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2.5 Organizational (corporate) culture (HL only) 2014

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Deborah Kelly

on 1 May 2018

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Transcript of 2.5 Organizational (corporate) culture (HL only) 2014

Influences on organizational culture
Senior management
may influence the culture of an organization through:

mission and vision statements - these inform staff about what the business is trying to achieve
the appointment of senior staff - likely will share the same values, attitudes and beliefs as the directors
the organization's ethical code of conduct - this lists the "dos" and "don'ts" that must be observed by staff when dealing with external stakeholders
strategies on social and environmental issues
the example they set - for example, how they treat subordinates and take decisions

the business operates in will also influence the values and beliefs of the organization.

legal constraints, social norms
cultural values
vary widely and these are likely to be reflected in the culture of the different countries organizations.
What is organizational culture?
"The way we do things around here."
2.5 Organizational (corporate) culture (HL only)
Types of organizational cultures
Charles Handy has identified the following culture types:
Power culture
- concentrating power among a few people. This is represented by a spider's web. The spider at the center has all the power
Decisions can be made swiftly as so few people are involved in making them
Managers are judged by results
Autocratic leadership style and hierarchical structures
Motivation methods would focus on financial incentives and bonuses to reward performance
Role culture
- each member of staff has a clearly defined job title and role. The image of a building is used to represent a role culture - solid and dependable but not going anywhere fast.

usually associated with bureaucratic organizations
staff operate within the rules and show little creativity
the structure of the organization is well defined and each individual has clear delegated authority
power and influence come from a person's position
decision-making is fast and risk taking is frowned upon
will use a tall hierarchical structure
Each organization has a unique culture which defines how that organization works.

Organizational culture is defined as the values, attitudes and beliefs of the people working in an organization.

Values, attitudes and beliefs have a very powerful influence on the way staff in a business will act, take decisions and relate to others in the organization.
Task culture
- based on cooperation and teamwork. The image of a net is used to show that the net's strength is derived from many strands.

groups are formed to solve particular problems
teams are empowered to take decisions
teams are encouraged to be creative
a strong team spirit often exists and this can be a very motivating environment
Person culture
- when individuals are given the freedom to express themselves and make decisions. This is depicted as a constellation of

stars each person is different from everyone else and they operate alone.
the most creative type of culture
no emphasis on teamwork as each individual is focused on their own tasks and projects
found in scientific research or professional partnerships like lawyers and architects
individuals will find it hard to work in a more structured environment
As with leadership styles there is no one right or wrong culture for a business, the appropriate culture will depend on the firm's objectives, the type of market it operates in and the values and expectations of managers and employees.
Culture Clashes
These exist when there is a conflict between one or more cultures within an organization. This often happens with
mergers, takeovers and expansion overseas
, when a firm
or if there is a
change in leadership.
As well it can result when the
culture of a business becomes
and clashes with new objectives needed to achieve growth, development and success.
Example: When EuroDisney first opened there were staff protests and they walked out. Why? Management wanted English as the language and had a strict dress code both of which were US based. Eventually, French working practices were adopted and it became Disneyland Paris.
Changing Organizational Culture
Changing the value system of a business and attitudes of all staff who work for it is never going to be an easy task.
The process can take several years
. In order to have effective cultural change:
The importance of organizational culture
the values of a business establish the norms of behavior of staff
culture determines the way in which company managers and workers treat each other
a distinctive organizational culture can support a business's brand image and relationship with customers
culture determines not just how decisions are made - with the participation of staff or not - but also the type of strategic decisions that are taken
organizational culture has been clearly linked to the economic performance and long-term success of organizations
elements of organizational culture
types of organizational culture
the reasons for
culture clash
influence of individuals on culture and how the culture influences individuals

Corporate Culture
2.5 Worksheet - Do it.

"Can Ryanair change its corporate culture with the same leadership?
"Changing Organizational Culture" - Kotter.
Organizational culture - strong vs weak.
key points in your notes.

Read Samsung Article and answer Q on next slide.
Look at clips in following slides and read article about the Kraft takeover of Cadbury. (great lead in to next topic on ER/ee relations.
Zappos Tony Hsieh on Corporate Culture
Like a business, each classroom also has its own culture. In groups of two think about one of your classes and "the way we do things". Think about...
What is a typical class like?
What are the teachers expectations of students?
Is the teacher passionate about their subject?
Is the teacher approachable if you have an problem or need clarification?
How often do you write assessments?
Do you have many assignments/projects?
Do you work in groups or alone?
Who does most of the talking - the teacher or students?
Can students ask questions?
What happens if you are late?
Elements of organizational culture
Kotter (a US management guru) in a blog -
6 components of a great corporate culture
outlines what he believes are the six elements which combine to make an organisational culture which can lead to better business performance. These are:

- what the purpose of an organisation is

- the behaviours and mindsets that aim to support the vision

- how the values of an organisation are translated into how it acts

- those who build and sustain the culture (with a strong link made to recruitment as a source of cultural strength)

- the story of the business; the heritage; the legends. A good example of this would be the HP Garage which is a core part of HP's organisational culture (the "HP Way")

- which significantly affect the values and behaviours of people in the organisation (a great example is the Googleplex)

Another element that impacts organizational culture is ...
Read Six Components of a Great Corporate Culture blog. List and briefly explain them in your notes.
Edgar Schein -
Three levels of organizational culture.

Deal and Kennedy (1982) described culture as the way to get things done within an organization based on feedback and reward and risk.
Tough-Guy, Macho
– This culture contains a world of individualists who enjoy risk and who get quick feedback on their decisions. This is an all-or-nothing culture where successful employees are the ones who enjoy excitement and work very hard to be stars. The entertainment industry, sports teams and advertising are great examples of this cultural type.

Teamwork is not highly valued in this culture, and it's a difficult environment for people who blossom slowly. This leads to higher turnover, which impedes efforts to build a cohesive culture. Thus, individualism continues to prevail
Work Hard/Play Hard
– This culture is the world of sales (among others). Employees themselves take few risks; however, the feedback on how well they are performing is almost immediate. Employees in this culture have to maintain high levels of energy and stay upbeat. Heroes in such cultures are high volume salespeople.

Interestingly, this culture recognizes that one person alone cannot make the company. They know it is a team effort and everyone is driven to excel. Contests among employees are common here, as they drive everyone to reach new heights.
– Here, the culture is one in which decisions are high risk but employees may wait years before they know whether their actions actually paid off. Pharmaceutical companies are an obvious example of this culture, as are oil and gas companies, architectural firms and organizations in other large, capital-intensive industries.

Because the need to make the right decision is so great, the cultural elements evolve such that values are long-term focused and there is a collective belief in the need to plan, prepare and perform due diligence at all stages of decision making.
– In this culture, feedback is slow, and the risks are low. Large retailers, banks, insurance companies and government organizations are typically in this group. No single transaction has much impact on the organization's success and it takes years to find out whether a decision was good or bad.

Because of the lack of immediate feedback, employees find it very difficult to measure what they do so they focus instead on how they do things. Technical excellence is often valued here and employees will pay attention to getting the process and the details right without necessarily measuring the actual outcome.
Deal and Kennedy
In your text there are also more:
Kotter and Heskett
Goffee and Jones
Geert Hofstede
Consequences of Culture Clash
In the beginning signs of culture clash are seen with employees will have a or feel:
Lack of focus - employees do not understand the "new" values and aims or the "new" leader.
preoccupation with the new leader or merger instead of focusing on their jobs
Sense of division
Sense of isolation
Unresponsive management

If these issues are not addressed the culture clash could lead to:
lower productivity
higher labour turnover
conflict in the workplace
decreased profitability
bankruptcy or failure
Artifacts = Organizational Attributes
You sense organizational attributes when you walk into a business. For example, when entering a government building in a communist country, stern signs or warnings are everywhere. Often visible is a picture or statue of a dominant leader. People may speak in hushed tones and dress in a conformist fashion. Others are viewed with suspicion.
What it is seen, heard and felt reflects the culture.
Espoused Values = Professed Culture
Some organizations "profess" their culture with slogans, statements, or images that project a certain image. These give clues as to how the organization operates. Websites of most large organizations give clear statements of what the business professes to believe or value. These sites contain statements about commitment to employees, customers, charities and other stakeholders.
Shared tactic assumptions = Organizational assumptions
People who have been with an organization for a long time will often talk about "how things really get done" as opposed to the "official" channels. These people are referring to the organizational assumptions. The ones who understand organizational assumptions have been there the longest. They know how to get things done - even if the "official" organizational structure says otherwise.

This reveals how difficult it is for new people in an organizations.
As well it explains how difficult it is for some new managers to initiate change.
Reasons for culture clashes
Different comfort level with diversity - some organizations are diverse others are ethnocentric

Different degrees of formality - formal vs informal

Different languages - can lead to misunderstandings

Different leadership styles

Different organization of task to people - some organizations are relationship oriented and others are task oriented

Different sense of time - in some cultures time is fixed - exact appointment times and schedules are important.
Be a thinker
Suggest one type of business organization which would suit:
power culture
role culture
task culture
person culture
Are there advantages and disadvantages in every case?
Culture is Key
Corporate Culture - Kraft's takeover of Cadbury's
Cadbury's -
stakeholder's impacted
Cadbury's culture
unions (2.6)
One year later
"The Kraft Foods Split Is The
Grand Finale Of An Epic
What happened? - Before and After
Key Concept - Business Culture
Samsung's Culture Problem
Source: tutor2u Jim Riley
Read the article "Culture shock - Samsungs mobile woes rooted in hardware legacy"
Consider the following question:
Could Samsung's organization culture be to blame?

What elements in the article would lead you to believe that their culture is to blame?
Research Zappos 10 Core Values. What are they?
30 minute revision video from Tutor2u -
also has potential Extended Essay ideas linked to the topic of Organizational Culture.
It is the beliefs and behaviors that permeate an organization that are the essence of culture.
concentrate on the positive
aspects of the business and enlarge on them.
full commitment
of people at the top and all key personnel
new objectives and a mission statement
that reflects the new values and attitudes
"bottom-up" participation of workers
when defining problems and devising solutions
train staff
in new procedures and new ways of working - if people believe in the change and understand the benefits of it, then it will become more acceptable to them
change the staff reward system to avoid rewarding the "old ways" - people need to be reassured that if they adjust to the new approach then they will gain from it.
Recap and Change
10 inspirational culture quotes from business leaders:
Five company's that get corporate culture right.
“Culture is simply a shared way of doing something with a passion.”
– Brian Chesky,
Co-Founder, CEO, Airbnb
(30 minutes on last slide!
The 8 Types of Company Culture
They all have pros and cons. For more, read "The Culture Factor."DECEMBER 18, 2017,
Harvard Business Review

LINK: https://hbr.org/video/5686668254001/the-8-types-of-company-culture
Full transcript