BUS 272 Organizational Culture PDF

BUS 272 – E100 Week 9: Organizational Culture Melissa McCrae, EdD Learning Outcomes 1. Describe the common characteristics of organizational culture 2. Compare the functional and dysfunctional effects of organizational culture on people and the organization 3. Identify the factors that create a...

BUS 272 – E100 Week 9: Organizational Culture Melissa McCrae, EdD Learning Outcomes 1. Describe the common characteristics of organizational culture 2. Compare the functional and dysfunctional effects of organizational culture on people and the organization 3. Identify the factors that create and sustain an organization’s culture 4. Show how culture is transmitted to employees 5. Demonstrate how an ethical organizational culture can be created 6. Describe a positive organizational culture Corporate Culture Corporate culture is made up of the values, norms, and behaviours either espoused or enacted in organizations Corporate culture can be framed by managers to provide employees with a sense of overarching values within the organizational context Organization Culture Shared Pervasive Enduring Implicit Tacit social order of an organization: it shapes attitudes and behaviours in wide-ranging and durable ways: Cultural norms define what is encouraged, discouraged, accepted, or rejected Culture is an elusive lever, because much of it is anchored in unspoken behaviours, mindsets, and social patterns. Culture and Structure “Culture is the soul of the organization – the beliefs and values, and how they are manifested. I think of 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” - Mintzberg, 1997 Organization Culture = a system of shared meaning held by members that distinguishes the organization from other organizations.  Artifacts Dimensions Characteristics of Organizational Culture Innovation and risk-taking: employees are encouraged to be innovative and take risks Attention to detail: employees are expected to exhibit precision, analysis, and attention to detail Outcome orientation: management focuses on results or outcomes rather than on technique and process People orientation: management decisions take into consideration the effect of outcomes on people within the organization Team orientation: work activities are organized around teams rather than individuals Aggressiveness: people are aggressive and competitive rather than easygoing Stability: organizational activities emphasize maintaining the status quo in contrast to growth Culture The dominant culture is a system of shared meaning that expresses the core values shared by a majority of the organization’s members Core values are the primary or dominant values that are accepted throughout the organization Subcultures are mini-cultures within an organization, typically defined by department designations and geographical separation Strong vs Weak Cultures If most employees (responding to surveys) have the same opinions about the organization’s mission and values, the culture is strong; if opinions vary widely, the culture is weak A strong culture is a culture in which the core values are intensely held and widely shared Strong cultures greatly influence employee behaviour Builds cohesiveness, loyalty, and organizational commitment; reduces turnover Lessens the need for high formalization, rules, policies  Culture’s Functions Boundary-defining, creates distinctions between organizations Conveys a sense of identity for organization members Facilitates commitment to something larger than one’s individual self-interest Enhances stability; it is the social glue that helps hold the organization together by providing standards for what employees should say and do Serves as a control mechanism that guides and shapes the attitudes and behaviour of employees and helps them make sense of the organization Current trend toward decentralized organizations makes culture more important than ever, but it also makes establishing a strong culture more difficult Strong leadership that communicates frequently about common goals and priorities is especially important in innovative organizations Culture creates Climate Organizational climate is the shared perceptions organizational members have about their organization and work environment This aspect of culture is like team spirit When everyone has the same general feelings about what is important or how well things are working, the effect of these attitudes will be more than the sum of the individual parts E.g. WestJet Climate vs Culture “Organizational climate reflects the current emotional state or feeling of your workplace. It concerns how employees experience and perceive the company. Your climate is influenced by leadership styles, communication practices, workload pressure and employee recognition. A positive climate fosters a sense of belonging, motivation, and higher performance, whereas a negative climate can lead to disengagement and hinder business goals.” “Organizational culture is the deep-rooted set of values, attitudes, and behaviors that define your company’s DNA. It’s the implicit or explicit codes that shape how employees interact with each other, interact with your clients, and make decisions.” https://www.aihr.com/blog/organizational-climate-vs-culture/  Climate vs Culture Culture Climate Focus Longer-term, foundational Shorter-term indicator of current aspects feelings/perceptions Analogy Personality of an organization Mood of an organization Stability Stable and enduring, resistant Changeable and fluid (leadership to change changes, new policies, workload) Visibility Less visible, abstract, unspoken More visible, observable (env, comm) Measure Difficult to quantify Can be measured (surveys, exit int) Time frame Long-term phenomenon, Short-to-medium term concept, can evolves slowly change rapidly (ldr change, events) https://www.aihr.com/blog/organizational-climate-vs-culture/ Culture Lego Ethical Dimensions of Culture Organizational cultures are not ethically neutral Ethical work climate (EWC) is the shared concept of right and wrong behaviour in the workplace that reflects the true values of the organization and shapes the ethical decision making of its members Ethical climate theory (E C T) and Ethical climate index (E C I): Categorize and measure the ethical dimensions of organizational cultures; Ethical climate reflects the true values of the organization and shapes the ethical decision-making of its members Five climate categories that are most prevalent: Instrumental; Caring; Independence; Law and code; Rules Culture & Sustainability Sustainability refers to an organization’s practices that can be sustained over a long period of time because the tools or structures that support them are not damaged by the processes Sustainable management does not need to be purely altruistic Culture & Innovation The most innovative companies are often characterized by their open, unconventional, collaborative, vision-driven, accelerating cultures Start-up firms often have innovative cultures by definition because they are usually small, agile, and focused on solving problems in order to survive and grow Culture as a Liability There are potentially dysfunctional aspects of culture on its effectiveness Some of the major factors that signal a negative organizational culture: Institutionalization is a condition that occurs when an organization takes on a life of its own, apart from any of its members, and acquires immortality Barriers to change Barriers to diversity Strengthening dysfunction Barriers to acquisitions and mergers How a Culture Begins An organization’s customs, traditions, and general way of doing things are largely due to what it has done before and how successful it was in doing it The ultimate source of an organization’s culture is its founders Culture creation occurs in the following ways: Hire and keep employees who think and feel the way the founders do Indoctrinate and socialize employees to their way of thinking & feeling Founders’ own behaviour encourages employees to identify with the founders and thereby internalize those beliefs, values, and assumptions Keeping a Culture Alive Once a culture is in place, practices within the organization maintain it by giving employees a set of similar experiences: Selection Top Management Socialization is the process that adapts new employees to an organization’s culture  Keeping a Culture Alive The prearrival stage is the period of learning in the socialization process that occurs before a new employee joins the organization The encounter stage is the stage in the socialization process in which a new employee sees what the organization is really like and confronts the possibility that expectations and reality may diverge The metamorphosis stage is the stage in the socialization process in which a new employee adjusts to the values and norms of the job, work group, & organization Keeping a Culture Alive The three-part entry socialization is complete when the following occurs when new employees: become comfortable have internalized, understand and accept the norms of the organization and the work group feel accepted by their peers are self-confident understand how they will be evaluated and know what criteria will be used to measure and appraise their work know what is expected and what constitutes a job “well done” How Employees Stories Learn Material Culture Symbols Rituals Language Changing Organizational Culture Trying to change the culture of an organization is quite difficult and requires that many aspects of the organization change at the same time, especially the reward structure Culture is such a challenge to change because it often represents the established mindset of employees and managers, often not visable Change is most likely when most or all of the following conditions exist: A dramatic crisis Turnover in leadership Young and small organization Weak culture Creating an Ethical Culture Be a visible role model Communicate ethical expectations Provide ethics training Visibly reward ethical acts and punish unethical ones Provide protective mechanisms Creating a Positive Culture A positive organizational culture is a culture that emphasizes building on employee strengths, rewards more than it punishes, and emphasizes individual vitality and growth Limits of a positive culture – is it the answer to all organizational problems? It is a new enough area that there is some uncertainty about how and when it works best Organizational cultures often reflect national culture Changing Organizational Culture 1. Have top-management people become positive role models, setting the tone through their behaviour 2. Create new stories, symbols, and rituals to replace those currently in vogue 3. Select, promote, and support employees who espouse the new values that are sought 4. Redesign socialization processes to align with the new values Changing Organizational Culture 5. Change the reward system to encourage acceptance of a new set of values 6. Replace unwritten norms with formal rules and regulations that are tightly enforced 7. Shake up current subcultures through transfers, job rotation, and/or terminations 8. 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 1. What is the purpose of organizational culture? Organizational culture provides stability and gives employees a clear understanding of “the way things are done around here.” 2. How do you read an organization’s culture? Artifacts, such as stories, rituals, material symbols, and language, can be used to help read an organization’s culture. Summary and Implications 3. How do you create and maintain culture? An organization’s culture is derived from the philosophy of its founders. It is communicated by managers and employees are socialized into it. 4. Can organizational culture have a downside? A strong culture can have a negative effect, including “pressure-cooker” cultures, barriers to change, difficulty in creating an inclusive environment, and hindering mergers and acquisitions. 5. How do you change culture? It is important to change the reward structure and to work carefully to change employee beliefs.