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Chapter # 16: Organizational Culture

What Is Organizational Culture?

1. Define organizational culture and describe its common characteristics.
What is Institutionalization?
When an organization takes on a life of its own, apart from any of its
members, becomes valued for itself, and acquires immortality.
What Is Organizational Culture?
Organizational Culture is a common perception held by the organizations
members; a system of shared meaning that distinguishes the one
organization from other organization.
Cultures have 7 primary characteristics that define the organization.

Innovation and risk taking

Attention to detail
Outcome orientation
People orientation
Team orientation

Contrasting Organizational Cultures

Organization A
This organization is a manufacturing firm.
Managers are expected to fully document all decisions; and good
managers are those who can provide detailed data to support their
Creative decisions that incur significant change or risk are not encouraged.
Because managers of failed projects are openly criticized and penalized,
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managers try not to implement ideas that deviate much from the status
One lower-level manager quoted an often used phrase in the company: If
it aint broke, dont fix it.
There are extensive rules and regulations in this firm that employees are
required to follow.
Managers supervise employees closely to ensure there are no deviations.
Management is concerned with high productivity, regardless of the impact
on employee morale or turnover.
Work activities are designed around individuals.
There are distinct departments & lines of authority, and employees are
expected to minimize formal contact with other employees outside their
functional area / line of command.
Performance evaluations and rewards emphasize individual effort, although
seniority tends to be the primary factor in the determination of pay raises
and promotions.

Organization B
This organization is also a manufacturing firm.
Here, however, management encourages and rewards risk taking and
Decisions based on intuition are valued as much as those that are well
Management prides itself on its history of experimenting with new
technologies and its success in regularly introducing innovation products.
Managers or employees who have a good idea are encouraged to run with
it. And failures are treated as learning experiences.
The company prides itself on being market-driven and rapidly responsive to
the changing needs of its customers.
There are few rules and regulations for employees to follow, and
supervision is loose because management believes that its employees are
hardworking and trustworthy.

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Management is concerned with high productivity, but believes that this

comes through treating its people right.
The company is proud of its reputation as being a good place to work.
Job activities are designed around work teams, & team members are
encouraged to interact with people across functions and authority levels.
Employees talk positively about the competition between teams.
Individuals and teams have goals, and bonuses are based on achievement
of these outcomes.
Employees are given considerable autonomy in choosing the means by
which the goals are attained.
Do Organizations Have Uniform Cultures?
Culture is a descriptive term: it may act as a substitute for formalization.
There are several different groupings that most cultures fit into as
described below.
a) Dominant Culture: Dominant culture is the core values that are shared by
the majority of employees in the organization.
b) Subcultures: Mini-cultures within an organization, typically defined by
departmental designations and geographical separation.
c) Core Values: The primary or dominant values that are accepted throughout
the organization
d) Strong Culture: A strong culture is one in which the core values are
intensely (forcefully) held and shared by most.
These definitions are key components of a culture and will help you further
understand organizational culture.

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What Is Organizational Culture?

Culture versus Formalization
A strong culture increases behavioral consistency and can act as a
substitute for formalization.
Organizational Culture versus National Culture
National culture has a greater impact on employees than does their
organizations culture.
Nationals selected to work for foreign companies may be atypical of the
local/native population.

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What Do Cultures Do?

2. Compare the functional and dysfunctional effects of organizational
culture on people and the organization.
Exam Q: What are functional and dysfunctional effects of organizational
Exam Q: Explain and discuss functional and dysfunctional effects of
organizational culture?
Exam Q: Culture is software brain. Explain this concept and Compare the
functional and dysfunctional effects of organizational culture on people
and productivity.( Two Times)
Differentiate between functional and dysfunctional effects of
organizational culture? (Two Times)
Functional Effects:
Following are the functional effects of Culture:

Defining Boundaries
Conveying Identity
Promoting Commitment
Controlling Behavior

a) Defining Boundaries
Culture has a boundary-defining role.
Culture creates distinctions between one organization and others.
b) Conveying Identity
Culture conveys a sense of identity for organization members.
Who receives a job offer to join the organization, who is appraised as a high
performer, and who gets the promotion is strongly influenced by the
individual-organization fit.

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c) Promoting Commitment
Culture facilitates the generation of commitment to something larger
than self-interest.
d) Controlling Behavior
Culture serves as a sense-making and control mechanism that guides
and shapes the attitudes and behavior of employees for fitting
employees in the organization
Every organization develops a core set of assumptions, understandings,
and implicit rules that govern day-to-day behavior in the workplace.
Culture enhances the stability of the social system.
Dysfunctional Effects or Culture as liability
Following are the functional effects of Culture:
a) Barrier to change
b) Barrier to diversity
c) Barrier to acquisitions and mergers
a) Barrier to change
When cultures are strong, they can become a barrier to change.
Barrier to change occurs when cultures values may not align with the
values needed to embrace or facilitate the change.
This is most likely to occur when an organizations environment is dynamic.

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b) Barrier to diversity
Strong cultures put considerable pressure on employees to conform, which
may lead to institutionalized bias.
Cultures that may pressure employees to conform can be a barrier to
hiring, developing, and promoting a diverse workforce.
Organizations seek out and hire diverse individuals because of their
alternative strengths.
c) Barrier to acquisitions and mergers
Historically, the key factors that management looked at in making
acquisition/ merger decisions:
Financial advantages
Product synergy
Cultural compatibility has become the primary concern.
Incompatible cultures can destroy an otherwise successful merger.
Finally, if a merger or acquisition occurs, one of the most difficult things to
do is to merge the two cultures, causing many mergers to fail.

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Creating and Sustaining Culture

3. Identify the factors that create and sustain an organizations culture
How Culture Begins
Cultures start from the very beginning of the organization with the
Founders hire and keep only employees who think and feel the same way
they do.
Founders indoctrinate and socialize these employees to their way of
thinking and feeling.
The founders own behavior acts as a role model that encourages
employees to identify with them and thereby internalize their beliefs,
values, and assumptions.
Keeping Culture Alive
Three forces play a particularly important part in sustaining a culture:
a) Selection practices
b) The actions of top management
c) Socialization methods
a) Selection practices
Concern with how well the candidates will fit into the organization.
Provides information to candidates about the organization.
b) The actions of top management
Senior executives help establish behavioral norms that are adopted by the

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c) Socialization methods
The process that helps new employees adapt to the organizations culture
Stages in the Socialization Process
The socialization process has the following three stages as shown in the figure:

a) Pre-arrival Stage
b) Encounter Stage
c) Metamorphosis Stage
a) Pre-arrival Stage
The period of learning in the socialization process that occurs before a new
employee joins the organization.
b) Encounter Stage
The stage in the socialization process in which a new employee sees what
the organization is really like and confronts the possibility that expectations
and reality may diverge.
c) Metamorphosis Stage
The stage in the socialization process in which a new employee changes
and adjusts to the work, work group, and organization.
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Socialization Program Options

Choose the appropriate alternatives:

Formal versus Informal

Individual versus Collective
Fixed versus Variable
Serial versus Random
Investiture (Installation, Inauguration) versus Divestiture (Dispossession)

Socialization Outcomes:
Higher productivity
Greater commitment
Lower turnover
Summary: How Organizational Cultures Form
Organizational cultures are derived from the founder
They are sustained through managerial action

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How Employees Learn Culture

4. Show how culture is transmitted to employees
Employees learn the organizational culture through a number of avenues. They

Material Symbols

a) Stories
They can gain an understanding of culture by hearing stories that present
the past and provide explanations for current practices.
b) Rituals
Rituals, or repetitive sequences of activities, can reinforce the key values of
the organization and provide insight into the culture.
c) Material Symbols
Material symbols such as dress codes, formal or informal, office size or
style, and perks for key employees can denote who is important in an
d) Language
Language is another way to learn about organizational culture as
employees will express themselves in certain ways to indicate membership
in the organization.
Jargon and special ways of expressing ones self to indicate membership in
the organization.
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Creating An Ethical Organizational Culture

5. Demonstrate how an ethical culture can be created
As cultures are created, it is important to incorporate ethics into the
cultural norms from the very beginning.
Certain characteristics will help develop high ethical standards, such as:
a) High tolerance for risk so people are not afraid to make mistakes.
b) Low to moderate in aggressiveness so that unethical behaviors are avoided
a) Focus on means as well as outcomes so that ethics is embedded in both.
Managerial Practices Promoting an Ethical Culture

Being a visible role model

Communicating ethical expectations
Providing ethical training
Rewarding ethical acts and punishing unethical ones
Providing protective mechanisms

Creating a Positive Organizational Culture

6. Describe a positive organizational culture
A positive organizational culture is one that builds on employee strengths
so that employees can develop and grow.
It also rewards more than it punishes so employees are not afraid to try
new things and feel good about what they are contributing.
Finally, it emphasizes individual vitality and growth so that employees are
operating at full potential.
Limits of Positive Culture:
May not work for all organizations or everyone within them

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7. Creating a Customer-Responsive Culture

Key Variables Shaping Customer-Responsive Cultures are:

The types of employees hired by the organization.

Low formalization: the freedom to meet customer service requirements.
Empowering employees with decision-making discretion to please the
Good listening skills to understand customer messages.
Role clarity that allows service employees to act as boundary spanners.
Employees who engage in organizational citizenship behaviors.

Managerial Actions:

Select new employees with personality and attitudes consistent with high
service orientation.
Train and socialize current employees to be more customers focused.
Change organizational structure to give employees more control.
Empower employees to make decisions about their jobs.
Lead by conveying a customer-focused vision and demonstrating
commitment to customers.
Conduct performance appraisals based on customer-focused employee
Provide ongoing recognition for employees who make special efforts to
please customers.

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Spirituality and Organizational Culture

8. Identify characteristics of a spiritual culture
Workplace Spirituality
Workplace Spirituality is the recognition that people have an inner life that
nourishes and is nourished by meaningful work that takes place in the
context of the community.
NOT about organized religious practices.
People seek to find meaning and purpose in their work.
Why Spirituality Now?
Spirituality is especially important now as people need a counterbalance to
the pressures and stress of the busyness of life.
Often spirituality allows the employee to fulfill all aspects of their lives
body, mind, and spirit.
Although the workplace is the dominant influence in peoples lives, they are
not willing to accept purposeless work.
They want to be able to incorporate their values into their work.
More and more people realize that material possessions do not fulfill their
Therefore, a holistic approach to life body, mind, and spirit is essential
and organizations will help their employees have fuller lives if they
recognize this approach.

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Characteristics of a Spiritual Organization

A spiritual organization will have a number of characteristics that help their
employees reach their full potential and help them deal with work/life
These include:

Strong sense of purpose

Trust and respect
Humanistic work practices
Toleration of employee expression

Reasons for the Growing Interest in Spirituality

Due to the pressures and stress of a turbulent pace of life and the lack of
community many people feel and their increased need for involvement and
Formalized religion hasnt worked for many people.
Job demands have made the workplace dominant in many peoples lives,
yet they continue to question the meaning of work.
The desire to integrate personal life values with ones professional life.
An increasing number of people are finding that the pursuit of more
material acquisitions leaves them unfulfilled.

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How Organizational Cultures Have an Impact on Performance and Satisfaction

Culture as an Intervening Variable
Employees form an overall subjective perception of the organization based
on the following objective factors:

These opinions will affect their performance and job satisfaction so it is

important to pay attention to organizational culture and its impact on
employee outcomes.

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