Organizational Culture

Cite this article as:"Organizational Culture," in The Business Professor, updated April 26, 2020, last accessed June 6, 2020, https://thebusinessprofessor.com/lesson/organizational-culture/.

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What Is Organizational Culture?

Organizational culture refers to a broad system of shared assumptions, values, and beliefs that manifest itself through individual behavior. Organizational culture affects many aspects of the organization, including decision-making, organizational design, leadership approaches, etc.

Managers seek to take advantage of organizational culture to promote organizational goals and improve performance and efficiency. It can also be an important control function for dictating and monitoring employee behavior.

The strength of organizational culture is related to how much consensus there is regarding the values and mission of the company. The stronger the culture, the more it affects the way employees behave, and the more difficult it is to change.

Interestingly organizations may have multiple cultures. Cultures tend to emerge with individual departments or subunits of the organization. These are known as organizational subcultures. The main influences on the formation of subcultures are personal characteristics of employees and work conditions.

A major difficulty for managers in managing organizational culture is the ability to recognize and understand the various subcultures. The fear for managers is that a subculture evolves into a counterculture. A counterculture shares values and beliefs that are in direct opposition to the values and beliefs of the organization.

As such, managers must become adept at identifying culture. The major ways that culture manifests itself are through:

What are the Levels of Organizational Culture?

Organizational culture consists of three interrelated levels.

  • Basic assumptions – These reflect beliefs about human nature and reality.
  • Values – These are shared principles, standards, and goals.
  • Artifacts – These are visible, tangible aspects of organizational culture.

Generally, managers start to understand an organization’s culture by observing the artifacts present. This can include the physical environment, employee interactions, company policies, reporting structure, work divisions, reward systems, and other observable characteristics.

To understand values, managers must observe employees individually. We all have unique values that influence our behavior to varying degrees. These values are most evident when we interact with others socially and professionally. Our values will also manifest themselves in our choices.

While basic assumptions are subconscious and not readily distinguishable without in-depth conversation and analysis, managers may be able to form an understanding of employee basic assumptions through a detailed understanding of their values. In addition to observation, managers may be able to take perspective or simply question employees about their values and beliefs.

What are the Dimensions of Culture?

As discussed, identifying the values common to the organization and employees will help in identifying, measuring, and managing culture more effectively.

The Organizational Culture Profile (OCP) is a well-recognized typology of where culture is represented by seven distinct values.

  • Innovative Cultures – Innovative cultures are flexible, adaptable, and experiment with new ideas. They tend to have a flat hierarchy in which titles and other status distinctions are downplayed.
  • Aggressive Cultures – Aggressive cultures value competitiveness and outperforming competitors.
  • Outcome-Oriented Cultures – Outcome-oriented cultures emphasize achievement, results, and action as important values. Managers and employees are held accountable for success or failure. There is normally a reward system tied to employee and group output.
  • Stable Cultures – Stable cultures are predictable, rule-oriented, and bureaucratic.
  • People-Oriented Cultures – People-oriented cultures value fairness, supportiveness, and respecting individual rights. There is a greater emphasis on treating people with respect and dignity.
  • Team-Oriented Cultures – Team-oriented culture are collaborative and emphasize cooperation among employees.
  • Detail-Oriented Cultures – Detail-oriented culture emphasize precision and paying attention to details.

How Are Cultures Created?

Cultures develop in an organization through the following means:

  • Founder Vision Values – Early on, an organization’s values are adopted from the values and vision of the founders. They shape the early aspects of the organization through various methods, such as structure, hiring, modeling, mentoring, etc.
  • Internal and External Challenges – Challenges are situations or circumstances faced by the organization. These challenges may affect how things are done internally and/or externally. For example, organizations must react and evolve with the characteristics and demands of the industry. The internal challenge concerns meeting operational demands. External challenges are competing against other businesses. Internal challenges affect the internal culture based upon how, why, and for what reason activities are undertaken. External challenges can create cultural similarities between companies within the industry.
  • Hiring and Attrition – As organizations grow, new members bring personal characteristics that affect the organizational culture. Also, elements of organizational culture may diminish as individuals leave the company.

What is Attraction-Selection-Attrition in Organizational Culture?

Attraction-selection-attrition (ASA) is the function through which organizational culture is maintained or strengthened within an organization.

  • Attraction – Organizations are attracted to cultures in which they fit in. Individuals routinely seek comfort an camaraderie in an organization. As such, they are naturally attracted to familiar cultures.
  • Selection – Research shows that fit within an organization’s structure is the most important characteristic for determining who is hired. The company grows by adding people who have assimilated into the existing culture.
  • Attrition – Individuals who do not fit within the organization’s culture and are never able to adequately assimilate often continue to feel uncomfortable or out of place. This can harm the individual’s job satisfaction and ultimately lead to attrition – leaving the company.

In summary, the organization attracts, selects, and retain individuals who fit within the existing culture (values, beliefs, interests). As such, the organization’s culture is like to maintain or strengthen.

Others methods of reinforcing Organizational Culture

A major way of maintaining or strengthening organizational culture is through indoctrination. This is primary done through exposure and training. This is also known as the organizational “socialization process”.

For example, during the company’s onboarding process, it is common to introduce the employee to the organization’s values, norms, and expected behavioral patterns .

Another example of indoctrination is through interaction with leadership. Leaders have an outsized role in setting organizational culture by virtue of their position of power and influence over subordinates. Employees are more apt to adopt behaviors that fit with the employer’s expectations. This is known as “role-modeling”.

Lastly, pursuant to reinforcement theory, employees will adopt behaviors that are positively or negatively incentivizes. Positive reinforcement would include reward desired behavior with company benefits, such as more money or recognition. Negative reinforcement might include removing negative consequences if the employee exhibits good behavior. Then, of course, there is always punishment as a deterrent to unwanted behavior. In any event, reinforcement causes adoption of expected behavior and the apparent acceptance to company goals and expectations.

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