ORGANIZATIONAL CULTURE

Corporate cultures provide identifying characteristics and values for organizational members to
appreciate and learn. Cultures are distinguished by artifacts, values, and basic assumptions. The
socialization process is the entry stage in an organization that provides clues about its culture.
Cultures are difficult to change, yet change is necessary in some instances for survival.
Organizations need an adaptive culture in order to respond effectively to the changing
environment.

LEARNING OBJECTIVES
After reading this chapter, you should be able to do the following:

1. Define organizational culture and explain its three levels.

2. Identify the four functions of culture within an organization.
3. Explain the relationship between organizational culture and performance.
4. Contrast the characteristics of adaptive and nonadaptive cultures.
5. Describe five ways leaders reinforce organizational culture.
6. Describe the three stages of organizational socialization and the ways culture is
communicated in each step.
7. Identify ways of assessing organizational culture.
8. Explain actions managers can take to change organizational culture.

KEY TERMS
This unit introduces the following key terms:

 organizational (corporate) culture

 artifacts
 espoused values
 enacted values
 assumptions
 strong culture
 adaptive culture
 organizational socialization
 anticipatory socialization
 encounter
 change and acquisition
 triangulation

THE CHAPTER SUMMARIZED

I. THINKING AHEAD: The Entrepreneurial Culture of Enron
II. THE KEY ROLE OF ORGANIZATIONAL CULTURE

Organizational cultures exist in all organizations, and have important effects on the morale and
motivation of organizational members. Cultures are communicated through artifacts, values, and
basic assumptions that are both visible and invisible. Stories are considered by some as the most
effective approach to reinforcing an organization’s values, and frequently involve the CEO.
Values that organizations hold can be either enacted or espoused. When espoused values are not
confirmed by actions, the organizational culture is weakened. Leaders have a responsibility to
monitor and alter the organizational culture when necessary. Much of our concept of
organizational cultures has been adapted from cultural anthropology. There appears to be distinct
cultures in organizations.

The subject has been studied closely since the 1970s, and particularly since the early 1980s, with
the publication of the Deal and Kennedy’s Corporate Cultures, Ouchi’s Theory Z, and Peters and
Waterman’s In Search of Excellence. One of the best known scholars in the area of corporate
cultures is Edgar Schein. Schein became interested in organizational culture when he discovered,
while teaching in Mexico and Europe, that company cultures may be stronger than country
cultures.

DEFINITIONS OF ORGANIZATIONAL CULTURE

Organization culture has been defined, by scholars in varied ways and numerous definition of
culture have been proposed. A few of these insights are:

Porter, Lawler & Hackman (1975) identify organization culture as:

“A set of customs and typical patterns of ways of doing things. The force, pervasiveness
and nature of such model, beliefs and values vary considerably from
organization to organization. Yet it is assumed that an organization that has any history at all has
developed some sort of culture and that this will have a vital impact on the degree of success of
any effort to improve or alter the organization.”

Edgar H. Schein (1984) defines organization culture as:

“A set of basic assumptions that a given group has invented, discovered or developed in
learning to cope with its problems of external adaptations and internal integration that have
worked well enough to be considered valid, and therefore, to be taught to new members as a
correct way to percieve, think and feel in relation to these problems.”

According to Daniel R. Denison (1990):

“Organization culture refers to the underlying values, beliefs and principles that serve as a
foundation for organization’s management systems, as well as the set of management practices
and behaviors that both exemplify and reinforce those basic principles.”

Thus, though organization culture is defined by different people in different ways, most of the
definitions stress on the importance of shared norms and values in the study of culture. The core
of the culture is formed by values which are not visible but shared by people even when
membership in the group changes. Organization culture has many characteristics. Based on the
varied definitions of culture, Amarchand (1992) identified the following seven distinct
characteristics of organization culture. Culture is
 Learned
 Rooted in the traditions of the organization
 Shared by the people of the organization
 Transgenerational
 Cumulative
 Symbolic in nature
 Multifaceted (i.e. it is composed of several elements put together)
 
A critical examination of the deliberations presented above seems to suggest that culture
determines the important issues within the organization. It identifies the principal goals, work
methods and behaviours, work rules, individual interaction patters in which they address each
other and the ways in which personal relationships are conducted. Sinha (1980) identified that in
complex organizations there may be subcultures, which may be different from each other.
Different units of a corporate body may develop different cultures. In the same organization,
finance, production, marketing, personnel and maintenance groups may hold different values and
world-views and hence, while sharing parts of the organization culture, these may have different
specific patterns.
J. Chatman & Caldwell has suggested the following seven primary characteristics that capture
the essence of an organization’s culture:
1              Innovation and Risk Taking -The degree to which employees are encouraged to be
innovative and take risks.
2              Attention to detail -The degree to which employees are expected to exhibit precision,
analysis, and attention to detail.
3              Outcome Orientation -The degree to which management focuses on results or
outcomes rather than on the techniques and processes used to achieve these outcomes.
4              People Orientation -The degree to which management decisions take into
consideration the effect of outcomes on people within the organization.
5              Team Orientation -The degree to which work activities are organized around teams
rather than individuals.
6              Aggressiveness -The degree to which people are aggressive and competitive rather
than easygoing.
7              Stability -The degree to which organizational activities emphasize maintaining the
status quo in contrast to growth.

A. Culture and its Levels:- Organizational (corporate) culture is a pattern of basic

assumptions that are considered valid and that are taught to new members as the way to perceive,
think, and feel in the organization. Culture consists of the three levels of artifacts, values, and
basic assumptions.

B. Artifacts:- Symbols of culture in the physical and social work environment are called
artifacts. Artifacts are the most visible and accessible level of culture. Artifacts include personal
enactment, ceremonies and rites, stories, rituals, and symbols.

1. Personal Enactment:- Personal enactment is behavior that reflects the

organization's values.

2. Ceremonies and Rites:- Ceremonies can be divided into organizational rites,

including rites of passage, rites of enhancement, rites of renewal, rites of integration, rites of
conflict reduction, and rites of degradation. They are relatively elaborate sets of activities that are
enacted repeatedly on important occasions.
 3. Stories:- Stories are rich carriers of organizational culture that give meaning and
identity to organizations and help orient new employees. There are stories about the boss, stories
about getting fired, stories about how the company deals with employees who have to relocate,
stories about whether lower-level employees can rise to the top, stories about how the company
deals with crisis situations, and stories about how status considerations work when rules are
broken.

4. Rituals:- Everyday practices that are repeated frequently are known as rituals.
Typically unwritten, rituals send a clear message about the way things are done in an
organization.

5. Symbols:- Symbols communicate the culture through unspoken messages, and

include company logos, company colors, and even mental images held by employees.

C. Values:- Values are a deeper level of culture that reflects underlying beliefs. An
espoused value is what organizational members say they value, like ethical practice. Enacted
values are values reflected in the way individuals actually behave, and may differ from espoused
values.

D. Assumptions:- Assumptions are deeply held beliefs that guide behavior and tell members
of an organization how to perceive and think about things. They are often held at a level below
consciousness and are difficult to measure.

III. FUNCTIONS AND EFFECTS OF ORGANIZATIONAL CULTURE

Culture serves four functions, including providing a sense of identity to members and promoting
a sense of commitment. Culture helps organizational members attribute sense and meaning to
organizational events, and reinforces the values in the organization. Finally, culture serves as a
control mechanism for shaping behavior.

A. The Strong Culture Perspective:- A strong culture is an organizational culture with a

consensus on the values that drive the company and with an intensity that is recognizable even to
outsiders. Strong cultures can be positive or negative. For example, street gangs have strong
cultures, yet they also exhibit negative characteristics.

B. The Fit Perspective:- The concept of fit asserts that an organization’s culture is only good
if it fits, or aligns itself, with the industry or the firm’s strategy.

C. The Adaptation Perspective:- Adaptive cultures encourage confidence and risk taking
among employees, have leadership that produces change, and focus on the changing needs of
customers. Cultures that promote long-term performance tend to be the most adaptive. Adaptive
cultures facilitate change to meet the needs of their constituents.

IV. THE LEADER'S ROLE IN SHAPING AND REINFORCING CULTURE

A. What Leaders Pay Attention To:- Organizational members can get information about the
priorities, values, and beliefs of leaders by observing the things on which leaders spend their
time, as long as leaders are consistent in what they pay attention to.

B. How Leaders React to Crises:- Many believe that organizations show their real culture
during times of crisis, and consequently pay close attention to the leaders during a crisis
situation.

C. How Leaders Behave:- Employees emulate the leader's behavior and look to leaders for
cues to appropriate behavior. Leaders demonstrate the organization’s values and culture through
their behavior.
D. How Leaders Allocate Rewards:- Rewarding behavior that is consistent with the
organization’s values increases acceptance of those values and the organization’s culture. If
leaders do not allocate rewards in a way that reinforces espoused values, employees may become
confused and frustrated.

E. How Leaders Hire and Fire Individuals:- Leaders often reinforce a desired organizational
culture through the selection of new employees whose value systems are similar to the
organization’s value system. Promoting from within the organization also serves to reinforce the
culture. Also, both the rationale behind firing an employee and the manner in which the
termination is carried out convey a great deal about the organization’s culture.

V. ORGANIZATIONAL SOCIALIZATION

A. The Stages of the Organizational Socialization Process:- Organizational socialization is

the process by which newcomers are transformed from outsiders to participating, effective
members of the organization. The movie The Firm illustrates this concept particularly well, in
that the socialization process for the new lawyer is exaggerated to make a point, and occurs more
quickly and aggressively than is typical in most organizations.

1. Anticipatory Socialization:- All of the learning about the organization that occurs before
a newcomer’s first day on the job is referred to as anticipatory socialization. Realism is the
degree to which the new person holds accurate expectations about the job and the organization.
Congruence refers both to the extent to which a newcomer’s abilities match the demands of the
job, and the extent to which the newcomer’s values match the values of the organization.

2. Encounter:- The second socialization stage, in which the newcomer learns the
organizational tasks associated with the job, clarifies roles, and establishes relationships at work,
is known as encounter. Expectations formed in the anticipatory socialization stage may clash
with the realities of the job during this stage.

3. Change and Acquisition:- During the change and acquisition stage, newcomers begin to
master the demands of the job. The time span of the last stage varies greatly, but is complete
when the newcomer and others consider the newcomer an organizational insider.
B. Outcomes of Socialization:- Successful socialization of newcomers typically results in
good performance, high job satisfaction, and the intention to stay with the organization. Mutual
influence also indicates successful socialization.

C. Socialization as Cultural Communication:- The socialization process centers on the

transmission of the organization’s core values to newcomers. Newcomers are exposed to these
values through interaction with and observation of role models, through training, and through the
rewarding and punishing of specific behaviors.

VI. ASSESSING ORGANIZATIONAL CULTURE

Quantitative and qualitative techniques are both valuable approaches to assessing culture.
A. Organizational Culture Inventory:- Based on Maslow's need hierarchy, the Organizational
Culture Inventory (OCI) measures twelve cultural styles. It provides an assessment of culture at
the individual level that can be aggregated to the group level or organization level. The two
dimensions of the OCI are task/people and security/satisfaction.

B. Kilmann-Saxton Culture-Gap Survey:- This survey focuses on what actually happens and
on the expectations of others in the organization. It measures operating norms and ideal norms
along the two dimensions of technical/human and time (short term versus long term). Results
provided at the individual level can be aggregated to the group level.

C. Triangulation:- Triangulation refers to the use of multiple methods to measure

organizational culture. Three commonly used methods include (1) obtrusive observations, (2)
self-administered questionnaires, and (3) personal interviews. This approach provides a more
complete picture than using any of the methods singularly would reveal.

VII. CHANGING ORGANIZATIONAL CULTURE

Organizations need to periodically reassess their cultures as environmental changes occur due to
globalization, workforce diversity, and advances in technology. Mergers and acquisitions require
the blending of two organizational cultures, often a difficult process. Two basic approaches to
changing culture are (1) helping current organizational members buy into a new set of values,
and (2) adding newcomers and socializing them into the organization, and removing current
members as appropriate.

A. Developing a Global Organizational Culture:- Developing a global organizational culture

requires that the values that drive an organization’s culture support a global view of the company
and its efforts. Conflicting pressures of centralization and decentralization add to the difficulty of
creating such a culture.

B. Developing an Ethical Organizational Culture:- An organization’s culture can profoundly

affect the ethical behavior of its employees. Managers must behave in an ethical manner
themselves, encourage ethical behavior from their employees, and present ethical behavior as
good business. Trust plays an important role in any effort to develop an ethical organizational
culture.
C. Developing a Culture of Empowerment and Quality:- Empowerment requires trust
between managers and supervisors and between supervisors and employees. In an environment
of trust, empowerment releases the creative energy of employees and leads to increased
productivity and higher quality products and services. However, in order to develop a culture of
empowerment, managers must be willing to let go of traditional hierarchical notions of power.

VIII. MANAGERIAL IMPLICATIONS: THE ORGANIZATIONAL CULTURE

CHALLENGE

CHAPTER SUMMARY

· Organizational (corporate) culture is a pattern of basic assumptions that are considered valid
and that are taught to new members as the way to perceive, think, and feel in the
organization.
· The most visible and accessible level of culture is artifacts, which include personal
enactment, ceremonies and rites, stories, rituals, and symbols.
· Organizational culture has four functions: giving members a sense of identity and increasing
their commitment, serving as a sense-making device for members, reinforcing organizational
values, and serving as a control mechanism for shaping behavior.
· Three theories about the relationship between culture and performance are the strong culture
perspective, the fit perspective, and the adaptation perspective.
· Leaders shape and reinforce culture by what they pay attention to, how they react to crises,
how they behave, how they allocate rewards, and how they hire and fire individuals.
· Organizational socialization is the process by which newcomers become participating,
effective members of the organization. Its three stages are anticipatory socialization,
encounter, and change and acquisition. Each stage plays a unique role in communicating
organizational culture.
· The Organizational Culture Inventory and Kilmann-Saxton Culture-Gap Survey are two
quantitative instruments for assessing organizational culture. Triangulation, using multiple
methods for assessing culture, is an effective measurement strategy.
· It is difficult but not impossible to change organizational culture. Managers can do so by
helping current members buy into a new set of values, by adding newcomers and socializing
them into the organization, and by removing current members as appropriate.

ATTITUDE
According to G.W. Allport, “Attitude is a mental and neutral state of readiness organized
through experience, exerting a directive or dynamic influence upon individual’s response to all
objects and situations with which it is related.”

Krech and Crutchfield defined “attitude as an enduring organization of motivational, emotional,

perceptual and cognitive processes with respect to some aspect of the individual’s world”
According to Katz and Scotland, “Attitude is a tendency or predisposition to evaluate an object
or symbol of that object in a certain way”. In effect attitude is used in a generic sense, as to what
people perceive, feel and express their views about a situation, object or other people. Attitude
cannot be seen, but the behaviour can be seen as an expression of attitude.
Components of Attitude
(a) Cognitive component: Cognitive component of attitude is related to value statement. It
consists of belief, ideas, values and other information that an individual may possess or has faith
in. Quality of working hard is a value statement or faith that a manager may have.

(b) Affective component: Affective component of attitude is related to person’s feelings about
another person, which may be positive, negative or neutral. I do not like Maya because she is not
hard working, or I like Mina because she is hard working. It is an expression of feelings about a
person, object or a situation.

(c) Behavioral component: Behavioral component of attitude is related to impact of various

situations or objects that lead to individual’s behaviour based on cognitive and affective
components. I do not like Maya because she is not hard working is an affective component, I
therefore would like to disassociate myself with her, is a behavioural component and therefore I
would avoid Maya. Development of favourable attitude, and good relationship with Mina is but
natural. Individual’s favourable behaviour is an outcome of the fact that Mina is hardworking.
Cognitive and affective components are bases for such behaviour. Former two components
cannot be seen, only the behaviour component can be seen. Former is important because it is a
base for formation of attitude. These components are explained in Figure 6.2 below.

Types of Attitude
Job satisfaction: Job satisfaction is related to general attitude towards the job. A person having a
high level of satisfaction will generally hold a positive attitude while dissatisfied people will
generally display negative attitude towards life. When we talk about attitude, we generally speak
about job satisfaction because they are inter-related in organizational behaviour.

Job involvement: Job involvement refers to the degree to which a person identifies himself
(psychologically) with his job, actively participates and considers his perceived performance
level important to self-worth. (Robbins) . High level of involvement indicates that the individual
cares for his job, that has an impact on high productivity. Higher the job satisfaction, lower will
be absenteeism and employee turnover.

Organizational commitment: Organizational commitment refers to degree to which an

employee identifies himself with the organizational goals and wishes to maintain membership in
the organization. He wants to “belong” to the organization and take an active part in the its
functioning. Absenting or resigning from the job versus job satisfaction is a predictor of
organizational commitment. The concept has been very popular in the recent times.
Organizational commitment depends upon job enrichment factor and degree to which the
workers enjoy autonomy and freedom of action while performing.

EGO STATE
Study of ego state is an important part of transactional analysis, it explains psychological
behaviour pattern of an individual. Study of ego state is related to the way an individual thinks,
his feelings and subsequent behaviour. People interact with each other in terms of psychological
positions of behaviour known as ego state. Sigmund Freud was the first to advocate that in
every individual there are three ego states residing within him i.e. parent ego, adult ego and child
ego. They stimulate, monitor and control individual behaviour. The ego state is not related to the
age of an individual. He further states that a person can change ego state depending upon
situation and modify his behaviour. Berne states, “Although we cannot directly observe these
ego states, we can observe behaviour of an individual and can infer which of the three ego states
an individual is transacting at a particular moment”. Let us study these ego states.

Parent Ego
Parent Ego refers to the personality attributes like value, attitude and behaviour of parent like
people, inherited by a person when he was child. This behavioural pattern becomes basics for
behaviour as individual copy parent figures like teacher, father, mother, brother or any other
person who is elderly and displays an advisory behaviour, which is copied by a child and
subsequently displayed in his lifetime when such situations arise. Parent ego can be of two types.

(a) Nurturing parents:- Nurturing parent ego is characterized by over protectiveness,

helpful, distant, dogmatic, indispensable and upright parent behaviour. When such behaviour is
displayed to a child, he inherits the same pattern of behaviour.

(b) Critical parents:- Critical parents ego state is characterized with the behaviour, which
is hurtful, waging finger at the other and conveys displeasures. The behaviour is strict which
usually quotes rules, laws and has great reliance on successful people.

Adult Ego
Adult Ego is based on reasoning, seeking from subordinates and providing information. A person
having adult ego views people equal, worthy of undertaking any job and responsible. They
behave rationally and think logically. Physical signs can identify their behaviour, which displays
controlling type. People with adult ego, verify their behaviour and update their parent and child
ego continuously. They block parent and child ego state based on experience. The person updates
data to determine what is valid thus he controls emotional expression. Adult ego is considered to
be valid ego state comparatively.
Child Ego
Child ego state is inner feelings, experience and adaptation. Person having child ego generally
displays creativity in his action. He conforms to the situation and people who interact with him
and displays anxiety, depression, dependence, fear and hate. Child ego can be perceived by
observing an individual who displays physical signs like silent compliance, attention seeker in
certain situations he displays temper, tantrums, giggling and coyness. The individual thinks non-
logical and wants immediate action on various issues. Such behaviour is formed unto 5 years of
age by accepting inputs of behaviour of various individuals around in childhood days. Child gets
a social birth and inherits various patterns within the child ego state. These are:-

(a) Natural Child:- Natural child generally displays following behavioural pattern
• Affectionate
• Does what come in the way
• Fearful
• Self-indulgent
• Self-centered
• Aggressive

(b) Adaptive child:- Adaptive child is psychologically trained in obeying instructions

from parents though not to his liking and does whatever because parents insist to do so. It has the
tendency to get involved in NOT OK transaction. Rebellion, frustration becomes part of his
personality.

(c) The little professor:- The little professor is intuitive, creative and manipulative. He
believes in magic and uses this ego state with adult ego state and achieves good interpersonal
relationship. He responds to non-verbal communication and play hunches. He is imaginative.