Case Study

Arod229

Neck2e_PPT_14.pptx

Home >Business & Finance homework help >Management homework help >Case Study

Chapter 14

Organizations and Culture

Case Study: Recreational Equipment Incorporated’s (REI) Organizational Culture

Case Questions:

Why does REI need employees who are experienced with their equipment just to sell products?

Why doesn’t REI take part in Black Friday even though it is many stores’ most successful day?

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

What Is Organizational Culture

Organizational culture is a pattern of shared norms, rules, values, and beliefs that guide the attitudes and behaviors of its employees.

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

LO 14.1 Describe the basic characteristics of organizational culture

The culture of an organization often influences its degree of success or failure. We define organizational culture as a pattern of shared norms, rules, values, and beliefs that guide the attitudes and behaviors of its employees. People are the most important asset to an organization and the behavioral side of a culture is as important as, if not more important than, the financial side.

What Is Organizational Culture

Components of culture:

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

Organizational culture can be subtle, with some of its components hidden beneath the surface. There are two main components: observable and unobservable.

Observable culture refers to the components of culture that we can see in an organization. For example, personal appearances and dress codes, processes and structures, behaviors and attitudes, and artifacts of the culture like awards, myths, and stories4 (described in more detail below in Slide 4) are all observable parts of organizational culture. Unobservable culture consists of the components that lie beneath the surface of an organization, such as company values and assumptions. For instance, multinational food manufacturing company Kellogg integrates the following values within its organizational culture: passion, integrity, commitment, and humility.6 While it is not easy to discern the extent of corporate values, they are often demonstrated in employee behaviors and attitudes. In some cases, assumptions and values can become so ingrained in the employees’ mindset that their perspectives and behaviors become difficult to change.

What Is Organizational Culture

Competing Values Framework

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

One popular way of approaching the study of organization culture is the competing values framework, which provides a means to identify, measure, and change culture. This model highlights two main value dimensions: the first dimension differentiates flexibility and discretion from stability and control. This means that some organizations benefit from a more adaptable, flexible culture whereas others might thrive on a more stable and mechanical culture. The second dimension differentiates internal focus and integration from an external focus in the workplace. In other words, some organizations are effective if they focus on the internal culture, for example, ensuring that employees share the same values, integrate well, and work harmoniously, while other organizations focus on building successful relationships outside the organization such as with suppliers, customers, and clients to make themselves more competitive.

What Is Organizational Culture?

Clan culture:

Flexibility and internal focus

Welcoming places

Leaders are mentors and coaches

Collaborative environment

Employee satisfaction

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

The clan culture falls under the flexibility and internal focus dimension. Typically, clan cultures are welcoming places where employees openly share and form strong personal relationships. Leaders tend to be perceived as mentors and coaches who focus on bringing out the best in each of their employees. The clan culture also furnishes a collaborative environment in which loyalty and commitment are high. Organizations with a clan culture primarily gauge their success against the performance and satisfaction of their employees. Tom’s of Maine is a good example of the clan culture. Tom Chappell founded his company, which produces all-natural toothpastes, soaps, and related hygiene products, on the basis of developing strong relationships with a number of stakeholders including employees, customers, suppliers, the community, and the environment. Like many clan cultures, Tom’s of Maine is essentially an “extended family” with Tom serving as the mentor or parental figure.

What Is Organizational Culture?

Hierarchy culture:

Stability and an internal focus

Formal and structured

Processes, rules, and procedures

Formal chain of command

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

The hierarchy culture exhibits a combination of stability and an internal focus. Unlike organizations adopting the clan culture, hierarchical organizations like the military can be formal and structured places where employees are primarily guided by processes, rules, and procedures. A formal chain of command is populated by leaders who use their positions to manage their employees and to emphasize the importance of efficiency, productivity, and organization in the day-to-day running of operations. Organizations that are too rigid and bureaucratic, however, tend not to react well to change.

What Is Organizational Culture?

Market culture:

Emphasis on interactions conducted outside the organization with a view to increasing company competitiveness.

Leaders tend to be driven and goal-oriented

Focus on market performance

Unhealthy competition

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

Like the hierarchy culture, the market culture is also positioned under the control and stability dimension but places more emphasis on interactions conducted outside the organization with a view to increasing company competitiveness. Leaders tend to be driven and goal-oriented and to gage success on the basis of market performance. Since this is a results-driven culture, there can sometimes be unhealthy competition among employees. Amazon is an example of a market culture that pressures its employees to perform in a demanding work environment in order to get the results it needs to beat the competition.

What Is Organizational Culture?

Adhocracy

Flexibility and discretion with an external emphasis

Fast-moving

Quick to adapt

Entrepreneurs and risk-takers

Experiment and generate innovative ideas

Culture:

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

The adhocracy culture focuses on flexibility and discretion with an external emphasis. These organizations are fast-moving and the quickest to adapt to changing markets. Leaders tend to be entrepreneurs and risk-takers who encourage their employees to experiment and generate innovative ideas. Success is measured by company growth and the production of unique, cutting-edge, and innovative products and services. Apple demonstrates its adhocracy culture by encouraging its employees to innovate and experiment at a fast rate to keep up with market change.

What Is Organizational Culture?

Dominant culture, subculture, and counterculture

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

Every cultural group has its distinctions. The dominant culture is the set of core values shared by the bulk of organizational employees. So, for instance, travel website Tripadvisor places importance on donating to charity and giving back to the community, and members of the dominant culture are expected to do community work such as painting schools. In addition to this dominant culture, subcultures may spring up, which are groups in an organization that share different values from those held by the majority. For example, the Department of Defense consists of different branches such as the Army, Marines, and the Navy. Overall, the dominant culture pervades, but each individual branch has its own subculture made up of unique characteristics. However, it is more common for subcultures to arise in companies where there is no dominant culture, or in the merger of two companies each of which has a different culture. An extreme type of subculture whose values strongly differ from those of the larger organization is a counterculture.16 Such groups openly reject the company’s values, embrace change, and challenge the status quo. It might seem that these “rebel” groups would be bad for an organization, but a counterculture can also produce positive results.

What Is Organizational Culture?

Strong and weak cultures:

Strong cultures:

Majority of employees are aligned with the values of an organization.

Less need for detailed policies and procedures.

Weak cultures:

Core values are not embraced or shared by its employees.

Core values are not defined or communicated well.

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

Artifacts of Organizational Culture

The artifacts or identifiable elements of an organization provide members and outsiders with a better understanding of its culture.

Stories

Symbols

Rituals

Ceremonies

Organizational language

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

LO 14.2 Discuss the various artifacts of organizational culture

The artifacts or identifiable elements of an organization provide members and outsiders with a better understanding of its culture. These might include the symbols or objects which give meaning to the culture, the rituals or formalized actions and planned routines, the ceremonies or events that reinforce the relationship between employees and the organization, or the organizational language which refers to the words or metaphors used within the organization.

Functions of Organizational Culture

External adaptation is the way an organization reacts to outside influences.

Internal integration, in contrast, is the process of creating a shared identity among employees by adopting a common language, group boundaries, an accepted distribution of power and status, and norms of trust, rewards, and punishment.

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

LO 14.3 Identify the functions of organizational culture

Two major functions of organizational culture imperative to an organization’s survival are external adaptation and internal integration. External adaptation is the way an organization reacts to outside influences. To achieve external adaptation to its environment, the organization must arrive at some basic shared assumptions about its mission and strategy, about the goals, tasks, and methods the organization needs to achieve, and about ways of managing both success and failure. Internal integration, in contrast, is the process of creating a shared identity among employees by adopting a common language, group boundaries, an accepted distribution of power and status, and norms of trust, rewards, and punishment.

Functions of Organizational Culture

Potential dysfunctions of culture:

Change hindrances

Diversity hindrances

Mergers and acquisitions hindrances

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

Change hindrances are cultural obstacles that impede progress and make it difficult for the organization to adapt to different situations. Examples of change hindrances are ineffective communication with employees, unclear processes and procedures, disorganized leadership, failure to involve employees, and inadequate resources. For managers to effectively implement change, such as introducing a new system or restructuring a team, they need to minimize resistance by communicating clear objectives, engaging their employees in decision-making, equipping them with the necessary resources to support the change, and keeping them fully informed about how and why the change is taking place. Diversity hindrances are cultural obstacles that limit the range of employee demographics in organizations. Mergers and acquisitions hindrances are cultural obstacles that make it difficult for two organizations to join together.

Types of Organizational Cultures

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

LO 14.4 Compare various types of organizational cultures

Earlier in this chapter, we explored the different types of organizational cultures, namely the adhocracy, clan, hierarchy, and market cultures, through the competing values framework. As we will see below, however, many more types of culture exist in the workplace.

Types of Organizational Cultures

Organizations with a positive organizational culture focus on supporting employees’ strengths, increasing morale, and providing rewards for good work.

Organizations that nurture a communal culture environment are home to employees who tend to think alike, are happy to share knowledge, and have a clear focus on the direction of the task.

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

Types of Organizational Cultures

Fragmented culture is found in companies where employees tend to keep to themselves, avoid socializing, and work as individuals rather than part of a team.

Mercenary cultures exist in organizations where making money is the top priority.

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

Types of Organizational Cultures

Networked cultures are characterized by a high degree of trust between employees and a willingness to communicate and share information.

In an ethical culture, managers need to be role models themselves, communicate ethical standards, and train employees to behave in an ethical manner.

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

Types of Organizational Cultures

Spiritual culture focuses on opportunities for employees to grow in the workplace by carrying out meaningful tasks that contribute to the good of society as a whole.

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

Adapting Organizational Practices Across Cultures

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

LO 14.5 Identify key ways in which organizations adapt their practices across cultures

One of the most valuable studies in measuring culture was conducted by Dutch sociologist Geert Hofstede. Hofstede identified five ways of measuring culture based on research analyzing the interactions between people from different cultures all over the world. Known as Hofstede’s dimensions, these five measures, each of which is shown as a continuum in Figure 14.5, have been used by organizations to improve understanding and cooperation between cultures.

Adapting Organizational Practices Across Cultures

Hofstede’s Dimensions:

Individualistic-collectivist

Power distance

Uncertainty avoidance

Competitive-cooperative

Long-term orientation-short-term orientation

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

The individualist–collectivist dimension focuses on the degree to which citizens in a given culture believe they have the right to live their lives as they see fit, choose their own values, and act on their own judgment.

Power distance expresses the extent to which people in different societies accept the way power is distributed.

Uncertainty avoidance measures the degree to which people are able to deal with the unexpected and how they cope with uncertainty in unstructured environments.

In countries with a competitive culture, such as Austria and China, employees generally tend to display more assertive, striving, merit-oriented personality traits. In contrast, countries with cooperative cultures such as Chile and Bulgaria tend to take a more compassionate, tolerant, and caring approach.

Cultures that lean toward long-term orientation measure values such as perseverance, respect for tradition, and thrift against short-term orientation values such as meeting social obligations and avoiding embarrassment or shame.

Adapting Organizational Practices Across Cultures

Global integration versus local responsiveness:

Standardization: Degree to which employees expected to follow same rules and policies everywhere

Localization: Adapting certain functions to accommodate the language, culture, or governing laws of a different country

Neck, Organizational Behavior, 2e. © SAGE Publishing, 2020.

International companies face challenges in two major areas when they operate in foreign countries: global integration and local responsiveness. This means they often have to strike a balance between following their own global strategies--determining how their products are made and marketed and how employees are treated--and meeting the legal, financial, employment, and other requirements of their host government. Firms may have to change or tailor their operations to remain in compliance with those requirements. As a result, they have to consider how much they should either standardize or localize their practices.

International Assignments and Career Development

Expatriate

HIPOs

Culture shock

LO 14.6 Describe how international assignments can be used for employee development

An expatriate is an employee who lives and works in a foreign country on a temporary basis. High-potential employees or HIPOs are employees who are flexible, committed, and motivated.

Many people underestimate the difficulty of moving to a different country as an expatriate and experiencing culture shock, a feeling of nervousness, doubt, and confusion arising from being in a foreign and unfamiliar environment.

Ideally, organizations should offer support and provide cultural knowledge and language training if necessary to prepare their employees for an overseas experience.

International Assignments and Career Development

Stages of Cultural Adaptation

Typically, there are five stages of cultural adaptation (see Figure 14.6). The first is the honeymoon stage that takes place soon after arrival in the new country.

However, after a few weeks, the disintegration stage sets in; the gloss starts to wear off, and feelings of nervousness and insecurity may appear.

The third stage is reintegration, which typically occurs after a few months in the foreign location. At this stage, you probably have reached an understanding about how the business and social cultures operate and have accepted the factors that seemed strange in the beginning.

During the autonomy stage you are more confident about knowing how to function in your new environment, you know how to interact with people and where to socialize, and you have a clearer understanding of business practices. In short, you are beginning to settle in.

This leads to the independence stage, in which you understand how the culture operates, feel confident that you can handle most situations, and value the culture for its differences from as well as its similarities to your own.

International Assignments and Career Development

Expatriate failure:

Family stress

Higher degree of responsibility

Inability to adjust to cultural differences

There are several reasons why expatriates fail to complete the duration of their stay in a different country. The most common is family stress. Although the employee is experiencing a novel and exciting environment and making new friends at work, the spouse, who may have left a job or career behind at home, may be lonely and struggling to adjust to the new culture, which can put an enormous amount of pressure on a relationship.

Another factor is that foreign assignments often come with a higher degree of responsibility, which some people find overwhelming. Managing people from different cultures can be frustrating and perplexing, especially if the expatriate is not familiar with local customs. If an expatriate is unable to fulfill the requirements of his or her role or does not possess the emotional maturity to handle additional responsibility, then the organization itself may choose to terminate the assignment.

Finally, another reason for expatriate failure is inability to adjust to cultural or language differences, which often occurs because of poor advance preparation. This can lead to severe homesickness and an early return home.

International Assignments and Career Development

Benefits and costs of international assignments:

Benefit:

Career development and experience

Cost:

Out of sight, out of mind

In some companies, a person’s career development depends on his or her taking international assignments. For example, an employee working in a U.S. investment bank in New York with branches located globally can gain great experience and make valuable new contacts in one of the firm’s international offices. However, “out of sight, out of mind” can also operate. In other words, sometimes expatriates can return home to find they have been overlooked for career opportunities or promotions while away.

Shaping Organizational Culture

Organizational culture can be difficult to change.

Successful organizations tend to be led by top managers who embody certain beliefs, values, and assumptions, thereby influencing employees to do the same

LO 14.7 Contrast differing approaches for shaping organizational culture

Organizational culture can be difficult to change. Unlike many other management functions, shaping organizational culture requires changing mindsets. In short, it is an emotional process rather than a rational or analytical one, and as we have learned, dealing with emotions in the workplace can be tricky.

Successful organizations tend to be led by top managers who embody certain beliefs, values, and assumptions, thereby influencing employees to do the same. Facebook CEO Mark Zuckerberg is a good example of a leader whose behaviors and values have been embraced by the Facebook staff and have become the core of the company’s mission. Facebook employees are given the freedom to work on projects they are most interested in and are encouraged to take action and contribute ideas.

Shaping Organizational Culture

Selection practices:

Person−organization fit refers to the process of selecting candidates whose personalities and attitudes best suite the organizational culture.

Managers working in organizations with a certain culture tend to select candidates whose personalities and attitudes best match that culture and values. This match is called person−organization fit. Research has shown that hiring for organizational fit.

Shaping Organizational Culture

Socialization methods

Context

Content

Social dynamics

New hires are integrated into the company’s corporate culture through socialization, the process through which an organization communicates its values to new employees. There are three main forms of socialization: context, content, and social dynamics.

Context: Socialization depends on the context in which the information is imparted. Organizations can choose to socialize new hires through an informal or formal process and on an individual or collective basis.

Content: Organizations often provide new hires with content, which is information regarding the activities and tasks they may be expected to carry out, and the time each activity should take to complete.

Social dynamics: Socialization also depends on the nature of social dynamics that take place once an employee has been hired.

Shaping Organizational Culture

Feldman’s Model of Organizational Socialization

Anticipatory socialization takes place before the individual actually joins the organization. This can happen in several ways. For example, the individual may have talked to current employees to get their opinions about what they like/dislike about the organization, or she or he may have researched the company online to get a better sense of the working environment. The encounter phase begins when the individual signs an employment contract and learns more about what the organization is really like. During this phase, the organization may use a number of socializing techniques to help the new employee become better acquainted with the working environment, such as introductions to key members of the organization, classroom or online training, or written guidelines about the company. When socialization is successful, the change and acquisition phase begins. Here, the employee will have a clear understanding of his or her role and will have learned how to confidently carry out new tasks and skills. This is also the period when new employees adjust to group values and norms and come to understand where they fit into the team dynamic.