8

Managing
Organizational
Culture
 Learning Outcomes

After studying this chapter, you should be able

to:
 Define organizational culture
 Explain the evolution of culture
 Discuss the impact of culture on strategy
 List the elements of organizational culture
 Discuss the importance of culture and leadership

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 Introduction

 Culture is vital.
 It is a way of life, affecting not only how an
organization creates values but also how the
organization is perceived.
 An organization will develop its own unique
culture — two organizations belonging to the
same industry and location will display
distinctively different ways of operating.

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 Organizational Culture and
Management
 Organizational culture is the specific collection of
values and norms that are shared by people and
groups in an organization.
 Enables an organization to adapt to environmental
changes, and coordinate and integrate its internal
operations.
 Presented as a factor which influences performance,
the integration process of mergers, knowledge transfer,
shareholder values, competitive advantage and the
adoption of the marketing concept by organizations.

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 Evolution of Culture

 The founder of an organization is usually the

main influence on its culture.
 The founder’s assumptions about success form
the foundation of the organization’s culture.
– A set of beliefs about the organization’s
distinctive competence will differentiate the
organization from others in new organizations.
– These beliefs will directly affect organizational
strategies and operations.

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 Impact of Culture on Strategy

 Organizational culture can either facilitate or

hinder an organization’s strategic actions.
 Successful organizations developed cultures
that emphasized three key groups of
stakeholders — customers, stakeholders and
employees.

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 Building a Strategy
Supportive of Culture

 Organization intending to create a fit between

organizational strategy and culture has to
consider the following elements:
– Symbolic actions and substantive actions
– Building a culture or spirit of high performance
– Fostering a strategy supportive of climate and
culture

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 Building a Strategy
Supportive of Culture (cont.)

– Maintaining internal responsiveness and

innovativeness
– Dealing with organization politics
– Enforcing ethical behaviour
– Leading the process of making corrective
adjustments

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 Communicating
Organizational Culture
 Organizational culture usually tends to influence
an organization’s philosophy, style and behavior.
Managers must, thus, carefully consider the type
of culture they want for their organization and
strive to foster it via communicating with every
organizational member.
 To use culture to an organization’s advantage,
managers must accomplish several tasks which
depend on effective communication:

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 Communicating Organizational
Culture (cont.)

– They must clearly understand the culture.

– They must transmit that culture to others in the
organization.
– They must sustain that culture by rewarding and
promoting those who understand it and work
towards maintaining it.

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 Elements of Organizational
Culture

Organizational culture includes:

 Values
 Symbols
 Stories
 Heroes
 Rituals and ceremonies

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 Functions of
Organizational Culture

 Cooperation
 Decision-making
 Control
 Communication
 Commitment
 Perception
 Justification of behaviour

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 Organizational Culture and
Leadership
 How leaders shape culture
– Transactional leadership
• Refers to the capacity to motivate followers by
exchanging rewards for performance
• Works within the organizational culture as it exists
– Transformational leadership
• Refers to the capacity to motivate followers by
inspiring involvement in a mission
• Changes the organizational culture

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 Organizational Culture and
Leadership (cont.)
 How leaders shape culture
– Charismatic leader
• Refers to one who has the ability to influence the
behaviour of others through his/her personal
qualities, enthusiasm, beliefs and charm

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 Organizational Culture and
Environment
 Adaptive cultures
– Innovative cultures that encourage and reward
initiative taken by middle and lower level managers
 Inert cultures
– Conservative cultures that caution and do not
value middle and lower level managers who take
such initiative or actions

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 Organizational Culture and
Environment
Environmentally Adaptive vs Unadaptive Organizational Cultures
Adaptive
Managers pay close attention to
all constituencies, especially
customers. Changes are initiated
Visible
when needed for legitimate
behaviour
interests, even if it entails taking
some risks.
Managers care deeply about
customers, stakeholders and
Expressed employees. They strongly value
values people and processes that create
useful changes.
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Unadaptive
Managers typically behave somewhat
politically and bureaucratically. Thus,
they do not change strategies quickly or
take advantage of changes in their
business environments.
Managers care about themselves, their
immediate work group or products, and
technology associated with the work
group. They strongly value a systematic,
risk-reducing management process to
leadership initiatives.
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 Geert Hofstede’s
Four-dimensional Model
of National Culture
 Power distance
– The extent to which less powerful members of
institutions and organizations accept that power is
distributed unequally.
Uncertainty avoidance
– The extent to which people feel threatened by
ambiguous situations and have created beliefs and
institutions that try to avoid these.

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 Geert Hofstede’s
Four-dimensional Model
of National Culture (cont.)

 Individualism
– The tendency of people to look after themselves and
their immediate family, valuing independence and
autonomy.
Masculinity
– In this context, it focuses on a culture in which the
dominant values in society are success, money and
material things.
These four dimensions when integrated assist in
explaining the differences in culture between
countries.
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