OTOS - Organizational Culture

8/9/2019 OTOS - Organizational Culture

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Chapter 16

Managing OrganizationalCulture


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Contents

Introduction

Culture and Organizational effectiveness

Culture and Formalization Creating, sustaining and transmitting a culture

Mergers and Acquisitions when cultures collide

Are cultures manageable For and Against Situational factors facilitating cultural change

Enacting cultural change

Summary2


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What is Organizational culture?

The norms which evolve over a period of time in working groups.

The dominant values that are espoused by the organization

The philosophy that guides the decisions & policies of an organization

The rules of the game that people must learn in order to get accepted

The feeling & climate that pervades and gets conveyed in the day to

day functioning of the organization.

Refers to a system of shared meaning. In every organization, there arepatterns of beliefs, symbols, rituals, myths & practices that have evolved over

time. These in turn create common understanding among members aboutwhat the organization is and how should members behave.

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Key characteristics of organizationalculture

Individual initiativeRisk tolerance Direction

IntegrationManagement

supportControl

Identity Reward system

Conflict tolerance&Communication

Patterns

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Dominant culture

Core values

Majority of members

Macro view of culture

Distinct personality

Subcultures

Common problems,situations, experiences

members face

Vertical and Horizontalsubculture

Defined by departmental

designations or geographicalseparations

Core values retained butmodified to reflect separated

units distinct situation5


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Culture and Organizational effectiveness

Core values intensely held, clearly ordered & widelyshared. E.g. AT&T

More no of members accept core values, agree onorder of importance and are highly committed

Strongculture

Weakculture

Young organizationsConstant turnoverMembers have not shared enough experiences tocreate common meanings

Effectiveness

Good external fit

Good internal fit

Culture, strategy, technology and technology

alignment. 6


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Culture and Formalization

Strong

Cultures

Behavioralconsistency

Powerfulmeans ofimplicitcontrol

Acts as asubstitute toformalization

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Creating, Sustaining and Transmittingculture

Creating

Past practices and the

degree of success

Founders impact on

early culture

Vision & Mission of

founders. E.g. IBM &

McDs

What original members

employed learnt fromown experiences

Sustaining

Selection

Top Management

Socialization

Transmitting

Stories

Rituals

Material Symbols

Language8


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When cultures collide Mergers and Acquisitions

A cultural mismatch is more likely to result in a disasterthan financial, technical, geographic or product mismatch

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Strength of organizations culture

Degree of difference

Success

M&A of strong cultures

Difficulty in blending if culture is well definedE.g. Mellon & Girard Bank merger

Compatibility if cultures highly similarE.g. R.J. Reynolds and Nabisco

M&A of weak cultures

Weak cultures adapt better to new situationsE.g. Mellon & Central Counties Bank merger


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Culture clashes in M&A

Cadbury and Kraft foods

Daimler and Chrysler

Sprint and Nextel

HP and Compaq

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Are cultures manageable For and Against

Case For

Times and conditions changeaffecting organizational

effectiveness

Management can alter thefactors that created and sustainthe current culture

E.g. Scott Papers culturalturnaround

Case Against

Cultures made up of stablecharacteristics that are difficult tochange

Difficult to unlearn experiences andmemories

Time frame for unlearning may makethe effort realistically impractical

Past practices work against culturalchange

Just because the management candescribe the desired culture doesntmean that it can be implemented

E.g. General Motors11


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Situational factors thatfacilitate cultural change

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Dramatic Crisis Leadership turnover Lifecycle stage

Age and Size of theorganization

Strength of currentculture

Absence ofSub-cultures


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Enacting cultural change

Cultural audit

How values came to be formed?

Ordering of these values

Cultures boundaries

What is the preferred culture being sought?

Desired culture compared with current values What cultural dimensions and values are out of alignment and

need changing?

Cultural

Analysis

Unfreeze entrenched culture

Makes crisis visible to all members of the organization Shakeup among key management personnel. E.g. Lee Iacocca

Communication of new values by top management

Move quickly to create new stories, symbols and rituals toreplace those currently in place

Change selection, socialization processes, evaluation & reward

systems to support employees who espouse new values sought

Changeefforts

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Summary

Organizations have personalities just like individuals called as organizationalcultures. Its a system of shared meaning

Key characteristics of organizational culture

Organizations have dominant cultures and subcultures

Strong cultures increase behavioral consistency and may act as a substitute forformalization

Ultimate source for organization culture is its founders

Sustained by selection and socialization process and action of top management

Transmitted through stories, rituals, material symbols and language

Cultures can be changed but a no of conditions necessary to bring about change

Even when conditions favorable, change can be measured in years rather than

months 14


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OTOS - Organizational Culture