3.10.2 Managing organisational culture

Question 1

What is organisational culture?

Answer 1

Organisational culture is the way that people do things in a company, and the way that they expect things to be done. It’s an important way to shape the expectations and attitudes of staff and managers

Question 2

What is weak culture?

Answer 2

Weak culture is where the employees of a company don’t share the company’s values, and have to be forced to comply with them (e.g. through company policies).

Question 3

Explain what a strong culture is.

Answer 3

Organisational culture is strong when employees agree with the corporate values of the company. Having a strong corporate culture has several advantages:
*Employees need less supervision, because their behaviour will naturally tend to fit in with the company’s values.
* Staff are more loyal to the business, so staff turnover is lower.
It increases employees’ motivation, so they work more productively.

Question 4

Handy’s Model of Organisational Structure

Answer 4

A leading authority on organisational culture, defined four different kinds of culture: power, role, task and person

Question 5

Explain what happens in an organisation with task culture.

Answer 5

• In an organisation with a power culture, power is held by just a few individuals whose influence spreads throughout the organisation
• There are few rules and regulations in a power culture. What those with power decide is what happens
• Employees are generally judged by what they achieve rather than how they do things or how they act
• A consequence of this can be quick decision-making, even if those decisions aren’t in the best long-term interests of the organisation
• A power culture is usually a strong culture, though it can swiftly turn toxic

Question 6

Draw what a power culture could look like.

Answer 6

Question 7

Explain what happens in an organisation with role culture.

Answer 7

• Organisations with a role culture are based on rules
• They are highly controlled, with everyone in the organisation knowing what their roles and responsibilities are
• Power in a role culture is determined by a person’s position (role) in the organisational structure.
• Role cultures are built on detailed organisational structures which are typically tall (not flat) with a long chain of command
• They can be slow to change as they lack creativity and empowerment
• A consequence is that decision-making in role cultures can often be painfully-slow and the organisation is less likely to take risks
• In short, organisations with role cultures tend to be very bureaucratic

Question 8

What does a role culture look like?

Answer 8

Question 9

Explain what happens in an organisation with task culture.

Answer 9

• Task culture forms when teams in an organisation are formed to address specific problems or progress projects
• The task is the important thing, so power within the team will often shift depending on the mix of the team members and the status of the problem or project
• It can be a constraint on growth as it created sub-cultures that can restrict overall changes
• Whether the task culture proves effective will largely be determined by the team dynamic. With the right mix of skills, personalities and leadership, working in teams can be incredibly productive and creative

Question 10

Draw what a task culture looks like.

Answer 10

Question 11

Explain what happens in an organisation with person culture.

Answer 11

• In organisations with person cultures, individuals very much see themselves as unique and superior to the organisation
• The organisation simply exists in order for people to work
• It is difficult to grow the organisation and individuals will resist any change/threat that undermines their position
• An organisation with a person culture is really just a collection of individuals who happen to be working for the same organisation

Question 12

Draw what a person culture looks like.

Answer 12

Question 13

What leadership styles are suitable for each culture type?

Answer 13

Question 14

What happens in Hofstede’s National Cultures?

Answer 14

Countries are scored on each of the six dimensions - these scores allow businesses to assess the cultural differences when dealing with businesses from different countries and plan for any culture clashes.

Question 15

What are the six dimensions in Hofstede’s National Cultures?

Answer 15

• Power distance
• Uncertainty Avoidance
• Individualism v Collectivism
• Masculinity v Femininity
• Long-term Orientation
• Indulgence v Restraint

Question 16

Explain power distance

Answer 16

The extent that people accept that power and wealth is distributed unequally. Societies with low power distance expect equality, and societies with high power distance (such as Saudi Arabia) accept the hierarchy of power without argument. For example, in a country with high power distance you would be expected to follow your boss’s orders without question.

Question 17

Explain uncertainty avoidance

Answer 17

The extent to which people attempt to minimise uncertainty. This can be done by introducing rules or regulations. People in societies with low uncertainty avoidance tend to be open to change.

Question 18

Explain individualism v collectivism

Answer 18

The extent to which people are expected to look after themselves rather than support each other.
Societies with high individualism focus on personal achievement and rights, and people are expected to look after themselves and their close family. Collectivist societies, e.g. Pakistan, are made up of large groups (such as large extended families) where members are expected to support each other in return for loyalty.

Question 19

Explain masculinity v femininity

Answer 19

Masculine cultures are highly competitive and powerful, with contrasting gender roles. Feminine cultures focus on caring and quality of life. The higher the masculinity, the more focus there is on power and money.

Question 20

Explain long term orientation

Answer 20

The higher the long-term orientation, the more the society looks to the future and accepts new ideas, rather than following tradition.

Question 21

Explain indulgence v restraint

Answer 21

Indulgent societies allow their people to satisfy their desires and impulses, within reason. Restrained societies attempt to regulate the desires of their people.

Question 22

Explain what stakeholders the organisational culture would affect.

Answer 22

1) Staff - Culture affects the motivation of the employees. E.g. a power culture or role culture can demotivate creative staff who can see ways to improve things but don’t have the power to put changes into practice.
2) Customers - Organisational culture affects customers’ loyalty to a business. Businesses with a customer-focused culture are more likely to have customers loyal to the firm or their brands.
3) Shareholders - The level of risk that businesses take depends on their organisational culture.
Shareholders might get low returns on their investment if they invest in a company with a low-risk culture, whereas investing in a company with a high-risk culture gives shareholders the possibility of high returns, but there’s also the risk that they’ll lose money.

Question 23

What are the two main reasons managers may want to change the organisational culture?

Answer 23

1) The organisational culture of a business depends on the preferences of its leaders. When a new manager joins a business, they might change it to make it more similar to businesses they have worked in before.
E.g. if a manager who is used to working in a business with a role culture starts working in a business with a task culture, they might force the business to adopt a role culture because that is what they are used to.
2) A business might change its culture in order to be more competitive. E.g. businesses with a power culture can be slow to spot ways to save money, or more efficient ways of working, so adopting an entrepreneurial culture where all the staff are constantly looking for ways to improve the business could make the business more competitive.

Question 24

How can changes such as growth influence organisational culture?

Answer 24

1) If a business grows, it might need to take on new employees. New employees may have different expectations and aims, which could influence the pre-existing culture.
2) A business’s growth and success can lead to it becoming more corporate, with a more rigid structure.
This can sway the business towards a role culture.
3) If a business becomes a multinational, its culture may be influenced by the culture of the country the business has entered. Companies can use Hofstede’s six dimensions of national culture to analyse the differences between the culture of each country.
4) The amount by which a culture is affected by a change depends on how strong the original culture was, how well it was reinforced and whether employees appreciate its values.

Question 25

Explain how changing the organisational culture can be difficult

Answer 25

1) Employees usually resist any kind of change, including changes in organisational culture.
Employees who have worked for the business for a long time are especially likely to resist changes to the organisational culture, because they’ll think the way they’ve always done things is better.
2) Changing organisational culture means changing the attitudes and behaviour of staff, so it’s much more complicated than changing things like pricing structure. E.g. the managers of a company might want to change from a person culture to a task culture, but splitting people up into small teams and giving them a project won’t achieve anything if employees just want to work individually and in their own interests.
3) Changing the organisational culture can also be very expensive. It might involve changing the office layout, giving extra training to staff, devising new processes, changing the company motto on marketing material, etc.
This means that businesses can’t always afford to change their culture as much as they would like to.
4) The HR department plays a big role in changing the organisational culture of a business - they might need to change their recruitment and induction procedures, change their payment and reward system, etc.