Organizational Behavior

Nineteenth Edition

Chapter 16
Organizational Culture and
Change

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Learning Objectives (1 of 2)
16.1 Describe the common characteristics of organizational
culture.
16.2 Show how culture is transmitted to employees.
16.3 Identify the factors that create and sustain an
organization’s culture.
16.4 Compare the functional and dysfunctional effects of
organizational culture on people and the organization.

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Learning Objectives (2 of 2)
16.5 Describe the similarities and differences in creating
positive, ethical, and innovative cultures.
16.6 Discuss how change operates both within and outside
organizations.
16.7 Compare the four main approaches to managing
organizational change.

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Common Characteristics of
Organizational Culture (1 of 6)
• A Definition of Organizational Culture
– Organizational culture refers to a system of shared
meaning held by members that distinguishes the
organization from other organizations.
 Values
 Beliefs
 Assumptions

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Common Characteristics of
Organizational Culture (2 of 6)
• Shared values, beliefs, and assumptions:
– Filter what employees pay attention to.
– Are physically manifested as material symbols and
stories.
– Form the foundation for shared meaning among
members of an organization.

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Common Characteristics of
Organizational Culture (3 of 6)
• Culture as a Descriptive Term
– Organizational culture is concerned with employees’
perceptions of the characteristics of the culture, not
whether they like them.
 Does it encourage teamwork?
 Does it reward innovation?
 Does it stifle initiative?
– It differs from job satisfaction:
 Job satisfaction is evaluative.
 Organizational culture is descriptive.

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Common Characteristics of
Organizational Culture (4 of 6)
Exhibit 16.2 The Effect of Culture on Organizational
Outcomes
Culture Attitudes & Innovatio Quality & Customer Profitability &
Performance n Efficiency Satisfaction Revenue Growth

Clan +* +* 0 +* 
Adhocracy +* + +*  0
Market 0 + +* +* 0
Hierarchy +*  +* 0 +*

Note: + corresponds with a positive effect on the outcome, - corresponds with a negative
effect on the outcome, 0 corresponds with no effect on the outcome, * suggests the culture
is strongly related to the outcome.
Source: Based on findings from C. A. Hartnell, A. Y. Ou, A. J. Kinicki, D. Choi, and E. P.
Karam, “A Meta-Analytic Test of Organizational Culture’s Association With Elements of an
Organization’s System and Its Relative Predictive Validity on Organizational Outcomes,”
Journal of Applied Psychology 104, no. 6 (2019): 832–50.
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Common Characteristics of
Organizational Culture (5 of 6)
• Do Organizations Have Uniform Cultures?
– Most organizations have a dominant culture and
numerous sets of subcultures.
– The dominant culture expresses the core values a
majority of members share and that give the
organization distinct personality.
 Subcultures tend to develop in large organizations
to reflect common problems, situations, or
experiences that members face.

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Common Characteristics of
Organizational Culture (6 of 6)
• Strong Versus Weak Cultures
– Strong culture: core values are intensely held and
widely shared.
 The more members who accept the core values
and the greater their commitment, the stronger the
culture and the greater its influence on member
behavior.

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How Is Culture Transmitted to
Employees?
• How employees learn culture
– Stories
 Ford Motor Company
 Nike
– Rituals
– Symbols
 Material symbols
– Language

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Creating and Sustaining Culture (1 of 7)

Exhibit 16.3 How Organizational Cultures Form

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Creating and Sustaining Culture (2 of 7)

• Culture creation occurs in three ways:

– Founders hire employees who think and feel the way
they do.
– Employees are indoctrinated and socialized into the
founders’ way of thinking.
– Founders’ own behavior encourages employees to
identify with them and internalize their beliefs, values,
and assumptions.

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Creating and Sustaining Culture (3 of 7)

• Keeping a Culture Alive

– Selection
 Identify and hire individuals with the knowledge,
skills, and abilities to perform successfully.
 Two-way street.
– Top Management
 Establish norms of behavior.
– Socialization
 A process which enables new employees to acquire
the social knowledge and necessary skills in order
to adapt to the organization’s culture.

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Creating and Sustaining Culture (4 of 7)

Exhibit 16.4 A Socialization Model

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Creating and Sustaining Culture (5 of 7)

OB POLL Exceptional Socialization Shapes Employee Expectations

Source: Based on Gallup, Creating an Exceptional Onboarding Journey for New

Employees (Washington, DC: Gallup, 2019).

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Creating and Sustaining Culture (6 of 7)
Exhibit 16.5 Socialization Practices
Formal vs. Informal The more a new employee is segregated from the ongoing
work setting and differentiated in some way to make explicit their newcomer’s
role, the more socialization is formal. Specific orientation and training programs
are examples. Informal socialization puts the new employee directly into the job,
with little or no special attention.

Individual vs. Collective New members can be socialized individually. This

describes how it is done in many professional offices. They can also be grouped
together and processed through an identical set of experiences, as in military
boot camp.

Fixed vs. Variable This refers to the time schedule in which newcomers make
the transition from outsider to insider. A fixed schedule establishes standardized
stages of transition. This characterizes rotational training programs. It also
includes probationary periods, such as the 8- to 10-year “associate” status used
by accounting and law firms before deciding on whether or not a candidate is
made a partner. Variable schedules give no advance notice of their transition
timetable. Variable schedules describe the typical promotion system, in which
one is not advanced to the next stage until one is “ready.”
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Creating and Sustaining Culture (7 of 7)
Exhibit 16.5 Socialization Practices
Serial vs. Random Serial socialization is characterized by the use of role models
who train and encourage the newcomer. Apprenticeship and mentoring programs
are examples. In random socialization, role models are deliberately withheld.
New employees are left on their own to figure things out.

Investiture vs. Divestiture Investiture socialization assumes that the

newcomer’s qualities and qualifications are the necessary ingredients for job
success, so these qualities and qualifications are confirmed and supported.
Divestiture socialization tries to strip away certain characteristics of the recruit.
Fraternity and sorority “pledges” go through divestiture socialization to shape
them into the proper role.

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What Do Cultures Do? (1 of 8)
• The Functions of Culture
– Boundary-defining role.
– Conveys a sense of identity for members.
– Facilitates the generation of commitment.
– Enhances the stability of the social system.
– Serves as a sense-making and control mechanism.

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What Do Cultures Do? (2 of 8)
• Culture Creates Climate
– Organizational climate is shared perceptions about
the organization and work environment.
 Team spirit at the organizational level.
– Climates can interact with one another to produce
behavior.
– Climate also influences the habits people adopt.

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What Do Cultures Do? (3 of 8)
Exhibit 16.6 How Organizational Cultures Have an Impact
on Employee Performance and Satisfaction

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What Do Cultures Do? (4 of 8)
• Culture as an Asset
– Culture can significantly contribute to an organization’s
bottom line in many ways.

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What Do Cultures Do? (5 of 8)
• The Ethical Dimension of Culture
– Organizational cultures are not neutral in their ethical
orientation, even when they are not openly pursuing
ethical goals.
 Over time, the ethical culture, or the shared
concept of right and wrong behavior in that
workplace, develops as part of the organizational
climate.
– The ethical climate reflects the true values of the
organization and shapes the ethical decision making of
its members.

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What Do Cultures Do? (6 of 8)
• Sustainability: practices that can be maintained over very
long periods of time because the tools or structures that
support the practices are not damaged by the processes.
– Social sustainability practices.
– Sustainable management doesn’t need to be purely
altruistic.
• To create a truly sustainable business, an organization
must develop a long-term culture and put its values into
practice.
• Like other cultural practices we’ve discussed, sustainability
needs time and nurturing to grow.

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What Do Cultures Do? (7 of 8)
• Culture and Innovation
– The most innovative companies have open,
unconventional, collaborative, vision-driven, and
accelerating cultures.
– Startup firms often have innovative cultures.
 They are usually small, agile, and focused on
solving problems in order to survive and grow.

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What Do Cultures Do? (8 of 8)
• Culture as a Liability
– Stagnation and entrenchment
– Uniformity and rigidity
– Toxicity and dysfunctions
– Cultural clashes

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Influencing an Organizational Culture
(1 of 3)

• There is a trend today for organizations to attempt to

create a positive organizational culture:
– Emphasizes building on employee strengths.
– Rewards more than it punishes.
– Emphasizes individual vitality growth.
• Positive culture is not a cure-all.
– Toxic positivity

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Influencing an Organizational Culture
(2 of 3)

• Developing an Ethical Culture:

– Be a visible role model.
– Communicate ethical expectations.
– Provide ethics training.
– Visibly reward ethical acts and punish unethical ones.
– Provide protective mechanisms.

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Influencing an Organizational Culture
(3 of 3)
• Developing an Innovative Culture
– Sources of innovation
– Context and innovation
– Idea champions and innovation
 Idea champion: individuals who take an
innovation and actively and enthusiastically
promote the idea, build support, overcome
resistance, and ensure that the idea is
implemented.

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How Change Operates Within and
Outside Organizations (1 of 6)
Exhibit 16.7 Forces for Change
Force Examples
Nature of the workforce More cultural diversity
Aging population
Increased immigration and outsourcing
Technology Faster, cheaper, and more mobile computers and handheld
devices
Emergence and growth of social networking sites
Deciphering of the human genetic code
Economic shocks Rise and fall of global housing market
Financial sector collapse
Global recession
Competition Global competitors
Mergers and consolidations
Increased government regulation of commerce

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How Change Operates Within and
Outside Organizations (2 of 6)
Force Examples
Social trends Increased environmental awareness
Liberalization of attitudes toward gay, lesbian, and
transgender employees
More multitasking and connectivity
World politics Rising health care costs
Negative social attitudes toward business and executives
Opening of new markets worldwide

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How Change Operates Within and
Outside Organizations (3 of 6)
• The Nature of Change
– Change: when things become different than the way
they were.
 Planned change: change activities that are
proactive, intentional, and goal-oriented.
 Change agents: people who act as catalysts and
assume the responsibility for managing change
activities.

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How Change Operates Within and
Outside Organizations (4 of 6)
Exhibit 16.8 Sources of Resistance to Change
Individual Sources
Habit—To cope with life’s complexities, we rely on habits or programmed
responses. But when confronted with change, this tendency to respond in our
accustomed ways becomes a source of resistance.
Security—People with a high need for security are likely to resist change
because it threatens their feelings of safety.
Economic factors—Changes in job tasks or established work routines can arouse
economic fears if people are concerned that they will not be able to perform the
new tasks or routines to their previous standards, especially when pay is closely
tied to productivity.
Fear of the unknown—Change substitutes ambiguity and uncertainty for the
unknown.
Selective information processing—Individuals are guilty of selectively processing
information in order to keep their perceptions intact. They hear what they want to
hear, and they ignore information that challenges the world they have created.
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How Change Operates Within and
Outside Organizations (5 of 6)
Exhibit 16.8 Sources of Resistance to Change
Organizational Sources
Structural inertia—Organizations have built-in mechanisms—such as their
selection processes and formalized regulations—to produce stability. When an
organization is confronted with change, this structural inertia acts as a
counterbalance to sustain stability.
Limited focus of change—Organizations consist of a number of interdependent
subsystems. One cannot be changed without affecting the others. So limited
changes in subsystems tend to be nullified by the larger system
Group inertia—Even if individuals want to change their behavior, group norms
may act as a constraint.
Threat to expertise—Changes in organizational patterns may threaten the
expertise of specialized groups.
Threat to established power relationships—Any redistribution of decision-making
authority can threaten long-established power relationships within the
organization.
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How Change Operates Within and
Outside Organizations (6 of 6)
• How Can Managers Overcome Resistance to Change?
– Communication
– Participation
– Building support and commitment
– Developing positive relationships
– Implementing changes fairly
– Manipulation and cooptation
– Selecting people who accept change
– Coercion

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Comparing the Four Main Approaches to
Managing Change (1 of 6)
Exhibit 16.9 Lewin’s Three-Step Change Model

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Comparing the Four Main Approaches to
Managing Change (2 of 6)
Exhibit 16.10 Unfreezing the Status Quo

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Comparing the Four Main Approaches to
Managing Change (3 of 6)
Exhibit 16.11 Kotter’s Eight-Step Plan for Implementing Change

1. Establish a sense of urgency by creating a compelling reason for why change

is needed.
2. Form a coalition with enough power to lead the change.
3. Create a new vision to direct the change and strategies for achieving the
vision.
4. Communicate the vision throughout the organization.
5. Empower others to act on the vision by removing barriers to change and
encouraging risk taking and creative problem solving.
6. Plan for, create, and reward short-term “wins” that move the organization
toward the new vision.
7. Consolidate improvements, reassess changes, and make necessary
adjustments in the new programs.
8. Reinforce the changes by demonstrating the relationship between new
behaviors and organizational success.
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Comparing the Four Main Approaches to
Managing Change (4 of 6)
• Action research:
– A change process based on the systematic collection
of data and selection of a change action based on
what the analyzed data indicate.
 Diagnosis
 Analysis
 Feedback
 Action
 Evaluation

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Comparing the Four Main Approaches to
Managing Change (5 of 6)
• Organizational development (O D) is a collection of
change methods that try to improve organizational
effectiveness and employee well-being.
– Process consultation
– Team building
– Intergroup development
– Appreciative inquiry

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Comparing the Four Main Approaches to
Managing Change (6 of 6)
• The Change Paradox
– Paradox theory: the theory that the key paradox in
management is that there is no final optimal status for
an organization.

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Implications for Managers (1 of 5)
• Realize that an organization’s culture is relatively fixed in
the short term. To effect change, involve top management
and strategize a long-term plan.
• Although every culture is unique in its own way,
researchers have uncovered four competing values that
tend to have reliably similar effects on organizational
outcomes. For innovation, try to build a clan culture. For
customer satisfaction and quality, try to build a market
culture. For employee attitudes and performance, try to
build an adhocracy. Finally, if profitability and revenue are
most important, try to build a hierarchy culture.

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Implications for Managers (2 of 5)
• Although you may think you have a strong, dominant
culture, looks can be deceptive. You may be surprised to
find that there are subcultures in departments, teams, or
other work units. If you encounter these subcultures, try to
determine what caused them to splinter off in the first place
and decide what you can do to meet the needs of these
employees.
• Stories, rituals, material symbols, and language are
powerful mechanisms you can leverage to build and
maintain culture.

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Implications for Managers (3 of 5)
• Starting a new company is a tall order—the decisions you
make set the tone and foundation for the entire culture of
your organization. Careful planning and strategizing are
paramount to building positive, ethical, sustainable,
innovative cultures.
• Several H R processes perpetuate culture: selection, top
management, and socialization (onboarding) all play a role
in transmitting culture. If you are looking to transform
culture, start with these processes.
• Although values, beliefs, and underlying assumptions are
relatively fixed aspects of culture, leaders can build
organizational climates that realize these values.

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Implications for Managers (4 of 5)
• Managers would do wise to avoid culture traps.
Stagnation, entrenchment, uniformity, rigidity, toxicity, and
other dysfunctions can cause organizations to fail if they
do not adapt and change.
• To build a positive culture, seek to develop employee
strengths, reward more than punish, and encourage
growth and vitality, but recognize that some negativity is
perfectly natural, and positivity does not mean
perfectionism.
• To build an ethical culture, be a visible role model for
appropriate behavior, communicate ethical expectations,
provide ethics training, reward (and punish) (un)ethical
behavior, and protect whistleblowers.
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Implications for Managers (5 of 5)
• To build an innovative culture, focus on creating structures
and contexts that nurture innovation, and ensure leaders
“champion” their ideas to others so they catch on.
• To inspire organizational change, recognize that the
process is extremely difficult and there is a high likelihood
for failure. (That does not mean that the effort is not
worthwhile, however.)
• Depending upon the nature of what you are trying to
change, there are a variety of mechanisms and tools
available (such as those provided by the field of
organizational development) to facilitate change.

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Discussion Questions
1. Choose a company with a distinctive organizational
culture, for example Virgin Group or Google. How is the
culture of the organization reflected in the image the
company presents and the strategy it follows?
2. Consider companies such as RE I or Patagonia that
emphasize sustainability. Using the framework presented
in the text, explain how the culture of these companies is
an asset.
3. CO VI D-19 has forced many companies to change
internally and externally. Using Exhibit 16.7 as a
reference, think about the nature of this change and what
it means for companies and their employees.

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