Case Study

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T he airline industry is known for being one of the most demanding and stressful work environments to work for. Employees have to deal with all kinds of potential

issues including irate customers and many times they have very little control of the situations they are placed in. Two airline companies, Delta and United, have been in the news largely because of their organizational cultures. Delta has been praised for handling issues while relying on a culture based largely on positive values and empowerment while United has been just the opposite. Each airline has about 85,000 employees and has gone through a major merger within the last decade. During a merger, companies have to decide which of the two company cultures to adopt moving forward (or potentially a mix). Most outsiders say that Delta picked the right culture to maintain (over Northwest’s) and United picked the wrong one (over Continental’s).

Based out of Atlanta, Delta’s culture can be traced all the way back to founder C.E. Woolman who was constantly focused on customer service and asked employees to put themselves in the passenger’s shoes when making deci- sions. Delta’s employees see themselves as part of a “fam- ily” and are pushed to think that way starting the day they are hired. Company programs such as active employee

involvement groups and “Velvet 360,” which lets around 8,000 frontline employees meet and interact with company executives every year, help to maintain this mindset. Delta CEO Ed Bastian says, “Keeping a values-based culture vibrant and alive isn’t easy. It takes a relentless focus and commitment, and it has to be more than just lip service.”

United, on the other hand, has developed a culture focused more on efficiency and cost-cutting. Taking these values to the extreme has resulted in a workplace where employees are constantly scared to break rules out of fear of being fired and executives are seen as “elitist.” Based in Chicago, United has been rated the lowest on most major performance metrics over the last five years and is responsible for 43 percent of all consumer complaints filed against U.S. airlines. Not only customers feel the cost- cutting though; even United’s new uniforms were seen as cheap by employees. However, employees are hope- ful that new CEO Oscar Munoz can help balance various aspects of their culture although it has been slow-going. A United flight attendant says, “The airline was just incredibly sick and Oscar Munoz is like a shot of penicillin. It’s going to get better, but it has to have some time to actually settle in and work.” 

DELTA AIRLINES AND UNITED AIRLINES

©RosaIreneBetancourt 11/Alamy

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O R G A N I Z AT I O N A L C U LT U R E

In almost every chapter prior to this point, we have simply given you definitions of important topics. However, there are just about as many definitions of organizational culture as there are people who study it. In fact, research on organizational culture has produced well over 50 differ- ent definitions!1 It seems that the term culture means a great many things to a great many people. Definitions of culture have ranged from as broad as, “The way we do things around here”2 to as specific as . . . well, let’s just suffice it to say that they can get complicated. Not surprisingly, the various definitions of organizational culture stem from how people have studied it. Sociologists study culture using a broad lens and anthropological research methods, like those applied to study tribes and civilizations. Psychologists tend to study culture and its effects on people using survey methods.3 In fact, many psychologists actually prefer the term climate, but for our purposes, we’ll use the two terms interchangeably. In this chapter, we define organizational culture as the shared social knowledge within an organization regarding the rules, norms, and values that shape the attitudes and behaviors of its employees.4

This definition helps highlight a number of facets of organizational culture. First, culture is social knowledge among members of the organization. Employees learn about most important aspects of culture through other employees. This transfer of knowledge might be through explicit communication, simple observation, or other, less obvious methods. In addition, culture is shared knowledge, which means that members of the organization understand and have a degree of con- sensus regarding what the culture is. Second, culture tells employees what the rules, norms, and values are within the organization. What are the most important work outcomes to focus on? What behaviors are appropriate or inappropriate at work? How should a person act or dress while at work? Indeed, some cultures even go so far as to say how employees should act when they aren’t at work. Third, organizational culture shapes and reinforces certain employee attitudes and behaviors by creating a system of control over employees.5 There is evidence that your individual goals and values will grow over time to match those of the organization for which you work.6 This development really isn’t that hard to imagine, given how much time employees spend working inside an organization.

W H Y D O S O M E O R G A N I Z AT I O N S H AV E D I F F E R E N T C U LT U R E S T H A N OT H E R S ?

One of the most common questions people ask when you tell them where you are employed is, “So, tell me . . . what’s it like there?” The description you use in your response is likely to have a lot to do with what the organization’s culture is all about. In calculating your response to the question, you might consider describing the kinds of people who work at your company. More than likely, you’ll do your best to describe the work atmosphere on a regular day. Perhaps you’ll painstakingly describe the facilities you work in or how you feel the employees are treated. You might even go so far as to describe what it is that defines “success” at your company. All of those answers give clues that help organizational outsiders understand what a company is actually like. To give you a feel for the full range of potential answers to the “what’s it like there?” question, it’s necessary to review the facets of culture in more detail.

C U LT U R E C O M P O N E N TS There are three major components to any organization’s culture: observable artifacts, espoused values, and basic underlying assumptions. You can understand the differences among these three components if you view culture like an onion, as in Figure 16-1. Some components of an organiza- tion’s culture are readily apparent and observable, like the skin of an onion. However, other com- ponents are less observable to organizational outsiders or newcomers. Such outsiders can observe,

16.1 What is organizational culture, and what are its components?

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FIGURE 16-1 The Three Components of Organizational Culture

Observable Artifacts

Espoused Values

Basic Underlying

Assumptions

interpret, and make conclusions based on what they see on the surface, but the inside remains a mystery until they can peel back the outside layers to gauge the values and assumptions that lie beneath. When asked about his company’s success, Walter Robb, co-CEO of Whole Foods, said, “If I could draw back the curtain, what you would see is a very strong culture of empowerment, and that is the secret of Whole Foods.”7 The sections that follow review the culture components in more detail.

OBSERVABLE ARTIFACTS Observable artifacts are the manifestations of an organization’s cul- ture that employees can easily see or talk about. They supply the signals that employees interpret to gauge how they should act during the workday. Artifacts supply the primary means of trans- mitting an organization’s culture to its workforce. It’s difficult to overestimate the importance of artifacts, because they help show not only current employees but also potential employees, cus- tomers, shareholders, and investors what the organization is all about. There are six major types of artifacts: symbols, physical structures, language, stories, rituals, and ceremonies.8

Symbols can be found throughout an organization, from its corporate logo to the images it places on its website to the uniforms its employees wear. Think about what Nike’s “swoosh” rep- resents: speed, movement, velocity. What might that symbol convey about Nike’s culture? Or consider Apple Computer’s “apple” logo. That symbol brings to mind Newton’s discovery of grav- ity under the apple tree, conveying the importance of innovation within Apple’s culture. When you think of the words “dark suit, white shirt, tie,” what company do you think of? For many, the symbol represents IBM because that summarizes the company’s long-standing dress code. Even though that dress code hasn’t been in place at IBM for more than 20 years, it still symbolizes a formal, bureaucratic, and professional culture.

Physical structures also say a lot about a culture. Is the workplace open? Does top management work in a separate section of the building? Is the setting devoid of anything unique, or can employ- ees express their personalities? While Takanobu Ito was CEO of Honda Motor, he sent a message about the company’s culture in his office. Ito worked at a plain wooden desk in a room with a dozen other executives.9 John Childress, founding partner of The Principia Group, tells the story of a Ford executive he worked with whose entire office had burned down: “He’d been having terrible prob- lems between departments. There were barriers that meant information wasn’t flowing. He had to quickly rent new premises and all he could find was an open-plan building. The culture changed

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overnight because of the different ways of work- ing.”10 IDEO, a creative design firm, also has an open-office environ- ment, though IDEO lets employees set up their offices however they like. When you walk around their work areas, you’ll be walking underneath bicy- cles hanging over your head and crazy objects and toys in every direc- tion.11 Reed Hastings, CEO of Netflix, doesn’t even have an office! Hast- ings simply walks around meeting with people. When he needs a quiet

space to think he heads to his “watchtower”—a room-sized glass square on the top of Netflix’s main building.12 That being said, most offices don’t look like that. While admitting that spaces across the country are becoming more “open” on average, Jonathan Webb, head of sales at KI, a Wisconsin–based commercial furniture maker, says that “Not everyplace looks like Google, not everybody has a slide in the lobby.”13

Language reflects the jargon, slang, and slogans used within the walls of an organization. Do you know what a CTR, CPC, or Crawler is? Chances are you don’t. If you worked for Yahoo, how- ever, those terms would be second nature to you: CTR stands for click-through rate, CPC stands for cost-per-click, and a Crawler is a computer program that gathers information from other web- sites. If you worked at Microsoft and got an e-mail from a software developer telling you that they were “licking the cookie,” what would you think? For Microsoft employees, “licking the cookie” means that a person or group is announcing that they are working on a feature or product and it is now off-limits for others to work on.14 Home Depot maintains a “stack it high and watch it fly” slogan, which reflects its approach to sales. Yum Brands Inc., which owns Pizza Hut, Taco Bell, KFC, and other fast-food restaurants, expects employees to be “customer maniacs”15—language that conveys its culture for customer interaction.

Stories consist of anecdotes, accounts, legends, and myths that are passed down from cohort to cohort within an organization. Telling stories can be a major mechanism through which lead- ers and employees describe what the company values or finds important. For example, Howard Schultz, CEO of Starbucks, tells the story of how (to improve quality) he forbade the common practice of resteaming milk. What this rule inadvertently created was the loss of millions of dol- lars of milk, as thousands of gallons of lukewarm liquid were poured down the drain. One of his store managers came up with a simple, brilliant suggestion: Put etched lines inside the steam- ing pitchers so baristas would know how much milk to pour for the drink size they were mak- ing, instead of just guessing.16 Paul Wiles, president/CEO of Novant Health in Winston-Salem, North Carolina, believes strongly in the power of storytelling to foster culture; he claims, “Talk about numbers, and people’s eyes glaze over; talk about one child who died unnecessarily, and no one can walk away from that.”17 Recent research finds that telling newcomers stories of low-level employees upholding the values of the firm as opposed to high-level employees is more effective at transmitting culture and affecting their behavior.18

Rituals are the daily or weekly planned routines that occur in an organization. Employees at New Belgium Brewing in Colorado, home of Fat Tire Ale, can enjoy a beer in the tasting room after their shift as well as get one free twelve-pack a week, conveying the importance of both employees and the company’s product.19 At UPS, every driver and package handler attends a man- datory “three-minute meeting” with their managers to help with communication. The 180-second

The ability to set up your own work space, as at

the design firm IDEO, is a hallmark of an open

corporate culture. Would this environment suit your

working style?

Courtesy of Ideo

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time limit helps enforce the importance of punctuality in the UPS culture. The Men’s Wearhouse pays managers quarterly bonuses when theft (referred to as “shrink”) is kept low. That ritual sends a message that “when workers steal from you, they are stealing from themselves and their colleagues.”20 At Davita, the Denver-based kidney dialysis company, CEO Kent Thiry says, “We do songs. We do chants. We do call and response. Many kinds of organizations in all cultures use these methods. Why? For positive energy. Some of our new executives say, ‘That’s really dumb’ or ‘That’s really cheesy.’ And two years later, they’re leading it.” At M5 networks, a New York–based seller of VoIP phone systems, over a third of the employees learn to play musical instruments in a rock band on company time. Dan Hoffman, CEO, says, “As adults, we tend to forget how to learn. The idea with the rock band program was to remind people how to learn.”21

Ceremonies are formal events, generally performed in front of an audience of organizational members. At Care.com, all workers are forced to move desks every year at the same time. CEO Sheila Marcelo assigns the seats. She says, “People don’t have a choice where they sit. Part of the reason was to embrace change, to remove turfiness so that you’re not just chatting with your friends and sitting with your friends. You sit with somebody else from a different team so you get to know their job. What are they doing? What are they saying on the phone? How do they tick? And it’s getting to know different people so that we build a really big team. And we do that every year. And it’s now actually become an exciting thing that people embrace.”22 At San Francisco– based Twitter, CEO Dick Costolo assembles the entire company twice a month in an area near their cafeteria for “tea time,” which is a meeting to update employees on what’s going on and to answer questions.23 Other types of ceremonies revolve around celebrations for meeting quality goals, reaching a certain level of profitability, or launching a new product.

ESPOUSED VALUES Espoused values are the beliefs, philosophies, and norms that a company explicitly states. Espoused values can range from published documents, such as a company’s vision or mission statement, to verbal statements made to employees by executives and managers. Examples of some of Whole Foods Market’s outward representations of espoused values can be found in Table 16-1. What does each of these statements tell you about Whole Foods and what it cares about?

It’s certainly important to draw a distinction between espoused values and enacted values. It’s one thing for a company to outwardly say something is important; it’s another thing for employees

TABLE 16-1 The Espoused Values of Whole Foods

Below is a list of the seven core values that Whole Foods believes lay the foundation for its organizational culture. The company believes that these values set it apart from competing organizations, show others why Whole Foods is a great place to work, and will always be the reasons for the company’s existence regardless of how large it grows. More details about each value can be found on the company’s website.

1. Selling the highest-quality natural and organic products available.

2. Satisfying and delighting our customers.

3. Supporting team member happiness and excellence.

4. Creating wealth through profits and growth.

5. Caring about our communities and our environment.

6. Creating ongoing win–win partnerships with our suppliers.

7. Promoting the health of our stakeholders through healthy-eating education.

Source: From Whole Foods Core Values, http://www.wholefoodsmarket.com/company/corevalues.php.

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to consistently act in ways that support those espoused values. When a company holds to its espoused values over time and regardless of the situations it operates in, the values become more believable both to employees and outsiders. However, in times of economic downturns, staying true to espoused values isn’t always easy. Marriott International struggles during economic down- turns, like many of its competitors in the lodging/travel business. It has been very tempting for the company to do everything it can to slash expenses, but its espoused value of always treating its people right prevents cuts that would harm employee benefits. If you ask any Marriott employee what the guiding principle of the company is all will say some version of J.W. Marriott’s founding philosophy, “Take care of the associates, the associates will take care of the guests, and the guests will come back again and again.”24 It is worth noting that not all companies are open in regards to their values. Trader Joe’s, the Monrovia, California–based grocery chain, is known by its patrons as perhaps the coolest, local product-seeking, customer-oriented business in America. In opposi- tion to Whole Foods, it is also perhaps one of the most secretive companies in the world when it comes to its business practices. In fact, suppliers have to sign agreements that they won’t disclose anything having to do with their business relationship with the store before they are allowed to supply products.25

BASIC UNDERLYING ASSUMPTIONS Basic underlying assumptions are the taken-for-granted beliefs and philosophies that are so ingrained that employees simply act on them rather than questioning the validity of their behavior in a given situation.26 These assumptions represent the deepest and least observable part of a culture and may not be consciously apparent, even to orga- nizational veterans. Edgar Schein, one of the preeminent scholars on the topic of organizational culture, uses the example of safety in an engineering firm. He states, “In an occupation such as engineering, it would be inconceivable to deliberately design something that is unsafe; it is a taken- for-granted assumption that things should be safe.”27 Whatever a company’s underlying assump- tions are, its hidden beliefs are those that are the most likely to dictate employee behavior and affect employee attitudes. They’re also the aspects of an organizational culture that are the most long-lasting and difficult to change.28

G E N E R A L C U LT U R E T Y P E S If we can consider the combination of an organization’s observable artifacts, espoused values, and underlying assumptions, we can begin to classify its culture along various dimensions. Of course, there are many different types of organizational cultures, just like there are many different types of personalities. Many researchers have tried to create general typologies that can be used to describe the culture of any organization. For instance, one popular general typology divides organizational culture along two dimensions: solidarity and sociability. Solidarity is the degree to which group members think and act alike, and sociability represents how friendly employees are to one another.29 Figure 16-2 shows how we might describe organizations that are either high or low on these dimensions. Organizations that are low on both dimensions have a fragmented culture in which employees are distant and disconnected from one another. Organizations that have cultures in which employees think alike but aren’t friendly to one another can be considered mercenary cultures. These types of organizations are likely to be very political, “what’s in it for me” environ- ments. Cultures in which all employees are friendly to one another, but everyone thinks differently and does his or her own thing, are networked cultures. Many highly creative organizations have a networked culture. Organizations with friendly employees who all think alike are communal cultures. There is some evidence that organizations have a tendency to move through the cul- tures as they get larger. Small organizations generally start out as communal cultures oriented around the owner and founder. As companies grow, they tend to move toward a networked culture because solidarity is harder to foster when groups get really large.30 Although we like to think of culture as being stable, it can change, as we discuss later in this chapter.

S P E C I F I C C U LT U R E T Y P E S The typology in Figure 16-2 is general enough to be applied to almost any organization. However, there are obviously other ways to classify an organization’s culture. In fact, many organizations

16.2 What general and specific types can be used to describe an organization’s culture?

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attempt to manipulate observable artifacts and espoused values to create specific cultures that help them achieve their organizational goals. Some of these specific cultures are more relevant in some industries than in others. Although the number of specific cultures an organization might strive for are virtually endless, we focus on five examples: customer service cultures, safety cultures, diversity cultures, sustainability cultures, and creativity cultures.

Many organizations try to create a customer service culture focused on service quality. After all, 80 percent of the gross domestic product in the United States is generated by service-based organi- zations.31 Organizations that have successfully created a service culture have been shown to change employee attitudes and behaviors toward customers.32 These changes in attitudes and behaviors then manifest themselves in higher levels of customer satisfaction and sales.33 Figure 16-3 illustrates the process of creating a service culture and the effects it has on company results. Numerous com- panies claim that the sole reason for their continued existence is their ability to create a service culture in their organization when it wasn’t originally present.34 USAA, the Texas–based provider of financial services to military families, is an excellent example of a customer service culture and one of Fortune’s most admired companies for five years in a row.35 As an example of the pains it goes to in order to create that culture, USAA call center reps are required to spend close to six months in training before actually answering the phones so that they can understand the lives of their military customers.36 Companies might go out of their way to hire customer-oriented employees, but research also shows that a customer service culture can lead to even more customer-oriented behaviors on the part of their employees and a larger bottom-line profit as a result.37

FIGURE 16-2 A Typology of Organizational Culture

Source: Adapted from R. Goffee and G. Jones, The Character of a Corporation (New York: Harper Business, 1998).

Low Sociability

High Sociability

Low Solidarity

High Solidarity

Networked

Fragmented Mercenary

Communal

FIGURE 16-3 The Service Culture Process

Service- Oriented

Leadership Behavior

Service Culture

Service- Oriented Employee Behaviors

Customer Satisfaction

Unit Sales

Source: Adapted from B. Schneider, M.G. Ehrhart, D.M. Mayer, J.L. Saltz, and K. Niles-Jolly, “Understanding Organization– Customer Links in Service Settings,” Academy of Management Journal 48 (2005), pp. 1017–32.

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