Culture for Effective Performance of an Organization - Essay Example

CMA SUDIPTAMOY MALLICK DEC 21ST , 2008 Essay Topic Schein (1985) considers that the behaviour of leaders at the top of the organisation is the major factor in culture change. Critically discuss Schein’s view and apply it to a consideration of a significant political, professional or business leader. “ Culture is a dynamic phenomenon that surrounds us at all the times , being constantly enacted and created by our interactions with others , and shaped by leadership behaviour,………………… These dynamic processes of culture creation and management are the essence of leadership and make one realize that leadership and culture are two sides of the same coin”. ( Schein , 2004 , Page 1). Schein described in details the significant roles of leadership in the creation and management of organizational culture throughout organizational growth; early life, midlife and maturity and decline. But what exactly is organizational culture? “ Culture is understood to be a system of common symbols and meanings. It provides the ‘shared rules’ governing cognitive and affective aspects of membership in an organization , and the means whereby they are shaped and expressed.” ( Kunda , 1998:8, Alvesson Mats , 2002 ) Most of the management theory espouses that having a culture is necessary for effective performance of an organization. Even as a layman, we can feel the different cultures prevalent in different organizations even in the same industry and in same geographical location , when we enter different banks, hotels or corporate offices in our day to day life. According to Schein , these perceivable but intangible organizational culture is inoculated and embedded by the leaders of that organizations. When a new organizational group is formed by a leader , be it a new wing of a corporate, led by a Departmental Manager , a regional office of a political party led by a young politician , or a proprietary firm owned by a budding entrepreneur , the leader brings in his own beliefs , vision and ideology. Leaders or founders have a major impact on how the early members of the organization define and solve their “external adaptation and internal integration problems”. Since founders or leaders are usually entrepreneurs who have a high level of self-confidence and determination, they usually impose strong assumptions to their invented organizations. Furthermore, founders or leaders tend to select other organizational members that have the similar assumptions and therefore strengthen the foundation of the organizational culture. When their assumptions survive and become successful in the business environment, the assumptions will be perceived as correct and eventually will be internalized as part of the organizational culture and it will define what form of leadership are acceptable to the organization. Organizational members who have conflicting views on organizational culture tend to leave and thus creating a more homogeneous climate for those who remains. Schein proposed two types of mechanisms used by the leaders/founders to integrate their assumptions in the organizational culture. The culture-embedding mechanisms are as follows; Primary Embedding Mechanisms Secondary Articulation and Reinforcement Mechanisms What leaders pay attention to, measure and control on regular basis How leaders react to critical incidents and organizational crises Observed criteria by which leaders allocate scarce resources Deliberate role modeling, teaching, and coaching Observed criteria by which leaders allocate rewards and status Observed criteria by which leaders recruit, select, promote, retire, and ex-communicate organizational members. Organizational design and structure Organizational systems and procedures Organizational rites and rituals. Design of physical space, facades, and buildings Stories, legends, and myths about people and events Formal statements of organizational philosophy, values and creed. Adapted from Schein (2004) In organizations, the secondary mechanisms are sometimes labeled as organizational climate and they are a reflection and manifestation of cultural assumptions derived from the leaders, especially at the initial formation of the organizations. These secondary mechanisms can become a powerful reinforcement of the primary mechanisms used by the leaders. The principles of using the secondary mechanisms are that they must be consistent with the primary mechanisms and leaders need to set an example. .( Abdullah ,Page 7, nd) However, the culture remains strong till the time the business environment remains stable. Once the business environment changes pose some serious challenge to the rationale of the existing organizational culture , the testing time for leadership arrives. Leaders must come out of the defunct practices and evolve , adapt processes that are more fruitful for the organization. “ This ability to perceive the limitations of one’s own culture and to evolve the culture adaptively is the essence and ultimately challenge of leadership”, ( Schein , 2004, Page 2). Let us look back to history to see how leaders influenced the culture of its organization. In India , Ashoka , the King of Magadh, had a vision of expanding his kingdom and led a ruthless army until the war of Kalinga transformed him into ‘Dharma’ Ashoka. His vision changed from winning the territory to spreading world peace through Buddhism. Later he led one egalitarian kingdom, best known for its role as an ambassador of world peace. Take the example of Mahatma Gandhi , whose belief in ‘Ahimsa’ and ‘Satyagraha’ was legendary in shaping the freedom struggle of India led by Indian National Congress during the first half of the 20th century. On the other hand, the great son of India, ‘ Netaji’ Subhas Bose had a strong belief in armed struggles against the British and eventually separated from Gandhi and formed ‘Azad Hind Bahini’ which fought the historic armed battle against the British . These exemplifies how leaders influence the culture of an organization and lead to the success of the same . The simplest explanation of how leaders get their message across is that , they do it through charisma -- that mysterious ability to capture the subordinate’s attention to communicate major assumptions and values in a vivid and clear manner. ( Bennis & Nanus,1985,Leavitt , 1986, Schein ,2004 , Page 245) The dynamics of midlife, maturity and declining organizations in term of the influence of leaders are quite different from the early stage of organization formation. For example, in the midlife organizations, the culture determines the leadership as founders have been replaced with newer generations of CEOs. The new breed of leaders need to understand the organizational culture and decide which cultural assumptions that needs to be changed. .( Abdullah ,Page 8, n,d) So , it is true that leaders shape the culture of an organization , but at the same time it is also true that external environments also have a major influence on the way the organizational culture is shaped. In recent times , the rapid changes in technology , the internet revolution and globalization have made it compulsory that the organization continuously adapts its culture to stay afloat in the changing world. “ ……….we basically do not know what the world of tomorrow will really be like, except that it will be different , more complex, more fast-paced , and more culturally diverse . ( Helselbein, Goldsmith , Somerville, 1999, n,d).This means that organizations and their leaders will have to become perpetual learners.” ( Schein , 2004, Page 393) But as management experts say , a ‘strong’ culture is essential for the performance of an organization . But a ‘strong’ culture is stable and hard to change and it is a paradox that in today’s turbulent and rapidly changing world , more flexibility and adaptability are expected from organizations . So , is that imply that strong cultures inoculated by leaders are becoming a practical liability today , or is it the responsibility of today’s leader to develop a culture which is learning oriented ? Leaders like it or not , it is more important today to be committed to continuous learning . In the face of greater complexity , the leaders dependence on others to generate solutions will increase ,………..new solutions are likely to be adapted if members of the organization have been involved in the learning process. The learning culture must have in its DNA , a ‘learning gene’. Learning must include not only learning about changes in the external environment but also learning about internal relationships and how well the organization is adapted to the external changes”. ( Schein , 2004, Page 395) Let us look at an example of how a leader with a learning attitude shapes the culture of an organization. It is the story of Tom Watson , Jr., in the context of IBM’s concern for people and for management development. A young executive had made some bad decisions that cost IBM several million dollars. He was summoned to Watson’s office. Expecting to be dismissed , when he entered the office , the executive said , “ I suppose after that set of mistakes , you will be wanting to free me”. Watson replied “ Not at all, young man, we have just spent a couple of million dollars educating you”. ( Schein , 2004 , Page 255) These are leaders who nurture the learning culture of an organization which withstand the test of time and come out as winner every time. As per Schein ( 2004 ) learning leaders must have faith in people and must believe that human nature is basically good and malleable. Humans can and will learn if they are provided with resources and the necessary psychological safety. On the other hand , if leaders start with assumptions that people are lazy , passive and do not care beyond their personal goals , that thinking will automatically create organizations that will become self-fulfilling prophecies. Such leaders will make their employees lazy, self-protective, and self-seeking , and they will cite those characters as proof of their original assumption about human nature. To sum it up , the learning leader must both believe in the power of learning and personally display an ability to learn , by seeking and accepting feedback, and by displaying flexibility of response as conditions change. ( Schein , 2004 , Page 394 ) Lat us take up the example of legendary Henry Ford to study how his leadership changed the culture of his company and also changed the way automobiles are manufactured and sold.. Henry Ford (July 30, 1863 – April 7, 1947) was the founder of the Ford Motor Company and father of modern assembly lines used in mass production. His introduction of the Model T automobile revolutionized transportation and American industry. Henry Ford’s impact on the manufacturing sector of the economy was and continues to be enormous. Ford is credited with inventing the moving assembly line, a system for carrying an item that is being manufactured past a series of stationary workers who each assemble a particular portion of the finished product. Using the moving assembly line, huge numbers of uniform products (such as automobiles, television, computers, toys, etc.) can be made quickly and cheaply. A fiercely driven man, Ford exercised great personal control over every aspect of his company. He avoided the use of outside contractors and suppliers, preferring to make and develop his own materials and parts as much as possible. Before Ford developed the Model T, in 1908 ,the automobile existed largely as an expensive toy for the wealthy. Ford’s strategy turned the automobile into the transportation of choice for the masses. The Model T had a simple design, included many interchangeable parts, and was produced on the moving assembly line. As a result, the car was reliable, easy to repair, and affordable. After the second year of production, Ford either dropped the price or enhanced the features of the Model T every year, carrying out his stated goal of increasing the Model T’s value annually. The price of the Model T, initially $850 in 1908, dropped to as low as $260 in 1924, while the car’s quality improved. (www.markmurray.com, Dec 21,2008) Henry Fords intense commitment to lowering costs resulted in many technical and business innovations, including a franchise system that put a dealership in every city in North America, and in major cities on six continents.Ford also created his own market for the Model T. In January of 1914, he doubled the pay of the average worker in the Ford plants from $2.50 to $5.00 a day and cut the work day from nine hours to eight. This strategy drew workers from all over the United States and the world. In addition, Ford drastically reduced employee turnover, raised morale, and created a new class of industrial workers who could afford to buy Ford automobiles. Ford regarded low wages as “the cutting of buying power and the curtailment of the home market.” The companys use of vertical integration also proved successful when Ford built a gigantic factory that shipped in raw materials and shipped out finished automobiles. (Batchelor, Ray., 1994,n,d) Ford’s strategy for producing the Model T was a huge success. The large degree of standardization in the automobile’s design and manufacturing allowed Ford to produce millions of vehicles. Over 15 million Model T’s were sold over a production run that lasted almost two decades. Ford achieved legendary status, and by 1922 was the richest man in the United States. The elimination of waste from every aspect of a business enterprise adds the savings directly to the bottom line. This is how Ford increased wages while reducing car prices and expanding his business.( Levinson, www.ganesha.org, n,d) The concepts of manufacturing innovation , cost control , waste elimination cultivated by Ford resulted in massive success for the company. Sales passed 250,000 in 1914. By 1916, as the price dropped to $360 for the basic touring car, sales reached 472,000. By 1918, half of all cars in America were Model Ts. The final total production was 15,007,034. This record stood for the next 45 years. This record was achieved in just 19 years flat from the introduction of the first Model T (1908). Though the story narrates how Ford influenced the positive cultures in Ford Motors , there are certain aspects of his leadership which have resulted in some negative cultures and consequences in the company. Though Ford pioneered the concept of high wages to retain and nurture talent ,he required his employees not only to perform their jobs diligently and up to the standards, but to meet his personal ideals of conduct and morality. To enforce his rules, Ford maintained a large security force to watch his employees. This group, headed by Harry Bennett, was particularly important to Ford in his struggle to prevent the unionization of his factories. They were instructed to monitor, harass, and intimidate organizers and potential members of the newly formed United Auto Workers (UAW). Ford Motor Company was the last of the major auto companies to unionize. After many years of court battles and strikes, Ford finally relented and signed a contract with the UAW in 1941. So in a way Ford & his company culture was not successful in handling organised labour efficiently. In addition to his conflicts with organized labor, Ford’s fatherly behavior resulted in many poor business decisions. In 1920 he bought out the other shareholders in the Ford Motor Company and became the sole person in charge. He ignored the advice of his subordinates, chased away many of his best executives and, by 1927, the last year of production of the Model T, his company had been eclipsed by General Motors. Ford could not take up the role of a learning leader who easily changes with situation and revamps the strategy according to the feedback of custpmers. By the end of the 1920’s , customers wanted a change, and Ford sales began to lag. In response to consumer demand, other manufacturers were introducing different car models and they were selling better than Ford’s Model T. In 1927, Ford finally stopped production of the Model T. He introduced the new Model A, 18 months later, but the new model was not enough to help Ford claim the top spot from competing car manufacturer, General Motors.Ford never accepted the changes brought about by the Great Depression and his company suffered because of this reluctance. This in short describes how Henry Ford , as a business leader, not only influenced his organizational culture , in most of the cases in a positive and constructive way , but also changed the way in which Automobile Industry behaves. Works Cited Alvesson , Mats , “ Organizational Culture” , Sage Publication , 2002 Batchelor, Ray. Henry Ford: Mass Production, Modernism and Design Manchester ,U. Press, 1994. Helselbein, Goldsmith , Somerville, 1999, Michael, 1985, 1991, Schwartz, 2003, “ Global Business Network” Levinson, Henry Fords Lean Vision: Enduring Principles from the First Ford Motor Plan, March2005, www.ganesha.org Nor Hazana Binti Abdullah, “The Influence Of Leadership On Organizational Culture And Its Effects On Knowledge Management Initiative” ,2008 Schein , H . Edgar, “Organizational Culture And Leadership” , Willfrey_Default,2004 www.markmurray.com, Dec 21, 2008,Ford, Henry - Overview, Personal life, Career details, Chronology Henry ford, Social and economic impact.htm, Read More