|Management of a business|
Organizational culture encompasses values and behaviors that contribute to the unique social and psychological environment of a business. The organizational culture influences the way people interact, the context within which knowledge is created, the resistance they will have towards certain changes, and ultimately the way they share (or the way they do not share) knowledge. Organizational culture represents the collective values, beliefs and principles of organizational members and is a product of factors such as history, product, market, technology, strategy, type of employees, management style, and national culture; culture includes the organization's vision, values, norms, systems, symbols, language, assumptions, environment, location, beliefs and habits.
Ravasi and Schultz (2006) characterise organizational culture as a set of shared assumptions that guide behaviors. It is also the pattern of such collective behaviors and assumptions that are taught to new organizational members as a way of perceiving and, even thinking and feeling. Thus organizational culture affects the way people and groups interact with each other, with clients, and with stakeholders. In addition, organizational culture may affect how much employees identify with an organization.
Schein (1992), Deal and Kennedy (2000), and Kotter (1992) advanced the idea that organizations often have very differing cultures as well as subcultures. Although a company may have its "own unique culture," in larger organizations there are sometimes co-existing or conflicting subcultures because each subculture is linked to a different management team. Flamholtz and Randle (2011) suggest that one can view organizational culture as "corporate personality." They define it as it consisting of the values, beliefs, and norms which influence the behavior of people as members of an organization.
- 1 Origins
- 2 Usage
- 3 Typology of cultural types
- 4 Effects
- 5 Change
- 6 Corporate subcultures
- 7 Legal aspects
- 8 Critical views
- 9 Research and models
- 9.1 Hofstede
- 9.2 O'Reilly, Chatman, and Caldwell
- 9.3 Daniel Denison
- 9.4 Deal and Kennedy
- 9.5 Edgar Schein
- 9.6 Gerry Johnson
- 9.7 Stanley G. Harris
- 9.8 Charles Handy
- 9.9 Kim Cameron and Robert Quinn
- 9.10 Robert A. Cooke
- 9.11 Adam Grant
- 9.12 Stephen McGuire
- 9.13 Eric Flamholtz
- 10 Ethical frameworks and evaluations of corporate culture
- 11 See also
- 12 References
- 13 Notes
- 14 Further reading
- 15 External links
The term of culture in the organizational context was first introduced by Dr. Elliott Jaques in his book The Changing Culture of a Factory, in 1951. This is the published report of "a case study of developments in the social life of one industrial community between April, 1948 and November 1950". The "case" is a publicly held British company engaged principally in the manufacture, sale, and servicing of metal bearings. The study is concerned with the description, analysis, and development of the corporate group behaviours.
According to Dr. Elliott Jaques "the culture of the factory is its customary and traditional way of thinking and doing of things, which is shared to a greater or lesser degree by all its members, and which new members must learn, and at least partially accept, in order to be accepted into service in the firm..." In simple terms, to the extent that people can share common wishes, desires and aspirations, they can commit themselves to work together. It is a matter of being able to care about the same things, and it applies to nations as well as to associations and organizations within nations.
Elaborating on the work in The Changing Culture of a Factory Dr. Elliott Jaques in his concept of requisite organization established the list of valued entitlements or organizational values that can gain from people their full commitment. Together they make an organizational culture or credo:
- Fair and just treatment for everyone, including fair pay based upon equitable pay differentials for level of work and merit recognition related to personal effectiveness appraisal.
- Leadership interaction between managers and subordinates, including shared context, personal effectiveness appraisal, feedback and recognition, and coaching.
- Clear articulation of accountability and authority to engender trust and confidence in all working relationships.
- Articulation of long-term organizational vision through direct communication from the top.
- Opportunity for everyone individually or through representatives to participate in policy development.
- Work for everyone at a level consistent with their level of potential capability, values and interests.
- Opportunity for everyone to progress as his or her potential capability matures, within the opportunities available
The role of managerial leadership at every organizational level is to make these organizational values operationally real.
Organizational culture refers to culture in any type of organization including that of schools, universities, not-for-profit groups, government agencies, or business entities. In business, terms such as corporate culture and company culture are often used to refer to a similar concept. The term corporate culture became widely known in the business world in the late 1980s and early 1990s. Corporate culture was already used by managers, sociologists, and organizational theorists by the beginning of the 80s. The related idea of organizational climate emerged in the 1960s and 70s, and the terms are now somewhat overlapping.
If organizational culture is seen as something that characterizes an organization, it can be manipulated and altered depending on leadership and members. Culture as root metaphor sees the organization as its culture, created through communication and symbols, or competing metaphors. Culture is basic, with personal experience producing a variety of perspectives.
The organizational communication perspective on culture views culture in three different ways:
- Traditionalism: views culture through objective things such as stories, rituals, and symbols
- Interpretivism: views culture through a network of shared meanings (organization members sharing subjective meanings)
- Critical-interpretivism: views culture through a network of shared meanings as well as the power struggles created by a similar network of competing meanings.
Business executive Bernard L. Rosauer (2013) defines organizational culture as an emergence – an extremely complex incalculable state that results from the combination of a few ingredients. In "Three Bell Curves: Business Culture Decoded" Rosauer outlines the three manageable ingredients which (he claims) guide business culture:
- employee (focus on engagement)
- the work (focus on eliminating waste increasing value) waste
- the customer (focus on likelihood of referral)
Rosauer writes that the Three Bell Curves methodology aims to bring leadership, their employees, the work and the customer together for focus without distraction, leading to an improvement in culture and brand. He states: "If a methodology isn't memorable, it won't get used. The Three Bell Curves Methodology is simple (to remember) but execution requires strong leadership and diligence. Culture can be guided by managing the ingredients." Reliance of the research and findings of Sirota Survey Intelligence, which has been gathering employee data worldwide since 1972, the Lean Enterprise Institute, Cambridge, MA, and Fred Reichheld/Bain/Satmetrix research relating to NetPromoterScore.[clarification needed]
Typology of cultural types
Many factors can contribute to the type of culture which is observed in large organizations and large institutions. The list ranges from depictions of relative strength to political and national issues.
Strong and weak types of organizational culture
Flamholtz and Randle state that: "A strong culture is that people clearly understand and can articulate. A weak culture is one that employees have difficulty defining, understanding, or explaining." Strong culture is said to exist where staff respond to stimulus because of their alignment to organizational values. In such environments, strong cultures help firms operate like well-oiled machines, engaging in outstanding execution with only minor adjustments to existing procedures as needed.
Conversely, there is weak culture where there is little alignment with organizational values, and control must be exercised through extensive procedures and bureaucracy.
Research shows that organizations that foster strong cultures have clear values that give employees a reason to embrace the culture. A "strong" culture may be especially beneficial to firms operating in the service sector since members of these organizations are responsible for delivering the service and for evaluations important constituents make about firms. Organizations may derive the following benefits from developing strong and productive cultures:
- Better aligning the company towards achieving its vision, mission, and goals
- High employee motivation and loyalty
- Increased team cohesiveness among the company's various departments and divisions
- Promoting consistency and encouraging coordination and control within the company
- Shaping employee behavior at work, enabling the organization to be more efficient
Irving Janis defined groupthink as "a mode of thinking that people engage in when they are deeply involved in a cohesive in-group, when the members' strivings for unanimity override their motivation to realistically appraise alternative courses of action." This is a state in which even if group members have different ideas, they do not challenge organizational thinking. As a result, innovative thinking is stifled. Groupthink can lead to lack of creativity and decisions made without critical evaluation. Groupthink can occur, for example, when group members rely heavily on a central charismatic figure in the organization or where there is an "evangelical" belief in the organization's values. Groupthink can also occur in groups characterized by a friendly climate conducive to conflict avoidance.
What Is Organizational Culture? And Why Should We Care? – Harvard Business Review
Organizations should strive for what is considered a "healthy" organizational culture in order to increase productivity, growth, efficiency and reduce counterproductive behavior and turnover of employees. A variety of characteristics describe a healthy culture, including:
- Acceptance and appreciation for diversity
- Regard for fair treatment of each employee as well as respect for each employee's contribution to the company
- Employee pride and enthusiasm for the organization and the work performed
- Equal opportunity for each employee to realize their full potential within the company
- Strong communication with all employees regarding policies and company issues
- Strong company leaders with a strong sense of direction and purpose
- Ability to compete in industry innovation and customer service, as well as price
- Lower than average turnover rates (perpetuated by a healthy culture)
- Investment in learning, training, and employee knowledge
Additionally, performance oriented cultures have been shown to possess statistically better financial growth. Such cultures possess high employee involvement, strong internal communications and an acceptance and encouragement of a healthy level of risk-taking in order to achieve innovation. Additionally, organizational cultures that explicitly emphasize factors related to the demands placed on them by industry technology and growth will be better performers in their industries.
According to Kotter and Heskett (1992), 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.
Healthy companies are able to deal with employees' concerns about the well-being of the organization internally, before the employees would even feel they needed to raise the issues externally. It is for this reason that whistleblowing, particularly when it results in serious damage to a company's reputation, is considered to be often a sign of a chronically dysfunctional corporate culture. Another relevant concept is the notion of "cultural functionality". Specifically, some organizations have "functional" cultures while others have "dysfunctional" cultures. A "functional" culture is a positive culture that contributes to an organization's performance and success. A "dysfunctional" culture is one that hampers or negatively affects an organization's performance and success.
Management types of communication
There are many different types of communication that contribute in creating an organizational culture:
- Metaphors such as comparing an organization to a machine or a family reveal employees' shared meanings of experiences at the organization.
- Stories can provide examples for employees of how to or not to act in certain situations.
- Rites and ceremonies combine stories, metaphors, and symbols into one. Several different kinds of rites affect organizational culture:
- Rites of passage: employees move into new roles
- Rites of degradation: employees have power taken away from them
- Rites of enhancement: public recognition for an employee's accomplishments
- Rites of renewal: improve existing social structures
- Rites of conflict reduction: resolve arguments between certain members or groups
- Rites of integration: reawaken feelings of membership in the organization
- Reflexive comments are explanations, justifications, and criticisms of our own actions. This includes:
- Plans: comments about anticipated actions
- Commentaries: comments about action in the present
- Accounts: comments about an action or event that has already occurred
- Such comments reveal interpretive meanings held by the speaker as well as the social rules they follow.
- Fantasy Themes are common creative interpretations of events that reflect beliefs, values, and goals of the organization. They lead to rhetorical visions, or views of the organization and its environment held by organization members.
Bullying culture type
Bullying is seen to be prevalent in organizations where employees and managers feel that they have the support, or at least implicitly the blessing, of senior managers to carry on their abusive and bullying behaviour. Furthermore, new managers will quickly come to view this form of behaviour as acceptable and normal if they see others get away with it and are even rewarded for it.
When bullying happens at the highest levels, the effects may be far reaching. That people may be bullied irrespective of their organisational status or rank, including senior managers, indicates the possibility of a negative ripple effect, where bullying may be cascaded downwards as the targeted supervisors might offload their own aggression on their subordinates. In such situations, a bullying scenario in the boardroom may actually threaten the productivity of the entire organisation.
Culture of fear type
Ashforth discussed potentially destructive sides of leadership and identified what he referred to as petty tyrants, i.e. leaders who exercise a tyrannical style of management, resulting in a climate of fear in the workplace. Partial or intermittent negative reinforcement can create an effective climate of fear and doubt. When employees get the sense that bullies "get away with it", a climate of fear may be the result. Several studies have confirmed a relationship between bullying, on the one hand, and an autocratic leadership and an authoritarian way of settling conflicts or dealing with disagreements, on the other. An authoritarian style of leadership may create a climate of fear, where there is little or no room for dialogue and where complaining may be considered futile.
In a study of public-sector union members, approximately one in five workers reported having considered leaving the workplace as a result of witnessing bullying taking place. Rayner explained these figures by pointing to the presence of a climate of fear in which employees considered reporting to be unsafe, where bullies had "got away with it" previously despite management knowing of the presence of bullying.
Tribal type of culture
David Logan and coauthors have proposed in their book Tribal Leadership that organizational cultures change in stages, based on an analysis of human groups and tribal cultures. They identify five basic stages:
- Life sucks (a subsystem severed from other functional systems like tribes, gangs and prison—2 percent of population);
- My life sucks (I am stuck in the Dumb Motor Vehicle line and can't believe I have to spend my time in this lost triangle of ineffectiveness—25 percent of population);
- I'm great (and you're not, I am detached from you and will dominate you regardless of your intent—48 percent of population);
- We are great, but other groups suck (citing Zappo's and an attitude of unification around more than individual competence—22 percent of population) and
- Life is great (citing Desmond Tutu's hearing on truth and values as the basis of reconciliation—3 percent of population).
This model of organizational culture provides a map and context for leading an organization through the five stages.
Organizational culture is taught to the person as culture is taught by his/her parents thus changing and modeling his/her personal culture. Indeed, employees and people applying for a job are advised to match their "personality to a company's culture" and fit to it. Some researchers even suggested and have made case studies research on personality changing.
National culture type
Corporate culture is used to control, coordinate, and integrate company subsidiaries. However differences in national cultures exist contributing to differences in the views on management. Differences between national cultures are deep rooted values of the respective cultures, and these cultural values can shape how people expect companies to be run, and how relationships between leaders and followers should be, resulting in differences between the employer and the employee regarding expectations. (Geert Hofstede, 1991) Perhaps equally foundational; observing the vast differences in national copyright (and taxation, etc.) laws suggests deep rooted differences in cultural attitudes and assumptions about property rights and sometimes about the desired root function, place, or purpose of corporations relative to the population.
- See also: Biculturalism
Xibao Zhang (2009) carried out an empirical study of culture emergence in the Sino-Western international cross-cultural management (SW-ICCM) context in China. Field data were collected by interviewing Western expatriates and Chinese professionals working in this context, supplemented by non-participant observation and documentary data. The data were then analyzed objectively to formulate theme-based substantive theories and a formal theory.
The major finding of this study is that the human cognition contains three components, or three broad types of "cultural rules of behavior", namely, Values, Expectations, and Ad Hoc Rules, each of which has a mutually conditioning relationship with behavior. The three cognitive components are different in terms of the scope and duration of their mutual shaping of behavior. Values are universal and enduring rules of behavior; Expectations, on the other hand, are context-specific behavioral rules; while Ad Hoc Rules are improvised rules of behavior that the human mind devises contingent upon a particular occasion. Furthermore, they need not be consistent, and frequently are not, among themselves. Metaphorically, they can be compared to a multi-carriage train, which allows for the relative lateral movements by individual carriages so as to accommodate bumps and turns in the tracks. In fact, they provide a "shock-absorber mechanism", so to speak, which enables individuals in SW-ICCM contexts to cope with conflicts in cultural practices and values, and to accommodate and adapt themselves to cultural contexts where people from different national cultural backgrounds work together over extended time. It also provides a powerful framework which explains how interactions by individuals in SW-ICCM contexts give rise to emerging hybrid cultural practices characterized by both stability and change.
One major theoretical contribution of this "multi-carriage train" perspective is its allowance for the existence of inconsistencies among the three cognitive components in their mutual conditioning of behavior. This internal inconsistency view is in stark contrast to the traditional internal consistency assumption explicitly or tacitly held by many culture scholars. The other major theoretical contribution, which follows logically from the first one, is to view culture as an overarching entity which is made of a multiplicity of Values, Expectations, and Ad Hoc Rules. This notion of one (multiplicity) culture to an organization leads to the classification of culture along its path of emergence into nascent, adolescent, and mature types, each of which is distinct in terms of the pattern of the three cognitive components and behavior.
Research suggests that numerous outcomes have been associated either directly or indirectly with organizational culture. A healthy and robust organizational culture may provide various benefits, including the following:
- Competitive edge derived from innovation and customer service
- Consistent, efficient employee performance
- Team cohesiveness
- High employee morale
- Strong company alignment towards goal achievement
Although little empirical research exists to support the link between organizational culture and organizational performance, there is little doubt among experts that this relationship exists. Organizational culture can be a factor in the survival or failure of an organization – although this is difficult to prove given that the necessary longitudinal analyses are hardly feasible. The sustained superior performance of firms like IBM, Hewlett-Packard, Procter & Gamble, and McDonald's may be, at least partly, a reflection of their organizational cultures.
A 2003 Harvard Business School study reported that culture has a significant effect on an organization's long-term economic performance. The study examined the management practices at 160 organizations over ten years and found that culture can enhance performance or prove detrimental to performance. Organizations with strong performance-oriented cultures witnessed far better financial growth. Additionally, 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 affect individual performance. Furthermore, innovativeness, productivity through people, and the other cultural factors cited by Peters and Waterman (1982) also have positive economic consequences.
Denison, Haaland, and Goelzer (2004) found that culture contributes to the success of the organization, but not all dimensions contribute the same. It was found that the effects of these dimensions differ by global regions, which suggests that organizational culture is affected by national culture. Additionally, Clarke (2006) found that a safety climate is related to an organization's safety record.
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.
Adkins and Caldwell (2004) 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.
It has been proposed that organizational culture may affect the level of employee creativity, the strength of employee motivation, and the reporting of unethical behavior, but more research is needed to support these conclusions.
Organizational culture also affects recruitment and retention. Individuals tend to be attracted to and remain engaged in organizations that they perceive to be compatible. Additionally, high turnover may be a mediating factor in the relationship between culture and organizational performance. Deteriorating company performance and an unhealthy work environment are signs of an overdue cultural assessment.
When an organization does not possess a healthy culture or requires some kind of organizational culture change, the change process can be daunting. Organizational culture can hinder new change efforts, especially where employees know their expectations and the roles that they are supposed to play in the organization. This is corroborated by Mar (2016:1) who argues that 70% of all change efforts fail because of the culture of an organization's employees. One major reason why such change is difficult is that organizational cultures, and the organizational structures in which they are embedded, often reflect the "imprint" of earlier periods in a persistent way and exhibit remarkable levels of inertia. Culture change may be necessary to reduce employee turnover, influence employee behavior, make improvements to the company, refocus the company objectives and/or rescale the organization, provide better customer service, and/or achieve specific company goals and results. Culture change is affected by a number of elements, including the external environment and industry competitors, change in industry standards, technology changes, the size and nature of the workforce, and the organization's history and management.
There are a number of methodologies specifically dedicated to organizational culture change such as Peter Senge's Fifth Discipline. There are also a variety of psychological approaches that have been developed into a system for specific outcomes such as the Fifth Discipline's "learning organization" or Directive Communication's "corporate culture evolution." Ideas and strategies, on the other hand, seem to vary according to particular influences that affect culture.
Burman and Evans (2008) argue that it is 'leadership' that affects culture rather than 'management', and describe the difference. When one wants to change an aspect of the culture of an organization one has to keep in consideration that this is a long term project. Corporate culture is something that is very hard to change and employees need time to get used to the new way of organizing. For companies with a very strong and specific culture it will be even harder to change.
Prior to a cultural change initiative, a needs assessment is needed to identify and understand the current organizational culture. This can be done through employee surveys, interviews, focus groups, observation, customer surveys where appropriate, and other internal research, to further identify areas that require change. The company must then assess and clearly identify the new, desired culture, and then design a change process.
Cummings & Worley (2004, p. 491 – 492) give the following six guidelines for cultural change, these changes are in line with the eight distinct stages mentioned by Kotter (1995, p. 2):
- Formulate a clear strategic vision (stage 1, 2, and 3). In order to make a cultural change effective a clear vision of the firm's new strategy, shared values and behaviors is needed. This vision provides the intention and direction for the culture change (Cummings & Worley, 2004, p. 490).
- Display top-management commitment (stage 4). It is very important to keep in mind that culture change must be managed from the top of the organization, as willingness to change of the senior management is an important indicator (Cummings & Worley, 2004, page 490). The top of the organization should be very much in favor of the change in order to actually implement the change in the rest of the organization. De Caluwé & Vermaak (2004, p 9) provide a framework with five different ways of thinking about change.
- Model culture change at the highest level (stage 5). In order to show that the management team is in favor of the change, the change has to be notable at first at this level. The behavior of the management needs to symbolize the kinds of values and behaviors that should be realized in the rest of the company. It is important that the management shows the strengths of the current culture as well; it must be made clear that the current organizational culture does not need radical changes, but just a few adjustments. (See for more: Deal & Kennedy, 1982; Sathe, 1983; Schall; 1983; Weick, 1985; DiTomaso, 1987). This process may also include creating committees, employee task forces, value managers, or similar. Change agents are key in the process and key communicators of the new values. They should possess courage, flexibility, excellent interpersonal skills, knowledge of the company, and patience. As McCune (May 1999) puts it, these individuals should be catalysts, not dictators.
- The fourth step is to modify the organization to support organizational change. This includes identifying what current systems, policies, procedures and rules need to be changed in order to align with the new values and desired culture. This may include a change to accountability systems, compensation, benefits and reward structures, and recruitment and retention programs to better align with the new values and to send a clear message to employees that the old system and culture are in the past.
- Select and socialize newcomers and terminate deviants (stage 7 & 8 of Kotter, 1995, p. 2). A way to implement a culture is to connect it to organizational membership, people can be selected and terminated in terms of their fit with the new culture (Cummings & Worley, 2004, p. 491). Encouraging employee motivation and loyalty to the company is key and will also result in a healthy culture. The company and change managers should be able to articulate the connections between the desired behavior and how it will affect and improve the company's success, to further encourage buy-in in the change process. Training should be provided to all employees to understand the new processes, expectations and systems.
- Develop ethical and legal sensitivity. Changes in culture can lead to tensions between organizational and individual interests, which can result in ethical and legal problems for practitioners. This is particularly relevant for changes in employee integrity, control, equitable treatment and job security (Cummings & Worley, 2004, p. 491). It is also beneficial, as part of the change process, to include an evaluation process, conducted periodically to monitor the change progress and identify areas that need further development. This step will also identify obstacles of change and resistant employees, and acknowledge and reward employee improvement, which will encourage continued change and evolvement. It may also be helpful and necessary to incorporate new change managers to refresh the process. Outside consultants may also be useful in facilitating the change process and providing employee training. Change of culture in organizations is very important and inevitable. Cultural innovation is bound to be more difficult than cultural maintenance because it entails introducing something new and substantially different from what prevails in existing cultures. People often resist changes, hence it is the duty of management to convince people that likely gain will outweigh the losses. Besides institutionalization, deification is another process that tends to occur in strongly developed organizational cultures. The organization itself may come to be regarded as precious in itself, as a source of pride, and in some sense unique. The organization's members begin to feel a strong bond with it that transcends material returns, and they begin to identify with it. The organization turns into a sort of clan.
Mergers and cultural leadership
One of the biggest obstacles in the way of the merging of two organizations is organizational culture. Each organization has its own unique culture and most often, when brought together, these cultures clash. When mergers fail employees point to issues such as identity, communication problems, human resources problems, ego clashes, and inter-group conflicts, which all fall under the category of "cultural differences".
One way to combat such difficulties is through cultural leadership. Organizational leaders must also be cultural leaders and help facilitate the change from the two old cultures into the one new culture. This is done through cultural innovation followed by cultural maintenance.
- Cultural innovation includes:
- Creating a new culture: recognizing past cultural differences and setting realistic expectations for change
- Changing the culture: weakening and replacing the old cultures
- Cultural maintenance includes:
- Integrating the new culture: reconciling the differences between the old cultures and the new one
- Embodying the new culture: Establishing, affirming, and keeping the new culture
Corporate culture is the total sum of the values, customs, traditions, and meanings that make a company unique. Corporate culture is often called "the character of an organization", since it embodies the vision of the company's founders. The values of a corporate culture influence the ethical standards within a corporation, as well as managerial behavior.
Senior management may try to determine a corporate culture. They may wish to impose corporate values and standards of behavior that specifically reflect the objectives of the organization. In addition, there will also be an extant internal culture within the workforce. Work-groups within the organization have their own behavioral quirks and interactions which, to an extent, affect the whole system. Roger Harrison's four-culture typology, and adapted by Charles Handy, suggests that unlike organizational culture, corporate culture can be 'imported'. For example, computer technicians will have expertise, language and behaviors gained independently of the organization, but their presence can influence the culture of the organization as a whole.
Corporate culture can legally be found to be a cause of injuries and a reason for fining companies in the US, e.g., when the US Department of Labor Mine Safety and Health Administration levied a fine of more than 10.8 million US dollars on Performance Coal Co. following the Upper Big Branch Mine disaster in April 2010. This was the largest fine in the history of this U.S. government agency.
Criticism of the usage of the term by managers began already in its emergence in the early 80s. Most of the criticism comes from the writers in critical management studies who for example express skepticism about the functionalist and unitarist views about culture that are put forward by mainstream management writers. They stress the ways in which these cultural assumptions can stifle dissent towards management and reproduce propaganda and ideology. They suggest that organizations do not encompass a single culture, and cultural engineering may not reflect the interests of all stakeholders within an organization.
Parker (2000) has suggested that many of the assumptions of those putting forward theories of organizational culture are not new. They reflect a long-standing tension between cultural and structural (or informal and formal) versions of what organizations are. Further, it is reasonable to suggest that complex organizations might have many cultures, and that such sub-cultures might overlap and contradict each other. The neat typologies of cultural forms found in textbooks rarely acknowledge such complexities, or the various economic contradictions that exist in capitalist organizations.
Among the strongest and most widely recognized writers on corporate culture, with a long list of articles on leadership, culture, gender and their intersection, is Linda Smircich. As a part of the critical management studies, she criticizes theories that attempt to categorize or 'pigeonhole' organizational culture. She uses the metaphor of a plant root to represent culture, saying that it drives organizations rather than vice versa. Organizations are the product of organizational culture; we are unaware of how it shapes behavior and interaction (also implicit in Schein's (2002) underlying assumptions[clarification needed]), which undermines attempts to categorize and define organizational culture.
Research and models
Several methods have been used to classify organizational culture. While there is no single "type" of organizational culture and organizational cultures vary widely from one organization to the next, commonalities do exist and some researchers have developed models to describe different indicators of organizational cultures. Some are described below:
Hofstede (1980) looked for differences between over 160 000 IBM employees in 50 different countries and three regions of the world, in an attempt to find aspects of culture that might influence business behavior. He suggested things about cultural differences existing in regions and nations, and the importance of international awareness and multiculturalism for their own cultural introspection. Cultural differences reflect differences in thinking and social action, and even in "mental programs", a term Hofstede uses for predictable behavior. Hofstede relates culture to ethnic and regional groups, but also organizations, professional, family, social and subcultural groups, national political systems and legislation, etc.
Hofstede suggests the need for changing "mental programs" with changing behavior first, which will lead to value change. Though certain groups like Jews and Gypsies have maintained their identity through centuries, their values show adaptation to the dominant cultural environment.
Hofstede demonstrated that there are national and regional cultural groupings that affect the behavior of organizations and identified four dimensions of culture (later five) in his study of national cultures:
- Power distance (Mauk Mulder, 1977) – Different societies find different solutions regarding social inequality. Although invisible, inside organizations power inequality of the "boss-subordinate relationships" is functional and according to Hofstede reflects the way inequality is addressed in the society. "According to Mulder's Power Distance Reduction theory subordinates will try to reduce the power distance between themselves and their bosses and bosses will try to maintain or enlarge it", but there is also a degree to which a society expects there to be differences in the levels of power. A high score suggests that there is an expectation that some individuals wield larger amounts of power than others. A low score reflects the view that all people should have equal rights.
- Uncertainty avoidance is the way of coping with uncertainty about the future. Society copes with it with technology, law and religion (though different societies have different ways of addressing it), and according to Hofstede organizations deal with it with technology, law and rituals, or in two ways – rational and non-rational, with rituals being the non-rational. Hofstede listed some of the rituals as the memos and reports, some parts of the accounting system, a large part of the planning and control systems, and the nomination of experts.
- Individualism vs. collectivism – disharmony of interests on personal and collective goals (Parsons and Shils, 1951). Hofstede raises the idea that society's expectations of Individualism/Collectivism will be reflected by the employee inside the organization. Collectivist societies will have more emotional dependence on members in their organizations; when in equilibrium an organization is expected to show responsibility to members. Extreme individualism is seen in the US. In fact, collectivism in the US is seen as "bad". Other cultures and societies than the US will therefore seek to resolve social and organizational problems in ways different from American ways. Hofstede says that a capitalist market economy fosters individualism and competition, and depends on it, but individualism is also related to the development of the middle class. Some people and cultures might have both high individualism and high collectivism. For example, someone who highly values duty to his or her group does not necessarily give a low priority to personal freedom and self-sufficiency.
- Masculinity vs. femininity – reflects whether a certain society is predominantly male or female in terms of cultural values, gender roles and power relations.
- Long- Versus Short-Term Orientation which he describes as "The long-term orientation dimension can be interpreted as dealing with society's search for virtue. Societies with a short-term orientation generally have a strong concern with establishing the absolute Truth. They are normative in their thinking. They exhibit great respect for traditions, a relatively small propensity to save for the future, and a focus on achieving quick results. In societies with a long-term orientation, people believe that truth depends very much on situation, context and time. They show an ability to adapt traditions to changed conditions, a strong propensity to save and invest, thriftiness, and perseverance in achieving results."
These dimensions refer to the effect of national cultures on management, and can be used to adapt policies to local needs. In a follow up study, another model is suggested for organizational culture.
O'Reilly, Chatman, and Caldwell
Two common models and their associated measurement tools have been developed by O'Reilly et al. and Denison.
O'Reilly, Chatman & Caldwell (1991) developed a model based on the belief that cultures can be distinguished by values that are reinforced within organizations. Their Organizational Cultural Profile (OCP) is a self reporting tool which makes distinctions according eight categories – Innovation, Supportiveness, Stability, Respect for People, Outcome Orientation, Attention to Detail, Team Orientation, and Aggressiveness. The model is also suited to measure how organizational culture affects organizational performance, as it measures most efficient persons suited to an organization[clarification needed] and as such organizations can be termed as having good organizational culture. Employee values are measured against organizational values to predict employee intentions to stay, and turnover. This is done through an instrument like Organizational Culture Profile (OCP) to measure employee commitment.
Daniel Denison's model (1990) asserts that organizational culture can be described by four general dimensions – Mission, Adaptability, Involvement and Consistency. Each of these general dimensions is further described by the following three sub-dimensions:
- Mission – Strategic Direction and Intent, Goals and Objectives and Vision
- Adaptability – Creating Change, Customer Focus and Organizational Learning
- Involvement – Empowerment, Team Orientation and Capability Development
- Consistency – Core Values, Agreement, Coordination/Integration
Denison's model also allows cultures to be described broadly as externally or internally focused as well as flexible versus stable. The model has been typically used to diagnose cultural problems in organizations.
Deal and Kennedy
Deal and Kennedy (1982) defined organizational culture as the way things get done around here.
Deal and Kennedy created a model of culture that is based on 4 different types of organizations. They each focus on how quickly the organization receives feedback, the way members are rewarded, and the level of risks taken:
- Work-hard, play-hard culture: This has rapid feedback/reward and low risk resulting in: Stress coming from quantity of work rather than uncertainty. High-speed action leading to high-speed recreation. Examples: Restaurants, software companies.
- Tough-guy macho culture: This has rapid feedback/reward and high risk, resulting in the following: Stress coming from high risk and potential loss/gain of reward. Focus on the present rather than the longer-term future. Examples: police, surgeons, sports.
- Process culture: This has slow feedback/reward and low risk, resulting in the following: Low stress, plodding work, comfort and security. Stress that comes from internal politics and stupidity of the system. Development of bureaucracies and other ways of maintaining the status quo. Focus on security of the past and of the future. Examples: banks, insurance companies.
- Bet-the-company culture: This has slow feedback/reward and high risk, resulting in the following: Stress coming from high risk and delay before knowing if actions have paid off. The long view is taken, but then much work is put into making sure things happen as planned. Examples: aircraft manufacturers, oil companies.
According to Schein (1992), culture is the most difficult organizational attribute to change, outlasting organizational products, services, founders and leadership and all other physical attributes of the organization. His organizational model illuminates culture from the standpoint of the observer, described at three levels: artifacts, espoused values and basic underlying assumptions.
At the first and most cursory level of Schein's model is organizational attributes that can be seen, felt and heard by the uninitiated observer – collectively known as artifacts. Included are the facilities, offices, furnishings, visible awards and recognition, the way that its members dress, how each person visibly interacts with each other and with organizational outsiders, and even company slogans, mission statements and other operational creeds.
Artifacts comprise the physical components of the organization that relay cultural meaning. Daniel Denison (1990) describes artifacts as the tangible aspects of culture shared by members of an organization. Verbal, behavioral and physical artifacts are the surface manifestations of organizational culture.
Rituals, the collective interpersonal behavior and values as demonstrated by that behavior, constitute the fabric of an organization's culture. The contents of myths, stories, and sagas reveal the history of an organization and influence how people understand what their organization values and believes. Language, stories, and myths are examples of verbal artifacts and are represented in rituals and ceremonies. Technology and art exhibited by members of an organization are examples of physical artifacts.
The next level deals with the professed culture of an organization's members – the values. Shared values are individuals' preferences regarding certain aspects of the organization's culture (e.g. loyalty, customer service). At this level, local and personal values are widely expressed within the organization. Basic beliefs and assumptions include individuals' impressions about the trustworthiness and supportiveness of an organization, and are often deeply ingrained within the organization's culture. Organizational behavior at this level usually can be studied by interviewing the organization's membership and using questionnaires to gather attitudes about organizational membership.
At the third and deepest level, the organization's tacit assumptions are found. These are the elements of culture that are unseen and not cognitively identified in everyday interactions between organizational members. Additionally, these are the elements of culture which are often taboo to discuss inside the organization. Many of these 'unspoken rules' exist without the conscious knowledge of the membership. Those with sufficient experience to understand this deepest level of organizational culture usually become acclimatized to its attributes over time, thus reinforcing the invisibility of their existence. Surveys and casual interviews with organizational members cannot draw out these attributes—rather much more in-depth means is required to first identify then understand organizational culture at this level. Notably, culture at this level is the underlying and driving element often missed by organizational behaviorists.
Using Schein's model, understanding paradoxical organizational behaviors becomes more apparent. For instance, an organization can profess highly aesthetic and moral standards at the second level of Schein's model while simultaneously displaying curiously opposing behavior at the third and deepest level of culture. Superficially, organizational rewards can imply one organizational norm but at the deepest level imply something completely different. This insight offers an understanding of the difficulty that organizational newcomers have in assimilating organizational culture and why it takes time to become acclimatized. It also explains why organizational change agents usually fail to achieve their goals: underlying tacit cultural norms are generally not understood before would-be change agents begin their actions. Merely understanding culture at the deepest level may be insufficient to institute cultural change because the dynamics of interpersonal relationships (often under threatening conditions) are added to the dynamics of organizational culture while attempts are made to institute desired change.
According to Schein (1992), the two main reasons why cultures develop in organizations is due to external adaptation and internal integration. External adaptation reflects an evolutionary approach to organizational culture and suggests that cultures develop and persist because they help an organization to survive and flourish. If the culture is valuable, then it holds the potential for generating sustained competitive advantages. Additionally, internal integration is an important function since social structures are required for organizations to exist. Organizational practices are learned through socialization at the workplace. Work environments reinforce culture on a daily basis by encouraging employees to exercise cultural values. Organizational culture is shaped by multiple factors, including the following:
- External environment
- Size and nature of the organization's workforce
- Technologies the organization uses
- The organization's history and ownership
Gerry Johnson (1988) described a cultural web, identifying a number of elements that can be used to describe or influence organizational culture:
- The paradigm: What the organization is about, what it does, its mission, its values.
- Control systems: The processes in place to monitor what is going on. Role cultures would have vast rule-books. There would be more reliance on individualism in a power culture.
- Organizational structures: Reporting lines, hierarchies, and the way that work flows through the business.
- Power structures: Who makes the decisions, how widely spread is power, and on what is power based?
- Symbols: These include organizational logos and designs, but also extend to symbols of power such as parking spaces and executive washrooms.
- Rituals and routines: Management meetings, board reports and so on may become more habitual than necessary.
- Stories and myths: build up about people and events, and convey a message about what is valued within the organization.
These elements may overlap. Power structures may depend on control systems, which may exploit the very rituals that generate stories which may not be true.
Stanley G. Harris
Schemata (plural of schema) are knowledge structures a person forms from past experiences, allowing the person to respond to similar events more efficiently in the future by guiding the processing of information. A person's schemata are created through interaction with others, and thus inherently involve communication.
Stanley G. Harris (1994) argues that five categories of in-organization schemata are necessary for organizational culture:
- Self-in-organization schemata: a person's concept of oneself within the context of the organization, including her/his personality, roles, and behavior.
- Person-in-organization schemata: a person's memories, impressions, and expectations of other individuals within the organization.
- Organization schemata: a subset of person schemata, a person's generalized perspective on others as a whole in the organization.
- Object/concept-in-organization schemata: knowledge an individual has of organization aspects other than of other persons.
- Event-in-organization schemata: a person's knowledge of social events within an organization.
All of these categories together represent a person's knowledge of an organization. Organizational culture is created when the schematas (schematic structures) of differing individuals across and within an organization come to resemble each other (when any one person's schemata come to resemble another person's schemata because of mutual organizational involvement), primarily done through organizational communication, as individuals directly or indirectly share knowledge and meanings.
- Power culture: concentrates power among a small group or a central figure and its control is radiating from its center like a web. Power cultures need only a few rules and little bureaucracy but swift in decisions can ensue.
- Role culture: authorities are delegated as such within a highly defined structure. These organizations form hierarchical bureaucracies, where power derives from the personal position and rarely from an expert power. Control is made by procedures (which are highly valued), strict roles descriptions and authority definitions. These organizations have consistent systems and are very predictable. This culture is often represented by a "Roman Building" having pillars. These pillars represent the functional departments.
- Task culture: teams are formed to solve particular problems. Power is derived from the team with the expertise to execute against a task. This culture uses a small team approach, where people are highly skilled and specialized in their own area of expertise. Additionally, these cultures often feature the multiple reporting lines seen in a matrix structure.
- Person culture: formed where all individuals believe themselves superior to the organization. It can become difficult for such organizations to continue to operate, since the concept of an organization suggests that a group of like-minded individuals pursue organizational goals. However some professional partnerships operate well as person cultures, because each partner brings a particular expertise and clientele to the firm.
Kim Cameron and Robert Quinn
Kim Cameron and Robert Quinn (1999) conducted research on organizational effectiveness and success. Based on the Competing Values Framework, they developed the Organizational Culture Assessment Instrument that distinguishes four culture types.
Competing values produce polarities like flexibility vs. stability and internal vs. external focus – these two polarities were found to be most important in defining organizational success. The polarities construct a quadrant with four types of culture:
- Clan culture (internal focus and flexible) – A friendly workplace where leaders act like father figures.
- Adhocracy culture (external focus and flexible) – A dynamic workplace with leaders that stimulate innovation.
- Market culture (external focus and controlled) – A competitive workplace with leaders like hard drivers
- Hierarchy culture (internal focus and controlled) – A structured and formalized workplace where leaders act like coordinators.
Cameron and Quinn designated six characteristics of organizational culture that can be assessed with the Organizational Culture Assessment Instrument (OCAI).
Clan cultures are most strongly associated with positive employee attitudes and product and service quality. Market cultures are most strongly related with innovation and financial effectiveness criteria. The primary belief in market cultures that clear goals and contingent rewards motivate employees to aggressively perform and meet stakeholders' expectations; a core belief in clan cultures is that the organization's trust in and commitment to employees facilitates open communication and employee involvement. These differing results suggest that it is important for executive leaders to consider the match between strategic initiatives and organizational culture when determining how to embed a culture that produces competitive advantage. By assessing the current organizational culture as well as the preferred situation, the gap and direction to change can be made visible as a first step to changing organizational culture.
Robert A. Cooke
Robert A. Cooke defines culture as the behaviors that members believe are required to fit in and meet expectations within their organization. The Organizational Culture Inventory measures twelve behavioral norms that are grouped into three general types of cultures:
- Constructive cultures, in which members are encouraged to interact with people and approach tasks in ways that help them meet their higher-order satisfaction needs.
- Passive/defensive cultures, in which members believe they must interact with people in ways that will not threaten their own security.
- Aggressive/defensive cultures, in which members are expected to approach tasks in forceful ways to protect their status and security.
In constructive cultures, people are encouraged to be in communication with their co-workers, and work as teams, rather than only as individuals. In positions where people do a complex job, rather than something simple like a mechanical task, this culture is efficient.
- Achievement: completing a task successfully, typically by effort, courage, or skill (pursue a standard of excellence) (explore alternatives before acting) – Based on the need to attain high-quality results on challenging projects, the belief that outcomes are linked to one's effort rather than chance and the tendency to personally set challenging yet realistic goals. People high in this style think ahead and plan, explore alternatives before acting and learn from their mistakes.
- Self-actualizing: realization or fulfillment of one's talents and potentialities – considered as a drive or need present in everyone (think in unique and independent ways) (do even simple tasks well) – Based on needs for personal growth, self-fulfillment and the realization of one's potential. People with this style demonstrate a strong desire to learn and experience things, creative yet realistic thinking and a balanced concern for people and tasks.
- Humanistic-encouraging: help others to grow and develop (resolve conflicts constructively) – Reflects an interest in the growth and development of people, a high positive regard for them and sensitivity to their needs. People high in this style devote energy to coaching and counselling others, are thoughtful and considerate and provide people with support and encouragement.
- Affiliative: treat people as more valuable than things (cooperate with others) – Reflects an interest in developing and sustaining pleasant relationships. People high in this style share their thoughts and feelings, are friendly and cooperative and make others feel a part of things.
Organizations with constructive cultures encourage members to work to their full potential, resulting in high levels of motivation, satisfaction, teamwork, service quality, and sales growth. Constructive norms are evident in environments where quality is valued over quantity, creativity is valued over conformity, cooperation is believed to lead to better results than competition, and effectiveness is judged at the system level rather than the component level. These types of cultural norms are consistent with (and supportive of) the objectives behind empowerment, total quality management, transformational leadership, continuous improvement, re-engineering, and learning organizations.
Norms that reflect expectations for members to interact with people in ways that will not threaten their own security are in the Passive/Defensive Cluster.
The four Passive/Defensive cultural norms are:
In organizations with Passive/Defensive cultures, members feel pressured to think and behave in ways that are inconsistent with the way they believe they should in order to be effective. People are expected to please others (particularly superiors) and avoid interpersonal conflict. Rules, procedures, and orders are more important than personal beliefs, ideas, and judgment. Passive/Defensive cultures experience a lot of unresolved conflict and turnover, and organizational members report lower levels of motivation and satisfaction.
This style is characterized with more emphasis on task than people. Because of the very nature of this style, people tend to focus on their own individual needs at the expense of the success of the group. The aggressive/defensive style is very stressful, and people using this style tend to make decisions based on status as opposed to expertise.
- Oppositional – This cultural norm is based on the idea that a need for security that takes the form of being very critical and cynical at times. People who use this style are more likely to question others work; however, asking those tough question often leads to a better product. Nonetheless, those who use this style may be overly-critical toward others, using irrelevant or trivial flaws to put others down.
- Power – This cultural norm is based on the idea that there is a need for prestige and influence. Those who use this style often equate their own self-worth with controlling others. Those who use this style have a tendency to dictate others opposing to guiding others' actions.
- Competitive – This cultural norm is based on the idea of a need to protect one's status. Those who use this style protect their own status by comparing themselves to other individuals and outperforming them. Those who use this style are seekers of appraisal and recognition from others.
- Perfectionistic – This cultural norm is based on the need to attain flawless results. Those who often use this style equate their self-worth with the attainment of extremely high standards. Those who often use this style are always focused on details and place excessive demands on themselves and others.
Organizations with aggressive/defensive cultures encourage or require members to appear competent, controlled, and superior. Members who seek assistance, admit shortcomings, or concede their position are viewed as incompetent or weak. These organizations emphasize finding errors, weeding out "mistakes" and encouraging members to compete against each other rather than competitors. The short-term gains associated with these strategies are often at the expense of long-term growth.
Adam Grant, author of the book Give and Take, distinguishes organizational cultures into giver, taker and matcher cultures according to their norms of reciprocity. In a giver culture, employees operate by "helping others, sharing knowledge, offering mentoring, and making connections without expecting anything in return", whereas in a taker culture "the norm is to get as much as possible from others while contributing less in return" and winners are those who take the most and are able to build their power at the expense of others. The majority of organizations are mid-way, with a matcher culture, in which the norm is to match giving with taking, and favours are mostly traded in closed loops.
In a study by Harvard researchers on units of the US intelligence system, a giver culture turned out to be the strongest predictor of group effectiveness.
As Grant points out, Robert H. Frank argues that "many organizations are essentially winner-take-all markets, dominated by zero-sum competitions for rewards and promotions". In particular, when leaders implement forced ranking systems to reward individual performance, the organisational culture tends to change, with a giver culture giving way to a taker or matcher culture. Also awarding the highest-performing individual within each team encourages a taker culture.
Stephen McGuire (2003) defined and validated a model of organizational culture that predicts revenue from new sources. An Entrepreneurial Organizational Culture (EOC) is a system of shared values, beliefs and norms of members of an organization, including valuing creativity and tolerance of creative people, believing that innovating and seizing market opportunities are appropriate behaviors to deal with problems of survival and prosperity, environmental uncertainty, and competitors' threats, and expecting organizational members to behave accordingly.
- People and empowerment focused
- Value creation through innovation and change
- Attention to the basics
- Hands-on management
- Doing the right thing
- Freedom to grow and to fail
- Commitment and personal responsibility
- Emphasis on the future
Eric Flamholtz (2001; 2011) has identified and validated a model of organizational culture components that drive financial results (Flamholtz and Randle, 2011). The model consist of five identified dimensions of corporate culture: 1) treatment of customers, 2) treatment of people, 3) performance standards and accountability, 4) innovation and change, and 5) process orientation. These five dimensions have been confirmed by factor analysis (Flamholtz and Narasimhan-Kannan, 2005) in addition, Flamholtz has published empirical research that show the impact of organizational culture on financial performance (Flamholtz, 2001). Flamholtz has also proposed that organizational (corporate) culture is not just an asset in the economic sense; but is also an "asset" in the conventional accounting sense (Flamholtz 2005). Flamholtz and Randle have also examined the evolution of organizational culture at different stages of organizational growth (Flamholtz and Randle, 2014).
Ethical frameworks and evaluations of corporate culture
Four organizational cultures can be classified as apathetic, caring, exacting, and integrative.
- An apathetic culture shows minimal concern for either people or performance.
- A caring culture exhibits high concern for people but minimal concern for performance issues.
- An exacting culture shows little concern for people but a high concern for performance.
- An integrative culture combines a high concern for people and performance.
A cultural audit is an assessment of an organization's values.
- Assessment culture
- Cultural capital
- Cultural identity
- Fit in or fuck off
- Inclusive business
- Kick the cat
- Kiss up kick down
- Lifestyle (sociology)
- Machiavellianism in the workplace
- My way or the highway
- Narcissism in the workplace
- Organizational behavior
- Organizational studies
- Organizational psychology
- Power (social and political)
- Psychological capital
- Psychopathy in the workplace
- Realistic job preview
- Three circles model
- Tick-box culture
- Working class culture
- Workplace diversity
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[...] in a very real sense, corporate culture can be thought of as a company's 'personality'.
Flamholtz, Eric; Randle, Yvonne (2014). "13: Implications of organizational Life Cycles for Corporate Culture and Climate". In Schneider, Benjamin; Barbera, Karen M. The Oxford Handbook of Organizational Climate and Culture. Oxford Library of psychology. Oxford: Oxford University Press. p. 247. ISBN 9780199860715. Retrieved 2018-10-25.
The essence of corporate culture, then, is the values, beliefs, and norms or behavioral practices that emerge in an organization. In this sense, organizational culture is the personality of the organization.
Flamholtz, Eric; Randle, Yvonne (2014). "13: Implications of organizational Life Cycles for Corporate Culture and Climate". In Schneider, Benjamin; Barbera, Karen M. The Oxford Handbook of Organizational Climate and Culture. Oxford Library of psychology. Oxford: Oxford University Press. p. 247. ISBN 9780199860715. Retrieved 2018-10-25.
The essence of corporate culture, then, is the values, beliefs, and norms or behavioral practices that emerge in an organization.
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