2.5. Organizational and Corporate Culture (HL only)

Organizational and corporate culture
- Defined as what is normal to the organizations; how workers behave w/in the business
Set of norms (based on mission and vision)
- Helps people fit in based on the organization’s traditions and routines
- A manager has to understand in order to:
  - Train the employees to fit company norms
  - Improve communications between employees
  - Better job description
- Other groups conform to subcultures, which can cause conflicts or culture gaps
  - Culture gaps are discrepancies among subgroups
  - Difference between cultures exists within a business
Elements of organizational culture
- N.O.R.M.S (nature of business, organizational structure, rewards, management styles, sanctions)
- External factors such as location can also affect corporate culture (concern from cross border joint ventures)
- Advantages of strong organizational culture
  - Belonging and security
  - Reducing mistakes
  - Team cohesiveness
  - Minimizes culture clash/gap
- Cultures can change due to:
  - Mergers, takeovers, acquisitions
  - Change in NORMS
Types of organizational cultures
- Charles Handy’s 4 Types of Culture
  - Power culture
    - Power is centralized, quick decision making
    - Results-based, likely flat
  - Role culture
    - Jobs are clearly stated, little creativity
    - Highly structured, tall organization/bureaucratic
  - Task culture
    - Focuses on getting results from work done
    - Individuals and teams are empowered and given flexibility
    - Decentralized power
  - Person culture
    - Staff have similar positions with similar expertise
    - Staff form groups to share knowledge
    - Individual may benefit which may carryover to firm
- Edgar Schein’s 3 levels of corporate culture:
  - Artifacts (e.g. history, facilities, buildings, dress code, etc.)
  - Espoused values (e.g. mission, branding, slogans, etc.)
  - Basic assumptions and values (values in behavior/action)
- Deal and Kennedy
  - Corporate culture is the way things get done
  - Two dimensions feedback/reward and risk
    - Rapid feedback means bad culture is quickly removed
    - High risk businesses needs people that fit well in their culture
  - 4 types of culture:
    - Tough-guy Macho (rapid feedback, high risk)
      - e.g. stock market, police force
    - Work-hard, Play-hard (rapid feedback, low risk)
      - Stress from pace of work instead of risk (e.g. hotel)
    - Bet-the-company (slow feedback, high risk)
      - e.g. oil exploration, pharmaceuticals
    - Process (slow feedback, low risk)
      - e.g. governments, insurance (bureaucracy)
- Knotted and Heskett
  - Adaptive cultures – flexible work practices, entrepreneurial
  - Inert cultures – strict work protocols
- Goffee and Jones
  - Sociability – extent of concern for colleagues
  - Solidarity – cohesiveness/unity in the organization
  - Ideal culture will have high sociability and solidarity
- Gerry Hofstede
  - Several factors in culture:
    - Power distance – extent of unequal power distribution
      - High – centralized
      - Low – decentralized, delegation
    - Individualism vs. collectivism
    - Masculinity vs. femininity
    - Uncertainty avoidance
    - Long-term vs. short-term
Culture clashes
- Occurs when there conflict between subcultures in an organization
- May lead to lowered productivity, staff walkouts, losses
- Happens during times of change
  - e.g. takeovers, acquisitions, mergers, expansions
- Common causes
  - High cost of implementing change
  - Resistance to change from workforce
  - Public opinion
  - Difference in national cultures (e.g. job practice)
Importance of understanding the organizational culture
- Culture gaps can cause major problems since individuals affect culture as much as the other way around
- Poor culture may lead to absenteeism, lateness
- Cultural intelligence or cultural quotient
  - Ability of individual to blend into a culture; attitude of workers to change
  - Rational, motivated, and attentive workers help establish good culture