2.5 Organisational Culture

Organisational Culture - What is considered “normal” to an organisation, such as the way that workers behave within the business. Culture is based on the beliefs, values and attitudes of the management of the employees, and represents the personality of an organisation.

Elements of Organisational Culture

Nature of the business - Culture is shaped by the purpose and direction of the business, derived from its mission, aims and objectives. For example, a cut-throat business chasing profits will have a different culture from a philanthropic NGO.

Organisational structure - Firms with flat structures have more collaboration and generally greater camaraderie among the workforce, whereas taller structures tend to be more bureaucratic.

Rewards - The tendency for employees to be rewarded for their efforts will decide the unity and sense of belonging within the organisation, which in turn influences the culture of motivation and productivity.

Management styles - Organisational culture is heavily dependent on management and how they lead the company. With an autocratic management, there is likely to be clear division between subordinates and managers, but with a democratic or paternalistic management, there will be strong cohesion among all employees.

Three Levels of Corporate Culture

Artefacts - Superficial and behavioural aspects of an organisation that can easily be seen, but that are not incorporated in the daily lives of employees. Examples include the dress code, an organisation’s history, etc.

Espoused values - The written core values that define an organisation. They are usually derived from the vision and mission statement, brands, and slogans.

Shared basic assumptions - The culture that is not explicitly stated but is very much integrated in the organisation. They are the actual values demonstrated by the actions of management and employees.

The belief that different cultures are required for different business functions. He categorised the types of cultures into 4 genres.

Power Cultures - When there is a dominant individual or group holding decision-making power, reminiscent of a centralised organisational structure and autocratic leadership. 

Role Cultures - When job roles and titles are paramount, such as in a hierarchical organisational structure.

Task Cultures - Where the focus is on getting results from the work done no matter how it is done, reminiscent of a laissez-faire leadership style where micromanagement of tasks is minimised and delegation is common. ‍

Person Cultures - When staff in similar positions with similar expertise form groups to synergise their knowledge and skills. Commonly found in organisations that advocate collaboration and community spirit.

Feedback and Reward - The speed of feedback and level of rewards within an organisation. If feedback is immediate, any unproductive or improper conduct is addressed and a negative culture will be avoided.

Risk - The degree of uncertainty and level of risk-taking in the organisation. High-risk organisations include emergency services and stock brokerage firms, where a single mistake could prove costly.

Tough-guy macho - High risk, rapid feedback

• Fast-paced and highly stressful culture.
• Focus on short-term objectives rather than long-term.

Work-hard, play-hard - Low risk, rapid feedback

• Large and fast-paced customer orientated businesses such as restaurants and hotels. Stress is more likely to come from scope of work than risk.

Bet-the-company - High risk, slow feedback

• Stressful as rewards do not manifest immediately after taking risks, thereby increasing uncertainties (pharmaceutical companies, oil exploration, R&D, etc.).
• Organisation is forced into focusing on long-term.

Process - Low risk, slow feedback

• Typically highly bureaucratic organisations where people get caught up in how things are done rather than focusing on the completion of tasks (government, insurance companies, etc.).
• Focus on security and how things are done.

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Two Types of Cultures

Adaptive Cultures - Organisations that are open and receptive to changes; a trait of organisations who prioritise innovation and risk-taking. Adaptive cultures are associated with a focus on growth and development of both the business itself and its employees. Organisations tend to constantly seek improvement in operations and invest in training employees, leading to a community-driven and collaborative culture.

Inert Cultures - Organisations that are resistant to change and are inward looking. Inert cultures are associated with authoritarian leadership styles and strictly top-down communication, with little focus on employee relations and the development of employees, leading to a toxic culture with higher turnover rates.

Two Dimensions of Culture

Sociability - The extent to which people have concerns for their colleagues. High-sociability is attributed to people-oriented organisations who promote delegation and the development of employees, whereas low-sociability is attributed to task-oriented organisations where productivity and maximising efficiency is prioritised.

Solidarity - The degree of unity in an organisation, such as whether people share the same values and are aligned in the vision of the organisation. High-solidarity aids harmony and collaboration in the workplace, whereas low-solidarity implies self-interest and survival take priority.

Five Dimensions of Culture

Power Distance - The extent to which subordinates expect and accept unequal power distribution within the organisation. A low power-distance reflects a culture of equality, whereas high power-distance usually reflects organisations with highly centralised decision-making.

Individualism vs Collectivism - The extent to which people feel they should care for themselves or should be cared for by others. It considers the extent to which people feel their situation is their responsibility to improve, or the responsibility of society and the government.

Masculinity vs Femininity - The extent to which a culture conforms to traditional gender values. Masculinity refers to values such as aggressiveness, competitiveness, ambition and selfishness. Femininity refers to values such as community, collaboration, and developing positive relationships.

Uncertainty Avoidance - The extent to which people in an organisation prefer predictable structured routines over flexible structures. It is an indicator for risk-aversion within an organisation, and willingness to adapt to changes.

Long-term vs Short-term Orientation - The extent to which an organisation is willing to make sacrifices in the present to reap benefits in the future. Long-term orientation is associated with larger organisations that are more financially stable.

Possible Reasons for Cultural Clashes

Change in Leadership - Leadership styles have a significant influence on corporate culture, hence a change in leadership threatens the entire culture of daily life in the organisation. 

Mergers and Acquisitions - Cultural clashes between integrating businesses are inevitable due to innate differences, such as the vision and mission of the businesses, as well as the traditions and practices of its employees.