At the heart of any organisation lies its culture in which are found the philosophies on how to work together and individually, how to treat customers, and how to generate revenue or keep the business operating successfully. Leaders and even middle managers are concerned with meeting some key goals tied to customers, products, and revenue, but they sometimes do not pay attention to the culture. The overriding beliefs and behaviours in the organisation that truly determine the ability to hit those key goals or not (Ford 2008: 1). It is the culture that determines how things get done, whether it is in a good or bad way, and it provides the mechanism for changing strategies and responding to competition or causing the demise of a merger or creating silos of isolation and conflict (Ford 2008: 2).
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Therefore, effectively managing culture in a way that addresses problems and helps everyone in the organisation embrace this culture will provide a strong foundation for accomplishing all the organisation’s strategic objectives. This paper will critically evaluate both the assumptions and methods put forward by various writers, including Edgar Schein, to effectively manage organisational culture as an integral component of management practices and strategic success.
Understanding Organisational Culture
As part of social science, the study of culture has been around for many decades as a means of better understanding how it plays a role in the “functioning of society” (Denison and Mishra 1995: 204). In recent years, business theorists began to look at the organisation of companies in the same manner, understanding that the same socialisation process could be applied to a business that previously might have just been seen as an intangible thing rather than a living organism that was made up of individual and collective behaviours.
One book described culture as the result of “group learning experiences in which a number of people face a problem and work out a solution together” (Miner 2007: 321). This could mean that one organisation develops a culture that can provide them with a competitive advantage whilst another may focus on ethical or environmental standards and still another may look to create a culture that is geared toward customers or technological innovation (Sims 2002: 301). Whatever the case, the culture is directed toward a particular belief about one of those areas that serves to direct all the organisation’s approach to strategy as well as its interaction with the external and internal environments.
That would certainly describe what is happening with business today as products and services are framed around finding solutions whilst internal processes are devised to solve internal problems. Other issues on an internal scale are also being linked to culture, especially when it comes to large firms caught up in scandals riddled with a lack of ethics like Enron and many of the recent lending practices in the U.S. and the U.K. that led to the credit crunch, in which the blame was placed firmly on the shoulders of the leaders and the culture that they had developed that might have promoted greed and a lack of ethical behaviours (Pfister 2009: 2).
Now that this understanding is becoming more readily accepted within organisational studies, theories on business culture and how it is being managed have begun to be formulated with a diverse array of ideas about how it plays out within management practice and organisational development (Martin 1992: 4. One of the earliest proponents of an organisational culture theory was Edgar Schein who believed that organisational culture was comprised of “assumptions, values, and artefacts” (Hatch 1993: 657). His perspective was based on a functional perspective in which these three components, which help to explain specific standards, beliefs, and ideals, form the basis of how to react to and cope with other factors that would help existing workers and new members to perceive and think about these factors in the same way to achieve a “normal” way in which to address existing problems or issues (Schein 1988: 12).
In this way, Schein’s theory illustrated that culture was a multi-layered intangible within a company that was first based on visible organizational structures and processes known as artefacts that were then connected to the organisation’s values (the strategies, philosophies, and goals) as well as to the basic underlying assumptions in an organisation, which is comprised of those beliefs that are “a given” or that are “taken for granted” (Schein 1992: 2). Similarly, Rousseau saw culture as a multi-layered, ring-like framework in which there are both visible and invisible signs and feelings of an organisation’s culture both of which must be addressed (1990: 158), illustrating that it is both tangible and intangible aspect of daily operations.
Since then, a number of theories have evolved from this early definition to envision organisational culture as a combination of these components as well as symbols and processes, which provide fluidity and flexibility for cultures to shift and change based on both dynamic internal and external factors (Hatch 1993: 657). There are three key theoretical views of culture in organisations that help to explain how culture works and what it achieves. First, the integrative theory sees culture as a means of achieving some sort of a consensus across the organisation in which there is general agreement and united effort toward a common goal and purpose (Martin 2002: 94).
The differentiation theory maintains that there may be subcultures or groups within an organisation that share a common belief but that may diverge from an overall consensus (Martin 2002: 94). Then, there is the fragmentation theory, which maintains that there may always be ambiguity and conflict within any type of culture but that it is necessary in order to adapt, be flexible, and be open to change (Martin 2002: 94). These last two theories contend that these types of organisational cultures are often found in large organisations, particularly those that are global in nature (Bush 2003: 160).
There are also typologies of organisational cultures that have been developed within theoretical frameworks as a way to categorise certain approaches to developing a culture. For instance, Quinn & McGrath (1985: 318) created four types of organisational structures–Hierarchy, Market, Adhocracy, and Clan) that correlated with four cultural types–Hierarchical, Rational, Ideological, and Consensual. These have then been used as benchmarks for organisations that are looking to adapt their cultures or bring structure to what has become a fragmented culture in order to take advantage of the of cultural types and accompanying behaviours and ideals in hopes of improving their performance.
Theories on Managing Organisational Culture
Since many theorists contend that organisational culture very much impacts an organisation’s ability to attract and retain talent, achieve specific performance levels that achieve profitability, and grow and expand operations (Denison and Mishra 1995: 204), it is clear that culture must be crafted, shaped, and managed in an effective way in order for it to help those within the organisation realise certain strategic objectives.
This is especially important in a business environment that is becoming more turbulent and unstable as well as one that requires specific cultural change when the external environment and demands shift as well as dynamic internal changes occur, especially when dealing with mergers of two organisations with different cultures (Ashkanasy et al. 2000: 261).
For example, one study found a direct correlation between company performance, using annual growth rates in sales, equity ratio, and the rate of return on its total assets, when study 88 Japanese organisations of various sizes (Kono 1990: 11). The highest performance rates were in those companies that had a vitalised, follow the leader culture and a vitalised culture versus those cultures that were stagnant, follow the leader and stagnant, and bureaucratic (Kono 1990: 12). Often, the cultures that were stagnant and bureaucratic were found in the larger organisations as well as those that had older employees versus those organisations that were newer, younger, and more flexible in their cultures (Kono 1990: 17).
Hence, a number of traits have to be in place and carefully managed to formulate an organisational culture that will become embedded in the organisation and become part of the daily behaviours of all that work there. One theory of organisational culture suggests that there are four key traits that management must nurture, namely consistency, adaptability, involvement, and mission (Denison and Mishra 1995: 204). These traits also involve other effective behaviours that have been identified for helping an organisational culture focus on the right aspects of business, and these include “flexibility, openness, and responsiveness” as “strong predictors of growth” (Denison and Mishra 1995: 204). Additionally, other behaviours that are essential with a business culture include profitability predictors, such as “integration, direction, and vision” (Denison and Mishra 1995: 204). Even more current literature suggests the need for an organisational culture to focus on these three behaviours as a formula for success.
Schein referred to the development and management of these traits as cultural embedding, which is primarily the responsibility of an organisation’s leader and management team based on what they determine are the most important values, traits, and goals to have for the organisation to achieve what it intends to do (Miner 2007: 321). It is the set of ideologies that an organisation’s leader has, according to existing theories on the subject, which will direct how the culture is developed and what ideals and values are encouraged (Ashkanasy et al. 2000: 262).
In order to maintain the cultural embedding and ensure the right culture is developed at both the overall level and among the developing subculture framework, it is then up to the leader and management to ensure some types of control mechanisms are in place over the tangible and intangible aspects of the organisation, including the “(1) organizational structure and design, (2) organizational procedures and systems, (3) the design of buildings and physical space, (4) stories and myths regarding important people and events, and (5) formal statements of organizational philosophies and missions” (Miner 2007: 321).
A similar school contends that the notion of organisational culture is based on the premise that people within an organisation act out their roles and responsibilities in response to how they define the concept of work and how their organisation rewards or punishes that definition of work, which then determines how they respond to those cultural beliefs (Chan 2000: 83; Alvesson 1993: 118). As such, managers would need to shape their organisational culture in such a way to help influence their workers’ definition of the concept of work so that they can maximise their talent and increase productivity in order to achieve their objectives. Again, this returns to the notion of cultural embedding where the management and leadership must imbue this culture into each individual within their organisation to influence beliefs and behaviours (Chan 2000: 83).
Because many of the concepts involved in culture tend to be intangible and somewhat hidden, including beliefs and values that may be hard to discern or articulate, the available management theories contend that it is up the leadership to take up the cause and communicate what the values and beliefs mean on a regular and consistent basis as part of the embedding process (Bush 2003: 160; Smircich 1985: 58). Additionally, the theories contend that leadership must also take up the cause of culture by creating and encouraging specific rituals and ceremonies, such as reward programmes, employee meetings, and other tactics that are designed to reinforce the values and beliefs of the organisations (Bush 2003: 161).
Effective intervention by leadership in an organisation can help adjust the culture to where it should be in order to meet strategic objectives. Theorists believe that leadership can enact this type of cultural shift through consensus building with the organisational members, focusing on trust and relationship-building both internally and externally, directing high levels of communication and feedback throughout the organisation, providing the necessary training and knowledge transfer, and, most importantly, leading by example (Deal and Kennedy 1982: 189). These tactics by management are particularly essential for larger organisations that may have subcultures, including those with multiple locations, which may need to change or adapt to an overall organisational shift in strategy or beliefs, such as a movement to an environmentally sensitive culture or a culture that is more customer-focused.
It is important to remember that, more often than not, theory is one thing and practice is something that is usually entirely different because it involves the dynamics of the real world as well as a wide range of human personalities, behaviours, and leadership styles that make organisational culture into its own specific process within a wide array of organisations. However, these theories provide a foundation for organisations to learn how to adapt their behaviours and beliefs to better achieve their performance goals and strategic objectives.
It is the leadership that sets the tone and shapes the cultural structure just like the leader of a country convinces the majority of its citizens to uphold certain beliefs and values. So, too, will those managing the masses within an organisation as they are responsible for guiding how work is perceived—and this can be in a positive or negative way—which then determines how those within the culture will enact it with each other, customers, and other stakeholders. Leading the way must be the head of the organisation along with the entire management team who can articulate and reward the behaviours and beliefs that they see as their ideal organisational culture, helping those within the organisation better understand the types of tangible and intangible components are essential for success.
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