Organizational Culture Flashcards
Organizational Culture: Definition
- Organizational culture refers to a system of shared meaning held by members that distinguishes the
organization from other organizations. This ‘system of shared meaning’ consists of a set of primary
characteristics which are accepted within the organization - Culture is defined as the learned beliefs, values, rules, norms, symbols, and traditions that are common to a group of people
Definition of Culture by Schein: Culture can be defined as…
a) a pattern of shared basic assumptions
b) that the group learned
c) as it solved its problems of external adaption and internal integration
d) that has worked well enough to be considered valid
e) and, therefore, to be taught to new members
f) as the correct way you perceive, think, and feel in relation to those problems
3 Levels of Culture by Schein
- Basic underlying assumptions
- Espoused values
- Artifacts
Basic underlying assumptions (3 Levels of Culture by Schein)
Not consciously perceptible, deeply-rooted, taken for granted:
Existing views , such as relationships to other employees (hierarchical vs. individualistic ), time orientation (traditional vs. innovative)
What is being discussed and what are people proud of ?
Espoused values (3 Levels of Culture by Schein)
Collective feeling of how things should be, norms, ideologies, philosophy:
Fairness, team spirit , fair play, passion, will to win
Artifacts (3 Levels of Culture by Schein)
Surface-level, visible results of culture:
Dress code, behavior , rituale, myths , products, annual
reports
Competing Values Framework
- Clan (Collaboration)
- Hierarchy (Control)
- Adhocracy (Creativity)
- Market (Competition)
Clan (Collaboration): “Doing
things together” / Long-Term
Development:
- A culture based on human affiliation
- Employees value attachment,
collaboration, trust, and support
Hierarchy (Control) - “Doing
things right” / Working
incrementally:
- A culture based on stability
- Employees value communication,
formalization, and routine
Adhocracy (Creative) - “Doing
things first” / Innovations:
- A culture based on change
- Employees value growth, variety,
attention to detail, stimulation, and
autonomy
Market (Competition) - “Doing
things quickly” / Short-Term
Performance:
- A culture based on achievement
- Employees value communication,
competence, and competition
Relevance of Organizational Culture
- An improvement in our culture would enhance the company’s value
- Culture is important for companies
- A poor culture leads to employees to act more unethically
- Culture is one of the top drivers of our company’s value
- Culture influences investment risk
–> Culture eats strategy for breakfast
Functions of Organizational Culture (I)
- Identification function
- Motivation function
- Stability function
- Performance function
Identification function
- “We” feeling
- Organizational cohesion (‘social glue’)
- Differentiation between different organizations
- Increased identification with short-, medium-, and long-term objectives of the organization
Motivation function
- Culture provides meaning / mechanism for collective sense-making and control of orientation
- Reciprocal commitment to core values leads to an increased willingness to engage for the organization (ex. McKinsey: «The client’s interest» as a core corporate value)
- Increased employer attractiveness
- Retention of talents
Stability function
- Appropriate standards for employee attitudes and behavior
- Integrity, shared values and norms promote common direction
- Reduction of complexity
- Avoiding debates on principles
Performance function:
- Increased efficiency and performance capability especially in crisis situations
- Promotion of employee creativity
- Commitment to organizational goals
Problems of Strong Organizational Cultures
- Institutionalization of organizations
- Barriers to change
- Barriers to organizational diversity
- Barriers to acquisitions and mergers
Institutionalization of organizations
- Unquestioned actions
- Culture as an end in itself, no relation to company’s products or services
Barriers to change
- Speed/pragmatism instead of technology
- Caution and precision instead of innovation
Barriers to organizational diversity
- One-dimensional thinking and acting
- Recruiting barrier for people with different characteristics (e.g. background, sex, age,
education)
Barriers to acquisitions and mergers:
- Cultural compatibility more important than financial advantage and product synergy?
National Culture: Challenges of Internationally Operating Companies
- National culture can be thought of as one layer above corporate culture – national cultures have their own
artifacts, values, and belief systems - Fit of values between individuals and the organization
- Fit of values between (part of) the organization and the national culture
(note: great variability within cultures)
Impact of National Culture on Organizational Culture: AirAsia
- Country of origin: Malaysia
- Highly collectivistic national culture
–> Organizational culture:
- participative management
- no individual offices
- informal dress code to hide
differences in status
Impact of National Culture on Organizational Culture: US Airways
- Country of origin: USA
- Highly individualistic national culture
–> Organizational culture:
- hierarchical organization
- formal culture
- wearing of uniforms which explicitly
show differences in status
Hofstede’s Dimensions of Culture: Original study in 1967-1970 and 1971-1973
- Global employee survey
at IBM - n > 117 000 employees from more
than 70 countries - The majority of test subjects took
part in the survey twice within an
interval of four years - Questions regarding satisfaction,
perception, personal goals, attitudes and demography
–> Students in 23 countries
–> Elite in 19 countries
–> Pilots in 20 countries
–> Consumers in 15 countries
–> Civil servants in 14 countries
Hofstede’s Dimensions of Culture: The 5 Dimensions
- Power Distance
- Individualism vs. Collectivism
- Masculinity vs. Femininity
- Uncertainty Avoidance
- Long-term vs. Short-term Orientation
Power Distance
The degree to which less powerful members of a society accept and expect that power is distributed unequally
Individualism vs. Collectivism
The extent to which individuals are
integrated into a group
Masculinity vs. Femininity
“Masculine” societies focus on self-assertion, performance, heroism and material compensation.
“Feminine” on compassion, cohesion, modesty and quality of life.
Uncertainty Avoidance
The degree to which the members of a society feel uncomfortable with uncertainty and ambiguity
Long-term vs. Short-term Orientation
Orientation towards the future (“modernity”) or the present (“tradition”)
Shaping Cultures: Implications for Leaders
The cultural dimensions hold several implications for leaders:
1. Recruiting
2. Targets
3. Training
4. Appraisal
5. Rewarding
Recruiting
Which skills do leaders need in different cultures?
Targets
People from different cultures are
motivated by different goals (e.g. team
performance vs. individual glory)
Training
Different “learning cultures” exist
(top-down versus participative)
Appraisal
There is no uniform “feedback culture”.
Leaders have to keep this in mind
Rewarding
Research shows that national culture has a strong influence on compensation policies in
different countries (e.g CEO compensation)
Advantages: Hofstede’s Dimensions of Culture
- Measurability of cultural differences
- Very ambitious and comprehensive model with more than 70 national cultures
- Still widely used in research and practice
- Large contribution towards the sensitization for cultural differences and towards research on culture
Disadvantages: Hofstede’s Dimensions of Culture
- Outdated data from the 1970s
- Poor representativeness of data (IBM
employees) - Very small sample sizes in some countries
- Critical assumption that national cultures are homogenous (generalization)
GLOBE Study: Global Leadership & Organizational Behavior Effectiveness
- Initiation of the GLOBE research project by Robert House in 1991
- Objective: Improved understanding of cultural differences and the impact of culture on leadership effectiveness
- n > 17 000 managers from more than 950 organizations that represent
more than 62 national cultures - Various methods of analysis, such as questionnaires, interviews, focal groups and content analyses of print media
- Identification of 9 dimensions of culture and 6 leadership styles based on which the investigated countries can be distinguished
GLOBE Study: 9 Dimensions
- Uncertainty Avoidance
- Power Distance
- Collectivism I ((Institutional collectivism)
- Collectivism II (Group and family collectivism)
- Gender Egalitarianism
- Assertiveness
- Future Orientation
- Performance Orientation
- Humane Orientation
Germanic Europe
- Countries: Austria, Netherlands, Switzerland and Germany
- High performance orientation, assertiveness and uncertainty avoidance
- Aggressive competition, formal rules and planning, individualism
Confucian Asia
- Countries: Singapore, Hong Kong,
Taiwan, China, South Korea und Japan - High performance orientation and collectivism
- Emphasis on results and teamwork,
loyalty towards family
Email communication: Suitable for a German colleague
- Direct and efficient
Email communication: Suitable for an American colleague
- Indirect, polite and respectful
GLOBE Study: advantages
- Large database
- Profound and standardized quantitative research design
- Extension of the Hofstede dimensions
- Allows conclusions on the appropriateness of
leadership styles in different cultures
GLOBE Study: Disadvantages
- Problematic selection and measurement of leadership styles –> sample: managers themselves were asked about leadership
- Purely Anglo-American perspective in the choice of constructs
- Neglect of leadership context, cf. classical leadership theories
Reasons for the Development of Culture (Organization Culture)
- Economic factors
- Socio-cultural factors
- Organization-internal factors
Economic factors
- Increased competition
- Internationalization / Globalization
- Strategic alliances
- Technological developments
- Scarce public budgets
Socio-cultural factors
- Changing values and value diversity
- Demographic change
Organization-internal factors
- Strong growth
- Productivity problems
- Changes at the top
- High fluctuation rates
- Imbalances in the organizational
culture (strong sub-cultures)
Model, Tools, and Methods: Organizational Culture
- Analysis of Organizational Culture
- Systematic Culture Development
- Adaption & Evaluation of Culture
Analysis of Organizational Culture
- Leader surveys
- Analysis of documents: Annual
reports, guidelines, corporate
identity, etc - Company tour: Assessing symbols of styles and status, typical ways of behavior, etc
- Meeting observations: Topics,
interaction, rituals, etc
Systematic Culture Development
- Definition of target culture
- Adaption of structures towards target culture
- Selection of personnel
- Trainings
- Leadership by example
Adaption & Evaluation of Culture
- Employee surveys
- Analysis of documents
- Company tour
- Observation of meetings
Strong vs. Weak Cultures
- Conciseness
- Degree of distribution
- Embedment depth
- Persistence
Conciseness
How clear are the
patterns of orientation
and values?
Degree of distribution
Extent to which the staff
shares the values
Embedment depth
To what extent have cultural
patterns become a natural part of
daily activities?
Persistence
Temporal stability of culture
Indirect ways to influence culture: Influencing visible artifacts
- Systems and processes: Budgets, reports, development programs, etc., which fit the organizational culture
- Adapt structures to organizational culture
- Furnishing design, e.g. open office, in order to promote the relevance of open communication
- Histories, legends, myths: Highlight real events which highlight specific values
- Formal declaration: Write down values
Systematic Culture Development: Symbolic Management
Symbolic management means the deliberate and goal-oriented influence on artifacts within the
company
Direct ways to influence culture: Influencing collective values and basic assumptions
- Attention:
–> Explicit attention towards specific norms and values
increases their impact
–> Non-attention highlights their unimportance - Reaction to crises: Setting an example of corporate culture values, especially in times of crisis
- Leaders as role models
- Formal and informal rewarding of culturally appropriate behavior
- Targeted selection and dismissal of personnel
Review & Adjustment of Culture: Six Cultural Factors that Drive Performance
- Maximize positive motivational factors for performance
- Minimize negative motivational factors for performance
Maximize positive motivational factors for performance
- Play: being motivated by the work itself
- Purpose: the work‘s outcome fits your identity and values
- Potential: the work enhances your potential
Minimize negative motivational factors for performance
- Emotional pressure: working because some external force threatens your identity
- Economic pressure: working to gain a reward or avoiding punishment
- Inertia: the motive to work is so far removed from the work that you can‘t identify why you are working
Advantages: Culture Management
- Effective approach in order to
comprehensively change the “soft” factors in an organization - Opportunity to sustainably embed specific values in an organization
Limitations: Culture Management
- Employees might feel manipulated
- Difficult to deliberately change the artifacts in an organization
- If new symbols are not experienced as authentic, this can lead to a loss of trust
