Organizational culture can be one of the most important means of improving organizational performance


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Organizational culture can be one of the most important means of improving organizational performance

  1. 1.     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. 2.     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. 3.     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. 4.     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. 5.     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:[Accessed 04 December 2010]Anonymous. ORGANIZATIONAL CULTURE. [Online]Available at:[Accessed 04 December 2010]Anonymous. Organizational Culture and Performance. [Online]Available at:[Accessed 04 December 2010]Anonymous. TYPOLOGY,FUNCTIONS AND EVOLUTION OF ORGANISATIONALCULTURE. [Online]Available at:[Accessed 04 December 2010]Bauer, T. & Erdogan, B. Characteristics of Organizational Culture [Online]Available at:[Accessed 04 December 2010]El-Nadi, Fathi. Examples Of Strong Corporate Cultures. [Online]Available at:[Accessed 04 December 2010].Scribd. Organizational Culture. [Online]Available at:[Accessed 04 December 2010].