What exactly is corporate culture? The dictionary defines culture as "the totality of socially transmitted behavior patterns, arts, beliefs, institutions and all other products of human work and thought." While this definition is far reaching, it does give some clues as to the nature of an organization's culture. Jason Young defines corporate culture as the assumptions, values, beliefs, behaviors, practices, norms, and products of an organization.
The subject of "corporate culture" seems to be on everyone's mind these days; from the college graduate entering the job market, to the IRM executive who is trying to improve management and productivity in his/her organization. It is the topic of interest at social and professional gatherings. Corporate culture pertains to identity and personality of the company we work with, either in the private or public sectors (Tim Bryce, 2005). "All companies have a culture; a way they behave and operate. They may be organized and disciplined or chaotic and unstructured. Either way, this is the culture the company has elected to adopt. In order for an employee to function and succeed, they must be able to recognize, accept and adapt to the culture" (Bryce's Law).
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The success of any company depends in part on the match between individuals and the culture of the organization. Organizational culture is the set of operating principles that determine how people behave within the context of the company. Underlying the observable behaviors of people are the beliefs, values, and assumptions that dictate their actions (Khan Organization Culture, 2005).
This study touches on the three key aspects in relation to corporate culture:
Corporate culture - a definition
Why is it important to understand the corporate culture?
Can corporate culture be managed?
Corporate Culture - a definition
Management is much more than just meeting deadlines. It is a people-oriented function. If we lived in a perfect world, there wouldn't be a need for managers. People would build things correctly first time and on schedule, on costs. The fact of matter is what we live in an imperfect world. People do make mistakes; people do have different perspectives, etc. Management is getting people to do what you want them to do, when you want them to do it. The corporate culture is a vital part of the art of management. Failure to recognize this has led to the demise of several managers. But for those managers who take it into consideration, the corporate culture can greatly influence the productivity of any organization (Tim Bryce, 2005).
Prior to define and manage corporate culture, we must first understand what Culture is. According to Moorhead and Griffin (2004), "Culture is a set of values, often taken for granted, that help people in an organization understand which actions are considered acceptable and which unacceptable."
Joji Gill, Director HR, Microsoft India, says, "Culture is the underlying shared assumptions, values and beliefs of the organization which describes the way it works."
Culture is defined as the characteristics of the members of the civilization. Ultimately, culture defines the quality of life for a group of people. Culture doesn't appear suddenly, it evolves over time as people grow and learn. The older the heritage, the more ingrained the culture is in its members. There are essentially three parts of any culture: Customs, Religion and Society. Each influences the others.
Corporate culture deals with how we see ourselves and others. We act on our perceptions, not necessarily what happens in reality. The culture greatly influences our perceptions and behavior. For example, our values and beliefs may distort what happens in fact. Gossips, propaganda and a sensational press, deals with what people want to hear, not necessarily what happens in reality.
Why is it important to understand the corporate culture?
As an executive, identifying, understanding and influencing the organizational culture can ensure corporate agility and financial success. As a potential employee, catching a glimpse of the true culture of an organization will help one decide if the company is a place where one can contribute and flourish. In both cases, misunderstanding the culture can lead to disaster. Corporate cultures have both gross and subtle manifestations that provide clues to the underlying norms and beliefs. Paying attention to the work practices, environment, communication paths, and even the level of humor in the company, will give one hint of the dominant organizational culture. Identification and understanding the culture is necessary to affect any minute or large scale changes in response to market imperatives. If one does not have a clear picture of the culture one cannot effectively modify it (Corporate culture, Joanne Mowat, The Herridge Group).
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Managers need an accurate understanding of the organization's culture in order to direct activities in a productive way and to avoid the destructive influence of having employees who are not committed to the company's goals. A shared sense of purpose starts with the hiring process and continues with careful attention to how employees are motivated and rewarded for their efforts. Managers need to continually transmit the values of the culture through efforts such as storytelling, rituals and firm-sponsored social events, as well as consistent positive feedback that gives each member of the organization a sense of importance (Khan Organization Culture, 2005).
Corporate culture is a hidden mechanism of coordination directing each individual towards the common goal. Understanding the culture of an organization facilitates:
Hiring employees who will succeed in the organization. The culture of an organization affects the type of people employed, their career aspirations, their educational backgrounds, their status in society (BOLA, 2001).
Creating policies and assignments to increase profitability and respond to market demands. If the organization wants to maximize its ability to attain its strategic objectives, it must understand if the prevailing culture supports and drives the actions necessary to achieve its strategic goals (Hagberg & Heifetz, 2000).
Making significant changes to the corporation in responses to real threats to its continued existence. "The power of cultural change is strong - strong enough to turn an aging dinosaur into a state-of-the-art profit-makerâ€¦ Because people working in different cultures act and perform differently, changing the culture can allow everyone to perform more effectively and constructively." (Toolpack, 2001)
Facilitates mergers, joint ventures, and acquisitions. Being able to merge and reinvent corporate cultures plays a critical role in national and international takeovers, joint ventures and mergers. If the cultures cannot be merged or reinvented, the business will fail (Wilms, Zell, Kimura and Cuneo, 1994).
Increasing profitability and growth. Understanding, shaping, nurturing and proclaiming cultural aspects can increase corporate profitability and growth. "Companies that display specific facets of corporate culture grow 10 times faster than companies that don't. The average net sales growth for so-called high-culture companies is 141 percent, compared with 9 percent growth at "low-culture" companies" (Kosan, 2001).
So, corporate culture is important because it shapes the work environment in which performance occurs. Ultimately, not paying attention to culture undermines an organization's profitability and sustainability. The good news is that corporate culture does not have to emerge by default; it can be designed and developed in thoughtful, intentional ways (Jason young, 2007).
Can corporate culture be managed?
Every business organization has a culture that serves as an operating system or framework for the organization. In some organizations, culture is conscious, intentional and tangible. In other organizations, culture is unconscious and intangible, but impactful nonetheless. What an organization assumes, believes, values, accepts, promotes, produces and the way in which behavior occurs frames its corporate culture. Corporate culture shapes the work environment in which performance occurs and performance drives the bottom line. There are two facts about organizational life in today's business economy (Jason Young, 2007).
Tan (2001) outlines four instances where corporate culture needs to be changed and managed:
When two or more companies of varied backgrounds merge and continuous conflict among people of different groups are undermining their performance;
When an organization has been around for a long time and its way of working are so entrenched that it is hindering the company from adapting changes and competing in the marketplace;
When a company moves into a totally different industry or areas of business and its current ways of doing things are threatening the survival of the organization;
When a company whose staff are so used to work under the favorable conditions of the economic boom nut could not adapt to the challenges posed by an economic slowdown.
Corporate culture cannot be changed through changing a policy or issuing an edict. It can also not be accomplished overnight. "The only way to change organizational culture overnight is to fire everyone and hire a new staff with the behaviors you now want." (Giles, 2000) Culture management requires consistency of message, goal, direction and leadership to succeed.
Microsoft believes it is very important for the entire organization to have the company's values align with its overall performance, including employee retention. Recently the company made a few changes in the value system and is looking at a few more like feedback from peers and stakeholders. The employees are empowered to do their job, the company encourages the team spirit and do not focus on hierarchy. The company has 'My Microsoft', an employee performance review system driven by certain values.
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Patni feels if the culture of the organization is not proper and transparent then it leads to high attrition rate as corporate culture matters to the employees. Kalpana Jaishankar, VP - HR Operations and People Development, Patni, feels that it is important for an organization to build a performance culture, and if the employees are not performing then it is necessary that the organization should give them a fair chance to improve. She adds, "The value system should be inculcated in all the employees, and at Patni we have articulated values wherein customers come first." At Patni, open culture is encouraged and value workshops are conducted by senior staff members to find out employees' ideas about the company's values.
Herb Kelleher, Southwest's CEO, said it best. "It starts with hiring. We are zealous about hiring. We are looking for a particular type of person, regardless of what job category it is. We are looking for attitudes that are positive and for people who can lend themselves to causes. We want folks who have a good sense of humor and people who are interested in performing as a teamâ€¦ if you start with the type of person you want to hire, presumably you can build a workforce that is prepared for the culture you desireâ€¦" What type of culture characterizes Southwest? Positive, fun, team oriented and "on-time" are just few of the words that come to mind. One Southwest employee was quoted as saying "of course I am on-time, I work for an on-time airline!"
Given strong leadership, Bijur (2001) has identified the five aspects of a successful management.
Values: values that drive the organization toward the realization of a shared version.
Motivation: understand what motivates people. Make them stakeholders in the change.
Shared ideas and strategies: create an environment that enables the sharing of ideas and strategies and encourages change.
Goals: clear and unambiguous goals, frequently communicated and discussed. There should be a clear link between individual and corporate goals.
Performance Ethic: a reward and recognition system that instills in the organization a performance ethic.
Despite all due diligence, commitment and application, the culture may not be managed or it may not change in the intended direction, or even in an appropriate direction. It is an expensive and long performance without guaranteed results. Changing and then managing a culture can take between three to six years during which profitability can be seriously affected (Toolpack, 2001). However, those companies that successfully changed their cultures reap enormous rewards.
The importance of managing organizational culture cannot be overlooked. The bottom line for managers who want to create a culture of success is to start with creating a positive environment. Bring in people whose values are in line with the organization's culture, and continue to acknowledge success and involve the whole organization in maintaining an environment that allows people to enjoy working hard to meet the company's goals (Khan Organization Culture, 2005).
Although organizational culture is often conditioned by factors outside the organization, culture is also governed by choices. Managers are therefore left with the job of managing the tension between creating a culture that produces a successful organization and creating one that makes people happy. The potential of this challenge for impact on performance is enormous. Culture can be the instrumental force in the organizational success if we understand what it means - and what it means to manage it.
Finally, the discerning leaders will involve those within the organization in articulating the desired culture based on shared values. It is not unusual to find that answers and solutions for creating alignment between values and behavior already reside in the people doing the work. The benefit of involving the entire organization in this process is buy-in, which translates into motivational environment where people can be and do their very best.
There is no golden quadrant that guarantees success.
Culture will be reshaped and realigned over time. Our choice is whether we allow it to evolve or manage it.