Discussion

16 Organizational Culture

Welcome to the Machine

During the Second World War, a quiet revolution was launched in an unassuming barn in Bletchley Park that would permanently transform the culture of British military intelligence. The Allies, Great Britain in particular, regularly intercepted German communications but couldn’t decode them. The traditional British code-breaking operation was notoriously inefficient, guided by individual cryptographers looking for patterns in secret communications. Finally, the innovative ideas of Alan Turing and Gordon Welchman resulted in an early computer that combed thousands of encrypted German messages to crack the code. Once its effectiveness had been demonstrated, the old bureaucratic British intelligence management system was rapidly reconfigured. A new culture now needed to embrace the role of big data while recognizing that human perceivers could still best decide how to use the decoded findings to outwit the enemy.

It might seem that adding an automated process for decision making is a matter of practicality and has little to do with culture. In practice, though, we encounter many cultural issues on the road to adopting electronic decision aids. The founder of massive hedge fund Bridgewater Associates, Ray Dalio (pictured here), notes that the transition to his organization’s data-oriented culture isn’t always easy for new hires. He said, “There’s a period—usually about 18 months—of sort of adaptation to this. And some make it and some don’t make it.” People sometimes resist a culture in which decisions are guided by well-defined, mechanized rules for evaluating information. But over time, managers in organizations where everyone buys into these systems see clear benefits. As former Aetna CEO Ron Williams noted, “When you have a pre-agreed set of numbers presented in a uniform way, you can train the company how to think about problems.”

Automated decision making requires a sophisticated organizational culture for successful implementation. Computer decision-making expert S. Barry Cooper notes that computerized decision systems do very well if they have enough data and a strict set of rules to guide them. But for fundamental decisions like figuring out how to motivate a team to work together, determining what new product is going to appeal to consumers, or responding to a competitor’s attempt to enter a market, human decision makers are still far ahead of machines.

In dysfunctional cultures, managers often use data selectively to support their point of view, and conveniently ignore it when it doesn’t. Rather than generating a sense of fairness and objectivity, picking and choosing only supportive data leads followers to feel distrust and cynicism. It also misses out on all the advantages of supporting decisions led by data. On the other hand, a culture that over-relies on data and does not constantly question and evaluate the system’s underlying assumptions leads to equally bad decision making. The message from experienced managers is clear—big data is an effective decision aid only when it’s paired with a consistent and thoughtful culture, one that acknowledges the need for human decision making and individual judgments.

Sources: C. Mims, “Why We Needn’t Fear the Machines,” Wall Street Journal, November 30, 2014,  http://www.wsj.com/articles/why-we-neednt-fear-the-machines-1417394021 ; J. Freeman, “The Soul of a Hedge Fund ‘Machine,’” Wall Street Journal, June 6, 2014,  http://www​.wsj.com/articles/james-freeman-the-soul-of-a-hedge-fund-machine-1402094722 ; and J. W. Ross, C. M. Beath, and A. Quaadgras, “You May Not Need Big Data after All,” Harvard Business Review, December 2013,  https://hbr.org/2013/12/you-may-not-need-big-data-after-all .

Just as tribal cultures have totems and taboos that dictate how each member should act toward fellow members and outsiders, organizations have rules and norms that govern how members behave. We call these expectations the organizational culture. Every organization has a culture that, depending on its strength, can have a significant influence on the attitudes and behaviors of organization members, even if that effect is hard to measure precisely. As the opening discussion of incorporating big data illustrates, even strong improvements to decision making in organizations challenge the organizational culture. In this chapter, we’ll discuss what organizational culture is, how it affects employee attitudes and behavior, where it comes from, and whether it can be changed.

What Is Organizational Culture?

1. 1 Describe the common characteristics of organizational culture.

An executive once was asked what he thought organizational culture meant. He gave essentially the same answer U.S. Supreme Court Justice Potter Stewart gave in defining pornography: “I can’t define it, but I know it when I see it.” In this section, we propose one definition and review several related ideas.

A Definition of Organizational Culture

Organizational culture  refers to a system of shared meaning held by members that distinguishes the organization from other organizations. 1  Seven primary characteristics seem to capture the essence of an organization’s culture: 2

1. Innovation and risk taking. The degree to which employees are encouraged to be innovative and take risks.

2. Attention to detail. The degree to which employees are expected to exhibit precision, analysis, and attention to detail.

3. Outcome orientation. The degree to which management focuses on results or outcomes rather than on the techniques and processes used to achieve them.

4. People orientation. The degree to which management decisions take into consideration the effect of outcomes on people within the organization.

5. Team orientation. The degree to which work activities are organized around teams rather than individuals.

6. Aggressiveness. The degree to which people are aggressive and competitive rather than easygoing.

7. Stability. The degree to which organizational activities emphasize maintaining the status quo in contrast to growth.

Each of these characteristics exists on a continuum from low to high. Appraising an organization on the strength of each provides a basis for the shared understanding members have about the organization, how things are done in it, and the way they are supposed to behave.

Let’s identify where the data-oriented Bridgewater Associates culture described in the introduction may fall on each of these characteristics. The push to use data to continuously revise methods is a clear example of highly valuing innovation, coupled with strong attention to detail and precise analyses. Bridgewater’s focus on intellectual rigor and independent thinking may place it somewhat lower than other organizations in terms of the people and teamwork dimensions. However, this is balanced by the company’s less competitive approach, in which potentially negative outcomes are seen as opportunities for learning and development. Finally, the organization places little value on overall stability, under Ray Dalio’s preference for constant innovation and change.  Exhibit 16-1  contrasts two companies that are very different along these dimensions.

Culture Is a Descriptive Term

If you’ve ever been in an organization (certainly you’ve been in many!), you probably noticed a pervasive culture among the members. Organizational culture shows how employees perceive the characteristics of an organization, not whether they like them—that is, it’s a descriptive term. Research on organizational culture has sought to measure how employees see their organization: Does it encourage teamwork? Does it reward innovation? Does it stifle initiative? In contrast, job satisfaction seeks to measure how employees feel about the organization’s expectations, reward practices, and the like. Although the two terms have overlapping characteristics, keep in mind that organizational culture is descriptive, whereas job satisfaction, for example, is evaluative.

Exhibit 1

Contrasting Organizational Cultures

Do Organizations Have Uniform Cultures?

Organizational culture represents a perception the organization’s members hold in common. Statements about organizational culture are valid only if individuals with different backgrounds or at different levels in the organization describe the culture in similar terms. 3  The purchasing department can have a subculture that includes the core values of the dominant culture, such as aggressiveness, plus additional values unique to members of that department, such as risk-taking.

The  dominant culture  expresses the  core values  a majority of members share and that give the organization its distinct personality. 4   Subcultures  tend to develop in large organizations in response to common problems or experiences a group of members face in the same department or location. Most large organizations have a dominant culture and numerous subcultures. 5

If organizations were composed only of subcultures, the dominant organizational culture would be significantly less powerful. It is the “shared meaning” aspect of culture that makes it a potent device for guiding and shaping behavior. That’s what allows us to say, for example, that the Zappos culture values customer care and dedication over speed and efficiency, which explains the behavior of Zappos executives and employees. 6

MYTH OR SCIENCE?

An Organization’s Culture Is Forever

This is actually not true. Although organizational culture is difficult to change and a significant change can take a long time, it can be done. Sometimes it is essential to survival. For years, Wisconsin’s Wellspring system provided nursing homes in which inpatients had little input about their care and the organizational culture allowed lax standards to prevail. Then the network of 11 nursing homes launched a culture change initiative. Management focused on caregiver collaboration, education, accountability, and empowerment. The results were excellent. Wellspring realized fewer state standards infractions and higher employee retention rates at the facilities, and the results for the patients were even greater: fewer bedfast residents, less use of restraints and psychoactive medication, less incontinence, and fewer tube feedings than in other nursing homes.

The Wellspring program illustrates the significant effect positive organizational culture change can achieve. CEO Bob Flexon of Dynegy Inc., a Houston-based electric utility giant emerging from bankruptcy, is trying to save his company by changing the organizational culture. First, he ditched the cushy CEO office suite, $15,000 marble desk, and Oriental rugs for a small cubicle on a warehouse-style floor shared with all 235 headquarters employees. Next, he visited company facilities, trained “culture champions,” reinstated annual performance reviews, and increased employee collaboration. He created a plaque as a reminder to “Be Here Now” instead of multitasking and banned smartphones from meetings. Flexon said, “The idea was to instill a winning spirit,” and he counts on his visibility as CEO to broadcast the culture change down to the lowest levels of the widespread organization.

Positive results at Dynegy have included a reduction in turnover from 8 percent in 2011 to 5.8 percent in the turnaround of 2012. Flexon said, “People are cautiously beginning to believe that we can win again.” The company continues to report massive earnings losses, but Flexon is optimistic about Dynegy’s rebound. He says, “Our ongoing focus on culture is what will make the difference.”

Sources: J. Bellot, “Nursing Home Culture Change: What Does It Mean to Nurses?” Research in Gerontological Nursing, October 2012, 264–73; J. S. Lublin, “This CEO Used to Have an Office,” The Wall Street Journal, March 13, 2013, B1, B8; and J. Molineux, “Enabling Organizational Cultural Change Using Systemic Strategic Human Resource Management—A Longitudinal Case Study,” International Journal of Human Resource Management, April 1, 2013, 1588–612.

Strong versus Weak Cultures

It’s possible to differentiate between strong and weak cultures. 7  If most employees (responding to surveys) have the same opinions about the organization’s mission and values, the culture is strong; if opinions vary widely, the culture is weak.

In a  strong culture , the organization’s core values are both intensely held and widely shared. 8  The more members who accept the core values and the greater their commitment, the stronger the culture and the greater its influence on member behavior. The reason is that a high degree of shared values and intensity create a climate of high behavioral control. Nordstrom employees know in no uncertain terms what is expected of them, for example, and these expectations go a long way toward shaping their behavior.

A strong culture should reduce employee turnover because it demonstrates high agreement about what the organization represents. Such unanimity of purpose builds cohesiveness, loyalty, and organizational commitment. These qualities, in turn, lessen employees’ propensity to leave. 9

Culture versus Formalization

We’ve seen in this text that high formalization creates predictability, orderliness, and consistency. A strong culture modifies behavior similarly. Therefore, we should view formalization and culture as two different roads to a common destination. The stronger an organization’s culture, the less management needs to be concerned with developing formal rules and regulations to guide employee behavior. Those guides will be internalized in employees when they adopt the organization’s culture.

What Do Cultures Do?

1. 2 Compare the functional and dysfunctional effects of organizational culture on people and the organization.

Let’s discuss the role culture performs and whether it can ever be a liability for an organization.

The Functions of Culture

Culture defines the rules of the game. First, it has a boundary-defining role: It creates distinctions between organizations. Second, it conveys a sense of identity for organization members. Third, culture facilitates commitment to something larger than individual self-interest. Fourth, it enhances the stability of the social system. Culture is the social glue that helps hold the organization together by providing standards for what employees should say and do. Finally, it is a sense-making and control mechanism that guides and shapes employees’ attitudes and behavior. This last function is of particular interest to us. 10

A strong culture supported by formal rules and regulations ensures employees will act in a relatively uniform and predictable way. Today’s trend toward decentralized organizations makes culture more important than ever, but ironically it also makes establishing a strong culture more difficult. When formal authority and control systems are reduced through decentralization, culture’s shared meaning can point everyone in the same direction. However, employees organized in teams may show greater allegiance to their team and its values than to the organization as a whole. Furthermore, in virtual organizations, the lack of frequent face-to-face contact makes establishing a common set of norms very difficult. Strong leadership that fosters a strong culture by communicating frequently about common goals and priorities is especially important for innovative organizations. 11

Individual–organization “fit”—that is, whether the applicant’s or employee’s attitudes and behavior are compatible with the culture—strongly influences who gets a job offer, a favorable performance review, or a promotion. It’s no coincidence that Disney theme park employees appear almost universally attractive, clean, and wholesome with bright smiles. The company selects employees who will maintain that image.

Culture Creates Climate

If you’ve worked with someone whose positive attitude inspired you to do your best, or with a lackluster team that drained your motivation, you’ve experienced the effects of climate.  Organizational climate  refers to the shared perceptions organizational members have about their organization and work environment. 12  This aspect of culture is like team spirit at the organizational level. When everyone has the same general feelings about what’s important or how well things are working, the effect of these attitudes will be more than the sum of the individual parts. One meta-analysis found that across dozens of different samples, psychological climate was strongly related to individuals’ level of job satisfaction, involvement, commitment, and motivation. 13  A positive workplace climate has been linked to higher customer satisfaction and organizational financial performance as well. 14

Dozens of dimensions of climate have been studied, including innovation, creativity, communication, warmth and support, involvement, safety, justice, diversity, and customer service. 15  For example, someone who encounters a diversity climate will feel more comfortable collaborating with coworkers regardless of their demographic backgrounds. Climates can interact with one another to produce behavior. For example, a climate of worker empowerment can lead to higher levels of performance in organizations that also have a climate of personal accountability. 16  Climate also influences the habits people adopt. If there is a climate of safety, everyone wears safety gear and follows safety procedures even if individually they wouldn’t normally think very often about being safe—indeed, many studies have shown that a safety climate decreases the number of documented injuries on the job. 17

The Ethical Dimension of Culture

Organizational 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 behavior, develops as part of the organizational climate. The ethical climate reflects the true values of the organization and shapes the ethical decision making of its members.

Researchers have developed ethical climate theory (ECT) and the ethical climate index (ECI) to categorize and measure the ethical dimensions of organizational cultures. 18  Of the nine identified ECT climate categories, five are most prevalent in organizations: 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 organizations. 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 behavior. Law and code climates require managers and employees to use an external standardized moral compass such as a professional code of conduct for norms, while rules climates tend to operate by internal standardized expectations from, perhaps, an organizational policy manual. Organizations often progress through different categories as they move through their business life cycle.

An organization’s ethical climate powerfully influences the way its individual members feel they should behave, so much so that researchers have been able to predict organizational outcomes from the climate categories. 19  Instrumental climates are negatively associated with employee job satisfaction and organizational commitment, even though those climates appeal to self-interest (of the employee and the company). They are positively associated with turnover intentions, workplace bullying, and deviant behavior. Caring and rules climates may bring greater job satisfaction. Caring, independence, rules, and law and code climates also reduce employee turnover intentions, workplace bullying, and dysfunctional behavior. Research indicates that ethical cultures take a long-term perspective and balance the rights of multiple stakeholders including employees, stockholders, and the community. Managers are supported for taking risks and innovating, discouraged from engaging in unbridled competition, and guided to heed not just what goals are achieved but how.

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

Research is exploring why organizations tend to fall into certain climate ECT categories by industry, especially successful organizations. We cannot conclude that instrumental climates are bad or that caring climates are good. Instrumental climates may foster the individual-level successes their companies need to thrive, for example, and they may help underperformers to recognize their self-interest is better served elsewhere. Managers in caring climates may be thwarted in making the best decisions when only choices that serve the greatest number of employees are acceptable. 20  The ECI, first introduced in 2010, is one new way researchers are seeking to understand the context of ethical drivers in organizations. By measuring the collective levels of moral sensitivity, judgment, motivation, and character of our organizations, we may be able to determine the strength of the influence our ethical climates have on us. 21

Although ECT was first introduced more than 25 years ago, researchers have been recently studying ethics in organizations more closely to determine not only how ethical climates behave but also how they might be fostered, even changed. 22  Eventually, we may be able to provide leaders with clear blueprints for designing effective ethical climates.

Culture and Sustainability

As the name implies,  sustainability  refers to practices that can be maintained over very long periods of time 23  because the tools or structures that support the practices are not damaged by the processes. One survey found that a great majority of executives saw sustainability as an important part of future success. 24  Concepts of sustainable management have their origins in the environmental movement, so processes that are in harmony with the natural environment are encouraged. Social sustainability practices address the ways social systems are affected by an organization’s actions over time, and in turn, how changing social systems may affect the organization.

For example, farmers in Australia have been working collectively to increase water use efficiency, minimize soil erosion, and implement tilling and harvesting methods that ensure long-term viability for their farm businesses. 25   In a very different context, 3M has an innovative pollution-prevention program rooted in cultural principles of conserving resources, creating products that have minimal effects on the environment, and collaborating with regulatory agencies to improve environmental effects. 26

Sustainable management doesn’t need to be purely altruistic. Systematic reviews of the research literature show a generally positive relationship between sustainability and financial performance. 27  However, there is often a strong moral and ethical component that shapes organizational culture and must be a genuine value in order for the relationship to exist.

To create a truly sustainable business, an organization must develop a long-term culture and put its values into practice. 28  In other words, there needs to be a sustainable system for creating sustainability! In one workplace study, a company seeking to reduce energy consumption found that soliciting group feedback reduced energy use significantly more than simply issuing reading materials about the importance of conservation. 29  In other words, talking about energy conservation and building the value into the organizational culture resulted in positive employee behavioral changes. Like other cultural practices we’ve discussed, sustainability needs time and nurturing to grow.

Culture and Innovation

The most innovative companies are often characterized by their open, unconventional, collaborative, vision-driven, accelerating cultures. 30  Startup 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, recently bought by Spotify. As a startup, the organization was unconventional, flexible, and open, hosting music app “hack” days for users and fostering a music culture. 31  All these are hallmarks of Spotify’s culture, too, making the fit rather seamless. 32  Because of the similar organizational cultures, Echo Nest and Spotify may be able to continue their startup level of innovation.

At the other end of the startup 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. “I saw one senior guy whose idea they’d been working on for nine months get disproved in a day because someone had a better way. He got up in front of everyone and said, ‘This is my bad. I should have checked my hypothesis earlier,’” said Eric Ries, author of The Lean Startup. As a consultant for entrepreneurs, Ries considers the older software company equally innovative to startups because of its culture. 33

Alexion Pharmaceuticals is also one of Forbes’ Most Innovative and, like Intuit, it has been in operation long past the usual innovation life-cycle stage. Unlike Intuit, though, this maker of life-saving medicines is not 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. 34

Culture as an Asset

As we have discussed, organizational culture can provide a positive ethical environment and foster innovation. Culture can also significantly contribute to an organization’s bottom line in many ways.

One strong example is found in the case of ChildNet. ChildNet is a nonprofit child welfare agency in Florida whose organizational culture was described as “grim” from 2000, when one of its foster children disappeared, through 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,” employee Maggie Tilelli said. However, after intense turnaround efforts aimed at changing the organizational 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 new managers at headquarters, acknowledging the stress employees and managers felt by establishing an employee recognition program, and creating cross-departmental roundtables (workgroups) 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.” 35

While ChildNet demonstrates how an organizational culture can positively affect outcomes, Dish Network illustrates the elusiveness of matching a particular culture to an industry or organization. By every measure, Dish Network is a business success story—it is the second-largest U.S. 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 U.S. 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 online, “You’re part of a poisonous environment . . . go find a job where you can use your talents for good rather than evil.”

At ChildNet, positive changes to the organization’s performance have been clearly attributed to the transformation of its organizational culture. Dish, on the other hand, may have succeeded despite its culture. We can only wonder how much more successful it could be if it reformed its toxic culture. There are many more cases of business success stories due to excellent organizational cultures than there are of success stories despite bad cultures, and almost no success stories because of bad ones.

Culture as a Liability

Culture can enhance organizational commitment and increase the consistency of employee behavior, which clearly benefits an organization. Culture is valuable to employees too, because it spells out how things are done and what’s important. But we shouldn’t ignore the potentially dysfunctional aspects of culture, especially a strong one, on an organization’s effectiveness. Hewlett-Packard, once known as a premier computer manufacturer, rapidly lost market share and profits as dysfunction in its top management team trickled down, leaving employees disengaged, uncreative, unappreciated, and polarized. 36  Let’s unpack some of the major factors that signal a negative organizational culture, beginning with institutionalization.

INSTITUTIONALIZATION When an organization undergoes institutionalization—that is, it becomes 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. 37  Institutionalized organizations often don’t go out of business even if the original goals are no longer relevant. Acceptable modes of behavior become largely self-evident to members, and although this isn’t entirely negative, it does mean behaviors and habits go unquestioned, which can stifle innovation and make maintaining the organization’s culture an end in itself.

BARRIERS TO CHANGE Culture is a liability when shared values don’t agree with those that further the organization’s effectiveness. This is most likely when an organization’s environment is undergoing rapid change, and its entrenched culture may no longer be appropriate. 38  Consistency of behavior, an asset in a stable environment, may then burden the organization and make it difficult to respond to changes.

BARRIERS TO DIVERSITY Hiring new employees who differ from the majority in race, age, gender, disability, or other characteristics creates a paradox: 39  Management wants to demonstrate support for the differences these employees bring to the workplace, but newcomers who wish to fit in must accept the organization’s core culture. Second, because diverse behaviors and unique strengths are likely to diminish as people assimilate, strong cultures can become liabilities when they effectively eliminate the advantages of diversity. Third, a strong culture that condones prejudice, supports bias, or becomes insensitive to differences can undermine formal corporate diversity policies.

STRENGTHENING DYSFUNCTIONS In general, we’ve discussed cultures that cohere around a positive set of values and attitudes. This consensus can create powerful forward momentum. However, coherence around negativity and dysfunctional management systems in a corporation can produce downward forces that are equally powerful. One study of thousands of hospitality-industry employees in hundreds of locations found that local organizational cultures marked by low or decreasing job satisfaction had higher levels of turnover. 40  As we know from this text, low job satisfaction and high turnover indicate dysfunction on the organization’s part. Negative attitudes in groups add to negative outcomes, suggesting a powerful influence of culture on individuals.

BARRIERS TO ACQUISITIONS AND MERGERS Historically, when management looked at acquisition or merger decisions, the key decision factors were potential financial advantage and product synergy. In recent years, cultural compatibility has become the primary concern. 41  All things being equal, whether the acquisition works seems to have much to do with how well the two organizations’ cultures match up. When they don’t mesh well, the organizational cultures of both become a liability to the whole new organization. A study conducted by Bain and Company found that 70 percent of mergers failed to increase shareholder values, and Hay Group found that more than 90 percent of mergers in Europe failed to reach financial goals. 42  Considering this dismal rate of success, Lawrence Chia from Deloitte Consulting observed, “One of the biggest failings is people. The people at Company A have a different way of doing things from Company B . . . you can’t find commonality in goals.” Culture clash was commonly argued to be one of the causes of AOL Time Warner’s problems.

The $183 billion merger between America Online (AOL) and Time Warner in 2001 was the largest in U.S. corporate history. It was also a disaster. Only 2 years later, the new company saw its stock fall an astounding 90 percent, and it reported what was then the largest financial loss in U.S. history.

Creating and Sustaining Culture

1. 3 Identify the factors that create and sustain an organization’s culture.

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

How a Culture Begins

An organization’s customs, traditions, and general way of doing things are largely due to what it has done before and how successful it was in doing it. This leads us to the ultimate source of an organization’s culture: the founders. 43  Founders have a vision of what the organization should be, and the firm’s initial small size makes it easy to impose that vision on all members.

Culture creation occurs in three ways. 44  First, founders hire and keep only employees who think and feel the same way they do. Second, they indoctrinate and socialize employees to their way of thinking and feeling. And finally, the founders’ own behavior encourages employees to identify with them and internalize their beliefs, values, and assumptions. When the organization succeeds, the founders’ personalities become embedded in the culture. For example, the fierce, competitive style and disciplined, authoritarian nature of Hyundai, the giant Korean conglomerate, exhibits the same characteristics often used to describe founder Chung Ju-Yung. Other founders with sustaining impact on their organization’s culture include Bill Gates at Microsoft, Ingvar Kamprad at IKEA, Herb Kelleher at Southwest Airlines, Fred Smith at FedEx, and Richard Branson at the Virgin Group.

Keeping a Culture Alive

Once a culture is in place, practices within the organization maintain it by giving employees a set of similar experiences. 45  The selection process, performance evaluation criteria, training and development activities, and promotion procedures (all discussed in  Chapter 17 ) ensure those hired fit in with the culture, reward those employees who support it, and penalize (or even expel) those who challenge it. Three forces play a particularly important part in sustaining a culture: selection practices, actions of top management, and socialization 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 candidates will fit into the organization, identifies people whose values are consistent with at least a good portion of the organization’s. 46  The selection process also provides information to applicants. Those who perceive a conflict between their values and those of the organization can remove themselves from the applicant pool. Selection thus becomes a two-way street, allowing employer and applicant to avoid a mismatch and sustaining an organization’s culture by removing those who might attack or undermine its core values, for better or worse.

W. L. Gore & Associates, the maker of Gore-Tex fabric used in outerwear, prides itself on its democratic culture and teamwork. There are no job titles at Gore, nor bosses or chains of command. All work is done in teams. In Gore’s selection process, teams put job applicants through extensive interviews to ensure they can deal with the level of uncertainty, flexibility, and teamwork that’s normal in Gore plants. Not surprisingly, W. L. Gore appears regularly on Fortune’s list of 100 Best Companies to Work For (number 17 in 2015) partially because of its selection process emphasis on culture fit.

TOP MANAGEMENT The actions of top management have a major impact on the organization’s culture. 47  Through words and behavior, senior executives establish norms that filter through the organization about, for instance, whether risk-taking is desirable, how much freedom managers give employees, what is appropriate dress, and what actions earn pay raises, promotions, and other rewards.

The culture of supermarket chain Wegmans—which believes driven, happy, and loyal employees are more eager to help one another and provide exemplary customer service—is a direct result of the beliefs of the Wegman family. Their focus on fine foods separates Wegmans from other grocers—a focus maintained by the company’s employees, many of whom are hired based on their interest in food. Top management at the company believes in taking care of employees to enhance satisfaction and loyalty. For example, Wegmans has paid more than $90 million in educational scholarships for more than 28,400 employees. Top management also supports above average pay for employees, which results in annual turnover for full-time employees at a mere 4 percent (the industry average is 24 percent). Wegmans regularly appears on Fortune’s 100 Best Companies to Work For list (number 7 in 2015), 48  in large measure because top management sustains the positive organizational culture begun by its founding members.

SOCIALIZATION No matter how good a job the organization does in recruiting and selection, new employees need help adapting to the prevailing culture. That help is  socialization . 49  Socialization can help alleviate the problem many employees report that their new jobs are different than expected (see OB Poll). For example, the consulting firm Booz Allen Hamilton begins its process of bringing new employees onboard even before their first day of work. New recruits go to an internal Web portal to learn about the company and understand the culture. After they start work, a social networking application links them with more established members of the firm and helps ensure that the culture is reinforced over time. 50  Clear Channel Communications, Facebook, Google, and other companies are adopting fresh onboarding (new hire acclimation) procedures, including assigning “peer coaches,” holding socializing events, personalizing orientation programs, and giving out immediate work assignments. “When we can stress the personal identity of people, and let them bring more of themselves at work, they are more satisfied with their job and have better results,” researcher Francesca Gino of Harvard said. 51

OB Poll Job Is Not as Good as Advertised

Source: S. Bates, “Majority of New Hires Say Job Is Not What They Expected,” Society for Human Resource Management, May 28, 2012,  http://www.shrm​.org/hrdisciplines/employeerelations/articles/pages/newhiresfeelmisled.aspx .

We can think of socialization as a process with three stages: prearrival, encounter, and metamorphosis. 52  This process, shown in  Exhibit 16-2 , has an impact on the new employee’s work productivity, commitment to the organization’s objectives, and decision to stay with the organization.

Exhibit 2

A Socialization Model

The  prearrival stage  recognizes that each individual arrives with a set of values, attitudes, and expectations about both the work and the organization. One major purpose of a business school, for example, is to socialize students to the attitudes and behaviors companies want. Newcomers to high-profile organizations with strong market positions have their own assumptions about what it’s like to work there. 53  Most new recruits will expect Nike to be dynamic and exciting and a stock brokerage firm to be high in pressure and rewards. How accurately people judge an organization’s culture before they join the organization, and how proactive their personalities are, become critical predictors of how well they adjust. 54

The selection process can help inform prospective employees about the organization as a whole. Upon entry into the organization, the new member enters the  encounter stage  and confronts the possibility that expectations—about the job, coworkers, boss, and organization in general—may differ from reality. If expectations were fairly accurate, this stage merely cements earlier perceptions. However, often this is not the case. At the extreme, a new member may become disillusioned enough to resign. Proper recruiting and selection should significantly reduce this outcome, along with encouraging friendship ties in the organization—newcomers are more committed when friendly coworkers help them “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 16-3  are alternatives designed to bring about metamorphosis. Most research suggests two major “bundles” of socialization practices. The more management relies on formal, collective, fixed, and serial socialization programs while emphasizing divestiture, the more likely newcomers’ differences will be stripped away and replaced by standardized predictable behaviors. These institutional practices are common in police departments, fire departments, and other organizations that value rule following and order. Programs that are informal, individual, variable, and random while emphasizing investiture are more likely to give newcomers an innovative sense of their roles and methods of working. Creative fields such as research and development, advertising, and filmmaking rely on these individual practices. Most research suggests high levels of institutional practices encourage person–organization fit and high levels of commitment, whereas individual practices produce more role innovation. 56

Exhibit 3

Entry Socialization Options

The three-part entry socialization process is complete when new members have internalized and accepted the norms of the organization and their work groups, 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 16-2  showed earlier, successful metamorphosis should have a positive impact on new employees’ productivity and their commitment to the organization, and reduce their propensity to leave the organization (turnover).

Researchers examine how employee attitudes change during socialization by measuring at several points over the first few months. Several studies have now 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 idealized hopes come into contact with the reality of organizational life. 57  Newcomers may find that the level of social support they receive from supervisors and coworkers is gradually withdrawn over the first few weeks on the job, as everyone returns to “business as usual.” 58  Role conflict and role overload may rise for newcomers over time, and workers with the largest increases in these role problems experience the largest decreases in commitment and satisfaction. 59  It may be that the initial adjustment period for newcomers presents increasing demands and difficulties, at least in the short term.

Summary: How Organizational Cultures Form

Exhibit 16-4  summarizes how an organization’s culture is established and sustained. The original culture derives from the founder’s philosophy and strongly influences hiring criteria as the firm grows. The success of socialization depends on the deliberateness of matching new employees’ values to those of the organization in the selection process and on top management’s commitment to socialization programs. Top managers’ actions set the general climate, including what is acceptable behavior and what is not, and employees sustain and perpetuate the culture.

Exhibit 4

How Organizational Cultures Form

How Employees Learn Culture

1. 4 Show how culture is transmitted to employees.

Culture is transmitted to employees in a number of forms, the most potent being stories, rituals, material symbols, and language.

Stories

When Henry Ford II was chairman of Ford Motor Company, you would have been hard pressed to find a manager who hadn’t heard how he reminded his executives, when they got too arrogant, “It’s my name that’s on the building.” The message was clear: Henry Ford II ran the company.

Today, a number of senior Nike executives spend much of their time serving as corporate storytellers. 60  When they tell how co-founder (and Oregon track coach) Bill Bowerman went to his workshop and poured rubber into a waffle iron to create a better running shoe, they’re talking about Nike’s spirit of innovation. When new hires hear tales of Oregon running star Steve Prefontaine’s battles to make running a professional sport and attain better performance equipment, they learn of Nike’s commitment to helping athletes.

Stories such as these circulate through many organizations, anchoring the present in the past and legitimating current practices. They typically include narratives about the organization’s founders, rule breaking, rags-to-riches successes, workforce reductions, relocations of employees, reactions to past mistakes, and organizational coping. 61  Employees also create their own narratives about how they came to either fit or not fit with the organization during the process of socialization, including first days on the job, early interactions with others, and first impressions of organizational life. 62

Rituals

Rituals  are repetitive sequences of activities that express and reinforce the key values of the organization—what goals are most important, and/or which people are important versus which are expendable. 63  Some companies have nontraditional rituals to help support the values of their cultures. Kimpton Hotels & Restaurants, one of Fortune’s 100 Best Companies to Work For, maintains its customer-oriented culture with traditions like a Housekeeping Olympics that includes blindfolded bedmaking and vacuum races. 64  At marketing firm United Entertainment Group, employees work unusual hours a few times a year, arriving in the late afternoon and working until early morning. CEO Jarrod Moses does this to support a culture of creativity. He says, “You mess with somebody’s internal clock, and some interesting ideas come out.” 65

Symbols

The layout of corporate headquarters, the types of automobiles top executives are given, and the presence or absence of corporate aircraft are a few examples of  material symbols . Others include the size of offices, the elegance of furnishings, perks, and attire. 66  These convey to employees who is important, the degree of egalitarianism top management desires, and the kinds of behavior that are appropriate, such as risk-taking, conservative, authoritarian, participative, individualistic, or social.

One example of the intentional use of material symbols is Texas electric company Dynegy. Dynegy’s headquarters doesn’t look like your typical head-office operation, as you could tell from the “Myth or Science?” box. There are few individual offices, even for senior executives. The space is essentially made up of cubicles, common areas, and meeting rooms. This informality conveys to employees that Dynegy values openness, equality, creativity, and flexibility. While some organizations provide their top executives with chauffeur-driven limousines and a corporate jet, other CEOs drive the company car themselves and travel in the economy section. At some firms, like Chicago shirtmaker Threadless, an “anything goes” atmosphere helps emphasize a creative culture. At Threadless, meetings are held in an Airstream camper parked inside the company’s converted FedEx warehouse, while employees in shorts and flip-flops work in bullpens featuring disco balls and garish decorations chosen by each team. 67

Some cultures are known for the perks in their environments, such as Google’s bocce courts, Factset Research’s onsite pie/cheese/cupcake trucks, software designer Autodesk’s bring-your-dog office, SAS’s free health care clinic, Microsoft’s organic spa, and adventure-gear specialist 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. For instance, Biotech leader Genentech and many other top companies provide paid sabbaticals. Genentech offers every employee 6 weeks’ paid leave for every 6 years of service to support a culture of equitability and innovative thinking. 68

An Ethical Choice

A Culture of Compassion

In the world of banking, success and ethical culture don’t necessarily go hand in hand. Leaders who desire ethical cultures in their organizations must choose to build ethics into the company’s definition of success in ways that translate into ethical actions for managers and employees. Contrast two financial success stories, Goldman Sachs and Wells Fargo. Both megabanks are among the Fortune 100 (the largest U.S. companies ranked by revenue). They are also two of Fortune’s World’s Most Admired Companies, a list that ranks the largest companies in revenue by nine criteria including social responsibility. Yet their organizational cultures appear to be vastly different. Goldman Sachs seems to struggle to achieve an ethical culture for its employees and clients, while Wells Fargo seems to emanate a culture of compassion. Consider some headlines:

· Mefit “Mike” Mecevic was a loyal janitor for Goldman Sachs when Superstorm Sandy hit New York in 2012. Mecevic and his coworkers rode out the storm in the company’s Manhattan skyscraper and worked nonstop for days to keep floodwaters back. Then a Goldman Sachs manager threw him out without explanation. Mecevic said to him, “‘I live in Staten Island, there’s a state of emergency, there are no cars, no trains, no lights. The water is up to our necks.’ I was begging for my life. But he said ‘Leave the building.’” Mecevic left but was later fired anyway. “I worked day and night,” Mecevic said. “They destroyed my life for nothing. Nothing.”

· Wells Fargo is committed to respecting its clients, even when those clients are in trouble. For the past few years, it has held “Home Preservation Workshops” where indebted homeowners can meet with “home retention” team members in confidential booths set up in large halls across the United States. Clients bring paperwork specific to their cases, and team members negotiate binding agreements. One client said, “It is a great feeling to not worry” about losing her home.

Organizational culture is where leaders’ ethical choices demonstrate their expectations for others’ decisions throughout the company. Both Goldman and Wells Fargo enjoy stellar reputations. But these examples suggest that the two cultures may make very different ethical choices.

Sources: B. Ross, A. Ng, and C. Siemaszko, “Ex-Goldman Sachs Janitor Sues for Being Forced into Post-Hurricane Sandy Destruction,” New York Daily News, June 7, 2013,  www.nydailynews.com/new-york/janitor-sues-tossed-aftermath-hurricane-sandy- article-1.1366334 ; M. Schifrin and H. Touryalai, “The Bank That Works,” Forbes, February 13, 2012, 66–74.

Language

Many organizations and subunits within them use language to help members identify with the culture, attest to their acceptance of it, and help preserve it. Unique terms describe equipment, officers, key individuals, suppliers, customers, or products that relate to the business. New employees may at first be overwhelmed by acronyms and jargon that, once assimilated, act as a common denominator to unite members of a given culture or subculture.

Influencing an Organizational Culture

1. 5 Describe the similarities and differences in creating an ethical culture, a positive culture, and a spiritual culture.

As we discussed, the culture of an organization is set by its founders and often difficult to change afterward. It’s true that the ideal scenario is a strong founder (or founders) who carefully plans the organization’s culture beforehand. That’s seldom the case, though; organizational culture usually grows organically over time. When we think of the development of culture as ongoing and conducted through each employee, we can see ways to increase the ethical, positive, and/or spiritual aspects of the environment, discussed next.

An Ethical Culture

Despite differences across industries and cultures, ethical organizational cultures share some common values and processes. 69  Therefore, managers can create a more ethical culture by adhering to the following principles: 70

· Be a visible role model. Employees will look to the actions of top management as a benchmark for appropriate behavior, but everyone can be a role model to positively influence the ethical atmosphere. Send a positive message.

· Communicate ethical expectations. Whenever you serve in a leadership capacity, minimize ethical ambiguities by sharing a code of ethics that states the organization’s primary values and the judgment rules employees must follow.

· Provide ethical training. Set up seminars, workshops, and training programs to reinforce the organization’s standards of conduct, clarify what practices are permissible, and address potential ethical dilemmas.

· Visibly reward ethical acts and punish unethical ones. Evaluate subordinates on how their decisions measure up against the organization’s code of ethics. Review the means as well as the ends. Visibly reward those who act ethically and conspicuously punish those who don’t.

· Provide protective mechanisms. Seek formal mechanisms so everyone can discuss ethical dilemmas and report unethical behavior without fear of reprimand. These might include identifying ethical counselors, ombudspeople, or ethical officers for liaison roles.

A widespread positive ethical climate has to start at the top of the organization. 71  One study demonstrated that when top management emphasizes strong ethical values, supervisors are more likely to practice ethical leadership. Positive attitudes transfer down to line employees, who show lower levels of deviant behavior and higher levels of cooperation and assistance. Several other studies have come to the same general conclusion: The values of top management are a good predictor of ethical behavior among employees. One study involving auditors found perceived pressure from organizational leaders to behave unethically was associated with increased intentions to engage in unethical practices. 72  Clearly the wrong type of organizational culture can negatively influence employee ethical behavior. Finally, employees whose ethical values are similar to those of their department are more likely to be promoted, so we can think of ethical culture as flowing from the bottom up as well. 73

A Positive Culture

At first blush, creating a positive culture may sound hopelessly naïve or like a Dilbert-style conspiracy. The one thing that makes us believe this trend is here to stay, however, are signs that management practice and OB research are converging. A  positive organizational culture  emphasizes building on employee strengths, rewards more than it punishes, and encourages individual vitality and growth. 74  Let’s consider each of these areas.

BUILDING ON EMPLOYEE STRENGTHS Although a positive organizational culture does not ignore problems, it does emphasize showing workers how they can capitalize on their strengths. As management guru Peter Drucker said, “Most Americans do not know what their strengths are. When you ask them, they look at you with a blank stare, or they respond in terms of subject knowledge, which is the wrong answer.” Wouldn’t it be better to be in an organizational culture that helped you discover your strengths and how to make the most of them?

As CEO of Auglaize Provico, an agribusiness based in Ohio, Larry Hammond used this approach in the midst of the firm’s worst financial struggles. When the organization had to lay off one-quarter of its workforce, he took advantage of what was right, rather than dwelling on what went wrong. “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,” he said. With the help of Gallup consultant Barry Conchie, Hammond focused on discovering and using employee strengths to help 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. 75

REWARDING MORE THAN PUNISHING Although most organizations are sufficiently focused on extrinsic rewards such as pay and promotions, they often forget about the power of smaller (and cheaper) rewards such as praise. Part of creating a positive organizational culture is “catching employees doing something right.” Many managers withhold praise because they’re afraid employees will coast or because they think praise is not valued. Employees generally don’t ask for praise, and managers usually don’t realize the costs of failing to give it.

Consider El´zbieta Górska-Kolodziejczyk, a plant manager for International Paper’s facility in Kwidzyn, Poland. Employees worked in a bleak windowless basement. Staffing became roughly one-third its prior level, while production tripled. These challenges had done in the previous three managers. So when she took over, at the top of her list were recognition and praise for staff. She initially found it difficult to give praise to those who weren’t used to it, especially men. “They were like cement at the beginning,” she said. “Like cement.” Over time, however, she found they valued and even reciprocated praise. One day a department supervisor pulled her over to tell her she was doing a good job. “This I do remember, yes,” she said. 76

ENCOURAGING VITALITY AND GROWTH No organization will get the best from employees who see themselves as mere cogs in the machine. A positive culture recognizes the difference between a job and a career. It supports not only what the employee contributes to organizational effectiveness but how the organization can make the employee more effective—personally and professionally. Top companies recognize the value of helping people grow. Safelite AutoGlass, Workforce Management’s 2012 Optima award winner for Competitive Advantage, attributes its success in part to its PeopleFirst Plan talent development initiative. “The only way we can stand out is if we have the best people,” says Senior Vice President Steve Miggo. 77

It may take more creativity to encourage employee growth in some industries. From the Masterfoods headquarters in Brussels, Philippe Lescornez led a team of sales promoters including Didier Brynaert, who worked in Luxembourg, nearly 150 miles away. Lescornez decided Brynaert’s role could be improved if he were seen as an expert on the unique features of the Luxembourg market. So Lescornez asked Brynaert for information he could share with the home office. “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,” he said. As a result, “Now he’s recognized 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 was, of course, also good for Lescornez, who got credit for helping Brynaert grow and develop. 78

LIMITS OF POSITIVE CULTURE Is a positive culture a cure-all? Though many companies have embraced aspects of a positive organizational culture, it is a new enough idea for us to be uncertain about how and when it works best.

Not all national cultures value being positive as much as the U.S. culture does and, even within U.S. culture, there surely are limits to how far organizations should go. The limits may need to be dictated by the industry and society. For example, Admiral, a British insurance company, has established a Ministry of Fun in its call centers to organize poem writing, foosball, conkers (a British game involving chestnuts), and fancy-dress days, which may clash with an industry value of more serious cultures. When does the pursuit of a positive culture start to seem coercive? As one critic notes, “Promoting a social orthodoxy of positiveness focuses on a particular constellation of desirable states and traits but, in so doing, can stigmatize those who fail to fit the template.” 79  There may be benefits to establishing a positive culture, but an organization also needs to be objective and not pursue it past the point of effectiveness.

A Spiritual Culture

What do Southwest Airlines, Hewlett-Packard, Ford, The Men’s Wearhouse, Tyson Foods, Wetherill Associates, and Tom’s of Maine have in common? They’re among a growing number of organizations that have embraced workplace spirituality.

WHAT IS SPIRITUALITY? Workplace spirituality is not about organized religious practices. It’s not about God or theology.  Workplace spirituality  recognizes that people have an inner life that nourishes and is nourished by meaningful work in the context of community. 80  Organizations that support a spiritual culture recognize that people seek to find meaning and purpose in their work and desire to connect with other human beings as part of a community. Many of the topics we have discussed—ranging from job design to corporate social responsibility (CSR)—are well matched to the concept of organizational spirituality. When a company emphasizes its commitment to paying Third World suppliers a fair (above-market) price for their products to facilitate community development—as did Starbucks—or encourages employees to share prayers or inspirational messages through e-mail—as did Interstate Batteries—it may encourage a more spiritual culture. 81

WHY SPIRITUALITY NOW? As noted in our discussion of emotions in  Chapter 4 , the myth of rationality assumed the well-run organization eliminated people’s feelings. Concern about an employee’s inner life had no role in the perfectly rational model. But just as we realize that the study of emotions improves our understanding of OB, an awareness of spirituality can help us better understand employee behavior.

Of course, employees have always had an inner life. So why has the search for meaning and purposefulness in work surfaced now? We summarize the reasons in  Exhibit 16-5 .

Exhibit 5

Reasons for the Growing Interest in Spirituality

CHARACTERISTICS OF A SPIRITUAL ORGANIZATION The concept of workplace spirituality draws on our previous discussions of values, ethics, motivation, and leadership. Although research remains preliminary, several cultural characteristics tend to be evident in spiritual organizations: 82

· Benevolence. Spiritual organizations value kindness toward others and the happiness of employees and other organizational stakeholders.

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

· Trust and respect. Spiritual organizations are characterized by mutual trust, honesty, and openness. Employees are treated with esteem and value, consistent with the dignity of each individual.

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

ACHIEVING SPIRITUALITY IN THE ORGANIZATION Many organizations have grown interested in spirituality but have experienced difficulty putting principles into practice. Several types of practices can facilitate a spiritual workplace, 83  including those that support work–life balance. Leaders can demonstrate values, attitudes, and behaviors that trigger intrinsic motivation and a sense of fulfilling a calling through work. Second, encouraging employees to consider how their work provides a sense of purpose can help achieve a spiritual workplace; often this is done through group counseling and organizational development, a topic we take up in  Chapter 18 . Third, a growing number of companies, including Taco Bell and Sturdisteel, offer employees the counseling services of corporate chaplains. Many chaplains are employed by agencies, such as Marketplace Chaplains USA, while some corporations, such as R.J. Reynolds Tobacco and Tyson Foods, employ chaplains directly. The workplace presence of corporate chaplains, who are often ordained Christian ministers, is obviously controversial, although their role is not to increase spirituality but to help human resources departments serve the employees who already have Christian beliefs. 84  Similar roles for leaders of other faiths certainly must be encouraged.

CRITICISMS OF SPIRITUALITY Critics of the spirituality movement in organizations have focused on three issues. First is the question of scientific foundation. What really is workplace spirituality? Is it just a new management buzzword? Second, are spiritual organizations legitimate? Specifically, do organizations have the right to claim spiritual values? Third is the question of economics: Are spirituality and profits compatible?

First, as you might imagine, there is comparatively little research on workplace spirituality. Spirituality has been defined so broadly in some sources that practices from job rotation to corporate retreats at meditation centers have been identified as spiritual. Questions need to be answered before the concept gains full credibility.

Second, an emphasis on spirituality can clearly make some employees uneasy. Critics have argued that secular institutions, especially business firms, should not impose spiritual values on employees. 85  This criticism is undoubtedly valid when spirituality is defined as bringing religion and God into the workplace. However, it seems less stinging when the goal is limited to helping employees find meaning and purpose in their work lives. If the concerns listed in  Exhibit 16-5  truly characterize a large segment of the workforce, then perhaps organizations can help.

Finally, whether spirituality and profits are compatible objectives is a relevant concern for managers and investors in business. The evidence, although limited, indicates they are. In one study, organizations that provided their employees with opportunities for spiritual development outperformed those that didn’t. 86  Other studies reported that spirituality in organizations was positively related to creativity, employee satisfaction, job involvement, and organizational commitment. 87

Career OBjectives

How do I learn to lead?

I’ll be starting a new job in a few weeks. It’s my first time working as a leader for a team, and I know I have a lot to learn. Is there any way I can be sure I’ll achieve success as a leader?

— Gordon

Dear Gordon:

Learning about a new job is always complicated. Learning how to be a leader is doubly complicated. It’s expected that you have the capacity to provide direction and purpose for employees, and that you will respect the existing culture of the group as well as the capacities of individual members. Here are a few key insights toward making your transition into leadership successful:

· Ask questions. New leaders are often anxious about asking questions of direct reports for fear of being seen as incompetent or weak. However, inquiring about how things have been done in the past and asking about individual goals signals that you are concerned about the team members. Familiarizing yourself with the group’s culture and practices can also help you develop techniques to harness the team’s strengths and overcome challenges.

· Build relationships with other leaders. Remember—you were put into this role for a reason, and the company wants to see you succeed, so make the most of the resources of others. Take detailed notes regarding specific activities and strategies that were successful, and schedule a check-in to discuss how these strategies have worked over time. If you can show you are truly engaged in the learning process, you’ll find others are more willing to provide you with assistance and advice.

· Start small. Much has been written about the importance of gaining small wins early on to build your reputation. The old saying “you never get a second chance to make a first impression” definitely holds true in the workplace. Try to develop new initiatives with clear outcomes that will allow you to demonstrate your leadership traits.

The best leadership transitions include learning what the situation calls for, and setting your team up for success from the start.

Be proactive!

Sources: T. B. Harris, N. Li, W. R. Boswell, X. Zhang, and Z. Xie, “Getting What’s New from Newcomers: Empowering Leadership, Creativity, and Adjustment in the Socialization Context,” Personnel Psychology 67 (2014): 567–604; Y. H. Ji, N. A. Cohen, A. Daly, K. Finnigan, and K. Klein, “The Dynamics of Voice Behavior and Leaders’ Network Ties in Times of Leadership Successions,” Academy of Management Proceedings, 2014, 16324; and B. Eckfeldt, “5 Things New CEOS Should Focus On,” Business Insider, June 1, 2015,  http://www.businessinsider.com/5-things-new-ceos-should-focus-on-2015-6.

The opinions provided here are of the managers and authors only and do not necessarily reflect those of their organizations. The authors or managers are not responsible for any errors or omissions, or for the results obtained from the use of this information. In no event will the authors or managers, or their related partnerships or corporations thereof, be liable to you or anyone else for any decision made or action taken in reliance on the opinions provided here.

The Global Context

1. 6 Show how national culture can affect the way organizational culture is transported to another country.

We considered global cultural values (collectivism–individualism, power distance, and so on) in  Chapter 5 . Here our focus is a bit narrower: How is organizational culture affected by the global context? Organizational culture is so powerful that it often transcends national boundaries. But that doesn’t mean organizations should, or could, ignore local culture.

Organizational cultures often reflect national culture. The culture at AirAsia, a Malaysian-based airline, emphasizes openness and friendships. The carrier has lots of parties, participative management, and no private offices, reflecting Malaysia’s relatively collectivistic culture. The culture of many U.S. airlines do not reflect the same degree of informality. If a U.S. airline were to merge with AirAsia, it would need to take these cultural differences into account. Organizational culture differences are not always due to international culture differences, however. One of the chief challenges of the merger of US Airways and American Airlines was the integration of US Airway’s “open-collar” culture with American’s “button-down” culture. 88

One of the primary things U.S. managers can do is to be culturally sensitive. The United States is a dominant force in business and in culture—and with that influence comes a reputation. “We are broadly seen throughout the world as arrogant people, totally self-absorbed and loud,” says one U.S. executive. Some ways in which U.S. 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 behavior is one area where national culture can rub against corporate culture. 89  U.S. managers endorse the supremacy of anonymous market forces as a moral obligation for business organizations. This worldview sees bribery, nepotism, and favoring personal contacts as highly unethical. They also value profit maximization, so any action that deviates from profit maximization may suggest inappropriate or corrupt behavior. In contrast, managers in developing economies are more likely to see ethical decisions as embedded in the social environment. That means doing special favors for family and friends is not only appropriate but possibly even an ethical responsibility. Managers in many nations view capitalism skeptically and believe the interests of workers should be put on a par with the interests of shareholders, which may limit profit maximization.

Creating a multinational organizational culture can initiate strife between employees of traditionally competing countries. When Swedish, Norwegian, Finnish, and Danish banks combined to form Nordea Bank AB, the stereotypes some employees held based on the countries’ historical relationships created tensions. Finland had originally been a colony of Sweden, and Norway had been a part of Denmark and then of Sweden. The fact that none of the employees had yet been born when their countries were colonies didn’t matter; complex alliances within Nordea formed along nationalistic lines. To bridge these gaps, Nordea employed storytelling to help employees identify with positive aspects of their shared geographical region. The organization reinforced the shared identity through press releases, corporate correspondence, equal country representation in top management, and championing of shared values. Although the organization continues to struggle with a multinational culture, the successes it has enjoyed can be attributed to careful attention to national differences. 90

As national organizations seek to employ workers in overseas operations, management must decide whether to standardize many facets of organizational culture. For example, should organizations offer wellness plans and work–life balance initiatives from the home country to the satellite offices, or tailor the plans for the norms of each society? Either can be problematic. For instance, when U.S. company Rothenberg International introduced its alcohol abuse remediation plan to Russian employees as part of its employee assistance program (EAP), it didn’t foresee that Russians resist the concept of “assistance” and prefer “support” instead. Rothenberg was able to adjust, but sometimes local laws intercede (as a help or a hindrance) when employers roll out homeland plans. Brazil has a government anti-HIV plan that employers can use, for instance, and the U.K.’s National Health Service pays for smoking cessation programs, while in Germany private insurance must pay for wellness plans. 91  At this point, there is no clear consensus on the best course of action, but the first step is for companies to be sensitive to differing standards.

Exhibit 6

How Organizational Cultures Have an Impact on Employee Performance and Satisfaction

Summary

Exhibit 16-6  depicts the impact of organizational culture. Employees form an overall subjective perception of the organization based on factors such as the degree of risk tolerance, team emphasis, and support of individuals. This overall perception represents, in effect, the organization’s culture or personality and affects employee performance and satisfaction, with stronger cultures having greater impact.