ORGANIZATIONAL CULTURE Organizational Culture and Leadership, 3rd Edition

HOW LEADERS EMBED AND TRANSMIT CULTURE 255a reflection of the culture. For purposes of this analysis, a crisis iswhat is perceived to be a crisis and what is defined as a crisis byfounders and leaders. Crises that arise around the major externalsurvival issues are the most potent in revealing the deep assumptionsof the leaders and therefore the most likely to be the occasionswhen those assumptions become the basis of shared learning andthus become embedded.According to a story told about Tom Watson, Jr., in the contextof IBM’s concern for people and for management development, ayoung executive had made some bad decisions that cost the companyseveral million dollars. He was summoned to Watson’s office,fully expecting to be dismissed. As he entered the office, the youngexecutive said, “I suppose after that set of mistakes you will be wantingto fire me.” Watson replied, “Not at all, young man; we havejust spent a couple of million dollars educating you.”Innumerable organizations have faced the crisis of shrinkingsales, excess inventories, technological obsolescence, and the subsequentnecessity of laying off employees in order to cut costs. Howleaders deal with such a crisis reveals some of their assumptionsabout the importance of people and their view of human nature.Ouchi (1981) cites several dramatic examples in which U.S. companiesfaced with layoffs decided instead to go to short workweeksor to have all employees and managers take cuts in pay to managethe cost reduction without people reduction.The DEC assumption that “we are a family who will take care ofeach other” came out most clearly during periods of crisis. When thecompany was doing well, Olsen often had emotional outbursts reflectinghis concern that people were getting complacent. When thecompany was in difficulty, however, Olsen never punished anyoneor displayed anger; instead, he became the strong and supportivefather figure, pointing out to both the external world and the employeesthat things were not as bad as they seemed, that the companyhad great strengths that would ensure future success, and thatpeople should not worry about layoffs because things would be controlledby slowing down hiring.