Organizational Culture

= 1 Introduction of the terminology organizational culture = According to Hofstede organizational culture (OC) can be defined as the collective programming of the mind that distinguishes the members of one organization from others[1]. Is crucial for the success of a company to be aware that having a powerful OC can account for 20-30% of the differential corporate performance when compared with culturally unremarkable competitors, is a tool that can actually make a big difference and must be thought thoroughly.[2]

A great culture starts with a vision or mission statement that provides the members with a purpose. While a vision articulates the company´s purpose, values offer a set of guidelines on behaviors and mindsets needed to achieve that vision. Whatever the organization´s values are they must be reinforced in review criteria and promotion policies, and baked into operating principles of daily life in the firm. So practices make an organization differ to another. Furthermore, a successful organizational culture demands people stick with the culture they like, and bringing the right culture carriers reinforce the culture an organizational already has. The importance of recruiting and people having the right cultural fit decreases turnover or possible conflict and increase the overall level of job satisfaction.

Once an organizational culture is part of the DNA of the company members, the organization will have a shared view of what is and why is, and most of all people will reinforce this narrative with rituals, symbols, heroes and will act according of the explicit and implicit rules. So after all we can define OC as the way organization do things.

As well is essential to remark that a culture has visible and invisible aspects, although already mentioned above, we can notice the artifacts such as the employees dress code, the architecture, the furniture, the products, etc; while the invisible aspects are more the values, attitudes, assumptions and beliefs. Notwithstanding some behaviors might be denoted such as the way reporting is done, what is the hiring and firing practices, training or even recycling programs.

All these aspects make cultures to have a specific or unique essence. No culture is static so it means that adapts and changes in response to various influences and conditions. [3]

The culture is dynamic and is shaped by and overlaps with other cultures, so global organizations face the challenge of establishing and maintaining a unified culture when operating in a context of multinational, regional and local cultures. Organizational culture is no different from ethnic culture except it usually includes people from all different backgrounds and histories.[4] It would be naïve to think that there is a unique culture and no subcultures; even inside the organization there are internal variations that at the same time influence the whole.

Figure1: Overview of organizational culture

Source:Bruce M. Tharp, Defining Culture and Organization from Anthropology to the Office

Access on: 22-10.2014

As seen in the figure above the way employees perceive leaders, the processes, the surroundings and even the urban legends can give a clear overview of the organizational culture.

Evaluating and understanding organizational culture is perhaps one of the major challenges of corporate leadership being able to influence individual and group performance, facilities performance, organizational performance, and ultimately the ever-important financial components of business performance.

Therefore is vital to keep sharing and growing the aspects that form the organizational culture and invite the members of the organization to participate actively, enriching it and most of integrating such culture as part of their daily life [5].

= 2 Introduction of relevant researcher =

2.1 Hofstede’s five dimensions
During a study in IBM with over 160 000 employees in 50 different countries Hofstede (1980) searched for characteristics of cultural differences that might effect business behavior in different ways. Hofstede (1980) found out that there are both regional and national cultural groupings that do affect the behavior in organizations. The result was four dimensions of culture with an additional dimension years after. The dimensions are Power Distance, Uncertainty avoidance, Individualism, Masculinity and Long-Term Orientation.[6]

Power distance is the degree to which less powerful members of institutions and organizations accept that power is distributed unequally. The fundamental issue here is how a society handles inequalities among people. People in societies exhibiting a large degree of power distance accept a hierarchical order in which everybody has a place and which needs no further justification. In societies with low power distance, people strive to equalize the distribution of power and demand justification for inequalities of power.[7]

In very high power distance cultures, the lower level person will unfailingly defer to the higher-level person, and feel relatively ok with that as it is the natural order. The higher-level person accepts this truth as well — or metes out consequences for failure to comply. In low power distance cultures, everyone expects to be listened to regardless of rank or background, and they will reject leaders whom they perceive as autocratic or patronizing. Malaysia has the highest power distance of any country in the world: a staggering 104 on the Hofstede comparative power distance index.

Malay culture is very respectful of a complex, nuanced system of titled classes and untitled “commoners,” and tends to grant much power to those at the top of an organization. Other Asian countries also have a high level of Power Distance: Philippines (94), Indonesia (78), followed closely by Singapore (at 74). By way of contrast, New Zealand has a very low index of 22, and the cluster of countries in and near Scandinavia is also very low: Denmark (18), Sweden, and Norway (31 each).[8]

Uncertainty Avoidance is about a society’s ability to cope with the uncertainty of the future. It shows how the members of culture programs either feel comfortable or uncomfortable in unstructured situations. The cultures that try to minimize the risk of such situations use strict laws, rules and safety measures. People that live in countries that are uncertainty avoidant are more emotional and motivated by their inner nervous energy. In contrast the people that live in uncertainty accepting countries are more accepting towards opinions that are different from what they are used to. Denmark is country with a low score of 23 in the uncertainty avoidant scale. This shows that people from Denmark do not require much structure or certainty in their organization and work life. Even though plans might change overnight the Danes are fine with it. In contrast Mexico with a score of 82 prefer not to deal with uncertainty. In these types of organizations there is an emotional need for rules. There is a desire of working hard with precision and punctuality in these kinds of organizations.

Individualism and collectivism is the level to which people are integrated into groups. In the societies that are on the individualist side the ties between members are loose. This means that people assume other people to take care for themselves and their family. On the opposite side of collectivism the societies and people are more integrated into strong groups. One example of this could be extended families with uncles, aunts and grandparents included. Loyalty is an important factor to collectivism and is what keeps the group together. In a company on the other hand is easy to identify if an individualistic company rewards top performers instead of a team, or the other way around. This might have a enormous impact on performance and motivation across the organization, therefore is key to identify which type of dimension the company is willing to promote. [9]

Masculinity and femininity refers to the perception in society of man and woman in the workplace. Countries with a higher index of masculinity are thought to be more competitive and value material rewards for success, they tend to be more assertive and have tend to focus in achievement and heroism. In the other side lower indexes of this dimension means that gender equality is more important, teams are more varied and cross functional. Men are allowed to be sensitive and woman can work hard for professional success. Japan is highly masculine with a score of 95, whereas Sweden has the lowest measured value (5). According to the model, if you were to open an office in Japan, you might have greater success if you appointed a male employee to lead the team and had a strong male contingent on the team. In Sweden, on the other hand, you would aim for a team that was balanced in terms of skill rather than gender.[10]

Long- versus short term Orientation describes whether or not a society strives towards quick results or future gains. In the Long-term type of societies people are more oriented towards saving money and are more adaptable to changing circumstances, such as traditions. Short-term oriented societies are however more oriented in preserving traditions and they do not care much for saving towards the future. Applied to organizations that means that there are some doing their planning long time ahead to not get surprised whereas others are used to short term planning. This can be a difference between days, weeks or months.

"Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster."[11] Even though facts exists that point towards different behavior between people, we still tend to believe that all people are the same. Most people do not have knowledge about cultures around the world that sometimes interpret differences as minimal. This can lead to misunderstandings between people in organizations and institutions.

2.2 Robert A. Cooke’s norms in Organizational Culture
Robert A. Cooke has a different approach and defines culture as the behavior that members think is required in order to meet expectations within the organization. Cooke came up with the Organizational Culture Inventory that includes twelve norms that are divided in three different types of cultures: Constructive cultures in which members are encouraged cooperate and meet the higher needs of the higher order. Passive cultures are where people believe that they need interaction in certain ways just to secure their own position. Lastly aggressive cultures are where members in the organization secure their status in forceful ways[12].

2.2.1 Twelve norms applied by the cultures:
Constructive cultures include four norms:

Ø  Achievement: Tasks a completed with success by determination, courage or expertise. Members are focused on attaining high-quality results and try to think ahead with minimizing risks of failure.

Ø  Self-actualizing: People in organization try to fulfill their capabilities and talent in order to reach personal growth. Strive to acquire knowledge and experience.

Ø  Humanistic-encouraging: Associates help others within the organization to develop. Focus lies on coaching and caring for your whole team in order to move forward.

Ø  Affiliative: Strive for cooperation and maintaining good working atmosphere. Members are friendly and are happy to share their feelings and thoughts.[13]

2.2.2 Four norms of passive culture:
Ø  Approval: Employees have a hard time taking own decisions. They seek their leaders approval before applying their ideas.

Ø  Conventional: Hard focus on rules and principles of the organization. Employees are supposed to act according to set standards.

Ø  Dependent: In these kind of organization performance of employees depends on decision of superiors. They do not question orders from the boss but instead follow blindly.

Ø  Avoidance: Employees in these organizations do not think about their own personal goals and only acts according to policies of the company.[14]

In organizations, that are included in the category of passive cultures, associates are unhappy and unmotivated with they way they should behave. In these organizations members also expects to satisfy the need of others and avoid conflict. Members feel forced to behave in different ways than they normally would in order to maximize effectiveness.

2.2.3 Four norms of aggressive cultures:
Ø  Oppositional: People that use this culture within organizations are critical and question others work. Sometimes this might lead to a better product but sometimes the user comes off as arrogant.

Ø  Power: Users like to control others and focus on their own respect and influence. If used too much people that are affected within organization feel dictated.

Ø  Competitive: Members that apply this norm focus on their own status. In order to do so users always compare themselves with others and then try to outperform them.

Ø  Perfectionistic: Users make an effort in acquiring perfect results with focus on details. Using high standards as improving their own self-worth. [15]

In organizations in which aggressive cultures are dominant members within appear controlled and disciplined. Mistakes and failures are not accepted therefore the organization emphasizes reducing the risk of this to happen. Competition is encouraged in order to achieve high standards. Tendencies of short-term gains often at expense of long-term growth.

2.3 Schein’s three levels in the organizational culture
One model that has been widely used in the research of organizational culture is Schein’s model that identifies three different levels of how visible the culture is to an observer. The three levels are Artifacts, Values and Assumptions. This model is also called the iceberg model as the levels described by Schein are only party visible – like an iceberg. Figure 2: Iceberg model

Source: http://globalmba-oa-le2.wikispaces.com/OC+Models+and+Concepts

Artifacts are the highest level and are visible to the observer. Inside the organization this includes features as architecture, technology, office layout and the dress code. In order to get insight into the values and assumptions of the organization one needs to explore this display.

The Values of the organization are the middle part of the model and this is  the stated values and rules of behavior within the organization The third level of the model is the basic assumptions. Assumption is described as the understandings that group members create as they talk to each other. This is the deepest level of the culture and is often taken for granted by the users. [16]

2.4 Cameron and Quinn’s four dimensions
More recent studies Cameron and Quinn found four different dimensions that can be used when comparing cultures within an organization. These forms are clan, hierarchy, market and adhocracy. [17]

The clan culture is typical for any organizations that focus on the internal maintenance with the use of high flexibility, concern for people and the care for customers. The central values of this dimension include co-operation, consideration and equality. In an organization like this it’s friendly to work and can be seen as an extended family where people care for each other.

A hierarchical culture strives for steadiness and control when the organizations focus is on internal maintenance. In order to maintain control the organization set up clear tasks and enforces strict rules.

Therefore the organization inclines to move towards a more formal approach. The leaders need to be able to coordinate and organize. This dimension places accordingly high value on the economic factor, formality, rationality, and obedience.

According to Igo & Skitmore, the adhocracy culture focuses on a high level of flexibility and individuality in order to reach a suitable external positioning. The organization promotes the willingness to act and it’s generally a lively and inspiring place to work. The leaders here are visionary and pioneering.

The definition of success within this organization is the means of producing unique and original services and products. Core values are creativeness, experimentation, risk and openness.

Market cultures work with high productivity and focus on the economical operation to reach their clear and rational goals. This dimension puts effort in getting the job done and its member’s value competition, thoroughness and in the organization. Leaders tends to have high focus on outperforming the competitors and being in the top of their market by maintaining steadiness and control.[18]

3 Organizational culture vs. national culture
These two kinds of culture both exert powerful influences on people. It is anything but rare for employees, especially those of foreign companies, to be facing conflicts between them. A company’s culture may be informal while a country’s culture could be rather formal. A company may be encouraging and rewarding risk-taking in a country where people are generally risk-averse or vice versa. All of these call for some kind of resolution to realign the companies and its individual employees’ beliefs and behaviors.

== 3.1 National Culture == A national culture is comprised of the symbols, values, rituals, and traditions of the people living in a particular region. Language, food, and family traditions are all rooted in national culture. How people behave in public verse how they behave within their own home is also associated with values and standards of their nation. Cultures usually differ in relationships between the individual and society, ways of dealing with conflict, relationships to authority, and conceptions of class and gender. All of these things are comparable to organizational culture, just on a grander scale.

The influences of national cultures shape strong value systems among their members. The resulting shared values, preferences, and behaviors of population groups differ widely between countries. That is frequently also the case between different subgroups within a country, so keep in mind that the term “national culture” can be misleading. It may only be referring to part of the people in a given country.

The emphasis on the central role of national culture has continued in recent years. The most recent large scale project, GLOBE, while not explicitly using the term ‘constraint’, emphasizes that the relationship between national culture and organizational culture is strong with organizations mirroring the countries where they are found, which seems consistent with the idea of a constraint.

Johns (2006: 396) states explicitly that ‘national culture constrains variation in organizational cultures’. His argument relies significantly on empirical work by Hofstede (1980, 2001) and on the work by Chatman and Jehn (1994), the latter who concluded that industry explained a substantial portion of the variance in organizational culture.

Employees facing actual conflicts between the organizational and national cultures are likely to respond in ways typical of their national culture, not their organizational one.[20]

3.2 Organizational Culture applied
Organizational culture is comprised of broad guidelines that are rooted in organizational practices learned on the job. Experts, including Geert Hofstede, agree that changing organizational culture is difficult and takes time.

What is often overlooked or at least underestimated when two or more company’s merge/integrate is how the underlying personal values of employees impact how they perceive the corporate culture change efforts.

A person can learn to adapt to processes and priorities, and a person can be persuaded to follow the exemplar behaviors of leaders in an organization. But if these priorities and leadership traits go against the deeply held national cultural values of employees, corporate values (processes and practices) will be undermined. What is appropriate in one national setting is wholly offensive in another. What is rational in one national setting is wholly irrational in another. And, corporate culture never trumps national culture.

The benefit of cultivating a pronounced organizational culture is that it helps establish common values and align behaviors among employees. Many multinational companies use employee handbooks, corporate ethics guidelines, written value definitions, and other tools for their employee’s worldwide in order to drive this kind of alignment.

An organization’s culture may reflect the personality and preferences of its founder or founding team. In other instances, charismatic leaders molded or amplified their enterprise’s culture. Sometimes, organizational cultures have been nurtured over such a long time that they seem to have acquired a life of their own, regardless of the person at the top.

Hofstede’s research shows that organizational cultures differ mainly at the level of practices. These are more superficial and more easily learned and unlearned than values forming the core of national cultures. As a consequence, the Hofstede dimensions of national cultures cannot be used by comparing cultures of organizations within the same country.

Country differences explain only a small percentage of the variance in individual level cultural values, suggesting that mean differences between countries are small relative to differences (i.e., variance) within countries. This considerable within-country variance at the individual level would be expected to contribute to variance in organizational cultures.

4. Links OC to leadership or to relation with national culture
There is no denying that Organizational Culture and Leadership are both closely related which then leads to success of a company, as many researchers have demonstrated plenty of times. The connection between these two concepts spring up job satisfaction and organizational commitment, and helps companies achieve a greater level of loyalty and innovation from their members.

Organizations begin to create cultures through the actions of founders who operate as strong leaders. Since one or more people (founders) have an idea for a new enterprise, they are solely responsible of the idea’s shape, form and implementation. They are the ones that mix their beliefs, values plus individual assumptions about the world and fuse them into an internal system of behaviors and rules.

According to Edgar H. Schein 1, “Cultures basically spring from three sources: (1) the beliefs, values and assumptions of founders of organizations; (2) The learning experiences of group members as their organization evolves; and (3) new beliefs, values and assumptions brought in by new members and leaders.”

4.1 Growth of Subcultures - subgroups [21]
As organizations mature, they typically bring in more people to deal with the growth in business. More sales representatives are needed to expand product development, so the Sales/Marketing department starts hiring executives as soon as possible. The IT department needs extra help processing all information acquired by their technology, thus hiring IT-minded people. As the amount of employees rise the differentiation is made regarding each person’s function. All this brings many different types of personalities with different assumptions and views of life that creates a culture of different occupations.

Geographical units play a role as well sometimes the need to be closer to a customer is imperative thus requiring the construction of a new building outside the company’s headquarters. The geographical units inevitably adopt some of the assumptions of the host culture in which they operate. Leadership will send most of the time a person from senior management with a strong organizational commitment to follow up with the culture in the remote building. If they are to hire externally they usually tend to put the new colleague through an intensive socialization process. [22]

Differentiation by hierarchical level is born by adding divisions by product, market and geographical location. This creates additional layers in the hierarchy so that the span of control of any given manager remains reasonable, but leadership always plays a vital role in the development of this evolving culture.

They are responsible of having creating channels for collaboration between different departments and function and open communication for everyone to adopt the new culture. [23]

4.2 A Cross-National Comparison
A study conducted by Peter Lok from the Australian Graduate School of Management and John Crawford from the School of Management, University of Technology in Sydney, Australia takes a look at the differences between Hong Kong and Australians managers and the effect of organizational culture and leadership style on job satisfaction and organizational commitment. It also points out to the differences between East and West philosophies.

The final sample consisted of 337 managers, 219 managers from Hong Kong, and 118 from Australia. The range of industries varied from telecommunications being the most common (19.8%) as well as manufacturing, transport, retail, banking, professional services and others. The positions ranged too from team members to executive members, senior management and CEO.

Some of the measures used in this study vary from Wallach’s (1983) organizational culture index (OCI) to Stogdill’s leader behavior description questionnaire (LBDQ) including three other types of questionnaires. This includes everything from demographic data like age, education, to various levels of leadership styles, duration of leadership and some distinct dimensions referring to OC like bureaucratic, innovative and supportive.

The conclusion from this study sums up to explain that Australian managers scored more highly in innovative and supportive culture measures and on job satisfaction and commitment which is consistent with the studies that have shown a positive link between empowerment, job satisfaction and commitment.[24]



In the other side the firms in Hong Kong tend to be more centralized and power resides always on the founders that in most cases are senior management. Traditionally Chinese people put more emphasis in level of education; age and tenure as well as Confucian values on seniority have a strong effect on job satisfaction and commitment.

  

Figure 3: Quotations regarding leadership within an organization

Source: Edgar H. Schein’s book – Organizational Culture and leadership

Access: 02-12-2015

= References = ·        Schein, Edgar H.; Organizational culture and leadership, 3rd ed.

·        Bernard M. Bass and Bruce J. Avolio

·        Transformational Leadership and Organizational culture- Public administration Quarterly (Volume 1)

·        Peter Lok John Crawford, (2004),"The effect of organizational culture and leadership style on job”

·        “Satisfaction and Organizational commitment", Journal of Management Development, Vol. 23 Iss 4 pp.  321 - 338

·        http://dx.doi.org/10.1108/02621710410529785

·        Igo, T. & Skitmore, M (2006) ”Diagnosing the organizational culture of an Australian engineering consultancy using the competing values framework.” Construction Innovation (Sage Publications, Ltd. ). Jun2006, Vol. 6 Issue 2

·        Mills, C. & Hoeber, L. (2013) “Exploring Organizational Culture Through Artifacts in a Community Figure Skating Club.” Journal of Sport Management. Nov2013, Vol. 27 Issue 6, p482-496

·        Geert Hofstede's, http://geert-hofstede.com/organisational-culture.html

·        James L. Heskett,  https://hbr.org/2013/05/six-components-of-culture/

·        https://hbr.org/2013/05/what-is-organizational-culture/

·        The missing link in organizational and Leadership http://www.ccl.org/leadership/pdf/publications/lia/lia2104link.pdf

·        Bruce M. Tharp, Defining Culture and Organization from Antrhopology to the Office http://ap.haworth.com/docs/default-source/white-papers/defining-culture-and-organizationa-culture_51-pdf-28527.pdf?sfvrsn=6

·        Brittani Sponaugle, 9 types of Organizational Culture https://www.udemy.com/blog/types-of-organizational-culture/

·        The key to Changing Organizational Culture http://www.forbes.com/sites/johnkotter/2012/09/27/the-key-to-changing-organizational-culture/

·        Defining “Culture” and “Organizational Culture”: From Anthropology to the Office / 04.09 (by: Bruce M. Tharp)

·        Vance, C. M, “Managing a Global Workforce: Challenges and Opportunities in International Human Resource Management”  2010

[1] Geert Hofstede's, http://geert-hofstede.com/organisational-culture.html

[2]  James L. Heskett,  https://hbr.org/2013/05/six-components-of-culture/

https://hbr.org/2013/05/what-is-organizational-culture/

The missing link in organizational and Leadership

[3] Bruce M. Tharp, Defining Culture and Organization from Antrhopology to the Office

http://ap.haworth.com/docs/default-source/white-papers/defining-culture-and-organizationa-culture_51-pdf-28527.pdf?sfvrsn=6

The key to Changing Organizational Culture

http://www.forbes.com/sites/johnkotter/2012/09/27/the-key-to-changing-organizational-culture/

[5] Brittani Sponaugle, 9 types of Organizational Culture https://www.udemy.com/blog/types-of-organizational-culture/

[6] Hofstede webpage (http://geert-hofstede.com, access 12-11.2014

[7] https://hbr.org/2012/04/in-asia-power-gets-in-the-way/, access 09-11-2014

[8] Hofstede webpage (http://geert-hofstede.com, access 12-11.2014)

[9] Hofstede webpage (http://geert-hofstede.com, access 12-11.2014)

[10] http://www.mindtools.com/pages/article/newLDR_66.htm (access 04-12-2014

[11] Gert Hofstede – “Managing A Global Workforce”

[12] Cooke, A. R., Balthazard, P., & Potter, R.“Dysfunctional culture, dysfunctional organization: Capturing the behavioral norms that form organizational culture and drive performance.” Journal of Managerial Psychology. 2006, Vol. 21 Issue 8, p709-732

[13] Idum

[14]http://www.strategyand.pwc.com/media/uploads/The_Passive_Aggressive_Organization.pdf (access, 12-11-2014)

[15] Cooke, A. R., Balthazard, P., & Potter, R.“Dysfunctional culture, dysfunctional organization: Capturing the behavioral norms that form organizational culture and drive performance.” Journal of Managerial Psychology. 2006, Vol. 21 Issue 8, p709-732

[16] Mills, C. & Hoeber, L. (2013) “Exploring Organizational Culture Through Artifacts in a Community Figure Skating Club.” Journal of Sport Management. Nov2013, Vol. 27 Issue 6, p482-496

[17] Igo, T. & Skitmore, M (2006) ”Diagnosing the organizational culture of an Australian engineering consultancy using the competing values framework.” Construction Innovation (Sage Publications, Ltd. ). Jun2006, Vol. 6 Issue 2

[18] Igo, T. & Skitmore, M (2006) ”Diagnosing the organizational culture of an Australian engineering consultancy using the competing values framework.” Construction Innovation (Sage Publications, Ltd. ). Jun2006, Vol. 6 Issue 2

[19] Defining “Culture” and “Organizational Culture”: From Anthropology to the Office / 04.09 by: Bruce M. Tharp

[20] Defining “Culture” and “Organizational Culture”: From Anthropology to the Office / 04.09 by: Bruce M. Tharp

[21] Edgar H. Schein’s book – Organizational Culture and leadership

http://www.untag-smd.ac.id/files/Perpustakaan_Digital_2/ORGANIZATIONAL%20CULTURE%20Organizational%20Culture%20and%20Leadership,%203rd%20Edition.pdf

[22] Edgar H. Schein’s book – Organizational Culture and leadership

http://www.untag-smd.ac.id/files/Perpustakaan_Digital_2/ORGANIZATIONAL%20CULTURE%20Organizational%20Culture%20and%20Leadership,%203rd%20Edition.pdf

[23]http://www.untagsmd.ac.id/files/Perpustakaan_Digital_2/ORGANIZATIONAL%20CULTURE%20Organizational%20Culture%20and%20Leadership,%203rd%20Edition.pdf (access 05-12-2014)

[24] Edgar H. Schein’s book – Organizational Culture and leadership

http://www.untag-smd.ac.id/files/Perpustakaan_Digital_2/ORGANIZATIONAL%20CULTURE%20Organizational%20Culture%20and%20Leadership,%203rd%20Edition.pdf

[25]