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BA105: Organizational Behavior


BA105: Organizational Behavior Professor Jim Lincoln Week 6: Lecture – PowerPoint PPT presentation

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Title: BA105: Organizational Behavior

BA105 Organizational Behavior
  • Professor Jim Lincoln
  • Week 6 Lecture

  • Last time Leadership vision and charisma as OB
    levers for change
  • This week Analyzing and managing organizational

Class business exams next week
  • Essay (Tuesday, March 2)
  • You will analyze a case (announced Thursday) that
    deals with structure, culture, and leadership
  • One or more exam questions will guide your
  • See p. 2 in the syllabus on how the exam will be
  • A model exam will be put on the website
  • Objective Thursday, March 4
  • 25-30 true-false, multiple-choice questions over
    required reading, lecture, and discussion
  • I will hold extended office hours on Thursday
    (330-530) and Friday (to be announced).

Class business Thursday agenda
  • Team project proposal due
  • Mary Kay video
  • Body Shop case
  • What is the culture of the Body Shop and where
    did it come from?
  • How (and how effectively) did TBS manage its
  • Was the Body Shops penchant for modelling itself
    on the opposite of standard cosmetic industry
    practice a matter of core values or smart
    business strategy?
  • Is the story of the Body Shop chiefly one of
    culture or one of leadership?
  • Discuss upcoming exams

Organizational Design
Informal Organization (Culture, leadership,
networks, politics)
Input Environment (Competition,
change) Resources (munificence) History (age,
conditions at founding)
Formal Organization (job titles, departments,
reporting hierarchy, IT HR systems
Output Systems Unit Individual
Tasks (technologies, work flows)
Strategy (diversification
People (ability, skills, motivation, biases)
  • The nature of culture
  • Fuzzy, ephemeral, intuitive
  • No one can define the HP way. If it werent
    fuzzy, it would be a rule (HP Vice President)
  • Emotional, charismatic, spiritual
  • Takes emotional intelligence to navigate
  • Holistic and enveloping

The Berkeley Way
  • It's invisible but omnipresent. Most know it
    exists but few can actually define it. Newcomers
    are perplexed by it. Confronting it head on can
    be dangerous.
  • The name of this nebulous creature? It's known
    on campus as "The Berkeley Way" -- an unwritten
    code of conduct that governs how people go about
    their business.
  • The Berkeleyan, February 16, 2000

Where did the concept of organization culture
come from?
  • Discovery of Japanese management in 80s
  • William Ouchi Theory Z.
  • Peters and Waterman In Search of Excellence
  • Richard Pascale and Anthony Athos The Art of
    Japanese Management.
  • Ezra Vogel Japan as No. 1.
  • James Abegglen and George Stalk Kaisha

What is culture?
  • Shared values, norms, beliefs/understandings
  • Manifested in
  • Ritual, ceremony, tradition
  • Folklore, heroes, legends, stories
  • Channeled through
  • Informal networks
  • Logos, slogans, PR, advertising, annual reports,

Southwest Airlines Values
  • Value 1 Work should be funit can be playenjoy
  • Value 2 Work is importantdont spoil it with
  • Value 3 People are importanteach one makes a
  • It used to be a business conundrum Who comes
    first? The employees, customers, or
    shareholders? Thats never been an issue to me.
    The employees come first. If theyre happy,
    satisfied, dedicated, and energetic, theyll take
    real good care of the customers. When the
    customers are happy, they come back. And that
    make the shareholders happy.
  • Herb Kelleher

Ciscos core values
  • Dedication to customer success
  • Innovation and learning
  • Partnerships
  • Teamwork
  • Doing more with less

KyoceraRespect the divine and respect people
  • Our goal is to strive toward both the
    material and spiritual fulfillment of all
    employees in the Company, and through this
    successful fulfillment, serve mankind in its
    progress and prosperity.
  • We are scientists constantly directing our
    efforts toward perfecting our technology. But we
    must not forget that complete process of living
    requires devotion to humanity as well as to
    science, to the emotional as with the rational,
    and to love equally with reason.
  • Just as a family unites in a common bond of
    support and affection, let us all unite in a bond
    of love and respect.

Is making money a value?
  • The culture paradox
  • An organization whose core values transcend
    making money will make the most money
  • Profits are to a corporation much like breathing
    is to life. Breathing is not the goal of life,
    but without breath, life ends. Similarly,
    without turning a profit, a corporation, too,
    will cease to exist.
  • Dennis Bakke, CEO, AES Corporation

Other core organizational values
  • Customer service (IBM, Nordstrom)
  • Innovation, creativity (3M, Intel, HP)
  • Competitiveness, aggressiveness (GE, Motorola,
  • Social responsibility (Ben and Jerrys Levis
    The Body Shop Working Assets)
  • Quality (Japanese companies Ford?)

Strong vs. weak cultures
  • Strong Consistent, persistent, intense, shared,
    crystallized, consensual, consequential
  • Weak Vague, fragmented, inconsistent,
    transitory, politicized, conflictual

Dimensions of culture strength
Complacent country club culture Strong, organization-wide culture
Absence of culture (anomie) Subcultures
  • Around departments, occupations, divisions,
  • Source of in-group cohesion, out-group
    competition, conflict, and politics
  • Is the overall organization culture strong enough
    to subsume subcultures?

(No Transcript)
Strong culture companies as cults, tribes,
cloisters, churches, the military
  • What do the Branch Davidians and Microsoft
    have in common? Give up? Both organizations are
    cults. No joke. The only difference is one is
    religious (Davidians), while the other
    (Microsoft) is corporate. So says David Arnott,
    author of Corporate Cults The Insidious Lure of
    the All-Consuming Organization (AMACOM).
  • Both are classified as cults because the
    members of these organizations are cut off from
    the real world and are obsessed with achieving
    the mission of their leaders. For the Davidians,
    it was the charismatic David Koresh for
    Microsoft, it's the world's richest man, Bill
  • Bob Weinstein, March 5, 2000

Apple as tribe
  • Apple is a lot like a tribe, with folklore
    handed down from generation to generation. The
    question is how can we channel it? We are trying
    to shift away from folk heroes and individualism
    in the organization, but we have selected people
    for this in the past, and we dont punish that
    kind of behavior. 
  • --Apple executive

The church of IBM
  • "IBM, more than any other big company, has
    institutionalized its beliefs the way a church
    does. They are expounded in numerous IBM
    internal publications to ensure that employees
    know what's expected of them. And they are
    reflected in codes of behavior(S)alespersons
    wear dark business suits and white shirts that's
    no longer a strict regulation but most IBM
    salesmen continue to dress that way
  • ....the result is a company filled with ardent
  • The IBM culture is so pervasive that, as one
    nine-year former employee put it, leaving the
    company is like emigrating."
  • Secrecy is one of IBM's hallmarks. One IBM
    watcher told Tim, if you understand the Marines,
    you can understand IBM."

What does culture do? It provides
  • Motivation and commitment
  • Vision and direction
  • Coordination and alignment
  • Ease of communication

Culture may align and coordinate functional,
product, or regional divisions
General Manager
Engineer- ing
Manufac- turing
Product A Culture
Can culture help the bottom line?
  • Lower cost
  • Fewer formal control systems
  • Better quality/productivity/customer service
  • Culture as branding
  • Apple, Southwest, Saturn, Japanese firms
  • Culture as sustainable competitive advantage
  • Hard-to-imitate capabilities

Culture as Hondas (Sonys) competitive advantage
and Toyotas (Matsushitas) competitive
  • Honda executives say Toyota's aggressive
    moves don't concern them, arguing that their
    giant rival will have difficulty emulating
    Honda's unique culture. "All Toyota is doing is
    aping us and letting their money talk," says Ken
    Hashimoto, a senior Honda RD executive.
  • Some of Honda's fears are already playing
    out. Toyota, in spite of its often-ridiculed
    "country boy" image, has been proving that it can
    successfully woo young car buyers, thanks to
    designers such as Takao Minai. Mr. Minai
    languished for a long time in Toyota's
    hierarchical culture but had a sudden leap in
    responsibilities two years ago. Under Mr. Okuda's
    guidance, the ponytailed 36-year-old amateur
    video jockey took charge of developing a dream
    car for male twentysomethings. Based on a sketch
    by another young designer, the 11-member team
    designed a small car shaped like a really clunky
    box. Toyota dubbed it "bB," short for black Box.

Are there downsides to strong culture?
  • Rigidity/inertia
  • Homogeneity
  • Overconformity
  • Narrowness/intolerance/xenophobia
  • Extremism/obsessiveness
  • Provincialism/insularity
  • Goal displacement ends-means inversion

SAS Institute
  • Some people say that SAS Institute reeks of
    paternalism or a plantation mentality in a world
    otherwise dominated by marketlike labor market
    transactions. For instance, an article in Forbes
    stated, More than one observer calls James
    Goodnights SAS Institute, Inc., the Stepford
    software company after the movie The Stepford
    Wives. In the movie people were almost robotlike
    in their behavior, apparently under the control
    of some outside force. Another article noted
    The place can come across as being a bit too
    perfect, as if working there might mean
    surrendering some of your personality.
  • OReilly and Pfeffer Hidden Value.

Strong culture spells homogeneity at PG
  • Few corporate cultures are as dominant as the
    "Procter Way." "It's such a strong culture, they
    really want sameness," says Ms. Beck, who later
    worked as a brand manager for Dunkin Donuts and
    as a vice president for Burger King. "The way
    women think and the way we do business has some
    inherently different qualities to it," Ms. Beck
    says. "In retrospect, there was a gender aspect
    to PG's culture that was not intentional, but
    was very, very real.
  • WSJ, 9/9/98

  • at one point product features became the
    religion, not the vision. This drove prices up
    and closed out individuals (as customers).
  • --Apple executive

Enrons culture of corruption or the absence
of culture?
  • The report (by three Enron non-executive
    directors) into the collapse of Enron, once one
    of America's top ten public companies, confirmed
    outsiders' suspicions about how badly the firm
    was run. The managements aims, the directors
    concluded, were to minimise taxes, maximise
    apparent profits and, in some cases, to line
    their own pockets. The directors' report was
    described by Senator Byron Dorgan, who is leading
    another investigation into the companys
    collapse, as devastating, adding that this is
    almost a culture of corporate corruption.
  • --The Economist, 2/12/02

The critique of 1950s corporate culture
Overconformity and alienation
  • William H. Whytes The Organization Man
  • (Doubleday, 1956)
  • The Man in the Gray Flannel Suit
  • (20th Century Fox, 1956)

The Organization Man
  • (A)s more and more lives have been encompassed
    by the organization way of life, the pressures
    for an accompanying ideological shift have been
    mounting. The pressures of the group, the
    frustrations of individual creativity, the
    anonymity of achievement are these defects to
    struggle against--or are they virtues in
    disguise? The organization man seeks a redemption
    of his place on earth--a faith that will satisfy
    him that what he must endure has a deeper meaning
    than appears on the surface. He needs, in short,
    something that will do for him what the
    Protestant Ethic did once. And slowly, almost
    imperceptibly, a body of thought has been
    coalescing that does that.
  • (I)t could be called an organization ethic, or
    a bureaucratic ethic more than anything else it
    rationalizes the organization's demands for
    fealty and gives those who offer it
    wholeheartedly a sense of dedication in doing
    so--in extremis, you might say, it converts what
    would seem in other times a bill of no rights
    into a restatement of individualism.
  • But there is a real moral imperative behind it,
    and whether one inclines to its beliefs or not he
    must acknowledge that this moral basis, not mere
    expediency, is the source of its power. Nor is it
    simply an opiate for those who must work in big
    organizations. The search for a secular faith
    that it represents can be found throughout our
    society--and among those who swear they would
    never set foot in a corporation or a government

Managing changing cultureStep I Study it
  • Be culturally savvy (vs. clueless) pay attention
  • Do a culture audit
  • Find key informants
  • oral histories with tribal elders
  • map genealogies
  • learn folklore
  • Be a fly on the wall
  • Ethnography participant observation
  • Study texts
  • Annual reports, websites, advertising
  • Do value surveys

Step II understand its causes
  • Leader/founder
  • Family ownership
  • Long history
  • PG
  • Society
  • Asia/Europe
  • Region
  • Northern California/Manhattan/South
  • Small town vs. big city
  • Amana, Cummins, Corning, Chase, Citibank
  • Product
  • Apple, Coke
  • Industry
  • High tech/railroads/investment banking
  • Structure
  • Functional/divisional mechanistic/organic

Apples product-driven culture
  • Heres the most interesting thing about our
    culture-- we are what we make. Ive never seen
    an organization where the personality of the
    organization is so intertwined with the
    personality of the product--individualistic,
    pure, uncompromised, ahead of everyone else, so
    elegant it cant fail. We are the Macintosh
  • Apple Marketing Manager

Step III Align/realign the organization
  • People
  • Formal organization
  • Structure
  • Information/incentive systems

Aligning people
  • Selection and socialization (buy or make)
  • First, selection
  • Select for fit or misfit to the culture
  • Intensive screening

Selection at Microsoft
  • In 1999, the average age of the more than
    31,000 Microsoft employees was only 34, and raw
    intelligence matters more than judgment or
    experience in determining who gets hired. Craig
    Mundie, senior vice president for consumer
    strategy, described Microsoft "as a company full
    of a lot of high IQ people who have relatively no

Selection at Apple
  • Sculley came to a company renowned for its
    exciting and countercultural work environment,
    where employees often wore T-shirts that
    proclaimed working 90 hours a week and loving
    it. Sculley described apple as the Ellis
    Island of American business because it
    intentionally attracted the dissidents who
    wouldnt fit into corporate America.
  • Harvard Business School Press

Selecting for bad fit at HP(Wall Street
Journal interview with former CEO Lew Platt)
  • WSJ Did you feel constrained running a company
    that had legendary founders and a culture
    enshrined in a book?
  • Platt A little bit. There were certain
    constraints. There were certain traditions they
    wanted upheld.
  • WSJ Give me an example.
  • Platt They were very conservative -- heavy
    investment in RD, little debt. I was asked not
    to question those things.
  • WSJ Ms. Fiorina is a woman, a nonengineer and an
    outsider -- all firsts for H-P. What should we
    read into that?
  • Platt They wanted someone who could bring
    change, someone with a higher visibility. Most
    H-P people are pretty low-key. David Packard
    and Bill Hewlett were that way. I'm that way.
    Carly comes in without some of those constraints.
    She will question some of the thinking that I, as
    a 33-year employee, couldn't.

Aligning people
  • Socialization
  • Focus on firm-specific values and tacit skills
  • Invest heavily in training, including OJT
  • Mentoring
  • Participation
  • Rites of passage
  • Humiliating-inducing experiences

Selection and socialization at PG
  • Job candidates must pass a battery of tests
    measuring aptitude and leadership skills. Once
    hired, employees are schooled in all things
    Procter, even attending training seminars known
    as PG College. Memos, written in a distinct PG
    style, are valued over meetings. Employees are
    expected to have facts and data at their
    fingertips -- opinions and intuition are frowned
  • Juelene Beck, who worked as PG beverage
    brand assistant from 1984 to 1986, says
    supervisors once questioned whether a trendy
    haircut and suit were "appropriate" for PG.
    During performance reviews, she says, she was
    asked why she preferred sailing to socializing
    with co-workers.

Cultural integration of acquisitions through
mentoring at Cisco
  • Ciscos acquisition identification process
    emphasizes cultural compatibilityCultural
    integration includes the use of integration teams
    who explain and model Ciscos values, the holding
    of orientation sessions, and the assignment of
    buddies. The buddy system involves pairing
    each new employee with a seasoned Cisco veteran
    of equal stature and similar job responsibility.
    The buddy offers personalized attention better
    suited to conveying the Cisco values and
  • OReilly and Pfeffer, Hidden Value

Hell Camp Extreme resocialization
  • Founded nine years ago in the foothills of
    Mt. Fuji, Hell Camp claims to have subjected some
    100,000 Japanese salarymen to 13 days of speed
    drills, speechifying and hazing rituals. Its
    main message-- 100 liters of sweat 100 liters
    of tears was designed to counteract a growing
    fear among Japans corporate and government elite
    that the nations workers are becoming too
    Americanized, too soft. The schools solution,
    for nearly 3000 a pop to crush the individual
    ego with mindless and humiliating exercises and
    then rebuild it with a modern version of the
    Samurai code of selfless servitude called
  • Japanese-style camp for managers is lost in
    translation in U. S. Hazing rituals and
    obeisance dont make it in Malibu even among
    freeloaders. WSJ, March 1, 1988.

(Re)Align the organization
  • Structure
  • Divisional/functional/matrix
  • Mechanistic/organic

Ford Changing culture by restructuring
  • Since the hard-charging 51-year-old
    executive took over in January (1999), he has
    picked up the whole organization by the lapels
    and shaken it. His goal? To reinvent the
    96-year-old industrial giant as a nimble,
    growth-oriented consumer powerhouse for the 21st
    century, when a handful of auto giants will
    battle across the globe.That's why Nasser has
    declared war on Ford's stodgy, overly analytic
    culture. In its place, he envisions a company in
    which executives run independent units--cut loose
    from a stifling bureaucracy and held far more
    accountable for success and failure. And with a
    consumer focus at the heart of his retooled Ford,
    he's banking on a future in which designers,
    engineers, and marketers someday will do a far
    better job of anticipating the wants and needs of
    car buyers.

Carly Fiorinas culture-structure realignment at
  • Most dramatically, she launched a plan to
    consolidate H-P's 83 businesses into only 12. She
    also aligned the reduced number of divisions into
    two "front-end" groups that would focus on
    customer activities, such as marketing and sales,
    and two "back-end" organizations devoted strictly
    to designing and making computer and printer
  • Old-time H-P executives were shocked. "I was a
    deer caught in the headlights when she described
    the front and back end," says Carolyn Ticknor,
    who now presides over the merged printer unit.
    Several of these executives protested that
    employees weren't ready for a major
  • Some executives fretted that managers wouldn't
    wield "real" authority if they couldn't control
    both product development and marketing. "It took
    some of the glory, if you wish, out of the job,"
    says Mr. Perez, the departed executive.
  • Consternation rippled through the ranks. Managers
    who had long aspired to run their own autonomous
    units, known as PLs, short for profit loss,
    suddenly saw most of those jobs disappear.
  • WSJ, 8/22/2000

Changing the symbolism of structure
  • Southwest
  • People Department
  • Culture Committee
  • Executive ranks at Chumbo Corp.
  • Grand Pooh-Bah
  • Web Goddess
  • Director of Something

(Re)align the organization
  • HR systems
  • Career design
  • Long-term employment
  • Job rotation
  • Compensation design
  • Reward group long-term performance
  • Reward conformity with core values
  • Innovators head new product divisions at 3M and
  • Maintain equity, keep inequality low

Aligning rewards at Cisco
  • Chambers is adamant about rewards being tied
    to customer satisfaction. He ties the
    compensation of all managers to measures of
    customer satisfaction really listening to the
    customer. We are the only company of anywhere
    near this size that does it.
  • OReilly and Pfeffer Hidden Value

Excessive culture-HR alignment at Penneys
  • To alter such deep-bred customer perceptions
    (that Penneys clothes are unfashionable) would
    require a feat of Herculean proportions, but
    Penney's, with a notoriously insular corporate
    culture, is averse to itinerant, superhero types.
    Of the company's top managers above the senior
    vice president level, only two have not spent
    their entire careers there.
  • "The norm is to be there your whole career,
    several are even second generation," said Lucille
    Klein, who left as fashion director of Penney's
    women's division three years ago, but still
    consults with the company. "It leads to tunnel
    vision, like the Penney's way of doing things is
    the only way."

Culture takeaways
  • Culture is an extremely powerful force in every
  • It can lead to either success or to failure
  • Culture may be soft but it can be managed and
  • It does take time, commitment, and consistency
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