Factors influencing the culture of an organisation and cultural

differences within an organisation

ORGANISATIONAL CULTURE

Key definitions

• Culture: “The way we do things around here” • Sub-culture: group of people within a culture (whether

distinct or hidden) which differentiates them from the larger culture to which they belong

• Mission: a formal statement of an organisation's fundamental purpose (similar to vision, purpose)

• Core values: the essential and enduring guiding principles of an organisation.

• Vision statement: a picture of an organisation in the future (aspiration, inspiration) which sets the framework for strategic planning.

• Paradigm: the set of assumptions held in common & taken for granted in an organisation

Key theories to consider

• Charles Handy: four types of culture – Power : focus on personal charisma & risk-taking – Role: focus on position, bureaucracy, hierarchy – Task: focus on problem-solving, teamwork, creativity – Person: focus on individual needs, independence

• Edgar Schein: 4 layers of organisational structure: Values | Beliefs | Behaviours | Paradigm

• Johnson & Scholes: Cultural Web (Symbols, Power Structures, Organisational Structures, Control Systems, Rituals & Routines, Stories)

Factors Influencing Culture of an Organisation (1)

• Influence of the founder (“shadow of the leader”)

• Size & development stage of the business (e.g. start-up, multisite, multinational)

• Leadership & management style

• Organisational structure, policies & practices

Factors Influencing Culture of an Organisation (2)

• Employee & management reward structures (e.g. pay, bonuses, individual v team rewards)

• Market /industries in which it operates • Working environment & nature of tasks (e.g.

physical, office, remote working, flexible working)

• External environment (e.g. legal, economic) • Attitude of organisation to risk-taking &

innovation

Sub-cultures

• Subcultures develop within an organisation based on occupations, product lines, functions, geographies and echelons in the hierarchy.

• Some firms: sub-cultures are stronger than overall organisational culture

• Managing Sub-cultures has become more important & challenging: – Mergers, takeovers, joint ventures more common – Globalisation: many firms now multi-cultural based on

nationality, language – Technological complexity: depts. more specialised; more remote

& flexible working

Some good examples to research

• Barclays: impact of powerful sub-culture at investment banking division (came to dominate retail bank)

• Apple / Disney: role of culture of innovation & secrecy; shadow of the leader – Steve Jobs, Walt Disney

• HP (HP Way), Toyota (Toyota Way) – long-established cultural programmes, including induction

• NHS: public sector organisation with complex cultural challenges – combination of role & task culture?

• Walmart: a common approach to employee (“shareholder”) engagement across the globe

• Google: has deliberately maintained existing culture of acquisitions (e.g. YouTube & Zappos)

Key depends on factors

• Organisations will vary significantly in terms of the strength and depth of their culture: this will depend on:

• Strength & clarity of the organisation founder

• Amount and intensity of shared experiences that organisation members have had

• How much success the organisation has enjoyed

Some possible evaluation points

• Much academic research on what organisational culture is – but little agreement, so theoretical models can only be a guide.

• Culture is a complex concept which is difficult to understand = a challenge for business leaders!

• There is no absolute criterion for a “better” or a “worse” culture – it depends on what is “right” for the organisation

Background Slides, Examples and Other

Activities

There are many different types of organisational culture

A useful analogy for Corporate Culture

Culture is the DNA of a business

Another analogy – the Culture Aquarium

“Culture cannot be manufactured. It has to be gently nurtured by everyone from the CEO down.

Ignoring the health of your culture is like letting aquarium water get dirty”

Source: Shaun Parr, FastCompany 2012

Corporate Culture has been

studied extensively

Two culture “gurus”

Ed Schein Charles Handy

Schein’s Culture Triangle

Artifacts

Espoused Values

Basic Underlying Assumptions

Shallower

Deeper

4 layers of organisational culture

Values

Beliefs

Behaviours

Paradigm

Source: E Schein

Organisational Culture, 1998

Schein on the key link between leadership & culture

“the only thing of real importance that leaders do is to create and manage culture”

Handy’s concise definition…

“The way we do things around

here!

Handy’s Four Classes of Culture

Power Role

Task Person

But note the comment from AQA…

“You are strongly recommended to compare and contrast a number of different types of organisational culture.

You will not be asked a question on any one specific type of culture”

The Cultural Web of an Organisation

The Paradigm

Stories

Rituals & Routines

Control Systems

Organisational Structures

Power Structures

Symbols

Source: Johnson & Scholes

Nordstrom

Nordstrom’s New Employee Handbook

Welcome to Nordstrom We're glad to have you with our Company. Our number one goal is to

provide outstanding customer service. Set both your personal and professional goals high. We have great confidence in your ability to

achieve them.

Nordstrom Rules: Rule #1: Use best judgment in all situations.

There will be no additional rules. Please feel free to ask your department manager, store manager, or

division general manager any question at any time.

Nordstrom’s organisational structure?

Customers

Sales & Sales Support People

Department Managers

Store Managers, Merchandise Mgrs, Buyers

Board of Directors

Nordstrom “Company Structure”

Stories

Which business was born in this garage?

Can corporate culture be measured?

Strong or weak culture?

Staff understand and respond to culture

Little need for policies and procedures

Consistent behaviour

Culture is embedded

Strong Little alignment with

business values

Inconsistent behaviour

A need for extensive bureaucracy &

procedures

Weak

• External surveys

• Customer testimonials

• % of repeat business

• Customer referrals

• Intuitive gauging

• Employees surveys

• Focus groups

• Staff retention

• Staff turnover

Some ways culture might be measured

Thinking Skills Exercise: Corporate Culture Unearthed in 2050

The year is 2050 Anthropologists have unearthed

evidence of a popular but now extinct business culture from 2013…

Culture Unearthed - 2050

What 3 words might the anthropologists

use to describe the corporate culture of the business they have unearthed?

The Importance of Symbols

Straw poll: Who likes shopping here?

Culture Mind Reader

“…I’m thinking of 5

symbols which help define

the culture of in the

minds of customers”

Culture Symbols of IKEA

Symbols of IKEA

“to visit IKEA is to visit Sweden”

Ollie Wastburg, Swedish Institute

IKEA – one of the BEST examples of Organisational Culture

Applying for a job at IKEA

Visit the tutor2u BUSS4 Organisational Culture

Blog for more resources