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LEADERSHIP
May be defined as the act of influencing others to work toward a goal. Leadership is the ability of an
individual or a group of individuals to influence and guide followers or other members of an
organization.
Types of Leadership
Formal leadership – that holds a position of authority that may utilize the power that comes from
position, as well as their personal power to influence others.
Informal leadership- are without a formal position of authority within the organization but demonstrate
leadership by influencing others through personal forms of power.
WHO IS A LEADER?
INTELLIGENCE
General mental ability which psychologists refers to as “g” and which often called “IQ” in everyday
language has been related to a person’s emerging as a leader within a group. Specifically, people who
have high mental abilities are more likely to be viewed as leaders in their environment.
In addition to having IQ, effective leaders tend to have high emotional intelligence. People with high EQ,
demonstrate a high-level self-awareness, motivation, empathy, and social skills.
Psychologist have proposed various systems for categorizing the characteristics that make up an
individual’s unique personality; one of the most widely accepted is the “Big Five” model.
Openness- Being curious, original, intellectual, creative, and open to new ideas.
SELF-ESTEEM- is not one of the Big Five personality traits, but it is an important aspect of one’s
personality. The degree to which a person is at peace with oneself and has an overall positive
assessment of one’s self worth and capabilities seem to be relevant to whether someone is viewed as a
leader.
It is possible that those with high self-esteem have greater levels of self-confidence and this affects their
image in the eyes of the followers. Self-esteem may also explain the relationship between some physical
attributes and leader emergence.
INTEGRITY - Research also shows that people who are effective as leaders tend to have a moral compass
and demonstrate honesty and integrity. Spiritual values and practices related to leadership
effectiveness. Leaders whose integrity is questioned lose their trustworthiness, and they hurt their
company’s business along the way.
There are also some traits that are negatively related to leader emergence and being successful in that
position. For example, agreeable people who are modest, good natured, and avoid conflict are less likely
to be perceived as leaders.
Despite problems in trait approaches, these findings can still be useful to managers and companies. For
example, knowing about leader traits helps organizations select the right people into positions of
responsibility. The key to benefiting from the findings of trait researchers is to be aware that not all
traits are equally effective in predicting leadership potential across all circumstances. Some
organizational situations allow leader traits to make a greater difference.
Leaders Behavior- is the traits and characteristics that make some effective as a leader. Leaders utilize
their behavior to help them guide, direct, and influence the work of their team
1. Task-oriented leader behavior- involve structuring the roles of subordinates, providing them
with instructions, and behaving in ways that will increase the performance of the group.
2. People-oriented leader behaviors- include showing concern for employee feelings and treating
employee with respect.
Leader Decision Making- Focused on how leaders actually make decisions and the influence of decision-
making styles on leader effectiveness and employee reaction.
1. Authoritarian decision making- occurs when leaders make the decision alone without
necessarily involving employees in the decision-making process.
2. Democratic decision making- occurs when leaders and employees participate in the making of
the decisions.
3. Laissez-faire decision making- occurs when leaders leave employees alone to make the
decision. The leader provides minimum guidance and involvement in the decision.
The earliest and one of the most influential contingency theories was developed by Frederick Fiedler.
Fledler, F.(1967). A theory of leadership effectiveness. According to the theory, a leader's style is a
measured by a scale called Least Preferred Coworker scale or LPC. People who are filling out this survey
are asked to think of a person who is their least preferred coworker. Then, they rate this person in terms
of how friendly, nice and cooperative this person is.
The theory predicts that in "favorable" and "unfavorable" situation, a low LPC leader- one who has a
feeling of dislike for coworkers who are difficult to work with- would be successful. When situational
favorableness is medium, a high LPC leader- one who is able to personally like coworkers who are
difficult to work with- is more likely to succeed.
Situational Leadership
Another contingency approach to leadership is Kenneth Blanchard and Paul Hersey's Situational
Leadership Theory or SLT which argues that leaders must use different leadership styles depending on
their followers' development leader.
According to this model, employee readiness (defined as a combination of their competence and
commitment levels) is the key factors determining the proper leadership style.
Robert's Houses path-goal theory of leadership is based on the expectancy theory of motivation. House
R.J.(1971). A path goal theory of leader effectiveness. The expectancy theory of motivation suggests that
employees are motivated when they believe or expect that;
According to the path-goal theory of leadership, the leaders main job is to make sure that all three of
these condition exist. Thus, leaders will create satisfied and high-performing employees by making sure
that employee efforts leads to performance, and their performance is rewarded by desired rewards.
Yale School of Management Professor Victor Vroom and his colleagues Philip Yetton and Arthur Hago
developed a decision-making tool to help leaders determine how much involvement they should seek
when making decisions.
The model starts by having leaders answer several key question and working their way through a
decision tree based on their responses
Decide - The leader makes the decision alone using available information
Consult Individually- The leader obtains additional information from group members before making the
decision alone.
Consult as a group- The leader shares the problem with group members individually and makes the final
decision alone.
Facilitate- The leader shares information about the problem with group members collectively, and acts
as a facilitator. The leader sets the parameter of the decision.
Transformational Leadership theory- is a recent additional to the literature, but more research has
been conducted on this theory than all the contingency theories combined.
Transformational leaders – who lead employees by aligning employee goals with the leader’s
goal.
Transactional leaders – who ensure that employees demonstrate the right behaviors and
provide resources in exchange. These leaders provide contingent rewards and manage by
exception.
1. Charisma – refers to behaviors leaders demonstrate that create confidence in commitment to,
and admiration for the leader.
2. Inspirational motivation - coming up with a vision that is inspiring to others.
3. Intellectual stimulation – which means that they challenge organizational norms and status and
they encourage employee to think creatively and work harder.
4. Individual consideration – which means that they show personal care and concern for the well
being of their followers.
Servant leadership - Is a leadership approach that defines the leader’s role as serving the needs of the
others. According to this approach, the primary mission of the leader is to develop employees and help
them reach their goals.
Authentic leadership- A leadership approach advising leaders to stay true to their own values.
Ethics- refer to the desirable and appropriate values and morals according to an individual or the society
at large. Ethics deal with the purity of individuals and their intentions.
Ethical decisions are complex and even to people who are motivated to do the right thing, the moral
component of decision may not be obvious.
Is leadership universal?
People who are perceived as leaders in one society may have different traits compared to people
perceived as leaders in a different culture, because each society has a concept of ideal leader
prototypes.
What is POWER ?
Power is the ability of one person or department in an organization to influence other people to bring
about desired outcomes.
Positive
Leadership responsibilities
Organizational and Personal Goals
Inspire Commitment
Creativity
Negative
Bully Bosses
Manipulator
Sexual Harassment
-Can refer to small things such as how people tend to face forward in an elevator. There’s no rule listed
in elevator saying which way to face, et it is expected that everyone will face forward.
There are three classic sets of studies illustrate how important it is to create checks and balances to help
individuals resist the tendency to conform or to abuse authority, these are the MILGRAM STUDY, ASCH
STUDY, and ZIMBARDO STUDY
Dependency
- the more that a person or unit is dependent on you, the more power you have
- You know how dependent you are on someone when you answer the following three key questions:
Scarcity- Refers to the uniqueness of a resource
-The more vital the resources that you control, the more power you will have
Substitutability- Refers to one’s ability to find another option that works as well as the one offered
The harder it is to find a substitute, the more dependent the person becomes and the more power
someone else has over them
Types of POWER
Legitimate Power – is power you derive from your formal position or office held in the organization’s
hierarchy of authority
Example: The president of a corporation has certain powers because of the office he holds in the
corporation
Reward Power – simply the power of a manager to give some type of reward to an employee as a
means to influence the employee to act. Rewards can be tangible and Intangible
Coercive Power – is the ability of a manager to force an employee to follow an order by threatening the
employee with punishment if the employee does not comply with the order
Expert Power – based upon employees’ perception that a manager or some member of organization has
a high level of knowledge or a specialized set of skills that other employees do not possess
Information Power – similar to expert power but differs in its source. It is a power that comes from
access to and control over information
Example: Knowing price information gives a person information power during negotiation
Referent Power – stems from the personal characteristics of the person such as the degree to which we
like, respect, and want to be like them. It is often called Charisma
Influence- The capacity or power of persons or things to be compelling force on or produce effects on
the actions, behavior, opinions, etc., of others
Resistance – occurs when the influence target does not wish to comply with the request and either
passively or actively repels the influence attempt
Compliance – occurs when the target does not necessarily want to obey, but they do.
Commitment – occurs when the target not only agrees to the request but also actively supports it as
well.
9 Influence Tactics
Rational Persuasion- a tactic that is used to try and convince someone with a valid reason, rational logic,
or realistic facts
Inspirational appeals – a tactic that builds enthusiasm by appealing to emotions, ideas and/ or values
Consultation- a tactic that focuses on getting others to in the planning process, making decisions, and
encourage changes
Ingratiation- a tactic that emphasizes on getting someone in a good mood prior to making a request. It
includes being friendly, helpful, and using praise or flattery
Personal appeals- a tactic that refers to friendship and loyalty while making a request
Exchange – A tactic that suggests that making express or implied promises and trading favors
Coalition tactics- refers to a tactic that prescribes getting others to support your effort to persuade
someone
Legitimating tactics- this tactic suggests that basing a request on one’s authority or right, organizational
rules or policies, or express or implied support from superiors, is a best.
Impression Management
1. Nonverbal Impression Management – includes the clothes you choose to wear and your demeanor
2. Verbal Impression Management – includes tone of your voice, rate of speech, what you choose to say
and how you say it
3. Behavior Impression Management – includes how you perform on the job and how you interact with
others
Direction of Influence
Upward Influence – the ability to influence your boss and others in position higher than yours. It may
include appealing to a higher authority or citing the firm’s goals as an overarching reason for others to
follow your cause
Peer Influence – occurs all the time. But to be effective within organizations, peers need to be willing to
influence each other without being destructively competitive
ORGANIZATIONAL POLITICS – Involves intentional acts of influence to enhance or protect the self-
interest of individuals or groups
INDIVIDUAL ANTECEDEN T
Political Skill- Ability to relate to others, self-monitor, alter their reaction depending upon the situation
they are in and inspire confidence and trust
Political Skill- When a person expects that they will be successful in changing an outcome, they are
more likely to engage in political behavior
Internal Locus of Control- believe that they can make a difference in organizational outcomes.
ORGANIZATIONAL ANTECEDENT
Scarcity of Resources- breeds politics. When resources such as monetary incentives or promotions are
limited, people see the organization as more political.
Performance Evaluations- This human resource practice can lead to greater political behavior such as
impression management, throughout the organization.
Role Ambiguity- role ambiguity allows individuals to negotiate and redefine their roles.
Democratic Decision Making- leads to more political behavior. Since many people have a say in the
process of making decisions, there are more people available to be influenced.
Social Networking
SOCIAL NETWORK- social networking refers to the use of internet-based social media sites to stay
connected with friends, family, colleagues, customers, or clients. Social networking can have a social
purpose, a business purpose, or both, through sites like Facebook, Twitter, LinkedIn, and Instagram.
Social networking is also a significant base for marketers seeking to engage customers.
- Social networking involves the development and maintenance of personal and business relationships
using technology. This is done using social networking sites, such as Facebook, Instagram, and Twitter.
These sites allow people and corporations to connect with one another so they can develop
relationships and so they can share information, ideas, and messages.
- Family members who are far apart may remain connected through personal social networking sites like
Facebook.
- Social networking is commonly used by marketers to increase brand recognition and encourage brand
loyalty.
- Marketers use social networking to improve conversion rates. Building a following provides access to
and interaction with new, recent, and old customers. Sharing blog posts, images, videos, or comments
on social media allows followers to react, visit the company’s website, and become customers.
ADVANTAGE
DISADVANTAGE
Social networks are important because they allow people to develop relationships with others with
whom they might not otherwise be able to connect. It also helps boost business productivity when used
for public relations, marketing, and advertising purposes.
-Power brings a special need for ethics, because circumstances of power make it easy for misuse to
occur
Power around the Globe
-Without a culture emphasizing the importance of integrity, honesty, and trust, the mandatory ethics
training programs are often doomed to fail.
-The values, norms, and beliefs of a company may also be at least partially imposed by the national
culture.
-Power can lead to conformity from those around us and this occurring conformity can breed corruption
Organizational structure- Refers to how the work of individuals and teams within an organization is
coordinated. In order to achieve organizational goals and objectives individual work needs to be
coordinated and managed.
An organizational structure defines show activities such as task allocation coordination and supervision
are directed toward the achievement of organizational aims.
Centralization- is the process of concentrating power and authority in the hands of senior management.
On the other hand, decentralization refers to the top down delegation of power and authority to
functional-level management.
Formalization- Is the extend to which policies procedures job descriptions and rules are written and
explicitly articulated. In other words formalized structures are those in which there are many written
rules and regulations. These structures control employee behavior using written rules and employees
have little autonomy to make decision on a case-by-case basis.
A formalized structure is associated with reduced motivation and job satisfaction as well as a slower
pace of decision making.
Hierarchical Levels
Another important element of a company’s structure is the number of level it has in the hierarchy.
Keeping the side of the organization constant tall structures have several layers of management
between frontline employees and the top level while flat structures consist of few layers. A closely
related concept is span of control or the number of employees reporting to a single manager.
In organizations using divisional structures departments represent the unique products, service,
customers, or geographic locations the company is serving.
Functional structures tend to be effective when an organization does not have a large number of
products and services requiring special attention. When a company has a diverse product line, each
product will have unique demands, deeming traditional structures less useful for promptly addressing
customer demands and anticipating market changes. Functional structures are also more effective in
stable environments that are slower to change. In contrast, organizations using product departments
are more agile and can perform better in turbulent environments. The type of employee who will
succeed under each structure is also different. Research shows that when employees work in product
departments in turbulent environments, because activities are diverse and complex, their performance
depends on their general mental abilities.
Mechanistic Structures- Similar to bureaucracies as they are highly formalized and centralized.
Communication tends to follow formal channels, and employees are given specific job descriptions
delineating their roles and responsibilities. Mechanistic organizations are often rigid and resist change,
making them unsuitable for being innovative and taking quick action. These forms have the downside of
inhibiting entrepreneurial action and discouraging the use of individual initiative on the part of
employees.
Organic Structures- are flexible, decentralized structures with low levels of formalization.
Communication lines are more fluid and flexible. Employee job descriptions are broader, and employees
are asked to perform duties based on the specific needs of the organization at the time as well as their
own expertise levels. Organic structures tend to be related to higher levels of job satisfaction on the part
of employees. These structures are conducive to entrepreneurial behavior and innovativeness.
MATRIX ORGANIZATION- have a design that combines a traditional functional structure with a product
structure. Instead of completely switching from a product-based structure, a company may use a matrix
structure to balance the benefits of product-based and traditional functional structures. Specifically,
employees reporting to department managers are also pooled together to form project or product
teams. As a result, each person reports to a department manager as well as a project or product
manager.
Boundaryless organization is a term coined by Jack Welch during his tenure as CEO of GE; it refers to an
organization that eliminates traditional barriers between departments as well as barriers between the
organization and the external environment.
One form is the modular organization, in which all nonessential functions are outsourced. The idea
behind this format is to retain only the value-generating and strategic functions in-house, while the rest
of the operations are outsourced to many suppliers. An example of a company that does this is Toyota.
By managing relationships with hundreds of suppliers, Toyota achieves efficiency and quality in its
operations.
Strategic alliances constitute another form of boundaryless design. In this form, similar to a joint
venture, two or more companies find an area of collaboration and combine their efforts to create a
partnership that is beneficial for both parties. In the process, the traditional boundaries between two
competitors may be broken.
LEARNING ORGANIZATIONS- is one whose design actively seeks to acquire knowledge and change
behavior as a result of the newly acquired knowledge. In learning organizations, experimenting, learning
new things, and reflecting on new knowledge are the norms. At the same time, there are many
procedures and systems in place that facilitate learning at all organization levels.
Organizational Change- is the movement of an organization from one state of affairs to another.
Organizational change can take many forms. It may involve a change in a company’s structure, strategy,
policies, procedures, technology, or culture.
Technology- the application of scientific knowledge to the practical aims of human life or, as it is
sometimes phrased, to the change and manipulation of the human environment.
Globalization- is the word used to describe the growing interdependence of the world's economies,
cultures, and populations, brought about by cross-border trade in goods and services, technology, and
flows of investment, people, and information.
Market Conditions- Changes in the market conditions may also create changes as companies struggle to
adjust.
Organizational growth- is a stage a company reaches when it can consider expansion and may look for
additional options to generate more revenue. Organizational growth is often a function of industry
growth trends, business lifecycle and the owners' desire for equity value creation.
Poor performance or underperformance- often shows up as: Failure to do the duties of the role or meet
the standard required. Non-compliance with workplace policies, rules or procedures. Unacceptable
behavior at work. Disruptive or negative behavior that affects co-workers.
Resistance to Change- Changing organization is often essential for a company to remain competitive.
Failure to change may influence the ability of a company to survive.
Active resistance is the most negative reaction to a proposed change attempt. Those who
engage in active resistance may sabotage the change effort and be outspoken objectors to the
new procedures.
1. Disrupted Habits
2. Personality
3. Feelings of Uncertainty
4. Fear of Failure
5. Personal Impact of Change
6. Prevalence of Change
When employees are not prepared, they are more likely to resist the change effort and less likely to
effectively function under the new system.
When vision is exciting and paints a picture of a future that employees would be proud to be part of,
people are likely to be more committed to change.
When employees know what is going to happen, and when and why, they may conquer their discomfort
with change.
People are more likely to accept change if they feel that there is a need for it.
5. Building a Coalition
Instead of trying to get everyone on board at the same time, it may be more useful to convince and
prepare the opinion leaders.
Opinion leaders- people who have strong influence over the behaviors and attitudes of others.
6. Provide Support
Emotional support
Instrumental support
Studies show that employees who participate in planning change efforts tend to have more positive
opinions about change.
8. Executing Change
The organization implements the planned changes on technology, structure, culture, or procedures.
Management has an important role in helping employees cope with stress by displaying support,
patience, and continuing to provide support to employees even after the change is complete.
If people see changes, improvements, and successes along the way, they will be inspired and motivated
to continue the change effort.
12. Refreezing
After the change is implemented, the long-term success of a change effort depends on whether change
becomes part of the company’s culture.
In order to make change permanent, the organization may benefit from sharing the results of the
change effort with employees.
Instead of declaring the victory early, the company is advised to make continuous improvements to how
business is conducted.
Organizations may benefit from rewarding those who embrace the change effort.
16. Make Change a Part of Organizational Culture
If change occurs only in superficial elements, it would be misleading to declare change a success.
● When corporate culture is too rigid and hierarchical, employees have fewer opportunities to develop
their moral intelligence.
● Organizational change is a time when managers are expected to behave ethically, because many
more dilemmas are likely to emerge when an organization is faced with change.
○ Alternatives:
■ Hiring freezes
■ Job sharing
➢ Layoffs- if companies take precautions to soften the blow of layoffs, such downsizing is likely to be
perceived as more ethical.
■ Cutting costs
○ Ringi system- decision making system that involves proposals at lower levels being signed and passed
along to higher level management in an effort to build consensus.
● Singapore and Hong Kong- emphasizes group-centered decision making and higher levels of
centralization. Individualism
● Individualistic cultures attach great importance to autonomy and personal freedom. Therefore, in
these cultures, structures giving responsibility to lower-level employees will be more common.
National cultures
● Germany and France- uncertainty avoidant cultures. They are relatively uncomfortable with change
and prefer structured situations that reduce ambiguity.
● US and China- cultures with low uncertainty avoidance. They are more comfortable with change.
○ US’ influence strategy- change agents are more likely to use inspirational appeals and rational
persuasion.
○ China’s influence strategy- asking for the help of a higher-level person to ensure the success of the
change process.
ORGANIZATIONAL CULTURE- refers to a system of shared assumptions, values, and beliefs that show
employees what is appropriate and inappropriate behavior. Culture is by and large invisible to
individuals. Even though it affects all employee behaviors, thinking, and behavioral patterns, individuals
tend to become more aware of their organization's culture when they have the opportunity to compare
it to other organizations.
An organization's culture may be one of its strongest assets, as well as its biggest liability. In fact, it has
been argued that organizations that have a rare and hard-to-imitate organizational culture benefit from
it as a competitive advantage. Culture, or shared values within the organization, may be related to
increased performance. Researchers found a relationship between organizational cultures and company
performance, with respect to success indicators such as revenues, sales volume, and stock prices.
Organizational culture consists of some aspects that are relatively more visible, as well as aspects that
may lie below one's conscious awareness. Organizational culture can be thought of as consisting of three
interrelated levels.
ASSUMPTIONS -Assumptions are taken for granted, and they are reflect beliefs about humasn
nature and reality.
VALUES -Values are the shared principles, standards, and goals.
ARTIFACTS -Or visible, tangible aspects of organizational culture.
Dimensional Culture- Summarize the extent to which cultural groups are found empirically to differ
from one another in terms of psychological attributes such as values, beliefs, Self construals, personality,
and behaviors
Innovative Culture- companies that have innovative cultures are flexible and adaptable, and experiment
with new ideas. These companies are characterized by a flat hierarchy in which titles and other status
distinctions tend to be downplayed.
Aggressive Culture- A Companies with aggressive cultures value competitiveness and outperforming
competitors: By emphasizing this, they may fall short in the area of corporate social responsibility.
Outcome-oriented cultures as those that emphasize achievement, results, and action as important
values. A good example of an outcome-oriented culture may be Best Buy Co. Inc. Having a culture
emphasizing sales performance, Best Buy tallies revenues and other relevant figures daily by
department.
Stable cultures are predictable, rule-oriented, and bureaucratic. These organizations aim to coordinate
and align individual effort for greatest levels of efficiency. When the environment is stable and certain,
these cultures may help the organization be effective by providing stable and constant levels of output.
People-oriented cultures value fairness, supportiveness, and respect for individual rights. These
organizations truly live the mantra that “people are their greatest asset.” In addition to having fair
procedures and management styles, these companies create an atmosphere where work is fun and
employees do not feel required to choose between work and other aspects of their lives. In these
organizations, there is a greater emphasis on and expectation of treating people with respect and
dignity.
Team-oriented cultures are collaborative and emphasize cooperation among employees. For example,
Southwest Airlines Company facilitates a team-oriented culture by cross-training its employees so that
they are capable of helping each other when needed. The company also places emphasis on training
intact work teams. Detail-oriented cultures are characterized in the OCP framework as emphasizing
precision and paying attention to details. Such a culture gives a competitive advantage to companies in
the hospitality industry by helping them differentiate themselves from others.
Service culture is not one of the dimensions of OCP, but given the importance of the retail industry in
the overall economy, having a service culture can make or break an organization. Some of the
organizations we have illustrated in this section, such as Nordstrom, Southwest Airlines, Ritz-Carlton,
and Four Seasons are also famous for their service culture.
Safety culture provides a competitive advantage, because the organization can reduce accidents,
maintain high levels of morale and employee retention, and increase profitability by cutting workers’
compensation insurance costs. Some companies suffer severe consequences when they are unable to
develop such a culture.
Strength of Culture- A strong culture is one that is shared by organizational members. A culture’s
content is more likely to affect the way employees think and behave when the culture in question is
strong.
So far, we have assumed that a company has a single culture that is shared throughout the organization.
However, you may have realized that this is an oversimplification. In reality there might be multiple
cultures within any given organization.
FOUNDER’S VALUE- A company’s culture, particularly during its early years, is inevitably tied to the
personality, background, and values of its founder or founders, as well as their vision for the future of
the organization.
INDUSTRY DEMANDS- While founders undoubtedly exert a powerful influence over corporate cultures,
the industry characteristics also play a role. Industry characteristics and demands act as a force to create
similarities among organizational cultures.dd
ATTRACTIOAN-SELECTION-ATTRITION
Selection- Just as candidates are looking for people who will fit into their current corporate culture.
Attrition- Refers to the natural process in which the candidates who do fit in will leave the company.
Another way in which an organization’s values, norms, and behavioral patterns are transmitted to
employees is through onboarding (also referred to as the organizational socialization process)
*ONBORDING- Refers to the process through which employees learn the attitudes, knowledge, skills and
behaviors required to function effectively within an organization.
A formal orientation program indoctrinates new employees to the company culture, as well as
introduces them to their new jobs and colleagues.
*Gather Information. Try to finds as much about the company and the job as you can before your first
day.
*Manage Your First Impression. First impressions may endure, so make sure that you dress
appropriately, are friendly, and communicated your excitement to be a part of the team.
*Invest In Relationship Development. The relationships you develop with your manager and co-workers
will be essential for you to adjust to your new job.
*Seek Feedback. Ask your manager or co-workers how well you are doing and whether you are meeting
expectations. Listen what they are telling you and also listen to what they are not saying.
*Show success early on. In order to gain the trust of your new manager and colleagues, you may want to
establish a history of success early.
LEADERSHIP
Leaders are instrumental in creating and changing an organization’s culture. There is a direct
correspondence between a leader’s style and an organization’s culture.
REWARD SYSTEMS- The company culture is shaped by the type of reward systems used in the
organization, and the kinds of behaviors and outcomes it chooses to reward and punish.
MISSION STATEMENT- A mission statement is a statement of purpose, describing who the company is
and what it does.
RITUALS- Refers to repetitive activities within an organization that have symbolic meaning.
RULES AND POLICIES- Companies create rules to determine acceptable and unacceptable behavior, and
thus the rules that exist in a company will signal the type of values it has. Policies about issues such as
decision making, human resources, and employee privacy reveal what the company values and
emphasizes.
PHYSICAL LAYOUT
A company’s building, including the layout of employee offices and other work spaces, communicates
important messages about a company’s culture. The building architecture may indicate the core values
of an organization’s culture
STORIES
Perhaps the most colorful and effective way in which organizations communicate their culture to new
employees and organizational members is through the skillful use of stories.
Culture influence the way members of the organization think, behave, and interact with each one
another. Thus, one of the best way of finding out about the company’s culture is by observing
employees or interviewing them. At the same time, culture manifests, itself in some visible aspects of
organization’s environment.
MISSION STATEMENT – A Statement of purpose, describing who the company is and what is does.
Rules and Policies - Another way in which an observer may find out about a company’s culture is to
examine its rules and policies. Companies create rules to determine acceptable and unacceptable
behaviour, and thus the rules that exist in a company will signal the type of values it has. Policies about
issues such as decision making, human resources, and employee privacy reveal what the company
values and emphasizes.
Physical Layout - A company’s building, including the layout of employee offices and other work spaces,
communicates important messages about a company’s culture. The building architecture may indicate
the core values of an organization’s culture.
Stories - A story can highlight a critical event an organization faced and the collective response to it, or
can emphasize a heroic effort of a single employee illustrating the company’s values
Culture is part of a company’s DNA and is resistant to change efforts. Unfortunately, many organizations
may not even realize that their current culture constitutes a barrier against organizational productivity
and performance. Changing company culture may be the key to the company turnaround when there is
a mismatch between an organization’s values and the demands of its environment.
Creating a Sense of Urgency - involves doing what needs to be done immediately, without being asked
and in the most thorough way possible in order to create change.
Changing Leaders and Other Key Players - Leaders need to possess the ability to explain to employees
why change is necessary, how change will impact them, and what each person must do to make the
change initiative a success. A leader’s vision is an important factor that influences how things are done
in an organization. Thus, culture change often follows changes at the highest levels of the organization.
Role Modeling - Role modeling is the process by which employees modify their own beliefs and
behaviors to reflect those of the leader.
Training - Training allows employees to acquire new skills, sharpen existing ones, perform better,
increase productivity and be better leaders. A well-crafted training programs may be instrumental in
bringing about culture change by teaching employees the new norms and behavioral styles.
Changing the Reward System -The criteria with which employees are rewarded and punished have a
powerful role in determining the cultural values in existence. Organizations undergoing change have
many opportunities to leverage rewards to support the change and demonstrate to employees the
personal benefits of transformation.
Creating New Symbols and Stories - The success of the culture change effort may be increased by
developing new rituals, symbols, and stories.
A recent study of 3000 employees and managers in United States confirms that the degree to which
employees in an organization behave ethically depends on the culture of organization. Gebler D. (2006)
Without a culture emphasizing the importance of integrity, honesty and trust, mandatory ethics training
programs are often doomed to fall.
Organizational Culture around the world
The values, norms, and beliefs of a company may also be at least partially imposed by national culture.
When an entrepreneur establishes an organization, the values transmitted to the organization may be
because of the cultural values of the founder of the overall society.
It is important for managers to know the relationship between national culture and company culture,
because the relationship explains why it would sometimes be challenging to create the same company
culture globally.
To summarize, in this chapter we have reviewed what defines organizational culture, how it is created
and how it can be change. Corporate culture may be the greatest strength or serious limitation fir a
company depending on whether the values held mare in line with corporate strategy and environmental
demands. Even though changing an organization’s culture is difficult, success of the organization may
require the change. Leaders through their actions role modeling, rulemaking , and story creation, serve
as instrumental change agents.