Organisational Culture and Change

1. What is organizational culture?

W.L. Gore % Associates, a company known for its innovative and high quality fabrics used in outdoor wear and other products, understands the importance of organizational culture. Since its founding in 1958, Gore has used employee teams in a flexible, non-hierarchical organizational arrangement to develop its innovative products. Employees, called associates, at Gore are committed to four basic principles articulated by the company founder, Bill Gore:

1. Fairness to one another and everyone you come in contact with 2. Freedom to encourage, help, and allow other associates to grow in knowledge , skill, and scope of responsibility 3. The ability to make your own commitments and keep them 4. Consulting other associates before taking actions that could affect the company’s reputation

After a visit to the company, one analyst reported that an associate told him, “If you tell anybody what to do here, they’ll never work for you again.” That’s the type of independent, people-oriented culture Bill Gore wanted. And it works well for the company – it earned a position on Fortune’s annual list of “100 Best Companies to Work For” every year since the list began in 1998, one of only three companies to achieve that distinction.

* Organizational Culture – The shared values, principles, traditions, and ways of doing things that influence the way organizational members act. These shared values and practices have evolved over time and determine how “things are done around here.”

Dimensions of Organizational Culture

Contrasting Organizational Cultures

2. Strong cultures

* Strong Cultures – Organizational cultures in which key values are intensely held and widely shared. Strong cultures have a greater influence on employees than do weaker cultures.

* Organisations with strong cultures tend to have employees that are more loyal, more committed, and higher performance. Employees understand the cultural values clearly and accept them, they know what to do and what is expected of them, and they can act quickly to solve problems.

* Benefits of a strong culture:

1. Creates a stronger employee commitment to the organization 2. Aids in the recruitment and socialization of new employees 3. Fosters higher organizational performance by instilling and promoting employee initiative

* The negative aspect of strong culture is that employees may be more reluctant to try new things when conditions change. Thus, a strong culture can be highly resistant to needed change.

3. Where culture comes from and how it continues

Establishing and Maintaining Culture

Organisational culture is established through several sources:

* Organization founder

Company founders are not constrained by previous customs or approaches and can establish the early culture by articulating a vision of what they want the organization to be. New companies are usually small, therefore, it is easier to instill the vision with all organizational members.

* Vision and mission

Vision and mission may be established by company founders, or they may change with new management or leaders. These set the broad direction the company is going toward in the long term, and dictate the required patterns of behaviour and actions needed to achieve them.

* Past practices

Once the culture is in place, certain organizational practices help maintain it. For instance, during employee selection process, managers typically judge job candidates not only on job requirements but also on how well they fit into the organization.

* Top management behavior

Through what they say and how they behave, top managers establish norms that cascade down the organization and can have effect on employees’ behaviours.

For example, IBM’s CEO, Sam Palmisano wanted employees to value team work; so he took several million dollars from his yearly bonus and give it to his top executives based on their team work. He said, “If you say you are about a team, you have to be a team. You’ve got to walk the talk, right?”

* Socialization

Organisations help employees adapt to the culture through socialization process which help them to learn the organisation’s way of doing things.

For example, new employees at Starbucks stores go through 24 hours of intensive training that help turn them into brewing consultants (baristas). They learn company philosophy, jargons, and how to assist customers with decisions about beans, grind, and espresso machines.

The benefit of socialization is that employees understand the culture, know what is acceptable or not, have a clue as to how to behave, and thus are in the position to be enthusiastic about their jobs and about serving customers.

4. How employees learn culture

Employees learn about organizational culture through the following:

* Stories – Narratives of significant events or people, e.g. organization founders, rule breaking, reaction to past mistakes etc.

Managers at Southwest Airlines tell stories celebrating employees who perform heroically for customers. Such stories help convey what’s important and provide examples that other employees can learn from.

* Rituals – Sequences of activities that express and reinforce the important values and goals of the organization

At Mary Kay Cosmetics, the successes of sales representatives are celebrated. Looking like a cross between a circus and Miss America pageant, the annual awards ceremony takes place in a large auditorium, on a stage in front of a large, cheering audience, with all the participants dressed in glamorous evening clothes. Salespeople are rewarded for sales goals achievements with gifts such as gold and diamond pins, furs, and pink Cadillacs.

This “show” acts as a motivator by publicly acknowledging outstanding sales performance. In addition, the ritual aspect reinforces late founder Mary Kay’s determination and optimism, which enabled her to overcome personal hardships, start her own company, and achieve material success. It conveys to her salespeople that reaching their sales goals is important and through hard work and encouragement, they too can achieve success.

* Material Artifacts and Symbols – Convey the kinds of behavior that are expected, e.g. risk taking, participation, authority, etc.

The layout of an organization’s facilities, how employees dress, the types of automobiles provided to the top executives, corporate aircrafts, etc, are examples of material symbols. Material symbols give a “feel” of the type of work environment found in a certain organization ~ formal, casual, fun, serious, etc.

See Google offices around the world at:
http://www.yourdigitalspace.com/2011/03/amazing-pictures-of-google-offices-around-the-world/

* Language – Acts as a common denominator that bonds members

Over time, organisations often develop unique terms to describe equipment, key personnel, suppliers, customers, processes, or products related to its businesses. New employees are frequently overwhelmed with acronyms and
jargons that, after a while, become a part of their natural language. Once learned, this language acts as a common denominator that bonds members.

For example, at Cranium, a Seattle, U.S. board game company, the word “chiff” is used to remind employees of the need to be incessantly innovative in everything they do. “Chiff” stands for “clever, high-quality, innovative, friendly, fun.”

5. How does culture affects managers

* Organisational culture established for managers what are appropriate and expected behaviours and what are not.

* Cultural values may not be written down but they are generally understood, obeyed and practiced. For example, if an organization has a culture that support the belief that profits can be increased by cost-cutting and that company’s best interests are served by having slow but steady increases in quarterly earnings, you are likely to find managers in this firm that are risk-averse and conservative.

* Another example: In a company whose culture conveys a basic distrust of employees, managers are more likely to use authoritarian style of leadership rather than a democratic, participative one.

* Managerial decisions are constrained by organizational culture in the following ways:

Managerial Decisions Affected by Culture

6. Changing organizational culture
[Robbins & Coulter, 2012:187-188]

* Cultures are naturally resistant to change by virtue of it being made up of relatively stable and permanent characteristics. An organizational culture takes a long time to develop and evolve, and once entrenched, it is very difficult to uproot. Employees have become highly committed to such culture; to change may be too uncomfortable or painful for them.

Lou Gerstner, IBM’s CEO from 1993 to 2000, observed how difficult it was to change IBM’s culture when he was saving the ailing company to regain its dominant position in the computer industry. He said, “I came to see in my decade at IBM that culture isn’t just one aspect of the game – it is the game.”

* Conditions that facilitate cultural change:

* The occurrence of a dramatic crisis, e.g., huge financial setback, loss of major customers, breakthrough technological innovation by competitors that change the industry

* Leadership changing hands – new leaders always want to impose their own values on the organization; to stamp their presence and importance, and this is even more important if the new leaders have been hired because the old ones have failed

* A young, flexible, and small organization – a young and small organization usually still have a fluid culture; it is easier to change its values because there are lesser members to persuade and educate

* A weak organizational culture – organizations with weak culture tend to be more receptive to attempts at creating a new, stronger cultural values

Making changes in organizational culture

7. Current issues in organizational culture

* Creating an Innovative Culture

Any successful organization needs a culture that supports innovation. Characteristics of an innovative culture include:

* Challenge and involvement – Are employees involved in, motivated by, and committed to long-term goals and success of the organization?

* Freedom – Can employees independently define their work, exercise discretion, and take initiative in their day-to-day activities?

* Trust and openness – Are employees supportive and respectful to each other?

* Idea time – Do individuals have time to elaborate on new ideas before taking actions?

* Playfulness/humour – Is the workplace spontaneous and fun?

* Conflict resolution – Do individuals make decisions and resolve issues based on the good of the organization versus personal interests?

* Debates – Are employees allowed to express opinions and put forth ideas for consideration and review?

* Risk-taking – Do managers tolerate uncertainty and ambiguity, and are employees rewarded for taking risks?

* Creating a Customer-Responsive Culture

Creating a Customer-Responsive Culture

* Nurturing workplace spirituality

* Workplace Spirituality – a culture where organizational values promote a sense of purpose through meaningful work that takes place in the context of community.

Organisations with a spiritual culture recognize that people have a mind and a spirit, seek to find meaning and purpose in their work, and desire to connect with other human beings and be a part of a community.

Workplace spirituality is becoming increasingly important; employees are looking for ways to cope with stress and pressures of life. For some people, spirituality isn’t fulfilled by formalized religion, thus they look for connection with others and meaningful work to replace religious faith and to fill a sense of life emptiness.

* Characteristics of a Spiritual Organization

* Strong sense of purpose
Spiritual organizations build their cultures around a meaningful purpose. While profits are important, they’re not the primary values of the organization.

* Focus on individual development
Spiritual organizations recognize the worth and value of individuals. They aren’t just providing jobs, they seek to create cultures in which employees can continually grow and learn.

* Trust and openness
Spiritual organizations are characterized by mutual trust, honesty, and openness. Managers aren’t afraid to admit mistakes and they tend to be upfront with employees, customers and suppliers. * Employee empowerment

Managers trust employees to make thoughtful and conscientious decisions. For example, at Southwest Airlines, employees, including flight attendants, baggage handlers, gate agents, and customer service representatives, are
encouraged to take whatever action they deem necessary to meet customer needs or help fellow workers, even if it means going against company policies. * Tolerance of employees’ expression

Spiritual organizations don’t stifle employee emotions. They allow people to be themselves, to express their moods and feelings without guilt or fear of reprimand.

* Critics have asked two issues: (1) Legitimacy [Do organizations have the right to impose spiritual values on their employees?], and (2) Economics [Are spirituality and profits compatible?]

* On the issue of legitimacy, spirituality is not meant as forcing religion on the workers; it is more to help workers with finding meaning in their work and to create a sense of community at the workplace.

* On the issue of economics, limited evidence have pointed towards improved productivity and reduced turnover for companies that practice spiritual values. There is also evidence that organizations that provide employees with opportunity for spiritual development outperformed those that didn’t. Other reports indicated that spirituality is positively related to creativity, ethics, employee satisfaction, job involvement, team performance, and organizational commitment (Robbins & Coulter, 2012:88).