Chapter FIVE

Organizational Cultures
and Diversity

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All Rights Reserved.
 Organizational Cultures and
Diversity
❖ The specific objectives of this chapter are to
1. DEFINE what is meant by organizational culture
and discuss the interaction of national and MNC
cultures.
2. IDENTIFY the four most common categories of
organizational culture and discuss characteristics of
each.
3. PROVIDE an overview of the nature and degree
of multi-culturalism and diversity in today’s MNCs.
4. DISCUSS common guidelines and principles used
in building team and organizational multicultural
effectiveness.

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 The Nature of
Organizational Culture
❖ Organizational culture
Shared values and beliefs enabling members to
understand their roles and the norms of the
organization, including:
❖ Observed behavioral regularities, typified by
common language, terminology, rituals
❖ Norms, reflected by things such as the amount
of work to do and the degree of cooperation
between management and employees
❖ Dominant values that the organization advocates
and expects participants to share
low absenteeism, high efficiency

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 The Nature of
Organizational Culture
❖ Other values and beliefs
Philosophy set forth regarding how to treat
employees and customers
Rules dictating do’s and don’ts of employee
behavior pertaining to productivity, intergroup
cooperation, and customer relations
Organizational climate as reflected by the way
participants interact with each other, treat
customers, and feel about how they are treated by
senior level management

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 Interaction between
National and Organizational Cultures
❖ National cultural values of employees may
significantly impact their organizational
performance
❖ Cultural values employees bring to the
workplace are not easily changed by the
organization

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Dimensions of Corporate Culture

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 European Perceptions of the Cultural
Dimensions of U.S. Operations and
European Operations of the same MNC

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European Management
Characteristics

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Organizational Cultures in MNCs

❖ Shaped by numerous factors including cultural

preferences of leaders and employees

❖ Some MNCs have subsidiaries that (aside

from logo and reporting procedures) wouldn’t
be easily recognizable as belonging to the
same MNC

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Organizational Culture in MNCs

❖ There are four critical steps to successfully integrate

organizational cultures after international expansion
via mergers/acquisitions:
1. The two groups establish the purpose, goals, and
focus of their merger
2. Then, mechanisms are developed to identify most
important structures and manager roles
3. Next, the groups determine who has authority
over resources.
4. Finally, the expectations of all involved
participants are identified, and communication
between departments and individuals is facilitated

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Trompeenars’ organizational
culture types

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 Organizational Cultures in MNCs
Family Culture
❖ Family Culture
Strong emphasis on hierarchy and orientation to
persons.
❖ Power oriented, headed by leader regarded as
caring parent
❖ Management takes care of employees,
ensures they’re treated well, and have
continued employment
❖ Catalyze and multiply energies of personnel or
end up supporting leader who is ineffective
and drains energy and loyalties

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 Organizational Cultures in MNCs
Eiffel Tower Culture
❖ Eiffel Tower Culture
Strong emphasis on hierarchy and orientation to
task
❖ Jobs well defined; coordination from top
❖ Culture narrow at top; broad at base
❖ Relationships are specific and status remains
with the job
❖ Few off-the-job relationships between
manager and employee
❖ Formal hierarchy is impersonal and efficient

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 Organizational Cultures in MNCs
Guided Missile Culture
❖ Guided Missile Culture
Strong emphasis on equality in workplace and in
task.
❖ Culture oriented to work
❖ Work undertaken by teams or project groups
❖ All team members equal
❖ Treat each other with respect
❖ Egalitarian and task-driven organizational
culture

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 Organizational Cultures in MNCs
Incubator Culture
❖ Incubator Culture
Strong emphasis on equality and personal
orientation
❖ Organization as incubator for self-expression
and self fulfillment
❖ Little formal structure
❖ Participants confirm, criticize, develop, find
resources for, or to help complete the
development of an innovative product or
service

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 Trompenaars' four diversity
cultures
❖ Two dimensions
📫 Person vs. task
📫 centralized (hierarchical) vs. decentralized
(egalitarian).

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 Trompenaars' four diversity
cultures

❖ Factors in each model

- Relationship between employees
- Attitude to authority
- Ways of thinking and learning
- Attitudes to people
- Managing change

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 Quinn &Cameron types of
organizational culture

1. Clan oriented cultures are family-like, with a

focus on mentoring, nurturing, and “doing things
together.”

2. Adhocracy oriented cultures are dynamic and

entrepreneurial, with a focus on risk-taking,
innovation, and “doing things first.”

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 Quinn &Cameron types of
organizational culture
3. Market oriented cultures are results oriented,
with a focus on competition, achievement, and
“getting the job done.”

4. Hierarchy oriented cultures are structured and

controlled, with a focus on efficiency, stability and
“doing things right.”

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Charles Handy's Four Types of
Culture

1. Power culture: In this type of culture, there is

usually a head honcho who makes
rapid decisions and controls the organizational
direction. This is most appropriate in smaller
organizations, and require a strong sense of
deference to the leader.

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Charles Handy's Four Types of
Culture

2. Role culture: Structure is defined and

operations are predictable. Usually this creates
a functional structure, where individuals know
their job, report to their superiors (who have a
similar skill set), and value efficiency and
accuracy above all.

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Charles Handy's Four Types of
Culture

3. Task culture: TeamsTeams are formed to

solve particular problems. Power is derived from
membership in teams that have the expertise
to execute a task.

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 Charles Handy's Four Types of
Culture

4. Person culture: In this type of culture,

horizontal structures are most applicable. Each
individual is seen as valuable and more
important than the organization itself. This can
be difficult to sustain, as the organization may
suffer due to competing people and priorities.

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 National Patterns
of Corporate Culture

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 Managing Multiculturalism
and Diversity
❖ Both domestically and internationally,
organizations lead workforces with a variety of
cultures consisting of largely diverse
populations
Women and Men
Young and Old
Black, White, Latin, Asian, Arab, Indian
Many others

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 The Evolution of
International Corporations

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 Types of Multiculturalism

❖ Domestic Multiculturalism
Multicultural and diverse workforce operating in
MNC home country
❖ Group Multiculturalism
Homogenous groups
Token groups
Bicultural groups
Multicultural groups

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 Potential Problems
Associated with Diversity
❖ Perceptual problems
When cultural diverse groups come together, they often bring
preconceived, erroneous stereotypes with them
❖ Inaccurate biases
❖ Inaccurate communication
❖ Attitudinal problems
May cause lack of cohesion resulting in unit’s inability to take
concerted action or be productive

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 Advantages of Diversity

❖ Enhances creativity
❖ Leads to better decisions
❖ Generates more effective/productive results
❖ Prevents groupthink
❖ Can facilitate highly effective teams under right
conditions

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 Building Multicultural Team
Effectiveness
❖ Select team members for task-related abilities, not
solely based on ethnicity
❖ Team members must recognize and be prepared to
deal with their differences
❖ The team leader must help identify/define the overall
goal
❖ Mutual respect among members is critical
❖ Managers must give team positive feedback on
process and output

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 Review and Discuss

1. In which of the four types of organizational cultures –

family, Eiffel Tower, guided missile, incubator –
would most people in U.S. feel comfortable?
2. Most MNCs need not enter foreign markets to face
challenges of dealing with multiculturalism. Do you
agree or disagree?
3. What are some problems to be overcome when
using multiculturally diverse teams?
4. What are some basic guidelines for helping make
diverse teams more effective?

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