2.5 Organizational Culture

Question 1

What is the definition of “organisational culture”?

Answer 1

Organizational culture is the sum total of a company’s values, attitudes, beliefs, expectations and assumptions of an organization.

Question 2

What are some of the key elements of an organisation’s culture?

Answer 2

1) Vision of organisation
2) Values
3) Practices
4) People
5) History

Question 3

How does “vision” affect a company’s culture?

Answer 3

The aim and mission of an organisation often mark the first step of building a successful corporate culture. A successful business must have a corporate culture consistent with the mission of the organisation.

Question 4

How do “values” affect a company’s culture?

Answer 4

Values are the core of the organisational culture. Values help achieve the vision of the organisation.

Question 5

How do “practices” affect a company’s culture?

Answer 5

Companies should put their values into practice. If an organisation professes to be environmentally supportive, then it should be evident in their practices.

Question 6

How do “people” affect a company’s culture?

Answer 6

nother element of organisational culture is how the most valuable resource of a company is hired. Practices of internal or external recruitment, and a thorough recruitment process, strive to find the right employee with a similar vision, and influence the corporate culture of a company.

Question 7

How does “history” affect a company’s culture?

Answer 7

Every great organisation has a unique history to influence future employees and to inspire a workforce.

Question 8

What is the definition of a “leadership style”?

Answer 8

The way in which an organization is led (is a major element of organizational culture.) For example, employees at Google are empowered to run their own projects and encouraged to make mistakes (just not too many that are costly!)

Question 9

Does the “leadership style” have an affect on the company’s culture?

Answer 9

yes, the leadership style is a MAJOR element of organisational culture

Question 10

What can a STRONG organisational culture lead to?

Answer 10

• Create a sense of harmony: more staff retention
• Encourages more teamwork: leads to more productivity
• Reduces misunderstandings and the “blame game” culture
• Guides the company into reaching their goals and objectives
• Reduces potential affects from having a cultural gap

Question 11

What can a WEAK organisational culture lead to?

Answer 11

• Confusion amongst employees
• Lack of harmony and understanding between workers
• Sense of suspicion and negative talk
• Visible sign of unproductivity
• Potential fall of profit

Question 12

What are the four types of organisational culture?

Answer 12

1) Power
2) Role
3) Task
4) Person

Question 13

What does the “power” culture include?

Answer 13

What is it?
- When an individual or small group of senior staff takes all decisions for the organisation (AUTOCRATIC)

What’s important?
- Results act as indicators of value of employees (results = important)

Question 14

What does the “role” culture include?

Answer 14

What is it?
- Operations and organizational norms are underpinned by formal structure and procedures. Clear policies and hierarchical structures facilitate the smooth running of the business (BUREAUCRATIC)

What’s important?
- Workers have defined roles and responsibilities
- Multiple hierarchies and long chains of command result in slow decision making.

Question 15

What does the “task” culture include?

Answer 15

What is it?
- Power is given to experts within a group.
- Employees are allocated to specific projects based on their level of expertise.

What’s important?
- Promotes problem-solving
- Teamwork is seen as essential to getting work done

Question 16

What does the “person” culture include?

Answer 16

What is it?
- Skills and expertise of a person is more important than the organization itself
- Thrives on experts, and their skills, knowledge and experiences
- Values every person as an expert.

What’s important?
- Making sure that highly skilled workers are motivated and retained through generous financial and non-financial remuneration packages
- Rigorous recruitment as organisations want experts.

Question 17

What are the advantages and disadvantages of the “power” culture?

Answer 17

Advantages:
- Centralised decision making causes operations to be relatively cheap (+ decisions can be made quickly)

Disadvantages:
- Can have lowered staff morale (and thus lower productivity levels)

Question 18

What are the advantages and disadvantages of the “role” culture?

Answer 18

Advantages:
- Organisation has a clear direction (+ procedures and policies)

Disadvantages:
- Organisations are not well prepared to respond to radical changes
- Slow decision making

Question 19

What are the advantages and disadvantages of the “task” culture?

Answer 19

Advantages:
- Gives chances to employees to build relationships with their other colleagues

Disadvantages:
- If too many people in same area of expertise, this could cause conflict

Question 20

What are the advantages and disadvantages of the “person” culture?

Answer 20

Advantages:
- Gives chances to employees to build relationships with their other colleagues

Disadvantages:
- If too many people in same area of expertise, this could cause conflict

Question 21

What could cause a cultural clash?

Answer 21

• Growth
• Mergers and Acquisitions
• Change in Leadership

Question 22

How can an organisation’s “growth” cause a cultural clash?

Answer 22

When an organisation grows internally there is often a disconnect between junior staff managers and senior staff managers.

Furthermore if a company grows beyond the country of operation firms can come across potential problems because of language and cultural differences.

Question 23

How can “Mergers and Acquisitions” cause a cultural clash?

Answer 23

When organizations merge or are taken over by another company, a culture clash often results. Inorganic growth usually results in one culture being more dominant than the other, so conflict is likely to occur (at least in the short term).

eg –> A $350 billion merger between Time Warner and AOL proved disastrous as a result of the cultural clash that happened soon after the merger. The AOL (America Online) and Time Warner deal took place in 1999, with a huge $350 billion valuation. Unfortunately, a few months after the deal was sealed, the dot-com bubble burst and the economy went into recession. In 2003, AOL-Time Warner posted a $99 billion loss and exemplified one of the worst mergers in the history of US business.

Question 24

How can a “Change in leadership” cause a cultural clash?

Answer 24

A change in leadership styles, perhaps as a result of a new CEO being appointed or a new board of directors being elected, can cause a culture clash as views and priorities may conflict.

• This often happens as a new leader will likely come up with new ideas for the organisation and push for a new culture.

Question 25

What are some consequences of a cultural clash?

Answer 25

• Employees will become fearful of their jobs, and might start searching for a new job.
• Can lead to confusion in the workspace
• Can cause a fall in productivity
• A sense of division with other workers (in case of a company merger)

Question 26

If there is a difference in culture in an organisation, what is this called?

Answer 26

A cultural gap