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Chapter 15
Organisational culture

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After studying this chapter, you should be able to:

Define organisational culture and describe its common characteristics.

Compare the functional and dysfunctional effects of organisational culture on people and the organisation.

Identify the factors that create and sustain an organisation’s culture.

Show how culture is transmitted to employees.

Demonstrate how an ethical culture can be created.

Describe a positive organisational culture.

Identify characteristics of a spiritual culture.

Show how national culture may affect the way organisational culture is transported to a different country.

Learning Objectives

Define organisational culture and describe its common characteristics
Compare the functional and dysfunctional effects of organisational culture on people and the organisation
Identify the factors that create and sustain an organisation’s culture
Show how culture is transmitted to employees
Demonstrate how an ethical culture can be created
Describe a positive organisational culture
Identify characteristics of a spiritual culture
Show how national culture may affect the way organisational culture is transported to a different country

What is organisational culture?

A system of shared meaning held by members that distinguishes the organisation from other organisations.

Seven primary characteristics capture the essence of an organisation’s culture:

Innovation and risk taking
Attention to detail
Outcome orientation
People orientation
Team orientation
Aggressiveness
Stability

What Is Organisational Culture?

An executive was asked what he thought organisational culture meant. He gave essentially the same answer that a Supreme Court justice 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 organisational culture in order to better understand the phenomenon. In this section, we propose one and review several related ideas.

A Definition Of Organisational Culture

Organisational culture refers to a system of shared meaning held by members that distinguishes the organisation from other organisations.1 Seven primary characteristics seem to capture the essence of an organisation’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.

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 organisation.

5. Team orientation—the degree to which work activities are organised around teams rather than individuals.

6. Aggressiveness—thedegreetowhichpeopleareaggressiveandcompetitiveratherthaneasy-going. 7. Stability—the degree to which organisational activities emphasise maintaining the status quo in

contrast to growth.

Each of these characteristics exists on a continuum from low to high. Appraising the organisation on these seven characteristics, then, gives a composite picture of the organisation’s culture. This picture becomes the basis for feelings of shared understanding that members have about the organisation, how things are done in it and the way members are supposed to behave. Exhibit 15.1 demonstrates how these characteristics can be mixed to create highly diverse organisations.

Other research has conceptualised 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 organisations.

Culture Is A Descriptive Term

Organisational culture is concerned with how employees perceive the characteristics of an organisation’s culture, not with whether they like them. That is, it’s a descriptive term. This is important because it differentiates this concept from job satisfaction. Research on organisational culture has sought to measure how employees see their organisation. Does it encourage teamwork? Does it reward innovation? Does it stifle initiative? In contrast, job satisfaction seeks to measure how employees feel about the organisation’s expectations, reward practices and the like. Although the two terms undoubtedly have overlapping characteristics, keep in mind that organisational culture is descriptive, whereas job satisfaction is evaluative.

Do Organisations Have Uniform Cultures?

Organisational culture represents a common perception that the organisation’s members hold. We should expect, therefore, that individuals with different backgrounds or at different levels in the organisation will tend to describe its culture in similar terms.5

That doesn’t mean, however, that there are no subcultures within any given culture. Most large organisations have a dominant culture and numerous subcultures.6 A dominant culture expresses the core values shared by a majority of the organisation’s members. When we talk about an organisation’s culture, we are referring to its dominant culture, which gives an organisation its distinct personality.7 Subcultures tend to develop in large organisations to reflect common problems, situations or experiences that groups of members in the same department or location face. 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 organisations were comprised only of numerous subcultures, organisational 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 behaviour. That’s what allows us to say, for example, that Microsoft’s culture values aggressiveness and risk-taking8 and to use that information to better understand the behaviour of Microsoft executives and employees. But many organisations also have subcultures that can influence members’ behaviour.

Strong Versus Weak Cultures

It is possible to differentiate between strong and weak cultures.9 If most employees (responding to management surveys) have the same opinions about the organisation’s mission and values, the culture is strong; if opinions vary widely, the culture is weak.

In a strong culture, the organisation’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 behaviour, because the high degree of sharedness and intensity creates an internal climate of high behavioural control. For example, Woolworths’ employees know in no uncertain terms what is expected of them, and these expectations go a long way in shaping their behaviour. In contrast, some of Woolworths’ competitors in the grocery and fresh food retail industry have a way to go to match this strong service culture.

A strong culture should reduce employee turnover, because it demonstrates high agreement about what the organisation stands for. Such unanimity of purpose builds cohesiveness, loyalty and organisational 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 organisation, the higher the profitability of the business unit.12 Another study found that when team managers and team members disagreed about perceptions of organisational 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 organisation provides more support than employees think it does.

Culture Versus Formalisation

We have seen that high formalisation creates predictability, orderliness and consistency. A strong culture achieves the same end without the need for written documentation.14 Therefore, we should view formalisation and culture as two different roads to a common destination. The stronger an organisation’s culture, the less management needs be concerned with developing formal rules and regulations to guide employee behaviour. Those guides will be internalised in employees when they accept the organisation’s culture.

Culture is a descriptive term

Organisational culture is based on how employees perceive the characteristics of an organisation’s culture, not with whether they like them. This is important because it differentiates this concept from job satisfaction.

Research on organisational culture has sought to measure how employees see their organisation.
In contrast, job satisfaction seeks to measure how employees feel about the organisation’s expectations, reward practices and the like.
Although the two terms undoubtedly have overlapping characteristics, keep in mind that organisational culture is descriptive, whereas job satisfaction is evaluative.

Culture Is A Descriptive Term

Do Organisations Have Uniform Cultures?

Strong Versus Weak Cultures

Culture versus Formalisation

Contrasting orgnisational cultures

Do organisations have uniform cultures?

Most large organisations have a dominant culture and numerous subcultures.

Dominant culture
Expresses the core values that are shared by a majority of the organisation’s members
Subcultures
Minicultures within an organisation, typically defined by department designations and geographical separation
Core values
The primary or dominant values that are accepted throughout the organisation

Do Organisations Have Uniform Cultures?

Strong versus weak cultures

It is possible to differentiate between strong and weak cultures. If most employees have the same opinions about the organisation’s mission and values, the culture is strong; if opinions vary widely, the culture is weak.

In a strong culture, the organisation’s core values are both intensely held and widely shared. The more members who accept the core values and the greater their commitment, the stronger the culture and the greater its influence on member behaviour, because the high degree of sharedness and intensity creates an internal climate of high behavioural control.
A strong culture should reduce employee turnover, because it demonstrates high agreement about what the organisation stands for. Such unanimity of purpose builds cohesiveness, loyalty and organisational commitment.

Strong versus Weak Cultures

Culture versus formalisation

We have seen that high formalisation creates predictability, orderliness and consistency.

A strong culture achieves the same end without the need for written documentation.

Therefore, we should view formalisation and culture as two different roads to a common destination.

The stronger an organisation’s culture, the less management needs be concerned with developing formal rules and regulations to guide employee behaviour.
Those guides will be internalised in employees when they accept the organisation’s culture.

Culture versus Formalisation

What do cultures do?

Culture’s Functions

Culture has a boundary-defining role: it creates distinctions between one organisation and others.
Culture conveys a sense of identity for organisation members.
Culture facilitates the generation of commitment to something larger than individual self-interest.
Culture enhances the stability of the social system. Culture is the social glue that helps hold the organisation together by providing appropriate standards for what employees should say and do.
Culture is a sense-making and control mechanism that guides and shapes employees’ attitudes and behaviour. This last function is of particular interest to us. Culture defines the rules of the game:

What Do Cultures Do?

Let’s review the role that culture performs and whether it can ever be a liability for an organisation.

Culture’s Functions

First, culture has a boundary-defining role: it creates distinctions between one organisation and others. Second, it conveys a sense of identity for organisation members. Third, it facilitates the generation of 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 organisation together by providing appropriate standards for what employees should say and do. Finally, it is a sense- making and control mechanism that guides and shapes employees’ attitudes and behaviour. This last function is of particular interest to us.15 Culture defines the rules of the game:

Culture by definition is elusive, intangible, implicit, and taken for granted. But every organisation develops a core set of assumptions, understandings, and implicit rules that govern day-to-day behaviour in the workplace. . . . Until newcomers learn the rules, they are not accepted as full-fledged members of the organisation. Transgressions of the rules on the part of high- level executives or front-line employees result in universal disapproval and powerful penalties. Conformity to the rules becomes the primary basis for reward and upward mobility.16

Today’s trend towards decentralised organisations 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 points everyone in the same direction. However, employees organised in teams may show greater allegiance to their team and its values than to the values of the organisation as a whole. In virtual organisations, 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 organisations.17

Individual–organisation ‘fit’—that is, whether the applicant’s or employee’s attitudes and behaviour are compatible with the culture—strongly influences who gets a job offer, a favourable performance review or a promotion. It is no coincidence that Disney theme-park employees appear almost universally attractive, clean and wholesome-looking 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 employees will act in a relatively uniform and predictable way.

Culture Creates Climate

If you have worked with someone whose positive attitude inspired you to do your best, or with a lacklustre team that drained your motivation, you have experienced the effects of climate. Organisational climate refers to the shared perceptions that organisational members have about their organisation and work environment.18 This aspect of culture is like ‘team spirit’ at the organisational 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. The same appears true for organisations. One meta-analysis found that, across dozens of different samples, psychological climate was strongly related to individual-level job satisfaction, involvement, commitment and motivation.19 A positive overall workplace climate has been linked to higher customer satisfaction and financial performance as well.20

Dozens of dimensions of climate have been studied, including safety, justice, diversity and customer service, to name a few.21 A person who encounters a positive climate for performance will think about doing a good job more often and will believe that others support his or her success. Someone who encounters a positive climate for diversity will feel more comfortable collaborating with colleagues regardless of their demographic background. Climates can interact with one another to produce behaviour. For example, a positive climate for worker empowerment can lead to higher levels of performance in organisations that also have a climate for personal accountability.22 Climate also influences the habits that people adopt. If there’s a positive climate for safety, everyone wears safety gear and follows safety procedures even if individually they wouldn’t normally think about being safe very often. Many studies have shown that a positive safety climate decreases the number of documented injuries on the job.23

The Ethical Dimension Of Culture

Organisational cultures are not neutral in their ethical orientation, even when they are not openly pursuing ethical goals. Over time, the ethical work climate (EWC), or the shared concept of right and wrong behaviour in that workplace, develops as part of the organisational climate. The ethical climate reflects the true values of the organisation and shapes the ethical decision making of its members.

Researchers have developed ethical climate theory (ECT) and the ethical climate index (ECI) to categorise and measure the ethical dimensions of organisational cultures.24 Of the nine identified climate categories, five are found to be most prevalent in organisations: instrumental, caring, independence, law and code and rules. Each explains the general mindset, expectations and values of the managers and employees in relationship to their organisation. For instance, in an instrumental ethical climate, managers may frame their decision making around the assumption that employees (and companies) are motivated by self-interest (egoistic). In a caring climate, conversely, managers may operate under the expectation that their decisions will positively affect the greatest number of stakeholders (employees, customers, suppliers) possible.

Ethical climates of independence rely on each individual’s personal moral ideas to dictate his or her workplace behaviour. Law and code climates require managers and employees to use an external standardised moral compass, such as a professional code of conduct, for norms, while rules climates tend to operate by internal standardised expectations from, perhaps, an organisational policy manual. Organisations often progress through different categories as they move through their business life cycle.

An organisation’s ethical climate powerfully influences the way its individual members feel they should behave, so much so that researchers have been able to predict organisational outcomes from the climate categories.25 Instrumental climates are negatively associated with employee job satisfaction and organisational commitment, even though those climates appeal to self-interest (of the employee and the company). They are positively associated with employee turnover intentions, workplace bullying and deviant behaviour. Caring and rules climates have a positive association with job satisfaction. Caring, independence, rules, and law and code climates also reduce turnover intentions, workplace bullying and dysfunctional behaviour.

Studies of ethical climates and workplace outcomes suggest that some climate categories are likely to be found in certain organisations. Industries with exacting standards, such as engineering, accounting and law, tend to have a rules, or a law and code, climate. Industries that thrive on competitiveness, such as financial trading, often have an instrumental ethical climate. Industries with missions of benevolence are likely to have a caring climate, even if they are for-profit, such as in an environmental protection firm.

Research is exploring why organisations tend to fall into certain climate categories by industry, especially successful organisations. We cannot conclude that instrumental climates are always bad or that caring climates are always good. Instrumental cultures may foster the individual success their companies need to thrive, for example, and they may help underperformers to recognise that their self- interest is better served elsewhere. Managers in caring cultures may be thwarted from making the best decisions when only those choices that serve the greatest number of employees are acceptable.26 The ECI is one new way researchers are seeking to understand the context of ethical drivers in organisations. By measuring the collective levels of moral sensitivity, judgment, motivation and character of our organisations, we may be able to judge the strength of the influence our ethical climates have on us.27

Although ECT was first introduced more than 25 years ago, researchers have recently been studying ethics in organisations more closely to determine not only how ethical climates behave (through ECI, for instance, introduced in 2010) but also how they might be fostered, even changed.28 Eventually, we will be able to provide leaders with clear blueprints for designing effective ethical climates to improve the lives of an organisation’s members.

Culture And Innovation

The most innovative companies are often characterised by their open, unconventional, collaborative, vision-driven, accelerating cultures.29 Start-up firms often have innovative cultures by definition because they are usually small, agile and focused on solving problems in order to survive and grow. Consider digital music leader, Echo Nest. This start-up has always been unconventional, flexible and open, hosting music app ‘hack’ days and permitting outsiders to use its unique technology for non-commercial experimentation.30

At the other end of the start-up spectrum, consider 30-year-old Intuit, one of the world’s 100 most innovative companies according to Forbes. Intuit employees attend workshops to teach them how to think creatively and unconventionally. Sessions have led to managers talking through puppets and holding bake sales to sell prototype apps with their cupcakes. The culture stresses open accountability.

Alexion Pharmaceuticals is also one of Forbes’ most innovative companies and, like Intuit, it has been in operation long past the usual innovation life-cycle stage. Unlike Intuit, though, the maker of life-saving medicines isn’t known for management shenanigans. The key to its continuing innovation is a culture of caring, which drives it to develop medicines that save victims of rare diseases, even when the patients affected are few, the cost of development is prohibitively high and the probability of success is low.31

Culture As An Asset

Culture can significantly contribute to an organisation’s bottom line in many ways. ChildNet is a non-profit child welfare agency in the US state of Florida. Its organisational culture was described as ‘grim’ from the time one of its foster children disappeared in 2000, through to 2007 when the CEO was fired amid FBI allegations of fraud and forgery. ‘We didn’t know if we would have jobs or who would take over. It was a very grim situation,’ employee Maggie Tilelli said. However, after intense turnaround efforts aimed at changing the organisational culture, ChildNet became Florida’s top-ranked agency within four years and Workforce Management’s Optima award winner for General Excellence in 2012. President and CEO Emilio Benitez, who took charge in 2008, effected the transformation by changing the executive staff, employing new technology to support caseworkers in the field and managers at headquarters, establishing an employee recognition program (and thereby acknowledging employees’ and managers’ feelings of stress), and creating cross-departmental roundtables (work groups) for creative problem solving. The roundtables have been able to find solutions to difficult client cases, resulting in better placement of foster children into permanent homes. ‘From a business perspective, [the new problem-solving approach] was a tremendous cost savings,’ Benitez said. ‘But at the end of the day, it’s about the families we serve.’32

While ChildNet demonstrates how an organisational culture can positively affect the bottom line, Dish Network illustrates the elusiveness of matching a particular culture to an industry or organisation. By every measure, Dish Network is a business success story—it is the second-largest US satellite TV provider, and it has made founder Charlie Ergen one of the richest men in the world. Yet Dish was recently ranked as the worst US company to work for, and employees say the fault is the micromanaging culture Ergen created and enforces. Employees describe arduous mandatory overtime, fingerprint scanners to record work hours to the minute, public berating (most notably from Ergen), management condescension and distrust, quarterly ‘bloodbath’ layoffs and no working from home. One employee advised another, ‘You’re part of a poisonous environment . . . Go find a job where you can use your talents for good rather than evil.’ Many employees do just that, but Dish thrives anyway, regularly exceeding its quarterly earnings estimates. However, its growth in subscribers has levelled out in the past several years, and even Ergen acknowledges that ‘we’re a one-trick pony’ with satellite TV as the only product.33

At ChildNet, positive changes to the organisation’s performance have been clearly attributed to the transformation of its organisational culture. Dish, on the other hand, may have succeeded despite its culture. Ergen is a clever entrepreneur, but the company has only 12% of the total US television provider market.34 We can only wonder how much more successful Dish could be if it reformed its toxic culture. There are many more cases of business success stories due to excellent organisational cultures than there are of success stories despite bad cultures, and almost no success stories because of bad ones.

CULTURE AS A LIABILITY

Culture enhances organisational commitment and increases the consistency of employee behaviour. These are clearly benefits to an organisation. From an employee’s standpoint, culture is valuable because it spells out how things are done and what is important. But we shouldn’t ignore the potentially dysfunctional aspects of culture, especially a strong one, on an organisation’s effectiveness. Hewlett-Packard, once known as a premier computer manufacturer, has been rapidly losing market share and profits as the dysfunction of its top management team has trickled down, leaving employees disengaged, uncreative, unappreciated and polarised.35

Institutionalisation

When an organisation undergoes institutionalisation and becomes institutionalised—that is, valued for itself and not for the goods or services it produces—it takes on a life of its own, apart from its founders or members.36 It doesn’t go out of business even if its original goals are no longer relevant. Acceptable modes of behaviour become largely self-evident to members, and although this isn’t entirely negative, it does mean that behaviours and habits that should be questioned and analysed become taken for granted, which can stifle innovation and make maintaining the organisation’s culture an end in itself.

Barriers to change

Culture is a liability when the shared values are not in agreement with those that further the organisation’s effectiveness. This situation is most likely to occur when an organisation’s environment is undergoing rapid change, and its entrenched culture may no longer be appropriate.37 Consistency of behaviour, an asset in a stable environment, may then burden the organisation and make it difficult for the organisation to be able to respond to changes.

Barriers to diversity

Hiring new employees who differ from the majority in terms of race, age, gender, disability or other characteristics creates a paradox.38 Management wants to demonstrate support for the differences these employees bring to the workplace, but newcomers must accept the organisation’s core cultural values to fit in. Because diverse behaviours and unique strengths are likely to diminish as people attempt to assimilate, strong organisational cultures can become liabilities when they effectively eliminate these advantages.

By limiting the range of acceptable values and styles, strong organisational cultures put considerable pressure on employees to conform. 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 concern.39 All things being equal, whether the acquisition actually works seems to have more to do with how well the two organisations’ cultures match up.

A survey by consulting firm A. T. Kearney revealed that 58% of mergers fail to reach the financial goals set by top managers.40 The primary cause of failure is conflicting organisational cultures. When health insurer BUPA Australia merged with MBF in 2010, the organisation tripled in size overnight. This was one of the more successful mergers in recent times. BUPA Australia managing director Richard Bowden was very sensitive to the issue of cultural fit between the two organisations and explains: ‘[W]e did lots and lots of communication, and we were conscious of being very transparent about our intentions and execution. We thought this was particularly important in view of the fact that, prior to the merger, there was vigorous competition between the two companies.’41

Culture and climate

Organisational climate: The shared perceptions that organisational members have about their organisation and work environment
This aspect of culture is like ‘team spirit’ at the organisational 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.
The same appears true for organisations. One meta-analysis found that, across dozens of different samples, psychological climate was strongly related to individual-level job satisfaction, involvement, commitment and motivation.
A positive overall workplace climate has been linked to higher customer satisfaction and financial performance as well.

Culture Creates Climate

The Ethical Dimension of Culture

Culture And Innovation

Culture As An Asset

Culture as a Liability

Institutionalisation

Barriers to change

Barriers to diversity

Barriers to acquisitions and mergers

The ethical dimension of culture

Organisational cultures are not neutral in their ethical orientation, even when they are not openly pursuing ethical goals.

Over time, the ethical work climate (EWC), or the shared concept of right and wrong behaviour in that workplace, develops as part of the organisational climate.

The ethical climate reflects the true values of the organisation and shapes the ethical decision making of its members.
Researchers have developed ethical climate theory (ECT) and the ethical climate index (ECI) to categorise and measure the ethical dimensions of organisational cultures.
Of the nine identified climate categories, five are found to be most prevalent in organisations: instrumental, caring, independence, law and code and rules.

The Ethical Dimension of Culture

Culture and innovation

The most innovative companies are often characterised by their open, unconventional, collaborative, vision-driven, accelerating cultures.

Start-up firms often have innovative cultures by definition because they are usually small, agile and focused on solving problems to survive and grow.

Additionally, some innovative companies:

encourage employees to attend workshops to teach them how to think creatively and unconventionally, which fosters open accountability
foster a culture of caring, even when the cost of development is prohibitively high and the probability of success is low.

Culture And Innovation

Culture as an asset

Culture can significantly contribute to an organisation’s bottom line in many ways.

At ChildNet, President and CEO Emilio Benitez effected the transformation by:

changing the executive staff
employing new technology to support caseworkers in the field and managers at headquarters
establishing an employee recognition program (and thereby acknowledging employees’ and managers’ feelings of stress)
creating cross-departmental roundtables (work groups) for creative problem solving.

‘From a business perspective, [the new problem-solving approach] was a tremendous cost savings,’ Benitez said. ‘But at the end of the day, it’s about the families we serve.’

Culture As An Asset

Culture as a liability

Institutionalisation
A condition that occurs when an organisation takes on a life of its own, apart from any of its members, and acquires immortality.
Barriers to change
Present a liability when the shared values are not in agreement with those that further the organisation’s effectiveness.
Barriers to diversity
Diverse behaviours and unique strengths are likely to diminish as people attempt to assimilate, strong organisational cultures can become liabilities when they effectively eliminate these advantages.
Barrier to acquisitions and mergers
For the acquisition actually works seems to have more to do with how well the two organisations’ cultures match up.

Culture As A Liability

Institutionalisation

Barriers to change

Barriers to diversity

Barriers to acquisitions and mergers

Creating and sustaining culture

Culture creation occurs in three ways:

Founders hire and keep only employees who think and feel the same way they do
Founders indoctrinate and socialise these employees to their way of thinking and feeling
The founders’ own behaviour acts as a role model that encourages employees to identify with them and thereby internalise their beliefs, values and assumptions

An organisation’s culture doesn’t pop out of thin air and, once established, it rarely fades away. What forces influence the creation of a culture? What reinforces and sustains a culture once it’s in place?

How A Culture Begins

An organisation’s current customs, traditions and general way of doing things are largely due to what it has done before and how successful it has been in doing it. This leads us to the ultimate source of an organisation’s culture: its founders.42 Founders traditionally have a major impact on an organisation’s early culture. Free of previous customs or ideologies, founders have a vision of what the organisation should be, and the initially small size of the organisation means it is easy to impose that vision on all members.

Culture creation occurs in three ways.43 First, founders hire and keep only employees who think and feel the same way they do. Second, they indoctrinate and socialise these employees to their way of thinking and feeling. And, finally, the founders’ own behaviour encourages employees to identify with them and internalise their beliefs, values and assumptions. When the organisation succeeds, the founders’ personality becomes embedded in the culture.

The fierce, competitive style and disciplined, authoritarian nature of Hyundai, the giant Korean conglomerate, are the same characteristics often used to describe founder Chung Ju Yung. Other founders with immeasurable impact on their organisation’s culture include Bill Gates at Microsoft, Ingvar Kamprad at IKEA, Gerry Harvey of Harvey Norman retail stores and Richard Branson at the Virgin Group.

Keeping a culture alive

Once a culture is in place, practices within the organisation maintain it by giving employees a set of similar experiences.

The selection process, performance evaluation criteria, training and development activities and promotion procedures ensure that those hired fit in with the culture, those who support it are rewarded and those who challenge it are penalised (and even expelled).

Three forces play a particularly important part in sustaining a culture:

Selection practices
Top management
Socialisation methods

Keeping A Culture Alive

Once a culture is in place, practices within the organisation maintain it by giving employees a set of similar experiences.44 The selection process, performance evaluation criteria, training and development activities and promotion procedures ensure that those hired fit in with the culture, those who support it are rewarded and those who challenge it are penalised (and even expelled). Three forces play a particularly important part in sustaining a culture: (1) selection practices, (2) the actions of top management and (3) socialisation methods. Let’s look at each.

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 is significantly influenced by the decision-maker’s judgment of how well the candidates will fit into the organisation, identifies people whose values are essentially consistent with at least a good portion of the organisation’s values.45 Selection also provides information to applicants. Those who perceive a conflict between their values and those of the organisation 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 organisation’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, no bosses and no 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 is normal in Gore plants. Not surprisingly, W. L. Gore appears regularly on Fortune’s list of ‘100 Best Companies to Work For’ (number 22 in 2014).46

Top management

The actions of top management also have a major impact on the organisation’s culture.47 Through words and behaviour, senior executives establish norms that filter through the organisation about, for instance, whether risk-taking is desirable, how much freedom managers should give employees, what is appropriate dress and what actions pay off in terms of pay increases, promotions and other rewards. When Michael Ebeid took over as the chief executive officer at SBS, he was very conscious of his role in shaping and influencing the culture of the organisation to improve its performance.

Socialisation

No matter how good a job the organisation does in recruiting and selection, new employees are not fully indoctrinated in the organisation’s culture and can disrupt beliefs and customs already in place. The process that helps new employees adapt to the prevailing culture is socialisation.48

All army recruits (whether in Australia, New Zealand, Singapore, Malaysia or elsewhere) must go through boot camp, where they ‘prove’ their commitment. Of course, at the same time, the trainers are indoctrinating new recruits in the ‘army way’ of doing things.

Socialisation in relation to occupational groups—such as human resources—can be a significant issue. According to Professor Roger Collins of the Australian Graduate School of Management, there seems to be little evidence that the human resources (HR) occupational group has exercised much influence over its own destiny. Whether it is legislation, government policy, professional standards, occupational reputation or management education and practice, there is little tangible evidence of the HR profession’s direct and lasting impact. One reason given for this is that HR people have weak occupational socialisation—there is a lack of strong identity and aspirations. In comparison to lawyers, doctors, dentists, engineers and accountants, the HR profession has ‘few recognised standards of entry, educational preparation and practice, few rites of passage and a professional body weakened by a chequered history of achievement and influence’, according to Professor Collins.49

As an example of the dark side of socialisation, German engineering giant, Siemens, used bribes so widely that a German government official said: ‘Bribery was Siemens’ business model. Siemens had institutionalised corruption.’ Managers were frequently socialised on how to bribe officials, where to obtain the money (bribes were referred to as ‘NA’ for nützliche Aufwendungen, or ‘useful money’) and how to hide it in a sham accounting system. In the end, 2700 of Siemens’ contracts were found to have been won through bribes and the company and its managers faced myriad penalties.50

We can think of socialisation as a process with three stages: pre-arrival, encounter and metamorphosis.51 This process, shown in Exhibit 15.2, has an impact on the new employee’s work productivity, commitment to the organisation’s objectives and eventual decision to stay with the organisation.

The pre-arrival stage explicitly recognises that each individual arrives with a set of values, attitudes and expectations about both the work to be done and the organisation. One major purpose of a business school, for example, is to socialise business students to the attitudes and behaviours that business organisations want. Newcomers to high-profile organisations with a strong market position will make their own assumptions about what it must be like to work there.52 Most new recruits will expect Nike to be dynamic and exciting, a prestigious law firm to be high in pressure and rewards, and the SAS (Special Air Services) to require both discipline and courage. No matter how well managers think they can socialise newcomers, however, the most important predictor of future behaviour is past behaviour. What people know before they join the organisation and how proactive their personality is are critical predictors of how well they will adjust to a new culture.53

One way to capitalise on the importance of pre-hire characteristics in socialisation is to use the selection process to inform prospective employees about the organisation as a whole. We have 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 or her ability to move into the organisation 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 organisation in charge of selection.’54

On entry into the organisation, the new member enters the encounter stage and confronts the possibility that expectations—about the job, colleagues, the boss and the organisation in general— may 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 with the reality to resign. Proper recruiting and selection should significantly reduce that outcome, along with encouraging friendship ties in the organisation; newcomers are more committed when friends and colleagues help them to ‘learn the ropes’.55

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 15.3 are alternatives designed to bring about the desired metamorphosis. Most research suggests that there are two major ‘bundles’ of socialisation practices. The more management relies on formal, collective, sequential, fixed and serial socialisation programs and emphasises divestiture, the more likely that newcomers’ differences will be stripped away and replaced by standardised predictable behaviours. These institutional practices are common in police departments, fire departments and other organisations that value rule-following and order. Programs that are informal, individual, random, variable and disjunctive and emphasise 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 that high levels of institutional practices encourage person–organisation fit and high levels of commitment, whereas individual practices produce more role innovation.56

The three-part entry socialisation process is complete when new members have become comfortable with the organisation and the job. They have internalised and accepted the norms of the organisation and their work group, are confident in their competence and feel trusted and valued by their peers. They understand the system—not 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 15.2 showed, successful metamorphosis should have a positive impact on new employees’ productivity and their commitment to the organisation and reduce their propensity to leave the organisation.

Researchers have begun to examine how employee attitudes change during socialisation 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 idealised hopes come into contact with the reality of organisational life.57 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.58 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 15.4 summarises how an organisation’s culture is established and sustained. The original culture derives from the founder’s philosophy and strongly influences hiring criteria as the company grows. Top managers’ actions set the general climate, including what is acceptable behaviour and what is not. The way employees are socialised will depend on the degree of success achieved in matching new employees’ values to those of the organisation in the selection process, and on top management’s preference for socialisation methods.

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 is significantly influenced by the decision-maker’s judgment of how well the candidates will fit into the organisation, identifies people whose values are essentially consistent with at least a good portion of the organisation’s values.
Selection also provides information to applicants.
Those who perceive a conflict between their values and those of the organisation 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 organisation’s culture.

Selection

Top management

Socialisation

Top management

The actions of top management also have a major impact on the organisation’s culture.

Through words and behaviour, senior executives establish norms that filter through the organisation about, for instance:

whether risk-taking is desirable
how much freedom managers should give employees
what is appropriate dress
what actions pay off in terms of pay increases, promotions and other rewards.

Top management

Socialisation

SUMMARY: HOW CULTURES FORM

Socialisation

Socialisation
A process that adapts employees to the organisation’s culture.
Pre-arrival stage
The period of learning in the socialisation process that occurs before a new employee joins the organisation.
Encounter stage
The stage in the socialisation process in which a new employee sees what the organisation is really like and confronts the possibility that expectations and reality may diverge.
Metamorphosis stage
The stage in the socialisation process in which a new employee changes and adjusts to the job, work group and organisation.

Socialisation

SUMMARY: HOW CULTURES FORM

A socialisation model

Entry socialisation options

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 15.3 are alternatives designed to bring about the desired metamorphosis:

formal vs informal
collective vs individual
sequential vs random
fixed vs variable
serial vs disjunctive
investiture vs divestiture

Entry socialisation options (cont’d)

Summary: how cultures form

The original culture derives from the founder’s philosophy and strongly influences hiring criteria as the company grows.
Top managers’ actions set the general climate, including what is acceptable behaviour and what is not.
The way employees are socialised will depend on the degree of success achieved in matching new employees’ values to those of the organisation in the selection process, and on top management’s preference for socialisation methods.

Summary: How Cultures Form

How an organisation’s culture forms

Summary: How Cultures Form

How employees learn culture

Stories: Stories contain a narrative of events about the organisation’s founders, rule breaking, rags-to-riches successes, reductions in the workforce, relocation of employees, reactions to past mistakes and organisational coping. These stories anchor the present in the past and explain and legitimise current practices.
Rituals: Repetitive sequences of activities that express and reinforce the key values of the organisation, which goals are most important, which people are important and which people are expendable.
Symbols: Symbols convey to employees who is important, the degree of egalitarianism that top management desires and the kinds of behaviour that are appropriate, such as risk-taking, conservative, authoritarian, participative, individualistic or social.
Language: Acronyms and jargon, that, once assimilated, act as a common denominator to unite members of a given culture or subculture.

How Employees Learn Culture

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.

A number of senior Nike executives spend much of their time serving as corporate storytellers. And the stories they tell are meant to convey what Nike is about.59 When they tell how co-founder 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 Steve Prefontaine’s battles to make running a professional sport and obtain better equipment, they learn of Nike’s commitment to helping athletes.

Stories such as these circulate through many organisations. They typically contain a narrative of events about the organisation’s founders, rule breaking, rags-to-riches successes, reductions in the workforce, relocation of employees, reactions to past mistakes and organisational coping.60 These stories anchor the present in the past and explain and legitimise current practices.

Rituals

Rituals are repetitive sequences of activities that express and reinforce the key values of the organisation, which goals are most important, which people are important and which people are expendable.61 An example is US retailer Walmart’s company chant. Begun by the company’s founder, 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 value of his employees to the company’s success. Similar corporate chants are used by IBM, Ericsson, Novell, Deutsche Bank and PwC.62

Symbols

The layout of company headquarters, the types of cars the 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.63 These convey to employees who is important, the degree of egalitarianism that top management desires and the kinds of behaviour that are appropriate, such as risk-taking, conservative, authoritarian, participative, individualistic or social.

Some cultures are known for the perks in their environments, such as Google’s bocce courts, Atlassian’s pool table meetings and free lunches, SAS’s free health-care clinic, Microsoft’s organic spa, and adventure-gear REI’s free equipment rentals. Other companies communicate the values of their cultures through the gift of time to think creatively, either with leaders or offsite. Financial products developer Think Finance and other companies set up rotating focus groups and ‘town halls’, where employees meet with top management to enhance an idea-sharing culture. Think Finance CEO Ken Rees says, ‘At the end, I always ask, “Tell me one thing you really like about the company and one thing that frustrates you about the company.” [It] is eye-opening.’ Biotech leader Genentech and many other top companies provide paid sabbaticals. Genentech offers every employee six weeks’ paid leave for every six years of service in order to support a culture of equitability and innovative thinking.64

Language

Many organisations 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. If you are a new employee at Boeing, you’ll find yourself learning a unique vocabulary, including BOLD (Boeing online data), CATIA (computer-graphics-aided three-dimensional interactive application), MAIDS (manufacturing assembly and installation data system), POP (purchased outside production) and SLO (service-level objectives).65

Creating an ethical organisational culture

Research suggests that managers can have an effect on the ethical behaviour of employees by adhering to the following principles:

Be a visible role model. Employees will look to the actions of top management as a benchmark for appropriate behaviour.
Communicate ethical expectations. Minimise ethical ambiguities by creating and disseminating an organisational code of ethics.
Provide ethical training. Set up seminars, workshops and similar ethical-training programs to reinforce the organisation’s standards of conduct, clarify what practices are and are not permissible and address potential ethical dilemmas.
Visibly reward ethical acts and punish unethical ones. Evaluate how manager’s decisions measure up against the organisation’s code of ethics.
Provide protective mechanisms. Provide formal mechanisms so employees can discuss ethical dilemmas and report unethical behaviour without fear of reprimand.

Creating An Ethical Organisational Culture

The organisational culture most likely to shape high ethical standards among its members is one that is high in risk tolerance, low to moderate in aggressiveness, and focused on means as well as on outcomes.66 This type of culture also takes a long-term perspective and balances the rights of multiple stakeholders, including the communities in which the business operates, its employees and its shareholders. Managers are supported for taking risks and innovating, discouraged from engaging in unbridled competition and guided to pay attention 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 behaviour. Johnson & Johnson has a strong culture that has long stressed corporate obligations to customers, employees, the community and shareholders, in that order. When poisoned bottles of Tylenol (a Johnson & Johnson product) were found on store shelves, employees at Johnson & Johnson independently pulled the product from these stores before management had even issued a statement about the tampering. No one had to tell these individuals what was morally right; they knew what Johnson & Johnson would expect them to do.

On the other hand, a strong culture that encourages pushing the limits can be a powerful force in shaping unethical behaviour. Enron’s aggressive culture, with its unrelenting pressure on executives to rapidly expand earnings, encouraged ethical lapses and eventually contributed to the company’s downfall.67

What can management do to create a more ethical culture? Research suggests that managers can have an effect on the ethical behaviour of employees by adhering to the following principles:68

Be a visible role model. Employees will look to the actions of top management as a benchmark for appropriate behaviour. Senior managers taking the ethical high road send a positive message to all employees.

Communicate ethical expectations. Minimise ethical ambiguities by creating and disseminating an organisational code of ethics. It should state the organisation’s primary values and the ethical rules employees are expected to follow.

Provide ethical training. Set up seminars, workshops and similar ethical-training programs. Use these to reinforce the organisation’s standards of conduct, clarify what practices are and are not permissible and address potential ethical dilemmas.

Visibly reward ethical acts and punish unethical ones. Include in managers’ performance appraisals a point-by-point evaluation of how their decisions measure up against the organisation’s code of ethics. Review the means taken to achieve goals as well as the ends themselves. Visibly reward those who act ethically. Just as importantly, unethical acts should be conspicuously punished.

Provide protective mechanisms. Provide formal mechanisms so employees can discuss ethical dilemmas and report unethical behaviour without fear of reprimand. These might include ethical counsellors, ombudsmen or ethical officers.

Setting a positive ethical climate has to start at the top of the organisation.69 A study of 195 managers demonstrated that supervisors are more likely to practise ethical leadership when top management emphasises strong ethical values. A positive ethical attitude transfers down to line employees, who show lower levels of deviant workplace behaviour and higher levels of cooperation and assistance. The general ethical behaviour and attitudes of other members of the department matter too for shaping individual ethical behaviour. 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.70

Creating a positive organisational culture

Creating a positive culture may sound hopelessly naïve or like a Dilbert-style conspiracy.

The one thing that indicates that this trend is here to stay, however, is the signs that management practice and OB research are converging.

A positive organisational culture emphasises:

building on employee strengths
rewards more than it punishes
emphasises individual vitality and growth

Creating A Positive Organisational Culture

Creating a positive culture may sound hopelessly naïve or like a Dilbert-style conspiracy. The one thing that indicates that this trend is here to stay, however, is the signs that management practice and OB research are converging.

A positive organisational culture emphasises building on employee strengths, rewards more than it punishes and emphasises individual vitality and growth.71 Let’s consider each of these areas.

Building on employee strengths

A lot of OB, and management practice, considers how to fix employee problems. Although a positive organisational culture doesn’t ignore problems, it does emphasise showing workers how they can capitalise on their strengths. As management guru Peter Drucker said, most people ‘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.’ Do you know what your strengths are? It would obviously be better to be in an organisational culture that helped you discover them and learn ways to make the most of them.

Larry Hammond used this approach—finding and exploiting employee strengths—when you’d least expect it: during his company’s darkest days. Hammond is CEO of Auglaize Provico, an agribusiness company. When the company was in the midst of its worst financial struggles and 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 yourself—you 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.72 One employee may be strong in ‘ideation’ (the ability to find connections between seemingly disparate phenomena) and learn to use that strength more often and effectively, while another may discover and develop the skill of ‘consistency’ (the ability to set clear rules and adhere to them).

Rewarding More Than Punishing

Although most organisations 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 organisational culture is ‘catching employees doing something right’. Another part is articulating praise. Many managers withhold praise because they’re afraid employees will coast or because they think praise isn’t valued. Because employees generally don’t ask for praise, managers usually don’t realise the costs of failing to provide it. Failing to praise can become a ‘silent killer’, like escalating blood pressure.

Consider El ́z bieta Górska-Kolodziejczyk, a plant manager for International Paper’s facility in Kwidzyn, Poland. The job environment at the plant is bleak and difficult. Employees work in a windowless basement. Staffing is roughly one-third its prior level, while production has tripled. These challenges had defeated the previous three managers. So, when Górska-Kolodziejczyk took over, she knew she had her work cut out for her. Although she had many items on her list of ways to transform the organisation, at the top was 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 called her over to tell her she was doing a good job. ‘This I do remember, yes,’ she said.73

Emphasising Vitality And Growth

A positive organisational culture emphasises organisational effectiveness as well as individuals’ growth. No organisation will get the best from employees who see themselves as mere tools or parts of the organisation. A positive culture recognises the difference between a job and a career and supports not only what the employee does to contribute to organisational effectiveness but also what the organisation can do to make the employee more effective (personally and professionally). Although it may take more creativity to encourage employee growth in some types of industries, consider the fast-paced food industry. Philippe Lescornez leads a team of employees at Masterfoods in Belgium. One of his team members is Didier Brynaert, who works in Luxembourg, nearly 250 kilometres from Masterfoods’ Belgian headquarters. Brynaert was considered to be a good sales promoter who was meeting expectations. Lescornez decided that 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 recognised as the specialist for Luxembourg—the guy who is able to build a strong relationship with the Luxembourg clients,’ says Lescornez. What’s good for Brynaert, of course, is also good for Lescornez, who gets credit for helping Brynaert grow and develop.74

Limits Of Positive Culture

Is a positive culture a panacea? Although companies such as GE, Xerox, Boeing and 3M have embraced aspects of a positive organisational culture, it is a new enough idea for there to be uncertainty about how and when it works best.

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 centres to organise events such as poem writings, football, conker competitions (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 stigmatise those who fail to fit the template.’75

There may be benefits to establishing a positive culture, but an organisation also needs to be careful to be objective and not pursue it past the point of effectiveness.

Building on employee strengths

As management guru Peter Drucker said, most people ‘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.’
Larry Hammond used this approach—finding and exploiting employee strengths—when you’d least expect it: during his company’s darkest days.
Rather than dwell on what was wrong, he took advantage of what was right. ‘If you really want to [excel], you have to know yourself—you have to know what you’re good at, and you have to know what you’re not so good at,’ says Hammond.

Building On Employee Strengths

Rewarding more than punishing

Although most organisations 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 organisational culture is:

‘catching employees doing something right’
articulating praise

Many managers withhold praise because they’re afraid employees will coast or because they think praise isn’t valued.

Rewarding More Than Punishing

Emphasising vitality and growth

A positive organisational culture emphasises organisational effectiveness as well as individuals’ growth.

No organisation will get the best from employees who see themselves as mere tools or parts of the organisation.
A positive culture recognises the difference between a job and a career and supports not only what the employee does to contribute to organisational effectiveness but also what the organisation can do to make the employee more effective (personally and professionally).
It may take more creativity to encourage employee growth in some types of industries.

Emphasising Vitality And Growth

Limits of positive culture

‘Promoting a social orthodoxy of positiveness focuses on a particular constellation of desirable states and traits but, in so doing, can stigmatise those who fail to fit the template.’
There may be benefits to establishing a positive culture, but an organisation also needs to be careful to be objective and not pursue it past the point of effectiveness.

Limits Of Positive Culture

There may be benefits to establishing a positive culture, but an organisation also needs to be careful to be objective and not pursue it past the point of effectiveness.

Spirituality and organisational culture

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 the community. It is not about organised religious practices
People seek to find meaning and purpose in their work.

Spirituality and Organisational Culture

What do Westpac, Hewlett-Packard, Ford, McKinsey & Co. and CPA Australia have in common? They are among a growing number of organisations that have embraced workplace spirituality.

What Is Spirituality?

Workplace spirituality is not about organised religious practices. It’s not about God or theology. Workplace spirituality recognises that people have an inner life that nourishes and is nourished by meaningful work in the context of community.76 Organisations that promote a spiritual culture recognise that people have both a mind and a spirit, seek to find meaning and purpose in their work, and desire to connect with other human beings and be part of a community. Many of the topics discussed already, ranging from job design (designing work that is meaningful to employees) to transformational leadership (leadership practices that emphasise a higher-order purpose and self- transcendent goals), are well-matched to the concept of organisational spirituality. When a company such as Starbucks emphasises its commitment to paying third-world suppliers a fair (above-market) price for their coffee to facilitate community development, or when Interstate Batteries encourages employees to share prayers or inspirational messages through email, they are encouraging a more spiritual culture.77

Why Spirituality Now?

As noted in the discussion of emotions in Chapter 5, the myth of rationality assumed that the well-run organisation eliminated feelings. Concern about an employee’s inner life had no role in the perfectly rational model. But, just as we have now come to realise that the study of emotions improves our understanding of organisational behaviour, an awareness of spirituality can help you better understand employee behaviour in the 21st century.

Of course, employees have always had an inner life. So why has the search for meaning and purposefulness in work surfaced now? The reasons are summarised in Exhibit 15.5.

Characteristics Of A Spiritual Organisation

The concept of workplace spirituality draws on previous discussions on topics such as values, ethics, motivation, leadership and work/life balance. What differentiates spiritual organisations from their non-spiritual counterparts? Although research on this question remains preliminary, several cultural characteristics tend to be evident in spiritual organisations:78

Strong sense of purpose. Spiritual organisations build their cultures around a meaningful purpose. Although profits may be important, they’re not the primary values of the organisation.

Trust and respect. Spiritual organisations are characterised by mutual trust, honesty and openness. Managers aren’t afraid to admit mistakes. Employees are treated with esteem and value, consistent with the dignity of each individual.

Benevolence. Spiritual organisations value showing kindness towards others and promoting the happiness of employees and other organisational stakeholders.

Open-mindedness. Spiritual organisations value flexible thinking and creativity among employees.

Many organisations have grown interested in spirituality but have had difficulty putting its principles into practice. Several types of practices can facilitate a spiritual workplace,79 including those that support work/life balance. Leaders can demonstrate values, attitudes and behaviours 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 to achieve a spiritual workplace; often this is done through group counselling and organisational development. A growing number of Australian companies, including Target and Bendigo Bank, offer employees the counselling services of corporate chaplains. Many chaplains are employed by agencies, such as Chaplains without Borders, while some corporations, such as R.J. Reynolds Tobacco and Tyson Foods, employ chaplains directly. The workplace presence of corporate chaplains, who are usually ordained Christian ministers, is obviously controversial, although their role is not to increase spirituality, but to help human resources serve the employees who already have Christian beliefs.80

Criticisms Of Spirituality

Critics of the spirituality movement in organisations 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 organisations legitimate? Specifically, do organisations 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 very little research on workplace spirituality. We don’t know whether the concept will have staying power. Do the cultural characteristics identified really separate spiritual organisations? Spirituality has been defined so broadly in some sources that practices from job rotation to corporate retreats to meditation centres have been identified as spiritual practices. Do employees of so-called spiritual organisations perceive that they work in spiritual organisations? Although the research suggests support for workplace spirituality, before the concept gains full credibility the questions we have posed need to be answered.

On the second question, an emphasis on spirituality can clearly make some employees uneasy. Critics might argue that secular institutions, especially business organisations, have no business imposing spiritual values on employees. This criticism is undoubtedly valid when spirituality is defined as bringing religion and God into the workplace.81 However, the criticism seems less stinging when the goal is limited to helping employees find meaning in their work lives. If the points listed in Exhibit 15.5 truly characterise a growing segment of the workforce, then perhaps the time is right for organisations to help employees to find meaning and purpose in their work and to use the workplace as a source of community.

Finally, whether spirituality and profits are compatible objectives is certainly relevant for managers and investors in business. The evidence, although limited, indicates they are. Organisations that provided their employees with opportunities for spiritual development outperformed those that did not.82 Other studies also report that spirituality in organisations is positively related to creativity, employee satisfaction, job involvement and organisational commitment.83

Spirituality and organisational culture

What Is spirituality?

Organisations that promote a spiritual culture recognise that people have both a mind and a spirit, seek to find meaning and purpose in their work, and desire to connect with other human beings and be part of a community:

job design (designing work that is meaningful to employees)
transformational leadership (leadership practices that emphasise a higher-order purpose and self- transcendent goals)

Spirituality And Organisational Culture

What do Westpac, Hewlett-Packard, Ford, McKinsey & Co. and CPA Australia have in common? They are among a growing number of organisations that have embraced workplace spirituality.

What Is Spirituality?

Why Spirituality Now?

Of course, employees have always had an inner life. So why has the search for meaning and purposefulness in work surfaced now? The reasons are summarised in Exhibit 15.5.

Characteristics Of A Spiritual Organisation

Strong sense of purpose. Spiritual organisations build their cultures around a meaningful purpose. Although profits may be important, they’re not the primary values of the organisation.

Benevolence. Spiritual organisations value showing kindness towards others and promoting the happiness of employees and other organisational stakeholders.

Open-mindedness. Spiritual organisations value flexible thinking and creativity among employees.

Criticisms Of Spirituality

Spirituality and organisational culture

Why Spirituality Now?

The myth of rationality assumed that the well-run organisation eliminated feelings. Concern about an employee’s inner life had no role in the perfectly rational model.

But, just as we have now come to realise that the study of emotions improves our understanding of organisational behaviour, an awareness of spirituality can help you better understand employee behaviour in the 21st century.

Of course, employees have always had an inner life.

Why Spirituality Now?

Of course, employees have always had an inner life. So why has the search for meaning and purposefulness in work surfaced now? The reasons are summarised in Exhibit 15.5.

Reasons for the growing interest in spirituality

Why Spirituality Now?

Of course, employees have always had an inner life. So why has the search for meaning and purposefulness in work surfaced now? The reasons are summarised in Exhibit 15.5.

Characteristics of a spiritual organisation

The concept of workplace spirituality draws on previous discussions on topics such as values, ethics, motivation, leadership and work/life balance. Several cultural characteristics tend to be evident in spiritual organisations:

Strong sense of purpose. Spiritual organisations build their cultures around a meaningful purpose. Although profits may be important, they’re not the primary values of the organisation.
Trust and respect. Spiritual organisations are characterised by mutual trust, honesty and openness. Managers aren’t afraid to admit mistakes. Employees are treated with esteem and value, consistent with the dignity of each individual.
Benevolence. Spiritual organisations value showing kindness towards others and promoting the happiness of employees and other organisational stakeholders.
Open-mindedness. Spiritual organisations value flexible thinking and creativity among employees.

Characteristics Of A Spiritual Organisation

Strong sense of purpose. Spiritual organisations build their cultures around a meaningful purpose. Although profits may be important, they’re not the primary values of the organisation.

Benevolence. Spiritual organisations value showing kindness towards others and promoting the happiness of employees and other organisational stakeholders.

Open-mindedness. Spiritual organisations value flexible thinking and creativity among employees.

Criticisms of spirituality

Critics of the spirituality movement in organisations have focused on three questions.

What really is workplace spirituality?
Are spiritual organisations legitimate? Specifically, do organisations have the right to impose spiritual values on their employees?
Are spirituality and profits compatible?

Organisations that provided their employees with opportunities for spiritual development outperformed those that did not.

Other studies also report that spirituality in organisations is positively related to creativity, employee satisfaction, job involvement and organisational commitment.

Criticisms Of Spirituality

Global organisational culture

We considered global cultural values; collectivism–individualism, power distance and so on. Here, our focus is a bit narrower: how is organisational culture affected by a global context?

Organisational cultures are often so powerful that they transcend national boundaries. But that doesn’t mean that organisations should, or could, be ignorant of local culture.

Organisational cultures often reflect national culture.

One of the primary things all managers can do is to be culturally sensitive, including:

talking in a low tone of voice
speaking slowly
listening more
avoiding discussions of religion and politics

Global Organisational Culture

We considered global cultural values (collectivism–individualism, power distance and so on) in Chapter 4. Here, our focus is a bit narrower: how is organisational culture affected by a global context? Organisational cultures are often so powerful that they transcend national boundaries. But that doesn’t mean that organisations should, or could, be ignorant of local culture.

Organisational cultures often reflect national culture. The culture at AirAsia, a Malaysian-based airline, emphasises informal dress so as not to create status differences. The carrier has a lot of parties, participative management and no private offices, reflecting Malaysia’s relatively collectivistic culture. However, the culture of Qantas does not reflect the same degree of informality. If Qantas were to merge with AirAsia, it would need to take these cultural differences into account. So, when an organisation opens up operations in another country, it ignores the local culture at its risk.

One of the primary things all managers can do is to be culturally sensitive. As one US executive put it: ‘We [American managers] are broadly seen throughout the world as arrogant people, totally self-absorbed and loud.’ Companies such as American Airlines, ExxonMobil and Microsoft have implemented training programs to sensitise their managers to cultural differences. Some ways in which managers can be culturally sensitive include talking in a low tone of voice, speaking slowly, listening more and avoiding discussions of religion and politics.

The management of ethical behaviour is one area where national culture can rub up against corporate culture.84 Many strategies for improving ethical behaviour are based on the values and beliefs of the host country. Managers in some Western countries endorse the supremacy of anonymous market forces and implicitly or explicitly view profit maximisation as a moral obligation for business organisations. Associated with this perspective is the belief that bribery, nepotism and favouring personal contacts are highly unethical practices. Any action that deviates from profit maximisation may indicate that inappropriate or corrupt behaviour is occurring.

Of course, there are exceptions to this, as we see in more recent times, particularly in the context of the global financial crisis. In the spirit of market-based capitalism, some senior executives have viewed such unethical practices as part of the game. A growing number of authors have expressed their alarm at the extent and depth of unethical practices in business, particularly involving the dominant and well-known US-based business icons.85

In contrast, managers in developing economies are more likely to see ethical decisions as embedded in a social environment. This means that doing special favours for family and friends is not only appropriate but may even be an ethical responsibility. Managers in many nations also view capitalism sceptically and believe that the interests of workers should be put on a par with the interests of shareholders.

Being culturally sensitive can incorporate many different situations. Three times a week, employees at the Canadian unit of Japanese video-game maker Koei begin the day by standing next to their desks, facing their boss and saying ‘Good morning’ in unison. Employees then deliver short speeches on topics that range from corporate principles to 3D game engines. Koei also has employees punch a time-clock and asks women to serve tea to top executive guests. Although these practices are consistent with Koei’s culture, they do not fit Canadian culture very well. ‘It’s kind of like school,’ says one Canadian employee.86

Summary

Employees form an overall subjective perception of the organisation based on factors such as:

degree of risk tolerance
team emphasis
support of people

This overall perception becomes, in effect, the organisation’s culture or personality and affects employee performance and satisfaction, with stronger cultures having greater impact.

Summary

Exhibit 15.6 depicts organisational culture as an intervening variable. Employees form an overall subjective perception of the organisation based on factors such as degree of risk tolerance, team emphasis and support of people. This overall perception becomes, in effect, the organisation’s culture or personality and affects employee performance and satisfaction, with stronger cultures having greater impact.

End Chapter