ORGANIZATIONAL CULTURE

,DIMENSIONS AND LAYERS OF

ORGANIZATIONAL CULTURE
What Is Organizational Culture?

◻ Organizational culture refers to a system of shared

assumptions, values, and beliefs that show employees
what is appropriate and inappropriate behavior
◻ These values have a strong influence on employee
behavior as well as organizational performance.
◻ In fact, the term organizational culture was made
popular in the 1980s when Peters and Waterman’s
best-selling book In Search of Excellence made the
argument that company success could be attributed to
an organizational culture that was decisive, customer
oriented, empowering, and people oriented.
◻ Culture is by and large invisible to individuals.
Even though it affects all employee behaviors,
thinking, and behavioral patterns, individuals tend
to become more aware of their organization’s
culture when they have the opportunity to compare
it to other organizations
Why Does Organizational Culture
Matter?
◻ An organization’s culture may be one of its strongest
assets, as well as its biggest liability. In fact, it has
been argued that organizations that have a rare
and hard-to-imitate organizational culture benefit
from it as a competitive advantage.
◻ In a survey conducted by the management consulting
firm Bain & Company in 2007, worldwide business
leaders identified corporate culture as important as
corporate strategy for business success.
◻ Culture, or shared values within the organization, may
be related to increased performance. Researchers
found a relationship between organizational
cultures and company performance, with respect to
success indicators such as revenues, sales volume,
market share, and stock prices.
◻ Organizational culture is an effective control
mechanism for dictating employee behavior. Culture
is in fact a more powerful way of controlling and
managing employee behaviors than organizational
rules and regulations. When problems are unique,
rules tend to be less helpful.
Levels of Organizational Culture

◻ Organizational culture consists of some aspects that

are relatively more visible, as well as aspects that
may lie below one’s conscious awareness.
Organizational culture can be thought of as
consisting of three interrelated levels. Edgar Schein
Organizational culture consists of three
levels
◻ At the deepest level, below our awareness lie
basic assumptions. Assumptions are taken for
granted, and they reflect beliefs about human
nature and reality.
◻ At the second level, values exist. Values are shared
principles, standards, and goals.
◻ Finally, at the surface we have artifacts, or visible,
tangible aspects of organizational culture.
◻ For example, in an organization one of the basic
assumptions employees and managers share might
be that happy employees benefit their
organizations. This assumption could translate into
values such as social equality, high quality
relationships, and having fun. The artifacts reflecting
such values might be an executive “open door”
policy, an office layout that includes open spaces
and gathering areas equipped with pool tables,
and frequent company picnics in the workplace.
KEY TAKEAWAY

◻ Organizational culture is a system of shared

assumptions, values, and beliefs that help individuals
within an organization understand which behaviors
are and are not appropriate within an
organization. Cultures can be a source of
competitive advantage for organizations. Strong
organizational cultures can be an organizing as well
as a controlling mechanism for organizations. And
finally, organizational culture consists of three levels:
assumptions, which are below the surface, values,
and artifacts.
Dimensions of Culture
Innovative Cultures

◻ Companies that have innovative cultures are flexible

and adaptable, and experiment with new ideas.
These companies are characterized by a flat
hierarchy in which titles and other status distinctions
tend to be downplayed.
◻ In this company, employees do not have bosses in
the traditional sense, and risk taking is encouraged
by celebrating failures as well as successes.
Aggressive Cultures

◻ Companies with aggressive cultures value

competitiveness and outperforming competitors: By
emphasizing this, they may fall short in the area of
corporate social responsibility
◻ For example, Microsoft Corporation is often
identified as a company with an aggressive culture.
The company has faced a number of antitrust
lawsuits and disputes with competitors over the
years. In aggressive companies, people may use
language such as “We will kill our competition.”
Outcome-Oriented Cultures

◻ Outcome-oriented cultures as those that emphasize

achievement, results, and action as important values
◻ Employees are trained and mentored to sell
company products effectively, and they learn how
much money their department made every day
◻ Research indicates that organizations that have a
performance-oriented culture tend to outperform
companies that are lacking such a culture.
◻ At the same time, some outcome-oriented companies
may have such a high drive for outcomes and
measurable performance objectives that they may suffer
negative consequences
◻ When performance pressures lead to a culture where
unethical behaviors become the norm, individuals see
their peers as rivals and short-term results are
rewarded; the resulting unhealthy work environment
serves as a liability.
Stable Cultures

◻ Stable cultures are predictable, rule-oriented, and

bureaucratic. These organizations aim to coordinate and
align individual effort for greatest levels of efficiency.
When the environment is stable and certain, these
cultures may help the organization be effective by
providing stable and constant levels of output.
◻ These cultures prevent quick action, and as a result may
be a misfit to a changing and dynamic environment.
Public sector institutions may be viewed as stable
cultures.
People-Oriented Cultures

◻ People-oriented cultures value fairness, supportiveness,

and respect for individual rights. These organizations
truly live the mantra that “people are their greatest
asset.”
◻ In addition to having fair procedures and management
styles, these companies create an atmosphere where
work is fun and employees do not feel required to
choose between work and other aspects of their lives. In
these organizations, there is a greater emphasis on and
expectation of treating people with respect and dignity.
◻ Starbucks Corporation is an example of a
people-oriented culture. The company pays
employees above minimum wage, offers health care
and tuition reimbursement benefits to its part-time
as well as full-time employees, and has creative
perks such as weekly free coffee for all associates.
Team-Oriented Cultures

◻ Companies with team-oriented cultures are

collaborative and emphasize cooperation among
employees.
◻ For example, Southwest Airlines Company facilitates
a team-oriented culture by cross-training its
employees so that they are capable of helping
each other when needed. The company also places
emphasis on training intact work teams.
Detail-Oriented Cultures

◻ Organizations with detail-oriented cultures are

characterized in the OCP framework as
emphasizing precision and paying attention to
details. Such a culture gives a competitive
advantage to companies in the hospitality industry
by helping them differentiate themselves from
others.
Do Organizations Have a Single
Culture?
◻ So far, we have assumed that a company has a single culture that is
shared throughout the organization. However, you may have
realized that this is an oversimplification. In reality there might be
multiple cultures within any given organization.
◻ For example, people working on the sales floor may experience a
different culture from that experienced by people working in the
warehouse. A culture that emerges within different departments,
branches, or geographic locations is called a subculture. Subcultures
may arise from the personal characteristics of employees and
managers, as well as the different conditions under which work is
performed. Within the same organization, marketing and
manufacturing departments often have different cultures such that
the marketing department may emphasize innovativeness, whereas
the manufacturing department may have a shared emphasis on
detail orientation.
EXERCISES
◻ Why do companies need culture?
◻ Give an example of an aspect of company culture
that is a strength and one that is a weakness.
◻ Out of the culture dimensions described, which
dimension do you think would lead to higher levels
of employee satisfaction and retention? Which one
would be related to company performance?