Study Guide
Unit 5: Organizational Culture
5a. Evaluate why culture is a crucial part of organizations
- What are the three levels of organizational culture, and how do they describe the overall culture?
- How does organizational culture contribute to the organization's success?
- How is organizational culture perpetuated?
- How is organizational culture maintained?
Organizational culture is the system of shared values, norms, attitudes, and beliefs an organization holds that guide employee behavior. Observable artifacts tell the outside world about the organization's culture at the surface level. Shared values are what the organization wants newcomers to learn and internalize as they become oriented with the organization. Underlying assumptions are the taken-for-granted knowledge people come to understand about the organization after becoming an insider. Organizational culture contributes to success by carrying the founder's values and personality into future generations. Culture allows the same beliefs and norms that made the company originally successful to continue the company's success even when the founder is gone.
Organizational culture is perpetuated by the Attraction-Selection-Attrition (ASA) process. People with values, beliefs, and attitudes that match those of the organization are attracted to it and then selected by the organization through the recruitment process. Those who no longer fit the organizational culture leave via attrition. While members of the organization, employees learn the specifics of the culture through socialization (or onboarding). Culture is maintained through the systems built into organizational operations. Mentors teach new employees the way things get done within the organization. Leaders use their vision and style to inspire and motivate employees to give their best to the organization. Leaders are also role models for the correct and acceptable behavior expected of all employees. Finally, culture is reinforced through the organization's reward systems. It has been said that what's rewarded gets done. If people are praised and recognized for good behavior and given negative consequences for unacceptable behavior, the beliefs and values on which leadership focuses will become clear.
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5b. Analyze the role of leadership in creating and changing organizational culture
- How do leaders create organizational cultures with specific characteristics?
- What are the six steps to changing organizational culture?
- What is accountability, and why would leaders want to create cultures of accountability in their organizations?
From the beginning, leaders infuse organizations with their values, beliefs, and attitudes. The organizational environment then determines if this set of values will be successful. If so, the organization hires more people with the same values and creates norms according to those values as the organization grows. If leaders want organizations to have specific characteristics, they must model their behavior for others and reward them when they follow the model. Likewise, people who do not behave appropriately must be removed from the organization. The organization also needs training, symbols, and stories supporting the specific cultural characteristics the leader wants to cultivate.
Because organizational culture is embedded in its structure from the start, it is quite difficult to change. However, like any other organizational change, it can be accomplished by creating a sense of urgency to change people's mindset and following a deliberate process. Once people understand why change is necessary, you may need to change leaders and other key players who may be blocking the change process. New players become role models for the desired behavior, and training is offered to existing employees. Rewards are given to those who accept and display the changes, while negative consequences happen to those who don't. Finally, the change is embedded in the new culture by changing the stories and symbols that support it so that it can be seen by the outside world and taught to new members.
For example, say a corporation has just survived an ethical scandal involving its executives that almost toppled the company. As part of its government-directed reorganization, the board of directors demands a new culture of accountability. Accountability is an obligation or willingness to accept responsibility for one's actions. Instead of continuing with a culture of checks and balances, the unethical executives would be fired, and new, accountable leaders would be hired to establish a culture of accountability. All systems would be changed to support a new culture in which everyone's roles were clear, and people accepted the consequences of their actions in the areas where they assumed responsibility. This culture allows work to be done efficiently and effectively with less supervision because people are accountable for their actions.
To review, see:
- Creating and Maintaining Organizational Culture
- Culture and Innovation
- Creating Culture Change
- Accountable Culture
5c. Assess various types of organizational culture
- What are the dimensions of culture according to the organizational cultural profile (OCP) framework?
- What are the dimensions of culture in the competing values framework (CVF)?
- Like the moral of The Blind Men and the Elephant, should we assume that organizations have but one culture?
In the organizational cultural profile (OCP) framework, culture is represented by seven values.
- Innovative cultures are flexible and adaptable and experiment with new ideas.
- Aggressive cultures value competitiveness and outperform competitors.
- Outcome-oriented cultures emphasize achievement, results, and action as important values.
- Stable cultures are predictable, rule-oriented, and bureaucratic.
- People-oriented cultures value fairness, supportiveness, and respect for individual rights.
- Team-oriented cultures are collaborative and emphasize cooperation among employees.
- Detail-oriented cultures value precision and pay attention to details.
The competing values framework (CVF), by Cameron and Quinn (1999), has been one of the most popular models of culture for the past 35 years. It comprises two dimensions: orientation of the culture (internal vs. external focus) and the environment in which the organization functions best (flexible, fast-paced vs. stable, controlled).
- An external focus in a flexible environment predicts a dynamic, entrepreneurial adhocracy culture.
- An internal focus in a flexible environment predicts a people-oriented, friendly clan culture.
- An internal focus in a stable environment predicts a process-oriented, structured hierarchy culture.
- An external focus in a stable environment predicts a results-oriented, competitive market culture.
It is important to remember that while culture tends to be generalized over organizations as a Whole, many subcultures emerge within different departments, branches, or geographic locations. These can be quite different and independent from broader organizational culture. Sometimes, they may even directly oppose those of the parent company, forming a counterculture.
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5d. Analyze the difference between strong and weak cultures
- How does a strong culture differ from an organizational culture in general?
- How would you define a weak organizational culture?
- How might a strong culture be an asset and a liability for an organization?
A strong culture is one that organizational members actually share. In other words, everyone may not accept culture individually, but an organization has a strong culture when everyone shares the same views. A weak culture is one that not all members accept. When an organization must patrol and castigate some members, it becomes less efficient and effective in its productivity and, thus, less successful.
A strong culture is usually an asset for an organization in the short term because it acts as a form of social control. When internalized norms and values guide people's behavior, the organization requires less supervision to run more efficiently and effectively. However, strong cultures can be a liability in the long term because they are extremely difficult to change. An organization will fail if it is too set in its ways and refuses to adapt to changing environmental demands.
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5e. Explain the role of culture in organizational responsibility and ethics
- What are ethics and corporate social responsibility (CSR)?
- Why do they matter to organizations, particularly in the 21st century?
- How does culture support organizations in upholding their ethics and CSR?
Ethics are the standards of behavior we hold ourselves to in our personal and professional lives. Corporate social responsibility (CSR) is when a business views itself as a member of society with social obligations and responsibility for its effects on environmental and social well-being. In the second half of the 20th century, organizations began running under the philosophy that they need not be solely profit-driven and that each part of the triple bottom line, including the environment, society, and finance, was equally important. The idea of stakeholders, all the individuals and groups affected by a business' decisions, being just as important as stockholders (or shareholders), individuals and institutions that own stock (or shares) in a corporation, became the rule. Still, at the dawn of the 21st century, the US saw many corporate scandals that revealed a lack of ethics at the top of some prestigious corporations. Between the passage of the Sarbanes-Oxley Act (2002), a law that created improved standards that affect all publicly traded firms in the United States, and the rapid spread of information via the Internet, there are even stricter consequences for corrupt practices today than ever. Therefore, it is crucial to behave ethically and responsibly at all times.
Organizational culture supports ethics and CSR through the nature of organizational leaders, a switch to long-term thinking about profitability and success, and the idea of ethics and CSR as corporate strategy. If organizational founders or leaders value ethics and CSR, they will infuse their culture with these values. They will be upheld in everything the organization does and all its decisions. Success is no longer defined simply by how much money an organization earns. Therefore, profitability can no longer be the only measure of success. Even if it were, these days, profitability comes from more from daily consumer transactions. Investments based on reputation, repeat business, and referrals can earn an organization far more business than everyday customer interaction. Thinking long-term about their relationships with communities and how they treat all stakeholders are the new norms for organizations. Finally, "doing good to do well" is a popular strategy. Ethics and profits do not have to be opposed. Organizations can choose ethics and social responsibility as the reason they are in business; investors and customers will pay premiums for their shares and merchandise.
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Unit 5 Vocabulary
This vocabulary list includes terms you will need to know to successfully complete the final exam.
- accountability
- adhocracy culture
- aggressive culture
- Attraction-Selection-Attrition (ASA) process
- attrition
- clan culture
- competing values framework (CVF)
- corporate social responsibility (CSR)
- culture of accountability
- detail-oriented culture
- ethics
- hierarchy culture
- innovative culture
- key player
- market culture
- mentor
- negative consequences
- observable artifacts
- organizational cultural profile (OCP) framework
- organizational culture
- outcome-oriented culture
- people-oriented culture
- reward
- reward system
- role models
- Sarbanes-Oxley Act (2002)
- sense of urgency
- shared values
- social control
- socialization
- stable culture
- stakeholders
- stockholders
- stories and symbols
- strong culture
- team-oriented culture
- underlying assumptions
- weak culture