Creating and

Managing
Organizational
Culture

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 Differentiate between values and norms,
understand the way culture is shared by an
organizations members, and why
organizations have different types of culture
Describe how individuals learn culture both
formally (that is, the way an organization
intends them to learn it) and informally (that is,
by seeing what goes on in the organization)

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 Identify the four building blocks or
foundations of an organizations culture
that account for cultural differences among
organizations
Understand how an organizations culture,
like its structure, can be designed or
managed
Discuss an important outcome of an
organizations culture: its stance on
corporate social responsibility

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 Organizational culture: The set of shared
values and norms that controls
organizational members interactions with
each other and with people outside the
organization
Can be a source of competitive advantage
Can be used to increase organizational
effectiveness

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 Values: General criteria, standards, or
guiding principles that people use to
determine which types of behaviors, events,
situations, and outcomes are desirable or
undesirable

Terminal value: A desired end state or outcome

that people seek to achieve. Organizations might
adopt any of the following as terminal values:
excellence, responsibility, reliability, profitability,
innovativeness, economy, morality, quality.

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 Instrumental value: A desired mode of behavior.
Modes of behavior that organizations advocate
include working hard, respecting traditions and
authority, being conservative and cautious, being
creative and courageous, being honest, taking
risks, and maintaining high standards.

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 Ideally, instrumental values help the organization
achieve its terminal goals.
Terminal values can often be found by studying
an organizations mission statement and official
goals, which tell members and stakeholders what
kinds of values and ethical standards it wishes its
members to use in their decision making.
This in turn helps members understand
instrumental valuesthat is, the styles of
behavior they are expected to follow as they
pursue desired end states

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 Norms: Standards or styles of behavior that
are considered acceptable or typical for a
group of people

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 Based on enduring values embodied in
organizational norms, rules, standard
operating procedures, and goals
People draw on these cultural values to
guide their actions and decisions when
faced with uncertainty and ambiguity
Important influence on members behavior
and response to situations

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 A countrys culture can affect the values
and norms of a company or a companys
culture
Differences in communication styles,
attitude toward competing tasks, and
different approaches to decision making
can impact a companys culture
Executives working abroad need to be
sensitive to both the countrys culture and
the companys culture

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 Cultural values are important facilitators of
mutual adjustment in an organization. They
provide a common reference point and help
in rapport-building.

Organizational culture facilitates the

workings of the organizational structure; it
is especially important in the way
employees view their tasks and roles.

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 Many mergers between companies have
failed because of differences in their
organizational cultures

Merger teams now exist to help smooth the

transition between the two cultures

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 The ability of an organizations culture to
motivate employees and increase
organizational effectiveness is directly
related to the way in which members learn
the organizations values.

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 From the organizations perspective, the
most effective way for newcomers to learn
appropriate values is through:
Socialization: Members learn and internalize
the values and norms of an organizations
culture

Role orientation: The characteristic way in

which newcomers respond to a situation
Institutionalized role orientation
Individualized role orientations
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7-11
 Van Mannen and Schein developed a model
of socialization that suggests how
organizations can structure the
socialization experience so newcomers
learn the values that the organization wants
them to learn.
They identified 12 socialization tactics that
influence a newcomers role orientation.
The use of different sets of these tactics
leads to two different role orientations:
institutionalized and individualized.
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 An institutionalized role orientation results
when individuals are taught to respond to a
new context in the same way that existing
organizational members respond to it.

An individualized role orientation results

when individuals are allowed and
encouraged to be creative and to
experiment with changing norms and values
so an organization can better achieve its
values.
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 The following list contrasts the tactics used
to socialize newcomers to an
institutionalized orientation with those
tactics used to develop an individualized
orientation.

1. Collective vs. Individual. Collective tactics

consist of common experiences to generate
standard responses. Individual tactics allow
newcomers to learn new responses.

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2. Formal vs. Informal. Formal tactics
separate newcomers during learning;
informal tactics encourage learning on the
job.

3. Sequential vs. Random. Sequential tactics

establish a sequence for activities; random
tactics are based on newcomer interests and
needs.

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4. Fixed vs. Variable. Fixed tactics provide a
specific timetable for each stage; variable
tactics set no timetable.
5. Serial vs. Disjunctive. Serial tactics use
existing members as role models and
mentors; disjunctive processes develop
individual behavior.
6. Divestiture vs. Investiture. Divestiture
gives members negative social support
(neglect) until they conform to norms.
Investiture gives positive support
immediately.
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The cultural values of an organization are
often evident in the stories, ceremonies, and
language found in the organization.
Organizations use several types of
ceremonial rites to communicate cultural
norms and values. (Refer to Table 7.2)

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 Rites of passage mark an individuals entry
to, promotion in, and departure from the
organization.

Rites of integration, such as shared

announcements of organizational success,
office parties, and company cookouts, build
and reinforce common bonds between
organizational members.

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 Rites of enhancement, such as awards
dinners, newspaper releases, and employee
promotions, publicly recognize and reward
employees contributions.

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 Organizational stories and the language of
an organization are important media for
communicating culture.

Stories (whether fact or fiction) about

organizational superstars provide important
clues about cultural values and norms as
they reveal the kinds of behaviors that the
organization values and the kinds of
practices the organization frowns on.
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 Because language is the principal medium
of communication in organizations, the
characteristic phrases that frame and
describe events provide important clues
about norms and values.

The concept of organizational language

encompasses not only spoken language but
how people dress, the offices they occupy,
the company cars they drive, and how they
formally address one another.
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 Characteristics of People within the
Organization: companies attract, hire, and
retain people with different values,
personalities, and ethics. As people and
values become more similar, organizational
culture becomes more unique. The founder
of an organization has a substantial
influence on the organizations initial
culture because of his or her personal
values and beliefs.

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 Property rights: Rights that an organization
gives to members to receive and use
organizational resources
The distribution of property rights to
different stakeholders determines:
How effective an organization is
The culture that emerges in the organization

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 Top managers are in a strong position to
establish the terms of their own
employment and the property rights
received by others
Changing property rights changes the
corporate culture by changing the
instrumental values that motivate and
coordinate employees
Strong property rights may harm the
organization

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 Organizational structure
Mechanistic vs. Organic
Mechanistic Predictability and stability are desired
goals
Organic Innovation and flexibility are desired end
states
Centralized vs. Decentralized
Decentralized Encourages and rewards creativity
and innovation
Centralized Reinforces obedience and
accountability

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 Some ways culture can be changed:
Redesign structure
Revise property rights used to motivate people
Change the people especially top management

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 A managers duty or obligation to make
decisions that nurture, protect, enhance,
and promote the welfare and well-being of
stakeholders and society as a whole

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 Obstructionist approach: The low end of the
organizations commitment to social
responsibility
Defensive approach: Indicates a
commitment to ethical behavior
Accommodative approach: The
acknowledgment of the need to support
social responsibility
Proactive approach: Actively embrace the
need to behave in socially responsible ways

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 Workers and society benefit directly
because organizations bear some of the
costs of helping workers
Quality of life as a whole would be higher as
a climate of caring is encouraged
It is the right thing to do
Companies that act responsibly toward their
stakeholders benefit from increasing
business and see their profits rise

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 Whistle-blower: Informing (by an employee)
an outside person or agency, about an
organizations illegal or immoral behavior
Managers own ethics influence their
behavior
Their own values strongly influence whether they
will take a proactive approach to social
responsibility

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior written permission of the
publisher. Printed in the United States of America.

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Hall

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