Lecture 3

Organisational Culture

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

The organisational culture

Our personality influences the way
we act and interact with others

Organisational personality?culture

Definition of organizational
culture
culture is the commonly held and relatively

stable beliefs, attitudes and values that exist

within organization.
A common perception held by the organization's
members; a system of shared meaning.
In summary, organizational culture is an
expression of the values, beliefs and
assumptions that dominate the organization. It
tells employees what is important and what type
of behavior is expected.
Culture influences the organizational behavior
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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 organizational

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.

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

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

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

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

Philosophy of
organization's
founders

Top
management
Selection
criteria

Organizational
culture
Socialization

Source: Robbins et al. 1989

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How Employees Learn Culture:

Manifestation 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 company s 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

organization and another

Conveys a sense of identity for members
of the organization
Facilitates the generation of commitment
to something larger than ones individual
self-interest
Enhances the stability of the organization's
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 the greater
their commitment to those values, the
stronger the culture is.
Research shows that those companies with
strong cultures have achieved high
performance.culture impacts on what
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managers do as it becomes stronger.

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 firm s
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

Dimensions

Entrepreneurial
characteristics

Administrative
characteristics

Strategic

Driven by perceptions
of opportunity

Driven by controlled
orientation resources

Commitment to seize
opportunities

Revolutionary change
in short period

Evolutionary change
over long period

Commitment of
resources

Many stages, with

minimal exposure at
each stage

A single stage, with

complete
commitment based on
one decision

Control of resources

Use of freelance help

and rental of needed
resources

Employment or
ownership of needed
resources

Management
structure

Few levels with

emphasis on informal
communication
patterns

Many levels, with

emphasis on
communication
through formal
hierarchy

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Believe in capacity to influence

the competitive environment

Organisation opportunity
matrix
yes

adaptive
entrepreneurial
organisation

no

Reactive planners Bureaucratic and

lethargic
organisation

no

Complacent
though successful
market leaders

yes
Desire for change
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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

Quadrant 1
Culture change:
moderately
difficult

Quadrant 3
Culture change:
very difficult

Quadrant 2
Culture change:
easy

Quadrant 4
Culture change:
moderately
difficult

small
low

Cultural homogeneity

high
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Source: Sharplin, A. 1985, Strategic Management, Mc Graw Hill.

When is cultural change most

likely to take place?
A dramatic crisis
Turnover in leadership
Younger and smaller organization
Weak culture

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Changing Organisational
Culture
Because they involve fairly stable values,
beliefs and assumptions, organizations
can be difficult to change.
An approach to changing culture:
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
Strong sense of purpose
Focus on individual development
Trust and openness
Employee empowerment
Toleration of employee expression
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