Organizational culture affect on organizational perfomance

This paper discusses the role of organization culture in performance. Firstly it discusses definition of Organizational Culture. Secondly it presents mainstream approaches and types of culture. Thirdly, the levels and context of culture within the organization are discussed, and types of culture that enhance performance. Finally organizational performance and how it is affected by organizational culture is discussed from various perspectives.

To what extent does the Organizational Culture affect the Organizational performance? This question is at the core of this essay. Many consultants and management scholar strongly believe that differences in culture can have a major impact on performance. According to Rollinson et al. (1998) a culture which is strong and positive will have beneficial impact on performance, whereas a strong negative culture will lead to failure.

Definition of Organizational Culture

Organizational culture has been defined in many ways, and the concept remains controversial. Defined culture as something “an organization has or is”. Other writer have tried to specify the concepts of culture Kilmann et al.(1985) defined it as the shared philosophies, ideologies, values, assumptions, beliefs, expectations, attitudes, and norms that knit a community together. Culture is the customary and traditional way of thinking and doing things, which is shared to a greater or lesser by all members, and which new member must learn, and at least partially accept, in order to be accepted into service in the firm. The asserted that culture is a tool to achieve the goals of the organization.

From the point of argument regarding the meaning, (Witte, 1999), emphasize that Smircich (1983) provide sufficient analysis in different approaches to the organizational culture, also emphasis that the concept of culture “has been borrowed from anthropology” Smircich (1983:339).

According to Kotter, & Heskett, (1992) “all firms have multiple culture – usually associated with different functional groupings and geographic locations” (p. 5).

Mainstream Approach

Types of culture

Gorden, (2002) classified organization culture into “Strong culture” which has internal stability and has a major impact on all member of an organization, and “Weak culture”, which demonstrates instability and has less impact. Moreover he defines organizational culture, based on their main areas of focus as follows:

“Function culture” this focuses on the decision making and individual role in the organization hierarchy. It emphasizes the consistency. This kind of organization is able to limit risk, continue success and maintain responsibility. Most U.S government agencies have a “Function culture”.

“Process-driven culture” This emphasizes customer satisfaction and quality, to meet customer demand. Organizations with this aspect emphasize the commitment to gain the confidence of their customers.

“Time-based culture” tries to minimize cost and bring services and new products to the market promptly. Organizations with this aspect reduce cycle time and develop new products.

“Network culture” this is occur within virtual firms, which contain for designing work that require competencies in an organization to be complete. Corporation with “network culture” able to develop a new products, also able to use resource from outside, Gorden, (2002).

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Types of organization culture which enhance performance

Kreitner and Kinicki (2004) suggested three perspectives which enhance organization performance.

“Strength perspective”. This shows the important link between “strong culture” and performance. The idea is that a “strong culture” can create motivation among employees, Facilitate “goal alignment” and create needed structure to improve performance.

“Fit perspective” is based on the premise that the culture of the organization must align with the context of strategy.

“The adoptive perspective” assumes that when cultures are affective, this will help firms to adopt and anticipate change in environment. Such adaptability may enhance performance (Kreitner and Kinicki, 2004).

Organization performance and the impact of organizational culture

According to Brown, (1998.p.226), generally “performance” means “economic performance”. Alvesson, (2002), analyzing “organizational culture and performance”(p 42). Identified four points of view on the relationship between them as follows:

The general view is that a “strong culture” based on the commitment of the managers and employees of the organization to the same set of beliefs, value and norms will have positive results. Denison, (1984) linked the strength of organization culture to company profit.

Other researchers suggest a “reverse relationship between culture and performance” (Alvesson, 2002: 54 ) that is high performance in the organization creates a “strong culture” and success could bring a set of common “orientations, values and beliefs”(p.54). In turn this culture could reproduce the organizations success and so contribute to performance.

Another idea that draws upon emergency thinking is that, under particular conditions, certain types of “organization culture” are appropriate, that may contribute to the performance.

“Adaptive culture” is suggested to be the key to excellent performance, for example, ability to react to changes in the environment, by willingness to take risk, and working together to find opportunities.

The most widespread hypothesis is that “strong culture” can lead to high performance (Brown, 1998). Deal and Kennedy (1982) stated that “the impact of strong culture on productivity is amazing” (p.15).

There are two arguments on how strong culture leads to high performance (Brown, 1998: 227).

“strong culture facilitates goal alignment” because employees share the same “basic assumptions” and all agree on the goal to be achieved, consequently, they will be enthusiastic and move in the same direction.

“Strong culture” enables learning from past experience. (Brown, 1998).

Robbins and Judge, (2008) emphasize that “strong culture” reduce turnover among employees and shows a high level of agreement among members about the stance of the organization, which contribute to the performance. Sorensen, (2002) attribute the link between “strong culture” and the economic performance to control of organization environment. Garmendia, (2004) similarity assumes that “strong culture” increase motivation and commitment among the organization staff. On the other hand, there is evidence that organizations may develop a culture then may damage performance Kotter, & Heskett, (1992), studying of 207 U.S. companies found that organizations with a culture that stresses all key aspects of management and leadership and applied them correctly outperformed those that did not. Culture could negatively impact performance preventing the firm from adopting the right strategy. “Corporate cultures that inhibit strong long-term financial performance are not rare; they develop easily, even in firms that are full of reasonable and intelligent people” (Kotter & Heskett, 1992 p. 11-12). Culture that encourages inappropriate patterns of behavior are difficult to change because they are invisible to people. However, “corporate culture can be made more performance enhancing” (p. 12), if leadership is be guided by a reasonable vision of how culture can enhance the performance (Kotter & Heskett, 1992). The same authors suggested that there are three logical reasons for the relationship between strong culture and performance, goal alignment, high employee motivation, and provision of a suitable structure without relying on bureaucracy, which may prevent the innovation and motivation (Kotter & Heskett, 1992). Deal and Kennedy, (1982) suggest a typical example of a “strong culture” is “Tandem Computers”, which was “founded on a well-ordered set of management beliefs and practices” also with “no formal organization chart and few formal rules”, the employee work with each other, also Top management invests in training, and employees bond through rituals such as the Friday afternoon “beer-bust”. All these factors make the employees feel part of the organization and work hard. Nevertheless, the studies of Kotter & Heskett, (1992) on a sample of 207 companies between 1977 to 1988 found the relationship between strength of corporate culture and long term performance to be only modest. There were also some companies that had “weak culture” but high performance due to monopoly and autonomy the companies were allowed. (Alvesson and Berg, 1992) emphasize that an “organizational culture” strongly change image of the firm from this point when the image have changed in the customer prospective by either, positive or negative it will contribute in performance. Denison, (1984) found that firms that have good communication have good performance. “Strong culture” is conducive to good performance only if includes appropriate “Artefacts, values and assumption” (Denison, 1984). Similarly Schein, (1985) stated that organizations can be affective if they adopt “right” culture, also (peters and waterman, 1982) argued that “strong culture” has possibility to associate with performance more than “weak culture”. Deal and Kennedy, (1982) argued that the fundamental reason for the success of Japanese companies is the ability to maintain very strong culture; also they mentioned that the success behind the “American Business” is that “strong culture”.

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From these perspectives the answer to the question is that, according to Alvesson, (2002), Soerensen, (2002, Brown, (1998), Kotter & Heskett, (1992) and, Deal and Kennedy, (1982) “organization culture” can affect organization performance in both positive and negative ways. Organizations that employ the right values, beliefs and assumptions and provide a good environment for business, that is, a “strong culture” will tend to increase economic performance, whereas those that do not, and have a “weak culture” will be affected negatively, unless they benefit from monopoly.

Conclusion

This essay has discussed perspectives on organizational culture and its impact on the organizational performance. The mainstream identifies strong and weak organizational cultures. However Sorensen, (2002) argued that “strong culture” can affect performance “by facilitating internal behavioural consistency” (p.70). It is also believe that organizations can benefit by a having high level of employee motivations and “common goals” (Deal and Kennedy, 1982; Peters and waterman; 1982; Kotter & Heskett, (1992). Furthermore, Deal and Kennedy, (1982) emphasize that values are the guidelines of “day-to-day behavior” (p.21). For this reason organization culture has strong impact on the organization’s performance, whether positive or negative depending on many variables. The key issues are the awareness and understanding of the management and leadership, to operate the organization well and enhance the performance.

References

Deal, TE. & Kennedy, AA. (1982). Corporate Culture: The Rites and Rituals of Corporate Life, London: Clays Ltd

Denison, D (1984), “Bringing corporate culture to the bottom line”. Organizational Dynamics, Vol 13, 2, 5-22.

Alvesson, M (2002), Understanding of Organizational Culture. London, Saga Ltd.

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Alvesson, M and Berg, P. O. (1992). Corporate Culture and Organizational Symbolism, Berlin: Walter de Gruyter,

Brown, A. (1998). Organizational Culture, 2nd ed. Harlow, Pearson Education Ltd.

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Garmendia J. A. (2004). “The Impact of corporate culture on company performance”. Current Sociology, Vol 52(6), 1021-1083.

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Gordon, JR. (2002). Organizational Behavior: A Diagnostic Approach, 7th ed. New Jersey. Pearson Education

Handy, C. (1993). Understanding Organizations , 4th ed. London: Penguin.

Jaques, E. (1951) The Changing Culture of A Factory. London :Tavistock.

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Kotter, J.P. and Heskett, J.L. (1992), Corporate Culture and Performance, New York: Free Press.

Martin, J. (2001). Organizational Behaviour, 2nd ed. London: Thomson.

Peter, T. J. & Waterman, R. H. (1982). In search of Excellence, Lessons from America’s Best-Run Companies, New York: Harper & Row

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