Topic 13:

Organizational Culture

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 Learning Objectives
After studying this chapter, you should be able to:
Define organizational culture and describe the
common characteristics of organizational culture.
Compare the functional and dysfunctional effects of
organizational culture on people and the organization.
Identify the factors that create and sustain an
organization’s culture.
Show how culture is transmitted to employees.
Demonstrate how an ethical culture can be created.

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LO 1
Organizational Culture

A Definition of Organizational Culture

 Organizational culture refers to a system of
shared meaning held by members that
distinguishes the organization from other
organizations.

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LO 1 Characteristics of
Organizational Culture
Seven primary characteristics that capture the
essence of an organization’s culture:
1. Innovation and risk taking
2. Attention to detail
3. Outcome orientation
4. People orientation
5. Team orientation
6. Aggressiveness
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7. Stability
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LO 1 Characteristics of
Organizational Culture
Some research has conceptualized culture into four
different types based on competing values:
1. The collaborative and cohesive clan.
2. The innovative and adaptable adhocracy.
3. The controlled and consistent hierarchy.
4. The competitive and customer focused market.

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LO 1 Characteristics of
Organizational Culture
Culture as a Descriptive Term
 Organizational culture is concerned with
employees’ perceptions of the characteristics of
the culture, not whether they like them.
Does it encourage teamwork?
Does it reward innovation?
Does it stifle initiative?
 It differs from job satisfaction :
Job satisfaction is evaluative.
Organizational culture is descriptive. 16-6

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LO 1 Characteristics of
Organizational Culture
Do Organizations Have Uniform Cultures?
 Most organizations have a dominant culture and
numerous sets of subcultures.
 The dominant culture expresses the core values
a majority of members share and that give the
organization distinct personality.
Subcultures tend to develop in large
organizations to reflect common problems,
situations, or experiences that members face.
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LO 1 Characteristics of
Organizational Culture
Strong versus Weak Cultures
 Strong culture – core values are intensely held
and widely shared.
Culture versus Formalization
 High formalization creates predictability,
orderliness, and consistency.
 Formalization and culture are two different
roads to the same destination.
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LO 2 Functional and Dysfunctional Effects
of Organizational Culture

 The Functions of Culture

 Boundary-defining role.
 Conveys a sense of identity for members.
 Facilitates the generation of commitment.
 Enhances the stability of the social system.
 Serves as a sense-making and control
mechanism.
 Defines the rules of the game.
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LO 2 Functional and Dysfunctional Effects
of Organizational Culture

The trend toward decentralized organizations makes

culture more important than ever, but also makes
establishing a strong culture more difficult.
Individual-organization “fit”— 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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LO 2 Functional and Dysfunctional Effects
of Organizational Culture

Culture Creates Climate

 Organizational climate is shared perceptions
about the organization and work environment.
Team spirit at the organizational level.
 Climates can interact with one another to
produce behavior.
 Climate also influences the habits people adopt.

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LO 2 Functional and Dysfunctional Effects
of Organizational Culture
The Ethical Dimension of Culture
 Organizational cultures are not neutral in their
ethical orientation, even when they are not
openly pursuing ethical goals.
Over time, the ethical work climate (EWC), or
the shared concept of right and wrong behavior
in that workplace, develops as part of the
organizational climate.
 The ethical climate reflects the true values of the
organization and shapes the ethical decision
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making of its members.
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LO 2 Functional and Dysfunctional Effects
of Organizational Culture

Studies of ethical climates and workplace outcomes

suggest that some climate categories are likely to be
found in certain organizations.
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.

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LO 2 Functional and Dysfunctional Effects
of Organizational Culture

Culture and Innovation

 The most innovative companies have open,
unconventional, collaborative, vision-driven, and
accelerating cultures.
 Startup firms often have innovative cultures.
They are usually small, agile, and focused on
solving problems in order to survive and grow.

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LO 2 Functional and Dysfunctional Effects
of Organizational Culture

Culture as an Asset
 Culture can significantly contribute to an
organization’s bottom line in many ways.
 There are many more cases of business success
stories because of excellent organizational
cultures than there are of success stories despite
bad cultures, and almost no success stories
because of bad ones.
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LO 2 Functional and Dysfunctional Effects
of Organizational Culture

Culture as a Liability
 Institutionalization
 Barriers to Change
 Barriers to Diversity
 Barriers to Acquisitions and Mergers

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LO 3 Create and Sustain
an Organization’s Culture
How a Culture Begins
 Ultimate source of an organization’s culture is its
founders.
 Founders have the vision of what the
organization should be.
Unconstrained by previous ideologies or
customs.
 New organizations are typically small, which
facilitates the founders’ imparting of their vision 16-17
on all organizational members.
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LO 3 Create and Sustain
an Organization’s Culture
Culture creation occurs in three ways:
1. Founders hire employees who think and feel the
way they do.
2. Employees are indoctrinated and socialized into
the founders’ way of thinking.
3. Founders’ own behavior encourages employees
to identify with them and internalize their
beliefs, values, and assumptions.
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LO 3 Create and Sustain
an Organization’s Culture
Keeping a Culture Alive
 Selection
Identify and hire individuals with the
knowledge, skills, and abilities to perform
successfully.
Two-way street.
 Top Management
Establish norms of behavior.
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LO 3 Create and Sustain
an Organization’s Culture

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LO 3 Create and Sustain
an Organization’s Culture

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LO 4 How Culture Is
Transmitted to Employees
How Employees Learn Culture
 Culture is transmitted to employees through:
Stories
Rituals
Symbols
Language

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LO 5 How An Ethical Culture
Can Be Created
The organizational culture most likely to promote
high ethical standards is:
 High in risk tolerance.
 Low to moderate in aggressiveness.
 Focused on means as well as outcomes.
Managers are:
 Supported for taking risks and innovating.
 Discouraged from unbridled competition.
 Guided to heed not just to what goal is achieved
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but also how.
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LO 5 How An Ethical Culture
Can Be Created
How can management create a more ethical culture?
 Be a visible role model.
 Communicate ethical expectations.
 Provide ethics training.
 Visibly reward ethical acts and punish unethical
ones.
 Provide protective mechanisms.

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LO 5
Positive
Organizational Culture
There is a trend today for organizations to attempt
to create a positive organizational culture:
 Emphasizes building on employee strengths.
 Rewards more than it punishes.
 Emphasizes individual vitality growth.
Positive culture is not a cure-all.

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Implications for Managers

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 Implications for Managers
Realize that an organization’s culture is relatively
fixed in the short term. To effect 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.
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
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to their job roles.
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 Implications for Managers
As a manager, you can shape the culture of your
work environment, sometimes as much as it shapes
you. 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.
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. 16-28

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