Culture

IX-A

Culture

• Collection of values and norms that are shared by people and groups in an organization that control the way they interact with each other andwith stakeholders outside the organization.

Values

• Beliefs and ideas about what kinds of goals members of an organizations should pursue and about the appropriate kinds of behaviour organizational members should use to achieve these goals.

Norms

• Guidelines that prescribe appropriate kinds of behaviour by employees in particular situations & control the behaviour of organizational members towards one another.

Examples

• GE:entrepreneurship, open communication

• Microsoft: long hours, casual dress

• IBM: very business like, pinstriped blue suits

Culture reinforcement

• Stories and myths play an important role in the transmission of values and norms among the members.

• Earlier founders have been known to set up the cultural tone of an organization such as Sam Walton’s low-cost and frugal approaches that reinforced Wal Marts low-cost strategy.

• HP’s reputation of not being a “hire and fire company” is derived from the leadership style of the founders.

Transmission culture

• Organizational Socialization is how people learn organizational culture.

• Through socialization people internalize and learn the norms and values of the culture so that they become homogenized members.

Culture Vs Structure• Organization Structure affects the culture of an

organization e.g. the way managers delegate authority and divide up task relationships such as Dell striving “to get as close to customer” as possible.

• Contrast the structure to Ford’s initial highly centralized structure where senior managers were hesitant to take risks (led to the very slow pace of changes and innovation).

Culture vs Structure

• Adaptive Culture (Encourage innovative):Promotes and rewards initiative by middle and lower-level managers.

• Inert Culture (Cautious and conservative): Does not value initiative by the middle

and lower-level managers - even discourage such behaviour.

Cultural Dilemma

• Do you know why you are so successful ?

• Has past success numbed your antenna ?

• Would a change of direction be an admission of failure ?

• How do you reconcile individual excellence against team work?

Social Capital

• The influence of norms and values on how people work together and how they treat one another and customers is called the Social Capital.

• Social Capital refers to the quality of interaction among people and whether they share a common perspective.

• It relates to both cultural and ethical aspects of an organization.

Social Capital

• Strong cultures have profound impact on the performance of a company , can be either positive or negative.

• Fortune magazine lists 100 best companies to work for on the basis their social capital comprising of 5 basic constituents :- credibility (communication) , - respect, fairness, pride (in your organization) and- camaraderie (sense of being a family)

Organizational Anatomy7s Framework

The 7 elements that can make a difference in the organizational culture and hence performance (McKinsey):

Hard Elements - StrategyStructureSystem

Soft Elements - Shared values (culture)Style (leadership)Staff (people)Skills (core competence)

7S

• Each of the 7s elements should be supportive to the 8 attributes (In search of excellence, Peters and Waterman, 1982)

#1. Bias for action: Ready, Fire, Aim? EDS vs IBM on problem solving (Perrot quote)

#2. Close to customers: Dell, Supermarket war

#3. Autonomy and Entrepreneurship: Encourage employees to take initiatives ( Watson and the $million employee

failure).

#4. Productivity through people: Motivate employees to do their best - Theory Z? A receptionist lending cuff link to the hotel guest (In search of excellence)

7S

#5. Stick to Knitting: Staying with the business it knows best - Coca Cola, Microsoft.

#6. Simple form, lean structure: Design the organization with the number of managers and hierarchies that are necessary to get the job done – Dell has a very flat structure

#7. Simultaneous loose-tight properties: Should be sufficiently decentralized to permit employees participation but centralized enough for management to make sure that the company pursues its strategic mission and cultural values are followed – Lou Gerstner’s experience of the European offices