ORGANIZATIONAL BEHAVIOUR

Notes
CHAPTER 14

ORGANIZATIONAL CULTURE

aa Learning Objectives
After going through this unit, youwill be able to:
" Define what is organizational culture
" State how cultures are developed, maintained and changed
"Enumerate steps of organizational culture change process
" Describe types of organizational cultures
" Effectively manage cultural diversity
Structure
14.1 Introduction
14.2 Defining Organizational Culture
14.3 Levels of Organizational Culture
14.4 Types of Corporate Cultures
14.4.1 Bureaucratic Culture
14.4.2 Clan Culture
14.4.3 Entrepreneurial Culture
14.4.4 Market Culture
14.5 Developing Organizational Culture
14.6 Maintaining Orgarnizational Culture
14.7 Changing Organizational Culture
14.8 Performance and Organizational Culture
14.9 Managing Cultural Diversity
14.10 Summary
14.11 Keywords
14.12 Self Assessment Questions
14.13 Further readings

14.1 Introduction
Organizational culture is the set of assumptions, beliefs, values and norms that
are shared by the members of an organization. It may be consciously created
by its key members, or it may have simply evolved over time. It represents a
key element of the work environment in which employees performtheir jobs. A
culture may exist across an entire organization, or it may refer to the
environment within a single division, branch, plant, or department. The idea of
organizational culture is somewhat intangible, for we cannot see it or touch it.
but it is present and pervasive. Like the air in a room, it surrounds and affects
everything that happens in an organization. Because it is a dynamic systems
concept, culture is also affected by almost everything that occurs within an
organization. They give an organizational identity to employees a defining

225 | Page
 ORGANIZATIONAL BEHAVIOUR

vision of what the organization represents. They are also an important source Notes
of stability and continuity to the organization which provides a sense of security
to its members.

One of the primary responsibilities of strategic leaders is, to create and

maintain the organizational characteristics that reward and encourage
collective effort. The most fundamental of these is organizational culture. VWhat
do we mean by organizationalculture? Howdoes it influence an organization?
Howdoes one go about building, influencing or changing an organization's
culture?

Organizational culture is the personality of the organization. Culture is

comprised of the assumptions, values, norms and tangible signs (artifacts) of
organization members and their behaviours. Members of an organization soon
Come to sense the particular culture of an organization. Culture is one of those
terms that are difficult to express, but everyone knows it when they sense it.
For example, the culture of a large, for-profit company is quite different than
that of a hospital which is quite different that of a university.
Edgar Schein, suggests that an organization's culture develops to help it cope
with its environment. Today, organizational leaders are confronted with many
Complex issues during their attempts to generate organizational achievement
in dynamicenvironments. Aleader's success willdepend, to a great extent,
upon understandingorganizational culture.

He also goes on to say that many of the problems confronting leaders can be
traced to their inability to analyze and evaluate organizational cultures. Many
leaders,when trying to implement new strategies or astrategic plan leading to
a new vision, will discover that their strategies will fail if they are inconsistent
with the organization's culture.

Senior management may try and determine a corporate culture. At times, they
may wish to impose corporate values and standards of behaviour that reflect the
objectives of the organization. Work-groups within the organization have their
own behavioural quirks and interactions which affect the whole system. Task
culture can be imported. For example, computer technicians will have
expertise, language and behaviours gained independently of the organization,
but their presence can influence the culture of the organization as a whole.

14.2 Defining Organizational Culture

Schein defines culture as the deeper level of basic assumptions and beliefs
that are: learned responses to the group's problems of survival in its external

226| Page
 ORGANIZATIONAL BEHAVIOUR

environment and its problems of internal integration; are shared by members Notes

of an organization; that operate unconsciously: and that define in a basic

"taken-for-granted" fashion in an organization's view of itself and its
environment.
[Organizational Culture is a pattern of beliefs and expectations shared by the
members of the organization. These beliefs and expectations produce norms
that powerfully shape the behaviour of individuals and groups in the
organizations. - Schwartz & Davis ,
Any social system arising from a network of shared ideologies consisting of
two components: substance-the networks of meaning associated with
ideologies, norms,and values;and forms-the practices whereby the meanings
are expressed, affirmed,and communicated to members (Trice and Beyer).
Organizational Culture represents a complex pattern of beliefs, expectations,
ideas, values, attitudes and behaviours shared by the members of the
organizations. More specifically, organizational culture includes:
a. Routine behaviours when people interact, such as organizational rituals
and ceremonies and the language commonly used.
b. The norms that are shared by the teams throughout the organization,
such as "all meetings shall be attended on time".
C. The dominant values held by the organization, such as "product quality"
or "price leadership".
towards its
d. The philosophy that guides an organization's policies
employees and customers.
or the "ropes"
e. The rules of the game for getting along in the organization
member: and
that anew comer must learn in order to become an accepted
physical layout
f. The feeling or climate conveyed in an organization by the customers
with
and the way in which managers and employees interact
and others outside.

Culture
14.3 Levels of Organizational
differ in terms of
Organizational culture exists on different levels, which
to Edgar Schein, there are 2
visibility and resistance to change. According
levels of organizational culture:
4 Behaviour and artifacts
of culture, and consists of
This is the most visible and observable level
perquisites provided
behaviour patterns and outward manifestationsS Of Culture:
executives, dress codes, level of technology utilized (and where is
to
spaces. All may be visible indicator
utilized), and the physical layout of work

227 | Page
 ORGANIZATIONAL BEHAVIOUR

culture, but difficult to interpret. Artifacts and behaviour also may tellus what Notes
group is doing, but not why.
3 Espoused values
The next level of culture is of values. Values underlie and determine behaviour
of people. Howeve, they are not directly observable, as behaviours are. There
may be a difference between stated and operating values. People will attribute
their behaviour to stated values.

3. Assumptions and beliefs

To really understand culture, we have to get to the deepest level, the level of
assumptions and beliefs. Schein says that underlying assumptions grow out of
values, until they become taken for granted and drop out of awareness. People
may be unaware of or unable to articulate the beliefs and assumptions forming
their deepest level of culture.
To understand culture, we must understand all three levels. One additional
aspect complicates the study of culture: the group or cultural unit which "owns"
the culture. An organization may have many different cultures or subcultures,
or even no discernible dominant culture at the organizational level.
Recognizing the cultural unit is essential to identifying and understanding the
culture.

14.4 Types of Corporate Cultures

Culturalelements and their relationships, create a pattern that is distinct to an
organization. However, organizational cultures have some common
characteristics. As is true of organization designs, different organiztional
cultures may be appropriate at different timesand situations, with no one type
of culture being ideal for every situation.However, some employees prefer one
culture to the other. Employees who workinorganizations with culture that fits
their own view of an ideal culture tend to be committed to the organization and
optimistic about its future.
Bureaucratic Culture

An organization that values formality, rules, standard operating procedures

and hierarchicalcoordination has a bureaucratic culture. Long-term concerns
of bureaucracy are predictability, efficiency and stability. Behavioural norms
support formality over informality. Managers view their role as good
cOordinators, organizers and enforcers of written rules and standards. Tasks.
responsibilities and authority for employees are clearly defined. The
organization's many rules and processes are spelled out in manuals and
employees believe their duty is to follow them.
228 | Page
 ORGANIZATIONAL BEHAVIOUR

14.4.2 Clan Culture Notes

Tradition, loyalty, personal commitment, extensive socialization, teamwork,

self-management and social influence are attributes of a clan culture. Its
members recognize an obligation beyond the simple exchange of labor fora
salary. They understand that contributions to the organization exceed beyond
the contractual agreements. Loyalty is rewarded by security. Because the
individuals believe that organization will treat them fairly in all respects and
aspects, they hold themselves accountable to the organization for their
actions. Longtime clan members serve as mentors and role models for the
newer members. These relationships perpetuate organization's norms and
values over successive generations of employees. In this type of a culture,
members share a sense of pride in membership. They have a strong sense of
identification and recognize the interdependence. Depending on the types of
norms, the culture may or may not generate risk taking behaviours or
innovation.

14.4.3 EntrepreneurialCulture
Stephen McGuire defined and validated the entrepreneurial culture. This
culture is a system of shared values, beliefs and norms of members of an
organization, including valuing creativity and tolerance of creative people,
believing that innovating and seizing market opportunities are appropriate
behaviours to deal with problems of survival and prosperity, environmental
uncertainty, and competitors' threats, and expecting organizational members
to behave accordingly.
characterize an
High levels of risk taking, dynamism and creativity
entrepreneurial culture. There is a commitment to experimentation, innovation
to change
and being on the leading edge. This culture doesn't just quickly react
in the environment - it creates change. Effectiveness means providing new
and
and unique products and rapid growth. Individual initiative, flexibility
rewarded.
freedom foster growth and are encouraged and well

14.4.4 Market Culture

The achievement of measurable and demanding goals, especially those which
are financial and market based (e.g., sales growth, profitability and market
share)characterize a market culture. Hard-driving competitiveness and profit
orientation prevail throughout the organization.
In amarket culture, the relationship between an individual and the organization
is contractual. There is a clear agreement on what one can expect from the

229 | Page
 ORGANIZATIONAL BEHAVIOUR

other and the formal control orientation is quite stable. The individual 1s Notes
responsible for some level of performance and the organization promises a
specified level of rewards. However, the organization does not promise (or
imply) security and the individual does not promise (or imply) loyalty. In this
culture, superior's interaction with subordinates largely consists of negotiating
performance - reward agreements and/or evaluating requests for resource
allocation. The absence of a long-term commitment of both the parties results
in aweak socialization process. Social relations among coworkers arent
officially emphasized, and few economic incentives are tiedto directly
cooperating with peers. The pure officialrelationships shared by the members
with each other may not result in personal network. The market culture is often
tied to monthly, quarterly and annual performance goals based on profits.

14.5 Developing Organizational Culture

An organizational culture forms in response to two major challenges that

confront every organization:
1) External adaptation and survival - It has to do with how the organization
will find a niche in and cope with its constantly changing external environment.
It involves addressing the following issues:
Mission and Strategy: ldentifying the primary purpose of the organization;
selecting strategies to pursue this mission.
Goals: Setting specific targets to achieve.
Means: Determining how to pursue goals, including selecting an
organizational structure and reward systems.
Measurement: Establishing criteria to determine how wel individuals and
teams are accomplishing their goals.

2) Internal integration - It refers to the establishment and maintenance of

effective working relationships among the members of the organization.
Internal integration involves addressing the following issues:
Language and concepts: Identifying methods of communication and
developing a shared meaning for important concepts.
Group and Team boundaries: Establishing criteria for membership in groups
and teams.

Power and Status: Determining rules for acquiring, maintaining and losing
power and status.
Rewards and punishments: Developing systems for encouraging desirable
behaviours and discouraging undesirable ones.

230 | Page
 ORGANIZATIONAL BEHAVIOUR

Notes
An organizational culture emerges when members share knowledge and
assumptions as they discover or develop ways of coping with issues o
external adaptation and internal integration.
The national culture, customs and societal norms of the country also shape the
culture of the organizations operating in it.
According to David Drennan, the twelve key casual factors, which shape a
company's culture, are:
1 Influence of a dominant leader
2 Company history and tradition
3. Technology, products and services
4. The industry and its competition
5. Customers
6. Company expectation
7 Information and control systems
8 Legislation and company environment
9 Procedures and policies
10. Reward systems and measurements
11. Organization and resources
12. Goals, values and beliefs

14.6 MaintainingOrganizational Culture

functions and is managed may have both

The ways in which an organization
maintaining and changing
intended and unintended consequences for
organizationalculture.
attention to One of the most powerful
What managers and teams pay
culture involves processes and
methods of maintaining organizational
employees and teams pay attention to:
behaviours that managers, individual
commented on. The ways of dealing with
that is the events that get noticed and behaviours
the employees on expected
these events send strong messages to
and important approaches.
Reactions to incidents and crisis -When an organization faces crises.
b
and employees reveals a great deal
the handling of those crises by managers
the crises are dealt with can either
about its culture. The manner in which
values and norms that change
reinforce the existing culture or bring out new
the culture in some way.

C Role Modeling, Teaching and Coaching -

Aspects of organizational
way managers fulfill their roles.
culture are communicated to employees by the
231 | Page
 ORGANIZATIONAL BEHAVIOUR

In addition, managers and teams may specifically incorporate important Notes

cultural messages into training programs and day-to-day coaching on the job.
d. Allocation of Rewards and Status - Employees also learn about the
organizational culture through its reward systems. VWhat is rewarded and what
is punished convey to employees the priorities and values of both individual
managers and the organization.
e. Recruitment, Selection, Promotion and Removal - One of the

fundamental ways in which the organization maintains its culture is through

Recruitment. In addition, the criteria used to determine who is assigned to
specific jobs or positions, who gets raises and promotions and why, who is
removed from the organization by firing or early retirement and so on, reinforce
and demonstrate aspects of organizational culture.
f Rites, Ceremonies and Stories - Rites and ceremonies are planned

activities or rituals that have important cultural meaning. Many of the

underlying beliefs and values of an organization's culture are expressed as
stories that become a part of its folklore. These stories transmit the existing
culture from old to new employees and emphasize important aspects of that
culture.

14.7 Changing Organizational Culture

The same basic methods used to maintain an organization's culture can be
used to modify it. Changing organizational culture is difficult primarily because,
assessing accurately the existing culture is itself a tough proposition. Most
large complex organizations actually have more than one culture. GE for
example, has distinctly different cultures in different parts of its multi divisional,
world wide operations. These multiple cultures are called sub cultures. Every
organization will have at least three cultures - an operating culture (line
employees), an engineering culture (technical and professional people), and
an executive culture (top management) stemming from the very diferent
views and perceptions held by these groups of people.
Cummings &Worley have given the following six guidelines for cultural
change:
1. Formulate a clear strategic vision
In order to make a cultural change effective a clear vision of the firm's new
strategy. shared values and behaviours is needed. This vision provides the
intention and direction for the culture change.
2. Display Top-management commitment
Itisvery important to keep in mind that culture change must be managed from
232| Page
 ORGANIZATIONAL BEHAVIOUR

Notes
the top of the organization, as willingness to change of the senior management
1s an impotant indicator. The top of the organization should be very much in
tavor of the change in order to actually implement the change in the rest of the
organization.
3. Model culture change at the highest level
In order to show that the management team is in favor of the change, the
change has to be notable at first at this level. The behaviour of the management
needs to symbolize the kinds ofvalues and behaviours that should be realized in
the rest of the company. It is important that the management shows the
strengths of the current culture as well, it must be made clear that the current
organizational does not need radical changes, butjust afew adjustments.
4. Modify the organization to support organizational change
The fourth step is to modify the organization to support organizational change.
5. Select and socialize newcomers and terminate deviants
Away to implement a culture is to connect it to organizational membership,
people can be selected and terminate in terms of their fit with the new culture.
6 Develop ethical and legal sensitivity
Changes in culture can lead to tensions between organizational and individual
interests, which can result in ethical and legal problems for practitioners. This
is particularly relevant for changes in employee integrity, control, equitable
treatment and job security
Indeed, any comprehensive change program in an organization, in some
sense, is an attempt to change the organizational culture.

Resistance to Cultural Change = Magnitude of change XStrength of the

prevailing culture.
Therefore, cultural change involves tremendous amount of efforts and time
and also need skillful people to manage this change successfully.

14.8 Performance and Organizational Culture

Organizational Culture has the potential to enhance organizational

effectiveness, individual satisfaction, the sense of certainty about how
problems need to be handled and so on. However, if the culture gets out of step
with the changing expectations of the internal and external stakeholders, the
organization's effectiveness can be hindered.
An underlying assumption is that an organization's culture and its performance
are directily related. Thus the rationale for attempting to change the culture is to
233 | Page
 ORGANIZATIONAL BEHAVIoUR

create amore effective organization.

ItIS Obseved and also experienced that strongand well-developed cultures is
Notes
an important characteristic of organizations that have outstanding
performance records. The term strong culture implies that most managers and
employees share aset of consistent values and methods of doing business
and conducting themselves.

Astrong organizational culture facilitates goal alignment. The idea is that

because allemployees share the same basicassumptions, they can agree not
Just on what goals to pursue but also on the means by which they should be
achieved. As aresult, employee initiative, energy and enthusiasm are all
channeled in the same direction, In these organizations, there are few
problems of coordination and control., communication is quick and
effective
and resources are not wasted in internal
conflicts. All this means
organizational performance is likely to be healthy.
b. Astrong culture leads to high levels of employee
two main arguments here. First, it has been
motivation. There are
suggested that there is something
intrinsically appealing about the strong cultures that
identify with them. Second, it is sometimes encourage people to
thought that strong culture
organizations incorporate practices which make working for them
These practices tend to include employee rewarding.
various recognition schemes.
participation in decision-making and
C. Astrong culture is better able to learn from it's past. The idea is
strong cultures that
characteristically possess agreed norms of behaviour,
integrative rituals and ceremonies and well-known
stories. These
consensus on the interpretation of issues and events based on reinforce
the past
experience, provide precedents from the organization's
decide how to meet new challenges, and history, which help
promote self-understanding and
social cohesion.

14.9 Managing Cultural Diversity

Organizations are becoming increasingly diverse in terms of

ethnicity and nationality. This growing diversity can bring gender, race.
Such as more successful substantial
benefits.
strategies, improved decision making and greater
creativity and innovation.

234 | Page
 ORGANIZATIONAL BEHAVIOUR

However, along with the benefits, cultural diversity also brings with it costs and Notes
Concerns. These include communication difficulties, intra organizational
Contiicts and turnover. There are no easy answers to managing a culturally
diverse workforce. However. research has revealed some common
characteristics of employee values, managerial philosophy and organlzauonal
Culture that are present in organizations having effective diversity
management programs. Here are some guidelines for managing the cultural
diversity successfully:

a. Managers and ernployees must understand that a diverse workforce will

embody diferent perspectives and approaches to work and must truly value
variety of opinion and insight.
b. The leadership of the organization must recognize both the learning
opportunities and chalenges that this diversity presents to the organization.
C. The organizational culture must create an expectation of high performance
from everyone.
d. The organizationalculture must stimulate personal development.
e. The organizational culture must encourage openness.
f. The organizational culture must make its members feel valued.
g. The organization must have a well articulated and widely understood
mission.
h. The organization must have a relatively non-bureaucratic structure.

14.10 Summary

Organizational culture comprises of the attitudes, experiences, beliefs and

values of an organization. It can be defined as "the specific collection of values
and norms that are shared by people and groups in an organization and that
control the way they interact with each other and with stakeholders outside the
organization. Organizaional values are beliefs and ideas about what kinds of
goals members of an organization should pursue and ideas about the
appropriate kinds or standards of behaviour organizational members should
use to achieve these goals. From organizational values develop
organizational norms, guidelines or expectations that prescribe appropriate
kinds of behaviour by employees in particular situations and control the
behaviour of organizational members towards one another"
Organizational culture has 3 levels according to Edgar Schein- Behaviour and
artifacts, the most visible and observable level of culture, and consist of

235 | Page
 ORGANIZATIONAL BEHAVIOUR
ollaviour patterns and outward manifestations of culture;espoused values,
Values underlie and determine behaviour of people and assumptions and Notes
Delers, the deepest level. and of which people may be unaware. lo
understand culture.we must understand all three levels.
Developing organizational culture involves external adaptation and survival
addressing issues such as mission strateay, goals, means and their
measurement; and internal intearation- addressing issues such as language,
Concepts, personal boundaries, power, status and rewards.
Maintaining the organizational culture involves processes and behaviOurs that
managers, individual emplovees and teams pay attention to, how are crisiS
responded to, coaching, teaching the key constituents and behaviours,
rewarding right behaviours, punishing or reprimanding wrong ones and the rites
and stories that develop over a period of
time.
Changing the culture involves identifying the current culture, having a clear
VISIon, Commitment of top management, role modeling by them, modifying
existing policies and correcting deviations.

Different types of culture exist such as, bureaucratic, clan,

entrepreneurial and
market. Organizations are becoming increasingly diverse in terms of
gender,
race, ethnicity and nationality. Cultural iversity brings with it
costs and
concerns. These include communication difficulties, intra
organizational
Conflicts and turnover. Hence, an organization needs to
manage cultural
diversity with sensitivity,concern and openness.
14.11 Keywords

Organization, Culture, Assumption, Belief, Values etc.

14.12 SelfAssessment Questions

1. What is your organization's culture? Give examples.

2. Describe the different levels of culture.
3. Ifvou were to develop a certain culture for a new
organization, what type of
culture will it be and how will you develop it?
4. Once you have developed the culture how will you maintain it?
5. What are the steps in changing acompany's culture?
6. Suggest steps to manage diversity in your organization.

236 | Page