2.5 Organizational (corporate) culture [HL] Flashcards
Organizational culture
AO1
Corporate culture, or organizational culture, describes the traditions and norms within an organization. It is largely based on people’s beliefs, values and attitudes in the workplace
Elements of organizational culture
AO2
Acronym NORMS: to remember the
interrelated determinants of organizational culture:
- Nature of the business
- Organizational structure
- Rewards
- Management styles
- Sanctions
Cultural clash
Cultural clashes exist when there is conflict or incompatibility between two or more cultures within an organization. This can exist when firms merge, when a business expands overseas (if workers are ignorant of international cultural differences) or when there is a change in leadership.
Reasons for organizational cultural clashes
3
The reasons for, and consequences of,cultural clashes within organizations
when they grow, merge and when leadership styles change
AO3
1 Growth of firms
-Internal growth of firms likely leads to more formal and hierarchical organizational
structure
-Can result in organizations
becoming more bureaucratic and power orientated in order to maintain control and coordination.
-In other organizations, an adaptive culture acts as the source of growth and evolution, rather than being the result of growth.
-Culture clashes often occur when businesses
expand into overseas markets
2 Mergers and acquisitions
-Organizational cultures
can clash or change when there is external growth, e.g.
a merger or takeover.
-In theory, mergers should help the organizations to gain from economies of scale
-However, mergers can fail due to culture clashes
-Even if the merger goes ahead, the culture of the more dominant firm tends to prevail or a new hybrid culture develops.
-In reality, those who cannot adapt to the new culture are likely to leave the organization.
3 Change in leadership
-Leadership style is a factor affecting corporate culture; a change in leadership
can easily result in a change in the organizational culture.
-Consider how your school principal shapes the culture of the school and what might happen if that person resigned.
-Leaders drive the strategic direction of the organization, so a change in the leadership team can
result in culture clashes
Consequences of organizational cultural
clashes
6
The reasons for, and consequences of,cultural clashes within organizations
when they grow, merge and when leadership styles change
AO3
1 Misunderstandings and miscommunications
-Cultural clashes and culture gaps often result in problems due to employees not understanding the reasons for change or if these have not been communicated effectively with the
workers.
2 Unhappy staff
-Cultural clashes and the potential conflict that results will tend to make people unhappy in the workplace.
3 Compromises must be reached
-In order for the
business to move forward, conflict needs to be resolved.
Compromises may therefore need to be made in the
negotiation process
4 Resistance to change
-This happens because staff are likely to resent changes to the culture that they are used to, perhaps due to fear of the unknown or due to a lack of understanding of the benefits of change.
5 High costs of training staff and implementing change
-For example, training costs may be necessary for businesses that adopt teleworking or diversify their operations
6 National culture clashes/ disputes
-National cultures
may be so strong that any attempts to change the way
things are done can cause conflict and resentment, e.g.
cosmeticfirmsmayfind it difficult to expand into Muslim
countries as the attitudes towards female liberation and
freedom of expression are still very conservative.
Nature of the business
NORMS
2
1 Culture is shaped by the
purpose and direction of the organization, derived
from its mission, aims and objectives (see Unit 1.3).
2 For example, there is likely to be a very different culture in a non-profit organization(such as a charity) than one found
in an organization that thrives on aggressive selling(such
as a real estate firm).
Organizational structure
NORMS
3
1 Firms with tall structures
tend to have lots of small teams that work well
independently.
2 By contrast, flatter structures may benefit from collaborative teamwork.
3 Organizations made up of
highly skilled and innovative staff have a different culture
from those with demotivated staff who have no input in
decision-making.
Rewards
NORMS
2
1 If employees are appropriately remunerated
for their efforts, the organization is more likely to develop a strong and united culture.
2 Hence, a motivated workforce results in a culture of productive workers who strive to achieve organizational objectives.
Management styles
NORMS
3
1 The culture in decentralized
organizations tends to benefit from workers able to deal with most problems themselves, rather than taking all their problems to the management.
2 Conversely, in firms where managers maintain centralized decision making power, a different culture exists with the use of threats and sanctions.
3 In extreme versions of this culture, much of management time is spent on checking employee emails, monitoring their telephone calls or even using surveillance cameras to observe the staff.
Sanctions
NORMS
2
1 An organization with few sanctions can encourage staff to be slack, e.g. to be late for work, or even miss work, and to provide poor customer service.
2 However, if an organization is too rigid in its policies and
is extremely harsh in reprimanding workers, staff may feel resentful of the management.
How individuals influence organizational culture and how organizational
culture influences individuals
AO3
(1 Individuals, usually leaders, can have a huge influence
on organizational culture.
This ultimately results in the organizational culture influencing individuals within the organization. )
2 The qualities of effective leaders, such as their
vision and interpersonal skills, influence staff members to develop the knowledge, skills, and values needed to shape
the desired corporate culture.
3 Equally, the unique element of any organizational culture is its diversity.
4 The various mix of
ethnicity, languages, gender and socioeconomic groups within a business means that individuals can shape the culture of the
organization
The challenge for leaders is to influence people within the organization to follow or to shape a shared vision and corporate culture.
Strategies to achieve this include being a MOVER:
How individuals influence organizational culture and how organizational
culture influences individuals
AO3
Mentor - Leaders act as mentors by sharing
knowledge and expertise, and supporting their people to mould a healthy organizational culture. This also helps to
build trust within the organization.
Outreach - Communicating the vision (and desired
culture) to all members of the organization, so everyone moves in the same direction and stands for the same values.
Vision - Without knowing where the business wants
to be, it is impossible and pointless trying to guide and
motivate staff.
Engaging - The desired corporate culture must engage and excite the workers; perhaps by the leader nurturing a sense of self-worth and commitment to the strategic goals
of the organization. Empowering others
also means a greater number of individuals can help to shape the organizational culture.
Role modelling - As Mahatma Gandhi said, “You must be the change you wish to see in the world”; that is, effective leaders lead by example. By being a role model to others in the organization, the leader can drive and develop the
desired culture.
There are several interrelated strategies to create a positive and harmonious culture:
4
1 Develop a sense of history
-written accounts, photos, museums, internet (Wikipedia)
2 Create a sense of unity
-SMART objective: teamwork in culture
3 Promote a sense of value
-e.g. the organization might enforce a policy of internally
promoting staff to help them in their careers
4 Encourage a sense of responsibility
-Staff need to feel dedicated and responsible for their work. This is more likely to happen if there is a sense of unity and purpose.
Cultural intelligence, or cultural quotient (CQ
Cultural intelligence, or cultural quotient (CQ), measures the ability of an individual to blend into occupational,
organizational and national cultures. CQ is an indicator of a worker’s ability to cope with change.
Exam tip!
The theorists covered in this section are not mentioned
by name in the BM Guide, so you will not be examined
on their work. However, their theories will help you gain
a better understanding of organizational culture.
(just get the point)(
