Organizational Culture

The idea of culture is that it is built on sets of assumptions underlying the relationships between the members of a community and the larger social environment of which they are a part.

The popularity of the corporate culture topic raises a number of questions. Can we identify cultures? Can culture be aligned with strategy? The best place to start is by defining culture and explaining how it is reflected in organizations.

What Is Culture?

Culture provides people with a sense of organizational or social identity and generates in them a commitment to beliefs and values that are larger than themselves.

Whereas structure, size, strategy, and technology, represent the formal organization; culture represents the informal organization.

Every organization has two sides at work: formal structures and system and the informal values, norms, and assumptions of the corporate culture. Everyone participates in culture, but culture generally goes unnoticed. It is only when managers try to implement new strategies, structures, or systems that go against basic cultural norms and values that they come face to face with the power of culture.

Fiure XI Levels of Corporate Culture

Organizational culture exists at two levels, as illustrated in Figure XI. On the surface are visible artifacts and observable behaviors — the ways people dress and act; office layouts; the type of control systems and power structures used by the company; and the symbols, stories, and ceremonies organization members share.

The visible elements of culture, however, reflect deeper values in the minds of organization members. These underlying values, assumptions, beliefs, and thought processes operate unconsciously to define the culture. For example, leaders at TechCoOpens in new window don’t have separate offices but sit in open bullpens with everyone else to encourage sharing of information.

Another example comes from Germany’s TeamBankOpens in new window, where top executives made the informal Du the mandatory form of address rather than the formal Sie commonly used in German workplaces. These are observable symbols. The underlying values are openness, collaboration, egalitarianism, and teamwork.

The attributes of culture display themselves in many ways but typically evolve into a patterned set of activities carried out through social interactions. Those patterns can be used to interpret an organization’s culture.

Emergence and Purpose of Culture

Culture provides people with a sense of organizational identity and generates in them a commitment to beliefs and values that are larger than themselves.

Though ideas that become part of the culture generally begin with a founder or early leader who articulates and implements particular ideas and values as a vision, philosophy or business strategy.

When these ideas and values lead to success, they become instituonalized and an organizational culture emerges that reflects the vision and strategy of the founder or leader.

For example, the culture at In-N-Out BurgerOpens in new window, a fast-food chain with 232 stores in the western United States, reflects the values and philosophy of founders Harry and Esther Snyder.

The Snyders created a corporate culture based on the idea that running a successful business depends on one thing: treating the people on the front lines right. In-N-OutOpens in new window was founded in 1948, but the values of quality, service, taking care of employees remain at the core of the company’s culture, a culture that has inspired intense loyalty among both employees and customers.

Cultures serve two critical functions in organizations:

1. To integrate members so that they know how to relate to one another, and
2. To help the organization adapt to the external environment.

Internal integration means that members develop a collective identity and know how to work together effectively. It is culture that guides day-to-day working relationships and determines how people communicate within the organization, what behavior is acceptable or not acceptable, and how power and status are allocated.

External adaptation refers to how the organization meets goals and deals with outsiders. It can help the organization respond rapidly to customer needs or the moves of a competitor.

The organization’s culture also guides employee decision making in the absence of written rules or policies. Thus, both functions of culture are related to building the organization’s social capital by forging either positive or negative relationships both within the organization and with outsiders.