ORGANIZATIONAL CULTURE Organizational Culture and Leadership, 3rd Edition

THE ROLE OF LEADERSHIP IN ORGANIZATIONAL “MIDLIFE” 287and societies use to deal with this problem is to create additionallayers in the hierarchy so that the span of control of any given managerremains reasonable. Of course, what is defined as reasonablewill itself vary from five to fifty; nevertheless, it is clear that everyorganization, if it is successful and grows, will sooner or later differentiateitself into more and more levels.The interaction and shared experience among the members of agiven level provide an opportunity for the formation of commonassumptions—a subculture based on rank or status. The strength ofsuch shared assumptions will be a function of the relative amount ofinteraction and the intensity of the shared experience that themembers of that level have with each other as contrasted with membersof other levels. Thus a top-management team that functions inisolation at corporate headquarters is quite likely to form a subculture.Similarly, a group of supervisors in a large geographically isolatedplant or a group of workers in a union will interact primarilywith each other and therefore eventually form a subculture.In Chapter Ten I described operator, engineering, and executivecultures within organizations. These subcultures are generally correlatedwith rank as well as with occupation and organizational tasks.For example, Donaldson and Lorsch (1983), in their study of howsenior executives make decisions, found that they were guided andconstrained by a “dominant belief system” about the necessity of balancingthe requirements of their major constituencies—the capitalmarkets from which they must borrow, the labor markets from whichthey must obtain their employees, the suppliers, and most important,the customers. Scarce resources must be allocated in such a way thatthe needs of each group are met to an optimal degree.Senior managers had complex mental equations by which theymade their decisions. Constraining such broad strategic decisionswas a set of interrelated beliefs about (1) the distinctive competenceof their organization, (2) the degree of financial risk that wasappropriate for their organization, and (3) the degree to whichthey felt their organization should be financially self-sufficient. The