Daft OTAD 13e PPT Ch11

Chapter 11
Organizational Culture and

Control
Chapter
11
Organization Theory and Design
Thirteenth Edition
Richard L. Daft
Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or part.
Learning Objectives
1. Define organizational culture and identify symbols, rituals,
stories, or other observable elements that signal cultural
values in a company you are familiar with.
2. Describe the four types of organizational culture.
3. Explain the relationship between culture, corporate values,
and performance.
4. Explain how managers create a high-performance culture.
5. Contrast a decentralized culture of control with a hierarchical
culture of control.
6. Explain the feedback control model.
7. Describe the balanced scorecard’s value for organizational
control.
Daft, Organization Theory and Design, 13e. © 2021 Cengage. All Rights Reserved. May not be scanned, copied or 2
What is Culture?
• Culture is the set of values, norms, guiding
beliefs, and understandings that are shared by
members of an organization
• It is taught to new members as the correct
way to think, feel, and behave
• Organizational culture exists at two levels:
– Visual artifacts and observable symbols
– Underlying values, assumptions, beliefs, and
thought processes
Levels of Corporate Culture
Emergence and Purpose of Culture
• Culture provides sense of organizational identity
• It serves two critical functions in organizations:
– To integrate members so they know how to relate to one
another
– To help organization adapt to external environment
• Internal integration: Members develop a collective
identity and understand how to work together
effectively
• External adaptation: How the organization meets
goals and deals with outsiders
Interpreting/Shaping Culture
• Aspects of the organization that can help decode
the organizational culture AND be used or changed
by managers to shape and influence culture
include:
– Rites and ceremonies
– Stories and sayings
– Symbols
– Organization structures
– Power relationships
– Control systems
Observable Aspects of Organizational
Culture
Organization Chart for Nordstrom Inc.
Culture and Organization Design
• Cultures can be assessed along
many dimensions, such as:
– (1) the extent to which the
competitive environment
requires flexibility or stability
– (2) the extent to which the
organization’s strategic focus
and strength are internal or
external
• Four categories of culture are
associated with these
differences: adaptability,
achievement, clan, and
bureaucratic
Culture Strength and
Organizational Subcultures
• Culture strength is the degree of agreement
among members of an organization about
specific values
• Subcultures reflect the common problems,
goals, and experiences of a team or department
• Subcultural differences can lead to conflicts
between departments or divisions
• Cultural conflicts can be particularly challenging
in the case of mergers and acquisitions
Culture and Performance
• Culture has a significant impact on
organizational performance
• Successful companies are those in which
managers are evaluated and rewarded for
paying careful attention to cultural values and
business performance
• Such companies have high-performance
cultures
Combining Culture and
Performance
The Cultural Focus of Control Systems
• Managers consider both control of the overall
organization and control of departments,
teams, and individuals
• Many companies are adopting a decentralized
control process rather than a hierarchical
control process
Hierarchical and Decentralized Methods of
Control (slide 1 of 2)
Hierarchical Control Decentralized Control
Basic People are incapable of self-discipline People work best when they are fully
assumptions and cannot be trusted. They need to committed to the organization.
be monitored and controlled closely.
Actions Uses detailed rules and procedures Features limited use of rules; relies on
and formal control systems. shared values, group and self-control,
selection, and socialization.
Uses top-down authority, formal
hierarchy, position power, Relies on flexible authority, flat
supervision, quality control structure, and expert power;
inspectors. everyone monitors quality.
Relies on task-related job Relies on results-based job
descriptions. descriptions; emphasizes goals to be
achieved.
Hierarchical and Decentralized Methods of
Control (slide 2 of 2)
Hierarchical Control Decentralized Control
Actions Emphasizes extrinsic rewards (pay, Emphasizes extrinsic and intrinsic
(continued) benefits, status). rewards (meaningful work,
opportunities for growth).
Features rigid organizational culture
and distrust of cultural norms as Features adaptive culture; culture
means of control. recognized as means for uniting
individual, team, and organizational
goals for overall control.
Consequences Employees follow instructions and do Employees take initiative and seek
just what they are told. responsibility.
Employees feel a sense of Employees are actively engaged and
indifference toward work. committed to their work.
Employee absenteeism and turnover Employee turnover is low.
is high.
Feedback Control Model
• Feedback is used to
determine whether
organizational
performance meets
established standards to
help the organization
attain
• Systems for organizational
control consist of the four
key steps in a feedback
control model
Organization Level: The Balanced Scorecard
(slide 1 of 2)
• The balanced scorecard (BSC) is a comprehensive

management control system that balances traditional
financial measures with operational measures relating to a
company’s critical success factors
• A BSC considers four major perspectives:
– Financial performance
– Customer service
– Internal business processes
– Organizational capacity for learning and growth
• Managers use these perspectives to identify key
performance indicators (KPIs) that the organization will track
Major Perspectives of the Balanced
Scorecard
Organization Level: The Balanced Scorecard
(slide 2 of 2)
• BSCs helps top executives and upper-level managers

see how organizational performance results from
cause–effect relationships
• A strategy map provides a visual representation of
the key drivers of an organization’s success and
shows the links between specific outcomes in one
area and performance in another area
• Strategy maps are typically complex, with concrete,
specific goals, desired outcomes, and metrics
relevant to the particular business
A Strategy Map for Performance
Management
Department Level: Behavior Versus
Outcome Control
• Lower-level managers use two different
approaches to evaluating and controlling
performance and allocating rewards at the
department level:
– Behavior control focuses on how people do their
job and is based on managers’ direct observation
and supervision of employee actions
– Outcome control focuses on what people
accomplish in their job and is based on monitoring
and rewarding employee results
Organizational Design Essentials (slide 1 of 2)
• Cultural values can contribute to organizational
success.
• Organizational cultures integrate members so that
they know how to relate to one another and help the
organization adapt to the external environment.
• Organizational culture should reinforce the strategy
and structure that the organization needs to be
successful in its environment.
• Even in organizations with strong cultures, several
sets of subcultures may emerge.
Organizational Design Essentials (slide 2 of 2)
• The right culture can enable solid business
performance through the alignment of motivated
employees with the mission and goals of the
company.
• All effective control systems involve the use of
feedback.
• The feedback control model includes setting strategic
goals, establishing metrics and standards of
performance, comparing actual performance to
standards, and taking corrective action as needed.

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Chapter 11

Organizational Culture and

• The balanced scorecard (BSC) is a comprehensive

• BSCs helps top executives and upper-level managers

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