326

Principles of Management and

Organisational Behaviour
LESSON
20
ORGANISATIONAL CULTURE
CONTENTS
20.0 Aims and Objectives
20.1 Introduction
20.2 Culture Defined
20.3 Basic Elements of Culture
20.4 Characteristics of Organizational Culture
20.5 Creating and Sustaining Culture
20.5.1 How Organizational Culture Begins?
20.5.2 Sustaining a Culture
20.6 How Employees Learn Culture?
20.7 Successful Organizational Culture
20.7.1 Corporate Culture and Organizational Success
20.7.2 Changing Organizational Culture
20.8 Let us Sum up
20.9 Lesson-end Activity
20.10 Keywords
20.11 Questions for Discussion
20.12 Suggested Readings
20.0 AIMS AND OBJECTIVES
After studying this lesson you will be able to:
(i) understand the relation between organisational culture and corporate context.
(ii) describe contribution of organisational culture to the management of change.
(iii) analyse elements of organisational culture.
(iv) review cultural types in organisations.
20.1 INTRODUCTION
When we talk about culture, we are typically referring to the pattern of development
reflected in a society's system of knowledge, ideology, values, laws, social norms and
day-to-day rituals. Accordingly, culture varies from one society to another. The word
"culture" has been derived metaphorically from the idea of "cultivation" the process of
327
Organisational Culture
tilling and developing land. Thus, culture can be considered as a constellation of factors
that are learned through our interaction with the environment.
20.2 CULTURE DEFINED
The organizational culture is a system of shared beliefs and attitudes that develop within
an organization and guides the behaviour of its members. There are clear-cut guidelines
as to how employees are to behave generally within organization. The employees need
to learn how the particular enterprise does things.
A few definitions on the term organizational culture are given below:-
According to Larry Senn, The corporate culture consists of the norms, values and
unwritten rules of conduct of an organization as well as management styles, priorities,
beliefs and inter-personal behaviour that prevail. Together they create a climate that
influences how well people communicate, plan and make decisions.
Joanne Martin defines cultures in organization in the following words As individuals
come into contact with organizations, they come into contact with dress norms the
organizations formal rules and procedures, its formal codes of behaviour rituals . And
so on. These elements are some of the manifestations of organizational culture.
Edgar Schein defines organizational culture as a pattern of basic assumptions invented,
discovered or developed by a given group as it learns to cope with its problems of
external adaptation and internal integration that has worked well enough to be considered
valuable and, therefore to be taught to new members as the correct way to perceive,
think and fell in relation to those problems.
According to Hersey, Blanchard and Johnson Organizational culture is itself a complex
phenomenon with many interpretations organizational culture is shared basic
assumptions, or beliefs, about how to cope with the two fundamental problems that all
groups and organizations face : survival and adaptation to the external environment and
the internal integration and coordination of organizational functioning.
From the above definitions, culture may be considered as the general pattern of behaviour,
shared beliefs, and values that organizational members have in common. Culture involves
the learning and transmitting of knowledge, beliefs and patterns of behaviour over a
period of time. Culture can be inferred from what people say, do, and think within an
organizational setting. It often sets tight tone for the organization and establishes implied
rules for the way people should behave. It is important to recognize that culture is learned
and helps people in their efforts to interact and communicate with others in the society.
When placed in a culture where values and beliefs are different, some people have a
great deal of difficulty in adjusting.
20.3 BASIC ELEMENTS OF CULTURE
From the above definitions it is clear that culture is how an organization has learned to
deal with its environment. It is a complex mixture of assumptions, behaviours, myths and
other ideas that fit together to define what it means to work in a particular organization.
Edgar H Schein suggests that culture exists on three levels: artefacts, espoused values
and underlying assumptions. The Figure 20.1 explains the three levels:
328
Principles of Management and
Organisational Behaviour
Source: Edgar H Schein, Organizational Culture and Leadership (2
nd
Edition) Jossey-Bass Publishers, San Francisco (1992)
page 17.
Figure 20.1: Scheins Levels of Culture
1. Artefacts: According to Schein, Artefacts are the first level of organizational culture.
Artefacts are the things that come together to define a culture and reveal what the
culture is about to those who pay attention to them. They include products, services,
and even behaviour patterns of the members of an organization. Schein has defined
Artefacts as things that one sees, hears, and feels when one encounters a new
group with an unfamiliar culture.
2. Espoused Values: Espoused values are the second level of organizational culture.
Values are things worth doing, or the reasons for doing what we do. Values are the
answers to the why questions. For examples, why are you reading this book? To
know more about Organization Behaviour. Why is that Important? To be a better
HR Manager. Why do you need more money? To fulfil my wifes desire to own a
farm house. Such questions go on and on, until you reach the point where you no
longer want something for the sake of something else. At this point, we have arrived
at a value. Corporations have values, such as size, profitability, or making a quality
product.
Espoused values are the reasons that we give for doing what we do. Schein argues
that most organizational cultures can trace their espoused values back to the founders
of the culture.
3. Basic Assumptions: The third level of organizational culture, are the beliefs that
organization members take for granted. Culture prescribes the right way to do
things at an organization, often through unspoken assumptions.
The influence of the leader on Organization Culture: Managers, especially top
managers, create the climate for the enterprise. Their values influence the direction of
the firm. Although the tern value is used differently, a value can be defined as a fairly
permanent belief about what is appropriate and what is not that guides the actions and
behaviour of employees in fulfilling the organizations aims. Values can be thought of as
forming an ideology that permeates every day decisions. In many successful companies,
value-driven corporate leaders serve as role models, set the standards for performance,
motivate employees, make the company special, and are a symbol to the external
environment.
ARTIFACTS
ESPOUSED
VALUES
BASIC
UNDERLYING
ASSUMPTIONS
Visible organizational structures and processes (hard to
decipher)
Strategies, goals, philosophies (espoused justification)
Unconscious, taken-for-granted beliefs, perceptions,
thoughts, and feelings (ultimate source of values )
329
Organisational Culture
20.4 CHARACTERISTICS OF ORGANIZATIONAL CULTURE
Organizational culture has a number of important characteristics. Fred Luthans has given
six characteristics which is given below:
Check Your Progress 1
1. Define culture?
2. What are the basic elements of culture?
3. Explain the influence of a leader on organisation culture.
4. Explain the characteristics of Organisational Culture.
20.5 CREATING AND SUSTAINING CULTURE
20.5.1 How Organizational Culture Begins?
An organizations current customs, traditions and general way of doing things are largely
due to what it has done before and the degree of success it has had with those endeavours.
How to Create A Value-based Organization
Hatim Tyabji was the founding chairman and CEO of VeriFone, Inc. from 1986 to 1988 when he
established Saraide, a highly respected company in the telecommunication industry. At the
national meeting of the Academy of Management in Toronto in 2000, Mr. Tyabji shared his
experience in creating an organization based on ethical values. On one occasion, it was brought to
his attention that manager with excellent performance figures was engaged in malfeasance.
Revealing this information, however, would have had a very negative effect on the companys
share price. Instead of hiding this information until the next quarterly reporting, Mr Tyabji after
checking carefully the facts, approached the manager who was in charge of a foreign operation,
and fired him on the spot. Impressed by this decision, the associates worked especially hard so that
the quarterly projection was still achieved. What effect did Mr Tyabjis decision communicated to
the employees of the company? This is a company with a culture in which performance, no matter
how impressive, cannot be achieved by unethical behaviour.

Source: David A. Whither and Andre L. Delbecq, Saraides Chairman Hatim Tyabji on creating
and sustaining a value-based organizational culture, Academy of Management Executive,
November 2000. Pages 32 40.

Organizational Culture: Important Characteristics

1. Observed behavioral regularities. When organizational participants interact with one
another, they use common language, terminology, and rituals related to deference and
demeanor.
2. Norms. Standards of behavior exist, including guidelines on how much work to do,
which in many organizations come down to Do not do too much; do not do too little.
3. Dominant values. There are major values that the organization advocated and expects
the participants to share. Typical examples are high product quality, low absenteeism,
and high efficiency.
4. Philosophy. There are policies that set forth the organizations beliefs about how
employees and/or customers are to be treated.
5. Rules. There are strict guidelines related to getting along in the organization.
Newcomers must learn those ropes in order to be accepted as full-fledged members of
the group.
6. Organizational climate. This is an overall feeling that is conveyed by the physical
layout, the way participants interact, and the way members of the organization conduct
themselves with customers or other outsiders.
Source: Fred Luthans Organizational Behavior (9
th
edition) McGraw-Hill International
Edition, Boston (2002) page 123.
E
330
Principles of Management and
Organisational Behaviour
The original source of an organizations culture usually reflects the vision or mission of
the organizations founders. Because the founders had the original idea, they also may
have biases on how to carry out the idea. Their focus might be on aggressiveness or it
might be on treating employees as family. The small size of most new organizations
helps the founders instil their vision in all organizational members. Organizational cultures
can develop in a number of different ways, these steps are explained below:-
1. A single person (founder) has an idea for a new enterprise: Some organizational
cultures may be the direct, or at least, indirect, result of actions taken by the founders.
The founders of an organization traditionally have a major impact on that
organizations early culture. They have a vision of what the organization should be.
2. Founders creation of a core group: The founder brings in one or more other key
people and creates a core group that shares a common vision with the founder.
The founders only hire and keep employees who think and feel the way they do.
These employees who form the core group believe that the idea is a good one, is
worth the investment of time, money and energy. Sometimes founders create weak
cultures, and if the organization is to survive, a new top manager must be installed
who will sow the seeds for the necessary strong culture.
3. Indoctrinate and Socialize: The founding core group begins to act in concert to
create an organization by raising funds, obtaining patents, incorporating, locating
land, building infrastructure and so on. The core group indoctrinate and socialize
employees to their way of thinking and feeling.
4. Build a Common History: The founders own behaviour acts as a role model that
encourages employees to identify with them and thereby internalize their beliefs,
values, and assumptions. At this point, others are brought into the organization, and
a common history begins to be built. When the organization succeeds, the founders
vision becomes seen as a primary determinant of that success. At this point, the
founders entire personalities become embedded in the culture of the organization.
Most of todays successful organizations follow the vision of their founders.
20.5.2 Sustaining a Culture
Once a culture is in place, there are practices within the organization that act to maintain
it by giving employees a set of similar experiences. Sustaining a culture depends on three
forces. These forces are explained below:
1. Selection: The goal of the selection process is to identify and hire individuals
who could make the organization successful through their services. Therefore
candidates who believe in the values of the organizational have to be selected.
Thus, the selection process attempt to ensure a proper match in the hiring of
people who have values essentially consistent with those of the organization
or at least a good portion of those values cherished by the organization. In this
way, the selection process sustains an organizations culture by selecting those
individuals who will fit into the organizations core values.
2. Top Management: Top management have a important role to play in sustaining
the organizations culture. It is the top management who establish norms that
filter down through the organization. It is they through their conduct both
implicit and explicit that shows what is desirable. They do this through pay
raises, promotions and other rewards.
3. Socialization: Socialization is the process that adapts employees to the
organizations culture. Organization wants to help new employees adapt to its
culture. The adaptation is done through the process of socialization.
Socialization is made up of three stages:
(a) The Pre-arrival Stage: This stage encompasses all the learning that occurs
before a new member joins the organization. The socialization process covers
both the work to be done and the organization. The pre-arrival stage is the
331
Organisational Culture
period of learning in the socialization process that occurs before a new employee
joins the organization. For example, when students join a business school to
pursue their MBA degree, they are socialized to have attitudes and behaviours
that business firms want. This is so because the success depends on the degree
to which the student has correctly anticipated the expectations and desires of
those in the business school.
(b) Encounter Stage: In this stage of the socialization process, the new
employee sees what the organization is really like and confronts the
possibility that expectations and reality may diverge. In expectations
prove to have been more or less accurate, the encounter stage merely
provides a reaffirmation of the perceptions gained during the pre-arrival
stage. Those employees who fail to learn the essential or pivotal role
behaviours risk being labelled as rebels and face the risk of expulsion.
This further contributes to sustaining the culture.
(c) Metamorphosis Stage: Metamorphosis stage is the stage in the
socialization process in which a new employee changes and adjusts to
the job, work group and organization. In this stage relatively long-lasting
changes take place. The employee masters the skill required for his or
her job, successfully performs his or her new roles, and makes the
adjustments to his or her work groups values and norms. The
metamorphosis stage completes the socialization process. The new
employee internalizes the norms of the organization and his work groups
and understands and accepts the norms of the organization and his
work group. The success of this stage have a positive impact on the
new employees productivity and his commitment to the organization.
Figure 20.2: Dimensions of Organizational Culture
Degree to which employees are
expected to exhibit precision,
analysis, and attention to detail
Degree to which
employees are
encouraged to
innovative and to take
risk
Attention
to Detail
Innovation and
Risk-taking
ORGANIZA-
TIONAL
CULTURE
Outcome
orientation
Degree to which
managers focus on results
or outcomes rather than
on how these outcomes
are achieved.
People orientation
Low.High
Degree to which
organizational
decisions and
actions emphasize
maintaining the
status quo
Stability
Low .High
Aggressiveness
Low .High
Degree to which employees
are aggressive and competitive
rather than cooperative
Degree to which work is organized around
teams rather than individuals
Degree to which
management
decisions take into
account the effects
on people in the
organization
Low .High
Low High
Team Orientation
Low .. High
High Low
Source: Stephen P Robbins and Mary Coulter Management (seventh edition) Prentice Hall of India
Private Limited, New Delhi (2003) Page 59.
Note: - Strong versus Weak Cultures
Strong Cultures are cultures in which the key values are deeply held and widely shared and have
a greater influence on employees than do weak cultures.
The more that employee accept the organizations key values and the greater their commitment
to those values, the stronger the culture is.
Whether an organizations culture is strong, weak or somewhere in between depends on factors
such as (i) the size of the organization (ii) how long it has been around (iii) how much turnover
there has been among employees, and (iv) the intensity with which the culture was originated.
332
Principles of Management and
Organisational Behaviour
20.6 HOW EMPLOYEES LEARN CULTURE?
Culture is transmitted to employees in a number of ways. The most significant are stories,
rituals, symbols, and language.
Stories: Organizational stories typically contain a narrative of significant events or people
including such things as the organizations founders, rules breaking, reactions to past mistakes,
and so forth. Lavinson and Rosenthal suggest that stories and myths about organizations
heroes are powerful tools to reinforce cultural values throughout the organization and specially
in orienting new employees. These stories provide prime examples that people can learn
from. Stories and myths are often filtered through a cultural network and remind
employees as to why we do things in a certain way. To help employees learn the culture,
organizational stories anchor the present in the past, provide explanations and legitimacy
for current practices, and exemplify what is important to the organization.
Rituals and Ceremonies: Corporate rituals are repetitive sequences of activates that
express and reinforce the values of the organization, what goals are most important, and
which people are important and which ones are superfluous. Ceremonies and rituals
reflect such activities that are enacted repeatedly on important occasions. Members of
the organization who have achieved success are recognized and rewarded on such
occasions. For example, awards given to employees on founders day, Gold medals
given to students on graduation day are reflections of culture of that institution.
Material / Cultural Symbols: Symbols communicate organizational culture by unspoken
messages. When you walk into different businesses, do you get a feel for the place
formal, casual, fun, serious, and so forth? These feelings you get demonstrate the power
of material symbols in creating an organizations personality. Material artefacts created
by an organization also speak of its cultural orientation and make a statement about the
company. These material symbols convey to employees who is important, the degree of
equality desired by top management and the kind of behaviour that are expected and
appropriate. Examples: - assigned parking space for senior executives in the company
premises, large offices given to senior managers, luxury automobiles given to senior or
successful officers of the organization.
Organizational Heroes: Top Management and prominent leaders of the organization
become the role models and a personification of an organizations culture. Their behaviour
and example become a reflection of the organizations philosophy and helps to mould the
behaviour of organizational members.
Language: - Many organizations and units within organizations use language as a way
to identify members of a culture. By learning this language, members attest to their
acceptance of the culture and their willingness to help to preserve it.
Managerial Decisions affected by culture: For any organization to grow and prosper,
it is important that its mission and its philosophy be respected and adhered to by all
members of the organization. Here managers play a significant role in building the culture
of the organization. The manager plays continuous attention to maintaining the established
standards and send clear signals to all the employees as to what is expected of them.
Cultural consistency and strong adherence to cultural values become easy when the
mangers themselves play strong role models. Good managers are able to support and
reinforce an existing strong culture by being strong role models and by handling situations
that may result into cultural deviations. The figure below shows the major areas of a
managers job are influenced by culture.
How the Environment Affects Managers: The environment affects managers
(i) Through the degree of environmental uncertainty
(ii) Through the various stakeholders relationships.
333
Organisational Culture
1. Environmental Uncertainty:-The environmental uncertainty is the degree of
change and complexity in an organizations environment.
Degree of Change: - If the components in an organizations environment changes to a
minimum, we call it a stable environment. A stable environment is characterises by
No new technological breakthroughs by current competitors.
No new competitors
Little activity by pressure groups to influence the organization
We call it a dynamic environment, if the components in an organizations environment
change frequently.
Degree of Complexity: - The degree of complexity refers to the number of components
in an organizations environment and the extent of the knowledge that the organization
has about those components.
The figure below explains the environmental uncertainty.
Source: Stephen P Robbins and Mary Coulter "Management" (7th Edition) Prentice Hall of India Private Limited, New Delhi (2003)
Page 73.
Figure 20.3: Environmental Uncertainty
Managers try to minimize uncertainty because it is a threat to organizations effectiveness.
Given the choice, managers would prefer to operate in an environment which is simple
and stable. However, managers rarely have full control over that choice.
Stakeholders Relationship: - Stakeholders are any constituencies in the organizations
external environment that are affected by the organizations decisions and actions.
The figure below identifies the various organizational stakeholders.
Source: Stephen P Robbins and Mary Coulter Management (7
th
Edition) Prentice Hall of India Private Limited, New Delhi (2003)
Page 75.
Figure 20.4: Various Organizational Stakeholders

DEGREE OF CHANGE
STABLE DYNAMIC
D
E
G
R
E
E

O
F

C
O
M
P
L
E
X
I
T
Y










C
O
M
P
L
E
X




S
I
M
P
L
E

CELL 1
Stable and predictable environment


Few components in environment

Components are somewhat similar and
remain basically the same


Minimal need for sophisticated
knowledge of components


CELL 3
Stable and predictable environment

Many components in environment

Components are not similar to one
another and remain basically the same


High need for sophisticated knowledge of
components
CELL 2
Dynamic and unpredictable
environment

Few components in environment

Components are somewhat similar
but are in continual process of change

Minimal need for sophisticated
knowledge of components


CELL 4
Dynamic and unpredictable
environment
Many components in environment

Components are not similar to one
another and are in continual process
of change

High need for sophisticated
knowledge of components
ORGANIZATION
Employees Customers
Social and Political
Action Groups
Competitors
Trade and Industry
Associations
Governments Media
Suppliers
Communities
Shareholders
Unions
S S h P R bbi d M C l M (7
th
Edi i ) P i H ll f I di
334
Principles of Management and
Organisational Behaviour
The few of the organizational stakeholders are explained below:
Stockholders: The shareholders are the persons who provide the funds to the
business enterprise. The business should be managed efficiently so as to provide a
fair return on the investments of the shareholders. They should be provided with
comprehensive reports giving full information about its working. In the same way,
the shareholders should also meet the obligations of the business enterprise by
supporting the efforts of the business so that continuous development of the
enterprise is possible. They should encourage the business to follow a dynamic
policy and to plough back profit for the purpose of development and expansion.
Customers: Customers satisfaction is the ultimate aim of all economic activity.
This involves more than the offer of products at the lowest possible price. Adulteration
of goods, poor quality, failure to give fair service, misleading advertising etc. are
some of the violation by business towards its customers. A business enterprise has
positive responsibility towards the consumers of its products. It has to provide
quality goods to customers at the right time, right place, and at right price.
Employees: Employees should be treated as human beings and their cooperation
must be achieved for the realization of the business enterprises goals. The
responsibilities of the business enterprises to its employees are the security of
employment with fair wages, equal opportunity for growth and development within
the organization, fair promotions, employee welfare, social security and profit sharing.
Further, the business enterprise should also provide the employee welfare, social
security and profit sharing. Further, the business enterprise should also provide the
employees scope for improvement of educational qualification, training and upgrading
of skills so that they may get a chance to improve their prospects.
Workers are poor and hence they cannot afford to remain without job for a long
period. Most of them are ignorant and require advice and guidance from persons
who have the genuine interest of the workers at heart. Each worker by himself is
unable to fight against the injustice done to him. As such all the economists have
recognized the right of the workers to organize themselves. As a group they can
settle terms with the employers in a better way. In other words, the workers have
been granted the right to bargain collectively.
With a view to self-protection and self -help labour has organized itself under
employee associations and unions. The associations formed by workers have come
to be known as Trade Unions.
Suppliers: An important force in the environment of a business enterprise is the
suppliers who supply the enterprise with inputs like raw materials and components.
The importance of reliable source of supply is indispensable for the smooth functioning
of a business enterprise. It is very risky to depend on a single supplier because the
problems with that supplier are bound to seriously affect the business organization.
Therefore, multiple sources of supply are often helpful. A business organization
should deal with the suppliers judiciously. It should try for fair terms and conditions
regarding price, quality, delivery of goods and payment. The dealings with the
suppliers should be based on integrity and courtesy. The business must create
healthy relations with its suppliers.
Competitors: A firms competitors include not only the other firms that market the
same or similar products but also those who compete for the discretionary income
of the consumers. Thus, competition among the different business organization
should be such that the customer is helped to satisfy his desires and is better of
buying the enterprises goods and services.
Government: The business enterprise should take responsibility for providing
amenities in the locality where it is located. It should pay the taxes to the government
335
Organisational Culture
regularly and honestly, so that the funds may be spent by the State for welfare
activities. It should take measures to avoid bad effluent, fouling the air and condition
of slum and congestion.
The business enterprise should extend full support to the Government in implementing
its policies and programmes relating to the solving of the national problems such as
the unemployment problem, food problem, wide disparity in income levels of the
different sections of the society, regional imbalance in the economic development
etc. It should also help the Government in the equitable distribution of commodities
which are in scarce supply, in controlling prices and inflationary trend in the country
and in the implementation of various development schemes of the Government.
The business enterprise should realize that it cannot function without the support of
the Government. If there is any difference between itself and the Government the
same should be settled by mutual exchange of ideas and suggestions and not by
restoring to non-cooperation with the Government.
From the above discussion, it is clear that the interest of the various Stakeholders
interacting with the business enterprise is not identical. They are inflicting conflicting.
The owners want highest dividend, the financial institutions want the highest interest,
the workers the highest possible wages, the Government wants the highest possible
revenue and the consumers want the lowest possible price. It is, therefore, the duty
of the business enterprise to bring about a compromise among the interests of
various groups. The enterprise is an arbiter among the various groups. It should
endeavour to provide a fair dividend to the shareholders, fair pay and working
conditions to the workers, good quality products at reasonable prices to the
customers.
Stakeholders have a stake in or are significantly influenced by what the organization
does. In turn, these groups can influence that organization. There are many reasons
why managers should care about managing stakeholders relationships. Some of
the reasons are given below:-
1. It can lead to other organizational outcomes such as improved predictability
of environmental changes, more successful innovations, greater degree of
trust among stakeholders, and greater organizational flexibility to reduce the
impact of change.
2. An organization depends on these external groups as sources of inputs
(resources) and as outlets for outputs (goods and services) and
organizations should consider their interests as they make decisions and
take actions.
Steps in Managing External Stakeholders Relationships:- There are four steps in
managing external stakeholder relationships.
1. Identifying who the organizations stakeholders are. Those external groups that
are to influence organizational decisions and be influenced by organizational decisions
are stakeholders.
2. Determine that particular interests or concerns these stakeholders might have. For
example
Customers product quality.
Shareholders financial issues
Employees safety/working conditions.
3. Decide how critical each stakeholder is to the organizations decisions and actions.
For example, some stakeholders are more critical to the organizations decisions
and actions than others.
4. Determine what specific approach they should use to manage the external
stakeholder relationship. The more critical the stakeholder, the more uncertain the
environment.
336
Principles of Management and
Organisational Behaviour
20.7 SUCCESSFUL ORGANIZATIONAL CULTURE
Research conducted by D.R Denison and A.K Mishra, show that organizational culture
is related to organizational success. Organizational culture is a framework that guides
day-to-day behaviour and decision making for employees and directs their actions toward
completion of organizational goals. Culture is what gives birth to and defines the
organizational goals. Culture must be aligned with the other parts of organizational actions,
such as planning, organizing, leading, and controlling; indeed, if culture is not aligned with
these tasks, then the organization is in for difficult times.
The figure below shows that culture based on adaptability, involvement, a clear mission
and consistency can help companies achieve higher sales growth, return on assets, profits,
quality and employee satisfaction.
Source: D.R Denison and A.K Mishra, "Toward a Theory of Organizational Culture and Effectiveness", Organization Science Vol. 6
(1995) Pages 204 - 223.
Figure 20.5: Successful Organizational Cultures
Note:-
Adaptability: is the ability to notice and respond to changes in the organizations environment.
Involvement: In cultures that promote higher levels of employment in decision-making employees
feel a greater sense of ownership and responsibility.
Clear Mission: Mission is a companys purpose or reason for existing. In organizational cultures in
which there is a clear organizational vision, the organizations strategic purpose and direction are
apparent to everyone in the company.
Consistency: In consistent organizational cultures, the company actively defines and teaches
organizational values, beliefs and attitudes. Consistent organizational cultures are also called strong
cultures, because the core beliefs and widely shared and strongly held.
Organizational cultures are important to a firms success for several reasons.
1. They give an organizational identity to employees a defining vision of what the
organization represents. When managers are uncertain about their business
environments, the vision helps guide the discussions, decisions, and behaviour of
the people in the company.
2. Organizational culture are an important source of stability and continuity to the
organization, which provide a sense of security to its members.
3. Knowledge of the organizational culture helps newer employees interpret what
goes on inside the organization, by providing an important context for events that
would otherwise seem confusing.
4. Culture helps to stimulate employee enthusiasm for their tasks by recognizing and
rewarding high-producing and creative individuals, thereby identifying them as role
models to emulate.

ADAPTABILITY

CONSISTENCY

CLEAR MISSION

INVOLVEMENT
337
Organisational Culture
Check Your Progress 2
1. How does organisational culture begun?
2. How can we sustain culture?
3. How do employees learn culture?
20.7.1 Corporate Culture and Organizational Success
Artefacts, espoused values, and basic assumptions form the basics of understanding
organizational culture. Organizational culture is a framework that guides day-to-day behaviour
of employees. Culture is what gives birth to and defines the organizational goals. John
Kotter and James Heskett, researchers of Harvard Business School, tried to determine
which factors make some organizational cultures more successful than others.
Source: John P Kotter and James L Heskett, "Corporate Culture and Performance" The Free Press, New York
(1992) page 5.
Figure 20.6: Corporate Culture and Performance
Kotter ahd Heskett identified two levels of culture.
1. Visible Level: are the behaviour patterns and styles of the employees.
2. Invisible Level: are the shared values and assumptions that are held over a long
period of time.
Kotter and Heskett, argue that changes in the visible level (i.e., in behaviour patterns and
styles) overtime can lead to change in the invisible level (i.e., more deeply held beliefs).
The study had four main conclusions:
Fig 20.6 Kotter and Hesketts Two Levels of Culture

Culture in an Organization


Invisible Harder to Change








Visible Easier to Change
Shared Values
Important concerns and goals that are shared by most of the
people in a group, that tend to shape group behavior and that
often persist over time even with the changes in group
memberships.
Examples: - The managers care about customers; executives
like long-term debt.
Group Behavior Norms
Common or pervasive ways of acting that are found in a
group and that persist because group members tend to
behave in ways that teach these practices (as well as their
shared values) to new members, rewarding those that fit in
and sanctioning those that do not

Corporate Insights
Culture built around several values
Jack Welch, former CEO of General Electric, led that company to an outstanding level of success
for more than twenty years. He has been referred to as the most successful Chief Executive ever,
by many business magazines and corporate observers. He achieved his results by defining,
emphasizing, and rewarding a corporate culture built around several valued principles:
Removing boundaries that inhibit the flow of ideas.
Increasing speed and simplicity by delayering the organization.
Setting stretch goals for employees and rewarding their achievement.
Following a six sigma program for improving quality and performance.
Emphasizing the importance of customer satisfaction.
Creating a learning culture that stresses high morals, open exchange of ideas, and high
levels of contributions form each employee.

Source: - Robert Slater, Jack Welch and the GE way, McGraw Hill New York (1998).
Source: Robert Slater, Jack Welch and the GE way, McGraw Hill, New York (1998).
from
338
Principles of Management and
Organisational Behaviour
1. Corporate culture can have a significant impact on a firms long-term economic
performance.
2. Corporate culture will probably be an even more important factor in determining
the success or failure of firms in the next decade.
3. Corporate cultures that inhibit strong long-term financial performance are not rare;
they develop easily, even in firms that are full of reasonable and intelligent people.
4. Although tough to change, corporate cultures can be made more performance enhancing.
The Harvard Researchers, Kotter and Heskett discovered in their research that some
corporate cultures are good at adapting to changes and preserving the performance of
the organization, while others are not. They distinguished between adaptive and un-
adaptive corporate cultures, which is summarized in the figure below:-
Figure 20.7: Adaptive vs Un-adaptive Corporate Cultures
20.7.2 Changing Organizational Culture
If organizations are to consciously create and manage their cultures they must be able to
take their employees into consideration. There are problems that managers face when
they go about the business of changing organizational culture. Changing organizational
culture takes patience, vigilance, and a focus on changing the parts of an organizational
culture that managers can control:
1. Behaviours: one way of changing a corporate culture is to use behavioural addition
or behavioural substitution to establish new patterns of behaviour among employees.
(a) Behavioural Addition: Behavioural Addition is the process of having
managers and employees perform new behaviours that are central to and
symbolic of the new organizational culture that a company wants to create.
(b) Behavioural Substitution: Behavioural substitution is the process of having
managers and employees perform new behaviours central to the new
organizational culture in place of behaviours that were central; to the old
organizational culture.
2. Visible Artefacts: Another way in which managers can begin to change corporate
culture is to change visible artefacts of their old culture. Visible artefacts are visible
signs of an organizations culture, such as the office design and layout, company
dress codes, and company benefits and perks like stock options, personal parking
spaces, etc. These need to change keeping the new corporate culture in mind.
20.8 LET US SUM UP
Corporate cultures are very difficult to change. Consequently, there is no guarantee that behaviour-
substitution, behavioural addition or changing visible artefacts will change a companys
organizational culture. Clearly, an open display of top management commitment and support for
the new values and beliefs is critically important to enable employees to change.
ADAPTIVE CORPORATE
CULUTRE
UN-ADAPTIVE CORPORATE
CULTURE
CORE
VALUES
Most managers care deeply about
customers, stockholders, and
employees. They also strongly value
people and processes that can create
useful change (e.g., leadership up
and down the management
hierarchy)
Most 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 process much more highly
than leadership initiatives
COMMON
BEHAVIOR
Managers pay close attention to all
their constituencies, especially
customers, and initiate change when
needed to serve their legitimate
interests, even if that 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
advantages of changes in their business
environment
339
Organisational Culture
20.9 LESSON END ACTIVITY
Cultural systems may be considered as products of action as well as the conditioning
elements of future action. Do You think this is true? Develop an argument to justify your
answer.
20.10 KEYWORDS
Organisational culture
Stakeholders
Rituals
Symbols
20.11 QUESTIONS FOR DISCUSSION
1. What is organizational culture?
2. Describe the seven dimensions of organizational culture.
3. What is the source of an organizations culture?
4. Describe how stories, rituals, material symbols, and language shape an organizations
culture.
5. Who are stakeholders? What are the reasons for managers to care about managing
their relationship?
6. Describe the four different ways for managers to manage stakeholders
relationships.
7. What are the major elements of organizational culture, and where do they come
from?
8. What are the major elements of organizational culture, and where do they come
from?
9. Explain in detail Kottar and Heskette study on organizational culture.
10. How can managers change organizational culture?
20.12 SUGGESTED READINGS
Argyris C. (1962) Interpersonal competence and Organisational Effectiveness,
Irwin, Homewood III
Ashburner L. (1990) Impact of Technological and Organizational Change,
Personnel Review U.K.
Bernard M. Bass and Edward C. Ryterband (1979) Organizational Psychology,
(2
nd
Ed) Allyn and Bacon, Boston.
Boss R.W. (1989) Organizational development in Health care, Addison-Wesley
Mass; Reading.
French W. and Bell C. (1978) Organisation development, (2
nd
Edition) Prentice
Hall Englewood Cliffs N.J.
George J.M. (1990) Personality Effect, and Behaviour in Groups, Journal of Applied
Psychology, vol. 75.
Marvin D. Dunnette (1976) Handbook of Industrial and Organizational
Psychology, Rand McNally, Chicago.
340
Principles of Management and
Organisational Behaviour
Marvin E. Shaw (1981)Group Dynamics: The Psychology of Small Group Behavior,
(3
rd
Edition) McGraw-Hill New, York.
Osborne J.E., (1992) Turning to Teambuilding to Tackle Tough Times, Supervisory
Management May 1992.
Howe M.A. (1989) Using Imagery to Facilitate Organisational Development and
Change, Group and Organization studies.
Varney G. H (1989) Building Productive Teams, Jossey-Bass, San Francisco.
William G. Dyer (1989) Team Building: A Microcosm of the Past, Present, and
Future of O.D, Academy of Management OD Newsletter, winter 1989.
P.G.. Aquinas, Organizational Behaviour, Excel Books, New Delhi.
Case I Gossip on Dolly!!
Dolly DSouza was an IV semester MBA student from Aloysius Institute of Management,
Mangalore. She was specializing in Marketing and had to do a summer project as part
fulfilment of the MBA degree programme. Mr. Rohan Vas is Marketing Manager of Mangalore
Chemicals Limited (MCL). Her seniors had told her many stories of Mr. Rohan and the way
he was intimately involved with girl students. The grapevine also indicated that Rohan
sought relationship with two girls last year and ditched them after sexually abusing them.
The manager of the accounting department who is Dollys neighbour had warned her to be
careful of Mr. Rohan.
Dolly was extremely apprehensive to meet Mr. Rohan after hearing all these rumours about
him. But she had to get the project done and therefore decided that she will go and discuss
the project with him. On the first day she met Mr. Rohan, he was extremely warm and kind to
her. He explained things out to her and urged her to come to him any time with questions,
problems or concerns.
It was three months now and Dolly had found that Mr. Rohan was an extremely warm and
kind human being. She was going to thank him for all the help he had extended to her during
her summer project. Dolly was pleasantly surprised when Mr. Rohan offered her a job as
marketing executive in the company. Dolly was delighted at the offer as she had not got any
offer of employment and that her MBA programme was over and she was awaiting results.
Dolly thanked Mr. Rohan as she wanted to be independent and not depend on her parents
for money moreover and she could save some thing for her marriage expense instead of
being a burden on her parents. She was extremely thankful to Mr. Rohan and warmly shook
hands with him. Mr. Rohan was extremely warm and told Dolly that he was impressed by her
credentials. He also promised to make her permanent within 6 months and an unequalled
career progress.
Dolly decided that she would keep her relationship with Mr. Rohan strictly businesslike.
She would work very hard at her marketing assignments, but would keep the relationship
cool and impersonal.
After about 4 months at the job, Dolly had become more and more comfortable with her
relationship with Mr. Rohan. Mr. Rohan had now started asking her to accompany him for
lunch. On several occasions in the past, she had refused but today she had reluctantly
agreed. As they were having lunch, Mr. Rohan hinted at the prospects of making her a
permanent staff of the company within 2 months. Dolly was delighted and Mr. Rohan
used this opportunity to touch her on her at inappropriate way. Though Dolly attempted to
deal with that by keeping her physical distance and pushing him mildly when he came too
close, she was afraid of telling him directly as she could loose the chance of getting conformed
on the job.
Mr. Rohan had invited her to accompany him on a two-day trip for a presentation of a
marketing plan at the ooty branch. Though she wanted to refuse, it was an important
Contd...
341
Organisational Culture
assignment and there were others in the department who would be too willing to go if she
dropped out. Though Dolly had her concerns, she decided to go feeling that if Mr. Rohan
acted funny, she would point blank tell him that she was totally uninterested in any kind of
intimate relationship.
After coming back to Mangalore Dolly was shattered as there were rumours in the company
that she had an affair with Rohan and was projected as a very cheap girl who will go any
extent to get a permanent job.
Questions:
1. Are the cultural factors responsible for putting Dolly in the situation that she finds
herself in today?
2. Given the Indian culture what do you predict will happen next. Why?
Case II Cross-Cultural Management
Bill Evans, Managing Director of English Foods Ltd., Cardiff was very unhappy after he
received a call from the Home Office. He was asked to explain about the discrimination,
racial intolerance and harassment meted out to his Indian employees. It all started about 3
weeks ago when an Indian employee Miras bangle got caught in the machine and cut her
wrist. The safety committee then decided that no one will be allowed to bangles, finger
rings, earrings, or necklaces at work. The order was passed with immediate effect. Almost all
girls Asian, African and English wore bangles. After the order, the English and African
girls had taken the bangles off. However, most of the Asian girls continued to ware bangles
even after the ban.
The supervisor in the food processing unit, Mr. Jack Straw tried to explain to one of his
employees Sheila why she should remove her bangles. The conversation went on as follows:-
Jack: - Sheila, you must have heard about the accident last week when Miras bangle got
caught in the machine and she cut her wrist. I am afraid that you will have to take off your
bangles.
Sheila: - I am sorry, but I cannot take off my bangles; I am a Hindu wife; the bangles are
important to my religion.
Jack:-There is an order and I am afraid that you will have to take it off.
Sheila: - I will have to ask my husband.
Jack: - Come on, Sheila, dont make a fuss. I had to shout at Saroja, and Elena to take off their bangles.
Sheila could see that Jack was very angry, so almost in tears, she removed the bangles.
That evening, the conversation among the Indian girls was about bangles. Girls from Africa
thought that it was a lot of fuss about nothing. However, many of the girls were very
worried.
After going home Sheila spoke to her husband.
Raman Singh was a close friend of the regional race relations employment advisor, Mr.
Major and he decided to explain things out to him. Mr Singh explained that the bangles are
not only a mark of marriage but also of the esteem in which a wife is held by her husband.
The more the bangles and the greater their value, the higher her esteem and the greater her
social standing. The most sentimental part of the whole problem is that women remove their
bangle if they are widowed and some fear that the removal of bangles might lead to their
husbands, death.
Contd...
342
Principles of Management and
Organisational Behaviour
The next week was an anxious time for Sheila. She wore a single bangle every day. Sometimes
the supervisor made her take it off. Sheila was sure that she would have to lose her job, and
her husband supported her even though her income was needed.
After several weeks of consultations with workers unions and supervisors, Mr. Evens
decided that the ban on the wearing of bangles and dangling exterior jewellery would have
to be enforced. It was however decided to permit the wearing of wedding rings and nose
rings.
Soon after the ban was imposed, Sheila and her husband attended a meeting held by an
organization called the Asian Advisory Committee (AAC). This organization was set up to
help members of the Asian Community.
Within a few days Sheilas connection with Mr. Major and the AAC helped her to present
her case before the Home Office alleging discrimination regarding race, intolerance and
harassment. Mr. Bill Evens, Managing Director, English Foods Ltd was summoned before
the select committee of the Home Office where he had lot of explanation to do.
Questions:
1. If you were Bill Evens, how would you have handled this case?
2. Do you feel that English Foods Ltd discriminated against its Indian workers? Give
reasons.
3. If you were the MD of English Foods Ltd., how would you explain the matter to the
Home Office?