Effects of Organizational Culture

8/12/2019 Effects of Organizational Culture

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Effects of Organizational Culture:-

There has been a great deal of anecdotal evidence and some

empirical evidence regarding the performance effects oforganizational culture. Anecdotal evidence begins Peters and

Watermans !n "earch of E#cellence $%&'(). This boo*

basicall+ stimulated the no, familiar business school case

stud+ approach. ore recent anecdotal evidence regarding the

most successful companies in the last several decades has also

been proffered. According to Cameron and uinn $%&&&)/ man+

of the most successful companies/ including "outh,est

Airlines $(%/0012 return on investment 34O!5)/ Wal-art

$%&/'602 4O!)/ T+son 7oods $%'/%%'2 4O!)/ Circuit Cit+

$%8/9%62 4O!)/ and Plenum Publishing $%1/8'&2 4O!)/ score

lo, on ,ell-established critical success factors

$i.e./ entr+ barriers that prevent organizations from

competing for the same mar*et/ non-substitutable products/

lo, levels of bargaining po,er on the part of bu+ers due to

customer dependence/ lo, levels of bargaining po,er for

suppliers because the+ have no alternative customers/ a large

mar*et share that promotes economies of scale/ and rivalr+

among the competition that deflects head-to-head

competition ,ith a potential dominator). These unli*el+

Winners have strong leadership that promotes uniuestrategies and a strong culture to help them realize these

strategies. There is also strong anecdotal support indicating

that the primar+ cause of failure of most ma;or change

efforts $such as T and reengineering) has been the failure


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to successfull+ change the organizational culture ,as a *e+

factor. !n addition/ higher

levels of emplo+ee participation ,ere correlated ,ith betterorganizational performance.

!n contrast to this supporting anecdotal and

empirical evidence/ it has become ,ell *no,n/ and a point of

great contention/ that the e#emplar+ companies identified b+

Peter and Waterman $%&'() did not remain e#emplar+. The

general e#planation for this is that these companies failed to

change ,ith the times > perhaps the ver+ strength of theirculture and their past success prevented them from uic*l+

and successfull+ adapting to ne, environmental reuirements

$Christensen %&&0). This parado# suggested the need for

more longitudinal investigations of the effects of

organizational culture. ?ro,ing evidence that e#cellent

companies do not remain e#cellent for long also suggests that

the traditional notion of a strong culture ma+ need to bereplaced ,ith a more discerning understanding of the t+pes

and role of culture and the need to change culture

over the life c+cle of the organization. 7or E#ample/ perhaps a

strong consistent culture is useful in the beginning start-up

phase of an organization but a mature organization ma+ need

to become more differentiated as ,ell as more oriented to

change and learning.

What is important for long term@

organizational success ma+ not be a particular t+pe of

organizational culture per se but the abilit+ to effectivel+

manage and change the culture over time to ad;ust to changes


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in the situation and needs of the organization. This

understanding has pointed to the need for a more d+namic

understanding of culture and the role of organizational

leaders in ensuring that the culture contributes both to theorganizations current and future success.

"chein $%&&() argues that leadership toda+ is

essentiall+ the creation/ the management/ and at times the

destruction and reconstruction of culture. !n fact/ he sa+s/

The onl+ thing of importance that leaders do is create and

manage cultureB and the uniue talent of leaders is their

abilit+ to understand and ,or* ,ithin cultureB. eaders mustbe able to assess ho, ,ell the culture is performing and ,hen

and ho, it needs to be changed. Assessing and improving

organizational culture as ,ell as determining ,hen ma;or

cultural transformations are necessar+ is critical to long-term

organizational success. anaging differentiated cultures and

creating s+nergies across these cultures is also a critical

leadership challenge. Effective culturemanagement is also necessar+ to ensure that ma;or strategic

and organizational changes ,ill succeed. Dasicall+/ culture

management is a *e+ leadership and management competenc+.

We are all a,are of successful leaders $erb Fellerher of

"outh,est Airlines/ ee !acocca of Chr+sler/ Alfred P. "loan

of ?.E./ and ?eneral 4obert E. Wood of "ears/ 4oebuc* G Co.)

,ho have succeeded in transforming the culture of the

organization. Critical instrumental mechanisms for changing

and managing culture include

"trategic planning and the identification of necessaril+

cultural reuisites


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Ensuring consistenc+ of culture ,ith mission/ goals/

strategies/ structures and processes

Creating formal statements of organizational philosoph+ and

valuesEstablishing consistent incentives/ recognition s+stems/ and

performance measurement

aintaining appropriate error-detection and accountabilit+

s+stems $"chein %&&&)

Coaching/ mentoring/ informal and formal training/ and

identif+ing role models $"chein %&&&)

Embracing appropriate rites/ rituals/ s+mbols/ and narratives$"chein %&&&)

Ta*ing advantage of the gro,th of subcultures $"chein

%&&&)

anaging and promoting strong communities of practice

7eature of organizational culture:-a. Observed Dehavioral 4egularities: When people in the organizations interact ,ith oneanother/ the+ generall+ use common language/ terminolog+/ and

other rituals that relates to deference and demeanor.

b. Horms:

"tandards of behaviopur are set to guide theorganizational members ho, much ,or* to do. This/ in man+organizations/ is e#pressed as Do not do too much, do not

do too little.


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surprisingl+/ the 4eliance ?roup completed there Patalganga

pro;ect in record time of %1 months. Even there

collaborators/ E! Hemours found this

achievement unbelievable and unparalleled

organ proposes four essential strengths of the

organizational culture approach:-

!t focuses attention on the human side of organizational

life/ and finds significance and learning in even its most

mundane aspects $for e#ample/ the setup in an empt+ meetingroom).

!t ma*es clear the importance of creating appropriate

s+stems of shared meaning to help people ,or* together

to,ard desired outcomes.

!t reuires membersKespeciall+ leadersKto ac*no,ledge the

impact of their behavior on the organizations culture. organ

proposes that people should as* themselves: LWhat impact am

! having on the social construction of realit+ in m+

organization@L LWhat can ! do to have a different and more

positive impact@L

!t encourages the vie, that the perceived relationship

bet,een an organization and its environment is also affected

b+ the organizations basic assumptions. organ sa+s:

According to Edgar "chein/ cultural anal+sis is especiall+

valuable for dealing ,ith aspects of organizations that seem

irrational/ frustrating/ and intractable. e ,rites/ LThe

bottom line for leaders is that if the+ do not become


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conscious of the cultures in ,hich the+ are embedded/ those

cultures ,ill manage them.L $"chein M01) !t is significant that

"chein uses the plural Lcultures.L Nsing open-s+stems

concepts/ ,e *no, that members of a group culture ma+ alsobelong to subcultures ,ithin an organization. "ince

organizations do have a shared histor+/ there ,ill normall+ be

at least a fe, values or assumptions common to the s+stem as

a ,hole. Dut sometimes/ as in man+ orchestra organizations/

the subcultures have had different e#periences over time/

and their group learning has produced ver+ different sets of

basic assumptions.This is an e#emplar+ application of Ldouble-loopL learning a

term coined b+ Chris Arg+ris of Hational Training

aboratories in Washington/


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the challenge of culture change in the corporate ,orld/ as ,ell

as in the orchestra field. "ta+ tuned

!ncreasing !mportance of Organizational

Culture:-

"chein $%&&() suggests that organizational culture is even

more important toda+ than it ,as in the past. !ncreased

competition/ globalization/ mergers/ acuisitions/ alliances/ andvarious ,or*force developments have created a greater need

for:

Coordination and integration across organizational units in

order to improve efficienc+/ ualit+/ and speed of designing/

manufacturing/ and delivering products and services

Product innovation

"trateg+ innovationProcess innovation and the abilit+ to successfull+ introduce

ne, technologies/ such as information technolog+.

Effective management of dispersed ,or* units and

increasing ,or*force diversit+


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Cross-cultural management of global enterprises and=or

multi-national partnerships

Construction of meta- or h+brid- cultures that merge

aspects of cultures from ,hat ,ere distinct organizationsprior to an acuisition or merger

anagement of ,or*force diversit+

7acilitation and support of team,or*.

!n addition to a greater need to adapt to these e#ternal and

internal changes/ organizational culture

a. has become more important because/ for an increasing

number of corporations/ intellectual asb. opposed to material assets no, constitute the main source

of value. a#imizing the value of

c. emplo+ees as intellectual assets reuires a culture that

promotes their intellectual participation and

d. facilitates both individual and organizational learning/ ne,

*no,ledge creation and

e. application/ and the ,illingness to share *no,ledge ,ithothers. Culture toda+ must pla+ a *e+ role in promoting

Fno,ledge management

Creativit+

Participative management

eadership

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Effects of Organizational Culture