2.5.

Organizational and Corporate

Culture (HL only)
 Organizational and corporate culture

 Defined as what is normal to the organizations; how workers behave w/in the
business
 Set of norms (based on mission and vision)
 Helps people fit in based on the organization’s traditions and routines
 A manager has to understand in order to:
 Train the employees to fit company norms
 Improve communications between employees
 Better job description
 Other groups conform to subcultures, which can cause conflicts or culture
gaps
 Culture gaps are discrepancies among subgroups
 Difference between cultures exists within a business
 Elements of organizational culture
 N.O.R.M.S (nature of business, organizational structure, rewards,
management styles, sanctions)
 External factors such as location can also affect corporate culture (concern
from cross border joint ventures)
 Advantages of strong organizational culture
 Belonging and security
 Reducing mistakes
 Team cohesiveness
 Minimizes culture clash/gap
 Cultures can change due to:
 Mergers, takeovers, acquisitions
 Change in NORMS
 Types of organizational cultures
 Charles Handy’s 4 Types of Culture
 Power culture
 Power is centralized, quick decision making
 Results-based, likely flat
 Role culture
 Jobs are clearly stated, little creativity
 Highly structured, tall organization/bureaucratic
 Task culture
 Focuses on getting results from work done
 Individuals and teams are empowered and given flexibility
 Decentralized power
 Person culture
 Staff have similar positions with similar expertise
 Staff form groups to share knowledge
 Individual may benefit which may carryover to firm
 Edgar Schein’s 3 levels of corporate culture:
  Artifacts (e.g. history, facilities, buildings, dress code, etc.)
 Espoused values (e.g. mission, branding, slogans, etc.)
 Basic assumptions and values (values in behavior/action)
 Deal and Kennedy
 Corporate culture is the way things get done
 Two dimensions feedback/reward and risk
 Rapid feedback means bad culture is quickly removed
 High risk businesses needs people that fit well in their culture
 4 types of culture:
 Tough-guy Macho (rapid feedback, high risk)
 e.g. stock market, police force
 Work-hard, Play-hard (rapid feedback, low risk)
 Stress from pace of work instead of risk (e.g. hotel)
 Bet-the-company (slow feedback, high risk)
 e.g. oil exploration, pharmaceuticals
 Process (slow feedback, low risk)
 e.g. governments, insurance (bureaucracy)
 Knotted and Heskett
 Adaptive cultures – flexible work practices, entrepreneurial
 Inert cultures – strict work protocols
 Goffee and Jones
 Sociability – extent of concern for colleagues
 Solidarity – cohesiveness/unity in the organization
 Ideal culture will have high sociability and solidarity
 Gerry Hofstede
 Several factors in culture:
 Power distance – extent of unequal power distribution
 High – centralized
 Low – decentralized, delegation
 Individualism vs. collectivism
 Masculinity vs. femininity
 Uncertainty avoidance
 Long-term vs. short-term
 Culture clashes
 Occurs when there conflict between subcultures in an organization
 May lead to lowered productivity, staff walkouts, losses
 Happens during times of change
 e.g. takeovers, acquisitions, mergers, expansions
 Common causes
 High cost of implementing change
 Resistance to change from workforce
 Public opinion
 Difference in national cultures (e.g. job practice)
 Importance of understanding the organizational culture
 Culture gaps can cause major problems since individuals affect culture as
much as the other way around
 Poor culture may lead to absenteeism, lateness
 Cultural intelligence or cultural quotient
 Ability of individual to blend into a culture; attitude of workers to change
 Rational, motivated, and attentive workers help establish good culture