10.2 Managing organisational culture The importance of organisational culture

Learning outcomes You should be able to understand: The importance of organisational culture Different models of organisational culture

Overview of key concepts Organisational culture is all about ‘the way things are done around here’. There are many influences, both internal and external, that affect it. National cultures also affect how people work together.

The importance of organisational culture

Organisational culture Definition: The behaviour of people within an organisation and the meaning that they attach to those behaviours. Culture includes the organisation's vision, values, norms, systems, symbols, language, assumptions, beliefs and habits Organisational culture is 'the way things are done around here‘.

The organisational culture gives a sense of identity to employees Who we are. What we do. What we stand for. A strong organisational culture is one that is internally consistent, widely shared and makes clear what is expected and how people should behave.

Where does culture come from? Organisational culture The behaviour of leaders Organisational practices Shared beliefs, values and assumptions Ways of working The behaviour of individuals and groups

Where does culture come from? It is created unconsciously based on the values of the: Founders Senior management Core people. Over time, culture can change and evolve.

How do staff find out about decisions, what happens daily? Patterns of behaviour, formalised in everyday life of organisation, e.g. training availability. Sources of organisational culture Company routines Formal controls Organisational structure Power structure Symbols Rituals and myths How do staff find out about decisions, what happens daily? Rules and procedures – the amount of autonomy. Emblems representing the organisation: pay scales and status, size and location of manager’s office! Vertically, layers of hierarchy, functional areas, delegation etc. Interrelationships between individuals or groups.

Types of organisational culture Charles Handy in Understanding Organisations (1981) identified four different types of culture. Power culture Role culture Task culture Person culture.

Hofstede’s national culture Professor Hofstede stated: ‘Culture is the collective programming of the mind distinguishing the members of one group or category of people from others.’ He studied how values in the workplace influenced culture. His studies were across countries and he distinguished the values that underlie a country. As we are living in a global age where digital technology means we can all communicate and work with each other, more people find themselves working with people from different cultures. This can be exciting, frustrating and uncertain. Businesses need to connect with people globally but still motivate employees, structure projects and develop strategies globally as well. Therefore, understanding national cultures is important. Each country is scored from 1-120

Hofstede’s national culture Four groups of national culture: Power distance Individualism vs. collectivism Masculinity vs. femininity Uncertainty avoidance.

Power distance (PD) This refers to the degree of inequity between people with and without power. A high PD score indicates there is an unequal distribution of power. Low PD means that power is shared and well dispersed. Characteristics Tips High PD Centralised structures Strong hierarchies Large gaps in compensation, authority and respect Acknowledge the leader’s power Be aware that you may need to go to the top for answers Low PD Flatter organisations Supervisors and employee considered equals Use of teamwork Involve as many people as possible in decision making

Individualism (IDV) This refers to the strength of ties people have with others in the community. High IDV indicates loose connections with the community beyond family. Low IDV would indicate a strong cohesion with loyalty and respect for the community. Characteristics Tips High IDV High valuation on people’s time and their need for freedom An enjoyment of challenges and expectation of rewards Respect for privacy Acknowledge accomplishments Don’t ask for too much personal information Encourage debate and expression of own ideas Low IDV Emphasis on building skills and becoming masters of something Work for intrinsic rewards Harmony more important than honesty Show respect for age and wisdom Suppress feelings/emotions to work in harmony Respect traditions and introduce change slowly

Masculinity (MAS) This refers to how much society sticks with and values traditional male and female roles. High MAS scores are in countries where men are expected to be 'tough', women are in separate professions to men. Low MAS scores roles are blurred. Characteristics Tips High MAS Men are masculine and women are feminine There is a defined distinction between men’s and women’s work. Be aware that people may expect male and female roles to be distinct Advise men to avoid discussing emotions or making emotionally based decisions or arguments Low MAS Women can do anything a man can do Powerful and successful women are admired and respected Avoid an ‘old boys club’ mentality Ensure job design and practices are not discriminatory to either gender Treat men and women equally

Uncertainty/avoidance index (UAI) This refers to the degree of anxiety that society members feel when in uncertain or unknown situations. High UAI nationals avoid ambiguous situations, they are governed by rules and order. Low UAI scores indicate a society that enjoys novel events and values differences; there are few rules. Characteristics Tips High UAI Very formal business conduct with lots of rules and policies Employees need and expect structure Sense of nervousness spurns high levels of emotion and expression Differences are avoided. Be clear and concise about expectations and parameters Plan and prepare, communicate often, provide detailed plans, focus on tactical aspects of job Express your emotions through hand gestures and raised voices. Low UAI Informal business attitude More concern with long term strategy than what is happening daily Accepting of change and risk Don’t impose rules or structure unnecessarily Minimise emotional response by being calm/ contemplate the situation before speaking Express curiosity on the discovery of differences

Long-term Orientation (LTO)

Indulgence versus Restraint (IVR)

Criticisms

Applications of Hofstede’s national cultures Power distance – Malaysia has a PD score of 104 – here reports would be sent to top management only and there would be closed-door meetings by only a selected few powerful leaders. Individualism (IDV) – Central American countries have a low IDV therefore marketing campaigns should emphasise the benefits to the community. Masculinity (MAS) – Japan is a highly masculine society scoring 95 whereas Sweden has the lowest at 5. In Japan a team is more likely to succeed if lead by a male. In Sweden it would be the person with the best skills. Uncertainty/avoidance Index (UAI) – Belgium scores highly at 94 and here it is better to offer a limited choice for consideration but with very detailed information available.