Managing Organisational Culture

Creating and managing organisational culture is essential for all leaders to pursue. Not only does organisational culture help foster a creative and productive environment but it also helps the organisation manage change. Let's find out how!

Organisational culture definition?

The organisational leaders are usually the ones that establish and influence organisational culture which includes shared beliefs and values. These shared beliefs and values are then communicated to employees and shape their understanding of the company and influence their behaviours at work, for example, this influences the way employees’ speak during their working hours.

If the organisational culture is strong employees are most likely to be aware of how to behave in most situations at work. On the other hand, if the organisational culture is weak, employees may not have a clear understanding of how to behave in certain situations.

Strong organisational culture can improve unity and teamwork between employees. This, in turn, results in organisational success, as by working well together employees will create more output. Moreover, with clear guidance on how to behave employees can perform a more consistent behaviour which influences better service quality, especially if their duties involve dealing with clients.

What are the organisational culture models?

Organisational cultural models play an important role in the company’s success. As the culture, that company follows influences employees’ motivation and their contribution to organisational success. Organisational cultures are unique cultural models that provide organisations with the foundations and key principles of developing an effective organisational culture.

Handy’s culture

This cultural model involves four different types of organisational culture, which are:

Role culture - This is the formal culture in which employees' tasks and responsibilities have written clear procedures, and employees are aware of their place in the hierarchy. This cultural model is most appropriate for large enterprises or medium-sized businesses in a steady environment.

Figure 1. Role Culture, StudySmarter

Power culture - This type of culture follows a structure where there are only key decision-makers in the organisation. This usually occurs in small businesses in which the founder is a clear leader and finds it difficult to give authority to other employees to make decisions in the organisation.

Figure 2. Power Culture, StudySmarter

Task culture - This organisational culture focuses on different projects and tasks rather than the daily working routines of employees. In the task, culture employees may have two main responsibilities: their work roles and roles in the project. Moreover, employees are likely to be part of temporary teams with experts from different departments. This culture usually occurs in organisations that follow matrix structure. An example of an organisation following structure are advertising agencies.

Figure 3. Task Culture, StudySmarter

Person culture - In this type of culture, employees have high levels of independence and control of their tasks in the organisation. This type of organisational culture usually occurs in the type of firms that require high expertise such as medical or legal firms and where the number of employees is relatively small.

Figure 4. Person Culture, StudySmarter

Hofstede’s national cultures

Professor Geert Hofstede describes the organisational culture like this:

The model focuses on how different national cultures impact the organisational cultures operating in that specific country. The key elements of this model are (see Figure 5 below):

Individualism and collectivism (IDV) - This element considers to what extent individual employees should concentrate on themselves rather than be team players.

Power and distance index (PDI) - This element concentrates on looking at the extent to which society tolerates unequal power distribution. Countries that follow low PDI accepts decentralised and more organic structures whereas if the country implements high PDI that means that this country will be more centralised and structures following rigid hierarchical structures.

Uncertainty and avoidance index (UAI) - This index measures the degree of uncertainty and ambiguity that people have in society. In countries that have high UAI people attempt to live life predictably and follow acceptable national behaviour codes. While countries with a low UAI index have a relaxed idea of acceptable behaviour and allow freedom.

Masculinity (MAS) - This index refers to the values that dominate in the organisation. They can be either masculine which means that organisations main focus is finances and individual employees’ confidence. Or feminine which focuses on being altruistic which means concern for others more than themselves. Additionally, the focus is on developing quality relationships with co-workers.

Long-term orientation (LTO) - This refers to employees’ long-term thinking. Meaning that if the organisation follows this cultural perspective employees will be focusing on long-term gains and always work in the way that will assist them in the long-term success instead of focusing on the short-term present gains. Short-term orientation is the opposite as organisations following this cultural element puts main focus towards present gains and put aside the long-term fulfilment.

Figure 5. Hofstede's National Cultures Model, StudySmarter

What is organisational culture in strategic management?

This section will address the impact that the organisational culture has on Strategic management.

The strategy helps employees understand their roles and responsibilities dedicated towards the goal achievement. To put it simply, the organisational strategy gives direction to employees.

Organisational culture contributes towards goal achievements as the shared values, acceptable practises and behaviours are established so that they assist employees in achieving organisational goals. To put it simply organisational culture sets the way on how employees are going to achieve set organisational goals.

Organisations should seek to achieve alignment. Figure 6 shows how organisations should aim to align their strategic management and organisational culture. This means that a strategic plan should be constantly in line with the organisational culture so that these elements work together and contribute to organisational success.

Figure 6. Alignment between strategic management and organisational culture, StudySmarter

What is the importance of organisational culture in Strategic management?

There are many reasons why organisational culture plays a highly important role in the organisation’s strategy. The key important reasons are:

Unified goals - The strong organisational culture establishes unified behaviours practised by employees. These behaviours may assist organisations in achieving their set strategic goals.

Culture influences employees’ behaviours - Culture affects employees’ behaviours unconsciously. This means that the strong culture will automatically encourage the acceptable attitude of employees on how to perform and approach certain tasks. That will save managers time and effort in regards to managing and controlling employees.

Creates competitive advantage - The organisational culture can assist the organisation in increasing its performance and getting ahead of competitors. This starts with a strong organisational culture which will encourage employees to work as a team. While working as a team employees will be aware of what to expect from each other and will work towards the common goal. This will help the company to get ahead of competitors as employees will achieve more while working as a group and working in an organisation-specific cultural way which will also help the company to differentiate itself from competitors.

Culture replaces written rules and regulations - in Strategic management when setting strategic goals managers need to put elements such as rules and regulations guiding employees on how to approach tasks and achieve set goals. However, the strict rules and regulations can be seen as undesirable, controlling and demotivating for employees. Instead, culture can be seen as ‘the way of working in the organisation’ shaping employees' behaviours and guiding them on how to approach tasks and complete them. This will increase employee motivation as it is seen less as controlling.

What is the impact of organisational culture on change management?

Firstly, before explaining the impact of organisanisational culture to change management we will first define change management.

Change management

The change management follows a process of taking the organisation from its current state to undergo the transition and achieve its desired future state.

Organisational culture impact on change management

The organisational culture has an impact on change management as when an organisation is planning on implementing any changes in its practices organisation will have to ensure that these changes align with the organisational culture. Otherwise, the organisation will need to change its culture.

However, some organisational cultures set barriers for organisations to go through changes and respond to the external environment. This is because the proposed changes may not align with cultural beliefs or leaders are afraid of facing failure due to made changes. That said, the organisation should make a few changes in its culture to go through successful change and respond to the external environment successfully.

Last but not least, change management and organisational culture should be aligned and changed when needed as it will result in success in the organisation’s performance.

Figure 7 shows how proposed changes in organisational structure and design can be aligned with changes in the organisational culture. Organisational strategic and cultural changes should always be made together because without adjusting changes in culture, the change management process will not be effective.

Figure 7. Organisational Culture and Change Management, StudySmarter

Understanding and managing organisational culture

Organisational is a culture made up of shared values and beliefs that guide employees on how to behave in the company. The understanding of the organisational culture is crucial to any leader or manager as their organisational cultural knowledge will help them to make better strategic decisions. The strategic decisions that are not aligned with the organisational culture may not work well in the organisation and face some resistance. If the management has a good understanding of culture and makes strategies aligned with it, strategies are more likely to be effective.

Moreover, managing organisational culture is extremely important especially when responding to an uncertain environment. Therefore, leaders should be confident in making and managing changes in the organisational culture to achieve the organisational goals. A few steps will assist managers in managing changes in the culture. They are:

• Measure current organisational cultural values

• Ensure to align the organisational culture with strategy and structure

• Ensure that staff and stakeholders are involved in proposing ideas and suggestions regarding the changes in the organisational culture

• Ensure organisational culture change is demonstrated and communicated to the employees frequently

• Manage the emotions of employees, emphasise with them and help staff to adapt to recent changes in the organisation.

SOURCES:

1. Hofstede Insights, https://hi.hofstede-insights.com/national-culture