Introduction

Most of us have noticed that different organisations have a different ‘feel’ to them, even when they are in the same industry. For example, a fast food chain such as McDonald’s may be seen as being community minded and active in providing playgrounds for children, while another chain, such as KFC, may portray itself as youth-oriented. Similarly, banks, department stores, hotels and other organisations seem to have characteristics which differentiate them from their competitors in the same industry. The special nature of an organisation which distinguishes it from another similar organisation has in recent years been given the label of ‘organisational culture’. The concept of organisational culture is somewhat similar to the concept of personality at the individual level (which we discussed in Topic 3), and the concept of norms at the group level (which we discussed in Topic 6).

In this topic, we begin by formally defining ‘organisational culture’ before critically assessing the description (as we did earlier when we discussed the definitions of ‘organisation’ and ‘leadership’). We will also consider the evidence as to whether organisational culture exists, or if it is a useful concept either for practitioners or researchers in management. In particular, we will examine the relationship between an organisation’s culture and its performance, and the nature of conflicts which may arise when two organisations with very distinct cultures decide to merge.

To the extent that organisational culture exists, it is transmitted from old members to new members in various ways. This transmission of organisational culture is called organisational socialisation. We will discuss different ways in which organisations socialise their new members and the role that socialisation may serve in influencing their behaviour. We also examine the effect of technology on the socialisation process.

Finally, in recent times considerable attention has also been given to ethics and its influence on organisational culture. Five strategies are identified which may assist organisations to develop a strong ethical culture. The topic concludes with a brief overview of the four main standards or moral judgments that people use when confronted with an ethical dilemma.

Objectives

On completion of this topic, you should be able to:

• define organisational culture for yourself and discuss differing interpretations of the concept
• recognise the difficulties in comparing research results in organisational culture
• discuss the relationship between organisational culture and performance
• describe the functions of organisational culture and how it can be effectively managed
• define organisational socialisation
• describe what is meant by the terms - subcultures and countercultures
• discuss the impact of technology on organisational socialisation
• summarise the link between ethics and organisational culture.

Approximate study time required

Actively engaging with the lecture content	2 hrs
Topic readings	3 hrs
Undertake the prescribed learning activities	1 hrs
Self-directed topic review	1 hrs
Total	7 hrs

Defining organisational culture

Robbins et al. (2020, p. 390) define organisational culture as:

A system of shared meaning held by members that distinguishes the organisation from other organisations.

Wood et al. (2006, p. 310) define organisational culture as:

… the system of shared beliefs and values that develop within an organisation and guides the behaviour of its member.

It is interesting to note that Schein (1984, p. 3) gives quite a different definition of organisational culture in a slightly earlier publication. According to his 1984 article, organisational culture is the ‘pattern of basic assumptions that a given group has invested, 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 those problems’. (The italicised words are as in the article cited, and Schein uses them as headings for various sections in his article.) The essence of Schein’s definition is that organisational culture is a pattern of basic assumptions shared by a group.

Wood et al. (2006) refer to three levels of analysis in relation to organisational culture: observable culture; shared values; and common assumptions. The observable culture is represented by the observable patterns of behaviours that groups display and teach to new members of the group. The second level of analysis is the shared values. This is a set of coherent values held by members of the organisation and that link them together. The third level of analysis is that of common assumptions. These are a ‘collection of truths that organisational members share as a result of their joint experiences and that guide values and behaviours’ (Wood et al. 2006, p. 312).

McShane et al. (2007, p. 448) configures similar concepts through Exhibit 14.1. This is in the form of an iceberg where the artefacts of organisational culture appear above the surface and can be deciphered as they are often subtle and tend to be ambiguous. What lies beneath the surface is the assumptions, beliefs and values which lie at a deep unconscious level within the organisational culture.

Organisational culture and performance

Many researchers have compared organisational cultures and the performance of different companies. Since each of them has used different methods to measure culture, their research studies cannot easily be compared with each other. The findings of each researcher, however, are of interest in their own right. According to Greenberg and Baron (1995, pp. 548–552) the following findings or conclusions can be drawn about how organisational culture affects organisational performance.

Finding 1

There is some evidence that companies with a participative culture are more profitable than companies without such a culture. In general, however, there is not much evidence that some kind of cultures are better (i.e. more effective) than others. This suggests the potential for a contingency theory of culture, i.e. that different kinds of cultures will be effective for different kinds of organisations. Such a theory will not be very meaningful, of course, unless we can also state hypotheses as to which kind of cultures will be effective for which kind of organisations.

Finding 2

Companies whose culture emphasises pleasant interpersonal relationships more than the value of hard work tend to have less voluntary turnover. It would be interesting to know whether either type of culture tends to have a better economic performance than the other.

Finding 3

Employees whose values have a close fit with those of their employers tend to be more satisfied with their job and are less likely to quit compared to employees whose values do not fit so well with their employer’s values.

Finding 4

When two companies establish a relationship with each other in the form of a merger or acquisition, they need to consider each other’s culture. If the cultures clash, the relationship may go sour.

Functions of cultures

Your textbook acknowledges that culture can be a liability and can create barriers to change and barriers to diversity. Culture as a liability occurs when there is incongruence between shared values that will not promote the organisation’s effectiveness. Barriers to diversity occurs when a strong culture of intolerance to diverse groups exist within an organisation. This can counter any moves by management to implement diversity strategies in terms of encouraging minority or less represented groups to apply for positions within the organisation. This point emphasises the role and function of organisational cultures. Your text identifies five key functions of culture as:

• Boundary defining role creates distinctions between organisations
• Conveys a sense of identity
• Facilitates a commitment to something larger than an individual’s self-interest
• Enhances the stability of the social system
• Serves as a sense-making and control mechanism that guides and shapes employees’ attitudes and behaviour.

Culture and socialisation

In the previous section, the importance of a fit between the values of an employee and an employer were indicated (Finding 3). The process by which an employee finds out the values of his or her new employer, and attempts to adapt to those values, is called socialisation. The process of socialisation actually starts long before the employee hears about the employer. If you are looking to work in a hospital, a law firm, or a retail store, for example, you learned something about the nature of these workplaces through watching TV shows in which they were portrayed, by meeting your doctor, by being a shopper, and possibly knowing a relative who is a solicitor. Indeed your educational preparation for a career was probably greatly influenced by the impressions you gained about different careers when you were growing up.

The process of socialisation continues through various stages of an employee’s career. The first step in joining a company for most of us is a job interview, usually held at the organisation’s recruitment office. This job interview tells us something about that company. The first job interview is often followed by a second interview at the company’s own office, which tells us a little bit more about the company’s culture, mostly through our informal observations about the furnishings and layouts in the offices, how people are dressed, how they address each other, etc.

Following the acceptance of a job offer, the company may have a formal orientation program for new employees. On the other hand, it is not unusual for smaller companies to ask the new employee to start work without much more training than ‘This is your desk. You will be working for Mr X or Ms Y’. Whether you are given a formal training program or just asked to start work, however, you are more likely to ‘learn the ropes’ from your fellow employees than through the formal training program or your supervisor.

Subcultures, countercultures and diversity

It is important to recognise that within any culture there will be groups or subcultures. Subcultures are groups which have unique sets of values and patterns of behaviour that are not necessarily inconsistent with the dominant culture of the larger organisational culture. Examples of the existence of subcultures can often be found in groups of highly specialised employees or project teams within organisations. The text refers to subcultures that are located in various divisions, geographic locations and even occupational groups within the larger organisation. ‘Some cultures enhance the dominant culture by espousing parallel assumptions, values and beliefs; others are called countercultures because they directly oppose the organisation’s core values’ (McShane et al. 2013, p. 460).

The emergence or creation of countercultures can occur due to acquisitions or mergers by organisations and results from a clash of cultures between the two organisational cultures coming together. The need to be aware of this phenomenon is very important when attempting to manage these types of mergers and acquisitions. Wood et al. (2006, p. 313), also point to the need to be cognisant of national cultures and subcultures within organisations. They emphasise the need to be aware of imported subcultures and of managing cultural diversity within organisations.

Robbins et al. (2008, p. 581) discusses whether national culture has a greater impact on employees than organisational culture and refers to research undertaken in Malaysia; specifically Malaysian employees of IBM in Kuala Lumpur. The research found the Malaysian employees were influenced more by Malaysian culture than IBM’s organisational culture (Adler 2002).

Technology and organisational culture

In the previous topic we noted that technology affects organisational structure. It can also affect organisational culture.

There has been a rapid increase in the amount of technological devices which are used in organisations today. Furthermore, these devices are used to carry out increasingly sophisticated tasks, which were previously done only by humans. This trend towards increasing use of technology and automation is likely to have some interesting and significant effects on the way organisations operate and how new members are (or are not) socialised to learn about the organisation’s culture.

There are likely to be three main effects of the new uses of technology. First, many jobs currently done by humans will be done by machines, creating at least temporary unemployment for the displaced worker. For example, bank tellers, whose job in significant part is now being done by ATM machines. The same thing happened in recent years to telephone operators whose work is now done by automatic switching circuits and to movie projectionists whose work is done by automated systems which can show several movies at once in a multi-screen theatre. As these employees’ jobs disappear, their years of accumulated knowledge of organisational culture becomes irrelevant and lost to the organisation, and of course may cause significant psychological and economic stress to the employees now made redundant by technology.

The second effect is that more jobs are now seen as being casual or temporary, rather than ‘permanent’. A person is now likely to have several jobs in different companies and even in different industries in their lifetime. This means that there are many more employees who are new to an organisation at any time, and fewer ‘old hands’ around to show them the ropes. This is likely to weaken the common cultural bonds experienced by members of an organisation, who are likely to feel like strangers to each other. This effect is similar to the effect of urbanisation on the society at large. When people lived in a village, they tended to spend their whole lives there, and everyone knew everyone else over long periods of times. In cities, by contrast, neighbours hardly know each other’s names, and by the time they have found out each other’s names, it is time for some of them to move to a new location.

The third effect of technology goes in the same direction as the first two, but perhaps has an even greater impact on organisational culture. Due to the ease with which data can be transmitted almost anywhere in the world, it is no longer essential for people to work in a common location and meet face to face with the people they work with. Instead, people can work from their home, or while travelling, and keep in touch with the ‘office’ via their modem and computer. This has been called a ‘virtual organisation’ which may have no physical identity, but exist only in the cyberspace. How can an organisation socialise its members and transmit its culture to them if they never see each other in one place?

The virtual organisation raises another important organisational issue. One reason that organisations came into existence, as we saw in Topic 8, was to be able to control the work of employees through ‘supervision’ which means, literally, ‘looking over’. If you cannot ‘supervise’ people, because they are nowhere to be seen, you obviously need new ways to manage them and inculcate some common organisational culture in them.

Ethical behaviour

What is the basis of the ethical position that an individual holds? Why does one person always act in an ethical manner and another tends to behave unethically? There is a number of explanations for the origins of ethics. Different people view situations in different ways!

Four different views of ethics

1. Utilitarian view of ethics

According to Robbins (2006), decisions that are taken solely on the basis of how to provide the ‘greatest good for the greatest number’ are considered to adhere to a utilitarian view of ethics. Utilitarian decisions are concerned with outcomes and consequences that use a quantitative method for determining the proportion of people positively and/or negatively affected by the decision.

As example, a decision to lay off 20% of a workforce could be justified through increased profitability and improved job security for the remaining 80% of the workforce. This would also be justified as being in the best interests of the stakeholders.

To the contrary it can be argued that this view could be seen to ignore and/or diminish the rights of certain stakeholders, as well as introducing bias toward the appropriate allocation of resources. Not surprisingly this is the approach to ethics that business is most likely to follow as it is more readily justified and accepted in terms of meeting organisational goals of productivity, efficiency and profitability (Robbins 2006).

2. Rights view of ethics

Robbins (2006) states that the rights view of ethics is concerned with protecting and respecting the rights, liberties and privileges of the individual. It is a view that seeks to protect the right of individuals to free speech, privacy, due process and freedom of conscience.

As example ‘whistleblowers’ should expect protection for raising and bringing to attention the fraudulent and/or unethical conduct of their employers or other staff members.

Whilst the justification is based in the protection of the individuals rights, on the negative side this view can hamper higher levels of productivity and efficiency by creating a work environment more concerned with protecting one’s rights than in getting the job done (Robbins 2006).

3. Theory of justice view of ethics

Under this egalitarian approach rules, regulations, policies and procedures are enforced fairly and impartially.

For example, managers following a theory of justice perspective in deciding a fair rate of pay for all would remove subjective differential characteristics such as gender, race, personality and religion from their decision-making process and make their decision based solely upon assessing an individual’s skill sets, capabilities and responsibilities fairly, equitably and relative to such objective criteria.

Robbins (2006) further points out that this view does serve to protect the rights of the underrepresented stakeholder or those lacking in power but also encourages a sense of entitlement that diminishes favourable cultural and organisational characteristics such as risk taking, innovation and productivity improvements.

4. Integrated social contracts view

In a quotation from Robbins (2006), ‘An ethical view that proposes that ethical decisions be based on existing norms in industries and communities in order to determine what constitutes right and wrong’. Or in other words, not what is, but what should be!

According to Robbins, this view integrates two contracts, that of the general contract that defines the normal rules in existence and a more specific contract that applies to members within that ‘community of practice’ that defines an acceptable basis for behaving.

As an example, we might consider the pressures that are applied to professional sports people to be role models within the community as applying a specific contract that defines ‘acceptable behaviour’ within that community or industry. Recent acts of misbehaviour and misconduct amongst professional Rugby League players has placed enormous pressures under the integrated social contracts view as to the acceptability of behaviour as role models. Their actions may or may not be illegal under the general contract however they are now certainly under much greater scrutiny as to what the norms should be for professional footballers under a specific moral and ethical contract.

A similar but contrary view might be raised if a new mining operation in South Africa were to use existing wage levels in a community to base their wages decision. In this instance although this theory would be focusing on existing practices in the community the problem might be that these practices are unethical (Robbins 2006).

Summary

Organisational culture is a relatively new concept which describes the attitudes, values, norms and expectations which are shared by an organisation’s members. Since different researchers define and measure organisational culture in different ways, it is difficult to compare their results with each other. It does seem, however, that if there is a good fit between an organisation’s culture and an employee’s values, the employee will be more satisfied and be less likely to quit. Similarly, a merger between two organisations is more likely to succeed if there is a good fit between their respective cultures. On the other hand, it does not seem that any particular kind of a culture is more likely to be effective than other kinds of cultures.

An organisation’s culture is transmitted to prospective and new employees through a process called socialisation. The socialisation takes place both before an employee joins the organisation and afterwards, and it can take place both formally and informally. When the socialisation process works well, it increases the probability that the employee’s values will match the organisation’s culture, and that the organisation’s culture will play a stronger role in the organisation’s effectiveness.

Modern technological advances are reducing face to face contacts among employees, leading towards what might be called a virtual organisation. Such virtual organisations will find it difficult to socialise employees regarding the organisation’s culture. Since culture may lose some of its ability to keep the organisational members working together, new kinds of techniques may become necessary to maintain organisational effectiveness among the virtual organisations.

Finally, five key strategies for were identified which can be used by organisations to develop a strong ethical culture.