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Organisational Culture: Factors influencing the Culture of an Organisation and Cultural Differences
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25th May 2014
We've summarised below some key points that students should consider when revising the the factors influencing the culture of an organisation and cultural differences within an organisation:
Definitions
- Culture: “The way we do things around here"
- Sub-culture: group of people within a culture (whether distinct or hidden) which differentiates them from the larger culture to which they belong
- Mission: a formal statement of an organisation's fundamental purpose (similar to vision, purpose)
- Core values: the essential and enduring guiding principles of an organisation.
- Vision statement: a picture of an organisation in the future (aspiration, inspiration) which sets the framework for strategic planning.
- Paradigm: the set of assumptions held in common & taken for granted in an organisation. Often unspoken.
Key Theories / Concepts
- Charles Handy: four types of culture
- Power : focus on personal charisma & risk-taking
- Role: focus on position, bureaucracy, hierarchy
- Task: focus on problem-solving, teamwork, creativity
- Person: focus on individual needs, independence
- Edgar Schein: 4 layers of organisational structure: Values | Beliefs | Behaviours | Paradigm
- Johnson & Scholes: Cultural Web (Symbols, Power Structures, Organisational Structures, Control Systems, Rituals & Routines, Stories)
Factors Influencing Culture of an Organisation
- Influence of the founder (“shadow of the leader")
- Size & development stage of the business (e.g. start-up, multisite, multinational)
- Leadership & management style
- Organisational structure, policies & practices
- Employee & management reward structures (e.g. pay, bonuses, individual v team rewards)
- Market /industries in which it operates
- Working environment & nature of tasks (e.g. physical, office, remote working, flexible working)
- External environment (e.g. legal, economic, social)
- Attitude of organisation to risk-taking & innovation
- Sector: e.g. service, manufacturing
Cultural Differences Within an Organisation
- Subcultures develop within an organisation based on occupations, product lines, functions, geographies and echelons in the hierarchy.
- Some firms: sub-cultures are stronger than overall organisational culture
- Managing Sub-cultures has become more important & challenging:
- Mergers, takeovers, joint ventures more common
- Globalisation: many firms now multi-cultural based on nationality, language
- Technological complexity: depts. more specialised; more remote & flexible working
Key Examples / Evidence
- Barclays: impact of powerful sub-culture at investment banking division (came to dominate retail bank)
- Apple / Disney: role of culture of innovation & secrecy; shadow of the leader – Steve Jobs, Walt Disney
- HP (“HP Way"), Toyota (“Toyota Way") – long-established cultural programmes, including induction
- NHS: public sector organisation with complex cultural challenges – combination of role & task culture?
- Walmart: a common approach to employee (“shareholder") engagement across the globe
- Google: has deliberately maintained existing culture of acquisitions (e.g. YouTube & Zappos)
- Ikea: has developed a consistent culture among employees around the world who “love the values"
Depends on Factors
- Organisations will vary significantly in terms of the strength and depth of their culture: this will depend on:
- Strength & clarity of the organisation founder
- Amount and intensity of shared experiences that organisation members have had
- How much success the organisation has enjoyed
- The history/heritage of the business
Further Evaluation Opportunities
- Much academic research on what organisational culture is – but little agreement, so theoretical models can only be a guide.
- Culture is a complex concept which is difficult to understand = a challenge for business leaders!
- There is no absolute criterion for a “better" or a “worse" culture – it depends on what is “right" for the organisation
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