MGMT 1110

Introduction to Management
Topic 3 Organizational Culture

To learn more about this topic, read Chapter 3

of the textbook

MGMT 1110 course outline:

The External Environment

The Internal
Environment

Topic 2: Managing the

external environment

Topic 4:
Decision making

Topic 1: Foundations
and history of
management

Topic 3:
Organizational
culture

The Manager
Planning
Topic 5: Planning
and strategy
Controlling
Topic 9:
Controlling

Leading

Organizing Topic 6:
Organizational
structure
Topic 7: Motivation
Topic 8: Leadership

Todays Class
Organizational culture
What is it? What types of cultures exist?

Making culture tangible

How can organizational culture be observed?

Sustaining organizational cultures over time

How do organizations create and maintain their
cultures?
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What is Organizational Culture?

Organizational culture refers to the shared values within an
organization that influence the way organizational members act.
What are values?
Simply speaking, values are things that
are important to you
Individuals have their own value system,
so do organizations. Your personal values
drive your preferences and behavior,
while organizations values guide
behaviors of organizational members
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Zappos Shared Values

Example of an individuals value system:

Career
achievement

Justice
Health

Democracy

Integrity

Wealth

Peace

Family
Community

Friendship

Wisdom

Knowledge

Beauty
Creativity

Independence
Nature/
Environment
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What are your top five values?

____________________
____________________
____________________
____________________

____________________

Within your group, compare

your lists of values and find the
common values
List the common values, starting
from the one that is shared by
most group members
This combined list reveals two
things:
The core/important values
in your group
The extent to which those
values are shared

Love (6)
Money (6)
Knowledge (5)
Integrity (4)

Hierarchy of Values in Organizations

What is Organizational Culture? (continued)

The shared values within an organization that influence the way
organizational members act.
This definition implies 3 things:
Culture is a perception its not something that can be physically
touched or seen, but employees perceive it on the basis of what
they experience within the organization

Culture is descriptive its concerned with how members perceive

the culture and describe it, not with whether they like it
Culture is shared organizational members tend to describe the
organizations culture in similar terms
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One way to assess organizational culture is to use the Organizational Culture Profile
(OCP) developed by OReilly et al. (1991)
In OCP, organizational members were asked to sort 54 values into 9 categories ranging
from most characteristic of my organizations culture to most uncharacteristic of
my organizations culture.
A willingness
to experiment
Being
innovative

Paying
attention to
detail

Being teamoriented

Opportunities
for personal
growth

Respect for
individual

Most
characteristic of
my firms culture

Resultoriented

Being precise

Predictability

Developing
friends at work

Being socially
responsible

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# of values
allowed in each
category

Most
uncharacteristic
of my firms
culture

O'Reilly, C, Chatman, J.. & Caldwell, D. 1991, People and organizational culture: A Q-sort approach to assessing
person-organization fit. Academy of Management Journal, 34: 487-516,

11

Using Organizational Culture Profile (OCP), we know two things:

How each organizational member perceives the organizations values;

how the person describes the organizational culture

The extent to which these perceptions are shared by organizational

members

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Organizational Culture Profile (OCP) describes organizational culture along

7 dimensions:
Degree to which employees
are encouraged to
experiment with new ideas
Innovation and
Risk Taking

Stability and
Predictability

Degree to which employees

are expected to exhibit
precision and analysis, and
pay attention to details
Attention to Detail

Degree to which managers

focus on the result rather
than the process
Outcome Orientation

Organizational
Culture

Degree to which the

organization is predictable,
rule-oriented, and
bureaucratic
Aggressiveness
Degree to which
employees are aggressive
and competitive

People Orientation
Degree to which
management decisions take
into account the effects on
people in the organization
Team Orientation

Degree to which work is

organized around teams
rather than individuals

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Dimension

Organization A

Organization B

Innovation and Risk Taking

Attention to Detail
Outcome Orientation
People Orientation
Team Orientation
Aggressiveness
Stability and Predictability
Low = Relatively uncharacteristic of the culture
High = Relatively characteristic of the culture

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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 recommendations. Creative decisions that incur significant change or
risk are not encouraged. Because managers of failed projects are openly criticized
and penalized, managers try not to implement ideas that deviate much from the
status quo. One 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
and lines of authority, and employees are expected to minimize formal contact with
other employees outside their functional area or 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.
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Organization B
This organization is also a manufacturing firm. Here, however, management
encourages and rewards risk taking and change. Decisions based on intuition are
valued as much as those that are well rationalized. 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.
There are few rules and regulations for employees to follow, and supervision
is loose because management believes that its employees are hardworking and
trustworthy. Employees are given considerable autonomy in choosing the means
by which the goals are attained. 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, and 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.
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Dimension

Organization A

Organization B

Innovation and Risk Taking

Attention to Detail

Outcome Orientation

People Orientation

Team Orientation

Aggressiveness

Stability and Predictability

Low = Relatively uncharacteristic of the culture

High = Relatively characteristic of the culture

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Self assessment: What's the right organizational culture for me?

1 = Strongly disagree 5 = Strongly agree

I like the thrill and excitement from taking risks.

I prefer managers who provide detailed and rational

explanations for their decisions.

If a person's job performance is inadequate, it's

irrelevant how much effort he or she made.

No person's needs should be compromised in order for a

department to achieve its goals.

I like being part of a team and having my performance

assessed in terms of my contribution to the team.

I like to work where there isn't a great deal of pressure

and where people are essentially easygoing.

I like things to be stable and predictable.

Organization-Person Cultural Fit

Match between your personal preferences and an organization's culture
Higher job satisfaction
Better performance evaluation
Lower turnover
Example: The culture of secrecy at Apple Inc.
Apple is known as the most secretive in
Silicon Valley, and information leaks are rare
People who dont like Apples culture of
secrecy dont last at Apple

Source: The secrets Apple keeps, Fortune, January 18, 2012.

http://tech.fortune.cnn.com/2012/01/18/inside-apple-adam-lashinsky/
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Strong vs. Weak Organizational Cultures

Strong culture

Weak culture

Values widely shared

Values limited to a few people

Culture conveys consistent

messages about whats important

Culture sends contradictory

messages about whats important

Employees strongly identify with

culture

Employees have little identification

with culture

Strong connection between shared

values and behaviors

Little connection between shared

values and behaviors

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Strong organizational culture is a

social glue.
It holds the organization together
by providing appropriate
standards for what employees
should do, ensuring that everyone
is pointed in the same direction.

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Having a strong organizational culture can benefit organizational

performance by creating stability and a united vision among employees.
But strong organizational cultures may also have dysfunctional effects:
Imagine a company with a strong culture of stability that operates in a
changing and dynamic environment

Imagine a company with a strong unethical, outcome-oriented culture

Barrier to acquisitions and mergers Cultural incompatibility between
companies undermines integration and thus leads to potentially poor
financial performance

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Todays Class
Organizational culture
What is it? What types of cultures exist?

Making culture tangible

How can organizational culture be observed?

Sustaining organizational cultures over time

How do organizations create and maintain their
cultures?
23

How Can Organizational Culture Be Observed?

Culture is usually transmitted or socialized in 4 ways:

24

Metaphors of culture:
Visible:
Stories & legends
Rituals & ceremonies
Organizational language
Material artifacts

Invisible: Shared values

25

Organizational Stories
What are stories?

Narratives of past events about the organization's founders,

reactions to past mistakes, and so forth.
Stories help convey whats important and provide examples that
people can learn from.

26

Example: Wow stories in Ritz-Carlton

Every day, employees of every department in every Ritz-Carlton hotel
around the world gather for a 15-minute staff meeting where they
share "wow stories." These are true stories of employee heroics that
go above and beyond conventional customer service expectations.
These wow stories accomplish two goals:
1. They offer employees local fame. Employees
want to be recognized in front of their peers.
2. They reinforce the values each employee is
expected to demonstrate as a Ritz-Carlton
ambassador. They reinforce the customerresponsive culture in Ritz-Carlton.

Source: Employee motivation the Ritz-Carlton way, businessweek.com, February 29, 2008

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Example: Product innovation stories at 3M

At 3M, the product innovation stories are legendary.

The story of how 3M developed post-it notes exemplify 3Ms culture of

innovation and knowledge sharing.

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Corporate Rituals
What are rituals?
Rituals are repetitive sequences of activities that express and
reinforce the important values and goals of the organization.
E.g. ceremonies for welcoming new organizational members,
promotion/recognition ceremonies, regular gatherings.

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Example: Rituals for new hires at Starbucks

Store managers celebrate the first day with a
new hire by preparing a coffee tasting.
New hires are encouraged to complete a
Coffee Passport, which guide them to taste
all of the coffees that Starbucks offers,
within their first 90 days of employment.
Why having these rituals?
Communicate the desired behavior of
learning the unique flavor profiles of
different coffee beans
Emphasize the importance of passion for
coffee
Source: Michelli, J.A. (2014) Leading the Starbucks way, pp.18-20.

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Example: Regularly scheduled Origin Experience at Starbucks

Starbucks sends employees from U.S. and Americas to Costa Rica, AsiaPacific employees to Indonesia, and European and Middle Eastern
employees to Tanzania.
They [employees] spent a weeklong immersion seeing how coffee is
grown, produced, processed, and then shipped out to our roasting
plants. What that helped to do was not only infuse passion for the
product, but it also helped our partners [employees] understand what
happens in the lives of the farmers and processors and all that we do
to support those communities as well.

Source: Michelli, J.A. (2014) Leading the Starbucks way, pp.25-26.

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Material Artifacts
Material artifacts (e.g. office layout, dcor, how employees dress)
reflect organizational culture.

"We are a gaming company, and we are about play,"

says Zyngas founder and CEO Mark Pincus.
"It [the office] should be loud and raucous."

Which office
reflects a more
innovative and
collaborative
culture?
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Language
What is language?
Organizations often develop unique terms to describe key personnel,
customers, processes, or products reflecting whats important in their
business.
New employees are frequently overwhelmed with jargon that, after a short
period of time, become a natural part of their language. Once learned, this
language acts as a common denominator that bonds members.
Example: Employees are called
cast members in Disneyland
Were all part of the cast in the
show called Disneyland.
It is all about putting on the best
show for our guests.
customer-centric culture
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Todays Class
Organizational culture
What is it? What types of cultures exist?

Making culture tangible

How can organizational culture be observed?

Sustaining organizational cultures over time

How do organizations create and maintain their
cultures?
34

How to Create and Sustain Organizational Cultures?

35

The Origins of the Organizations Culture

Founders have a vision of what they want the organization
to become in the future
An organizations early culture reflects the founders vision
and business philosophy

Founders influences in culture creation:

Hiring and retention
Founders hire and
keep only employees
who have values
similar to their
values

Organizational
practices
Founders create
organizational
practices that are
consistent with their
vision

Role modeling
Founders act as role
models that
establish norms
down the
organization
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Why Replace the Founder by a New CEO?

Provide objective view to counteract the excessive
attachment most founders feel toward their baby and
early employees
Offer management skills that help transition a venture
from egalitarian decision making to using centralized
systems/processes
Implement a broader sales and marketing orientation,
allowing faster market expansion
How to maintain the organizations culture during rapid growth?

History of Lululemon

Organizational Culture Profile describes organizational culture along 7 dimensions:

Degree to which employees

are encouraged to
experiment with new ideas
Innovation and
Risk Taking

Stability and
Predictability

Degree to which employees

are expected to exhibit
precision and analysis, and
pay attention to details
Attention to Detail

Degree to which managers

focus on the result rather
than the process
Outcome Orientation

Organizational
Culture

Degree to which the

organization is predictable,
rule-oriented, and
bureaucratic
Aggressiveness
Degree to which
employees are aggressive
and competitive

People Orientation
Degree to which
management decisions take
into account the effects on
people in the organization
Team Orientation

Degree to which work is

organized around teams
rather than individuals

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Value Proposition and Brand

Lululemons Organizational Culture

Creating Lululemons Culture

43

Lululemons Culture and Store Management

44

Establishing and Maintaining Organizational Culture

Top
Management
Philosophy of
Organizations
Founders

Organizations
Culture

Selection
Criteria
Socialization

45

How can a Culture be Maintained?

Employee Selection
Attraction-Selection-Attrition (ASA) Theory
people are attracted to organizations that hold values that are
congruent with their values
the organization usually selects and hires people with attributes
that fit the organizational culture
those employees who do not fit the organizational culture leave
(voluntarily or involuntarily)
As such, employees values are consistent with the organizations
values, resulting in a homogeneous and strong culture
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Top Management
Actions speak louder than words: Through what they
say and how they behave, senior executives establish
norms that filter down through the organization
Reward policy: Managers should reward behaviors
consistent with corporate values.
Organizational Socialization

Organizational socialization is the process by

which newcomers learn an organizations culture
(via stories, rituals, material artifacts, and
languages)

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Intended learning outcomes

for Topic 3
By now, you should be able to:
Describe an organizations culture
Identify the benefits and risks of strong and weak
organizational cultures
Discuss how organizational culture can be established and
maintained

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