Organizational Culture Importance To Businesses

This report will examine the theory behind the link between strategic management and organisational culture. More specifically, this report will look mainly at the role of culture in organisations and it’s important to managers. This report will also demonstrate some outlooks and reviews by academics as well as some for and against personal views and considerations about the culture in organisations.

Introduction

The aim of this report is to understand the concept of organisational culture in relation to its position to strategic management. More specifically, is to identify the role of organisational culture and why is it important to managers.

Every organisation has its distinct character! Every organisation has a culture! (Mullins 2005) define culture as “how things are done around here”. Culture influences every aspect of the organisation and has an impact on its performance. Specifically, it is the filter and shaper through which the managers develop and implement their strategies. When people join an organisation, they bring with them the values and beliefs they have been taught and because of that, managers need to be very flexible to adapt to different personalities and the behaviour of the organisation in order to create a culture which is beneficial in achieving the goals of the organisation.

To create a culture that can bring a positive result, we absolutely need to consider the impact of “Organisational Culture”. Why is it necessary? The effect of organisational culture and is it really important to managers? Answers will be clarified throughout this report.

What is “Organisational Culture” and why is it important?

For example, if a friend ask us to describe the new organisation we have just joined, it is more likely that we will begin to describe the culture of the organisation. For instance, we might say that the office appears friendly, no one is pressurizing for the completion of the job, so as long the job gets done we can fill our work hours as we like. People laugh and have a joke and the work gets done just the same. All of these aspects describe the culture of the organisation.

Although most of us will understand in our minds what is meant by organisational culture, it is a general concept that is difficult to define or explain precisely. In 1988, Cleland defines organisational culture as: “The pattern of beliefs, values and expectations shared by organisational members.” Organisational culture can be described as the norm of behaviour in that particular environment. In other words, that the action of the organisation is expected because that’s the way that this particular organisation works. For example, an organisation like MacDonald’s, their culture is expected, is to deliver fast food. That’s the norm of the company, that’s their culture.

Although that each organisation has its different culture, (Handy 1985) suggest that there are four main types of organisational cultures: power culture: such as small building companies or some newspapers with dominant proprietors. Role culture: such as civil service or retail banks. Task culture: such as advertising agencies or consultancies. Person culture: such as management’s consultants or architects and engineers.

Power Culture the webRole Culture the greek temple

task culture the latticeperson culture the cluster

According to Handy, he suggests that “different people enjoy working in different types of organisational culture and they are more likely to be happy and satisfied at work if their attributes and personalities are consistent with the culture of that part of the organisation in which they are employed”.

On the other hand, organisational culture can be something very important because it identifies the importance of creating appropriate systems of shared meaning to help people work together to achieve targets. Deal and Kennedy (1982) argue that culture is the single most important factor accounting for success or failure in organizations. Edgar Schein (1999) suggests that organizational culture is even more important today than it was in the past. Increased competition, globalization, mergers, acquisitions, alliances and various workforce developments have created a greater need for the attention on culture in an organisation.

Goffee and Jones (1998) argue that no business strategy or programme can or will succeed without the appropriate organisational culture in place. Mullins (1999) argues that organisational culture helps to explain why different groups of people perceive things in their own way and perform things differently from other groups. He also suggests that there is nothing accidental about cultural strengths, there is a relationship between an organizations culture and its performance. To support that point, Peters and Waterman (1982) in their book “In Search of Excellent” they suggested there is a psychological theory of the link between organizational culture and business performance. These models and theories are not common sense instead they are evidence that support the arguments in which the concept of organisational culture is important.

Why “Organisational Culture” is important to managers?

Managers need to have a solid understanding of the dynamics of culture and how to change it so that they can direct activities in a manner that gets results. Mullins (2005) suggests that it is important that managers understand the organization culture of the company as it is the heart of organisation development and improved performance. Managers need to continually transmit the values of the culture through efforts such as rituals and social events as well as consistent positive feedback that gives each member of the organization a sense of importance.

Organization culture differs in the type of organisation, therefore it is important that mangers understand the organizational structure. For example, Lou Gerstner who was the chief executive officer of IBM 1993-2002, he believed in order for IBM to remain successful, he should transform the culture of the organisation. Some of the changes he made were to cut back on employment, reduce expenses and build a strong customer service. However, these changes had a massive impact on the culture in the organisation. For instance, since employment would be cut back that means that the workers that did stay would have longer hours. IBM employees were competing more within themselves than with external competitors. He forgot to change the mindset of the employees that customers drive the market and no one else. All of these reasons were affecting IBM from reaching the outstanding performance that it once achieved.

Another example which can illustrate the issues concerned with organisational culture, strategic drift and the management of change is seen in the case of Mark & Spence. In the 1990s M&S ran into big trouble. The problem at M&S was that the organisation adopted a culture of doing things which was very hard to change to deliver the needs and wants of its customers. Also, it had become clear that the culture at M&S was not only driving the strategy but also driving the management team.

The culture in M&S was created around one family atmosphere, until 1991 there had never been a chief executive of M&S who had not been a member of the family. They also had other problems such as not understanding the customers directly. As M&S were selling women products such as clothing they never had a woman who worked as senior management. These were all symptom of an organisation removing itself from immediate contact with customer need.

A very simple example is that if somebody today wants to work in a Chinese restaurant; would the manager of the Chinese restaurant employee somebody who is not Chinese? Unlikely! It is not discrimination but someone who is not Chinese would not fit in the environment of the restaurant, would not fit into the culture of the restaurant. Therefore, managers need to take a lot of considerations around the environment in which they work in order to consider whether a change is or is not required so they can get the best out of their employees.

IBM and M&S could have avoided this by analysing the strategic decisions which made by senior managers such as what aspect of the current situation might aid change in the desired direction and how might these be reinforced, or by identifying the existing culture and that’s by using a method such as “The Cultural Web”. A study developed by Gerry Johnson and Kevan Scholes in 1992. http://www.new-paradigm.co.uk/Cultural%20Web.gif

For any manager the cultural web is a useful method of bringing together the basic elements that are helping in analysing the culture of an organisation and its relationship to organisational strategy.

Conclusion

Organization culture is something that evolves over a period of time. Organizational culture is a very complex subject and can be very difficult for managers to control. It is also very difficult for managers to change culture in the organisation because it requires a lot of time and deep understanding of the organization history.

Organisational culture is important to managers and it is something that cannot be ignored. Behaviour is critical to managers and the management of change so therefore, in order for an organisation to be compatible effective in todays competitive business world they need to take a lot of consideration into the concept of organisational culture.

In general, understanding an organization’s culture can help understand why change does not take place or why a project is not successful. Understanding the culture can also help determine where to make changes. Making changes to an organization’s culture can determine the survival of the organization; therefore, modifying a culture can be sensitive and should be approached with caution.