Organizational culture can be one of the most important means of improving organizational performance
Introduction to Business and Management Topic- “Organizational culture can be one of the most important means of improving organizational performance” Name: Akta Gupta Course: BBA Business studies Module Code: MNGT120 Module Coordinator: Dr. Seema Bhatt GDGWI ID: 100100 Batch: 2010-2013 Section: A Word Count: 1182 words
2 MNGT120 GDGWI ID 100100 “Culture is the soul of the organization — the beliefs and values, and how they are manifested. I think of the structure as the skeleton, and as the flesh and blood. And culture is the soul that holds the thing together and gives it life force.” -Henry Mintzberg These lines by Henry Mintzberg, an internationally renowned author on Business and Management, portray how critical is a culture in an organization. Organizational culture is the combination of the values, norms, and behavior of all the people working in an organization, which creates the physical and social artefacts of any organization. The culture of the organization is derived from the founder’s philosophy. Over a period of time, the values and beliefs of the founders are presented in the functioning of the company, which later becomes its culture. The question is, what are the values, norms and behaviors in an organization that form its culture. Researches have suggested that the organizational culture has seven distinct values, which forms the organizational culture profile (OCP). These values are: • Detail-Orientation This deals with the degree of importance given to the details of any activity by the employees. This becomes a competitive advantage to the organization in differentiating its company. McDonald’s Corporation is a company that follows this. Every employee is instructed how the task is to be performed and detail is given from the start of processing the product until served. • Result-Orientation This deals with the people focusing on achieving the end result rather than on the processes used to attain the results. Many companies implement the Results Oriented Work Environment (ROWE) that allows employees to work flexibly until and unless the work is completed. • People-Orientation It is a value where the organization focuses on its people during decision-‐ making. It values the individualism and rights of the employees. Starbucks Corporation is one such company that follows this culture. It pays its employees above minimum wage; provide health care and creative perks. Infosys is another company that treats employees as assets. • Team-Orientation It is the degree of emphasizing on working in teams instead as individuals. Southwest Airlines company facilities a team oriented environment, which builds a cooperative environment among the employees.
3 MNGT120 GDGWI ID 100100 • Aggressiveness Companies that have an aggressive culture, work towards competiveness to reduce competition to be the dominant company. Bill Gates, co-‐founder of Microsoft Corporation emphasizes on having an aggressive work environment. Every employee works towards killing the competition in the market. This culture at times may fall short on the corporate social responsibility as it works solely on the vision of the company unless and until the company is a NGO like Greenpeace that also follows an aggressive culture. • Stability This culture is highly formal with high levels of bureaucracy. Activities are predictable in nature. Though such a culture may result in increasing efficiency in a stable environment, it may tend to fall in a dynamic environment, due to inability to adapt new environments. Kraft Foods Inc. has a stable culture and follows a very bureaucratic method of functioning. • Innovation and Risk-Taking Contrasting to the stable culture, companies with an innovative culture support employees towards flexibility at work. The working style is less bureaucratic with a flat organizational hierarchy. Google provides this environment to its employees. It allows them to spend 20% of their working hours on projects of choice. These shared values vary in organizations between continuums of high and low. It is considered that if a company has a high degree of acceptance and sharing for the cultures, it has a strong culture. People have the same belief and culture due to which the organization works smoothly, increasingly efficiency. If it has a low degree, the people in the company do not share the same values, thus contradict each other, resulting in conflict. The culture is perceived as a weak that reduces the efficiency levels and performance of the company. Roger Harrison in 1972 developed a systematic analytical method of comparing cultures. He defined a theoretical framework of culture types, which are, -‐Power culture-‐The power is concentrated to a few people, which then radiates outward. Companies with centralized decision-‐making fall under this category. -‐Role culture-‐This culture has defined authority in highly bureaucratic and structured organization. The people rely on scope to higher position and have little scope for power. -‐Task culture-‐In this culture, teams are formed which results in a network forming a matrix organization. Power and authority of task is distributed to the right person with the right expertise. This culture is highly performance orientated where the personal goals tend to synchronize with the organizational goals.
4 MNGT120 GDGWI ID 100100 -‐Personal culture-‐In this culture, the individual person is considered superior to the organization as the organization exists only if the individuals share a like-‐minded goal and come together as one for a purpose. Example: Volunteers coming together to support a rally. Researchers have shown a link between the organizational culture and how it affects the organizational performance. If the people in the organization follow the same culture uniformly and accept the cultures as well, there would be unity formed within the organization that would lead to high levels of efficiency thus resulting in an increase in the levels of performance. A common culture results in having a common goal that helps in makes decision making easier. People would agree to the decisions made more easily and be motivated to work, as the decisions made are the same as the goal of the people. A reverse relationship between organizational culture and performance is also shown. It is known that an increase in performance can lead to a development of a culture, which could lead to culture homogeneity in the way the organization works. Thus, the culture in the business can just be a by-‐product of the performance. Culture is considered as a regulatory mechanism to regulate complex situations, resulting higher efficiency thus has a high level of performance. If an organization has the ability to adapt to various cultures, depending on the task, it would lead to high levels of efficiency as the chaos and confusion created within an organization due to change in the environment and work type would be minimized, thus increasing performance and motivation levels. This culture could also result in being a limitation to the company, which recruits new people who belong to a different culture and ideas. It is very important for the employees to adapt to the new culture, which may consume a lot of time in the beginning. Also, recent studies have shown that, companies are moving towards concentrating on merging or acquiring companies that share a similar culture because the major issue that arises after a merger or acquisition is incompatibility of workers with the new environment resulting in diseconomies of scale. Thus, an organization with a strong culture, which may vary depending on the industry the company is in, not just helps in increasing the organization performance levels, but also increases the opportunities available to the company and developing a competitive advantage over the other companies which in the long run becomes a company’s identity.
5 MNGT120 GDGWI ID 100100 BibliographyBooks:André, R.,2008. Organizational Behavior an Introduction to Your Life inOrganizations. Upper Saddle River, NJ: Pearson Education. Ch.17.Coulter, M. Robbins, Stephen P. & Vohra, N.,2010. Management. 10th ed. New Delhi:Pearson Education. Ch.3.Judge, Timothy A & Robbins, Stephen P.,2009. Organizational Behavior. 13th ed.New Delhi: PHI Learning. Ch.17.Moshal, B. S.,2009. Organisational Theory and Behavior Text and Cases. 2nd ed.New Delhi: Ane Pvt. Ch.13.Sinha, Jai B. P.,2008. Culture and Organizational Behaviour. 1st ed. Los Angeles:SAGE. Ch.12.Internet:Anonymous. Corporate Culture. [Online]Available at:http://www.slideshare.net/Yuvarajah/corporate-culture-5344549.[Accessed 04 December 2010]Anonymous. ORGANIZATIONAL CULTURE. [Online]Available at: http://fds.oup.com/www.oup.co.uk/pdf/bt/fincham/Chapter15.pdf.[Accessed 04 December 2010]Anonymous. Organizational Culture and Performance. [Online]Available at: http://www.sagepub.com/upm-data/9432_010384ch3.pdf.[Accessed 04 December 2010]Anonymous. TYPOLOGY,FUNCTIONS AND EVOLUTION OF ORGANISATIONALCULTURE. [Online]Available at:http://managementconsultingcourses.com/Lesson36TypologyFunctions&EvolutionOfOrganisationalCulture.pdf.[Accessed 04 December 2010]Bauer, T. & Erdogan, B. Characteristics of Organizational Culture [Online]Available at: http://www.flatworldknowledge.com/node/28971#web-28971.[Accessed 04 December 2010]El-Nadi, Fathi. Examples Of Strong Corporate Cultures. [Online]Available at: http://www.evancarmichael.com/Human-Resources/840/Examples-Of-Strong-Corporate-Cultures.html.[Accessed 04 December 2010].Scribd. Organizational Culture. [Online]Available at: http://www.scribd.com/doc/37268845/Organizational-Culture[Accessed 04 December 2010].