MGT504 - Organization Theory and Design - Lecture Handout 24

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ORGANIZATIONAL DESIGN AND CULTURE

INTERPRETING CULTURE

To identify and interpret the content requires that people make inferences based on observable artifacts. Artifacts can be studied but are hard to decipher accurately. A ceremony in one company may have a different meaning that in another company. To discipline what is really going on in an organization requires detective work and probably some experience as an insider. Some of the typical and important observable aspects of culture are rites and ceremonies, stories, symbols, and language.

Rites and Ceremonies: Important artifacts for culture are rites and ceremonies. the elaborate, planned activities that make up a special event and are often conducted for the benefit of an audience. Managers can hold rites and ceremonies to provide dramatic examples of what a company values. These are special occasions that reinforce specific values, create a bond among people for sharing an important understanding, and anoint and celebrate heroes and heroines who symbolize important beliefs and activities.

Four types of rites that appear in organizations are hereunder. Rises of passage facilitate the transition of employees into new social roles. Rites of enhancement create stronger social identities and increase the status of employees. Rites of renewal reflect training and develop activities that improve organization functioning. Rites of integration create common bonds and good feelings among employees and increase commitment to the organization. The following examples illustrate how these rites and ceremonies are used by top managers to reinforce important cultural values.

  • In major bank, election as officers was seen as the key event in a successful career, a series of activities accompanied every promotion to bank officer, including a special method of notification, taking the new officers to the officers’ dining room for the first time, and the new officer buying drinks on Friday after his or her notification. This is a rite of passage.
  • Mary Kay Cosmetic Company holds elaborate awards ceremonies, presenting gold and diamond pins, furs, and pink Cadillac’s to high – achieving sales consultant. The most successful consultants are introduced by film clips, such as the kind used to introduce award nominees in the entertainment industry. This is a rite of enhancement.
  • An important annual event at McDonald’s is the nationwide contest to determine the best hamburger cooking team in the country. The contest encourages all stores to reexamine the details of how they cook hamburgers.

Stories: Stories are narratives based on true events that are frequently shared among organizational employees and told to new employees to inform them about an organization. Many stories are about company heroes who serve as models or ideals for serving cultural norms and values. Some stories are considered legends because the events are historic and may have been embellished with fiction details. Other stories are myths, which are consistent with the fictional details. Other stories are myths, which are consistent with the values and beliefs of the organization but are not supported by facts. Stories keep alive the primary values of the organization and provide a shared understanding among all employees. Example of how stories shape culture is as follows.

  • At 3M Corp.., the story is told of a vice – president who was fired early in his career for persisting with a new product even after his boss had told him to stop because he thought it was a stupid idea. After the worker was fired, he stayed in an unused office, working without a salary on the new product idea. Eventually he was rehired, the product was a success, and he was promoted to vice president. The story symbolizes the 3M value of persisting in what you believe in.
  • One FedEx story concerns a delivery person who had misplaced the key to a FedEx drop box. Rather than allow the packages to be late, the employee uprooted the box, put it in his delivery truck, and rushed it back to the sorting station, where they were able to pry it open and get the contents to their destination the following day. By
    telling this story, FedEx workers communicate the importance of putting the customer first.
    Symbols: Another tool for interpreting culture is the symbol. A symbol is something that represents another thing. In one sense, ceremonies, stories, slogans, and rites are all symbols. They symbolize deeper values of an organization. Another symbol is a physical artifact of the organization. Physical symbols are powerful because they
    focus attention on specific item. Examples of physical symbols are as follows.
  • Nordstrom department store symbolizes the importance of supporting lower – level employees with the organization chart. Nordstrom’s is known for its extraordinary customer service, and the organization chart symbolizes that managers are to support the employees who give the service rather than be managers who control
    them.
  • At St. Luke’s , London advertising agency, the office layout symbolizes the company’s commitment to values of openers, equality, flexibility, and creativity, there are no individual desk and personal work space; teams gather in large, client – specific brand rooms to generator ideas for new accounts and store work in progress.
    Language: The final techniques for influencing culture are language. Many companies use a specific saying, slogan, metaphor, or other form of language to convey special meaning to employees. Slogans can be readily picked up and repeated by employees as well as customers of the company. Bank one promotes its emphasis on customer service though the slogan, “ Whatever it takes,” bank one’s culture encourages employees to do whatever it takes to exceed customer expectations. Other significant uses of language to shape culture are as follows;
  • T.J. Watson, Jr., son of the founder of international Business Machines, used the metaphor “Wild ducks” to describe the type of employees needed by IBM. His point was, “you can make wild ducks tame, but you can never make tame ducks wild again,” Wild ducks symbolized the freedom and opportunity that must be available to keep from taming creative employees at IBM.

Recall that culture exists at two levels – the underlying values and assumptions and the visible artifacts and observable behaviors. The slogans, symbols, and ceremonies just described are artifacts that reflect underlying company values, these visible artifacts and behaviors can be used by mangers to shape company values and to strengthen organizational culture.

Corporate culture should reinforce the strategy and structural design that the organization needs to be effective within its environment. For example, if the external environment requires flexibility and responsiveness, such as the environment for emerging internet – based companies, the culture should encourage adaptability; the correct relationship among cultural values, organizational strategy and structure, and the environment is associated with four categories of culture, which are illustrated. These categories are based on two factors; (1) the extent to which the competitive environment requires flexibility or stability, and (2) the extent to which the strategic focus and strength is internal or external. The four categories associate with these differences are adaptability / entrepreneurial, mission, clan, and bureaucratic. Each of the four cultures can be successful, depending on the needs of the external environment and the organization’s strategic focus.

THE ADAPTABILITY / ENTREPRENEURIAL CULTURE

The adaptability / entrepreneurial culture is characterized by strategic focus on the external environment through flexibility and change to meet customer needs, the culture encourages norms and beliefs that support the capacity of the organization to detect, interpret, and translate signals from the environment into new behavior responses, this type of company, however, doesn’t just react quickly to environmental changes – it actively creates change. Innovation, creativity, and risk – taking are valued and rewarded.

An example of the adaptability / entrepreneurial culture is 3 M, a company whose values promote individual initiative and entrepreneurship. All new employees attend a class on risk – taking, where they are told to pursue their ideas even if it means defying their supervisors, Acxiom Corp.., based in Conway, Arkansas, began changing to an adaptability / entrepreneurial culture in the early 1990s. After years of rapid growth and an explosion of interest in data management products and services, managers discovered that the company’s culture, which emphasized internal efficiency, consistency in following established rules and procedures, and top – down decision making, was no longer suitable to meet the demands, of the rapidly changing environment. Acxiom shifted to an external focus emphasizing the importance of employee’s empowerment, flexibility, and initiative. Most e – commerce companies, such as eBay, Drugstore.com and Buy.Com, as well as companies in the marketing, electronics, and cosmetics industries, use this type of culture because they must move quickly to satisfy customers.

THE MISSION CULTURE

An organization concerned with serving specific customers in the external environment, but without the need for rapid change, is suited to the mission culture. The mission culture is characterized by emphasis on a clear vision of the organization’s purpose and on the achievement of goals, such as sales growth, profitability, or market share, to help achieve the purpose. Individual employees may be responsible for a specified level of performance, and the organization promises specified rewards in return. Managers shape behavior by envisioning and communicating a descried future state for the organization. Because the environment is stable, they can translate the vision into measurable goals and evaluate employee performance for meeting them. In some cases, mission cultures reflect a high level of competitiveness and profit – making orientation.

One example is PepsiCo, where former CEO Wayne Calloway set a vision to be the best consumer products company in the world. Managers who met the high performance standards were generously rewarded – first class air travel, fully loaded company cars, stock option, bonuses, and rapid promotion. Annual performance reviews focus specifically on meeting performance goals, such as sales target or marketing goals. Another example of a mission culture is Nucor Corp…, a steel company with headquarters in Charlotte, North Carolina; Nucor keeps employees focused on bottom –line profits and long – term survival. It asks its manages to produce more steel for less money and rewards them well for doing.

THE CLAN CULTURE

The clan culture has a primary focus on the involvement and participation of the organization’s members and on rapidly changing expectations, from the external environment. This culture is similar to the clan form of control. More than other, this culture focuses on the needs of employees as the route to high performance, involvement and participation create a sense of responsibility and owner ship and hence, greater commitment to the organization

The most important value is taking care of employees and making sure they have whatever they need to help them be satisfied as well as productive. By taking care of employees, SAS is able to adapt to competition and changing markets. The creativity of employees is highly valued at SAS, where more than 30 percent of revenues are plowed back into research and development. Companies in the fashion and retail industries also use this culture because it releases the creativity of employees to respond to rapidly changing tastes.

THE BUREAUCRATIC CULTURE

The bureaucratic culture has an internal focus and consistency orientation for a stable environment. This organization has a culture that supports a methodical approach to doing business. Symbols, heroes, and ceremonies support cooperation, tradition, and following established policies and practice as a way to achieve goals, Personal involvement is somewhat lower here, but that is out weighed by a high level of consistency, conformity, and collaboration among members. This organization succeeds by being highly integrated and efficient.

One example of a bureaucratic culture is Safeco Insurance Company, Considered by some to be stuffy and regimented. Employees take their coffee breaks at an assigned time, and the dress codes specify white shirts and suits for men and no bards. However, employees like this culture. Reliability counts. Extra work is not required. The culture is appropriate for the insurance company. Which succeeds because it can be trusted to deliver on insurance polices as agreed.

CULTURE STRENGTH AND ORGANIZATIONAL SUBCULTURES

A strong organizational culture can have a powerful impact on company performance. Culture strength refers to the degree of agreement among members of an organization about the importance of specific values. If widespread consensus exists about the importance of those values, the culture is cohesive and strong; if little agreement exists, the culture is weak.

A strong culture is typically associated with the frequent use of ceremonies, symbols, stories, heroes, and slogans, these elements increase employee commitment to the values and strategy of a company. In addition, managers who want to create and maintain strong corporate cultures often give emphasis to the selection and socialization of employees. For example, at Southwest Airlines, prospective employees are subjected to rigorous interviewing. Sometimes even by Southwest’s regular customers, so that only those who fit the culture are hired. At Trilogy Software, Inc.., one of today’s fastest –growing software companies, selection and socialization of new employees is a company wide mission, as descried in the Taking the Lead Box.

However, culture is not always uniform throughout the organization. Even in organizations that have strong cultures, there may be several sets of subcultures, particularly within large organizations. Subcultures develop to reflect the common problems, goals, and experiences that members of a tem, department, or to the unit share. An office, branch, or unit of a company that is ph6ysically separated from the company’s main operations may also take on a distinctive subculture.

For examples, although the dominant culture of an organization may be a mission culture, various departments may also reflect characteristic of adaptability / entrepreneurial, clan or bureaucratic cultures. The manufacturing department of a large organization may thrive in an environment that emphasizes order, efficiency, and obedience to rules, whereas the research and development department may be characterized by employee empowerment, flexibility, and customer focus. This is similar to the concept of differentiation, where employees in manufacturing, sales, and research departments studied by Paul Lawrence and Jay Lorsch developed different values with respect to time horizon, interpersonal relationships, and formality in order to perform the job of each particular department most effectively. The credit division of Pitney Bowes, a huge corporation that manufactures postage meters, copies, and other office equipment, developed a distinctive subculture to encourage innovation and risk – taking. Subcultures typically include the basic values of the dominant organizational cultural plus additional values unique to members of the subculture. However, sub cultural differences can sometimes lead to conflicts between departments, especially in organization that do not have strong overall corporate cultures. When sub cultural values become too strong and outweigh the corporate cultural values, organizational performance may suffer.

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