session 10 decision making and organizational culture

8/19/2019 Session 10 Decision Making and Organizational Culture

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Information Technology and

Organizational Control


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Information Requirements

• Information:

Which alters or reinforce understanding• Data:

The input and output of a communication channelBecomes information when it is used to alter areceiver’s understanding

•Information amountVolume of Data gathered and interpreted byorganizational participantsmount of information processed increases asuncertainty increases

• Information !ichness:

Information carrying capacity of data"igh rich convey greater understanding than lowrich mediaInformation richness increases when tas#s aredi$cult to analyze and interpret


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Rich

Lean

Information Medium Richness of Information

Face to Face Discussion Highest

Telephone Conversation High

Written letters/memos(Individuall addressed! Moderate

Formal "ritten documents

(unaddressed #ulletin or

reports)

Lo"

Formal numeric

documents( printouts$

%udget reports!

Lo"est


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&ources of 'ncertaint and amount of information processed

on)routine

Technolog

'nsta#le

*nvironment

Interdependent

Tas+s

Large &i,e

-reater

'ncertaint for

Managers

Large .mount of

Information

rocessed


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'ncertaint and .m#iguit Influences information

processing .mount .nd Channels

*nvironment

&i,e

on)routine

TechnologInterdependent

Tas+s

&elect InformationTechnolog (High

Tech! and/ or

Interpersonal ( High

Touch! Channels

'ncertaint for

Managers

.mount ofInformation

rocessed

.m#iguit for

Managers

Richness ofInformation

Channels


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nal,a#ilit

high

Lo"

Tas+ 0arietLo" High

Craft Technolog

&mall amount of richinformation$ personal

o#servation$ occasional

face to face and group

meetings1 Little MI&$ D&&1

High touch

on)routine Technolog

Large amount of richinformation$ fre2uent face

to face and group

discussion$ su#stantial

MI&$ D&& support1 High

tech and high touch

Routine Technolog&mall amounts of clear$

often 2uantitative

information 3 "ritten

reports$ procedures$schedules$ some MI& and

data#ase support

*ngineering TechnologLarge amounts of primar

2uantitative information 3

large computer

data#ases$ "ritten andtechnical materials$

reliance on MI&$ D&&

support$ high tech


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New Organization Structuresand Information Technology

• Organization structure purpose: The way in which parts of the organization

communicate and coordinate Vertical linages and !orizontal linages are used

for coordination purpose Information technology pro"ides stronger linages

across departments #lay signi$cant role in the shift to horizontal forms

of organizing

#hysical pro%imity no longer required as worersfrom "arious functions can communicate andcolla&orate electronically ' "irtual teams(


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)pplications of Information Technology

1. Operations

2. Business

Resource

3. Strategic

Weapon

processing systems

• Data warehousing

• Transaction

Management

information

systems

• Decision Support

Systems

• !ecuti"e

information

systems

•

• #now$e%ge

Management

• &ntranets

• nterpriseresource

p$anning

• !tranets

• '(ommerce

• &ntegrate%

nterprise

&)TR)*+ ,TR)*+

+OW S-STM (OM+,&T- /&0/

Direction of

&nformation

System

"o$ution

M*)*0M)T

++

TO

strategy p$ans

non'programme%4

5&RST'+&)

operationa$ past

programme%4


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Information Technology as aStrategic weapon

o Can &uild and enhance strategy &y pro"iding &etter dataand information within the organization 'internalapplication( as well as help the organization rede$ne andsupport relationships with customers* and otherorganizations 'e%ternal applications(

o Internal applications include: Networing Intranets +nterprise Resource #lanning '+R#(o +%ternal applications include +%tranets +,Commerce Networ structures


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+%ample of +R# Networ

(entra$

Data6ase

5inancia$ an%

*ccountingSa$es

Distri6ution

urchasing

&n"entory an%Manufacturing

/uman

Resources


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+lectronic -ata Interchange forInternational Transactions

!port 5reight

5orwar%er

Manufacturer7s

Ban87

!port

(ustoms

&mport

(ustoms

&mport

($earing *gent

(ustomerM*)95*(T9RR

(ustomer7s

Ban8

Supp$iers


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Distribution

Account

Receivable

Manufacturing

Marketing

Public

Relations

HealthProducts,

Inc. (Central

Hub)

he D!na"ic #et$ork %tructure


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.ey Characteristics of Traditional "s,+merging Interorganizational

Relationships

Tra%itiona$ &nterorgani:ationa$

Re$ationshipsmerging &nterorgani:ationa$

Re$ationships

Supp$iers

(ustomers

*rm7s'$ength re$ationship

9se of te$ephone mai$ some

D& for or%ering in"oicing

payments

Direct access to manufacturer

rea$'time information e!change

$ectronic access to pro%uct

information consumer ratings

customer ser"ice %ata

+imite% communication withmanufacturer

Mi! of phone response mai$

har% copy information

&nteracti"e e$ectronic

re$ationship

$ectronic or%ering in"oicing

payments

Source: Based on Charles V. Callahan and Bruce A. Pasternack,

“Corporate Strategy in the Digital Age,” Strategy & Business, Issue 1,

Second !uarter 1""", 1#$1%.


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Strategic Advantage of Information Technology

Lo" cost Leadership4perational *fficienc

Interdepartmental

CoordinationRapid re)suppl

DifferentiationLoc+ in customers

Customer service

roduct development$mar+et niches


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IT Impact on OrganizationStructure

• Smaller Organizations

• -ecentralized organizationstructures

• Impro"ed internal and e%ternalcoordination

• /reater employee participation


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.nowledge 0anagement• ) new way to thin a&out organizing and sharing

organization1s intellectual and creati"e resources

• Systematically $nd* organize* and mae a"aila&le acompany1s intellectual capital and to foster a culture ofcontinuous learning and nowledge sharing so thatorganizational acti"ities &uild on what is already nown

• The company1s intellectual capital is the sum of itsinformation* e%perience* understanding* relationships*

processes* inno"ations* and its disco"eries• ) complete nowledge management system include notonly processes for capturing and storing nowledge andorganizing it for easy access* &ut also ways to generatenew nowledge through learning and to sharenowledge through out the organization,

• Information technology alone is not enough to handlethis comple% pro&lem


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Types of .nowledge4, +%plicit nowledge

5ormal systematic nowledge that can &ecodi$ed* written down* and passed on toothers in documents or general instructions

6, Tacit nowledge Is &ased on personal e%perience* rules of

thum&* intuition* and 7udgment It includes professional now3how* e%pertise*

indi"idual insights and e%perience* andcreati"e solutions that are often di8cult tocommunicate and pass on to others

+%plicit nowledge 9 nowing a&out

Tacit nowledge 9 nowing how

) h t . l d


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)pproaches to .nowledgemanagement

• Three dri"ing forces &ehind the surge of interest innowledge management

4, Rapid ad"ance in in information technology thatmaes it possi&le to share e%plicit nowledge morequicly and easily as well as to connect people innetwors for the sharing of the nowledge

6, )s the economic &asis of organization shifts fromnatural resources to intellectual capital* tope%ecuti"es ha"e found it imperati"e to appraisetheir organizations1 nowledge resources and howto le"erage them

, /rowing interest in nowledge management isclosely related to companies1 e;orts to &ecomelearning organizations* in which managers stri"eto create a culture and a system of creating newnowledge and for capturing &oth e%plicit andtacit nowledge and getting to the right place at

the right time


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Two )pproaches to .nowledge0anagement

&'licitProvide high*ualit!, reliable, and fast

infor"ation s!ste"s for access of

codified, reusable kno$ledge

acitChannel individual e'ertise to rovide creative advice

on strategic roble"s

Peoletodocu"ents

Develo an electronic

docu"ent s!ste" that

codifies, stores,

disse"inates, and allo$s

reuse of kno$ledge

Invest heavil! in

infor"ation

technolog!, $ith a goal of

connecting eole $ith

Reusable, codifiedkno$led e

Persontoerson

Develo net$orks for linking eole so that

tacit kno$ledge can

be shared

Invest "oderatel! ininfor"ation technolog!,

$ith a goal of facilitating

conversations and the e'

change of tacit kno$ledge

Source: Based on &orten '. (ansen, )itin )ohria, and 'ho*as 'ierney,

“+hats -our Strategy or &anaging /no0ledge” Harvard Business

Review, &arch$April 1""", 1#2$112.


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-ecision 0aing and

Organizational CultureSession 4<


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-ecision 0aing• -e$nition:

= #rocess of identifying and sol"ing pro&lems>4, #ro&lem identi$cation stage:

Information a&out en"ironmental and

organizational conditions is monitored to

determine if performance is satisfactory and todiagnose the cause of shortcomings

6, The pro&lem solution stage:

)lternati"e courses of action are considered

and one alternati"e is selected andimplemented

d d


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#rogrammed Vs, Non3programmeddecisions

#rogrammed decisions

? Repetiti"e* well de$ned

?#rocedures e%ist for resol"ingpro&lems

?Criteria for performance clear

?/ood information a"aila&le forcurrent performance

?)lternati"es well speci$ed

?Relati"e certainty that chosenalternati"e will &e successful

Non programmed decisions

?No"el @ poorly de$ned

?No procedure e%ist for sol"ing thepro&lem

?Clear cut decision criteria do not e%ist

?)lternati"es are fuzzy

?Ancertainty whether a pro&lem solutiwill sol"e the pro&lem

?5ew alternati"es can &e de"eloped

?) single solution is custom3tailored tothe pro&lem


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Individual Decision Making

• Rational )pproach

Stress the need for systematicanalysis of a pro&lem followed &ychoice and implementation in alogical step &y step sequence

)ccording to the rational approachdecision maing can &e &roen downinto eight steps


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Steps in the Rational )pproach

to -ecision30aing

0onitor-ecision

+n"ironment

ImplementChosen

)lternati"e-e$ne

-ecision#ro&lem

Specify

-ecisionO&7ecti"es

-iagnose#ro&lem

-e"elop)lternati"eSolutions

+"aluate

)lternati"es

ChooseBest

)lternati"e

4

6

D

E

F

G


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Today1sBusiness +n"ironment

• New strategies

• Reengineering

• Restructuring• 0ergersH)cquisitions

• -ownsizing

• New productHmaret de"elopment• , , , +tc,


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-ecisions 0ade Inside theOrganization

• Comple%* emotionally charged issues

• 0ore rapid decisions

• ess certain en"ironment• ess clarity a&out meansHoutcomes

• Requires more cooperation


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) New -ecision30aing#rocess

• Required &ecause – no one person has enough info to mae

all ma7or decisions

– No one person has enough time andcredi&ility to con"ince many

• Relies less on hard data

• /uided &y powerful coalition• #ermits trial and error approach


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Bounded Rationality• In choosing &etween alternati"es*

mangers attempt to =satis$ce*> or loofor the one that is satisfactory or = goodenough>

• Because they satis$ce rather than

ma%imize* they can mae their choiceswithout $rst determining all possi&lealternati"es and without ascertainingthat these are in fact all the alternati"es

• -ecision maers end up satis$cing&ecause they do not ha"e a&ility toma%imize


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Bounded Rationality• Reasons for Satis$cing -ecisions

O&7ecti"es are dynamic rather than static

Information is seldom perfect

Time and cost constraints

)lternati"es seldom lend themsel"es toquanti$ed preference ordering

+;ects of en"ironmental forces cannot &edisregarded

o The di;erence &etween rational and &ondedrationality is one of degree* &ecause under

some condition* satis$cing approaches arema%imizing* whereas in other conditions*satis$cing and ma%imizing are "ery far apart


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Intuiti"e decision maing• Bounded rationality perspecti"e is often

associated with intuiti"e decision maing

• +%perience and 7udgment rather thansequential logic or e%plicit reasoning is used tomae decisions

• Intuition are not ar&itrary or irrational &ecauseit is &ased on years of e%perience and practice

• In situations of greater comple%ity oram&iguity pre"ious e%perience are needed toincorporate intangi&le elements at &oth thepro&lem identi$cation and pro&lem solutionstages

• Bonded rationality perspecti"e and intuitionapplies to non programmed decisions

Constraints and Trade o;s


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Trade3o;

Trade3o;

Trade3o;

Constraints and Trade3o;s-uring Non3programmed -ecision3

0aing

#ersonal Constraints:-esire for prestige* successJpersonal decision styleJ and

the need to satisfy emotionalneeds* cope with pressure*

maintain self3conceptOrganizational Constraints:Need for agreement* sharedperspecti"e* cooperation*

support* corporate culture andstructure* ethical "alues

Bounded Rationality:imited time* information*

resources to deal withcomple%*

multidimensional issues

-ecisionHChoice:

Search foa high3quali

decision

alternati"

Trade3o;

Trade3o;


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Organizational -ecision 0aing

• 0anagement science )pproach

Ased when pro&lems are analyza&le and"aria&les could &e identi$ed andmeasured

0athematical models can contain

thousands or more "aria&les* eachrele"ant in some way to the ultimateoutcome

The system is at its &est when applied

to pro&lems that are analyza&le* aremeasura&le* and can &e structured in alogical way


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Carnegie 0odel• Organization3le"el decisions in"ol"e many

managers and $nal choice is &ased on

coalition among these managers• Reasons for management coalition:

4, Organization goals are often am&iguous andinconsistent* and operati"e goals of the

department are often inconsistent, This resultsin disagreement a&out pro&lem priorities, Theymust &argain a&out pro&lems and &uildcoalition regarding which pro&lem to sol"e

6, Indi"idual managers intend to &e rational &ut

wor with limitation cogniti"e limitations andother constraints, These limitation leads tocoalition &uilding,


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Carnegie 0odel• Implication for organizational decision

&eha"ior

4, -ecisions are made to satis$ce rather thanoptimize pro&lem solution

6, 0anagers are concerned with immediatepro&lems and short run solutions, They

engage in pro&lematic search' loo around inthe immediate en"ironment for a solution toquicly resol"e a pro&lem

, -iscussion and &argaining are especiallyimportant in the pro&lem identi$cation stageof decision maing, Anless coalitionmem&ers percei"e a pro&lem* action will not&e taen


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Choice #rocesses in the Carnegie 0odel

!old 7oint discussionand interpret goalsand pro&lems

Share opinions

+sta&lish pro&lempriorities

O&tain social

supportfor pro&lem*solution )dopt the $rst

alternati"ethat is accepta&le

to the coalition

Conduct a simple*local search

Ase esta&lished

procedures if appropriate

Create a solutionif needed

0anagersha"edi"erse goals*opinions*"alues*

e%perience

Information islimited0anagersha"emany

constraints

Ancertainty Coalition 5ormation Search

Satis$cing

ConKict


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The Incremental -ecision #rocess 0odel

%& Identi$cation #hase

a, Recognition One or more managers &ecome aware of the

pro&lem and the need to mae decision Asually stimulated &y a pro&lem or an opportunity ) pro&lem e%ists when elements in the e%ternal

en"ironment change or when internal performanceis percei"ed to &e &elow standard&, -iagnosis 0ore information is gathered if needed to de$ne

pro&lem solution

-iagnosis may &e systematic or informaldepending on the se"erity of the pro&lem Se"ere pro&lems do not allow time for e%tensi"e

diagnosis* the response must &e immediate 0ild pro&lems are uually diagnosed in a more

systematic manner

h l i i


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The Incremental -ecision#rocess 0odel

6, -e"elopment #hase ) solution is shaped to sol"e the pro&lem de$ned in

identi$cation stage The de"elopment of solution taes one of two formsi, Search procedure may &e used to see out alternati"es

within organizationLs repertoire of solutions

To conduct search organization participants may loo intotheir own memories* tal to other managers* or e%aminethe formal procedures of the organization

ii, To design custom solution This happens when the pro&lem is no"el so that pre"ious

e%perience has no "alue

In theses cases ey decision maers only ha"e "ague ideaof the ideal solution /radually through a trail or error screening process a

custom designed alternati"e will de"elop -e"elopment of solution is a grouping* incremental

procedure* lie &uilding a house &ric &y &ric

h l i i


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, Selection #hase The solution is chosen This phase is not always a matter of maing a clear

choice among alternati"es +"aluation and choice may &e accomplished in three

ways4, Mudgment This form is used when a single choice falls upon a single

decision maer and choice in"ol"es 7udgment &asedupon e%perience

6, )nalysis )lternati"es are e"aluated on a more systematic &asissuch as management science techniques

0intz&erg found that most decisions did not in"ol"eanalysis and alternati"es of techniques

Th I l - i i


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, Bargaining Selection in"ol"es a group of decision maers +ach decision maer may ha"e di;erent stae in the

outcome* an conKict emerges -iscussion and &argaining occurs until a coalition is

formed• )uthorization 2hen decision is formally accepted &y the

organization * authorization taes place The decision may &e passed up the hierarchy to the

responsi&le hierarchical le"el

)uthorization is often routine &ecause of the e%pertiseand nowledge rests with the lower le"el decisionmaers * who identi$ed the pro&lem and the solution

) few decisions are re7ected &ecause of theimplication not anticipated &y lower le"el managers


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The Incremental -ecision #rocess0odel

• -ynamic 5actors

The lower part of the chart shows line running towards the&eginning of decision maer These lines represent the loops or cycles that taes place in

the decision maing process Organizational decisions do not follow an orderly progression

from recognition through authorization

0inor pro&lems can arise and force a loop &ac to an earlierstage, These are called decision interrupts

If custom designed solution is percei"ed as unsatisfactory *the organization may ha"e to go &ac to the "ery &eginningand reconsider whether the pro&lem is worth sol"ing

5eed&ac loops can &e caused &y pro&lems of timings*

politics* disagreement among managers* ina&ility to identifya feasi&le solution* turno"er of managers or the suddenappearance of a new alternati"e

Because most decisions taes place o"er a e%tended periodof time circumstances change

-ecision maing is a dynamic process that may require a

num&er of cycles &efore a pro&lem is sol"ed


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earning Organization -ecision #rocess2hen #ro&lem Identi$cation and #ro&lem

Solution )re Ancertain

2hen pro&lem identi$cation is

uncertain* Carnegie model applies

#olitical and social process isneeded

Build coalition* see agreement*

and resol"e conKict a&out goalsand pro&lem priorities

2hen pro&lem solution is

uncertain* Incremental processmodel applies

Incremental* trial3and3errorprocess is needed

Sol"e &ig pro&lems in little steps

Recycle and try again when&loced

#ROB+0 I-+NTI5IC)TION #ROB+0 SOATION

/ar&age Can 0odel


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/ar&age Can 0odel• Considers the whole organization and frequent decisions

&eing made &y managers through out• -escri&es decision maing under highly uncertain

conditions* = organized anarchy> an e%tremely organicorganization

• Characteristics of Organized )narchy

4, #ro&lematic #references: /oals* pro&lems* alternati"es* and solutions are ill de$ned,

)m&iguity characterize each step of decision maing

6, Anclear* poorly understood technology: cause and e;ectrelationship within the organization are di8cult to identify,+%plicit data&ase that applies to decisions is not a"aila&le

, Turno"er:Organizational positions e%perience turno"er of participants

+mployees are &usy and ha"e only limited time to allocateto any one pro&lem or decision

/ & C 0 d l


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/ar&age Can 0odel

• Streams of +"ents:4,#ro&lems

#ro&lems are percei"ed to require attention They are distinct from solution and choices) pro&lem may lead to proposed solution or it may not#ro&lems may not &e sol"ed when solution are adopted

6, #otential solutionsSolution e%ist independent of pro&lemsparticipants may &e simply attracted to certain ideasand push them as logical choice regardless of pro&lems)ttraction to an idea may cause an employee to loofor a pro&lem to which it could &e attached and hence 7usti$ed

/ & C 0 d l


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/ar&age Can 0odel

• Streams of +"ents:

, #articipants+mployees who come and go through out theorganization#articipants "ary in their ideas* perceptions*e%periences and training

The pro&lem and solution recognized &y oneparticipant may &e di;erent from other

, Choice opportunities2hen an organization usually maes a decision

2hen right mi% of participants* solution* and pro&lemse%ists0atch up of pro&lems and solution results in decisions

/ & C 0 d l


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/ar&age Can 0odel

• 2ith the concept of four streams* the o"erall

organizational decision maing taes onrandom quality

• 2hen a pro&lem* solution* and participanthappen to connect at one point* a decision

may &e made and pro&lem may &e sol"ed,• Organization decisions are disorderly and not

the result of logical* step &y step sequence

• +"ents may &e well de$ned and comple% that

decisions* pro&lems and solutions act asindependent e"ents


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Illustration of Independent Streams of+"ents in the /ar&age Can 0odel of

-ecision30aing

#ro&lemsSolutions

ChoiceOpportunities#articipants

#ro&lemsSolutionsChoice

Opportunities#articipants

#ro&lemsSolutionsChoice

Opportunities#articipants

Choice OpportunitiesChoice Opportunities

#articipants

#articipants

0iddle 0anagement

#ro&lems Solutions

Solutions

#articipants

#ro&lems#ro&lems

Solutions

ChoiceOpportunities

#ro&lems

#articipants

#articipants

Solutions

-epartment ) -epartment B


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Certain Ancertain

Contingency 5ramewor for

Asing -ecision 0odels#ro&lem

ConsensusIndi"idual: Rational )pproach

ComputationOrganization: 0anagement Science

Indi"idual: Bargaining*

Coalition 5ormationOrganization: Carnegie 0odel

Indi"idual: Mudgment Trial3and3error

Organization: Incremental -ecision

#rocess 0odel

Indi"idual: Bargaining and Mudgment Inspiration and Imitationearning Organization: Carnegie and Incremental -ecision #rocess 0odels*

+"ol"ing to /ar&age Can

Solution.nowledge

Certain

Ancertain

64

Organization Culture


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Organization Culture• Refers to a system of shared meaning In e"ery organizations there are patterns of

&eliefs* sym&ols* rituals* myths* andpractices that ha"e e"ol"ed o"er time These in turn* create common understanding

among mem&ers as to what the organizationis and how its mem&ers should &eha"e

Culture implies the e%istence of certaindimensions or characteristics that are closelyassociated and interdependent

There are ten characteristics that when

mi%ed and matched tap the e%istence of anorganization culture


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e"els of Corporate Culture

Observable SymbolsCeremonies, Stories,

Slogans,

Behaviors, Dress,

Physical Settings

Underlying

Values,

Assumptions,

Beliefs, Attitudes,

eelings

Characteristics of Organization Culture


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Characteristics of Organization Culture4, Indi"idual initiati"e: The degree of responsi&ility* freedom* and

independence that indi"iduals ha"e

6, Ris tolerance: The degree to which employees are encouraged to&e aggressi"e* inno"ati"e* and ris seeing

, -irection : The degree to which the organization creates clearo&7ecti"es and performance e%pectations

, Integration :The degree to which units within the organization areencouraged to operate in a coordinated manner

D, 0anagement support: the degree to which managers pro"ide clearcommunication* assistance* and support to their su&ordinates

E, Control : the num&er of rules and regulations* and he amount ofsuper"ision that are used to o"ersee and control employees&eha"ior

F, Identity : the degree to which mem&ers identify with organization aswhole rather than with their particular wor group or $eld ofprofessional e%pertise

G, Reward system: the degree to which reward allocation are &ased onemployee performance criteria in contrast o seniority* fa"oritism*etc,

, ConKict toleranceJ the degree to which employees are encouragedto air conKicts and criticism openly

4


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Characteristics of OrganizationCulture

These characteristics include &oth structural and&eha"ioral dimensions

3 management support is an measure of leadershipdimensions

0ost of these dimensions are closely intertwined with anorganization1s design3 the more routine an organization technology and the more

centralized its decision maing process* the less indi"idualinitiati"e employees in that organization will ha"e3 functional structures create cultures with more formalcommunication patterns than do simple or matri% structures3 integration is essentially an indicator of horizontalinterdependence

Organization cultures are not 7ust reKections of theirmem&ers1 attitudes and personalities

) large part of an organization1s culture can &e directlytraced to structurally related "aria&les

-o organization ha"e uniform cultures


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• Organization culture is de$ned as a system ofshared meaning

)cnowledgement that organizational culture hascommon properties does not mean that therecannot &e su&cultures within any gi"en culture

0ost organizations ha"e a dominant culture andnumerous sets of su&cultures

-ominant culture

+%press the core "alues that are shared &y ama7ority of organization1s mem&ers3 the term organization culture is usually thedominant culture of an organization

Su& culture3 -e"elop in large organizations to reKectcommon pro&lems* situations* or e%periencesthat mem&ers face



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Vertical su&culture:

3 2hen one product di"ision of a conglomerate has

a culture unique from that of other di"isions ofthe organization

!orizontal su&culture

3 2hen speci$c set of functional specialist ha"e acommon set shared understanding

If organizations had no dominant culture andwere comprised only of numerous su&cultures *the inKuence of culture on organization culturewould &e far more am&iguous

3 )s there would &e no consistency of perceptionsof &eha"ior

3 it is the shared meaning aspect of organizationalculture that maes it such a potent concept

Culture and Organizational +;ecti"eness


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Strong culture: ) Strong culture is characterized &y the

organization1s core "alue &eing intenselyheld* clearly ordered* and widely shared

The more mem&ers that accept the core"alues* agree on their order of importance*and are highly committed to them* thestronger the culture

The stronger the culture the more importantit is that culture properly $t with theorganization1s en"ironment* strategy* and

technology The successful organization will achie"e

good e%ternal $t if its culture is shaped to $twith its en"ironment and strategy



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3 0aret dri"en strategies are more appropriate indynamic en"ironment and requires a culture thatemphasizes indi"idual initiati"e* high ris taing*

high integration* tolerance for conKict* andhorizontal communication3 #roduct dri"en strategy focus on sta&ility ande8ciency* will require a culture that is high incontrol and minimizes ris taing and conKict

Successful organization will also require a internal $t&etween their culture and technologies3 Routine technologies pro"ide sta&ility and wor well

when lined to a culture that emphasize centralizeddecision maing and limited indi"idual initiati"e

3 Non routine technologies require adapta&ility andare &est when matched with cultures thatencourage indi"idual initiati"e and downplay control


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Relationship of +n"ironment and Strategyto Corporate Culture

#eeds of the &nviron"ent

% t r a

t e g i c

+ o c u s

Adatabilit!

Culture

ClanCulture

ureaucraticCulture

MissionCulture

+le'ibilit!

&'ternal

Internal

%tabilit!

Sources: Based on Daniel 3. Denison and Aneil /. &ishra,

“'o0ard a 'heory o 4rgani5ational Culture a nd 6ecti7eness,”

Organization Science 2, no. 8 9&arch$April 1"":; 8#%$8?erg and @. Petrock, “4n Culture Change; sing the Co*pany

Values @ra*e0ork to (elp eaders 6ecute a 'ransor*ational

Study,” Human Resource Management


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The )dapta&ilityH +ntrepreneurialCulture

• Strategic focus on e%ternal en"ironmentthrough Ke%i&ility and change to meetcustomer needs

• +ncourages norms and &eliefs that support

the capacity to detect* interpret* andtranslate signals from en"ironment into new&eha"ior responses

• -oesn1t 7ust react quicly to en"ironmental

change it acti"ely creates change• Inno"ation* creati"ity* and ris3taing are

"alued and rewarded

The 0ission Culture


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The 0ission Culture• Concerned with ser"ing speci$c customers*

&ut without the need for rapid change• +mphasis is on a clear "ision of the

organization1s purpose and on achie"inggoals

• Indi"idual employees may &e responsi&le for

speci$ed le"el of performance* andorganization promises speci$ed rewards• 0anagers shape &eha"ior &y en"isioning and

communicating desired future state

• Because en"ironment is sta&le they cantranslate the "ision into measura&le goals• ReKect a high le"el of competiti"eness and a

pro$t maing orientation


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The clan Culture

• 5ocus on the in"ol"ement and participationof the organization1s mem&ers on rapidlychanging e%pectations from the e%ternal

en"ironment• This culture focuses on the needs of

employees as a route to high performance

• In"ol"ement and participation create a senseof responsi&ility and ownership and hencegreater commitment to the organization


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The Bureaucratic Culture• Internal focus and a consistency orientation

for a sta&le en"ironment• Culture supports a methodical approach to

doing &usiness• Sym&ols* heroes* and ceremonies support

cooperation* tradition* and followingesta&lished policies and practices as a way toachie"e goals

• #ersonal in"ol"ement is somewhat lowerhere* &ut is outweighed &y high le"el of

consistency* conformity and colla&orationamong mem&ers• This organization succeeds &y &eing highly

integrated and e8cient

Culture a Su&stitute 5or 5ormalization


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Culture a Su&stitute 5or 5ormalization • Strong cultures increases &eha"ioral consistency

It con"eys to employees what &eha"iors they

should engage in Strong cultures* as they increase &eha"ioral

consistency* therefore it could &e powerful meansof implicit control and can act as su&stitute forformalization

!igh formalization creates predicta&ility*orderliness* and consistency

) strong culture achie"es the same without theneed for written documentation

Strong culture may &e more potent than anyformal structural controls &ecause culturecontrols the mind and soul as well as the &ody

Creating Sustaining and Transmitting


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Creating* Sustaining* and TransmittingCulture

• !ow a culture &egins:3 The founder of an organization has su&stantial

inKuence on the organization1s initial culture&ecause of his personal "alues and &eliefs

3 They not only esta&lish the new organization"alues* &ut they hire its $rst mem&ers

3 The followers hired &y the founder ha"e "aluesand interest similar to the founder

3 O"ertime* mem&ers &uy into founder1s "ision and

perpetuate the founder1s "alues3 This e%plains partly why organization e%perienceinertia in their decision maing and whyorganizations are slow to change

3 Culture of an organization can &e changed &y

changing the people who control and lead


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Creating Sustaining and Transmitting


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Creating* Sustaining* and TransmittingCulture

These norms are $ltered down through theorganization and con"ey desired &eha"iorslieJ

3 whether ris taing is desira&le

3 how much freedom managers should gi"e totheir su&ordinates

3 appropriate dress

3 what actions will pay o; in terms of payraises* promotions* and other rewards

3 ethical &eha"ior and decision maing


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Interpreting Culture


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Interpreting Culture

• Rites and ceremonies

+la&orate* planned acti"ities that mae upspecial e"ent and are conducted for the&ene$t of an audience

• Stories

)re narrati"es &ased on true e"ents that arefrequently shared among organizationalemployees and told to new employees toinform them a&out the organization

!eroes

egends

myths


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ypo ogy o rgan zat ona tes an e r oc aConsequences


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q

Tpe of Rite *5ample &ocialConse2uences

assage Induction and basic training;US Army

Facilitate transition oferson into ne! socialroles and statuses

*nhancement Annual a!ards night "nhance social identities

and increase status ofmembers

Rene"al #rgani$ational develomentactivities

%efurbish social structuresand imrove organi$ationfunctioning

Integration #ffice holiday arty "ncourage and revivecommon feelings that bindmembers together andcommit them to theorgani$ation

Source: Adapted ro* (arrison &. 'rice and anice &. Beyer,

“Studying 4rgani5ational Cultures through 3ites and Cere*onials,”

cademy o$ Management Review " 91"E%:, 2


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(eremonies

)nnual awardsfor meritoriouscustomer ser"ice

0onthlymeetings toacnowledgepeople who

attain 4' equality offamily(

*ordstrom Inc


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*ordstrom+Inc

Anderlying Culture


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Anderlying Culture

Shared &alues 'uiding (eliefsustomer service at anycost

ustomers* deservesecial treatment

"mloyees are art offamily

+e li,e this comany

Attain Sales targets The comany cares

about us

Clash of Cultures: 0ergers and )cquisitions


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Clash of Cultures: 0ergers and )cquisitions

• 0any sound strategic and $nancial pro7ections ofmergers &etween organizations fails &ecause of

incompati&ility of two strong cultures Research has shown that


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g q

3 they can adapt &etter to new situations

'6( The degree of di;erence that e%ist &etween the

organizations1 ey cultural dimensions The merging of two strong cultures needn1t present

pro&lems if the cultures are highly similar Strong cultures are liely to hinder the e;ecti"eness

in the newly merged organizations only when thecultures are at odds

Cultural $t can &e &est assessed &y comparing thetwo merger candidates on their ey culturalcharacteristics

If the e"aluation indicates a poor $t and if thecultures are relati"ely strong* management might &e

well ad"ised to loo elsewhere for a mergercandidate

0anaging -i"erse Cultures


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0anaging -i"erse Cultures5ollowing )cquisition

• 5our di;erent methods of managing two di;erent cultures• The choice of method should &e &ased on:4, !ow much mem&ers of the acquired $rm "alue preser"ing their

own culture6, !ow attracti"e they percei"e the culture of the acquired $rmi, Integration:

In"ol"es a relati"ely &alanced gi"e and tae of culture andmanagement practices &etween the merger partners

No strong imposition of cultural change on &oth the partners It merges the culture in such a way that the separate cultures of

&oth the $rms are preser"ed in the resulting cultureii, )ssimilation:

In"ol"es the domination of one $rm o"er the other The domination is not forced &ut welcomed &y the acquired $rm The acquired $rm surrender its culture and adopt the culture of

the acquiring company

0anaging -i"erse Cultures


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5ollowing )cquisition

iii, Separation

separation of two companies culture

They are structurally separated* withoutcultural e%change

i", -eculturation: In"ol"es the disintegration of one company1s

culture resulting from the unwanted ande%treme pressure from he other to impose its

culture This is the most common and most destructi"e

method of dealing with two di;erent cultures

,&- .ethods of .anaging the (ulture of an c/uired 0irm 10ig& ,&23


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#rentice !all* 6


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• The Case 5or: )n Organization1s culture may ha"e &een

appropriate for certain times and set ofconditionsBut times and conditions change* in such a

case management can alter those factors thatcreated and sustained the current culture

Selection practices* top management1s actionand socialization process sustain a culture

Similarly stories* rituals* material sym&ols* andlanguage are means &y which employeeslearn who and what is important

By changing these factors one should &e a&leto change the culture


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The .ey -e&ate: )re Cultures 0anagea&leA d t di th Sit ti l 5 t


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• Anderstanding the Situational 5actors )re there conditions under which culture could &e

managed

The situational analysis of conditions necessary orwill facilitate cultural change

4, ) -ramatic Crisis: The condition that is most uni"ersally

acnowledged as ha"ing to e%ist &efore culture

can &e changed is a dramatic crisis that is widelypercei"ed &y the organization1s mem&ers Shoc that undermines the status quo It calls into question current practices opens the

door towards accepting a di;erent set of "alues

that can respond to crisis situation The crisis need not to &e real to &e e;ecti"e, The ey is that it is percei"ed as real &y mem&ers

Anderstanding the Situational 5actors6 eadership Turno"er


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6, eadership Turno"er Since top management is a ma7or factor in transmitting culture*

change in the organization1s ey leadership position facilitates theimposition of new rules

The new leader must ha"e:3 a clear alternati"e "ision of what the organization can &e

3 there must &e respect for this leadership1s a&ility

3 must ha"e power to enact their alternati"e "ision Rather than ha"ing pre"ious e%ecuti"es accept the new leader1s

"alue* it is usually more e;ecti"e to replace people with indi"idualswho ha"e no "ested interests in the old culture

, ife cycle stage: Cultural change is easier when the organization is in transition from

formation stage to growth stage* and from maturity to decline )s the organization mo"es into growth stage ma7or changes will &e

necessary, These changes are more liely to &e accepted &ecausethe culture is less entrenched

2hen organizations mo"e into decline stage it typically requirescut&ac and other retrenchment strategies

Such actions are liely to dramatize the to employees that theorganization is e%periencing a true crisis


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+nacting Cultural Change


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• Cultural )nalysis:• Step4:

This would include a cultural audit to assess thecurrent culture ) comparison of the present culture against that

which is desired* and a gap e"aluation to identifywhat cultural elements need changing

The cultural audit should loo at the currentculture in terms of ten dimensions3 how much inno"ation is there3 is inno"ation encouraged3 to what e%tent rewards are contingent on

performance Three &asic questions should &e answered4, 2hat is the &acground of founders and others

who followed them

+nacting Cultural Change


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4, !ow did the organization respond to past crises orother critical e"ents and what was learned fromthese e%periences

6, 2ho are considered de"iants in the culture and howthe organization respond to them

)nswer to these questions will re"eal how particular"alues were formed * the ordering of these "alues*and where the culture1s &oundaries are

• Step6: "alues sought in the new culture &earticulated 2hat is the pro;ered culture that is &eing sought The desired culture can &e compared against the

organization1s current "alues

• Step : 2hat cultural dimensions and "alues are outof alignment and need changing Once gaps ha"e &een identi$ed consideration can

&e gi"en to speci$c actions that will directly correctthe discrepancy

session 10 decision making and organizational culture

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