Organizational Culture

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Organizational Culture

Learning Objectives

After reading this chapter, you should be able to: • Describe the elements of organizational culture. • Discuss the importance of organizational subcultures. • List four categories of artifacts through which corporate culture is communicated. • Identify three functions of organizational culture. • Discuss the conditions under which cultural strength improves corporate performance. • Discuss the effect of organizational culture on business ethics. • Compare and contrast four strategies for merging organizational cultures. • Identify five strategies to strengthen an organization’s culture.




o an outsider, PeopleSoft is one of the loopiest places on the planet. The Pleasanton, California, business management software company has nerf ball shootouts and minigolf tournaments in the hallways. Dress-down day is every day of the week. A white collar is usually a T-shirt. The bagels and gourmet coffee are free. Having fun is so ingrained that many employees—called PeoplePeople—say it’s the best place to have a bad day. PeopleSoft also values egalitarianism— treating everyone with respect and minimal status differences. Executives don’t have secretaries, special perks, or grandiose offices. “Don’t kiss up and slap down,” PeopleSoft cofounder Dave Duffield reminds everyone. In other words, give the bagel delivery guy the same respect as the company president. PeopleSoft is also extreme on technology and flexible customer service. Job applicants use an automated voice response system to accept their job offer. On the first day of work, newcomers are outfitted with a notebook computer and a backpack. They also receive tools for posting personal web pages on the company intranet. “There’s an unstated expectation that this is how things are done at the company,” says Steve Zarate, PeopleSoft’s chief information officer. This corporate culture has contributed to Nerf ball shootouts and minigolf PeopleSoft’s success. The company has grown tournaments in the hallways reveal some faster than SAP and Oracle and is now the of PeopleSoft’s corporate culture. second largest provider of business management software (after SAP). “Our true compe[K. Miller. Used with permission.] tence is our culture,” explains Dave Duffield. “That’s what attracts people and keep them here. It also helps sell customers. Customers want to work with companies that are competent, trustworthy, and fun.”1 497


Chapter Sixteen eopleSoft has a distinctive organizational culture. Moreover, it is a culture that seems to work well for the computer software firm’s competitiveness. Organizational culture is the basic pattern of shared assumptions, values, and beliefs considered to be the correct way of thinking about and acting on problems and opportunities facing the organization. It defines what is important and unimportant in the company. You might think of it as the organization’s DNA—invisible to the naked eye, yet a powerful template that shapes what happens in the workplace.2 This chapter begins by examining the elements of organizational culture and how culture is deciphered through artifacts. This is followed by a discussion of the relationship between organizational culture and corporate performance, including the effects of cultural strength, fit, and adaptability. Then we turn to the issue of mergers and corporate culture. The last section of this chapter looks at specific strategies for maintaining a strong organizational culture.

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Elements of Organizational Culture
As we see in Exhibit 16.1, the assumptions, values, and beliefs that represent organizational behavior operate beneath the surface of organizational behavior. They are not directly observed, yet their effects are everywhere. Assumptions represent the deepest part of organizational culture because they are unconscious and taken for granted....
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