SESSION 03 – ORGANISATIONAL CULTURE

OVERVIEW
Objective

¾ To describe and examine the role of culture within an organisation.

¾ Overview
CULTURE ¾ Determinants

¾ Edgar Schein
WRITERS ¾ Handy, Charles (1932 – )
¾ Geert Hofstede (1928 – )

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1 CULTURE
1.1 Overview

¾ Culture is very difficult to precisely define. Some definitions/explanations include:

Culture

“In organisations there are deep-set beliefs about the way work should be
organised, the way authority should be exercised, people rewarded, people
controlled . . . these are all aspects of the culture of an organisation.” Charles
Handy

“A set of common understandings around which action is organised, . . .

finding expression in language whose nuances are peculiar to the group”
(Becker and Geer).

“A set of understandings or meanings shared by a group of people that are

largely tacit among members and are clearly relevant and distinctive to the
particular group which are also passed on to new members” (Louis) .

“A system of knowledge, of standards for perceiving, believing, evaluating

and acting . . . that serve to relate human communities to their environmental
settings” (Allaire and Firsirotu) .

“A system of shared values and beliefs about what is important, what

behaviours are appropriate and about feelings and relationships internally and
externally. Values and cultures need to be unique to the organisation, widely
shared and reflected in daily practice and relevant to the company purpose
and strategy”. (Chartered Institute of Personnel and Development)

“The way things get done around here” (Deal & Kennedy)

¾ Whilst culture covers many levels, e.g.:

‰ National culture – nations, regions within countries, ethnic groups

‰ Gender culture – sex, i.e. female, male, gay
‰ Social class culture – lower class, middle class, upper class
‰ Occupational culture – working class, professional class, blue-collar, white-collar
‰ Organisational culture – for profit, not-for-profit, NGOs, entrepreneurial

there are two basic views on culture – it is either implicit or explicit.

1.1.1 Implicit

¾ Being implicit, means that in social life culture is what naturally emerges as individuals
transform themselves into social groups such as tribes, communities, and ultimately,
nations.

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1.1.2 Explicit

¾ Being explicit implies that culture is a social product arising from social interaction
either as an intentional or unintentional consequence of behaviour. In other words,
culture is comprised of distinct observable forms (e.g., language, use of symbols,
ceremonies, customs, methods of problem solving, use of tools or technology, and
design of work settings) that groups of people create through social interaction and use
to confront the broader social environment. (Wuthnow and Witten 1988).

¾ The explicit view of culture is most relevant to the analysis and evaluation of
organisational culture and to cultural change strategies that leaders can employ to
improve organisational performance

1.2 Determinants

¾ The culture of an organisation is not something that is developed “overnight”. It

develops slowly over time and is the product of many different influences and
determinants.

Example 1

Describe SIX determinants of culture within an organisation.

Solution

¾ G. Johnson in an article written for the Strategic Management Journal, described a cultural
web, identifying a number of elements that can be used to describe or influence
organisational culture:

‰ The Paradigm – what the organization is about, what it does, its mission, its values.
‰ Control Systems – the processes in place to monitor what is going on. Role cultures
would have vast rulebooks. There would be more reliance on individualism in a
power culture.
‰ Organizational Structures – reporting lines, hierarchies, and the way that work
flows through the business.

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‰ Power Structures – who makes the decisions, how widely spread is power, and on
what is power based?
‰ Symbols – these include organisational logos and designs, but also extend to
symbols of power such as parking spaces and executive washrooms.
‰ Rituals and Routines – management meetings, board reports and so on may
become more habitual than necessary.
‰ Stories and Myths – these build up about people and events, and convey a message
about what is valued within the organisation.

¾ Deal & Kennedy considered that, in the 1980s, the idea that the culture of an
organisation was important became widely accepted and influential. The idea’s basic
premise was that a strong organisational culture means that everyone knows how
things are done and so there is little or no need for any tight structuring of activities,
that is via detailed formal plans and procedures.

¾ A tight or strong organisational culture means that loose or more implicit structuring is
possible. Conversely if culture control is weak and if the organisation is going to
survive in economic terms then activities (sub-tasks) are more likely to be tightly
structured.

2 WRITERS
2.1 Schein

¾ Edgar Schein (1928 - ) a professor at the Sloan Business School at MIT, defined
organisational culture as “the basic tacit assumptions about how the world is and ought
to be that a group of people are sharing and that determines their perceptions, thoughts,
feelings, and, their overt behaviour.”

¾ He believed that culture was the primary source of resistance to change. Managers who
ignore the implications of an organisation’s culture, end up being managed by that
culture rather than being able to manage and use that culture to their advantage.
Cultural understanding is essential for leaders if they are to lead, especially if they deem
it necessary to change the organisational culture to ensure the organisation’s survival.

¾ He classified organisational culture into three levels:

‰ Level 1 – Artefacts and creations, i.e. the constructed physical environment (e.g.
space and layout) and social environment (e.g. language and behaviour). These
will usually be highly visual and can be seen in things like the company dress code
(spoken or unspoken), organisation logos and letter heads, greeting styles
(handshakes, exchange of business cards, use of surname or first name) the office
layout (open plan or private offices, size of offices, size of desks), the type of art
chosen for the premises (modern or classic) or the use of elaborate decorative
ornaments (e.g. fountains in the reception, fish tanks in the lifts).

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Commentary

Whilst easily seen, artefacts may be hard to understand and decipher, e.g. the tale of
two executives sitting at a meeting where all executives are wearing black and white
three pointed hats, one saying to another ….. “I don’t know how it started, either. All
I know is that it’s part of our corporate culture.”

‰ Level 2 – Espoused Values, i.e. the conscious strategies, goals, values and
philosophies held close by management. These may be different from enacted
values (the values reflected by employees’ actual behaviour). For example, the
senior management might advocate an equal opportunity policy (espoused value),
but the middle management might disregard this in the recruitment process (actual
behaviour). In some cases, such values and beliefs may be overtly expressed in
corporate slogans or the mission statement.

‰ Level 3 – Basic assumptions and values, i.e. unconsciously held (taken for granted
and therefore difficult to discern) learned responses. These may start as espoused
values but become ingrained as problems are repeatedly solved and accepted such
that the initial reason for doing so becomes lost. For example, how employees
repeatedly deal with customers’ problems (orientation towards customer
satisfaction, informal procedures or formal company rules) can be a become a basic
assumption. These assumptions form because of the nature of humans, their
relationships, activities, reality and truths.

2.2 Handy (1932 — )

¾ Charles Handy, in his 1983 book Understanding Organisations, suggests four

classifications of organisational culture based on the work of Harrison.

2.2.1 Power culture

Example 1

Describe Handy’s power culture

Solution

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2.2.2 Role culture

¾ Role-cultures tend to develop in relatively stable environments. Importance is given to

predictability, standardisation and consistency. Such organisations are effectively
bureaucracies, working by logic and rationality. There is a highly formalised structure
with clear job descriptions, well-defined rules and much proceduralisation. It is
characterised by a high degree of specialisation in job roles.

Commentary

Typical examples are very often found within national and local government functions.
Up until the early 80s, many examples also existed within commercial organisations,
e.g. IBM. However, changing demands and business environment required such
organisations to become more flexible and responsive, so moving away from a role
culture.

¾ Work is based around the position (role) rather than an individual. So long as
somebody is capable of carrying out the required role, they are suitable. The structure
of the organisation (and the roles within that structure) determines the authority and
responsibility of individuals. Performance required is related to role and functional
position. Performance over and above role is not expected and may disrupt.

¾ Individual views or personalities are unimportant. Entrepreneurial behaviour is

regarded as dysfunctional. Decision making and conflict resolution is taken up through
the lines of authority until an appropriate response can be made.

¾ Efficiency stems from rational allocation of work and conscientious performance of

defined responsibility. Application of rules and procedures are major methods of
influence.

¾ Employees benefit from security and predictability in working patterns. Power is based
on position not personal expression. Expert power is tolerated if it is line with the
accepted position.

¾ Because of the bureaucratic nature of role culture, such organisations may find it harder
to adjust to change or to recognise that the rules, procedures and tested ways of doing
things no longer fit the circumstances.

¾ Employees in a role-culture organisation may become frustrated and de-motivated if

they consider the work to be dehumanising or stifling initiative. Others may find it
motivating in that they just have to follow the rules and know exactly what is
happening and what needs to be done.

2.2.3 Task culture

¾ Within a task culture, the emphasis is on flexible working in teams on individual tasks
to get results and things done. Resources are given to the right people, at whatever
level, who are brought together as a team and given decision making powers to get on
with the task. Individuals are empowered with discretion and control over their work.

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¾ The task and results are the main focus and team composition and working
relationships are founded on capability rather than status. Position within a hierarchy
is usually irrelevant, an individual’s experience and knowledge being the key currency
to successfully completing a task (although in some organisations, an individual’s
experience will be an indicator of their position, e.g. assistant, senior, supervisor,
manager, partner within a financial services/auditing firm).

¾ If the task has a relatively short timeframe, e.g. weeks, when completed the team may
be given further tasks or will be broken up with the individual members joining other
teams (e.g. audit teams serving different clients). If the task has a timeframe measured
in months or years (e.g. a computer system development project) then the composition
of the team will change as the project progresses.

Commentary

Application of Belbin’s team role theory (e.g. shaper, implementer, co-coordinator etc.)
can be critical to the successful outcome of the team completing the given task.

In addition, team managers need to be well versed in the team building theories of
Tuckman (forming, storming, norming, performing). See www.businessballs.com

¾ Team based organisations tend to have higher employment costs, e.g. more managers
may be needed than in role based organisations. Economies of scale may be difficult to
achieve as each project may require different forms of resources at different times. If
resources become scarce, then project managers may have to compete for such resources
and a form of power culture may develop as individual priorities and objectives take
over.

¾ Other names applied to task cultures include:

‰ Network organisations
‰ Matrix organisations

2.2.4 Person culture

¾ In an organisation that shows person culture, the individual is the central point. If there
is a structure it exists only to serve the individuals within it. The culture only exists for
the people concerned, it has no super-ordinate objective.

¾ This culture may be the only acceptable organisation to particular groups – such as
workers’ co-operatives or where individuals basically work on their own but find some
back up useful, e.g. legal barristers, small partnerships, freelance consultants and
professionals and other freelance workers (who basically do all the work themselves
and who may only require secretarial and similar support).

¾ Power within such organisations is by consent. Influence is shared and the power base,
if needed, is usually expert individuals who do what they are good at and are listened
to on that basis.

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¾ “Management” positions are often lower in status than the professional individuals
within such organisations. In many cases, the professionals are “managed” by their
personal assistants, secretaries and clerks.

2.2.5 Mix and match

¾ Whilst Handy identified the above four classifications of culture, he also recognised that
each could be found within an organisation at the same time. Taking Anthony’s
classification of managerial activity:

‰ Strategic management, being concerned with setting direction, making policy and
managing crisis, could be aligned with power culture.

‰ Tactical management could be based on task culture in that it is concerned with

establishing means to the corporate ends, mobilising resources and innovating.

‰ Operational management, being concerned with routine activities to carry out the
tactical plans, is aligned with a role culture.

¾ Within larger organisations, it is possible that specific functions or divisions will be

based on a person culture, e.g. consultancy and training.

¾ As organisations are established and grow, the form of culture may also change. For
example, a task culture may be best for establishing and managing the start up of a set
of activities. Once established, and the initial tasks have been completed, the
organisation becomes more settled and homogeneous in carrying out its specific role.
Thus a role culture may best be suited to running the business.

2.3 Hofstede (1928 — )

¾ Geert (Gerard) Hofstede is a researcher from the Netherlands who looked at the
influence national culture has on organisational culture. He initially compared
(between 1967 and 1973) the cultural differences across the international offices of IBM
(covering some 70 countries) to develop his ideas.

¾ His initial studies have been supplemented since 2001 by further studies covering
commercial airline pilots and students in 23 countries, civil service managers in 14
counties, “up-market” consumers in 15 countries and “elites” in 19 countries.

¾ From his initial studies, he identified 4 primary dimensions of national culture (see
below). A fifth dimension, long term orientation (LTO), was added following further
studies with Chinese employees.

¾ His website (www.geert-hofstede.com) contains data on his dimensions for some 55

countries and regions. The Singapore page also shows a world average graph giving:

‰ Power distance (PD) = 52

‰ Individualism (IDV) = 40
‰ Masculinity (MAS) = 48
‰ Uncertainty avoidance index (UAI) = 61
‰ Long term orientation (LTO) = 44

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2.3.1 Power distance (PD)

¾ The extent to which less powerful members of society accept, and expect, an unequal
distribution of power (all societies are unequal, but some are more unequal than others).
This is not so much taken from the view point of the elite, but more from the “bottom of
the pile”. It suggests that a society’s level of inequality is endorsed by the followers as
much as by the leaders.

¾ A high PD index indicates cultures that accept higher inequalities of power, e.g. strong
centralisation, power concentrated in the hands of the few (elite), a top-down chain of
command, close supervision of the individual and little opportunity given to
individuals to influence decisions or progress to higher levels.

¾ A low PD index shows cultures where equality and opportunity for everyone is stressed
as being equal. Differences between power and wealth are not over emphasised.
Individuals are more likely to expect equality and equal rights in their society and have
significant opportunities to reach the top in their chosen work or profession. An
individual’s abilities count for more than their parental background, educational
establishment, class or wealth.

2.3.2 Individualism (IDV)

¾ The extent to which people form group ties and bonds. People in an individualistic
society have looser ties between individuals, and the boundary of care-giving is limited
to immediate family. In a collectivist society, people have stronger extended families
and the security that extended families will be there for help when needed.

¾ High individualism implies a society in which the ties between individuals are loose.
Individuals are expected to look after themselves and/or their immediate family.
Autonomy, individual choice, individual initiative and accepting responsibility for self
actions are key elements. Fits well with flat, group and task orientated organisations.

¾ Low individualism means collectivism based societies in which people from birth
onwards are integrated into strong, cohesive in-groups, often extended families (with
uncles, aunts and grandparents) which continue protecting them in exchange for
unquestioning loyalty. Fits well with organisations that offer a “job for life” approach
to their employees.

Commentary

Margaret Thatcher (British Prime Minister 1979-1990) once (in)famously said “There
is no such thing as Society. There are individual men and women, and there are
families.”

She had also said, earlier in her terms as Prime Minister, “We want a society where
people are free to make choices, to make mistakes, to be generous and compassionate.
This is what we mean by a moral society; not a society where the state is responsible for
everything, and no one is responsible for the state.”

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2.3.3 Uncertainty avoidance index (UAI)

¾ The extent to which a society tolerates uncertainty and ambiguity (i.e. unstructured) or
prefers security, order and control.

¾ A high UAI indicates a country does its best to avoid uncertainty. It has a low tolerance
for uncertainty, ambiguity, dissent and deviation. This creates a rule-oriented society
that institutes laws, rules, regulations, and controls in order to reduce the amount of
uncertainty. People tend to be more emotional and motivated by inner nervous energy.

¾ A low UAI ranking shows less concern about ambiguity and uncertainty and more
tolerance for unstructured situations, variety of opinions, dissent, conflict and
deviations from the norm. This is reflected in a society that is less rule-oriented, more
readily accepts change, and takes more and greater risks. Unstructured situations are
novel, unknown, surprising, different from usual. In such cultures, individuals tend to
be more flexible and creative. They may also deliberately seek out change and take risk.

2.3.4 Masculinity (MAS)

¾ Refers to the distribution of roles between traditionally male or female values within a
society. Male values might include competitiveness, assertiveness, aggressiveness,
achievement, control, power and the accumulation of wealth. Feminine values include
modesty, tenderness, compassion, consensus, relationships, quality of working life,
caring and supportive behaviour.

Commentary

This does not mean to say that all males, and only males, have “male” values. There
are many females who also display such characteristics. Hofstede uses these terms as
reference points.

¾ A high MAS ranking indicates the country experiences a high degree of gender
differentiation. In these cultures, the male role dominates a significant portion of the
society and power structure, with females being controlled by male domination. If
females are to progress to higher levels within an organisation (e.g. breaking through
the glass ceiling) they must use and display male role characteristics.

¾ A low MAS ranking indicates the country has a low level of differentiation and
discrimination between genders. In these cultures, females are treated equally to males
in all aspects of the society. This does not mean that they develop 100% male
characteristics, but are more often accepted as they are and for what they do. Men take
on more of the female characteristics as females take on more of the male characteristics.

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2.3.5 Long-Term Orientation (LTO)

¾ Focuses on the degree the society embraces, or does not embrace, long-term devotion to
traditional, forward thinking values – the importance of the future versus the past and
present.

¾ Long term oriented societies will value thrift and perseverance. In short term oriented
societies, respect for tradition and fulfilling social obligations and protecting one’s
“face” are valued more.

¾ High LTO ranking indicates the country prescribes to the values of long-term
commitments and respect for tradition. This is thought to support a strong work ethic
where long-term rewards are expected as a result of today’s hard work.

¾ However, business may take longer to develop in this society, particularly for an
“outsider”.

¾ A low LTO ranking indicates the country does not reinforce the concept of long-term,
traditional orientation. In this culture, change can occur more rapidly as long-term
traditions and commitments do not become impediments.

¾ Both the positively and the negatively rated values of this dimension are found in the
teachings of Confucius, the most influential Chinese philosopher who lived around 500
B.C. Hofestede’s approach to this dimension ensures that it also applies to countries
without a Confucian heritage.

FOCUS
You should now be able to:

¾ define organisational culture;

¾ describe the factors that shape the culture of the organisation;

¾ explain the contribution made by writers on culture, e.g. Schein, Handy and Hofstede.

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EXAMPLE SOLUTION
Solution 1 — Determinants of culture

¾ Mission, aims and objectives of the organisation and clarity of direction given by
management.
¾ History and values of the founder, including surviving family members active within
management.
¾ Structure, e.g. private or public ownership.
¾ People – their background, nationality, sex, religion, age and how they interact.
¾ Management style, e.g. degree of formality, dominant individuals, communication
channels, participation, contact, use and encouragement of the informal organisation.
¾ Degree of individual initiative, autonomy, responsibility, independence, risk and
conflict tolerance allowed to individuals.
¾ Business values, e.g. professionalism, attitude to morals, ethical behaviour and social
responsibility.
¾ Orientation towards quality in product, service and attitude to customers.
¾ Dynamism, e.g. entrepreneurialism.
¾ Reward systems, e.g. annual inflation, recognition of performance, promotions.

Solution 2 — Handy’s power culture

¾ Often described in terms of a spider’s web with a central controlling spider. Those
ensnared within the web are dependent on the central power source, i.e. there is one
main source of power within the organisation.

¾ The controlling structure effectively radiates out from the centre with sideway links (the
web). The control may be through a single individual (e.g. an entrepreneur) or through
a small group (e.g. a family board of directors).

¾ There may be a specialist or functional structure but central control is exercised largely
through appointing loyal key individuals who are expected to perform in accordance
with the centre’s wishes rather than on rules and procedures. Such individuals are
often rewarded in ways that should they step out of line, the impact of loosing their
rewards and power will be significant and highly damaging to them.

¾ Power based organisations can be strong, proud and dynamic. They will react quickly
to external demands – or at least as quickly as the centre wishes. Often, there is no need
for formal rules and procedures, as decision making is always referred to the centre or
follows precedent previously set by the centre (in other words, there is only one rule –
“do as I say”).

¾ Such organisations do however rely heavily on the ability and judgement of the central
power – if they loose their touch (e.g. become weak, fail to recognise the need for
change, react too slowly or make the wrong decision) the organisation will struggle.

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¾ The organisation may also suffer from staff disaffection. Employees, especially
management, may feel they have insufficient scope and freedom to use their initiative.
The interventionist pressure and constant need to refer to centre may create
dysfunctional competition and jostling for the support of the boss. This will result in
less co-operation and sharing of information between employees, as certain employees
perceive a competitive advantage by not co-operating with others. They may also
perceive that withholding resources will damage a potential “competitor’s” position
and status within the eyes of the centre (boss).

¾ As the organisation grows, the power culture may eventually break down as it becomes
impossible for the centre to keep control over all aspects. The power is based on control
over resources and personal influence over others who may have also created their own
spider webs within the organisation (e.g. through divisionalisation).

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