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- 1. Chapter 3 Organizational Culture: Definition, Importance, and Categories Arsenio P. Mirando Jr.
- 2. What is organizational culture? •Organizational culture is the collection of values, expectations, and practices that guide and inform the actions of all team members. Think of it as the collection of traits that make your company what it is
- 3. The importance of culture to your company • Organizational culture affects all aspects of your business, from punctuality and tone to contract terms and employee benefits. When workplace culture aligns with your employees, they’re more likely to feel more comfortable, supported, and valued. Companies that prioritize culture can also weather difficult times and changes in the business environment and come out stronger. • Culture is a key advantage when it comes to attracting talent and outperforming the competition. 77 percent of workers consider a company’s culture before applying, and almost half of employees would leave their current job for a lower-paying opportunity at an organization with a better culture. The culture of an organization is also one of the top indicators of employee satisfaction and one of the main reasons that almost two-thirds (65%) of employees stay in their job.
- 4. The Clan Culture The people-oriented, friendly Collaborate Culture. The Adhocracy Culture The dynamic, entrepreneurial Create Culture The Heirarchy Culture The process-oriented, structured Control Culture. The Market Culture The results-oriented, competitive Compete Culture. Categories of Organizational Culture
- 10. • Other types of organizational culture Purpose culture – Company leaders and employees share altruistic values of changing the world and ensuring global resources are shared with those who live the margins. Learning organizational culture – Focuses on research, innovation, creativity, learning and development. Enjoyment organizational culture – Having fun and a sense of humor is what defines this culture. Results organizational culture – Characterized by meeting targets, achieving goals, and is performance-driven. Authority organizational culture – Is defined by strong leadership and confident employees. It is a competitive working environment where employees strive to be the Safety organizational culture – May be risk-averse where leaders thrive on fostering safety through planning and taking calculated or little risk and doing what has worked Order organizational culture – Is usually defined by rules, procedures and where employees have very defined roles. Caring organization culture – Will be characterized by an environment that cares for its employees and where there may be strong engagement and loyalty.
- 11. In Matthew 20:25-28, Jesus tells His disciples that leaders should not exercise authority over people. Instead, whoever wants to become great must lower himself to be a servant. Leaders realize that serving others is the only way to lead with a pure heart, free of pride and arrogance.
- 12. Thank you and Have A Blessed weekend!!!
- 13. Qualities of a great organizational culture • Every organization’s culture is different, and it’s important to retain what makes your company unique.
- 15. • Alignment comes when the company’s objectives and its employees’ motivations are are all pulling in the same direction. Exceptional organizations work to build continuous alignment to their vision, purpose, and goals.
- 17. • Appreciation can take many forms: a public kudos, a note of thanks, or a promotion. A culture of appreciation is one in which all team members frequently provide recognition and thanks for the contributions of others.
- 19. • Trust is vital to an organization. With a culture of trust, team members can express themselves and rely on others to have their back when they try something new.
- 21. • Performance is key, as great companies create a culture that means business. In these companies, talented employees motivate each other to excel, and, as shown above, greater profitability and productivity are the results.
- 23. • Resilience is a key quality in highly dynamic environments where change is continuous. A resilient culture will teach leaders to watch for and respond to change with ease
- 25. • Teamwork encompasses collaboration, communication, and respect between team members. When everyone on the team supports each other, employees will get more done and feel happier while doing it.
- 27. • Integrity, like trust, is vital to all teams when they rely on each other to make decisions, interpret results, and form partnerships. Honesty and transparency are critical components of this aspect of culture.
- 29. • Innovation leads organizations to get the most out of available technologies, resources, resources, and markets. A culture of innovation means that you apply creative thinking to all aspects of your business, even your own cultural initiatives.
- 31. • Psychological safety provides the support employees need to take risks and provide honest feedback. Remember that psychological safety starts at the team level, not the individual level, so managers need to take the lead in creating a safe environment where everyone feels comfortable contributing. Now that you know what a great culture looks like, let’s tackle how to build one in your organization.
Editor's Notes
- A great organizational culture is the key to developing the traits necessary for business success. And you’ll see its effects in your bottom line: companies with healthy cultures are 1.5 times more likely to experience revenue growth of 15 percent or more over three years and 2.5 times more likely to experience significant stock growth over the same period. Despite this, only 31 percent of HR leaders believe their organizations have the culture they need to drive future business, and getting there is no easy task — 85 percent of organizations fail in transforming their cultures. This is a comprehensive guide to making culture a major strength of your organization, from what culture is and why it’s important to a roadmap you can follow to create a culture that delivers results time after time.
- A great culture exemplifies positive traits that lead to improved performance, while a dysfunctional company culture brings out qualities that can hinder even the most successful organizations. Don’t confuse culture with organizational goals or a mission statement, although both can help define it. Culture is created through consistent and authentic behaviors, not press releases or policy documents. You can watch company culture in action when you see how a CEO responds to a crisis, how a team adapts to new customer demands, or how a manager corrects an employee who makes a mistake.
- Consider Microsoft and Salesforce. Both technology-based companies are world-class performers and admired brands, and both owe this in part to prioritizing culture. Microsoft, known for its cut-throat competitiveness under Steve Balmer, has been positively transformed by Satya Nadella, who took over as CEO of the company in 2014. He embarked on a program to refine the company culture, a process that upended competitiveness in favor of continuous learning. Instead of proving themselves, employees were encouraged to improve themselves. Today Microsoft’s market cap flirts with $1 trillion and it is again competing with Apple and Amazon as one of the most valuable companies in the world. Salesforce puts corporate culture front and center and has experienced incredible growth throughout its history. Marc Benioff, Salesforce’s founder and CEO, established philanthropic cultural norms that have guided the company over the past two decades. All new Salesforce employees spend part of their first day volunteering and receive 56 hours of paid time to volunteer a year. This focus on meaning and mission has made Salesforce one of the best places to work in America according to Fortune, and it hasn’t compromised profits either: Salesforce’s stock price has surged year after year at an average of over 26% annually to date.
- Every organization has its own mix of these four organizational culture types, with one culture typically dominating. The larger the organization, the bigger the possibility that there may be more than one culture in the organization. This may be beneficial to the organization, but it may also be disadvantageous or challenging when attempting to have a cohesive culture in a regionally and globally dispersed organization. Let’s have a look at each organizational culture type and how to develop them in more detail.
- The best-known classification of types of organizational culture is the Competing Values Framework. Kim Cameron and Robert Quinn at the University of Michigan identified four distinct types of organizational culture. Organizational cultures are classified based on two types of competing values: flexibility vs. stability and an internal vs. external focus. The four organizational cultures Cameron and Quinn identified are:
- ‘Clan’ is a group of close-knit and interrelated families or a group of people with a strong common interest. Clan cultures are common in small or family-owned businesses that are not hierarchical in nature. Employees are valued regardless of their level and environments are supportive. Companies like Tom’s of Maine, Redmond (Real Salt), and Chobani may be described as clan cultures that prioritize their employees. This culture aims to work collaboratively in teams by making sure all employees feel like equals. They feel comfortable providing honest and open feedback. Apart from teamwork, there may be a strong emphasis on mentorship and apprenticeship as competencies and values are passed on from one generation to another. There is usually high employee engagement in this culture, which makes for excellent customer service. However, the downside to this type of culture is that it is difficult to maintain it as the organization grows. Operations may lack focus and fluidity as the organization grows. Developing a clan culture To cultivate a clan culture within your company, your first step is to turn to your employees. Communication is vital to a thriving clan culture, so let your team know that you’re open to feedback. Find out what they value, what they’d like to see change, what ideas they have to help push the company further. Step two: take their thoughts into account and put them into action. “Organizations need two things to get from mission and vision to impact: one is a strategy to drive employees on what to focus on, and the other is an intentionally-designed culture, to guide employees on how to work as individuals and as teams,” says consultant, coach, and culture change facilitator Lisa Schmidt. “Many organizations are overly focused on the what (results) and pay little attention to the how (values+behaviours). As employees seek greater meaning and purpose from work, companies that place importance on balancing both will not only become magnets to talented jobseekers, they will also build a workforce happy to provide discretionary effort in service of the mission and vision,” adds Schmidt.
- Adhocracy is a combination of the words ‘Ad hoc’ and bureaucracy. Therefore, organizations with an adhocracy culture are flexible and not inhibited by bureaucratic procedures and policies. There is an emphasis on constant innovation and improvements, the pace is usually extremely fast, and the status quo, though it may be working, will be challenged. Most start-up and tech companies like Apple, Google, and Facebook are driven by adhocratic culture because it provides them the latitude to be innovative. This is critical to their brand and success in a market that is constantly changing and highly competitive. However, when start-ups become large tech giants like these organizations, an adhocratic culture will become less feasible throughout the entire organization. There will be some functions or business units that will need more structure, and moving slower may actually be better for the organization, for example, in the areas of ethics and compliance. Therefore, the adhocracy culture may be relegated to specific units to ensure the organization remains innovative and competitive in the market. Developing an adhocracy culture Depending on your industry, it might not be easy to develop an authentic adhocracy culture that also includes a high-risk business strategy. However, implementing strategy and brainstorming sessions allows employees to share big ideas that can help drive performance. Rewarding successful ideas encourages teams to think outside of the box, too.
- The hierarchy culture is a prevalent corporate culture in the US. It is defined by structure, established procedures, and levels of authority. Employees in this culture know precisely where they fit in the chain of command – who’s accountable to them, who they report to, and what the rules are. It is imperative in this culture to do the right thing. Duties are clearly defined, and operations tend to be streamlined. Financial institutions, health insurance organizations, and oil and gas companies all have a hierarchy culture. This type of company culture enables them to manage risk better, be stable and be operationally efficient. However, it may hinder them from being innovative, agile, and responsive to sudden changes in their markets and industries. They might lack the flexibility needed in today’s and future markets. Developing a hierarchy culture The first step to establishing a hierarchy culture is to button up your processes. If the chain of command has some gaps, fill them. Consider every team and department to ensure they have clear long- and short-term goals.
- Market culture is all about profit margins and staying ahead of the competition. It is results-oriented with a strong external focus to ensure customers are satisfied. Examples of companies driven by a market culture are Tesla, Amazon, and General Electric. Having top-notch products or services is critical to the success of these organizations, so there is a constant demand to be more creative and get new or improved products to the market before their competitors. While this type of culture may secure the longevity of the business, employees often burn out from the high expectations and constant demand to produce. There may also be less emphasis on the employee experience or employee satisfaction. Developing a market culture A market culture is tied to the company’s bottom line. Therefore, start by evaluating each position within your organization. Calculate the ROI of every role and ascribe reasonable benchmarks for production. Consider rewarding top performers to encourage similar work.
- Cultures can be dissected and described in more granular ways. The reason is that each organization is uniquely shaped by its vision, mission, and leadership. Groysberg, Lee, Price, and Cheng identified the following additional organizational cultures in their research published in Harvard Business Review (2018).
- Cultures can be dissected and described in more granular ways. The reason is that each organization is uniquely shaped by its vision, mission, and leadership. Groysberg, Lee, Price, and Cheng identified the following additional organizational cultures in their research published in Harvard Business Review (2018).
- However, the cultures of high-performing organizations consistently reflect certain qualities that you should seek to cultivate:
- However, the cultures of high-performing organizations consistently reflect certain qualities that you should seek to cultivate: