October 24, 2012

MU0012 [Employee Relations Management] Set1 Q2

Q.2 What is organization culture? What are the elements of organization culture?

Ans:

Organisational Culture

Organisational culture describes the psychology, attitudes, experiences, beliefs and values of an organisation. It is defined as ’the specific collection of values and norms that are shared by people and groups in an organisation and that control the way they interact with each other and with stakeholders outside the organisation’. 

An organisation is said to have a strong culture if its employees are aligned with the organisational values. Organisations that have a strong culture function efficiently. On the other hand, in organisations that have a weak culture, the employees are not aligned with the organisational values. Control has to be exercised through extensive procedures and rules.

In organisations with a strong culture, ‘Groupthink’ can develop. Groupthink is a state wherein people do not challenge organisational thinking even if they have different ideas. Innovative thinking gets discouraged in such situations. Innovative organisations need people who are willing to change the status quo, and to implement new ideas and procedures.

Organizational culture is an idea in the field of organizational studies and management which describes the psychology, attitudes, experiences, beliefs and values (personal and cultural values) of an organization. It has been defined as "the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization." Ravasi and Schultz (2006) state that organizational culture is a set of shared mental assumptions that guide interpretation and action in organizations by defining appropriate behavior for various situations. Although it’s difficult to get consensus about the definition of organizational culture, several constructs are commonly agreed upon – that organizational culture is holistic, historically determined, related to anthropological concepts, socially constructed, soft, and difficult to change.

This definition continues to explain organizational values, described as "beliefs and ideas about what kinds of goals members of an organization should pursue and ideas about the appropriate kinds or standards of behavior organizational members should use to achieve these goals. From organizational values develop organizational norms, guidelines, or expectations that prescribe appropriate kinds of behavior by employees in particular situations and control the behavior of organizational members towards one another.

Elements of Organisational Culture
Now that we have defined organisational culture, let us look into the elements that define organisational culture.

G. Johnson described a cultural web, identifying a number of elements that can be used to describe or influence Organizational Culture:
The Paradigm: What the organization is about; what it does; its mission; its values.
Control Systems: The processes in place to monitor what is going on. Role cultures would have vast rulebooks. There would be more reliance on individualism in a power culture.
Organizational Structures: Reporting lines, hierarchies, and the way that work flows through the business.
Power Structures: Who makes the decisions, how widely spread is power, and on what is power based?
Symbols: These include organizational logos and designs, but also extend to symbols of power such as parking spaces and executive washrooms.
Rituals and Routines: Management meetings, board reports and so on may become more habitual than necessary.
Stories and Myths: build up about people and events, and convey a message about what is valued within the organization

These elements may overlap. Power structures may depend on control systems, which may exploit the very rituals that generate stories which may not be true.

According to Schein (1992), the two main reasons why cultures develop in organizations is due to external adaptation and internal integration. External adaptation reflects an evolutionary approach to organizational culture and suggests that cultures develop and persist because they help an organization to survive and flourish. If the culture is valuable, then it holds the potential for generating sustained competitive advantages. Additionally, internal integration is an important function since social structures are required for organizations to exist. Organizational practices are learned through socialization at the workplace. 

Work environments reinforce culture on a daily basis by encouraging employees to exercise cultural values. Organizational culture is shaped by multiple factors, including the following:
External environment
Industry
Size and nature of the organization’s workforce
Technologies the organization uses
The organization’s history and ownership

Organizational values, role models, symbols and rituals shape organizational culture. Organizations often outline their values in their mission statements, although this does not guarantee that organizational culture will reflect them. The individuals that organizations recognize as role models set, by example, the behavior valued by the organization. In addition, tangible factors such as work environment act as symbols, creating a sense of corporate identity.

The founding of an organization is a critical period in the life of the organization and the development of its culture. An organization’s founder or chief executive has an influential impact on the development of the organization’s culture since that person is likely to have control in hiring people with the same values and influence the choice of strategy. By screening candidates for a cultural fit, organizations select those employees that will be able to uphold the organizational culture. Additionally, leaders embed culture in organizations by what they pay attention to, measure, and control; how they react to critical incidents and crises; the behaviors they model for others; and how they allocate rewards and other scarce resources.

Additionally, the legacy of an organizational founder may be reflected in the culture long after that person leaves through the processes of cultural transmission (e.g. rites, stories) where the culture perpetuates itself. The values of founders and key leaders shape organizational cultures, but the way these cultures affect individuals is through shared practices.

Transforming your organization's culture can reap many benefits and improve organizational performance. But it is not for the faint of heart and it is not a quick fix solution. 

Whether it is the current economic climate, the shifting political landscape or just the ever-increasing pace of change in today's world, business leaders are taking a fresh look at how their current organizational culture needs to change to enable success. One study found that almost 90 percent of organizations were either experiencing or had experienced some type of cultural change.  

Organizational culture is one of those terms that everyone is familiar with, but most of us would probably be quite challenged to fully describe or define the culture within our own organization. Despite this difficulty there is little argument about the importance of culture to an organization’s success or failure. 

An organization’s culture influences every aspect of its operation – from the way it plans and manages a meeting to how it defines and sets its core strategic direction. It represents the set of common or collectively learned values, beliefs, and assumptions that guide and direct individuals’ behaviour and interactions. Simply put, organizational culture defines how, what and most importantly why things get done the way they do in your organization.

Organizational culture is multidimensional and, like change, functions at both conscious and unconscious levels.  Edgar Schein, one of the most influential researchers in the field of organizational culture, identified three dimensions of organizational culture.

The first and most visible he called the artifacts --those highly visible elements that you can hear, see and feel immediately upon entering the establishment. This includes things like d├ęcor, dress code, greetings and other visible interactions.

The second level is slightly less visible. It represents the values, philosophies and strategies espoused by the members of the organization.

The third and most powerful level of organizational culture he identified holds the unconscious and collectively learned beliefs and assumptions that form the unspoken rules of the organization.  This level forms the foundation on which all other aspects of an organization’s culture has been built. It’s also the hidden element that enables the proliferation of conflicting subcultures within the same organization.

Schein noted culture was the most stable part of the organization, making it particularly challenging and complex to change. Even a dysfunctional culture provides the constancy and predictability that helps people stay in their comfort zones. It takes strong and committed leadership to move them to a new set of values, behaviours and beliefs.

Therefore, it is critical that you consider all of the levels – especially the hidden level -- of your organization’s current culture when embarking on a culture change initiative. Kim Cameron and Robert Quinn, who researched and developed the widely-used Organizational Culture Assessment Instrument (OCAI), identified that putting new procedures and strategies in place won’t lead to sustained change if the basic values, rules and unspoken assumptions from which the organization operates don’t change too. In other words, if you don’t affect change at the “third level”, your organization’s culture will eventually come back to where it is today. 

Four elements you need when launching an organizational cultural change initiative:
1. A thorough understanding of the problem/opportunity to be addressed. Not all problems or opportunities require a cultural change. 

2. A full understanding your organization’s current culture and sub-cultures, including the unconscious and unspoken beliefs and attitudes. Unless you know the current culture you cannot define what aspects of the culture are influencing the problem. To be successful, any change, including a culture change, must be based in the present with a view to the future.

3. A clearly defined articulation of the intended outcome and the behavioural changes needed to meet the outcome. Without this you cannot assess how culture will impact your success.

4. A well documented transition plan. I’m a fan of the late Richard Beckhard, who many consider to be the founder of Organizational Development, and I echo his belief that more than any other type of change, culture change requires planning and a commitment to creating the environment of the intended culture. 

Of course, you also need TIME. Organizational culture change requires knowledge, detailed planning and commitment to stick with it for the long haul. Although successes can be achieved during the transition, fully transforming an organization’s culture is not a short-term project.

Because organizational culture pervades all aspects of your organization, any attempt to transform your organization’s culture requires a holistic and integrated approach with the full and committed participation of the entire organization. People will not move willingly outside their comfort zones unless they can see the destination clearly and actively participate in the journey. Applying sound change management practices from the outset will help ensure you and your employees reap maximum benefits from your organizational culture change initiative.

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