2.5 Organizational (Corporate) Culture (HL)

Organizational culture: The values, attitudes, and beliefs of the people working in an organization that controls the way they interact with each other and with external stakeholder groups.

Types of organizational culture

Charles Handy introduced four distinct organizational cultures:

  1. Power Culture: Concentrating power among a few people.

  2. Role Culture: Each member of staff has a clearly defined job title and role.

  3. Task Culture: Based on cooperation and teamwork.

  4. Person Culture: When individuals are given the freedom to express themselves and make decisions.

Edgard Schein: three levels of cultures.

  1. Organizational attributes

    What is seen, heard, and felt when you walk into an organization? (visible statue or a picture of a dominant leader) How people speak and dress.

  2. Professed culture

    The slogans, statements, or images that project. Statement about commitment to employees, customers…

  3. Organizational assumptions

    How did the business function? To work closely with someone to understand deeper functional cultures.

Culture clash: conflict brought up amongst individuals when they enter an organization and obtain different ways of working or communicating within the organization.

Early indicators:

  • Lack of Focus

  • Preoccupation with the merger -> Employees focus their attention and energy on the fact of the merger or new leader rather than their jobs. This can negatively affect productivity and overall job performance. (focused on the merger itself rather than the benefits)

  • Sense of division-> Employees focus on the differences between themselves and other employees, rather than their common purpose or similarities. 

  • Sense of isolation - while managers focus on the strategy of the new organization, employees feel isolated and ignorant of what is happening.

  • Unresponsive management - employees feel that managers are not concerned for their well-being.

Reasons:

  • Different comfortability levels with diversity (discomfort) → Some individuals will be used to diversity while others might not

  • Degrees of formality- different levels of formality (roots and regulations)

  • Languages: difficulties for individuals unable to communicate in the culture

  • Leadership styles: adaptation to different styles and methods of leadership

  • Different orientations to tasks and people- power and span of control as well as delegations and roles

  • Practices: how the organization operates may vary between organizations causing a need for adaptation and possibly difficulties

  • Senses of time: punctuality varies in different cultures, as well as the perception of time and schedules for work and breaks

Problems:

  • Lower productivity

  • Higher labor turnover

  • Various types of conflict

  • Decreased profitability

  • Bankruptcy and failure