Unit 4
- Created by: georgia
- Created on: 28-05-13 14:36
Factors influencing the culture of an organisation
Defintions
- Culture- 'the way we do things around here'
- Sub culture- group of people within a culture which differentiates them from the larger culture to which they belong
- Core values- the essential and enduring guiding principles of an organisation
- Vision statement- a picture of an organisation in the future which ssets the framework for strategic planning
- Paradigm- the set of assumptions held in common & taken for franted in an oragnisation
Factors influencing culture of an organisation
- size and development stage of the business
- leadership and management style
- attitude of organisation to risk-taking and innovation
- market/industry in which it operates
- external environment
- working environment and nature of tasks
- employee and management reward structures (e.g. pay, bonuses, individual v team rewards)
Factors influencing the culture of an organisation
Key theories/ concepts
Charles Handy- 4 types of culture
- Power: focus on personal charisma & risk taking
- Role: focus on position, bureacracy, hierachy
- Task: focus on problem-solving, teamwork, creativity
- Person: focus on individual needs, independence
Cultural differences within an organisation
- subcultures develop within an organisation based on occupations, product lines, functins, geographies and echelons in the hierachy. Some firms: subcultures are stonger than overall organisational culture
- managing sub cultuers has become more improtant and challenging: mergers, takeovers, joint ventures more common
- globalisation: many firms now multi-cultural based on nationality, language
- technological complexity: depts. more specialised; more remote & flexible working
Factors influencing the culture of an organisation
Examples
- Barclays
- Apple/Disney
Depends on factors
Organisations will vary significantly in terms of the strength and depth of their culture which will depend on: strength and clarity of the organisation founder, amount and intensity of shared experiences that organisation member have had and how much success the organisation has enjoyed
Further evaluation opportunities
- much accademic research on what organisational culture is - but little agreement, so theoretical models can only be a guide
- culture is a complex xoncept which is difficult to understand= a challenge for business leaders
- always depend on the organisation- no right or wrong culture
The impact of organisational culture on business s
Definitions
Intangible asset- non monetary asset without physical substance which generates economic benefits
Strong culture- a consistent culture; understood and felt by people inside & outside the organisation, consistent with organisational goals
Features of negative/ toxic business culture
Toxic culture- questionable morals and unethical behaviour. May arise within a sub-culture or within the business as a whole
Features of weak culture- little alignment with business values; inconsistent behavior; a need for extensive bureacracy & procedures
Key theories/ concepts
- employee engagement
- competitve advantage
- cultural glue
The impact of organisational culture on business s
Features of positive/ successful culture
- a source of competitive advantage & potentially the most important intangible asset of an organisation
- clear set of values, missions & goals
- performance orientated
- encourages suitable risk-taking & innovation
- strong internal communication
- engaged employees: higher motivation and loyalty
- better connection between depts & divisions
- not easily copied
Examples of when culture goes wrong:
- RBS- Fred Goodwin
- ...
The impact of organisational culture on business s
Depends on factors
- research emphasises the complexity of corporate culture & the risks of oversimplifying what is it and how to change it
- larger, longer-established firms have more complex cultures, consisting of sub-cultures, individuals and groups
- having a clear, well-communicated and accepted set of core values helps to establish a common, positive culture
- a flawed business model or strategy is unlikely to result in business success, even if the culture is strong and healthy
- a culture that fails to adapt to the changing external environment may hasted the failure of an organisation
Further evaluation opportunities
- many potential links between organisation culture and business sucess but difficult to prove
- successful businesses often recognise that the business modle/strategy and culture are independent- the whole system is aligned
- better performing firms pay attention to nurturing culture- they're disciplined & invest time in it
- leadership plays a key role in nurturing culture
The reasons for changes in organisational culture
Definitions
Static culture- a clture that does not change in response to the changing external environment
Dynamic culture- a culture that evolves in response to changes in the external environemtn and or a different business strategy/model
Reasons for changing culture
Improved business performance:
- declining profits and sales
- inadequate returns on investment
- low quality of standars of customer service
To respond to significant change:
- market changes (growth,competitors)
- political and legal environment
- change of ownership (takeover/merger) or change of leadership (new CEO)
- economic conditions
The reasons for changes in organisational culture
Key theories/ concepts
- Bonus culture: a culture in which importance of financial rewards is emphasised and celebrated. Can be for key individuals or company wide.
- Toxic culture: when a workplace culture evolves on its own with little attention given to relationships and employees arent held accountable for reudness or disrespect
Potential signs/ evidence of dysfunctional culture
- internal fighting; management criticism
- high leves of voluntary staff turnover and hard to retain top talent
- greater absenteeism
- processes become more bureaucratic
- innovation is no longer valued
- evidence of declining customer service
- leadership show double standards or decision making becomes inconsistent
- communication becomes more closed and restricted
The reasons for changes in organisational culture
Key Examples
Some firms whose culture may have contributed to a failure to change:
- Kodak
- Nokia
Businesses going through a painful process of organisational change:
- Royal Mail
- NHS
- RBS
Depends on factors
- organisational culture evolves naturally, but the pace and nature of change will very muh depend on the evolving circumstances of the organisation
- managing the cultureal evolution is one of the primary tasks of an organisaion's leadership
Ways of changing organisational culture
Definitions
Change management- a structured approach in an organisation for ensuring that changes are smoothly and successfully implemented, and that the lasting benefits of change are acheived
Step change/ incremental change: how much change and when?
Methods of change
- recognise what contributes tomaking the culture matter (visions, values)
- invest in and nuture what matters to the desired culture (training, innovation, employee engagement)
- aim to maintain high cultural distinctiveness and competitive edge
- owning the culture is part of every employee's role- need to tka responsibility to fit it in, meet cultural expectations and develop the culture
Key theories
- Lewin force field analysis
Ways of changing organisational culture
Ways of measuring culture and effect of culture
Ways to measure the strength/ effectiveness of culture change: external surveys, % of repeat customers, customer referrals, employee surves, focus groups, staff turnover
What to change?
- leadership- how employees feel about the head of the organisation
- my manager- how employees feel about and communicate with their direct manager
- personal growth- what employees feel about training and their future prospects
- wellbeing- how employees feel about stress, pressure at work, and work life balance
- my team- employees feelings towards their immediate colleagues and how well they work together
- giving something back- the extent to which employees feel their organisation has a positive impact on society
- my company- the level of engagement employees have for thei job and organisation
- fair deal- how happy employees are with their pay and benefits
Ways of changing organisational culture
Key exmaples
Insights from CEOs who have successfully changed organisational culture:
- Moya Greene (Royal Mail)
- Archie Norman (ITV, Asda)
Depends on factors:
- lots of evidence that culture management is not optional- so leaders have to find a way
- organisational culture is a 'soft' management issure- it is not easily measuerd or controlled
- organisational culture is becoming less predictable- like other elements of the external environement because of the way the work is changing
Further evaluation opportunities
- it is too easy to under-estimate the challenge of trying to change/improve organisational culture
- culture change is not straightforward- its a slow and often painful process
- you cannot 'create; a new culture in an organisation that has already evolved a culture
Problems of changing organisational culture
Definitions
Culture clash- when one of more cultres are integrated into one environment, causing disruption and challenging contemporary traditions
Problems of change
- mergers and acquisitions
- generational differences
- national/geographical
- departmental
- strategic or leadership change
Forces resisting change
- loyalty to existing relationships; failure to accept the need for change, insecurity, preference for the existing arrangements, different person ambitions
- fear of change; loss of skills, loss of power, loss of income, dear of the unknown, inability to perform as well in the new situation, brea up of work groups
Problems of changing organisational culture
Key examples
Take overs and mergers provide a rich source of examples of how difficult it is to change and integrate organisational culture, e.g. Daimler/Chrysler
Depends on factors:
- organisational culture is deep, danger that if management treat it as a superficial phenomenon and assume it can be changed at will, they will fail
- organisational culture is normally & inherently stable (resistant to change). Humans dont like change
- if an organisational is to change then it has to unlearn something before learning something new
Further evaluation opportunities
- recognise that an organisation's culture is in a continuous state of flux responding to change in the external environment
- aiming to create, change or protect culture is challenging and takes time
- successful cultural change requires clear business strategy & a strong set of corporate goals
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