Organisational Culture: The values and behaviors that contribute to the unique social and psychological environment of an organisation.
Organisational culture includes an organisation’s expectations, experiences, philosophy, and values that hold it together, and is expressed in its self-image, inner workings, interactions with the outside world, and future expectations.
It is based on shared attitudes, beliefs, customs, and written and unwritten rules that have been developed over time and are shown in:
(1) the ways the organisation conducts its business, treats its employees, customers, and the wider community,
(2) the extent to which freedom is allowed in decision making, developing new ideas, and personal expression,
(3) how power and information flow through its hierarchy, and
(4) how committed employees are towards collective objectives.
It affects the organisation’s productivity and performance, and provides guidelines on customer care and service, product quality and safety, attendance and punctuality, and concern for the environment.
It also extends to production-methods, marketing and advertising practices, and to new product creation. Organisational culture is unique for every organization and one of the hardest things to change.
Valuing your Talent common measures
Knowledge: these are measures of employee knowledge of the values of the organisation as well as measures of whether individuals can recognise the organisation culture and understand when behaviours are inconsistent or misaligned (see here for more information).
Perceptions: this measures employee opinion of the culture of the organisation, its leadership, and their peers. Such measures focus on identifying desired values and priorities and those which exists in reality.
Behaviour: these measures report on incidents of good and bad behaviour which are related to the stated values of the organisation, as well as the values of individuals within the organisation.
For example, e.g. number of incidences highlighting prioritising individual merit over employee wellbeing
Number of employees fired for acting outside of stated behaviours and organisation culture.
Alignment of business and team strategies against defined objectives: this is a measure of how aligned individual, team and function objectives are to overall business objectives (see here for more information).
For example, a measurement of increases in management behaviours aligned to business objectives and defined business culture.
Developing organisation culture: six case studies
An organisation’s culture affects every aspect of how the organisation operates and how work gets done. In the quest for sustainable performance, ensuring their culture is fit for the future is a high priority for many organisations.
Developing the right culture can help organisations improve engagement, increase innovation and mitigate their risks. Workforce data can help leaders better understand how to develop and drive their organisational culture and how it can improve long-term business performance.
Having the right culture is important for sustainable organisation performance. This report contains detailed case studies of six organisations who are undertaking culture change. The report also includes a practical checklist, drawn from our case studies’ experiences, of some of the important issues to consider for effective culture transformation is also included.
For more information on changing organisational culture read a series of case studies, including Arts Council England, Visa Europe and BNP Paribas, on how they have sought developed cultures that align to their business objectives.
Download the report: Developing organisation culture – six case studies
The Cultural Web
Johnson and Scholes’ Cultural Web outlines the six elements that contribute to organisational value.
Johnson and Scholes’ model is given below:
This cultural web helps management to focus on the key factors of culture and their impact on strategic issues helping to improve performance and competitive advantage. Download the CMI introduction:
Hofstede's Cultural Dimensions
While there are several types of cultural and organisational theory models, Hofstede’s cultural dimensions theory is one of the most cited and referenced. Hofstede looked for global differences in culture across 100,000 IBM employees in 50 countries in an effort to determine the defining characteristics of global cultures in the workplace. With the rise of globalisation, this is particularly relevant to organisational culture.
Through this process, he underlined observations that relate to six different cultural dimensions (originally there were five, but they have been updated in response to further research):
- Power distance: Power distance is simply the degree to which an authority figure can exert power and how difficult it is for a subordinate to contradict them.
- Uncertainty avoidance: Uncertainty avoidance describes an organisation’s comfort level with risk-taking. As risk and return are largely correlative in the business environment, it is particularly important for organisations to instill a consistent level of comfort with taking risks.
- Individualism vs. collectivism: This could best be described as the degree to which an organisation integrates a group mentality and promotes a strong sense of community (as opposed to independence) within the organisation.
- Masculinity vs. femininity: This refers to the ways that behaviour is characterised as “masculine” or “feminine” within an organisation. For example, an aggressive and hyper-competitive culture is likely to be defined as masculine.
- Long-Term Orientation: This is the degree to which an organisation or culture plans pragmatically for the future or attempts to create short-term gains. How far out is strategy considered, and to what degree are longer-term goal incorporated into company strategy?
- Indulgence vs. Restraint: This pertains to the amount (and ease) of spending and fulfillment of needs. For example, a restrained culture may have strict rules and regulations for tapping company resources.
Charles Handy's Four Types of Culture
Leading management thinker Charles Handy identifies four main types of culture that organisations typically embrace.
His four types include:
A culture in organisations where the power remains in the hands of only few people and only they take decisions and control the organisational direction and further delegate responsibilities to the other employees. In such a culture the employees do not have the liberty to express their views or share their ideas on an open forum and have to follow what their superior says.
Role culture is a culture where every employee is delegated roles and responsibilities according to his specialisation, educational qualification and interest to extract the best out of him. Usually this creates a functional structure, where individuals know their job, report to their superiors (who have a similar skill set), and value efficiency and accuracy above all.
Organisations where teams are formed to achieve the targets or to solve particular problems follow the task culture. In such organisations individuals with common interests and specialisations come together to form a team. Power is derived from membership in teams that have the expertise to execute a task. In such a culture every team member has to contribute equally and accomplish tasks in the most innovative way.Due to the importance of given tasks, and the number of small teams in play, a matrix structure is common.
There are organisations where the employees feel that they are more important than their organisation. Such organisations follow a culture known as person culture. Each individual is seen as valuableand more important than the organisation itself.
Edgar Schein's Cultural Model
Edgar Schein’s model identifies 3 types of culture within an organisation, which, as a simpler model than Hofstede’s, is somewhat more generalised.
- Artifacts: The simplest perspective on culture is provided by the tangible artifacts that reveal specific cultural predispositions. How desks are situated, how people dress, how offices are decorated, etc., are examples of organisational artifacts.
- Values: Values pertain largely to the ethics embedded in an organisation. What does the organisation stand for? This is usually openly communicated with the public and demonstrated internally by employees. An example might be a non-profit organisation trying to mitigate poverty. The values of charity, understanding, empowerment, and empathy would be deeply ingrained within the organisation.
- Assumptions: The final type of culture, according to Schein, is much more difficult to deduce through observation alone. These are assumptions that infect the way in which communication occurs and individuals behave. They are often unconscious, yet hugely important.
In many ways, this correlates with Hofstede’s cultural dimensions. For example, a culture of avoiding risk wherever possible may be an assumption which employees act upon without realising it, and without receiving any directives to do so. High power distance could be another, where employees intuit that they should show a high degree of deference to their superiors without being specifically told to do so.
UNDERSTANDING ORGANISATIONAL CULTURES
This technical paper aims to offer a better understanding of the various types of organisational culture. A brief introduction discusses the two main approaches for analysing the culture of an organisation and includes the web model of Johnson & Scholes and the definitions of Charles Handy.
The paper also presents the various classifications, levels and structures of organisational culture, namely those of Hofstede, Schein, Trompenaars, and Deal & Kennedy. All of these classifications, levels and structures offer an explanation of how an organisational culture works and the various definitions are included to enhance the meaning and how cultures work.
Developing a culture in your organisation
An understanding of organisational culture is essential for effective leadership.
For practical guidance on understanding and developing culture in your organisation, download the CMI checklist below:
Understanding and Managing Organisational Culture Public service management perspective
Organisational culture is a widely used term but one that seems to give rise to a degree of ambiguity in terms of assessing its effectiveness on change variables in an organisation. For the past number of decades, most academics and practitioners studying organisations suggest the concept of culture is the climate and practices that organisations develop around their handling of people emphasises that an important trend in managerial thinking in recent decades has been one of encouraging managers to try to create strong organisational cultures. Schein suggests that culture and leadership are conceptually intertwined. This is supported by O’Farrell’s analysis of public service management.
This study reviews evidence that shows why managing culture is important to effectively enhancing both organisation performance and, in macro terms, the public service modernisation programme.