Organizational Behavior

Zeki Pagda
Fall2022

Source: Baldwin, T. T., Bommer, W., & Rubin, R. S. (2013). Managing organizational
behavior: What great managers know and do McGraw-Hill Irwin.
Source: Snell, S., Morris, S., & Bohlander, G. W. (2015). Managing human resources.
Cengage Learning.
Chief People Officer
Booz Allen Hamilton
What would you do?
Are Top Managers Clueless?

Leadership at Wells Fargo and Volkswagen trashed their own brands by

following the same script:

• Act I: Set daunting standards for employees

• Act II: Look the other way when employees cheat

• Act III: When things blow up, blame the workers

Org Culture

• Increasing technological/scientific
complexity of all functions
• Global networking through
GE information technology
AN
CH
• More multicultural organizations
through mergers and joint
ventures
• More organizational concern
about global warming and
sustainability

* Exp: Outliner: Korean Airlines

Culture is Complex
Your organization

• Describe your organization’s culture to

your classmates
• Share a story as an example of the
organization’s culture
• Share your selected key terms with your
table
• Can you identify any common themes
among the selected key terms?
Understanding Culture

Understand culture to explain

many of our puzzling and
frustrating experiences in social
and organizational life.

Culture is to a group what

personality or character is to an
individual.
Definition of culture

Culture = pattern of shared basic assumptions

• learned by a group
• solve problems of external adaptation
and internal integration
• worked well so as to be considered valid
• taught to new members as the correct
way to perceive, think, feel, and act
Multiple definitions of culture

…a mental program…collective programming

of the mind which distinguishes the members of
one human group from another… and
influences a human group’s response to its
environment… (Hofstede, 1980)
Complex Anthropological Models of Culture

… instead of Abstract Business Models

• Observed behavioral regularities when people interact: The language
they use, the customs and traditions that evolve, and the rituals they employ
in a wide variety of situations

• Group norms: The implicit standards and values that evolve in working
groups.

• Espoused values: The articulated publicly announced principles and

values.

• Formal philosophy: The broad policies and ideological principles.

• Rules of the game: The implicit, unwritten rules for getting along in the
organization.
Complex Anthropological Models of Culture

… instead of Abstract Business Models

• Climate: The feeling that is conveyed in a group by the physical layout and the
way in which members of the organization interact with each other, with
customers, or with other outsiders.

• Embedded skills: The special competencies displayed by group members in

accomplishing certain tasks, the ability to make certain things that get passed
on from generation to generation without necessarily being articulated in
writing.

• Habits of thinking, mental models, and/or linguistic paradigms: The

shared cognitive frames that guide the perceptions, thought, and language
used by the members of a group and are taught to new members in the early
socialization process.
Complex Anthropological Models of Culture

… instead of Abstract Business Models

• Shared meanings: The emergent understandings that are created by group
members as they interact with each other.

• “Root metaphors” or integrating symbols: The ways that groups evolve to

characterize themselves.

• Formal rituals and celebrations: The ways in which a group celebrates key
events that reflect important values.
Categories of Culture

Culture Category
Macrocultures Nations, ethnic and religious groups, occupations
that exist globally
Organizational Cultures Private, public, nonprofit, government organizations
Subcultures Occupational groups within organizations
Microcultures Microsystems within or outside organizations
(small task forces)
Deciphering Organizational Culture

Visible Culture:
• Artifacts
• Behaviors
• Expressed Beliefs &Values
Waterline

Hidden Culture:
• Basic Assumptions
• Deep Values
Three Levels of Organizational Culture

• Visible and feelable structures and processes

Artifacts • Observed behavior
✔ Difficult to decipher

• Ideals, goals, values, aspirations

• Ideologies
Espoused Beliefs • Rationalizations
and Values ✔ Role perception theory: Stanford Prison Experiment
✔ May or may not be congruent with behavior and other
artifacts

• Unconscious, taken-for-granted beliefs and values

• Determine behavior, perception, thought, and feeling.
Basic Underlying ✔ Double-loop learning, Goggle assumption military
Assumptions ✔ Work experience is predictor of success.
✔ Money is a good motivator assumption.
✔ Homoecomicus versus Homosapiens
Visible Culture: Artifacts

Artifacts:
• Easy to observe
• Difficult to understand
Visible Culture: Artifacts
Visible Culture: Stories
Deciphering Organizational Culture

Visible Culture:
• Artifacts
• Behaviors
• Expressed Beliefs &Values
Waterline

Hidden Culture:
• Basic Assumptions
• Deep Values
Visible Culture: Espoused values and beliefs
Espoused Values
Espoused values
Espoused values and beliefs

Statement of purpose
Reason organization exists

Should be unique
Espoused Values: Purpose Statement

What could this indicate

about the organizational
culture?
Espoused Values: Mission Statement
Espoused Values: Mission Statement

help individuals achieve their serious,

long-term financial goals while
understanding their needs and
implementing tailored solutions
Espoused Values: Mission Statement
Espoused Values: Mission Statement

Who knows their

organization’s mission
statement?
• Share examples

How does it align with

your experience at the
organization?
Deciphering Organizational Culture

Visible Culture:
• Artifacts
• Behaviors
• Expressed Beliefs &Values
Waterline

Hidden Culture:
• Basic Assumptions
• Deep Values
Hidden culture: Underlying Assumptions

•How identify underlying assumptions if

people aren’t aware of them?

•Intense observation over extended

period of time
• Conversations
• Formal and informal interactions
• Communication
Corporate Culture
Organizational Culture

Organizational culture refers to a system of shared meaning

held by members that distinguishes the organization from
other organizations.

✔ how a group of people behave

✔ what people value and appreciate
✔ what people believe is right and fair, etc.
Common Characteristics of Organizational Culture
Culture as a Descriptive Term

• Organizational culture is concerned with employees’ perceptions

of the characteristics of the culture, not whether they like them.

✔ Does it encourage teamwork?

✔ Does it reward innovation?

✔ Does it stifle initiative?

• It differs from job satisfaction:

✔ Job satisfaction is evaluative.

✔ Organizational culture is descriptive.

Common Characteristics of Organizational
Culture
Do Organizations Have Uniform Cultures?
• Most organizations have a dominant culture and numerous sets of
subcultures.

• The dominant culture expresses the core values a majority of members

share and that give the organization distinct personality.

✔ Subcultures tend to develop in large organizations to reflect

common problems, situations, or experiences that members face.
Differentiation with the Growth of Subcultures

• Functional/occupational differentiation
• Geographical decentralization
• Differentiation by product, market, or technology
• Divisionalization
• Differentiation by hierarchical level, span of control, power
distance
Common Characteristics of Organizational Culture

Strong versus Weak Cultures

• Strong culture: Core values are intensely held and widely shared.

✔ The more members who accept the core values and the greater
their commitment, the stronger the culture and the greater its
influence on member behavior.
The Concept of Culture

• Structural stability: Culture is something that survives even when some

members of the organization depart. Culture is hard to change because
group members value stability in that it provides meaning and
predictability.

• Depth: unconscious part of a group, less tangible and less visible

• Breadth: every part of organization.

• Patterning or integration: This derives from the human

need to make our environment as sensible and orderly as
we can. Disorder or senselessness makes us anxious, so
we will work hard to reduce that anxiety by developing a
more consistent and predictable view of how things are
and how they should be.
MIT Organizational Culture Study

• Companies in the Culture 500 are divided into 33 clearly

defined industries, with an average of 18 companies per
industry.

• A total of 64 distinct values were found.

• Due to the complexity & differentiation between the

industries, the list was narrowed down to “The Big 9
Cultural Values,” which held constant across all
industries and businesses.
MIT Organizational Culture Study

• Who: Research team from MIT Sloan, specifically Don Sull, Charlie
Sull, and Andrew Chamberlain.

• What: Leading world companies were targeted using Glassdoor

reviews that were taken ONLY from the United States.

• When: Project development took place over the course of 3+ years

due to NLP Algorithm complexity.

• Why: Culture affects company performance.

• How: Researchers analyzed over 1.2 million reviews using a natural

language processing (NLP) methodology that accurately classifies
free text into more than 90 culture-related topic.
Culture 500

• Provides data-based view of the corporate cultures of some of the

largest and most powerful organizations in the world.

• Corporate leaders can gauge whether employees believe they are

living up to their stated values.

• Entrepreneurs can use the Culture 500 to assess the cultural fit
between their startup and a large corporation before entering into a
partnership or being acquired.

• Identifies areas where some of the world’s most influential

companies can improve their culture.

• https://sloanreview.mit.edu/culture500
Agility

• Employee can respond quickly and effectively to changes in the

marketplace and seize new opportunities.

• Externally, it can flexibly respond to market changes,

technological innovations, customer feedback and government
supervision; internally, it can be open and inclusive, with a flat
structure and continuous evolution, without the need for
frequent subversion, and it is more tolerant of the uncertainty
and ambiguity in business operations.

• Example: Nokia, Kodak and Motorola - Insufficient agility

Collaboration

• Employees work well together within their team and

across different parts of the organization.

• Enables individuals to work together to achieve a

defined and common business purpose

• When companies exercise this value, their employees

are cohesive and productive

• Fast food and retail apparel are some industries that

have this down to a science; HP is a great example.
Performance

• Company rewards results through compensation, informal

recognition, and promotions, and deals effectively with
underperforming employees.

• The insurance and semiconductor industries stand out when

it comes to performance, and Goldman Sachs is a leader.

• Performance is deemed to be the fulfillment of an obligation,

in a manner that releases the performer from all liabilities
under the contract.
Customer

• Employees put customers at the center of everything that

they do, listening to them and prioritizing their needs

• Companies that are customer focused (Amazon for example)

build products based on what their customers are asking for,
NOT what their competitors are developing.
Diversity

• Company promotes a diverse and inclusive workplace where no one is

disadvantaged because of their gender, race, ethnicity, sexual orientation,
religion, or nationality.

• Diverse workplace helps people become more comfortable and helps with overall
productivity. More perspectives when working in groups.

• By committing to values like diversity, integrity, and respect, influential

companies can raise the bar of what is possible and desirable for competitors,
suppliers, partners, and startups. Organizations that compromise their values
breed cynicism and undermine the norms required for society as a whole to
flourish.
Execution

• Employees are empowered to act, have the resources they

need, adhere to process discipline, and are held accountable
for results
Innovation

• Company pioneers novel products, services, technologies, or ways

of working.

• Consistent with the typical company’s official culture, which

emphasizes customer obsession and innovation,

• We see that Amazon employees were most positive about

innovation

• Employee reviews can predict industry changes, such as fintech

startups’ disruption of financial services — including regional
banks, insurance, and investment services industries.
Innovation
Respect
• Employee demonstrate consideration and courtesy for others, and treat each
other with dignity. Create a respect work environment will bring a huge
unexpected benefits to the company.

✔ Respect contributes to job satisfaction

✔ Respect increases employee engagement

✔ Respect creates a fair environment

✔ Respect is a stress reducer

✔ Respect improves knowledge sharing

✔ Respect boosts the bottom line

Cultural Typologies of Organizations

• Power oriented: Organizations dominated by

charismatic/autocratic founders.

Harrison (1979) • Achievement oriented: Organizations dominated by task

and results.
Handy (1978)
• Role oriented: Public bureaucracies.

• Support oriented: Nonprofit or religious organizations.

• Hierarchy: Internal focus and stable; structured, well coordinated.

• Clan: Internal focus and flexible; collaborative, friendly, family

Cameron like.
and
• Market: External focus and stable; competitive, results oriented.
Quinn (1999, 2006)
• Adhocracy: External focus and flexible; innovative, dynamic,
entrepreneurial.
Typologies That Focus on Assumptions About
Authority and Intimacy (Etzioni’s,1975)
• The individual is essentially captive for
physical or economic reasons and must,
Coercive Organizations: therefore, obey whatever rules are imposed
by the authorities.
• Examples: Prisons, military academies and
units.

• The individual provides “a fair day’s work

for a fair day’s pay” and, therefore, abides by
Utilitarian Organizations: whatever rules are essential for the
performance of the organization.
• Examples: Business organizations of all sorts.

• The individual contributes his or her

commitment and accepts legitimate authority
Normative Organizations: because the goals of the organization are
basically the same as the individual’s goals.
• Examples: Churches, political parties.
Three Generic Subcultures

The Operator Subculture

The Engineering/
Design Subculture

The Executive Subculture

Which organizational culture is best?

Depends . . .
 Creating
Organizational
Culture
Culture Begins…

•Cultures derives from 3 sources:

1. Beliefs, values, and assumptions of founders
2. Learning experiences of group members as the
organization evolves
3. New beliefs, values, and assumptions brought in by
new members and new leaders

•As the organization succeeds in accomplishing its primary

task, the leader’s assumptions become shared and part of
the culture of the organization.
Creating and Sustaining Culture

Culture creation occurs in 3 ways:

1. Founders hire employees who think and feel

the way they do
2. Employees are indoctrinated and socialized into
the founders’ way of thinking
3. Founders’ own behavior encourages employees
to identify with them and internalize their
beliefs, values, and assumptions
Creating and Sustaining Culture

How organizational cultures form

Top
management
Philosophy of
Selection
organization’s Organizational
criteria
founders Culture

Socialization
Creating and Sustaining Culture

A Socialization Model
Outcomes

Socialization process Productivity

Prearrival Encounter Metamorphosis Commitment

Turnover
Person-Job Fit vs. Person-Organization Fit

Other Dimensions of Fit

• Although person-job fit and person-organization fit are

considered the most salient dimensions for workplace outcomes,
other avenues of fit are worth examining.

✔ Person-group fit
✔ Person-supervisor fit
Organizational Structure
Identify Seven Elements of an
Organization’s Structure
Key Design Questions and Answers for Designing the Proper
Organizational Structure
The Key Question The Answer Is Provided by
1. To what degree are activities subdivided into Work specialization
separate jobs?
2. On what basis will jobs be grouped together? Departmentalization
3. To whom do individuals and groups report? Chain of command
4. How many individuals can a manager efficiently Span of control
and effectively direct?
5. Where does decision-making authority lie? Centralization and decentralization
6. To what degree will there be rules and Formalization
regulations to direct employees and
managers?
7. Do individuals from different areas need to Boundary spanning
regularly interact?
Identify Seven Elements of an
Organization’s Structure
• Work specialization: the division of labor into separate
activities.
– Repetition of work.
– Training for specialization.
– Increasing efficiency through invention.
– Henry Ford
Identify Seven Elements of an
Organization’s Structure
Economies and Diseconomies of Work Specialization
Identify Seven Elements of an
Organization’s Structure
• Grouping jobs together so common tasks can be
coordinated is called departmentalization.
– By functions performed.
– By type of product or service the organization
produces.
– By geography or territory.
– By process differences.
– By type of customer.
Identify Seven Elements of an
Organization’s Structure
• Chain of command: an unbroken line of authority that
extends from the top of the organization to the lowest
echelon and clarifies who reports to whom.
– Once a basic cornerstone in organization design.
– Two complementary concepts:
 Unity of command
 Authority
Identify Seven Elements of an
Organization’s Structure
Contrasting Spans of Control
Identify Seven Elements of an
Organization’s Structure
• Centralization and Decentralization
– Centralization refers to the degree to which
decision making is concentrated at a single point in
the organization.
– Advantages of a decentralized organization:
• Can act more quickly to solve problems.
• More people provide input into decisions.
• Employees are less likely to feel alienated from
those who make decisions that affect their work
lives.
Identify Seven Elements of an
Organization’s Structure
• Formalization: the degree to which jobs within the
organization are standardized.
– A highly formalized job means a minimum amount of
discretion.
– Low formalization – job behaviors are relatively non-
programmed, and employees have a great deal of
freedom to exercise discretion in their work.
Common Organizational Frameworks and
Structures
A Simple Structure (Jack Gold’s Men’s Store)
Common Organizational Frameworks and
Structures
• Simple structure: the manager and the owner are one
and the same.
– Strengths:
• Simple, fast, and flexible.
• Inexpensive to maintain.
• Accountability is clear.
– Weaknesses:
• Difficult to maintain in anything other than small
organizations.
• Risky—everything depends on one person.
Common Organizational Frameworks and
Structures
• A bureaucracy is characterized by standardization.
– Highly routine operating tasks.
– Very formalized rules and regulations.
– Tasks grouped into functional departments.
– Centralized authority.
– Narrow spans of control.
– Decision making that follows the chain of command.
Common Organizational Frameworks and
Structures
• Strengths of bureaucracy:
– Ability to perform standardized activities in a highly
efficient manner.
• Weaknesses of bureaucracy:
– Subunit conflicts.
– Unit goals dominate.
– Obsessive behavior.
– Covering weak management.
Common Organizational Frameworks and
Structures
• Two aspects of bureaucracies:
• Functional structure: groups employees by their
similar specialties, roles, or tasks.
• Divisional structure: groups employees into units
by product, service, customer, or geographical
market area.
Common Organizational Frameworks
and Structures (
• The matrix structure combines two forms of
departmentalization—functional and product:
– The strength of functional is putting specialists
together.
– Product departmentalization facilitates coordination.
• It provides clear responsibility for all activities
related to a product, but with duplication of
activities and costs.
Alternate (???) Design Options
• The Virtual Organization
– The essence of the virtual organization is that it is
typically a small, core organization that outsources
major business functions.
• Also referred to as a modular or network
organization.
• It is highly centralized, with little or no
departmentalization.
Mechanistic vs. Organic Structural
Models
Mechanistic versus Organic Models
Implications for Managers
Organizational Structure: Its Determinants and Outcomes
from