Why Managing Organizational Culture Effectively Is Crucial for Successful Organizational Performance - Term Paper Example

CRITICAL ESSAY: MANAGING ORGANIZATIONAL CULTURE EFFECTIVELY IS CRUCIAL FOR SUCCESSFUL ORGANIZATIONAL PERFORMANCE. By + Name] [Name of Tutor] [Name of University] [City, State] [Date of Submission] Executive Summary In line with all social mechanisms, the culture of an organization is charged with performing certain social functions. The functions may either be intentional or unintentional, a factor difficult to be held under control by any force or management. Just like organizational structure though, it is not easy to observe, map or even measure organizational culture and sometimes culture tends to support or reinforce structure, while at some other instances, culture tends to conflict with structure. In most situations though, culture simply acts as the functional alternative used to reduce variability in behaviour, or better still, create uniformity and consistency in the firm (Pfisher, 2009, p.51). However, it is not in all instances that a strong culture would automatically lead to the success of an organization. While it may contribute to a substantial amount of success, it is often that the very strong cultures get to impede some of the actions that the management takes. This occurs in unpredictable and unexpected ways because while cultural control mechanisms direct individual behaviour, they do not always direct it in a manner that is in consistence with the managerial goals or mission of the organization. For instance, in a production firm where employees set production standards and subsequently enforce them on the members, such standards may be lower than the expectations of the management. In such a scenario, the groups may tend to exert some strong influences on the members with the aim of protecting each other from managerial action and therefore create a conflict between the organizational structure and the norms of the group (Willcoxson and Millet, 2000, p. 92). This critical essay shall expound on the argument surrounding organizational culture, and whether managing organizational culture effectively is crucial for successful organizational performance. However, the writer is of the opinion that “Managing Organizational Culture Effectively is Crucial for Successful Organizational Performance” is true. Table of Contents 1. Introduction……………………………………………………………………………3 1.1. Background Information…………………………………………………………3 1.2. Aims and Objectives of the Report……………………………………………….4 2. Managing Organizational Culture Effectively is Crucial for Successful Organizational Performance……………………………………………………………….…………..4 2.1. Arguments in Support of the Hypothesis……………………….…….…………...4 2.2. Arguments against the Hypothesis……………………………………...………..12 3. Conclusion………………………………………………………………….….…..….16 4. Reference List………………………………………………….……………...............17 1. Introduction 1.1. Background Information In the 1980’s the corporate world experienced an augmentation in the levels of attention that was directed towards the concept of organisational culture as a crucial determining factor in the success of a business. While the correlation between organizational effectiveness and organizational culture may not be clear-cut, it is obvious that every organization has a unique social structure and that these social structures drive much of the individual behaviour observed in organizations. According to Schmidt & Scholl (2003), there is single definition of organizational culture, or rather; the same has proven to be elusive. As such, scholars have opted to use the causes and effects of organizational culture to define it. For instance defined by outcomes/ effects, culture would be referred to as a manifestation of behavioural patterns. A lot of people tend to use the term “culture” in reference to patterns of cross-individual behavioural consistency. For instance, when a person says that culture is the manner in which they carry out their duties, or “do things”, they are just defining the consistent manner in which members of that family, group or society perform their duties, resolve conflicts, solve problems, relate with customers, and relate with fellow colleagues (Flamholtz and Randle, 2011, p. 14). When defined using process, organizational culture may be defined as a set of mechanisms that creates cross individual behavioural consistency. In this light, it consists of the informal norms, values and beliefs that control how individuals and groups too relate with others in the organization as well as those who are outside the organization (Seong, 2011, p. 25). The business dictionary however, goes directly to define organizational culture in the place of work has been defined as the environment that is formulated from the different interactions that take place in the office. As much as it may be difficult to capture culture, it is an observable and very powerful force for the organization. Based on the fact that organizational culture is able to govern the members of the organisation even at the subconscious level, it is capable of having a potent effect on the well being and success of the firm (Janicijevic, 2012, p.292-300). 1.2. Aims and Objectives of the Report Studies have shown that the role of culture to the organization is perceived in somewhat similar aspects. While some of the people associate culture with a compass that provides direction to the members, others perceive it as the glue that keeps and holds all the people together. Despite largely operating outside of the awareness of the people it governs, culture tends to create some form of common ground for the members of the team, and reduces any kinds of uncertainty because it offers a sense of order that directs all members to knowing what is expected of them (Kane-Urrabazo, 2006, p. 190). This is in addition to providing a sense of unity and continuity, as well as a vision around which the firm can rally. Throughout history, anthropologists have been spending numerous resources attempting to develop methods aimed at categorising and diagnosing organizational culture. In today’s world and culture, people tend to search for clues in the climate which includes products, people and processes that can be observed, as well as in the espoused values of the leadership. An issue that proves difficult to observe is the unconscious and underlying assumptions that the team shares (Janicijevic, 2011, p.72-76). Denning (2011), from Forbes, states that changing the organizational culture of any firm could be one of the difficult challenges that face leadership. This is due to the fact that the values, goals, processes, beliefs, attitudes, assumptions and norms are interlocking by nature, and this would involve overwhelming energy and resources to disintegrate. Organizational cultures more or less resemble the cultures of different countries in that entering a new organisation is equated to entering a new country, with a totally different culture from what an individual is used to. To survive well, a new member needs to realise that the key aspects of any new culture involves the sharing of values, as well as a structuring of experiences in the firm. It is rather difficult to have all people in an organization fully agreeing about the dominant norms, beliefs and values (Sims, p. 302). In contrast to common belief, the specific substance of the culture of an organization form the general experiences of the group, and as the group attempts to adapt to its external environment and build a system of internal coordination, so is the birth of an organizational culture. Each of the diverse human systems that an individual interacts with has their own culture; family, employer, colleagues, leisure-time organization members, religious groups and classmates. These cultures are capable of making different, and often conflicting, demands on an individual (Schermerhorn, Osborn and Uhl-Bien, 2011, p. 348). With the significance of organizational culture described above, the aim of the paper is to evaluate the positive and negative effects of a strong corporate culture on the firm. Much emphasis has been laid on the positive aspect of organizational culture without realizing that there could be negative effects of equal measure. The report consists of two major parts, being the arguments in support of the hypothesis, “managing organizational culture effectively is crucial for successful organizational performance”. The section evaluates the benefits that a firm will derive from having a strong corporate culture in regards to profitability; productivity; market share; and organizational reputation. The second part discusses the arguments against the hypothesis, and these shall include the major issues that could negatively affect a firm on grounds of having a strong organizational culture in place. Conclusions shall then be drawn on the basis of the view of the researcher. 2.0. Managing Organizational Culture Effectively is Crucial for Successful Organizational Performance 2.1. Arguments in Support of the Hypothesis According to Bradt (2012) of the Forbes organization, “Given enough time and money, your competitors can duplicate almost everything you’ve got working for you. They can hire away some of your best people. They can reverse engineer your processes. The only thing they can’t duplicate is your culture”. This is a clear indication that the culture of an organization is unique to itself and when used or applied appropriately, organizational culture is the surest means to gaining a competitive edge. Perhaps one of the most frequently used claims in regards to this is that a strong and distinctive organizational culture presents the firm with a competitive advantage over others in the same industry. The assumption that organizational or social innovation is key to corporate competitive strengths is also a concept that is shared by a number of practitioners, who are also of the opinion that there exists a direct and proportional correlation between a strong organizational culture and the performance of the firm in regards to profitability, creativity as well as productivity (Ehrhart, Schneider and Macey, p.134). This is the very assumption that has pushed organizations to come up with coherent and strong cultures as a prerequisite of high performance and excellence. In conjunction with this, organizations are increasingly making attempts at “cultural revolutions” and “cultural turn-around”. The rate at which company executives are passing instructions to the human resource managers in regards to creation and implementation of strong corporate cultures is overwhelming. It’s all in an attempt to attain the high performance and excellence levels (Alvession and Berg, p.136). In accordance with the initial intra-organizational line of reasoning, the highly performing and excellent organizations tend to have an overall committed and competent work force which can only be expressed as possessing a strong corporate culture, a powerful corporate identity and a good company image among others. In this context, it would be noteworthy to state that to fully utilise the potential of an organization’s human resource, it is imperative that a high level of personal commitment and identification with the organization are maintained. This is especially so if the business is in the service industry where the behaviours and attitudes of the front line employees are key to determining the quality levels delivered to clients (Garnage, p.68). Consulting firms that provide various services including legal, accounting, auditing, marketing, and event management services among others require a strong organizational culture if they are to stay in business. In such organizations, the assets of the firm are the workers and this is because they are not in the business of selling tangible goods that would speak for themselves despite the organization having a weak corporate culture. In such office or corporate settings, the corporate assets get to work at 8.00 am, and leave at 5.00 pm, and it is rather crucial that the concept of “espirit de corps” is maintained as a crucial mechanism of unity. If a client goes to the office for a particular service and finds Miss. A, they should be in a position to receive the same kind and quality of service with another client who came to the office and spoke to Mrs. C. This is the power of a strong corporate culture (De Witte and Muijen, 1999, pp. 89-91). In such standardized kinds of procedures where the services offered by one party are easily duplicated by another party, and without the competitive advantage that could be enhanced by technology, corporate identity/ culture becomes a most important discriminating factor (Wilkinson and Kannan, p.242). A strong corporate culture is also associated with augmenting the trust of the employees in the organization. As such, the management and top executives will strive to increase the trust in the firm’s justification of itself, in its rightful and legitimate role in society, in achieving its mission as well as its basic values. These will form the basis of the most crucial elements of the process of management. This goes hand in hand with the belief that a strong corporate culture has got a strong impact on the image of an organization (Fehr and Gelfand, 2012, p. 670). For the success of the firm to be guaranteed, the company increasingly relies on the cooperation of clients and customers to perform their duties. As such, these clients and customers must be kept and maintained at close range to the organization and this is not only by provision of automatic services such as delivery systems and timely bank transactions, or by creating membership clubs where clients are treated as members rather than customers, but also by developing and projecting strong organizational identities that the clients could identify with. A lot of organizations tend to value the image of the company more than the content or substantial value of the products and services that they provide. This factor goes a long way in making the customers and clients more dedicated to fundamental goals of the organization, as well as its values. As one such organization put it, “It is no longer enough for an organization to have many customers, but they also need many friends” (Alvesson and Berg, p.138). Another benefit that comes with a strong organizational culture is the fact that there is reduced need for detailed procedures and policies and procedures. This is due to the fact that the way that things are done is completely acknowledged and understood (Credoreference.com). There are numerous examples of organisations with rather strong corporate cultures. Undeniably, associations whose basis lies on a clearly defined set of foundation values, and which are applied consistently, use their strong culture as a source of competitive advantage as discussed earlier (Nieminem, Biermeier-Hanson and Denison, 2013 p.185). Some of the most valued and clear examples of strong cultures include IKEA, Disney Theme Parks and the Southwest Airlines. IKEA is well known for the being the inventor behind Ingvar Kamprads culture of teamwork and thrift, while the Southwest Airlines invented Herb Kellehers strategy of an employee-centric culture. The Disney Theme Parks, known globally for their exclusive entertainment apply the culture which identifies their clients and customers guests, jobs parts, while work uniforms are referred to as costumes. For each of the organizations mentioned, the culture applied is an in-built core element of the strategy. For Southwest Airlines and IKEA particularly, these cultures have been incorporated as the company strategies. Other organizations that could be used as having a strong organizational culture basis include McDonalds, Goldman Sachs, Nordstrom and HP and Nordstrom, among others who have businesses successfully built on a distinctive and strong corporate culture. One may even argue that an entire industry sector in the name of Mittel-stand companies, Germany, enjoys the advantages of strong culture (Basu, 2009, p.245). Corporate culture is also crucial because it helps in the integration of a firm’s subsystems and processes. The importance of integration is that it aids in letting the organization to coordinate its various actions effectively. A common language style is also developed within a particular culture and this aids in effective communication among the members. They also tend to develop conceptual categories which come in handy in filtering unimportant details, while laying focus on more important issues. Perceptual filtration tends to decrease the likelihood of a member of the group becoming overwhelmed, or overloaded with stimuli which are defined by the culture as unimportant. This significantly increases the organizational performance because employees tend to focus on the more important issues to the organization, and in this way wastage of resources which could otherwise be used for other more profitable projects and undertakings is reduced (Sims, 2002, p. 305). Culture tends to define boundaries of groups as well as the criteria that are used to vet members for inclusion. Boundaries that are created as a form of criteria for inclusion into the various organizational groups act as a filter for the type of people joining a particular group. As such, the well defined boundaries enhance the identification of members to the groups, and to the work of the groups. In this way, strong groups encourage their members to get their work done, and effectively so. If all, or most of the groups encourage their members to carry out their duties effectively, this will translate to efficiently in the entire or a large part of the firm and as such, the whole organization will benefit and as such increase the performance of the organization (Markovic, 2012, p.17). An ideology refers to a set of overarching values that serve to collect all fundamental assumptions that are embedded in the culture of an organization. They simply define what an organization is all about. Organizational culture is very critical in the formulation of company ideologies, a process which includes ideology development and communication. In organizations, ideologies appear in stories which tell of past successes or descriptions, or about the heroes of the organization who may have passed on, left the firm or still be part of the firm. Whatever the situation, the notion represented by each hero forms part of the company’s tradition. This thereafter becomes a strong and overpowering guide to action. In view of this, an ideology is crucial to the organizational culture of a firm, and this must be communicated to the new persons joining the organization (Schultz, 1994, p.23). A weak organizational culture arises when its core values fail to meet a clear definition. Also in instances where such values may be clearly defined but have not been clearly communicated, or worse still widely accepted by the people working for the particular organization.  Another reason which may bring up the existence of a poor organizational culture is when there is little or no alignment between the way things are done and the proposed values (Lewis, 2005, p. 94). This is due to the fact that such a situation could lead to inconsistency in behavior of the workers, and subsequently, this causes inconsistency in the experiences of the clients and consumers. A chief consequence of a weak corporate culture is that it creates a great requirement for policies, procedures, and bureaucracy in order to get things done as per the required standards. This badly affects the performance of a firm and could substantially eat into the costs of the organization (Schein, 2010, p.76). To avoid this, a company should just work at adopting a strong organizational culture, and reap all the benefits that come with it. 2.2. Arguments against the Hypothesis In evaluating the functions and benefits of having a strong organizational culture, it is often easy to make the assumption that a strong and distinctive organizational culture automatically leads to the success of an organization. However, according to Schmidt and Scholl (2003), this is often untrue, and often, the presence of a very strong organizational culture may impede some actions or decisions taken by the management. One of the dysfunctions of a strong organizational culture is the fact that they often act as a barrier to change and improvement. As earlier stated, organizational cultures consist of norms and values that are deeply internalised by the members of the organization to great lengths. As such, this may create a concept of resistance to change, mostly if they foresee the possibility of a conflict between the changes and their current culture. Such a situation will mostly arise when the changes are bound to happen by way of structural change (Alwari et.al. 2013, p. 5). For instance, if an organization’s management decides to introduce a new reward system or a motivation system to the firm as a result of changes in strategy, the move could be countered by supporters of the former systems, who may still be deeply embedded with the past. This creates the beginning of a battle over the respective powers of the structure and culture. Even if the structure will finally end up being a more powerful force and the move has to be implemented, the speed or rate at which implementation of the change is slowed as it experiences multiple forms of resistance (Salk and Schneider, 2009, pp. 80-84). In other instances, strong organizational culture could become barriers to diversity. As stated earlier, strong organizational cultures become part and parcel of the organization and the people working for the organisation, and such a situation is likely to create rigidity. Uniformity and consistency of behaviour among the employees otherwise referred to as cross individual behavioural consistency does not exactly create any room for new ideas and concepts. As much as consistency may sound desirable in many ways as explained earlier, it could work to the detriment of the firm in regards to meeting its goals of creating a diverse workplace, and further making use of this diversity for competitive advantage. To begin with, an organization with a strong organizational culture tends to recruit new employees based on person-organization fit, whereby applicants selected are those believed to "fit" into the organization. This kind of tradition does not in any way encourage diversity because only like minded people get to work in the organization (Catanzaro, Moore and Marshall, 2010, p. 655). In the same line of thought, potential employees, in this case those seeking for employment opportunities tend to do so in companies that support their ideologies. As such, they avoid the organizations that have strong cultures not associated with their values. Another way in which strong cultures tend to impede diversity is in regards to the manner in which they act to homogenise the workforce. Diversity is encouraged in organizations for the simple reason that more diverse decision-making teams will be more creative and make decisions more inline with a diverse marketplace. Any benefits achieved through diversity hiring can be lost as the mechanisms of a strong culture as new employees attempt to fit in with the team (Sonata, 2013, p.100). To add onto the above, strong corporate cultures act as impediments to cross departmental and cross organizational cooperation, a factor that is detrimental to any organizations since there needs to be integration of all departments to allow for smooth running of operations. In the large corporations, they are made up of sub-cultures which are then combined to form one large corporation. These may be divided according to their geographical locations or into functional units. Unlike smaller or medium sized organizations where the entire organization is governed by a uniform set of norms, these large firms operate as sections to a whole, for instance the culture of the marketing department is often very different in comparison to the culture of an engineering department. In the instance that communication and coordination within the organization fails to be delivered or gets misinterpreted due to conflicts in priorities, this may hamper the ability of the units to work together towards meeting the goals of the organization. Inability to coordinate or communicate effectively means that any two groups cannot effectively work on a project together, nor can they solve a problem that faces the entire firm in unison (Garnett, 1997, p.481). One of the factors that have been cited for causing failure in mergers and acquisitions is the fact that the process failed to deal with the conflict in cultures between the two original organizations. This is especially so when the plan seeks to have two culturally diverse departments merging and operating as one unit (Yildirim, and Birinci, 2013, p. 79). For the seemingly simple reason that cultural differences were not tabled prior to the merge and discussed to resolve potential conflict, it gets increasingly difficult to meet the goals and objectives of the merger. Such differences could be as simple as the form of dress code to use, or as complex as the form of leadership style to be applied, or issues to do with the decision making process (Champoux, 2011, p.79). Sims (2002, p.306) expounds on this notion by stating that current organizational structures could lead to dysfunctional outcomes when a firm attempts to diversify their market, their products (or services), get into a merger or acquire another company. In summary, such changes or amendments normally involve financial, technical and physical resources, all which tend to overshadow the concept of the culture of the organization being targeted. In such an instance, a merger could result in the merging of two incompatible cultures which may eventually give rise to conflicts and inefficiencies. On the other hand, venturing into new and unfamiliar markets could expose the firm to new and unfamiliar subcultures, which may not necessarily respond in the same way as the markets that the organization is familiar with. Schmidt and Scholl (2003) also argue that strong corporate culture could be dysfunctional, especially for an organization that goes ahead to bring in technologies with the aim of gaining efficiency in manufacturing processes, or in provision of a particular service. This is due to the fact that new technology has the tendency of changing the familiar ways of doing things that have progressively been accepted and embedded as part of the current culture. Such an instance may cause power and status shifts to those who know how to make use of the new technology, while leaving out those without the knowledge, and who may have had the powers and status prior to the introduction of the new technology. Such a move, and the resultant shifts only serve to undermine such people, and this may be the birth of conflicts, inefficiencies and probable sabotage of the new technology (Stanisslav and Aleksios, 2010, p.1165). Finally, culture impacts people so heavily and they get to adopt different ways of perceiving events, language and people. This could end up creating mistrust between people from different subcultures due to the fact that they bear different worldviews, a factor that could also spring conflicts especially when each of the parties holds onto their views passionately (Fiona and Elizabeth, 2012, pp. 91). 3.0. Conclusion Organization culture can act as a strong enabler or an insuperable impediment to organizational change implementation. The change efforts applied by many organizations normally require some amount of culture shift. However, changing the culture of an organization still continues to be an exceedingly difficult and often obscure endeavour. After all, culture by definition provides continuity, stability, and predictability to the life of an organizational (Levin and Gottlieb, 2009, p. 31). At the outset of this paper, the writer stated their stand in regards to the hypothesis stating that “Managing organizational culture effectively is crucial for successful organizational performance”. After the critical analysis that sought to find out the arguments supporting and those against the stand, it is important to note that the position still stands. Organizational culture does more good than harm to an organization and this is clearly elaborated in the functions of a corporate culture. Business failure is more likely for those organizations that lack a strong culture, and this is due to the fact that they could lose their clients as a result of inconsistency and lack of confidence. A client wants to see and feel that the services they are receiving are quality, and that the people offering service know what they are doing. In addition, a mismatch between efficiency/flexibility strategy and organisational culture results in production inefficiency within the firm, whereas a proper match leads to superior performance (Su, 2012, p.5317). No. of words: 4535 4.0. Reference List Alvesson, M. and Berg, P.O., 1992, Corporate Culture and Organizational Symbolism. Berlin, Walter de Gruyter & Co. Alwari, K. et.al. 2013, Organizational Culture and the Creation of a Dynamic Environment for Knowledge Sharing. 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