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By Ahmad Malik and Antonello Pisanelli

Here we discuss current hot issues in OC.

OC and Leadership
OC in Multinational and Multicultural Organizations
Cultural Compatibility Issues in Mergers & Acquisitions
OC and Change Management
Culture and Knowledge Sharing





OC and Leadership


CEO Personality, Leadership, and Organizational Culture

How do senior leaders affect organizational culture? Several authors have identified the mechanisms through which managers might develop and change cultures. O’Reilly and Chatman (1996) define culture as a social control system based on norms and values. As such, they argue that the mechanisms for developing and changing culture can be seen in the social-psychological processes of normative and informational influence (e.g., Cialdini, 1993). Leaders shape culture through consistent signals, systems of involvement that promote commitment, vivid illustrations of normatively appropriate or inappropriate behaviors, and the provision of rewards, both formal and informal, to reinforce the desired attitudes and behaviors.

CEO personality
Personality traits are patterns of thought, emotion, and behavior that are relatively consistent over time and across situations. They describe behavioral regularities and can be described with familiar words such as “reliable” or “cheerful” as well as more specialized terms such as “narcissistic” or “conscientious.”

The personality traits of leaders are likely to be a particularly useful set of personal characteristics for understanding the linkages between the CEO and the culture of their firms. Personality refers to the set of characteristics that define a person and exemplify how he or she interacts with others (Allport 1961).

The five-factor model (FFM), or Big Five model has become a generally accepted taxonomy of personality traits (Mount and Barrick 1995). Goldberg (1990) suggests that nearly all personality characteristics can be categorized into one of the five broad traits. The Big Five traits include:
  1. Extraversion which is characterized by sociability, assertiveness, energy, and optimism
  2. Agreeableness which includes the tendency to trusting, cooperative, caring, and kind
  3. Conscientiousness which comprises two dimensions-- achievement and dependability--and is characterized by the propensity to be deliberate, self-disciplined, well-organized, and hard-working
  4. Neuroticism which represents the tendency exhibit poor emotional adjustment and to experience negative affect, such as anxiety, insecurity and hostility
  5. Openness to Experience which is the disposition to be imaginative, nonconventional, insightful and autonomous.
    These five dimensions serve as an important integrative framework for understanding and integrating the research on personality.

    Linking CEO Personality and Organizational Culture
    • CEO Extraversion – The most obvious aspect of extraversion is the propensity to prefer extensive interactions with others. However, extraverts are also characterized by optimism, energy and a preference for excitement (e.g., Costa & McCrae, 1992; Judge et al, 2002). In contrast, those low in extraversion are less interested in interpersonal interactions and may be seen as timid and withdrawn.
    • CEO Agreeableness – Individuals high on agreeableness are typically seen as modest, helpful, and willing to compromise (e.g., Hogan, Curphy, & Hogan, 1994; Petersen, et al., 2003). They tend to trust others and not challenge them. People who are low on agreeableness are more competitive than cooperative and can be seen as skeptical and antagonistic. Because CEOs who are high on agreeableness are more willing to compromise and avoid conflict, their organizations will have cultures that are more collaborative and less results-oriented.
    • CEO Conscientiousness – Conscientiousness refers to the tendency to control impulses and tenaciously pursue goals. People high on this dimension are hard-working, practical, and persistent as well as orderly and reliable (Judge & Bono, 2000). People who are low on conscientiousness tend to be more spontaneous, less constrained, and less achievement-oriented.
    • CEO Neuroticism – People who score high on neuroticism tend to be emotionally unstable and upset by minor threats or frustrations. They are prone to anxiety, embarrassment, self-doubt, and guilt. This often makes them fearful of new situations and susceptible to feelings of dependence. They are sometimes described as submissive and indecisive (Lim & Ployhart, 2004). Those who are low on neuroticism are seen as emotionally stable, relaxed, and secure. Because of this, leaders who score high on this dimension are seen as more likely to be associated with cultures that are less results-oriented and less collaborative.
    • CEO Openness to Experience –Openness to experience is the tendency to be imaginative, unconventional, and independent. People high on this dimension are described as insightful, comfortable with new ideas, curious, and resourceful. People who are low in this regard are seen as unimaginative, conservative, and resistant to change (Bono & Judge, 2004).

    The connections between CEO personality, organizational culture and firm performance, suggest that it could be useful for Boards of Directors to consider carefully CEO candidates’ personality when evaluating their suitability for the position. Given the importance of aligning culture with strategy (e.g., Harreld, O’Reilly & Tushman, 2007), boards might select CEO’s based on the fit between the CEO’s personality and the firm’s strategic needs. For example, given equivalent qualifications, firms that have a pressing need to be more results-oriented might desire a candidate who is extraverted and low on agreeableness and neuroticism. Firms that need to be more detail-oriented could prioritize conscientiousness as an attribute in a desirable candidate. CEO’s that help cultivate results-oriented and detail oriented cultures will likely enable strong firm performance, in terms of revenue growth and employee attitudes.

    References
    1. Cialdini, Robert B. 1993. Influence: The psychology of persuasion. New York. William Morrow.
    2. Costa, Paul T. and McCrea, Robert R. 1992. Four ways five factors are basic. Personality and Individual Differences, 13: 653-665.
    3. Goldberg, Lewis R. 1990. An alternative ‘description of personality’: The Big Five factor structure. Journal of Personality and Social Psychology, 59: 1216-1219.
    4. Hogan, Robert; Curphy, Gordon J. and Hogan, Joyce. 1994. What we know about leadership: Effectiveness and personality. American Psychologist, 49: 493-504
    5. Judge, Timothy A., Bono, Joyce E., Iles, Remus and Gerhardt, Megan W. 2002. Personality and leadership: A qualitative and quantitative review. Journal of Applied Psychology, 87: 765-780.
    6. Lim, Beng-Chong and Ployhart, Robert E. 2004. Transformational leadership: Relations to the Five-Factor Model and team performance in typical and maximum contexts. Journal of Applied Psychology, 89: 610-621.
    7. Mount, Michael K., Barrick, Murray R. and Strauss, J. Perkins 1994. Validity of observer ratings of the Big Five personality dimensions. Journal of Applied Psychology, 79: 272-280.
    8. O’Reilly, Charles A. and Chatman, Jennifer A. 1996. Culture as social control: Corporations, cults, and commitment. Research in Organizational Behavior, 18: 157-200.
    9. O’Reilly, Charles A., Chatman, Jennifer A., and Caldwell, David F. 1991. People and organizational culture: A profile comparison approach to assessing person-organization fit. Academy of Management Journal, 34: 487-516.
    10. O’Reilly, Charles A. and Tushman, Michael L. 2008. Ambidexterity as a dynamic capability: Resolving the innovator’s dilemma. Research in Organizational Behavior, 28: 185-206.
    11. Peterson, Randall S., Smith, D. Brent, Matorama, Paul V. and Owens, Pamela D. 2003. The impact of Chief Executive Officer personality on top management team dynamics: One mechanism by which leadership affects performance. Journal of Applied Psychology, 88: 795- 808.



OC in multinational and multicultural organizations


The challenges of working in a multicultural environment
In today's global environment, globalization efforts and demographic shifts employees of a multinational organization may be working directly - in person or virtually - with people from all over the world; or they may be working side by side with immigrants from halfway around the world, or with people from the same country but of a different ethnic, racial or cultural background. This cultural diversity introduces a number of benefits as well as challenges for the management of an organization.

The challenges of working in a multicultural environment are summarized by Adler (2002) as an intensification of challenges inherent in workplace interactions and, consequently, the danger of being ineffective. She points out that although multicultural teams have potential for being the most effective and productive teams, they often become the least productive. Greater diversity among team members makes interaction and group dynamics considerably more complex. The challenges include:
  • Team development is slower because time required to build rapport and trust is longer.
  • Communication among diverse people is more difficult and time-consuming.
  • Creating common understanding requires considerably more effort.
  • Different expectations held by diverse people often lead to misunderstanding, conflict and more negative evaluations of each other (Trefry, 2001).
Such problems can decrease organizational performance and increase organizational costs through employee turnover and time required to solve the issues.

Effects of diversity on convergent and divergent processes
Adler (2002) reports that diversity is most likely to cause problems in convergent processes in organizations - when employees need to think or to act in similar ways. Communication (converging on meanings) and integration (converging on actions) is more difficult because of the greater potential for misunderstanding, disagreement and conflict among diverse employees.
In divergent processes, however, diversity is actually a benefit. Different perspectives are advantageous when an organization wants to expand its approach, reposition itself, explore a broader range of ideas, or assess issues. Thus convergence in practices in a multicultural organization is challenging. When such convergence in practices or behavior is necessary a strong organizational culture will help to achieve it. The culture enables diverse people to come together and quickly learn what to do.

Management of multicultural challenges
How is it that multicultural organizations manage the challenges and achieve the maximum benefit from their culturaL diversity? The answer lies in the nature of the organizational culture as well as a strategic approach to harnessing diversity for benefit of the organization. It is the strategic utilization of cultural differences that creates real competitive advantage for the organization (Schneider & Barsoux, 2003).

References
  1. Adler, N. (2002). International dimensions of organizational behavior (4'" ed.). Cincinnati: South-Western Publishing.
  2. Schneider, S.C.,& Barsoux, J.L. (2003). Managing across cultures (2nd ed.). London: FT Prentice-Hall.
  3. Trefry, M. Multicultural teams: Insight from experiences in Luxembourg. Proceedings of the European International Business Association Annual Conference. Paris, France, December 13-15,2001.
  4. Trefry, Mary & Gildas Vaillant. Harnessing cultural diversity to stimulate organizational learning." In M.A. Rahim, R.T Golembiewski, & K.D. Mackenzie (Eds.), Current Topics in Management, vol. 7, 47-60. London: Transaction Publishers, 2002.

Cultural compatibility issues in Mergers & Acquisitions


Culture consists of the long-standing, largely implicit shared values, beliefs, and assumptions that influence behavior, attitudes, and meaning in a company (or society). This definition has several important implications: Culture is implicit. People who share in a culture find their culture challenging to recognize. The most insightful cultural observers often are outsiders, because cultural givens are not implicit to them
.
Culture influences how people behave and how people understand their own actions. As a result, culturally influenced beliefs and actions feel right to people, even while their implicit underpinnings make it difficult for those people to understand why they act the way they do or why other ways of acting might also be appropriate.

Culture is resilient. Its elements are long-standing, not a matter of fads. The resilience of culture is supported by culture being implicit. It is difficult for people to recognize their own culture and how it exerts an influence on them. The staying power of culture is that it feels right to people; new cultural values that are imposed on people seldom replace their underlying values and beliefs in the long run.

What does this mean for integrating two companies?
If people acted solely on the basis of rational calculations — the model of behavior preferred by economists — mergers would be effective — or not — based on the soundness of their economic underpinnings. But participants in mergers are human and driven both by their shared culture and individual personalities. Cultural influences have the potential to be broad and far reaching:

Culture Affects
Resulting In
Decision-making style (for example: consensus contrasted with top-down)
  • Different decision-making styles can lead to slow decision making, failure to make decisions, or failure to implement decisions.
Leadership style (for example: dictatorial or consultative, clear or diffuse)
  • A shift in leadership style can generate turnover among employees who object to the change. This is especially true for top talent, who are usually the most mobile employees.
  • Loss of top talent can quickly undermine value in integration by draining intellectual capital and market contacts.
Ability to change (willingness to risk new things, compared with focus on maintaining current state and meeting current goals)
  • Unwillingness to implement new strategies.
  • Unwillingness to work through the inevitable difficulties in creating a new company.
How people work together (for example: based on formal structure and role definitions or based on informal relationships)
  • Merged companies will create interfaces between functions that come from each legacy company, or new functions that integrate people from both legacy companies. If the cultural assumptions of the legacy companies are inconsistent, then processes and handoffs may break down with each company's employees becoming frustrated by their colleagues' failure to understand or even recognize how work should be done.
Beliefs regarding personal "success" (for example: organizations that focus on individual "stars," or on teamwork, or where people rise through connections with senior practitioners)
  • Again, these differences can lead to breakdowns in getting work done. If people who believe they have to achieve goals as a team integrate with people whose notion of "success" emphasizes individual performance, the resulting situation is often characterized by personal dislike and lack of support for getting the job done.
Culture must be a focus in efforts to integrate companies, because when left to itself culture will often undermine value-creation. Efforts to address culture should be based on the recognition that culture is both powerful and implicit, that employees are unlikely to change their cultural beliefs in response to exhortations to adopt new cultural values, and that culture can be rigorously linked to behaviors that affect business value. The focus on business value, rather than on "soft stuff" is essential to positioning culture in a way that business leaders will agree to support it. By tying culture to value-creation and to identifying and changing specific behaviors when necessary, culture can become an effective tool for achieving post-merger integration objectives.


OC and Change Management


Changes in organizations are challenging, but perhaps the most daunting is changing the culture. There are at least two reasons for this:
  1. Culture is a soft concept - If there’s no concrete way of defining or measuring culture, then its not easy to change it
  2. Culture represents collective norms and behaviors – It’s hard enough to change one person’s behavior — its not easy to change the behavior of an entire organization

For building high performance organizations, managers need to address culture change.
Wellman (2009) presents a series of leadership roles that will help facilitate organizational culture change:

  • Acknowledge the existence and influence of organizational culture: It must be brought into the open so people can see and understand how it affects activities
  • Have a clear and persistent vision of what the culture should be and of what changes need to be applied: This vision must be understood by management at all levels and spread across the organization.
  • Consciously manage culture: Wellman suggests the using health assessments and employee surveys to evaluate progress and direction. Expanding upon this, one might add the use of incentives (whatever is suitable within that particular organization) and of using managers as intermediaries between different cultures within the organization. Management must strive to create a culture where knowledge sharing is perceived as beneficial to the whole and also to the individual. In other words, through shared vision, incentives, etc. they must foster an atmosphere of trust to ensure that individuals have faith in the principle of reciprocity. They must also bridge cultural differences that exist between different communities and power structures within the organization.

Gardner presents a somewhat more concrete approach to organizational culture change. He states that it is dependent on redefining the assumptions that shape the common understanding, or in other words the paradigm. It thus involves introducing "anomalies" that present a reality that cannot be true under the old assumptions. As more and more anomalies are presented, people will eventually abandon old beliefs and frames of understanding and eventually be willing to adopt new ones.

No matter what, organizational culture change is a difficult process that is likely to meet significant resistance. Its stubbornness is due in part to the fact that it is history dependent, woven into everyday practice, and used as socializing mechanism for newcomers (Beitler 2005). However, as Beitler argues, despite all the hurdles, managing culture simply must be done.

Culture and Knowledge Sharing

A great article on Knowledge Creating and Sharing Corporate Culture.
Details: 'Knowledge Creating and Sharing Corporate Culture Framework'
Social and Behavioural Sciences, volume 74, 29 March 2013, Pages 251–260


An interesting article about cultural values and their impact on knowledge-sharing process in organisations.
Details: ‘Theory-based Approach to Studying the Influence of Individual Cultural Background on Intra-organisational Knowledge Sharing’
Block, Madeleine; Laurinkari, Juhani. Proceedings of the European Conference on Intellectual Capital. 2012, p499-506


Videos


The challenges of working in a multicultural environment
In today's global environment, globalization efforts and demographic shifts employees of a multinational organization may be working directly - in person or virtually - with people from all over the world; or they may be working side by side with immigrants from halfway around the world, or with people from the same country but of a different ethnic, racial or cultural background. This cultural diversity introduces a number of benefits as well as challenges for the management of an organization.
Subject Author Replies Views Last Message
Comments MatthewW9 MatthewW9 0 28 May 1, 2013 by MatthewW9 MatthewW9

The challenges of working in a multicultural environment are summarized by Adler (2002) as an intensification of challenges inherent in workplace interactions and, consequently, the danger of being ineffective. She points out that although multicultural teams have potential for being the most effective and productive teams, they often become the least productive. Greater diversity among team members makes interaction and group dynamics considerably more complex. The challenges include:
· Team development is slower because time required to build rapport and trust is longer
· Communication among diverse people is more difficult and time-consuming
· Creating common understanding requires considerably more effort
· Different expectations held by diverse people often lead to misunderstanding, conflict and more negative evaluations of each other (Trefry, 2001).
Such problems can decrease organizational performance and increase organizational costs through employee turnover and time required to solve the issues.
Effects of diversity on convergent and divergent processes

Adler (2002) reports that diversity is most likely to cause problems in convergent processes in organizations - when employees need to think or to act in similar ways. Communication (converging on meanings) and integration (converging on actions) is more difficult because of the greater potential for misunderstanding, disagreement and conflict among diverse employees.
In divergent processes, however, diversity is actually a benefit. Different perspectives are advantageous when an organization wants to expand its approach, reposition itself, explore a broader range of ideas, or assess issues.
Thus convergence in practices in a multicultural organization is challenging. When such convergence in practices or behavior is necessary a strong organizational culture will help to achieve it. The culture enables diverse people to come together and quickly learn what to do.
Management of multicultural challenges
How is it that multicultural organizations manage the challenges and achieve the maximum benefit from their cultural diversity? The answer lies in the nature of the organizational culture as well as a strategic approach to harnessing diversity for benefit of the organization. It is the strategic utilization of cultural differences that creates real competitive advantage for the organization (Schneider & Barsoux, 2003).