16

Organizational Culture
LEARNING OBJECTIVES

After studying this chapter, you should be able to:

16.1 Describe the common characteristics of organizational culture.
16.2 Show how culture is transmitted to employees.
16.3 Identify the factors that create and sustain an organization’s culture.
16.4 Compare the functional and dysfunctional effects of organizational culture on
people and the organization.
16.5 Describe the similarities and differences in creating an ethical culture, a positive
culture, and a spiritual culture.
16.6 Show how national culture can affect the way organizational culture is
interpreted in another country.

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Would you spend $10,000 on a guitar without even playing it? Customers of Chicago-
based Reverb.com, an online musical instrument marketplace, are willing to do so. Why
do they keep coming back, rather than going to competitors such as eBay? The answer
may be found in its organizational culture.1
We have all felt an indescribable essence about the organizations we have experi-
enced. This pervasive atmosphere can have a strong and measurable impact on behavior.
Reverb.com has created an organization and a brand, founded on a passion for music and
a drive to create a wonderful customer experience for musicians. Employees and custom-
ers alike share values, beliefs, and traditions centered around music and its performance.2
As you will see in this chapter, organizational culture can have a profound effect on orga-
nizational effectiveness. Notably, 88 percent of millennials surveyed by Gallup (a polling
company) stated that they would remain in their jobs for more than five years if they were
satisfied with the company’s purpose, or mission.3
 Chapter 16 • Organizational Culture

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Organizational culture refers to a system of shared meaning held by members that Organizational
distinguishes the organization from other organizations.4 This system of shared mean- culture
A system of shared
ing includes values, beliefs, material symbols, and assumptions that characterize the
meaning held by
organization.5 These values, beliefs, and assumptions, when put into practice, (1) filter members that
what employees pay attention to, (2) are physically manifested as material symbols (for distinguishes the
example, uniforms, statues) and stories, and (3) form the foundation for shared meaning organization from
amongst members of an organization.6 other organizations.
This system is char-
Organizational culture shows how employees perceive the essence of an organiza-
acterized by values,
tion, not whether they like them—that is, it is a descriptive term. Research on organi- beliefs, and underly-
zational culture has sought to measure how employees see their organization: Does it ing assumptions that
encourage teamwork? Does it reward innovation? Does it stifle initiative? In contrast, serve several purposes.
job satisfaction is an evaluative term: it seeks to measure how employees feel about the
organization’s expectations, reward practices, and the like. See Exhibit 16-1 for a contrast
of two companies with very different organizational cultures.

Organization A ':*+$+6
This organization is a manufacturing firm. Managers are expected to fully document all deci- %QPVTCUVKPI
sions, and “good managers” are those who can provide detailed data to support their rec- 1TICPK\CVKQPCN
ommendations. Creative decisions that incur significant change or risk are not encouraged. %WNVWTGU
Because managers of failed projects are openly criticized and penalized, managers try not to
implement ideas that deviate much from the status quo. One lower-level manager quoted an
often-used phrase in the company: “If it ain’t broke, don’t fix it.”
There are extensive rules and regulations in this firm that employees are required to fol-
low. Managers supervise employees closely to ensure there are no deviations. Management
is concerned with high productivity, regardless of the impact on employee morale or
turnover.
Work activities are designed around individuals. There are distinct departments and lines
of authority, and employees are expected to minimize formal contact with other employees
outside their functional area or line of command. Performance evaluations and rewards
emphasize individual effort, although seniority tends to be the primary factor in the deter-
mination of pay raises and promotions.
Organization B
This organization is also a manufacturing firm. Here, however, management encourages and
rewards risk taking and change. Decisions based on intuition are valued as much as those
that are well rationalized. Management prides itself on its history of experimenting with
new technologies and its success in regularly introducing innovative products. Managers or
employees who have a good idea are encouraged to “run with it.” And failures are treated
as “learning experiences.” The company prides itself on being market driven and rapidly
responsive to the changing needs of its customers.
There are few rules and regulations for employees to follow, and supervision is loose
because management believes that its employees are hardworking and trustworthy.
Management is concerned with high productivity but believes that this comes through
treating its people right. The company is proud of its reputation as being a good place to work.
Job activities are designed around work teams, and team members are encouraged to
interact with people across functions and authority levels. Employees talk positively about
the competition between teams. Individuals and teams have goals, and bonuses are based
on achievement of these outcomes. Employees are given considerable autonomy in choosing
the means by which the goals are attained.
Part 5 • Leading, Understanding, and Transforming the Organization System

Organizational cultures are extremely difficult to define and characterize, and over
the years, many people sought to understand the meaning of culture in organizations.7
Many have asked, do organizations have cultures? These researchers have tried to figure
out what makes cultures different from one another. Still others have asked, what are
organizations’ cultures? These researchers are more concerned with describing specific
cultures and understanding what makes one particular organization tick. As an example,
followers of the have perspective might try to figure out what values and beliefs that
descriptively separate Reverb.com from, say, eBay. On the other hand, followers of the
are perspective would only try to understand what Reverb.com is, for what it is, by study-
ing the stories, rituals, material symbols, and language used at Reverb.com. Notably,
these latter forms (described later in the next section) are notoriously hard to measure
and interpret. Although sometimes observable by outsiders, they tap into deep underlying
assumptions that are sometimes only capable of being fully grasped and experienced by
an “insider.”8
Regardless of the many ways of conceptualizing varying “types” of culture by val-
ues or beliefs, one of the most common frameworks describes organizational cultures as
possessing several competing values.9
• “The Clan.” A culture based on human affiliation. Employees value attachment,
collaboration, trust, and support.
• “The Adhocracy.” A culture based on change. Employees value growth, variety,
attention to detail, stimulation, and autonomy.
• “The Market.” A culture based on achievement. Employees value communica-
tion, competence, and competition.
• “The Hierarchy.” A culture based on stability. Employees value communication,
formalization, and routine.
The differences between these cultures are reflected in their internal versus exter-
nal focus and their flexibility and stability.10 For instance, clans are internally focused
and flexible, adhocracies are externally focused and flexible, markets are externally
focused and stable, and hierarchies are internally focused and stable. Reviews of hun-
dreds of studies have helped summarize the findings on the cultures from the competing
values framework.11 As shown in Exhibit 16-2, the various cultures differ regarding how
they influence organizational outcomes. Although we note that many of these outcomes
are also heavily influenced by leadership and organizational structure (see their respec-
tive chapters for more information), culture adds more to the picture than leadership or
structure. A strategic approach to culture would suggest that cultures would ideally match
one’s objectives. Although most cultures have a positive effect on employee attitudes,
performance, innovation, product/service quality, and operational efficiency, it is clear
that a clan or market culture is perhaps best aligned with customer-oriented outcomes and
that a hierarchical culture is best for profitability and revenue growth.
Although the competing values approach is one of the most frequently studied ways
of examining organizational culture, other frameworks have been introduced. For example,
the Organizational Culture Inventory groups cultures into three categories: (1) constructive
cultures that value affiliation, encouragement, and achievement; (2) passive-defensive
cultures that avoid accountability, seek validation and approval from others, and are
conventional; and (3) aggressive-defensive cultures that are competitive, perfectionist, and
power-oriented.12
 Chapter 16 • Organizational Culture

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Employee Attitudes High Quality Products/Services Customer Satisfaction Profitability &

Culture & Performance Innovation & Operational Efficiency & Market Share Revenue Growth
Clan +* +* 0 +* -
Adhocracy +* + +* - 0
Market 0 + +* +* 0
Hierarchy +* - +* 0 +*

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Another widely used framework is the Organizational Culture Profile (OCP).13

The OCP draws upon a novel survey method in which employees sort a set of values
based on how closely they represent their organization. The OCP suggests an organi-
zational culture can be described by eight dimensions: (1) innovation, (2) attention to
detail, (3) decisiveness, (4) team orientation, (5) outcome orientation, (6) aggressiveness,
(7) supportiveness, and (8) rewards emphasis.
Dominant culture
A culture that
&Q 1TICPK\CVKQPU *CXG 7PKHQTO %WNVWTGU! expresses the core
values that are shared
Organizational culture represents a perception that the organization’s members hold in com-
by most of the orga-
mon. Statements about organizational culture are valid only if individuals with different nization’s members.
backgrounds or at different levels in the organization describe the culture in similar terms.14
The dominant culture expresses the core values most members share and that
give the organization its distinct personality.15 Subcultures tend to develop in large orga-
nizations in response to common problems or experiences a group of members face in
the same department or location.16 Most large organizations have a dominant culture and
numerous subcultures.17 Sometimes the subcultures can be so strong, however, that they
subtly reject the “official” culture and do not conform.18 If organizations were composed Core values
only of subcultures, the dominant organizational culture would be significantly less pow- The primary or domi-
erful. It is this “shared meaning” aspect of culture (in both dominant and subcultures) that nant values that are
makes it a potent device for guiding and shaping behavior. Subcultures have even been accepted throughout
the organization.
detected at the country or nation level, with subcultures forming because of immigration,
assimilation of new immigrants, or class differences amongst the people.19
Subcultures
Minicultures within
5VTQPI 8GTUWU 9GCM %WNVWTGU an organization,
typically defined by
It is possible to differentiate between strong and weak cultures.20 If most employees department designa-
(responding to surveys) have the same opinions about the organization’s mission and tions or geographical
values, the culture is strong; if opinions vary widely, the culture is weak. separation.
 Part 5 • Leading, Understanding, and Transforming the Organization System

Strong culture In a strong culture, the organization’s core values are both intensely held and
A culture in which widely shared.21 The more members who accept the core values and the greater their
the core values are
intensely held and
commitment, the stronger the culture and the greater its influence on member behavior.
widely shared. David Rodriguez, Marriott executive vice president and chief human resources officer,
emphasizes that it really is the people who forge a strong culture: “If you don’t have the
courage and wisdom to release control of the culture to your associates and employees,
it won’t work.” Instead, Marriott enlists the help of over 15,000 volunteer employees to
champion the company’s culture.22
A strong culture should reduce employee turnover because it demonstrates high agree-
ment about what the organization represents. Such unanimity of purpose builds cohesive-
ness, loyalty, and organizational commitment. These qualities, in turn, lessen employees’
propensity to leave. Indeed, a study of nearly 90,000 employees from 137 organizations
found that culture strength or consistency was related to numerous financial outcomes when
there was a strong sense of mission and high employee involvement.23 A strong culture
has enabled companies like Ace Hardware to thrive in an extremely competitive market, a
market in which many other companies have folded or declared bankruptcy.24

*19 '/2.1;''5 .'#40 %7.674'

Culture is transmitted in several forms, the most potent being stories, rituals, material
symbols, and language.

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When Henry Ford II was chairman of Ford Motor Company, you would have been hard
pressed to find a manager who had not heard how he reminded his executives when they
got too arrogant, “It’s my name that’s on the building.” The message was clear: Henry
Ford II ran the company.
Today, several senior Nike executives spend much of their time serving as corporate
storytellers.25 When they tell how cofounder (and Oregon track coach) Bill Bowerman
went to his workshop and poured rubber into a waffle iron to create a better running shoe,
they are talking about Nike’s spirit of innovation. The elderly man running in their first
commercial in 1988 marks the first use of their slogan “just do it,” and continues the story
Rituals
Repetitive sequences that anyone, despite their differences, can strive for and achieve their athletic goals.26
of activities that Stories such as these circulate through many organizations, anchoring the present
express and reinforce to the past and legitimizing current practices.27 They typically include narratives about
the key values of the the organization’s founders, rule breaking, rags-to-riches successes, workforce reduc-
organization, which
tions, relocations of employees, reactions to past mistakes, and organizational coping.28
goals are most impor-
tant, which people are Employees also create their own narratives about how they came to either fit or not fit
important, and which with the organization during the process of socialization, including first days on the job,
are expendable. early interactions with others, and first impressions of organizational life.29

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Rituals are repetitive sequences of activities that express and reinforce the key values of
the organization—what goals are most important and/or which people are important ver-
sus which are expendable.30 Some companies have nontraditional rituals to help support
the values of their cultures. Kimpton Hotels & Restaurants, one of Fortune’s 100 Best
 Chapter 16 • Organizational Culture

Companies to Work For, maintains its customer-oriented culture with traditions like a
Housekeeping Olympics that includes blindfolded bedmaking and vacuum races.31 Some
companies have also been using rituals to “convert” potential customers, clients, and inves-
tors. For example, Ontario cool climate wineries have been using rituals in order to inspire
and rouse emotional experiences among wine enthusiasts to identify with the winery
and their product.32 Why do rituals work in reinforcing values and placating supervisors,
employees, and customers alike? Recent research suggests that rituals work because they
inspire a sense of control in their participants and, as a result, reduce anxiety.33

5[ODQNU
The layout of corporate headquarters, the types of automobiles top executives are given,
and the presence or absence of corporate aircraft are a few examples of material symbols, Material symbols
sometimes also known as artifacts.34 Others include the size of offices, the elegance of Physical objects, or
furnishings, perks, and attire.35 These convey to employees who is important, the degree artifacts, that symbol-
ize values, beliefs, or
of egalitarianism top management desires, and the kinds of behavior that are appropriate, assumptions inherent
such as risk taking, conservative, authoritarian, participative, individualistic, or social in the organization’s
behavior. Material symbols also offer a sense of connection and stir emotions in employees culture.
who make sense of the symbols.36
At some firms, like Chicago shirt maker Threadless, an “anything goes” atmo-
sphere helps emphasize a creative culture. Threadless meetings are held in an Airstream
camper parked inside the company’s converted FedEx warehouse, while employees in
shorts and flip-flops work in bullpens featuring disco balls and garish decorations chosen
by each team.37 As another example, the Palo Alto office of IDEO has an airplane wing
sticking out of one of the walls—which may symbolize IDEO’s playful experimentation
and free expression values.38
Some cultures are known for the perks in their environments, such as Google’s
bocce courts, FACTSET Research’s onsite pie/cheese/cupcake trucks, software designer
Autodesk’s bring-your-dog office, SAS’s free health care clinic, Microsoft’s organic spa,
and adventure-gear specialist REI’s free equipment rentals. Other companies communi-
cate the values of their cultures through the gift of time to think creatively, either with
leaders or offsite. For instance, Biotech leader Genentech and many other top compa-
nies provide paid sabbaticals. Genentech offers every employee six weeks’ paid leave for
every six years of service to support a culture of equitability and innovative thinking.39

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Many organizations and subunits within them use language to help members identify with
the culture, attest to their acceptance of it, and help preserve it.40 Unique terms describe
equipment, officers, key individuals, suppliers, customers, or products that relate to the
business. New employees may at first be overwhelmed by acronyms and jargon that,
once assimilated, act as a common denominator to unite members of a given culture or
subculture. As an idea of how expansive the terminology used in the U.S. government is,
one librarian created a comprehensive dictionary and guide (GovSpeak) to non-military
acronyms, abbreviations, and terms.41
Despite providing a unique, descriptive window into the culture of organizations,
values and beliefs can be conveyed through stories, rituals, material symbols, and lan-
guage. For example, in one study of Fortune 500 mission statements, organizations that
 Part 5 • Leading, Understanding, and Transforming the Organization System

communicated that they believe people can grow and improve tended to have more posi-
tive culture ratings on Glassdoor than companies that believe people do not change. In
subsequent studies of employees at Fortune 1000 companies, this perception of culture
impacted employee trust and commitment.42

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An organization’s culture does not pop out of thin air, and once established it rarely fades
away. What influences the creation of a culture? What reinforces and sustains it once in place?

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An organization’s customs, traditions, and general way of doing things are largely due to
what it has done before and how successful it was in doing it. This leads us to the ultimate
source of an organization’s culture: the founders.43 Founders have a vision of what the
organization should be, and a firm’s initially small size makes it easy to enact that vision
with all members.
Culture creation occurs in three ways.44 First, founders hire and keep only employees
who think and feel the same way they do. Second, they socialize employees to their way of
thinking and feeling. And finally, the behavior of the founder(s) encourages employees to
identify with them and internalize their beliefs, values, and assumptions. When the organi-
zation succeeds, the personality of the founder(s) becomes embedded in the culture.
For example, the fierce, competitive style and disciplined, authoritarian nature of
Hyundai, the giant Korean conglomerate, exhibits the same characteristics often used to
describe founder Chung Ju-Yung.45 Other founders with sustaining impact on their organi-
zation’s culture include Bill Gates at Microsoft, Ingvar Kamprad at IKEA, Herb Kelleher at
Southwest Airlines, Fred Smith at FedEx, and Richard Branson at the Virgin Group.
Exhibit 16-3 summarizes how an organization’s culture is established and sus-
tained. The original culture derives from the founders’ philosophy and strongly influ-
ences hiring criteria as the firm grows.46 The success of socialization depends on the
deliberateness of matching new employees’ values to those of the organization in the
selection process and on top management’s commitment to socialization programs. Top
managers’ actions signal what is valued, including what is acceptable behavior and what
is not, thus directly influencing the socialization process and the culture.47 The culture
then becomes linked and entrenched within the organizational structures and systems and
is perpetuated by leadership. In the most comprehensive study of organizational culture
to-date (an impressive study of more than 500,000 employees from over 26,000 organiza-
tions), culture was found to be strongly related to the current leadership, practices, and
structures that comprise the organization.48

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management
1TICPK\CVKQPCN Philosophy of Selection Organizational
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criteria culture
founders
Socialization
 Chapter 16 • Organizational Culture

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Once a culture is in place, practices within the organization maintain it by giving employ-
ees a set of similar experiences.49 The selection process, performance evaluation criteria,
training and development activities, and promotion procedures ensure those hired fit in
with the culture, reward those employees who support it, and penalize (or even expel)
those who challenge it.50 Three forces play a particularly important part in sustaining a
culture: selection practices, actions of top management, and socialization methods (e.g.,
onboarding, teaching, and including new employees).

5'.'%6+10 The explicit goal of the selection process is to identify and hire individuals
with the knowledge, skills, and abilities to perform successfully. The final decision,
because it is significantly influenced by the decision maker’s judgment of how well
candidates will fit into the organization, identifies people whose values are consistent
with at least a good portion of the organization’s.51 The selection process also provides
information to applicants. Those who perceive a conflict between their values and those
of the organization may remove themselves from the applicant pool or even fake their way
into the organization by feigning that they share the organization’s values.52 Selection
thus becomes a two-way street, with both employers and applicants as active participants
in determining the value fit between the applicant and the organization. For example, in
W. L. Gore & Associate’s selection process, teams put job applicants through extensive
interviews to ensure that they can deal with the level of uncertainty, flexibility, and
teamwork that is normal in Gore plants. Not surprisingly, W. L. Gore appears regularly
on Fortune’s list of “100 Best Companies to Work For” (number eighty-three in 2020)
partially because of its selection process emphasis on culture fit.53

612 /#0#)'/'06 The actions of top management have a major impact on the
organization’s culture.54 Through words and behavior, senior executives establish norms
that filter through the organization about, for instance, whether risk taking is desirable;
how much freedom managers give employees; the uniforms employees should wear; and
what behavior is desired and rewarded. Interestingly, research on hundreds of CEOs and
top management team members suggests that organizational culture and leadership can
be complementary: It is not always best if they focus on the same values.55 In other
words, one can fill in where the other fails.

51%+#.+<#6+10 No matter how good a job the organization does in recruitment

and selection, new employees need help adapting to the prevailing culture. This help
comes in the form of socialization.56 Socialization can help alleviate the problem many Socialization
employees report when their new jobs are different than they expected. For example, A process that
Clear Channel Communications, Facebook, Google, and other companies are adopting enables new employ-
ees to acquire the
fresh onboarding (new hire assimilation) procedures, including assigning “peer coaches,” social knowledge
holding socializing events, personalizing orientation programs, and giving out immediate and necessary skills
work assignments. “When we can stress the personal identity of people, and let them in order to adapt to
bring more of themselves at work, they are more satisfied with their job and have better the organization’s
results,” researcher Francesca Gino of Harvard said.57 culture.
We can think of socialization as a process with three stages: prearrival, encounter,
and metamorphosis.58 This process, shown in Exhibit 16-4, has an impact on the new
employee’s work productivity, commitment to the organization’s objectives, and decision
to stay with the organization.
 Part 5 • Leading, Understanding, and Transforming the Organization System

':*+$+6 Socialization process Outcomes

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Productivity
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Prearrival Encounter Metamorphosis Commitment

Turnover

Prearrival stage 1. Prearrival stage. The prearrival stage recognizes that everyone arrives with a set
The period of learning of values, attitudes, and expectations about both the work and the organization.
in the socialization
process that occurs
One major purpose of a business school, for example, is to socialize students to the
before a new attitudes and behaviors companies want. Newcomers to high-profile organizations
employee joins the with strong market positions have their own assumptions about what it is like to
organization. work there.59 Most new recruits will expect Nike to be dynamic and exciting and
a stock brokerage firm to be high in pressure and rewards. How accurately people
judge an organization’s culture before they join the organization, and how positive,
adaptive, and proactive their personalities are, become critical predictors of how
well they adjust.60
2. Encounter stage. The selection process can help inform prospective employees
about the organization. Upon entry into the organization, the new member enters
the encounter stage and confronts the possibility that expectations—about the job,
coworkers, boss, and organization in general—may differ from reality.61 If expec-
Encounter stage tations were accurate, this stage merely cements earlier perceptions. However, this
The stage in the is not often the case. At the extreme, a new member may become disillusioned
socialization process
enough to resign. Proper recruiting and selection should significantly reduce this
in which a new
employee sees what outcome, along with encouraging friendship ties in the organization—newcomers
the organization is are more committed when friendly coworkers help them “learn the ropes.”62 For
really like and con- better or worse, learning, unlearning, and relationship building are key during this
fronts the possibility stage:63 If newcomers are not proactive enough in learning about the organization
that expectations and
and helping out where they can, if supervisors and coworkers do not do their due
reality may diverge.
diligence in socializing the newcomer and fulfilling promises made during recruit-
ment, or if the exchange between the newcomer and the employees is not good,
newcomers may become disillusioned.64 However, it is also possible for undesir-
able behaviors that may be an aspect of the organization’s culture such as CWBs to
be transmitted to employees during the encounter stage. For example, one study of
manufacturing sales departments in southern China found employees may model
undesirable behaviors, such as heavy drinking with clients, that may result in in-
Metamorphosis creased work-family conflict and turnover risk over time.65
stage 3. Metamorphosis stage. Finally, to work out any problems discovered during the
The stage in the encounter stage, the new member changes or goes through the metamorphosis
socialization process stage.66 The options presented in Exhibit 16-5 are alternatives designed to bring
in which a new
about metamorphosis. Most research suggests two major “bundles” of socialization
employee changes
and adjusts to the practices.67 The more management relies on formal, collective, fixed, and serial
job, workgroup, and socialization programs while emphasizing divestiture, the more likely newcomers’
organization. differences will be stripped away and replaced by standardized predictable
 Chapter 16 • Organizational Culture

Formal Versus Informal The more a new employee is segregated from the ongoing work ':*+$+6
setting and differentiated in some way to make explicit their newcomer’s role, the more 'PVT[
socialization is formal. Specific orientation and training programs are examples. Informal
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socialization puts the new employee directly into the job, with little or no special attention.
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Individual Versus Collective New members can be socialized individually. This describes how
it is done in many professional offices. They can also be grouped together and processed
through an identical set of experiences, as in military boot camp.
Fixed Versus Variable This refers to the time schedule in which newcomers make the
transition from outsider to insider. A fixed schedule establishes standardized stages of
transition. This characterizes rotational training programs. It also includes probationary
periods, such as the eight- to ten-year “associate” status used by accounting and law firms
before deciding on whether or not a candidate is made a partner. Variable schedules give no
advance notice of their transition timetable. Variable schedules describe the typical
promotion system, in which one is not advanced to the next stage until one is “ready.”

Serial Versus Random Serial socialization is characterized by the use of role models who train
and encourage the newcomer. Apprenticeship and mentoring programs are examples. In
random socialization, role models are deliberately withheld. New employees are left on their
own to figure things out.

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

behaviors. These institutional practices are common in police departments, fire

departments, and other organizations that value rule following and order. Programs
that are informal, individual, variable, and random while emphasizing investiture
are more likely to give newcomers a sense of their roles and methods of working.
Creative fields such as research and development, advertising, and filmmaking rely
on these individual practices.68 Most research suggests that high levels of institu-
tional practices encourage person–organization fit, high levels of commitment, and
improved role clarity, whereas individual practices produce more role innovation,
improve motivation, and lead to social integration.69
Researchers examine how employee attitudes change during socialization by mea-
suring it at several time points over the first few months. Several studies have now docu-
mented patterns of “honeymoons” and “hangovers” for new workers, showing that the
period of initial adjustment is often marked by decreases in job satisfaction as idealized
hopes come into contact with the reality of organizational life.70 Newcomers may find
that the level of social support they receive from supervisors and coworkers is gradu-
ally withdrawn over the first few weeks on the job, as everyone returns to “business as
usual.”71 Role conflict and role overload may rise for newcomers over time, and workers
with the largest increases in these role problems experience the largest decreases in com-
mitment and satisfaction.72 It may be that the initial adjustment period for newcomers
presents increasing demands and difficulties, at least in the short term. What can super-
visors and coworkers do to address “hangovers”? Research suggests that “too many”
socialization practices can make things worse but providing a great deal of social support
helps newcomers deal with their increasing demands and decreasing attitudes.73
 Part 5 • Leading, Understanding, and Transforming the Organization System

9*#6 &1 %7.674'5 &1!

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Culture defines “the rules of the game.” First, it has a boundary-defining role: It creates
distinctions between organizations. Second, it conveys a sense of identity for organization
members. Third, culture facilitates commitment to something larger than individual self-
interest. Fourth, it enhances the stability of the social system. Culture is the social glue that
helps hold the organization together by providing standards for what employees should say
and do. Finally, it is a sense-making and control mechanism that guides and shapes employees’
attitudes and behavior. This last function is of interest to us in the study of OB.74
A strong culture ensures employees will act in a relatively uniform and predictable
way. For example, research has shown that a positive organizational culture improves
employee job attitudes and, as such, bolsters talent attraction and retention.75 As another
example, a study of the top 100 Taiwanese financial enterprises in 2005 demonstrated
that those companies that valued innovation as a component of their culture were able to
learn more and more quickly in order to drive innovation.76
Today’s trend toward decentralized organizations makes culture more impor-
tant than ever, but ironically, it also makes establishing a strong culture more difficult.
When formal authority and control systems are reduced through decentralization, cul-
ture’s shared meaning can point everyone in the same direction. Decentralization also
highlights the role climate plays in linking organizational culture to organizational and
employee outcomes.

%WNVWTG %TGCVGU %NKOCVG

Organizational Organizational climate refers to the shared perceptions organizational members have
climate about their organization’s policies, procedures, and practices.77 Although it may appear
The shared percep-
tions organizational
difficult on the surface to distinguish organizational culture from climate, culture and
members have about climate are “two crucial building blocks for organizational description.”78 In our discus-
their organization’s sion of culture so far, we have referred to culture as something that is difficult to measure
policies, procedures, and somewhat esoteric. For instance, an employee of an organization for many years may
and practices. have a much better understanding of an organization’s culture than someone who just
found out about the organization. Today, researchers agree that organizational climate
represents the more readily observable “behavioral evidence” for an organization’s cul-
ture.79 It directly links what the organization values and believes with explicit practices,
policies, and procedures. In other words, it puts the “what we believe and value” (like
what you would find in a mission statement) and links it to what employees perceive is
actually supported, rewarded, and practiced. If an organization is like an onion, the cul-
ture is at the core, and the climates are on the surface layers.
An example might help illustrate this culture–climate distinction.80 Let us say the
captain of a cargo ship was running behind in departing from port. The captain tried to
increase speed and take a more direct course to make up for the delay. On its way to the
destination, the ship ran aground and was damaged, and thousands of dollars in expen-
sive cargo was damaged. If we were to interview the captain, the captain might say, “I
feel a tremendous sense of pressure to make sure the cargo gets to where it needs to be
on time. Our company values timeliness above everything else, and top management con-
stantly reiterates this to us.” These statements reflect the underlying value of timeliness
 Chapter 16 • Organizational Culture

that underlies the company’s culture. “Besides, we are rewarded for getting to the port
on time, policy permits us to increase speed and alter routes to get to port on time, and
every other captain I work with at this company makes similar decisions when we’re run-
ning behind!” These statements reflect the policies, practices, and procedures that reflect
a timeliness climate. At the same time, when asked about safety, the captain’s shoulder
shrug and “it’s just not important to them” says a lot. An organization with a strong
safety culture (valuing safety and believing safety matters) and a strong safety climate
(prohibiting speed and direction changes, incorporating technology to detect and prevent
collisions, using proper safety equipment, and requiring safety training for captains) may
have avoided this incident altogether.
Dozens of dimensions of climate have been studied, including innovation, creativ-
ity, communication, warmth and support, involvement, safety, justice, diversity, and cus-
tomer service.81 For example, strong safety climates (like the one described earlier) lead
to high levels of job satisfaction, organizational commitment, and healthier employees.82
Climate influences the habits people adopt. In an organization with a strong safety cli-
mate, everyone wears safety gear and follows safety procedures even if individually they
would not normally think very often about being safe—indeed, many studies have shown
that a safety climate decreases the number of documented injuries on the job.83 In gen-
eral, one meta-analysis found that across dozens of different samples, positive climates
(e.g., innovation, warmth and support, etc.) were strongly related to individuals’ levels
of job satisfaction, involvement, commitment, and motivation.84 Positive workplace cli-
mates have also been linked to higher customer satisfaction and organizational financial
performance.85
Exhibit 16-6 depicts the impact of organizational culture. Employees form an over-
all subjective perception of the organization based on leader and member behaviors, the
organizational structure, and the organization’s values and beliefs as well as artifacts, sto-
ries, and symbols. This overall perception represents, in effect, the organization’s culture,
which varies in its strength (or degree to which others perceive the culture in the same
way). The culture is then revealed through organizational climates, which manifest the
culture’s underlying values and beliefs. The climates then affect employee performance
and satisfaction, along with other outcomes relevant to organization.
In the following sections, we describe several cultures (and their corresponding
climates) that affect attitudes and behavior in organizations.

':*+$+6
*QY 1TICPK\CVKQPCN %WNVWTGU *CXG CP +ORCEV QP 'ORNQ[GG 2GTHQTOCPEG CPF 5CVKUHCEVKQP
Strength
Observed factors
High
• Leader and member
behaviors
Performance
• Organizational structure Perceived as Organizational Organizational
• Organizational mission,
culture Climate
values, beliefs
Satisfaction
• Organizational artifacts,
stories, symbols
Low
 Part 5 • Leading, Understanding, and Transforming the Organization System

6JG 'VJKECN &KOGPUKQP QH %WNVWTG

Organizational cultures are not neutral in their ethical orientation, even when they are not
Ethical culture openly pursuing ethical goals. Ethical culture develops over time as the shared concept
The shared concept of right and wrong behavior in the workplace. Ethical culture reflects the true values of
of right and wrong the organization and shapes the ethical decision making of its members.86 Research on
behavior in the work-
place that reflects public sector organizations in Finland suggests that ethical culture is important for orga-
the true values of nizations to reduce employee burnout and bolster employee engagement, in both manag-
the organization and ers and employees.87
shapes the ethical Researchers have developed ethical climate theory (ECT) to measure the shared
decision making of perceptions of ethical policies, practices, and procedures.88 Ethical climates are heavily
its members.
influenced by the values and beliefs leaders hold about ethical behavior as well as the col-
lective sense of identity people forge around their shared ethics89 manual. Organizations
H&M often progress through different categories as they move through their business life cycle.
In September 2020,
the French branch
An organization’s ethical climate powerfully influences the way its individual
of multinational members feel they should behave, so much so that researchers have been able to predict
Swedish clothing organizational outcomes.90 Ethical climates that emphasize self-interest are negatively
company H&M associated with employee job satisfaction and organizational commitment, even though
announced a those climates appeal to helping oneself vs. others. These climates are also positively
partnership with
EcoTree, a non-
associated with turnover intentions, workplace bullying, and deviant behavior.91 Ethical
profit organization climates that emphasize caring for one another and establishing rules may bring greater
concerned with job satisfaction, as well as reduce employee turnover intentions, workplace bullying, and
promoting dysfunctional behavior. Research also suggests ethical climates have a strong influence
biodiversity. The on sales growth over time when there is also a customer service climate to support it.92
deal involves
supporting EcoTree
in identifying %WNVWTG CPF 5WUVCKPCDKNKV[
places in France
Sustainability refers to maintaining practices over very long periods of time, because the
for various
environmental tools or structures that support the practices are not damaged by the processes.93 Jeffrey
initiatives. One of Hollender created an organization that literally embodies the concept of sustainability:
the planned projects Seventh Generation. Founded in 1988, the company’s name is based on an Iroquois prov-
includes planting erb: In our every deliberation, we must consider the impact of our decisions on the next
nectar-producing
seven generations.”94 The name serves as a symbol reflecting the value of sustainability to
bushes for bees to
pollinate. H&M Seventh Generation. When we engage in business practices (e.g., enacting a sustainability
will fund the climate), we do so sustainably when we ensure that our practices can be continued and
projects by selling that we use resources responsibly, minimizing waste, maximizing reusability, and ensuring
paper bags for continued efficiency. Social sustainability practices address the ways social systems are
15 eurocents, and
affected by an organization’s actions over time and, in turn, how changing social systems
the proceeds will
go to EcoTree.95 may affect the organization. Here, organizations should consider the effect of their labor
practices on people over time, such as how job design (e.g., working hours) affects stress
and health, how layoff policies and health insurance affect employees’ well-being, etc.96
Sustainability
Organization One survey found that a great majority of executives saw sustainability as an
practices that can important part of future success.97 Indeed, research has demonstrated that sustainability
be sustained over a practices can affect organizations’ reputation, productivity, talent acquisition, retention,
long period of time engagement, cost efficiency, innovation, and financial performance.98 Concepts of sus-
because the tools
tainable management have their origins in the environmental movement, so processes
or structures that
support them are that are in harmony with the natural environment are encouraged. For example, farm-
not damaged by the ers in Australia have been working collectively to increase water use efficiency, mini-
processes. mize soil erosion, and implement tilling and harvesting methods that ensure long-term
 Chapter 16 • Organizational Culture

viability for their farm businesses.99 In a very different context, Siemens has a com-
prehensive sustainability strategy that uses the United Nation’s sustainable development
goals as a guideline, focusing on improving peoples’ health and well-being, taking action
for clean energy and climate, as well as furthering education, peace, and justice across the
globe.100 With such a comprehensive focus on sustainability, it is no wonder that Siemens
was ranked in the Top Ten Most Sustainable Companies in the world in 2018, according
to Forbes.101
To create a truly sustainable business, an organization must develop a long-term
culture and put its values into practice through climate.102 In other words, there needs to be
a sustainable system for creating sustainability! In one study, a company seeking to reduce
energy consumption found that soliciting group feedback reduced energy use significantly
more than simply issuing reading materials about the importance of conservation.103 In
other words, talking about energy conservation and building the value into the organiza-
tional culture resulted in positive employee behavioral changes. The leader plays a large
role, too: In one study of British and Italian firms in the cultural/creative industry, leaders
can engage in several behaviors to help build a sustainable culture.104 Like other cultural
practices we have discussed, sustainability needs time and nurturing to grow.

%WNVWTG CPF +PPQXCVKQP

The most innovative companies are often characterized by their open, unconventional,
collaborative, vision-driven, and accelerating cultures.105 Start-up firms often have inno-
vative cultures because they are usually small, agile, and focused on solving problems in
order to survive and grow. Consider ad agency Droga5, recently bought by Accenture.
As a start-up, Droga5 sought to “redefine advertising, making it viral and into a union of
marketing and entertainment instead of a ‘disruption model of uninvited guests’” (e.g.,
intrusive or annoying commercials, ad spots).106 Both Accenture and Droga5 have been
listed on most innovative company lists, so the fit seemed to be a good one.107 Because
of the similar organizational cultures, the two may be able to continue their start-up level
of innovation. Research on companies such as these has found that innovation-friendly
practices (support for new ideas, openness to change, and providing resources to be cre-
ative) leads to boosts in creativity at work, the creation and implementation of novel
ideas, and increased performance.108
At the other end of the start-up spectrum, consider Netflix. They went from a tra-
ditional mail-order DVD service to video-on-demand, even when they were the leader
in their already large business. Netflix embodies, as Gary Pisano (professor at Harvard)
notes, the “no, it doesn’t have to be that way” culture. When others were predicting
their downfall when trying to innovate while they already “had a good thing going,”
they succeeded.109 Innovation can also come from subcultures. For example, during the
2013–2018 period, researchers at NASA’s Johnson Space Center documented a subcul-
ture group that became known as the “Pirates.” They were known for directly opposing
NASA’s early values of hierarchy, and revolutionizing the way employees ran mission
control, resulting in an innovative and cost-focused culture.110

%WNVWTG CU CP #UUGV
As we have discussed, organizational culture can foster a positive environment, with
organizational climates that put values in action. Culture can also significantly contribute
to an organization’s bottom line in many ways.111
 Part 5 • Leading, Understanding, and Transforming the Organization System

One strong example can be found in the case of ChildNet.112 ChildNet is a nonprofit
child welfare agency in Florida whose organizational culture was described as “grim”
from 2000 (when one of its foster children disappeared) through 2007 (when the CEO
was fired amid FBI allegations of fraud and forgery). “We didn’t know if we would have
jobs or who would take over,” employee Maggie Tilelli said. However, after intense turn-
around efforts aimed at changing the organizational culture, ChildNet became Florida’s
top-ranked agency within four years and Workforce Management’s Optima award winner
for General Excellence in 2012.
While ChildNet demonstrates how an organizational culture can positively affect
outcomes, Dish Network illustrates the elusiveness of matching a particular culture to
an industry or organization.113 By every measure, Dish Network is a business success
story—it is the second-largest U.S. satellite TV provider and it has made its founder one
of the richest men in the world. Yet Dish had been ranked as the worst U.S. company
to work for at one point, and employees say that this is due to the culture. Employees
recounted various practices that suggest undesirable climates, including arduous manda-
tory overtime, fingerprint scanners to record work hours to the minute, public berating
from leadership, management condescension and distrust, quarterly “bloodbath” layoffs,
and no working from home. One employee advised another online, “You’re part of a
poisonous environment . . . go find a job where you can use your talents for good rather
than evil.”
At ChildNet, positive changes to the organization’s performance have been clearly
attributed to the transformation of its organizational culture. Dish, on the other hand, may
have succeeded despite its culture. We can only wonder how much more successful it
could be if it reformed its toxic culture. There are many more cases of business success
stories due to excellent organizational cultures than there are of success stories despite
bad cultures, and almost no success stories because of bad ones. Research suggests that
part of the reason why culture affects an organization’s performance is through customer
satisfaction: One study of nearly one hundred automobile dealerships over a six-year
timeframe found that a positive culture leads to improved sales performance because it
increases customer satisfaction.114

%WNVWTG CU C .KCDKNKV[
Culture can enhance organizational commitment and increase the consistency of
employee behavior, which clearly benefits an organization. Culture is valuable to employ-
ees too, because it spells out what is important. But we should not ignore the potentially
dysfunctional aspects of culture, especially a strong one, on an organization’s effective-
ness. Hewlett-Packard, once known as a premier computer manufacturer, rapidly lost
market share and profits as dysfunction in its top management team trickled down, leav-
ing employees disengaged, uncreative, unappreciated, or in a polarized environment.115
Institutionalization Let us unpack some of the major factors that signal a negative organizational culture,
A condition that beginning with institutionalization.
occurs when an
organization takes on +056+676+10#.+<#6+10 When an organization undergoes institutionalization—that
a life of its own, apart
from any of its mem-
is, it becomes valued for itself and not for the goods or services it produces—it takes on
bers, and acquires a life of its own, apart from its founders or members.116 Institutionalized organizations
immortality. often do not go out of business even if the original goals are no longer relevant. Acceptable
 Chapter 16 • Organizational Culture

modes of behavior become largely self-evident to members, and although this is not
entirely negative, it does mean behaviors and habits go unquestioned, which can stifle
innovation and make maintaining the organization’s culture an end in itself.

$#44+'45 61 %*#0)' Culture is a liability when shared values are not aligned
with those that further the organization’s effectiveness. This is most likely when an
organization’s environment is undergoing rapid change and its entrenched culture may
no longer be appropriate.117 Consistency of employee behavior, which is an asset in a
stable environment, may then burden the organization and make it difficult to respond
to changes. Cultural change is possible, however.118 Consider the case of the joint auto
plant where GM, whose workforce was struggling, teamed up with Toyota. Within just
a year’s time, GM’s product quality increased, absenteeism dropped by 18 percent to
near-zero levels, strikes stopped, counterproductive work behaviors were squelched, and
employees passionately embraced the change.119

$#44+'45 61 &+8'45+6; Hiring new employees who differ from the majority in race,
age, gender, disability, or other characteristics creates a paradox:120 Management wants
to demonstrate support for the differences these employees bring to the workplace, but
newcomers who wish to fit in are usually pressured to accept the organization’s core
culture. Second, because diverse behaviors and unique strengths are likely to diminish as
people assimilate, strong cultures can become liabilities when they effectively eliminate
the advantages of diversity. Third, a strong culture that condones prejudice, supports
bias, or becomes insensitive to differences can undermine formal corporate diversity
policies or the positive effects of demographic diversity.121 It seems that these barriers to
diversity can start at the community level: One study of nearly 150 retail bank locations
in the United States found that the demographic composition of the community serves
as an important signal in setting the diversity norms that are adopted and made part of
an organization’s culture and climate.122Barriers to diversity can, in part, be addressed
through cultures and climates of inclusion—by showing the organization values and
enacts an inclusive environment, diversity may flourish within the organization, and
employees may be more committed to the organization.123 On the other hand, people
from various backgrounds may perceive the culture and climates differently, undermining
the effect positive cultures and climates may have on organizational outcomes.124

61:+%+6; #0& &;5(70%6+105 We have discussed cultures that generally cohere

around a positive set of values and beliefs. This consensus can create a powerful
forward momentum. However, coherence around negative and dysfunctional values
in a corporation can produce downward forces that are equally powerful yet toxic.
For example, research on 862 bank employees in about 150 branches of a large bank
in the United States suggests that branch managers model conflict management styles,
which then shape conflict cultures within each branch.125 Collaborative cultures (i.e.,
encouraging proactive, constructive, and collaborative conflict resolution) tended to
increase the cohesion and satisfaction of the branch and decrease levels of burnout.
Dominating cultures (i.e., encouraging active confrontation and aggressive competition
among employees when there is conflict) tend to reduce branch cohesion and customer
service performance. Avoidance cultures (i.e., those that passively avoid conflict) tended
to be less creative.
Part 5 • Leading, Understanding, and Transforming the Organization System

$#44+'45 61 #%37+5+6+105 #0& /'4)'45 Historically, when management looked

at acquisition or merger decisions, the key decision factors were potential financial
advantage and product synergy. In recent years, cultural compatibility has become the
primary concern.126 All things being equal, whether the acquisition works seems to
have much to do with how well the two organizations’ cultures match up. When they do
not mesh well, the organizational cultures of both become a liability to the whole new
organization. A study conducted by Bain and Company found that 70 percent of mergers
failed to increase shareholder values, and Hay Group found that more than 90 percent
of mergers in Europe failed to reach financial goals.127 Considering this dismal rate of
success, Lawrence Chia from Deloitte Consulting observed, “One of the biggest failings
is people. The people at Company A have a different way of doing things from Company
B . . . you can’t find commonality in goals.” For example, one employee (of a creative
company acquired by a larger one), who was transplanted from the East Village to Wall
Street (in New York City), suggested the move was “more than physical, representing the
scrappy creative adolescent putting on a tie.”128 In order for mergers or acquisitions to
be successful, cultural integration is essential, as well as flexibility and complementarity
in employee skills (think back to the chapters on foundations of group behavior and
understanding work teams and what we know about team diversity).129

+0(.7'0%+0) 14)#0+<#6+10#. %7.674'

As we discussed, the culture of an organization is set by its founders and is often difficult
to change. It is true that the ideal scenario is a strong founder (or founders) who carefully
plans the organization’s culture beforehand. That is seldom the case, though; organiza-
tional culture usually grows organically over time. When we think of the development of
culture as ongoing and conducted through each employee, we can see ways to increase
the ethical, positive, and/or spiritual aspects of the environment, as discussed next.

'VJKECN %WNVWTGU
Despite differences across industries and cultures, ethical organizational cultures share
some common values and processes.130 Therefore, managers can create a more ethical
culture and more ethical climates by adhering to the following principles:131
• Be a visible role model. Employees will look to the actions of top management as
a benchmark for appropriate behavior, but everyone can be a role model to posi-
tively influence the ethical atmosphere. Send a positive message.
• Communicate ethical expectations. Whenever you serve in a leadership capacity,
minimize ethical ambiguities by sharing a code of ethics that states the organiza-
tion’s primary values and the judgment rules employees must follow.
• Provide ethical training. Set up seminars, workshops, and training programs to
reinforce the organization’s standards of conduct, clarify what practices are permis-
sible, and address potential ethical dilemmas.
• Visibly reward ethical acts and punish unethical ones. Evaluate subordinates on
how their decisions measure up against the organization’s code of ethics. Review
the means as well as the ends. Visibly reward those who act ethically and conspicu-
ously punish those who do not.
 Chapter 16 • Organizational Culture

• Provide protective mechanisms. Seek formal mechanisms so everyone can dis-

cuss ethical dilemmas and report unethical behavior without fear of reprimand.
These might include identifying ethical counselors, ombudspeople, or ethical of-
ficers for liaison roles.
A widespread positive ethical climate must start at the top of the organization.132
When top management emphasizes strong ethical values, supervisors are more likely
to practice ethical leadership. Clear expectations transfer down to line employees, who
show lower levels of deviant behavior and higher levels of cooperation and assistance.
Several other studies have come to the same general conclusion: The values of top man-
agement are a good predictor of ethical behavior among employees. For example, one
study involving auditors found perceived pressure from organizational leaders to behave
unethically was associated with increased intentions to engage in unethical practices.133
Clearly, the wrong type of organizational culture can negatively influence employee ethi-
cal behavior. Conversely, ethical leadership has been shown to improve group ethical
voice, or the extent to which employees feel comfortable speaking up about issues that
seem unethical to them, through improvements in ethical culture.134 Finally, employees
whose ethical values are similar to those of their department are more likely to be pro-
moted, so we can think of ethical culture as flowing from the bottom up as well.135

2QUKVKXG %WNVWTGU
At first blush, creating a positive culture may sound hopelessly naïve or like a Dilbert-style
conspiracy. The one thing that makes us believe this trend is here to stay, however, are signs
that management practice and OB research are converging. A positive organizational Positive
culture values building on employee strengths, rewards more than it punishes, and encourages organizational
individual vitality and growth.136 Let us consider each of these areas. culture
A culture that values
building on employee
$7+.&+0) 10 '/2.1;'' 564'0)6*5 Although a positive organizational culture strengths, rewards
does not ignore problems, it does emphasize showing workers how they can capitalize on more than it punishes,
their strengths. As management guru Peter Drucker said, “Most Americans do not know and encourages
what their strengths are. When you ask them, they look at you with a blank stare, or they individual vitality
and growth.
respond in terms of subject knowledge, which is the wrong answer.” Wouldn’t it be better
to be in an organizational culture that helped you discover your strengths and how to
make the most of them?

4'9#4&+0) /14' 6*#0 270+5*+0) Although most organizations are sufficiently

focused on extrinsic rewards such as pay and promotions, they often forget about the
power of smaller (and cheaper) rewards such as praise. Part of creating a positive
organizational culture is “catching employees doing something right.” Many managers
withhold praise because they are afraid employees will coast or because they think praise
is not valued. Employees generally do not ask for praise, and managers usually do not
realize the costs of failing to give it.

'0%174#)+0) 8+6#.+6; #0& )4196* No organization will get the best from
employees who see themselves as mere cogs in the machine. A positive culture
recognizes the difference between a job and a career. It supports not only what the
 Part 5 • Leading, Understanding, and Transforming the Organization System

employee contributes to organizational effectiveness but how the organization can make
the employee more effective—personally and professionally.

.+/+65 1( 215+6+8' %7.674' Is a positive culture a cure-all? Though many companies

have embraced aspects of a positive organizational culture, it is a new enough idea for us
to be uncertain about how and when it works best.
Not all national cultures value being positive as much as the U.S. culture does and,
even within U.S. culture, there surely are limits to how far organizations should go. The
limits may need to be dictated by the industry and society. For example, Admiral, a British
insurance company, has established a Ministry of Fun in its call centers to organize poem
writing, foosball, conkers (a British game involving chestnuts), and fancy-dress days,
which may clash with an industry value of more serious cultures.137 When does the pur-
suit of a positive culture start to seem coercive? As one critic notes, “Promoting a social
orthodoxy of positiveness focuses on a particular constellation of desirable states and
traits but, in so doing, can stigmatize those who fail to fit the template.”138 There may be
benefits to establishing a positive culture, but an organization also needs to be objective
and not pursue it past the point of effectiveness.

5RKTKVWCN %WNVWTGU
What do Southwest Airlines, Hewlett-Packard, Ford, The Men’s Wearhouse, Tyson
Foods, Wetherill Associates, and Tom’s of Maine have in common? They are among a
growing number of organizations that have embraced workplace spirituality.

9*#6 +5 52+4+67#.+6;! Workplace spirituality is not about organized religious

Workplace practices. It is not about God or theology. Workplace spirituality recognizes that people
spirituality have an inner life that nourishes and is nourished by meaningful work in the context of
The recognition that
people have an inner
community.139 Organizations that support a spiritual culture recognize that people seek to
life that nourishes find meaning and purpose in their work and desire to connect with other human beings as
and is nourished by part of a community. Many of the topics we have discussed—ranging from job design to
meaningful work corporate social responsibility (CSR)—are well matched to the concept of organizational
that takes place in
spirituality. When a company emphasizes its commitment to paying third-world suppliers
the context of com-
munity. a fair (above-market) price for their products to facilitate community development—as
did Starbucks—or encourages employees to share prayers or inspirational messages
through e-mail—as did Interstate Batteries—it may encourage a more spiritual culture
and climate.140

9*; 52+4+67#.+6; 019! As noted in our discussion of emotions in the chapter on

emotions and moods, the myth of rationality assumed the well-run organization eliminated
people’s feelings. Concern about an employee’s inner life had no role in the perfectly rational
model. But just as we realize that the study of emotions improves our understanding of OB,
an awareness of spirituality can help us better understand employee behavior.
Of course, employees have always had an inner life. So why has the search for mean-
ing and purposefulness in work surfaced now? We summarize the reasons in Exhibit 16-7.
 Chapter 16 • Organizational Culture

• Spirituality can counterbalance the pressures and stress of a turbulent pace of life. ':*+$+6
Contemporary lifestyles—single-parent families, geographic mobility, the temporary 4GCUQPU HQT
nature of jobs, new technologies that create distance between people—underscore the VJG )TQYKPI
lack of community many people feel and increase the need for involvement and connection. +PVGTGUV KP
• Formalized religion hasn’t worked for many people, and they continue to look for anchors 5RKTKVWCNKV[
to replace a lack of faith and to fill a growing feeling of emptiness.
• Job demands have made the workplace dominant in many people’s lives, yet they continue
to question the meaning of work.
• People want to integrate personal life values with their professional lives.
• An increasing number of people are finding that the pursuit of more material acquisitions
leaves them unfulfilled.

%*#4#%6'4+56+%5 1( # 52+4+67#. 14)#0+<#6+10 The concept of workplace

spirituality draws on our previous discussions of values, ethics, motivation, and
leadership. Although research remains preliminary, several cultural values tend to be
evident in spiritual organizations:141
• Benevolence. Spiritual organizations value kindness toward others and the
happiness of employees and other organizational stakeholders.
• Strong sense of purpose. Spiritual organizations build their cultures around
a meaningful purpose. Although profits may be important, they are not the
primary value.
• Trust and respect. Spiritual organizations are characterized by mutual trust, honesty,
and openness. Employees are treated with esteem and are valued, consistent with
the dignity of each individual.
• Open-mindedness. Spiritual organizations value flexible thinking and creativity
among employees.

#%*+'8+0) 52+4+67#.+6; +0 6*' 14)#0+<#6+10 Many organizations have grown

interested in spirituality but have had trouble putting principles into practice. Several
types of practices can facilitate a spiritual climate,142 including those that support work–
life balance. Leaders can demonstrate values, attitudes, and behaviors that trigger intrinsic
motivation and a sense of fulfilling a calling through work.143 Encouraging employees
to consider how their work provides a sense of purpose can help achieve a spiritual
workplace; often this is done through group counseling and organizational development,
a topic we take up in the chapter on organizational change and stress management. Third,
a growing number of companies, including Taco Bell, offer employees the counseling
services of corporate chaplains. Many chaplains are employed by agencies, such as
Marketplace Chaplains USA, while some corporations, such as Tyson Foods, employ
chaplains directly. The workplace presence of corporate chaplains, who are often
ordained Christian ministers, is obviously controversial, although their role is not to
increase spirituality but to help human resources departments serve the employees who
already have Christian beliefs.144 Similar roles for leaders of other faiths certainly must
be encouraged.
Part 5 • Leading, Understanding, and Transforming the Organization System

%4+6+%+5/5 1( 52+4+67#.+6; Critics of the spirituality movement in organizations145

have focused on three issues. First is the question of scientific foundation. What is
workplace spirituality, exactly? Is it just a buzzword? Second, an emphasis on spirituality
can clearly make some employees uneasy. Critics have argued that secular institutions,
especially business firms, should not impose spiritual values on employees.146 This
criticism is undoubtedly valid when spirituality is defined as bringing religion and God
into the workplace. However, it seems less stinging when the goal is limited to helping
employees find meaning and purpose in their work lives. Finally, whether spirituality
and profits are compatible objectives is a relevant concern for managers and investors
in business. Although there has been relatively little research on this topic in recent
years, some research does suggest that it can help address some of the negative effects
of emotional labor in Chinese service workers.147 In another study, organizations that
provided their employees with opportunities for spiritual development outperformed
those that did not.148 Other studies reported that spirituality in organizations was
positively related to creativity, employee satisfaction, job involvement, and organizational
commitment.149

6*' ).1$#. %106':6

We considered global cultural values (collectivism–individualism, power distance, and
so on) in the chapter on personality and values. Here our focus is a bit narrower: How is
organizational culture affected by the global context? Organizational culture is so power-
ful that it often transcends national boundaries.150 But that does not mean organizations
should ignore national and local culture.
One of the primary things U.S. employees can do is be culturally sensitive. The
United States is a dominant force in business and in culture—and with that influence
comes a reputation. “We are broadly seen throughout the world as arrogant people, totally
self-absorbed and loud,” says one U.S. executive. Some ways in which U.S. employees
can be culturally sensitive include being aware of one’s actions and how they may be per-
ceived by others and to consider others’ backgrounds, perspectives, and emotions before
speaking or acting.
The management of ethical behavior is one area where national culture can rub
against corporate culture.151 U.S. managers and employees often endorse the supremacy
of anonymous market forces as a moral obligation for business organizations. This world-
view sees bribery, nepotism, and favoring personal contacts as highly unethical. They
also value profit maximization, so any action that deviates from profit maximization may
suggest inappropriate or corrupt behavior. In contrast, managers in developing economies
are more likely to see ethical decisions as embedded in the social environment. That
means doing special favors for family and friends is not only appropriate but possibly
even an ethical responsibility. Managers in many nations view capitalism skeptically and
believe the interests of workers should be put on a par with the interests of shareholders,
which may limit profit maximization. Creating a multinational organizational culture can
initiate strife between employees of traditionally competing countries. As national orga-
nizations seek to employ workers in overseas operations, top management must decide
whether to standardize many facets of organizational culture. At this point, there is no
clear consensus on the best course of action, but the first step is for companies to be sen-
sitive to differing standards.
 Chapter 16 • Organizational Culture

57//#4;
Organizational cultures have an immense impact on behavior in organizations. Although
the “essence” of an organization is often hard to describe, we can peer into the world of
organizational life by examining an organization’s shared values and beliefs, material
symbols, rituals, stories, and language. Several culture frameworks have demonstrated
that values and beliefs can have a substantial effect on organizational outcomes and that
different cultural values affect different strategic outcomes. Cultures can also cut across
organizations because employees differ in how strongly they agree on their organization’s
culture—these differences can lead to the creation of subcultures, which have implica-
tions for why people do things differently in different branches, departments, or teams.
The influence of founders on organizations’ cultures is strong and undeniable.
Founders set the tone and establish the foundation for what is valued, which leads them
to hire people who share these values (and exclude those who do not). Over time, support
from top management and socialization processes perpetuate the organizational culture,
making it very difficult to change.
Cultures serve several functions for organizations. They define boundaries, convey
a sense of identity, facilitate commitment to something larger than the self, and enhance
the stability of the organizational system (acting as the “glue that holds the organization
together”). The way the culture establishes tangible, concrete roots in organizations is
through the establishment of climates, or policies, practices, and procedures that rein-
force cultural values and beliefs. These climates then influence organizational outcomes
such as performance and attitudes. Notably, a plethora of types of cultures and climates
have been studied in OB to date. Of these, safety, ethical, sustainable, and innovation cul-
tures and climates are particularly important and relevant for organizations. Furthermore,
cultures and climates can be construed as both assets and liabilities, depending upon the
values and practices considered. To enhance their value as assets, managers and em-
ployees alike can seek to foster positive, ethical, and spiritual cultures and climates that
may help make their organization a reaffirming and positive place to work. As a caveat,
you should always be aware of how national and organizational cultures may sometimes
clash, especially when it comes to ethical issues.

+/2.+%#6+105 (14 /#0#)'45

• Realize that organizational culture is a complex, descriptive, and information-rich
aspect of organizations that has a major influence on important outcomes, although
is relatively fixed in the short term. To affect change, involve top management and
strategize a long-term plan for culture and climate transformation.
• Hire individuals whose values align with those of the organization (unless the ob-
jective is to introduce a diversity of perspectives); these employees will tend to re-
main committed and satisfied. Not surprisingly, “misfits” have considerably higher
turnover rates.
• Understand that employees’ performance and socialization depend to a consider-
able degree on their knowing what is valued and what is practiced in the organiza-
tion. Train your employees well and keep them informed of changes to their job
roles.
Part 5 • Leading, Understanding, and Transforming the Organization System

• You can shape the culture of your work environment, sometimes as much as it
shapes you. All managers can do their part to create the desired culture by focus-
ing on establishing policies, practices, and procedures that reinforce the desired or
emphasized values.
• Realize that although culture change often begins with managers, it is most directly
a function of the people who make up the company. You must involve and engage
employees to be active participants in the organizational culture to create, sustain,
or change culture.
• Be aware that your company’s organizational culture may not be “transportable”
to other countries. Understand the cultural relevance of your organization’s norms
before introducing new plans or initiatives overseas.