Understanding Organizational Culture

Transcription

1 Understanding Organizational Culture Introduction Organizational culture is a broad term that describes the attitudes, beliefs, values, and psychology of an organization. It is the collective reflection of the organization s interaction with the stakeholders and between the people within the organization. In his book Organizational Culture & Leadership (1992), Edgar Schein defines culture as..."a basic set of assumptions that defines for us what we pay attention to, what things mean, and how to react emotionally to what is going on, and what actions to take in various kinds of situations" (p. 22). Schein's definition suggests that leaders who hope to implement a radical departure from the "norm" in an organization will need to influence and finally change the culture before leading a successful organizational change effort. The organizational culture displays the ideas and beliefs that the members of the organization are made to pursue and the standards of behavior that are appropriate to achieve the goals of the organization, thus representing the value system embedded in the organization. These values help in deriving guidelines and norms as well as in setting the individual and organizational goals and expectations. There are many ways to visualize the concept of organizational culture. The following is the popular onion model where a cut onion is used to visualize organization culture. The Onion Model of Organizational Culture Source: Strong and Weak Cultures A strong organizational culture can help the organization come out of crises smoothly or the losses can be minimized. A well responsive staff and the staff s alignment with organizational values are reflective of a strong culture. In the recent decades there has

2 been a lot of emphasis on developing a strong culture especially for organizations in the service industry. Shaping a strong culture can be possible if the organization has well defined goals and strategies to attain those goals. The organization needs to document the appropriate behavior through which those goals shall be achieved. This needs to be made known to the members of the organization. If control needs to be exercised across all levels to direct the staff, such a system is a reflection of a weak organizational culture where the staff is not in alignment with the organizational goals and value system. As the individuals are varied, organizations, too, are varied in cultural aspects. Organizational culture is complex and can have long ranging effects on the employees as well as the organizational strategies. An organization with strong culture can, to a great extent, preserve its growth and success. A strong culture is a necessity for the survival of the organization, especially in the present market scenario where the competition and volatility is high. A strong culture can benefit the organization in several ways: The members of the organization will be in alignment with achieving the organization s mission, vision and goals High employee motivation and loyalty Increased understanding and better relationship between various departments and divisions improves consistency and coordination within the organization Helps shape employee behavior at work and thereby his or her efficiency Groupthink On the downside, excessive importance given to the promotion and sustenance of a culture in order to make it a strong culture may have its ill effects. Irving L Janis describes such effects as Groupthink. This is...a quick and easy way to refer to a mode of thinking that people engage when they are deeply involved in a cohesive in-group, when members' strive for unanimity override their motivation to realistically appraise alternatives of action." In such an organization, the employees do not challenge an idea even if they differ from one. This hurts innovation. This can happen when there is a heavy reliance on a central charismatic figure or when there is an intense belief in the organization s values, or also when the employees are friendly and would like to avoid conflict arising out of disagreements. It is important to protect the organization from groupthink effects. The culture should promote innovative thinking, allow employees to challenge the status quo and facilitate the employees by providing a platform to share their new ideas or disagreements.

3 As the author Stephen P Robbins notes in his book Organizational Behavior, a weak culture can create barriers to change, create barriers to diversity or barriers to mergers and acquisitions. This is when culture becomes a liability to an organization. Organizational culture and organizational leaders In his book, Organizational Culture and Leadership (1992), Edgar Schein has five guidelines for the leader: 1. Don't oversimplify culture or confuse it with climate, values, or corporate philosophy. Culture underlies and largely determines these other variables. Trying to change values or climate without getting at the underlying culture will be a futile effort. 2. Don't label culture as solely a human resources (read "touchy-feely") aspect of an organization, affecting only its human side. The impact of culture goes far beyond the human side of the organization to affect and influence its basic mission and goals. 3. Don't assume that the leader can manipulate culture as he or she can control many other aspects of the organization. Culture, because it is largely determined and controlled by the members of the organization, not the leaders, is different. Culture may end up controlling the leader rather than being controlled by him or her. 4. Don't assume that there is a "correct" culture, or that a strong culture is better than a weak one. It should be apparent that different cultures may fit different organizations and their environments, and that the desirability of a strong culture depends on how well it supports the organization's strategic goals and objectives. 5. Don't assume that all the aspects of an organization's culture are important, or will have a major impact on the functioning of the organization. Some elements of an organization's culture may have little impact on its functioning, and the leader must distinguish which elements are important, and focus on those. Characteristics of Healthy Organizational Cultures An organizational culture which helps the organization in attaining its goals, to increase productivity, to reduce attrition, to reduce counterproductive behavior and increase growth and efficiency is a healthy culture. A healthy culture exhibits the following characteristics: Clarity of thoughts, appreciation and acceptance for diversity Fair treatment of employees and consideration for the contributions of the employees towards the organization Employees enjoy the work performed and are proud of the organization Equal opportunity for each employee to learning, growth and promotion Clear communication with all employees regarding company issues and policies

4 Strong sense of direction, purpose and strategy among the leadership Competitive products and services Employee appreciation for the opportunities provided by the organization for training and development Higher employee interaction and involvement Strong internal communication, unambiguous procedures and guidelines, and statistically better financial growth John P. Kotter & James L. Heskett, in their work Corporate Culture & Performance (1992), note that organizations with adaptive cultures perform much better than organizations with unadaptive cultures. An adaptive culture translates into organizational success; it is characterized by managers paying close attention to all of their constituencies, especially customers, initiating change when needed, and taking risks. An unadaptive culture can significantly reduce a firm's effectiveness, disabling the firm from pursuing all its competitive/operational options. Culture: One of the Four Components of an Organization Organizations comprise four basic components: Culture, physical components, infrastructure and behavioral components. For an organization to achieve its goals, a synchronized interaction between these four components is necessary. While the physical components are the visible aspects of the organization, the infrastructural components are the systems and processes used to performing, directing and managing work. The intangible components such as behavioral components are the actions and reactions of the employees and the cultural component is the underlying assumptions, values, norms and beliefs that shape the behavior of the members of the organization. The following graph depicts the different components of an organization. The figure also shows that while it is easy to change the physical or infrastructural components, it is difficult to change the behavioral and cultural components. The graph also shows that the durability of any changes to the infrastructural or physical components is shortlived whereas that of cultural and behavioral changes has long term effects. Without a change in the underlying cultural and behavioral aspects, any superficial changes to the organization are short-lived.

5 Importance of Understanding Organizational Culture Understanding the inherent organizational culture helps one understand why a particular change has internal opposition, or why a particular project did not yield the expected results. A deeper understanding of the organizational culture can point at areas that need changes or improvements. Whether there is a need to improve the market share, bring out better quality products, support innovation, reduce attrition, improve the organization s standing in the industry, improve business processes, or to create a challenging and rewarding environment, it is important to understand the underlying cultural aspects that are influencing these areas and review the extent of influence it has on these areas. This will help in understanding if the organization needs deeper changes or changes in one particular area of operation. Organizational culture is reflected in the way people perform tasks, set objectives, and administer the necessary resources to achieve objectives. Culture affects the way individuals make decisions, feel, and act in response to the opportunities and threats affecting the organization. Corporate Culture and Organizational Effectiveness (2004) by Denison, D.R., Haaland, S. and Goelzer. P states that culture contributes to the success of the organization, but not all dimensions contribute the same. It was found that the impacts of these dimensions differ by global regions, which suggests that organizational culture is impacted by national culture. A 2003 Harvard Business School study reported that culture has a significant impact on an organization s long-term economic performance. The study examined the

6 management practices at 160 organizations over ten years and found that culture can enhance or create barriers to performance. Organizations with strong performanceoriented cultures witnessed far better financial growth. A 2002 Corporate Leadership Council study found that cultural traits such as risk taking, internal communications and flexibility are some of the most important drivers of performance, and may impact individual performance. In their work, In Search of Excellence, Tom Peters and Robert Waterman (1982) note that innovativeness, productivity through people, and other cultural factors they have cited in this book also have positive economic consequences. In Firm or subgroup culture: Where does fitting in matter most? Adkins, B., &Caldwell, D. (2004), Journal of Organizational Behavior, 25, , found that job satisfaction was positively associated with the degree to which employees fit into both the overall culture and subculture in which they worked. A perceived mismatch of the organization s culture and what employees felt the culture should be is related to a number of negative consequences including lower job satisfaction, higher job strain, general stress, and turnover intent. Types of Culture Organizational cultures can be grouped into four main categories based on the structure, flexibility and dynamism of the organization. They are Hierarchical: This is an organization which is structured, process-driven or almost inflexible in the way it operates. Adhocracy: This is an organization which is flexible, informal, innovative, and dynamic. Clan: Clan cultured organization displays a friendly and social environment. Market culture: This is an organization that is result-oriented and sales-driven. Elements Influencing Organizational Culture Several elements influence organizational culture. Identification of these elements and understanding their interplay helps in better understanding of the prevalent organizational culture. A good study of these elements will also help us identify the areas that need a change. The Cultural Web, developed by Gerry Johnson and Kevan Scholes in 1992, provides an excellent approach to understanding culture. It also helps in identifying the assumptions and practices that are detrimental to the organization s progress.

7 Elements of the Cultural Web According to The Cultural Web, there are six basic interrelated elements that make up the paradigm of the work environment in the organization. An analysis of these elements helps in knowing what works or what does not work for an organization. The six elements are: 1. Stories The stories that are talked about with respect to the organization. The stories indicate employees perception about the organization 2. Rituals and Routines the behavior that is considered acceptable and not acceptable. This gives an insight into what is valued by the management and what is expected from the employees. 3. Symbols symbols indicate the visual representation of the company, some of the examples are the logos, dress code, interior decoration and such other areas that represent the organization 4. Organizational Structure this not only consists of organizational chart, but also unwritten lines of power, who is more influential, who is not, and whose contribution is valued and so on. 5. Control Systems control system includes all the processes in place including the quality management system, performance evaluation, financial systems, the methods used to recognize and reward talents and every other area where there is a process in place. 6. Power Structures - this indicates the perception about the power play within the organization. This could be one particular key executive, a group of executives, or a department. This aspect examines who is considered to have how much influence within the organization. These elements are represented as six semi-overlapping circles which together influence the cultural paradigm. These circles overlap since one element may have a cause in one circle and the effects may be noted in another circle. For example, a particular routine may lead to a change in control system. The routine may arise due to a false story making the rounds in the organization.

8 In his book, Organizational Culture and Leadership (1992), Edgar Schein observes that a culture develops in an organization due to external adaptation and internal integration. While external adaptation is bringing about a culture that is conducive to survive and flourish in a highly competitive environment, internal integration is necessary for the organization to exist and perform. The factors that influence organizational culture are: External environment Industry Size and nature of the organization s workforce Technologies the organization uses The organization s history and ownership Impacts of Organizational Culture Organizational culture impacts the organization in several ways, some direct and some others indirect. Organizational culture can be responsible for survival or extinction of the organization, can impact employee creativity by either placing the organization among the most innovative companies or on the downside discourage employees from sharing their ideas. Culture also influences recruitment and retention efforts of the organization. Employees that find the culture compatible are more likely to remain with the organization. Overall company performance may also be an indicator of either a strong culture or deteriorating culture in the organization. Assessing the Current and Desired Organizational Culture In order to derive maximum benefit from organizational culture, it is important to assess whether or not the existing culture is conducive for employee and organizational

9 development, for achievement of goals with least possible resistance. This process requires a deeper understanding and assessment of current organizational culture before effecting any desired change. In the article Connecting Culture to Organizational Change (Human Resources Magazine, March 1996, pp ), T. Galpin suggests that since changing the basic characteristics of any organizational culture is difficult, it is important to understand what exactly needs change and work on bringing about change in that specific area or those specific areas that are most critical for implementing and sustaining the changes. Galpin suggests targeting one or more of the following cultural components which in turn can bring about the change that is sought: Rules and policies Goals and measurements Customs and norms Training Ceremonies and events Management behaviors Rewards and recognition Communications Physical environment Organizational structure Source:

10 Cultural Forms Harrison, Trice M. and Janice M. Beyer, in Studying Organizational Cultures Through Rites and Ceremonials, Academy of Management Review. 1984, Vol. 4, list the following cultural forms in relation to organizations: Rite: Relatively elaborate, dramatic, planned sets of activities that consolidate various forms of cultural expressions into one event, which is carried out through social interactions, usually for the benefit of an audience. Ceremonial: A system of several rites connected with a single occasion or event. Ritual: A standardized, detailed set of techniques and behaviors that manage anxieties, but seldom produce intended, technical consequences of practical importance. Myth: A dramatic narrative of imagined events usually used to explain origins of transformations of something. Also, an unquestioned belief about the practical benefits of certain techniques and behaviors that is not supported by demonstrated facts. Saga: An historical narrative describing the unique accomplishments of a group and its leaders-usually in heroic terms. Legend: A handed-down narrative of some wonderful event that is based in history but has been embellished with fictional details. Story: A narrative based on true events-often a combination of truth and fiction Folktale: A completely fictional narrative. Symbol: Any object, act, event, quality, or relation that serves as a vehicle for conveying meaning, usually by representing another thing. Language: A particular form or manner in which members of a group use vocal sounds and written signs to convey meanings to each other. Gesture: Movements of parts of the body used to express meanings. Physical: Those things that surround people physically, setting and provide them with immediate sensory stimuli as they carry out culturally expressive activities. Artifact: Material objects manufactured by people to facilitate culturally expressive activities. The cultural forms, according to Trice, act as linking mechanisms. These help in developing networks of understanding among employees. They act as a medium for communicating ideologies, norms and values. The leaders can influence the desired culture or thinking through these forms. It is important to create or utilize a cultural form that has long term positive effects for the organization.

11 The Denison Organization Culture Model This is a tool that measures organizational culture in an objective way and provides a lot of information with respect to observations in different areas. There are four cultural traits that are measured for flexibility and stability and internal and external focus, as shown in the diagram below: The Denison Organizational Culture Survey has 60 items that measure specific aspects of an organization s culture in each of the four traits and twelve management practices identified in Dr. Denison's research. Individual surveys are collectively tabulated into a graphic profile that compares an organization s culture to that of higher and lowerperforming organizations. The results are presented in a typical circumflex with reports being produced in bar charts.

12 The results an organization gets can start to shape the way to take the organization. High Performing Companies Weak Performing Companies Composite of companies that had an ROI of 30% ROI: Return on Investment Composite of companies that had an ROI of 9% Source:

13 Role of Leaders in Characterizing Organizational Culture A supportive, productive and strong culture is possible if the leaders understand the existing culture and its impact across different levels, and are able to evaluate the extent of changes required to achieve the organizational goal. The leaders should be well aware of the organizational goals and identify actions that can be fruitful in attaining such goals. Culture is deep-seated and can pose great resistance to change. The leaders should support and follow the culture that they have visualized for the organization. The leaders should check for internal and external conflicts or ambiguities and work towards clarifying or resolving them. They must pay attention to how they deal with or react to different incidents within the organization which can sometimes send wrong messages to the employees. 1. Leaders must review what is measured and controlled in the organization 2. They must support innovation and allow employees to share their ideas rather than giving out a must be perfect and mistakes are not allowed image. 3. Leaders should watch their reaction to crises and critical incidents. Crises are the make or break points for the organization. An organization s strong culture and integrity can withstand any crises. If there is disconnect between the organization s projected culture and the actual reaction pattern this can hurt the organization in more ways than one. 4. Leaders must be role models. Their behavior must be consistent with the projected organizational culture. They must play an active role in coaching the employees in order to internalize the desired culture. 5. There must be well defined criteria for allocation of rewards and status. An environment where new ideas are ridiculed or sabotaged can become detrimental to an organization s development. 6. The criteria for recruitment, selection, promotion, and retirement must be monitored and well-defined and in alignment with the organizational culture. The employees who are supportive of the culture must be advised to nurture the desired culture. 7. Leaders must review organizational design, structure and internal and external communication channels between different hierarchies. Mistrust between the hierarchies can cost the organization heavily. 8. Organizational systems and procedures must be revamped to promote healthy internal and external communication. Routines and procedures must be embedded in such a way that they shall form the backbone of culture within the organization. 9. Design of physical space, cabins and buildings should reflect and promote the organizational values and beliefs. 10. Stories or events that can promote growth of positive and strong organizational culture must be emphasized.

14 Summary Like individuals, organizations can be differentiated from one another based on the values, norms, principles, belief systems and other inherent traits which form the core of organizational culture. Culture can be strong or weak based on its effect on the organization, based on how supportive or detrimental it is to achieving organizational goals and based on how much of a resistance, if any, it creates or the conducive environment it promotes. With change in goals and strategies of any organization, culture may need to be changed. There are several external and internal factors that influence and shape the culture of an organization. It is important that these factors be monitored and controlled if need be. It is important for a new leadership as well as for the existing leadership to periodically review the organizational culture to ensure its fitment with the organizational strategies. Culture affects across all level and has a wide range of influence in almost all activities of the organization. Deep rooted cultural complacency cannot be changed overnight; continuous monitoring, review and revamping of certain norms, procedures, routines and other cultural forms may be necessary to bring about changes in the desired areas of cultural paradigm. This requires the leaders to be the role models for the employees. Only then can the employees imbibe the strong and positive aspects of organizational culture at a faster pace in an effective manner.