The walt disney company reinforcing culture and values to employees

14

ORGANIZATIONAL CULTURE, SOCIALIZATION, AND MENTORING

How Can I Use These Concepts to Fit, Develop, and Perform?
Major Topics I’ll Learn and Questions I Should Be Able to Answer
1. 14.1

THE FOUNDATION OF ORGANIZATIONAL CULTURE: UNDERSTANDING ITS DRIVERS AND FUNCTIONS

MAJOR QUESTION: What is culture and why is it helpful to understand its layers and functions?

2. 14.2

THE IMPACT OF ORGANIZATIONAL CULTURE TYPES ON OUTCOMES

MAJOR QUESTION: How are different types of organizational culture related to outcomes?

3. 14.3

MECHANISMS OR LEVERS FOR CULTURE CHANGE

MAJOR QUESTION: What mechanisms or levers can I use to implement culture change?

4. 14.4

EMBEDDING ORGANIZATIONAL CULTURE THROUGH THE SOCIALIZATION PROCESS

MAJOR QUESTION: How can I integrate the findings of socialization research with the three phases of socialization?

5. 14.5

EMBEDDING ORGANIZATIONAL CULTURE THROUGH MENTORING

MAJOR QUESTION: How can I use mentoring to foster personal and professional success?

The Organizing Framework in Figure 14.1 summarizes what you will learn in this chapter. Two person factors—human and social capital—and four situation factors—culture types, leader behavior, organizational climate, and human resource practices and policies—influence key processes at the individual, group, and organizational levels. In turn, these key processes support positive outcomes at all three levels. Concepts we discuss in this chapter have greater impact on individual and organizational outcomes than on group ones.

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FIGURE 14.1 Organizing Framework for Understanding and Applying OBA summary graphic outlining what will be learned in this chapter.

© 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.. Access the text alternative for Figure 14.1. The Walt Disney Company was founded in 1923 by brothers Walt and Roy Disney. The company is much more than its theme parks. Today Disney is a diversified multinational mass media and entertainment company headquartered in Burbank, California. The company has a long reputation of having a strong culture aimed at being innovative and a fun place to work. In recognition of this theme, the Walt Disney Company was ranked as the 5th most Admired Company in 2016 by Fortune. Here we see a manifestation of the company’s culture in front of Cinderella’s Castle at Walt Disney World, Orlando, Florida. Thousands of families visit their theme parks to have fun and enjoy the outstanding service provided by employees. The strong customer-driven culture established by the Disney brothers is alive and well. This chapter will help you understand how companies like Disney create such cultures.© Ilene MacDonald/Alamy

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Winning at Work
How Would I Assess Person–Organization Fit (P-O) When Applying for Jobs?
Fitting in is important to everyone. When I was 7, my father put me on a baseball team composed of 8- and-9-year-old boys. He thought it would be good for my development, but I was smaller and less skilled than the other boys, and they treated me like an outsider who didn’t fit in. It did not help that I was the coach’s son. I hated the experience.

I also experienced a lack of fit at some of my early job positions. I valued things others did not and believed people were engaging in counterproductive actions. Some of my peers loved the job, the boss, and the work environment. They could not understand why I wasn’t happy, but I felt disengaged and started looking for a new job. That experience opened my eyes to the importance of “fitting in” at work.

What Does It Mean to Fit?
Person–environment fit (P-E) is “the compatibility between an individual and a work environment that occurs when their characteristics are well matched.” 1 Although there are many types of fit, we are interested in person–organization fit (P-O) , which reflects the extent to which your personality and values match the climate and culture in an organization. P-O fit matters because good fit is associated with more positive work attitudes and task performance, lower intentions to quit, and less stress. 2 The process of assessing fit begins during the recruiting phase. Your goal should be to discover whether you and the job or the organization are a good fit for each other.3

A photo of a puzzle piece.Fitting in at work is like doing a puzzle. When the pieces fit in the right pattern, all is well.© Corbis/Punchstock RF

How Can I Assess P-O Fit?
Assessing P-O fit 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 it online or talking with current employees. With this information you can prepare a set of diagnostic questions to ask during the interview process.4 For example, if you value recognition for hard work, 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 P-E fit and will not be happy working at this company.

A Take-Away Application later in this chapter will help you practice the process of assessing person–organization fit.

How Can I Improve My Level of Fit?
· Find ways to build your strengths into your work role. Talk to your boss about how to redesign or modify your job to incorporate your strengths.

· Decide whether weaknesses are affecting your performance. If they are, seek developmental opportunities, coaching, or mentoring. If that does not work, find another role.

· Assess any misalignment between your values and those endorsed by the company. You can do this by writing down your five most important values and comparing them to your employer’s stated values. If they don’t overlap and you can’t accept the discrepancy, it’s time to move on.

· If you don’t fit at one job or location, consider a lateral move to another department. You may just need a different role or boss.5

What’s Ahead in This Chapter
This chapter begins your study of macro-level organizational behavior from the perspective of the organization as a whole. We start by exploring the foundation of organizational culture so 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 ways managers can change organizational culture. Finally, we discuss how socialization and mentoring serve to embed organizational culture, and we focus on how you can use knowledge of these processes to enhance your career success and happiness.

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14.1
THE FOUNDATION OF ORGANIZATIONAL CULTURE: UNDERSTANDING ITS DRIVERS AND FUNCTIONS
MAJOR QUESTION
What is culture and why is it helpful 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 about to learn what creates organizational culture and how culture affects other organizational processes. You also will identify the three levels that constitute culture and the functions it serves for organizations.

The saying “Culture eats strategy for breakfast” was attributed to management expert Peter Drucker. But it really caught everyone’s attention when Mark Fields, CEO of Ford Motor Co., used it in 2006. The slogan currently hangs in the company’s “war room,” a meeting place where executives discuss the execution of Ford’s corporate strategies. Ford’s former CEO Alan Mulally created the room, which contains charts, graphs, and lists of products. The culture slogan serves as a reminder of the impact of organizational culture on Ford’s success. 6 Others agree with Ford’s emphasis on organizational culture.

Alan Murray, Fortune editor, studied the annual Best Companies to Work For lists and concluded that great companies don’t just provide “free food, generous benefits, and nap pods (although those clearly don’t hurt).” He believes that culture is the essence of what makes great companies. “Today’s workers are looking for a corporate culture that values them and their contributions,” he said.7

Bruce Arians, head coach of the Arizona Cardinals NFL team, also believes in the power of corporate culture. When asked by a reporter to comment on the team’s success over two recent seasons—the Cardinals won 34 of 48 regular-season games—he said, “It’s the culture in your locker room. Culture beats talent anytime, and we have great culture, great leadership, and great accountability in our locker room.”8

One of our primary goals in this chapter is to help you understand how managers can use organizational culture as a competitive advantage. We 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.” 9 This definition highlights four important characteristics of organizational culture:

· Shared concept. Organizational culture consists of beliefs and values shared among a group of people.

· Learned over time. Culture is passed to new employees through the processes of socialization and mentoring, discussed later in this chapter.

· Page 548Influences behavior at work. Its influence on behavior is the reason “culture eats strategy for breakfast.”

· Affects outcomes at multiple levels. Culture affects outcomes at the individual, group/team, and organizational levels.

Figure 14.2 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.

FIGURE 14.2 Drivers and flow of organizational cultureA summary graphic of the elements of organizational culture. SOURCE: Adapted from C. Ostroff, A. J. Kinicki, and R. S. Muhammad, “Organizational Culture and Climate,” in Handbook of Psychology, vol. 12, 2nd ed., I.B. Weiner, N.W. Schmitt, and S. Highhouse, eds. (Hoboken, NJ: Wiley, 2013), 643–676. Reprinted with permission of John Wiley & Sons, Inc.

In turn, organizational culture influences the type of organizational structure a company adopts and a host of internal processes (including human resource practices) it implements in pursuit of its goals. These organizational characteristics then affect a variety of group and social processes. 10 This sequence ultimately affects employees’ work attitudes and behaviors and a variety of organizational outcomes. All told, Figure 14.2 tells us that organizational culture has a wide span of influence, ultimately influencing many individual, group, and organizational outcomes. 11 Once again, this is the reason 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.

These levels differ in their visibility and resistance to change, and each one influences another. Let’s look at them one by one.

Level 1: Observable Artifacts
At the most visible level, culture consists of observable artifacts. Artifacts are the physical manifestation of an organization’s culture. They include:

· Acronyms.

· Manner of dress.

· Awards.

· Page 549Myths and stories told about the organization.

· Published lists of values.

· Observable rituals and ceremonies.

· Special parking spaces.

· Pictures and images handing on walls.

A photo of a toy elephant.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?© photonic 2/Alamy RF

At Facebook, for example, the word hack is pasted all around offices. It symbolizes “the hacker way” of pursuing continuous improvement and challenging the status quo. 12 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 reserved for sensitive meetings or discussions. Paul English, cofounder and chief technology officer, created the room because Kayak’s open floor plan does not lend itself to discussions of touchy matters. Annabelle is the “elephant in the room,” the difficult topics discussed there. The company feels Annabelle and the conference room have led to more honest and constructive communications among employees. 13 Artifacts are easier to change than the less visible aspects of organizational culture.

Level 2: Espoused Values
Values were defined in Chapter 2 as abstract ideals that guide our thinking and behavior across all situations. In the context of organizational culture, we distinguish between values that are espoused and values that are enacted.

· Espoused values are the explicitly stated qualities and norms 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 list. For example, Ikea’s espoused values are humility, willpower, simplicity, togetherness, and enthusiasm. 14 Google and Zappos each have 10 espoused values.

Because espoused values are explicitly communicated to employees, managers hope they will directly influence employee behavior. But people do not always automatically “walk the talk.” Leadership at CVS Health recognized this gap and made a key strategic change to align its stated values with its actions.

EXAMPLE A landmark moment in the company’s transformation came early last year [2014] when [CEO Larry] Merlo announced that CVS would cease selling tobacco products by October 1, 2014—a deadline it met nearly a month early. The decision meant sacrificing about $2 billion in sales. Led by Merlo, CVS’s executive team decided that continuing to sell cigarettes had become untenable for a company that was simultaneously trying to sell itself as a health care giant.15

· Enacted values are the qualities and norms that are exhibited or converted into employee behavior. These are values employees ascribe to an organization based on their observations of what occurs on a daily basis. As at CVS, managers should reduce gaps between espoused and enacted values because they can significantly influence employee attitudes and organizational performance.

A survey from the Ethics Resource Center showed that employees were more likely to behave ethically when management set a good behavioral example and kept its Page 550promises and commitments. 16 This finding was underscored by another study of 129 mergers. Employees were more productive and post-merger performance was higher when employees believed that behavior was consistent with the newly formed firm’s espoused values. 17

Level 3: Basic Underlying Assumptions
Basic underlying assumptions are organizational values so taken for granted over time that they become assumptions guiding organizational behavior. Underlying assumptions are employees’ deep-seated beliefs about their company and are the core of organizational culture. As you might expect, they are highly resistant to change. Consider the way Unilever CEO Paul Polman reinforces a core belief in sustainability (see the OB in Action box).

Sustainability is “a company’s ability to make a profit without sacrificing the resources of its people, the community, and the planet.” 18 Achieving sustainability is sometimes called “being green” and has become a priority for many companies.

OB IN ACTION
Unilever Promotes a Sustainability Culture
A photo of Paul Polman.Paul Polman, CEO of Unilever.© epa european pressphoto agency b.v./Alamy

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.

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 establishing three key sustainability focus areas: improving health and well-being, reducing environmental impact, and enhancing livelihoods.19 The company also set a goal to “double the size of our business while reducing our environmental footprint and increasing our positive social impact.”20 The company wanted to (1) 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, and (2) improve “the lives of 2 million children and their mothers by 2016 by providing access to health workers, basic nutrition, and life-saving interventions.”21

Unilever also modified its sourcing policies—the requirements for doing business with the company. These now include the following:

1. Business is conducted lawfully and with integrity.

2. Work is conducted on the basis of freely agreed and documented terms of employment.

3. Workers are treated equally and with respect and dignity.

4. All workers are of an appropriate age.

5. Workers’ health and safety are protected.

6. Land rights of communities including indigenous peoples will be protected and promoted.

7. Business is conducted in a manner which embraces sustainability and reduces environmental impact.22

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Polman told investors, “If you don’t buy into this [sustainability], I respect you as a human being, but don’t put your money in our company.” He believes 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.”23

What Are the Results of Unilever’s Push for a Sustainability Culture? Polman believes employees are now more engaged and the company is a more desirable place to work. The company is making money and contributing to the greater good. According to the Dow Jones Sustainability Report, in “2014 the company enjoyed its fifth consecutive year of top and bottom line growth. Since 2008, the company has reduced costs by EUR 400 million by cutting raw and packaging materials and reducing disposed waste. As of 2014, 33 percent of the company’s food and refreshments products met the highest nutritional standards for their respective product categories, based on globally recognized dietary guidelines, contributing to improved diets for 55 million people.”24

Employees at Unilever say that “doing good is in the company’s DNA.” This is what we call a basic underlying assumption! 25

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? Why or why not?

3. Whether you agree with Polman or not, was he wise to tell investors not to put money in Unilever if they did not also buy into its sustainability plan? Why or why not?

The Four Functions of Organizational Culture
An organization’s culture fulfills four important functions (see Figure 14.3 ):

1. Establish organizational identity.

2. Encourage collective commitment.

3. Ensure social system stability.

4. Act as sense-making device.

FIGURE 14.3 Four functions of organizational cultureA summary graphic of the 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 has taken shape at Southwest Airlines. Southwest has grown to serve more customers domestically than any other airline and has achieved 43 consecutive years of profitability. The company has been on Fortune’s list of Most Admired Companies in the World for 22 consecutive years, and it was named 2015 Airline of the Year by Air Transport World. 26

Function 1: Culture Provides Employees with an Organizational Identity
The identity of Southwest Airlines employees is focused on the belief that employee satisfaction and customer loyalty are more important than corporate profits. Gary Kelly, Southwest’s CEO, highlighted this theme by noting, “Our people are our single greatest strength and our most enduring long-term competitive advantage.” 27

Southwest reinforces this identity by demonstrating in a variety of ways that it truly cares about its employees. The company’s catastrophe fund, for instance, is based on Page 552voluntary contributions for distribution to employees experiencing serious personal difficulties. Its profit-sharing program paid out $620 million in 2016, adding about 15.6 percent to each employee’s compensation.28 Southwest’s people-focused identity also is reinforced by the fact that it is an employer of choice. The company received 371,202 résumés for 6,370 job openings in 2015. It also was rated as providing outstanding opportunities for women and Hispanics by Professional Women magazine and Hispanic magazine, respectively, and the National Conference on Citizenship ranked Southwest as one of The Civic 50 for its use of time, talent, and resources in civic engagement.

Function 2: Culture Facilitates Collective Commitment
The mission of Southwest Airlines is to dedicate itself to “the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” 29 This commitment to serving others is endorsed by the company’s nearly 49,000 employees. It was rated as providing the best customer service in 2014 by Temkin Experience Ratings, the fourth time it had received the top rating for an airline.30 Southwest also received the lowest ratio of complaints to passengers boarded of all major U.S. airlines, based on statistics accumulated by the Department of Transportation since September 1987. Commitment to service doesn’t just apply to customers at Southwest. Employees volunteered more than 130,000 hours to national and local nonprofit organizations.31

A photo of two Southwest customer service employees in an airport terminal wearing airplane costumes.This photo demonstrates Southwest’s culture. Employees are having fun in an airport terminal to lighten what can be a frustrating experience for passengers. Do you think these employees can lift the spirits of the travelers in the background?© Denver Post/Getty Images

Function 3: Culture Promotes Social System Stability
Social system stability is 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, holding parties, and celebrating. For example, staff in each city in which the firm operates are given a budget for parties. The company also uses a variety of performance-based awards and service awards to reinforce employees’ efforts. Its positive and enriching environment is supported by the lowest turnover rates in the airline industry. In 2015 Southwest also was recognized as one of the best places to work in the Glassdoor Employees’ Choice Awards.32

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Function 4: Culture Shapes Behaviors by Helping Members Make Sense of Their Surroundings
Making sense of the surroundings is what 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 its main competitor in 1971, employees understand why the airline’s primary vision is to be the best short-haul, low-fare, high-frequency, point-to-point carrier in the United States. Employees know they must achieve exceptional performance, such as turning a plane around in 20 minutes, because they must keep costs down to compete against Greyhound and automobiles. In turn, the company reinforces the value it places on outstanding customer service and high performance by using performance-based awards and profit sharing. Employees own about 13 percent of the company stock. 33

TAKE-AWAY APPLICATION
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 yet have experience 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 these espoused values?

3. Identify three key beliefs you have about your employer: You may want to ask a work colleague the same question. Are these beliefs consistent with the meaning of the artifacts you described in answering question 1?

4. How does your employer’s culture compare to that of Southwest?

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14.2
THE IMPACT OF ORGANIZATIONAL CULTURE TYPES ON OUTCOMES
MAJOR QUESTION
How are different types of organizational culture related to important outcomes?
THE BIGGER PICTURE
Do you think companies rated on Fortune’s List of 100 Best Places to Work might have unique cultures? How do we know what type of culture exists at these companies or your current employer? In this section you will learn about the four types of culture defined by the competing values framework. You will also discover the extent to which these four culture types are related to important outcomes.

To learn how different types of culture relate to outcomes, we need a way to classify culture types. While the complexity of culture makes agreement on a set of types difficult to reach, academics have proposed and scientifically tested three different frameworks. The competing values framework we discuss here is the most widely used. It also was named 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. 34 We will also 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—clan, adhocracy, hierarchy, and market—all shown in Figure 14.4 . 35

FIGURE 14.4 The competing values framework Culture varies along two axes 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 character.A summary graphic of the CVF.

SOURCE: Adapted from K. S. Cameron, R. E. Quinn, J. Degraff, and A. V. Thakor, Competing Values Leadership (Northampton, MA: Edward Elgar, 2006), 32. Access the text alternative for Figure 14.4.

The CVF was developed by a team of researchers trying to classify different ways to assess organizational effectiveness. Their research showed that measures of organizational effectiveness varied along two fundamental dimensions or axes. One axis described whether an organization focuses its attention and efforts on internal dynamics and employees, or outward to its external environment and its customers and shareholders. The second axis measured an organization’s preference for flexibility and discretion over control and stability. Combining these two axes creates four types of organizational culture, each with different core values and different sets of criteria for assessing organizational effectiveness.

Figure 14.4 shows the strategic direction associated with each cultural type (collaborate, create, and so on), along with the means and goals it pursues. Each type has different characteristics, and while one type tends to dominate in any given organization, it is the mix of types that creates competitive advantage. We begin our discussion of culture types in the upper-left-hand quadrant of the CVF.

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Clan Culture
A company with a clan culture has an internal focus and values flexibility rather than stability and control. It resembles a family-type organization that achieves effectiveness 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 and development. Clan organizations devote considerable resources to hiring and developing their employees, and they view customers as partners. Collaborating is this culture’s strategy.

A photo.Google employees celebrate at the company’s annual Google Dance on the Mountain View, California, campus.

© Martin Klimek/Zumapress/Newscom

EXAMPLE Fortune has rated Google the No. 1 place to work seven times between 2006 and 2016. 36 Larry Page, Google’s cofounder and former CEO, describes the culture as a “family” environment. He said, “My job … 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.” 37 Google holds weekly, all-hands (“TGIF”) meetings so employees can ask Page, Sergey Brin, a Google cofounder, and other executives questions about anything related to the company. This practice enhances employee communication and morale, two aspects of a clan culture.

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EXAMPLE Property and casualty insurance company Acuity, Fortune’s No. 2 best company to work for in 2016, strongly endorses a clan culture. CEO Ben Salzmann told Fortune “if employees are given a fun, rewarding place to work where they can express their creativity, in return the firm will get innovation, diehard loyalty, and world-class customer service.” Employees have generous perks and are empowered to participate in the way the company is run. The end result is profitability and an enviably low 2 percent turnover rate.38

Adhocracy Culture
The term adhocracy reflects an organization with less structure and bureaucracy. It also reflects a management team focused on responding to problems rather than avoiding them. Companies with an adhocracy culture have an external focus and value flexibility. Creation of new products and services is their strategy, which they accomplish by being adaptable, creative, and fast to respond to changes in the marketplace. Adhocracy cultures do not rely on the centralized power and authority relationships that are part of market and hierarchical cultures (see below). They encourage and empower employees to take risks, think outside the box, and experiment with new ways of getting things done.

An article in The Wall Street Journal noted that adhocracy cultures are decreasing in the United States as many companies are becoming risk-averse. The downside of this trend is that a certain amount of reasonable risk taking is necessary to create new businesses, products, and ultimately jobs. On the positive side, however, risk taking is still occurring in industries such as technology and energy, and in coastal cities such as San Francisco and Boston and college towns like Boulder, Colorado, and Austin, Texas. 39

EXAMPLE Former CEO David Brennan stated that biopharmaceutical 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.” 40

EXAMPLE Ikea, the global Swedish home furnishing company, uses innovation to generate growth. Its product development process is based on extensive research. For example, the company studied 8,000 people to investigate their morning routines, hoping to understand how these practices could be enhanced by products designed to meet specific needs. One result was a new product called the Knapper, a freestanding mirror with a rack on the back for hanging clothes.41

Market Culture
Companies with a market culture have a strong external focus and value stability and control. Competition is their strategic thrust. They have a strong desire to deliver results and accomplish goals, and because they are focused on the external environment, customers and profits take precedence over employee development and satisfaction. Managers’ major goal is to improve productivity, profits, and customer satisfaction.

EXAMPLE Grupo 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, [the company] uses tricycle delivery bikes in urban areas of China where streets are too narrow for trucks, a practice it first implemented in Latin America," according to a Harvard Business Review author. 42 Grupo Bimbo operates 171 plants and delivers more than 10,000 products to 22 countries.

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A photo of a man moving a stack of boxes using a hand truck with Bimbo delivery trucks in the background.Imagine having to deliver over 10,000 products to 22 countries. Do you think this takes a lot of planning and detailed execution? Bimbo’s market-based culture contributes to this effort.© Scott Olson/Getty Images

EXAMPLE Publix Super Markets, the largest employee-owned supermarket chain in the United States, was ranked Fortune’s 67th of 100 best places to work in 2016. The company is highly customer-focused and trains and rewards employees to provide friendly and helpful service. 43 Business writer Vicky Applebaum noted “Publix also serves the consumer need for convenience. Consumers want the shortest route through a shopping experience and transaction, and Publix delivers.”44

Hierarchy Culture
Control is the strategy 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, the extensive use of measurement, and the implementation of a variety of control mechanisms. Effectiveness is likely to be measured in terms of efficiency, timeliness, quality, safety, and reliability in producing and delivering products and services. 45

EXAMPLE Amazon relies on the benefits of a hierarchcal culture to effectively manage its vast shipping processes. A Harvard Business Review author commented that the company has achieved success by “sticking steadfastly—even boringly—to a few key principles.… Instead of focusing on competitors or technology shifts [a market culture orientation], they continually invest in getting a little bit better. In their core retail business, they grind out incremental improvements in delivery speed and product offerings while chipping away at prices.” 46

Consider the positive example of Mumbai’s dabbawalas, individuals who deliver prepared meals to customers’ homes or offices and then return the 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 box ).

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PROBLEM-SOLVING APPLICATION
Dabbawalas Rely on a Hierarchical Culture to Efficiently Deliver Food
More than 5,000 dabbawalas in Mumbai, India, deliver 200,000 or more lunch boxes every day. The need for this service grew from the working population’s strongly embedded reliance on having a hot meal for lunch. The dabbawalas first pick up meals customers have prepared for themselves at home, then deliver them to offices in late morning, and after lunch pick up the empty containers and return them to customers’ homes for the next day. Workers are willing to pay for the service, and the dabbawalas are so skilled in execution that the service remains affordable for many.

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 self-management, 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 200,000 transactions a day, six days a week, 52 weeks a year.

How Does a Hierarchical Culture Help? The dabbawalas don’t use any IT system or cell phones. Instead they have integrated organization, management, process, and culture to achieve their goals. It all begins with the Mumbai Suburban Railway. A worker picks up a dabba from a customer’s home and takes it 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 customers’ homes.

The railway system’s schedule effectively sets the timing and speed of the process. 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 them to find the most efficient way to get these key tasks completed.

Some slack is built into the system. Each group has two or three extra workers who help wherever 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 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 one.

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. 47

Apply the 3-Step Problem-Solving Approach
1. Step 1:Define the major problem dabbawalas want to avoid.

2. Step 2:Identify the causes of the problem. What OB concepts help explain why the dabbawalas are effective?

3. Step 3:Make your recommendation about whether a similar system would work for a comparable firm in the United States. Explain.

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Cultural Types Represent Competing Values
The four cultural types include some opposing core values. The internal values associated with clan and hierarchy can conflict with the external ones associated with adhocracy and market cultures. Similarly, the flexibility and discretion associated with clan and adhocracy cultures are at odds with the stability and control values endorsed by companies with hierarchy and market cultures.

These conflicts matter because an organization’s success may depend on its ability to act on core values associated with competing cultural types. While this is difficult to pull off, it can be done. Video game developer Activision Blizzard is a good example.

OB IN ACTION
Activision Blizzard Integrates Clan and Adhocracy Cultures
If you like video games, you have probably played one from Activision Blizzard. The company is the leading developer and publisher of video games and has created blockbuster hits such as Call of Duty, World of Warcraft, and Guitar Hero. In 2015, the company’s games were played for more than 14 billion hours. Activision was rated the 77th best place to work by Fortune in 2016 (up from 96th in 2015) and employs about 7,200 employees worldwide.

FIGURE 14.5 Graph of Activision’s culture A graph showing how Activision rates in the four cultures.Based on multiple articles describing the work environment at Activision Blizzard. Access the text alternative for Figure 14.5.

Activision’s culture appears to be a combination of all four culture types, but with an emphasis on clan and adhocracy (see Figure 14.5 ). One employee Page 560described it this way: “We are lucky to work in a business where imagination, creativity, and play aren’t only encouraged, they’re required.”48 Bobby Kotick, Activision Blizzard CEO, reinforced this belief by saying, “Everything we do starts with our employees’ talent, inspired creativity, and commitment to excellence.” The culture is noted for being inspirational, creative, and fun.49

Clan Dominates One of the company’s mantras is “Gamers + gaming = fun.” “Activision Blizzard is a community of people who love to have fun together, and our employee camaraderie is fueled by our passion for gameplay," according to the company's website.”50 This cultural characteristic is reinforced via the Gaming Zone. Great Place to Work described the Gaming Zone as “the heart of Activision Blizzard’s headquarters. Employees are encouraged to play games during their breaks, and the company regularly hosts tournaments and biweekly get-togethers like Gaming Zone Game Night, where employees play video games together.”51

Personal development is encouraged. For example, Activision Blizzard Studio Summit is an annual event at which game development teams meet to discuss experiences and learn from each other. Great Place to Work noted that “development teams share their combined knowledge and annual findings across a variety of disciplines, including audio and talent, art, design, animation, programming, and production.”52 Other developmental activities include a Master’s in the Business of Activision (the company’s self-made MBA program) and Blizzard Academy, where experts teach specialized classes.53

Other clan-related characteristics include a host of positive employee perks such as company-paid health benefits, a wellness program, free food and beverages, massage therapy, and work–life balance programs.54

Adhocracy Dominates Creativity is at the core of Activision’s success. “Bringing Activision Blizzard’s franchises to our audiences is a massive, complex, and very creative process,” says CEO Kotick. “I think of our teams as symphony orchestras, because they work hard to bring so many details together in perfect harmony.”55

The company uses its Cultural Enrichment Series to foster innovation and creativity. Part of the series consists of TED-type talks called Activisionaries. “This speaker and concert series features inspirational leaders, entrepreneurs, world-class athletes, military leaders, best-selling authors, musicians, and others. The events not only provide intellectual stimulation and consistent opportunities for community-gathering, but also instill a sense of creativity that inspires and guides our culture.”56

YOUR THOUGHTS?

1. What is the cultural thread that enables Activision to have a culture dominated by clan and adhocracy?

2. Do you think Activision’s cultural profile is the best one for a company whose strategic goal is to grow its business? Explain.

3. Would you like to work at Activision? Why or why not?

Are you curious about the type of culture that exists in a current or past employer? Do you wonder whether you possess person–organization fit? Self-Assessment 14.1 allows you to consider these questions.

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SELF-ASSESSMENT 14.1 What Is the Organizational Culture at My Current Employer?
Please be prepared to answer these questions if your instructor has assigned Self-Assessment 14.1 in Connect.

1. How would you describe the organizational culture?

2. Do you think 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 organizational culture can influence outcomes at the individual, group, and organizational levels of the OB Organizing Framework. A team of researchers tested this hypothesis by conducting a meta-analysis of more than 38,000 organizational units and 616,000 individuals: An organizational unit is either an organization as a whole or departments in different organizations. Figure 14.6 summarizes the findings.57

FIGURE 14.6 Correlates of clan, adhocracy, market, and hierarchy organizational cultures A bar graph illustrating the strength of relationships between the four culture types and nine different organizational outcomes.SOURCE: Results were based on A. Ou, C. Hartnell, A. Kinicki, E. Karam, & D. Choi “Culture in Context: A Meta-Analysis of the Nomological Network of Organizational Culture." Presentation as part of a symposium, titled “Connecting Culture and Context: Insights from Organizational Culture Theory and Research,” at the 2016 National Academy of Management Meeting in Anaheim. Access the text alternative for Figure 14.6.

Figure 14.6 illustrates the strength of relationships among nine organizational outcomes and the four culture types. As you probably expected, culture is positively Page 562associated with a variety of outcomes. Most relationships were of moderate strength, meaning they are important to today’s managers. Closer examination of Figure 14.6 leads to the following six conclusions:

1. Organizational culture is related to organizational effectiveness. This means an organization’s culture can be a source of competitive advantage.

2. Employees have more positive work attitudes when working in organizations with clan cultures. Employees clearly prefer to work in organizations that value flexibility over stability and control, and those that are more concerned with satisfying employees’ needs than with customer or shareholder desires.

3. Clan and market cultures are more likely to deliver higher customer satisfaction and market share. We suspect this result holds because the positive employee attitudes associated with clan cultures motivate employees to provide better customer service.

4. Operational outcomes, quality, and innovation are more strongly related to clan, adhocracy, and market cultures than to hierarchical ones. Managers should avoid the use of too many rules and procedures—hierarchical characteristics—when trying to improve these outcomes.

5. An organization’s financial performance (profit and revenue growth) is not strongly related to organizational culture. Only market and hierarchy cultures were associated with financial outcomes. Managers should not expect to immediately increase financial performance when they try to change their organization’s culture. This underscores the conclusion that culture change needs time to take hold.

6. Companies with market cultures tend to have more positive organizational outcomes. Managers should make their cultures more market oriented.

Subcultures Matter
Thus far we have discussed organizational culture as if a company possessed a single homogeneous culture. Most don’t. Rather, organizations develop subcultures.58

Two OB scholars describe organizational subcultures as consisting of “distinctive clusters of ideologies, cultural forms [clan, adhocracy, market, hierarchy], and other practices that identifiable groups of people in an organization exhibit.” They tend to vary from a company’s overall culture, “either intensifying its understandings and practices or diverging from them.”59 Subcultures tend to form along the following lines, often leading to noticeably different cultures.60

· Functional/occupational groups.

· Geographical areas.

· Products, markets, or technology.

· Divisions or departments.

· Levels of management—senior management versus supervisors.

· Work role—firefighter versus emergency medical technician.

While subcultures develop naturally, senior leaders should link them with “common goals, common language, and common procedures for solving problems," according to OB expert Edgar Schein. 61 You don’t want highly different subcultures to develop, because they can lead groups to focus on different goals, customers, or values, which lowers unit and organizational performance.62 Such culture clashes frequently happen when companies merge. Research shows that the failure to integrate cultures is a key cause of failed acquisitions.63

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14.3
MECHANISMS OR LEVERS FOR CULTURE CHANGE
MAJOR QUESTION
What mechanisms or levers can I use to implement culture change?
THE BIGGER PICTURE
Some people suggest that culture change takes years, whereas others believe leadership actions can change culture more quickly. Yet others contend that culture evolves and managers should not attempt to manage it. Where do you stand? We believe culture can and should be nurtured and developed so it aligns with a company’s vision and strategic plan. You will learn about 12 mechanisms or levers you can use to implement culture change. We discuss them in the context of the managerial role, but knowing these techniques helps you at any level in the organization.

Edgar Schein, who has written a great deal about organizational culture, believes the creation and management of culture is a leader’s most important role. 64 We agree, because culture can be a source of competitive advantage. Consider companies like Apple, Google, and Facebook. As suggested by Figure 14.2 , the cultures at these companies were first formed by their founders—Steve Jobs at Apple, Larry Page and Sergey Brin at Google, and Mark Zuckerberg at Facebook. Over time, the 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. It is not an easy task to change an organization’s culture, but let us look at how it can be done.

A photo.Sergey Brin (left) and Larry Page met as Ph.D. students at Stanford. They created the first version of the algorithm underlying searches while students, and then incorporated Google after graduation. Today, Brin is president of Alphabet, Inc., Google’s parent company, and Page is the CEO. Although Google is somewhat secretive about the number of searches it conducts, the best estimate is more than 3 billion a day. © Matthew Staver/Bloomberg/Getty Images

First let’s review four truths about culture change.

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. Aileen Wilkins, chief people officer for H&R Block, believes creating a healthy culture starts with strong leadership. “The people at the top set the tone for behaviors all the way down the line,” she says. 65

2. Page 564Changing culture starts with targeting one of the three levels of organizational culture—observable artifacts, espoused values, or 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 to reinforce the value of high performance. That said, culture will not change in a significant way unless managers are able to change basic underlying assumptions. 66 It takes time to alter this deep-seated component of culture.

3. The current culture probably closely aligns with the organization’s vision and strategic plan. Remember the quote “culture eats strategy for breakfast” whenever you pursue culture change. An organization’s culture must be consistent with its vision and strategic goals. A vision is a long-term goal that describes what an organization wants to become. A strategic plan outlines the organization’s long-term goals and the actions necessary to achieve them.

EXAMPLE Alan Mulally, former CEO of Ford, wanted to get management to work more collaboratively in pursuit of the company’s strategic goals. This change toward a clan culture was necessary to overcome the competitiveness and aggressiveness—signs of a market culture—among senior managers. Among other changes, Mulally instituted weekly update meetings in which executives shared results about their units. The culture changed as executives became more collaborative, and profits rose. 67