3140709 PEM GTU Study Material Notes Unit-8 PDF

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Organizational culture Organizational culture is defined as the underlying beliefs, assumptions, values and ways of interacting that contribute to the unique social and psychological environment of an organization. Organizational culture includes an organization’s expectations, experiences, philosop...

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Unit-8 – Organizational culture Organizational culture • •

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Organizational culture is defined as the underlying beliefs, assumptions, values and ways of interacting that contribute to the unique social and psychological environment of an organization. Organizational culture includes an organization’s expectations, experiences, philosophy, as well as the values that guide member behavior, and is expressed in member self-image, inner workings, interactions with the outside world, and future expectations. Culture is based on shared attitudes, beliefs, customs, and written and unwritten rules that have been developed over time and are considered valid (The Business Dictionary). Culture also includes the organization’s vision, values, norms, systems, symbols, language, assumptions, beliefs, and habits (Needle, 2004). Simply stated, organizational culture is “the way things are done around here” (Deal & Kennedy, 2000). The environment of any organization defines the culture, and is very crucial for the entities that make up the organization. Their behavior, attitude and performance are directly influenced by the culture although it varies from person to person. In short organizational culture defines psychology, attitude, experience and belief of an organization and it is very important for the employees to know the organization’s culture as it helps them in understanding the objective and philosophy of the organization. It is not always easy to define the culture of any organization but it can be observed in day to day activities of any organization. It works at an unconscious level. People follow organizational culture as an integral part of their professional life sometimes without even realizing it.

Importance of organizational culture 1. It defines your company’s internal and external identity •

Peter Ashworth explains that your organizational culture “defines for you and for all others, how your organization does business, how your organization interacts with one another and how the team interacts with the outside world, specifically your customers, employees, partners, suppliers, media and all other stakeholders.”

2. Organizational culture is about living your company’s core values • •

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Your culture can be a reflection of your company’s core values. The ways in which you conduct business, manage workflow, interact as a team, and treat your customers all add up to an experience that should represent who you are as an organization and how you believe a company should be run. In short, your culture is the sum of your company’s beliefs in action. But, if your promoted values don’t match your culture than that’s a problem. It could mean that your “core values” are a list of meaningless buzzwords, and your people know it. A strong organizational culture keeps your company’s core values front and center in all aspects of its day-to-day operations and organizational structure. The value of doing so is incalculable.

3. Your culture can transform employees into advocates (or critics) •

One of the greatest advantages of a strong organizational culture is that it has the power to turn employees into advocates. | 3140709 – Principles of Economics and Management

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Unit-8 – Organizational culture • •

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Your people want more than a steady paycheck and good benefits, they want to feel like what they do matters. And when your people feel like they matter, they’re more likely to become culture advocates that is, people who not only contribute to your organization’s culture, but also promote it and live it internally and externally. How do you achieve this? One way is to recognize good work. A culture that celebrates individual and team successes, that gives credit when credit is due, is a culture that offers a sense of accomplishment. And that’s one way to turn employees into advocates. Then again, if your company culture doesn’t do this, you may be inviting criticism.

4. A strong organizational culture helps you keep your best people •

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It should come as no surprise that employees who feel like they’re part of a community, rather than a cog in a wheel, are more likely to stay at your company. In fact, that’s what most job applicants are looking for in a company. Ask any top performer what keeps them at their company and you’re bound to hear this answer: the people. It’s because a workplace culture focused on people has profound appeal. It helps improve engagement, deliver a unique employee experience, and makes your people feel more connected.

5. A well-functioning culture assists with onboarding • • • •

Organizational culture also has the potential to act as an aligning force at your company. This is particularly the case with new hires who, more often than not, have put some considerable thought into the type of culture they’re entering into. The culture at your organization is essentially a guiding force for them, so it’s important that it starts with onboarding. Writing in Forbes, George Bradt explains further: “People fail in new jobs because of poor fit, poor delivery or poor adjustment to changes down the road. Assuming you’ve aligned the organization around the need for your new employees and acquired them in the right way, your onboarding program should accommodate their needs (so they can do real work), assimilate them into the organization (so they fit culturally) and accelerate their progress (so they can deliver and adjust).”

6. Your culture transforms your company into a team • • •

A successful organizational culture brings together the people at your company and keeps them aligned. When your culture is clear, different perspectives can gather behind it with common purpose. The culture at your organization sets expectations for how people behave and work together, and how well they function as a team.

7. Culture impacts performance and employee wellbeing •

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Reports show that organizational culture has a direct impact on performance and, more importantly, your employees’ wellbeing. A healthy culture addresses both of these areas by finding an appropriate balance based on company values. Does your company stress performance to such a degree that you feel like your physical and mental health are being overlooked? There might be instances when that may not be a problem, but for the vast majority of cases, it’ll have a negative effect on your company.

| 3140709 – Principles of Economics and Management

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Unit-8 – Organizational culture Attributes of organization culture •

Instead, imagine a place where employees actually enjoy working together, communicate freely, share the load, love their job and exceed expectations. This is not an impossible dream. These healthy organizational cultures exist in large and small companies and generally have eight characteristics in common:

1. Retention is high, turnover is low •

Employees stay when they are appreciated for their contribution, have opportunities to learn and grow, and enjoy what they do.

2. Work is both challenging and rewarding • • •

Engaged employees into both the company and team missions. In the ideal situations, employees had an active role in creating them. When work is rewarding and challenging, employees are always looking for ways to do things better because they care about the results.

3. People want to join your team • •

High growth companies often struggle to hire top talent that fits at the rate they need to hit aggressive growth targets. Attracting top talent is easier for companies with a healthy culture.

4. Leadership is shared • •

In healthy corporate cultures, leaders actively involve more people in making important decisions. They value input, feedback and continuous learning.

5. There is a lack of complaining, whining, finger pointing and gossip • •

Healthy corporate cultures have little tolerance for workplace politics. There are no “behind-the-scenes”, conversations, issues are dealt with directly, openly, and without fear of effect.

6. Employees smile •

As inconsequential as it may seem, employees at healthy companies consistently greet each other happily at work and genuinely look forward to time together.

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Smiling also aligns with the old adage that “a happy worker is a productive worker.”

7. Employees feel valued • •

Rather than feeling they are simply a cog in the wheel of their organization, healthy cultures make sure employees know they truly matter. Employees feel valued when they are paid fairly, the organization makes investments to make them more successful and leaders are committed to making it a great place to work.

8. Change is generally well received • •

In a healthy work environment, change does not inspire the fear that it does elsewhere. Employees are well-informed beforehand, trust their leaders, are asked for input regarding changes that affect their work and understand why the changes are happening.

| 3140709 – Principles of Economics and Management

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Unit-8 – Organizational culture How does culture affect managers? •

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A company culture can and should tremendously affect the attitudes of managers, management is driven by the culture, which, by definition, directs the behavior of business owners, managers and employees toward a common objective. There are a number of ways in which the attitudes possessed by management can be sculpted, enhanced or otherwise changed by the demands of business culture.

Motivation •

When a company culture demonstrates its values by singularly tying achievement to managers’ ability to move ahead with the company, the attitudes of supervisors can be either positively or negatively affected, depending on what drives the individual.

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For example, a culture stated as, “Our company rewards leadership that focuses on producing new ideas and inventive thinking,” could do one of two things: It might positively influence a manager's can-do, problem-solving attitude, resulting in rapid advancement, or it could overwhelm leaders who may excel in other necessary business functions, such as finance, which may not offer many opportunities to provide innovative ideas.

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The attitudes of these managers could become contrary toward their potential for advancement.

Leadership • •

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A company culture can alter a manager’s attitude toward leadership. For example, an employee-centric culture might be expressed with a statement such as, “Our Company’s culture asserts our fundamental belief that leaders are cultivated from within our ranks, and we consistently work from this precept.” When this type of cultural environment consistently supports and grooms managers through training and similar investments, subsequent leadership possesses attitudes that, in turn, short-term internal employee growth. Conversely, should a company deviate from its cultural declarations by hiring external management, managers’ attitudes, as well as those of line employees, may suffer.

Ambiguous cultures • •

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Business cultures that are not clearly established can change managers’ attitudes from positive to negative. A new manager may be excited and energized to prove his worth to a company. However, if the culture does not specifically support and empower managers' decision-making efforts, a reversal may occur, changing the upbeat attitude to a fearful one. For example, when challenges arise, managers who typically feel highly capable may experience a change in attitude to being reactive – non-responsive, avoiding responsibility – or expose a victimized attitude, such as by claiming that the problem was not related to them but caused by others.

Ethics • • •

Managers with strong values match up with company cultures purporting high ethical standards in all business dealings. During the course of business, circumstances may require a test of these standards, such as when an ethical question arises from an improper marketing-related decision. Business owners can fall back on the company’s culture to hold offending managers accountable, thereby retaining the culture's validity. | 3140709 – Principles of Economics and Management

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Unit-8 – Organizational culture •

Failing to do so can tarnish for managers the company’s belief structure, transforming attitudes into those that may detrimentally ignore breaches in ethics standards.

How does culture affect employees? • • • • • • • • • •

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Organizational culture provides a framework with respect to the behavior of employees in their workplace. Depending on the type of culture that is created in an organization, it can have a positive or negative effect on employee performance. Let’s look at a few organizational situations that result in either positive or negative employee performance. An organizational culture where employees are considered an integral part of the growth process of the organization fosters employee commitment towards the organization. They align their goals and objectives with those of the organization and feel responsible for the overall well-being of the organization. As their efforts are in turn appreciated by the management and suitably rewarded, they have immense job satisfaction. In such organizational cultures, the employees are committed to achieving their goals and thus have a positive effect on the overall performance of the organization. In organizations where managers are not facilitators but taskmasters, employees live with fear and distrust and work is nothing but a boring routine. Since they are not involved in the overall organizational goals, they do not understand the implications of their tasks and hence may not be committed to achieving them. An organization where there is no cooperation between different departments ends up having employees working in silos or working towards undermining the efforts of the other departments which is detrimental to the overall health of the organization. Organizational culture to a large extent determines the performance of the employees. Therefore, it is in the interest of organizations to eliminate negative factors that slow down employee performance in order to foster a positive workplace environment or a positive organizational culture.

Environment concept of organization / how does external environment affect organization?

Fig. Environment concept of organization

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Unit-8 – Organizational culture •

Forces and institutions outside the organization that may affect organizational performance are: o Specific environment – which includes those constituencies that have a direct and immediate impact on managers’ decisions and actions. ➢ Customers - absorb organization’s outputs. ➢ Suppliers - provide material and equipment. ➢ Competitors - provide similar services/products. ➢ Pressure groups - special-interest groups. o General environment - includes the broad conditions that may affect organizations. ➢ Economic conditions - interest rates, changes in disposable income, and stage of the business cycle. ➢ Political/legal conditions - federal, provincial, and local governments. ➢ Socio-cultural conditions - expectations of society (values, customs and tastes). ➢ Demographic conditions - trends in the physical characteristics of a population. ➢ Technological conditions - most rapidly changing aspect of the general environment. ➢ Global conditions - increasing number of global competitors and consumer markets.

| 3140709 – Principles of Economics and Management

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