Organisational Culture

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Lecture 7

• Organisational Culture

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Lecture objectives and Outline

• The nature of organisational culture
• Explain how culture is developed, reinforced and
  maintained
• The functions of culture
• Importance of a strategy-culture fit
• Understand the role of culture in organisational
  change
• Current organizational culture issues facing
  managers

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The organisational culture

• Our personality influences the way we act and
  interact with others
• Organisational personality?culture

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Definition of organisational culture

• Williams, Dobson and Walters (1989) state that
  culture is the commonly hold and relatively
  stable beliefs, attitudes and values that exist
  within organisation.
• Robbins et al.(2001) states that culture is a
  common perception held by the organisations
  members a system of shared meaning.
• In summary, organisational culture is an
  expression of the values, beliefs and assumptions
  that dominate the organisation. It tells
  employees what is important and what type of
  behaviour is expected.
• Culture influences the organisational behaviour

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Definition of Organisational Culture

• The above definitions have following
  implications
• Organisational culture is a perception based on
  what organisational members see, hear or
  experience within the organisation.
• Individuals within a organisation may have
  different backgrounds or work at different
  levels, they tend to describe culture in similar
  terms.
• Organisational culture is a descriptive term. It
  concerns with how members perceive the
  organisation rather than whether they like it.

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What makes up an organisational culture?

• Beliefs about how business ought to be conducted
• Values business principles of management
• How we do things around here
• Official policies
• Traditions
• Approaches to stockholder relationships
• Company politics
• Often-told stories illustrating companys values
• Ethical standards

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Dimensions of Organisational Culture

• Research suggests there are seven dimensions that
  capture the essence of an organisations culture
  (regard them as seven organisational
  personalities), each dimension exists on a
  continuum from low to high (Robbins et al. 2005).
• In the reading 7.4 there are six key perspectives
  of workplace culture, what are they?

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Dimensions of Organisational Culture

• Attention to detail degree to which employees
  are expected to exhibit precision, analysis and
  attention to detail (have made quality being
  companys driving theme)
• Outcome orientation degree to which managers
  focus on results or outcomes rather than on how
  these outcomes are achieved (ex customer service)

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Dimensions of Organisational Culture (cont.)

• People orientation degree to which management
  decisions take into account the effects on people
  in the organisation (Rivers Footwear Clothing
  Merchant with a family-friendly working
  arrangement culture)
• Team orientation degree to which work is
  organised around teams rather than individuals
  (law firms )
• Aggressiveness degree to which employees are
  aggressive and competitive rather than
  cooperative (Microsoft, coca-cola)

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Dimensions of Organisational Culture (cont.)

• Stability degree to which organisational
  decisions and actions emphasise maintaining the
  status quo, it emphasis on growth
• Innovation and risk taking degree to which
  employees are encouraged to be innovative and to
  take risks (Intel corporation, ANZ, Virgin Blue)

Source Robbins et al. 2005, Foundations of
Management, 1st edn., Prentice Hall, Australia.
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How is an organisational culture created?

• Founder or early leader who articulated beliefs,
  principles, values, practices (Wal-Mart-Sam
  Walton, the Body Shop- Roddick)
• Over time, these values, principles, practices
  are shared widely by all employees
• A company culture is a product of internal social
  forces

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How is an organisational culture maintained?

• Through the process of selecting for employment
  or promotion those individuals who are best able
  to sustain or promote the prevailing culture.
• Through actions of top management that constantly
  reaffirm and reflect the culture to all
  employees.
• Through the action of the socialisation process
  that disseminates the culture among all the
  member of the organisation
• Using mentors, training programs and formal
  orientation session

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• Process of creating and sustaining culture

Top management
Philosophy of organisations founders
Selection criteria
Organisational culture
Socialisation
Source Robbins et al. 1989
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How Employees Learn CultureManifestation of
organisational Culture

• Culture is transmitted to employees in a number
  of ways
• Symbols
• Objects, acts, events or qualities serving as a
  vehicle for conveying meaning
• Stories
• Narratives based on true events, which may be
  embellished to highlight intended value
• Rites and Ceremonials
• Relatively elaborate, dramatic, planned sets of
  activities intended to convey cultural values to
  participants and, usually, an audience
• Systems of rites performed in conjunction with a
  single occasion or event

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How Employees Learn Culture

• Language use language as a way to identify
  members of a culture. Using companys own
  vocabulary, acronyms and jargon.
• For example In Microsoft
• Work judo the art of deflecting a work
  assignment to someone else without making it
  appear that you are avoiding it
• Flat food goodies from the vending machine that
  can be slipped under the door to a colleague who
  is working feverishly on a deadline
• Facemail talk to someone face to face

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Why Culture matters?The functions of culture

• Creates distinctions between one organisation and
  another
• Conveys a sense of identity for members of the
  organisation
• Facilitates the generation of commitment to
  something larger than ones individual
  self-interest
• Enhances the stability of the organisations
  social system
• Provides standards for what employees should say
  and do
• Defines the rules of the game

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Strong Culture

• Organisations in which the key values are
  intensely held and widely shared, have a great
  influence on employees than do weak cultures.
• The more employees accept the organisations key
  values and their greater their commitment to
  those values, the stronger the culture is.
• Research shows that those company with strong
  cultures have achieved high performance.culture
  impacts on what managers do as it becomes
  stronger.

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Weak Culture

• Few values beliefs widely shared by all
  employees and no strong sense of company identity
• Is strong culture good and weak culture bad?
• What is the disadvantage of a strong culture?

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Why culture matters?Importance of a
Strategy-culture Fit

• Close match between culture strategy adds
  significantly to effectiveness of strategy
  execution
• Beliefs, goals, practices underpinning a
  strategy success may or may not be compatible
  with company culture
• When they are not, culture may impede or even
  defeat successful implementation
• Strong cultures
• Promote good performance when fit exists and
• Hurt performance when little fit exists

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Organisation Opportunity Matrix

• Successful organisations foster adaptive,
  entrepreneurial cultures rather than
  administrative cultures.
• The organisation opportunity matrix classify
  firms by how much a firms culture support a
  desire for change and a belief in its capacity to
  influence the competitive environment.

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Characteristics of Entrepreneurial Versus
Administrative Cultures
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Believe in capacity to influence the competitive
environment
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Changing culture

• Changing culture to fit a new strategy is a tough
  executive challenge
• Especially when prevailing culture is entrenched
  unhealthy
• Senior executives must personally lead efforts to
  create a strategy-supportive culture!

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Culture Change Matrix

large
Size and complexity
small
Cultural homogeneity
high
low
Source Sharplin, A. 1985, Strategic Management,
Mc Graw Hill.
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When is cultural change most likely to take
place?

• A dramatic crisis
• Turnover in leadership
• Younger and smaller organisation
• Weak culture

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Changing Organisational Culture

• Because they involve fairly stable values,
  beliefs and assumptions, organisations can be
  difficult to change.
• An approach to changing culture (Kilmann 1985)
• Surfacing actual norms
• Articulating new directions
• Establishing new norms
• Identifying culture gaps
• Closing culture gaps

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Leadership Culture Change

• Crisis identification
• Communication of a new vision
• Motivation of key staff
• to lead cultural change by implementing the new
  vision and its corresponding strategy

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Current organisational culture issues facing
mangers

• Creating an ethical culture
• Creating an innovative culture
• Creating a customer-responsive culture
• Workplace spirituality and organisational culture
• The recognition that people have inner life that
  nourishes and is nourished by meaningful work
  that takes place in the context of community
  (Ashmos and Duchon 2000).
• Strong sense of purpose
• Focus on individual development
• Trust and openness
• Employee empowerment
• Toleration of employee expression

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Activities

• Exercise Corporate Culture Preference Scale
• AYS case (page 71 of your textbook)