Organization Culture

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CHAPTER EIGHTEEN Organization Culture Copyright © Houghton Mifflin Company. All rights reserved. Learning Objectives • Define organization culture, explain how it affects employee behavior, and understand its historical roots • Describe how to create organization culture • Describe two different approaches to culture in organizations • Identify emerging issues in organization culture • Discuss the important elements of managing the organizational culture Copyright © Houghton Mifflin Company. All rights reserved. 18 | 2 The Nature of Organization Culture • Organizational Culture Defined – Culture is some set of values held by individuals in a firm that help employees understand acceptability of actions – Culture values often are taken for granted • They are not made explicit in a manual or training program – Communication of values is done through symbolic means Copyright © Houghton Mifflin Company. All rights reserved. 18 | 3 Table 18.1 Definitions of Organization Culture Copyright © Houghton Mifflin Company. All rights reserved. 18 | 4 The Nature of Organization Culture • Historical Foundations – Anthropology: Study of human cultures – Sociology: Study of people in social systems – Social Psychology: Study of groups and the influence of social factors on individuals – Economics: Study of creating economic advantage Copyright © Houghton Mifflin Company. All rights reserved. 18 | 5 The Nature of Organization Culture • Culture versus Climate – Organization culture: Refers to historical context within which a situation occurs and the impact of this context on the behaviors of employees • Difficult to alter in the short-run • Means through which people in the organization learn/communicate organization acceptability (values/norms) Copyright © Houghton Mifflin Company. All rights reserved. 18 | 6 The Nature of Organization Culture • Culture versus Climate – Organization climate: Refers to current situations in an organization and the linkages among work groups, employees, and work performance • Easier for management to manipulate in order to directly affect the behavior of employees Copyright © Houghton Mifflin Company. All rights reserved. 18 | 7 Creating the Organization Culture • Process of Creating an Organization: Culture-Linking Strategic-Cultural Values – Steps in Creating Organization Culture 1. 2. 3. 4. 5. Formulate strategic values Develop cultural values Create vision Initiate implementation strategies Reinforce cultural behaviors Copyright © Houghton Mifflin Company. All rights reserved. 18 | 8 Approaches to Describing Organization Culture • The Ouchi Framework*- William G. Ouchi – Analyzed Three Types of Firms • Typical U.S. firms • Typical Japanese firms • Type Z U.S. firms * William G. Ouchi, Theory Z: How American Business Can Meet the Japanese Challenge (Reading, MA: Addison-Wesley, 1981). Copyright © Houghton Mifflin Company. All rights reserved. 18 | 9 Approaches to Describing Organization Culture • The Ouchi Framework: William G. Ouchi • Type Z U.S. firms – Committed to retaining employees – Evaluate workers’ performance based on qualitative and quantitative information – Emphasize broad career paths – Exercise control through informal/implicit mechanisms – Require that decision making occur in groups – Are committed to full information-sharing – Expect individuals to take responsibility for decisions – Emphasize concern for people Copyright © Houghton Mifflin Company. All rights reserved. 18 | 10 Table 18.3 The Ouchi Framework Copyright © Houghton Mifflin Company. All rights reserved. 18 | 11 Approaches to Describing Organization Culture • The Peters-Waterman* Approach – Attributes of an Excellent Firm • • • • • • • • Bias for action Stay close to the customer Autonomy and entrepreneurship Productivity through people Hands-on management Stick to the knitting Simple form, lean staff Simultaneously loose and tight organization *Thomas J. Peters and Robert H. Waterman Jr., In Search of Excellence: Lessons from America’s Best-Run Companies (New York: Harper & Row, 1982). Copyright © Houghton Mifflin Company. All rights reserved. 18 | 12 Emerging Issues in Organization Culture • Innovation: The process of creating and doing new things that are introduced into the marketplace as products, processes, or services – Types • Radical innovation • New ventures • Corporate research Copyright © Houghton Mifflin Company. All rights reserved. 18 | 13 Emerging Issues in Organization Culture • Innovation (cont.) • Radical innovation – Major breakthroughs that change or create whole industries – Systems innovation: Creates a new functionality by assembling parts in new ways – Incremental innovation: Continues the technical improvement and extends the applications of radical and systems innovations Copyright © Houghton Mifflin Company. All rights reserved. 18 | 14 Emerging Issues in Organization Culture • Innovation (cont.) • Radical innovation • New ventures – Require entrepreneurship and good management – Intrapreneurship: Entrepreneurial activity that takes place within the context of a large organization – Entrepreneur’s profile • Needs achievement • Desires to assume responsibility • Willing to take risks • Focuses on concrete results Copyright © Houghton Mifflin Company. All rights reserved. 18 | 15 Emerging Issues in Organization Culture • Innovation (cont.) • Radical innovation • New ventures • Corporate research – Supports existing businesses to provide incremental innovations and to explore potential new technology bases – Responsible for keeping the company’s products/ processes technologically advanced – Corporate culture can be instrumental in fostering environment for creativity and innovation Copyright © Houghton Mifflin Company. All rights reserved. 18 | 16 Emerging Issues in Organization Culture • Empowerment – The process of enabling workers to set their own work goals, make decisions, solve problems within their sphere of responsibility and authority Copyright © Houghton Mifflin Company. All rights reserved. 18 | 17 Emerging Issues in Organization Culture • Appropriate Cultures – Goffee and Jones*: The nature of the value chain and the dynamism of the environment are two factors that may determine what type of culture is appropriate for a particular organization *Rob Goffee and Gareth Jones, “Organizational Culture,” in Organization 21C: Someday All Organizations Will Lead This Way , et. Subir Chowdhury (Upper Saddle River, NJ: Financial Times-Prentice Hall, 2003), pp. 273-290. Copyright © Houghton Mifflin Company. All rights reserved. 18 | 18 Managing Organization Culture • Elements of Managing Organization Culture – Taking advantage of the existing culture – Teaching organization culture – Changing the organization culture Source: © Royalty Free/Triangle Images/ Getty Images Copyright © Houghton Mifflin Company. All rights reserved. 18 | 19 Managing Organization Culture • Elements of Managing Organization Culture – Taking advantage of the existing culture • Easier/faster to alter employee behaviors within the existing culture than it is to change existing history/traditions/values • Managers must be aware/understand the organization’s values • Managers can communicate their understanding to lowerlevel individuals Copyright © Houghton Mifflin Company. All rights reserved. 18 | 20 Managing Organization Culture • Elements of Managing Organization Culture – Taking advantage of the existing culture – Teaching organization culture • Organizational socialization: Process through which employees learn about the firm’s culture and pass their knowledge/understanding on to others • Organizational mechanisms: – Examples employees see in experienced people’s behavior – Corporate pamphlets and formal training sessions Copyright © Houghton Mifflin Company. All rights reserved. 18 | 21 Managing Organization Culture • Elements of Managing Organization Culture – Taking advantage of the existing culture – Teaching organization culture – Changing the organization culture • Managing symbols: Substitute stories/myths that support new cultural values for those that support old ones • The difficulty of change – Upper management inadvertently reverts to old behavior • The stability of change – New values/beliefs are as stable/influential as old ones – Value systems tend to be self-reinforcing – Changing value systems requires enormous effort Copyright © Houghton Mifflin Company. All rights reserved. 18 | 22