Organizational Culture and Decision Making

Introduction.

Decision making is an important part to operator a company successfully, in the same time the organizational culture also can influence the company somehow, and the organizational culture can been considered as the centre theme of the whole company because of it describe and explain what the company is and what the company need to do. Decision making also can be influenced by the organizational culture.

The concept of organizational culture

To define organizational culture, people should understand what culture means in a society. In a broad sense, culture is the summation of spiritual values and material values which was recognized and formed in the historical activities of the society.In a narrow sense, culture is the ideology and the organization, rules which matched with it. But the organizational culture is different from the culture in traditional meaning, and it is the result of effect from serval elements such as the awareness, character, habit of the member in the organization and their scientific and cultural level(See Schien,1985).Organizational culture is the beliefs and values that are shared. “As such, the culture prescribe what is true, and describe and, therefore, the goals one ought to pursue and how one should go about pursuing them”.(Beyer,1981) And the organizational culture is based on the organization, and forming with the organization or dying with the organization, it exist no matter it has been presented.(Nystrom &W. H. Starbuck)

As a kind of culture which formed in a organization, organizational culture can be influenced by the managers, and that is why the organizational culture is a part of management. It is based on the organizational values, (Wikipedia, Organizational culture, 2010) and the organizational values is ruled and controlled by the manager-CEO(Chief Executive Officer). In the other words, the organizational culture is created by the CEO.

There are several types of organizational culture, and they can be classified by several methods. According to Geert Hofstede’s research on IBM’s employees in different parts of the world. He identified four dimensions of culture.

1.Power distance

2.Uncertainty avoidance

3.Individualism vs. Collectivism

4.Masculinity vs. Femininity.(Hofstede G. 1980).

On the other hand, there are some elements of organizational culture

People and empowerment focused

Value creation through innovation and change

Attention to the basics, hands-on management,

Doing the right thing,

Freedom to grow and to fail,

Commitment and personal responsibility,

Emphasis on the future. (Wikipedia,Organizational culture, 2010)

All of these elements are important in the forming process of organizational culture, and they can not be copied so each organizational culture is unique and an organizational culture is improving all the time

The effect of organizational culture on decision making

Since the definition of organizational culture has been gave, it has become more easy to analysis the relationship between organizational culture and decision making.

There is no doubt that the decisions were made by the empolyee in the organization, according to the definition of organizational culture, the organizational culture influence the member.Organizational culture can be divided into strong organizational cultures and weak organizational cultures. A strong organizational culture means the organizational culture can influence the organization more deeply than weak organizational culture. Whether organizational culture is strong or weak can be relate to the original culture, the scale of the organization, the liquidity of employees and the employee. As a result, a strong culture can decide how the staffs who have a unitive attitude respond to the stimulus, on the other hand,with a weak culture of the organization, staffs have different attitudes and responds. That means a same decision can make different effects in two organization if the organizational cultures are different–in the organization with a strong culture, the decision would be accepted easily,and in the organization with a weak culture, the staffs may doubt the decision and that make the decision implement hard. (Cambell&Nash,1992) So, the organizational culture influences decisions by its members and the way in which it influences its members’ acceptance or rejection of the decision. That means when the manager making decision, he or she must consider more thing to ensure the decision can work out efficient.

As a organization, especially a organization with a strong organizational culture, organizational culture can limit the manager’s choices to make decision to manage his or her management function. Because the organizational culture establish the regulations about what people should do or should not do. Although the regulations are not write down, even not explicit or people do not talk about, they are exist and influence people all the time. The first hypothesis is that different groups can be demonstrated to have different degrees of culture fragmentation, and that this will either reflect or be reflected in their general well-being and success in pursuit of their goals.(Lee Roy Beach 1998)

Decision making in organizations is accomplished by application of both the compatibility test and the profitability test, in precisely the same way as for individual decision makers.(Lee Roy Beach, 1998) This is because the organizational culture, vision, and strategic plans are possessed by its members; there is no “organizational mind” that retains there images and makes decisions(Beach, 1990) There are many commons in individual decision making between organizational decision making. All of the two type of decision maker must consider about environment, the whole plan of the business, and the danger. But decision making in an organization can be more difficult, because the decision can bring changes, and members of this organization may have resist or welcome two completely different attitude. In turn to conservative, nostalgia, maintain organization, people always based on past the criterion for judging now decisions, always worried in change will lose what will occur, thus to doubt and fear and changes of psychology and behavior; organ-tissues Conversely, in a pioneering, innovation atmosphere organization, people always with the development the judgement to analysis and decision of rationality, always hope in May produce change, so eager to get what changes, welcome change, support changes. Obviously, welcome change of organizational culture conducive to the implementation of the new decision, and resist change of organizational culture may give any new decision-making implementation disastrous effects. In the latter case, in order to effectively implement the new decision through a lot of work, must first change organization member attitudes, establishing a conducive to change of organizational culture.

How an organizational culture enhance a company

The organizational culture is core of a organization. For example, the world’s first brand-Coca-Cola Company. Its boss said: “Even today all of my factory all destroyed, tomorrow I also can easily built a new one Coca-Cola.” That is because the Coca-Cola’s organizational culture give him the confidence. The general organizational culture is creative and focus on customer. All the decision making processes must focus on these two points. In China, Coca-Cola set up its brands such as Allen su and Qoo to pander to Chinese customer, even Coca-Cola has become the leader of the drink, but they still not give up creating. In 1995 German, the management of Coca-Cola decided to set up a new subsidiary corporation to produce a kind of new drink-“koke light” and “diet koke”. That was a result of the organizational culture influence,and the koke light has become the third drink brand in the world. Another example of Coca-Cola organizational culture is the found of Fanta. In World War II, a Coca-Cola factory in German insisted produced coke during the war, even the headquarter of Coca-Cola did not know they were still working. But because the shortage of raw materials, they decided to use other materials to produce another orange soda drink, and what make them surprise is the drink achieved a great success and earned a number of profits. This decision made Coca-Cola reborn in European, principals use of these funds, and assisted other European territory “Coca-Cola” drink plant rebuilding operation, for “Coca-Cola” postwar market solid foundation. While “Fanta” was also corporation acceptance, in the 1950s officially launched. (Wikipedia, Fanta, 2010) That is why the organizational culture makes Coca-Cola become the first drink brand whose share of market is 48% in the world.

How the organizational culture can save a company

Organizational culture not only can make Coca-Cola maintain its overlordship in the market but also can save a small company from the predicament of going bankrupt. In 1980s, Haier is a company which only had a little factory and a backward product line, even worse the small company had debt of over ï¿¥1.4 million. The Zhang Ruimin took over the company and pushed new management methods, put the attention on creativity. After years’ hard working, Zhang managed to create a new organizational culture, it made Haier refleash on the stage. As a result of focus on creativity, Haier produced more than 200 types including 13 areas. Now, Haier build more than 29 factory and 8 research centre. In 2008,Haier was appraised as the first brand of Chinese consumer electronics industry. Haier brand topped the top two consecutive years, reflect the Haier’s international influence. (Jeannie Jinsheng Yi,Shawn Xian Ye, 2003)

How can the organizational culture undermine decisionmaking

On the other hand, an organizational culture not only can benefits a lot for a organization but also destroy an organization. Motorola, one of three world communication leaders, it can be recognized as the origin of the mobile phone and telecommunication. Almost all the modern communication technologies can refer to the contributions of Motorola, and Motorola had the largest share of market. But in recent years, the sale performance of Motorola keeps dropping, and the lack of creative lead to the product is repetitive and no advantage when compared with other same kind of products from other company. In an interview of “Business Weekly”, the CEO of Motorola-Greg Brow summarized the reasons. He said;”Among the departments of lack of a free flowing communication. We need to quickly and no filtering the level of free flow of information flow, rather than information is divided into different levels. We should be in technology and products trends as soon as possible to face reality.Successful enterprise could hear sounds from both within and outside the enterprise. They are not only depending on technical level, level or search process, but different opinions, and seeking and user most close to the practical needs. They zhongsheng in observing the whole to the developing tendency of the market continuously, and examine the enterprise internal execution and resilience.”(Business Weekly ,2009) From the interview, it is not hard to see the organizational culture made the negative effect on the decision making which lead Motrorla went downhill. The overconfidence and wrong forces on the requirement of customer results the share of market decreased from 100% to 4% in 1995 ,and in 1998, the Nokia announced they has become the biggest electric communication company in the world.

The three examples of how the organizational culture affect on the decision making, all showed the organizational culture plays an important role in decision making.

The managers should adjust the decision to blend in the organizational culture or make decision according to the organizational culture, only this way can make the decision work out more successfully and efficiently.

Conclusion

In this essay, it is not hard to understand the organizational culture is so important that it can influence the development of the company in the future. An organizational culture can be strong or weak, a weak organizational culture makes the cohesive force low in enterprises, and a strong organizational culture makes more influence than a weak organizational culture, but that does not mean the organizational culture is more stronger is better.The organizational culture affects the decision making in two ways, one way is the organizational culture influences the atmosphere in the organization or encourage the staffs and direct them how to achieve the goals. Another way is to establish the regulations, it may make employees act more carefully in the organization, but it also limits the vision of employees to make right decision.