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Chapter 16
Organizational Culture
LEARNING OBJECTIVES
After studying this chapter, students should be able to:
16-1. Describe the common characteristics of organizational culture.
people and the organization.
16-3. Identify the factors that create and sustain an organization’s culture.
16-4. Show how culture is transmitted to employees.
culture, and a spiritual culture.
16-6. Show how national culture can affect the way organizational culture is transported
to another country.
INSTRUCTOR’S RESOURCES
Instructors may wish to use the following resources when presenting this chapter.
Text Exercises
Myth or Science?: “An Organization’s Culture Is Forever”
An Ethical Choice: A Culture of Compassion
Career OBjectives: How Do I Learn to Lead?
MyLab Management
oPersonal Inventory Assessment: Comfort with Change Scale
oWatch It!: Organizational Culture (TWZ Role Play)
oTry It!: Simulation: Organizational Culture
Point/Counterpoint: Organizational Culture Can Be “Measured”
Questions for Review
Experiential Exercise: Greeting Newcomers
Ethical Dilemma: Culture Architects
Text Cases
Case Incident 1: The Place Makes the People
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Case Incident 2: Active Cultures
Instructor’s Choice
This section presents an exercise that is NOT found in the student’s textbook. Instructor’s
Choice reinforces the text’s emphasis through various activities. Some Instructor’s
Choice activities are centered on debates, group exercises, Internet research, and student
experiences. Some can be used in class in their entirety, while others require some
additional work on the student’s part. The course instructor may choose to use these at
any time throughout the class—some may be more effective as icebreakers, while some
may be used to pull together various concepts covered in the chapter.
Web Exercises
and ideas for researching OB topics on the Internet. The exercises “Exploring OB Topics
on the Web” are set up so that you can simply photocopy the pages, distribute them to
your class, and make assignments accordingly. You may want to assign the exercises as
an out-of-class activity or as lab activities with your class.
Summary and Implications for Managers
Exhibit 16-6 depicts organizational culture as an intervening variable. Employees form an
overall subjective perception of the organization based on factors such as degree of risk
tolerance, team emphasis, and support of individuals. This overall perception represents,
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:
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.
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.
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.
You can shape the culture of your work environment, sometimes as much as it
shapes you. All managers can do their part to create an ethical culture and to
consider spirituality and its role in creating a positive organizational culture.
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.
This chapter begins with a discussion of organizational culture at Chevron. Just as tribal cultures have
totems and taboos that dictate how each member should act toward fellow members and outsiders,
organizations have values, beliefs, assumptions, and norms that govern how members behave. We call
these expectations the organizational culture. Every organization has a culture that, depending on its
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strength, can have a considerable influence on the attitudes and behaviors of organization members, even
if that effect is hard to measure precisely. In this chapter, we’ll discuss what organizational culture is, how
it affects employee attitudes and behavior, where it comes from, and whether it can be changed.
BRIEF CHAPTER OUTLINE
I. What Is Organizational Culture?
A. Definition of Organizational Culture
characterize the organization.
3. Research identifies six primary characteristics that capture the essence of an
organization’s culture:
a. Adaptability.
b. Detail orientation.
c. Results/Outcome orientation.
d. People/Customer orientation.
e. Collaboration/Team orientation.
f. Integrity.
4. Each of the characteristics exists on a continuum from low to high.
dimensions.
5. Another common culture framework groups organizations into one of four
types, each which has its own assumptions, beliefs, values, artifacts, and even
criteria for effectiveness:
value attachment, collaboration, trust, and support.
b. “The Adhocracy.” A culture which is based on change. Employees value
growth, variety, attention to detail, stimulation, and autonomy.
value communication, competence, and competition.
d. “The Hierarchy.” A culture which is based on stability. Employees value
communication, formalization, and routine.
6. The differences between these cultures are reflected in their internal vs.
external focus and their flexibility and stability.
and hierarchies are internally focused and stable.
7. A review of the prior studies conducted on clans, adhocracies, and market
committed to clan cultures.
8. Further, market clans tend to be the most innovative, although all three tend to
produce equally quality products and services.
B. Culture Is a Descriptive Term
1. Organizational culture is concerned with employees’ perception of the
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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: organizational culture is
descriptive, whereas job satisfaction is evaluative.
C. Do Organizations Have Uniform Cultures?
1. Most organizations have a dominant culture and numerous sets of subcultures.
the organization’s members.
problems, situations, or experiences that members face.
4. However, sometimes the subcultures can be so strong that they subtly reject
that “official” culture and do not conform.
D. Strong Versus Weak Cultures
it demonstrates high agreement about what the organization represents.
4. Such unanimity of purpose builds cohesiveness, loyalty, meaning, and
organizational commitment.
II. What Do Cultures Do?
1. The Functions of Culture:
a. Boundary-defining role.
b. Conveys a sense of identity for members.
c. Facilitates the generation of commitment.
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.
organizations.
5. Furthermore, research on 114 CEOs and 324 top management team (TMT)
redundant.
6. 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.
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B. Culture Creates Climate
1. Organizational climate refers to the shared perceptions organizational
members have about their organization and work environment.
2. A positive overall workplace climate has been linked to higher customer
satisfaction and financial performance.
3. Recent theory also suggests that there is a difference between espoused (i.e.,
adopted on-the-surface) and enacted (i.e., actually put into practice) cultural
values, beliefs, and assumptions that have implications for how climate
emerges.
a. Employees, in making sense of their environments, draw a distinction
between what they “hear” or “see” being supported by organizational
leaders in meetings, memos, rulebooks, etc., with what they “actually” see
being enacted.
b. Climate, then, is a function of what employees perceive is being rewarded.
Furthermore, research in Australia suggests that when there is alignment
between espoused and enacted organizational values, employees have
higher organizational commitment.
5. Climate influences the habits people adopt.
a. If there is a climate of safety, 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 safety
climate decreases the number of documented injuries on the job.
accountability.
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 culture, or the shared concept of right and wrong
c. Employees and managers are open to discuss ethical issues and are
reinforced for their ethical behavior.
3. Researchers have developed ethical climate theory (ECT) and the ethical
climate index (ECI) to categorize and measure the shared perceptions of the
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and procedures. Of the nine identified climate categories, five are found to be
most prevalent in organizations: instrumental, caring, independence, law and
code, and rules.
through their business life cycle.
4. 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
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.
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.
6. We cannot conclude that instrumental climates are always bad, or that caring
climates are always good.
are acceptable.
7. 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 substantial majority of executives saw
sustainability as an important part of future success.
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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 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
G. Culture as a Liability
1. Introduction
a. Culture enhances organizational commitment and increases the
consistency of employee behavior.
2. Institutionalization
or members.
b. It doesn’t go out of business even if its original goals are no longer
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relevant.
3. Barriers to change
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
differences.
5. Toxicity and Dysfunctions
a. Coherence around negativity and dysfunctional management systems in a
corporation can produce downward forces that are equally powerful.
b. Collaborative cultures (i.e., encouraging proactive, constructive, and
branch cohesion and customer service performance.
d. Finally, Avoidance cultures (i.e., that passively avoid conflict) tend to be
less creative.
6. Barriers to acquisitions and mergers
a. Cultural compatibility has become the primary concern when considering
acquisitions and/or mergers.
to increase shareholder values.
III. Creating and Sustaining Culture
A. Introduction
1. Once an organization’s culture is established, it rarely fades away.
B. How a Culture Begins
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.
thinking.
c. Founders’ behavior acts as a role model.
C. Keeping a Culture Alive
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1. Selection
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
other rewards.
3. Socialization (Exhibit 16-2)
a. The process of helping new employees adapt to the organization’s culture
is socialization.
b. Three stage process:
i. Pre-arrival
attitudes, and expectations.
ii. Encounter
(a) Individual confronts the possible dichotomy between expectations
and reality.
iii. Metamorphosis (Exhibit 16-3)
encounter stage.
(b) The options presented in Exhibit 16-3 are alternatives designed to
bring about the desired metamorphosis.
(c) Most research suggests high levels of institutional practices
encourage person–organization fit and high levels of commitment,
whereas individual practices produce more role innovation.
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
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months.
D. Summary: How Cultures Form (Exhibit 16-4)
1. Exhibit 16-4 summarizes how an organization’s culture is established and
sustained.
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
and language.
B. Stories
1. Stories such as these circulate through many organizations, anchoring the
present in the past and legitimating current practices.
C. Rituals
the organization are rituals.
D. Symbols
1. Layout of corporation headquarters, types of automobile top executives are
given, aircraft, size of offices, executive perks, etc. are examples of material
symbols.
E. Language
V. Influencing an Ethical Organizational Culture
A. Developing an Ethical Culture
1. How can management create a more ethical culture?
a. Be a visible role model.
b. Communicate ethical expectations.
c. Provide ethical training.
e. Provide protective mechanisms.
B. The work of setting a positive ethical climate must start at the top of the
organization.
1. When top management emphasizes strong ethical values, supervisors are more
likely to practice ethical leadership.
engage in unethical practices.
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a. Clearly the wrong type of organizational culture can negatively influence
employee ethical behavior.
culture.
3. 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.