Organizational Culture PDF

§7 Crea ng and managing organiza onal culture 7.1 What is organiza onal culture? Organiza onal culture is the set of shared values and norms that control organizaonal members’ interacons with each other and with suppliers, customers, and other people outside the organizaon. An organizaon’s cultu...

§7 Crea ng and managing organiza onal culture 7.1 What is organiza onal culture? Organiza onal culture is the set of shared values and norms that control organizaonal members’ interacons with each other and with suppliers, customers, and other people outside the organizaon. An organizaon’s culture can be used to increase organizaonal e*ecveness. This is because organizaonal culture controls the way members make decisions, the way they interpret and manage the organizaonal environment, what they do with informaon, and how they behave. Values are general criteria, standards, or guiding principles that people use to determine which types of behaviours, situaons, and outcomes are desirable or undesirable. There are two kinds of value: terminal value is a desired end state or outcome that people seek to achieve. An instrumental value is a desired mode of behaviour, for example working hard, being honest, taking risks, etc. Terminal values can o2en be found by studying an organizaon’s mission statement and o;cial goals, which tell organizaon members and other stakeholders what kinds of values and ethical standards it wishes its members to use in their decision making. Norms are standards or styles of behaviour that are considered acceptable or typical for a group of people. Dierences in global values and norms Di*erences between the cultures of di*erent countries that arise because of di*erences in their naonal values and norms help reveal powerful e*ect of organizaonal culture on behaviour. Cultural di*erences are major factors that hamper coordinaon in outsourcing relaonships that require contact between people from di*erent countries. 7.2 How is an organiza on’s culture transmiGed to its members? 32 Organizaonal members learn pivotal values from an organizaon’s formal socializaon pracces and from the stories, ceremonies, and organizaonal language that develop informally as an organizaon’s culture matures. The most e*ecve way for newcomers to learn appropriate values is through socializa on, which is the process by which members learn and internalize the norms of an organizaon’s culture. The indirect method of learning the values is risky, because newcomers might observe habits that are not acceptable in the organizaon. Role orienta on is the characterisc way in which newcomers respond to a situaon. Van Maanen and Schein idened 12 socializaon taccs that in:uence a newcomer’s role orientaon. The use of di*erent sets of these taccs leads to two di*erent role orientaons: instuonalized and individualized. An ins tu onalized role orienta on results when individuals are taught to respond to a new context in the same way that exisng organizaonal members respond to it, it encourages obedience and conformity to rules and norms. An individualized role orienta on results when individuals are allowed and encouraged to be creave and to experiment with changing norms and values so an organizaon can be9er achieve its values. The following list contrasts the taccs used to socialize newcomers in both ways: 1. Collec ve versus individual 2. Formal versus informal 3. Sequen al versus random: sequenal taccs provide newcomers with explicit informaon about the sequence in which they will perform new acvies or occupy new roles as they advance in an organizaon; with random taccs, the training is based on the interests and needs of newcomers. 4. Fixed versus variable 5. Serial versus disjunc ve: with serial taccs, exisng members are role models and mentors for newcomers; disjuncve processes require newcomers to gure out and develop their own way of behaving. 6. Dives ture versus inves ture: with divesture, newcomers receive negave social support to learn the ropes and conform to established norms; with investure, newcomers immediately receive posive social support and are encouraged to be themselves. The dangers of instuonalized socializaon are that it gives much power to the top of the organizaon to manipulate the situaon, and that it may produce sameness among members in an organizaon Stories, ceremonies, and organiza onal language The cultural values of an organizaon are o2en evident in the stories, ceremonies, and language found in the organizaon. Organizaons use several types of ceremonial rites to communicate cultural norms and values: - - rites of passage marks an individual’s entry to, promoon in, and departure from the organizaon (e.g. inducon and basic training, to learn norms and values); rites of integra on such as shared announcements of organizaonal success, o;ce pares, and company cookouts, build and reinforce common bonds between organizaonal members (goal: build common norms and values); rites of enhancement publicly recognize and reward employees’ contribuons (e.g. awards dinners, newpaper releases, and employee promoons). 33 Organizaonal stories and the language of an organizaon are important media for communicang culture. Stories (fact or con) about organizaonal superstars provide important clues about cultural values and norms. The concept of organizaonal language encompasses not only spoken language but how people dress, the o;ces they occupy, the company cars they drive, and how they formally address one another. Finally, organizaonal symbols o2en convey and organizaon’s cultural values to its members and to others outside the organizaon. 7.3 Where does organiza onal culture come from? Organizaonal culture develops from the interacon of four factors: the personal and professional characteriscs of people within the organizaon, organizaonal ethics, the property of rights that the organizaon gives to employees, and the structure of the organizaon (see gure 7.2). The ulmate source of organizaonal culture is the people who make up the organizaon. An organizaon’s culture can be strengthened and changed over me by the people who control and lead it. Organiza onal ethics An organizaon can consciously and purposefully develop some cultural values to control member’s behaviour, for example with ethical values. Ethical values are the moral values, beliefs, and rules that establish the appropriate way for organizaonal members to deal with one another and with the organizaon’s stakeholders. Ethical values, and the rules and norms they embody, are an inseparable part of an organizaon’s culture because they help shape the values that members use to manage situaons and make decisions. Top managers can ensure the legality of organizaonal behaviour with creang an organizaonal culture that insls ethical instrumental values so that members re:exively deal with stakeholders in an ethical manner. But, personal and professional ethics also in:uence how a person will act in an organizaon, so an organizaon’s culture is strongly a*ected by the people who are in a posion to establish its ethical values. Property rights The values in an organizaon also stem from how the organizaon distributes property rights: the rights that an organizaon gives to its members to receive and use organizaonal resources. Property rights dene the rights and responsibilies of each inside stakeholder group and cause the development of di*erent norms, values, and a3tudes towards the organizaon. Shareholders have the strongest property rights of all stakeholder groups because they own the resources of the company and share in its prots. Managers are usually given strong rights because if they do not 34 share in the value that the organizaon creates, they are unlikely to be movated to work hard on behalf of the organizaon and its other shareholders. The distribuon of property rights to di*erent stakeholders determines (1) how e*ecve an organizaon is, and (2) the culture that emerges in the organizaon, because they in:uence people’s expectaons about how people should behave and what they can expect from their acons. Property rights can become too strong, which means that employees have no movaon to perform or to take risks. Therefore, property rights must be assigned on the basis of performance and in a discriminang way. Property rights can become too strong, which means that employees have no movaon to perform or to take risks. Therefore, property rights must be assigned on the basis of performance and in a discriminang way. Organiza onal structure The organiza onal structure is the formal system of task and authority relaonships that an organizaon establishes to control its acvies. Because di*erent structures give rise to di*erent cultures, managers need to design a certain kind of organizaonal structure to create certain kind of organizaonal culture. Organizaonal structure a*ects the cultural values that guide organizaonal members as they perform their acvies. In turn, culture improves the way structure coordinates and movates organizaonal resources to help an organizaon achieve its goals. One source of a company’s compeve advantage is its ability to design its structure and manage its culture so there is a good t between the two. 7.5 Can organiza onal cultural be managed? To change a culture can be very di;cult because those four factors (discussed before) interact, and major alteraons are o2en needed to change an organizaon’s values. To change its culture, an organizaon might need to redesign its structure and revise the property rights it uses to movate and reward employees. Besides, the organizaon might need to change its people. To prevent an organizaon’s culture from changing in ways that reduce e*ecveness as the organizaon grows, top managers must connually redesign its structure to o*set the control problems that occur with large size and complexity. 7.6 Social responsibility Social responsibility refers to a manager’s duty or obligaon to make decision that nurture, protect, enhance, and promote the welfare and well-being of stakeholders and society as a whole. The strength of an organizaon’s commitment to social responsibility ranges from low to high. At the low end of the range is an obstruc onist approach, in which managers choose not to behave in a socially responsible way. Instead, they behave unethically and illegally and do all they can to prevent knowledge of their behaviour from reaching other organizaonal stakeholders and society at large. 35 A2er that, a defensive approach indicates at least a commitment to ethical behaviour. Defensive managers stay within the law and abide strictly within legal requirements, but they make no a9empt to exercise social responsibility beyond what the law dictates. When making ethical choices, these managers put claims and interests of their shareholders rst, at the expense of other stakeholders. The third (from low to high) is an accommoda ve approach, which is an acknowledgement of the need to support social responsibility. Accommodave managers agree that organizaonal members ought to behave legally and ethically, and they try to balance the interests of di*erent stakeholders against one another so the claims of stockholders are seen in relaon to the claims of other stakeholders. Managers want to make choices that are reasonable in the eyes of society. Managers taking a proac ve approach acvely embrace the need to behave in socially responsible ways, go out of their way to learn the needs of di*erent stakeholder groups, and are willing to use organizaonal resources to promote the interests not only of stockholders but of the other stakeholders. Why be socially responsible? Reasons for managers to behave in a socially responsible manner are (1) workers and society benet directly because organizaons bear some of the costs helping works, (2) it has been said that if all organizaons in a society were socially responsible, the quality of life as a whole would be higher, (3) it is the right thing to do, and (4) companies that act responsibly toward their stakeholders benet from increasing business and see their prots rise. A whistle-blower refers to a person who reports illegally or unethical behaviour and takes a stand against unscrupulous managers or other stakeholders who are pursuing their own ends. §8 Organiza onal design and strategy in a changing global environment 8.1 strategy and the environment A strategy is a specic pa9ern of decisions and acons that managers take to use core competences to achieve a compeve advantage and outperform competors. Through its strategy, an organizaon seeks to use and develop core competences to gain a compeve advantage. Core competences are skills and abilies in value-creaon acvies , such as manufacturing, markeng or R&D that allow company to achieve superior e;ciency, quality, innovaon or customer responsiveness. Sources of competences The strength of its core competences is a product of the specialized resources and coordinaon abilies that it possesses and other organizaon’s lack. Specialized resources To kinds of resources provide an organizaon with core competences that give it a compeve advantage. Func onal resources are the skills possessed by an organizaon’s funconal personnel. However, it’s not su;cient that an organizaon has high-quality funconal resources; these resources must also be unique and di;cult to imitate. Organiza onal resources are the companyspecic skills and competences that give an organizaon a compeve advantage. They include the skills of a company’s top management team, the vision of its founder/CEO, and the possession of valuable and scarce resources. They must be unique and hard to imitate. 36