512 CHAPTER 16 Organizational Culture Like every major CEO, Burns is a millionaire. Yet she still shops for groceries. She drives herself to work. She cleans her own house. \"Where you are is not who you are,\" her mother often told her. Burns appears to have lived that credo. With quiet determination, she's trying to make Xerox's culture, in some ways, reflect who she is. Sources: A. Bryant, \"We're Family, So We Can Disagree,\" The New York Times (February 21, 2010), pp. BU1, BU9; K. Damore, \"Burns: Blazing A New Trail,\" CRN (May 23, 2011), downloaded on July 15, 2011, from www.crn.com/; and D. Mattioli, \"Xerox Makes Push for Faster Services Growth,\" The Wall Street Journal (May 11, 2011), downloaded on July 15, 2011, from http://online.wsj.com/. A strong organizational culture provides stability to an organization. But as the chapter-opening example shows, it's not for everyone. And for some organizations, it can also be a major barrier to change. In this chapter, we show that every organization has a culture that, depending on its strength, can have a significant influence on the attitudes and behaviors of organization members. First let's figure out what kind of organizational culture you prefer. Take the self-assessment to find out. S A L SELF-ASSESSMENT LIBRARY What's the Right Organizational Culture for Me? In the Self-Assessment Library (available on CD and online), take assessment III.B.1 (What's the Right Organizational Culture for Me?) and answer the following questions. 1. Judging from your results, do you fit better in a more formal and structured culture or in a more informal and unstructured culture? 2. Did your results surprise you? Why do you think you scored as you did? 3. How might your results affect your career path? What Is Organizational Culture? 1 Define organizational culture and describe its common characteristics. An executive once was asked what he thought organizational culture meant. He gave essentially the same answer a U.S. Supreme Court justice once gave in attempting to define pornography: \"I can't define it, but I know it when I see it.\" We, however, need a basic definition of organizational culture to better understand the phenomenon. In this section we propose one and review several related ideas. A Definition of Organizational Culture Organizational culture refers to a system of shared meaning held by members that distinguishes the organization from other organizations.1 Seven primary characteristics seem to capture the essence of an organization's culture:2 1. Innovation and risk taking. The degree to which employees are encouraged to be innovative and take risks. 2. Attention to detail. The degree to which employees are expected to exhibit precision, analysis, and attention to detail. What Is Organizational Culture? 513 3. Outcome orientation. The degree to which management focuses on results or outcomes rather than on the techniques and processes used to achieve them. 4. People orientation. The degree to which management decisions take into consideration the effect of outcomes on people within the organization. 5. Team orientation. The degree to which work activities are organized around teams rather than individuals. 6. Aggressiveness. The degree to which people are aggressive and competitive rather than easygoing. 7. Stability. The degree to which organizational activities emphasize maintaining the status quo in contrast to growth. Each of these characteristics exists on a continuum from low to high. Appraising the organization on them, then, gives a composite picture of its culture and a basis for the shared understanding members have about the organization, how things are done in it, and the way they are supposed to behave. Exhibit 16-1 Exhibit 16-1 Contrasting Organizational Cultures Organization A This organization is a manufacturing firm. Managers are expected to fully document all decisions, and \"good managers\" are those who can provide detailed data to support their recommendations. Creative decisions that incur significant change or risk are not encouraged. Because managers of failed projects are openly criticized and penalized, managers try not to implement ideas that deviate much from the status quo. One lower-level manager quoted an often-used phrase in the company: \"If it ain't broke, don't fix it.\" There are extensive rules and regulations in this firm that employees are required to follow. Managers supervise employees closely to ensure there are no deviations. Management is concerned with high productivity, regardless of the impact on employee morale or turnover. Work activities are designed around individuals. There are distinct departments and lines of authority, and employees are expected to minimize formal contact with other employees outside their functional area or line of command. Performance evaluations and rewards emphasize individual effort, although seniority tends to be the primary factor in the determination of pay raises and promotions. Organization B This organization is also a manufacturing firm. Here, however, management encourages and rewards risk taking and change. Decisions based on intuition are valued as much as those that are well rationalized. Management prides itself on its history of experimenting with new technologies and its success in regularly introducing innovative products. Managers or employees who have a good idea are encouraged to \"run with it.\" And failures are treated as \"learning experiences.\" The company prides itself on being market driven and rapidly responsive to the changing needs of its customers. There are few rules and regulations for employees to follow, and supervision is loose because management believes that its employees are hardworking and trustworthy. Management is concerned with high productivity but believes that this comes through treating its people right. The company is proud of its reputation as being a good place to work. Job activities are designed around work teams, and team members are encouraged to interact with people across functions and authority levels. Employees talk positively about the competition between teams. Individuals and teams have goals, and bonuses are based on achievement of these outcomes. Employees are given considerable autonomy in choosing the means by which the goals are attained. organizational culture A system of shared meaning held by members that distinguishes the organization from other organizations. 514 CHAPTER 16 Organizational Culture demonstrates how these characteristics can be mixed to create highly diverse organizations. Other research has conceptualized culture into four different types based on competing values:3 the collaborative and cohesive clan, the innovative and adaptable adhocracy, the controlled and consistent hierarchy, and the competitive and customer focused market. A review of 94 studies found that job attitudes were especially positive in clan-based cultures, innovation was especially strong in market cultures, and financial performance was especially good in market cultures.4 Although the competing values framework received some support in this review, the authors noted that further theoretical work needs to ensure it is consistent with the actual cultural values found in organizations. Culture Is a Descriptive Term Organizational culture shows how employees perceive the characteristics of an organization's culture, not whether they like themthat is, it's a descriptive term. This is important because it differentiates culture from job satisfaction. Research on organizational culture has sought to measure how employees see their organization: Does it encourage teamwork? Does it reward innovation? Does it stifle initiative? In contrast, job satisfaction seeks to measure how employees feel about the organization's expectations, reward practices, and the like. Although the two terms have overlapping characteristics, keep in mind that organizational culture is descriptive, whereas job satisfaction is evaluative. Do Organizations Have Uniform Cultures? Organizational culture represents a common perception the organization's members hold. We should therefore expect individuals with different backgrounds or at different levels in the organization to describe its culture in similar terms.5 That doesn't mean, however, that there are no subcultures. Most large organizations have a dominant culture and numerous subcultures.6 A dominant culture expresses the core values a majority of members share and that give the organization its distinct personality.7 Subcultures tend to develop in large organizations to reflect common problems or experiences members face in the same department or location. The purchasing department can have a subculture that includes the core values of the dominant culture plus additional values unique to members of that department. If organizations were composed only of numerous subcultures, organizational culture as an independent variable would be significantly less powerful. It is the \"shared meaning\" aspect of culture that makes it such a potent device for guiding and shaping behavior. That's what allows us to say, for example, that the Zappos culture values customer care and dedication over speed and efficiency and to use that information to better understand the behavior of Zappos executives and employees.8 But subcultures can influence members' behavior too. Strong versus Weak Cultures It's possible to differentiate between strong and weak cultures.9 If most employees (responding to management surveys) have the same opinions about the organization's mission and values, the culture is strong; if opinions vary widely, the culture is weak. In a strong culture, the organization's core values are both intensely held and widely shared.10 The more members who accept the core values and the greater their commitment, the stronger the culture and the greater its influence on member behavior, because the high degree of sharedness and intensity creates a climate of high behavioral control. Nordstrom employees know in no What Is Organizational Culture? 515 glOBalization! Face Culture, Dignity Culture, and Organizational Culture s we have discussed throughout the book, culture can be represented at either the national or the organizational level. Global organizations need to carefully consider the differences in culture across countries to determine which management practices are likely to be most effective with different populations of employees. Recently, social psychologists have begun to explore the difference between \"face\" and \"dignity\" national cultures. In a face culture, individuals use information from others in order to determine who they are, allowing themselves to be defined by social A opinions. In a dignity culture, on the other hand, individuals are more eager to define themselves based on their own internal judgments and may be more resistant to outside efforts to define them. Although more research is needed to specify which cultures put more emphasis on social face versus personal dignity in self-definition, most has focused on East Asian countries as face cultures and European countries and the United States and Canada as dignity cultures. What are the implications of these differences? Individuals from face cultures will be more concerned with the implications of hierarchical judgments on their worth. Thus, organizational cultures in face countries are likely to emphasize roles and titles to give definition to employees and provide them with a secure sense of self. Organizational cultures in dignity countries will be more flexible in providing role definitions, allowing individuals to use self-expression to determine who they are. Sources: Based on Y. Kim, D. Cohen, and W. Au, \"The Jury and Abjury of My Peers: The Self in Face and Dignity Cultures,\" Journal of Personality and Social Psychology 98, no. 6 (2010), pp. 904-916; and Y. Liao and M. H. Bond, \"The Dynamics of Face Loss Following Interpersonal Harm for Chinese and Americans,\" Journal of Cross-Cultural Psychology 42, no. 1 (2011), pp. 25-38. uncertain terms what is expected of them, and these expectations go a long way in shaping their behavior. In contrast, Nordstrom competitor Macy's, which has struggled through an identity crisis, is working to remake its culture. A strong culture should reduce employee turnover because it demonstrates high agreement about what the organization represents. Such unanimity of purpose builds cohesiveness, loyalty, and organizational commitment. These qualities, in turn, lessen employees' propensity to leave.11 One study found that the more employees agreed on customer orientation in a service organization, the higher the profitability of the business unit.12 Another study found that when team managers and team members disagree about perceptions of organizational support, there were more negative moods among team members, and the performance of teams was lower.13 These negative effects are especially strong when managers believe the organization provides more support than employees think it does. Culture versus Formalization We've seen that high formalization creates predictability, orderliness, and consistency. A strong culture achieves the same end without the need for written documentation.14 Therefore, we should view formalization and culture as two dominant culture A culture that expresses the core values that are shared by a majority of the organization's members. core values The primary or dominant values that are accepted throughout the organization. subcultures Minicultures within an organization, typically defined by department designations and geographical separation. strong culture A culture in which the core values are intensely held and widely shared. 516 CHAPTER 16 Organizational Culture different roads to a common destination. The stronger an organization's culture, the less management need be concerned with developing formal rules and regulations to guide employee behavior. Those guides will be internalized in employees when they accept the organization's culture. What Do Cultures Do? Compare the functional and dysfunctional effects of organizational culture on people and the organization. Source: Jonathan Sprague/Redux. 2 Facebook describes itself as \"a cutting-edge technology company, constantly taking on new challenges in the worlds of milliseconds and terabytes.\" The vast majority of the company's employees are under 40 and enjoy the excitement of working in a fast-paced environment with considerable change and ambiguity. Facebook encourages employees to interact in a creative climate that encourages experimentation and tolerates conflict and risk. The company fosters a funloving, casual, and collegial identity in its employees. Let's review the role culture performs and whether it can ever be a liability for an organization. Culture's Functions First, culture has a boundary-defining role: it creates distinctions between one organization and others. Second, it conveys a sense of identity for organization members. Third, culture facilitates commitment to something larger than individual self-interest. Fourth, it enhances the stability of the social system. Culture is the social glue that helps hold the organization together by providing standards for what employees should say and do. Finally, it is a sense-making and control mechanism that guides and shapes employees' attitudes and behavior. This last function is of particular interest to us.15 Culture defines the rules of the game. Today's trend toward decentralized organizations makes culture more important than ever, but ironically it also makes establishing a strong culture more difficult. When formal authority and control systems are reduced, culture's shared meaning can point everyone in the same direction. However, employees organized in teams may show greater allegiance to their team and its values than to the organization as a whole. In virtual organizations, the lack of frequent face-to-face contact makes establishing a common set of norms very difficult. Strong leadership that communicates frequently about common goals and priorities is especially important in innovative organizations.16 Individual-organization \"fit\"that is, whether the applicant's or employee's attitudes and behavior are compatible with the culturestrongly influences who gets a job offer, a favorable performance review, or a promotion. It's no coincidence that Disney theme park employees appear almost universally attractive, clean, and wholesome with bright smiles. The company selects employees who will maintain that image. On the job, a strong culture supported by formal rules and regulations ensures they will act in a relatively uniform and predictable way. Culture Creates Climate If you've worked with someone whose positive attitude inspired you to do your best, or with a lackluster team that drained your motivation, you've experienced the effects of climate. Organizational climate refers to the shared perceptions organizational members have about their organization and work environment.17 This aspect of culture is like team spirit at the organizational level. When everyone has the same general feelings about what's important or how well things are working, the effect of these attitudes will be more than the sum of the individual parts. One meta-analysis found that across dozens of different samples, psychological climate was strongly related to individuals' level of job satisfaction, involvement, commitment, and motivation.18 A positive overall workplace climate has been linked to higher customer satisfaction and financial performance as well.19 What Do Cultures Do? OB Poll 517 How Leaders See Their Company's Culture My company . . . 59% 55% 49% 46% 41% 45% 51% 54% is a meritocracy understands what motivates employees excels at collaboration moves more quickly than our competition Survey of 479 senior managers in Asia, North America, Europe, Latin America, and Africa. Note: Survey of 479 senior managers in Asia, North America, Europe, Latin America, and Africa. Source: Based on Global Firms in 2020 (Economist Intelligence Unit, 2010). Downloaded on July 2, 2011, from www.shrm.org/. Dozens of dimensions of climate have been studied, including safety, justice, diversity, and customer service.20 A person who encounters a positive climate for performance will think about doing a good job more often and will believe others support his or her success. Someone who encounters a positive climate for diversity will feel more comfortable collaborating with co-workers regardless of their demographic background. Climates can interact with one another to produce behavior. For example, a positive climate for worker empowerment can lead to higher levels of performance in organizations that also have a climate for personal accountability.21 Climate also influences the habits people adopt. If the climate for safety is positive, everyone wears safety gear and follows safety procedures even if individually they wouldn't normally think very often about being safeindeed, many studies have shown that a positive safety climate decreases the number of documented injuries on the job.22 Culture as a Liability Culture can enhance organizational commitment and increase the consistency of employee behavior, clearly benefits to an organization. Culture is valuable to employees too, because it spells out how things are done and what's important. But we shouldn't ignore the potentially dysfunctional aspects of culture, especially a strong one, on an organization's effectiveness. Institutionalization When an organization undergoes institutionalization and becomes institutionalizedthat is, it is valued for itself and not for the goods or services it producesit takes on a life of its own, apart from its founders or members.23 It doesn't go out of business even if its original goals are no longer relevant. Acceptable modes of behavior become largely self-evident to members, organizational climate The shared perceptions organizational members have about their organization and work environment. institutionalization A condition that occurs when an organization takes on a life of its own, apart from any of its members, and acquires immortality. CHAPTER 16 518 Organizational Culture and although this isn't entirely negative, it does mean behaviors and habits that should be questioned and analyzed become taken for granted, which can stifle innovation and make maintaining the organization's culture an end in itself. Barriers to Change Culture is a liability when the shared values don't agree with those that further the organization's effectiveness. This is most likely when an organization's environment is undergoing rapid change, and its entrenched culture may no longer be appropriate.24 Consistency of behavior, an asset in a stable environment, may then burden the organization and make it difficult to respond to changes. Barriers to Diversity Hiring new employees who differ from the majority in race, age, gender, disability, or other characteristics creates a paradox:25 management wants to demonstrate support for the differences these employees bring to the workplace, but newcomers who wish to fit in must accept the organization's core cultural values. Because diverse behaviors and unique strengths are likely to diminish as people attempt to assimilate, strong cultures can become liabilities when they effectively eliminate these advantages. A strong culture that condones prejudice, supports bias, or becomes insensitive to people who are different can even undermine formal corporate diversity policies. Barriers to Acquisitions and Mergers Historically, when management looked at acquisition or merger decisions, the key factors were financial advantage and product synergy. In recent years, cultural compatibility has become the primary Myth or Science? \"Employees Treat Customers the Same Way the Organization Treats Them\" his statement is true to a significant degree. Two studies using different methods for operationalizing organizational treatment have shown that when employees are treated well, they are likely to treat customers well, but when employees are treated poorly, they treat customers poorly. Thus, a culture that shows positive treatment for employees is likely to create a positive culture for treatment of customers. The first study collected data from 292 managers, 830 employees, and 1,772 bank customers in Japan. The researchers examined whether companies that provided high-performance work practices like service training, information sharing, T self-management teams, and employee autonomy had a superior climate for customer service and whether this climate for service was related to higher levels of organizational performance. The employeebenefiting practices did indeed lead to higher performance through a better climate for customer service. The second study looked at \"internal service,\" the extent to which employees believe their work unit is treated well by the organization as a whole. More than 600 employees of a Caribbean financial services firm described their internal service, and then quality data were collected from nearly 2,000 customers. The results showed that service climate was more posi- tively related to customer satisfaction when internal service was high, meaning that having a positive climate for service leads to higher levels of customer satisfaction especially when a company provides positive internal service to its employees. Sources: H. Liao, K. Toya, D. Lepak, and Y. Hong, \"Do They See Eye to Eye? Management and Employee Perspectives of High-Performance Work Systems and Influence Processes on Service Quality,\" Journal of Applied Psychology 94, no. 2 (2009), pp. 371-391; and K. H. Ehrhart, L. A. Witt, B. Schneider, and S. J. Perry, \"Service Employees Give as They Get: Internal Service as a Moderator of the Service Climate-Service Outcomes Link,\" Journal of Applied Psychology 96, no. 2 (2011), pp. 423-431. Creating and Sustaining Culture 519 concern.26 All things being equal, whether the acquisition actually works seems to have more to do with how well the two organizations' cultures match up. A survey by consulting firm A. T. Kearney revealed that 58 percent of mergers failed to reach their financial goals.27 As one expert commented, \"Mergers have an unusually high failure rate, and it's always because of people issues\" in other words, conflicting organizational cultures. The $183 billion merger between America Online (AOL) and Time Warner in 2001 was the largest in U.S. corporate history. It was also a disaster. Only 2 years later, the stock had fallen an astounding 90 percent, and the new company reported what was then the largest financial loss in U.S. history. To this day, Time Warner stock trading around $32 per share in late 2011remains at a fraction of its former price (around $200 per share before the merger). Culture clash is commonly argued to be one of the causes of AOL Time Warner's problems. As one expert noted, \"In some ways the merger of AOL and Time Warner was like the marriage of a teenager to a middle-aged banker. The cultures were vastly different. There were open collars and jeans at AOL. Time Warner was more buttoned-down.\"28 Creating and Sustaining Culture 3 Identify the factors that create and sustain an organization's culture. An organization's culture doesn't pop out of thin air, and once established it rarely fades away. What influences the creation of a culture? What reinforces and sustains it once it's in place? How a Culture Begins MyManagementLab For an interactive application of this topic, check out this chapter's simulation activity at www.mymanagementlab.com. An organization's current customs, traditions, and general way of doing things are largely due to what it has done before and how successful it was in doing it. This leads us to the ultimate source of an organization's culture: its founders.29 Free of previous customs or ideologies, founders have a vision of what the organization should be, and the firm's small size makes it easy to impose that vision on all members. Culture creation occurs in three ways.30 First, founders hire and keep only employees who think and feel the same way they do. Second, they indoctrinate and socialize these employees to their way of thinking and feeling. And finally, the founders' own behavior encourages employees to identify with them and internalize their beliefs, values, and assumptions. When the organization succeeds, the founders' personality becomes embedded in the culture. The fierce, competitive style and disciplined, authoritarian nature of Hyundai, the giant Korean conglomerate, exhibits the same characteristics often used to describe founder Chung Ju-Yung. Other founders with immeasurable impact on their organization's culture include Bill Gates at Microsoft, Ingvar Kamprad at IKEA, Herb Kelleher at Southwest Airlines, Fred Smith at FedEx, and Richard Branson at the Virgin Group. Keeping a Culture Alive Once a culture is in place, practices within the organization maintain it by giving employees a set of similar experiences.31 The selection process, performance evaluation criteria, training and development activities, and promotion procedures (all discussed in Chapter 17) ensure those hired fit in with the culture, reward those who support it, and penalize (or even expel) those who challenge 520 CHAPTER 16 Organizational Culture Source: Brad Swonetz / Redux. it. Three forces play a particularly important part in sustaining a culture: selection practices, the actions of top management, and socialization methods. Let's look at each. Tony Hsieh, CEO of Zappos.com, is also the architect of the company's culture. Hsieh invited all employees to participate in creating ten core values that define the culture of Zappos and serve as the framework from which all decisions are made. The core values are: deliver WOW through service; embrace and drive change; create fun and a little weirdness; be adventurous, creative, and open minded; pursue growth and learning; build open and honest relationships with communication; build a positive team and family spirit; do more with less; be passionate and determined; and be humble. Hsieh maintains the culture through the company's hiring process and training programs to ensure that employees are committed to the core values. Selection The explicit goal of the selection process is to identify and hire individuals with the knowledge, skills, and abilities to perform successfully. The final decision, because it's significantly influenced by the decision maker's judgment of how well the candidates will fit into the organization, identifies people whose values are essentially consistent with at least a good portion of the organization's.32 Selection also provides information to applicants. Those who perceive a conflict between their values and those of the organization can remove themselves from the applicant pool. Selection thus becomes a two-way street, allowing employer or applicant to avoid a mismatch and sustaining an organization's culture by selecting out those who might attack or undermine its core values. W. L. Gore & Associates, the maker of Gore-Tex fabric used in outerwear, prides itself on its democratic culture and teamwork. There are no job titles at Gore, nor bosses or chains of command. All work is done in teams. In Gore's selection process, teams of employees put job applicants through extensive interviews to ensure they can deal with the level of uncertainty, flexibility, and teamwork that's normal in Gore plants. Not surprisingly, W. L. Gore appears regularly on Fortune's list of \"100 Best Companies to Work For\" (number 31 in 2011).33 Top Management The actions of top management also have a major impact on the organization's culture.34 Through words and behavior, senior executives establish norms that filter through the organization about, for instance, whether risk taking is desirable, how much freedom managers give employees, what is appropriate dress, and what actions earn pay raises, promotions, and other rewards. The culture of supermarket chain Wegmanswhich believes driven, happy, and loyal employees are more eager to help one another and provide exemplary customer serviceis a direct result of the beliefs of the Wegman family. The chain began in 1930 when brothers John and Walter Wegman opened their first grocery store in Rochester, New York. Its focus on fine foods quickly separated it from other grocersa focus maintained by the company's employees, many of whom are hired based on their interest in food. In 1950, Walter's son Robert became president and added generous employee benefits such as profit sharing and fully paid medical coverage. Now Robert's son Danny is president, and he has continued the Wegmans tradition of taking care of employees. To date, Wegmans has paid more than $54 million in college scholarships for its employees, both full-time and part-time. Pay is well above market average, making annual turnover for full-time employees a mere 6 percent, according to the Food Marketing Institute. (The industry average is 24 percent). Wegman's regularly appears on Fortune's list as well (number 3 in 2011). Socialization No matter how good a job the organization does in recruiting and selection, new employees need help adapting to the prevailing culture. That help is socialization.35 For example, all Marines must go through boot camp, where they prove their commitment and learn the \"Marine way.\" The consulting firm Booz Allen Hamilton begins its process of bringing new employees onboard even before they start their first day of work. New recruits go to an internal Web portal to learn about the company and engage in some activities that help them understand the culture of the organization. After they start work, they continue to learn about the organization through an ongoing social Creating and Sustaining Culture Exhibit 16-2 521 A Socialization Model Socialization process Outcomes Productivity Prearrival Encounter Metamorphosis Commitment Turnover networking application that links new workers with more established members of the firm and helps ensure that culture is transmitted over time.36 We can think of socialization as a process with three stages: prearrival, encounter, and metamorphosis.37 This process, shown in Exhibit 16-2, has an impact on the new employee's work productivity, commitment to the organization's objectives, and eventual decision to stay with the organization. The prearrival stage recognizes that each individual arrives with a set of values, attitudes, and expectations about both the work and the organization. One major purpose of a business school, for example, is to socialize business students to the attitudes and behaviors business firms want. Newcomers to highprofile organizations with a strong market position will make their own assumptions about what it must be like to work there.38 Most new recruits will expect Nike to be dynamic and exciting, a prestigious law firm to be high in pressure and rewards, and the Marine Corps to require both discipline and courage. No matter how well managers think they can socialize newcomers, however, the most important predictor of future behavior is past behavior. What people know before they join the organization, and how proactive their personality is, are critical predictors of how well they adjust to a new culture.39 One way to capitalize on prehire characteristics in socialization is to use the selection process to inform prospective employees about the organization as a whole. We've also seen how the selection process ensures the inclusion of the \"right type\"those who will fit in. \"Indeed, the ability of the individual to present the appropriate face during the selection process determines his ability to move into the organization in the first place. Thus, success depends on the degree to which the aspiring member has correctly anticipated the expectations and desires of those in the organization in charge of selection.\"40 On entry into the organization, the new member enters the encounter stage and confronts the possibility that expectationsabout the job, co-workers, the boss, and the organization in generalmay differ from reality. If expectations were fairly accurate, the encounter stage merely cements earlier perceptions. However, this is often not the case. At the extreme, a new member may become disillusioned enough to resign. Proper recruiting and selection should significantly reduce that outcome, along with encouraging friendship ties in the socialization A process that adapts employees to the organization's culture. prearrival stage The period of learning in the socialization process that occurs before a new employee joins the organization. encounter stage The stage in the socialization process in which a new employee sees what the organization is really like and confronts the possibility that expectations and reality may diverge. 522 CHAPTER 16 Organizational Culture Exhibit 16-3 Entry Socialization Options Formal vs. Informal The more a new employee is segregated from the ongoing work setting and differentiated in some way to make explicit his or her newcomer's role, the more socialization is formal. Specific orientation and training programs are examples. Informal socialization puts the new employee directly into the job, with little or no special attention. Individual vs. Collective New members can be socialized individually. This describes how it's done in many professional offices. They can also be grouped together and processed through an identical set of experiences, as in military boot camp. Fixed vs. Variable This refers to the time schedule in which newcomers make the transition from outsider to insider. A fixed schedule establishes standardized stages of transition. This characterizes rotational training programs. It also includes probationary periods, such as the 8- to 10-year \"associate\" status used by accounting and law firms before deciding on whether or not a candidate is made a partner. Variable schedules give no advance notice of their transition timetable. Variable schedules describe the typical promotion system, in which one is not advanced to the next stage until one is \"ready.\" Serial vs. Random Serial socialization is characterized by the use of role models who train and encourage the newcomer. Apprenticeship and mentoring programs are examples. In random socialization, role models are deliberately withheld. New employees are left on their own to figure things out. Investiture vs. Divestiture Investiture socialization assumes that the newcomer's qualities and qualifications are the necessary ingredients for job success, so these qualities and qualifications are confirmed and supported. Divestiture socialization tries to strip away certain characteristics of the recruit. Fraternity and sorority \"pledges\" go through divestiture socialization to shape them into the proper role. organizationnewcomers are more committed when friends and co-workers help them \"learn the ropes.\"41 Finally, to work out any problems discovered during the encounter stage, the new member changes or goes through the metamorphosis stage. The options presented in Exhibit 16-3 are alternatives designed to bring about the desired metamorphosis. Most research suggests there are two major \"bundles\" of socialization practices. The more management relies on formal, collective, sequential, fixed, and serial socialization programs and emphasize divestiture, the more likely newcomers' differences will be stripped away and replaced by standardized predictable behaviors. These institutional practices are common in police departments, fire departments, and other organizations that value rule following and order. Programs that are informal, individual, random, variable, and disjunctive and emphasize investiture are more likely to give newcomers an innovative sense of their role and methods of working. Creative fields, such as research and development, advertising, and filmmaking, rely on these individual practices. Most research suggests high levels of institutional practices encourage person-organization fit and high levels of commitment, whereas individual practices produce more role innovation.42 The three-part entry socialization process is complete when new members have internalized and accepted the norms of the organization and their work group, are confident in their competence, and feel trusted and valued by their peers. They understand the systemnot only their own tasks but the rules, procedures, and informally accepted practices as well. Finally, they know what is expected of them and what criteria will be used to measure and evaluate their work. As Exhibit 16-2 showed, successful metamorphosis should have a positive impact on new employees' productivity and their commitment to the organization and reduce their propensity to leave the organization. How Employees Learn Culture Exhibit 16-4 Philosophy of organization's founders 523 How Organization Cultures Form Top management Selection criteria Organization culture Socialization Researchers have begun to examine how employee attitudes change during socialization by measuring at several points over the first few months. One study has documented patterns of \"honeymoons\" and \"hangovers\" for new workers, showing that the period of initial adjustment is often marked by decreases in job satisfaction as their idealized hopes come into contact with the reality of organizational life.43 Other research suggests that role conflict and role overload for newcomers rise over time, and that workers with the largest increases in these role problems experience the largest decreases in commitment and satisfaction.44 It may be that the initial adjustment period for newcomers presents increasing demands and difficulties, at least in the short term. Summary: How Cultures Form Exhibit 16-4 summarizes how an organization's culture is established and sustained. The original culture derives from the founder's philosophy and strongly influences hiring criteria as the firm grows. Top managers' actions set the general climate, including what is acceptable behavior and what is not. The way employees are socialized will depend both on the degree of success achieved in matching new employees' values to those of the organization in the selection process, and on top management's preference for socialization methods. How Employees Learn Culture 4 Show how culture is transmitted to employees. Culture is transmitted to employees in a number of forms, the most potent being stories, rituals, material symbols, and language. Stories When Henry Ford II was chairman of Ford Motor Company, you would have been hard pressed to find a manager who hadn't heard how he reminded his executives, when they got too arrogant, \"It's my name that's on the building.\" The message was clear: Henry Ford II ran the company. metamorphosis stage The stage in the socialization process in which a new employee changes and adjusts to the job, work group, and organization. 524 CHAPTER 16 Organizational Culture A number of senior Nike executives spend much of their time serving as corporate storytellers.45 When they tell how co-founder (and Oregon track coach) Bill Bowerman went to his workshop and poured rubber into his wife's waffle iron to create a better running shoe, they're talking about Nike's spirit of innovation. When new hires hear tales of Oregon running star Steve Prefontaine's battles to make running a professional sport and attain better performance equipment, they learn of Nike's commitment to helping athletes. Stories such as these circulate through many organizations, anchoring the present in the past and legitimating current practices. They typically include narratives about the organization's founders, rule breaking, rags-toriches successes, reductions in the workforce, relocation of employees, reactions to past mistakes, and organizational coping.46 Employees also create their own narratives about how they came to either fit or not fit with the organization during the process of socialization, including first days on the job, early interactions with others, and first impressions of organizational life.47 Rituals Rituals are repetitive sequences of activities that express and reinforce the key values of the organizationwhat goals are most important and which people are important and which are expendable.48 One of the best known rituals is Walmart's company chant. Begun by the company's founder, the late Sam Walton, as a way to motivate and unite his workforce, \"Gimme a W, gimme an A, gimme an L, gimme a squiggle, give me an M, A, R, T!\" has become a ritual that bonds workers and reinforces Walton's belief in the contribution his employees made to the company's success. Similar corporate chants are used by IBM, Ericsson, Novell, Deutsche Bank, and PricewaterhouseCoopers.49 Material Symbols Alcoa headquarters doesn't look like your typical head-office operation. There are few individual offices, even for senior executives. The space is essentially made up of cubicles, common areas, and meeting rooms. This informality conveys to employees that Alcoa values openness, equality, creativity, and flexibility. Some corporations provide their top executives with chauffeur-driven limousines and a corporate jet. Other CEOs drive the company car themselves and travel in the economy section. The layout of corporate headquarters, the types of automobiles top executives are given, and the presence or absence of corporate aircraft are a few examples of material symbols. Others include the size of offices, the elegance of furnishings, executive perks, and attire.50 These convey to employees who is important, the degree of egalitarianism top management desires, and the kinds of behavior that are appropriate, such as risk taking, conservative, authoritarian, participative, individualistic, or social. Language Many organizations and subunits within them use language to help members identify with the culture, attest to their acceptance of it, and help preserve it. Unique terms describe equipment, officers, key individuals, suppliers, customers, or products that relate to the business. New employees may at first be overwhelmed by acronyms and jargon, that, once assimilated, act as a common denominator to unite members of a given culture or subculture. Creating an Ethical Organizational Culture 525 Source: Melanie Stetson Freeman/CSM/Newscom. At Sermo, it's okay for employees to bring their dogs to work and to include them in company meetings, as shown in this photo. Sermo is an online community for physicians where they can collaborate and improve patient care. Sermo's culture derives from the company's founder and CEO Dr. Daniel Palestrant, who wants employees to love coming to work, to be comfortable, to have fun, and to just be themselves in a space that suits them. Sermo's informal work environment and open office plan conveys to employees that the company values openness, individuality, creativity, and flexibility. Creating an Ethical Organizational Culture 5 Demonstrate how an ethical culture can be created. rituals Repetitive sequences of activities that express and reinforce the key values of the organization, which goals are most important, which people are important, and which are expendable. The organizational culture most likely to shape high ethical standards among its members is high in risk tolerance, low to moderate in aggressiveness, and focused on means as well as outcomes.51 This type of culture takes a long-term perspective and balances the rights of multiple stakeholders, including employees, stockholders, and the community. Managers are supported for taking risks and innovating, discouraged from engaging in unbridled competition, and guided to heed not just to what goals are achieved but also how. If the culture is strong and supports high ethical standards, it should have a very powerful and positive influence on employee behavior. Examples of organizations that have failed to establish proper codes of ethical conduct can be found in the media nearly every day. Some actively deceive customers or clients. Others produce products that harm consumers or the environment, or they harass or discriminate against certain groups of employees. Others are more subtle and cover up or fail to report wrongdoing. The negative consequences of a systematic culture of unethical behavior can be severe and include customer boycotts, fines, lawsuits, and government regulation of an organization's practices. material symbols What conveys to employees who is important, the degree of egalitarianism top management desires, and the kinds of behavior that are appropriate. 526 CHAPTER 16 Organizational Culture What can managers do to create a more ethical culture? They can adhere to the following principles:52 Be a visible role model. Employees will look to the actions of top management as a benchmark for appropriate behavior. Send a positive message. Communicate ethical expectations. Minimize ethical ambiguities by sharing an organizational code of ethics that states the organization's primary values and ethical rules employees must follow. Provide ethical training. Set up seminars, workshops, and training programs to reinforce the organization's standards of conduct, clarify what practices are permissible, and address potential ethical dilemmas. Visibly reward ethical acts and punish unethical ones. Appraise managers on how their decisions measure up against the organization's code of ethics. Review the means as well as the ends. Visibly reward those who act ethically and conspicuously punish those who don't. Provide protective mechanisms. Provide formal mechanisms so employees can discuss ethical dilemmas and report unethical behavior without fear of reprimand. These might include ethical counselors, ombudsmen, or ethical officers. The work of setting a positive ethical climate has to start at the top of the organization.53 A study of 195 managers demonstrated that when top management emphasizes strong ethical values, supervisors are more likely to practice ethical leadership. Positive ethical attitudes transfer down to line employees, who show lower levels of deviant behavior and higher levels of cooperation and assistance. A study involving auditors found perceived pressure from organizational leaders to behave unethically was associated with increased intentions to engage in unethical practices.54 Clearly the wrong type of organizational An Ethical Choice Designing a Culture of Ethical Voice uch research has emphasized how organizations establish ethical principles that employees are supposed to follow. More recent work examines how organizations can harness employees' inherent sense of right and wrong, so employees will speak up when they feel organizational actions are inconsistent with their own ethical principles. Saying organizations should establish a culture for ethical behavior is easy enough, but developing a culture where employees feel empowered to speak up is considerably trickier. Here are a few suggestions: M 1. Overcome the silence. Employees who know something is wrong may still fail to speak up because they fear reprisals. Both official and unofficial measures must encourage people to bring ethical lapses to the attention of upper management and reward them for doing so. 2. Encourage employees to continually investigate whether their behavior is consistent with organizational values. Many ethical lapses are not so much dishonest or malicious acts but failure to even recognize the moral issue at stake. 3. Develop formal roles for ethical compliance officers, who provide oversight and training to ensure employees are aware of the company's core values and can discuss ethical behavior in practice. Sources: M. Kaptein, \"Ethics Programs and Ethical Culture: A Next Step in Unraveling Their Multi-Faceted Relationship,\" Journal of Business Ethics 89, no. 2 (2009), pp. 261-281; P. Verhezen, \"Giving Voice in a Culture of Silence. From a Culture of Compliance to a Culture of Integrity,\" Journal of Business Ethics 96, no. 2 (2010), pp. 187-206; and M. Kaptein, \"From Inaction to External Whistleblowing: The Influence of Ethical Culture of Organizations on Employee Responses to Observed Wrongdoing,\" Journal of Business Ethics 98, no. 3 (2011), pp. 513-530. Creating a Positive Organizational Culture 527 culture can negatively influence employee ethical behavior. Finally, employees whose ethical values are similar to those of their department are more likely to be promoted, so we can think of ethical culture as flowing from the bottom up as well.55 Creating a Positive Organizational Culture 6 Describe a positive organizational culture. At first blush, creating a positive culture may sound hopelessly nave or like a Dilbert-style conspiracy. The one thing that makes us believe this trend is here to stay, however, are signs that management practice and OB research are converging. A positive organizational culture emphasizes building on employee strengths, rewards more than it punishes, and emphasizes individual vitality and growth.56 Let's consider each of these areas. Building on Employee Strengths Although a positive organizational culture does not ignore problems, it does emphasize showing workers how they can capitalize on their strengths. As management guru Peter Drucker said, \"Most Americans do not know what their strengths are. When you ask them, they look at you with a blank stare, or they respond in terms of subject knowledge, which is the wrong answer.\" Wouldn't it be better to be in an organizational culture that helped you discover your strengths and learn how to make the most of them? Larry Hammond used this approach when you'd least expect it: during his firm's darkest days. Hammond is CEO of Auglaize Provico, an agribusiness company based in Ohio. In the midst of the firm's worst financial struggles, when it had to lay off one-quarter of its workforce, Hammond decided to try a different approach. Rather than dwell on what was wrong, he took advantage of what was right. \"If you really want to [excel], you have to know yourselfyou have to know what you're good at, and you have to know what you're not so good at,\" says Hammond. With the help of Gallup consultant Barry Conchie, Hammond focused on discovering and using employee strengths and helped the company turn itself around. \"You ask Larry [Hammond] what the difference is, and he'll say that it's individuals using their natural talents,\" says Conchie.57 Rewarding More Than Punishing Although most organizations are sufficiently focused on extrinsic rewards such as pay and promotions, they often forget about the power of smaller (and cheaper) rewards such as praise. Part of creating a positive organizational culture is \"catching employees doing something right.\" Many managers withhold praise because they're afraid employees will coast or because they think praise is not valued. Employees generally don't ask for praise, and managers usually don't realize the costs of failing to give it. positive organizational culture A culture that emphasizes building on employee strengths, rewards more than punishes, and emphasizes individual vitality and growth. 528 CHAPTER 16 Organizational Culture Source: Reed Saxon/AP Images. Employees of Pricewaterhouse Coopers work within a positive organizational culture that emphasizes individuals' vitality and growth. One of the largest global accounting firms, PwC offers employees professional and individual learning opportunities on the job, at clients' workplaces, and in formal training programs. PwC's Learning and Education Group provides access to the latest information on industry standards and best practices, and offers classes to help employees develop their technical skills. Company coaches and mentors guide employees in designing a personalized career path. The PwC team, shown here, counts the Oscars ballots for the Academy of Motion Picture Arts and Sciences, a company client for more than 75 years. Consider Elzbieta Grska-Kolodziejczyk, a plant manager for International Paper's facility in Kwidzyn, Poland. Employees work in a bleak windowless basement. Staffing is roughly one-third its prior level, while production has tripled. These challenges had done in the previous three managers. So when GrskaKolodziejczyk took over, although she had many ideas about transforming the organization, at the top were recognition and praise. She initially found it difficult to give praise to those who weren't used to it, especially men. \"They were like cement at the beginning,\" she said. \"Like cement.\" Over time, however, she found they valued and even reciprocated praise. One day a department supervisor pulled her over to tell her she was doing a good job. \"This I do remember, yes,\" she said.58 Emphasizing Vitality and Growth No organization will get the best from employees who see themselves as mere cogs in the machine. A positive culture recognizes the difference between a job and a career. It supports not only what the employee contributes to organizational effectiveness but also how the organization can make the employee more effectivepersonally and professionally. Although it may take more creativity to encourage employee growth in some types of industries, consider the food industry. At Masterfoods in Belgium, Philippe Lescornez leads a team of employees including Didier Brynaert, who works in Luxembourg, nearly 150 miles away. Brynaert was considered a good sales promoter who was meeting expectations when Lescornez decided Brynaert's job could be made more important if he were seen less as just another sales promoter and more as an expert on the unique features of the Luxembourg market. So Lescornez asked Brynaert for information he could share with the home office. He hoped that by raising Brynaert's profile in Brussels, he could create in him a greater sense of ownership for his remote sales territory. \"I started to communicate much more what he did to other people [within the company], because there's quite some distance between the Brussels office and the section he's working in. So I started to communicate, communicate, communicate. The more I communicated, the more he started to provide material,\" says Lescornez. As a result, \"Now he's recognized as the Spirituality and Organizational Culture 529 specialist for Luxembourgthe guy who is able to build a strong relationship with the Luxembourg clients,\" says Lescornez. What's good for Brynaert is, of course, also good for Lescornez, who gets credit for helping Brynaert grow and develop.59 Limits of Positive Culture Is a positive culture a cure-all? Though companies such as GE, Xerox, Boeing, and 3M have embraced aspects of a positive organizational culture, it is a new enough idea for us to be uncertain about how and when it works best. Not all cultures value being positive as much as U.S. culture does, and, even within U.S. culture, there surely are limits to how far we should go to preserve a positive culture. For example, Admiral, a British insurance company, has established a Ministry of Fun in its call centers to organize poem writings, foosball, conker (a British game involving chestnuts), and fancy-dress days. When does the pursuit of a positive culture start to seem coercive or even Orwellian? As one critic notes, \"Promoting a social orthodoxy of positiveness focuses on a particular constellation of desirable states and traits but, in so doing, can stigmatize those who fail to fit the template.\"60 There may be benefits to establishing a positive culture, but an organization also needs to be objective and not pursue it past the point of effectiveness. Spirituality and Organizational Culture What do Southwest Airlines, Hewlett-Packard, Ford, The Men's Wearhouse, Tyson Foods, Wetherill Associates, and Tom's of Maine have in common? They're among a growing number of organizations that have embraced workplace spirituality. What Is Spirituality? Workplace spirituality is not about organized religious practices. It's not about God or theology. Workplace spirituality recognizes that people have an inner life that nourishes and is nourished by meaningful work in the context of community.61 Organizations that promote a spiritual culture recognize that people seek to find meaning and purpose in their work and desire to connect with other human beings as part of a community. Many of the topics we have discussedranging from job design (designing work that is meaningful to employees) to transformational leadership (leadership practices that emphasize a higher-order purpose and self-transcendent goals) are well matched to the concept of organizational spirituality. When a company emphasizes its commitment to paying Third World suppliers a fair (above-market) price for their coffee to facilitate community developmentas did Starbucksor encourages employees to share prayers or inspirational messages through e-mailas did Interstate Batteriesit is encouraging a more spiritual culture.62 workplace spirituality The recognition that people have an inner life that nourishes and is nourished by meaningful work that takes place in the context of community. 530 CHAPTER 16 Organizational Culture Source: m42/ZUMA Press/Newscom. Steve Baxter, a Target Corporation employee, tries to comfort a child while serving as a volunteer for Project Homeless Connect, a community program that provides housing, dental, medical, employment, child care, and other services for homeless people and others in need. Baxter and other Target employees are inspired by a strong sense of purpose in showing kindness to, promoting the happiness of, and serving customers, fellow workers, and people in the community. Employees experience the joy and satisfaction that comes from helping others by volunteering in social services programs that feed the hungry, prevent family violence, give shelter to the homeless, and provide disaster relief. Why Spirituality Now? As we noted in our discussion of emotions in Chapter 4, the myth of rationality assumed the well-run organization eliminated feelings. Concern about an employee's inner life had no role in the perfectly rational model. But just as we've now come to realize that the study of emotions improves our understanding of organizational behavior, an awareness of spirituality can help us better understand employee behavior in the twenty-first century. Of course, employees have always had an inner life. So why has the search for meaning and purposefulness in work surfaced now? We summarize the reasons in Exhibit 16-5. Characteristics of a Spiritual Organization The concept of workplace spirituality draws on our previous discussions of values, ethics, motivation, and leadership. What differentiates spiritual organizations from their nonspiritual counterparts? Although research remains Exhibit 16-5 Reasons for the Growing Interest in Spirituality Spirituality can counterbalance the pressures and stress of a turbulent pace of life. Contemporary lifestylessingle-parent families, geographic mobility, the temporary nature of jobs, new technologies that create distance between peopleunderscore the lack of community many people feel and increase the need for involvement and connection. Formalized religion hasn't worked for many people, and they continue to look for anchors to replace lack of faith and to fill a growing feeling of emptiness. Job demands have made the workplace dominant in many people's lives, yet they continue to question the meaning of work. People want to integrate personal life values with their professional life. An increasing number of people are finding that the pursuit of more material acquisitions leaves them unfulfilled. Spirituality and Organizational Culture 531 preliminary, several cultural characteristics tend to be evident in spiritual organizations:63 S A L SELF-ASSESSMENT LIBRARY Benevolence. Spiritual organizations value showing kindness toward others and promoting the happiness of employees and other organizational stakeholders. Strong sense of purpose. Spiritual organizations build their cultures around a meaningful purpose. Although profits may be important, they're not the primary value of the organization. Trust and respect. Spiritual organizations are characterized by mutual trust, honesty, and openness. Employees are treated with esteem and value, consistent with the dignity of each individual. Open-mindedness. Spiritual organizations value flexible thinking and creativity among employees. How Spiritual Am I? In the Self-Assessment Library (available on CD and online), take assessment IV.A.4 (How Spiritual Am I?). Note: People's scores on this measure vary from time to time, so take that into account when interpreting the results. Achieving a Spiritual Organization Many organizations have grown interested in spirituality but have had difficulty putting its principles into practice. Several types of practices can facilitate a spiritual workplace,64 including those that support work-life balance. Leaders can demonstrate values, attitudes, and behaviors that trigger intrinsic motivation and a sense of calling through work. Encouraging employees to consider how their work provides a sense of purpose through community building also can help achieve a spiritual workplace; often this is achieved through group counseling and organizational development, a topic we take up in Chapter 18. Criticisms of Spirituality 7 Identify characteristics of a spiritual culture. Critics of the spirituality movement in organizations have focused on three issues. First is the question of scientific foundation. What really is workplace spirituality? Is it just a new management buzzword? Second, are spiritual organizations legitimate? Specifically, do organizations have the right to impose spiritual values on their employees? Third is the question of economics: are spirituality and profits compatible? First, as you might imagine, there is comparatively little research on workplace spirituality. We don't know whether the concept will have staying power. Do the cultural characteristics we just identified really separate spiritual organizations? Spirituality has been defined so broadly in some sources that practices from job rotation to corporate retreats at meditation centers have been identified as spiritual. Questions need to be answered before the concept gains full credibility. On the second point, an emphasis on spirituality can clearly make some employees uneasy. Critics have argued that secular institutions, especially business firms, have no business imposing spiritual values on employees.65 This criticism is undoubtedly valid when spirituality is defined as bringing religion and God into the workplace. However, it seems less stinging when the goal is limited to helping employees find meaning and purpose in their work lives. If the concerns listed in Exhibit 16-5 truly characterize a large segment of the workforce, then perhaps organizations can do so. 532 CHAPTER 16 Organizational Culture Finally, whethe