The importance of organizational culture in management

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Knowledge forms a fundamental part of an organization, and poor management of such knowledge can result in catastrophic results. While knowledge sharing may not be an active problem in an organization, management very often forget about the effects that the organization's corporate culture has on the knowledge sharing capabilities of the organization.

Understanding the relationship between corporate cultures and knowledge management, you can easily maximize the sharing and performance capabilities of an organization. This is however only possible with a well defined, understandable and expressive corporate culture, and ensuring that the employees of the organization understand this culture.

This text aims to define the core concepts, identify the effects they have on each other and to provide general characteristics of knowledge sharing cultures.

Corporate Culture:

Defined and Explained

Corporate culture cannot be defined in a single sentence, nor can it be simplified into a simple definition. Instead, I will attempt to explain corporate culture as a series of levels, as described by Edgar H. Schein (1999). Please note that the phrases "Corporate Culture" and "Organizational Culture" will be used interchangeably in this text, both referring to the same concept.

The first level can be seen as the level of Artefacts. This level immediately shows you the very basic values that the organization has as a culture. The things that you can hear, smell, see and feel (physical or emotional) add up to form a perception of the organization, allowing you to get the first feel of the surroundings and cultural values. This level is extremely physical and may lead you to believe quite the opposite of what is really seen as their culture. It is extremely important to understand that you have to be careful not to form a predefined culture about the organization before you completely understand the reasons for their behaviour and the ways in which they express their cultural values.

Imagine two teams assigned to do the exact same tasks. The first team is in a well defined, relaxed culture, while the other is in a strictly professional culture. The first team will most likely share all the information between themselves, working out ideas and solving the problem. In the second team, every member is likely to keep to him or herself, trying on their own to solve the problem. The outcomes of the two teams may be the same, but the efficiency and productivity of the teams will definitely differ. The cause of this is simple: The second team's knowledge sharing capabilities are minimized due to their hierarchical-focussed corporate culture. You cannot however understand these cultures based on this level.

The second level of corporate culture is the level of Espoused Values. This typically refers to the organisations values, ideals and goals. These values and goals are defined in a company's vision and mission, and a great deal lies within their corporate culture. The issue: How will you as an outsider be able to define and understand their espoused values if they are captured within the corporate culture? Surely you can extract some of the basic values from the organisation's vision and mission, but this will only give you their public values and beliefs.

Schein proposes the use of an "Informant", which is someone inside the organisation who has experienced and dealt with the corporate culture and understands the underlying values and beliefs that the employees share.

The final level of corporate culture is Shared Tacit Assumptions. This level is considered to be the 'Deep' level. Here you focus on the assumptions and values that have, over the years, become shared knowledge between co-workers, but are still known to employees only. This kind of knowledge is usually taken for granted, and can only be accessed by experiencing the corporate culture as a whole. This type of knowledge refers to things such as specific know-how, experienced methods, things that you can only obtain through years of experience or an experienced mentor.

"Culture is the sum total of all the shared, taken-for-granted assumptions that a group has learned throughout its history. It is the residue of success." (Schein, 1999) Corporate culture is formed by the employees of the organization, their behaviour and the way they operate. It is formed over an extensive period of time, gradually growing and forming a kind of "trend" for each employee to follow. It is extremely important to notice that without such a culture, or an ill defined one being forced down on your employees, may have an extremely negative effect on the outcome of your organization's daily tasks.

Knowledge Management:


A very related, although extremely different concept, is Knowledge Management, and can be defined as follows:

"Knowledge management is the strategic application of collective company knowledge and know-how to build profits and market share. Knowledge assets - both ideas or concepts and know-how are created through the computerized collection, storage, sharing, and linking of corporate knowledge pools. Advanced technologies make it possible to mine the corporate mind." (Zuckerman & Buell, 1998)

From this definition you will see that Knowledge Management does not only apply to knowledge found in printed media or digital media, but also to knowledge found intellectually. Knowledge consists of a wide variety of aspects, and this includes general know-how and task specific knowledge derived from experience. As you might have realised, intellectual knowledge gained through experience is very closely related to Shared Tacit Assumptions.

Corporate Culture and Knowledge Management:

What is the connection?

"Knowledge resources are an outcome of organizational culture, structure, and strategy, because knowledge is created, made sense of, and utilized in accordance with a set of cultural values and norms, embedded in structural relationships, and reflected in strategic priorities." (Zheng et al., 2009)

For knowledge management to take place, you need knowledge. This may never be an issue, but what we tend to forget about is the fact that every piece of knowledge has a source. There are a tremendous amount of sources within an organization that produce vast amounts of information on a daily basis. This information applied by various employees becomes knowledge needing to be managed. Organizational culture, as described above, can loosely be defined as "The way we do things". Processing information is done via a predefined system of processes, values, norms and assumptions. This process is defined within our organizational culture, structure and strategy. (Zheng et al., 2009)

As you can see, an organization's corporate culture defines the process of applying and using information, and can be seen as the source of knowledge. Knowledge management uses this source of knowledge in order to manage that knowledge effectively and productively, thereby creating direct connection between corporate culture and knowledge management. Without corporate culture there will be no sources of information. Without sources no knowledge will be formed, eliminating the need for knowledge management.

Main characteristics:

Knowledge Sharing/Culture Management

It is extremely important for organizations to grow and adapt to the needs of their customers, employees and business. Growing organizations often have to adjust and adapt their organizational cultures according to their needs and the needs of the customers. As Kotter (1996) suggests, the cultural changes that take place should be "considered as grafts of new values and behaviours on to the old corporate culture." With this in mind, it is clear that many organizations will form and build their own characteristics based on their corporate and knowledge sharing cultures.

According to Smith & McKeen (2002), there are three sets of organizational characteristics which are associated with knowledge sharing cultures:

High Solidarity and Sociability culture:

The sociability of an organization directly influences the ability to share knowledge between employees and departments. Having a high sociability creates an atmosphere of sharing and creative interaction. This promotes the very core idea of knowledge sharing. On the other hand, the solidarity affects the time and value of reactions of your employees. Having a high solidarity will increase your employee's focus, while keeping them on the edge of their respective fields.

Emphasis on fair processes and outcomes:

If you are an employee in an organization where outcomes of performance appraisals, resource allocation, rewards and incentives are fair, you are likely to experience the culture as one that you can trust. This might motivate you to do your job beyond what is expected of you, while still being acknowledged for what you have done. It is vital for an organization to ensure that their employees feel that they are treated fairly, as this will encourage trust, and above all, cooperation.

Recognizing the employees' work:

Employee satisfaction plays a very important role in any organization. Ensuring that the employees are satisfied with their work and cultural environments, will maximize their performance and cohesive capabilities within the work environment. An important part of ensuring employee satisfaction is the acknowledgement of their work efforts, which can easily be done by implementing a reward system (prizes, vacation days, etc), or an acknowledgement system (employee of the month, performer of the week, etc). This will not only improve their own abilities within the organization, but may encourage organizational citizenship, willingness to cooperate within teams, and prevention of conflict situations.

A simple conclusion

With a clear definition of corporate culture and knowledge management in mind, it is effortless to see that these concepts greatly influence one another in practise. Corporate culture guides every employee in an organization according to a culture defined by many years of experience and organizational management. It directly influences organizational members' decisions, their actions and beliefs. It is based on a number of components such as the values, assumptions and artefacts that is expressed within the organization.

Knowledge management deals with the management of the tacit and explicit knowledge, derived from various sources, including the corporate culture.

Understanding the importance of corporate culture as an information resource is very important, and is crucial to understanding the impacts that these to concepts have on each other. An organization without any corporate cultures or even a poorly defined corporate culture will experience a great deal of difficulty in terms of knowledge sharing, as the cultures define the way in which employees will share their tacit and explicit knowledge.

It is clear that both corporate culture and knowledge management are important aspects that directly influence the success of the organization. Ensuring a well defined, understandable and expressive culture will maximize knowledge sharing, and ultimately the success of the organization.