Organizational Culture

In any organization, there are the ropes

to skip and the ropes to know.

-- R. Ritti and

G. Funkhouser

Environment and Corporate Culture

GENERAL

ENVIRONMENT

OPERATING

ENVIRONMENT

INTERNAL

ENVIRONMENT

SOCIALECONOMIC

POLITICAL

LEGAL

TECHNOLOGY

NEW ENTRANTS

SUPPLIER

SUBSTITUTES

CUSTOMER

COMPETITION

PRODUCTION

TECHNOLOGY

STRUCTURE

INPUTS

CULTURE

What is Organizational Culture?

A system of meaning shared by the

organization’s members

Cultural values are collective beliefs,

assumptions, and feelings about what things are

good, normal, rational, valuable, etc.

Characteristics of Organizational Culture

Organizational

Culture

Observed

behavioral

regularities

Norms

Philosophy

on treatment

of employees/

customers

Rules of

employee

behavior

Organizational

climate

Dominant

values

Physical Structures

Rituals/ Ceremonies

Stories

Language

Beliefs

Values

Assumptions

Artifacts of

Organizational

Culture

Organizational

Culture

Elements of Organizational Culture

Artifacts: Organizational Stories

Social prescriptions of desired behavior

Demonstrate that organizational objectives

are attainable

Most effective stories:Describe real people

Assumed to be true

Known throughout the organization

Are prescriptive

Artifacts: Rituals and Ceremonies

Rituals

programmed routines

e.g., conducting meetings, employee forums, x-mas parties

Ceremonies

planned activities for an audience

e.g., award ceremonies

Heroes

Figure who exemplifies character and deed

E.g. founders as Tom Watson of IBM, Bill Gates of Microsoft

Artifacts: Organizational Language

Words used to address people, describe clients, etc.

e.g. sir/ma’am, first name calling

Leaders use phrases and metaphors as cultural symbols

e.g.. General Electric’s “grocery store”

Language also found in subculturese.g.. Whirlpool’s “PowerPoint culture”

SlogansE.g. Nokia Connecting People

Organizational Subcultures

Located throughout the organization

Can support or oppose (countercultures) firm’s dominant culture

Two functions of countercultures:

provide surveillance and evaluation

source of emerging valuesE. M. Samelson/Orlando Sentinel

Courtesy of Oakley, Inc.

Artifacts: Physical Structures/Space

Oakley, Inc.’s protective and competitive

corporate culture is apparent in its building

design and workspace. The building looks

like a vault to protect its cherished product

designs (eyewear, footwear, apparel and

watches).

Courtesy of Oakley, Inc.

Artifacts - Industry

Information technology Advertising and Media Call Centers

How Organizational Cultures Form

Philosophy

of the

Organization’s

Founders:

Bill Hewlett &

Dave Packard

John Gokongwei

Bill Gates

Organizational

CultureSelection

Top

Management

Socialization

Do Organizations Have Uniform

Cultures?

CoreValues

SubculturesDominantCulture

How EmployeesLearn Culture/

How it is “reinforced”

Material

SymbolsLanguage

Stories Rituals

Benefits of Strong Corporate Cultures

Strong

Organizational

Culture

Social

Control

Aids

Sense-Making

Social

Glue

Controlling behavior

Defining boundaries

Conveying identity

Promoting commitment

Blocking mergers

Inhibiting diversity

Inhibiting change

Blocking acquisitions

Functions Liabilities

Organizational Culture

Managing, Changing, and

Merging Cultures

Managing through stories, heroes, symbols and

ceremonies

Culture often need to be changed to ensure

organizational success

Merging cultures through symbolic leaders

Adaptive Organizational Cultures

External focus -- firm’s

success depends on

continuous change

Focus on processes more

than goals

Strong sense of ownership

Proactive --seek out

opportunities

AP/Wide World

Bicultural Audit

Part of “due diligence” in merger

Minimizes risk of cultural collision by diagnosing

companies before merger

Three steps in bicultural audit:

1. Collect artifacts

2. Analyze data for cultural conflict/compatibility

3. Recommend solutions

Merging Organizational Cultures

Assimilation

Deculturation

Acquired company embraces acquiring firm’s culture

Acquiring firm imposes its culture on unwilling acquired firm

IntegrationBoth cultures combined into a new composite culture

SeparationMerging companies remain separate with their own culture

Strengthening

Organizational

Culture

Foundersand leaders

Culturallyconsistentrewards

Stableworkforce

Selectionand

socialization

Managing theculturalnetwork

Strengthening Organizational Culture

Low EmployeeTurnover

High BehavioralControl

Strong Versus Weak Cultures

Commitment toCore Values

(widely shared)

Intensity ofCore Values

Studies show that culture is closely

related to the effectiveness of

organizations.

Effectiveness depends on . . .

the core values and beliefs of the members of

the organization.

the policies and practices used by the

organization.

the success in translating the core values and

beliefs into policies and practices.

the match between values, beliefs, policies,

practices, and the organization’s environment.

Effectiveness is related to . . .

involvement = participation.

consistency = shared beliefs and values.

adaptability = ability to recognize the need for

change and the willingness to change

mission = shared purpose.

Model of Organizational Culture Types

Four Culture Types

Studies on Culture Types

Deshpande, Farley, and Webster (1993) found

that competing values of the market culture

outperform those of the clan culture.

Those of the adhocracy culture outperformed

those of the diagonally opposing hierarchy

culture.

The speed of response to environmental

changes which determine a higher performance

is thus culturally dependent.

EXERCISE-

Organizational Culture Assessment

Instrument (OCAI)

Clan Adhocracy

Hierarchy

Market

1

2

3

4

5

5

4

3

2

1

Case Study: Organizational Culture and

Performance

Clan Adhocracy

Hierarchy Market

12

34

5

54

32

1

Clan Adhocracy

Hierarchy Market

12

34

5

54

32

1

Case Study: Organizational Culture

and Performance

•Started GSM 1999

•5000+ cellsites

•25 Million subscribers

•58% market share

•Net Income 2003 – P16.1B

•Net Income 2002 – P6.2B

•Started GSM 1994

•3000+ cellsites

•14 Million subscribers

•40% market share

•Net Income 2003 – P10.3B

•Net Income 2002 – P6.9B

•Started GSM 2002

• 2 million subscribers

Clan Adhocracy

Hierarchy Market

12

34

5

54

32

1

Clan Adhocracy

Hierarchy Market

12

34

5

54

32

1

Clan Adhocracy

Hierarchy Market

12

34

5

54

32

1

Case Study: Organizational Culture

and Performance

Clan Adhocracy

Hierarchy Market

12

34

5

54

32

1

Clan Adhocracy

Hierarchy Market

12

34

5

54

32

1

Case Study: Merging Cultures

Clan Adhocracy

Hierarchy Market

12

34

5

54

32

1

Clan Adhocracy

Hierarchy Market

12

34

5

54

32

1

Clan Adhocracy

Hierarchy Market

12

34

5

54

32

1

Leadership Practices and Culture Types

The Learning Organization:

Management Approach in New Millenium

The learning organization approach to management

is the management approach based on an

organization anticipating change faster than its

counterparts to have an advantage in the market

over its competitors.

Environment in the millenium•Information and electronic age

•Information and knowledge is going to be readily

available to us all

•Information speed through Internet

•The future is going to be dominated by our need to

understand systems.

Learning Organization Culture

Has a culture that values sharing knowledge to

adapt to the changing environment and

continuously improve» From “Management Fundamentals” by Lussier

Clan Adhocracy

Hierarchy Market

12

34

5

54

32

1EXTERNALINTERNAL

When Companies Seek to Foster Certain

Culture Types

Clan culture needs the five leadership practices

Adhocrarcy culture needs enabling others to act and

encouraging the heart

Hierarchy culture should not use enabling others to act

and encouraging the heart;

Market culture should consider alternatives to leadership

practices.

What is the Organizational Culture in

the Philippines?

Philippine Organizational Culture

Espouses a reorientation in the organization to three

values, namely:

kaugnayan (identity),

karangalan (pride)

katapatan (commitment).

To accentuate these core values, corporate

leaders emphasize

paternalism (pagbabahala and pananagutan),

personalism or pakikipagkapwa (treating a person as a fellow

human being),

familism (giving importance to the family as a social unit).

Clan Adhocracy

Hierarchy Market

12

34

5

54

32

1