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Organizational culture is the pattern of shared values and beliefs that help individuals understand organizational functioning. The characteristics that captures the essence of organization's culture include member identity, group emphasis, people focus, unit integration, control, risk tolerance, reward criteria, conflict tolerance, means- end orientation, and open system focus. Appraising the organization on these ten characteristics gives a composite picture of the organization's culture.
However, we have strong culture and weak culture. Strong cultures are those in which organizational values and beliefs are widely shared and significantly influence people's behaviour on the job. Organizations with a strong culture create clear and coherent values and expect that members agree with and care intensely about those values.
Denison identifies four key traits that an organization should master in order to be effective as mission, consistency, involvement, and adaptability.
Strong organizational cultures have been linked to increased staff alignment, resulting in enhanced organizational effectiveness.
However some research shows that strong cultures may enhance short-term success but inhibit long-term organizational performance, and may even contribute to long-term failure by preventing organizations from adapting to changing contingencies.
Culture is 'how things are done around here' (Martin, 2002) and it shapes the behaviour of its members in overt and covert ways, including when change takes place (Smollan, 2009). Culture can also be defined as the collective programming of the mind (Hofstede, 2005). According to Jan Vom (2011), Scope of culture can be defined by differentiating between two defining elements: (1) the manifestation of culture and (2) the scope of the referenced group.
Schein's (2004) identifies three layers of culture as artefacts, espoused values, and basic underlying assumptions.
On the surface, culture manifests itself through visible artefacts such as a company's symbols, its products, typical behaviours and rituals, the way of dressing, and architecture.
Espoused values are less visible; they include publicly expressed strategies and goals as well as norms and rules that provide day-to-day operating principles for members of a culture group.
Below the surface, basic underlying assumptions account for the biggest part of culture. This subconscious part of culture further accounts for a mental map of fundamental aspects of life such as the nature of time and space, the role of social hierarchies, and the relative importance of work, family, and self-development.
An Organization manifests its culture through visible structures and strategies (Tichy, 1983).
Scope of the referenced group
Examples include national culture, organizational culture and work group culture (Jon Vam, 2011). Apart from the referenced group, the concept of culture does not fundamentally differ between various culture research streams (Jon Vam, 2011).
1.3 ORGANIZATIONAL CULTURE
Deshpande and Webster (1989) define organizational culture as the pattern of shared values and beliefs that help individuals understand organizational functioning and thus provide them norms for behaviour in the organization.
By increasing members' understanding of organizational objectives, ties to one another, and commitment, organizations with strong cultures increase the chances that members can execute those objectives and, as a collective, increase organizational performance (Deal & Kennedy, 1982; Pottruck & Pearce, 2001; Tushman & O'Reilly, 1997).
Research suggests that there are ten primary characteristics that, in aggregate, capture the essence of organization's culture (Hofstede, Neuijen, Ohajv and Sanders, 1990 and O'Reilly, Chantman, and Chaldwell, 1991).
Member identity: The degree to which employees identify with the organization as a whole rather than with their type of job or field of professional expertise.
Group emphasis: The degree to which work activities are organised around groups rather than individuals.
People focus: the degree to which management decisions taken into consideration the effect of outcomes on people within the organization.
Unit integration: the degree to which units within the organization are encouraged to operate in a coordinated or interdependent manner.
Control: the degree to which rules, regulations, and direct supervision are used to oversee and control employee behaviour.
Risk tolerance: the degree to which employees are encouraged to be aggressive, innovative, and risk seeking.
Reward criteria: the degree to which rewards such as salary increases and promotions are allocated according to employee's performance rather than seniority, favouritism, or other non- performance factors.
Conflict tolerance: the degree to which employees are encouraged to air conflicts and criticisms openly.
Means-ends orientation: the degree to which management focuses on results or outcomes rather than on the techniques and processes used to achieve those outcomes.
Open - system focus: the degree to which the organization monitors and responds to changes in the external environment.
Appraising the organization on these ten characteristics gives a composite picture of the organization's culture, and depending on its strength, culture can have a significant influence on the attitude and behaviour of organization's members (Dwivedi, 1995).
Organizational culture connects the objective aspect of the organization such as technology, leadership, etc, with the motivation and trusting/ distrusting, stressful or highly stressful and other behavioural aspect of human resources (Dwivedi, 1995).
1.4 STRONG CULTURE AND WEAK CULTURE
Organizational culture varies more than any other corporate asset, including large and tangible information and communication technology infrastructure. It is said to be strong where employees respond to stimuli because of their alignment with it. Conversely, it is said to be weak where there is little alignment, and control is exercised with administrative orders (Olivier, 2009).
Strong cultures are those in which organizational values and beliefs are widely shared and significantly influence people's behaviour on the job (Badovick and Beatty 1987; Deal and Kennedy 1982). A strong organizational culture contains two vital traits: (1) the ability to influence and motivate organizational members to behave in a manner endorsed by the organization and (2) a crystallization, or pervasive level of agreement on the part of members, regarding the importance of the system of organizational values (O'Reilly 1989; O'Reilly, Chatman, and Caldwell 1991; Schneider 2000; Wiener 1988).
On the other hand, weak cultures produce symptoms such as a lack of motivation by the members of the organization (John, 2006). Weak cultures provide little or no strategy-implementing assistance since there are no traditions, beliefs, values, common bonds, or behavioral norms that management can use as levers to mobilize commitment to executing the chosen strategy.
2.0 STRONG CULTURE AND ORGANIZATIONAL EFFECTIVENESS
Culture has long been regarded as critical to organizational effectiveness (Shein, 1992). Strong organizational cultures have been linked to increased staff alignment, resulting in enhanced organizational effectiveness, heightened consensus regarding strategic direction, increased employee productivity, and advanced levels of employee commitment (Barney, 1986).
Organizations with a strong culture create clear and coherent values (Chatman 2002; Saffold, 1988) and expect that members agree with and care intensely about those values (Jackson, 1966; O'Reilly, 1989), even if core values emphasize dissent and creativity (Flynn & Chatman, 2001; Sutton & Hargadon, 1996). Agreement refers to the level of consensus (or consistency) among members about organizational values and associated behavioral norms, while intensity refers to members' demonstrated commitment to those values.
Organizations attain strategic advantages through strong cultures (Collins & Porras, 1994; Gordon & DiTomaso, 1992; O'Reilly 2000). For example, Southwest Airlines' ability to perform better than industry competitors over a sustained period of time has been attributed to its strong culture focusing on keeping costs low and customers happy.
Avolio et al. (1991) stated that organizational culture holds the key to increased commitment, productivity, and profitability.
Denison (1990) noted that successful organizations, over time, are likely to possess a strong well-defined culture. The Denison model of organizational culture highlights four key traits (mission, consistency, involvement, adaptability) that an organization should master in order to be effective.
Figure 1: The Denison Model of organizational effectiveness
Source: Denison Research notes (2006)
Denison's research has demonstrated that effective organizations have high culture scores in all four traits. Thus, effective organizations are likely to have cultures that are adaptive, yet highly consistent and predictable, and that foster high involvement, but do so within the context of a shared sense of mission.
External Focus (Adaptability + Mission)
Schein (1985) discusses the relationship between culture and adaptation, and emphasizes that a culture usually consists of the collective behavioral responses that have proven to be adaptive in the past for a particular social organization.
The adaptation hypothesis asserts that an organization must hold a system of norms and beliefs which support the capacity of an organization to receive, interpret, and translate signals from its environment into internal behavioral changes that increase its chances for survival, growth and development (Denison, 1990).
Tichy (1983) emphasizes that the capacity to manage change and strategic adaptation is a central element to any organization's effectiveness.
A mission, on the other hand, provides purpose and meaning by defining a social role for an institution and defining the importance of individual roles with respect to the institutional role (Denison, 1990).
On an individual level, there is convincing evidence that success is more likely when it is goal-directed (Locke, 1968). On an organizational level, despite the fact that organizational "goals" may often be post hoc reconstructions, a related process seems to take place.
Hence, an organization with a strong external focus is focused on adapting and changing in response to the external environment. It has a constant eye on the marketplace and a strong sense of where it is headed. A strong external focus typically impacts revenue, sales growth, and market share (Denison, 2006).
Internal Focus (Involvement + Consistency)
High levels of involvement and participation create a sense of ownership and responsibility (Denison, 1990). Shared system of beliefs, values, and symbols, which are widely understood by an organization's members, has a positive impact on their ability to reach consensus and carry out coordinated action.
According to Denison, consistency involves defining the values and systems that are the basis of a strong culture.
An organization with a strong internal focus is focused on the dynamics of the internal integration of systems, structures, and processes. It values its people and prides itself on the quality of its products or services. A strong internal focus has been linked to higher levels of quality, fewer defects and less rework, good resource utilization, and high employee satisfaction (Denison, 2006).
Flexibility (Adaptability + Involvement)
A flexible organization has the capability to change in response to the environment. Its focus is on the marketplace and its people. A flexible organization is typically linked to higher levels of product and service innovation, creativity, and a fast response to the changing needs of customers and employees (Denison, 2006).
Stability (Mission + Consistency)
A stable organization has the capacity to remain focused and predictable over time. A stable organization is typically linked to high return on assets, investments and sales, as well as strong business operations (Denison, 2006).
2.1 OPPOSING VIEWS
Some researchers have questioned how well strong cultures improve bottom-line performance (Saffold, 1988). According to Denison (1990), Organizations with strong cultures had greater returns on investments, but only in the short run; after three years the relationship between cultural consistency and performance became negative.
Strong cultures may enhance short-term success but inhibit long-term organizational performance, they may even contribute to long-term failure by preventing organizations from adapting to changing contingencies (Alicia, 2002).
Gagliardi (1986) suggested that organizations with strong cultures are capable of only limited change because members are especially resistant to changing those strongly held and widely shared values. This resistance limits the range of permissible value changes to those that are compatible with existing core values.
For example, such resistance threatened Westinghouse's survival, by preventing it from reaping any benefits from acquiring a factory automation business. The head of Westinghouse's advanced technology group concluded after this significant failure that, "It was a classic case of trying to merge an entrepreneurial organizational into a relatively slow-moving, large American corporation" (Nohria, Dwyer, & Dalzell, 2002)
Thus, while cultural strength and stability may enhance organizational performance in the short run and in stable environments, they may also inhibit an organization's ability to change, adapt, or innovate (Alicia, 2002)
3.0 LEDERSHIP ROLE IN ORGANIZATIONAL EFFECTIVENESS
According to Bryman (1992), the leader could alter or impact the organizational culture. Leaders have offered tempered positions relative to the impact that a leader can have on shaping and preserving the culture of an organization (Weese, 1995), and suggested that the culture is the organization, not something that the organization possesses, and consequently, culture change is an arduous assignment.
Transformational leaders help shape and maintain the desired culture of an organization (Schein, 1993), which may link to organizational effectiveness.
Some researchers have suggested that transformational leadership and organizational culture contain the key to understanding organizational effectiveness (Bass and Avolio, 1992). High transformational leaders possess strong organizational cultures and carry out culture-building activities, especially the customer-orientation function, to a greater extent than other leaders do (Weese, 1995).
Yukl (1994) defined transformational leadership as the process of influencing major changes in the attitudes and assumptions of organizational members and building commitment for the organization's mission, objectives and strategies.
Leaders should therefore put their energies on developing a strong organizational culture that supports managing change, achieving goals, coordinating team work, and customer orientation in organization (Schein, 1990).
It has been established that culture has a significant impact on organization's performance. Organizations with strong culture, and are able to maintain its stability enjoy better performance than weaker cultural organizations. Organizations should pay attention to mission, consistency, involvement, and adaptability in order to have organizational effectiveness (Denison, 2006). However, it is important for transformational leaders to possess a stronger organizational culture.
Also, organizations with strong cultures but are resistant to change can use subcultures to become more agile and to drive innovation (Alicia, 2002).