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Chapter 16
Organizational Culture
Chapter Overview
This chapter examines organizational culture: the effects culture as on members within the
organization; how members learn the culture; and how it can be changed.
Chapter Objectives
After studying this chapter, the student should be able to:
2. Compare the functional and dysfunctional effects of organizational culture on
people and the organization.
4. Show how culture is transmitted to employees.
6. Show how national culture may affect the way organizational culture is transported
to a different country.
Suggested Lecture Outline
I. INTRODUCTION
A. In Chapter 5, we found that individuals have relatively enduring and stable traits
that help predict their attitudes and behaviors.
B. Organizations also have personalities, which are referred to as “cultures.”
Organizational cultures govern how that organization’s members behave.
II. WHAT IS ORGANIZATIONAL CULTURE?
A. A Definition of Organizational Culture.
1. A system of shared meaning held by members that
distinguishes the organization from other organizations.
2. This is a shared medium consists of a set of seven key characteristics of the
organization values.
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2) Attention to Detail. The degree to which employees are expected to
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3) Outcome Orientation. The degree to which management focuses on
4) People Orientation. The degree to which management decisions take
5) Team Orientation. The degree to which work activities are organized
around teams rather than individuals.
7) Stability. The degree to which organizational activities emphasize
maintaining the status quo in contrast to growth.
B. Culture Is a Descriptive Term.
1. Organizational culture describes how employees perceive
2. Job satisfaction seeks to measure affective responses to the work environment:
it is concerned with how employees feel about the organization. It is an
evaluative term.
C. Do Organizations Have Uniform Cultures?
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of dissimilar backgrounds or at varying levels in the
2. Dominant Culture.
a. This is the overall organizational culture as expressed by the core values
3. Subcultures.
a. These subsets of the overall culture tend to develop in larger organizations
to reflect the common problems, situations, or experiences that are unique
to members of certain departments or geographical areas.
b. The subculture retains the core values of the dominant culture but adds to,
or modifies, them to reflect their own distinct situation.
D. Strong versus Weak Cultures.
1. Strong cultures have a greater impact on employee
behavior and are more directly related to reduced
2. Strong Culture.
a. This exists when an organization’s core values are both intensely held and
widely shared.
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c. On the job, a strong culture, supported by formal rules and regulations,
ensures they will act in a relatively uniform and predictable way.
B. Culture Creates Climate
1. If you’ve worked with someone whose positive attitude inspired you to do your
best, or with a lackluster team that drained your motivation, you’ve experienced
the effects of climate.
3. This aspect of culture is like team spirit at the organizational level.
a. When everyone has the same general feelings about what’s important or
1) One meta-analysis found that across dozens of different samples,
2) A positive overall workplace climate has been linked to higher customer
satisfaction and financial performance as well.
4. Dozens of dimensions of climate have been studied, including safety, justice,
diversity, and customer service, to name a few.
5. 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.
C. Culture as a Liability
2. From an employee’s standpoint, culture is valuable because it spells out how
things are done and what’s important.
3. But we shouldn’t ignore the potentially dysfunctional aspects of culture,
especially a strong one, on an organization’s effectiveness.
a. INSTITUTIONALIZATION
1) When an organization undergoes institutionalization and becomes
3) Acceptable modes of behavior become largely self-evident to members,
and although this isn’t entirely negative, it does mean behaviors and
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granted, which can stifle innovation and make maintaining the
organization’s culture an end in itself.
b. BARRIERS TO CHANGE
1) Culture is a liability when the shared values are not in agreement with
those that further the organization’s effectiveness.
3) Consistency of behavior, an asset in a stable environment, may then
burden the organization and make it difficult to respond to changes.
c. BARRIERS TO DIVERSITY
1) Hiring new employees who differ from the majority in race, age, gender,
disability, or other characteristics creates a paradox:
2) Management wants to demonstrate support for the differences these
3) Because diverse behaviors and unique strengths are likely to diminish as
4) A strong culture that condones prejudice, supports bias, or becomes
insensitive to people who are different can even undermine formal
corporate diversity policies.
d. BARRIERS TO ACQUISITIONS AND MERGERS
2) In recent years, cultural compatibility has become the primary concern.
4) The primary cause of failure is conflicting organizational cultures.
a) The $183 billion merger between America Online (AOL) and Time
Warner in 2001 was the largest in U.S. corporate history.
b) It was also a disaster.
(1) There were open collars and jeans at AOL.
(2) Time Warner was more “buttoned-down.”
IV. CREATING AND SUSTAINING CULTURE
A. How a Culture Begins.
1. The ultimate source of an organization’s culture is its founder(s). Founders
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2. The new organization’s small size facilitates the founder’s imposition of his or
her vision on all organizational members. Founders create culture in three
ways:
a. Employees Selection. Founders hire and keep only those employees who
think and feel the same way the founders do.
b. Socialization. Founders indoctrinate and socialize their employees toward
the founders’ way of thinking and feeling.
c. Modeling.
1) The founder acts as a role model and encourages to employees identify
3) In a sense, the organization becomes an extension of the founder’s
personality.
B. Keeping a Culture Alive.
1. Once a culture exists, practices within the organization
serve to maintain it by giving employees a similar set of
experiences.
2. These practices include the selection process, performance evaluation criteria,
3. Selection.
a. The selection process needs to identify and hire employees with relevant
knowledge, skills, and abilities; one of the more critical facets of this process
is ensuring that those selected have values that are consistent with those of
the organization.
b. Employees whose values and beliefs are misaligned with those of the
organization tend to not be hired, or self-select out of the applicant pool,
thereby protecting the existing organizational culture.
4. Top Management.
a. The verbal messages and actions of top management establish norms of
5. Socialization.
a. New employees must adapt to the organizational
culture in a process called socialization.
b. While socialization continues throughout an
1) Prearrival.
a) This encompasses all the learning that occurs before a new member
joins the organization.
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(5) Serial versus Random. Serial programs use role models to train
and encourage the newcomer, such as in apprenticeship
(6) Investiture versus Divestiture. Investiture socialization assumes
and confirms that newcomers have the necessary qualities and
qualifications for success. Divestiture programs try to strip away
certain characteristics of the recruits to reshape them into the
proper role.
C. Summary: How Cultures Form.
1. Exhibit 16-3 provides a simple model of how an
organization’s culture is established and sustained.
2. The original culture is derived from the founder’s
3. The actions of top management set the general climate of what is acceptable
behavior.
4. How well employees are socialized will depend on management’s selection of
socialization method and the closeness of the new employees’ values to those of
the organization.
V. HOW EMPLOYEES LEARN CULTURE
A. Culture is transmitted to employees in a number of forms:
stories, rituals, material symbols, and language.
B. Stories.
1. Stories typically revolve around key events such as rule breaking, unlikely
2. These stories anchor the present in the past and provide explanations and
legitimacy for current practices.
C. Rituals.
1. These are repetitive sequences of activities that express and reinforce the key
values of the organization. They highlight what goals are most important: which
people are important and which are not.
D. Material Symbols.
1. Material symbols such as the size of offices, the elegance of furnishings,
perquisites, awards and trophies, and the attire worn, all convey to employees
who is important, the degree of egalitarianism desired by top management, and
the kinds of appropriate behavior.
E. Language.
1. Specialized languages, acronyms or jargon serve as a means to identify and
segregate members of a culture or subculture.
2. Once assimilated, the specialized language acts as a common denominator that
unites members of a given culture or subculture.
VI. CREATING AN ETHICAL ORGANIZATIONAL CULTURE.
A. The organizational culture most likely to shape high ethical
standards among its members is one that’s high in risk
Exhibit 16.3
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C. Rewarding More Than Punishing
1. Although most organizations are sufficiently focused on extrinsic rewards such
2. Part of creating a positive organizational culture is “catching employees doing
something right.”
4. Because employees generally don’t ask for praise, managers usually don’t realize
the costs of failing to do it.
5. Failing to praise can become a silent killer, like escalating blood pressure.
D. Emphasizing Vitality and Growth
1. A positive organizational culture recognizes the difference between a job and a
career.
2. It supports not only what the employee contributes to organizational
3. A positive culture recognizes the difference between a job and a career and
4. Although it may take more creativity to encourage employee growth in some
types of industries, consider the fast-paced food industry.
E. Limits of Positive Culture
1. Is a positive culture a panacea? Though companies such as GE, Xerox, Boeing,
2. Not all cultures value being positive as much as U.S. culture does, and, even
3. For example, Admiral, a British insurance company, has established a Ministry of
4. When does the pursuit of a positive culture start to seem coercive or even
Orwellian?
5. As one critic notes, “Promoting a social orthodoxy of positiveness focuses on a
6. Our point is that 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.
VIII. GLOBAL IMPLICATIONS
A. Organizational cultures are so powerful they often transcend
national boundaries.
2. Organizational cultures often reflect national culture.
B. One of the primary things U.S. managers can do is to be culturally sensitive.
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1. 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.
D. U.S. managers endorse the supremacy of anonymous market forces and implicitly or
explicitly view profit maximization as a moral obligation for business organizations.
1. This worldview sees bribery, nepotism, and favoring personal contacts as highly
unethical.
3. In contrast, managers in developing economies are more likely to see ethical
decisions as embedded in a social environment.
4. That means doing special favors for family and friends is not only appropriate
but may even be an ethical responsibility.
E. 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.
F. U.S. employees are not the only ones who need to be culturally sensitive.
1. Three times a week, employees at the Canadian unit of Japanese video game
3. Koei also has employees punch a time clock and asks women to serve tea to top
executive guests.
4. Although these practices are consistent with Koei’s culture, they do not fit
Canadian culture very well. “It’s kind of like school,” says one Canadian
employee.
IX. IMPLICATIONS FOR MANAGERS
A. Employees form an overall subjective perception of the
1. This overall perception becomes, in effect, the organization’s culture or
personality and affects employee performance and satisfaction, with stronger
cultures having greater impact.
B. Just as people’s personalities tend to be stable over time, so too do strong cultures.
2. Changing an organization’s culture is a long and difficult process.
3. Thus, at least in the short term, managers should treat their organization’s
culture as relatively fixed.
C. One of the most important managerial implications of organizational culture relates
to selection decisions.
1. Hiring individuals whose values don’t align with those of the organization is
2. Not surprisingly, employee “misfits” have considerably higher turnover rates.
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D. An employee’s performance also depends to a considerable degree on knowing
what to do and not do.
1. Understanding the right way to do a job indicates proper socialization.
E. As a manager, you can shape the culture of your work environment.
1. 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.
X. KEEP IN MIND
A. Organizational culture develops over time and reflects deeply
held values to which employees are strongly committed.
B. Ethical and positive organizational cultures can be created—methods differ.
C. National culture influences organizational culture.
XI. SUMMARY
Discussion Questions
1. Describe the seven key characteristics that capture the essence of the organization’s
culture.
Answer: (1) Innovation and Risk Taking. The degree to which employees are
encouraged to be innovative and take risks. (2) Attention to Detail. The degree to
which employees are expected to exhibit precision, analysis, and attention to detail.
2. Contrast organizational culture and job satisfaction.
3. Identify the functional and dysfunctional effects of organizational culture on
employees.
Answer: 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
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1. Are some expatriate managers more likely to acclimatize to the new assignment
than others?
2. Is there an estimate of the time and effort it will take for each of the expatriate
managers to acclimatize to the new location? Are some more likely to acclimatize
faster than others based on their country cultures?
3. Which may be more effective:
a. The plan to acclimatize our expatriate managers for managing in Viet Nam