2.5 Organisational culture

Full video class on YouTube, summary and notes on Instagram, class extracts on TikTok, text below. Have fun!

The main point of this class is to figure out what organisational culture is and to get to know a few ways to describe it.

Organisational (or corporate) culture refers to the ideas, beliefs, values and other attributes of a group of people. The “other attributes” part of this definition sounds vague and may have a lot of interpretations, based on different theories and approaches to organisational culture that will be discussed in part 2 of this class. For now, we’ll have to work with a definition above.

Culture is something that is formed naturally and that goes beyond managers’ control. Managers are part of organisational culture too. They can, however, influence organisational culture, but they are not able to change it at their will.

Cultural clash is a mismatch between a person’s (or a group’s) culture and that of an organisation. For example, when a new employee joins an organisation and his/her beliefs and values are conflicting with the beliefs and values of the organisation. Cultural clash is counter-productive to the group dynamics and managers work hard to eliminate it. We will discuss cultural clash in more detail in the third part of this class.

In addition to managers, there are other factors that can impact organisational culture:

• Staff turnover and staff retention. High levels of staff turnover are likely to make the culture flexible and dynamic, because new people constantly come and go. High levels of staff retention, on the contrary, make cultures more rigid and inflexible because it’s the same people working together for a long time.
• National cultures. Cultures of different countries impact organisational cultures greatly. For example, even though most staff members in an international school in China are non-Chinese, the fact that the school is in China will have a major impact on the school culture.
• Organisational structure. Hierarchical structures with long chains of command and many levels of hierarchy are likely to be bureaucratic and formalistic, whereas flat structures with large spans of control tend to be more family-like and informal.
• Leadership styles (see 2.3). Personality and leadership style of a leader has a great impact on the entire staff. Leaders set the tone of the relationships in an organisation and very often leadership is one of the main factors to consider when it comes to decisions about joining or quitting an organisation.
• Rewards and punishments. The way people are rewarded and punished is one of the elements of cultures. The extent of praise and the severity of punishments affect decision-making and relationships in any organisation.
• Industry. Different industries have different cultures that affect all the organisations within these industries. For example, cultures in the banking sector and advertising industry might be completely different. Just think about an average bank clear and an average illustrator.
• Size of the organisation. The larger organisations are, the more formal relationships are and the more hierarchical they are. Relationships in smaller organisations are more informal and friendly-like.
• Risk. Risky professions (for example, surgeons) are very different from professions with low risk in many aspects. People whose occupations imply more risk are usually more direct and straightforward and make quick decisions. Leadership in high-risk occupations is often autocratic.

There are many other factors and elements of organisational cultures that shape cultures and impact them in different ways. Some theories/approaches discussed in the next part of class will provide you with more insights.

In this part of class, we will discuss 2 approaches/models to describing organisational culture: Charles Handy’s and Edgar Schein’s. In addition to that, we will learn one more approach as one of the business tools in BM Toolkit — Geert Hofstede’s cultural dimensions.

Charles Handy, whom we mention for the third time now, in his book Gods of Management, described four types of organisational culture and associated each type of culture with one of the Ancient Greek gods. I am not going to delve into Ancient Greek mythology, but feel free to follow the links in the text to explore more. These types of culture are: power culture, role culture, task culture, person culture.

Power culture. The main feature of this type of culture is that it’s centralised: decision-making is concentrated in one person or a small group of people. If decision-makers are removed from an organisation, then it will not be able to work well. Decisions in power cultures are quick and everyone is expected to follow them. There are not many rules in power cultures but the level of risk-taking is usually high. Results matter more than the means of achieving these results. Because of these features, power cultures are illustrated by a spider web (see figure 1) and Zeus.

Role culture. In this type of culture, roles and expectations of employees are clearly defined. Employees are very well aware about their role and duties in an organisation. Usually organisations with role culture have tall hierarchical structures with long chains of command, bureaucratic procedures and formalism. This type of culture is not suitable for risk-taking and creativity, because excessive procedures and rules hinder risk-taking. Based on these features, Charles Handy illustrated role culture as a house (where different elements have clearly defined functions) and Apollo.

Task culture. Procedures and power do not matter as much as task. Depending on the task that an organisation faces, power transfers from one group of people to the other, depending on who copes with the given task better. Matrix structures and project-based organisations (review 2.2 if you forgot what these things mean) are usually task cultures. This type of culture is illustrated by a net (where different cells are of different importance in different tasks) and Athena.

Person culture. In person cultures, people are more important than organisation. Employees consider themselves experienced unique individuals and do not really associate themselves with the organisation, which makes these people quite hard to manage. People just “go” to work in person cultures. In fact, they just achieve their personal goals, first of all, as opposed to organisational goals. An example of such an organisation could be a university that has a lot of brilliant minds teaching students under one roof. Employees in person cultures are usually managed under laissez-faire leadership. This type of culture is illustrated by the stars in the sky (that are close to each other but shine independently) and Dionysius.

Edgar Schein’s model divides organisational culture into three levels: artefacts, norms and values, and underlying assumptions. The main idea is that artefacts are the easiest to see but are the most superficial, whereas underlying assumptions are invisible but the most important things that guide people’s behaviour.

Artefacts. This is the most superficial indicator of culture, that’s what on the surface. For example, the artefacts of your school could be the school building, the posters in the rooms, students’ uniform and teachers’ dress code. These things are not necessarily easy to understand and interpret, but they are easy to see.

Norms and values is what people are told. They are invisible, unlike artefacts. These are the principles that are expected to be important for members of the organisations, even though members (employees) are nit necessarily committed to them. If we still use your school as an example, then examples of norms and values would be mission/vision statement, slogans, official channels of communication, announcements from the Head Teacher.

Underlying assumptions is what is taken for granted by people, how things really work in an organisation. Underlying assumptions are not officially stated, they are invisible, and yet they are the actual values demonstrated through behaviour, because they are what really drives people. In your school, underlying assumptions can be students’ and teachers’ working habits, understanding of which rules can actually be ignored and which things really matter (even if they are not officially declared).

Just a reminder that there is one more approach to organisational culture that was developed by Geert Hofstede, but it is covered in BM Toolkit and is taught as a business tool.

As I mentioned in the first part of this class, cultural clash is a mismatch between person/group culture with that of an organisation, usually as a result of organisational change. We have already learnt a lot of information that relates to cultural clash in previous classes, so I will just list them here and provide links so that it’s easy for you to review these things, in case you forgot.

Some of the reasons for cultural clash or some of the sources of organisational change that causes cultural clash are:

1. M&As (review 1.5 if you forgot what that is),
2. change of leadership (see 2.3 for more info),
3. high turnover (more in 2.4),
4. relocation — when an organisation is changing its location.

All of the things above might cause cultural clash, that might, in turn, lead to some of the following consequences:

1. resistance to change (see 2.1 to review resistance to change),
2. diseconomies of scale (more in 1.5),
3. lower job satisfaction (more in 2.4),
4. lower productivity — when employees start doing less tasks and/or the quality of their work deteriorates even though they spent the same amount of time on to as before,
5. “us and them” culture (more about it in 2.2),
6. lower profitability — the decrease of profit, caused by the things listed above.

There is no one solution to overcome cultural clash and every single case is individual. However, by now, you should know a few theories that could help you, as a potential manager, to alleviate cultural clash:

1. Kotter & Schlesinger’s “change theory” (we learnt it in 2.1),
2. Charles Handy’s Gods of Management (see part 2 of this class)
3. Edgar Schein’s organisational culture model (again, part 2 of this class)
4. Geert Hofstede’s culture dimensions (see BM Toolkit)

Lastly, let me remind you that the main point of this part of class is not just to learn something about cultural clash but to be able to discuss and evaluate different cultural clashes (or their reasons, or consequences, or ways to overcome them). This skill should be developed with the help of your teacher in your classroom and it is my hope that some of the ideas in the infographics below would be helpful.

Make sure you can define all of these:

1. Organisational (corporate) culture
2. Cultural clash
3. Charles Handy
4. Power culture
5. Role culture
6. Task culture
7. Person culture
8. Edgar Schein
9. Artefacts
10. Norms and values
11. Underlying assumptions