ORGANIZATIONAL CULTURE
As people work together
to accomplish goals, groups develop into organizations. As goals become more
specific and longer-term, and work more specialized, organizations become both
more formal and institutionalized. Organizations tend to take on a life of
their own and widely held beliefs, values, and practices develop,
differentiating one organization from another and often affecting the
organization's success or failure. In the early 1980s, management scholars
began attempting to describe these belief systems, which they referred to as
organizational or corporate cultures.
Interest in
organizational cultures was further created by William Ouchi's 1981
best-seller, Theory Z: How
American Business Can Meet the Japanese Challenge. Ouchi considered organizational
culture to be a key determinant of organizational effectiveness. In 1982 two
other best-sellers, Terrance Deal and Allan Kennedy's Corporate Cultures: The Rites and
Rituals of Corporate Life and Thomas Peters and Robert Waterman's In Search of
Excellence, supported the
idea that excellent companies tended to have strong cultures.
An organizational
culture is defined as the shared assumptions, values, and beliefs that guide
the actions of its members. Organizational culture tends to be shaped by the
founders' values, the industry and business environment, the national culture,
and the senior leaders' vision and behavior. There are many dimensions or
characteristics of organizational culture that have been defined. For example,
a research study conducted by J.A. Chatman and K.A. Jehn in 1994, identified
seven primary characteristics that define an organization's culture:
innovation, stability (maintaining the status quo versus growth), people
orientation, outcome orientation, easygoingness, detail orientation, and team
orientation.
Large organizations usually have a dominant
culture that is shared by the majority of the organization and subcultures
represented by groups of individuals with unique values or beliefs that may or
may not be consistent with the dominant culture. Subcultures that reject the
dominant culture are called countercultures. Strong organizational cultures are
those where the core values of the dominant culture are strongly believed by
the great majority of organizational members. A strong culture tends to
increase behavior consistency and reduce turnover. However, strong cultures may
be less adaptive to change, may create barriers to diversity, and may create
barriers to successful acquisitions and mergers.
CULTURAL FIT
BETWEEN ORGANIZATION
AND MEMBERS
There are many
practices within an organization that tend to keep a culture alive and measure
the cultural fit between the organization and its employees. Many of the human
resource practices such as selection, performance appraisal, training, and
career development reinforce the organization's culture. Organizational beliefs
also tend to influence the work norms, communication practices, and
philosophical stances of employees. Organizations use a process called socialization
to adapt new employees to the organization's culture. If employees do not adapt
well, they feel increasing pressure from supervisors and from coworkers who are
better acculturated. They might stay and fight, stay and become isolated, or
leave the organization, voluntarily or involuntarily, and look for a different
organization whose culture they fit better.
In contrast, employees who understand and share
the organization's values have a better basis for making choices that match the
firm's goals. Many organizations compete through innovation. When most
employees understand and support the organization's expectations, less time is
spent explaining, instructing, and building consensus before trying something
innovative. Moreover, the error level will be lower in most cases. Employees
who are well acculturated also find their work more meaningful: They are part
of, and contributing to, something larger than themselves. Thus, a good
cultural fit between employees and the organization contributes to employee
retention, organizational productivity, and profit.
MEANS OF CONVEYING
CULTURE
Organizations often
convey cultural values explicitly by means of mission statements or corporate
credos, or to a lesser extent through slogans, logos, or advertising campaigns.
Leaders and managers also show what the organization values by what they say
and do, what they reward, who they make allies, and how they motivate
compliance. Other elements of culture appear tacitly in symbols and symbolic
behavior: For instance, meeting protocols, greeting behavior, allocation and
use of space, and status symbols are a few areas where organizational norms
often develop. Culture can regulate social norms as well as work or task norms.
The new-employee
orientation typically offered by organizations conveys selected cultural
elements of which management is both aware and proud. Some cultural elements
might be initially unpalatable, however, and some others might be hard to put
into words. For instance, an orientation would rarely say outright that the
culture rewards neglect of one's personal life and demands a 60-hour work week,
although these expectations are not unknown in corporate life. Perceptive new
employees learn about tacit cultural elements through observation and through
questioning trusted employees or mentors. This is not one-time learning;
employees must continue to watch for signs that the rules are changing.
These organizational
rules include explicit policy statements, but also a much larger and less
evident set of unwritten organizational expectations. Attentive employees
figure them out sooner than others. They listen to the metaphors, images, and
sayings that are common in the organization. They watch, for example, the
consequences of others' mistakes to reach conclusions about appropriate
behavior.
Organizations also
communicate values and rules through displayed artifacts. For example, in some
organizations, the CEO's office displays many symbols of wealth, such as
expensive original art or antiques. In others, the CEO's workspace is very
Spartan and differs little from that of other executives and higher-level
managers. In the former case, a manager with other sources of income might be
able to afford similar status symbols but would be unwise to display them since
this might be perceived as competing with the CEO. In the latter case, display
of personal wealth by people in general would probably be counter to
organizational values.
Even the way a physical plant is laid out
communicates cultural messages: Is it an open area where everyone can see
everyone? Are there cubicles? Are there private offices? Is it easy or
difficult to move and communicate between functional areas? Have ergonomics and
convenience been considered or ignored? Are there adequate neutral spaces for people
to meet to make decisions and solve problems? Do the break rooms and lunch
rooms invite or discourage use?
SOME COMPONENTS OF
CULTURE
The idea that
organizations have cultures came originally from ethnography, the study and
description of human social cultures. Researchers in organizational culture
have borrowed some of that language. Individuals in societies took on specific
"roles," such as ruler, priest, historian, or teacher. In
organizations, similar roles emerge. The historian or storyteller, for
instance, is usually a longtime employee who narrates inspirational stories
about the company's early years or its evolution. Embodied in the stories are
many of the core values that permeate the organization. This
"organizational folklore" includes oft-repeated stories about the
founder, a long-term CEO, a dramatic firing, or an individual who rose through
the ranks very quickly owing to some attribute highly valued by the firm. The
stars of an organization are comparable to a social culture's heroes. An
organization's success stories yield "role models" for the ambitious.
Organizations develop
"rites and rituals" comparable to traditional activities within an
ethnic culture. Whereas some organizations might emphasize award ceremonies,
others might de-emphasize explicit recognition and affiliation behaviors. Still
others might foster "management by walking around," whereby managers
spend frequent one-on-one time away from their desks giving praise or criticism
to individuals. As another example, lunch with the president might be a
longstanding tradition, although the amount of actual communication will vary
from organization to organization according to unwritten rules about who talks
to whom.
Although all organizations have both formal and
informal communication networks, organizational culture strongly affects the
content, reliability, and influence of the informal network or
"grapevine." When information through formal channels is scarce, the
grapevine carries heavier traffic. Leaders aware of culture's importance try to
find ways to tap and monitor the grapevine and sometimes use the grapevine by
adding information to it.
CULTURE CHANGE
An organization's
culture is composed of relatively stable characteristics that are based on
deeply held values that are reinforced by many organizational practices.
However, an organizational culture can be changed. Cultural changes are most
likely to occur when there is a dramatic setback such as a financial crisis or
when there is a turnover in top leadership. Also, younger and smaller
organizations and organizations with a weak culture are more amenable to
change.
Deliberate and major
culture change occurs by executive fiat, by implementation of a plan, or a
combination of these means. When leadership changes or when existing leadership
commits to change, employees learn that the old assumptions which they were
comfortable are no longer safe. After a merger or acquisition, for example,
"how we do things here" will change, sometimes quickly and radically.
A wise leadership team implements a planned culture-change process. The process
usually consists of a series of two-way communications that elicit the
prevailing assumptions, reassure employees that the changes can benefit them,
introduce (sometimes gradually) the new vision, and work to gain employees'
commitment and support. Leaders also must model the new culture for others and
change the organization's structure and management practices to support the new
culture. If the leaders skip the process or do an inadequate job, employees at
all levels experience stress, confusion, and anger. When change is introduced
so as not to arouse fear and resentment, however, transition may be relatively
smooth.
A 1992 research study
by J.P. Kotter and J.L. Heskett showed that long-term financial performance was
highest for organizations with an adaptive culture. One example of when
organizations must adapt their culture is when organizations become
multinational. With the increase in global organizations, it has become clear
that national cultures impinge on organizational cultures. Besides language
differences, employees bring to the job many radically different assumptions
about such aspects as the dignity of work, the proper relationship between
employee and supervisor, the value of initiative, the treatment of unwelcome
information, and the voicing of complaints. Organizations with international
customers, and even more, those with global operations have needed to learn how
to adapt to a multicultural environment. Failure to adapt jeopardizes an
organization's chance of success abroad.
To summarize,
organizational culture is the shared assumptions, beliefs and values held by
most members of an organization. Culture is conveyed in both explicit and
implicit ways. Newcomers to an organization must quickly assimilate a great
deal about the culture. Veteran employees must remain aware of cultural change
too, especially when the leadership changes. A strong culture that is aligned
with the organization's strategic context and is adaptive to environmental
changes can enhance an organization's long-term financial performance.
Jeanette W. Gilsdorf
Revised by Dr. Fraya Wagner-Marsh
FURTHER READING
Chatman, J.A. and K.A.
Jehn. "Assessing the relationship between industry characteristics and
organizational culture: How different can you be?." Academy of Management
David, Stanley M. Managing Corporate Culture. Cambridge , MA Co. , 1984.
Deal, Terrence E., and
Allan A. Kennedy. Corporate
Cultures: The Rites and Rituals of Corporate Life. Reading , MA
Frost, Peter J., Larry
F. Moore, Meryl R. Louis, Craig C. Lundberg, and Joanne Martin, eds. Organizational Culture. Beverly Hills , CA
Graf, Alan B.
"Building Corporate Cultures." Chief
Executive, March 2005, 18.
Hofstede, Geert. Cultures and Organizations:
Software of the Mind. New York : McGraw-Hill,
1991.
Kilman, Ralph H., M.J.
Saxton, and Roy Serpa, eds. Gaining
Control of the Corporate Culture. San Francisco :
Jossey-Bass, 1985.
Kotter, J.P. and J.L.
Heskett. Corporate Culture and
Performance. New York : Free Press,
1992.
LaRue, Bruce, and
Robert R. Ivany. "Transform Your Culture." Executive Excellence, December 2004, 14–15.
LeFranc, Fred. "A
Dynamic Culture Can Make a Franchise System Successful." Franchising World, February 2005, 75–77.
Oden, Howard W. Managing Corporate Culture,
Innovation, and Intrapreneurship. Westport , CT
Ouchi, William G.
"Theory Z: How American Business Can Meet the Japanese Challenge." Reading , MA
Panico, C. Richard.
"Culture's Competitive Advantage." Global
Cosmetic Industry 172, no. 12
(December 2004): 58–60.
Peters, Thomas J., and
Robert H. Waterman, Jr. In
Search of Excellence: Lessons from America New York : Harper & Row, 1982.
Schein, Edgar H. Organizational Culture and Leadership:
A Dynamic View. San Francisco :
Jossey-Bass, 1995.
Schneider, Benjamin,
ed. Organizational Climate and
Culture. San Francisco : Jossey-Bass, 1990.
Weick, Karl E. Sensemaking in Organizations. Thousand Oaks , CA
Wright, Gordon.
"Realigning the Culture." Building
Design & Construction 46,
no. 1 (January 2005): 26–34.
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