Site icon Educia: Blogs

Organization Culture- It can make or break your organization

Organization Culture - It can make or break your organization

Organization Culture - It can make or break your organization

After the last last article about LinkedIn, it is time to move ahead from just networking to a more serious issue, within an organization- “Organization Culture”. Although we all talk about it time and again, we hardly pay any attention to it, especially the start-ups. Every organization, however big or small needs and has its own culture. Culture is a must. It’s like air. So it up to you whether you want to help shape it for your workplace or let it take its own form.

What is Organizational Culture?

Organizational culture is the personality of the organization, ‘the way we do things around here’. Originally an anthropological term, culture refers to the underlying values, beliefs and codes of practice that make a business what it is.

Management psychologist Schein describes culture as a phenomenon that surrounds us all. Culture according to Schein is ‘A pattern of shared basic assumptions that a group learns as it solves problems’.

It can be seen through:

1. Behaviour: language, customs, traditions
2. Groups norms: standards and values
3. Espoused values: published, publicly announced values
4. Formal Philosophy: mission
5. Rules of the Game: rules to all in organizations
6. Climate: climate of group in interaction
7. Embedded skills
8. Habits of thinking, acting, paradigms: Shared knowledge for socialization
9. Shared meanings of the group
10. Metaphors or symbols



Why is culture important?

Evidence shows that organizations that have strong cultures are capable of increasing revenue, profitability and shareholder value. Likewise organizations with weak cultures find it difficult to change and adapt to market demands. Many ex-monopolies in the public sector for example struggled to respond to changing consumer patterns. In the early 1990s IBM recognized that it needed to fundamentally change its culture and self-belief that it was invincible in the marketplace. Its then somewhat arrogant culture had prevented it from recognizing the rise in demand for personal computers and it was in danger of failure as a company.

With the growing increase in globalization, organizations face far more competition than ever before. Having a strong culture which supports and underpins an organization’s brand proposition helps businesses create and maintain competitive advantage – witness organizations such as Sony, Disney and Orange.

Increasingly business leaders are recognising that the concept of organizational culture is particularly important when it comes to managing organization-wide change. If change is to be deep seated and long lasting within an organization, it needs to happen at a cultural level. The challenge for many organizations is how to change existing cultures as culture is rooted deep in the unconscious but represented in behaviour and practice.

The 7 ‘S’s diagnostic framework, developed by management consultants McKinsey, provides a useful perspective with which to assess the culture and effectiveness of an organization. The Seven ‘S’s are:

1 Structure
2 Strategy
3 Shared values
4 Style
5 Staff
6 Skills
7 Systems

1. There are many permutations of structure that an organization can adopt:

• Centralised
• Decentralised
• Hierarchical
• Flat
• Team based
• Virtual

Each has its pros and cons. For example many layers of hierarchy can block a leader’s access to customers and vice versa. Middle managers may ‘filter’ reality and present leaders with the picture of customer satisfaction which they wish them to see. The result of this is not only leaders who lack customer focus, but also employees who are fearful of ‘stepping out of line’ or taking responsibility for the customer.

2. Strategy

The strategy of an organization shapes its structure. Likewise the behaviours and values of an organization can promote or undermine its strategy

3. Shared values

If you discover the passion of the CEO, you will discover the organization’s real priorities. Is there fundamental passion towards
– making money?
– staff relationships?
– customer orientation?

These are important issues to get to the bottom of. What measures are used in reward systems? This often shows the reality of what is important to the organization

4. Style

How leaders behave influences the behaviours of their staff. The most effective leaders are those who are sensitive to people’s needs. When senior managers? career paths have been via specialist or technical functions, for example, they may well fail to appreciate the need for a holistic approach to change. Typically where this style prevails, quantitative measures are set for operational delivery. Little attention is paid to the qualitative aspects of service such as creating rapport and being empathetic to the customer.

Senior managers are often pre-occupied with other influences such as competitors, shareholders, the City, government and regulatory bodies. Customers compete against these other preoccupations for their share of airtime and often lose.

Senior managers can all too easily become cocooned in a world far removed from the customer and the company people who work at the sharp end. One acid test of how removed your senior people may be from customers is: Who replies when a customer writes to the CEO?

This remoteness frequently leads managers to:

Become hooked into the internal politics of the organization.

This can all add up to management decisions which are far from customer-friendly such as rules and regulations that work well for the organization but not the customer.

5. Staff

We are increasingly engaged within organizations to move front-line employees from a dependent, compliant and rule-bound style towards one where they freely take risks and confidently exercise discretion. The answer frequently starts with the very senior managers who bemoan the lack of initiative in their staff. People working for ‘task-master’ style managers who are directive and autocratic develop into terrorists – reluctant or resistant to change, or spectators – who take a back seat when it comes to resolving a customer problem. This is because people often become resentful or discouraged to take initiative when they are constantly told what to do and when the only feedback they receive is negative.

New recruits soak up culture like sponges: they may have been recruited for their winning qualities, but they are influenced strongly by other’s behaviours.

6. Skills

Customer orientated organizations such as the department store Nordstrom in the US emphasize the attitude and interpersonal skills needed to interact effectively with customers. Role, skills and knowledge can be taught, whereas many of the less tangible, empathetic interpersonal skills involve being able to create vital rapport with customers. Nordstrom recruit only self-starters – a high commission system helps deselect others. Each of Nordstrom’s 35,000 staff effectively runs their own business (within limited rules).

7. Systems

The systems, which organizations use to interact with their customers, need to be designed with the customer in mind.

I would like end my article with a very precise example (an experiment carried out at Stanford University to study culture) to emphasize how a culture in an organization takes shape without our knowledge:

Start with a cage containing five apes.  In the cage, hang a banana on a string and put stairs under it.  Before long, an ape will go to the stairs and start to climb towards the banana.  As soon as he touches the stairs, spray all of the apes with cold water.  After a while, another ape makes an attempt with the same result:  all the apes are sprayed with cold water. 

Turn off the cold water.  If, later another ape tries to climb the stairs, the other apes will try to prevent it even though no water sprays them.  Now, remove one ape from the cage and replace it with a new one.  The new ape sees the banana and wants to climb the stairs.  To his horror, all of the other apes attack him.  After another attempt and attack, he knows that if he tries to climb the stairs, he will be assaulted. Next, remove another of the original five apes and replace it with a new one.  The newcomer goes to the stairs and is attacked.  The previous newcomer takes part in the punishment with enthusiasm.  Again, replace a third original ape with a new one.  The new one makes it to the stairs and is attacked as well.  Two of the four apes that beat him have no idea why they were not permitted to climb the stairs, or why they are participating in the beating of the newest ape.

 After replacing the fourth and fifth original apes, all the apes, which have been sprayed with cold water, have been replaced.  Nevertheless, no ape ever again approaches the stairs?  Why not?  “Because that’s the way it’s always been around here.”

Exit mobile version