Organisational culture is described as a system of shared values, objectives, traits, beliefs and ideologies, which govern the way employees work and behave in organisations. Every organisation has a unique culture, followed by its employees.
Fundamentally, culture is created by the founding members of an organisation. It is their responsibility to decide, which type of culture they want to develop in the organisation. In addition, a culture is also characterised by its stakeholders, ethics, and organisational structure.
Table of Content
Where Does Organizational Culture Come From?
- Characteristics of People Within the Organisation
- Organizational Ethics
- Property Rights
- Organizational Structure
Characteristics of People Within the Organisation
An organization is a social system consisting of people. The characteristics and behavior of people within the organization have an impact on its culture. Thus, organizations tend to hire and retain employees having similar values and characteristics. They select people who exhibit similar cultural traits and can easily adapt to the culture of the organization.
The characteristics of employees represent the culture of an organization to the outside world. These characteristics determine how the employees work in an organization, treat other employees, and behave at work.
For example, a client of a multinational organization visited an organization to meet the project manager. As he came without taking an appointment, he was asked by the receptionist to wait. The client was made to wait for more than an hour.
Moreover, the receptionist forgot to inform the manager about the client’s arrival. Due to the callous attitude of the receptionist, the client went back with a negative impression of the work culture of the organization.
Organizational ethics refers to values, practices, principles, and policies that an organization pursues and applies in its business practices. These ethics are part of an organization’s business activities.
Ethics are also reflected in the core values of an organization. An organization’s culture profoundly depends on these ethics, which drive its business. Thus, we can say that organizational ethics are the moral-based practices that are reflected in an organization’s business operations. However, not all organizations are ethical in their dealings. For example, in the 1980s, Beech-Nut, a baby food manufacturer, was exposed by an R&D (Research and Development) expert.
The company was accused of using malic acid, corn syrup, and sugar for making an apple juice drink that was sold in the market as pure apple juice. After a thorough investigation, the company was fined over $2 million for indulging in unethical practices.
Property rights refer to the privileges given to the stakeholders to access and use the resources of an organization. These rights include stock options, salaries, and incentives, access to organizational resources, lifetime employment, medical facilities, decision-making power, dividends and bonuses, pension schemes, etc.
These property rights distinguish the culture of an organization from others. Not all organizations have similar cultures and thus do not provide the same degree of access to property rights to the stakeholders.
The distinct characteristics of an organization’s culture are reflected in the strategies that it follows to distribute property rights to its employees. Strong property rights work as an incentive for employees to work hard and efficiently. For instance, access to the company gymnasium, transport facility, and free meals may motivate the employees to be dedicated to their work.
Property rights shape the behavior, attitude, and productivity of the employees, all of which ultimately determine the effectiveness of the organization as well as its culture. An organization’s culture can be affected by changes in property rights. For example, Bimba, a USbased aluminum cylinder manufacturing company, had a very rigid culture. Its employees were given fewer property rights and treated with little respect.
In 1987, a major cultural change took place in the company, as a result of which employees were entitled to several new property rights. This resulted in a dramatic increase in employee motivation that boosted sales by 70%.
Organizational structure refers to a framework that defines how tasks and work responsibilities are allocated and grouped within an organization. The structure describes the manner in which an organization distinguishes authority and power to facilitate various roles and responsibilities to its employees.
An employee’s work and decision-making capability, which is determined by the structure of the organisation, further helps in shaping organizational culture. There are a few key elements that need to be considered by the management while designing the structure of an organisation.
These elements include work specialization, a chain of command, a span of control, departmentalization, centralization and decentralization, and formalization. Based on these elements, two organizational structure models can be formed, which reinforce and inculcate different cultural values.
These organizational structure models are as follows:
A mechanistic structure also referred to as a bureaucratic structure, is based on a formal system where power is centralized among a few authorities. It leads to stability and predictability in work practices.
This model involves high specialization, a narrow span of control, and centralization, thereby facilitating obedience and accountability. In addition, employees are given less freedom, and only the top executives make decisions.
The organic model fosters change and a dynamic environment. It involves cross-functional and hierarchical teams, thereby facilitating a wide span of control and free flow of information. In addition, it rapidly adapts to change and thus results in innovation and flexibility.
An organic model promotes rewards, freedom, accountability, creativity, and innovation. Hence, it provides employees with the freedom to make independent decisions.
Ways of Learning Culture
Every organization has a distinct culture that holds different ideologies, values, assumptions, and beliefs. When an employee joins an organisation, he/she needs to learn its culture and adapt to it. The culture can be learned by observing and following the practices of others in the organization.
It is transmitted in a number of forms, such as stories, material symbols, rituals, and language. Let us discuss the different ways of learning about culture in detail.
Stories are one of the most effective ways of learning about the culture of an organization. They are impactful past events that convey a meaningful message to others in the organization.
Stories are generally associated with successful people in the organization, such as the founders, chairman, chief executive officer, and managers.
However, some stories may also be related to the employees who work at the lower level and are noticed and appreciated for their good work. For example, there is a very famous story of a security guard at IBM.
The security guard had stopped the then-CEO Thomas Watson, Jr. from entering the company premises as he was not carrying his identification badge. Even after an explicit explanation from Mr. Watson about his designation, the security guard kept insisting on showing the identification badge.
Mr. Watson was impressed by the integrity and commitment of the guard toward his work. Instead of taking any action against him, Watson praised him for his dedication to his duties and gave his example to others. Such stories always inspire and influence others to perform well in their jobs.
Rituals are planned sequences of events or activities that are followed by an organization. These events or activities express and emphasize the fundamental values of the organization.
Rituals include various events, such as annual functions, celebrations of new product launches, sports and outdoor activities, award ceremonies, birthday celebrations, and so on.
Rituals have a great impact on the life of the employees at work as they foster positive and harmonious organizational culture. Some organizations have annual family picnics and ‘child at work’ programs that encourage employees to spend time with their families. One such corporate ritual is Walmart’s company chant.
This chant was created by the company’s founder, Sam Walton for motivating and uniting the workforce. Organizations, such as IBM, Ericsson, and PricewaterhouseCoopers also use similar corporate chants to motivate their employees.
Material symbols refer to the facilities offered to the employees by an organisation. Thus, these material symbols represent the organization’s culture and motivate the employees to perform well.
Material symbols include size and layout of offices, hygiene, natural ambiance, common area, conference rooms, parking space, bonuses, furnishings, attires, perquisites, etc.
Google is an American multinational conglomerate that provides its employees with a pleasant working environment, which has now become a culture at Google. Here, employees are treated as the most precious assets and thus, the company tries to meet their every single need and expectation.
Apart from providing ample liberty to work and an elegant working ambiance, Google offers its employees other amenities as well, which include a gymnasium, cafeteria, work area, park, and parking space.
In another example, British Airways (BA) discarded its old hierarchical and administrative values by changing its office from the multi-story building near Heathrow Airport to the elegantly designed central village square.
The central village square has separate work units where executives are placed with their entire units. One of the CEOs of BA, Bob Ayling, who served the company from 1996 to 2000, said “move the office, change the culture.”
An organization’s culture is known by the behavior of its employees, and language is one of the most influential aspects of behavior. Language develops the culture of an organization. Generally, it is found that top-level executives influence the language of an organization.
Employees working at the middle or lower levels tend to follow in the footsteps of top-level executives. Thus, the top-level management holds the maximum responsibility to ensure an ethical, friendly, transparent, and courteous culture of the language across the organization.
Culture may at times be exemplified by metaphors, phrases, punchlines, jargon, slang, and other special vocabularies. Sometimes the top executives use jargon and acronyms while addressing the employees. For instance, Jack Welch, the then CEO of General Electric (GE) used the term “grocery store” for the company.
He always wanted everyone at GE to consider the company as a small business, not an electrical manufacturing giant. Similarly, in Boeing, a unique vocabulary of acronyms, such as BOLD (Boeing online data), CATIA (computer graphics aided three-dimensional interactive application), etc. is used that may confuse the new employees.