Foundations for Business Successes (PDF)

Chapter 8: Organisational Culture Organisational culture - a system of shared assumptions, values, and beliefs that show people what is appropriate and inappropriate behaviour. These values heavily influence employee behaviour and organisational performance. Culture - largely invisible to individu...

Chapter 8: Organisational Culture Organisational culture - a system of shared assumptions, values, and beliefs that show people what is appropriate and inappropriate behaviour. These values heavily influence employee behaviour and organisational performance. Culture - largely invisible to individuals, just like how the sea is invisible to the fish swimming in it. Individuals tend to become more aware of their organisation's culture when they have the opportunity to compare it to that of other organisations. An organisation's culture can be its strongest asset or its biggest liability. Organisations with rare and hard-to-imitate cultures may have a competitive advantage. ​ A survey conducted by the management consulting firm Bain & Company in 2007 showed that worldwide business leaders consider corporate culture to be as important as corporate strategy for business success. ​ Shared values within an organisation may be related to increased performance. ​ Researchers have found a relationship between organisational cultures and company performance in terms of revenues, sales volume, market share, and stock prices. Just like having the "right" culture can be a competitive advantage, having the "wrong" culture can: ​ lead to performance difficulties, ​ cause organisational failure, and ​ prevent the company from changing and taking risks. Organisational culture - a powerful way of controlling and managing employee behaviour, more so than rules and regulations. Levels of Organisational Culture 1.​ Assumptions - at the deepest level, below our awareness, lie basic assumptions. These assumptions are taken for granted and reflect beliefs about human nature and reality. 2.​ Values - at the second level are shared principles, standards, and goals. 3.​ Artefacts - on the surface are the visible, tangible aspects of organisational culture. The artefacts that reflect these values might include: ​ an executive "open door" policy, ​ an office layout that includes open spaces and gathering areas with pool tables, and ​ frequent company picnics. Understanding an organisation's culture starts with observing its artefacts: ​ its physical environment,  ​ employee interactions, ​ company policies, ​ reward systems, and ​ other observable characteristics. The values and assumptions that shape the organisation can be discovered by: ​ observing how employees interact and the choices they make, and ​ enquiring about their beliefs and perceptions regarding what is right and appropriate behaviour. Organisational Culture Profile (OCP) - identifies seven distinct values that can be used to characterise an organisation's culture. Here's a breakdown of these dimensions: 1. Innovative Cultures ​ Characteristics: Flexible, adaptable, and open to experimentation with new ideas. ​ Structure: Often characterised by flat hierarchies where titles and status distinctions are downplayed. 2. Aggressive Cultures ​ Characteristics: Highly competitive, focused on outperforming rivals, and may fall short on corporate social responsibility. ​ Language: May use aggressive language like "we will kill our competition". 3. Outcome-Oriented Cultures ​ Characteristics: Prioritise achievement, results, and action. ​ Focus: Hold employees and managers accountable for success and use systems that reward output. ​ Rewards: Often tie rewards to performance indicators rather than seniority or loyalty. 4. Stable Cultures ​ Characteristics: Predictable, rule-oriented, and bureaucratic. ​ Suitability: Can be effective in stable environments, providing consistent output. ​ Drawbacks: Can hinder quick action and adaptability, making them a poor fit for dynamic environments. 5. People-Oriented Cultures ​ Characteristics: Value fairness, supportiveness, and respect for individual rights. ​ Emphasis: Place a strong emphasis on treating people with respect and dignity.  ​ Benefits: Can contribute to higher employee retention rates. 6. Team-Oriented Cultures ​ Characteristics: Emphasise collaboration and cooperation among employees. ​ Practices: Often use cross-training and team-based training to foster teamwork. 7. Detail-Oriented Cultures ​ Characteristics: Emphasise precision and attention to detail. ​ Advantages: Can be a source of competitive advantage, particularly in industries like hospitality. Strength of Culture - a strong culture is one where organisational members widely share the company's values. ​ Impact: Strong cultures are more likely to influence employee behaviour and thinking. However, they can be an asset or a liability depending on the nature of the shared values. ​ Challenges: Strong cultures can be difficult to change. For instance, Home Depot faced resistance when the CEO attempted to centralise decision-making, leading to employee departures despite improved financial results. ​ Mergers and Acquisitions: Strong cultures can create clashes during mergers and acquisitions. The DaimlerChrysler merger is a prime example, where the distinct engineering culture of Daimler clashed with the sales-driven culture of Chrysler, causing integration challenges. Subcultures and Countercultures ​ Subcultures: Cultures that develop within different departments, branches, or locations of an organisation. They arise from personal characteristics, work conditions, and other factors. It's crucial for managers to understand these subcultures as they can impact workforce behaviours. ​ Countercultures: Shared values and beliefs that directly oppose the broader organisational culture, often forming around a charismatic leader. They may be tolerated if they contribute to organisational effectiveness, but can also be perceived as threats. Creation of Cultures ​ Founder Values and Preferences: The sources highlight the profound influence of founder values on shaping an organisation's culture, particularly in its early stages. Founders' vision, personality, background, and values shape the organisation's initial rules, structure, and hiring decisions. This influence is enduring as the organisation grows and matures..  ​ Industry Demands: While founders play a significant role, the sources also acknowledge the impact of industry characteristics and demands in shaping organisational cultures. Different industries often exhibit cultural similarities due to common regulatory requirements, competitive pressures, and industry norms.​ Maintenance of Cultures ​ Attraction-Selection-Attrition (ASA): This process acts as a self-regulating mechanism, ensuring that individuals who align with the organisation's culture are attracted to, selected by, and retained within the company. ○​ Attraction: Individuals are drawn to organisations where they perceive a good fit with their own values and personality. For instance, individuals with a strong competitive drive might be attracted to organisations with a similar culture. ○​ Selection: Organisations actively seek candidates who align with their cultural values during the hiring process. They may use various techniques, such as multiple interviews with future peers, to assess cultural fit. ○​ Attrition: Employees who don't fit the culture are more likely to leave voluntarily or involuntarily. Research shows that person-organisation misfit is a significant contributor to employee turnover. ​ New Employee Onboarding (Organisational Socialisation): This process helps new employees learn the necessary attitudes, knowledge, skills, and behaviours to function effectively within the organisation. Effective onboarding integrates new employees into the culture, fostering acceptance, confidence, and understanding of shared assumptions, norms, and values. This, in turn, contributes to improved performance, job satisfaction, organisational commitment, and longer tenure.​ ○​ Formal Orientation Programs: These programs introduce new employees to the company's history, goals, culture, and power structure. They can range from structured sessions with lectures and materials to more informal approaches. Research suggests that formal programs are particularly helpful in conveying information about the organisation, although computer-based orientations may not be as effective. ○​ Role of Organisational Insiders: Leaders, coworkers, and mentors play crucial roles in supporting new employee onboarding. Leaders influence how quickly employees grasp company politics and culture, coworkers impact team adjustment, and mentors provide guidance and insights into the company's workings. Mentoring can be formal or informal, and research suggests that programs are more effective when participants have input in matching and mentors receive prior training. ○​ What Employees Can Do: New employees can enhance their onboarding experience by being proactive, seeking feedback, and actively building relationships with colleagues and managers. Seeking feedback early on helps  identify any necessary behavioural adjustments to align with the company culture. Networking is also crucial, especially when the company lacks a structured onboarding approach, as building strong relationships is vital for adjustment and success. ​ Leadership: Leaders play a pivotal role in shaping and maintaining organisational culture. Their leadership style, actions, and reactions send clear signals to employees about the accepted norms and values within the organisation.​ ○​ Role Modelling: Leaders demonstrate desired behaviours and act as examples for employees to emulate. This is particularly important for fostering an ethical culture, as leaders' actions communicate acceptable and unacceptable conduct. ○​ Reactions and Priorities: Leaders' responses to various situations, such as praising achievements, handling mistakes, and addressing conflicts, shape the organisational culture. Their priorities, as evident in their questions, concerns, and reactions, signal what is truly valued in the organisation. ​ Reward Systems: The way an organisation rewards and punishes employees significantly influences its cultural values. The design of reward systems, including the criteria used for evaluation, types of incentives, and recognition mechanisms, reinforces specific behaviours and outcomes, ultimately shaping the culture.​ ○​ Focus on Behaviours or Results: Organisations that reward both intangible behaviours and tangible results tend to develop people- or team-oriented cultures, whereas a sole focus on goal achievement may lead to outcome-oriented and competitive cultures. ○​ Performance vs. Seniority: Rewarding performance over seniority fosters a culture of achievement and meritocracy, while seniority-based rewards can hinder outcome orientation. ○​ Reinforcing Desired Behaviours: The behaviours that are rewarded, punished, or ignored determine the direction of cultural evolution. A well-designed reward system, as part of the controlling function, serves as a powerful tool for shaping and maintaining the desired organisational culture. Steps to Increase the Chances of Success: ​ 1. Creating a Sense of Urgency:​ ○​ Effective culture change initiatives begin by establishing a clear and compelling rationale for the change. Leaders must effectively communicate the need for change to employees, highlighting the negative consequences of maintaining the status quo and emphasising the benefits of embracing a new way of doing things. This sense of urgency helps create buy-in and motivates employees to support the change effort.  ​ 2. Changing Leaders and Other Key Players:​ ○​ Culture change often necessitates changes in leadership, particularly at the top levels of the organisation. Existing leaders, due to their entrenched beliefs, self-interest, or resistance to change, can act as significant barriers. Replacing them with individuals who champion the desired cultural shifts can accelerate the process. ​ 3. Role Modelling:​ ○​ Leaders play a crucial role in demonstrating the desired behaviours and values associated with the new culture. Their actions serve as powerful signals to employees about what is expected and rewarded within the organisation. ​ 4. Training:​ ○​ Targeted training programs play a vital role in equipping employees with the necessary skills and knowledge to align with the new cultural values. These programs help employees understand the new norms, behavioural expectations, and desired ways of working. ​ 5. Changing the Reward System:​ ○​ Modifying the reward system to align with the desired cultural values is crucial for reinforcing the change. The criteria for rewards and punishments send powerful signals to employees about what behaviours and outcomes are valued within the organisation. ​ 6. Creating New Symbols and Stories:​ ○​ Developing new rituals, symbols, and stories that embody the desired cultural values helps communicate and reinforce the change. Replacing outdated symbols and narratives with ones that align with the new culture helps embed the change and create a shared sense of identity. Before You Join: Uncovering the Cultural Landscape ​ Research: The sources stress the importance of thorough research before even stepping into an interview. This research can encompass various avenues: ○​ Networking: Reach out to individuals within your personal and professional networks who may have insights into the company's culture. ○​ Online Resources: Utilise search engines and company websites to gather information about the organisation's mission, values, news articles, and employee reviews. ​ Observe the Physical Environment: Pay close attention to the physical cues during interviews or site visits. ○​ Office Layout: Does the workspace foster collaboration with open layouts, or does it prioritise individual work with private offices?  ○​ Dress Code: What does the attire of employees convey about the level of formality and expectations? ○​ Employee Demeanour: Are employees engaged and energetic, or do they appear stressed and overworked? ​ Read Between the Lines: Look beyond the obvious and interpret subtle cues: ○​ Company Policies: Does the presence or absence of a detailed employee handbook indicate a preference for flexibility or strict adherence to rules? ○​ Communication: Are you treated with respect and kept informed during the recruitment process, or do you experience delays and a lack of communication? ​ Ask Insightful Questions: Prepare thoughtful questions to glean deeper insights into the culture: ○​ Employee Turnover: Enquire about the reasons for the previous incumbent's departure. This can shed light on potential challenges or cultural mismatches. ○​ Success Factors: Ask what qualities and behaviours contribute to success within the organisation. ○​ Ideal Candidate: Understand the company's expectations and the profile of their ideal candidate. ​ Trust Your Instincts: The sources emphasise the importance of listening to your gut feeling. Pay attention to your overall impression of the organisation, the interactions with potential colleagues and managers, and the general atmosphere. If there's a sense of unease or misalignment, it's worth considering whether this is the right cultural fit for you. You've Got the Job! Now, How to Get on Board? ​ Gather Information: ○​ Pre-Start: Before your first day, leverage all available resources to learn as much as you can about the company, the department, your role, and your team. ○​ Active Observation: Once you start, pay attention to how people interact, dress, and behave. Observe communication styles, decision-making processes, and the overall work dynamic. ​ Manage Your First Impression: ○​ Professionalism: Present yourself in a professional manner, adhering to the dress code and demonstrating punctuality and preparedness. ○​ Enthusiasm: Express genuine excitement and a positive attitude towards being part of the team. ○​ Respectful Interactions: Engage in courteous and respectful interactions with colleagues at all levels. ​ Invest in Relationship Development: ○​ Proactive Networking: Initiate conversations, attend social events, and seek opportunities to connect with colleagues.  ○​ Building Rapport: Show genuine interest in your colleagues, listen attentively, and build rapport. Strong relationships contribute significantly to a smoother onboarding experience. ​ Seek Feedback: ○​ Proactive Approach: Don't wait for formal feedback sessions. Actively seek input from your manager and colleagues on your performance and how you can improve. ○​ Receptiveness: Demonstrate openness to feedback and a willingness to learn and adapt. ○​ Follow Through: Act on the suggestions you receive to show that you value feedback and are committed to improvement. ​ Show Success Early On: ○​ Taking Initiative: Volunteer for projects that align with your skills and interests, allowing you to showcase your abilities and contribute meaningfully. ○​ Seeking Learning Opportunities: Embrace projects that may challenge you and expand your knowledge, even if they are not high-profile. ○​ Strategic Networking: Participate in projects that involve collaboration with key individuals within the organisation, expanding your network and visibility.