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Economics and Organisations Week 9

Organisational Culture – and the Effects of National Culture

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What is Organisational Culture?

Basic Definition – Gareth Jones

“A set of shared values and norms that controls organisation members’ interaction with each other, and with suppliers, customers and others outside the organisation”

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Alternative Definitions

• “Culture is a system of publicly and collectively accepted meanings operating for a given group at a given time. This system of terms, forms, categories and images interprets a people’s own situation to themselves” – Pettigrew, 1979

• “…organisational culture can be thought of as the glue that holds an organisation together through a sharing of patterns of meaning. The culture focuses on the values, beliefs, and expectations that members come to share” - Siehl and Martin, 1984

• “The pattern of basic assumptions that a given group has invented, discovered or developed in learning to cope with its problems of external adaptation, and internal integration, and that have worked well enough to be considered valid, and therefore to be taught to new members as the correct way to perceive, think and feel in relation to these problems” - Edwin Schein, 1985

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Examples of Contrasting Cultures

• Hewlett Packard v ITTHP has history of collaboration, invention and teamwork

since 1940s – Never ‘hire and fire’ – cut hours not cut staff – Trust and cooperation; ‘locked door’ example

ITT led by Harold Geneen – considerable success under ruthless management – intensely competetive, every action challenged, management based on ‘unshakable facts’

• Coca-Cola vv Pepsi ColaApparently identical products, markets and everything!

BUT Coke has long tradition of highly participative management, whereas,Pepsi is highly authoritarian management

5Functionalist Approach to Organisation Culture

Organisational Values

Terminal Values

Desired end states or outcomes

Instrumental Values

Desired modes of behaviour

Specific norms, rules and SOPs

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Factors that determine Organisation Culture

Property Rights System

Characteristics of people

Organisational Culture

Organisational Structure

OrganisationalEthics

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Characteristics of People

• Different cultures attract different sorts of people – Cultures are different because people are different

• Organisations select staff with matching personality characteristics

• Staff in any organisation become more similar over time

• This is one of major problems for organisation change

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Organisational Ethics

• ‘Organisational ethics are moral values and rules that establish the appropriate way for organisational stakeholders to deal with one another and with the organisations environment’

• Organisational ethics are composed of:– Societal ethics – from society at large– Professional ethics – very strong in some

professions– Individual ethics – some people would never take a

pencil whereas others fiddle their expenses all the time!!

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Property Rights System

• “The rights that an organisation gives its members over the resources of the organisation”

• Property rights include:– Managers – ‘golden parachutes’, stock options– Employees – Lifetime employment, generous

severance payments, pensions and benefits– Shareholders – secure dividends, increase in value

• Property rights can be a restraint on change

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Organisational Structure

• Different structures are associated with different cultures - cause or effect?

• Mechanistic v Organic• Machine Bureaucracy v Adhocracy

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Other Theories of Organisational Culture

• More recent theories tend to be from outside the Functionalist paradigm

• Schein’s Theory• Symbolic-Interpretive• Post-Modern• Modernist

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Schein’s Model of Organisational Culture

Beliefs and Assumptions

Artifacts

Values

Assumptions

Visible but often undecipherable

Greater level of awareness

Taken for granted assumptions

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Assumptions - Examples

• With regard to its environment does the organisation perceive itself to be:– Dominant, Submissive, Harmonising, Searching a

niche

• How do we define what is ultimately true:– By pragmatic test, By reliance on wisdom, By social

consensus

• Is the best way to organise society on the basis of individuals or groups

• Is the best system of authority: autocratic/paternalistic or collegial/participative

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Norms and values

“Values are social principles, goals and standards held within a society to have intrinsic worth”- e.g. freedom, loyalty honesty, democracy etc

“Norms are closely associated with values. They are the unwritten rules that allow members of a culture to know what is expected of them in a wide variety of situations” – clothes you wear; how you address your boss; when to seek help

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Artifacts

“..are the remains of the culture left strewn about on the surface of a culture….”

Examples:• Company logo, layout of office• Clothes worn• Traditions, customs and rituals• Stories, myths and traditions• Jargon• Well known jokes and anecdotes

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How Culture Works in Schein’s Model

• Assumptions Values Artifacts

• Logic is inside moving outwards• New members are selected, attracted because

they share the values• Reverse is also true

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Symbolic-Interpretive Theory of Organisation Culture

• Clifford Geertz• Culture is a socially constructed reality – “webs

of significance that man himself has spun”• How are these realities constructed?• People make use of and interpret symbols and

this constructs a culture• Culture is thus understood by the observation

of symbol construction – e.g. ethnography• Culture is found through the perspective of

many members of a culture, not an individual

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Organisation as a set of sub-cultures

Societal culture

Organisational culture

Organisational sub-cultures

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Types of Sub-Culture - 2 approaches

• Relation to dominant culture– Enhancing sub-cultures – Support the dominant

cultures values– Countercultures – oppose the dominant cultural

values– Orthogonal sub-cultures – maintain their own values

alongside the dominant culture

• Occupational or functional sub-cultures– Engineers v Accountants v Marketing v etc– Professional managers (MBAs) v worked-way-up

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Post-modern and Modern Approches

• Post modern approach focuses on ways in which cultures are inconsistent, ambiguous, multiplicititous, in a constant state of flux

• Often described as ‘Fragmentation Perspective’

• In contrast, Modernists view culture as a tool for management, the culture as a variable to be manipulated as a means to gain the desired performance or behaviour

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Analysis of National Culture

• Geert Hofstede devloped this analysis in late 1970s, based on a study of IBM worldwide; widely used since then.

• Four measurable dimensions:– Power Distance– Uncertainty Avoidance– Individualism– Masculinity

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• Power Distance – extent to which members of a nation are prepared to accept unequal distribution of power, wealth, prestige

Low power distance = more equality e.g. Denmark

• Uncertainty Avoidance – ways in which society has developed methods to deal with uncertainty. E.g. using technology to defend against earthquakes.

Uncertainty avoidance high in Greece, Portugal and Japan

Low in Singapore, Hong Kong

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• Individualism – involves the degree to which individuals in a culture are expected to act independently of other members of the societyIndividualism v CollectivismIn US individualism seen as source of well-beingIn China and Mexico it seen as undesirable or alienating

• Masculinity – refers to clear separation of gender rolesHighly masculine cultures, men are expected to be more assertive and women nurturingLow masculinity favours work goals concerning interpersonal relations, service and physical environment

24Power-distance v Individualism

Power Distance

Indivdualism

25Masculinity v Uncertainty avoidance

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An Example of National and Organisation Culture

• Murray Sayle• Observed features of Japanese organisation

culture include:– Collectivity – belonging not just working– Collaboration – like a village or commune– Interdependence shared concerns, mutual support– Life-long commitments – in famous large companies– Authoritarian/paternalistic – traditional and

deferential– Strong links between welfare of individual,

corporation and state

27Sayle’s Explanation

• Two sets of values are melded into a corporate culture, based on national values of: ‘rice field’ and ‘samurai’

• Rice field:– Work is precarious virtually impossible – Work is therefore cooperative– Product of work is shared with protectors

• Samurai:– ‘men of service’ leaders in bureaucratic society– Parallel to modern clans and elites– Close cooperation between powerful groups– Deferential and submissive to Samurai

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Comment

• Sayle’s explanation fits post war advance of Japan, but does not deal so well with problems of 1990s

• Also contrast UK social culture – class conflict etc, with the corporate cultures

Good Reading• ‘Images of Organisation’, Gareth Morgan, chpts

5 and 6 plus chpt 10 case study• Gareth Jones• M J Hatch