Unit 4

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  • Created by: georgia
  • Created on: 28-05-13 14:36

Factors influencing the culture of an organisation

Defintions

  • Culture- 'the way we do things around here'
  • Sub culture- group of people within a culture which differentiates them from the larger culture to which they belong
  • Core values- the essential and enduring guiding principles of an organisation
  • Vision statement- a picture of an organisation in the future which ssets the framework for strategic planning
  • Paradigm- the set of assumptions held in common & taken for franted in an oragnisation

Factors influencing culture of an organisation

  • size and development stage of the business
  • leadership and management style
  • attitude of organisation to risk-taking and innovation
  • market/industry in which it operates
  • external environment
  • working environment and nature of tasks
  • employee and management reward structures (e.g. pay, bonuses, individual v team rewards)
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Factors influencing the culture of an organisation

Key theories/ concepts

 Charles Handy- 4 types of culture

  • Power: focus on personal charisma & risk taking
  • Role: focus on position, bureacracy, hierachy
  • Task: focus on problem-solving, teamwork, creativity
  • Person: focus on individual needs, independence

Cultural differences within an organisation

  • subcultures develop within an organisation based on occupations, product lines, functins, geographies and echelons in the hierachy. Some firms: subcultures are stonger than overall organisational culture
  • managing sub cultuers has become more improtant and 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
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Factors influencing the culture of an organisation

Examples

  • Barclays
  • Apple/Disney
  • Google

Depends on factors

Organisations will vary significantly in terms of the strength and depth of their culture which will depend on: strength and clarity of the organisation founder, amount and intensity of shared experiences that organisation member have had and how much success the organisation has enjoyed

Further evaluation opportunities

  • much accademic research on what organisational culture is - but little agreement, so theoretical models can only be a guide
  • culture is a complex xoncept which is difficult to understand= a challenge for business leaders
  • always depend on the organisation- no right or wrong culture
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The impact of organisational culture on business s

Definitions

Intangible asset- non monetary asset without physical substance which generates economic benefits

Strong culture- a consistent culture; understood and felt by people inside & outside the organisation, consistent with organisational goals

Features of negative/ toxic business culture

Toxic culture- questionable morals and unethical behaviour. May arise within a sub-culture or within the business as a whole

Features of weak culture- little alignment with business values; inconsistent behavior; a need for extensive bureacracy & procedures

Key theories/ concepts

  • employee engagement
  • competitve advantage
  • cultural glue
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The impact of organisational culture on business s

Features of positive/ successful culture

  • a source of competitive advantage & potentially the most important intangible asset of an organisation
  • clear set of values, missions & goals
  • performance orientated
  • encourages suitable risk-taking & innovation
  • strong internal communication
  • engaged employees: higher motivation and loyalty
  • better connection between depts & divisions
  • not easily copied

Examples of when culture goes wrong:

  • RBS- Fred Goodwin
  • ...
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The impact of organisational culture on business s

Depends on factors

  • research emphasises the complexity of corporate culture & the risks of oversimplifying what is it and how to change it
  • larger, longer-established firms have more complex cultures, consisting of sub-cultures, individuals and groups
  • having a clear, well-communicated and accepted set of core values helps to establish a common, positive culture
  • a flawed business model or strategy is unlikely to result in business success, even if the culture is strong and healthy
  • a culture that fails to adapt to the changing external environment may hasted the failure of an organisation

Further evaluation opportunities

  • many potential links between organisation culture and business sucess but difficult to prove
  • successful businesses often recognise that the business modle/strategy and culture are independent- the whole system is aligned
  • better performing firms pay attention to nurturing culture- they're disciplined & invest time in it
  • leadership plays a key role in nurturing culture
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The reasons for changes in organisational culture

Definitions

Static culture- a clture that does not change in response to the changing external environment

Dynamic culture- a culture that evolves in response to changes in the external environemtn and or a different business strategy/model

Reasons for changing culture

Improved business performance:

  • declining profits and sales
  • inadequate returns on investment
  • low quality of standars of customer service

To respond to significant change:

  • market changes (growth,competitors)
  • political and legal environment
  • change of ownership (takeover/merger) or change of leadership (new CEO)
  • economic conditions
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The reasons for changes in organisational culture

Key theories/ concepts

  • Bonus culture: a culture in which importance of financial rewards is emphasised and celebrated. Can be for key individuals or company wide.
  • Toxic culture: when a workplace culture evolves on its own with little attention given to relationships and employees arent held accountable for reudness or disrespect

Potential signs/ evidence of dysfunctional culture

  • internal fighting; management criticism
  • high leves of voluntary staff turnover and hard to retain top talent
  • greater absenteeism
  • processes become more bureaucratic
  • innovation is no longer valued
  • evidence of declining customer service
  • leadership show double standards or decision making becomes inconsistent
  • communication becomes more closed and restricted
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The reasons for changes in organisational culture

Key Examples

Some firms whose culture may have contributed to a failure to change:

  • Kodak
  • Nokia

Businesses going through a painful process of organisational change:

  • Royal Mail
  • NHS
  • RBS

Depends on factors

  • organisational culture evolves naturally, but the pace and nature of change will very muh depend on the evolving circumstances of the organisation
  • managing the cultureal evolution is one of the primary tasks of an organisaion's leadership
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Ways of changing organisational culture

Definitions

Change management- a structured approach in an organisation for ensuring that changes are smoothly and successfully implemented, and that the lasting benefits of change are acheived

Step change/ incremental change: how much change and when?

Methods of change

  • recognise what contributes tomaking the culture matter (visions, values)
  • invest in and nuture what matters to the desired culture (training, innovation, employee engagement)
  • aim to maintain high cultural distinctiveness and competitive edge
  • owning the culture is part of every employee's role- need to tka responsibility to fit it in, meet cultural expectations and develop the culture

Key theories

- Lewin force field analysis

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Ways of changing organisational culture

Ways of measuring culture and effect of culture

Ways to measure the strength/ effectiveness of culture change: external surveys, % of repeat customers, customer referrals, employee surves, focus groups, staff turnover

What to change?

  • leadership- how employees feel about the head of the organisation
  • my manager- how employees feel about and communicate with their direct manager
  • personal growth- what employees feel about training and their future prospects
  • wellbeing- how employees feel about stress, pressure at work, and work life balance
  • my team- employees feelings towards their immediate colleagues and how well they work together
  • giving something back- the extent to which employees feel their organisation has a positive impact on society
  • my company- the level of engagement employees have for thei job and organisation
  • fair deal- how happy employees are with their pay and benefits
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Ways of changing organisational culture

Key exmaples

Insights from CEOs who have successfully changed organisational culture:

  • Moya Greene (Royal Mail)
  • Archie Norman (ITV, Asda)

Depends on factors:

  • lots of evidence that culture management is not optional- so leaders have to find a way
  • organisational culture is a 'soft' management issure- it is not easily measuerd or controlled
  • organisational culture is becoming less predictable- like other elements of the external environement because of the way the work is changing

Further evaluation opportunities

  • it is too easy to under-estimate the challenge of trying to change/improve organisational culture
  • culture change is not straightforward- its a slow and often painful process
  • you cannot 'create; a new culture in an organisation that has already evolved a culture
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Problems of changing organisational culture

Definitions

Culture clash- when one of more cultres are integrated into one environment, causing disruption and challenging contemporary traditions

Problems of change

  • mergers and acquisitions
  • generational differences
  • national/geographical
  • departmental
  • strategic or leadership change

Forces resisting change

  • loyalty to existing relationships; failure to accept the need for change, insecurity, preference for the existing arrangements, different person ambitions
  • fear of change; loss of skills, loss of power, loss of income, dear of the unknown, inability to perform as well in the new situation, brea up of work groups
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Problems of changing organisational culture

Key examples

Take overs and mergers provide a rich source of examples of how difficult it is to change and integrate organisational culture, e.g. Daimler/Chrysler

Depends on factors:

  • organisational culture is deep, danger that if management treat it as a superficial phenomenon and assume it can be changed at will, they will fail
  • organisational culture is normally & inherently stable (resistant to change). Humans dont like change
  • if an organisational is to change then it has to unlearn something before learning something new

Further evaluation opportunities

  • recognise that an organisation's culture is in a continuous state of flux responding to change in the external environment
  • aiming to create, change or protect culture is challenging and takes time
  • successful cultural change requires clear business strategy & a strong set of corporate goals
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