Class 19: Organizational Culture 2

Where does culture come from

• often reflects a founder’s values and vision

• History of organization

• Shared experiences and success

• Also reflects the industry, national and societal culture

The “promise” of a strong culture

is that it lets a firm relax the trade-off between ensuring coordination and reducing people’s motivation. Ideally, people do what you want them to do because they want to do it

Maintaining an Organizational Culture

Attraction-Selection-Socialization-Attrition

Attraction

Some potential job applicants won’t apply due to a perceived lack of fit. Think of a place where you wouldn’t want to work?

Selection

Organizations horse people who already share the values and beliefs they want to encourage, further weeding out potential “misfits“ Think of a time where you voted against someone to join your club because of a perceived misfit?

Socialization

Workers are socialized into values and beliefs of the organization in two ways:

• from above: the actions of leadership

• From around: the action’s of one’s peers

Attrition

Those people who still don’t fit will either be unhappy or ineffective when working in the organization. Have you ever quit an organization, team, or club?

Social influence and conformance

Culture is sustained through mechanisms of conformance with social influence

Compliance

Most clearly tied to incentives, people follow rules because of external pressure (to get rewards or punishment)

Identification

Is about understanding there is a certain way to behave and doing so because you want to belong or be accepted by the group

Internalization

Is about overtime people adopt the group’s values as their own beliefs, acting that way even without external pressure

Peer socialization is good and bad

Is most organizations, peer socialization is the most powerful lever

The good and the bad of peer socialization

It generates a feedback loop

• people who agree with the future are more let to stay

• People whop do not agree are more likely to leave

Organizational design

Plays a central role in supporting people, structure, and culture by aligning the internal workings of an organization with its strategic goals

Culture shapes

Behavior, supports, structure, and drives engagement