MGMT 1135 Organisational Behaviour - Organisational Culture

What's Organisational Culture?

  • Definition: Organisational culture is a system of shared meaning held by members that distinguishes one organisation from another.
  • Other definitions:
    • "The way we do things around here" (Deal & Kennedy, 1982)
    • "THE pattern of basic assumptions that a given group has invented, discovered or developed in learning to cope with its problems of external adaptation and internal integration."
    • "A dominant and coherent set of shared values conveyed by such symbolic means as stories, myths, legends, slogans, anecdotes and fairy tales." (Peters & Waterman, 1982)

Levels of Organisational Culture

  • Artefacts (visible): Observable elements – ceremonies, language, dress codes, office layout, rituals, etc.
  • Espoused Values (partially visible): Declared values – innovation, sustainability, quality, equality, etc.
  • Basic Assumptions (invisible): Deeply held beliefs – taken-for-granted truths that guide daily behaviour. Hard to observe and even harder to change.

Types of Organisational Culture – Handy’s Model

  • Power Culture: Centralised control, authority held by a dominant figure or group; decisions made via influence or charisma.
  • Role Culture: Bureaucratic structure; logic, rules, and procedures guide decision-making.
  • Task Culture: Project-based; focused on results, flexibility, and innovation.
  • Support Culture: People-focused; emphasises relationships, trust, and individual interests.

Quinn & Cameron – Competing Values Framework

  • Clan (Collaborate): Internal focus + flexibility; teamwork, shared values, participation.
  • Adhocracy (Create): External focus + flexibility; innovation, creativity, risk-taking.
  • Hierarchy (Control): Internal focus + stability; rules, structure, efficiency.
  • Market (Compete): External focus + stability; performance, targets, competitiveness.

Seven Primary Culture Characteristics

  • Innovation & risk-taking: Employees are encouraged to be innovative and take risks
  • Attention to detail: Employees are expected to exhibit precision, analysis, and attention to detail
  • Stability: Organizational activities emphasize maintaining the status quo in contrast to growth
  • Aggressiveness: people are aggressive and competitive rather than easy-going
  • Outcome orientation: Management focuses on results rather than on the techniques and processes used to achieve them
  • People orientation: Management’s decisions consider the effect of outcomes on people within the organization
  • Team orientation: Work activities are organized around teams rather than individuals

Organisational Culture Is Descriptive

  • Culture reflects how employees perceive the organisation’s characteristics.
  • It describes what is, not how employees feel about it.
  • Culture ≠ Job Satisfaction:
    • Culture = descriptive (e.g. “There is teamwork here.”)
    • Satisfaction = evaluative (e.g. “I like how teamwork is encouraged.”)

Do Organisations Have Uniform Cultures?

  • Dominant culture: Core values shared by a majority of members. Defines the organisation’s identity. Example: Microsoft’s culture emphasises aggressiveness and risk-taking.
  • Subcultures: Develop within departments, locations, or roles. Reflect unique challenges or experiences. Example: The R&D team may value innovation, while the finance team values risk aversion.
  • Shared meaning makes culture a strong influence on behaviour.

Strong vs. Weak Organisational Cultures

  • Strong Culture:
    1. Core values are intensely held and widely shared.
    2. Creates cohesion, loyalty, and behavioural consistency.
    3. Know “the way things are done around here”
    4. Less need for detailed policies & procedures.
    5. Reduces turnover and enhances commitment.
  • Weak Culture:
    1. The organization’s core values are NOT clearly defined, communicated, or widely accepted by those working for the organization.
    2. Members have divergent views on values and mission.
    3. Less influence on behaviour; greater variability in norms.
    4. Lead to inconsistent behaviour of members, political games or power struggle.

What do cultures do?

  • Formalization vs. Culture
    • Formalization focus on generating formal rules, regulations, and guidelines, etc.
    • Culture focus on building shared mindset

Functions of Organisational Culture

  1. Boundary-defining – Distinguishes the organisation from others. E.g., Apple’s sleek, design-driven culture vs. IBM’s technical precision.
  2. Identity – Gives members a sense of who they are. E.g., Patagonia employees identify as environmental stewards.
  3. Commitment – Promotes loyalty beyond self-interest. E.g., Non-profits like Médecins Sans Frontières attract mission-driven staff.
  4. Stability – Acts as social glue, reinforcing shared norms. E.g., Toyota’s continuous improvement culture fosters internal cohesion.
  5. Sense-making & control – Guides behaviour and sets “rules of the game.” E.g., Disney sets clear standards for employee appearance and conduct.

The Ethical Dimension of Culture

  • Ethical Work Climate (EWC): Shared perceptions of right and wrong behaviour in an organisation.
  • Common Ethical Climate Types (Ethical Climate Theory – ECT):
    1. Instrumental: Self-interest guides decisions → Example: Investment banks (e.g., pre-2010 Goldman Sachs)
    2. Caring: Focus on well-being of others → Example: Environmental NGOs, such as WWF
    3. Independence: Guided by personal moral standards → Example: Startups encouraging individual ethical discretion
    4. Law & Code: Based on external codes (e.g., professional standards) → Example: Accounting firms (e.g., PwC)
    5. Rules: Based on internal policies and procedures → Example: Public sector agencies with formalised manuals

Recognising and Responding to Unethical Cultures

  • Signs of a Toxic Culture:
    • Pressure to hide your identity to fit in
    • Overwork and “hustle” is the norm
    • Hyper-competitiveness or internal bullying
  • Strategies for Individuals:
    • Self-care and reflection
    • Repair strained relationships
    • Build microcultures with shared values
    • Be patient and persistent

Culture and Organisational Performance

  • Positive culture = aligned goals, motivation, trust → higher engagement and performance
  • Strong cultures can drive results—but not always positively
  • Culture affects employee morale, innovation, customer service, and turnover
  • Example – Telstra (2009–2014): CEO David Thodey transformed a rigid, low-trust culture Shifting focus to customer-centricity, reduced bureaucracy Outcomes: ↓ complaints, ↑ morale, ↑ satisfaction, ↓ turnover

Culture as an Organisational Challenge

  • When Culture Becomes a Barrier
    • Strong culture ≠ always beneficial
    • Can hinder adaptation, diversity, and creativity
    • May promote conformity over innovation
  • Challenges:
    • Change Management: Entrenched values slow down responsiveness
      • Example: Ford – Alan Mulally’s “One Ford” culture restored trust & performance
    • Diversity: Strong culture may pressure minority groups to assimilate
      • Risk: Dilution of diverse perspectives or reinforcement of bias

Special case: Culture in Mergers and Acquisitions

  • Culture Fit Matters
    • Cultural incompatibility = major reason for M&A failure
      • Survey: 58% of mergers fail due to cultural clash (A.T. Kearney)
  • Example – BUPA & MBF (2010):
    • Tripled in size overnight
    • Success credited to open communication & cultural sensitivity
    • Financial synergy ≠ enough. Long-term success relies on cultural integration.

How to create and sustain culture?

  • How A Culture Begins?
    • Ultimate source of an organization's culture is its founders

Keeping a Culture Alive – Key Mechanisms

  • Selection & Reward
    • Hire and reward people who fit the culture
    • Two-way fit: Applicants self-select or opt out
  • Socialisation
    • Helps new employees adapt and internalise culture
    • Stages: Pre-arrival, Encounter, Metamorphosis
  • Modelling Behaviours
    • Leaders set the tone through visible actions
    • Success reinforces culture – Founders’ traits become embedded

A socialisation model

  • Socialisation process
    • Pre-arrival
    • Encounter
    • Metamorphosis
  • Outcomes
    • Productivity
    • Commitment
    • Turnover

Entry socialisation options

  • Formal vs. informal
    • The more a new employee is segregated from the ongoing work setting and differentiated in some way to make explicit their newcomer's role, the more formal socialisation is. Specific orientation and training programs are examples. Informal socialisation puts the new employee directly into the job, with little or no special attention.
  • Collective vs. individual
    • New members can be grouped together and processed through an identical set of experiences, as in military boot camp. Or they can be socialised individually, as in many professional offices.
  • Sequential vs. random
    • A sequential schedule establishes standardised stages of transition, as in rotational training programs. It also includes probationary periods, such as the eight-to-ten-year 'associate' status used by accounting and law firms before a candidate can be made a partner. Random schedules give no advance notice of their transition timetable, as in the typical promotion system in which an employee is not advanced to the next stage 'ready'.
  • Fixed vs. variable
    • When the content of socialisation is fixed, all employees entering the organisation receive the same standardised information, often from a policy manual or a training curriculum. When the content is variable, different employees are exposed to different information depending on their specific job tasks.
  • Serial vs. disjunctive
    • Serial socialisation is characterised by the use of role models who train and encourage the newcomer. Apprenticeship and mentoring programs are examples. In disjunctive socialisation, role models are deliberately withheld, and new employees are left on their own to figure things out.
  • Investiture vs. divestiture
    • Investiture socialisation assumes that the newcomer's qualities and qualifications are the necessary ingredients for job success, so these qualities and qualifications are confirmed and supported. Divestiture socialisation tries to strip away certain characteristics of the recruit.

How do employees learn culture?

  • Levels of Organisational Culture
    • Artefacts: visible organisational features-physical spaces, observable behaviours, written and spoken language, dress codes, visible organisational structures, company logos
    • Norms and values-The things employees say about their organisation; the strategies, goals, philosophies, mission statements
    • Basic assumptions-Unconscious enacted values, 'taken-for-granted' beliefs, perceptions and thoughts that are not normally articulated by organisational members

Stories – How Culture Is Transmitted

  • Organisational Stories: Narratives about key people, events, or decisions Reinforce values, behaviours, and identity Help new employees understand "how things work here"
    • E.g., A team that worked overnight to deliver a product on time → emphasises commitment and teamwork
    • IKEA – Ingvar Kamprad’s Frugality Founder Ingvar Kamprad was famously frugal—he flew economy and assembled his own furniture. Message: Simplicity and cost-consciousness are core to IKEA’s identity.

Rituals – Reinforcing Organisational Values

  • What Are Rituals?
    • Repetitive activities that express and reinforce key organisational values
    • Help establish what is celebrated, rewarded, or normalised
    • Encourage shared experiences and a sense of belonging
    • E.g., Weekly team check-ins or stand-up meetings → reinforces collaboration and transparency
    • Netflix – Freedom & Responsibility Talks New hires attend sessions explaining the company’s unique culture of autonomy and accountability. Cultural message: Trust employees to make decisions; hold them to high performance.

Symbols – Communicating Organisational Values

  • What Are Symbols?
    • Physical or material elements that reflect and reinforce cultural values
    • Symbolic cues about status, hierarchy, and behavioural norms
    • E.g., Size of office, type of desk or chair; Dress code (formal vs. casual)
    • Google: Relaxed workspace with game rooms and nap pods → creativity, freedom

Language – Shared Meaning in Organisational Culture

  • What Are Organisational Language?
    • Specific jargon, acronyms, phrases, and metaphors used internally
    • Helps shape shared meaning and signal inclusion or expertise
    • E.g., “Circle back” → revisit a topic later;BOLD (Boeing online data)
    • Pixar: “Braintrust” → trusted group for creative feedback sessions

How to increase the ethical and positive aspects of organizational culture?

  • Changing Organisational Culture
    • Why Change Organisational Culture?
      • Needed to adapt to globalisation, technology, competition
      • May require redefining mission, values, and basic assumptions
    • Why Is It Difficult?
      • Culture is deeply embedded, shared, and resistant to change

How to Change Culture

  1. Adjust artefacts and espoused values
  2. Select, reward, and promote people aligned with new culture
  3. Model and reinforce desired behaviours
  4. Dismiss or demote those who resist key values
  5. Communicate the new cultural vision consistently

Creating an ethical culture

  • A culture that encourages doing the right thing—emphasising how goals are achieved, not just what is achieved.
  • Key Characteristics:
    • High risk tolerance, low to moderate aggressiveness
    • Focus on both means and ends
    • Long-term stakeholder focus (employees, communities, shareholders)
  • Examples: Enron: Aggressive culture encouraged unethical behaviour → organisational failure

Creating an ethical culture

  • A culture that encourages doing the right thing—emphasising how goals are achieved, not just what is achieved.
  • What Can Managers Do?
    1. Be visible role models and communicate ethical expectations
    2. Provide protective mechanisms to assist workers in behaving ethically
    3. Visibly reward ethical acts and punish unethical ones
    4. Provide training on ethical behaviors and guidelines

Creating a positive culture

  • A culture that focuses on growth, strengths, and vitality—supporting employees to thrive, not just perform.
  • Core Principles:
    1. Build on employee strengths → Help individuals discover and apply their unique talents
    2. Reward more than punish → Reinforce desired behaviours with recognition and support
    3. Emphasise individual growth and vitality → Foster energy, learning, and personal development

Rewarding More Than Punishing

  • Positive Culture Principle: Recognise and Reward
    1. Focus on praise, appreciation, and recognition
    2. Reinforce behaviours through positive reinforcement, not fear
  • Why it matters:
    1. Praise boosts motivation, engagement, and retention
    2. Silence can demoralise—praise is a low-cost, high-impact tool

Encouraging Growth – And Knowing the Limits

  • Positive Culture Principle: Support Growth & Vitality
    • Focus on long-term development, not just short-term output
    • Recognise the difference between a job and a career
  • But… Beware the Limits
    1. Overdoing "positiveness" can feel forced or fake
    2. Risk of stigmatising those who don’t conform
    3. Balance positivity with realism and inclusion

Organisational Culture in a Global Context

  • Organisational Culture vs. National Culture
    • Organisational culture may transcend national borders—but not always successfully
  • National cultural values (e.g. collectivism, power distance) can shape how culture is received
    • Organisations must adapt to local norms when expanding globally
    • Cultural sensitivity is crucial for managers
    • Ethical standards are interpreted differently across countries

Takeaway

  1. What Is Organisational Culture?
    • A system of shared values, beliefs, and assumptions that guide member behaviour
  2. Key Components
    • Artefacts: stories, rituals, symbols, language
    • Espoused values vs. enacted values
    • Basic assumptions (deepest level)
  3. Types of Culture
    • Handy’s typology: power, role, task, support
    • Quinn & Cameron’s framework: clan, adhocracy, hierarchy, market
    • Seven differentiating characteristics (e.g., innovation, people orientation)
  4. Ethical and Positive Culture
    • Ethical cultures focus on integrity, fairness, and stakeholder respect
    • Positive cultures emphasise strengths, recognition, and employee growth
  5. Global Context
    • Organisational culture must adapt to national culture; Ethical norms and behaviours vary across countries