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Organisational Culture by Kate Harrad

February 1, 2010 - In Leadership in Management - No comments yet

Is culture important? The evidence suggests that it is.  In 1996 Harvard Business Review conducted a study of successful companies and found that the most successful ones consistently performed well at what they described as ‘the four primary management practices’ – strategy, execution, culture, and structure. Beyond this, though, the types of successful culture were very different.

Building the right culture is essential to building a successful company, but the ‘right’ culture will depend almost entirely on the nature of the organization. Asking if company culture is good or bad is like asking if clothes are good or bad: the question to ask is whether they fit, whether they work, whether they enhance or undermine. The best clothing is tailored to the individual; equally, you cannot have a one-size-fits-all culture for all companies. For example, organizations can work with various different levels of sociability and of solidarity*, provided that the levels are right for the specific organization. High levels of sociability can lead to a good working environment, or to a cliquey and chaotic one; low levels can negatively affect morale, or can encourage greater productivity.

Examining culture more closely When we talk about culture, we need to be aware that it can be broadly divided into two main categories, which can be described as espoused culture and underlying culture. It should also be borne in mind that a third category, perceived culture, can make a significant difference.

Espoused culture is what the formal organization wants and what it believes about itself: job descriptions, official roles, activities designed to achieve common goals, mission statements, hierarchy, official relationships between groups and between individuals – the tip of the iceberg.

Underlying culture is the informal organization that underpins, interacts with and deeply affects the formal organization: personalities, unofficial alliances, activities that arise from individuals’ own needs rather than the company’s. This is the underwater part of the iceberg, the majority. It could also be described as ‘what is actually going on’.

Perceived culture is the company’s reputation in the outside world. This will involve several groups, including customers/clients; the industry within which the company operates; suppliers; potential employees; previous employees; shareholders, and other stakeholders such as the media. It can be quite different to both espoused culture and underlying culture. For example, a company might claim high standards of customer service, but have a reputation for rude employees and call centres that never answer the phone. And perhaps the truth, the underlying culture, is something in between, and depends on the behaviour of individual managers and their people.

In a successful organization, the underlying culture will be aligned with the espoused culture, and the perceived culture will reflect this, underpinning brand and reputation. If it is not aligned, this suggests a failure to implement the espoused culture, or that the company’s original culture has changed without its leaders noticing, or perhaps that the espoused culture is unrealistic in its ideals and aims. Why might this happen?

It could be that the organization has fallen out of touch with its people. If top managers do not know what is happening lower down, that could have a detrimental impact in several ways – the top levels will not be able to make realistic decisions about culture because they do not know the current reality; and the people who make up the bulk of the organization will not feel listened to or appreciated, which could lead them to turn against the organization. Edgar Shein in his book Organizational Psychology† describes what happens when an organization is seen as distant and unfeeling, i.e. when it stops paying attention to the underlying culture of individual personalities and extra-curricular behaviours. Individuals will often react to this by becoming transactional and viewing the organization with complete cynicism. Departments and other sub-groups of the organization may become loyal to the sub-group instead of the company as a whole, and may compete with other groups in a way which lowers business productivity.

Transparency is also an important attribute of an aligned culture. If a company is honest about its working environment, it will attract people who will be happy and productive working there. An employee who has been told that the company prioritises life-work balance and then finds that he or she is expected to stay till 10pm every night will quickly become demotivated. This is an example of an espoused culture that nobody believes, not even those who espouse it. It would be better to be open from the beginning about the workload, or better still, redesign the job to fit in with the espoused culture and allow the employee to achieve a genuine life-work balance.

How many mission statements or charters are taken seriously by employees? Companies who make public statements about their culture face a growing scepticism, unless they describe the company’s culture as it actually operates. Too many organizations do not follow through on their promises, and as a result they damage the culture they are trying to sustain.

*The concepts of sociability and solidarity are described in the article What Holds the Modern Company Together? by Rob Goffee and Gareth Jones. They say: “Sociability is a measure of sincere friendliness among members of a community. Solidarity is a measure of a community’s ability to pursue shared objectives quickly and effectively, regardless of personal ties.” (Harvard Business Review, November/December 1996.)

† Edgar Schein in Organizational Psychology† (Prentice-Hall, 1970) describes different kinds of psychological contract – coercive, utilitarian, normative – to make a similar point, that various kinds of organizational culture can work provided the psychological contract is fair and just.

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