Is the set of key values assumptions understandings and norms that is shared by members of an organization and taught to new members as correct?

The Internal environment within which managers work includes corporate culture, production technology, organization structure, and physical facilities. Of these corporate culture has surfaced as extremely important to competitive advantages. The internal culture most fits the needs of the external environment and company strategic . When this fit occurs highly committed employees create a high performance organization that is tough to beat.

Culture: The set of key values, beliefs, understandings and norms that members of an organization share.

The concept of culture has been of growing concern to managers since the 1980s, as turbulence in the external environment has grown, often requiring new values and attitudes. Organizational culture has been defined and studied in many and varied ways. We define culture as the key values, beliefs, understandings and norms shared by members of an organization . The concept of culture helps mangers understand the hidden complex, aspects of organizational life. Culture is a pattern of shared values and assumptions about how things are done within the organizations. This pattern is learned by members as they cope with external and internal problems and taught to new members as the correct way to perceive, think, and feel. Culture can be analyzed at three levels as illustrated in Exhibit with each level becoming less obvious. At the surface level are visible, artifacts which include such things as manner of dress, patterns of behavior, physical symbols, organizational ceremonies and office layout. Visible artifacts are all the things one can see, hear and observe by watching members of the organization. At a deeper level are the expressed values and beliefs, which are not observable but can be discerned from how people explain and justify what they do. These are values that members of the organization hold a conscious level. They can be interpreted from the stories, language and symbols organization members use to represent them. Some values become so deeply embedded in a culture that members are no longer consciously aware of them. These basic, underlying assumptions and beliefs are the essence of culture and subconsciously guide behavior and decisions. In some organizations, a basic assumption might be that people are essentially lazy and will shirk their duties, whenever possible, thus employees are closely supervised and given little freedom, and colleagues, are frequently suspicious of one another . More enlightened organizations operate on the basic assumption that people want to do a good job; in these organizations , employees are given more freedom and responsibility and colleagues trust one another and work cooperatively.

The fundamental values that characterizes an organization’s culture can be understood through the visible manifestations of symbols, stories, heroes, slogans, and ceremonies.


A symbol is an object act or event that conveys meaning to others. Symbols can be considered a rich, non verbal language that vibrantly conveys the organization’s important values concerning how people relate to one another and interact with the environment. For example managers at a New York based start up provides Internet solutions to local television broadcasters wanted a way to symbolize the company’s unofficial mantra of drilling down to solve problem . They bought a dented old drill for $2 and dubbed it The Team drill. Each month the drill is presented to a different employee in recognition of exceptional work, and the employee personalizes drill in some way before passing it on to the next winner.

Steel Corp., built a new, pyramid shaped corporate development center to symbolize new cultural values of collaboration , teamwork, and innovation. Whereas designers, engineers, and marketers had previously been located in different buildings, they’re now all housed in the pyramid. The six floor building features an open atrium from ground floor to ceiling with a giant pendulum to remind people of constant change. Open areas and thought stations with white boards encourage brainstorming and the exchange of ideas.

Source: Richard L.Daft

1 1 Chapter 14 Shaping Culture and Values

2 2 Chapter Objectives Understand why shaping culture is a critical function of leadership. Recognize the characteristics of an adaptive, as opposed to an unadaptive, culture. Understand and apply how leaders shape culture and values through ceremonies, stories, symbols, language, selection and socialization, and daily actions. Identify the cultural values associated with adaptability, achievement, clan, and bureaucratic cultures and the environmental conditions associated with each. Use the concept of values-based leadership.

3 3 Culture The set of key values, assumptions, understandings, and norms that is shared by members of an organization and taught to new members as correct

4 4 Ex. 14.1 Levels of Corporate Culture Visible 1.Artifacts such as dress, office layout, symbols, slogans, ceremonies Invisible 2.Expressed values, such as “The Penney Idea,” “The HP Way” 3.Underlying assumptions and deep beliefs, such as “people here care about one another like a family” Deeper values and shared understandings held by organization members Culture that can be seen at the surface level

5 5 Culture Strength The degree of agreement among employees about the importance of specific values and ways of doing things

6 6 Ex. 14.2 Adaptive Versus Unadaptive Cultures Adaptive Organizational Culture Unadaptive Organizational Culture Visible Behavior Leaders pay close attention to all their constituencies, especially customers, and initiate change when needed to serve their legitimate interests, even if it entails taking some risks Managers tend to behave somewhat insularly, politically, and bureaucratically. As a result, they do not change their strategies quickly to adjust to or take advantage of changes in their business environments Expressed Values Leaders care deeply about customers, stockholders, and employees. They also strongly value people and processes that can create useful change (e.g., leadership initiatives up and down the management hierarchy) Managers care mainly about themselves, their immediate work group, or some product (or technology) associated with that work group. They value the orderly and risk- reducing management processes much more highly than leadership initiatives Underlying Assumption Serve whole organization, trust others Meet own needs, distrust others

7 7 Ceremony, Story, and Symbol Ceremony A planned activity that makes up a special event and is generally conducted for the benefit of an audience Story A narrative based on true events that is repeated frequently and shared among employees Symbol A object, act, or event that conveys meaning to others

8 8 Organizational Values The enduring beliefs that have worth, merit, and importance for the organization

9 9 Ex. 14.3 Four Corporate Cultures External focus Flexibility Internal focus Stability Clan Culture Values: Cooperation Consideration Agreement Fairness Social equality Bureaucratic Culture Values: Economy Formality Rationality Order Obedience Adaptability Culture Values: Creativity Experimentation Risk-taking Autonomy Responsiveness Achievement Culture Values: Competitiveness Perfectionism Aggressiveness Diligence Personal initiative

10 10 Ethics The code of moral principles and values that governs the behavior of a person or group with respect to what is right and wrong

11 11 Values-Based Leadership A relationship between leaders and followers that is based on shared, strongly internalized values that are advocated and acted upon by the leader

12 12 Code of Ethics and Chief Ethics Officer Code of Ethics: a formal statement of the company’s ethical values Chief Ethics Officer: A high-level company executive who oversees all aspects of ethics

  1. Define organizational culture.
  2. Understand why organizational culture is important.
  3. Understand the different levels of organizational culture.

Organizational culture refers to a system of shared assumptions, values, and beliefs that show employees what is appropriate and inappropriate behavior (Chatman & Eunyoung, 2003; Kerr & Slocum Jr., 2005). These values have a strong influence on employee behavior as well as organizational performance. In fact, the term organizational culture was made popular in the 1980s when Peters and Waterman’s best-selling book In Search of Excellence made the argument that company success could be attributed to an organizational culture that was decisive, customer oriented, empowering, and people oriented. Since then, organizational culture has become the subject of numerous research studies, books, and articles. However, organizational culture is still a relatively new concept. In contrast to a topic such as leadership, which has a history spanning several centuries, organizational culture is a young but fast-growing area within organizational behavior.

Culture is by and large invisible to individuals. Even though it affects all employee behaviors, thinking, and behavioral patterns, individuals tend to become more aware of their organization’s culture when they have the opportunity to compare it to other organizations. If you have worked in multiple organizations, you can attest to this. Maybe the first organization you worked was a place where employees dressed formally. It was completely inappropriate to question your boss in a meeting; such behaviors would only be acceptable in private. It was important to check your e-mail at night as well as during weekends or else you would face questions on Monday about where you were and whether you were sick. Contrast this company to a second organization where employees dress more casually. You are encouraged to raise issues and question your boss or peers, even in front of clients. What is more important is not to maintain impressions but to arrive at the best solution to any problem. It is widely known that family life is very important, so it is acceptable to leave work a bit early to go to a family event. Additionally, you are not expected to do work at night or over the weekends unless there is a deadline. These two hypothetical organizations illustrate that organizations have different cultures, and culture dictates what is right and what is acceptable behavior as well as what is wrong and unacceptable.

An organization’s culture may be one of its strongest assets, as well as its biggest liability. In fact, it has been argued that organizations that have a rare and hard-to-imitate organizational culture benefit from it as a competitive advantage (Barney, 1986). In a survey conducted by the management consulting firm Bain & Company in 2007, worldwide business leaders identified corporate culture as important as corporate strategy for business success (Why culture can mean life or death, 2007). This comes as no surprise to many leaders of successful businesses, who are quick to attribute their company’s success to their organization’s culture.

Culture, or shared values within the organization, may be related to increased performance. Researchers found a relationship between organizational cultures and company performance, with respect to success indicators such as revenues, sales volume, market share, and stock prices (Kotter & Heskett, 1992; Marcoulides & Heck, 1993). At the same time, it is important to have a culture that fits with the demands of the company’s environment. To the extent shared values are proper for the company in question, company performance may benefit from culture (Arogyaswamy & Byles, 1987). For example, if a company is in the high-tech industry, having a culture that encourages innovativeness and adaptability will support its performance. However, if a company in the same industry has a culture characterized by stability, a high respect for tradition, and a strong preference for upholding rules and procedures, the company may suffer as a result of its culture. In other words, just as having the “right” culture may be a competitive advantage for an organization, having the “wrong” culture may lead to performance difficulties, may be responsible for organizational failure, and may act as a barrier preventing the company from changing and taking risks.

In addition to having implications for organizational performance, organizational culture is an effective control mechanism for dictating employee behavior. Culture is in fact a more powerful way of controlling and managing employee behaviors than organizational rules and regulations. When problems are unique, rules tend to be less helpful. Instead, creating a culture of customer service achieves the same result by encouraging employees to think like customers, knowing that the company priorities in this case are clear: Keeping the customer happy is preferable to other concerns such as saving the cost of a refund.

Organizational culture consists of some aspects that are relatively more visible, as well as aspects that may lie below one’s conscious awareness. Organizational culture can be thought of as consisting of three interrelated levels (Schein, 1992).

Figure 12.2

Is the set of key values assumptions understandings and norms that is shared by members of an organization and taught to new members as correct?

Organizational culture consists of three levels.

At the deepest level, below our awareness lie basic assumptions. Assumptions are taken for granted, and they reflect beliefs about human nature and reality. At the second level, values exist. Values are shared principles, standards, and goals. Finally, at the surface we have artifacts, or visible, tangible aspects of organizational culture. For example, in an organization one of the basic assumptions employees and managers share might be that happy employees benefit their organizations. This assumption could translate into values such as social equality, high quality relationships, and having fun. The artifacts reflecting such values might be an executive “open door” policy, an office layout that includes open spaces and gathering areas equipped with pool tables, and frequent company picnics in the workplace. For example, Alcoa Inc. designed their headquarters to reflect the values of making people more visible and accessible, and to promote collaboration (Stegmeier, 2008). In other words, understanding the organization’s culture may start from observing its artifacts: the physical environment, employee interactions, company policies, reward systems, and other observable characteristics. When you are interviewing for a position, observing the physical environment, how people dress, where they relax, and how they talk to others is definitely a good start to understanding the company’s culture. However, simply looking at these tangible aspects is unlikely to give a full picture of the organization. An important chunk of what makes up culture exists below one’s degree of awareness. The values and, at a deeper level, the assumptions that shape the organization’s culture can be uncovered by observing how employees interact and the choices they make, as well as by inquiring about their beliefs and perceptions regarding what is right and appropriate behavior.

Organizational culture is a system of shared assumptions, values, and beliefs that help individuals within an organization understand which behaviors are and are not appropriate within an organization. Cultures can be a source of competitive advantage for organizations. Strong organizational cultures can be an organizing as well as a controlling mechanism for organizations. And finally, organizational culture consists of three levels: assumptions, which are below the surface, values, and artifacts.

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Chatman, J. A., & Eunyoung Cha, S. (2003). Leading by leveraging culture. California Management Review, 45, 19–34.

Kerr, J., & Slocum, J. W., Jr. (2005). Managing corporate culture through reward systems. Academy of Management Executive, 19, 130–138.

Kotter, J. P., & Heskett, J. L. (1992). Corporate culture and performance. New York: Free Press.

Marcoulides, G. A., & Heck, R. H. (1993, May). Organizational culture and performance: Proposing and testing a model. Organizational Science, 4, 209–225.

Schein, E. H. (1992). Organizational culture and leadership. San Francisco: Jossey-Bass.

Stegmeier, D. (2008). Innovations in office design: The critical influence approach to effective work environments. Hoboken, NJ: John Wiley.

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