Organizational Culture

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Information about Organizational Culture

Published on March 3, 2014

Author: koppulachandra


Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 Unit-V Organizational Culture Introduction: Organizational culture refers to the shared values and assumption of its members. It determines how employees behave in a particular organization. It also affects how the external environment or how people from outside the organization sees it. That is, organizational behavior determines how employees behave, react to outsider or customers. Therefore, good organizational culture leads to higher performance and values innovations. Organizational culture is the behavior of humans who are part of an organization and the meanings that the people attach to their actions. Culture includes the organization values, visions, norms, working language, systems, symbols, beliefs and habits. It is also the pattern of such collective behaviors and assumptions that are taught to new organizational members as a way of perceiving, and even thinking and feeling. Organizational culture affects the way people and groups interact with each other, with clients, and with stakeholders. Organizational culture refers to culture in any type of organization be it school, university, notfor-profit groups, government agencies or business entities. In business, terms such as corporate culture and company culture are sometimes used to refer to a similar concept, Although the new idea that the term became known in businesses in the late 80s and early 90s is widespread, in fact corporate culture was already used by managers and addressed in sociology, cultural studies and organizational theory in the beginning of the 80s Definition: According to Needle (2004), organisational culture represents the collective values, beliefs and principles of organisational members and is a product of such factors as history, product, market, technology, and strategy, type of employees, management style, and national cultures and so on. Corporate culture on the other hand refers to those cultures deliberately created by management to achieve specific strategic ends. Types of Organizational Culture Several methods have been used to classify organizational culture. While there is no single "type" of organizational culture and organizational cultures vary widely from one organization to the next, commonalities do exist and some researchers have developed models to describe different indicators of organizational cultures. Some are described below: Hofstede Organizational Culture: Hofstede looked for differences between over 160 000 IBM employees in 50 different countries and three regions of the world, in an attempt to find aspects of culture that might influence business behavior. He suggested things about cultural differences existing in regions and nations, and the importance of international awareness and multiculturalism for the own cultural introspection. Cultural differences reflect differences in thinking and social action, and even in "mental programs", a term Hofstede uses for predictable behaviour. Hofstede relates culture to ethnic and regional groups, but also organizations, profession, family, to society and subcultural groups, national political systems and legislation, etc. QIS College of Engineering and Technology, Ongole Page 1

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 Hofstede suggests the need for changing "mental programs" with changing behaviour first, which will lead to value change. Though certain groups like Jews, Gypsies and Basques have maintained their identity through centuries without changing. Hofstede dimensions of culture 1. Power distance - Different societies find different solutions on social inequality. Although invisible, inside organizations power inequality of the "boss-subordinates relationships" is functional and according to Hofstede reflects the way inequality is addressed in the society. 2. Uncertainty avoidance is the coping with uncertainty about the future. Society copes with it with technology, law and religion (however different societies have different ways of addressing it), and according to Hofstede organizations deal with it with technology, law and rituals or in two ways - rational and non-rational, where rituals being the nonrational. 3. Individualism vs. collectivism - disharmony of interests on personal and collective goals. Hofstede brings that society's expectations of Individualism/Collectivism will be reflected by the employee inside the organization. Collectivist societies will have more emotional dependence of members on their organizations, when in equilibrium organization is expected to show responsibility on members. . 4. Masculinity vs. femininity - reflect whether certain society is predominantly male or female in terms of cultural values, gender roles and power relations. 5. Long- Versus Short-Term Orientation - which he describes as "The long-term orientation dimension can be interpreted as dealing with society‘s search for virtue. Societies with a short-term orientation generally have a strong concern with establishing the absolute Truth. They are normative in their thinking. They exhibit great respect for traditions, a relatively small propensity to save for the future, and a focus on achieving quick results. In societies with a long-term orientation, people believe that truth depends very much on situation, context and time. They show an ability to adapt traditions to changed conditions, a strong propensity to save and invest, thriftiness, and perseverance in achieving results." Deal and Kennedy: Deal and Kennedy created a model of culture that is based on 4 different types of organizations. They each focus on how quickly the organization receives feedback, the way members are rewarded, and the level of risks taken: 1. Work-hard, play-hard culture: This has rapid feedback/reward and low risk resulting in: Stress coming from quantity of work rather than uncertainty. High-speed action leading to high-speed recreation. Examples: Restaurants, software companies. 2. Tough-guy macho culture: This has rapid feedback/reward and high risk, resulting in the following: Stress coming from high risk and potential loss/gain of reward. Focus on the present rather than the longer-term future. Examples: police, surgeons, sports. 3. Process culture: This has slow feedback/reward and low risk, resulting in the following: Low stress, plodding work, comfort and security. Stress that comes from internal politics and stupidity of the system. Development of bureaucracies and other ways of QIS College of Engineering and Technology, Ongole Page 2

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 maintaining the status quo. Focus on security of the past and of the future. Examples: banks, insurance companies. 4. Bet-the-company culture: This has slow feedback/reward and high risk, resulting in the following: Stress coming from high risk and delay before knowing if actions have paid off. The long view is taken, but then much work is put into making sure things happen as planned. Examples: aircraft manufacturers, oil companies. Edgar Schein: According to Schein (1992), culture is the most difficult organizational attribute to change, outlasting organizational products, services, founders and leadership and all other physical attributes of the organization. His organizational model illuminates culture from the standpoint of the observer, described by three cognitive levels of organizational culture. At the first and most cursory level of Schein's model is organizational attributes that can be seen, felt and heard by the uninitiated observer - collectively known as artifacts. Included are the facilities, offices, furnishings, visible awards and recognition, the way that its members dress, how each person visibly interacts with each other and with organizational outsiders, and even company slogans, mission statements and other operational creeds. Strong/weak cultures: Strong culture is said to exist where staff respond to stimulus because of their alignment to organizational values. In such environments, strong cultures help firms operate like well-oiled machines, engaging in outstanding execution with only minor adjustments to existing procedures as needed. Conversely, there is weak culture where there is little alignment with organizational values, and control must be exercised through extensive procedures and bureaucracy. Factors and elements Gerry Johnson described a cultural web, identifying a number of elements that can be used to describe or influence organizational culture: The paradigm: What the organization is about, what it does, its mission, its values. Control systems: The processes in place to monitor what is going on. Role cultures would have vast rulebooks. There would be more reliance on individualism in a power culture. Organizational structures: Reporting lines, hierarchies, and the way that work flows through the business. Power structures: Who makes the decisions, how widely spread is power, and on what is power based? Symbols: These include organizational logos and designs, but also extend to symbols of power such as parking spaces and executive washrooms. Rituals and routines: Management meetings, board reports and so on may become more habitual than necessary. Stories and myths: build up about people and events, and convey a message about what is valued within the organization. QIS College of Engineering and Technology, Ongole Page 3

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 Organizational culture is shaped by multiple factors, including the following: External environment Industry Size and nature of the organization‘s workforce Technologies the organization uses The organization‘s history and ownership Communicative Indicators There are many different types of communication that contribute in creating an organizational culture: Metaphors such as comparing an organization to a machine or a family reveal employees‘ shared meanings of experiences at the organization. Stories can provide examples for employees of how to or not to act in certain situations. Rites and ceremonies combine stories, metaphors, and symbols into one. Several different kinds of rites that affect organizational culture: Rites of passage: employees move into new roles Rites of degradation: employees have power taken away from them Rites of enhancement: public recognition for an employee‘s accomplishments Rites of renewal: improve existing social structures Rites of conflict reduction: resolve arguments between certain members or groups Rites of integration: reawaken feelings of membership in the organization Reflexive comments are explanations, justifications, and criticisms of our own actions. This includes: Plans: comments about anticipated actions Commentaries: comments about action in the present Accounts: comments about an action or event that has already occurred Such comments reveal interpretive meanings held by the speaker as well as the social rules they follow. Fantasy Themes are common creative interpretations of events that reflect beliefs, values, and goals of the organization. They lead to rhetorical visions, or views of the organization and its environment held by organization members. Healthy organizational cultures Organizations should strive for what is considered a "healthy" organizational culture in order to increase productivity, growth, efficiency and reduce counterproductive behavior and turnover of employees. A variety of characteristics describe a healthy culture, including: QIS College of Engineering and Technology, Ongole Page 4

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 Acceptance and appreciation for diversity Regard for and fair treatment of each employee as well as respect for each employee‘s contribution to the company Employee pride and enthusiasm for the organization and the work performed Equal opportunity for each employee to realize their full potential within the company Strong communication with all employees regarding policies and company issues Strong company leaders with a strong sense of direction and purpose Ability to compete in industry innovation and customer service, as well as price Lower than average turnover rates (perpetuated by a healthy culture) Investment in learning, training, and employee knowledge Charles Handy Charles Handy popularized Roger Harrison with linking organizational organizational culture. The described four types of culture are: structure to 1. Power culture: concentrates power among a small group or a central figure and its control is radiating from its center like a web. Power cultures need only a few rules and littlebureaucracy but swift in decisions can ensue. 2. Role culture: authorities are delegated as such within a highly defined structure. These organizations form hierarchical bureaucracies, where power derives from the personal position and rarely from an expert power. Control is made by procedures (which are highly valued), strict roles descriptions and authority definitions. These organizations have consistent systems and are very predictable. This culture is often represented by a "Roman Building" having pillars. These pillars represent the functional departments. 3. Task culture: teams are formed to solve particular problems. Power is derived from the team with the expertise to execute against a task. This culture uses a small team approach, where people are highly skilled and specialized in their own area of expertise. Additionally, these cultures often feature the multiple reporting lines seen in a matrix structure. 4. Person culture: formed where all individuals believe themselves superior to the organization. It can become difficult for such organizations to continue to operate, since the concept of an organization suggests that a group of like-minded individuals pursue organizational goals. However some professional partnerships operate well as person cultures, because each partner brings a particular expertise and clientele to the firm. Constructive cultures Constructive cultures are where people are encouraged to be in communication with their coworkers, and work as teams, rather than only as individuals. In positions where people do a complex job, rather than something simple like a mechanic one, this sort of culture is an efficient one. 1. Achievement: completing a task successfully, typically by effort, courage, or skill (pursue a standard of excellence) (explore alternatives before acting) - Based on the need QIS College of Engineering and Technology, Ongole Page 5

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 to attain high-quality results on challenging projects, the belief that outcomes are linked to one's effort rather than chance and the tendency to personally set challenging yet realistic goals. People high in this style think ahead and plan, explore alternatives before acting and learn from their mistakes. 2. Self-actualizing: realization or fulfillment of one's talents and potentialities - considered as a drive or need present in everyone (think in unique and independent ways) (do even simple tasks well) - Based on needs for personal growth, self-fulfillment and the realization of one's potential. People with this style demonstrate a strong desire to learn and experience things, creative yet realistic thinking and a balanced concern for people and tasks. 3. Humanistic-encouraging: help others to grow and develop (resolve conflicts constructively) - Reflects an interest in the growth and development of people, a high positive regard for them and sensitivity to their needs. People high in this style devote energy to coaching and counseling others, are thoughtful and considerate and provide people with support and encouragement. 4. Affiliative: treat people as more valuable than things (cooperate with others) - Reflects an interest in developing and sustaining pleasant relationships. People high in this style share their thoughts and feelings, are friendly and cooperative and make others feel a part of things Aggressive/defensive cultures This style is characterized with more emphasis on task than people. Because of the very nature of this style, people tend to focus on their own individual needs at the expense of the success of the group. The aggressive/defensive style is very stressful, and people using this style tend to make decisions based on status as opposed to expertise. 1. Oppositional - This cultural norm is based on the idea that a need for security that takes the form of being very critical and cynical at times. People who use this style are more likely to question others work; however, asking those tough question often leads to a better product. Nonetheless, those who use this style may be overly-critical toward others, using irrelevant or trivial flaws to put others down. 2. Power - This cultural norm is based on the idea that there is a need for prestige and influence. Those who use this style often equate their own self-worth with controlling others. Those who use this style have a tendency to dictate others opposing to guiding others‘ actions. 3. Competitive - This cultural norm is based on the idea of a need to protect one‘s status. Those who use this style protect their own status by comparing themselves to other individuals and outperforming them. Those who use this style are seekers of appraisal and recognition from others. 4. Perfectionistic - This cultural norm is based on the need to attain flawless results. Those who often use this style equate their self-worth with the attainment of extremely high standards. Those who often use this style are always focused on details and place excessive demands on themselves and others. QIS College of Engineering and Technology, Ongole Page 6

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 Entrepreneurial organizational culture Stephen McGuire (2003) defined and validated a model of organizational culture that predicts revenue from new sources. An Entrepreneurial Organizational Culture (EOC) is a system of shared values, beliefs and norms of members of an organization, including valuing creativity and tolerance of creative people, believing that innovating and seizing market opportunities are appropriate behaviors to deal with problems of survival and prosperity, environmental uncertainty, and competitors' threats, and expecting organizational members to behave accordingly. Elements People and empowerment focused Value creation through innovation and change Attention to the basics Hands-on management Doing the right thing Freedom to grow and to fail Commitment and personal responsibility Emphasis on the future National and organizational culture Corporate culture is used to control, coordinate, and integrate of company subsidiaries. However differences in national cultures exist contributing to differences in the views on the management. Differences between national cultures are deep rooted values of the respective cultures, and these cultural values can shape how people expect companies to be run, and how relationships between leaders and followers should be resulting to differences between the employer and the employee on expectations. Perhaps equally foundational; observing the vast differences in national copyright laws suggests deep rooted differing cultural attitudes and assumptions on property rights and sometimes; the desired root function, place, or purpose of corporations relative to the population. Learning culture: To become learning Organisation is to accept a set of attitudes, values and practices that support the process of continuous learning within the organisation. Training is a key element in the business strategy of an organisation dedicated to continuous learning. Through learning, individuals can re-interpret their world and their relationship to it. A true learning culture continuously challenges its own methods and ways of doing things. This ensures continuous improvement and the capacity to change. The Progress International workshop will look at some research into Learning Cultures conducted by leading management thinker, Peter Senge, who has identified five disciplines of a learning culture that contribute to building a QIS College of Engineering and Technology, Ongole Page 7

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 robust learning organisation. These elements are: Personal mastery – create an environment that encourages personal, organizational goals to be developed and realised in partnership Mental models – know that a person‘s 'internal' picture of their environment will shape their decisions and behaviour Shared vision – build a sense of group commitment by developing shared images of the future Team learning – transform conversational and collective thinking skills, so that a group‘s capacity to reliably develop intelligence and ability is greater than the sum of its individual member's talents System thinking – develop the ability to see the 'big picture' within an organisation and understand how changes in one area affect the whole system. Creating a Learning Culture Creating a learning culture within your organisation will take you one step beyond just acquiring the skills that you need to deliver its products and services. It will empower your people to achieve dramatically improved results compared to more traditional organisations, as it enables staff to: easily adapt to change actually anticipate change be more responsive to the market place generate more energetic, loyal and goal oriented employees grow through innovation. Learning cultures can be achieved in all Authorities, Industries and Companies of all sizes. The programme will explore the ―WHAT? WHY? and HOW?‖ of Learning Cultures and will challenge attendees to consider the WHEN? -i.e. WHEN will they start their creation of such a culture by encouraging the delegates to create Learning Culture SMART objectives for them or their working groups or departments? Definition and Characteristics The culture of an organization is all the beliefs, feelings, behaviors, and symbols that are characteristic of an organization. More specifically, organizational culture is defined as shared philosophies, ideologies, beliefs, feelings, assumptions, expectations, attitudes, norms, and values. While there is considerable variation in the definitions of organizational culture, it appears that most contain the following characteristics: Observed behavioral regularities: When organization members interact, they use common language, terminology, and rituals and ceremonies related to deference and demeanor. QIS College of Engineering and Technology, Ongole Page 8

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 Norms: Standards of behavior evolve in work groups that are considered acceptable or typical for a group of people. The impact of work-group behavior, sanctioned by group norms, results in standards and yardsticks. Dominant values: An organization espouses and expects its members to share major values. Typical examples in schools are high performance levels of faculty and students, low absence and dropout rates of students, and high efficiency. Philosophy: Policies guide an organization‘s beliefs about how employees and clients are to be treated. For example, most school districts have statements of philosophy or mission statements. Rules: Guidelines exist for getting along in the organization, or the ―ropes‖ that a newcomer must learn in order to become an accepted member. Advantages of a learning culture Success for a is usually defined by increase in customer satisfaction, CPD rating or revenue and profit. Yet the cost cutting, downsizing and other rationalization measures that can be used to reach this goal are finite. Sustainable competitive advantage For an Organisation or business to remain productive and competitive in local and global markets, training and lifelong learning should be encouraged across all levels of operation. The benefits of implementing a learning culture include: Superior performance Better quality of product and services Better customer satisfaction Committed and result-focused workforce Greater ability to deal with change. Achieve a learning culture According to Peter Senge, most of us have experienced being part of a great team – a group of people who: Function together in an extraordinary way Trust and complement each other Have common goals that are larger than individual goals Produce extraordinary results. Great teams like this have learned how to work together to produce extraordinary results. QIS College of Engineering and Technology, Ongole Page 9

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 See your organisation in a new way Building a learning organisation requires a shift in the way you see your business. Traditionally, organisations are managed through departments or divisions that do not always communicate well or work together towards a common vision. While most problems can be dealt with by breaking them down into smaller components and finding solutions for each, a learning organisation always considers the impact of each decision on the whole organisation. Commit for the long term Becoming a learning organisation requires a long term commitment. It may take twelve months to introduce the five interrelated disciplines of Peter Senge‘s learning culture model to a business – starting with ‗system thinking‘ and then progressing to the other four disciplines, as follows: System thinking Personal mastery Mental models Shared vision Team learning The Progress Programme will explore ways of developing a learning culture within your organisation based on the following: 1. Top management’s commitment: A learning culture can be developed in an Organisation only when the top management and executive is committed and deeply involved. The learning culture has to be top down and is best cascaded when ―Learning Culture‖ is stated as one of the Organisation KPI‘s or Annual Objectives. Learning should be imbibed in the work culture and the people must live and breathe learning culture with Senior Management being seen to encourage macro-management and empowerment to their employees. 2. Aligning learning culture to business needs: The training professionals should ensure that their modus operandi of developmental activities are aimed at learning. Management must make the employees feel that learning is aligned to business strategies. HR professionals should regularly talk with the line managers or section heads about the issues and problems they are facing and enable the employees to find solutions through the learning process. 3. Setting clear objectives: There should be a clear and firm idea of the goals and objectives to be achieved. As stated above, ―Learning Culture‖ should be a Corporate Goal and stated at the highest level of objectives in order that it is cascaded down to the organisations employees and becomes a part of every employee‘s personal, annual goals. QIS College of Engineering and Technology, Ongole Page 10

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 4. 5. 6. 7. The strategic nature of the job must be reflected through plans. Best plans are developed not in isolation but through joint involvement of colleagues, clients and other stakeholders in business. The use of Appreciative Inquiry in the creation of strategic visions and plans is an excellent tool – as recently used by the BBC, NHS, BP etc. The business objectives are set after a thorough inquiry with clients, senior managers, HR team, and the target employees on how they want to develop their learning culture and best strategies to be adopted. Personalising learning: It must be understood that learning is work and work is learning. The learning content must be appropriate and timely for every employee. The learning content and outcome and objective must be customized to each employee. The learning needs can be identified through performance appraisals or competency based assessments (or centres). Employees should be made to analyse their learning needs visà-vis their performance to achieve the organisational objectives. Employees can be encouraged to work in teams, share information, learning and knowledge through team learning process. The peer group networks must be encouraged so that employees learn from others in teams. Create the right environment for learning: A learning organisation without active learners is like a college without students. In order to build a learning culture we must cultivate active learners by creating a learner centric environment. Employees must be provided with necessary tools and the relevant content to become self-learners. Refining our approach to learning must continually develop learning culture. It is possible to refine learning approach after getting feedback from employees. The refined learning approach can be implemented by piloting learning zones. After assessing the success of the pilot zones the learning approach can be implemented in the Organisation. Attention to peoples preferred learning styles is to be considered so as to create a variety of learning methods to suit the Theorist, Activist, Pragmatist, Reflector etc. Developing contract for learning: In developing a learning culture employees are expected to play a role in their career development. The ownership and accountability for learning should be on the employees. The contract of employment shall be clear about what the company is prepared to offer and what the company expects from the employee towards continuous learning. But the learning contracts may not be appropriate in all situations. The main objective of a learning contract is to create a clear learning strategy and communicating the same to employees. The learning contract through communicating the clear-cut strategy to employees must get their tacit commitment for the learning process to achieve the goals of the organization. Removing barriers in learning: The main aspect in self-learning is that the learners may not tolerate any obstacle. The obstacles if any should be removed and the work life must become hassle free for learners. The learning courses must be intuitive to use and must be available in one place and easily accessible. As the learning is important, cost must not be a hurdle in implementing a learning culture. QIS College of Engineering and Technology, Ongole Page 11

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 8. Building learning culture: One may come across many barriers particularly the reluctance of employees to change their behaviour. This barrier can be removed by developing coaches and mentors to help employee development. Coaches are to be rewarded for their services. The coaches and mentors love to perform the tasks because the rewards are personalised. In building learning culture in an organisation the work culture must have democratic principles. The coaches are to be assessed about their attitudes. The organisation culture shall not be of command and control. The learning culture cannot be built in such an atmosphere. Organisations to become Learning Organisations shall have to invest time and provide resources for learning. 9. Encourage experimental mindset: Employees must be encouraged to experiment with new ideas and to take calculated risks. Organisations should encourage employees to take advantage of changes taking place in business. In fact they must be able to foresee changes and be prepared to ace changes. Employees must be encouraged to try new things at their workplace and within the context of the organisation. Employees who are innovative, creative, and experimental must then be rewarded. 10. Listen to the feedback: The management should listen to and consider the feedback from the learners about the effectiveness of the learning process practiced in the organisation. It is better to have an online assessment tool and conduct surveys to find out the employees views on the learning process and build an improvement plan. Learning Outcomes Delegates will recognize the importance of a Learning and Development culture and it‘s positive effects it will have on individuals, teams and organizations. Delegates will learn the 10 Pre-Requisites of a Learning Culture and how to apply it to their own organisation. Delegates will learn Appreciative Inquiry facilitation skills to enable them to create shared ―learning culture‖ visions within their own companies. Delegates will discover how to create the most effective environment in order to encourage a Learning Culture to thrive. Delegates will explore how Leadership Styles and Organisational Cultures can encourage or stifle innovation. Delegates will learn how to create a contagious environment in their workplace where a Personal Continuous Development attitude flourishes. Delegates will develop the ability to see the 'big picture' within an organisation and understand how changes in one area affect the whole system. QIS College of Engineering and Technology, Ongole Page 12

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 Organizational Culture Measurement Dimensions of Culture Which values characterize an organization‘s culture? Even though culture may not be immediately observable, identifying a set of values that might be used to describe an organization‘s culture helps us identify, measure, and manage culture more effectively. For this purpose, several researchers have proposed various culture typologies. One typology that has received a lot of research attention is the Organizational Culture Profile (OCP) where culture is represented by seven distinct values. Innovative Cultures: According to the OCP framework, companies that have innovative cultures are flexible, adaptable, and experiment with new ideas. These companies are characterized by a flat hierarchy and titles and other status distinctions tend to be downplayed 2. Aggressive Cultures: Companies with aggressive cultures value competitiveness and outperforming competitors; by emphasizing this, they often fall short in corporate social responsibility. For example, Microsoft is often identified as a company with an aggressive culture. The company has faced a number of antitrust lawsuits and disputes with competitors over the years. In aggressive companies, people may use language such as ―we will kill our competition.‖ In the past, Microsoft executives made statements such as ―we are going to cut off Netscape‘s air supply…Everything they are selling, we are going to give away,‖ and its aggressive culture is cited as a reason for getting into new legal troubles before old ones are resolved. 3. Outcome-Oriented Cultures: The OCP framework describes outcome-oriented cultures as those that emphasize achievement, results, and action as important values. A good example of an outcome-oriented culture may be the electronics retailer Best Buy. Having a culture emphasizing sales performance, Best Buy tallies revenues and other relevant figures daily by department. Employees are trained and mentored to sell company products effectively, and they learn how much money their department made 1. QIS College of Engineering and Technology, Ongole Page 13

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 4. 5. 6. 7. 8. every day. In 2005, the company implemented a Results Oriented Work Environment (ROWE) program that allows employees to work anywhere and anytime; they are evaluated based on results and fulfillment of clearly outlined objectives. Outcomeoriented cultures hold employees as well as managers accountable for success and use systems that reward employee and group output. In these companies, it is more common to see rewards tied to performance indicators as opposed to seniority or loyalty. Research indicates that organizations that have a performance-oriented culture tend to outperform companies that are lacking such a culture. Stable Cultures: Stable cultures are predictable, rule-oriented, and bureaucratic. When the environment is stable and certain, these cultures may help the organization to be effective by providing stable and constant levels of output. These cultures prevent quick action and, as a result, may be a misfit to a changing and dynamic environment. Public sector institutions may be viewed as stable cultures. In the private sector, Kraft Foods is an example of a company with centralized decision making and rule orientation that suffered as a result of the culture-environment mismatch. People-Oriented Cultures: People-oriented cultures value fairness, supportiveness, and respecting individual rights. In these organizations, there is a greater emphasis on and expectation of treating people with respect and dignity. One study of new employees in accounting companies found that employees, on average, stayed 14 months longer in companies with people-oriented cultures. Team-Oriented Cultures: Companies with a team-oriented culture are collaborative and emphasize cooperation among employees. For example, Southwest Airlines facilitates a team-oriented culture by cross-training its employees so that they are capable of helping one another when needed. The company also emphasizes training intact work teams. Detail-Oriented Cultures: Organizations with a detail-oriented culture are characterized in the OCP framework as emphasizing precision and paying attention to details. Such a culture gives a competitive advantage to companies in the hospitality industry by helping them differentiate themselves from others. Strength of Culture: A strong culture is one that is shared by organizational member— that is, a culture in which most employees in the organization show consensus regarding the values of the company. The stronger a company‘s culture, the more likely it is to affect the way employees think and behave. For example, cultural values emphasizing customer service will lead to higher-quality customer service if there is widespread agreement among employees on the importance of customer-service-related values. QIS College of Engineering and Technology, Ongole Page 14

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 Organizational Effectiveness Organizational effectiveness is the concept of how effective an organization is in achieving the outcomes the organization intends to produce. The idea of organizational effectiveness is especially important for non-profit organizations as most people who donate money to nonprofit organizations and charities are interested in knowing whether the organization is effective in accomplishing its goals. Organizational effectiveness is typically evaluated within nonprofit organizations using logic models. Logic models are a management tool widely used in the nonprofit sector in program evaluation. Logic models are created for specific programs to link specific, measurable inputs to specific, measurable impacts. Typically, logic models specify how program inputs, such as money and staff time, produce activities and outputs, such as services delivered, which in turn lead to impacts, such as improved beneficiary health. Definition: According to Richard ‖organizational effectiveness captures organizational performance plus the myriad internal performance outcomes normally associated with more efficient or effective operations and other external measures that relate to considerations that are broader than those simply associated with economic valuation (either by shareholders, managers, or customers), such as corporate social responsibility‖. Approaches to Measuring Organizational Effectiveness Goal Approach: Effectiveness is the ability to excel at one or more output goals. Internal Process Approach: Effectiveness is the ability to excel at internal efficiency, coordination, motivation, and employee satisfaction. System Resource Approach: Effectiveness is the ability to acquire scarce and valued resources from the environment. Constituency Approach: Effectiveness is the ability to satisfy multiple strategic constituencies both within and outside the organization. Domain Approach: Effectiveness is the ability to excel in one or more among several domains as selected by senior managers. QIS College of Engineering and Technology, Ongole Page 15

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 Factors affecting the Organizational Effectiveness Determinants of Organizational Effectiveness What makes organizations effective is directly related to decision-making criteria and processes; calls for all to make explicit their ―theories of effectiveness‖ Goal-centered vs. natural systems perspectives of effectiveness. In the ―real world‖ proponents of each see these as mutually exclusive Underlying objective was to determine a parsimonious set of effectiveness determinants to be used for organizational design. Campbell found 30 in the literature, but warned against assumptions of objectivity, even among ―hard,‖ statistically-obtained artifacts; determining effectiveness criteria is a political process Framework for Organizational Effectiveness Organization comprised of constituencies; effectiveness is a matter of coordination of these subunits (hence degrees of interdependency are important. QIS College of Engineering and Technology, Ongole Page 16

Management Theory & Organizational Behavior K. Chandra sekher-13491E0037 Dominant coalitions of constituencies set the agenda (and there‘s a good, hegemonic reason for this – they‘re the ―rational‖ ones) Organizations exist in an environment of external constituencies with whom they have exchange relationships. The organization plus its external constituencies comprise the ―organizational set.‖ Approaches to Organizational Effectiveness Goal Approach: The Goal Approach is also called rational-goal or goal-attainment approach; it has its origins in the mechanistic view of the organization. This approach assumes that organisations are planned, logical, goal-seeking entities and they are meant to accomplish one or more predetermined goals. Goal approach is worried with the output side and whether or not the organization attains its goals with respect to preferred levels of output. It sees effectiveness with respect to its internal organisational objectives and performance. Typical goal-attainment factors include profit and efficiency maximization 2. System Resource Approach: This approach to Organizational Effectiveness was developed in response to the goal approach. The System Resource Approach sees an organisation as an open system. The organisation obtains inputs, participates in transformation processes, and generates outputs. This approach emphasizes inputs over output. It sees most organizations as entities which function in order to survive, at the same time rivaling for scarce and valued resources. It assumes that the organisation consists of interrelated subsystems. If any sub-system functions inefficiently, it is going to influence the performance of the whole system. 3. Internal-Process Approach: This approach has been developed in response to a fixed output view of the goal approach. It looks at the internal activities. Organizational effectiveness is assessed as internal organizational health and effectiveness. According to Internal-Process Approach effectiveness is the capability to get better at internal efficiency, co-ordination, commitment and staff satisfaction. This approach assesses effort as opposed to the attained effect. 4. Strategic Constituencies Approach: This approach suggests that an efficient organisation is one which fulfills the demands of those constituencies in its environment from whom it needs support for its survival. It assesses the effectiveness to satisfy multiple strategic constituencies both internal and external to the organization. Strategic Constituencies Approach is ideal for organizations which rely highly on response to demands. The Strategic-constituencies approach takes explicitly into consideration that organizations fulfill multiple goals: each kind of organizational constituency (like proprietors, workers, consumers, the local community, etc.) is supposed to have distinct interests‘ vis-à-vis the corporation, and will thus use different evaluation criteria. 1. QIS College of Engineering and Technology, Ongole Page 17

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