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Lesson#6
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The Organization Culture
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The Organization Culture
Basically, 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 behaviors.
Culture is one of those terms that are difficult to express
distinctly, but everyone knows it when they sense
it. For example, the culture of a large, for-profit corporation
is quite different than that of a hospital which
is quite different that that of a university. You can tell the
culture of an organization by looking at the
arrangement of furniture, what they brag about, what members
wear, etc. -- similar to what you can use to
get a feeling about someone's personality.
Definition:
“The culture of an organization is its customary and traditional
way of thinking and doing things, which is
shared to a greater or lesser degree by all its members, and
which new members must learn and at least
partially accept, in order to be accepted into service in the
firm. Culture covers a wide range of behavior:
the methods of production; job skills and technical knowledge;
attitudes towards discipline and
punishment; the custom and habit of managerial behavior; its way
of doing business; the methods of
payment; the values placed on different types of work; beliefs
in democratic living and joint consultation”.
Culture shows up in both visible and invisible ways. Some
manifestations of this energy field called
"culture" are easy to observe. You can see the dress code, work
environment, perks, and titles in a
company. This is the surface layer of culture. These are only
some of the visible manifestations of a culture.
The far more powerful aspects of culture are invisible. The
cultural core is composed of the beliefs, values,
standards, paradigms, worldviews, moods, internal conversations,
and private conversations of the people
that are part of the group. This is the foundation for all
actions and decisions within a team, department, or
organization.
Visible Manifestations of Culture:
• Dress Code
• Work Environment
• Benefits
• Perks
• Conversations
• Work/Life Balance
• Titles & Job Description
• Organizational Structure
Invisible Manifestations of Culture:
• Values
• Private Conversations
(with self or confidants)
• Invisible Rules
• Attitudes
• Beliefs
• Worldviews
• Moods and Emotions
• Unconscious
Interpretations
• Standards of Behavior
• Paradigms
• Assumptions
Business leaders often assume that their company's vision,
values, and strategic priorities are synonymous
with their company's culture. Unfortunately, too often, the
vision, values, and strategic priorities may only
be words hanging on a plaque on the wall. In a thriving
profitable company, employees will embody the
values, vision, and strategic priorities of their company. What
creates this embodiment (or lack of
embodiment) is the culture that permeates the employees'
psyches, bodies, conversations, and actions.
The energy fields that make up a group's culture are dynamic and
change continuously. Culture is created
and constantly reinforced on a daily basis through
conversations, symbols, rituals, written materials, and
body language. It is the small, mundane actions and behaviors
that create a culture and can shift a culture.
Creating and sustaining a healthy, vibrant culture requires
reinforcement of the culture through daily and
proactive conversations and communications. The failure to
discuss the values, purpose, and rules within a
group often leads to a culture that is at cross purposes with
the stated intention of the group. Poor
communication creates a lot of confusion and often a crisis of
meaninglessness.
Since a culture is created every time a group of people come
together to form a team, a company will have
many sub-cultures that exist within its main culture. Within the
company, there may be sub-cultures in
departments, divisions, regions or operating units. For example,
the marketing and technology teams may
have different worldviews, jargon, work hours, and ways to do
things. A big challenge for today's company
is to create a strong, cohesive corporate culture that pulls all
of the sub-cultures together and ensures that
they can work as a unified team.
Corporate culture starts when the organization begins and
develops as it grows. Corporate culture controls
the way the people in an organization interact with each other
and the stakeholders outside the
organization. Over time, the culture changes as people come and
go. Culture reflects the values, ethics,
beliefs, personality and traits of the company's founders,
management and employees. In a well-established
company, the culture is so strong that even new top management
may not be able to change it. Or, if they
try, it may take 5, 10 or 20 years to change. Employees who feel
comfortable and compatible with the
company culture will stay; those who don't will leave or will
not perform as well as they can.
Culture is extremely powerful. The rules of the game, what
behavior is ethical and accepted, the mood of
the organization, and the enthusiasm of employees are all
contained in the culture. So, culture can be a
powerful, hidden asset or it can be a liability - a time-bomb
waiting to go off. If your leadership team has
not pro-actively created a corporate culture to support the
company's purpose, then chances are that the
culture is a hidden liability.
Every time people come together with a shared purpose, culture
is created. This group of people could be a
family, neighborhood, project team, or company. Culture is
automatically created out of the combined
thoughts, energies, and attitudes of the people in the group.
Have you ever noticed how people react to foreign visitors;
whether an exchange student or a visiting
professional? The stranger may be welcomed, but may never be
accepted unless that person can adapt to
the norms of their new environment. If they do not, the members
will shun the stranger and reject the alien
from their culture. The same is true in business. If the new
employee, consultant or visitor cannot adapt to
the corporate culture, their chances for success are slight. The
members of the culture will reject the person
outright and will work against them.
The reason for this phenomenon is because people tend to prefer
conformity in their culture. Conformity
represents a harmonious environment where the behavior and
actions are predictable. Most people have a
deeply rooted desire for a sense of order and stability in their
lives, which is what conformity provides. A
stable environment promotes self-confidence in the members of
the culture and allows them to concentrate
on their work.
Culture is an energy force that becomes woven through the
thinking, behavior, and identity of those within
the group. Culture is powerful and invisible and its
manifestations are far reaching. Culture determines a
company's dress code, work environment, work hours, rules for
getting ahead and getting promoted, how
the business world is viewed, what is valued, who is valued, and
much more.
The term organization culture refers to a system of shared
meanings, including the language, dress, patterns
of behavior, value system, feelings, attitudes, interactions,
and group norms of the members. Examine the
patterns of behavior on your campus or in your company. How do
people dress? What jargon or unique
terms do they use?
Norms:
Norms are organized and shared ideas regarding what members
should do and feel, how this behavior
should be regulated, and what sanctions should be applied when
behavior does not coincide with social
expectations. The values and behaviors of every organization are
unique. Some patterns of behavior may be
functional and may facilitate the accomplishment of
organizational goals. Other patterns of behavior or
cultural norms may actually inhibit or restrict the
accomplishment of organization goals.
A look at the types of norms that exist in an organization will
help in gaining a better understanding of the
organization's culture. Norms are generally enforced only for
the behaviors viewed as most important by
most group members. Norms essential to accomplishing the
organization's objectives are called
pivotal
norms
. Norms that
support and contribute to the pivotal norms but are not essential to the
organization's
objectives are called
peripheral norms
.
For example, dress codes that are enforced Monday through
Thursday are probably peripheral in light of Friday's being a
casual dress day. Pivotal and peripheral norms
constantly confront individuals in an organization, and they
must decide whether or not to conform. The
pressure to conform to norms varies, allowing individuals some
degree of freedom in responding to these
organizational pressures depending on how they perceive the
rewards or punishments. The organization
also has latitude in the degree of conformity it requires of its
members.
The Socialization Process:
Even if an organization does an effective job of recruiting, new
employees must still adjust to the
organizational culture. Because they are not aware of the
culture, new employees are likely to disagree with
or question the customs and values that exist. Socialization may
be defined as the process that adapts
employees to the organization's culture. The socialization of
employees at Procter and Gamble Co. starts at
an early age because employees often begin their careers there
and grow up together. The culture is one of
being resistant to new ideas and even being insular. P&G is, by
many measures, a family company and only
promotes from within. It is located in a relatively small city,
Cincinnati, where employees live near one
another, go to the same social functions, and eat at the same
restaurants. CEO Alan Lafley admits, "I am
worried that I will ask the organization to change ahead of its
understanding, capability, and commitment."
New Employee Expectations:
To function effectively, managers and members must be aware of
the organization's norms. They must
recognize how sharply norms are defined and how strongly they
are enforced. Entry into a new situation
often results in some degree of anxiety or stress. The less an
individual can relate the new situation to
previous situations, the greater the feelings of anxiety and
discomfort. The more the individual can meet
expectations, the less the feelings of anxiety and discomfort.
Some organizations assign current employees to act as mentors to
new employees. W. L. Gore &
Associates assigns each person hired by the company a sponsor
who acts as a mentor. Twenty percent of
Gore's associates (employees) are sponsors, and the sponsor is
typically the person who has the most at
stake in making the new associate successful. The Gore
philosophy is that if you sponsor someone, you
want them to be successful, and therefore will offer them
opportunities, such as sitting in on meetings. If
the new associate is successful, the team will be successful,
and Gore will be successful.
Encounter Organization's Culture:
The organizational culture provides a way for organization
members to meet and get along. Three
important aspects of socialization when joining an organization
are:
1. Deciding who is a member and who is not.
2. Developing an informal understanding of behavioral norms
3. Separating friends from enemies.
To work together effectively, individuals need to understand
things like power, status, rewards, and
sanctions for specific types of behaviors. For instance, what
behavior gets one a good grade, and so on.
While the individual employees are experiencing a new situation,
the organization may be attempting to
influence them. If new members come to an organization expecting
to find a certain set of norms, they are
looking for their expectations to be affirmed. If their
expectations reflect the actual norms of the
organization, the integration process for both the new members
and the organization is relatively painless.
Adjustment to Cultural Norms:
New members often find that the norms are unclear, confusing,
and restrictive. As a result, they may react
in different ways when entering an organization. At one extreme,
a new member may choose to conform to
all the norms of the organization, resulting in uniformity of
behavior and complete acceptance of
organizational values. This conformity may result in stagnation,
non-responsiveness, and a loss of
creativeness. At the other extreme, a new member may choose to
rebel, to reject all the values, or to leave
the organization altogether.
Figure: 06
A less obvious alternative is for new members to accept the
pivotal norms and seriously question the
peripheral norms, which can be termed creative individualism.
This is the ideal behavior for a healthy and
effective organization, but it is often difficult for a newcomer
to correctly determine which norms are
peripheral and which are pivotal. What may be a pivotal norm in
one department may be a peripheral norm
or not a norm at all in another department of the same
organization. Since norms are changing and dynamic,
the organization member must have the awareness to discern the
differences between pivotal and
peripheral norms.
Results:
Only the more healthy organizations allow their members to
challenge their norms. The aim of OD is to
develop an organizational climate that is appropriate to the
organization's mission and members. In a sense,
OD involves changing the culture of organizations and work
groups so that a more effective means of
interacting, relating, and problem solving will result. OD seeks
to develop the organization to the point that
it feels comfortable about allowing its members to openly
examine the norms, both pivotal and peripheral,
with the ultimate goal of building a more effective
organization. The reaction of the individual to the norms
results in the formation of an unwritten agreement with the
organization.
For example, at one organization employees believe that it is
their responsibility to innovate and be
creative. They develop new and improved products, processes, and
ways to serve their customers. They
believe that team discussion, challenging ideas, and taking
risks are appropriate behaviors for achieving
goals. However, at another organization employee believe that
following procedures, reaching numerical
outcome targets, doing no more or less than what is required,
and not saying anything that the boss does
not want to hear are the appropriate behaviors. These two
organizations have very different types of
cultures. In both of these organizations, each person tends to
do the following:
1.
Separate more
important from less important goals.
2.
Develop ways to
measure their accomplishments.
3.
Create explanations
for why goals may not always be met.
Psychological Contracts:
A psychological contract may be defined as an unwritten
agreement between individuals and the
organization of which they are members. It describes certain
expectations that the organization has of the
individual and the individual's expectations of the
organization. Because the two parties are growing and
changing, the contract must be open-ended, so that old issues
and new issues can be renegotiated.
An organization has certain expectations of its members. If it
is a business organization, its expectations of
member behavior will probably be spelled out very clearly. It
undoubtedly expects its members to be on the
job during certain hours of the day. It is probably concerned
with the quality and quantity of the work they
do, their loyalty, their appearance, and various other things
unique to the organization. For the organization
to be satisfied, the individual will need to comply to some
degree with its expectations. In other words, the
organization has certain requirements, and the individual must
do certain things to meet those requirements
if there is to be a lasting and healthy relationship. In many
instances, unfulfilled expectations result in high
turnover, absenteeism, sabotage, and worker alienation.
Similarly, the individual has certain expectations of the
organization. An individual may expect to gain work
experience, security, and advancement. The individual probably
expects to have an opportunity to meet
people, make friends, and form social relationships; and
undoubtedly expects remuneration from the
organization. For the individual to be satisfied and stay, the
organization will have to meet the individual's
expectations.
When either the organization's or the individual's expectations
are not being satisfied adequately by the
other party, friction and difficulties may develop. If these
problems cannot be solved, they may culminate
in the individual's leaving the organization, either voluntarily
or by the organization's choice. All too often,
the problem is solved by not solving it: it takes too much
effort to reach a real solution, so both parties
must continue with a tenuous and unharmonious relationship.
Sometimes the psychological contract between the organization
and the individual does not even address
certain key expectations. One or both parties may assume that
the other party agrees to some unstated
expectations. The phrase "it is intuitively obvious to the most
casual observer" may be the underlying
assumption of one or both parties. Unstated or assumed
expectations can lead to an organization of
individuals who feel cheated or of managers who are disappointed
in their subordinates. To avoid such
misunderstandings, both parties the members and the
representatives of the organization should formulate
a psychological contract that can be continually renegotiated.
OD in Practice: What’s your culture worth?
The founders of Setpoint had a pretty good idea of the sort of
company culture they wanted to build. It
didn’t occur to them that what they came up with would become
one of the company’s most valuable
assets.
Steve Peterson, owner of his own company, Peterson Inc., with
about 300 employees, says he had no
particular agenda when he dropped by Setpoint for a visit. He
certainly wasn’t thinking about a merger.
Setpoint was just another custom-manufacturing company employing
only about 30 employees. Most of its
revenues come from designing and building factory-automation
equipment. He’d heard about some of the
things they were doing with project management and open-book
accounting. Setpoint CEO, Joe Knight,
took Peterson on a tour of the facility. At some point they
wound up in the shop, where about 10
employees were working on half a dozen machines. Peterson
noticed a large whiteboard off to one side.
Scribbled across the board were about 20 rows and 10n columns of
numbers forming a table of some sort.
The Board
“What’s that?” he asked
“That’s our board,” Knight said. “It’s how we track our projects
and figures out whether or not we’re
making money.”
“How do you do that?” Peterson asked. Knight began explaining
what the numbers were and where they
came from.
Then Knight stopped. “You know,” he said, “you really shouldn’t
take my word for it. You should get
these guys to tell you about it.” He called out to one of the
technicians and introduced him.
“Would you mind explaining this board to us?” Peterson asked.
“Sure,” the young man said and proceeded to walk them through
it. He talked about calculating the gross
profit that he and his colleagues had earned the previous week
on each project. He pointed out the column
showing each project’s gross profit per hour and explained the
importance of keeping that number in mind.
He said he also watched the ration of overall gross profit to
operating expenses, since that’s how you knew
if the company was making money. He added that he liked to see
it running at about 2.0
“I was just amazed,” Peterson recalls. “He knew the board inside
and out. He knew every number on it. He
knew exactly where the company was and where they had to focus
their attention. There was no hesitation.
He had great confidence in what was up there.” Peterson
continues, “I could see that the board was a
cherished possession, and I was so impressed, not that Joe
Knight understood it, but that the people on the
shop floor had it down like that. It was their scoreboard. It
was the way they could tell if they were winning
or losing. I talked to several of them, and I just couldn’t get
over the positive attitude they had and their
understanding of business …I knew right then that Setpoint had
what we needed, and somehow we had to
get it.”
Merger Negotiation
Shortly thereafter, Peterson began negotiating with the owners
of Setpoint to acquire their business, their
services, their management system, and their culture.
Companies are bought for a limited number of reasons. In almost
every acquisition the buyer is looking for
market share, earnings, cash flow, strategic advantage, or some
kind of synergy, either alone or in
combination. Setpoint has little to offer Peterson in terms of
those criteria. Yet Setpoint does have one
asset that Steve Peterson would be willing to pay a substantial
price for – namely, a particular type of
corporate culture.
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