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| Tuesday, 23 November 2004 |
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Organisational culture and its impact on corporate performance by Prasanna Perera, Being part of an organisation involves being part and parcel of its culture. "How we do things around here" as an impact on organisational performance. Culture is something deep seated and unique. No two cultures are the same, be it the culture of a country or business. Defining organisational culture Before defining organisational culture, let us first examine what culture means. Culture is the complex mixture of assumptions, behaviour, stories, myths, metaphors and other ideas that fit together to define what it means to be a member of a particular society. This concept of culture is one that has been borrowed from the discipline of anthropology, where it has long been used to describe the way of life of a particular group of people. It also highlights what is distinctive about the way members in society interact with one another and with outsiders and how they achieve what they do. So much for culture, let us now examine and define organisational culture. Organisational culture can be described as what the organisation "is" a ground-up set of factors which employees can readily identify. Another definition of organisational culture is as follows. The set of important understandings, such as norms, values, attitudes and beliefs, shared by organisational members. Over the last 15 to 20 years, the concept of organisational culture has been expanded to understand what goes on in organisations. Why do meetings in certain organisations commence with the singing of the organisation anthem? Why do members in certain organisations write memos of only one page? These are certainly not some mysterious tribal rituals. Culture, therefore, is how an organisation has learned to deal with its environment. It is a complex mixture of assumptions behaviour, stories, myths, metaphors and other ideas that fit together to define what it means to work in a particular organisation. Dupont has a culture of safety, Dell has a culture of excellent service, 3M has an innovatory culture. This all means that people at each of these organisations have learnt a particular way to deal with a lot of complex issues. Three basic elements of culture Edgar H. Schein, suggests that culture exists at three levels, namely artifacts, espoused values and underlying assumptions. Artifacts refer to the things that one sees, hears and feels when one encounters a new group, with an unfamiliar culture. For example in a certain organisation superiors would be addressed by their first name, whilst in another they would be addressed as Mr/Mrs....these differing artifacts are evidence of two very different organisational cultures. Artifacts are everywhere, and we can learn about a culture by paying attention to them. Espoused values are the reasons given by an organisation, for the way things are carried out. In most organisational cultures, espoused values can be traced back to the founders, of the culture. Example of values would be safety to products, quality and superior performance of products. Basic underlying assumptions, are the beliefs that organisation members take for granted. Culture prescribed "the right way to do things" is an organisation, often through unspoken assumptions. Many cosmetic companies have assumed that advertising and promotions, should be focused on how their products enhanced beauty. The Body Shop have questioned these basic assumptions. Factors that influence organisational culture There are several factors, which influence organisational culture. One of the main factors is related to the founder of an organisation. The ideals, values and beliefs of the founder, are often spread far and wide in an organisation, and this firmly takes root. The organisation's history also reflects it culture, specially reflecting the specific era of foundation. Leadership and management style is another factor, and an organisation will recruit employees who naturally conform to the culture of the organisation. Finally organisational structure and systems affect culture. For eg. a bureaucratic structure breeds an unhealthy culture. A more flexible structure, such as Matrix will result in more participatory culture evolving. The Studies by Peters & Waterman Peters & Waterman carried out an extensive study among US Corporations to examine the relationship between organisational excellence and culture.They argue that employees can be "switched on" to extra ordinary loyalty and performance, if they are treated as winners and their duel needs are met (organisational and personal). As Peters & Waterman argue, a strong central faith" (a mission) which binds the organisation together as a whole should be combined with a strong emphasis on individual self expression, contribution and success. This will result in a healthy organisational culture and result in enhanced organisational performance. Importance of culture and organisation An organisation's culture, will influence its strategy, its way of doing business and the way it responds to change. A key factor, in determining organisational effectiveness, is the appropriateness of its culture on its stake holders especially customers. A characteristic of a strong culture is that it will minimise some of the perceptual differences, among people within an organisation. Further it will also reflect the philosophy and values of the organisations founder of any other dominant group. Concept of organisational iceberg This is described by French and Bell, in which formal aspects are overt, and informal aspects are covert or hidden. The formal aspects are relating to the hard element of culture, namely goals, structure, policies and procedures and financial resources. The informal aspects are the soft element of culture, namely perceptions, attitudes, feelings, values, informal interactions and group normals. For an organisation to be effective it needs to combine the hard elements and soft elements. Often it is the soft elements that really drive organisational performance and effectiveness. Culture and control Culture often acts as self-controlling mechanism. It is stated in organisations that when in doubt, please refer to the organisation's mission and co-values. What does this mean? The mission and co-values are the cornerstones of organisational culture. This clearly indicates the linkage. A strong corporate culture may also be required in turbulent business environments, as well as when employing staff who are able to self regulate themselves. Organisational culture is a fascinating area of study. There have been numerous theories and models, which have attempted to shed light, on this very important but often misunderstood, area of study in management. A strong corporate culture, is the cornerstone of a successful organisation. Culture is something unique to an organisation. It simply explains how things are carried out |
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