Organisational Culture - Essay Example

Organisational Culture Introduction ‘Culture’ of an organisation often stands as a metaphor for its value and ethics. Success of an organisation is directly related to its organisational culture. It is commonly perceived that employees working in a same organisation should follow similar values and corporate ethics but with the emergence of multinational companies, the management is required to cater to the demands of employees belonging to different cultures (Adler & Gundersen, 2008, p.63). The management is responsible for ensuring a healthy organisational culture that promotes well being and innovation among its employees. Since employees devote a considerable amount of time in their workplace, it is necessary that the internal environment is comfortable and cosy. Therefore, it is the responsibility of the management to provide a healthy organisational culture. A company frames its corporate mission statement to curve its unique identity in the market. This mission statement is used to convey the core values which the company wants its employees to follow. This leads to the building up of the desired organisational culture. When an employee enters the organisation, he or she interprets the corporate mission statement to understand the organisational culture. With time, this employee internalises the culture to become a part of the existing system. Failure to introduce corporate ethics into the organisational culture results in poor management efficiency which in turn affects the productivity of employees. This explains why companies give special attention to their organisational culture and employ several management strategies to cultivate a healthy and motivating organisational culture that reflects corporate mission of the company to the external stakeholders. Literature review of organisational culture Organisational culture is often defined as “the set of shared, taken-for-granted implicitly assumptions that a group holds and that determines how it perceive, thinks about, and react to its various environment” (Kinicki, n.d., p.43). Therefore, organisational culture reflects the common behaviour followed by the employees of a specific organisation. Figure 1: Levels of Organisational Culture (Source: Ahmad, Gilkar & Darzi, 2008, p.359) Often the terms organisational culture, climate, organisational identity and image are used interchangeably. Basically, organisational culture is directly connected to the climate, organisational identity and image. Some critics argue that all these concepts are quite similar whereas others consider them to be distinctly different from each other (Martin, 2002, p.111). Schein (1984) opined that organisational culture is something which is inculcated by the employees over a significant period of time, while working in the organisation as a group. On the other hand, the organisational climate is the recurring pattern of behaviour that is exhibited by day to day basis by the employees. A new employee who enters the organisation uses this experience to model his or her behaviour in the organisation (Morris, n.d., p.2). In the same way, organisational culture is different from organisational identity and image. Organisational identity is what the company thinks or perceives about itself. Albert and Whetten (1985) defined organisational image as “central, enduring and distinctive about the organisation’s characters” (Martin, 2002, p.113). There is a difference between organisational identity and organisational image. The latter reflects what the audience or the stakeholders believe about the company instead of what the company thinks about itself. This definition of organisational image was further expanded by Hatch and Schulz. They explained that while considering the image of an organisation, one should pay attention that how the employees perceive each other. After considering all the four elements it can be concluded that organisational culture has overlapping elements like organisational image, identity and culture (Martin, 2002, p.113). Type of organisational culture Organisational culture can be of four main types as these are present in the below given diagram. This classification has been given by Jeffrey Sonnenfeld of Emory University. Figure 2: Type of organisational culture (Source: Ahmad, Gilkar & Darzi, 2008, p.362) Academy: Such organisations behave very much like an academy. They hire young employees from colleges and provide them with specific training and later on assist them to perform specialised jobs in a particular functional area. Companies like Coca-Cola, IBM and General Motors possess such organisational structure. Club: Like a club, factors like loyalty and commitment are valued in such organisation. Senior people receive respect and play a key role in the organisation. Therefore in such organisational culture, factors like age and experience counts more. Delta Airlines, government agencies and military are some organisations where club organisational culture is predominant. Baseball team: The organisation that follows ‘base ball team’ organisational culture is a heaven for risk takes and innovators. Such organisation hires people of all age groups in different fields. The company rewards the employees for their hard work in the form of financial incentives and greater freedom. Organisations involved in jobs like investment banking, accounting, law, consulting, advertising agencies and research centres possess a baseball team organisational culture. Fortress: Companies which otherwise follow academy, club or base ball organisational culture become fortress when faced with crisis. Herein, the employees have low job security but are still preferred by employees who like challenges in the process of turnover (Ahmad, Gilkar & Darzi, 2008, p.363). Companies like large retailers, oil and gas exploration firms and hotels follow such organisational culture (Ahmad, Gilkar & Darzi, 2008, p.363). Depending on the nature of organisational culture, the management decides which strategies are to be followed to maintain a healthy organisational culture. Factors effecting organisational culture Before finalising the management policies, the company should be well aware of factors that influence its organisational cultures. Few of them have been discussed below: 1. Organisational contexts: The organisational culture is often a reflection of the management’s philosophy. The management develops different policies and rules to introduce the required organisational culture. However, just rules, regulations and policies alone cannot shape the organisational culture of a company. The reaction of the employees is equally valuable. If employees accept rules and acknowledge managerial policies, organisational operations become easy, whereas if employees refuse to accept them, it becomes complicated and problematic to manage the organisation as a whole. Figure 3: Key element effecting organisational culture (Source: Lashley & Lee-Ross, 2003, p.150) 2. Structure: Organisational structure of a nation reflects the hierarchy prevailing in company. It explains the formal relation existing among the authority; hence this factor should also be taken into account while understanding the organisational structure. As for example, if a company has a decentralised its organisational culture, then it can be said that participative decision making process will result in a sound organisational culture. On the other hand, the decision making process will be more consistent in an organisation having a tall organisational hierarchy, resulting in a centralised decision making process (Stanford, 2007, p.215-216). Figure 4: Centralised organisational culture (Source: Watson, Gallagher & Armstrong, 2005, p.158) Figure 5: Decentralised organisational culture (Source: Watson, Gallagher & Armstrong, 2005, p.159) 3. Process: Processes like communication, motivation, decision making and leadership are extremely important since they help the management to run the organisation. For example, if the organisation possesses a formal culture, the employees as well as the management will prefer to use written communications and emphasis will be more on vertical communication. On the contrary, organisations having informal organisational prefer oral communication to convey information. In such organisations, apart from vertical, horizontal communication, diagonal communication channels are also in practice. Decision making and motivation practices also influence the organisational culture. As discussed before, if the decision making process is highly structured, it results in a formal organisational culture. Again, if the management motivates employees to take active part in the decision making process, it results in a more informal and casual organisation culture (Barker & Angelopulo, 2005, p.75). 4. Physical evidences: In an organisation, physical evidences also influence the organisational culture. Basically, physical evidences like geographical location, building, work environment and other factors influence the work culture of the employees. Among the factors that results in satisfaction of the employees, a clean and hygienic work environment is of paramount importance. Several researches have been conducted to understand the role played by the physical factors such as infrastructure, basic hygiene and other facilities in the work environment of the employees. Organisational culture management In an organisation, it is the responsibility of the management to develop a healthy organisational culture. The management can do so only if it understands the basic factors that influence organisational culture. These factors have been discussed in the earlier section of this project. The management should set its strategy by taking these factors into account and find out ways by which the core organisational values can be incorporated in the organisational culture. Organisation can use different performance measurement tools such as balance scorecard or management by objectives to monitor the organisational culture. If a change is required, the management should employ proper change management process. The management should first conduct root cause analysis to identify the causes that is plaguing the company. Later on, some other managerial tools such as Transition Grid and Power-Interest Grid should be used to analyse the responses of different stakeholders and employees to the changes that will be introduced in the organisation. While evaluating the implication of change, an appropriate change management model should be selected. Some of the commonly used change management tools are Chartier's Change Model, Kurt Lewin’s Classic Change Model, William Bridges on transitions and John Kotter’s Model (Sabri, Gupta & Beitler, 2006, p.165-176). These models will provide the steps to be followed while implementing the change. An effective change management process will assist in smooth implementation of change and also overcoming the hurdles in the process. Care should also be taken while implementing the change so that complication in post change phase can be minimised. Undoubtedly, a proper management control system is effective in introducing the required influence on the organisational culture but the leadership style also makes a considerable difference. In many organisations, culture gets spoiled because the leader is not influential enough to incorporate corporate values into the organisational culture. It’s true that there is no such leadership style that can be called the best one. Depending on the organisational culture, structure and situation a leader should decide ones leadership style. For example, if the employees are quite knowledgeable and possess the ability to understand critical issues, then the leader should follow democratic leadership style. Again, if the employees are not much involved in the critical issues of the company or if the organisational structure is large and it is not possible for the management to allow these employees to take active role in decision making, then it is better to implement autocrat leadership style. This will assist in monitoring the organisational activities and help it progress as per the pre determined form. In the contemporary organisation culture, more and more leaders are relying on transitional leadership style. The leaders not just assist his followers to achieve the organisational goal but also train the followers so that in future they can take the decision by themselves. Example of poor management of organisational culture Several companies are found to found to be victims of poor organisational culture. Such problems erupt due to irrelevant top management philosophy, problem in the organisational structure or problem in any other factors that affect the organisational culture. A company with problematic organisational culture soon loses its productivity and thus the market image declines. AIG is one such company that is suffering from problematic organisational culture. Long vertical organisational structure is often blamed for it. It hinders proper flow of information from top to down and vice versa. As the information passes through the tall organisational structure often it gets distorted and thus it loses its authenticity. This adversely affects the transparency in the organisational culture. The problem is not just in the organisational structure but also in the decision making process. AIG has several decentralised decision making units but these bodies are not properly coordinated. As a result the decision making process is often lengthy and haphazard. The company has failed to take prompt actions in response to the changing market scenario and thus it is losing its competitiveness in the industry. The management hardly allows the employees to participate in the decision making process; hence the employees do not feel motivated enough to improve their performance or share the knowledge with the management. This hampers the learning graph of the company and motivational level of the employees. The case of AIG explains that when the management fails to manage the organisational culture, the company suffers a lot. In the past, AIG was a respected name but because of poor organisational culture the company lost its image in the market. In 2008, AIG was included in the list of ten most corrupted companies in America (Carter, 2010). The company manipulated its financial information through improper accounting. This reflects heights of corruption in the organisational culture (Bloomberg Businessweek, 2005). The case of AIG is a unique example of poor managerial control on the organisational culture. The management of the company failed to identify factors that had adversely affected the company. In AIG, the top management was equality involved in unethical actions and hence it failed to manage and control the organisational culture. In near future, if the company does not take any firm steps, its market image will further deteriorate. Therefore, the company should identify the root causes that have adversely affected the organisational culture and take necessary steps. In this way AIG will succeed in reviving its culture and regaining the competitive image that it once enjoyed in the industry. Conclusion For a company, its organisational culture is like a mirror that reflects its core corporate values. The external stakeholders often take into account the organisational culture of a company to determine its future prospect and growth potential. This organisational culture is actually a combination of common beliefs and values practiced by people working as a group. It is often influenced by factors like philosophy of the top management, the organisational structure, processes and the physical environments. The management should be well aware of these factors while developing strategies meant for managing the organisational culture. If required, changes should be incorporated to develop a healthy and highly motivating organisational culture. While introducing the changes, caution should be exercised to ensure that the management model not only makes the whole process effective but also minimises possible hurdles. The management should always keep in mind that an organisation cannot achieve heights of success until and unless the organisational culture is effective enough to motivate the employees. Therefore, the management and the workforce should work hand in hand to develop a healthy and transparent organisational culture in the firm. Reference Adler, N. J. & Gundersen, A. 2008. International dimensions of organizational behaviour. Cengage Learning. Ahmad, F., Gilkar, N. A. & Darzi, J. A. 2008. Organisational Behaviour. Atlantic Publishers & Distributors. Barker, R. & Angelopulo, G. C. 2005. Integrated Organisational Communication. Juta and Company Ltd. Bloomberg Businessweek. April 11, 2005. AIG: What Went Wrong. [Online]. Available: http://www.businessweek.com/magazine/content/05_15/b3928042_mz011.htm [November 11, 2010]. Carter, Z. May 16, 2010. America's Ten Most Corrupt Capitalists. [Online]. Available: http://www.informationclearinghouse.info/article25461.htm [Accessed on November 11, 2010]. Kinicki. No date. Organizational Behavior, 2E (Iae). McGraw-Hill. Lashley, C. & Lee-Ross, L. 2003. Organization behaviour for leisure services. Butterworth-Heinemann. Martin, J. 2002. Organizational culture: mapping the terrain. SAGE. Morris, W. No date. Enhancing Organisational Creativity A Literature Review. [Pdf]. Available at: http://www.future-edge.co.nz/Files/Organisational.pdf [Accessed on November 10, 2010]. Sabri, E. H., Gupta, A. P. & Beitler, M. A. 2006. Purchase order management best practices: process, technology, and change management. J. Ross Publishing. Stanford, N. 2007. Guide to Organisation Design: Creating High-Performing and Adaptable Enterprises. Bloomberg Press. Read More