The Influence of Culture on Organisations - Literature review Example

The Influence of Culture on Organisations INTRODUCTION Tonny Hsieh, an entrepreneur, venture capitalist and the CEO of the online shop Zappos once said “For individuals, character is destiny…for organisations, culture is destiny” (Hsieh, cited in Walter, 2014). Culture as a destiny within an organisation is quite a strong comparison, which obviously is based on the personal experience of Zappos’ leader. However, the role of culture within an organisation is widely recognised by many other leaders of the best international companies. Recently, Fortune magazine has carried out a study analysing the role of culture within an organisational context. As the research has shown, leaders of the 100 Best Companies to Work For agreed that “creating an ideal culture for their employees” is one of the secrets to business success (Moskowitz and Levering, 2015). According to the results of studies, where thousands of employees were surveyed and interviewed, the best employers are those whose leaders focus on the workplace culture as a competitive tool (Moskowitz and Levering, 2015). Culture has also maintained dominance among researchers and scholars over years. The reason for this is that culture is inevitable across place and time. All types of organisations have culture consisting of the ways of life followed consciously or sub-consciously in their daily operations. Sparrow (2012) contends that facets such as mission, vision, control systems, internal stories and myths, organisational structures, power hierarchies, symbols and routines influence culture in organisations. Academic researchers and mangers also state that culture has widespread influence on the performance of organisations. Culture is one of the aspects that have a strong impact on organisation and management. According to Johnson, Whittington, and Scholes (2011), behaviour, actions, and interactions of the members of the organisation are determined by culture. Sparrow (2012) defines organisational culture as a system of assumptions, attitudes, values, and norms manifested through symbols developed and adopted by members of an organisation over time. Culture determines the meaning around the members of organisations and the ways through which they should behave in such cultures. It is interesting to note that many great leaders make strong focus on people. This approach is a pillar of many corporate cultures. Probably, that is why, so many great leaders stressed the importance of “culture” in the interviews and their success stories. Some of the expressions are given below: “No company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it”, Jack Welch “To make customers happy, we have to make sure our employees are happy first”, Zappos “Culture drives innovation and whatever else you are trying to accomplish within a company – innovation, execution, whatever it’s going to be. And that then drives results”, Stephen Sadove, Saks “We will never - and I mean never – turn our back on our employees”, Howard Schultz, Starbucks (Quantum Workplace, 2013). However, culture within an organisation seems to be quite a tricky thing. On the one hand, it can help management to achieve desired results and set goals, on the other hand, it can become a major barrier to achieving these results and goals. (Source: UTS Alumni Association, 2014) The crucial question in organisations concerns the way, through which culture affects organisations. In order to understand more specifically how culture influences organisations, it is vital to analyse critically the influence of culture on organization in theory and contrast it with practical implications. The core objective of this e-portfolio is to analyse the influence of culture on organisations by focusing on the effect of culture on the basic elements that affect organisational management. Aspects of Culture Prevalent in Organisations The vital aspects of business management emerge from the ways through which employees understand reality and behave in it. Fleisher and Bensoussan (2007) posit that organisational culture, through its assumptions, symbols, norms and values, determines the perception and interpretation of reality in organisations. Culture also determines the way through which organisational publics behave in the perceived and interpreted reality. In theory, the basic elements that are influenced by culture include the following: organisational change strategy, organisational structure, motivation and reward systems, and leadership style (Janićijević, 2012). In order to gain evidence from the real world, there was carried out a short survey, which was sent to the managers of different companies (different size, industry, structure, etc.). There were 5 multiple-choice questions, which were expected to provide empirical evidence to the theoretical concepts laid out in for this e-portfolio. These 4 multiple-choice questions included the following: The results of survey were the following: 1. 10% of respondents believe that culture is not important; 30% of respondents believe that culture is important; 60% believe that culture is critical to company’s success; 2. 70% of respondents stated that culture influences their leadership style, while 30 % claimed it does not; 3. 60% of respondents agreed that culture predetermines the structure of an organisation, while 40% stated it does not; 4. 100% of respondents claimed that culture impacts on organisational change 5. 90% of respondents agreed that culture impacts on motivation, while 10% disagreed. This survey enables to prioritise the importance of culture in every aspect determined. Thus, it is interesting to note that all managers agreed that culture influences the organisational change. Below is provided more detailed discussion based on the secondary research findings. Organisational Change Strategy The most important components of organizations influenced by culture is the management of organisational change. Organisational change occurs when it becomes necessary to readjust certain aspects of the organisations due to changing business circumstances and times (Khan, Asghar & Zaheer, 2014). Change management is the process of planning, organising, directing, and regulating change processes. During change, culture influences the selection of adequate organisational change management similarly to the way it affects all other aspects of the management. The way in which employees and managers develop an understanding of the organisation is largely determined by the assumptions and values existing in the organisation. During General Electric’s change in the 1960s, culture that existed in the organisation was based on collectivism and concern for the welfare of humanity (General Electric Company, 2012). All stakeholders clearly understood that the change was initiated to benefit them; hence, they all supported changes that lead to the adoption of Six Sigma strategy. IBM has also undergone significant organisational changes. This involves transition from a hardware-focused company a cloud-oriented provider of software and services (Alden, 2014). The primary aim of these transitions has been for both pursuit of vision and execution of strategy. Organisational culture of unity and focus on collective prosperity has always made stakeholders buy-in to the ideas of IBM’s organisational changes. The leadership of Chris Bruzzo has seen the transition of Starbucks; the company has currently designed new strategies for allowing customers at the company’s 12,000 stores to apply their own technology while drinking coffee (Sokovic, Pavletic & Kern-Pipan, 2010). Starbuck’s culture of availing quality services to all customers encouraged them to express interests in technology and motivated employees to work in teams and achieve greater results than people working separately can achieve. The case of Google supports major theoretical concepts related to culture and its impact on organisational change. After the company went public it has introduced a different culture in order to adapt to new change. The company faced “with a challenge in convincing its employees that management was actually valuable”. In order to address this challenge it has developed a 20% time policy whereas Google employees were encouraged to spend 20% of time on side projects that were expected to become innovative products. Thus, the company developed a culture facilitating innovation and creativity (Frick, 2014). The type of change happening in organisations is largely contingent upon the view of leaders and organisational members on the functioning, suitability, usefulness, and effectiveness of the ways of making changes. Thus, the process of organisational change management differs across organisations with different cultures (Horațiu-Catalin, Radu, Mihai & Bogdan, 2013). In organisations having cultures dominated by the value of flexibility, members will consider changes as critical projects meant to benefit both individuals and the organisation. Therefore, in these organisations, change will be continual and incremental in nature characterised minimal resistance. People in flexible organisations like change and change is part of them (Janićijević, 2012). Volberda (2011), however, warns that even with this flexibility, organisations should be careful not to permit excessive change that may damage organisations. On the contrary, organisational members in cultures based on values of stability and conservatism view changes as harmful to both individuals and organisations; this make organisational changes rare. However, if changes happen, they will be radical and comprehensive characterised by high degree of resistance. Conservativeness and stability in these organisations instil fear in organisational member concerning the anticipated changes. While it is clear that corporate culture impact the way how organisations introduce and manage changes, and how employees perceive and implement these changes, it is also important to mention the process of changing culture within an organisation. As everything is changing, the organisations change as well. In order to stay competitive, organisations need to adjust their strategies and quite often change organisational culture. It also happens, that organisations need to change organizational culture because of new leader, new investor, or as a result of acquisition of existing company. The picture above gives an insight that it might be quite a challenging task. There are many different theories and practices of how to change corporate culture. However, it is a very complex and challenging task, success of which depends on many different factors. extremely challenging task, which requires substantial efforts, effective change management strategy, and time. However, this paper will not cover this issue in details, as it is a topic for separate discussion. Organisational Structure The culture adopted within an organisation “creates a frame of reference in which the organization management’s considerations and reasoning circulate in the process to decision-making concerning the organisational structure model” (Janićijević, 2013: 39). This statement clearly supports the idea that type of organisational structure adopted by a given organisation depends on the culture and perceptions of management. Management’s interpretive schemes are shaped by culture; leaders have a specific vision of an organisation, which is reflected in the model and design of corporate structure (Janićijević, 2013). The way on how organisation is structured inevitably affects the level of performance of the organisation. Although Capon (2008) opposed the idea that organisational structure affects the performance of an organisation, Volberda (2011) contends that the type of structure is the primary determinant of how people relate in organisations. According to Jennings and Wattam (1998), work relationships can either be negative or positive; negative work relationships minimises cooperation and spurs hatred in workplaces, leading to low productivity. A positive work relationship, on the other hand, enhances teamwork and cooperation, which are critical elements of organisational prosperity. In autocratic organisations, leaders tend to initiate negative relationships in order to prevent people from collaborating against them. Democratic and laissez-faire leaders propagate positive work relationships in order to enhance proper functioning of teamwork. Taking the example of Apple, simplicity of the organisational structure has been the main culture largely contributing to the success of the company. The organisational chart of Apple, Inc. is straightforward void of matrix responsibilities, promoting cultural diversity and inclusion (Johnson, Whittington, Scholes, Angwin & Regnér, 2014). What enhances the uniqueness of Apple as far as their structure is concerned is the fact that there has never arisen any confusion concerning division of responsibilities. Employees are randomly assigned responsibilities and a list produced for each function. They are encouraged for innovation. Fleisher and Bensoussan (2007), however, argue that Apple’s organisational structure is deceptively line hiding several issues in it. Considering the consistent management excellence that characterise Apple and its success, it is hard to find evidence for such assertions. Organisations with cultures based on rigid values prefer complex organisational structures such as matrix structures that can promote their desired bureaucracy. If the management of the company encourages culture of machine-type work, where everything is systemised, regulated and standardized, the structure of such company will more likely have specialised and formal structure (Janićijević, 2013). Line structures are adopted by flexible and collectivist culture organisations. Thus, corporate culture influences the type of organisational structure adopted by such organisation. Motivation and Reward Systems Motivation is the primary factor enhancing employee productivity and organisational sustainability. When employees are motivated, they tend to work extra harder to enhance organisational performance (Taylor, 2014). The strength of the culture of an organisation is a vital factor in determining organisational performance. The most important factor to consider concerning the effect of culture on motivation and hence improved performance is the extent to which behaviour patterns supported by culture are in line with the organisation’s requirements. Culture itself may be a strong motivator for employees. As John Mackey from Whole Foods Market explains, “If you are lucky enough to be someone’s employer, then you have a moral obligation to make sure people do look forward to coming to work in the morning” (cited in Quantum Workplace, 2013, n. p.). These words reflect managerial values and interpretation of how the things should be done within an organisation. Therefore, culture and the values adopted within an organisation influence of the way of how employees are motivated and encouraged to perform their jobs. Thus, for example, Richard Branson from a Virgin Group explains his approach to culture and motivation: “When you lavish praise on people, they flourish. Criticise, and they shrivel up” (cited in Quantum Workplace, 2013, n. p.). Strong cultures tend to bind people together, leading to streamlined functioning. The problem with strong cultures is that they tend to propagate rigidities in organisations. This is detrimental because it inhibits innovativeness and creativity in addition to discouraging change. For example, an advertising company is more effective when employees are innovative and creative. This kind of culture requires people characterised by readiness to take risks and experiment new aspects of their job responsibilities. A lot of motivation in terms of monetary rewards, praises, and bonuses are required to motivate employee take risks (Bodtke, 2015). Strong cultures stress on conventionalism and shuns all new ideas that come with changing generations. This implies that leaders operating in environments characterised by dynamisms should appreciate some degree of flexibility in their management endeavours in order to promote the positive role of culture in organisations. Leadership Style Contemporary leaders recognise that the style of leadership selected to handle current situations tends to influence the likelihood of organisational success. Although most modern leaders apply primary leadership styles in leading their organisations, cultural traditions and values have extensive impact on the roles of leaders. The International Journal of Cross-cultural management argues that both cultural norms and the needs of the leadership job are fundamental determinants of leadership traits (Taylor, 2014). Leadership styles differ according to the ways power is used in organisation; for example, leaders who act with the aim of maximising personal gains have the behaviour of individualists while those working to help the community behave as collectivists. A leadership style adopted by an organisation is based on the behavioural theory of leadership. The behavioural theory posit that the type of leadership adopted by a given leader results from the behaviour of such a leader. Different leaders have varied behaviours. Examples of leadership behaviours include stubbornness, controlling, exploitative, understanding, and hand-off from production processes. Kurt Lewin, focusing on the distinctive characteristics differentiating various leaders designed a framework classifying leaders based on behaviours (Wiengarten, Fynes, Cheng & Chavez, 2013). Organizational culture determines the style of leadership adopted by leaders in an organisation. Different organisations have various cultures that determine whether organisations will adopt autocracy, democracy, or laissez-faire style of leadership. In practice leader may adopt flexible approach to leadership style, varying from situation to situation and evolving throughout the time. Thus, for example, in his interview with New York Times, Stephen Sadove, chairman and chief executive of Saks Inc. describe his philosophy of leadership and explained how it drives culture: “I have a very simple model to run a company. It starts with leadership at the top, which drives a culture. Culture drives innovation and whatever else you’re trying to drive within a company — innovation, execution, whatever it’s going to be. And that then drives results. When I talk to Wall Street, people really want to know your results, what are your strategies, what are the issues, what it is that you’re doing to drive your business. They’re focused on the bottom line. Never do you get people asking about the culture, about leadership, about the people in the organization. Yet, it’s the reverse, because it’s the people, the leadership, the culture and the ideas that are ultimately driving the numbers and the results. So it’s a flip. What I try to teach people is, don’t ask the first question in terms of numbers. Let’s talk about the people, let’s talk about the culture, let’s talk about the ideas and the innovation” (Sadove cited in Bryant, 2010, n.p.). This position of one of the global leaders supports the theory that leadership and organizational culture are closely interrelated concepts, whereas leadership style is affected by organizational culture. Concluding Remarks Culture is one of the aspects that have a strong impact on organisation and management. It determines the meaning around the members of organisations and the ways through which they behave in such cultures. The influence of culture on organisations is broad and emerges from nature and content. In theory there are identified many different approaches and views of how culture influences various aspects in organisations, varying from organisational change, and structure to leadership style and motivation of employees. In practice, managers also recognise the power of culture of the organisation on change management strategy, organisational structure, motivation and reward systems, and leadership style. Perhaps the most important aspect about the influence of culture in organisations is accepting that culture provides evidence of organisational transition from introduction to establishment. Organisations undergo cycles throughout their growth processes. The extent to which culture influences organisations cannot be overlooked considering its effect on various areas of management. Culture cannot be separated from the strategy because it has widespread effects on all organisations. The results of the primary research also support the theoretical concepts related to influence of culture on organisation. However, the results of the survey has shed some light to the prioritisation of these aspects. Thus, for example, the impact of culture on organisational change was recognised by 100% of managers, and 90% of respondents agreed that culture impacts on motivation system. The views on the impact of culture on leadership style were more varying, as only 70% of respondents claimed that culture had impact on their leadership style. Furthermore, only 60% of respondents agreed that culture predetermines the structure of an organisation. This survey enables to prioritise the importance of culture in every aspect determined. Thus, it is interesting to note that all managers agreed that culture influences the organisational change. Organisations should respect their cultures and manage their businesses based on the assumptions, values, and norms while allowing some degree of flexibility for change. Following the example of global leaders, it is important to adopt employee-centric and customer-centric culture, whereas the interests and needs of both employees and customers are taken into consideration. Such culture enables the company to succeed and stay ahead of its competitors. However, it is also worth to mention that changing corporate culture is an extremely challenging task, which requires substantial efforts, effective change management strategy, and time. References: Alden, W 2014, 'General Electric's industrial segments lift earnings', The New York Times, 2014, Opposing Viewpoints in Context, EBSCOhost, viewed 26 April 2014. 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