Organizational Culture and Control PDF

Chapter 11 Organizational Culture and Control Chapter 11 Organization Theory and Design T...

Chapter 11 Organizational Culture and Control Chapter 11 Organization Theory and Design Thirteenth Edition Richard L. Daft Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.  Learning Objectives 1. Define organizational culture and identify symbols, rituals, stories, or other observable elements that signal cultural values in a company you are familiar with. 2. Describe the four types of organizational culture. 3. Explain the relationship between culture, corporate values, and performance. 4. Explain how managers create a high-performance culture. 5. Contrast a decentralized culture of control with a hierarchical culture of control. 6. Explain the feedback control model. 7. Describe the balanced scorecard’s value for organizational control. Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 2 duplicated, or posted to a publicly accessible website, in whole or part.  What is Culture? Culture is the set of values, norms, guiding beliefs, and understandings that are shared by members of an organization It is taught to new members as the correct way to think, feel, and behave Organizational culture exists at two levels: –Visual artifacts and observable symbols –Underlying values, assumptions, beliefs, and thought processes Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 3 duplicated, or posted to a publicly accessible website, in whole or part. Levels of Corporate Culture Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 4 duplicated, or posted to a publicly accessible website, in whole or part.  Emergence and Purpose of Culture Culture provides sense of organizational identity It serves two critical functions in organizations: – To integrate members so they know how to relate to one another – To help organization adapt to external environment Internal integration: Members develop a collective identity and understand how to work together effectively External adaptation: How the organization meets goals and deals with outsiders Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 5 duplicated, or posted to a publicly accessible website, in whole or part.  Interpreting/Shaping Culture Aspects of the organization that can help decode the organizational culture AND be used or changed by managers to shape and influence culture include: – Rites and ceremonies – Stories and sayings – Symbols – Organization structures – Power relationships – Control systems Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 6 duplicated, or posted to a publicly accessible website, in whole or part. Observable Aspects of Organizational Culture Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 7 duplicated, or posted to a publicly accessible website, in whole or part. Organization Chart for Nordstrom Inc. Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 8 duplicated, or posted to a publicly accessible website, in whole or part.  Culture and Organization Design Cultures can be assessed along many dimensions, such as: – (1) the extent to which the competitive environment requires flexibility or stability – (2) the extent to which the organization’s strategic focus and strength are internal or external Four categories of culture are associated with these differences: adaptability, achievement, clan, and bureaucratic Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 9 duplicated, or posted to a publicly accessible website, in whole or part.  Culture Strength and Organizational Subcultures Culture strength is the degree of agreement among members of an organization about specific values Subcultures reflect the common problems, goals, and experiences of a team or department Subcultural differences can lead to conflicts between departments or divisions Cultural conflicts can be particularly challenging in the case of mergers and acquisitions Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 10 duplicated, or posted to a publicly accessible website, in whole or part.  Culture and Performance Culture has a significant impact on organizational performance Successful companies are those in which managers are evaluated and rewarded for paying careful attention to cultural values and business performance Such companies have high-performance cultures Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 11 duplicated, or posted to a publicly accessible website, in whole or part.  Combining Culture and Performance Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 12 duplicated, or posted to a publicly accessible website, in whole or part. The Cultural Focus of Control Systems Managers consider both control of the overall organization and control of departments, teams, and individuals Many companies are adopting a decentralized control process rather than a hierarchical control process Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 13 duplicated, or posted to a publicly accessible website, in whole or part. Hierarchical and Decentralized Methods of Control (slide 1 of 2) Hierarchical Control Decentralized Control Basic People are incapable of self-discipline People work best when they are fully assumptions and cannot be trusted. They need to committed to the organization. be monitored and controlled closely. Actions Uses detailed rules and procedures Features limited use of rules; relies and formal control systems. on shared values, group and self- control, selection, and socialization. Uses top-down authority, formal hierarchy, position power, Relies on flexible authority, flat supervision, quality control structure, and expert power; inspectors. everyone monitors quality. Relies on task-related job Relies on results-based job descriptions. descriptions; emphasizes goals to be achieved. Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 14 duplicated, or posted to a publicly accessible website, in whole or part. Hierarchical and Decentralized Methods of Control (slide 2 of 2) Hierarchical Control Decentralized Control Actions Emphasizes extrinsic rewards (pay, Emphasizes extrinsic and intrinsic (continued) benefits, status). rewards (meaningful work, opportunities for growth). Features rigid organizational culture and distrust of cultural norms as Features adaptive culture; culture means of control. recognized as means for uniting individual, team, and organizational goals for overall control. Consequences Employees follow instructions and do Employees take initiative and seek just what they are told. responsibility. Employees feel a sense of Employees are actively engaged and indifference toward work. committed to their work. Employee absenteeism and turnover Employee turnover is low. is high. Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 15 duplicated, or posted to a publicly accessible website, in whole or part.  Feedback Control Model Feedback is used to determine whether organizational performance meets established standards to help the organization attain Systems for organizational control consist of the four key steps in a feedback control model Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 16 duplicated, or posted to a publicly accessible website, in whole or part. Organization Level: The Balanced Scorecard (slide 1 of 2) The balanced scorecard (BSC) is a comprehensive management control system that balances traditional financial measures with operational measures relating to a company’s critical success factors A BSC considers four major perspectives: – Financial performance – Customer service – Internal business processes – Organizational capacity for learning and growth Managers use these perspectives to identify key performance indicators (KPIs) that the organization will track Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 17 duplicated, or posted to a publicly accessible website, in whole or part. Major Perspectives of the Balanced Scorecard Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 18 duplicated, or posted to a publicly accessible website, in whole or part. Organization Level: The Balanced Scorecard (slide 2 of 2) BSCs helps top executives and upper-level managers see how organizational performance results from cause–effect relationships A strategy map provides a visual representation of the key drivers of an organization’s success and shows the links between specific outcomes in one area and performance in another area Strategy maps are typically complex, with concrete, specific goals, desired outcomes, and metrics relevant to the particular business Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 19 duplicated, or posted to a publicly accessible website, in whole or part. A Strategy Map for Performance Management Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 20 duplicated, or posted to a publicly accessible website, in whole or part.  Department Level: Behavior Versus Outcome Control Lower-level managers use two different approaches to evaluating and controlling performance and allocating rewards at the department level: –Behavior control focuses on how people do their job and is based on managers’ direct observation and supervision of employee actions –Outcome control focuses on what people accomplish in their job and is based on monitoring and rewarding employee results Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 21 duplicated, or posted to a publicly accessible website, in whole or part. Organizational Design Essentials (slide 1 of 2) Cultural values can contribute to organizational success. Organizational cultures integrate members so that they know how to relate to one another and help the organization adapt to the external environment. Organizational culture should reinforce the strategy and structure that the organization needs to be successful in its environment. Even in organizations with strong cultures, several sets of subcultures may emerge. Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 22 duplicated, or posted to a publicly accessible website, in whole or part. Organizational Design Essentials (slide 2 of 2) The right culture can enable solid business performance through the alignment of motivated employees with the mission and goals of the company. All effective control systems involve the use of feedback. The feedback control model includes setting strategic goals, establishing metrics and standards of performance, comparing actual performance to standards, and taking corrective action as needed. Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 23 duplicated, or posted to a publicly accessible website, in whole or part.