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Chapter 13

Chapter 13. Organizational Culture. Building a Constructive Organizational Culture. Organizational culture consists of values, symbols, stories, heroes, and rites that have special meaning for a company’s employees.

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Chapter 13

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  1. Chapter 13 Organizational Culture

  2. Building a ConstructiveOrganizational Culture • Organizational culture consists of values, symbols, stories, heroes, and rites that have special meaning for a company’s employees. • Culture represents the emotional, intangible part of the organization. If structure is the organization’s skeleton, culture is its soul. • Many firms are trying to develop cultures that will motivate their employees and keep them committed to the firm. • 47% of 400 CEOs in North America and Europe said that reshaping culture and related employee behavior took up a great deal of their time and was as important as monitoring financial information. • A recent study of 200 mergers found incompatible cultures to be the primary cause of failures.

  3. JUSTIFICATION OF BEHAVIOR ENHANCED COOPERATION ENCOURAGE SHARED PERCEPTIONS ENHANCED COMMITMENT IMPROVED DECISION MAKING IMPROVED COMMUNICATION ENHANCED CONTROL Functions of Organizational Culture(Figure 13-1) CULTURE

  4. Rituals Values Rites Symbols Heroes Narratives Elements of Organizational Culture Organizational Culture

  5. HARRY QUADRACCI Focus on Management:Organizational Culture at Quad/Graphics • Selected as one of the “100 Best Companies to Work for in America,”Quad/Graphics is a remarkable success story. • The company’s philosophy is “Have fun, make money, and don’t do business with anyone you don’t like.” • The late Harry Quadracci, who has been called the P. T. Barnum of Printing, described the company as a circus, a continuous performance of highly creative and individualistic troupes. • Employees at Quad/Graphics are empowered, don’t sign time cards, are continually learning, and receive a variety of unique benefits.

  6. Organizational Values Organizational values are beliefs held by an individual or group that speak to the actions and ends that organizations “ought to” or “should” pursue.

  7. The Importance of Values “Every excellent company we studied is clear on what it stands for, and takes the process of value shaping seriously. In fact, we wonder whether it is possible to be an excellent company without clarity on values and without having the right sorts of values.” Peters & Waterman, In Search of Excellence

  8. Focus on Management: Values at Hewlett-Packard The HP Way: • We have trust and respect for individuals • We focus on a high level of achievement and contribution • We conduct our business with uncompromising integrity • We achieve our common objectives through teamwork • We encourage flexibility and innovation

  9. Symbols • Symbols are things that stand for or suggest something else. • As examples: • office assignments signal status • dress codes suggest the level of formality • logos can influence customer and employee perceptions • an action can be symbolic, as in the case of the “Lambeau Leap”

  10. A PHYSICAL OBJECT A UNIFORM A MASCOT AN ACTION Some Forms of Symbols

  11. Web Wise: The Land O’Lakes Logo • The importance of company symbols to those outside the firm is seen in a study of customers’ ratings of 47 firms on things such as quality and reputation. • 600 customers were asked to rate the firms on the basis of their names, and another 600 were also provided with the company logo. • The logo had a strong influence on ratings. For example, Motorola’s score rose by 55%. • Land O’Lakes’ kneeling native American woman logo dropped the company’s rating by 12%. • http://www.landolakes.com/new/ourCompany/LandOLakesHistory.cfm

  12. Forms of Narratives • Stories dramatize relatively ordinary, everyday events within organizations in order to convey important cultural meanings. • Legends are more uplifting than stories and portray events that defy explanation by ordinary circumstances. • Myths are dramatic, unquestioned narratives about imagined events. • Sagas describe heroic exploits performed in the face of adversity.

  13. Recurring Story Themes • Equality. These recognize that members must deal with status inequalities in organizations. • Security. These recognize that members desire security, but that organizations can threaten their security. • Control. These recognize tensions between members’ desire to control events and their realization that they can’t always do so.

  14. Focus on Management:Stories at 3M • The importance of innovation as a 3M value is supported by a story often repeated throughout the firm concerning transparent tape. • According to the story, an employee accidentally developed cellophane tape but was unable to get superiors to accept the idea. • The employee was able to sneak into the corporate boardroom and tape down the board members’ copies of the minutes with the transparent tape. • The board was impressed enough with the novelty to give it a try, and the product was incredibly successful. • The story reinforces the importance of innovation and encourages 3M employees who believe in their ideas to never take no as a final answer.

  15. Heroes • Heroes are company role models. In their performance of deeds, embodiment of character, and support of the existing organizational culture, they highlight the values a company wishes to reinforce. • Heroes are the main characters in the stories relayed throughout an organization.

  16. Rites • Rites combine cultural forms into a public performance. • Some forms of rites include: • Rites of Passage (completion of Army basic training) • Rites of Enhancement (awards ceremony) • Rites of Integration (company Christmas party)

  17. Rituals • Rituals are relatively simple combinations of repetitive behaviors, often carried out without much thought, and often brief in duration. • For example: • how members greet one another • how visitors are met at airports • who eats where and with whom • how a phone conversation should proceed • Rituals are often more important for their expressive, emotional consequences than for more practical reasons

  18. Focus on Management: Herb Kelleherof Southwest Airlines • Herb Kelleher is cofounder, chairman of the board, and former CEO of Southwest Airlines. • Under Kelleher’s guidance, Southwest has been remarkably successful. It has been profitable every year since 1973 yet maintains the lowest fares. It is the safest airline in the world and ranks number one in the industry for service, on-time performance, and lowest employee turnover rate. • Fortune magazine named it the most admired airline and best place to work in the United States. • Kelleher has created a unique culture at Southwest Airlines through a mix of humor, altruism, concern for others, and straight talk.

  19. Focus on Management:Culture at Walt Disney Company • Employees -- primarily high school and college students -- are critical to Disney’s success. • Employees must convey the Disney fantasy and create happiness while carrying out repetitive work at low pay. • Disney is heavily unionized, with 24 unions at Disneyland alone. • To deal with this, Disney pays close attention to organizational culture.

  20. Focus on Management:Culture atWalt Disney Company (Continued) • Selection. Disney’s clean-cut and conservative image attracts the kind of employees it wants. A film shows prospective employees the sort of discipline, grooming, and dress code the company demands. • Socialization. Cast members participate in an ongoing program that continually reinforces Disney’s values, philosophies, and guest service standards. • Language. Employees are “cast members” and they are “cast” in “roles.” Cast members work “onstage” or “backstage” and they wear “uniforms.” • Ceremonies. Service recognition awards, peer recognition awards, banquets, and informal recognition parties help boost morale.

  21. Web Wise: Harley Owners Group (HOG) A good example of rites of integration is the “meetings” of Harley-Davidson’s HOG (Harley-Owners Group) chapters, where “the bond is metal” as hundreds of Harley riders hit the road together to help out worthy causes of just “share the awareness.” http://www.harley-davidson.com/selector.asp?hog=true

  22. Some Guidelines for Assessing Organizational Culture • Look around -- what do the headquarters and other buildings look like? How are people dressed? How much interaction is there? Who is talking with whom? How does the place “feel”? • Ask to see newsletters and other internal documents. What values are emphasized? Who are the “heroes” held up for praise? Are parties, celebrations, or other ceremonies mentioned? What sorts of things are discussed? • Look at annual reports or other communications to those outside the firm. What “face” is being presented to the world?

  23. Guidelines for Assessing Organizational Culture (Cont.) • Ask, “Can you tell me anything about what the culture is like here? Are there stories that people here tell about X?” • Ask, “What values are stressed in X? How are they communicated? How are they reinforced?” • Ask, “Who is looked up to in X?” • See what you can learn about rites and ceremonies in the organization. What happens when people accomplish something? Are there “rites of passage” such as promotion ceremonies and retirement parties? Are there regular “get-togethers” such as holiday parties, social events, and company softball games?

  24. Guidelines for Assessing Organizational Culture (Continued) • Ask, “What sorts of behaviors are expected and rewarded here? What sorts of behaviors are punished?” • Ask people outside the firm what they think of it. • Check magazines, newspapers, and other sources to get clues about the culture of the organization. • As appropriate, use quantitative measures of organizational culture.

  25. Some Guidelines for AssessingOrganizational Culture (Cont.) • Overall, how salient is culture? • Do leaders mention culture, values, and heroes in their messages? • Do organizational members talk much about culture and its elements? • What primary themes emerge? • Are responses consistent across people, levels, and units? • How does everything fit together? • Are valued behaviors rewarded? • Are symbols, stories, heroes, and ceremonies consistent?

  26. Subcultures • Subcultures are distinctive clusters of ideologies, cultural forms, and other practices within the larger culture. • Subcultures may develop among organization members with similar training or duties or personal characteristics, frequent interaction, or shared experiences. • Subcultures may lead to conflict and misunderstanding. • Potential benefits of subcultures include: • accomplish certain tasks while permitting the primary culture to present a certain “face” to the world • provide diversity of views, assumptions, and values • serve as seeds for desired change

  27. Countercultures • Counterculturesare subcultures that contradict the dominant culture. • Countercultures help clarify the bounds between acceptable and unacceptable behavior. • Countercultures may arise: • to provide a safe haven for the development of innovative ideas. • to encourage the questioning of old, and perhaps outmoded, values. • to handle severe, shared employee discontents. • because of mergers or acquisitions of firms with differing cultures.

  28. PARTICULAR CULTURAL CHARACTERISTICS “STRONG” CULTURE “HEALTHY” CULTURE STRATEGICALLY APPROPRIATE CULTURE Four Views of How OrganizationalCulture Affects Performance(Figure 13-2) PERFORMANCE

  29. Theory Z • In his book, Theory Z, William Ouchi presented comparative studies of Japanese and American management techniques. • He identified three types of organizations: • Typical Japanese (Type J) • Typical American (Type A) • Ideal Hybrid (Type Z) • The Type Z organization: • Emphasis on group decision making and consensus • Long-term employment • Individual achievement and advancement

  30. Type A, Type J, and Type Z Organizations (Figure 13-3)

  31. In Search of Excellence • The most popular writing on the relationship between organizational culture and effectiveness was presented by Tom Peters and Robert Waterman in In Search of Excellence. • Based on their observation of 62 successful firms, including Hewlett-Packard, McDonald’s, Disney Productions, Levi Strauss, and Johnson & Johnson, Peters and Waterman concluded that eight key attributes of the organizational culture contributed to their success.

  32. CLOSENESS TO CUSTOMER AUTONOMY AND ENTREPRENEURSHIP BIAS FOR ACTION SIMULTANEOUS LOOSE-TIGHT PROPERTIES PRODUCTIVITY THROUGH PEOPLE SIMPLE FORM, LEAN STAFF HANDS-ON, VALUE-DRIVEN STICK TO THE KNITTING Attributes of Effective Organizational Culture (Peters & Waterman) EXCELLENCE

  33. Reactions to In Search of Excellence • There have been several challenges to the conclusions of In Search of Excellence. • Excellence was based on financial performance. Were the firms also successful in terms of social responsibility and social responsibility? • In the years following publication of In Search of Excellence, several of the “excellent” companies suffered financially. • One study found no significant performance differences between a subset of the Peters and Waterman “excellent” companies and a set of firms representative of the Fortune 1,000 industrials. • There were also no differences between the two groups of firms in the extent to which they adhered to the Peters and Waterman attributes of “excellent” companies.

  34. Strong Cultures • Strong culture is variously defined in terms of: • degree to which values and ideologies are widely shared and clearly ordered in terms of their relative importance • degree of extremity of values; strength of commitment to values • It seems simplistic to assume that having a strong culture would necessarily lead to success. There are certainly some strong cultures that are inconsistent with demands of the environment, and a strong culture may discourage change. • Having a strong culture may not be enough; it also has to be “right”

  35. Strategically Appropriate Culture • For culture to be effective, it must: • be distinctive • be valuable • be hard to imitate • Court ruling: “that there may be instances in which the law might recognize a perceived threat to a ‘corporate culture’ that is shown to be palpable (for lack of a better word), distinctive, and advantageous.”

  36. Neurotic Leaders and Their Firms(Figure 13-4) EXECUTIVE CULTURE DramaticNeeds attention, Dependency needs of excitement, feels a subordinates complement sense of entitlement “strong leader” tendencies of chief executive SuspiciousVigilantly prepared “Fight or flight” culture, to counter attacks including dependency, and personal threats fear of attack, lack of trust DetachedWithdrawn and not Lack of warmth or emotions; involved; lacks conflicts; jockeying for power; interest in present insecurity or future

  37. Neurotic Leaders and Their Firms(Figure 13-4) (Cont.) EXECUTIVE CULTURE DepressedLacks self-esteem, Lack of initiative; passivity; self-confidence, or negativity; lack of motivation; initiative; fears ignorance of markets; success and tolerates leadership vacuum mediocrity or failure CompulsiveTends to dominate Rigid, inward-directed, insular; organization from subordinates are submissive, top to bottom; uncreative, insecure dogmatic or obstinate; perfectionist

  38. Formulate Strategic Objectives to Support the Mission Identify the Core Values and Operating Principles That Support the Mission and Strategic Objectives Socialize New Employees into the Culture of the Firm Hire New Employees Who Are Compatible with the Firm’s Culture Develop Formal Mechanisms for Communicating the Elements of the Culture to Employees The Bottom Line: Developing an Effective Organizational Culture Develop a Mission Statement for the Firm

  39. Guidelines for Culture Change • Understand the current culture. • Change at the right time. • Value diversity. • Understand resistance to culture change. • Recognize the importance of implementation. • Use appropriate cultural forms. • Give it some time.

  40. Communicate the New Culture to Employees Realign the Organizational Policies and Practices to Support the New Culture Evaluate the Culture of the Firm in Relation to the Firm’s Mission Replace Managers and Employees Who Do Not Embrace the New Culture Use Formal Mechanisms to Reinforce and Transmit the New Culture The Bottom Line: Changing the Cultureof an Organization Define the Elements of the New Culture

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