Organizational culture- summary of chapter 14 of Organizational Behavior by Mcshane, S. (8th edition)

Organizational Behavior
Chapter 14
Organizational culture

Organizational culture: the values and assumptions shared within an organization.

Elements of organizational culture

Shared values and assumptions relate to each other and are associated with artifacts.

Values: stable, evaluative beliefs that guide our preferences for outcomes or courses of action in a variety of situations. Conscious perceptions about what is good or bad, right or wrong.
Shared values: values that people within the organization or wok unit have in common and place neat the top of their hierarchy of values.

Shared assumptions: nonconscious, taken-for-granted perceptions or ideal prototypes of behavior that are considered the correct way to think and act toward problems and opportunities.

Espoused versus enacted values

Espoused values: the values that corporate leaders hope will eventually become the organization’s culture, or at least the values they want others to believe guide the organization’s decisions and actions.
Usually socially desirable.

Enacted values: when they actually guide and influence decisions and behavior. Values put into practice.

Content of organizational culture

Organizations differ in the relative ordering of shared values. (cultural content).

Problems

• People oversimplify the diversity of cultural values in organizations
• Most measures ignore the shared assumptions aspect of an organizational culture
• Many measures of organizational culture incorrectly assume that organizations have a fairly clear, unified culture that is easily decipherable.

In reality, an organizational culture is typically blurry and fragmented.

Organizational subcultures

When discussing organizational culture, we are really referring to the dominant culture.
Dominant culture: the values and assumptions shared most consistently and widely by the organization’s members.

Organizations are composed of subcultures, located throughout their various divisions, geographic regions, and occupational groups.
Some subcultures enhance the dominant culture by espousing parallel assumptions and values.
Others differ from, but do not conflict the dominant culture.
Countercultures embrace values or assumptions that directly oppose the organization’s dominant culture.
It is also possible that some organizations consist of subcultures with no decipherable dominant culture at all.

Subcultures, particularly countercultures, potentially create conflict and dissension among employees.
But they also serve two important functions:

• They maintain the organization’s standards of performance and ethical behavior
• Subcultures act as spawning groups for emerging values that keep the firm aligned with the evolving need and expectations of stakeholders.

Deciphering organizational culture through artifacts

Artifacts: the observable symbols and signs of an organization’s culture.

Culture is cognitive whereas artifacts are observable manifestations of that culture.

Artifacts provide valuable evidence about a company’s culture.

Four broad categories of artifacts:

• Organizational stories and legends
• Language
• Rituals and ceremonies
• Physical structures and symbols

Organizational stories and legends

Organizational stories serve as powerful social prescriptions of the way thinks should (or should not) be done. They add human realism to corporate expectations, individual performance standards, and the criteria for getting fired. And they produce emotional markers.

Stories communicate corporate culture most effectively when:

• They describe real people
• Are summed to be true
• Are known by employees throughout the organization.

Organizational language

An organization’s culture particularly stand out when employees habitually use customized phrases and labels.

Rituals and ceremonies

Rituals: the programmed routines of daily organizational life that dramatize the organization’s culture.
Rituals are repetitive, predictable events that have symbolic meaning of underlying cultural values and assumptions.

Ceremonies: planned displays of organizational culture, conducted specifically for the benefit of an audience.

Physical structures and symbols

Each physical artifact alone might not say much, but put enough of them together and you can see how they symbolize the organization’s structure.

Is organizational culture important?

Meaning and potential benefits of a strong culture

The strength of an organizational culture refers to how widely and deeply employees hold the company’s dominant values and assumptions.
These values and assumptions are also institutionalized trough well-established artifacts, which further entrench the culture.
Strong cultures tend to be long-lasting.

Under the right conditions, companies are more effective when they have strong cultures because of three important functions:

• Control system
  Organizational culture is a deeply embedded form of social control that influences employee decision and behavior. Culture is pervasive and operates nonconsciously.
• Social glue
  Organizational culture is the social glue that bonds people together and makes them feel part of the organizational experience. It fulfills the need for social identity.
• Sense making
  Organizational cultures helps employees make sense of what goes on and why things happen in the company. It also makes it easier to understand what is expected from them.

Contingencies of organizational culture and effectiveness

Strong cultures improve organizational effectiveness only under specific conditions:

• Whether the culture content is aligned with the environment
• Whether the culture is moderately strong, not cultlike
• Whether the culture incorporates an adaptive culture.

Culture content is aligned with the external environment

The benefits of a strong culture depend on whether its content is aligned with the external environment.
If the dominant values are congruent with the environment, then employees are more likely to engage in decisions and behavior that improve the organization’s interaction with that environment.
When the dominant values are misaligned with the environment, a strong culture encourages decisions and behaviors that can undermine the organization's connection with stakeholders.

Culture strength is not the level of cult

The degree of culture strength.
Companies with very strong cultures (corporate cults) may be less effective than companies with moderately strong cultures.

• They lock people into mental models
• They suppress dissenting subcultures

Culture is an adaptive culture

Adaptive culture: an organizational culture in which employees are receptive to change, including the ongoing alignment of the organization to its environment and continuous improvement of internal processes.

Employees in adaptive cultures see things from an open system perspective and take responsibility for the organization’s performance and alignment with the external environment.

In an adaptive culture, receptivity to change extends to internal processes and roles.
And a strong adaptive culture has a strong learning orientation.

Organizational culture and business ethics

An organization’s culture influences the ethical conduct of its employees.

Merging organizational cultures

Bicultural audit

Bicultural audit: a process of diagnosing cultural relations between companies and determining the extent to which cultural clashes will likely occur.
Begins by identifying cultural differences between the merging companies.
Then the parties determine which differences between the two firms will result in conflict and which cultural values provide common groups on which to build a cultural foundation in the merged organization.
The final stage involves identifying strategies and preparing action plans to bridge the two organization’s cultures.

Strategies for merging different organizational cultures

Four main strategies:

• - Assimilation
  Occurs when employees at the acquired company willingly embrace the cultural values of the acquiring organization.
  Works when the acquired firm has a weak culture and acquiring firm’s culture is strong and successful.
  But employees usually resist organizational change, particularly when they are asked to throw away personal and cultural values.
• Deculturation
  Imposing cultures and business practices on the acquired organization.
  The acquiring firm strips away artifacts and reward systems that support the old culture. People who cannot adopt the acquiring company’s culture often lose their jobs.
  May be necessary when the acquiring firm’s culture doesn’t work, even when the employees in the acquired company aren’t convinced of this.
  But difficult.
• Integration
  To combine the cultures of the two firms in one new composite culture that preserves the best features of the previous cultures.
  Slow and potentially risky.
  Should be considered when the companies have relatively weak cultures or when their cultures include overlapping values.
  Works best when the cultures of both merging companies could be improved.
• Separation
  When the merging companies agree to remain distinct entities with minimal exchange of culture or organizational practices.
  Most appropriate when the two merging companies are in unrelated industries.
  Also preferred approach for the corporate cultures of diversified conglomerates.

Changing and strengthening organizational culture

Changing an organization’s culture isn’t easy. It is a monumental challenge.

Actions of founders and leaders

The company’s founder usually forms an organization’s culture.
In later years, organizational culture is reinforced through stories and legends about the founder that symbolize the core values.
Subsequent leaders need to actively guide, reinforce, and sometimes alter that culture.

The process of leading cultural change is associated with both transformational and authentic leadership.

Align artifacts with the desired culture

Artifacts are mechanisms that keep the culture in place or shift the culture to a new set of values and assumptions.

Introduce culturally consistent rewards and recognition

Reward systems have a powerful effect on strengthening or reshaping an organization’s culture.

Support workforce stability and communication

An organization's s culture is embedded in the minds of its employees.
A strong culture depends on a stable workforce.
A strong organizational culture also depends on a work-place where employees regularly interact with each other.

Use attraction, selection, and socialization for cultural fit

A valuable way to strengthen and possible change an organization’s culture is to recruit and select job applicants whose values are compatible with the culture.

Attraction-selection-attribution (ASA) theory: a theory that states that organizations have a natural tendency to attract, select, and retain people with values and personality characteristics that are consistent with the organization’s character, resulting in a more homogeneous organization and a stronger culture.

• Attraction
  Job applicants engage in self-selection by avoiding prospective employers whose values seem incompatible with their own values.
• Selection
  How well the person ‘fits in’ with the company’s culture is often a factor in deciding which job applicants to hire.
• Attrition
  People leave environments that are a poor fit.

Organizational socialization

Organizational socialization:the process by which individuals learn the values, expected behaviors, and social knowledge necessary to assume their roles in the organization.
This process can potentially change employee values to become more aligned with the company’s culture.
Socialization also helps newcomer adjustment to coworkers, work procedures, and other corporate realities.

Learning and adjustment process

Organizational socialization is a process of both learning and adjustment.
Effective socialization supports newcomers’ organizational comprehension. It accelerates development of an accurate cognitive map of the physical, social, strategic, and cultural dynamics of the organization.
Newcomers also need to adapt to their new work environment.

Psychological contracts

Psychological contract: the individual’s beliefs about the terms and conditions of a reciprocal exchange agreement between that person an another party.
A perception formed during recruitment and throughout the organizational socialization process about what the employee is entitled to receive and is obliged to offer the employer in return.

Types of psychological contracts

Some psychological contracts are more transactional whereas others are more relational.

• Transactional contracts are primarily short-term economic exchanges. Responsibilities are well defined around a fairly narrow set of obligations that do not change over the life of the contract.
• Relational contracts are long-term attachments that encompass a broad array of subjective mutual obligations. Dynamic.

Stages of organizational socialization

Organizational socialization is a continuous process.
It is most intense when people move across organizational boundaries.

Three stages:

Preemployment socialization

(Outsider)
Learn about the organization and job
Form employment relationship expectations

Problems:

• Outsiders rely on indirect information
• Applicants avoid asking important questions about the company because they want to convey a favorable image to their prospective employer.
• Applicants engage in impression management
• Employers are sometimes reluctant to ask certain questions or use potentially value selection devices because they might scare of applicants.

Encounter

(Newcomer)
Reality shock: the stress that results when employees perceive discrepancies between their preemployment expectations and on-the-job reality.

• Newcomers sometimes face unmet expectations
• Or unrealistic expectations

Role management
(Insider)
Begins during preemployment, but is most active as employees make the transition from newcomers to insiders.

Improving the socialization process

Companies have a tendency to exaggerate positive features of the job and neglect to mention the undesirable elements.
Realistic job preview (RJP): a method of improving organizational socialization in which job applicants are given a balance of positive and negative information about the job and work context.

Socialization agents

Socialization agents play a central role in helping people adjust to their job and changes.
Supervisors tend to provide technical information, performance feedback, and information about job duties. They also improve the socialization process by giving newcomers reasonably challenging first assignments, buffering them from excessive demands, helping them form social ties with coworkers, and generating positive emotions around their new work experience.

Coworkers are important socialization agents because they

• Are easily accessible
• Can answer questions when problems arise
• Serve as role models for appropriate behavior
• Are flexible and tolerant

Newcomer socialization is most successful when companies help to strengthen social bonds between the new hires and current employees.