Organizational CultureTheory

by Erlan Bakiev, Ph. D.

Zirve UniversitySpring 2012

Organizational Culture

• What is organizational culture?• When is organizational culture functional?

Dysfunctional?• How do employees learn about the culture of their

organization?

Henry Mintzberg on Culture

• “Culture is the soul of the organization — the beliefs and values, and how they are manifested. I think of the structure as the skeleton, and as the flesh and blood. And culture is the soul that holds the thing together and gives it life force.”

What is Organizational Culture?

• A system of meaning shared by the organization’s members

• Cultural values are collective beliefs, assumptions, and feelings about what things are good, normal, rational, valuable, etc.

Organizational Culture

• The pattern of shared values, beliefs and assumptions considered to be the appropriate way to think and act within an organization.• Culture is shared• Culture helps members solve problems• Culture is taught to newcomers• Culture strongly influences behaviour

Where Does Culture Come From?

• Organization founder• Vision and mission• Past practices• Top management behavior • Socialization - The process

that helps employees adapt to the organization’s culture.

Exhibit 9-1 Layers of Culture

Artifacts of Organizational

Culture

Material SymbolsLanguage

RitualsStories

Organizational Culture

BeliefsValues

Assumptions

Culture’s Overall Function

Culture is the social glue that helps hold an organization together by providing

appropriate standards for what employees should say or do.

Characteristics of Organizational Culture

• Innovation and risk-taking• The degree to which employees are encouraged to be innovative and take

risks.

• Attention to detail• The degree to which employees are expected to exhibit precision,

analysis, and attention to detail.

• Outcome orientation• The degree to which management focuses on results or outcomes rather

than on technique and process.

• People orientation• The degree to which management decisions take into consideration the

effect of outcomes on people within the organization.

Characteristics of Organizational Culture

• Team orientation• The degree to which work activities are organized around teams

rather than individuals.

• Aggressiveness• The degree to which people are aggressive and competitive rather

than easygoing.

• Stability• The degree to which organizational activities emphasize

maintaining the status quo in contrast to growth.

Cultural Artifacts

• Stories

• Rituals

• Material Symbols

• Language

How EmployeesLearn Culture/

How it is “reinforced”

How EmployeesLearn Culture/

How it is “reinforced”

MaterialMaterialSymbolsSymbolsMaterialMaterialSymbolsSymbols

LanguageLanguageLanguageLanguage

StoriesStoriesStoriesStories RitualsRitualsRitualsRituals

Organizational Culture

Controlling behavior

Defining boundaries

Conveying identity

Promoting commitment

Blocking mergers

Inhibiting diversity

Inhibiting change

Blocking acquisitions

Functions Liabilities

Do Organizations Have Uniform Cultures?

• Organizational culture represents a common perception held by the organization members.

• Core values or dominant (primary) values are accepted throughout the organization.• Dominant culture

• Expresses the core values that are shared by a majority of the organization’s members.

• Subcultures • Tend to develop in large organizations to reflect common

problems, situations, or experiences.

Exhibit 9-3 How Organizational Culture Forms

Selectioncriteria

Socialization

Organization'sculture

Philosophyof

organization'sfounders

Topmanagement

Keeping a Culture Alive

• Selection• Identify and hire individuals who will fit in with the

culture

• Top Management• Senior executives establish and communicate the norms

of the organization

• Socialization• Organizations need to teach the culture to new

employees

Exhibit 9-5A Socialization Model

Prearrival Encounter Metamorphosis

Socialization Process Outcomes

Commitment

Productivity

Turnover

Entry Socialization Options

• Formal vs. Informal

• Individual vs. Collective

• Fixed vs. Variable

• Serial vs. Random

• Investiture vs. Divestiture

Exhibit 9-7 Culture Typology

Fragmented

Networked

Low

High

Solidarity

Mercenary

Low High

Communal

Soc

iabi

lity

Culture’s Functions

• Social glue that helps hold an organization together • Provides appropriate standards for what

employees should say or do

• Boundary-defining

• Conveys a sense of identity for organization members

Culture’s Functions

• Facilitates commitment to something larger than one’s individual self-interest

• Enhances social system stability

• Serves as a “sense-making” and control mechanism • Guides and shapes the attitudes and behaviour

of employees

Culture as a Liability

• Culture can have dysfunctional aspects in some instances• Culture as a Barrier to Change

• When organization is undergoing change, culture may impede change

• Culture as a Barrier to Diversity• Strong cultures put considerable pressure on employees to

conform

• Culture as a Barrier to Mergers and Acquisitions• Merging the cultures of two organizations can be difficult, if

not impossible

How to Change Culture

• Have top-management people become positive role models, setting the tone through their behaviour.

• Create new stories, symbols, and rituals to replace those currently in vogue.

• Select, promote, and support employees who espouse the new values that are sought.

• Redesign socialization processes to align with the new values.

How to Change Culture

• Change the reward system to encourage acceptance of a new set of values.

• Replace unwritten norms with formal rules and regulations that are tightly enforced.

• Shake up current subcultures through transfers, job rotation, and/or terminations.

• Work to get peer group consensus through utilization of employee participation and creation of a climate with a high level of trust.

Summary and Implications

• Employees form an overall subjective perception of the organization based on such factors as degree of risk tolerance, team emphasis, and support of people.• This overall perception becomes, in effect, the organization’s

culture or personality.

• These favourable or unfavourable perceptions then affect employee performance and satisfaction, with the impact being greater for stronger cultures.

• Just as people’s personalities tend to be stable over time, so too do strong cultures.• This makes strong cultures difficult for managers to change.

Summary and Implications

• One of the more important managerial implications of organizational culture relates to selection decisions.• Hiring individuals whose values don't align with those of the

organization is not good.

• An employee's performance depends to a considerable degree on knowing what he should or should not do.

Point-CounterPoint

• Why Culture Doesn’t Change Culture develops over many

years, and becomes part of how the organization thinks and feels

Selection and promotion policies guarantee survival of culture

Top management chooses managers likely to maintain culture

• When Culture Can Change There is a dramatic crisis There is a turnover in

leadership The organization is young

and small There is a weak culture

Organizational Culture Theory

Move from systemic and structural issues to . . .

Culture Theory

Understanding organizations through a cultural lens with a focus on values, attitudes and beliefs of members

“Organizational Culture” FOCUS

• Changes in Global Marketplace• Intense Competition• Reconsider Traditional Management Practices• Shift from traditional, highly rationale theories to

more fluid and irrational• Societal consciousness-raising regarding

oppressive atmosphere in organizations for workers, women, and minorities

• Inequities and Oppressive Circumstances

Organizational Culture Theory

• Fenerbahce vs. GS• Attempts to explain behavior within organizations• Attempts to account for differences among organizations• Description of how members of a group live and make sense

of their world together• Culture provides a lens through which its members interpret,

interact with, and make sense of reality• Culture helps to explain patterns of behavior and thought that

characterize individuals and the groups with which they are associated

• Focus on VALUES, ATTITUDES, and BELIEFS of members

• Different concepts of culture, stemming from two distinct disciplines (anthropology and sociology), have been applied to organizational studies since the early 1980s.

• These two underlying disciplines represent different paradigms in Burrell and Morgan’s (1979) framework, and have contributed to the emergence of the different theories and frameworks of organizational culture in the academic literature.

Organizational Culture Theory

• Anthropology takes the interpretivist view and sees culture as a metaphor for organizations, defining organizations as being cultures.

• On the other hand, sociology takes on the functionalist view and defines culture, as something an organization possesses.

• Despite the separate definitions of organizational culture, there seems to be a movement towards a general consensus.

Organizational Culture Theory

• The most widely used organizational culture framework is that of Edgar Schein (1988), who adopts the functionalist view and described culture as• a pattern of basic assumptions, invented, discovered,

or developed by a given group, as it learns to cope with its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore is to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.

Organizational Culture Theory

In Schein’s (1988) model, culture exists on three levels:

•1. Artifacts – Artifacts are difficult to measure and they deal with organizational attributes that can be observed, felt and heard as an individual enters a new culture.

•2. Values – This level deals with the espoused goals, ideals, norms, standards, and moral principles and is usually the level that is usually measured through survey questionnaires.

Organizational Culture Theory

• 3. Underlying assumptions – This level deals with phenomena that remain unexplained when insiders are asked about the values of the organizational culture. Information is gathered in this level by observing behavior carefully to gather underlying assumptions because they are sometimes taken for granted and not recognized. According to Schein, the essence of organizational culture lies in this level.

Organizational Culture Theory

Diagram/schematic of theory

Organizational Culture Theory

• Organizational culture provides meanings for routine organizational events, thereby reducing the amount of cognitive processing and energy members need to expend throughout the day.

Misunderstandings and Organizational Culture

• Cultural variations are often the cause of major and minor misunderstandings as groups come into contact with one another

• Value of cultural perspective is in illustrating the misunderstandings that occur within an organization

• Culture may hinder organizations from progress in the future• Organizations consist of “subcultures”• Mergers and International Mergers are also a source of

misunderstandings

Two Competing Perspectives on Organizational Culture

• Culture as Variable• Something an organization “has”• By-product of organizational activities• Stories, rites, rituals, and heroes• Culture is changeable by management• Organizational “tool” for enhancing organizational effectiveness• In Search of Excellence (Peters and Waterman)• Corporate Cultures: The Rites and Rituals of Corporate Life (Deal & Kennedy)• Strong cultures have four key components

• Values - basic beliefs and concepts (concrete guidelines for success)• Heroes - personify cultural values• Rites and rituals - public performances that display and enact values• Cultural network - primary carrier of cultural information (stories, myths, legends,

jokes, and gossip)

• Criticisms: shortsighted, more than strategy, not just a skill; culture is a complex, communicative phenomenon rooted in the history of the organizations events.

Two Competing Perspectives on Organizational Culture

• Culture as Root Metaphor• Something an organization “is” as opposed to something it “has”• Organizations as expressive forms, manifestations of human consciousness• Culture is the process of sense-making created and sustained through communication

and interactions• Rituals and stories are ‘generative processes’ the yield and shape meanings• Provides deep understanding of the way members of a particular organization make

sense of the world around them• The essence of an organization is culture• Three Primary Elements

• Complex (multi-level construction of values, beliefs and attitudes)• Communicative Construction (constructed and reconstructed through interaction)• Subcultures and Countercultures

• Differential interaction• Shared experiences• Similar personal characteristics

Comparison of Two Competing Perspectives on Organizational Culture

• VARIABLE• Something the

organization “has”; a tool, skill, or lever

• Inform workplace of values

• Change occurs through management directive and intervention

• ROOT METAPHOR• Something the

organization “is”; expressive form

• Create sustain and influence culture

• Change occurs through natural evolution; all members influence culture

Multi-level Perspective on Culture

• Schein’s Model of Organizational Culture• Three Interrelated Levels of Culture

• Artifacts and Creations• tangible, physical, or hearable things in the environment of the organization• Important to connect artifacts to values

• Values• Sense of what “ought” to be, as distinct from what is• Common basis for operating together• Cognitive constructions

• Basic Assumptions - represent the essence of cultureFIVE BASIC ASSUMPTIONS

• Humanity’s relationship to nature• The nature of reality and truth - is truth real or discovered?• The nature of human nature• The nature of human activity• The nature of human relationships

Critical Perspectives on Culture

• Critical Perspectives . . .• Reject the notion that organizations are value-free sites• Organizations are sites of struggle between management and workers resulting

in domination and oppression of the powerless by the powerful.

• Critical Theory• Roots in the Institute for Social Research in Frankfurt (Frankfurt School)

• Knowledge is not objective; tainted by personal interests and the power structure• Involvement in the inner workings of society to reveal contradictions associated

with the imbalance of power• Provide critique that allows for the reversal of oppressive conditions in the future

• Research goal: reveal how social and technological structures within the organization serve to oppress workers

• Researchers must engage in consciousness-raising among organizational members