38 Organizational Culture

Dr. Radha Kanwal Sharma

1. Learning Outcome

2. Introduction

3. Characteristics of organizational culture

4. Levels of culture

5. Uniformity in culture

6. Functions of culture

7. Origin of culture

8. Sustaining the culture

9. Summary

2. Introduction

Culture is a pattern of basic assumptions invented, discovered or developed by given group as it learns to cope with its problems of external adoption and internal integration worked well enough to be considered valuable and therefore, to be taught to new members as a correct way to perceive, think and feel, in relation to those problems.

Edgar Schein

Culture is the shared attitude and perceptions in an organization that are based on a set of

fundamental norms and values and help members understand the organization.”

Wagner III and Hollenbeck

Corporate culture consists of norms, values and unwritten rules of conduct of an organization as

well as management styles, priorities, belief and interpersonal behaviors that prevail. Together

they create climate that influences how well people communicate, plan and make decisions.

Sinn

It is clear from above definitions that (i) culture is about combination of the factors that are learnt

through interaction with environment and (ii) organization culture stress on the sharing of norms

and values that guide the employees‟ behavior. Culture guides the employees‟ behavior within

the organization and defines a code of conduct outside the organization.

3. Characteristics of organizational culture: Organizational Culture is identified through following characteristics:

1. Individual autonomy: It is the degree of responsibility and freedom to take initiative for decision making by employees;

2. Structure: It refers to the degree to which the organization creates clears objectives and performance expectations and

includes degree of direct supervision used to control the employees‟ behaviour.

3. Support of management: this is the degree to which the management provides clear communication, assistance, warmth

and support to subordinates;

4. Identity: this is the extent to which the employees identify with the organization as a whole, rather than with their

particular work group.

5. Performance reward system: the degree to which the reward system in the organization like salary hike, promotions,

recognition etc is based on employee performance than on unfair practices like seniority, favouritism etc;

6. Tolerance to conflict: this refers to the degree of conflict present in relationships between colleagues and work groups.

It also refers to the extent to which the employees are encouraged to air conflicts and criticisms openly;

7. Risk tolerance: It refers the degree to which employees are encouraged to be innovative, aggressive and risk taking.

8. Communication patterns: the degree to which the organization communication is restricted to formal hierarchy of authority;

9. Orientation towards outcomes: it refers to the extent to which the management focuses on final outcomes rather than

techniques and processes used to arrive at these outcomes.

10. People orientation: this is the degree to which the management decisions take into consideration the impact of outcomes

on people within the organization.

4. Levels of culture/ Learning of culture: Schein proposes three levels of culture at which it is learnt:

1. Observable artifacts of culture: These are the symbols of culture in the physical and social work environment. These are visible and most accessible. These include founders of organization, their leadership styles and ethical behaviors. Employees are expected to follow and copy their work ethics.

Rites and rituals are recurring activities that are used at special times to influence the behavior and understanding of organizational members. For example taking out Colours during oath ceremony is in the defense services. Colours remind soldiers of the excellent work done and sacrifices made by their predecessors, presentations of certificates/degrees during convocation ceremony in the university. Rituals are systems of rites like departmental song, colors, and company picnic or retirement dinners. Cultural symbols are an object, act, or event that serves to transmit cultural meaning”. Corporate uniform, tie, buttons etc are the examples. Saga is a heroic account of accomplishments Sagas are important because they are used to tell new members the real mission of the organization, how the organization operates, and how individual can fit into the organizational settings.

2. Shared values: The values can be terminal values that reflects end state of existence; and instrumental values, the means to achieve terminal values. Being hard working (instrumental value) may lead to achieve solace (terminal value). Shared value resides at the very heart of the organizational culture. It helps turn routine activities into valuable, important actions, tie the corporation to important value of society that may provide a very distinctive source of competitive advantage. Values should be linked with work. A person should feel that he is producing an umbrella that keeps health of the society. He is not merely working for material gain but for good of society. An organizations should therefore develop a “dominant and coherent set of shared values” so that individual behaves in a graduated manner in line with the organizational philosophy.

3. Common Assumptions: Common assumptions are fallout of shared value system and observable artifacts of culture. Employees, over a period of time form within themselves a common culture. In Bajaj Automobiles, everybody comes in time to the plant. Punctuality is therefore a common assumption that is embedded in their organizational culture. Indians believe in truth and non-violence. Therefore it is a common assumption of our national culture.

5. Uniformity of Culture: It is commonly presumed that organization has a uniform culture throughout. It means that employees with different backgrounds interpret the culture in the similar way. But it is not always true. There have been different types of the cultures which have been identified so far:

(i) Dominant culture and Sub culture: A dominant culture is a set of core values shared by a majority of an organization‟s employees. Most prevalent and talked about organizational culture is the dominant culture. Dominant culture helps guide the day to day behavior of employees.

A sub culture is a set of values shared by a small minority of organizations‟ members.sub culture arises as a result of experiences shared by members of a particular department or unit of the organization. In the sub culture, core values of dominant culture are retained but are modified to reflect the particular unit‟s situation. E.g. marketing department has its own sub culture and R & D has its own sub culture due to additional values unique to these departments.

An organization must have a strong dominant culture. If sub cultures become stronger, these will come into conflict with the dominant culture. As a result, the dominant culture will become weak and concept of shared behavior will no longer be effective.

(b) Strong culture and weak culture: An organizational culture can be strong or weak. Strong culture has strong values and strong leadership; is always widely shared; and is intensely held by its members who show sense of deep commitment towards culture.

A weak culture is the reverse of the strong culture. A strong culture leads to reduced turnover and positive employee attitude. Major drawback of strong culture is that it leads to „group think‟, collective blind spots and resistance to change and innovation.

(c) Mechanistic and Organic Culture: In mechanistic type of culture, the values of bureaucracy and feudalism are maintained. Emphasis is given to specialization, flow of authority from top to lower levels and well defined communication channels. This culture can result into loyalty of employees, but inter departmental rivalry exist. This culture also resists change and innovation.

Organic culture is the contrast of mechanistic culture. Stress is on flexibility, consultation, change and innovation. There are no well defined communication channels, departmental boundaries, hierarchies of authority or formal rules and regulations. Whole staff acts as a team.

(d) Authoritarian and Participative Culture: Authoritarian culture is characterized by centralization of power, stress on discipline and punishment for disobedience. It is assumed that leader knows what is good for the organization. This type of culture discourages professionalism because professionals consider themselves as equals.

The participative culture is based on the assumption that if all people working in the organization participate in decision making, then they are more likely to be committed to the decision that has been taken rather than to those decisions which are imposed on them by autocratic leaders. Group problem solving always leads to better decisions because several minds working together are always better than single mind working alone.

(e) National Culture vs. Organizational culture: organizational culture is always influenced by the culture of the country, irrespective of the origin of the company. If there is a clash between organizational culture and national culture, the organizational culture generally prevails. E.g. multinational companies operating in India declare holidays according to Indian festivals.

6. Functions of organizational culture

Organizational culture serves the following functions:

1. It gives members an organizational identity: Sharing norms, values and perceptions gives people a sense of togetherness

that helps promote a feeling of common purpose. This also enables the employees how to think and behave as expected of

them.

2. It facilitates collective commitment: The common purpose that grows out of shared culture tends to elicit strong

commitment from all employees who accept the culture as their own.

3. It promotes systems stability: By encouraging a shared sense of identity and commitment, culture encourages

lasting integration and cooperation among the members of an organization. It enhances social stability by holding the

organizational members together by providing them appropriate standards.

4. It shapes behaviour by helping members make sense of their surroundings: An organization culture serves as a source of

shared meaning that explains why things occur the way they do. Organizational culture is seen but felt. Culture reflects the

value shared by organizational members.

5. It provides a boundary: Culture creates distinction between one organization and the other. Such boundary defining

helps identify members and non-members of the organization.

6. Culture facilitates the generation of commitment to something larger them one‟s individual self-interest. It serves as

control mechanism that guides and shapes the attitude and behaviour of organizational members.

7. It helps organizational members stick to conformity and expected mode of behaviour. Culture ensures that everyone

thinks and behaves in a prescribed manner.

6.1 Dysfunctions of Culture

Though organizational culture is very important and serves many functions, yet it can prove to be a liability for the organization.

1. Barrier to change: when the business environment is stable, the consistency of employee behavior is an asset for the organization. But when the environment becomes dynamic, the consistent behavior becomes a problem as the employees try to resist the changes in the environment. Many companies, have a strong culture, that has worked very well for them in the past, had to face many difficulties when need to change with the environmental changes arose (e.g. General Motors, IBM). Thus strong culture can become an obstacle to change if these cultures fail to match with changing environmental needs.

2. Barrier to Diversity: Strong cultures put a lot of pressure on employees to confirm to the accepted values and styles of the organization. The employees belonging to different country, race or religion also have to conform to organizations‟ culture and values; otherwise they are believed to be unfit for the company. Strong cultures do not accept the fact that people from different backgrounds bring unique strengths to the company. This proves to be a barrier in the diversity management.

3. Barrier to Mergers and Acquisitions: Earlier, during mergers and acquisitions, the financial matters and product synergy alone were considered the key factors in deciding which company should merge with which company or which company should acquire which company. In the recent years, trend has changed. Cultural compatibility has become a primary concern during mergers and acquisitions. Strong cultures of the two merging companies create problems of acceptability of the other culture. Same is true of acquisitions.

7. Origin of the organizational culture

The vision of founders and various functions of the organization create culture. The ideology and customs are bedrock of any organizational culture. The mission and vision of founder members, hard work, competitive spirit and the way of life is important as it establishes cultural value of any organization. E.g. the vision of Ratan Tata has created a Tata culture. There are two steps in creation of culture.

1. A single person (founder) has an idea for a new enterprise.

2. The founder brings in one or more other key people and creates a core group that shares a common vision with the founder. That is, all in the core group believe that the idea is good one, is workable, and is worth running some risk for.

3. The founder core group starts to create an organization by raising funds, obtaining patents, locating land, designing building etc.

4. At this point, others are brought into organization and a common history begins to be built.

5. The founders have a major impact on the organization‟s early culture. They do not have any constrains of previous customs or ideologies. As new enterprises have small size, it becomes easy for the founders to exercise their will on organization members. The founders have their own prejudices regarding the fulfilment of original ideas. The organization culture results from interaction between

(a) Founder‟s biases and assumptions;

(b) What the original members, who were employed by founders, learnt from them.

Best example of this is the Tata Empire. The late J.R.D. Tata was the founder. His supportive and constructive role; his beliefs in hard work and professionalism ; and his assumption that only honesty and fair dealing pays, has been followed by his successors and is imbibed deeply in the Tata culture. This has made Tata group, what it is today.

7.1 Sustaining the organizational culture

Following practices help to sustain the organizational culture:

Selection: Standardized procedure should be used to hire right people for right job. Experts should try to screen out those whose value system does not conflict with that of the organization. It is important that organizations lay down detailed process of selection criteria and selects a team who can employ right people for right jobs. The vision, mission, and policy of a sound organization must not be bypassed while selecting the people for work performance. People who do not have core values of an organization must not be appointed because one day they might destroy the very foundation of value system in an organization.

Top Management: The actions of top management have a major impact on the organization culture. . It is the duty of the management to lay down organizational mission, which is achievable. It is the duty of managers to ensure that all workers respect the organizational culture and run the organization as per its philosophy. It is therefore important that managers play a significant role in keeping values, behaviors and opinions of the organizational members under control and guide them appropriately. Leaders in the organization should pay continuous attention to maintaining the established standards and send clear signals to all the members as to what is expected of them.

Socialization: Employees should be properly inducted in the organization. Organization policy should lay down procedure for this. Individual employee should be briefed on the organization structure, his department and the immediate superior to whom he is to report. Induction also involves lying down career path for managerial cadre. Training and development programmes, promotional cadres should be planned on a regular basis so that an appropriate message is passed on to the employees. It is the duty of the senior managers to ensure that organizational culture is enriched. During induction the employees receive a positive signal of the level of organizational culture. In case employees fail to adapt to the organization‟s culture are called „non conformist‟ and are further put through an intensive training programme as under.

Pre-arrival Stage: The values, attitudes, personality and learning aptitude are assessed to drive the individual towards organizational culture. It is diagnosis stage, which identifies, in an individual the possibilities of socialization (adaptation) of the organization‟s culture.

Encounter Stage: It is an induction stage where a recruit joins an organization and is put through the job. He compares his expectations and image that he has formed with the organizational set up. If the expectations are far from reality, they are expected to learn and follow organizational value system. Those who modify and learn are taken into the mainstream of the organization. Those who resist have to quit the organization being misfit.

Metamorphosis Stage: It is a consolidation stage where individual learn the values, norms, culture of the organization. It is voluntary process where an individual is put under a facilitator for learning process. Individual masters skills required for job performance, he adopts new role and adjust himself to changed life style.

In the defense services socialization has a great importance and is also known as „regimentation‟. Each officer is required to follow daily routine that soldiers follow. The aim of the exercise is to make him aware of the criticality and knowing each function from grass route level. This also enables his troops to understand him and his commitment towards them in exercise of command. This type of induction has paid rich dividends.

8. Changing organizational culture

Under some critical circumstances, the existing culture may become undesirable, giving rise to the need of a new culture. Some of such circumstances are as under:

1. A major crisis like financial setback, cost cutting, loss of key customers or technological breakthrough;

2. When a top executive leaves the organization and a new leadership takes over, era of a new culture sets in;

3. In young and small organizations, the culture can be easily changed;

4. Weak Culture: a weak culture is easy to change than a strong one.

Following points should be considered while changing the culture of an organization:

1. The top management should become the positive role model through their own behaviour;

2. Culture is learnt through stories, rituals etc. the old ones should be replaced by new ones , which are in vogue;

3. Adding a new executive at the top is the powerful strategy to change the culture;

4. The socialisation process should be redesigned to align with new values;

5. Reward system establishes and reinforces the cultural behaviours. So this should also align with and support new culture;

6. Unwritten norms and beliefs should be replaced with formal written rules and regulations;

7. Liberal use of job rotations should be made to shake current sub culture.

Enriching organizational culture

Following additional practices contribute to enrich the organizational culture;

1. Job analysis should be done periodically;

2. An individual should be encouraged in public for good work done;

3. job requirements should be clearly defined ;

4. Celebrate festivals that employees greatly value;

5. Publicize stories, encourage hero worship;

6. Organize social functions;

7. Ensure quality decisions;

8. Show concern to all employees;

9. Encourage innovative ideas and reward them;

10. Lay down promotion policy; create a healthy and competitive work environment;

11. Ensure quality of work life.

9. Summary

Culture is invisible power of any organization. When thinking and actions of employees are institutionalized, an organizational culture is deemed to have taken birth. Culture guides the employees. Organizational culture is not inborn. It has to be invented and later developed over a period of time. Organizational culture comes into existence due to philosophy and beliefs of founder team. It is passed on to successive employees. It is learnt through shared values, sagas/ stories, rites, rituals and assumptions. Top management plays a major role in creating and sustaining a culture. Organizational culture has sub cultures as its parts. A strong culture can prove to be a liability for the organization due to problems it can possess; including resistance to change and diversity management. There are different types of cultures: dominant/ sub culture, strong/ weak culture, mechanistic/organic culture, authoritarian / participative culture and national culture. Due to dynamic external environment, sometimes it becomes inevitable to change the organizational culture. Changing the culture is a long and tedious process and it may take years to properly implement the new organizational culture.

Learn More:

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