Organisational culture influences the behaviour of organisations but as it is intangible it is difficult to define and understand. Organisational culture introduces unspoken rituals and tacit rules and addresses the actions, values, and behaviours, which, in combination, contribute to the overall philosophy and environment of the organisation. It shapes the way in which employees behave and make decisions and is formed over time as a result of the experiences and values of the organisation and the way in which it reacts to internal and external circumstances.
Culture has been described as the glue holding organisations together or, more simply just the way in which things are done in a business (Reiss, 2012; Bower, 2003). There are a number of indicators of organisational culture:
- The way in which an organisation treats its employees, customers and stakeholders.
- Attitudes towards decision-making.
- The treatment of power, knowledge, and information within the organisation.
- Whether employees are committed and engaged, sharing the values of the organisation.
(Landy & Conte, 2016)
All of these factors impact upon organisational performance and profitability, as well establishing unwritten/implied guidelines on issues such as customer engagement, quality, innovation, and corporate social responsibility. The way in which employees behave is likely to reveal the true culture of the organisation, which may or may not reflect the more overt statements made. Organisational culture is unique, and while it may be possible to loosely categorise an organisation on the basis of its actions and behaviours, it is also important to note that culture, whilst deeply embedded, is not static and may be multi-faceted.
National/Regional and societal aspects are known to influence organisational cultures. This has clear implications for international businesses and there is increasing recognition of the fact that ‘Western’ beliefs about organisational culture do not necessarily apply in other settings and vice versa. It is therefore appropriate to examine organisational and wider environmental issues in parallel.
Schein (2010) argued that there are three layers of culture in organisations - artifacts and behaviours, espoused values and basic underlying assumptions. This was represented as an iceberg model, as only the artefacts/behaviours were seen (above the surface), with the other elements being hidden (below the surface).
Artefacts and behaviours represent the physical manifestations of organisational culture (e.g. branding and uniforms) and can be readily identified and broadly understood. The next layer (espoused values) includes overt statements of organisational intent and planned behaviour such as mission, vision and values statements. Underpinning all of these aspects are the underlying assumptions about organisational behaviour, including collective belief patterns. Such beliefs mean that employees quickly assume what decisions or options would be preferred by the organisation, often without being able to articulate why.
Schein believes that culture within organisations is a response to both external and internal conditions. Employees anchor themselves to organisational culture and recognise whether or not they will be a good fit and therefore if they will be content in the workplace. The theory has been criticised for being too superficial as it does not consider different cultural drivers or the dynamics of more modern, highly flexible/responsive organisations.
Charles Handy (1996) developed a framework linking categorisations of organisational culture to evidence in the form of organisational structure (Diagram 1):
Diagram 1: Handy’s Organisational Culture
- Role Cultures possess established formal rules and procedures and a defined, understood and enforced organisational hierarchy. Employees understand what is expected of them and there are procedures to follow. However, such organisations can be less agile than their competitors.
- Task Cultures respond well to a competitive environment, but require individuals to be effective collaborators/communicators, willing to apply their own initiative. Team dynamics are likely to be an important success factor and it is unlikely to be an ideal environment for those preferring structure and predictability.
- Power cultures are found within entrepreneurial concerns and smaller, more agile businesses capable of operating in a turbulent environment. Whilst the organisation may be responsive, it can be difficult to work for leaders with strong opinions who may often change their views whilst expecting others to keep pace.
- Personal Cultures allow individuals to operate on a self-motivation basis so need limited formal guidance or structure. However, it can prove difficult to direct people in these organisations and staff can react badly to even minor procedural changes.
Handy recognises that in small organisations culture will probably be driven by the personality and/or preferences of individual managers/leaders, but within larger organisations culture will become self-replicating and self-reinforcing. However, it has been argued that the model should be updated to consider the challenges presented by modern flexible working environments where career patterns and organisational structures have less relevance.
Deal and Kennedy (2000) stated that there are six interrelated elements defining organisational culture:
- Organisational history. Shared past experiences shaping current beliefs and values and the traditions upon which the organisation is built.
- Values and beliefs. Those shared beliefs of employees and the organisation, including written and underwritten activities and behaviours accepted as valid.
- Rituals and ceremonies. These may be formalised or informal and become reinforcing, forming part of the culture of an organisation.
- Storytelling, This helps new employees understand their position and role within the organisation. Stories are often relatable for people, ensuring that they quickly become embedded within organisational culture.
- Heroic figures. Often former employees embedded within storytelling. They manifest organisational values and culture and can include the founder of the organisation.
- Cultural network. The informal social network through which employees share knowledge and acquire social capital. Specific personalities include the office gossip, the office spy, and the office whisperer, all of whom play key roles in the collection and dissemination of organisational information.
Deal and Kennedy categorised company culture around attitudes to risk-taking and the speed of feedback. In essence, how organisations make and implement decisions and how quickly they determine if those decisions are right for the business. The key characteristics are:
- Work Hard/Play Hard. Epitomised by a sales-driven culture where employees take very few risks but receive rapid feedback on their decisions and actions. Heroes in such cultures are likely to be highly successful salesman and employees are likely to respond well to internal competition and extrinsic rewards. This can build a collaborative working culture (e.g. shared sales targets), but if managed badly can create a culture of fear and intimidation.
- Tough Guy/Macho: Associated with risk-takers who expect rapid feedback. They expect to be recognised for what they achieve, but are less likely to work within a team as they are very competitive and can be difficult to manage. The ruthless organisational environment that results requires individuals to possess a high degree of self-confidence.
- Process. In such cultures risks are low, feedback is slow and it is unlikely that individuals will be able to have a significant impact on organisational activity. Employees tend to focus on accuracy in process and procedure believing that ultimately it will deliver organisational goals. Technical expertise and accuracy is valued in such a culture but it can be difficult to change organisational direction.
- Bet-Your-Company: Probably a high risk environment but one where feedback can be slow to materialise. Typically, such environments involve a high degree of capital investment and expenditure and also have a long (but potentially lucrative) payback period. Employees recognise that they are mutually dependent upon one another to succeed and believe in long-term planning and forward preparation. However, this does mean that employees can collectively reinforce poor decisions.
Johnson and Scholes’ cultural web seeks to understand the current culture of an organisation and then compare this to a desired future end point (Scholes & Johnson, 2002). The gap between the two then forms the foundation needed to change organisational culture.
(Scholes & Johnson, 2002)
Diagram 2: The Cultural Web
The model encourages people to consider the types of stories told, the meaning of symbols and how they are interpreted and the impact of structure, power, control, rituals and routines. As culture is self-reinforcing if employees continue to tell stories or support structures which are damaging then change is clearly required. This can be done incrementally e.g. by telling more positive stories or by creating a professional image through uniforms and dress codes. Such a phased approach ensures that employees feel involved in the change process thereby reinforcing and embedding the practices needed to create a permanent culture change.
Hofstede (2017) identified six dimensions of national culture:
Diagram 3: Hofstede’s Dimensions of National Culture
Hofstede noted that there are embedded cultural norms and behaviours (such as respect for authority, willingness to take risks, and belief in individualism or collectivism) which influence individual activity. These help to understand how people from different cultures react to different situations.
Lewis (1999; 2006) expanded Hofstede’s work to develop the model shown in Diagram 4:
Diagram 4: Lewis Cultural Communications Model
Lewis determined that cultural background influences communication. The model recognises the need to understand the perspective of another culture both in terms of business interactions and the way in which these influences will shape organisational culture, particularly for international/multinational business entities.
Culture shapes the way organisations behave and how individuals within those organisations act and respond. Globalisation has increased workplace multiculturalism which can be positive as different perspectives supports innovation and increases market knowledge. However, bringing employees from diverse backgrounds together does not mean that they will automatically work well together. People possess their own belief systems and values drawn from their cultural background, which can lead to workplace misunderstandings and poor communication.
International work placements are becoming increasingly popular and whilst many multinational organisations. For placements to be effective it is better to send employees who are able to recognise and appreciate differences in culture and communication styles. Whilst professional competence is important, it may therefore be appropriate to send a less technically skilled individual with the cultural awareness and flexibility needed to work effectively in the new/different context.
As there are likely to be differences in working and communication styles as a result of cultural beliefs and values, it is important that organisations take practical steps to create a framework for employees to help them appreciate and understand possible differences. This might include an international induction programme so that overseas employees understand nuances of organisational and national culture. It is also important for employees from the host country to appreciate that their international colleague may have a different perspective and a different way of communicating. Taking the time and effort to support such engagement can generate significant business benefits, as it allows allowing employees from diverse backgrounds to share their broader knowledge and wider perspective.
Given the challenges of managing culture, challenging or changing these constructs is even more difficult. For change to be effective and endure, employees must be involved in the process and be given responsibility and accountability for it. Only in this way is the commitment required to deliver the changes required likely to develop. Resistance to any change programme impacting on corporate culture is likely to be significant, but if employees understand the purpose of the change and are involved in decision-making, then this can be addressed. Ultimately, the broadest possible levels of employee involvement are required, given that the tacit/hidden aspects of corporate culture.
This chapter has presented a number of models and theories around organisational culture, noting the relationship with wider national/regional culture and the implications for more global business operations. It is important for leaders to understand such issues and how they can be shaped to help deliver corporate goals. Whilst it is possible to change organisational culture, this is a difficult and resource-intensive process which will take time. However, if carried forward effectively it can create a point of critical competitive differentiation and advantage.
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