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ORGANIZATIONAL CULTURE

CHAPTER SCAN
Corporate cultures provide identifying characteristics and values for organizational members to
appreciate and learn. Cultures are distinguished by artifacts, values, and basic assumptions. The
socialization process is the entry stage in an organization that provides clues about its culture.
Cultures are difficult to change, yet change is necessary in some instances for survival.
Organizations need an adaptive culture in order to respond effectively to the changing
environment.

LEARNING OBJECTIVES
After reading this chapter, you should be able to do the following:
1.
2.
3.
4.
5.
6.

Define organizational culture and explain its three levels.

Identify the four functions of culture within an organization.
Explain the relationship between organizational culture and performance.
Contrast the characteristics of adaptive and nonadaptive cultures.
Describe five ways leaders reinforce organizational culture.
Describe the three stages of organizational socialization and the ways culture is communicated
in each step.
7. Identify ways of assessing organizational culture.
8. Explain actions managers can take to change organizational culture.

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KEY TERMS
Chapter 16 introduces the following key terms:
organizational (corporate) culture
artifacts
espoused values
enacted values
assumptions
strong culture
adaptive culture
organizational socialization
anticipatory socialization
encounter
change and acquisition
triangulation

THE CHAPTER SUMMARIZED

I.

THINKING AHEAD: The Entrepreneurial Culture of Enron

II.

THE KEY ROLE OF ORGANIZATIONAL CULTURE

Organizational cultures exist in all organizations, and have important effects on the morale and
motivation of organizational members. Cultures are communicated through artifacts, values, and
basic assumptions that are both visible and invisible. Stories are considered by some as the most
effective approach to reinforcing an organizations values, and frequently involve the CEO.
Values that organizations hold can be either enacted or espoused. When espoused values are not
confirmed by actions, the organizational culture is weakened. Leaders have a responsibility to
monitor and alter the organizational culture when necessary. Much of our concept of
organizational cultures has been adapted from cultural anthropology. There appears to be distinct
cultures in organizations.
The subject has been studied closely since the 1970s, and particularly since the early 1980s, with
the publication of the Deal and Kennedys Corporate Cultures, Ouchis Theory Z, and Peters and
Watermans In Search of Excellence. One of the best known scholars in the area of corporate
cultures is Edgar Schein. Schein became interested in organizational culture when he discovered,
while teaching in Mexico and Europe, that company cultures may be stronger than country
cultures.

A.

Culture and its Levels

Organizational (corporate) culture is a pattern of basic assumptions that are

considered valid and that are taught to new members as the way to perceive, think, and
feel in the organization. Culture consists of the three levels of artifacts, values, and basic

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assumptions.
B.

Artifacts

Symbols of culture in the physical and social work environment are called artifacts.
Artifacts are the most visible and accessible level of culture. Artifacts include personal
enactment, ceremonies and rites, stories, rituals, and symbols.
1.

Personal Enactment

Personal enactment is behavior that reflects the organization's values.

2.

Ceremonies and Rites

Ceremonies can be divided into organizational rites, including rites of passage, rites
of enhancement, rites of renewal, rites of integration, rites of conflict reduction,
and rites of degradation. They are relatively elaborate sets of activities that are
enacted repeatedly on important occasions.
3.

Stories

Stories are rich carriers of organizational culture that give meaning and identity to
organizations and help orient new employees. There are stories about the boss,
stories about getting fired, stories about how the company deals with employees
who have to relocate, stories about whether lower-level employees can rise to the
top, stories about how the company deals with crisis situations, and stories about
how status considerations work when rules are broken.
4.

Rituals

Everyday practices that are repeated frequently are known as rituals. Typically
unwritten, rituals send a clear message about the way things are done in an
organization.
5.

Symbols

Symbols communicate the culture through unspoken messages, and include

company logos, company colors, and even mental images held by employees.
C.

Values

Values are a deeper level of culture that reflects underlying beliefs. An espoused value is
what organizational members say they value, like ethical practice. Enacted values are
values reflected in the way individuals actually behave, and may differ from espoused
values.
D.

Assumptions

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Assumptions are deeply held beliefs that guide behavior and tell members of an
organization how to perceive and think about things. They are often held at a level below
consciousness and are difficult to measure.

III.

FUNCTIONS AND EFFECTS OF ORGANIZATIONAL CULTURE

Culture serves four functions, including providing a sense of identity to members and promoting a
sense of commitment. Culture helps organizational members attribute sense and meaning to
organizational events, and reinforces the values in the organization. Finally, culture serves as a
control mechanism for shaping behavior.
A.

The Strong Culture Perspective

A strong culture is an organizational culture with a consensus on the values that drive the
company and with an intensity that is recognizable even to outsiders. Strong cultures can
be positive or negative. For example, street gangs have strong cultures, yet they also
exhibit negative characteristics.
B.

The Fit Perspective

The concept of fit asserts that an organizations culture is only good if it fits, or aligns
itself, with the industry or the firms strategy.
C.

The Adaptation Perspective

Adaptive cultures encourage confidence and risk taking among employees, have
leadership that produces change, and focus on the changing needs of customers. Cultures
that promote long-term performance tend to be the most adaptive. Adaptive cultures
facilitate change to meet the needs of their constituents.

IV.

THE LEADER'S ROLE IN SHAPING AND REINFORCING CULTURE

A.

What Leaders Pay Attention To

Organizational members can get information about the priorities, values, and beliefs of
leaders by observing the things on which leaders spend their time, as long as leaders are
consistent in what they pay attention to.
B.

How Leaders React to Crises

Many believe that organizations show their real culture during times of crisis, and
consequently pay close attention to the leaders during a crisis situation.
C.

How Leaders Behave

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Employees emulate the leader's behavior and look to leaders for cues to appropriate
behavior. Leaders demonstrate the organizations values and culture through their
behavior.
D.

How Leaders Allocate Rewards

Rewarding behavior that is consistent with the organizations values increases acceptance
of those values and the organizations culture. If leaders do not allocate rewards in a way
that reinforces espoused values, employees may become confused and frustrated.
E.

How Leaders Hire and Fire Individuals

Leaders often reinforce a desired organizational culture through the selection of new
employees whose value systems are similar to the organizations value system. Promoting
from within the organization also serves to reinforce the culture. Also, both the rationale
behind firing an employee and the manner in which the termination is carried out convey a
great deal about the organizations culture.
V.

ORGANIZATIONAL SOCIALIZATION
A.

The Stages of the Organizational Socialization Process

Organizational socialization is the process by which newcomers are transformed from

outsiders to participating, effective members of the organization. The movie The Firm
illustrates this concept particularly well, in that the socialization process for the new
lawyer is exaggerated to make a point, and occurs more quickly and aggressively than is
typical in most organizations.

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1.

Anticipatory Socialization

All of the learning about the organization that occurs before a newcomers first day
on the job is referred to as anticipatory socialization. Realism is the degree to
which the new person holds accurate expectations about the job and the
organization. Congruence refers both to the extent to which a newcomers abilities
match the demands of the job, and the extent to which the newcomers values
match the values of the organization.
2.

Encounter

The second socialization stage, in which the newcomer learns the organizational
tasks associated with the job, clarifies roles, and establishes relationships at work,
is known as encounter. Expectations formed in the anticipatory socialization stage
may clash with the realities of the job during this stage.
3.

Change and Acquisition

During the change and acquisition stage, newcomers begin to master the
demands of the job. The time span of the last stage varies greatly, but is complete
when the newcomer and others consider the newcomer an organizational insider.
B.

Outcomes of Socialization

Successful socialization of newcomers typically results in good performance, high job

satisfaction, and the intention to stay with the organization. Mutual influence also indicates
successful socialization.
C.

Socialization as Cultural Communication

The socialization process centers on the transmission of the organizations core values to
newcomers. Newcomers are exposed to these values through interaction with and
observation of role models, through training, and through the rewarding and punishing of
specific behaviors.
VI.

ASSESSING ORGANIZATIONAL CULTURE

Quantitative and qualitative techniques are both valuable approaches to assessing culture.
A.

Organizational Culture Inventory

Based on Maslow's need hierarchy, the Organizational Culture Inventory (OCI) measures
twelve cultural styles. It provides an assessment of culture at the individual level that can
be aggregated to the group level or organization level. The two dimensions of the OCI are
task/people and security/satisfaction.
B.

Kilmann-Saxton Culture-Gap Survey

This survey focuses on what actually happens and on the expectations of others in the
organization. It measures operating norms and ideal norms along the two dimensions of

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technical/human and time (short term versus long term). Results provided at the individual
level can be aggregated to the group level.
C.

Triangulation

Triangulation refers to the use of multiple methods to measure organizational culture.

Three commonly used methods include (1) obtrusive observations, (2) self-administered
questionnaires, and (3) personal interviews. This approach provides a more complete
picture than using any of the methods singularly would reveal.
VII.

CHANGING ORGANIZATIONAL CULTURE

Organizations need to periodically reassess their cultures as environmental changes occur due to
globalization, workforce diversity, and advances in technology. Mergers and acquisitions require
the blending of two organizational cultures, often a difficult process. Two basic approaches to
changing culture are (1) helping current organizational members buy into a new set of values, and
(2) adding newcomers and socializing them into the organization, and removing current members
as appropriate.
A.

Developing a Global Organizational Culture

Developing a global organizational culture requires that the values that drive an
organizations culture support a global view of the company and its efforts. Conflicting
pressures of centralization and decentralization add to the difficulty of creating such a
culture.
B.

Developing an Ethical Organizational Culture

An organizations culture can profoundly affect the ethical behavior of its employees.
Managers must behave in an ethical manner themselves, encourage ethical behavior from
their employees, and present ethical behavior as good business. Trust plays an important
role in any effort to develop an ethical organizational culture.
C.

VIII.
IX.

Developing a Culture of Empowerment and Quality

Empowerment requires trust between managers and supervisors and between supervisors
and employees. In an environment of trust, empowerment releases the creative energy of
employees and leads to increased productivity and higher quality products and services.
However, in order to develop a culture of empowerment, managers must be willing to let
go of traditional hierarchical notions of power.
MANAGERIAL IMPLICATIONS: THE ORGANIZATIONAL CULTURE
CHALLENGE
LOOKING BACK: How Enrons Culture Empowers People

CHAPTER SUMMARY

Organizational (corporate) culture is a pattern of basic assumptions that are considered valid
and that are taught to new members as the way to perceive, think, and feel in the organization.

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The most visible and accessible level of culture is artifacts, which include personal enactment,
ceremonies and rites, stories, rituals, and symbols.
Organizational culture has four functions: giving members a sense of identity and increasing
their commitment, serving as a sense-making device for members, reinforcing organizational
values, and serving as a control mechanism for shaping behavior.
Three theories about the relationship between culture and performance are the strong culture
perspective, the fit perspective, and the adaptation perspective.
Leaders shape and reinforce culture by what they pay attention to, how they react to crises,
how they behave, how they allocate rewards, and how they hire and fire individuals.
Organizational socialization is the process by which newcomers become participating,
effective members of the organization. Its three stages are anticipatory socialization,
encounter, and change and acquisition. Each stage plays a unique role in communicating
organizational culture.
The Organizational Culture Inventory and Kilmann-Saxton Culture-Gap Survey are two
quantitative instruments for assessing organizational culture. Triangulation, using multiple
methods for assessing culture, is an effective measurement strategy.
It is difficult but not impossible to change organizational culture. Managers can do so by
helping current members buy into a new set of values, by adding newcomers and socializing
them into the organization, and by removing current members as appropriate.

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REVIEW QUESTIONS: SUGGESTED ANSWERS

1. Explain the three levels of organizational culture. How can each level of culture be measured?
Artifacts are the most visible and accessible level of culture. Artifacts include personal enactment,
ceremonies and rites, stories, rituals, and symbols. Values are a deeper level of culture that reflects
underlying beliefs. Espoused values are communicated through written information and the
spoken comments of organizational leaders. Enacted values are evident in organizational
members behavior. Assumptions are deeply held beliefs that guide behavior and tell members of
an organization how to perceive and think about things. They are often held at a subconscious
level and are difficult to measure.
2. Describe five artifacts of culture and give an example of each.
Personal enactment: The President of the company volunteers at Habitat for Humanity.
Ceremonies and rites: Total quality teams present members with certificates at an elaborate
banquet to recognize their efforts in reducing errors.
Stories: Herb Kelleher first presented his idea for Southwest Airlines on the back of a napkin.
Rituals: At Texas A&M football games, all students remain standing throughout the game.
Symbols: Most universities have shields and/or emblems that serve as their logo and are printed
on transcripts, diplomas and letterhead paper.
3. Explain three theories about the relationship between organizational culture and
performance. What does the research evidence say about each one?
The strong culture theory says that deeply held and widely shared cultures perform best.
Research evidence provides modest support. The fit perspective says the culture should fit the
industry and the organizations strategy. Research evidence indicates that the fit
perspectivepredicts only short-term performance. The adaptation perspective says that flexible,
responsive cultures lead to long-term performance. Research evidence supports this perspective.
4. Contrast adaptive and nonadaptive cultures.
Adaptive cultures encourage risk taking and confidence among employees, while nonadaptive
cultures tend to reduce risk taking and are political and bureaucratic. Nonadaptive cultures are
inflexible to the changes necessary to respond to internal demands or environmental changes.
5. How can leaders shape organizational culture?
Employees emulate leaders behavior. They look for consistency between espoused values and
enacted behavior. Leaders can shape organizational culture by what they pay attention to, by how
they react to crisis situations, and by the way they reward, hire and fire organizational members.

6. Describe the three stages of organizational socialization. How is culture communicated in

each stage?
Anticipatory socialization is the set of information gathered before a newcomer actually joins the
organization. Culture is ascertained by hints in the interview process, contacts with current

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employees, and media channels. The second stage is the encounter stage, where a newcomer
learns his or her tasks and clarifies his or her role. In this stage, culture is communicated by
mentors, supervisors, and others who model behavior, as well as through policies, meetings,
memos, etc. In the last stage, change and acquisition, both the newcomer and others begin to
think of the newcomer as an insider. The individual is rewarded for displaying behavior that
reflects the values of the culture.
7. How can managers assess the organizational culture? What actions can they take to change
the organizational culture?
Sophisticated tools and techniques have been developed to assess organizational culture. The
Organizational Culture Inventory is a popular tool that diagnoses the fit between the organization
and the individual. The Kilmann-Saxton Culture-Gap, another popular tool, compares what
actually happens with the expectations of others in the organization. This instrument helps
pinpoint gaps in cultural change that affect performance, job satisfaction, and morale.
Triangulation includes three techniques that provide the most comprehensive view of the
organization when used in combination.
8. How does a manager know that cultural change has been successful?
Using the interventions for changing organizational culture presented in Figure 16.3, managers
can assess the extent to which employees buy into a new set of values rather than merely
complying with them.
9. What can managers do to develop a global organizational culture?
Managers can create a clear mission statement and share it with all individuals. Next, they need to
ensure that the flow of information is effective. They can broaden managers minds to allow them
to think globally. Global career paths ensure that a broad range of employees experience various
cultures. Tapping into the strengths of various cultures can enhance the products and services.
Finally, managers can implement worldwide management education and team- development
programs to help establish a shared identity among organizational members.

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DISCUSSION AND COMMUNICATION QUESTIONS: SUGGESTED ANSWERS

1. Name a company with a visible organizational culture. What do you think are the companys
values? Has the culture contributed to the organization's performance? Explain.
If students have difficulty discussing a specific company, it is useful to highlight a type of
environment with which most can identify. The medical field provides very recognizable examples
of culture. The medical field is monitored through self-accreditation and maintenance. Peers
scrutinize the quality of their ranks, leading to a highly competitive and highly independent form
of organization. Hospitals have little control over physicians, yet a great deal of joint sponsorship
of goals. This shared responsibility and lack of authority leads to a very decentralized organization
that lacks commitment to the organization from the colleagues. Loyalty is directed primarily
toward the profession rather than the organization.
2. Name a leader you think manages organizational culture well. How does the leader do this?
Use Scheins description of how leaders reinforce culture to analyze the leaders behavior.
Most students will mention famous people initially. The problem with responding with high
visibility individuals is that they may not be able to discuss the specifics of how these individuals
reinforce culture. The textbook examples are some of the better examples. It is also interesting to
discuss managers who may not be particularly adept at managing culture.
3. Suppose you want to change your organizations culture. What sort of resistance would you
expect from employees? How would you deal with this resistance?
Change is inevitable in all organizations, as is resistance to change. Even those individuals who
advocate change will experience some anxiety as the organizations culture changes. Typically,
individuals who have been with an organization longer have some commitment and investment to
the "way things are". These individuals should be centrally involved in planning and implementing
changes.
4. Given Scheins three levels, can we ever truly understand an organization's culture? Explain.
Artifacts, such as ceremonies and rituals, are obvious most of the time. Values are less obvious
and assumptions may be very difficult to uncover. Values and assumptions become very important
when they are challenged or when a crisis forces the organization to take decisive action.
5. To what extent is culture manageable? Changeable?
Culture is very difficult to change, and it does not happen quickly. However, culture can be
changed if there is a conscious effort to assess the existing culture to determine what needs to be
altered. Accomplishing change may require hiring new members into the organization.
6. Select an organization that you might like to work for. Learn as much as you can about that
companys culture, using library resources, online sources, contacts within the company, and as
many creative means as you can. Prepare a brief presentation to the class summarizing the
culture.

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This exercise is excellent to assist in preparing students for the job search process. It gives them
practice at researching an organization and allows them to learn about a variety of companies
through their classmates presentations.
ETHICS QUESTIONS: SUGGESTED ANSWERS
1. Are rites of degradation ethical?
No. Students' examples will have varying degrees of severity. Bans on hazing practices can
stimulate interesting conversations.
2. Is it ethical to influence individuals values through the organizational culture? If culture
shapes behavior, is managing culture a manipulative tactic? Explain.
When organizations suppress individuality, they are probably engaging in manipulation of
employees. Do students see the issue differently when they consider organizations such as an all
womens college, a male barbershop quartet, or a Hispanic club?
3. How can leaders use organizational culture as a vehicle for encouraging ethical behavior?
When organizational leaders respond to ethical issues in visible ways that reflect ethical behavior,
they reinforce ethical behavior in their organizations. Leaders can also promote ethical behavior as
a good business practice that leads to congruence with society as a whole.
4. Korean chaebols hire individuals to fit their cultures. To what extent might this practice be
considered unethical in the United States?
Such a practice might hinder equal employment opportunities for women and minorities in the
United States. Dismissal of employees who do not fit the culture may result in legal actions
against the organization on the basis of discrimination. Alternatively, organizations can and do
attempt to hire individuals whose values match their own in order to sustain a certain
organizational culture and/or image.
5. One way of changing culture is to remove members who do not change with the culture. How
can this be done ethically?
Performance standards that reflect the new desired behaviors can be used to assess members
contributions to the organization. When failure to change negatively affects job performance,
members with substandard performance can be removed.
CHALLENGES
16.1 ANALYZING THE THREE LEVELS OF CULTURE
Encouraging students to discuss examples from this challenge in the classroom can really bring the
concepts alive for them. Another option would be to have the whole class evaluate the artifacts in
the universitys environment.
16.2 ORGANIZATIONAL CULTURE AND ETHICS

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This challenge integrates the material on ethics with the information on organizational culture.
Students could also be asked to evaluate the ethical climate of the university. This would provide
a common experience to generate class discussion on the influence an organizations culture has
on the ethical behavior of its members.

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EXPERIENTIAL EXERCISES
16.1 IDENTIFYING BEHAVIORAL NORMS
Instructor's Notes:
Students enjoy this exercise. There are sometimes very different norms for the international
students than for the dominant culture students. Some students will have a hard time remembering
the socialization process they lumbered through as freshmen. It is worth noting that transfer
students have a different socialization process than most students. Another interesting response
usually follows if you ask students how their campus culture differs from other universities.
16.2 CONTRASTING ORGANIZATIONAL CULTURES
Instructor's Notes:
Unless impression management issues are involved, it is usually better to have students get factual
information about the organizations that are on the list. It is also worthwhile to allow students to
select an organization that is not on the list, particularly if they are interested in non-profit
organizations.

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ALTERNATIVE EXPERIENTIAL EXERCISE

THE HEADBAND ACTIVITY
Advancement Strategies, Pfeiffer, 1992
1. In advance, write labels on headbands that reflect areas of difference relevance to the group.
Suggested labels include the following: Single parent, highly educated, gay, physically
handicapped, learning disabled, over sixty, under twenty-five, HIV positive, Native American,
African American, Jewish, Puerto Rican, Mexican American, Chicano, Chinese American,
African, and West Indian.
2. Ask students to form circles containing no more than ten members. Hand each participant a
headband and ask him or her to tie it across his or her forehead without reading what is
written on it. (Members can clearly see on another's labels but not their own.) If you prefer,
it works well with nametags.
3. Give the small groups this decision-making task to perform: "Role play an employee group
charged with the responsibility of determining merit increases for its members. The problem is
that all but three members can receive increases this year. The other members must wait until
next year and try again."
4. Tell the group they have only 20 minutes to decide and the decision must be unanimous.
Instruct participants not to share with another person what label he or she is wearing but to
treat one another as they would treat people of the labeled group.
5. Process the activity initially by asking each participant to guess what his or her headband said
and to discuss how he or she discerned the label.
6. Post on a flip chart the following discussion generators and invite the class to share responses
with one another:

How did it feel to wear a label? Would it have felt better if you had known what it said or if
you had been able to choose another label?
Did you treat others according to their labels? Why? Why not? Did you find that your
behavior changed over the course of the activity? What factors influenced your behavior?
Did you feel empowered or disempowered by your role? Why?

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EXTRA EXPERIENTIAL EXERCISES

The following alternative exercises to supplement the material in the textbook can be obtained
from:
Marcic, Dorothy, Seltzer, Joseph, & Vaill, Peter. Organizational Behavior: Experiences and
Cases, 6th Ed. South Western College Publishing Company, 2001.
Organizational Culture Assessment. p. 213-218. Time: 45 minutes in class.
Purpose: To identify organizational norms and to identify campus norms students hold in
common.
Decisions at R.J.P.&B. Advertising. p. 219-220. Time: 50 minutes.
Purpose: To discuss the impacts of downsizing and physical settings on organizational
culture.
Fandt, Patricia M. Management Skills: Practice and Experience. West Publishing Company,
1994.
In-Basket Exercise2: Establishing Priorities. p. 281.
In-Basket Exercise 3: Developing Work Strategies. p. 283.
CASE QUESTIONS: SUGGESTED ANSWERS
PATAGONIAS CULTURE
1. Explain Patagonias culture using the levels of organizational culture model that is presented
in Figure 16.1.
Three levels of organizational culture are identified in Figure 16.1: artifacts, values, and basic
assumptions.
Artifacts refer to the visible symbols of culture, including personal enactment, ceremonies and
rites, stories, rituals, and symbols. Personal enactment is the artifact that is most evident in the
case. Personal enactment is behavior that reflects the organizations values. The three
Patagoniacs mentioned in the case engage in behavior that reflects commitments to people and
to the environment and both are core values of the organization.
Values reflect peoples underlying beliefs of what should or should not be. Key values for
members of the Patagonia organization include a love of the outdoors; being passionately
committed to quality, to people, and to the environment; and the desire to make a difference.
Additionally, espoused values and enacted values are highly consistent at Patagonia.
Assumptions are the deeply held beliefs that guide behavior and tell members how to perceive
and think about things. Patgonias values suggest that the underlying assumptions pertain to
an unbridled appreciation for the natural environment and concern about preserving it and to
the importance of people pursuing their respective passions. The underlying assumptions are
also reflected in the following statement from Patagonia officials: We prefer the human scale

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to the corporate, vagabonding to tourism, the quirky and lively to the toned down and
flattened out.
2. Using the concept of a strong culture, explain the nature of Patagonias culture.
A strong culture refers to one where there is consensus on the organizations core values,
where organization members are highly committed to those values, and where there is
substantial resistance to change regarding those values. Consensus on and commitment to the
organizations core values are evident in the Patagoniacs shared characteristics, which reflect
the companys core values of loving the outdoors; being passionately committed to quality, to
people, and to the environment; and desiring to make a difference. While not stated directly,
substantial resistance to change in Patagonias core values can be very easily implied from the
case facts.
3. Can Patagonias culture be described as an ethical organizational culture? Explain your
answer.
An ethical organizational culture is one with norms that promote ethical behavior that is,
doing what is right, fair, and just. Students should be encouraged to interpret the different
elements of the case in terms of doing what is right, fair, and just. In particular, they can cite
Patagonias commitment to people, quality, and the natural environment as evidence of an
ethical organizational culture.