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Ch10 Organizational Culture and Ethical Values.doc

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Joel Marcus

Chapter 10: Organizational Culture and Ethical Values Organizational Culture What is Culture? • The textbook defines it as the set of values, guiding beliefs, understandings, and ways of thinking that are shared by members of an organization and are taught to new members as correct o Culture is shared o It provides a sense of organizational identity o It helps members solve problems o Culture strongly influences behaviour • Mintzberg gives a stronger definition and defines it as the soul of the organization — the beliefs and values, and how they are manifested. I think of the structure as the skeleton, and as the flesh and blood. And culture is the soul that holds the thing together and gives it life force • Culture exists at 2 levels o Surface: Artifacts  Aspects of an organization that you see, hear, and feel  For example, the way people dress and act and the symbols, stories, and ceremonies organization members share o Underlying: Assumptions, beliefs, and values  Assumptions are taken for granted notions of how something should be in an organization  Beliefs are the understandings of how objects and ideas relate to each other  Values are the stable, long-lasting beliefs about what is important  For example, Steelcase Corp built a new building with “thought stations” and other aspects that emphasized the values of openness, collaboration, teamwork, and constant change • Layers of culture: Emergence and Purpose of Culture • Culture provides members with a sense of organizational identity and generates in them a commitment to beliefs and values that are larger than themselves • Cultures serve 2 critical functions in organizations o Internal integration  A state in which organization members develop a collective identity and know how to work together effectively  It guides day-to-day working relationships and determines how people communicate within the organization, what behaviour is acceptable, and how power and status are located o External adaptation  The manner in which an organization meets goals and deals with outsiders • Culture helps guide the daily activities of workers to meet certain goals • Culture can help the organization respond rapidly to customer needs or moves of a competitor • Culture can also guide employee decision making in the absence of written rules or policies Interpreting Culture • To identify and interpret culture requires that people make inferences based on observable artifacts • Some of the typical and important observable aspects of culture are: o Rites and Ceremonies  The elaborate, planned activites that make up a special event and often are conducted for the benefit of an audience  4 types of rites: o Stories  Narratives based on true events that are frequently shared among organizational employees and told to new employees to inform them about the organization  For example: At McDonald’s, all new employees are told the story about the guy that got fired for dropping a french-fry and not picking it up o Symbols  Something that represents another thing  For example, Nordstrom’s department store symbolizes the importance of supporting lower-level employees, by the organizational chart that shows customers on the top, followed by sales people, with board of directors all the way at the bottom  They can also represent negative elements, like at Enron, where premium parking spots were symbols of power, wealth, and winning at any cost o Language  Slogans, sayings, metaphors, or other expressions that convey a special meaning to employees  These are examples of artifacts, such as the slogan for Averitt Express, “Our driving force is people”, applying to both customers and employees Organization Design and Culture • Corporate culture should reinforce the strategy and structural design that the organization needs to be effective within its environment • It can be assessed with 2 dimensions: o The extent to which the competitive environment requires flexibility or stability o The extent to which the organization’s strategic focus and strength are internal or external • 4 categories of culture are associated with the above 2 dimensions The Adaptability Culture • A culture characterized by strategic focus on the external environment through flexibility and change to meet customer needs • It encourages entrepreneurial values, norms, and beliefs that support the capacity of the organization to detect, interpret, and translate signals from the environment into new behaviour responses • It doesn’t react quickly to changes – it actively creates change, by encouraging innovation, creativity, and risk taking • For example, 3M promotes individual initiative and entrepreneurship The Mission Culture • A culture that places emphasis on a clear vision of the organization’s purpose and on the achievement of specific goals • Focuses on sales growth, profitability, market share, etc. • Because of the stable environment, the vision can be translated into measurable goals • Mission cultures often reflect a high level of competitiveness and a profit-making orientation • For example, Siebel Systems thrives on an intense, ambitious culture The Clan Culture • A culture that focuses primarily on the involvement and participation of the organization’s members and on rapidly changing expectations from the external environment • Focuses on the needs of employees as the route to high performance • Involvement and participation create a sense of responsibility and ownership • For example, Wegman’s grocery store considers employee commitment and satisfaction key to success The Bureaucratic Culture • A culture that has internal focus and a consistency orientation for a stable environment • Symbols, heroes, and ceremonies support cooperation, tradition, and following established polices and practice as a way to achieve goals • There is a high level of consistency, conformity, and collaboration among members, and the organization succeeds by being highly integrated and efficient • For example, Pacific Edge Software uses this by ensuring that all its projects are on time and on budget Framework Culture Strength and Organizational Subcultures • Culture strength is the degree of agreement among members of an organization about the importance of specific values o A strong culture is associated with frequent use of ceremonies, symbols, stories, heroes, and slogans o These elements increase employee commitment to the values and strategy of a company o They build cohesiveness, loyalty, and commitment, hence, decreasing turnover • Subcultures are cultures that develop within an organization to reflect the common problems, goals, and experiences that members of a team, department, or other unit share o These are likely in large organizations and can influence behaviour o Strong subcultures can make it difficult to influence change o For example, a manufacturing department may emphasize order, efficiency, and obedience, where R&D may be characterized by employee empowerment, flexibility, and customer focus o When subcultures become too strong and outweigh the corporate cultural values, conflicts may emerge and hurt organizational performance Organizational Culture, Learning, and Performance • Culture can play an important role in creating an organizational climate that enables learning and innovative response to challenges, competitive threats, or new opportunities • There is a strong relationship between culture and performance, but cultures must be adaptive in order to be successful • Strong, adaptive cultures often incorporate the following values: o The whole is more important than the parts and boundaries between parts are minimized o Equality and trust are primary values o The culture encourages risk taking, change, and improvement • Adaptive Vs. Nonadaptive Cultures: Adaptive Corporate Cultures Nonadaptive Corporate Cultures Core Values Managers care deeply about Managers care mainly about customers, stockholders, and themselves, their immediate work employees. They also strongly value group, or some product associated people and processes that can create with that work group. They value the useful change (For example, orderly and risk-reducing leadership initiatives up and down the management process much more management hierarchy) highly than leadership initiatives Common Behaviour Managers play close attention to all Managers tend to be somewhat their constituencies, especially isolated, political, and bureaucratic. customers, and initiate change when As a result, they don’t change their needed to serve their legitimate strategies quickly to adjust to or take interests, even if it entails taking someadvantage of changes in their risks business environments Ethical Values and Social Responsibility Sources of Individual Ethical Principles • Ethics are the code of moral principles and values that governs the behaviour of a person or group with respect to what is write or wrong • Ethical values set standards as to what is good or bad in conduct and decision making • Ethics are personal and unique to each individual, although in any given group, organization, or society there are many areas of consensus about what constitutes ethical behaviour • Sources of individual ethical principles and actions: o History: religion, philosophy, geographic environment, nationality, society, culture o Society: societal norms and values, as well as laws, codes, and regulations o Local Environment: organizations, geographic regions/community, family/clan o Individual Ethics and Actions: All above things, in order, lead to this Managerial Ethics and Social Responsibility • Strict ethical standards are becoming part of the formal policies and informal cultures of many organizations • Ethical standards for the most part apply to behaviour not covered by the law, and the rule of law applies to behaviours not necessarily covered by ethical standards o For example, the morality of aiding a drowning person is
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