PowerPoint 14: Internal Environment: The Organization's Culture

Environmental Elements
Internal: Marketing, purchasing, personnel, IT, legal, A/R and A/P
External: Customers, payers, suppliers, labor supply, technology and innovation, regulators, competitors
Organizational Culture: The organizational "personality"
Shared values, assumptions, beliefs, and norms that unite members of an organization and shape their views and behaviors
- "The way things are done around here..."—what is valued, rewarded, how you dress
- Helps individuals understand their work group, their role and expected behavior
- Legacy- what the organization is and what it stands for (corporate culture)
Organizational Climate
The atmosphere of the organization; A relatively enduring quality of the internal environment of an organization, which is experienced by its members and influences their behavior (Can be measured in terms of trust, morale, conflict, equity in rewards, leader credibility, resistance to change and scapegoating)
Aspects of culture
1) Fit: supports/interferes with goals
2) Pervasiveness: Distribution among employees
3) Strength: Level of acceptance among employees
Examples of cultural elements
High work ethic
Enjoyable environment
Technical orientation
Acceptance of diversity
Sources and influences on culture
1) Beliefs, values, and assumptions of the founder(s) of the organization
2) Learning experiences of the group members as their organization evolves
3) New beliefs, values, and assumptions brought in by new members and leaders
4) Rewards, policies
5) Critical incidents
6) Changing environment
Importance of cultural reinforcers
1) Shapes acceptable behavior
2) Depicts desired relationship between the organization and employees, customers, and other stakeholders
3) Culture often governs behavior "when no one is looking"
4) Not directly observable, infer from manifestations
Elements that reinforce culture
Heroes and stories
Rites and Ceremonies
Reward systems
Levels of Culture: Artifacts
Visible organizational structures
and processes (Hard to decipher)
Levels of Culture: Espoused Values
Strategies, goals, philosophies
(espoused justifications)
Levels of Culture: Basic Underlying Assumptions
Unconscious, taken-for granted beliefs,
perceptions, thoughts, and feelings
(ultimate source of values and actions)
Elements that reinforce culture: Language
Use of vocabulary; ex) Disney: "cast members, guests, Central Casting, costumes, props, in character/ out of character"—supports show business culture; technical environment differences
Elements that reinforce culture: Heroes and Stories
Narrative based on true event, which may be embellished to emphasize intended value ie. stories of company founders
Elements that reinforce culture: Rite
relatively elaborate, dramatic, planned set of activities intended to convey cultural values
Elements that reinforce culture: Ceremonial
system of rites performed in conjunction with single occasion or event
Elements that reinforce culture: Symbols
Object, act, event, or quality that serves as a vehicle for conveying meaning; Examples: company pin, employee-of-the-month award, reserved parking place
Elements that reinforce culture: Reward Systems
Formal Performance Appraisals/Symbols granted as rewards:
Pay, bonus
Informal "atta boys"
Culture as a Barrier to Achieving Organizational Goals
1) Barriers to change, diversity, and mergers and acquisitions
2) Cultural elements might be weak in supporting organizational goals, not align with organizational goals, inhibit change (such as mergers/acquisitions, organizational shifts, new products or services), or discourage diversity
How Leaders Change Culture
1) Create tension or crisis for change
2) Communicate compelling vision of future
3) Motivate others to adopt new vision and required cultural changes - Selection of employees (fit), socialization of employees (orientation), reward systems (compensation, benefits)
Observations to Assess Culture
1) Physical location - Location, ambiance, employee dress, artwork and décor, cleanliness
2) Dominant interpersonal style - Friendly or formal, use first names or last?
3) Identify rules and regulations, rewards, use of language, whether promotion is from outside or within, what the measures of success are, and how employees refer to the company
Importance of understanding organizational culture and climate
1) Job performance
2) Job selection