Morgan next explores the metaphor of organisation as culture. The word derives from the idea of cultivation, the process of tilling and developing the land. Nowadays when we talk about a society's culture we are referring to its way of life. Morgan writes:

In a sense, we can thus say that people working in factories and offices in Detroit, Moscow, Liverpool, Paris, Tokyo and Toronto all belong to the same industrial culture. They are all members of organizational societies. Their work and life experience seem qualitatively different from those of individuals living in more traditional societies dominated by domestic systems of production. If nothing else, modern office and factory workers share basic expectations and skills that allow organizations to operate on a day-to-day basis.

Organisational culture can be summarised as the way we see and do things around here. It is a system of shared assumptions, values, and beliefs which governs how people behave in organisations. The culture of an organisation shapes the way people and groups interact with each other, with clients, and with stakeholders. It can dictate how employees dress, act, and perform their jobs.

Through tradition, history and structure, organisations build up their own culture. Legends, rituals, beliefs and language give an organisation a sense of identity - who we are, what we stand for, and what we do. This in turn can also affect how far individual employees identify with their organisation.

New members of an organisation pick up - often quite quickly - the ideas, norms and unspoken assumptions that govern how they are expected to behave in order to fit into the culture of an organisation. Some of these expectations may be made explicit in corporate induction programmes.

Morgan describes how the founders of Hewlett-Packard, Bill Hewlett and Dave Packard, "established a corporate culture famed for strong team commitment coupled with a philosophy of innovation through people." He contrasts this with a very different example of corporate culture, describing the development and success of ITT under the tough, uncompromising and ruthless leadership of Harold Geneen. "Geneen's approach motivated people through fear… ITT under Geneen was a successful corporate jungle."

Morgan also contrasts Geneen's very macho style of management with the more female approach to corporate leadership of Anita Roddick at Body Shop. He quotes her as saying, "I run my company according to feminine principles - principles of caring, making intuitive decisions, not getting hung up on hierarchy … having a sense of work being part of your life, not separate from it."

Karl Weick describes the process through which people shape and structure their reality as a process of enactment. Although reality may appear to be just the way things are, we bring our realities into being through the way in which we interpret things. This implies that culture isn't simply something that an organisation possesses or a leader establishes, but rather is: active, living phenomenon through which people jointly create and re-create the worlds in which they live… organizations are in essence socially constructed realities that are as much in the minds of their members as they are in concrete structures, rules and relations.
In the 1980's and 1990's ideas such as total quality, customer service, reengineering and empowerment were very influential in management practice. Implementing such ideas successfully required culture change and a deep and genuine shift in values and mindsets. Many such initiatives failed because they didn't "replace the bureaucratic logic governing the old mode of operation." Morgan notes that genuine cultural change:

…is a challenge of transforming the mind-sets, visions, paradigms, images, metaphors, beliefs and shared meanings that sustain existing business realities and of creating a detailed language and code of behavior through which the desired new reality can be lived on a daily basis.

Watch these two video clips. The first summarises Morgan's chapter on organisations as culture, including a comparison of different national cultures in Britain, Japan and the USA.

The second video explores different aspects of organisational culture, ending with a description of four types of corporate culture:

These four types of corporate culture were described originally by Charles Handy:

A power culture emanates from centralized power in a charismatic leader. This leader acts decisively and unilaterally, but always with the best intentions for the organization in mind. Power cultures are demanding of the people within the organization. Late nights and weekends in the office often are the norm.

A role culture is a highly structured environment where clear objectives, goals, and procedures exist. An employee is judged almost solely on how well they meet these objectives and goals. This culture rewards dependability and consistency and, due to its well articulated procedures, produces little stress.

An achievement culture is one where people work hard to achieve goals and better the group as a whole. This culture generally consists of highly motivated people who need little to no supervision. Rules and procedures are limited as they may interfere with the accomplishment of work.

A support culture acts like a tiny community where people support and trust each other. Members of this culture will cooperate, make sure everyone is together on an idea, and do all that they can to resolve conflict. Support cultures consist of good communication and excellent service both internal and external.