Organizations with adhocracy cultures are described as

What is organizational culture and why is it important to understand its layers and functions?

What are the common forces or drivers of change at work, and how can this knowledge improve my personal effectiveness?

Describe the relationship between the Human Resources functions and organizational development

Discuss how socialization and mentoring are used to embed organizational culture.

Discuss the contingency approach’s six strategies to overcoming resistance.

ORGANIZATIONAL CULTURE, SOCIALIZATION, AND MENTORING How Can I Use These Concepts for Competitive Advantage? © 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors. MAJOR TOPICS I’LL LEARN AND QUESTIONS I SHOULD BE ABLE TO ANSWER 14.1THE FOUNDATION OF ORGANIZATIONAL CULTURE: UNDERSTANDING ITS DRIVERS AND FUNCTIONS MAJOR QUESTION: What is culture and why is it important to understand its layers and functions? 14.2THE IMPACT OF ORGANIZATIONAL CULTURE TYPES ON OUTCOMES MAJOR QUESTION: To what extent are the different types of organizational culture related to important outcomes? 14.3THE PROCESS OF CULTURE CHANGE MAJOR QUESTION: What are the mechanisms I can use to implement culture change? 14.4THE ORGANIZATIONAL SOCIALIZATION PROCESS MAJOR QUESTION: How can the practical lessons of socialization research be integrated within the three phases of socialization? 14.5EMBEDDING ORGANIZATIONAL CULTURE THROUGH MENTORING MAJOR QUESTION: What are the four developmental networks and how can I use them to advance my career? INTEGRATIVE FRAMEWORK FOR UNDERSTANDING AND APPLYING OB This chapter focuses on organizational culture and the socialization and mentoring that allow new members to become part of the culture of the organization. The Integrative Framework shows how culture functions as both an environmental input and an organizational process. Page 479 winning at work HOW WOULD I ASSESS PERSON–ENVIRONMENT FIT (PE) WHEN APPLYING FOR JOBS? “Employment site Glassdoor provides information on salaries, organizational cultures, and interview questions by using anonymous posts from employees and people seeking employment. In 2012 the company obtained 285,000 questions used by hiring managers. Here are the four most frequently asked interview questions: What’s your favorite movie? What’s your favorite website? What’s the last book you read for fun? What makes you uncomfortable?1 “WHY ARE COMPANIES ASKING THESE QUESTIONS? “Although these questions have nothing to do with performance, recruiters ask them because they are trying to assess whether or not an applicant will “fit in” with the company’s culture. A recent study of people hiring undergraduate and graduate students revealed that more than 50 percent of the evaluators considered “fit” to be the most important criterion during the interview process.2 “WHAT DOES IT MEAN TO “FIT”? Person–environment fit (PE) reflects “the compatibility between an individual and a work environment that occurs when their characteristics are well matched.”3 Although there are many types of fit, we are interested in what is called person–organization fit (PO), which reflects the extent to which your personality and values match the climate and culture in an organization. PO fit is important because it is associated with more positive work attitudes and task performance and lower intentions to quit and stress.4 “HOW CAN YOU ASSESS “FIT”? “It will take some effort on your part. First conduct an evaluation of your strengths, weaknesses, and values. Next, do the same for the company or department at hand by doing research about the company on the Internet or talking with current employees. This information will now enable you to prepare a set of diagnostic questions to ask during the interview process. These questions need to focus on determining your level of fit. For example, if you value recognition for hard work, then ask a recruiter how the company rewards performance. If the answer does not support a strong link between performance and rewards, you probably will have a low PE fit and will not be happy working at this company. We have created a Take-Away Application later in this chapter to help you practice the process of assessing person–organization fit. FOR YOUWHAT’S AHEAD IN THIS CHAPTER This chapter begins your exploration of what is called “macro” organizational behavior. Macro OB is concerned with studying OB from the perspective of the organization as a whole. We use the graphical image of the Integrative Framework of OB on the previous page to illustrate how organizational culture is a key input that influences a host of processes and outcomes. We begin by exploring the foundation of organizational culture so that you can understand its drivers and functions. Next we review the four key types of organizational culture and consider their relationships with various outcomes. This is followed by a discussion of how managers can change organizational culture. Finally, we discuss how socialization and mentoring are used to embed organizational culture, and focus on how you can use knowledge of these processes to enhance your career success and happiness. Page 480 14.1THE FOUNDATION OF ORGANIZATIONAL CULTURE: UNDERSTANDING ITS DRIVERS AND FUNCTIONS MAJOR QUESTION What is culture and why is it important to understand its layers and functions? THE BIGGER PICTURE Although you may have a small impact on your employer’s organizational culture, you undoubtedly are affected by it. Culture affects outcomes at the individual, group, and organizational level. You are going to learn what creates organizational culture and how culture in turn affects other organizational processes. You also will understand the three levels that constitute culture and the functions it serves for organizations. The quote “culture eats strategy for breakfast” was attributed to management expert Peter Drucker. But it really caught everyone’s attention when Mark Fields, CEO at Ford Motor Company, used it in 2006. The slogan currently hangs in the company’s “war room.” Ford’s former CEO Alan Mulally created the war room, which contains charts, graphs, and lists of products, as a meetingplace for executives to discuss the execution of Ford’s corporate strategies. The culture slogan serves as a reminder of the importance of organizational culture to Ford’s success.5 What is the point of this slogan? It’s quite simple. A company can have the best vision and strategy in the world, but it won’t be able to execute them unless the culture is aligned with the strategy. This is a lesson that successful companies like Lincoln Electric, Southwest Airlines, and SAS Institute have applied for years. Lincoln Electric has the largest share of the global welding market, Southwest is the largest airline in the United States, and SAS is the world’s largest privately held software firm.6 All of these firms exert significant effort at creating and reinforcing the type of culture that helps them achieve their strategic goals. One of our primary goals in this chapter is to help you understand how managers can use organizational culture as a competitive advantage. Let us start by considering the foundation of organizational culture. Defining Culture and Exploring Its Impact Organizational culture is defined as “the set of shared, taken-for-granted implicit assumptions that a group holds and that determines how it perceives, thinks about, and reacts to its various environments.”7 This definition highlights four important characteristics of organizational culture: •Shared concept. Organizational culture consists of beliefs and values that are shared among a group of people. •Learned over time. It is passed on to new employees through the process of socialization and mentoring, topics discussed later in this chapter. •Influences our behavior at work. This is why “culture eats strategy for breakfast.” •Impacts outcomes at multiple levels. Culture affects outcomes at the individual, group/team, and organizational levels. Page 481 FIGURE 14.1DRIVERS AND FLOW OF ORGANIZATIONAL CULTURE SOURCE: Adapted from C. Ostroff, A. J. Kinicki, and R. S. Muhammad, “Organizational Culture and Climate,” in I. B. Weiner, N. W. Schmitt, and S. Highhouse, eds., Handbook of Psychology, vol. 12, 2nd ed. (Hoboken, NJ: Wiley, 2012), 643–676. Reprinted with permission of John Wiley & Sons, Inc. Figure 14.1 provides a conceptual framework for understanding the drivers and effects of organizational culture. Five elements drive organizational culture: •The founder’s values •The industry and business environment •The national culture •The organization’s vision and strategies •The behavior of leaders In turn, organizational culture influences the type of organizational structure adopted by a company and a host of internal processes (including human resource practices, policies, and procedures) implemented in pursuit of organizational goals. These organizational characteristics then affect a variety of group and social processes.8 This sequence ultimately affects employees’ work attitudes and behaviors and a variety of organizational outcomes. All told, Figure 14.1 tells us that organizational culture has a wide span of influence, ultimately impacting a host of individual, group, and organizational outcomes.9 Once again, this is why culture eats strategy for breakfast. The Three Levels of Organizational Culture Organizational culture operates on three levels: 1.Observable artifacts 2.Espoused values 3.Basic underlying assumptions Each level varies in terms of outward visibility and resistance to change, and each level influences another level. Level 1: Observable ArtifactsAt the more visible level, culture represents observable artifacts. Artifacts consist of the physical manifestation of an organization’s culture. Organizational examples include: •Acronyms •Manner of dress •Awards •Myths and stories told about the organization •Published lists of values •Observable rituals and ceremonies •Special parking spaces •Decorations Page 482 At Facebook, for example, the word “hack” is pasted all around offices. The term “hack” is symbolic of “the hacker way” of pursuing continuous improvement and challenging the status quo.10 Kayak.com, an online travel company, uses a two-foot-tall stuffed elephant named Annabelle as an artifact. Annabelle sits in a specially designed conference room that is used to have sensitive meetings or discussions. Paul English, cofounder and chief technology officer, created the room and brought in Annabelle because Kayak’s open floor plan does not lend itself to discussing touchy matters. The company feels that this artifact has led to more honest and constructive communications among employees.11 It’s important to remember that artifacts are easier to change than the less visible aspects of organizational culture. Annabelle the Elephant is an artifact of the corporate culture at Kayak.com, provided as a catalyst to make sure employees do not ignore an important but difficult topic, the so-called elephant in the room. Can you think of other artifacts that might prime people to give honest feedback? Level 2: Espoused ValuesValues were defined in Chapter 2 as abstract ideals that guide one’s thinking and behavior across all situations. In the context of organizational culture, it is important to distinguish between values that are espoused versus those that are enacted. •Espoused values represent the explicitly stated values and norms that are preferred by an organization. They are generally established by the founder of a new or small company and by the top management team in a larger organization. Most companies have a short of list of espoused values. For example, Procter and Gamble’s list of values includes integrity, leadership, ownership, passion for winning, and trust.12 In contrast, Google and Zappos have 10 espoused values. Because espoused values represent aspirations that are explicitly communicated to employees, managers hope that those values will directly influence employee behavior. Unfortunately, aspirations do not automatically produce the desired behaviors because people do not always “walk the talk.” EXAMPLEEnergy company BP, for instance, has long claimed that it values safety, yet the company had a refinery fire in Texas City, Texas, that killed 15 people in 2005. In 2006, a pipeline leak in Alaska lost over 200,000 gallons of crude, and the 2010 Deepwater Horizon spill in the Gulf lost more than 200 million gallons according to the US government.13 •Enacted values represent the values and norms that actually are exhibited or converted into employee behavior. They represent the values that employees ascribe to an organization based on their observations of what occurs on a daily basis. It is important for managers to reduce gaps between espoused and enacted values because they can significantly influence employee attitudes and organizational performance. Consider that a survey from the Ethics Resource Center showed that employees were more likely to behave ethically when management behavior set a good ethical example and kept its promises and commitments.14 This finding was underscored by another study of 129 mergers. Employees were more productive and post-merger performance was higher when employees believed that the post-merger behavior within the newly formed firm was consistent with the espoused values.15 It pays to walk the talk when it comes to integrating companies after a merger. EXAMPLEJuniper Networks spent considerable effort to align its espoused values of trust, delivering excellence, pursuing bold aspirations, and making a meaningful difference with employee behavior. The company started by selecting 200 employees from around the world to come up with a list of behaviors that exemplified each of the values. These behaviors were then infused into the human resource practices of hiring, training, evaluating, and promoting people. The company completely revamped its process of performance appraisal. Page 483 •Old. Employees felt the old system violated the company’s values. Previously the company evaluated all employees and then forced a distribution curve across the entire population. •New. The new system builds on a “conversation day.” On such days, “employees and managers discuss areas for improvement and areas for growth, set stretch goals, and align the goals with employees’ career aspirations. There is no rating given or a specific measure of improvement.” An employee survey revealed that 66 percent of Juniper’s employees felt that the new system was helpful or extremely helpful.16 Level 3: Basic Underlying Assumptions Basic underlying assumptions constitute organizational values that have become so taken for granted over time that they become assumptions that guide organizational behavior. They represent deep-seated beliefs that employees have about their company and thus constitute the core of organizational culture. As you might expect, basic underlying assumptions are highly resistant to change. Consider how Unilever CEO Paul Polman reinforces a core belief in sustainability (see Example box). Sustainability represents “a company’s ability to make a profit without sacrificing the resources of its people, the community, and the planet.”17 Sustainability also is referred to as “being green,” and Pulitzer Prize–winning political commentator Thomas Friedman believes that “outgreening” other nations can renew America and even defeat al-Qaeda.18 EXAMPLEUnilever Strives to Promote a Sustainability Culture When Paul Polman took over as CEO of Unilever in 2009, he told Wall Street analysts that the company would no longer provide earnings guidance and quarterly profit statements. This is unheard of! Analysts revolted and the stock price immediately dropped. Paul Polman, CEO at Unilever. WHAT WAS POLMAN TRYING TO ACCOMPLISH? Polman wanted to instill a deep-seated belief regarding sustainability within all employees at Unilever. He started this effort by creating a “Sustainable Living Plan.” The plan contained goals to “double its sales even as it cuts its environmental footprint in half and sources all its agricultural products in ways that don’t degrade the earth by 2020.” The company also set a goal to improve the well-being of 1 billion people by influencing them to wash their hands and brush their teeth and by selling foods with less salt and fat. Polman told investors that “if you don’t buy into this, I respect you as a human being, but don’t put your money in our company.” He believes that shareholder return should not override nobler goals. He also said, “Our purpose is to have a sustainable business model that is put at the service of the greater good. It’s as simple as that.” Page 484 WHAT ARE THE RESULTS OF UNILEVER’S PUSH FOR A SUSTAINABILITY CULTURE?Polman believes that employees are more engaged and the company is a more desirable place to work. As evidence, Unilever “is one of the five most-searched-for employers, behind Google, Apple, Microsoft, and Facebook.” In 2012, sales grew in every region Unilever operates in around the globe, and the company cut costs through its Sustainable Living plan. Employees at Unilever “say that doing good is in the company’s DNA.” This is what we call a basic underlying assumption!19 YOUR THOUGHTS? 1.What do you think was the driving force behind Polman’s desire to create a culture of sustainability? 2.Do you agree with Polman about the tangible business benefits of Unilever’s cultural values? 3.Whether you agree with Polman or not, was he wise to tell investors not to put money in the Unilever if they did not also buy into the Sustainable Living plan? The Four Functions of Organizational Culture An organization’s culture fulfills four important functions (see Figure 14.2): 1.Organizational identity 2.Collective commitment 3.Social system stability 4.Sense-making device FIGURE 14.2FOUR FUNCTIONS OF ORGANIZATIONAL CULTURE SOURCE: Adapted from discussion in L. Smircich, “Concepts of Culture and Organizational Analysis,” Administrative Science Quarterly, September 1983, 339–358. Copyright © 1983. Reprinted with permission of Sage Publications, Inc. To help bring these four functions to life, let’s consider how each of them has taken shape at Southwest Airlines. Southwest is a particularly instructive example because it has grown to become the largest carrier in the United States serving more customers domestically than any other airline and has achieved 40 consecutive years of profitability. Fortune named Southwest the seventh Most Admired Company in the World, and it was recognized in 2012 by Chief Executive Magazine as one of the 40 Best Companies for Leaders based on outstanding company culture and internal professional development.20 Page 485 Function 1: Culture Provides Employees with an Organizational Identity Southwest Airlines is known as a fun place to work that values employee satisfaction and customer loyalty over corporate profits. Gary Kelly, Southwest’s CEO, highlighted this theme by noting that “our people are our single greatest strength and our most enduring long-term competitive advantage.”21 The company has a catastrophe fund based on voluntary contributions for distribution to employees who are experiencing serious personal difficulties. Southwest’s people-focused identity is reinforced by the fact that it is an employer of choice. Southwest contributed $228 million into its employee-based profit-sharing program in 2013. The company also was rated as providing outstanding opportunities for women and Hispanics by Professional Women magazine and Hispanic magazine, respectively, and National Conference on Citizenship ranked Southwest as one of The Civic 50 for use of time, talent, and resources in civic engagement. Function 2: Culture Facilitates Collective CommitmentThe mission of Southwest Airlines “is dedicated to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”22 Southwest’s nearly 46,000 employees are committed to this mission. As evidence, Southwest was rated number one in Customer Service by the 2013 Airline Quality Ratings and JD Power named them 2012 Customer Service Champion for performance in People, Presentation, Price, Process, and Product. This photo demonstrates Southwest’s culture. You see employees having fun in an airport terminal, which can be a frustrating experience for passengers. Do you think these employees can lighten the spirit of the travelers in the background? Page 486 Function 3: Culture Promotes Social System StabilitySocial system stability reflects the extent to which the work environment is perceived as positive and reinforcing, and the extent to which conflict and change are effectively managed. Southwest is noted for its philosophy of having fun, having parties, and celebrating. For example, each city in which the firm operates is given a budget for parties. Southwest also uses a variety of performance-based awards and service awards to reinforce employees. The company’s positive and enriching environment is supported by the lowest turnover rates in the airline industry and the employment of 1,355 married couples. In 2013 Southwest was recognized with the Employee Choice Awards Best Place to Work, by Glassdoor.com. Function 4: Culture Shapes Behaviors by Helping Members Make Sense of Their SurroundingsThis function of culture helps employees understand why the organization does what it does and how it intends to accomplish its long-term goals. Keeping in mind that Southwest’s leadership originally viewed ground transportation as their main competitor in 1971, employees come to understand why the airline’s primary vision is to be the best primarily short-haul, low-fare, high-frequency, point-to-point carrier in the United States. Employees understand they must achieve exceptional performance, such as turning a plane around in 20 minutes, because they must keep costs down in order to compete against Greyhound and the use of automobiles. In turn, the company reinforces the importance of outstanding customer service and high-performance expectations by using performance-based awards and profit sharing. Employees own about 13 percent of the company stock.23 TAKE-AWAY APPLICATION—TAAP Assessing the Levels of Culture at My Current Employer Answer the following questions by considering your current or a past employer. (If you do not have experience yet as an employee, substitute your current school/university or a company you are researching as an employer of choice.) 1.What artifacts can you see at work? What do these artifacts tell you about your employer? 2.What are the company’s espoused values? Do you think management’s enacted behaviors are consistent with the espoused values? 3.Identify three key beliefs you have about your employer: You may want to ask a colleague the same question. Are these beliefs consistent with the meaning of the artifacts you described in question 1? 4.How does your employer’s culture compare to that of Southwest? Page 487 14.2THE IMPACT OF ORGANIZATIONAL CULTURE TYPES ON OUTCOMES MAJOR QUESTION To what extent are the different types of organizational culture related to important outcomes? THE BIGGER PICTURE Do you think that companies rated on Fortune’s List of 100 Best Places to Work have unique cultures? How do we know what type of culture exists at these companies or your current employer? You will learn about the four types of culture that are defined by the competing values framework. You also will discover the extent to which these four culture types are related to important outcomes. To address the above Major Question, we need to provide a taxonomy of culture types. You can imagine that it is hard to get agreement on a common set of organizational culture types given culture’s complexity. While consultants tend to invent their own proprietary assessments, academics have proposed and scientifically tested three different frameworks. This section discusses the competing values framework because it is the most widely used approach for classifying organizational culture. It also was named as one of the 40 most important frameworks in the study of organizations and has been shown to be a valid approach for classifying organizational culture.24 We then discuss relationships among culture types and outcomes. Identifying Culture Types with the Competing Values Framework The competing values framework (CVF) provides a practical way for managers to understand, measure, and change organizational culture. It identifies four fundamental types of organizational culture as shown in Figure 14.3.25 The CVF was originally developed by a team of researchers who were trying to classify different ways to assess organizational effectiveness. This research showed that measures of organizational effectiveness varied along two fundamental dimensions or axes. One axis pertained to whether an organization focuses its attention and efforts on internal dynamics and employees or outward toward its external environment and its customers and shareholders. The second was concerned with an organization’s preference for flexibility and discretion or control and stability. Combining these two axes creates four types of organizational culture that are based on different core values and different sets of criteria for assessing organizational effectiveness. Figure 14.3 shows the strategic thrust associated with each cultural type along with the means used to accomplish this thrust and the resulting ends or goals pursued by each cultural type. Before beginning our exploration of the CVF, it is important to note that organizations can possess characteristics associated with each culture type. That said, however, organizations tend to have one type of culture that is more dominant than the others. Let us begin our discussion of culture types by starting in the upper-left-hand quadrant of the CVF. Page 488 FIGURE 14.3THE COMPETING VALUES FRAMEWORK Culture varies along two continua of competing values: flexibility and discretion vs. stability and control, and internal focus and integration vs. external focus and differentiation. This leads to four categories of organizations, each with its own unique thrust. SOURCE: Adapted from K. S. Cameron, R. E. Quinn, J. Degraff, and A. V. Thakor, Competing Values Leadership (Northampton, MA: Edward Elgar, 2006), 32. Clan Culture Companies with a clan culture have an internal focus and value flexibility rather than stability and control. These resemble a family-type organization in which effectiveness is achieved by encouraging collaboration, trust, and support among employees. This type of culture is very “employee-focused” and strives to instill cohesion through consensus and job satisfaction and commitment through employee involvement. Clan organizations devote considerable resources to hiring and developing their employees, and they view customers as partners. Collaborating is the strategic thrust of this culture. EXAMPLEGoogle is the number 1 company to work for in 2014.26 Larry Page, Google’s co-founder and CEO, describes the culture as a “family” environment. He said, “my job in the company is to make sure everybody in the company has great opportunities, and that they feel they’re having a meaningful impact and are contributing to the good of society. . . . It’s important that the company be a family, that people feel that they’re part of the company, and that the company is like a family to them. When you treat people that way, you get better productivity.”27 Google also holds weekly all-hands (“TGIF”) meetings so that employees can ask Larry, Sergey Brin—a Google co-founder—and other executives questions about anything involving the company. This practice enhances employee communication and morale, two aspects of a clan culture. EXAMPLEEdward Jones, the privately held financial services firm, was ranked as the 4th best company to work for in 2014. Edward Jones has over 11,000 small offices and 7 million clients worldwide. The company maintains a close-knit culture by using a variety of celebratory events. Its 8% turnover rate is one of the lowest in the industry and more than 33% of its financial advisors are more than 50 years old.28 Adhocracy CultureCompanies with an adhocracy culture have an external focus and value flexibility. Creation of new products and services is the strategic thrust of this culture, which is accomplished by being adaptable, creative, and fast to respond to changes in the marketplace. Adhocracy cultures do not rely on the type of centralized power and authority relationships that are part of market and hierarchical cultures. They empower and encourage employees to take risks, think outside the box, and experiment with new ways of getting things done. Page 489 Edward Jones launched a program that provides tablet PCs to its financial advisors. As shown, advisors take tablets on the road as they make personal visits to existing and potential clients. The goal is to reduce the amount of time advisors spend on administrative tasks, leaving them more time to build strong relationships with clients. A recent article in The Wall Street Journal noted that adhocracy-type cultures are decreasing in the United States as many companies are becoming risk averse. The downside of this trend is that “reasonable” risk taking is needed to create new businesses, products, and ultimately jobs. On the positive side, however, pockets of risk taking are taking place in different industries such as technology and energy and different regions like the coastal cities of San Francisco and Boston and college towns like Boulder, Colorado, and Austin, Texas.29 EXAMPLEBiopharmaceutical firm AstraZeneca “is experimenting with new ways to organize research to improve productivity. Scientists now are responsible for candidate drugs until they begin the final human trials, ending a culture of handing off early-stage products to other researchers as if on an assembly line.”30 EXAMPLEThe Tata group, a multinational conglomerate headquartered in Mumbai, India, has 100 operating companies in more than 80 countries. Tata takes innovation so seriously that it developed an “Innometer.” The conglomerate measures creative goals and accomplishments vs. domestic or global benchmarks while instilling a sense of urgency among employees.31 Market CultureCompanies with a market culture have a strong external focus and value stability and control. Competition is the strategic thrust of these organizations. They have a strong desire to deliver results and accomplish goals. Because this type of culture is focused on the external environment, customers and profits take precedence over employee development and satisfaction. The major goal of managers is to drive toward productivity, profits, and customer satisfaction. EXAMPLEGrupo Bimbo is the world’s largest bakery company. Bimbo managers operate in a low-margin business and thus focus heavily on execution. “Profits depend heavily on getting the right amount of highly perishable products to stores at the right moment and at a reasonable cost. . . . For instance, it uses tricycle delivery bikes in urban areas of China where streets are too narrow for trucks, a practice it first implemented in Latin America.”32 The company operates 171 plants and delivers over 10,000 products across 22 countries. Page 490 EXAMPLECanada’s Bombardier is the largest train manufacturer in the world. Bombardier’s culture focuses on the importance of setting and achieving goals. CEO Pierre Beaudoin said, “Connecting goals to each person’s day-to-day work is important. . . . What I like most, though, is that we now have an organization that wants to get better. And that’s the key. We always talk about why we’re not there yet; we’re on a journey—how close are we to those world-class metrics. We used to make excuses for why our performance was good enough. Today we say, ‘what will it take to get to world class?’” Can you see the cultural focus on productivity, goal achievement, and competitiveness?33 Imagine having to deliver over 10,000 products across 22 countries. Do you think this takes a lot of planning and detailed execution? Bimbo’s market-based culture contributes to this effort. Hierarchy CultureControl is the strategic thrust within a hierarchy culture. The hierarchy culture has an internal focus, which produces a more formalized and structured work environment, and values stability and control over flexibility. This orientation leads to the development of reliable internal processes, extensive measurement, and the implementation of a variety of control mechanisms. Effectiveness in a company with this type of culture is likely to be assessed with measures of efficiency, timeliness, quality, safety, and reliability of producing and delivering products and services.34 Hierarchical cultures have been found to have both negative and positive effects. EXAMPLEConsider the positive example of Mumbai’s dabbawalas, individuals who deliver prepared meals to customers’ homes or offices and then return empty dabbas—metal lunch boxes—later in the day. To do their jobs effectively, dabbawalas rely on a hierarchical culture (see the Problem-Solving Application). EXAMPLEConsider the negative impact at General Motors. Mary Barra, GM’s former product officer and current CEO, has been “attacking GM’s bureaucracy, slashing the number of required HR reports by 90 percent and shrinking the company’s employee policy manual by 80 percent. But loosening the dress code drew a flood of calls and e-mails from employees asking if they could, in fact, wear jeans.” The answer was yes. “Barra saw the dress code, along with other changes, as an opportunity to have a conversation about responsibility. ‘There was a culture in the past where the rule was the rule and when you weren’t empowered to make the decision you could all just complain about the rule. Well, now we were really empowering virtually every single person,’ Barra says.” One of her major goals is to reduce the complexity associated with producing cars.35 This means that she wants more flexibility, which is a component of either a clan or adhocracy culture. Bara was promoted to the CEO position at GM in January 2014. Page 491 solving application The Dabbawalas Rely on a Hierarchical Culture to Effectively Deliver Food Over 5,000 dabbawalas in Mumbai deliver more than 130,000 lunchboxes every day. The need for this service grew from the strong cultural reliance by the working population on a hot meal for lunch. The dabbawalas pick up the prepared lunchboxes in late morning and return the empty containers after lunch. Vendors also use the delivery service for getting their commercial hot lunches to customers. Workers are willing to pay for the service and the illiterate dabbawalas are so skilled in execution that the service remains affordable for many workers. Each dabbawala belongs to a group, and the groups manage themselves “with respect to hiring, logistics, customer acquisition and retention, and conflict resolution.” Within each group individuals have a very clear hierarchical role to play. Despite a high degree of selfmanagement, the independent groups must collaborate and coordinate to deliver lunch within the fourth-largest city in the world. Mistakes are rare even though these employees complete over 260,000 transactions during a day, and they do it six days a week, 52 weeks a year. How Does a Hierarchical Culture Help? First off, the dabbawalas don’t use any IT system or cell phones. These workers have integrated organization, management, process, and culture to achieve their goals. It all begins with using the Mumbai Suburban Railway. A workday starts with a worker picking up a dabba from a customer—customers prepare their own lunch and dabbawalas pick them up and transport them. The dabba is then taken to “the nearest train station, where it is sorted and put onto a wooden crate according to its destination. It is then taken by train to the station closest to its destination. There it is sorted again and assigned to another worker, who delivers it to the right office before lunchtime.” The process reverses in the afternoon when the dabbas are picked up and returned to the customer’s home. The railway system’s schedule effectively sets the timing of what needs to be done. For example, “workers have 40 seconds to load the crates of dabbas onto a train at major stations and just 20 seconds at interim stops.” This requires the workers to determine the most efficient way to get these key tasks completed. Workers also build some slack into the system. Each group has 2 or 3 extra workers who help out wherever they are needed. This works because employees are cross-trained in the major tasks of collecting, sorting, transporting, and customer relations. How Do the Independent Workers Communicate? The dabbawalas use a very basic system of symbols to communicate. Three key markings are included on the lid of a dabba. The first indicates where the dabba must be delivered. The second is a series of characters: a number is used to indicate which employee is making the delivery, “an alphabetical code (two or three letters) for the office building, and a number indicating the floor. The third—a combination of color and shape, and in some instances, a motif—indicates the station of origin.” Customers also provide their own unique small bags for carrying dabbas, which helps workers remember who gets which dabba. Does It Work? Yes. Not only does this work system result in the reliable distribution of lunches, but the dabbawalas tend to stay in the same work group their entire working lives. Employees genuinely care about each other.36 YOUR CALL Stop 1:What is the major problem dabbawalas want to avoid? Stop 2:What OB concepts help explain why the dabbawalas are effective? Stop 3:Would you recommend a similar system for a comparable firm in the United States? Explain. Page 492 Cultural Types Represent Competing ValuesIt is important to note that certain cultural types reflect opposing core values. These contradicting cultures are found along the two diagonals in Figure 14.3. For example, the clan culture—upper-left quadrant—is represented by values that emphasize an internal focus and flexibility, whereas the market culture—bottom-right quadrant—has an external focus and concern for stability and control. You can see the same conflict between an adhocracy culture that values flexibility and an external focus and a hierarchy culture that endorses stability and control along with an internal focus. Why are these contradictions important? They are important because an organization’s success may depend on its ability to possess core values that are associated with competing cultural types. While this is difficult to pull off, it can be done. 3M is a good example. EXAMPLE3M is a global innovation company that is structured around five business groups. 3M tried to merge competing cultural characteristics from an adhocracy with those from a hierarchy. Reflecting an adhocracy culture, 3M released 1,000 new products in 2009, and it awards annual Genesis Grants, “worth as much as $100,000, to company scientists for research. The money is allocated by their peers and is spent on projects for which ‘no sensible, conventional person in the company would give money,’” says Chris Holmes, a 3M division vice president. The company has a goal to generate 30 percent of its revenue from products developed in the last five years. In contrast, 3M pursued a hierarchical culture by implementing quality management techniques to reduce waste and defects and increase efficiency. Although 3M achieved better efficiency and earnings in the short run, new product revenue decreased and scientists complained that the quality initiatives were choking off innovation. One engineer quipped that “it’s really tough to schedule invention.” 3M’s CEO, George Buckley, was made aware of these cultural conflicts and decided to reduce the conflict within company labs by decreasing hierarchical policies/procedures while simultaneously increasing those related to adhocracy. The company continues to emphasize quality and reliability in its factories. To date, results indicate a successful transition as the company achieved both its efficiency and new product revenue goals in 2010.37 Are you curious about the type of culture that exists in a current or past employer? Do you wonder if you possess person–organization fit? The following Self-Assessment allows you to consider these questions. SELF-ASSESSMENT 14.1 What Is the Organizational Culture at My Current Employer? Go to connect.mheducation.com and complete Self-Assessment 14.1. Then answer the following questions. 1.How would you describe the organizational culture? 2.Do you think that this type of culture is best suited to help the company achieve its strategic goals? Explain. Outcomes Associated with Organizational Culture Both managers and academic researchers believe that organizational culture can drive employee attitudes, performance, and organizational effectiveness, thereby leading to competitive advantage. To test this possibility, various measures of organizational culture have been correlated with a variety of individual and organizational outcomes. So what have we learned? A meta-analysis involving over 1,100 companies uncovered the results shown in Figure 14.4.38 Figure 14.4 illustrates the strength of relationships among eight different organizational outcomes and the culture types of clan, adhocracy, and market: Hierarchy was not included due to a lack of research on this type. Results reveal that the eight types of organizational outcomes had significant and positive relationships with clan, adhocracy, and market cultures. The majority of these relationships were of moderate strength, indicating that they are important to today’s managers. Closer examination of Figure 14.4 leads to the following five conclusions: Page 493 FIGURE 14.4CORRELATES OF ORGANIZATIONAL CULTURE Note: The category of organizational commitment was associated with only clan and market structures, and not adhocracy, and therefore shows only two bars. SOURCE: Data supplied from C. A. Hartnell, A. Y. Ou, and A. J. Kinicki, “Organzational Culture and Organizational Effectiveness: A Meta-Analytic Investigation of the Competing Values Framework’s Theoretical Suppositions,” Journal of Applied Psychology, July 2011, 677–694. Five Lessons 1.Organizational culture is related to measures of organizational effectiveness. This means that an organization’s culture can be a source of competitive advantage. 2.Employees are more satisfied and committed to organizations with clan cultures. These results suggest that employees prefer to work in organizations that value flexibility over stability and control and those that are more concerned with satisfying employees’ needs than customer or shareholder desires. 3.Innovation and quality can be increased by building characteristics associated with clan, adhocracy, and market cultures into the organization. Managers may want to use a combination of all three types of culture to produce these outcomes. 4.An organization’s financial performance (growth in profit and growth in revenue) is not strongly related to organizational culture. Managers should not expect to increase financial performance immediately by trying to change their organization’s culture. (This is not an argument against all cultural change. Some changes in culture can improve competitive advantage, which then results in financial benefits, as we will see.) 5.Companies with market cultures tend to have more positive organizational outcomes. Managers are encouraged to consider how they might make their cultures more market oriented. Page 494 14.3THE PROCESS OF CULTURE CHANGE MAJOR QUESTION What are the mechanisms I can use to implement culture change? THE BIGGER PICTURE Some people suggest that culture change takes years. Do you agree? Others contend that the culture evolves and that managers should not attempt to manage it. Do you agree? We believe that culture can and should be nurtured and developed so that it is aligned with a company’s vision and strategic plan. You will learn about 12 mechanisms you can use to implement culture change. Our discussion is in the context of the managerial role, but knowledge of these techniques helps you at any level in the organization. Edgar Schein, the most prolific academic writer about organizational culture, believes that the creation and management of culture is the most important role of a leader.39 We agree with Schein because culture can be a source of competitive advantage. Consider companies like Apple, Google, and Facebook. As suggested by Figure 14.1, the cultures at these companies initially were affected by the founders—Steve Jobs at Apple, Larry Page and Sergey Brin at Google, and Mark Zuckerberg at Facebook. Over time, these founders embedded or reinforced their desired cultures by adopting specific types of organizational structure and implementing a host of human resource practices, policies, and procedures. Although it is not an easy task to change an organization’s culture, this section provides an overview of how to create cultural change. Before describing the specific ways in which managers can change organizational culture, let’s review four truths about culture change. Sergey Brin (on the left) and Larry Page started Google in 1998. They met as Ph.D. students at Stanford. Today, Sergey directs special projects and Larry is the CEO. The company runs more than 1 million servers and processes over 1 billion searches per day. 1.Leaders are the architects and developers of organizational culture. This suggests that culture is not determined by fate. It is formed and shaped by the ongoing behavior of everyone who works at a company. Herb Kelleher, former CEO of Southwest Airlines, noted that culture change is not formulaic. “It’s not a job that you do for six months and then you just say, ‘Well that’s behind us.’ It’s something you do every day.”40 2.Changing culture starts with targeting one of the three levels of organizational culture—observable artifacts, espoused values, and basic underlying assumptions. The fastest way to start a culture change project is through the use of observable artifacts. For example, if you wanted to foster a market culture, you could post graphs of performance metrics around the office. These charts would reinforce the importance of high performance. That said, culture will not change in a significant way unless managers are able to change basic underlying assumptions.41 It takes time to change this deep-seated aspect of culture. Page 495 3.Consider how closely the current culture aligns with the organization’s vision and strategic plan. Remember the quote “culture eats strategy for breakfast” whenever you pursue culture change. It is essential that an organization’s culture is consistent with its vision and strategic goals. A vision represents a long-term goal that describes “what” an organization wants to become. A strategic plan outlines an organization’s long-term goals and the actions necessary to achieve those goals.