Organizational Culture And Organizational Theory PDF

Chapter Five: Organizational Culture and Organizational theory 5.1. Organizational culture Culture is the set of values, norms, guiding beliefs, and understandings that is shared by members of an organization and taught to new members as the correct way to think, feel, and behave in the organ...

Chapter Five: Organizational Culture and Organizational theory 5.1. Organizational culture Culture is the set of values, norms, guiding beliefs, and understandings that is shared by members of an organization and taught to new members as the correct way to think, feel, and behave in the organization. It represents the unwritten, feeling part of the organization. Everyone participates in culture, but culture generally goes unnoticed. It is only when managers try to implement new strategies or programs that go against basic cultural norms and values that they come face to face with the power of culture. Levels of organizational culture Organizational culture exists at three levels; Observable artifacts, espoused values and basic assumptions. 1. Observable aspects It includes visible organizational features such as the physical structure of buildings and their architecture, uniforms, and interior design. This level is easily observable but does not reveal everything about an organization’s culture. Sometimes researchers use the term organizational climate to refer to the more evident and malleable aspects of the organization’s environment. Observable aspect of culture is the most visible. Its constituent elements are defined below. a. Artifacts: are material objects created by human hands to facilitate culturally expressive activities. They include tools, furniture, appliances and clothing. b. Rites and ceremonies: the elaborate, planned activities that make up a special event and are often conducted for the benefit of an audience. e. g. opening events, prize- giving, graduations, religious services. c. Stories and Myths: Stories are narratives based on true events that are frequently shared among employees and told to new employees to inform them about an organization. Many stories are about company heroes who serve as models or ideals for serving cultural norms and values. Some stories are considered legends because the events are historic and may have been embellished with fictional details. Other stories are myths, which are consistent with the values and beliefs of the organization but are not supported by facts. Stories keep alive the primary values of the organization and provide a shared understanding among all employees. Compiled By Gazu G. (MBA) Page 1  d. Symbols: A symbol is something that represents another thing. In one sense, ceremonies, stories, and rites are all symbols because they symbolize deeper values. Another symbol is a physical artifact of the organization. e. Organization Structures: A strong reflection of the culture is how the organization is designed. Does it have a rigid mechanistic structure or a flexible organic structure, as described in Chapter 4, the way in which people and departments are arranged into a whole, and the degree of flexibility and autonomy people have, tells a lot about which cultural values are emphasized in the organization. f. Language: is the particular form or manner in which members use vocal sounds and written signs to convey meaning to each other. It includes both specialist technical vocabulary related to the business (jargon), as well as general naming choices. g. Slogans: are short, catchy phrases that are regularly changed. They are used for both customer advertising and also to motivate employees. 2. Espoused values Values represent a non-visible facet of culture that encompasses the norms and beliefs that employees express when they discuss organizational issues. A mission statement or a commitment to equal employment opportunities is part of this level. 3. Basic assumptions It is the deepest culture which is hidden beneath artifacts and expressed values. It is the most important level. It includes the basic assumptions that shape organizational members’ worldviews, beliefs, and norms, which guide their behavior without being explicitly expressed. It is the most influential level because it works surreptitiously and shapes decision-making processes almost invisibly. It is hard to observe and even harder to change. Nonetheless, it is the level that carries the most potential for transformation. 5.2. Organization design and culture Managers want a corporate culture that reinforces the strategy and structural design that the organization needs to be effective within its environment. For example, if the external environment requires flexibility and responsiveness, such as the environment for Internet- based companies like Face book, the culture should encourage adaptability. The correct relationship among cultural values, organizational strategy and structure, and the environment can enhance organizational performance. Compiled By Gazu G. (MBA) Page 2 Cultures can be assessed along many dimensions, such as the extent of collaboration versus isolation among people and departments, the importance of control and where control is concentrated, or whether the organization’s time orientation is short range or long range. Here, we will focus on two specific dimensions: (1) the extent to which the competitive environment requires flexibility or stability; and (2) the extent to which the organization’s strategic focus and strength are internal or external. Four categories of culture associated with these differences are adaptability, mission, clan, and bureaucratic. These four categories relate to the fit among cultural values, strategy, structure, and the environment. A. The Adaptability Culture The adaptability culture is characterized by strategic focus on the external environment through flexibility and change to meet customer needs. The culture encourages entrepreneurial values, norms, and beliefs that support the capacity of the organization to detect, interpret, and translate signals from the environment into new behavior responses. This type of company, however, doesn’t just react quickly to environmental changes but it actively creates change. Innovation, creativity, and risk taking are valued and rewarded. B. The Mission Culture The mission culture is characterized by emphasis on a clear vision of the organization’s Compiled By Gazu G. (MBA) Page 3 purpose and on the achievement of goals, such as sales growth, profitability, or market share, to help achieve the purpose. Individual employees may be responsible for a specified level of performance, and the organization promises specified rewards in return. Managers shape behavior by envisioning and communicating a desired future state for the organization. Because the environment is stable, they can translate the vision into measurable goals and evaluate employee performance for meeting them. In some cases, mission cultures reflect a high level of competitiveness and a profit-making orientation. C. The Clan Culture The clan culture has a primary focus on the involvement and participation of the organization’s members and on rapidly changing expectations from the external environment. This culture is similar to the clan form of control. More than any other cultures, this culture focuses on meeting the needs of employees as the route to high performance. Involvement and participation create a sense of responsibility and ownership and, hence, greater commitment to the organization. In a clan culture, an important value is taking care of employees and making sure they have whatever they need to help them be satisfied as well as productive. D. The Bureaucratic Culture An organization that emphasizes rules, policies, procedures, chain of command, and centralized decision making has a bureaucratic culture. The goals of a bureaucracy are predictability, efficiency, and stability. Its members highly value standardized goods and customer service. Behavioral norms support formality over informality. Leaders view their roles as being good coordinators, organizers, and enforcers of written rules and standards. Tasks, responsibilities, and authority for all employees are clearly defined. The organization’s many rules and processes are spelled out in thick manuals, and employees believe that their duty is to “go by the book” and follow legalistic procedures 5.3 Culture and the learning organization A learning organization has developed the continuous capacity to adapt and change. “All organizations learn, whether they consciously choose to or not it is a fundamental requirement for their sustained existence.” Some organizations just do it better than others. Culture can play an important role in creating an organizational climate that enables learning and innovative response to challenges, competitive threats, or new opportunities. A strong Compiled By Gazu G. (MBA) Page 4 culture that encourages adaptation and change enhances organizational performance by energizing and motivating employees, unifying people around shared goals and a higher mission, and shaping and guiding behavior so that everyone’s actions are aligned with strategic priorities. Thus, creating and influencing an adaptive culture is one of a manager’s most important jobs. The right culture can drive high performance. Strong cultures that don’t encourage adaptation, however, can hurt the organization. A danger for many successful organizations is that the culture becomes set and the company fails to adapt as the environment changes. When organizations are successful, the values, ideas, and practices that helped attain success become institutionalized. As the environment changes, these values may become detrimental to future performance. Many organizations become victims of their own success, clinging to outmoded and even destructive values and behaviors. Thus, the impact of a strong culture is not always positive. Typically, healthy cultures not only provide for smooth internal integration but also encourage adaptation to the external environment. Non adaptive cultures encourage rigidity and stability. Strong adaptive cultures often incorporate the following values: 1. The whole is more important than the parts, and boundaries between parts are minimized. People are aware of the whole system, how everything fits together, and the relationships among various organizational parts. All members consider how their actions affect other parts and the total organization. This emphasis on the whole reduces boundaries both within the organization and with other companies. Although subcultures may form, everyone’s primary attitudes and behaviors reflect the organization’s dominant culture. The free flow of people, ideas, and information allows coordinated action and continuous learning. 2. Equality and trust are primary values. The culture creates a sense of community and caring for one another. The organization is a place for creating a web of relationships that allows people to take risks and develop to their full potential. The emphasis on treating everyone with care and respect creates a climate of safety and trust that allows experimentation, frequent mistakes, and learning. Managers emphasize honest and open communications as a way to build trust. 3. The culture encourages risk taking, change, and improvement. A basic value is to question the status quo. Constant questioning of assumptions opens the gates to Compiled By Gazu G. (MBA) Page 5  creativity and improvement. The culture rewards and celebrates the creators of new ideas, products, and work processes. To symbolize the importance of taking risks, an adaptive culture may also reward those who fail in order to learn and grow. In adaptive cultures, managers are concerned with customers and employees as well as with the internal processes and procedures that bring about useful change. Behavior is flexible, and managers initiate change when needed, even if it involves risk. In unadaptive cultures, managers are more concerned about themselves or their own special projects, and their values discourage risk taking and change. Thus, strong, healthy cultures help organizations adapt to the external environment, whereas strong, unhealthy cultures can encourage organizations to march resolutely in the wrong direction. 5.4 Ethical values in organizations Ethics refers to the code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong. Ethical values set standards as to what is good or bad in conduct and decision making. Ethics are personal and unique to each individual, although in any given group, organization, or society there are many areas of consensus about what constitutes ethical behavior. Each person is a creation of his or her time and place in history. National culture, religious heritage, historical background, and so forth lead to the development of societal morality, or society’s view of what is right and wrong. Societal morality is often reflected in norms of behavior and values about what makes sense for an orderly society. Some principles are codified into laws and regulations, such as laws against drunk driving, robbery, or murder. These laws, as well as unwritten societal norms and values, shape the local environment within which each individual acts, such as a person’s community, family, and place of work. Individuals absorb the beliefs and values of their family, community, culture, society, religious community, and geographic environment, typically discarding some and incorporating others into their own personal ethical standards. Each person’s ethical stance is thus a blending of his or her historical, cultural, societal, and family backgrounds and influences. It is important to look at individual ethics because ethics always involve an individual action, whether it be a decision to act or the failure to take action against wrongdoing by others. In organizations, an individual’s ethical stance may be affected by peers, subordinates, and supervisors, as well as by the organizational culture. Organizational Compiled By Gazu G. (MBA) Page 6 culture often has a profound influence on individual choices and can support and encourage ethical actions or promote unethical and socially irresponsible behavior. Managerial Ethics Managerial ethics are principles that guide the decisions and behaviors of managers with regard to whether they are right or wrong. An ethical dilemma arises in a situation concerning right and wrong in which values are in conflict. Ethical dilemmas are not easy to resolve, but top executives can aid the process by establishing organizational values that provide people with guidelines for making the best decision from a moral standpoint. Example of value conflict: An Ethiopian manufacturer operating abroad was asked to make cash payments (a bribe) to government officials and was told it was consistent with local customs, despite being illegal in Ethiopia. Corporate Social Responsibility The notion of corporate social responsibility (CSR) is an extension of the idea of managerial ethics and refers to management’s obligation to make choices and take action so that the organization contributes to the welfare and interest of all organizational stakeholders, such as employees, customers, shareholders, the community, and the broader society. 5.5 Leadership, Culture and Ethics The CEO and other top managers must be committed to specific ethical values and provide constant leadership in tending and renewing the values. Values can be communicated in a number of ways speeches, company publications, policy statements, and, especially, personal actions. It is important to remember that employees are often influenced most by the managers and supervisors they work with closely, rather than by distant top leaders. Managers throughout the organizations need to espouse and model ethical values. Formal ethics programs are worthless if leaders do not live up to high standards of ethical conduct. How leaders shape culture and ethics? Managers can shape cultural and ethical value through Values-Based leadership and formal Structure and Systems. A. Values-Based Leadership Compiled By Gazu G. (MBA) Page 7 Organizational values are developed and strengthened primarily through values based leadership, a relationship between a leader and followers that are based on shared, strongly internalized values that are advocated and acted upon by the leader. Every act and statement of managers has an impact on culture and values. Employees learn about values, beliefs, and goals from watching managers, just as students learn which topics are important for an exam, what professors like, and how to get a good grade from watching professors. Actions speak louder than words, so values based leaders “walk their talks”. Employees learn from and model the behaviors of people they admire. In many cases employees look up to their managers, so values-based leaders serve as ethical role models. Characteristics of Values-Based Leaders a. Interpersonal Behaviors: Values-based leaders treat others with care, are helpful and supportive of others, and put effort into maintaining positive interpersonal relationships. b. Fairness with Others: They treat everyone fairly and with respect. Values-based leaders accept others’ mistakes and failures and are never condescending. c. Personal Actions and Expectations: They hold themselves to high ethical standards; continuously strive to be honest, humble, and trustworthy and to be consistently ethical in both their public and private lives. However, they are open about and accept responsibility for their own ethical failings. d. Organizational Leadership: Values-based leaders also clearly articulate and communicate an uncompromising vision for high ethical standards in the organization, and they institutionalize the vision by holding themselves and others accountable and by putting ethics above short-term personal or company interests. B. Formal Structure and Systems Another set of tools leaders can use to shape cultural and ethical values is the formal structure and systems of the organization. These systems can be especially effective for influencing managerial ethics. Managers can make the formal systems of the organization to implement desired cultural and ethical values. These systems include an ethics committee, a chief ethics officer, disclosure mechanisms, a code of ethics, and ethics training programs. Compiled By Gazu G. (MBA) Page 8  i. Structure (ethics committee): This is a cross-functional group of executives who oversee company ethics. The committee provides rulings on questionable ethical issues and assumes responsibility for disciplining wrongdoers. By appointing top-level executives to serve on the committee, the organization signals the importance of ethics. Today, many organizations are setting up ethics departments that manage and coordinate all corporate ethics activities. These departments are headed by a chief ethics officer, a high-level company executive who oversees all aspects of ethics, including establishing and broadly communicating ethical standards, setting up ethics training programs, supervising the investigation of ethical problems, and advising managers on the ethical aspects of corporate decisions. Ethics offices sometimes also work as counseling centers to help employees resolve tricky ethical dilemmas. The focus is as much on helping employees make the right decisions as on disciplining wrongdoers. Most ethics offices have confidential ethics hotlines that employees can use to seek guidance as well as report questionable behavior. ii. Disclosure Mechanisms: A confidential hotline is also an important mechanism for employees to voice concerns about ethical practices. Holding organizations accountable depends to some degree on individuals who are willing to speak up if they suspect illegal, dangerous, or unethical activities. Whistle blowing is employee disclosure of illegal, immoral, or illegitimate practices on the part of the organization. iii. Code of Ethics: A code of ethics is a formal statement of the company’s values concerning ethics and social responsibility; it clarifies to employees what the company stands for and its expectations for employee conduct. Codes of ethics may cover a broad range of issues, including statements of the company’s guiding values; guidelines related to issues such as workplace safety, the security of proprietary information, or employee privacy; and commitments to environmental responsibility, product safety, and other matters of concern to stakeholders. iv. Training Programs: To ensure that ethical issues are considered in daily decision making, many companies supplement a written code of ethics with employee Compiled By Gazu G. (MBA) Page 9  training programs. This training has been an important catalyst for establishing ethical behavior and integrity as critical components of strategic competitiveness. These formal systems and structures can be highly effective. However, they alone are not sufficient to build and sustain an ethical company. Leaders should integrate ethics into the organizational culture, as well as support and renew ethical values through their words and actions. Only when employees are convinced that ethical values play a key role in all management decisions and actions can they become committed to making them a part of their everyday behavior Compiled By Gazu G. (MBA) Page 10