ASSIGNMENT COVER

Course code: 201

Course name: Introduction to Functions of Management

Assignment title: The importance of organizational culture

Instructor’s name: Mr. Zoumbos

Student’s name: Maria Bagourdi

Date: 21/3/14

Comments:

Grade: /100
Table of Contents.

1. Assignment Cover

2. Table of Contents

3. Introduction

4. Organizational Culture

5. Usage

6. Types

7. Healthy Organizational Cultures

8. Impacts
 Introduction

The main aim of the research is to give more information about what organizational culture is

about, the usage of it, models who describe different indicators of organizational cultures, what

characteristics needs an organizational culture to be considered as healthy and what impacts

organizational culture (healthy or not) has to an organization.

Organizational culture is the manners of people who belong to an organization and the values that

the people attach to their behavior. Culture may contain organizational values along with plans,

working patterns, systems, customs and patterns. It is also the norm of such collective conducts and

affairs that are taught to new organizational members as a way of apprehending, and can reach

levels of even thinking and feeling. Organizational culture can affects the way people and parties

interact with each other, with customers, and with stakeholders.

Ravasi and Schultz state that organizational culture is a set of shared mental assumptions that

guide understanding and action in organizations by describing the acceptable behavior for various

circumstances. At the same time although an organization may have their "own trademark culture",

in larger organizations, there is a varied and often inconsistent cultures that exist due to conflicting

characteristics of the management team. The organizational culture may also have negative and

positive features.Kotter, Schein, Deal & Kennedy and many others state that organizations often

have very differing cultures as well as subcultures.

According to Needle (2004), organizational culture stands for the collective morals, ideals, ethics

and standards of organizational members and is a product of such factors as history, product,

market, technology, and strategy, type of employees, management style, and national cultures and

so on. Corporate culture on the other hand refers to those cultures intentionally created by

management to achieve specific strategic ends.

Usage

Organizational culture refers to culture in any type of organization be it school, university, non

government organizations, government agencies or business entities. In business, terms such as

corporate culture and company culture are sometimes used to refer to a related meaning.

Even though this whole new suggestion that the term became known in businesses in the late 80s
and early 90s is widespread, the truth might be different from this perspective. As a matter of fact

corporate culture was already used by managers and addressed in social science , cultural studies

and organizational theory at the beginning of the 80s.

The idea about the culture and overall environment and characteristics of organization, in fact, was

first and comparably approached with the concept of organizational climate in the 60s and 70s, and

the terms now are somewhat lie on top.

Types

Numerous methods have been used to categorize organizational culture. While there is no single

"type" of organizational culture and organizational cultures diverge widely from one organization to

the other, unities do exist and some researchers have developed models to describe different

indicators of organizational cultures. Some are described below:

Hofstede

Main: Hofstede's cultural dimensions theory

Hofstede looked for variations between over 160 000 IBM employees in 50 different countries

and three regions of the world, in an effort to find aspects of culture that might influence business

behavior. He suggested things about cultural differences existing in nations, and the significance of

international awareness and multiculturism. Cultural differences mirror differences in thinking and

social action, and even in "mental programs", a term Hofstede uses for predictable behaviour.

Hofstede recounts culture to ethnic and regional groups, but also organizations, line of work, family,

to society and subcultural groups e.t.c

Hofstede suggests the need for changing "mental programs" with changing manners first, which

will lead to value change. Though certain groups like Jews, Gypsies and Basques have maintained

their identity through centuries without changing.

Hofstede demonstrated that there are national and regional cultural alliances that affect the behavior

of organizations and identified four dimensions of culture (later five) in his study of national

cultures:
Power distance

Different societies find different solutions on social inequality. Although invisible, inside

organizations power inequality of the "boss-subordinates relationships" is practical and according to

Hofstede emulates the way inequality is addressed in the society. "According to Mulder's Power

Distance Reduction theory subordinates will try to reduce the power distance between themselves

and their bosses and bosses will try to maintain or enlarge it", but there is also a degree to which a

society expects there to be differences in the levels of power. A high score suggests that there is an

anticipation that some individuals exert larger amounts of power than others. A low score reflects

the view that all people should have equal rights.

Avoidance is the coping with uncertainty about the future. Society handles it with technology,

religion. Also the Law composes a big part at it, even though different societies have different ways

of addressing it, and according to Hofstede organizations deal with it with technology, law and

rituals or in two ways - rational and non-rational, where rituals being the non-rational. Hofstede

listed as rituals the memos and reports, some parts of the accounting system, large part of the

planning and control systems, and the nomination of experts.

Individualism vs. Collectivism

Hofstede brings that society's expectations of Individualism/Collectivism will be imitated by the

employee inside the organization. Collectivist societies will have more emotional dependence of

members on their organizations, when in symmetry - organization is expected to show

responsibility on members. Individualism that reaches extreme heights is seen in the US, in fact in

US collectivism is seen as "bad". Other cultures and societies than the US will therefore seek to

resolve social and organizational problems in ways different from the American one. Hofstede says

that a capitalist market economy promotes individualism and competition and depends on it but
individualism is also related to the development of middle class. Research points out that some

people and cultures might have both high individualism and high collectivism, for example, and

someone who highly values duty to his or her group does not necessarily give a low priority to

personal freedom and self indipendence.

Masculinity vs. femininity

Mirror whether certain society is predominantly male or female in terms of cultural values, gender

roles and power relations.

Long- Versus Short-Term Orientation

Hofstende describes as "The long-term orientation dimension can be interpreted as dealing with

society’s search for virtue. Societies with a short-term orientation generally have a strong concern

with establishing the absolute Truth. They are normative in their thinking. They exhibit great

respect for traditions, a relatively small propensity to save for the future, and a focus on achieving

quick results. In societies with a long-term orientation, people believe that truth depends very much

on situation, context and time. They show an ability to adapt traditions to changed conditions, a

strong propensity to save and invest, thriftiness, and perseverance in achieving results."

O'Reilly, Chatman, and Caldwell

Two similar organizational models and their associated measurement tools have been developed by

O’Reilly et al. and Denison.

O’Reilly, Chatman & Caldwell developed a model based on the belief that cultures can be

distinguished by values that are strengthened within organizations.

Their Organizational Cultural Profile (OCP) is a self reporting tool which makes distinctions

according seven categories

 Innovation,

 Stability,

 Respect for People,

 Outcome Orientation ,
  Attention to Detail,

 Team Orientation, and

 Aggressiveness.

The model is also fitted to calculate how organizational culture effects organizational performance,

as it measures most resourceful persons suited in an organization and as such organizations can be

termed as good organizational culture. Employee values are measured against organizational values

to predict employee intentions to stay, and predict turnover. This is done through instrument like

Organizational Culture Profile (OCP) to measure employee level of commitment at an organization,

agency, business .

Daniel Denison’s model declares that organizational culture can be described by four general

dimensions – Mission, Adaptability, Involvement and Consistency. Each of these general

dimensions is further described by the following three sub-dimensions:

1. Mission - Strategic Direction and Intent, Goals and Objectives and Vision

2. Adaptability - Creating Change, Customer Focus and Organizational Learning

3. Involvement - Empowerment, Team Orientation and Capability Development

4. Consistency - Core Values, Agreement, Coordination/Integration

Denison’s model also allows cultures to be described generally as outwardly or internally focused as

well as flexible versus steady. The model has been typically used to diagnose cultural problems in

organizations.

Deal and Kennedy

Deal and Kennedy defined organizational culture as the way things get done around here.
Deal and Kennedy created a model of culture that is based on 4 different types of organizations.

They each focus on how quickly the organization receives feedback, the way members are

rewarded, and the level of risks taken:

Work-hard, play-hard culture: This has rapid feedback/reward and low risk resulting in: Stress

coming from quantity of work rather than uncertainty. High-speed action leading to high-speed

recreation. Examples: Restaurants, software companies.

Tough-guy macho culture: This has rapid feedback/reward and high risk, resulting in the following:

Stress coming from high risk and potential loss/gain of reward. Focus on the present rather than the

longer-term future. Examples: police, surgeons, sports.

Process culture: This has slow feedback/reward and low risk, resulting in the following: Low stress,

plodding work, comfort and security. Stress that comes from internal politics and stupidity of the

system. Development of bureaucracies and other ways of maintaining the status quo. Focus on

security of the past and of the future. Examples: banks, insurance companies.

Bet-the-company culture: This has slow feedback/reward and high risk, resulting in the following:

Stress coming from high risk and delay before knowing if actions have paid off. The long view is

taken, but then much work is put into making sure things happen as planned. Examples: aircraft

manufacturers, oil companies.

Healthy organizational cultures

Organizations should struggle for what is considered a "healthy" organizational culture in order to

increase efficiency, enlargement, competence and reduce counterproductive behavior and turnover

of employees. A variety of characteristics describe a healthy culture, including:

 Acceptance and appreciation for diversity

 Regard for and fair treatment of each employee as well as respect for each employee’s
 contribution to the company

 Employee pride and enthusiasm for the organization and the work performed

 Equal opportunity for each employee to realize their full potential within the company

 Strong communication with all employees regarding policies and company issues

 Strong company leaders with a strong sense of direction and purpose

 Ability to compete in industry innovation and customer service, as well as price

 Lower than average turnover rates (perpetuated by a healthy culture)Investment in learning,

training, and employee knowledge

Additionally, performance oriented cultures have been shown to possess statistically better financial

growth. Such cultures possess high employee participation, strong internal communications and an

reception and support of a healthy level of risk-taking in order to achieve modernization. In

addition, organizational cultures that openly highlight factors connected to the demands placed on

them by industry technology and growth will be better performers in their industries.

According to Kotter and Heskett , organizations with adaptive cultures perform much better than

organizations with cultures than cannot become accustomed to. An adaptive culture translates into

organizational success; it is considered by managers paying close attention to all of their

constituencies, especially customers, commencing change when needed, and taking risks. An

unadaptive culture can significantly reduce an organization’s effectiveness, disabling the firm from

pursuing all its competitive/operational options.

Strong culture is said to exist where staff respond to motivation because of their position to

organizational values. In such environments, strong cultures help firms operate like well-oiled

machines, engaging in exceptional execution with only minor alterations to existing actions as

needed.

Additionaly, there is weak culture where there is little alignment with organizational values, and

control must be exercised through extensive procedures and bureaucracy.

Research shows that organizations that foster strong cultures have clear values that give employees

a reason to embrace the culture. A "strong" culture may be especially beneficial to firms operating

in the service sector since members of these organizations are responsible for delivering the service

and for evaluations important constituents make about firms. Research indicates that organizations

may derive the following benefits from developing strong and productive cultures:

 Better aligning the company towards achieving its vision, mission, and goalsHigh employee

motivation and loyalty

 Increased team cohesiveness among the company's various departments and divisions

 Promoting consistency and encouraging coordination and control within the company

 Shaping employee behavior at work, enabling the organization to be more efficient

Where culture is strong , people do things because they believe it is the right thing to do, and there

is a risk of another phenomenon, groupthink. "Groupthink" was described by Irving Janis. He

defined it as "a quick and easy way to refer to a mode of thinking that people engage when they are

deeply involved in a cohesive in-group, when the members' strivings for unanimity override their

motivation to realistically appraise alternatives of action." This is a state in which even if they have
different ideas, do not challenge organizational thinking, and therefore there is a reduced ability for

pioneering thoughts. This could arise, for example, where there is heavy dependence on a central

charismatic figure in the organization, or where there is a deep belief in the organization' values, or

also in groups where a friendly climate is at the base of their identity (avoidance of conflict). In fact,

groupthink is very common and happens all the time, in almost every group. Members that are

disobedient are often turned down or seen as a negative influence by the rest of the group because

they bring inconsistency to the group and also may cau conflict between it’s members.

Impacts

Research suggests that many results have been related either directly or indirectly with

organizational culture. A healthy and strong organizational culture may provide various benefits,

including the following:

Competitive edge derived from innovation and customer service

Reliable, resourceful employee performance

Team consistency

High employee morale

Strong company motivation towards goal achievement

Although little experimental research exists to support the link between organizational culture and

organizational performance, there is little doubt among experts that this relationship exists.

Organizational culture can be a factor in the survival or failure of an organization - although this is

difficult to prove considering the necessary long scale analyses are hardly possible. The continued

superior performance of firms like IBM, Google, and McDonald's may be, at least partly, a
reflection of their organizational cultures.

A 2003 Harvard Business School study reported that culture has a important impact on an

organization’s long-term economic performance. The study observed the management practices at

160 organizations over ten years and found that culture can improve performance or prove

damaging to performance. Organizations with strong performance-oriented cultures witnessed far

better financial growth. Additionally, a 2002 Corporate Leadership Council study found that cultural

traits such as risk taking, internal communications, and suppleness are some of the most important

drivers of performance, and may impact individual performance. Additionally, innovativeness,

productivity through people, and the other cultural factors cited by Peters and Waterman also have

positive economic consequences.

Organizational culture is reflected in the way people perform tasks, set objectives, and manage the

necessary resources to achieve their goals. Culture can affect the way individual decision making,

the way a person feels, and acts in response to the opportunities and threats affecting the

organization. It has been proposed that organizational culture may impact the level of employee

imagination, the strength of employee enthusiasm, and the reporting of immoral behavior, but more

research is needed in order to for this conclusions to be final.

Organizational culture also has an impact on staffing and preservation. Individuals tend to be

attracted to and remain occupied by organizations that they perceive to be well-suited. Furthermore,

high turnover may be a interceding factor in the relationship between culture and organizational

performance. Failing company performance and an unhealthy work environment are signs of an

overdue cultural assessment.

When an organization does not possess a healthy culture or requires some kind of organizational

culture change, the change process can be discouraging. One major reason why such change is

difficult is that organizational cultures, and the organizational structures in which they are

surrounded, often reflect the "imprint" of earlier periods in a persistent way and exhibit remarkable

levels of inactivity. Culture change may be necessary to reduce employee turnover, influence

rescale the organization, provide better customer service, and achieve specific organizational goals

and results. Culture change is affected by a number of elements, including the external environment

and industry competitors, change in industry values, technological changes, the size and nature of

the labour force as well as the organization’s history and management.

Bibliography

 http://changingminds.org/explanations/culture/deal_kennedy_culture.htm

 Shein, Edgar (1992). Organizational Culture and Leadership: A Dynamic View. San

Francisco, CA: Jossey-Bass.

  Modaff, D.P., DeWine, S., & Butler, J. (2011). Organizational communication:

Foundations, challenges, and misunderstandings (2nd Ed.). Boston: Pearson Education.

  Deal and Kennedy's cultural model, ChangingMinds.org

 Cooke, R. A. (1987). The Organizational Culture Inventory. Plymouth, MI: Human

Synergistics, Inc