MODULE 3 OB ORGANIZATONAL CULTURE

DEFINITION
Edgar Schein- "A pattern of basic assumptions invented, discovered, or developed by a
given group as it learns to cope with its problems of external adoption and internal
integration that has worked well enough to be considered valuable and, therefore, to be
taught to new members as the correct way to perceive, think, and feel, in relation to those
problems.

Seven Elements of Organizational Culture by Chatman and Jehn (1994)

1.​ Innovation​
Innovation in organizational culture emphasizes creativity and the generation of
new ideas. Companies with this culture actively encourage employees to think
outside the box and experiment with unconventional solutions.​
Example: A tech company like Google provides employees with time and
resources to work on personal projects (e.g., the "20% time" policy). This freedom
has led to groundbreaking products like Gmail and Google Maps.
2.​ Stability​
Stability fosters a predictable and rule-oriented environment where consistency
and reliability are valued. Organizations prioritize structured processes and
standardized protocols to maintain order.​
 Example: Banks like JPMorgan Chase ensure stability by enforcing strict
compliance rules and financial protocols to protect clients and ensure operational
safety.
3.​ Orientation Toward People​
This element focuses on fairness, support, and respect for individuals.
Organizations with a people-oriented culture prioritize employee well-being and
foster a sense of belonging.​
Example: A company like Patagonia offers employees benefits like on-site
childcare and paid time off for volunteering, demonstrating their commitment to
employee happiness and social responsibility.
4.​ Result Orientation​
This type of culture revolves around achieving desired outcomes. Employees and
teams are motivated to reach targets, often tied to measurable performance
indicators.​
Example: Sales teams at companies like Amazon have specific revenue goals, and
high performers receive bonuses or other incentives to recognize their
achievements.
5.​ Easygoingness​
An easygoing culture is relaxed, flexible, and informal. It reduces stress and
promotes a fun, enjoyable work environment.​
Example: Startups often adopt an easygoing culture by allowing employees to
work remotely or offering flexible hours, like a small software firm where
employees work in casual attire and play video games during breaks.
6.​ Attention to Detail​
This culture emphasizes precision, accuracy, and thoroughness. It is often
prevalent in industries where even minor mistakes can have significant
consequences.​
Example: A pharmaceutical company like Pfizer implements meticulous quality
control processes to ensure the safety and efficacy of its products.
 7.​ Collaborative Orientation​
Collaborative cultures prioritize teamwork over individual effort. Employees are
encouraged to work together, share ideas, and support each other to achieve
common goals.​
Example: Consulting firms like McKinsey & Company emphasize project-based
teamwork, where diverse experts collaborate to solve complex client problems.

Three Levels of Organizational Culture by Edgar Schein (1982)

1.​ Basic Assumptions​

These are deeply held, often unconscious beliefs that form the foundation of an
organization’s culture. They are rarely questioned and provide a sense of direction
for decision-making and behavior.​
Example: A company with a strong commitment to sustainability may believe
that "protecting the environment is everyone’s responsibility." This belief
influences practices like reducing waste, using renewable energy, and creating
eco-friendly products.
2.​ Artefacts​
Artefacts are the visible and tangible aspects of an organization’s culture. These
include office design, dress codes, rituals, ceremonies, and even communication
styles.​
Example: Open office layouts in companies like Meta (formerly Facebook)
symbolize transparency and encourage collaboration, while formal dress codes in
law firms signify professionalism and tradition.
3.​ Values​
Values are the shared principles and standards that guide behavior within the
organization. They serve as a moral compass and influence how employees
interact with each other and stakeholders.​
 Example: A company with a value of "integrity" will expect employees to be
honest in their dealings, even if it means losing a business opportunity.

Implications of Organizational Culture

1.​ Employee Behavior​

The culture defines acceptable behaviors, shaping how employees interact with
each other and approach their work.​
Example: A results-oriented culture encourages employees to avoid
procrastination and focus on delivering outcomes efficiently.
2.​ Decision-Making​
Organizational culture influences how decisions are made—whether they are
centralized with leaders or decentralized, allowing employees more autonomy.​
Example: In a collaborative culture, decisions may involve input from team
members rather than being made unilaterally by managers.
3.​ Motivation​
A strong and positive culture aligns organizational goals with employees’ personal
values, inspiring them to contribute their best.​
Example: A people-oriented culture where employees are recognized for their
efforts can motivate them to stay engaged and perform better.
4.​ Adaptability​
Culture determines how well an organization can respond to changes in the
external environment. A flexible culture is more adaptable to innovation and
market shifts.​
Example: Companies like Netflix adapted their culture to focus on streaming
services when consumer preferences shifted from DVDs to online entertainment.
5.​ Performance​
A well-aligned culture enhances productivity, efficiency, and morale. When
 employees believe in the organization’s values, they are more likely to perform at
their best.​
Example: Companies with a strong innovation culture, like Apple, produce
high-quality, market-leading products that boost their bottom line.

Process of Organizational Culture

1.​ Formation of Culture​

Leaders and founders set the tone for the organization by establishing values and
assumptions that align with their vision.​
Example: The founder of Tesla, Elon Musk, instilled a culture of innovation and
risk-taking to drive technological breakthroughs in the automotive industry.
2.​ Socialization​
Employees learn about the organization’s culture through onboarding, training,
and observing peers and leaders.​
Example: A new employee at Starbucks learns about the company’s
customer-focused culture by shadowing experienced baristas and participating in
training programs.
3.​ Reinforcement​
Organizations reinforce their culture by recognizing and rewarding behaviors that
align with their values. This ensures employees stay motivated and committed.​
Example: A collaborative culture is reinforced by celebrating team successes with
awards or public recognition.
4.​ Adaptation or Change​
When external environments change, organizations may need to adapt their
culture. This involves revisiting core values, redefining norms, and
communicating the changes effectively.​
 Example: When the COVID-19 pandemic hit, many organizations adapted their
cultures to support remote work, prioritizing flexibility and digital collaboration.

CHARACHTERISTICS

1.Observed Behavioral Regularities​

When people interact in organizations, they use common language, rituals, and behaviors
that promote uniformity.

Example: At Google, employees address each other, including senior

leaders, by their first names. Collaborative brainstorming sessions and
open-plan office spaces are part of their culture, fostering innovation and
openness.

1.​ Norms​
Unwritten standards of behavior guide how much work to do and how to conduct
oneself.

Example: At Toyota, the norm of stopping the production line if a defect is

found (referred to as "Jidoka") emphasizes quality over speed and
empowers employees to ensure excellence.

2.​ Dominant Values​

Organizations promote specific core values, expecting members to embody them.

Example: Apple is driven by innovation and aesthetics. Employees are

encouraged to think differently, consistently pushing the boundaries of
creativity and aligning with the organization’s vision.
3.​ Philosophy​
Core beliefs define how employees and customers are treated, creating an ethical
backbone for the organization.

Example: Southwest Airlines prioritizes employee happiness, believing

that satisfied employees lead to satisfied customers. Their philosophy of
respect and fun shapes their workplace environment.

4.​ Rules​
Guidelines help new members adapt and become integral parts of the organization.

Example: At McDonald’s, strict rules govern food preparation,

cleanliness, and customer service. Trainees learn exact processes, like the
precise time for cooking fries, to ensure consistency.

5.​ Organizational Climate​

The overall ambiance, shaped by interactions and physical layout, reflects the
organization’s culture.
 Example: Zappos fosters a friendly and casual atmosphere. Their colorful
offices, open-door management policy, and focus on customer satisfaction
create an engaging and inclusive climate.

Reliance Group highlights the value of time, as seen in their rapid completion of the
Patalganga project in just 15 months—a testament to how organizational culture drives
efficiency and success.

Types of Organizational Cultures

Organizations can have different types of cultures that shape how employees work and
interact. The two main types are:
1. Dominant Culture and Subculture

●​ Dominant Culture:​
This is the main culture shared by most members of the organization. It gives the
organization a consistent personality and helps employees align their day-to-day
behavior.
○​ Example: At Reliance Group, employees prioritize the value of time,
which is a core part of their dominant culture. This focus on efficiency
influences decisions and actions across all levels.
●​ Subculture:​
These are smaller cultures within the organization, formed by specific
departments, teams, or groups. Subcultures arise because of unique challenges or
experiences within a division.
○​ Types:
■​ Vertical Subculture: A division like marketing or sales develops its
own unique culture, distinct from others in the organization.
■​ Horizontal Subculture: Groups like accountants or engineers share
common practices and values across departments.
○​ Example: In a large company, the R&D department might focus on
creativity and innovation, while the operations team emphasizes precision
and efficiency.
2. Strong and Weak Cultures

Aspect Strong Culture Weak Culture

Definition - A culture where core values are A culture where core values are
deeply held and widely shared by not widely shared or understood.
employees.

Orientation- New employees are trained in the Limited or no focus on training

organization’s values and practices employees in the organization’s
through clear programs and values or goals.
examples.

Rewards- Employees who follow and uphold Rewards and promotions are not
core values are rewarded and tied to the organization’s values,
promoted, reinforcing the culture. causing confusion and
disengagement.

Employee Employees are highly aligned with Employees often work without a
Behavior- the organization’s goals, making sense of shared purpose or
decisions and working in harmony alignment with organizational
with its values. goals.
Turnover- Low employee turnover as people High turnover as employees may
feel connected and motivated to feel disconnected or unsupported.
stay.

Examples- - Google: Employees share strong - A start-up with no established

values like innovation and culture may lack shared values.
collaboration.
- Companies facing internal
- Toyota: Quality and efficiency are conflicts or lack of vision.
deeply ingrained.

FUNCTIONS OF ORGANIZATIONAL CULTURE

1. Provides Shared Understanding

●​ Explanation: Culture helps employees understand what behaviors and attitudes

are acceptable in the organization.
●​ Example: In an organization that values teamwork, employees are encouraged to
collaborate and share ideas during meetings rather than working in isolation.

2. Shapes Feelings and Values

●​ Explanation: Culture defines what employees should feel or value, aligning

emotions with the organization’s mission.
●​ Example: A hospital culture emphasizing empathy ensures that healthcare
workers prioritize patient care and emotional connection with patients.
3. Defines Boundaries

●​ Explanation: Culture creates a sense of identity, separating the organization from

others and defining who belongs to it.
●​ Example: A tech company like XYZ Innovations may have a distinct culture of
flexibility, using casual dress codes and open workspaces that differentiate it from
a formal corporate office.

4. Encourages Commitment

●​ Explanation: Culture motivates employees to prioritize organizational goals over

individual ones.
●​ Example: A non-profit organization with a mission to fight climate change instills
a shared sense of purpose in employees, leading them to dedicate extra effort
toward sustainability projects.

5. Promotes Social Stability

●​ Explanation: Culture reduces conflicts and ensures harmony by providing clear

behavioral expectations.
●​ Example: In a retail company, a culture that values customer satisfaction trains
employees to remain calm and courteous during conflicts with customers.

6. Acts as a Control Mechanism

●​ Explanation: Culture guides employee behavior by setting clear rules and

expectations.
●​ Example: A financial services firm might emphasize integrity and transparency,
ensuring employees follow ethical practices in all transactions.
7. Provides Direction

●​ Explanation: Culture aligns employees toward common goals, ensuring

consistency in efforts.
●​ Example: In a manufacturing company, a culture focused on quality ensures every
employee works toward producing defect-free products.

HOW Organizational Culture , CREATE , SUSTAIN AND CHANGE

Organizational culture is the shared understanding of values among members of an

organization. While it provides identity and guides behavior, culture is not permanent and
can fade over time. As the external environment changes, organizational culture must
also adapt to remain relevant. This brings us to three important questions:

1.​ How is culture created?

2.​ What forces sustain culture?
3.​ How does culture change?

1. Creating a Culture

Origin of Culture:​
The beliefs and values that form the foundation of an organization's culture are rooted in
its past. The founders of an organization play a central role in establishing its culture.
They envision what the organization should be and impose this vision on others. Through
interaction and experience, the vision becomes shared by the organizational members.

Examples of Founders Influencing Culture:

●​ Thomas Watson (IBM): His emphasis on research, product innovation, employee

dress code, and compensation policies left a legacy that continues to influence
IBM, even though he passed away in 1956.
 ●​ J.R.D. Tata (Tata Group): Tata’s professionalism, supportiveness, and belief in
honesty shaped the Tata Group’s culture, which persists today.

Process of Culture Creation:​

Fred Luthans outlined a three-step process for how culture is created:

1.​ Vision or Idea by the Founder: A single person, the founder, begins with an idea
or vision for what the organization should be.
2.​ Formation of a Core Group: The founder recruits a team that shares the vision.
This core group works together to establish the organization by accepting and
acting on the founder’s ideas.
3.​ Organizational Establishment: The founding group takes concrete steps to turn
the vision into reality. This includes raising funds, obtaining patents, creating
infrastructure, and building the organization.

2. Sustaining a Culture

Once culture is created, it requires reinforcement to prevent it from fading. The key
mechanisms for sustaining culture are selection practices, actions of top management,
and socialization methods.

A. Selection Practices:​
The first step in sustaining culture is ensuring that new employees align with the
organization’s values. This is achieved through a meticulous selection process aimed at
identifying candidates whose personal styles and values fit the organizational culture.

●​ Example: At Procter & Gamble (P&G), the selection process is exhaustive.

○​ Recruiters, trained through lectures, films, and role plays, thoroughly
interview candidates.
 ○​ Candidates are screened for their ability to align with P&G’s value of
rationality.​
This approach ensures that employees who join P&G contribute to
sustaining its culture.

B. Actions of Top Management:​

Subordinates emulate their managers. Therefore, the behavior and actions of top
management significantly influence and sustain the organizational culture.

●​ Managerial decisions such as granting autonomy, setting dress codes, and offering
rewards for good performance reinforce cultural norms.
●​ These practices create a trickle-down effect, embedding the culture throughout the
organization.

C. Socialization Methods:​
Socialization helps new employees adapt to the organization’s culture by learning its
values, behaviors, and norms. This process has three phases:

1.​ Pre-Arrival: This includes all the learning a new recruit undergoes before joining
the organization. The individual forms expectations about the organization during
this stage.
2.​ Encounter: This stage begins when the recruit joins the organization. They
compare their expectations with the reality of the organization.
○​ If expectations align with reality, the transition is smooth.
○​ If there is a mismatch, stress and frustration occur, leading the individual to
either adjust or leave the organization.
3.​ Metamorphosis: This is the final stage where the individual adjusts their
behavior, values, and norms to align with the organization’s culture.
○​ Employees master the skills for their roles and internalize the organization’s
norms.
 ○​ This voluntary adjustment marks the completion of the socialization
process.

3. Changing a Culture

Why Change is Necessary:​

Organizations operate in dynamic environments. Factors like market trends, technological
advancements, and societal expectations require cultural adaptation. A culture that works
well in one environment may become ineffective in another. Without change,
organizations risk becoming obsolete.

Challenges in Changing Culture:​

Changing a strong culture is particularly difficult due to:

●​ Deeply rooted values and assumptions.

●​ Employees’ emotional commitment to the existing culture.

In contrast, weak cultures are easier to change as their values are not as firmly
entrenched.

Process of Cultural Change:​

To successfully change culture, organizations must:

1.​ Recognize misalignments between the current culture and environmental demands.
2.​ Implement strategies that align cultural practices with new conditions.

Culture vs. Formalization

Organizations use two main ways to shape employee behavior:

1.​ Formalization – Using written rules, policies, and procedures to ensure

consistency, predictability, and order.
2.​ Organizational Culture – Unwritten shared values, norms, and behaviors that
employees naturally follow.

A strong organizational culture can reduce the need for formalization. When employees
internalize the company’s values, they don’t need strict rules to guide them.

Example 1: A Restaurant Chain

●​ A fast-food chain like McDonald's has detailed rulebooks for everything – how to
cook fries, how long to greet a customer, and how to clean tables. This is
formalization because it ensures every branch delivers the same service.
●​ In contrast, a luxury restaurant may have a strong culture of hospitality, where
employees naturally treat customers well without needing strict guidelines.

Example 2: A Tech Company

●​ A company like Google encourages innovation through culture rather than rigid
rules. Employees are expected to be creative and collaborate without needing
written instructions.
●​ On the other hand, a government office may need formal rules to ensure
procedures are followed correctly.

Organizational Culture vs. National Culture

While company culture shapes employee behavior, national culture has an even greater
influence.
Employees tend to follow their national culture more than their company’s culture.
However, companies try to hire employees who match their values, even if they don’t fit
the "typical" national stereotype.

Example 1: IBM in Germany

●​ IBM has a global culture that promotes teamwork and innovation.

●​ However, employees at an IBM office in Germany may still act according to
German culture, which values structure, discipline, and precision.
●​ Even though they work for IBM, they may prefer clear instructions and careful
planning, rather than a flexible work style.

Example 2: A British Company in Italy

●​ A British multinational company expands to Italy.

●​ Italian culture values creativity, relationships, and flexibility rather than strict
rules.
●​ However, the company may hire Italians who fit into the British company’s
structured and disciplined work style, even if they are different from the typical
Italian workplace behavior.

Culture as a Liability

Culture plays a big role in shaping an organization. A strong culture can improve
employee commitment, create consistency in behavior, and provide clear guidelines on
how things should be done. However, culture can also become a disadvantage in certain
situations. If an organization clings too tightly to its existing culture, it can face problems
that affect its success and growth.
1. Institutionalization – When Culture Becomes More Important than Goals

Over time, some organizations start valuing their culture more than the actual work they
do. This is called institutionalization. In such cases, the organization continues to exist
even if its original goals are no longer relevant. The way things are done becomes more
important than questioning whether those things are still useful.​
🔹 Example: A 100-year-old publishing company may still insist on printing books
traditionally, even when digital books and audiobooks have become more popular.
Instead of adapting to modern trends, the company focuses on maintaining old processes,
which may lead to a decline in sales.

2. Barriers to Change – When Culture Prevents Growth

A strong culture can make it difficult for organizations to adapt to change. If a company’s
environment is rapidly changing, but its culture remains rigid, it may struggle to keep up.
Employees may resist new ideas or processes because "this is how we’ve always done it."​
🔹 Example: A retail company that has always relied on in-store sales may refuse to
shift to online selling. Even when customers prefer online shopping, the company’s
strong in-store culture stops it from making necessary changes, causing financial losses.

3. Barriers to Diversity – When Culture Excludes People

A strong culture can sometimes make it hard for diverse employees to fit in. If a company
hires people of different backgrounds, races, genders, or abilities but expects them to
conform to its existing culture, it can reduce the benefits of diversity. In extreme cases,
culture may support biases or prejudices, making it difficult for minorities to feel
included.​
🔹 Example: A technology company with a strong workaholic culture may expect all
employees to work late hours. This may make it difficult for working mothers or people
with disabilities to fit in, even if they are highly skilled. Over time, the company may lose
talented employees because they don't feel welcomed.
 4. Barriers to Acquisitions and Mergers – When Two Cultures Clash

When companies merge or acquire new businesses, cultural differences can cause
problems. Even if the merger makes sense financially, employees from different
organizations may struggle to work together because their ways of thinking and working
don’t match. If the culture of one company is very different from the other, conflicts can
arise.

How is Culture Learned in an Organization?

Organizational culture is the set of values, beliefs, and behaviors that employees share in
a company. It is not written in rulebooks but is passed down in different ways.
Employees learn culture through stories, rituals, symbols, and language.

1. Stories – Learning Through Narratives

Stories about the company’s past events, founders, and employees help preserve and
communicate core values. These stories may be real or slightly exaggerated but are used
to teach important lessons.

🔹 Example:​
At Ford Motor Company, there was a famous story about Henry Ford II, the
company’s chairman. Whenever executives argued too much, he reminded them, "It’s
my name on the building!" This story reinforced that leadership decisions were final
and that Henry Ford II had the ultimate authority.

🔹 Real-Life Comparison:​
Just like grandparents tell stories to children to pass on family traditions, organizations
use stories to teach new employees how things are done.

2. Rituals – Learning Through Repeated Activities

Rituals are regular activities or ceremonies that reinforce company values. These events
help employees understand what is important in the company.

🔹 Examples:
●​ Award ceremonies – Show employees that the company values hard work and
success.
●​ Weekly team lunches – Encourage teamwork and bonding among employees.
●​ Annual general meetings (AGMs) – Reinforce the company's mission and future
goals.

🔹 Real-Life Comparison:​
Just like schools celebrate annual day functions to recognize students' achievements,
companies hold events to reinforce their culture and values.

3. Symbols – Learning Through Visual Representations

Symbols are physical things that represent company culture. They show what the
organization values.

🔹 Examples:
●​ Office size & location – In many companies, senior employees get bigger offices
to show status.
●​ Reserved parking spaces – Some organizations reserve parking spots for top
executives to show hierarchy.
●​ Dress code – A company with a strict formal dress code may value
professionalism, while a company with a casual dress code promotes flexibility.

🔹 Real-Life Comparison:​
Just like in schools, gold medals, trophies, and special uniforms are given to the best
students to show excellence, organizations use symbols to communicate values.
4. Language – Learning Through Communication

Every organization has its own special words, phrases, and expressions that reflect its
culture. The way employees communicate shapes how they think and behave.

🔹 Examples:
●​ Google encourages a culture of innovation, and employees use terms like
“Googlers” (Google employees) and “Moonshot projects” (big, ambitious
ideas).
●​ In military organizations, the language is strict and disciplined, reflecting the
need for structure.

🔹 Real-Life Comparison:​
Just like different regions have their own languages and slang, organizations have
their own way of speaking that reflects their culture.

Employees learn culture over time through stories, rituals, symbols, and language.
These elements shape their behavior, decisions, and interactions in the workplace. A
strong culture helps employees feel connected, while a confusing or weak culture can
create misunderstandings.

Understanding how culture is learned helps organizations build a positive work

environment where employees feel valued and motivated.