ORGANIZATION CULTURE AND ORGANIZATION CULTURE DEVELOPMENT

INTRODUCTION

In the 21st century where business becomes unusual, organization has to be

more competence to continue sustainable and remain existence. As Chisholm

(1998) highlights four key challenges that the organization today faced. First, rapid

advancement of technology in communication had closer geographical distances

and widespread of information within the organization and its environment. Second,

globalization has resulted in a more complex environment and competitiveness

within organization and its environment. Third, the workplace has grown in its

operational and process complexity placing greater importance on learning

organization or knowledge base organization. Fourth, a shift in values and beliefs

from an olden conservative business operation to a cooperative orientation business

operation.

Further, researchers emphasis that there is importance for management to

understand the organization culture before setting the organization strategic. Culture

determines how an organization operates; it is reflected in strategies, structures and

system. Understanding the organization culture orientation can help to define the

range and type of strategic option that are considered and engaged in (Cameron &

Quinn, 2006).

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WHAT IS ORGANIZATION CULTURE

In general, the concept of organization culture used in organization studies is

borrowed from anthropology. There are numberless definitions about organization

culture which is defined in many different ways in the literature. Each scholar has a

differences view of organization culture and there is no consensus on the definition.

The followings are several quotes on organization culture definition presented by

various scholars.

Schwartz and Davis (1981), defined an organization culture as a “pattern of

belief and expectations shared by the organization’s members” and it can make

norms that can shape the behavior of individuals and groups in organization.

Sigler and Pearson (2000), which described organization culture as the

pattern of values, beliefs and assumptions shared by members in an organization,

which are perceived by the organization as the valid, correct way to perceive and

solve problems.

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 Schein (1992) described culture is a pattern of basic beliefs, assumptions,

and values shared by organization members.

However, Schneider (1990) relates organization culture with organizational

climate. He described that organization culture is distinct from the concept of

organizational climate, whereby culture is core characteristic of organization; is an

enduring and change slowly however organizational climate is based on altitudes,

can change quickly and dramatically. In other word, organizational culture is a result

of climate changed in the organization.

Whereas, Williams, Dobson, and Walters, (1994) defined culture as “the

way we do things around here'' or “the way we think about things around here’’

From the above definition of organization culture, we can see that even

though the definition may be diverse and different, to certain extent there is

consensus that organization culture is a system of shared assumptions, beliefs,

values, and behavior in an organization.

CONCEPTS OF ORGANIZATION CULTURE

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 In the following discussion, I will discuss several concepts of organization

culture presented by various scholars. The discussion will look in Schein’s Concept,

Onion Diagram by Hofstede and Culture Web by Johnson & Scholes.

i. Schein’s Concept

There are many concept of organization culture defined in many

different ways in the literature. Perhaps the most common and famous

concept was introduced by Schein. In Schein’s concept, organization

culture can be thought of as consisting of three interrelated level as

illustrated in figure 1 below.

Artefacts

Assumptions

Values
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 Figure 1: Structure of Organization Culture

Source: Schein, E.H. (1992)

The outer level of organization culture structure is artefacts

level. In the level, there is very easy to identify the organization culture

because the artefacts of organization are all visible, hear able and

perceptible phenomena. These artefacts include products, facilities,

offices, furnishings, visible awards and recognition, the way that its

members dress, how each person visibly interacts with each other and

with organizational outsiders, and even company slogans, mission

statements and other operational creeds. This level of culture is easy to

observe but very difficult to decode because the sense of artefacts can

be found in deeper levels of culture only (Schein, 1997).

The second level that Schein describes is the “espoused

values”. Espoused values are the things the organization says it

believes, they are often written in forms of mission and vision

statements and process manuals. They are made explicit and are

available to most or all employees, and even to some customers. At

this level, organization slogans, mission, vision, objectives and client

customers.

The third level or core culture is assumptions. Basic

assumptions are implicit assumptions guiding individual behavior, and

tell group members how to perceive, think about, and feel about things.

This level is very difficult to change. Since the human mind needs

cognitive stability, any challenge to, or questioning of, a basic

assumption will release fear and defensiveness (Schein, 1997).

ii. Onion Diagram by Hofstede

Hofstede used an Onion Diagram to illustrate his view of culture

as a many-layered concept. His categorized culture into three layers

using Onion Diagram as figure 2 below.

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 Figure 2: Onion Diagram

Source: Hofstede (1997)

In the outer layer, symbols are words, gestures, pictures or

objects that carry a particular meaning which is only recognized by

those who share the culture. For example, Maybank use acronym

T.I.G.E.R to represent its five core values, only the Maybanker can

understand T.I.G.E.R mean. The symbols can be changed over the

time and the new symbols are easily developed and old ones

disappear (Hofstede, 1997).

Heroes are persons, alive or dead, real or imaginary, who

possess characteristics which are highly prized in a culture, and who

thus serve as models for behavior. For example the founder of Genting

Highlands, Tan Sri Lim Goh Thong, his spirit and hard working has

become foundation of company’s core values.

Rituals are collective activities, technically superfluous in

reaching desired ends, but which, within a culture, are considered as

socially essential: they are therefore carried out for their own sake.

Ways of greeting and paying respect to others, social and religious

ceremonies are examples. Symbols, heroes, rituals can be subsumed

under the term practices.

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 At the very center of Onion Diagram finds values, which can be

properly interpreted only by the members of a given culture (Hofstede,

1994). Values are intimately connected with moral and ethical and

determine what people think ought to be done, and identify “likes” and

dislikes” for both employers and employees.

iii. Cultural Web

Johnson and Scholes described organization culture by using

culture web which divided culture into seven key elements and each

interrelated. In the center of culture web, the paradigm held beliefs and

values of the organization and this paradigm is interrelated with six

others elements as illustrated in figure 3 below.

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 Figure 3 : Culture Web

Source : G. Johnson & K. Scholes (1999)

The seven elements are stories & myths, rituals & routines,

symbols, power structure, organization structure, control system and

the paradigm as center of web. Stories and myths are the past events

and people talked about inside and outside the company. Who and

what the company chooses to immortalize says a great deal about

what it values, and perceives as great behavior. (Johnson & Scholes,

1999)

Rituals and Routines are the daily behavior and actions of

people that signal acceptable behavior. This determines what is

expected to happen in given situations, and what is valued by

management. (Johnson & Scholes, 1999)

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 Symbols are the visual representations of the company including

logos, how plush the offices are, and the formal or informal dress

codes. (Johnson & Scholes, 1999)

Organizational Structure includes both the structure defined by

the organization chart, and the unwritten lines of power and influence

that indicate whose contributions are most valued. (Johnson &

Scholes, 1999)

Control Systems is ways that the organization is controlled.

These include financial systems, quality systems, and rewards

(including the way they are measured and distributed within the

organization.) (Johnson & Scholes, 1999).

Power Structures are the pockets of real power in the company.

This may involve one or two key senior executives, a whole group of

executives, or even a department. The key is that these people have

the greatest amount of influence on decisions, operations, and

strategic direction. (Johnson & Scholes, 1999).

TYPE OF ORGANIZATION CULTURE

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 The following discussion will focus on several type of organization presented

by various scholars. The discussion will focus on the competing Values Framework

and Handy’s organization culture theory.

i. The Competing Values Framework

Type of organization culture can described through The

Competing Values Framework. The Competing Values Framework was

developed initially from research conducted on the major indicators of

effective organizational performance. It has been found to be useful

model for organizing and understanding organizational effectiveness,

leadership and organizational culture. (Cameron and Quinn,1999).

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 Figure 4: The Competing Values Framework

Source: Cameron and Quinn, 1999

The framework consists of two dimensions, first dimension is

focus on flexibility and discretion and stability and control. In this

dimension, some organizations are effective if they are flexible in

changing and adaptable, whereas other organizations are effective if

they are stable, predictable and mechanistic.

The second dimension differentiates a focus on internal and

external orientation. In this dimension, some organizations are effective

if they focus on internal environment, whereas others are effective if

they focus on interacting or competing with others outside their

organization.

Together these two dimensions form four quadrants and each

representing a distinct set of organization effectiveness indicators and

organization culture.

In the upper left quadrant of Figure 4 is the Clan Culture.

Environment of this type of organization culture is very harmonies,

experiences including values, beliefs and goal.

According to Cameron & Quinn (1999), this type of organization

feels more “family like” than “business like” and emphasis on

empowerment and employee evolvement.

The leaders of the organization are very concern on employee’s

welfare and always act like mentors, coaches and even as parent

figures. In other word, the organizations more focus on internal

orientation and internal integration rather than external orientation.

Therefore, Clan culture aspects are those organizational cultures that

place primary emphases upon human resources. These organizations

have a family atmosphere and utilize regular personnel assessment to

determine the morale of their members such as The Best Employee

Award.

Besides that, the clan culture has less focus on structure and

control and a greater concern for flexibility with less strict rules and

procedures. Employees are driven through vision, shared goals,

outputs and outcomes (Cameron & Quinn, 1999).

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 In the upper right quadrant of the competing values framework is

the adhocracy culture. It is characterized as a dynamic,

entrepreneurial, and creative workplace. Organizations that succeed

within the Adhocracy model are those that must change direction with

little warning, rely on individual risk taking, and exist in a very dynamic

environment (Cameron & Quinn, 1999).

The adhocracy has greater independence and flexibility than

the Clan culture, which is necessary in a rapidly changing business

climate. The organizations have ability to respond to the new

challenges and adaptability to the rapid changing business climate.

Therefore, adhocracy type of organizations more focus on external

factors in making any changes in the organization. Leaders in an

adhocracy culture organization are visionary, innovative entrepreneurs

and dare to undertake risks and stresses.

The organizational culture in the lower left quadrant is the

hierarchy culture. This type of organization culture are very formalized

and very structured working environment with very little discretion to its

staff, as all activities are governed by a vast set of rules. Therefore, the

hierarchy culture helps to create stability of organization by focusing on

internal orientation.

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 In the hierarchy culture, the leadership type is coordinator,

monitor and organizer. Effectiveness criteria are efficiency, timeliness

and smooth functioning of the organization. The managerial

assumptions are that control fosters efficiency in the organization.

The final culture type that Cameron and Quinn present is the

market culture. For profit companies with a market culture are oriented

outward, focusing on the needs of constituencies, and not on the needs

of internal stakeholders. These organizations are focused on

transactions with suppliers, customers and regulators. Profitability,

financial results, ability to create market niches, and secure customer

bases are primary objectives of these companies (Cameron & Quinn,

1999).

ii. Chales Handy’s Organization Culture Type

Charles Handy (1985) popularized a method of looking at

organizational structure link to organizational culture. In his method,

culture of organization consists of four elements which are power

culture, role culture, task culture and person culture. The following is a

summary is from of his research;

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a. Power Culture – where power is concentrated among a few

persons. Control radiates from the canter like a web. Power

Cultures have few rules and little bureaucracy; swift decisions

can ensue

b. Role Culture - people have clearly delegated authorities within a

highly defined structure. Typically, these organizations form

hierarchical bureaucracies. Power derives from a person's

position and little scope exists for expert power

c. Task Culture - teams are formed to solve particular problems.

Power derives from expertise as long as a team requires

expertise. These cultures often feature the multiple reporting

lines of a matrix structure

d. Person Culture - exists where all individuals believe themselves

superior to the organization. Survival can become difficult for

such organizations, since the concept of an organization

suggests that a group of like-minded individuals pursue the

organizational goals. Some professional partnerships can

operate as person cultures, because each partner brings a

particular expertise and clientele to the firm

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 Handy popularized these culture types by making links between

the culture types and Ancient Greek gods. Handy’s research poses

some important questions by asking people to identify the relevant

culture within their organization and then identify the culture with which

they personally felt most comfortable. Many conclusions can be drawn

from the results, and an understanding of how and why people may or

may not fit within the dominant culture of the organization and why sub

cultures may emerge.

AN ORGANIZATION CULTURE OF MALAYAN BANKING BERHAD

On the next discussion, I choose Malayan Banking Berhad (Maybank) as an

example of discussion and relate it’s to the scholars’ view of organization culture as

discussed before to enhance the understanding on what organization culture all

about. The discussion will relate Maybank’s culture with Schein’s concept of

organization culture and Quinn’s Competing Values Framework.

The three levels of culture as described by Schein can be found in Maybank’s

organization culture.

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 Firstly, Maybank has five core values as foundation of business, all

Maybankers are guided by five core values, which are Teamwork, Integrity, Growth,

Excellence & Efficiency and Relationship Building. All Maybankers work together as

a team based on mutual respect and dignity. The integrity values stressed in

Maybank are honest, professionalism and ethical in dealing with customer.

Committed to delivery outstanding performance and superior service through value

of excellence and efficiency. Maybankers also passionate about constant

improvement and innovation to achieve growth value. Maybank clearly understand

that the importance of customer, therefore, relationship building value was put ahead

to continuous build long term and mutually beneficial partnership with its customer.

These values guide Maybankers in pursuit growth and excellence, as they strive to

build mutually beneficial partnerships with all. The first letters of each core values

brought together become an acronym of T.I.G.E.R.

Secondly, Maybank has very unique artefact such as corporate logo, which is

a yellowish tiger head and Menara Maybank building in the shape of Kris’s cover, the

Malay traditional fighting weapon. The others artefacts that easily to identify is its

extensive products and services include commercial banking, investment banking,

Islamic banking, offshore banking, leasing and hire purchase, insurance, factoring,

trustee services, asset management, stock broking, nominee services, venture

capital and Internet banking.

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 Thirdly, there are basic assumptions that guide Maybankers behavior. One of

example is company’s “Code of Ethics” giving to all employees acts as a guide

during their employment with the company.

As we know, Maybank is a profits oriented organization and aimed to become

a financial leading institution in the region by 2015 as stated in its Strategic

Transformation Plan. Therefore, type of organization culture is market model of

culture, however, the other three cultures, which are Clan , Adhocracy and Hierarchy

model of culture also found in Maybank’s culture.

As a Market model of organization culture, Maybank targets are results

oriented. As economic uncertainties, Maybank now looking forward to better

business prospects. As such, Maybank now refocus efforts to enhance its position

as the leading financial group in Malaysia and a key player in the region through its

Strategic Transformation Plan with focusing on three strategic thrusts:

i. Secure Maybank’s position as the undisputed leader in financial services

in Malaysia ;

ii. strengthen regional presence through enhancing the quality of operations

in seven out of 10 Asean countries Maybank operates in today, whilst

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 continuing to look for opportunities in other lucrative growth markets in

the region; and

iii. become a talent and execution-focused company.

As Market model of organization culture is results oriented, early results of

Strategic Transformation Plan include:

i. Over 100% increase in sales performance for branches undergoing the

sales stimulation programme;

ii. increased product penetration of our corporate client portfolio through

more targeted and structured account planning processes;

iii. significant annual cost savings and cost avoidance achieved through

strategic procurement being implemented in waves;

iv. cost avoidance in excess of RM100 million through a more stringent

approach on benefits applied upon re-prioritization of all IT projects;

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 v. launch of a consolidated capability to proactively address potential non-

performing loans for the SME and consumer segments;

vi. successful rollout of Group Human Capital workshops nationwide,

engaging over 2,600 Line Managers on a wide range of topics including

performance management; and

vii.a marked increase in employee engagement through a set of

communications programmes and by reinvigorating our focus on

Maybank’s core values.

Another good example of results oriented is Maybank’s online financial portal,

Maybank2u.com become No.1 Internet banking website in Malaysia with 3.8 million

registered users and a leading market share of over 54%. As financial year 2010,

Maybank Group achieved pre-tax profit of RM5.37 billion compared to pre-tax profit

of RM1.67 billion posted in 2009.

Maybank realized that the internal factors such as employees play an

importance role to help accelerate organization growth. Therefore, a great emphasis

is placed on the development of human capital. Vital information with regards to the

direction and strategies of the company is cascaded down to all employees via the

internal portal and in-house news publication. The Chief Executive Officer (CEO)

also conducts regular dialogue sessions or breakfast meetings with groups of

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employees from all levels and regional locations to discuss on various issues ranging

from group strategies right down to operational and human related matters.

The management also very concern on employee’s welfare. Recognition and

rewards now encompass spot awards to star employees, innovation awards, awards

for the best talent in all categories, and incentive plans catering to the different lines

of business across the Group. Thus, clan culture model also found in Maybank’s.

Maybank also adopt a very strong hierarchy culture with bureaucracy system

take in place. In Head Office, Maybank Group led by Chief Executive Officer assisted

by three business wing, which are Strategies Business Unit,

Finance/Operation/Credit Unit and Corporate Office. The management in the

regional was led by Regional Manager and Branches Managers was under

supervisory of Regional Manager. The organization structure was designed as such

to facility expansion of businesses as Maybank has more than 1,750 branches in 14

countries.

Maybank has ability to respond to the new challenges and adaptability to

rapid changing business climate. In other word, Maybank has flexibility and

discretion towards external factors. As Information Technology become importance

in financial services industry. Maybank Group has introduced innovative services to

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enhance customer convenience through the use of technology. The followings are

several innovative services with adapting Information Technology;

i. In 1979, Maybank became the first Malaysian bank to embark on a

computerization programme.

ii. The first bank in Malaysia to implement the use of Automated Teller

Machines (ATM) and to establish a shared ATM network with its

subsidiaries.

iii. The first local bank to introduce a telephone banking service in 1991

which allows customers to conduct their banking transactions as well

as pay utility bills, amongst others, through the telephone.

iv. Introduced the Desktop Banking system, which allows corporate

customers to carry out banking transactions using personal computers

at their offices.

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 v. in 1997 introduced MAS Electronic Ticketing (MASET) marked the first

ticketless travel convenience for domestic flights on Malaysia Airlines.

It was later expanded to include flights to Singapore.

Through its Strategic Transformation Plan, Maybank’s performance

improvement programme was phases in 2 states from 2008 until 2015. First phase

aimed to secure leadership and outperform through Implement multi-segment model

and well-executed business strategies to secure position and gain share, assemble

or build leadership pool and pipeline to fill critical roles and establish highly effective

performance and talent management processes.

The second phase aimed to expand footprint and capture new markets

through continue to develop commercial and operational excellence, expand

footprint to new markets and regionalize operating model, create global talent

management system to meet regional needs and continue to strengthen

performance culture

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CONCLUSION

In the above discussion, the definition of organization culture was elaborated

extensively base on the citation from researches. The concepts of formation

organization culture also touch with presented three concept of organization culture

from Cameron & Quinn, Hofstede and Johnson & Scholes. Several type of

organization culture also discussed briefly. The discussions continue to relate the

literature finding to the real existence organization to enhance the understanding of

the discussion.

From the above discussion, we see organizational culture as the critical

foundation which shapes the way that the work of the organization gets done and the

infrastructure gets utilized. Aligning organizational culture with strategy is a powerful

means for gaining competitive advantage and industry or sector leadership as we

see at in Maybank as an example.

An understanding of organizational culture, and how to transform it, is a

crucial skill for leaders trying to achieve strategic outcomes. The Maybank’s Chief

Executive Officer very much understands his organization culture and its

environment as rolling out their 6 years Strategic Transformation Plan. This is the

essence of strategic success. Effective organizations likes Maybank empower and

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engage their people, build their organization around teams, and develop human

capability to create their own organization culture to suit its business environment.

Whereas organizational cultures often change in predictable ways over time

(Cameron & Whetten, 1981; Quinn & Cameron, 1999) organization face the need to

change culture as a result of environment jolts, mergers and acquisitions, new

marketplace opportunities, or the need to implement certain kinds of organizational

changes.

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