee behavior in the twenty-first century.
4. Of course, employees have always had an inner life. So why has the search for
meaning and purposefulness in work surfaced now?
5. Summarized reasons in Exhibit 16-5.
C. Characteristics of a Spiritual Organization
1. The concept of workplace spirituality draws on our previous discussions of
values, ethics, motivation, and leadership.
2. Although research remains preliminary, several cultural characteristics tend to
be evident in spiritual organizations.
a. Benevolence.
i. Spiritual organizations value showing kindness towards others and
promoting the happiness of employees and other organizational
stakeholders.
b. Strong sense of purpose.
i. Spiritual organizations build their cultures around a meaningful
purpose.
(a) Although profits may be important, they’re not the primary value
of the organization.
c. Trust and respect.
i. Spiritual organizations are characterized by mutual trust, honesty, and
openness.
ii. Employees are treated with esteem and value, consistent with the
dignity of each individual.
d. Open-mindedness.
i. Spiritual organizations value flexible thinking and creativity among
employees.
D. Achieving a Spiritual Organization
1. Many organizations have grown interested in spirituality but have had
difficulty putting its principles into practice.
2. Several types of practices can facilitate a spiritual workplace, including those
that support work-life balance.
3. Leaders can demonstrate values, attitudes, and behaviors that trigger intrinsic
motivation and a sense of calling through work.
4. Encouraging employees to consider how their work provides a sense of
purpose through community building also can help achieve a spiritual
workplace; often this is achieved through group counseling and organizational
development, a topic we take up in Chapter 18.
E. Criticisms of Spirituality
1. Critics of the spirituality movement in organizations have focused on three
issues.
a. First is the question of scientific foundation. What really is workplace
spirituality?
b. Second, are spiritual organizations legitimate? Do organizations have the
right to impose spiritual values on their employees?
c. Third is the question of economics: are spirituality and profits compatible?
2. As you might imagine, there is comparatively little research on workplace
spiritualty.
3. An emphasis on spirituality can clearly make some employees uneasy.
a. Critics have argued that secular institutions, especially business firms,
have no business imposing spiritual values on employees.
b. This criticism is undoubtedly valid when spirituality is defined as bringing
religion and God into the workplace.
c. However, it seems less stinging when the goal is limited to helping
employees find meaning and purpose in their work lives.
4. If the concerns listed in Exhibit 16-5 truly characterize a large segment of the
workforce, then perhaps organizations can do so.
IV. Global Implications
A. We considered global cultural values (collectivism–individualism, power distance,
and so on) in Chapter 5. Here our focus is a bit narrower.
1. How is organizational culture affected by a global context?
2. But that doesn’t mean organizations should, or could, be blissfully ignorant of
local culture.
B. Organizational cultures often reflect national culture.
1. The culture at AirAsia, a Malaysian-based airline, emphasizes openness and
friendships.
a. The carrier has lots of parties, participative management, and no private
offices, reflecting Malaysia’s relatively collectivistic culture.
2. However, the culture of many U.S. airlines does not reflect the same degree of
informality.
a. If U.S. airlines were to merge with AirAsia, they would need to take these
cultural differences into account.
3. So when an organization opens up operations in another country, it ignores the
local culture at its own risk.
C. 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. “We are broadly seen throughout the world as arrogant people, totally
self-absorbed and loud,” says one U.S. executive.
3. Companies such as American Airlines, Lowe’s, Novell, ExxonMobil, and
Microsoft have implemented training programs to sensitize their managers to
cultural differences.
4. 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.
D. 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. Any action that deviates from profit maximization may indicate that
inappropriate or corrupt behavior may be occurring. In contrast, managers in
developing economies are more likely to see ethical decisions as embedded in
a social environment.
5. That means doing special favors for family and friends is not only appropriate
but also may even be an ethical responsibility.
6. 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.
V. 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. 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.
Myth or Science?
“An Organization’s Culture Is Forever”
This exercise contributes to:
Learning Objectives: Describe the common characteristics of organizational culture; Identify the factors
that create and sustain an organization’s culture
Learning Outcome: Describe best practices for creating and sustaining organizational cultures
AASCB: Diverse and multicultural work environments; Reflective thinking
This is actually not true. Although research indicates organizational culture is difficult to
change and that change can take a long time, it can be done. Sometimes it is essential to
survival. For years, Wisconsin’s Wellspring system provided a low-level nursing home
environment in which inpatients had little input about their care and the organizational
culture allowed lax standards to prevail. Then the network of 11 nursing homes launched
a culture change initiative. Management focused on caregiver collaboration, education,
accountability, and empowerment. The results were excellent. Wellspring realized fewer
state standards infractions and higher retention rates at the facilities, but the results for the
patients were even greater: fewer bedfast residents, less use of restraints and psychoactive
medication, less incontinence, and fewer tube feedings than in other nursing homes.
The Wellspring program illustrates the significant effect positive organizational culture
change can achieve. CEO Bob Flexon of Dynegy Inc., a Houston-based electric utility
giant emerging from bankruptcy, is trying to save his company by changing the
organizational culture. First, he ditched the cushy CEO office suite, $15,000 marble desk,
and Oriental rugs for a small cubicle on a warehouse-style floor shared with all 235
headquarters employees. Next, he visited company facilities, trained “culture
champions,” and reinstated annual performance reviews as part of the plan to increase
collaboration. He created a plaque as a reminder to “Be Here Now” instead of
multitasking and banned smartphones from meetings. Flexon said, “The idea was to
instill a winning spirit,” and he counts on his visibility as CEO to broadcast the culture
change down to the lowest levels of the widespread organization.
Positive results have included a reduction in turnover from 8 percent in 2011 to 5.8
percent in 2012. Flexon said, “People are cautiously beginning to believe that we can win
again.” The company continues to report massive earnings losses, but Flexon is
optimistic about Dynegy’s rebound. He says, “Our ongoing focus on culture is what will
make the difference.”
Sources: J. Bellot, “Nursing Home Culture Change What Does It Mean to Nurses?” Research in Gerontological Nursing (October
2012), pp. 264–-273; J. S. Lublin, “This CEO Used to Have an Office,” The Wall Street Journal (March 13, 2013), pp. B1, B8; and J.
Molineux, “Enabling Organizational Cultural Change Using Systemic Strategic Human Resource Management—A Longitudinal Case
Study,” International Journal of Human Resource Management (April 1, 2013), pp. 1588–-1612.
Class Exercise
1. Divide the class into groups of three to five students each.
2. Ask students to identify several HR issues such as hiring and retention decisions,
or benefits decisions, and how these might be viewed by the companies in the text
feature. Students should consider the issues under the organizations’ former and
current organizational cultures.
3. Then ask each group to read
http://www.forbes.com/sites/stevedenning/2011/07/23/how-do-you-change-an-org
anizational-culture/ and use the model presented in the article to explore how the
companies presented in the text feature changed their cultures.
4. Ask students to discuss their findings as a class.
Teaching Notes
This exercise is applicable to face-to-face classes or synchronous online classes such as
BlackBoard 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See
http://www.baclass.panam.edu/imob/SecondLife for more information.
An Ethical Choice
A Culture of Compassion
This exercise contributes to:
Learning Objective: Compare the functional and dysfunctional effects of organizational culture on people
and the organization
Learning Outcome: Describe best practices for creating and sustaining organizational cultures
AASCB: Ethical understanding and reasoning; Reflective thinking
In the world of banking, success and ethical culture don’t necessarily go hand in hand.
Leaders who desire ethical cultures in their organizations must choose to build ethics into
the company’s definition of success in ways that translate into ethical actions for
managers and employees. Contrast two financial success stories, Goldman Sachs and
Wells Fargo. Both megabanks are among the Fortune 100 (the largest U.S. companies
ranked by revenue). They are also two of Fortune’s World’s Most Admired Companies, a
list that ranks the largest companies in revenue by nine criteria including social
responsibility. Yet their organizational cultures appear to be vastly different. Goldman
Sachs seems to struggle to achieve an ethical culture for its employees and clients, while
Wells Fargo seems to emanate a culture of compassion. Consider some recent headlines:
Mefit “Mike” Mecevic was a loyal janitor for Goldman Sachs when Superstorm
Sandy hit New York in 2012. Mecevic and his coworkers rode out the storm in the
company’s Manhattan skyscraper and worked nonstop for days to keep floodwaters
back. Then a Goldman Sachs manager threw him out without explanation. Mecevic
said to him, “I live in Staten Island, there’s a state of emergency, there are no cars, no
trains, no lights. The water is up to our necks. I was begging for my life. But he said
‘Leave the building.’” Mecevic implored two other managers to help him, to no avail.
He left but was later fired anyway. “I worked day and night,” Mecevic said. “They
destroyed my life for nothing. Nothing.”
Wells Fargo is committed to respecting its clients, even when those clients are in
trouble. For the past few years, it has held “Home Preservation Workshops” where
indebted homeowners can meet with “home retention” team members in confidential
booths set up in large halls across the United States. Clients bring paperwork specific
to their cases, and team members negotiate binding agreements. One client said, “It is
a great feeling to not worry” about losing her home.
Organizational culture is where leaders’ ethical choices demonstrate their expectations for
others’ decisions throughout the company. Both Goldman and Wells Fargo enjoy stellar
reputations. But these examples suggest that the two companies make very different
ethical choices with respect to their cultures.
Sources: B. Ross, A. Ng, and C. Siemaszko, “Ex-Goldman Sachs Janitor Sues for Being Forced into Post-Hurricane Sandy
Destruction,” New York Daily News, June 7, 2013,
www.nydailynews.com/new-york/janitorsues-tossed-aftermath-hurricane-sandy-article-1.1366334; M. Schifrin and H. Touryalai, “The
Bank That Works,” Forbes, February 13, 2012, 66–74.
Class Exercise
1. Divide the class into groups of three to five students each.
2. Assign half the groups the task of identifying companies with poor cultures that
lack compassion. Teams with this assignment should discuss whether
incorporating more compassion into the organizations would limit their success.
3. The other groups should identify companies that have reputations for compassion
and giving. Teams should discuss why this philosophy makes the organizations
what they are and how they might change if their approach was different.
4. Have each group present their discussions to the class. Ask students which type of
organization they would rather work for and why.
Teaching Notes
This exercise is applicable to face-to-face classes or synchronous online classes such as
BlackBoard 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See
http://www.baclass.panam.edu/imob/SecondLife for more information.
Career OBjectives
How do I learn to lead?
This exercise contributes to:
Learning Objective: Describe the common characteristics of organizational culture; Identify the factors
that create and sustain an organization’s culture
Learning Outcome: Describe best practices for creating and sustaining organizational cultures
AASCB: Diverse and multicultural work environments; Reflective thinking
I’ll be starting a new job in a few weeks. It’s my first time working as a leader for a team,
and I know I have a lot to learn. Is there any way I can be sure I’ll achieve success as a
leader? — Gordon
Dear Gordon:
Learning about a new job is always complicated. Learning how to be a leader is doubly
complicated. It’s expected that you have the capacity to provide direction and purpose for
employees, and that you will respect the existing culture of the group as well as the
capacities of individual members. Here are a few key insights toward making your
transition into leadership successful:
• Ask questions. New leaders are often anxious about asking questions of direct reports
for fear of being seen as incompetent or weak. However, inquiring about how things have
been done in the past and asking about individual goals signals that you are concerned
about the team members. Familiarizing yourself with the group’s culture and practices
can also help you develop techniques to harness the team’s strengths and overcome
challenges.
• Build relationships with other leaders. Remember—you were put into this role for a
reason, and the company wants to see you succeed, so make the most of the resources of
others. Take detailed notes regarding specific activities and strategies that were
successful, and schedule a check-in to discuss how these strategies have worked over
time. If you can show you are truly engaged in the learning process, you’ll find others are
more willing to provide you with assistance and advice.
• Start small. Much has been written about the importance of gaining small wins early on
to build your reputation. The old saying “you never get a second chance to make a first
impression” definitely holds true in the workplace. Try to develop new initiatives with
clear outcomes that will allow you to demonstrate your leadership traits.
The best leadership transitions include learning what the situation calls for, and setting
your team up for success from the start.
Be proactive!
Sources: T. B. Harris, N. Li, W. R. Boswell, X. Zhang, and Z. Xie, “Getting What’s New from Newcomers: Empowering Leadership,
Creativity, and Adjustment in the Socialization Context,” Personnel Psychology 67 (2014): 567–604; Y. H. Ji, N. A. Cohen, A. Daly,
K. Finnigan, and K. Klein, “The Dynamics of Voice Behavior and Leaders’ Network Ties in Times of Leadership Successions,”
Academy of Management Proceedings, 2014, 16324; and B. Eckfeldt, “5 Things New CEOS Should Focus On,” Business Insider,
June 1, 2015, http://www.businessinsider.com/5-thingsnew-ceos-should-focus-on-2015-6
Personal Inventory Assessments
Comfort with Change Scale
Do you like change? Hate change? Few people are neutral about their preference for
change. Take this PIA to see how comfortable you are with change.
Point/Counterpoint
Organizations Should Strive to Create a Positive
Organizational Culture
This exercise contributes to:
Learning Objective: Describe the common characteristics of organizational culture
Learning Outcome: Describe best practices for creating and sustaining organizational cultures
AASCB: Diverse and multicultural work environments; Reflective thinking
Point
Organizations should do everything they can to establish a positive culture, because it
works. Scores of recent studies have shown that individuals who are in positive states of
mind at work and in life lead happier, more productive, and more fulfilling lives. Given
the accumulating evidence, researchers are now studying ways to make that happen.
In a Harvard Business Review article, Adam Grant discusses an interesting concept:
outsourcing inspiration. What does he mean by that? Grant writes: “A growing body of
research shows that end users—customers, clients, patients, and others who benefit from
a company’s products and services—are surprisingly effective in motivating people to
work harder, smarter, and more productively.”
Some tangible examples of how this can work:
Northwestern University’s “buddy program” introduces Alzheimer’s patients to
scientists working to develop treatments for the disease.
At a Merrill Lynch branch, weekly team meetings begin with stories about how the
team has made a difference in customers’ lives.
“All Medtronic employees have a ’defining moment’ in which they come face-to-face
with a patient whose story deeply touches them,” writes former CEO Bill George.
Of course, there are other ways of creating a positive organizational culture, including
building on strengths and rewarding more than punishing.
Outsourcing inspiration is a great way for employees to feel appreciated, to experience
empathy, and to see the impact of their work—all motivating outcomes that will lead
organizations to be more effective and individuals more fulfilled in their work. Creating a
positive organizational culture is not magic, but it tends to have extremely positive
benefits for organizations that embrace it.
Counterpoint
There are many unanswered questions about the merits of using positive organizational
scholarship to build positive organizational cultures. Let’s focus on three.
What is a positive culture? The employment relationship can be amicable and even
mutually beneficial. However, glossing over natural differences in interests with the
frosting of positive culture is intellectually dishonest and potentially harmful. From time
to time, any organization needs to undertake unpopular actions. Can anyone terminate an
employee positively (and honestly), or explain to someone why others received a raise?
There’s a danger in trying to sugarcoat. Positive relationships will develop—or not—on
their own. We’d be better off preaching that people, and organizational cultures, should
be honest and fair, rather than unabashedly positive.
Is practice ahead of science? Before we start beseeching organizations to build positive
cultures, we should make sure these interventions work as we think they do. Many have
unintended consequences, and we simply don’t have enough research to support the
claims put forth. As one reviewer noted, “Everyone wants to believe they could have
greater control over their lives by simply changing the way they think. Research that
supports this idea gets promoted loudly and widely.” But it’s not based on a mountain of
evidence.
Is building a positive culture manipulative? Psychologist Lisa Aspinwall writes of
“saccharine terrorism,” where employees are coerced into positive mindsets by happiness
coaches. You may think this an exaggeration, but companies like UBS, American
Express, KPMG, FedEx, Adobe, and IBM use happiness coaches to do exactly that. As
one critic noted, “Encouraging people to maintain a happy outlook in the face of
less-than-ideal conditions is a good way of keeping citizens under control in spite of
severe societal problems, or keeping employees productive while keeping pay and
benefits low.” Rather than insisting on positive cultures, how about promoting honest
cultures as an idea?
Sources: B. Azar, “Positive Psychology Advances, with Growing Pains,” Monitor on Psychology (April 2011), pp. 32–36; A. Grant,
“How Customers Can Rally Your Troops,” Harvard Business Review (June 2011), downloaded on July 12, 2011, from http://hbr.org/;
and J. McCarthy, “5 Big Problems with Positive Thinking (And Why You Should Do It Anyway),” Positive Psychology (October
2010), downloaded on July 10, 2011, from http://psychologyofwellbeing.com/.
Class Exercise
1. Divide the class into teams of three to five students each.
2. Assign half the class teams to assume the Point view and the other half the
Counterpoint view.
3. Ask the students to fact find on the Internet about their side of the issue and
prepare to debate to convince the class that their side is more correct or feasible.
4. Additional information can be found from such sources as
http://www.management-issues.com/2006/5/25/opinion/the-difference-between-m
anipulation-and-motivation.asp.
5. On a specified day, call upon a Point Team and a Counterpoint Team to use 15
minutes to make their sides of the issue clear. Offer each team a chance to rebut
the view of the other team.
6. Take a vote among the class. Which side was more persuasive?
Teaching Notes
This exercise is applicable to face-to-face classes or synchronous online classes such as
BlackBoard 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See
http://www.baclass.panam.edu/imob/SecondLife for more information.