TRACE COLLEGE Los Baos, Laguna

BE 311

Organizing
Job Design and Work Schedules Organization Structure, Culture, and Change

Submitted by: Alcaria, Ana Victoria Beltran, Nikixandra Carbonell, Jonathan Submitted to: Ms. Karla Pacificador Instructor Smagula, Bertoni Wong, Ingrid Tapia, Christian

Job Design and Work Schedules

A. FOUR MAJOR DIMENSIONS OF JOB DESIGN PLUS JOB SPECIALIZATION AND JOB DESCRIPTION A useful starting point in understanding job design is to examine the major dimensions or components of jobs. Job design is the process of laying out job responsibilities and duties and describing how they are to be performed. Job specialization is the degree to which a jobholder performs only a limited number of tasks. Specialists handle a narrow range of tasks especially well. High occupational-level specialists include the investment consultant who specializes in municipal bonds and the surgeon who concentrates on liver transplants. The job description is a written statement of the key features of a job and the activities required to perform it effectively. Sometimes a description must be modified to fit basic principles of job design. For example, the job description of a customer-service representative might call for an excessive amount of listening to complaints, thus creating too much stress.

"The Four Job Dimensions and Their Sub-Dimensions" Task Characteristics

Work-scheduling autonomy Decision-making autonomy Work-methods autonomy Task variety Task significance Task identity Feedback from the job

Knowledge Characteristics

Job complexity Information processing Problem solving Skill variety Specialization

Social Characteristics

Social support Initiated interdependence Received interdependence Interaction outside organization Feedback from others
Contextual Characteristics

Ergonomics Physical demands Work conditions Equipment use

Task Characteristics Task characteristics focus on how the work itself is accomplished and the range and nature of the tasks associated with a particular job. A task characteristic for a manager at a steel mill might be using a spreadsheet to make a time-series analysis of the demand for recycled steel by manufacturers of washing machines.

Autonomy: in general refers to how much freedom and independence the incumbent has to carry out his or her work assignment. The freedom aspect includes (a) work scheduling, (b) decision making, and (c) work methods. A steel manager with high autonomy might decide when to do the forecast, make decisions based on the forecast, and choose the method for making the forecast (maybe not using a spreadsheet). Task variety: refers to the degree to which the job requires the worker to use a wide range of tasks, such as the steel-mill manager making forecasts, selecting employees, and motivating workers. Task significance: indicates the extent to which a job influences the lives or work of others, whether inside or outside the organization. Because the steel our manager helps produce is contained in the vehicles and home appliances of many people, the managers job has high task significance. Task identity: reflects the extent to which a job involves a whole piece of work that can readily be identified. An audiologist who administers hearing tests to customers in a shopping mall has high task identity. Job Design and Work Schedules Analyst who performs financial analysis that only contributes to a larger report has low task identity. Feedback: from job refers to the extent to which the job provides direct and clear information about task performance. The focus is on feedback directly from the job itself, as opposed to feedback from others. An installer of satellite TV has considerable feedback because before leaving the customers home, he or she knows if the rig is working. One of the potential frustrations in a managers job is that the manager does not know right away if he or she has done any good, such as in attempting to motivate workers.

Knowledge Characteristics An obvious job dimension is the demand for knowledge, skill, and ability placed on a job holder because of the activities built into the job. Ex. The security person at the door of a bar must know the difference between a valid I.D. card and a fake I.D. card. A chief financial officer must understand the various ways in which profits might be stated. Job complexity: refers to the degree to which the job tasks are complex and difficult to perform. Work that involves complex tasks requires high- level skills and is mentally demanding and challenging. Even some basic jobs, such as a production technicians, have become more complex because of the math and computer skills required to carry out these jobs. Most managerial positions involve high complexity, including the many skills described in Chapter 1 and throughout this book. Information processing: refers to the degree to which a job requires attending to and processing data and information. (Information is the result of making data useful, such as making sense of a survey about customer satisfaction.) Some jobs require higher levels of monitoring and processing information than others. As managers dash about consulting their BlackBerry, a high level of information processing is required. A students life is filled with processing information, as is the life of a professional -level worker in any field.

Problem solving: refers to the degree to which a job requires unique ideas or solutions, and it also involves diagnosing and solving no routine problems and preventing or fixing errors. Creativity is often required to perform effective problem solving. Without problem-solving skills, a worker could be replaced by soft- ware or a handbook. Managers and professional-level workers are essentially problem solvers, yet some managerial jobs require heavier problem solving than others. For example, the

CEO of Ford Motor Company at one time had to solve the problem of how to make the automotive division profitable. Skill variety: refers to the extent to which a job requires the incumbent to use a variety of skills to perform the work. Skill variety and task variety are not the same thing because the use of multiple skills is different from the performance of multiple tasks. Your task might be to assemble a PowerPoint presentation, and you would need a variety of skills to perform this one task. Among the skills would be keyboarding, operating software, data analysis, and being artistic. Specialization: refers to the extent to which a job involves performing specialized tasks or possessing specialized knowledge and skills. Depth of knowledge and skill is required to be an effective municipal-bond analyst or brain surgeon. A managers job is typically that of a generalist rather than a specialist, yet the manager is most likely a specialist on the way to becoming a man- ager. A basic example would be a purchasing specialist later becoming a purchasing manager. Later, we add a few more comments about job specialization to highlight its importance in defining jobs and careers.

Social characteristics Relate to the interpersonal aspects of a job or the extent to which the job requires interaction with others. Social support: refers to the degree to which a job involves the opportunity for advice and assistance from others in the workplace. Social support often contributes to the job holders well -being, as in being able to turn to coworkers for technical assistance. Interdependence: reflects the degree to which the job depends on others and others depend on the job-to accomplish the task.

Ex. Visualize a team putting together a proposal for a large government contract to build an airplane. The various team members must provide input about manufacturing time and cost figures, such as the quality of a particular component being some- what dependent on how much money is available for its manufacture. Interaction outside the organization refers to how much the job requires the employee to interact and communicate with people outside the organization. Ex. Customer contact workers obviously interact with outsiders, and so do C-level managers such as a CFO speaking with Wall Street financial analysts. Feedback: from others refers to the extent to which other workers in the organization provide information about performance. Supervisors and coworkers are typical sources of feedback, yet feedback can also be received from those outside the immediate work area. For example, a senior manager might encounter a specialist in the hallway and say, Jackie, I heard youre doing a great job for us. Keep up the good work.

Contextual characteristics Refer to the setting or environment of the job, such as working in extreme temperatures. Ergonomics: indicates the degree to which a job allows correct posture or movement. Example A chicken cutter in a poultry factory might suffer from tendonitis as a result of the repetitive movements, whereas most managerial jobs do not risk ergonomics problems except for too much keyboarding and mouse utilization. Physical demands: refer to the level of physical activity or effort required for the job, particularly with respect to physical strength, endurance, effort, and activity.

Example The job of a furniture mover obviously has high physical demands; however, many managerial positions have heavier physical demands than outsiders imagine. Among these demands can be travelling a lot, which requires endurance, lugging a heavy laptop computer and accessories, standing for long hours at a trade show, and working long hours. Work conditions: relate directly to the environment in which the work is performed, including the presence of health hazards, noise, temperature, and cleanliness of the workplace. A project manager on a building site faces more environmental challenges than does his or her counterpart working in a climate-controlled office. Equipment use: is a sub-dimension of contextual characteristics that reflects the variety and complexity of the technology and equipment incorporated into the job. Although managers are not ordinarily considered equipment operators, they often make use of computers, printers, personal digital assistants, telephones, pocket calculators, and even coffee pots.

B.

Job Enrichment and the Job Characteristics Model Job enrichment is an approach to including more challenge and responsibility in

jobs to make them more appealing to most employees. At its best, job enrichment gives workers a sense of ownership, responsibility, and accountability for their work. Because job enrichment leads to a more exciting job, it often increases employee job satisfaction and motivation. People usually work harder at tasks they find enjoyable and rewarding, just as they put effort into a favorite hobby. The general approach to enriching a job is to build into it more planning and decision making, controlling, and responsibility. Most managers have enriched jobs; most data entry specialists do not. Characteristics of an Enriched Job the design of an enriched job includes as many of the characteristics in the following list as possible, based on the pioneering work of Frederick Herzberg and on updated research. Job characteristics model, a

method of job enrichment that focuses on the task and interpersonal dimensions of a job. C. Describe Job Involvement, Enlargement, and Rotation

Job Involvement The degree to which an employee is engaged in and enthusiastic about performing rehire work. Business managers are typically well aware that efforts to promote job involvement among staff ten to par off substantially since employees will be more likely to assist in furthering their company's objects.

Job Enlargement A job technique in which the number of tasks associated with a job is increased (and appropriate training provided) to add greater to activities, thus reducing monotony. Job enlargement is considered a horizontal restructuring method in that the job is enlarged by adding related tasks. Job enlargement may also result in greater workforce flexibility.

Job Rotation A job design technique in which employees are moved between two or mow jibs in a planned manner. The objective is to expose the employees to different experiences and wider variety of skills to enhance job satisfaction and to cross-train them.

D.

Explain how workers use job crafting to modify their jobs

Job crafting refers to the physical and mental changes individuals make in the task or relationship aspects of their job. Three common types of job crafting include (1) the number and types of job tasks, (2) the interactions with others on the job, and (3) ones view of the job.

E.

Summarize the various modified work schedule. A modified work schedule is any formal departure from the traditional hours of

work, excluding shift work and staggered work hours. Shift work presents enough unique managerial challenges to warrant discussion here. Modified work schedules include flexible working hours, a compressed workweek, job sharing, telecommuting, and parttime and temporary work.

Bureaucracy as an Organization Structure

Organization Structure It is an arrangement of people and tasks to accomplish organizational goals. The structure specifies who reports to whom and who does what, and it is also a method for implementing a strategy or for accomplishing the purpose of the organization. Bureaucracy A rational, systematic and precise form of organization in which rules, regulations, and techniques of control are specifically defined. Think of bureaucracy as the traditional form organization; other structures are variation of, or supplements to, bureaucracy. Do not confuse the word bureaucracy with bigness. Although most big organizations are bureaucratic, small firms can also follow the bureaucratic model. Principles of Organization in a Bureaucracy

1. Hierarchy of Authority The dominant characteristic of a bureaucracy is that each lower organizational unit is controlled and supervised by a higher one. The person granted the most formal authority occupies the top place of the hierarchy.

2. Unity of Command The states that each subordinate receives assigned duties from one superior only and is accountable to that superior.

3. Task Specialization The organizations designate separate divisions or departments such as new product development, customer service and information technology. Workers assigned to these organizational units employ specialized knowledge and skills that contribute to the overall effectiveness of the firm 4. Responsibilities and Job Descriptions Bureaucracies are characterized by rules that define the responsibilities of employees. In a highly bureaucratic organization, each employee follows a precise job description and therefore knows his or her job expectations. Defined

in writing lets managers know what is expected of them and what limits are set to their authority.

5. Line and Staff Functions Line functions involve the primary purpose of an organization or its primary outputs. Staff functions assist the line functions.

Advantages of Bureaucracy The organizational members know who is responsible Everyone knows who has the authority to make a particular decision

Disadvantage of Bureaucracy A bureaucracy can be rigid in handling people and problems. Its well-intended rules and regulations sometimes create inconvenience and inefficiency. What is Departmentalization? It was the process of subdividing work into departments. It has frequently used forms: Functional, Geographic and Product-Service

Functional Departmentalization Defines departments by the function each one performs, such as accounting or purchasing. Dividing work according to activity is the traditional way of organizing the efforts of people. In a functional organization, each department carries out a specialized activity such as information processing, purchasing, sales, accounting or maintenance.

Advantage Functional departmentalization works particularly well when large batches of work must be processed on a recurring basis and when the expertise of specialist is required. Disadvantage The people within a unit may not communicate sufficiently with workers in other units. Geographic Departmentalization Arrangement of departments according to the geographic area or territory served. In this organization structure, people performing all the activities for a firm in a given geographic area report to one manager who often has a title such as Regional Vice President. Marketing divisions often use territorial departmentalization; the sales force may be divided into northeastern, southeastern, Midwestern, northwestern and southwestern regions. Advantage It allows for decision making at a local level, where the personnel are most familiar with the problems and the local culture, including tastes in fashion, product styling and food. Disadvantage

Arrangement can be quite expensive because of duplication of cost and effort. For instance, each region may build service departments that duplicate activities carried out at headquarters. A bigger problem arises when top-level management experiences difficulty controlling the performance of field units. To deal with this problem, many multinational corporations supplement the geographic structure by coordinating functional activities across regions.

Product - Service Departmentalization Arrangement of departments according to the products or services they provide. When specific products or services are so important that the units that create and support them almost become independent companies, product service departmentalization makes sense. Organizing by product line offer numerous benefits; employees focus on a product or service, which allows each division or department the maximum opportunity to grow and prosper.

Advantage Sales representatives are assigned to one product or service group in which they become experts, rather than being sales generalists Disadvantage It can be expensive because of duplication of effort, and top-level management may find it difficult to control the separate units.

Modification of Bureaucratic Organization

Project and Matrix Organization Flat Structure, Downsizing and Outsourcing Horizontal Structure Informal Structure and Communication Network Power Sharing at the Highest Level

The Project and Matrix Organization A project organization is a temporary group of specialists working under one manager to accomplish a fixed objective, offers one widely used solution to this problem. And it is used extensively on military, aerospace, construction, motion picture, and computer industries. Project management is so widespread that software has been developed to help managers plot out details and make all tasks visible. The project managers is a central figure in getting major tasks accomplished, such as seeing a new product to completion and serve as a linking pin between an organization providing service and the client. A matrix organization is the best-known application of project management, a project structure superimposed on a functional structure. It evolved to capitalize on the advantages of project and functional structures while minimizing their disadvantages. Matrix Structure Organization

Personnel assigned to a project all report to two managers: a project head and a functional manager.

The advantages of Matrix Structure Organization

Individuals can be chosen according to the needs of the project. The use of a project team that is dynamic and able to view problems in a different way as specialists have been brought together in a new environment. Project managers are directly responsible for completing the project within a specific deadline and budget.

The disadvantages of Matrix Structure Organization

A conflict of loyalty between line managers and project managers over the allocation of resources. Projects can be difficult to monitor if teams have a lot of independence. Costs can be increased if more managers (i.e. project managers) are created through the use of project teams.

Flat Structures, Downsizing, and Outsourcing In creating flat structure, downsizing, and outsourcing, it simplified an organization structure by reducing the number of layers that typically makes an organization less bureaucratic. Flat Structure is a form of organization with relatively few layers of management, making it less bureaucratic. Two reasons why it acts as less bureaucratically: Fewer available managers review the decisions of other workers. A shorter chain of command means that managers and workers at lower levels can make decisions more independently. Important consequence: Leaves the remaining managers with a larger span of control. (Span of Control - the number of workers reporting directly to a manager.)

A large span of control works best with competent and efficient managers and group members. When group members do relatively similar work, the manager can supervise more people. Flat Structure Organization

Advantages of Flat Structure Organization

Less costly because it has only few managers. It creates fewer levels of management. Quick decisions and actions can be taken because it has only a few levels of management. Fast and clear communication is possible among these few levels of management. Subordinates are free from close and strict supervision and control. It is more suitable for routine and standardized activities. Superiors may not be too dominating because of large numbers of subordinates.

Disadvantages of Flat Structure Organization There are chances of loose control because there are many subordinates under one manager. The discipline in the organization may be bad due to lose control.

The relations between the superiors and subordinates may be bad. Close and informal relations may not be possible. There may be problems of team work because there are many subordinates under one manager. It may create problems of coordination between various subordinates. Efficient and experienced superiors are required to manage a large number of subordinates. It may not be suitable for complex activities. The quality of performance may be bad.

Downsizing reducing the size of a company by eliminating workers and/or divisions within the company. Corporate downsizing is often the result of poor economic conditions and/or the companys need to cut jobs in order to lower costs or maintain profitability. It may occur when one company merges with another, a product or service is cut, or the economy falters. It also occurs when employers want to streamline a company this refers to corporate restructuring in order to increase profit and maximize efficiency. It can be expensive and the costs associated that must be considered are: severance pay supplements to early retirement plans, disability claims lowered productivity To help the company in the long run: It should be part of a business strategy to improve the company, not just a stopgap measure to save money. Eliminating low-volume and no-value activities. Keeping the future work requirements in mind. Sensible criteria should be used to decide which workers to let go.

 Offer assistance in finding new employment or reorienting their career. Comprehensive Principle: Involve employees in the resizing process. Outsourcing is the contracting out of a business process to a third-party. By outsourcing, a company can reduce its need for employees and physical assets and their associated costs. Major justification: A company is likely to profit when it focuses its effort on activities it performs best, while noncore activities such as human resources, payroll processing, and information systems are performed by outside experts. Homeshoring - A rapidly growing development in outsourcing, moving customer service into workers homes as a form of telecommuting. The Horizontal Structure (Organization by Team and Process) A horizontal structure is the arrangement of work by multidisciplinary teams that are responsible for accomplishing a process.

In a horizontal organization, even though specialists are assigned to the team, they are expected to understand one anothers tasks and perform some of those tasks as needed.

Horizontal structure is coexists with vertical structure as other modifications of bureaucratic structure. The process teams offer a balanced focus so that employees direct their effort and attention toward adding value for the customer. Switching from a vertical (task) emphasis to a horizontal (process) emphasis can be done through reengineering. Reengineering - It is the radical redesign of work to achieve substantial improvements in performance. It searches for the most efficient way to perform a large task and is process innovation because it searches for new ways to perform the same process. It also emphasizes uncovering wasted steps, such as people handing off documents to others to obtain approvals. Key performance objectives for the team: Reduce cycle time. Reduce costs. Reduce throughput time. Informal Structures and Communication Networks An informal structure is a set of unofficial relationships that emerge to take care of events and transactions not covered by the formal structure. It supplements the formal structure by adding a degree of flexibility and speed. It is also referred as informal networks because of the focus on how people use personal contacts to obtain information in a hurry and get work done. In informal structure, the widespread application is the presence of tech fixers who supplement the technical support center. The informal organization can be revealed by social network analysis, the mapping and measuring of relationships and links between and among people, groups, and organizations. It helps management survey the informal interactions

among employees that can lead to innovative ideas. The maps can point to areas where workers should be collaborating but are not. In this way the maps help facilitate knowledge sharing. The maps can also be used to pinpoint the interactions one manager has, so he or she can give the information to a successor.

Power Sharing at the Highest Level of Management A slight deviation from the bureaucratic structure is to share power in the executive suite by having the chairperson position separate from the CEO; another option is to have co-CEOs. The CEO allows concentrating on managing the company and spending less time interacting with other members of the board and focuses on operations. The chairperson is free to focus on long-term strategy.

Disadvantage: It leads to confusion in leadership.

A person who is an outstanding manager and leader and highly ethical can probably hold both posts of chairperson and CEO. When the job is perceived as too big for one person to handle, it is possible to divide the responsibilities of the CEO position. In the co-CEOs form of power sharing, two executives work together as a team and make joint decisions. Unique Feature of Various Organization Structures

Key Factors That Influence the Selection of an Organization Structure The most effective structure depends on key factors: 1. Strategy and goals. ~ Most influential factor. 2. Technology. ~ High technology favors a flexible structure, whereas low technology favors bureaucracy. 3. Size. ~ Large size often moves a company toward bureaucracy. 4. Financial Condition of the firm . ~ influence structure because flatter structures lower costs. 5. Environmental Stability. ~ An unstable environment favors a flexible structure.

Organization Structure, Culture and Change

DELEGATION, EMPOWERMENT, AND DECENTRALIZATION Collective effort would not be possible, and organizations could not grow and prosper, if a handful of managers did all the work themselves. In recognition of this fact, managers divide up their work. Subdividing work through the process of departmentalization has already been described. The section that follows will discuss subdivision of work using the chain of command through delegation, empowerment, and decentralization. Delegation of Responsibility and Empowerment Delegation refers to assigning formal authority and responsibility for

accomplishing a specific task to another person. If managers do not delegate any of

their work, they are acting as individual contributorsnot true managers. Some managers are hesitant to delegate because they dislike giving up control, which explains why control freaks are poor at delegation. Delegation relates closely to empowerment, the process by which managers share power with group members, thereby enhancing employees feelings of personal effectiveness. Delegation is a specific way of empowering employees and increasing motivation. A major goal of delegation is the transfer of responsibility as a means of increasing ones own productivity. At the same time, delegation allows team members to develop by learning how to handle responsibility and become more productive. Even though a manager may hold a group member responsible for a task, final accountability belongs to the manager. (To be accountable is to accept credit or blame for results.) If the group member fails miserably, the manager must accept the final blame; the manager chose the person who failed. Delegation and empowerment lie at the heart of effective management. For example, a study was conducted with management teams in 102 hotel properties in the United States. A major finding was that empowering leadership increased the sharing of job knowledge among employees and increased effective teamwork. In turn, the improved knowledge sharing and teamwork were related to good performance. Following the five suggestions presented next improves the manager s chance of increasing productivity by delegating to and empowering individuals and teams. (Note that teams as well as individuals can be the unit of delegation and power sharing.) 1. Assign duties to the right people . The chances for effective delegation and empowerment improve when capable, responsible, well-motivated group members receive the delegated tasks. The manager must be aware of the strengths and weaknesses of staff members to delegate effectively. However, if the purpose of delegation is to develop a group member, the present capabilities of the person

receiving the delegated tasks are less important. The manager is willing to accept some mistakes as the cost of development. 2. Delegate the whole task and step back from the details. In the spirit of job enrichment, a manager should delegate an entire task to one subordinate rather than dividing it among several. So doing gives the group member complete responsibility, enhances motivation, and gives the manager more control over results. After the whole task is delegated, step back from the details. If a manager cannot let go of details, he or she will never be effective at delegation or empowerment. 3. Give as much instruction as needed. Some group members will require highly detailed instructions, while others can operate effectively with general instructions. Many delegation and empowerment failures occur because instruction was insufficient. Dumping is the negative term given to the process of dropping a task on a group member without instructions. Under ideal circumstances, delegating should be an opportunity for coaching employees and sharing skills with them. 4. Retain some important tasks for yourself. Managers should retain some highoutput or sensitive tasks for themselves. In general, the manager should handle any task that involves the survival of the unit or employee discipline. However, which tasks the manager should retain always depends on the circumstances. Strategic planning is ordinarily not delegated except to obtain input from group members. Sales managers often keep one or two key accounts for themselves. 5. Obtain feedback on the delegated task. A responsible manager does not delegate a complex assignment to a subordinate and then wait until the assignment is complete before discussing it again. Managers must establish checkpoints and milestones to obtain feedback on progress. Decentralization

Decentralization is the extent to which authority is passed down to lower levels in an organization. It comes about as a consequence of managers delegating work to lower levels. The term also refers to decentralization by geography. Geographic decentralization often results in passing down authority; managers in the decentralized units are granted decision-making authority. Unless so noted, this text uses the term decentralization in reference to authority. Centralization is the extent to which authority is retained at the top of the organization. Decentralization and centralization lie on two ends of a continuum. No firm operates as completely centralized or decentralized. How much control top management wants to retain determines how much an organization is decentralized. Organizations favor decentralization when a large number of decisions must be made at lower organizational levels, often in response to customer needs. Johnson & Johnson, the medical and personal care products giant, favors decentralization, in part, because the company consists of a collection of different businesses, many with vastly different customer requirements. Division management is much more aware of these needs than are people at company headquarters. In general, a centralized firm exercises more control over organization units than a decentralized firm. Many firms centralize and decentralize operations simultaneously. Certain aspects of their operations are centralized, whereas others are decentralized. Rapid-service franchise restaurants such as Subway, Long John Silver s, and Wendys illustrate this trend. Central headquarters exercises tight control over such matters as menu selection, food quality, and advertising. Individual franchise operators, however, make human resource decisions such as hiring. An advanced technique of juggling the forces of centralization and decentralization simultaneously is for decentralized units to remain somewhat autonomous, yet cooperate with each other for the common good. For example, the basic structure of Johnson & Johnson is a decentralized firm with 204 nearly autonomous units organized into three divisions: drugs, medical and diagnostic devices, and consumer products (such as Band-Aids and Johnsons Baby Powder). J&J is considered by many to be the reference company for decentralization. The current emphasis at J&J is for the autonomous divisions to cooperate with each

other to achieve better products. For example, sutures from one division are coated with drugs from another to help prevent infections. Microsoft Corp. is another company in which top-level management has searched for ways to get better cooperation across divisions in order to enhance innovation. According to CEO Steve Ballmer, Microsoft tries to find the right balance between being a conglomerate and a monolithic operating company (highly centralized).

Organizational Culture
Organization structure has sometimes been referred to as the hard side of how a firm operates; understanding the soft side of an organization is also essential. Organizational culture (or corporate culture) is the system of shared values and beliefs that actively influence the behavior of organization members. The term shared implies that many people are guided by the same values and that they interpret these values in the same way. Values develop over time and reflect a firm s history and traditions. Its important to understand organizational culture because it is a major factor in the success of any company. In the words of Douglas R. Conant, the dynamic CEO of Campbell Soup Co., If you want to be a sustainably good company, you have to have a sustainably good culture. This section describes significant aspects of organizational culture: how it is learned and its determinants, dimensions, consequences, and management and maintenance.

Determinants of Organizational Structure Many forces shape a firms culture. Often its origin lies in the values, administrative practices, and personality of the founder or founders. The leader s vision can have a heavy impact on culture; John Chambers dreamed of Cisco Systems becoming one of the worlds greatest companies in history. Steve Jobs, the co-founder

of Apple Inc., exemplifies how a leader s personality can help influence the culture. Jobs is recognized as a high-tech visionary who has attracted many talented people to his companies. (Jobs has also served as CEO of Pixar, but his influence is greater at Apple.) Jobs pronounced personal traits and behaviors (arrogance and smugness) spill over to the culture of Apple; most workers believe that they are part of a superior group of people and that whatever they produce is outrageously good. Part of the culture is to denounce the competition. The culture in which a society operates helps determine the culture of the firm. Sooner or later, societys norms, beliefs, and values find their way into the firm. Societal values are communicated through such means as the media, conversations, and education. The emphasis on sexual and racial equality in U.S. society has become incorporated into the value culture of many employers. The emphasis on collegiality translates into harmony and cooperation in the workplace at many Scandinavian companies, including Nokia. Another perspective on national culture is that the introduction of values from another society into a retail business can be a competitive advantage. For example, the Korean values of high quality, reliability, and spotless factories have helped fuel the success of the Hyundai and Kia car brands in the United States. The industry to which a firm belongs helps shape its culture. For example, a public utility will have a culture different from a food manufacturer of comparable size. Heavy competition and low profit margins may force the food manufacturer to operate at a faster pace than the utility, which usually competes with only several other utilities. Dimensions of Organizational Culture The dimensions of organizational culture help explain the subtle forces that influence employee actions. In addition to the dominant culture of a firm, the subculture also influences behavior. A subculture is a pocket in which the organizational culture differs from the dominant culture and from other pockets of subculture. A frequently observed difference in subcultures can be found between the marketing and production groups, even in such matters as dress and behavior. The marketing

people are likely to be more style conscious and people oriented. Six dimensions significantly influence organizational culture. 1. Values. Values provide the foundation of any organizational culture. The organizations philosophy expressed through values guides behavior on a day-to-day basis. Representative values of a firm might include ethical behavior, concern for employee welfare, a belief that the customer is always right, a commitment to quality, and a belief in the importance of equality and independence. An emphasis on teamwork is another key value. A pervasive value is the importance of formality. For example, a heavily bureaucratic culture believes strongly in formality, including following procedures and protocol. Another value of significance is an emphasis on truthfulness and candor. In a culture characterized by candor, workers resist telling others what they want to hear.

2. Relative diversity. The existence of an organizational culture assumes some degree of homogeneity. Nevertheless, organizations differ in terms of how much deviation can be tolerated. Many firms are highly homogeneous; executives talk in a similar manner and even look alike. Those executives promote people from similar educational backgrounds and fields of specialty into key jobs. The diversity of a culture reflects itself in the dress code. Some organizations insist on uniformity of dress, requiring men to wear a jacket and tie when interacting with customers or clients. Strongly encouraging all workers to conform to dress-down Fridays discourages diversity. 3. Resource allocations and rewards. The allocation of money and other resources exerts a critical influence on culture. The investment of resources sends a message to people about what is valued in the firm. If a customer-service department is fully staffed and nicely furnished, employees and customers can assume that the company values customer service.

4. Degree of change. The culture in a fast-paced, dynamic organization differs from that of a slow paced, stable one. A highly competitive environment might encourage a fast-paced climate. Top-level managers, by the energy or lethargy of their stance, send signals about how much they welcome innovation. The degree of change influences whether a culture can take root and how strong that culture can be. 5. A sense of ownership. The movement toward employee stock ownership creates an ownership culture and inspires workers to think and act like owners. An ownership culture increases loyalty, improves work effort, and aligns worker interests with those of the company. An ownership culture can be reflected in such everyday actions as conserving electricity, making gradual improvements, and not tolerating sloppiness by coworkers. An ownership culture can backfire, however, if employee wealth stays flat or decreases as a result of stock ownership. 6. Strength of the culture. The strength of the culture, or how much influence it exerts, emerges partially as a by-product of the other dimensions. A strong culture guides employees in everyday actions. It determines, for example, whether an employee will inconvenience himself or herself to satisfy a customer. Without a strong culture, employees are more likely to follow their own whims; they may decide to please customers only when convenient. A research study with 123 organizations found that the climate (or culture) tended to be strongest when it was unambiguous, either clearly bureaucratic or clearly flexible. These dimensions represent a formal and systematic way of understanding organizational culture. In practice, people use more glib expressions in describing culture, as illustrated in Exhibit 8-10.

How Workers Learn the Culture

Employees learn the organizational culture primarily through socialization, the process of coming to understand the values, norms, and customs essential for adapting to the organization. Socialization is a method of indoctrinating employees into the organization in such a way that they perpetuate the culture. The socialization process takes place mostly by imitation and observation. Another important way in which workers learn the culture is through the teachings of leaders, as implied in the cultural dimension of resource allocations and rewards. Organizational members learn the culture to some extent by observing what leaders pay attention to, measure, and control. Suppose a coworker of yours is praised publicly for doing community service. You are likely to conclude that an important part of the culture is to help people outside the company. Senior executives will sometimes publicly express expectations that help shape the culture of the firm, such as demanding data-driven decision making. Workers also learn the culture by hearing repeated stories that illustrate company values. For example, at FedEx workers hear stories about how someone went beyond the call of duty to deliver a package during a storm, or how a driver rescued a person caught in a flood. The value illustrated is outstanding service to customers and the community.

Consequences and Implications of Organizational Culture The attention to organizational culture stems from its pervasive impact on organizational effectiveness. Exhibit 8-11 outlines several key consequences of organizational culture. The right organizational culture contributes to gaining competitive advantage and therefore achieving financial success. The consistently strong performance of Google can be partially attributed to its culture that values intelligence, imagination, and hard work. The right organizational culture can enhance productivity, quality, and morale. A culture that emphasizes productivity and quality encourages workers to be more productive and quality conscious. A synthesis of many studies found that organizational

culture is related to quality practices related to attitudes (such as top management support for quality). These practices, in turn, were related to manufacturing performance. A culture that values the dignity of human beings fosters high morale and job satisfaction. A corporate culture that encourages creative behavior contributes to innovation, as described in Chapter 5 about problem solving and decision making. Amazon chief executive Jeff Bezos notes that a culture of experimentation is crucial in a fast-changing world. He says, Invention always leads you down paths that people think are weird. At times a culture that facilitates high quality and business success can become smug and complacent, believing that it cannot fail. A recent example is Toyota, a company envied for its manufacturing techniques. Toyota was subject to the largest automobile recall in history in 2010. The problems related to both uncontrolled acceleration and brake problems. Analysts describe a Toyota management team culture characterized by self-love and arrogance that had become too insular to handle the flawed vehicle problem. The company had received some warnings about accelerator problems stemming back to 2002. Another cultural problem might have been that managers and workers in Japanese corporations have a difficult time delivering bad news to executives. Also, there is shame and embarrassment associated with admitting to problems in a company noted for exceptional product quality. Managing and Sustaining the Culture After a new CEO is appointed, the person typically makes a public statement such as this: My number-one job is to change the culture. A manager might do the following to bring about change and assure that a healthy corporate culture is maintained.

 Serve as a role model for the desired attitudes and behaviors. Leaders must behave in ways consistent with the values and practices they wish to see imitated throughout the organization. For example, if the CEO wants to move the culture toward higher risk taking, he or she must take risks such as investing in new products and services and experimenting with new organization structures. Establish a reward system that reinforces the culture, such as suggestion awards to promote innovation. At Boeing Co., CEO W. James McNerney Jr. wanted to create a common culture and work toward a shared goal. To discourage negative internal competition and the hoarding of information, part of executive compensation is based on how well managers share information with other units across the company. Select candidates for positions at all levels whose values mesh with the values of the desired culture. Many firms hire only those candidates whose work and school suggest that they might be good team players a cultural value. Sponsor new training and development programs that support the desired cultural values. Top management might sponsor diversity training to support the importance of cultural diversity, or training in quality to support the value of quality. Disseminate widely the type of cultural change required. General Motors had long been known for having a highly bureaucratic, slow-moving, low risk-taking organizational culture that some thought interfered with its competitiveness. When Ed Whitacre was appointed as chairman (and later CEO), he held a conference at which he told 800 GM workers, We want you to step up. We dont want any bureaucracy. Were not going to make if you dont take a risk. The address was broadcast over the Internet to GM employees worldwide. As a follow-up to the conference, Whitacre urged his top-level managers to make decisions more on their own rather than asking for approval. A suggestion in relation to organizational culture is to find employment where you fit the culture or quickly adapt your values and behavior to create a fit. For

example, if the culture emphasizes data-driven decision making and a highly disciplined approach to management, act in this manner to survive and prosper.