CORPORATE CULTURE

Change in any institution starts with leadership of an institution. We shall therefore look at leadership and Hofstede‘s cultural dimensions.

Hofstede’s Cultural Dimensions

Power Distance Index (PDI) focuses on the degree of equality, or inequality, between people in the country’s society. A High Power Distance ranking indicates that inequalities of power and wealth have been allowed to grow within the society. These societies are more likely to follow a caste system that does not allow significant upward mobility of its citizens.

A Low Power Distance ranking indicates the society de-emphasizes the differences between citizen’s power and wealth. In these societies equality and opportunity for everyone is stressed. Individualism (IDV) focuses on the degree the society reinforces individual or collective achievement and interpersonal relationships. A High Individualism ranking indicates that individuality and individual rights are paramount within the society. Individuals in these societies may tend to form a larger number of looser relationships. A Low Individualism ranking typifies societies of a more collectivist nature with close ties between individuals. These cultures reinforce extended families and collectives where everyone takes responsibility for fellow members of their group.

Masculinity (MAS) focuses on the degree the society reinforces, or does not reinforce, the traditional masculine work role model of male achievement, control, and power. A High Masculinity ranking indicates the country experiences a high degree of gender differentiation. In these cultures, males dominate a significant portion of the society and power structure, with females being controlled male domination. A Low Masculinity ranking indicates the country has a low level of differentiation and discrimination between genders. In these cultures, females are treated equally to males in all aspects of the society.

Uncertainty Avoidance Index (UAI) focuses on the level of tolerance for uncertainty and ambiguity within the society – i.e. unstructured situations. A High Uncertainty Avoidance ranking indicates the country has a low tolerance for uncertainty and ambiguity. This creates a rule-oriented society that institutes laws, rules, regulations, and controls in order to reduce the amount of uncertainty. A Low Uncertainty Avoidance ranking indicates the country has less concern about ambiguity and uncertainty and has more tolerance for a variety of opinions. This is reflected in a society that is less rule oriented, more readily accepts change, and takes more and greater risks.

Long-Term Orientation (LTO) focuses on the degree the society embraces, or does not embrace, long-term devotion to traditional, forward thinking values. High Long-Term Orientation ranking indicates the country prescribes to the values of long-term commitments and respect for tradition. This is thought to support a strong work ethic where long-term rewards are expected as a result of today’s hard work. However, business may take longer to develop in this society, particularly for an “outsider”. A Low Long-Term Orientation ranking indicates the country does not reinforce the concept of long-term, traditional orientation. In this culture, change can occur more rapidly as longterm traditions and commitments do not become impediments to change.

The Nature of Leadership

Leadership

  • The process which a person exerts influence over others and inspires, motivates and directs their activities to achieve group or organizational goals.
  • Effective leadership increases the firm‘s ability to meet new challenges.

Leader
An individual who is able to exert influence over other people to help achieve group or organizational goals.

Personal Leadership Style
The specific ways in which a manager chooses to influence others shapes the way that manager approaches the other tasks of management. Leaders may delegate and support subordinates, while others are very authoritarian. The challenge is for managers at all levels to develop an effective personal management style.

Leadership Across Cultures
Leadership styles may vary among different countries or cultures. European managers tend to be more people-oriented than American or Japanese managers. Japanese managers are group-oriented, while U.S managers focus more on profitability. Time horizons also are affected cultures.

• U.S. firms often focus on short-run efforts and results.
• Japanese firms have a longer-run perspective.
• European firms fall somewhere between the U.S. and Japanese orientations.

Contingency Models of Leadership

Fiedler’s Model

Effective leadership is contingent on both the characteristics of the leader and of the situation. Leader style is the enduring, characteristic approach to leadership that a manager uses and does not readily change.

• Relationship-oriented style: leaders concerned with developing good relations with their subordinates and to be liked them.
• Task-oriented style: leaders whose primary concern is to ensure that subordinates perform at a high level so the job gets done.

Situation Characteristics

  1. How favorable a situation is for leading to occur.
  2. Leader-member relations—determines how much workers like and trust their leader.
  3. Task structure—the extent to which workers tasks are clear-cut; clear issues make a situation favorable for leadership.
  4. Position Power—the amount of legitimate, reward, and coercive power leaders have due to their position. When positional power is strong, leadership opportunity becomes more favorable.

House’s Path-Goal Theory
• A contingency model of leadership proposing the effective leaders can motivate subordinates by:

1. Clearly identifying the outcomes workers are trying to obtain from their jobs.
2. Rewarding workers for high-performance and goal attainment with the outcomes they desire
3. Clarifying the paths to the attainment of the goals, remove obstacles to performance, and express confidence in worker‘s ability.

Motivating with Path-Goal
• Path-Goal identifies four leadership behaviors:
1. Directive behaviors: set goals, assign tasks, show how to do things.
2. Supportive behavior: look out for the worker‘s best interest.
3. Participative behavior: give subordinates a say in matters that affect them.
4. Achievement-oriented behavior: Setting very challenging goals, believing in worker‘s abilities.

• Which behavior to be used depends on the nature of the subordinates and the tasks.

The Leader Substitutes Model
• Leadership Substitute

1. Acts in the place of a leader and makes leadership unnecessary. Possible substitutes can be found in:

• Characteristics of the subordinates: their skills, experience, motivation.
• Characteristics of context: the extent to which work is interesting and fun.

2. Worker empowerment or self-managed work teams reduce leadership needs.
3. Managers should be aware that they do not always need to directly exert influence over workers.

Transformational Leadership
• Leadership that:

  1. Makes subordinates aware of the importance of their jobs and performance to the organization providing feedback to the worker.
  2. Makes subordinates aware of their own needs for personal growth and development.
  3. Motivates workers to work for the good of the organization, not just themselves.

Being a Charismatic Leader
Charismatic Leader is an enthusiastic, self-confident transformational leader able to clearly communicate his or her vision of how good things could be by:

• Being excited and clearly communicating excitement to subordinates.
• Openly sharing information with employees so that everyone is aware of problems and the need for change.
• Empowering workers to help with solutions.
• Engaging in the development of employees working hard to help them build skills.

Transactional Leadership

Transactional Leaders

  1. Use their reward and coercive powers to encourage high performance— they exchange rewards for performance and punish failure.
  2. Push subordinates to change but do not seem to change themselves.
  3. Do not have the ―vision‖ of the transformational leader.

From a global perspective, in Singapore leaders built capacity in the people through:-

  1. Human Resource Investments
  2. Strategic Educational Subsidies & Grants
  3. Generous Merit Scholarships
  4. Strategic Housing Subsidies
  5. Skills Development Fund (SKF)
  6. Strategic Health Subsidies: A,B,C wards
  7. Infra-Structure Investments: supply chain
  8. Low Personal Income Taxes & No Death Tax
  9. Re-distribution of Wealth: No Capital Gain Tax
  10. Scouting for next generation Leaders
  11. Sympathetic Social Welfare Department

How to inculcate values and an ethical culture of integrity

  1. National leaders‘ commitment to national core values
  2. societal change-agents & leaders mobilized
  3. government leaders
  4. business leaders
  5. educational leaders (teachers)
  6. media leaders
  7. sports & performing arts leaders
  8. religious leaders
  9. family (parents)

Definition: Corporate culture is an idea in the field of organizational studies and management which describes the psychology, attitudes, experiences, beliefs and values (personal and cultural values) of an organization. It has been defined as “the specific collection of values and norms that are shared people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization.”

Definition: Corporate values, also known as “beliefs and ideas about what kinds of goals members of an organization should pursue and ideas about the appropriate kinds or standards of behavior organizational members should use to achieve these goals. From organizational values develop organizational norms, guidelines, or expectations that prescribe appropriate kinds of behavior employees in particular situations and control the behavior of organizational members towards one another. The three structural levels of any culture from Alan Price (2007) Human Resource Management in a Business Context (3rd Edition)

Value
The value acts as the roots of all culture which provides the organisation with both stability and solidity. It also helps in sustaining the organisation the values are put as the roots of tree.

Institutions
The institution includes formal or informal where the values and the beliefs take shape in a diverse area of experience, structuring the behavior and the ways of acting of the members of the society in question. This is achieved offering a frame work in which the values take shape in different area of experience. The institutions are the trunk of a tree.

Practices
This is formal particular practices which provide physical and evident dimensions from the outside of the culture in question. The practices act as the branches of a tree which can experience very important changes which help the culture to be maintained. For us to be able to maintain culture we need to have strong roots (myths, beliefs and values) which need to be developed in whole (structure and strong practices). For any organisation to survive globally, it needs to be visible looking at the different elements that shapes all the culture, practices together with institution.

Types of organizational culture
Organizational culture can vary in a number of ways. It is these variances that differentiate one organisation from the others. Some of the bases of the differentiation are presented below :

1.Strong vs weak culture:

Organizational culture can be labeled as strong or weak based on sharedness of the core values among organizational members and the degree of commitment the members have to these core values. The higher the sharedness and commitment, the stronger the culture increases the possibility of behaviour consistency amongst its members, while a weak culture opens avenues for each one of the members showing concerns unique to themselves. Strong culture is said to exist where staff respond to stimulus because of their alignment to organizational values. In such environments, strong cultures help firms operate like well-oiled machines, cruising along with outstanding execution and perhaps minor tweaking of existing procedures here and there.

2.Soft vs hard culture:

Soft work culture can emerge in an organisation where the organisation pursues multiple and conflicting goals. In a soft culture the employees choose to pursue a few objectives which serve personal or sectional interests.

A typical example of soft culture can be found in a number of public sector organizations in India where the management feels constrained to take action against employees to maintain high productivity. The culture is welfare oriented; people are held
accountable for their mistakes but are not rewarded for good performance. Consequently, the employees consider work to be less important than personal and social obligations. Sinha (1990) has presented a case study of a public sector fertilizer company which was established in an industrially backward rural area to promote employment generation and industrial activity. Under pressure from local communities and the government, the company succumbed to overstaffing, converting mechanized operations into manual operations, payment of overtime, and poor discipline. This resulted in huge financial losses (up to 60 percent of the capital) to the
company.

Formal vs informal culture :

The work culture of an organisation, to a large extent, is influenced the formal components of organizational culture. Roles, responsibilities, accountability, rules and regulations are components of formal culture. They set the expectations that the
organisation has from every member and indicates the consequences if these expectations are not fulfilled

The cultural web contains 6 inter-related elements:

Rituals and routines – are concerned with the day-to-day behavior of people in the organisation e.g. the way customers are dealt with or the existence of privileges for certain staff. They are things that are taken for granted existing staff but have to be learned new people. They often present significant barriers to change, if people are protective of their ‘customs’. Rituals such as training programmes or personnel procedures can reinforce the perception of how things are done, and demonstrate to staff what behavior is desirable and valued senior management.

Stories – within the company focus upon past events in the organisation and are told to people both outside and inside the organisation. They communicate something of the organization‘s culture. Company ‘heroes’, such as charismatic leaders of the past, and mavericks can be perceptions of ‘normal’ behavior.

Symbols. – Logos, language, status symbols e.g. company cars; office carpets etc can all provide a visible reflection of company culture.

Power structures. – Directors and senior managers, or groups of directors and senior managers with the most power, are likely to have the most influence.

Organizational structure. – Both the formal structure (as found on the organisation chart) and the informal structure are likely to reflect power structures and play an important part in influencing the core values of an organisation.

Control systems – the measurement and reward systems used in the organisation There are a number of behaviorally focused tools, such as Corporate culture Inventory, which look at the culture through the behaviors‘ of the managers and leaders. These can provide a platform for identifying what development is required to move towards a positive, performance culture. However, it does not necessarily focus on business oriented outcomes, but more on the personal criteria.

Importance of organizational subculture

Sub cultures are minicultures within an organisation. These minicultures operate within the larger, dominant culture. Subcultures are usually an outcome of occupational, professional, functional differences or geographical distance.

Types of organizational Sub culture.

Academy
Organizations with this kind of a culture hire new college graduates and train them in a wide variety of jobs. Such an organisation culture provides the employees with opportunities to master different jobs.

Club
Organizations that are highly concerned with getting people to fit in and be loyal are referred to as a club the organisation promotes form within and highly value seniority.

Baseball teams
In such cultures employees tend to be entrepreneurs who are willing to take risks and are handsomely rewarded for their success. This type of culture exists in fast paced high risk organizations such as an investment banking, advertising.

Fortress
The fortress type of culture exists in organisations that are facing a hard time in fighting for the survival. Employees who enjoy the challenges of fighting with their backs against the wall and do not mind the lack of job security enjoy working in this kind of culture.
Categories of artifacts through which corporate culture is communicated.

Artifacts are the observable symbols and signs of an organization‘s culture, such as the way visitors are greeted, the physical layout, and how employees are rewarded. ―You show your corporate culture in everything—the way the building looks, the way people
act, the names of the conference rooms,‖ said Joe Kraus, a cofounder of Excite, an Internet gateway We look at four broad categories of artifacts: organizational stories and legends, rituals and ceremonies, language, and physical structures and symbols.

Organizational stories and legends
Many years ago, so the story goes, a security guard stopped IBM CEO Thomas Watson, Jr., as he was about to enter an area without his identification badge. Watson explained who he was, but the guard insisted that a badge must be worn in secured areas of the building. Rather than discipline the guard, Watson praised him and used this experience to tell others about performing their job well. Stories and legends like this about past corporate incidents serve as powerful social prescriptions of the way things should (or should not) be done. They provide human realism to individual performance standards and use role models to demonstrate that organizational objectives are attainable. This IBM‘s story advises employees to obey rules

Rituals and ceremonies
Rituals are the programmed routines of daily organizational life that dramatize the organization‘s culture. Rituals include how visitors are greeted, how often senior executives visit subordinates, how people communicate with each other, how much time employees take for lunch, and so on. Ceremonies are more formal artifacts than rituals. Ceremonies are planned activities conducted specifically for the benefit of an audience. This would include publicly rewarding (or punishing) employees, or celebrating the launch of a new product or newly won contract.

Language

The language of the workplace speaks volumes about the company‘s culture. Language also highlights values held organizational subcultures. Corporate culture might also be represented in the phrases, metaphors, and other special vocabularies used by
organizational leaders.

Physical structures and symbols

Physical structures and spaces, such as British Airways‘ the Red Cross, often symbolize the company‘s underlying values and beliefs.28 The size, shape, location, and age of buildings might suggest the organization‘s emphasis on teamwork, risk aversion, flexibility, or any other set of values.

Culture supplements rational management:

Creation of an appropriate work culture is a time – consuming process. Therefore, organisation culture cannot suddenly change the behaviour of people in an organisation. A number of management tools are used to channelize the behaviour of people in a desired way. No change can be effectively brought about without involving people. Culture communicates to people through symbols, values, physical settings, and language, and heresupplementing the rational management tools such as technology
and structure.

Culture facilities induction and socialization:

Induction is a process through which new entrants to an organisation are socialized and indoctrinated in the expectation of the organisation; its cultural norms, and undefined conduct. The newcomer imbibes the culture of the organisation which may involve changing his/her attitudes and beliefs to achieving an internalized commitment to the organisation. Different organizations follow different practices for induction. Gillette India has a system of online induction which enables an IT – savvy newcomer to pick and choose the areas where he/she needs more detailed information. Bureaucratic organizations, however, spend considerable time explaining rules and procedures during induction as following rules is one of the major requirements of such organizations. Central government organizations in India have a one – year probation training – cum – induction involving cultural training. On the other hand, younger and entrepreneurial organizations are less formal in their induction process. Here, the established senior members share with the newcomers stories of heroes, founders, and charismatic team leaders with vision.

Culture promotes code of conduct:

A strong in an organisation explicitly communicates accepted modes of behaviour are accepted and others would never be visible. The presence of a strong culture would be evident where members share a set of beliefs, values, and assumptions which would influence their behaviour in an invisible way. Where culture has been fully assimilated people they persistently indulge in a typical bahaviour in a spontaneous way. Promotion of the culture of quality can help achieve good business results. Rohmetra (2000) conducted a study of cultural diversity and ethical behaviour. She collected data from 30 managers of Dogra culture and 35 managers of Laddakhi culture. Her results showed that Dogra managers had highest consistency between what they believe and what they do at work, while the situation was the reverse for Laddaakhi managers.

Subcultures contribute to organisational diversity:

Sub – cultures, and sub -systems of values and assumptions which may be based on departmentalization, activity centers, or geographical locations, provide meaning to the interests of localized, specific groups of people within the macro organisation. Sub –
cultures can affect the organisation in many ways:

  1. they may perpetuate and strengthen the existing culture;
  2. They may promote something very different from those existing;
  3. They may promote a totally opposite sub – culture (beliefs and values) or counter culture when in a difficult situation.

Care needs to be exercised when promoting a counter culture as it may be detrimental to the larger organizational interest.

  1. Gives members an organisational identity, in other words, attracts develop and keep talented people. Serve as a magnet. A feeling of belonging exists among employers.
  2. Facilitates collective commitment. People own the company, are prepared to give of themselves. Salaries are high, dividends are
    high productivity is high.
  3. Promote social system stability, strict standards – tight controls more than just discipline – a mystique. Low turnover. Passionate
    commitment to work hard – strong identification with the company.
  4. Shapes behavior helping members to make sense of their surroundings. (Corporate culture– social glue).

Conditions under which cultural strength improves corporate performance Does corporate culture affect corporate performance? Ken Iverson, CEO of Nucor Steel is a stunning success story, thinks so. Many writers on this subject generally, argue that culture serves three important functions. First, social control Second, corporate culture is the ―social glue‖ that bonds people together and makes them feel part of the organizational experience. Finally, corporate culture assists the sense-making process. It helps employees understand organizational events.

A strong culture thus is better than a weak one. A strong Corporate culture exists when most employees across all subunits hold the dominant values. The values are also institutionalized through well-established artifacts, theremaking it difficult for those values to change. Strong cultures are long lasting. In many cases, they can be traced back to the beliefs and values established the company‘s founder. This makes the company more successful than the one with a weak culture. Companies have weak cultures when the dominant values are short lived, poorly communicated, and held mainly a few people at the top of the organization.

However strong culture increases organizational performance only when the cultural content is appropriate for the organization‘s environment Companies that operate in a highly competitive environment might be better served with a culture that engenders efficiency. Companies in environments that require dedicated employees will be more successful with an employee-oriented culture. A second concern is that a company‘s culture might be so strong that employees focus blindly on the mental model shaped that culture.

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