Strong Culture and Organizational Effectiveness

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.

TABLE OF CONTENTS (JUMP TO)

1.0 Introduction

1.1 Culture

1.2 Organizational culture

1.3 Strong culture and weak culture

2.0 Strong culture and organizational effectiveness

2.1 Subculture

3.0 Leadership role in organizational effectiveness

4.0 Conclusion

1.0 INTRODUCTION

1.1 CULTURE

Culture is the way we do things are done around here (Schein, 1985) defining the actions of an organization in overt and covert ways, and 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), two significant elements covers the scope of culture: (1) culture’s manifestation (2) scope of the referenced group.

Culture’s manifestation

Organization’s culture is manifested through visible structures and strategies (Jan Vom, 2011). The three layers of culture related to its manifestation are; artefacts, espoused values, and basic underlying assumptions (Schein, 2004 as quoted in Jan Vom, 2011).

The visible artefact through which culture is manifested includes company’s symbols, its products, architecture, way of dressing, typical behaviours and rituals. It is important to connect artefacts to values.

Espoused values are less visible and encompass publicly expressed strategies, goals, norms and rules that provide the daily operating doctrine for members of the organization.

Basic underlying assumptions are a subconscious part of the culture which 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. These represent the essence of culture.

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Scope of the referenced group

Reference group refers to the set of people an individual perceives as belonging to his or her work environment which defines the social world of work in which he or she engages, including people with whom the individual does and does not communicate (Lawrence, 2006).

Thus, the referenced group are the people within the context of the culture. The scope of the culture is defined depending on the referenced group (Jan Vom, 2011).

1.2 ORGANIZATIONAL CULTURE

Organizational culture has been defined by numerous authors in different ways. Deshpande and Webster (1989) define organizational culture as the pattern of shared values and beliefs that help individuals understand organizational functioning thus providing norms for behaviour in the organization.

In contrast, other authors such as Schein (1985) have put forward that culture is best thought of as a psychological tendency, which he refers to as ‘basic assumptions’, that members of an organization learns as it solves its problems of external adaptation and internal integration, and considered valid because it is successful, and then taught to new members to use when facing those problems.

However, no matter how we choose to define culture, culture is an important aspect of an organization, and organization’s with strong culture increase the chances that members can execute its objectives and increase organizational performance by enlightening members on those objectives (Pottruck, 2001).

Chantman, and Chaldwell (1991) quoted in Dwivedi (1995) suggests that the ten primary characteristics that, in aggregate, capture the essence of organization’s culture includes:

1. Member identity: how employees identify with the organization as a whole rather than with their type of job or field of professional expertise.
2. Group emphasis: The degree to which work activities are organised around groups rather than individuals.
3. People focus: the degree to which management decisions taken into consideration the effect of outcomes on people within the organization.
4. Unit integration: the degree to which units within the organization are encouraged to operate in a coordinated or interdependent manner.
5. Control: the degree to which rules, regulations, and direct supervision are used to oversee and control employee behaviour.
6. Risk tolerance: the degree to which employees are encouraged to be aggressive, innovative, and risk seeking.
7. 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.
8. Conflict tolerance: the degree to which employees are encouraged to air conflicts and criticisms openly.
9. 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.
10. Open – system focus: the degree to which the organization monitors and responds to changes in the external environment.

These characteristics reflect the organization’s value and are used to determine an organization’s culture. Depending on its strength, it can bring about organizational effectiveness (Dwivedi, 1995).

However, some researchers have questioned how well strong cultures improve organizational performance. According to Denison (1990), organizations with strong cultures had greater returns on investments, but this only happens in the short run, after three years the relationship between cultural consistency and performance becomes negative.

Also, Alicia (2002) is of the opinion that strong cultures may facilitate 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.

Thus, while cultural strength may bring about increase in organizational performance in the short run, they may also inhibit an organization’s ability to adapt, change, and innovate.

1.3 STRONG CULTURE AND WEAK CULTURE

An organization’s culture can either be strong or weak depending on the degree of alignment of the organization’s value and employee’s response to stimuli because of their alignment with it (Olivier, 2009).

Strong cultures: Here, organizational values and beliefs are widely shared with significant influence on people’s behaviour with respect to their job (John, 2006). It encompasses the ability to influence and motivate organizational members to act in an approved manner in the organization, and also an agreement on the part of members, regarding the importance of the organizational values (Schein, 2004).

Weak cultures: Here, there is lack of motivation by the members of the organization, and it encompasses little or no strategy-implementing assistance since there are no traditions, beliefs, values, common bonds, or behavioural norms that management can use to motivate to execute the chosen strategy (John, 2006).

2.0 STRONG CULTURE AND ORGANIZATIONAL EFFECTIVENESS

Culture has long been regarded as essential to organizational effectiveness (Schein, 1992). According to Alicia (2002); Organizations with a strong culture create clear and coherent values and expect members to care and agree with those values, even if core values emphasize dissent and creativity (Flynn & Chatman, 2001).

Chatman (2002) is of the opinion that organizations attain strategic advantages through strong cultures. For example, Southwest Airlines’ has better performance than its competitors, over a period of time, due to its strong culture of focusing on keeping costs low and customers happy.

However, Denison (1990) postulated a model that highlights the four key traits of organizational culture, which includes; mission, consistency, involvement, adaptability.

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)

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 behavioural changes that increase its chances for survival, growth and development (Denison, 1990).

Schein (1985) emphasizes that a culture usually consists of some adaptive collective behavioural responses, and the capacity to manage these responses is key to organization’s effectiveness.

A mission, on the other hand, provides purpose and meaning by defining a social role for an institution and defining the relevance of individual roles as related to the institutional role (Denison, 1990).

Hence, an organization that is focused on adapting and changing in response to the external environment, and also has well defined goals and objectives has a strong external focus which is key to organizational effectiveness. 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). Members of an organization are able carry out coordinated action when they shared system of beliefs, and values, which are widely understood.

Consistency involves defining the values and systems that are the basis of a strong culture. Strong organizational culture which is consistent leads to organizational effectiveness by priding itself on the quality of its products or services.

An organization with strong internal focus has higher levels of quality, fewer defects, 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 with focus is on the marketplace and its people. An organization that is flexible has 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. An organization that is stable has high return on assets, investments and sales, as well as strong busi­ness operations (Denison, 2006).

Hence an organization should master these key traits and strengthen its culture in order to be effective. According to Barney (1986), strong organizational culture facilitates increased staff alignment, thus strengthening organizational effectiveness, and increasing employee productivity and commitment.

However, on the contrary, Gagliardi (1986) suggested that organizations with strong cultures are only capable of a limited change because of resistance by members to changing those strongly held and widely shared values.

For example, such resistance threatened the survival of Westinghouse electrical company in the 1950’s, by preventing it from reaping any benefits from acquiring a factory automation business. It was concluded that the failure was due to the organization’s culture of merging an entrepreneurial organizational activity into a relatively slow-moving, large American corporation (Nohria, Dwyer, & Dalzell, 2002).

This further reinforces the point that cultural strength increases organizational performance, but only in the short run, they may also inhibit an organization’s ability to change. However Alicia (2002) suggests that organizations facing such problems can use subcultures to become more agile and to drive innovation.

2.1 SUBCULTURE

Subcultures are groups whose common characteristic is a set of shared norms and beliefs, formed based on an array of individual, societal, and organizational characteristics (Chatman, 2002). Organizational subcultures may be based on membership in various groups (departments, workgroups, and teams), levels of hierarchies, professional and occupational affiliations, socio-demographic categories (sex, ethnicity, age, or nationality) and performance-related variables such as organizational commitment and work performance (Trice & Beyer, 1993 quoted by Chatman, 2002)

Hofstede (1998) suggested that subculture provides information about employees’ perceptions of the organization, and thus managers’ lack of awareness of existing or potential subcultures can be damaging.

As mentioned earlier, members of strong cultures may resist change, and change within strong culture organizations may lead to conflict. Subcultures can absorb this conflict, with the value of the organizational culture intact. Thus, subcultures may offer a way for organizations with strong culture to be flexible enough to change and adapt to external occurrences (Chatman, 2002).

3.0 LEADERSHIP ROLE IN ORGANIZATIONAL EFFECTIVENESS

According to Bryman (1992), the leader could alter or impact the organizational culture. Weese (1995) suggested that leaders have tempered positions relative to the impact that a leader can have on shaping and preserving the culture of an organization, that the culture is the organization, not something that the organization possesses, and consequently, culture change is an arduous assignment.

Hence, transformational leaders are needed to help shape and maintain the desired culture of an organization (Schein, 1993), which may link to organizational effectiveness. 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).

Also, Bass and Avolio (1992) suggested that transformational leadership and organizational culture is vital to organizational effectiveness. 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 focus on developing a strong organizational culture which supports achieving set goals and objectives, coordinated team work, customer orientation, as well as managing change in the organization.

4.0 CONCLUSION

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). Also, it is important for transformational leaders to possess a stronger organizational culture.

However, strong cultures may inhibit an organization’s ability to change, but such organizations can use subcultures to become more agile and to drive innovation (Chatman, 2002).