Management Benchmark Study-Book Summary Chapter 11-Literature, Summaries of Benchmarking

Download Management Benchmark Study-Book Summary Chapter 11-Literature and more Summaries Benchmarking in PDF only on Docsity! Ch 11 Organizational Culture 06.08.02.doc 06.08.02 Chapter 11. Organizational Culture1 By Kathryn A Baker The literature on organizational culture is as relevant to public science management as it is to the management of private sector business organizations. Given a rapidly changing environment and continuing insights into organizational effectiveness, science organizations, as most other organizations, are seriously rethinking what they do and how they can best define and accomplish their goals and objectives. Once goals are defined, it is necessary to address the type of culture that is necessary to advance these goals and objectives and ensure the successful implementation of the necessary changes. In addition, the organizational effectiveness literature has been increasingly emphasizing the importance of culture in motivating and maximizing the value of its intellectual assets, particularly its human capital. This is particularly important in knowledge intensive organizations, such as publicly funded scientific laboratories. This review of the organizational culture literature makes it clear that (1) culture is essential for both successful organizational change and maximizing the value of human capital (2) culture management should become a critical management competency, and (3) while the right culture may be a necessary condition for organizational success, it is by no means a sufficient condition. An important challenge for managers is to determine what the most effective culture is for their organization and, when necessary, how to change the organizational culture effectively. Organizational culture became a business phenomenon in the early 1980s, triggered by four seminal books: ♦ Ouchi’s (1981) Theory Z: How American Business Can Meet the Japanese Challenge ♦ Pascale and Athos’s (1982) The Art of Japanese Management: Applications for American Executives ♦ Deal and Kennedy’s (1982) Corporate Cultures: The Rites and Rituals of Corporate Life ♦ Peters and Waterman’s (1982) In Search of Excellence: Lessons from America’s Best Run Companies. The first two books suggested that Japanese business success could be attributed in large part to Japanese corporate culture. All four books suggested that corporate culture was key to organizational performance and that corporate culture could be managed to improve a company’s competitive advantage. They provided pragmatic prescriptions to American business leaders desperate for answers to help them remain successful in the face of increasing Japanese competition. These books were bestsellers; the last out sold all other non-fiction books for the year. The concept of organizational culture also appealed to organizational scientists and practitioners who had grown disillusioned with the prevailing formalistic, quantitative organizational research. The emphasis on organizational culture shifted attention away from the functional and technical aspects (the so-called hard side) of management that could be more readily quantified and empirically analyzed to the interpersonal and symbolic aspects (the soft side) of management that required in-depth, qualitative studies of organizational life. This focus on the qualitative, symbolic aspects of organizations and management stimulated a large literature on leadership. In 1 Related chapters include: Change Management; Knowledge Management; Competencies; Leadership; Innovation; Creativity. Ch 11 Organizational Culture 06.08.02.doc 2 2.20.02 addition, specialized literatures emerged around particular variants of organizational culture considered increasingly important for success in the modern business world, such as change- oriented culture, learning culture, innovating culture, team- and project-oriented cultures. More recently, attention has turned to identifying and creating an organizational culture that facilitates agility; promotes alliances, partnerships and networks; encourages knowledge management; fosters corporate responsibility and/or moral integrity; and embraces diversity. The concept of organizational culture has generated a massive literature with enormous popularity. By the 1990s, a literature search would generate over 2500 hits (Alvesson and Berg 1992). It is an extremely important literature because the concept of organizational culture has been central to much of the subsequent work on organizational effectiveness. History Although the concept of organizational culture was popularized in the early 1980s, its roots can be traced back to the early human relations view of organizations that originated in the 1940s. Human relations theorists viewed the informal, nonmaterial, interpersonal, and moral bases of cooperation and commitment as perhaps more important than the formal, material, and instrumental controls stressed by the rational system theorists (see Chapter 3: Overview of the Management and the Organizational Effectiveness Literatures). The human relations perspective drew its inspiration from even earlier anthropological and sociological work on culture associated with groups and societies (see Geertz 1973; Mead 1934; Durkheim 1964; Weber 1947, 1958). Attention to organizational culture lost ground as organizational science, and social science in general, became increasingly quantitative. To the extent that research on organizational culture survived, its focus shifted to its more measurable aspects, particularly employee attitudes and perceptions and/or observable organizational conditions thought to correspond to employee perceptions (i.e., the level of individual involvement, the degree of delegation, the extent of social distance as implied by status differences, and the amount of coordination across units). This research, referred to as organizational climate studies, was prominent during the 1960s and 1970s (Denison 1990). The renewed interest in organizational culture that emerged in the late 1970s and resulted in the four books mentioned above suggested that a deeper, more complex anthropological approach was necessary to understand crucial but largely invisible aspects of organizational life. This renewed interest in organizational culture represented a return to the early organizational literature but it went far beyond this literature in contributing important new insights and ways of thinking about the role, importance, and characteristics of organizational culture. Also, research on the effect of culture on organizational performance and investigations into how organizational cultures are created, maintained, and changed received greater attention. The main difference was that organizational culture was now viewed less as a natural, organically emergent phenomenon and more as a manipulable and manageable competitive asset. What is Organizational Culture? Definitions of organizational culture initially focused on distinguishing levels of organizational culture and strong versus weak cultures. Ch 11 Organizational Culture 06.08.02.doc 5 2.20.02 Theories of Organizational Culture Just as there are differing perspectives on what organizational culture is, there are differing perspectives regarding how it functions. Denison (1990) identifies four basic views of organizational culture that can be translated into four distinct hypotheses: ♦ The consistency hypothesis – the idea that a common perspective, shared beliefs and communal values among the organizational participants will enhance internal coordination and promote meaning and a sense of identification on the part of its members. ♦ The mission hypothesis – the idea that a shared sense of purpose, direction, and strategy can coordinate and galvanize organizational members toward collective goals. ♦ The involvement/participation hypothesis – the idea that involvement and participation will contribute to a sense of responsibility and ownership and, hence, organizational commitment and loyalty. ♦ The adaptability hypothesis – the idea that norms and beliefs that enhance an organization’s ability to receive, interpret, and translate signals from the environment into internal organizational and behavioral changes will promote its survival, growth, and development. These hypotheses focus on different aspects of culture but more importantly, they stress different functions of culture. The first two hypotheses tend to encourage/promote stability; the second two allow for change and adaptability. The first and third hypotheses see culture as focusing on internal organizational dynamics; the second and fourth see culture as addressing the relation of the organization to its external environment. Stability/Control Change/Flexibility Internal Consistency Involvement/participation External Mission Adaptability These hypotheses about organizational culture correspond closely to Cameron and Quinn’s (1999) categorization of organizational effectiveness perspectives and associated types of organizations, as shown below. Stability/Control Flexibility/Discretion Internal Focus/ Integration Hierarchy Clan External Focus/ Differentiation Market Adhocracy Handy (1995), well-known for his characterization of four dominant types of leaders as corresponding to gods of Greek mythology, also distinguishes key types of organizational cultures that correspond to different organizational forms. He asserts that clearly distinguishable organizational cultures give rise to four types of leaders, which he characterizes as: Zeus, Apollo, Athena, and Dionysus. These distinct cultures (just as clan-based, hierarchy-oriented, market- Ch 11 Organizational Culture 06.08.02.doc 6 2.20.02 based, and adhocracy-based cultures) are associated with organizations that have congruent attributes across multiple technical/functional dimensions. In contrast to identifying distinct types of organizational cultures, there has been a growing tendency to recognize and emphasize cultural complexity (Denison et al. 1995). One approach to incorporating greater cultural complexity is to recognize that most organizations today will have some aspects of all of these cultures. This view of culture focuses on the need to balance and manage the mix. The problem with this view is that culture tends to lose any sense of coherency. It is difficult to see culture, in this sense, as providing meaning or motivating/inspiring organizational members to behave in particular ways. There is an alternative approach to cultural complexity that avoids the problem that culture will fail to provide meaning and a sense of corporate identify. This approach moves beyond differentiating cultures in terms of technical/functional orientations (i.e., external versus internal orientation, stable versus change orientation, control versus individual discretion, directive versus participative, autocratic versus democratic, task-oriented versus relationship-oriented, integrative versus adaptive, sameness versus differentiation, transactional versus transformational). Rather than seeing the role of organizational culture as balancing competing technical needs and, thus, becoming a complicated mix of cultural types, organizations are viewed as consisting of multiple, differentiated cultural orientations directed at critical ways of thinking and behaving as a member of the organization. These cultural orientations can include ways of thinking and behaving with respect to change, diversity, conflict, innovation, organizational learning, knowledge management, partnership or alliance building, relationship formation, and corporate responsibility. This cultural differentiation perspective sees cultures being developed around various critical organizational aspects rather than based on competing orientations. The key is to identify and effectively manage key cultural orientations, develop synergies between them where possible, and prevent them from conflicting with one another. Although, in many cases, these various orientations can be highly interrelated and mutually reinforcing, there is not necessarily a need for a single overarching culture that incorporates everything. Perhaps, at most, there may be a coherent set of shared basic assumptions and values. This notion of cultural differentiation is similar to but not the same as the notion of subcultures. Cultural differentiation refers to somewhat distinct, though not necessarily conflicting, cultures associated with different organizational aspects, while organizational subcultures refer to different cultures developing among distinct organizational occupational groupings or professions (such as blue collar/white collar/management subcultures; subcultures of engineers/ production workers/ marketing and sales/managers; and/or cultures associated with various scientific or professional disciplines). Subcultures often refer to informal emergent cultures whereas differentiated cultures are more likely to refer to more formal and managed cultures, but this is a hazy distinction. Increasing Importance of Organizational Culture Schein (1992) suggests that organizational culture is even more important today than it was in the past. Increased competition, globalization, mergers, acquisitions, alliances, and various workforce developments have created a greater need for: ♦ Coordination and integration across organizational units in order to improve efficiency, quality, and speed of designing, manufacturing, and delivering products and services ♦ Product innovation Ch 11 Organizational Culture 06.08.02.doc 7 2.20.02 ♦ Strategy innovation ♦ Process innovation and the ability to successfully introduce new technologies, such as information technology ♦ Effective management of dispersed work units and increasing workforce diversity ♦ Cross-cultural management of global enterprises and/or multi-national partnerships ♦ Construction of meta- or hybrid- cultures that merge aspects of cultures from what were distinct organizations prior to an acquisition or merger ♦ Management of workforce diversity ♦ Facilitation and support of teamwork. In addition to a greater need to adapt to these external and internal changes, organizational culture has become more important because, for an increasing number of corporations, intellectual as opposed to material assets now constitute the main source of value. Maximizing the value of employees as intellectual assets requires a culture that promotes their intellectual participation and facilitates both individual and organizational learning, new knowledge creation and application, and the willingness to share knowledge with others. Culture today must play a key role in promoting ♦ Knowledge management (see Chapter 5) ♦ Creativity (see Chapter 15) ♦ Participative management (see Chapter 10) ♦ Leadership (see Chapter 12). Effects of Organizational Culture There has been a great deal of anecdotal evidence and some empirical evidence regarding the performance effects of organizational culture. Anecdotal evidence begins Peters and Waterman’s In Search of Excellence (1982). This book basically stimulated the now familiar business school case study approach. More recent anecdotal evidence regarding the most successful companies in the last several decades has also been proffered. According to Cameron and Quinn (1999), many of the most successful companies, including Southwest Airlines (21,775% return on investment [ROI]), Wal-Mart (19,807% ROI), Tyson Foods (18,118% ROI), Circuit City (16,410% ROI), and Plenum Publishing (15,689% ROI), score low on well-established critical success factors (i.e., entry barriers that prevent organizations from competing for the same market, nonsubstitutable products, low levels of bargaining power on the part of buyers due to customer dependence, low levels of bargaining power for suppliers because they have no alternative customers, a large market share that promotes economies of scale, and rivalry among the competition that deflects head-to-head competition with a potential dominator). These unlikely winners have strong leadership that promotes unique strategies and a strong culture to help them realize these strategies. There is also strong anecdotal support indicating that the primary cause of failure of most major change efforts (such as TQM and reengineering) has been the failure to successfully change the organizational culture (CSC Index 1994; Caldwell 1994; Goss et al. 1993; Kotter and Heskett 1992). Kotter and Heskett (1992) have attempted to make this intriguing, but admittedly inconclusive, anecdotal evidence more systematic and empirical. They had financial analysts identify the firms they considered most successful and then describe the key factors discriminating these firms from those that were less successful. Seventy-four of the seventy-five analysts indicated that Ch 11 Organizational Culture 06.08.02.doc 10 2.20.02 Cultural Change Cultural change typically refers to radical versus limited change. It is not easy to achieve; it is a difficult, complicated, demanding effort that can take several years to accomplish. There are three basic types of cultural change (Trice and Beyer 1991): ♦ Revolutionary and comprehensive efforts to change the culture of the entire organization ♦ Efforts that are gradual and incremental but nevertheless are designed to cumulate so as to produce a comprehensive reshaping of the entire organizational culture ♦ Efforts confined to radically change specific subcultures or cultural components of the overall differentiated culture. Strategies for effecting cultural change include (Schein 1999): ♦ Unfreezing the old culture and creating motivation to change ♦ Capitalizing on propitious moments—problems, opportunities, changed circumstances, and/or accumulated excesses or deficiencies of the past ♦ Making the change target concrete and clear ♦ Maintaining some continuity with the past ♦ Creating psychological safety through a compelling positive vision, formal training, informal training of relevant groups and teams, providing coaches and positive role models, employee involvement and opportunities for input and feedback, support groups, and addressing fears and losses head on ♦ Selecting, modifying, and creating appropriate cultural forms, behaviors, artifacts, and socialization tactics ♦ Cultivating charismatic leaders ♦ Having a realistic and solid transition plan ♦ Exercising risk management by understanding and addressing the risks and the benefits as well as the potential inequitable distribution of these risks and benefits. The Application of Organizational Culture to Public Science Management In understanding the role of organizational culture in achieving the desired changes in public science management, the various public science organizations will need to understand not only their internal culture but the cultural attributes best suited to promoting desired behaviors on the part of the science system as a whole. An important role for public science management is to help define and bring about the cultural orientations that will provide the context and promote the behaviors, values, and relationships that foster effective science, including scientific collaborations. This literature suggests it would be worthwhile to (1) identify how science funding and directing organizations could promote appropriate cultural orientations and a favorable cultural environment for publicly funded science organizations (laboratories, universities, and private R&D centers) and (2) determine the cultural orientations and cultural environment needed within the funding and directing organizations to make this happen. In organizations responsible for both science and national security, such as the US Departments of Energy and Defense, a significant challenge is to balance the cultural requirements of creativity and collaboration with those of regulatory compliance and the protection of classified information. Relevant questions for managers of publicly funded science include: Ch 11 Organizational Culture 06.08.02.doc 11 2.20.02 1. Have the goals and strategies for effecting effective and efficient scientific development changed over time? 2. What culture attributes are necessary to help achieve the goals and strategies on the part of publicly funded science organizations (public and private laboratories, universities, R&D centers, etc.) as well as the goals and strategies necessary to achieve effective and efficient scientific development for the system as a whole? Is there potential conflict between these two sets of goals and strategies? How could this conflict be addressed? 3. How can public science funding and directing organizations (such as the National Science Foundation, the DOE Office of Science, etc.) contribute to bringing about desired cultural attributes in these publicly funded science organizations? What are the obstacles to doing this? 4. Will the culture (and perhaps goals, strategies, structures, and practices) of public science funding and directing organizations need to change in order to for them to be successful in effecting desired change within the publicly funded science organizations? If so, what changes may be necessary? 5. How can desired cultural (as well as strategy, structure, and practice) changes be identified by and promoted within the many public science funding and directing organizations? Will this require a collaborative effort among these organizations? If so, how can this collaboration be encouraged? What are the obstacles to successful cultural change? References Alvesson, Mats, and Per Olof Berg. 1992. Corporate Culture and Organizational Symbolism: An Overview. Berlin: Walter de Gruyter & Co. Caldwell, Bruce. 1994. Missteps, Miscues: Business Reengineering Failures Have Cost Corporations Billions, and Spending is Still on the Rise. Information Week (June 20):50-60. Cameron, Kim S., and Robert E. Quinn. 1999. Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework. Reading, MA: Addison-Wesley Publishing Co. Christensen, Clayton M. 1997. The Innovator’s Dilemma. Boston: Harvard Business School Press. 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