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Organizational Culture,


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Title: Organizational Culture,

Chapter 8
  • Organizational Culture,
  • Empowerment, and Ethics

Humane, Empowering Work Environments
Humane, Empowering Work Environment
Building a ConstructiveOrganizational Culture
  • Organizational culture consists of the values,
    symbols, stories, heroes, and rites that have
    special meaning for a companys employees.
  • Culture represents the emotional, intangible part
    of the organization. If structure is the
    organizations skeleton, culture is its soul.
  • Many firms are now attempting to develop cultures
    that are helpful in motivating their employees
    and keeping them committed to the firm.
  • 47 of 400 CEOs in North America and Europe said
    that reshaping culture and related employee
    behavior took up a great deal of their time and
    was as important as monitoring financial
  • A recent study of 200 mergers found incompatible
    cultures to be the primary cause of failures.

Functions of Organizational Culture(Figure 8-1)
Elements of Organizational Culture
Organizational Culture
Focus on ManagementOrganizational Culture at
  • Selected as one of the 100 Best Companies to
    Work for in America,Quad/Graphics is a
    remarkable success story.
  • The companys philosophy is Have fun, make
    money, and dont do business with anyone you
    dont like.
  • Harry Quadracci, who has been called the P. T.
    Barnum of Printing, describes the company as a
    circus, a continuous performance of highly
    creative and individualistic troupes.
  • Employees at Quad/Graphics are empowered, dont
    sign time cards, are continually learning, and
    receive a variety of unique benefits.

Organizational Values
  • Organizational values are beliefs held by an
    individual or group that speak to the actions and
    ends that organizations ought to or should

The Importance of Values
  • Every excellent company we studied is clear
    on what it stands for, and takes the process of
    value shaping seriously. In fact, we wonder
    whether it is possible to be an excellent company
    without clarity on values and without having the
    right sorts of values. Peters Waterman, In
    Search of Excellence

Focus on Management Values at Hewlett-Packard
  • The HP Way
  • We have trust and respect for individuals
  • We focus on a high level of achievement and
  • We conduct our business with uncompromising
  • We achieve our common objectives through teamwork
  • We encourage flexibility and innovation

  • Symbols are things that stand for or suggest
    something else.
  • As examples
  • office assignments signal status
  • dress codes suggest the level of formality
  • logos can influence customer and employee
  • an action can be symbolic, as in the case of the
    Lambeau Leap

Some Forms of Symbols
Web Wise The Land OLakes Logo
  • The importance of company symbols to those
    outside the firm is seen in a study of customers
    ratings of 47 firms on things such as quality and
  • 600 customers were asked to rate the firms on the
    basis of their names, and another 600 were also
    provided with the company logo.
  • The logo had a strong influence on ratings. For
    example, Motorolas score rose by 55.
  • Land OLakes kneeling native American woman logo
    dropped the companys rating by 12.
  • http//

Forms of Narratives
  • Stories dramatize relatively ordinary, everyday
    events within organizations in order to convey
    important cultural meanings.
  • Legends are more uplifting than stories and
    portray events that defy explanation by ordinary
  • Myths are dramatic, unquestioned narratives about
    imagined events.
  • Sagas describe heroic exploits performed in the
    face of adversity.

Recurring Story Themes
  • Equality. These recognize that members must deal
    with status inequalities in organizations.
  • Security. These recognize that members desire
    security, but that organizations can threaten
    their security.
  • Control. These recognize tensions between
    members desire to control events and their
    realization that they cant always do so.

Focus on ManagementStories at 3M
  • The importance of innovation as a 3M value is
    supported by a story often repeated throughout
    the firm concerning transparent tape.
  • According to the story, an employee accidentally
    developed cellophane tape but was unable to get
    superiors to accept the idea.
  • The employee was able to sneak into the corporate
    boardroom and tape down the board members copies
    of the minutes with the transparent tape.
  • The board was impressed enough with the novelty
    to give it a try, and the product was incredibly
  • The story reinforces the importance of innovation
    and encourages 3M employees who believe in their
    ideas to never take no as a final answer.

  • Heroes are company role models. In their
    performance of deeds, embodiment of character,
    and support of the existing organizational
    culture, they highlight the values a company
    wishes to reinforce.
  • Heroes are the main characters in the stories
    relayed throughout an organization.

  • Rites combine cultural forms into a public
  • Some forms of rites include
  • Rites of Passage (completion of Army basic
  • Rites of Enhancement (awards ceremony)
  • Rites of Integration (company Christmas party)

  • Rituals are relatively simple combinations of
    repetitive behaviors, often carried out without
    much thought, and often brief in duration.
  • For example
  • how members greet one another
  • how visitors are met at airports
  • who eats where and with whom
  • how a phone conversation should proceed
  • Rituals are often more important for their
    expressive, emotional consequences than for more
    practical reasons

Focus on Management Herb Kelleherof Southwest
  • Herb Kelleher is cofounder, chairman of the
    board, and CEO of Southwest Airlines.
  • Under Kellehers guidance, Southwest has been
    remarkably successful. It has been profitable
    every year since 1973 yet maintains the lowest
    fares. It is the safest airline in the world and
    ranks number one in the industry for service,
    on-time performance, and lowest employee turnover
  • Fortune magazine named it the most admired
    airline and best place to work in the United
  • Kelleher has created a unique culture at
    Southwest Airlines through a mix of humor,
    altruism, concern for others, and straight talk.

Focus on ManagementCulture at Walt Disney
  • Employees -- primarily high school and college
    students -- are critical to Disneys success.
  • Employees must convey the Disney fantasy and
    create happiness while carrying out repetitive
    work at low pay.
  • Disney is heavily unionized, with 24 unions at
    Disneyland alone.
  • To deal with this, Disney pays close attention to
    organizational culture.

Focus on ManagementCulture atWalt Disney
Company (Continued)
  • Selection. Disneys clean-cut and conservative
    image attracts the kind of employees it wants. A
    film shows prospective employees the sort of
    discipline, grooming, and dress code the company
  • Socialization. Cast members participate in an
    ongoing program that continually reinforces
    Disneys values, philosophies, and guest service
  • Language. Employees are cast members and they
    are cast in roles. Cast members work
    onstage or backstage and they wear
  • Ceremonies. Service recognition awards, peer
    recognition awards, banquets, and informal
    recognition parties help boost morale.

Web Wise Harley Owners Group (HOG)
A good example of rites of integration is the
meetings of Harley-Davidsons HOG
(Harley-Owners Group) chapters, where the bond
is metal as hundreds of Harley riders hit the
road together to help out worthy causes of just
share the awareness. http//
Some Guidelines for Assessing Organizational
  • Look around -- what do the headquarters and other
    buildings look like? How are people dressed?
    How much interaction is there? Who is talking
    with whom? How does the place feel?
  • Ask to see newsletters and other internal
    documents. What values are emphasized? Who are
    the heroes held up for praise? Are parties,
    celebrations, or other ceremonies mentioned?
    What sorts of things are discussed?
  • Look at annual reports or other communications to
    those outside the firm. What face is being
    presented to the world?

Guidelines for Assessing Organizational Culture
  • Ask, Can you tell me anything about what the
    culture is like here? Are there stories that
    people here tell about X?
  • Ask, What values are stressed in X? How are
    they communicated? How are they reinforced?
  • Ask, Who is looked up to in X?
  • See what you can learn about rites and ceremonies
    in the organization. What happens when people
    accomplish something? Are there rites of
    passage such as promotion ceremonies and
    retirement parties? Are there regular
    get-togethers such as holiday parties, social
    events, and company softball games?

Guidelines for Assessing Organizational Culture
  • Ask, What sorts of behaviors are expected and
    rewarded here? What sorts of behaviors are
  • Ask people outside the firm what they think of
  • Check magazines, newspapers, and other sources to
    get clues about the culture of the organization.
  • As appropriate, use quantitative measures of
    organizational culture.

Some Guidelines for Assessing Organizational
Culture (Continued) --Making Sense of the
  • Overall, how salient is culture?
  • Do leaders mention culture, values, and heroes in
    their messages?
  • Do organizational members talk much about culture
    and its elements?
  • What primary themes emerge?
  • Are responses consistent across people, levels,
    and units?
  • How does everything fit together?
  • Are valued behaviors rewarded?
  • Are symbols, stories, heroes, and ceremonies

  • Subcultures are distinctive clusters of
    ideologies, cultural forms, and other practices
    within the larger culture.
  • Subcultures may develop among members of the
    organization who have common training or duties,
    similar personal characteristics, frequent
    interaction, or shared experiences.
  • Subcultures may lead to conflict and
  • Potential benefits of subcultures include
  • accomplish certain tasks while permitting the
    primary culture to present a certain face to
    the world
  • provide diversity of views, assumptions, and
  • serve as seeds for desired change

  • Countercultures are subcultures that contradict
    the dominant culture.
  • Countercultures help clarify the bounds between
    acceptable and unacceptable behavior.
  • Countercultures may arise
  • to provide a safe haven for the development of
    innovative ideas.
  • to encourage the questioning of old, and perhaps
    outmoded, values.
  • to handle severe, shared employee discontents.
  • because of mergers or acquisitions of firms with
    differing cultures.

Four Views of How OrganizationalCulture Affects
Theory Z
  • In his book, Theory Z, William Ouchi presented
    comparative studies of Japanese and American
    management techniques.
  • He identified three types of organizations
  • Typical Japanese (Type J)
  • Typical American (Type A)
  • Ideal Hybrid (Type Z)
  • The Type Z organization
  • Emphasis on group decision making and consensus
  • Long-term employment
  • Individual achievement and advancement

Type A. Type J, and Type Z Organizations (Figure
In Search of Excellence
  • The most popular writing on the relationship
    between organizational culture and effectiveness
    was presented by Tom Peters and Robert Waterman
    in In Search of Excellence.
  • Based on their observation of 62 successful
    firms, including Hewlett-Packard, McDonalds,
    Disney Productions, Levi Strauss, and Johnson
    Johnson, Peters and Waterman concluded that eight
    key attributes of the organizational culture
    contributed to their success.

Attributes of Effective Organizational Culture
(Peters Waterman)
Reactions to In Search of Excellence
  • There have been several challenges to the
    conclusions of In Search of Excellence.
  • Excellence was based on financial performance.
    Were the firms also successful in terms of social
    responsibility and social responsibility?
  • In the years following publication of In Search
    of Excellence, several of the excellent
    companies suffered financially.
  • One study found no significant performance
    differences between a subset of the Peters and
    Waterman excellent companies and a set of firms
    representative of the Fortune 1,000 industrials.
  • There were also no differences between the two
    groups of firms in the extent to which they
    adhered to the Peters and Waterman attributes of
    excellent companies.

Strong Cultures
  • Strong culture is variously defined in terms of
  • degree to which values and ideologies are widely
    shared and clearly ordered in terms of their
    relative importance
  • degree of extremity of values strength of
    commitment to values
  • It seems simplistic to assume that having a
    strong culture would necessarily lead to success.
    There are certainly some strong cultures that
    are inconsistent with demands of the environment,
    and a strong culture may discourage change.
  • Having a strong culture may not be enough it
    also has to be right

Strategically Appropriate Culture
  • For culture to be effective, it must
  • be distinctive
  • be valuable
  • be hard to imitate
  • Court ruling that there may be instances in
    which the law might recognize a perceived threat
    to a corporate culture that is shown to be
    palpable (for lack of a better word),
    distinctive, and advantageous.

Neurotic Leaders and Their Firms(Figure 8-4)
  • Dramatic Needs attention, Dependency needs
    of excitement, feels a subordinates
    complement sense of entitlement strong leader
    tendencies of chief executive
  • Suspicious Vigilantly prepared Fight or flight
    culture, to counter attacks including
    dependency, and personal threats fear of
    attack, lack of trust
  • Detached Withdrawn and not Lack of warmth or
    emotions involved lacks conflicts jockeying
    for power interest in present insecurity
  • or future

Neurotic Leaders and Their Firms (Figure 8-4)
  • Depressed Lacks self-esteem, Lack of initiative
    passivity self-confidence, or negativity lack
    of motivation initiative fears ignorance of
    markets success and tolerates leadership
    vacuum mediocrity or failure
  • Compulsive Tends to dominate Rigid, inward
    directed, insular organization
    from subordinates are submissive, top to
    bottom uncreative, insecure dogmatic or
  • perfectionist

The Bottom Line Developing an Effective
Organizational Culture
Develop a Mission Statement for the Firm
Guidelines for Culture Change
  • Understand the current culture.
  • Change at the right time.
  • Value diversity.
  • Understand resistance to culture change.
  • Recognize the importance of implementation.
  • Use appropriate cultural forms.
  • Give it some time.

The Bottom Line Changing the Cultureof an
Define the Elements of the New Culture
Empowering Others
  • To foster a creative and productive environment
    where employees are motivated to achieve
    exceptional performance, the organizations
    culture needs to empower its employees.
  • Empowerment seeks to break the cycle of
    powerlessness in organizations by giving
    employees a real sense of control.
  • Empowerment gives people in organizations the
    ability to get things done, often at levels of
    the hierarchy where the power can be most
    directly and effectively applied.

  • I am the people -- the mob -- the crowd -- the
  • Do you know that all the great work of the world
    is done through me?
  • Carl Sandburg

  • Learned helplessness is a condition that results
    from the belief that ones behaviors simply dont
    make a difference. Learned helplessness results
    in feelings of powerlessness.
  • Causes of powerlessness in organizations include
  • rules wont change
  • bosses are set in their ways
  • things have always been done a certain way
  • the assembly line is relentless

Some Consequences of Powerlessness
Stages of the Empowerment Process(From Figure
Some Conditions Leading to Powerlessness
  • Organizational factors such as bureaucratic
  • Autocratic supervision
  • Rewards that arent tied to performance
  • Routine, simplified jobs

Some Empowering Managerial Practices
  • Let the people who work for you participate in
    decision making. They will gain a sense of
    control over their work lives and will be more
    enthusiastic about implementing decisions.
  • Offer control over work processes, such as the
    ability to stop the assembly line.
  • Tie rewards to performance. Employees naturally
    feel powerless when they see that their actions
    dont directly influence things they care about.
  • Express confidence, encouragement, and support.
    Celebrate small wins and provide assurance that
    obstacles can be overcome.

Sources of Self-Efficacy Information
  • Enactive attainment. People may gain
    self-efficacy through actual mastery of a task.
  • Vicarious experience. People may gain
    self-efficacy by seeing that others who are
    similar can master a task.
  • Verbal persuasion. Employees may simply be
    convinced through words of encouragement and
    feedback that they can master tasks.
  • Emotional arousal. Techniques that create
    emotional support or foster a supportive
    environment may reduce the emotional arousal that
    lowers self-efficacy.

Focus on Management An Empowering Culture at
Saturn Corp.
  • Saturn employees at plants in Spring Hill,
    Tennessee and Wilmington, Delaware dont punch
    time clocks.
  • Labor and management (all called team members)
    share the same cafeteria.
  • The union gave up rigid work rules, and GM
    (Saturns parent corporation) abandoned most of
    its rigid hierarchy.
  • Saturn employees were grouped into small teams
    and given responsibility for everything from
    covering absent members to major production
  • A special team, called Saturn Consulting
    Services, is available to provide consulting and
    training expertise to organizations wanting to
    learn from the Saturn experience.

Focus on ManagementEmpowerment at Federal
  • The goal of Fred Smith, chairman and president of
    Federal Express, was to create a power
    environment. He calls empowerment the most
    important element in managing an organization.
  • To create a power environment, Fed Ex has a
    philosophy that fosters respect for human
    dignity, ingenuity, and potential.
  • Fed Ex has a job-secure environment in which
    people arent afraid to take risks, jobs have
    been redesigned to increase employee power, and
    there are many opportunities for promotion from
  • The company also has many programs and processes
    designed to empower employees. These include an
    annual employee attitude survey followed by an
    action phase to deal with concerns, as well as a
    process for resolving grievances, an awards
    program, and others.

The Bottom Line Empowering Employees
Assess the Current Job Responsibilities of
Encouraging Ethical Behavior
  • Ethics are principles of morality or conduct.
  • Business ethics are rules about how businesses
    and their employees ought to behave.
  • Business ethics help to guide an organizations
    efforts and offer a foundation for its culture.
  • The need for ethical behavior in organizations
    has been dramatized by some very visible ethical
    violations, including kickbacks, bribes, and
    myriad other forms of corruption.

Global Perspectives Bribes,Quanxi, and Sokaiya
  • Bribery in overseas dealings has increased
    sharply in the last two decades it has been
    estimated that bribes paid to acquire large
    contracts in developing countries now exceed 15
    of the contracts value.
  • Outright bribes and payments for quanxi, or
    connections, total 3 billion to 5 billion in
  • Japan has been rocked by evidence that corporate
    leaders have made large payments to yakuza, or
    gangsters, to secure favors and prevent
    retribution, including to sokaiya, gangsters who
    obtain information about illicit corporate
    activities and threaten to disclose it.

Ethics and Firm Performance
  • One recent study found that companies that had an
    ethical commitment -- as evidenced by inclusion
    of ethics codes in the management reports within
    annual reports -- had much higher levels of
    performance than did those without such codes.
  • Also, some companies with an ethical commitment
    had higher scores on Fortune reputation ratings.
  • Committing specific unethical acts may have
    disastrous consequences for organizations and
    their officers.

Whistle Blowing
  • Whistle blowers are individuals who report to the
    press, government, or other parties outside the
    firm illegal or unethical activity within the
  • Whistle blowers may find their jobs and careers
  • About 35 states now have laws protecting whistle
  • The federal False Claims Act allows whistle
    blowers to sue government wrongdoers in the name
    of the United States.
  • Opponents of whistle blower protection argue that
    it may be misused by marginal employees, may
    result in sidestepping of internal resolution
    mechanisms, and may lead to dialing-
    for-dollars whistle blowing.

Legal Remedies for Unethical Behavior
  • One of the earliest legal codes for dealing with
    unethical behavior was the Code of Hammurabi,
    consisting of 282 rules outlining all aspects of
    public involvement.
  • Governments are increasingly applying criminal
    laws to companies and company executives.
  • The Foreign Corrupt Practices Act of 1977 was
    enacted in response to disclosures that American
    companies were paying bribes to high government
    officials in foreign countries in an attempt to
    win contracts and sell products and services.
  • The 1991 Sentencing Guidelines for Organizations
    provide tough sanctions, including jail sentences
    and fines in the millions of dollars, for those
    convicted of corporate lawbreaking.

Guidelines for Ethical Behavior
  • Be honest, direct, and open in your dealings with
  • Take ethical stands on difficult issues.
  • Ask whether your actions respect the rights of
  • Ask whether your actions are just.
  • Ask how you would feel if the act was done to
  • Use your power in ethical ways.
  • Apply the sunlight test.

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Encouraging Ethical Behavior in Others
  • Promote, communicate, and reward ethical behavior
    as a key value.
  • Model ethical behavior in public and private.
  • Speak out against unethical behavior when you see
  • Communicate expectations regarding ethical
    behavior, including through a code of ethics.
  • Make sure that goals dont push employees into
    unethical behavior unreasonable goals are often
    the motivation for lying, cheating, and stealing.

Encouraging Ethical Behavior in Others(Continued)
  • Encourage ethics training.
  • Give employees ways to voice their ethical
    questions and concerns, such as through use of
    ethics hot lines and ombudsmen.
  • Set up internal programs to resolve ethical

A Short Code of Ethics
The Bottom Line Encouraging EthicalEmployee
Develop a Code of Ethics