ORGANISATIONAL CULTURE

-SWATI SISODIA

swati.sisodia@nmims.edu

What is Organisational Culture

• The basic paTTern of shared values and assumpTions governing The way employees wiThin as organisaTion Think abouT and acT on problems and opporTuniTies

A system of meaning shared by the organization’s membersCultural values are collective beliefs, assumptions, and feelings about what things are good, normal, rational, valuable, etc.

Aspects of cultureValues

Customs

Symbols

Language

Cultural Diversity

Why doesn’t McDonald’s sell hamburgers in India?

Coca-Cola’s name in China was first read as “Kekoukela”, meaning “Bite the wax tadpole” or “female

horse stuffed with wax”, depending on the dialect.

Coke then researched 40,000 characters to find a phonetic

equivalent “kokou kole”, translating into “happiness in the

mouth.”

Culture and the workplace (Hofstede)

Purpose: understanding of business situations across-cultures

MUST understand own culture AND other culture(s)

Geert Hofstede – sampled 100,000 IBM employees 1963-1973

Compared employee attitudes and values across 40 countries

Isolated 4 dimensions summarizing culture:

1. Power distance2. Individualism vs. collectivism3. Uncertainty avoidance4. Masculinity vs. feminity

Managerial ImplicationsEthnocentrism vs Polycentrism

Must a company adapt to local cultures or can corporate -- often home-country dominated -- culture prevail?

Cross-cultural literacy essential

Do some cultures offer a national competitive advantage over others?

Organisational Culture at people soft

PeopleSoft is one of the loopiest places on the planet. The Pleasanton, California, business management software company has mini golf tournaments in the hallways.

Dress-down day is every day of the week. A white collar is usually a T-shirt. The gourmet coffee are free. Having fun is so ingrained.

In other words, give the bagel delivery guy the same respect as the company president. PeopleSoft is also extreme on technology and flexible customer service. Job applicants use an automated voice response system to accept their job offer. On the first day of work, newcomers are outfitted with a notebook computer and a backpack. They also receive tools for posting personal web pages on the company intranet.

This corporate culture has contributed to PeopleSoft’s success. The company has grown faster than SAP and Oracle and is now the second largest provider of business management software (after SAP). “Our true competence is our culture,” explains Dave Duffield.

“That’s what attracts people and keep them here. It also helps sell customers. Customers

want to work with companies that are competent, trustworthy, and fun.

How EmployeesLearn Culture/

How it is “reinforced”

MaterialSymbolsLanguage

Stories Rituals

Oakley, Inc.’s headquarters symbolizes a corporate culture in which employees believe they are at war with competitors.

Oakley’s combat-ready headquarters symbolizes a corporate culture that attacks such rivals as Nike with gladiator glee. The lobby of the two-year-old, $40-million building looks like a bomb shelter. Its huge, echoing vault is straight out of Star Wars. Sleek pipes, watertight doors, and towering metallic walls studded with oversize bolts suggest a place that is routinely subjected to laser fire and floods. Ejection seats from a B-52 bomber furnish the waiting area. Oakley’s culture is also apparent in its annual report, which reads more like the Art of War than a financial report. “We’ve always had a fortress mentality,” says Colin Baden, Oakley’s vice president of design. “What we make is gold, and people will do anything to get it, so we protect it.”

Examples of few culture

Innovation and risk taking (3M)Outcome orientation (Bausch & Lomb)Aggressiveness (Microsoft)

Culture’s Effects on Managerial Process

Decision Making (Central/Decentralization)Safety vs. RiskIndividual vs. Group RewardsInformal/Formal ProceduresOrganizational LoyaltyCo-operation vs. CompetitionTime Horizons- Long or ShortStability Innovation

The Nature of Organizational Culture

Organizational cultureShared values and beliefs that enable members to understand their roles and the norms of the organization, including

Observed behavioral regularities, as typified by common language, terminology, and rituals.Norms, as reflected by things such as the amount of work to be done and the degree of cooperation between management and employees.Dominant values that the organization advocates and expects participants to share, such as high product and service quality, low absenteeism, and high efficiency.

A philosophy that is set forth in the MNC’s beliefs regarding how employees and customers should be treated.Rules that dictate the do’s and don’ts of employee behavior relating to areas such as productivity, customer relations, and intergroup cooperation.Organizational climate, or the overall atmosphere of the enterprise as reflected by the way that participants interact with each other, conduct themselves with customers, and feel about the way they are treated by higher-level management

What are the values/beliefs/norms of the following companies?

India’s second largest bank exudes a performance-oriented culture. Its organizational practices place a premium on training, career development, goal setting, and pay-for-performance, all with the intent of maximizing employee performance and customer service.

“We believe in defining clear performance for employees and empowering them to achieve their goals “ -MD ICICI BANK

ICICI BANK

Wal-Mart, Inc.

Wal-Mart’s headquarters almost screams out frugality and efficiency.

The world’s largest retailer has a Spartan waiting room for suppliers, rather like a government office waiting areas.

Visitors pay for their own soft drinks and coffee.

In each of the building’s inexpensive cubicles, employees sit at inexpensive desk finding ways to squeeze more efficiencies and lower costs out of suppliers as well as their own work processes.

Importance of Organisational Culture

• Talent attractor

• Talent –Retainer

• Engages People

• Creates energy and momentum

• Changes the view of work

• Creates greater Synergy

• Makes evryone ,ore successful

Types of Organisational Culture

Organisational culture can vary in a number of ways. It is these variances that differentiate one organisation from the others. Some of the bases of the differentiation are presented here:

• Strong vs weak culture

• Soft vs hard culture :

• Formal vs informal culture

Types of Cultures

• The Clan Culture– A very friendly place to work where people share a lot of

themselves. It is like an extended family.

• The Hierarchy Culture– A very formalized structured place to work.

– Procedures govern what people do.

Example

Hewlett Packard (HP) is a global organization with a corporate culture that is spread to employees around the world. Whether at HP’s Far East distribution center in Singapore or at research labs in California, employees live by five well-established values known as “The HP Way:”

These values include trust and respect for individuals, a focus on achievement and contribution, the conduct of business with uncompromising integrity, achievement of common objectives through teamwork, and encouragement of flexibility and innovation.

• The Adhocracy Culture– A dynamic entrepreneurial, and creative place to work.

People stick their necks out and take risks.

• The Market Culture– A results oriented organization whose major concern is

with getting the job done. People are competitive and goal-oriented.

“Collaborate (Clan)” Culture

• An open and friendly place to work where people share a lot of themselves. It is like an

extended family. Leaders are considered to be mentors or even parental figures. Group loyalty and sense of tradition are strong. There is an emphasis on the long-term

benefits of human resources development and great importance is given to group cohesion. There is a strong concern for people.

The organization places a premium on teamwork, participation, and consensus.

“Create (Adhocracy)” Culture

• A dynamic, entrepreneurial, and creative place to work. Innovation and risk-taking are embraced by employees and leaders. A commitment to experimentation and thinking differently are what unify the organization. They strive to be on the leading edge. The long-term emphasis is on growth and acquiring new resources. Success means gaining unique and new products or services. Being an industry leader is important. Individual initiative and freedom are encouraged.

“Control (Hierarchy)” Culture

A highly structured and formal place to work. Rules and procedures govern behavior. Leaders strive to be good coordinators and organizers who are efficiency-minded. Maintaining a smooth-running organization is most critical. Formal policies are what hold the group together. Stability, performance, and efficient operations are the long-term goals. Success means dependable delivery, smooth scheduling, and low cost. Management wants security and predictability.

“Compete (Market)” Culture

A results-driven organization focused on job completion. People are competitive and goal-oriented. Leaders are demanding, hard-driving, and productive. The emphasis on winning unifies the organization. Reputation and success are common concerns. Long-term focus is on competitive action and achievement of measurable goals and targets. Sucess means market share and penetration. Competitive pricing and market leadership are important.

Each year Fortune magazine releases its list of india’s Top Employers. Visit the site and do a keyword search on “best

companies to work for.” Who are some of the top companies to work for

according to Fortune? What might employees find appealing about the

organizational culture of those companies?

Functions of Organizational Culture

Culture provides a sense of identity to members and increases their commitment to the organization

Culture is a sense-making device for organization members

Culture reinforces the values in the organization

Culture serves as a control mechanism for shaping behavior

AdaptivePerspective

Theories about the relationship between organizational culture and performance

Strong Culture

Perspective

FitPerspective

Strong cultures facilitate performance because:

They are characterized by goal alignment

They create a high level of motivation because of shared values by the members

They provide control without the oppressive

effects of bureaucracy

Strong Culture

Perspective

Argument that a culture is good only if it fits the industry’s or the firm’s strategy.

FitPerspective

Organizational characteristics that may affect culture Customer requirements Competitive environment Societal expectations

An organizational culture that encourages confidence and risk taking among employees, has leadership that produces change, and focuses on the changing needs of customers

Adaptive Nonadaptive

Most managers careabout themselves,their work group, oran associated product

Most managers care about customers,stockholders, and employees

Managers tend tobehave somewhat politically,and bureaucratically

Managers pay close attention to alltheir constituencies,esp. customers

Core Values

CommonBehavior

AdaptivePerspective

Situations That May Require Cultural ChangesMerger or acquisition Employment of people from different countries

TechnologyMarket forcesPolitical and regulatory forcesSocial trends

Environmental forces include:

Creating and sustaining culture

Creating Corporate Culture

• The ultimate source of an organisational culture is its founders

• Culture creation occurs in three ways:- Employee hired and kept with same thinking- Indoctrinate and socialize the employee with the

organization's thinking- The founders behavior acts as role model for the

employees- With the organizations' success the founder’s

personality is embedded in the organisational culture.

Sustaining Organisational culture

Three forces play a particular important part in sustaining a culture

1. Selection Practices

2. Action of top management

3. Socialization Methods

Selection

• Explicit goals- Identifying and hiring individuals having knowledge, skills and abilities to perform the jobs successfully

• Individuals having values consistent with those of the organization are selected as per the decision makers guidelines

TOP MANAGEMENT

• The action of top management establishes the norms so as to:

• Whether risk taking is desirable

• How much freedom should be given to their subordinates

• What actions will pay off in terms of pay rise, promotions and other rewards, etc

SOCIALISATION

• New employees are not familiar with the organisational culture and are potentially likely to disturb the existing culture

• The process through which the employees are proselytized about the customs and traditions of the organization is known as socialization

• It is the process of adaption by which new employees are to understand the basic values and the norms for becoming “accepted” member of the organization

SOCIALISATION PROCESS

• Pre arrival: – Newcomers form expectations regarding particular occupations and what it

would be like to be a member of a particular organization

• Encounter– Newcomer confronts the reality of his or her organizational role– Not yet an “insider” (uncertainty vs. information seeking)– Not socialized by the organization– Not individualized role requirements - affect organizational situation

• Metamorphosis– When new employees begin to change some of his behaviors and

expectations in order to meet the standards of the new environment– Create an individual identity– A time of ethical dilemmas

CHANGING ORGANISATIONAL CULTURE

Lewin’s Three-Step Change Model

• The model given by Lewin has three steps:

RefreezingMovingUnfreezing

Making the change

getting ready for change

stabilizing the change

Murlidhar Puthran

Unfreezing

• Arouse dissatisfaction with the current state

• Activate and strengthen top management support

• Use participation in decision making

• Build in rewards

Murlidhar Puthran

Moving

• Establish goals

• Institute smaller, acceptable changes that reinforce and support change

• Develop management structures for change

• Maintain open, two-way communication

Murlidhar Puthran

Refreezing

• Build success experiences

• Reward desired behaviour

• Develop structures to institutionalize the change

• Make change work

Live Example

ICICI Bank merger with Bank of Madura(December 2000)

It reveals the importance of change management for the Bank of Madura and how effective management of

change could bring out best results from the employees in the Bank of Madura.

Facts

ICICI Bank Ltd

• ICICI was established by the Government of India in 1955

• 3 times the size of BoM

• Staff strength was only 1,400

• departments into individual profit centers

Bank of Madura (BoM)

• Established in 1943 at Madurai, Tamil Nadu. By 2000, it was number one bank in Tamil Nadu

• One third the size of ICICI

• Staff strength was 2,500

• management concentrated on the overall profitability of the Bank

Immediate Impact

There were large differences in profiles, grades, designations and salaries of personnel

• there was uneasiness among the staff of BoM as they felt that ICICI would push up the productivity per employee, to match the levels of ICICI

• BoM employees feared that their positions would come in for a closer scrutiny.

• They were not sure whether the rural branches would continue or not as ICICI's business was largely urban-oriented.

Employee behavioral pattern study

PERIOD EMPLOYEE BEHAVIOR

Day 1 Denial, fear, no improvement

After a month Sadness, slight improvement

After a Year Acceptance, significant improvement

After 2 Years Relief, liking, enjoyment, business development activities

Steps taken to Decrease resistance of change by ICICI

• Established clear communication channels throughout

• Training programmes were conducted which emphasized on knowledge, skill, attitude and technology to upgrade skills of the employees

• direct dialogue with the employee unions of the BoM to maintain good employee relations

By June 2001, the process of integration between ICICI and BoM was started

• ICICI transferred around 450 BoM employees to ICICI Bank, while 300 ICICI employees were shifted to BoM branches.

• Promotion schemes for BoM employees were initiated and around 800 BoM officers were found to be eligible for the promotions.

• End of the year, ICICI seemed to have successfully handled the HR aspects of the BoM merger.

“The win-win situation created”

• We do put people under stress by raising the bar constantly. That is the only way to ensure that performers lead the change process.“ K. V. Kamath, MD & CEO, ICICI

• Noticing Small Changes EarlyHelps You Adapt To The Bigger Changes That Are To Come

• Change Happens, Anticipate Change, Monitor Change, Adapt To Change Quickly.

Enjoy Change!Be Ready To Change Quickly And Enjoy It Again