Explanations 
Flashcards 
StudySmarter AI 
Notes 
Study Plans 
Study Sets 
Exams 
Magazine 
Find a job 
Mobile App 
Jump to a key chapter
Understanding Managing Organisational Culture
Managing organisational culture is a pivotal skill for any business leader. It moulds the workplace environment, shapes behaviour, and ultimately, impacts the overall performance of the organisation. It's crucial for you, as a student studying Business Studies, to grasp the nuances of this concept.
Managing Organisational Culture involves shaping and maintaining the shared values, beliefs, and norms that characterise an organisation, influencing the behaviour and perceptions of its members. It's a strategic tool that can be manipulated to drive change, improve performance, and steer the organization towards its goals.
According to a study by the Harvard Business Review, companies with a strong culture saw a 4x increase in revenue growth. This is a testimony to the power and impact of organisational culture when managed correctly.
Managing Organisational Culture Definition
Now, let's dive into the specifics of what Managing Organisational Culture entails.
In the context of business management, Managing Organisational Culture refers to the process of establishing, embedding, and changing the core values, beliefs, and principles that guide an organisation's operations and define its identity. It involves a combination of strategic planning, employee engagement, and alignment with organizational goals.
Strategic planning: Drafting a concise vision and mission statement that clearly articulates the company's values and purpose.
Employee engagement: Encouraging employees to internalize the values and contribute to the culture through their daily behaviour.
Alignment with organisational goals: Making sure that the culture aids in achieving the long-term objectives of the organisation.
For example, let's consider a company like Google. Google has always prided itself on promoting an open, innovative, and inclusive culture. Its strategic planning involves encouraging radical creativity and maintaining an open door policy. Employee engagement is fostered through their famous '20% time', where employees can spend 20% of their time working on their pet projects. This open and creative culture runs parallel to Google's aim to continuously innovate and remain leaders in the tech industry.
Understanding Organisational Culture in a Business Context
Organisational Culture in a business context refers to the inherent values, beliefs, attitudes, norms, and practices shared by the employees in a workplace. This culture manifests itself in various ways, including management style, employee interaction, and decision-making processes.
| Elements of Culture | Descriptive Elements |
| Management Style | The techniques and strategies employed by leaders to guide the performance and conduct of team members. |
| Employee Interaction | The nature and quality of relationships between employees at all levels of the organisation. It includes communication practices, teamwork, and networking. |
| Decision-making Processes | The methodologies and strategies employed by an organisation for problem-solving and decision-making. They reflect the levels of autonomy and creativity encouraged in the organisation. |
For example, in a startup, organisational culture might be less formal with a focus on open communication and collaboration, continual innovation, and agility. The management style could be democratic, with leaders valuing the input of each team member. Decision-making might also be a quick process, enabling the company to adapt to changes swiftly.
The Role of Organisational Culture in Performance Management
Managing organisational culture is central to robust performance management. It's the invisible force that drives employee behaviour, motivation, and commitment, collectively influencing the overall output of an organisation.
Did you know? A review by the Journal of Organizational Behavior found a significant relationship between organisational culture and performance outcomes regarding effectiveness, job satisfaction, and innovation.
Explain How Organisational Culture Impacts on Performance Management
Performance management is not just about assessing individual performance but creating a culture that encourages growth and excellence. Here, organisational culture plays a strategic role.
Performance management refers to the ongoing process of communication and feedback between a supervisor and an employee that occurs throughout the year, supporting the accomplishment of strategic objectives. It's centred around goal setting, performance review, and the development of employees.
Goal Setting: A positive organisational culture influences goal setting by making sure that set objectives align with the firm's values and mission, fostering a shared vision.
Performance Review: Culture shapes the process of performance evaluation. For example, a culture of open communication might encourage regular feedback and constructive criticism.
Development: Culture can drive professional development among employees. In a culture that values learning and improvement, there might be robust systems for training and employee learning.
Consider an organisation with a culture of continuous learning. Here, the performance management system might go beyond the routine appraisal procedures and emphasise on identifying development needs, training, expanded roles, and even fostering innovation. The employees in such a culture would be propelled to perform better, knowing that their growth and learning are a priority for the organisation.
The Cause and Effect Relationship between Organisational Culture and Performance
The cause and effect relationship between organisational culture and performance is paramount to comprehend. The nature of the culture can directly influence the performance outcomes of an organisation.
When we speak of performance in an organisational context, we refer to the extent to which an organisation achieves its objectives. This could relate to financial outcomes, operational efficiency, innovation, or customer satisfaction. Each aspect of performance is intricately linked with the prevailing organisational culture.
| Organisational Culture | Performance Outcomes |
| Innovation-oriented Culture | Increased creativity leading to new product development, patents, and innovation. |
| Customer-centric Culture | Improved customer satisfaction, loyalty, and retention rates. |
| Efficiency-focused Culture | Better operational efficiency as employees aim to complete tasks quickly and accurately. |
A good example can be seen with companies like Apple, known for their innovative organisational culture. Apple's culture encourages employees to think out-of-the-box and take calculated risks. This has resulted in a series of product innovations over the years and has made Apple synonymous with ground-breaking technology. Here, the innovative culture directly results in improved performance with regard to technology development.
\(Performance = f(Organisational Culture)\). This simple equation implies that performance is a function of organisational culture. It summarises the cause and effect relationship between culture and performance within an organisation.
Organisational Culture in Strategic Management
The intersection of organisational culture and strategic management is crucial in the realm of business studies. Organisational culture can be the driving force behind the successful execution of strategies and the achievement of organisational objectives. A culture that is aligned with its business strategy can steer the organisation towards its goals effectively.
Studies reveal that over 60% of corporate strategy implementation efforts fail due to a misalignment between organisational culture and strategic goals. Hence, managing organisational culture is key to successful strategic management.
Importance of Organisational Culture in Strategic Management
Organisational culture holds great significance in strategic management. It can play a lead role in either facilitating or hindering the implementation of strategic plans. It serves as the shared framework that informs how an organisation goes about meeting its objectives.
Strategic management refers to the comprehensive collection of ongoing activities and processes that organisations use for systematically coordinating and aligning resources and actions with mission, vision and strategy throughout an organization.
Alignment: It aligns the workforce with the company's strategic vision. For instance, a culture that encourages innovation and risk-taking is critical for a strategy focused on product development.
Motivation: Culture can fuel employee motivation and commitment towards strategic goals. In a culture that values hard work and perseverance, employees would be motivated to meet challenging strategic objectives.
Change management: Managing organisational culture is crucial for managing change and implementing strategic decisions that require shifts in direction or operations.
Consider Tesla, a company known for its bold and disruptive business strategy. In line with this strategy, Tesla has developed an organisational culture that promotes experimentation and disregards the fear of failure. This culture has enabled Tesla to achieve its strategic goals of revolutionising the auto industry with electric cars and challenging traditional auto industry norms.
How Strategic Management Relies on Effective Organisational Culture
Strategic management heavily relies on an effective organisational culture for the successful execution of strategy. Culture acts as the glue that holds all strategic initiatives together, fostering a sense of purpose and unity amongst the workforce.
| Aspects of Strategic Management | Reliance on Organisational Culture |
| Setting Strategic Goals | Culture can influence what goals are set – ambitious, customer-focused, innovative etc., based on the values and norms of the organisation. |
| Strategy Execution | A supportive culture can streamline the execution of strategic initiatives by fostering teamwork and collaboration, and creating a conducive environment. |
| Handling Strategic Change | A flexible culture can facilitate strategic change by preparing employees for transitions and mitigating resistance to change. |
As an example, let's consider Netflix. The company's strategy has evolved over the years – from a DVD rental service to a global streaming service and now, a content-creating giant. This strategic evolution has been possible due to a culture that values flexibility, agility, and creative risk-taking. The alignment between Netflix's strategy and its culture has catalysed the company's successful transition into diverse business ventures.
\[Strategy = f(Organisational Culture)\]. This formula suggests that the effectiveness of strategic management relies heavily on organisational culture. The culture within an organisation shapes how strategies are created, executed, and adjusted over time.
Organisational Culture Amidst Change Management
Change is a constant in the modern business landscape, and managing this change effectively is essential to an organisation's success. Amidst these transitions, organisational culture serves as a potent navigating tool, determining how smoothly change can be incorporated into everyday operations.
Research indicates that nearly 70% of organisational change initiatives fail due to resistance from employees and a lack of effective change management. Hence, an understanding of organisational culture can be the key to successful change management.
Organisational Culture and Change Management - Seamless Transition
Navigating change is no easy feat. It brings with it uncertainty, fear, and adjustment woes. However, an understanding of organisational culture can ease this process, creating a seamless transition during periods of change.
Change Management refers to the structured approach and methodology for steering and managing people, teams, and organisations from a current state to a desired future state. It involves adeptly managing resistance, cultivating understanding, building commitment, and driving behavioural change.
Managing Resistance: A positive organisational culture can reduce resistance to change. If the culture values adaptability and learning, employees are more likely to embrace change.
Cultivating Understanding: A culture of open communication can foster understanding of the need for change, its benefits, and the impact on the employees.
Building Commitment: In a culture that promotes teamwork and unity, there would be a collective commitment to make change work.
Driving Behavioural Change: Culture can steer behavioural change by shaping attitudes and mindsets towards the change.
Take an example of a shift from a traditional office setup to a remote working model. If the organisation's culture values flexibility and work-life balance, the resistance towards this change might be low. Continuous communication from the management detailing the benefits of remote work and the steps taken to ease the transition process (like provision for technology, flexible working hours, etc.) could further smoothen the process. Thereby, a supportive organisational culture can assure a seamless transition amidst change.
How to Manage Culture While Implementing Business Changes
Managing organisational culture during change implementation can be a pivotal factor in deciding the success or failure of change initiatives in business environments.
Managing culture during change implementation includes understanding the existing values and alignment of those values with the intended change, communicating the need and process for change, facilitating interaction and feedback, and recognising and rewarding culturally aligned behaviour.
| Steps in Culture Management | Implementation During Change |
| Understanding Existing Values | Audit the existing culture to understand the deep-seated norms and values in the organisation. Assess how these values align with the proposed change. |
| Communicating the Change | Clearly communicate the need for change, its benefits, and the blueprint of change. Maintain transparency to build trust and acceptance amongst employees. |
| Facilitating Interaction | Create platforms for dialogues, discussions and feedbacks about the change. Make the process participative to foster buy-in. |
| Recognising & Rewarding | Recognise and reward adherence to new behavioural expectations. Positive reinforcement can nudge employees towards accepting the change. |
Suppose an organisation plans to introduce a new technology platform to streamline their operations. The management first needs to understand whether their organisational culture favours tech-advancement and learning. They need to clearly articulate the benefits of the new platform and allay any concerns regarding its usage. Training sessions or workshops could be arranged to assist employees with the transition. Finally, employees who quickly adapt and exhibit advanced application of the technology can be rewarded to encourage others. Hence, managing organisational culture can facilitate a smooth implementation of business changes.
\[Change = f(Organisational Culture)\]. Interpretation? The trajectory and ease of change is heavily influenced by the existing organisational culture, emphasising the vital role of managing organisational culture during change implementation.
Models and Importance of Managing Organisational Culture
In the complex domain of business studies, understanding and managing organisational culture gains paramount importance. Various models have been propounded to dissect organisational culture and the methods to manage it effectively. Let's delve into these perspectives, and unravel the role of managing organisational culture in today's competitive business world.
Managing Organisational Culture Models - A Comprehensive Review
Organisational culture models offer a structured understanding of the culture within an organisation and can aid in formulating effective management strategies. Here, we explore some of these pivotal models:
The Deal and Kennedy's Model of Organisational Culture was proposed by Terrence E. Deal and Alan A. Kennedy in 1982. This model categorises organisational cultures into four types: The Tough-Guy Macho Culture, the Work-Hard Play-Hard Culture, the Bet-Your-Company Culture, and the Process Culture. The model suggests that managing culture involves understanding these characteristics and aligning managerial practices accordingly.
Hofstede's Cultural Dimensions Theory: Proposed by Geert Hofstede, this model outlines six dimensions of culture: Power Distance, Individualism vs. Collectivism, Masculinity vs. Femininity, Uncertainty Avoidance, Long Term vs. Short Term Orientation, and Indulgence vs. Restraint. It aids management in understanding cross-cultural dynamics and effectively managing multicultural organisations.
Schein's Three Levels of Culture: The model, formulated by Edgar Schein, divides organisational culture into three levels - Artifacts, Espoused Beliefs & Values, and Basic Underlying Assumptions. It helps management decode the visible and invisible layers of culture and manage culture transformation.
Denison's Organisational Culture Model: This model, proposed by Daniel Denison, links organisational culture to business performance. It suggests that adaptability, mission, involvement, and consistency are characteristics of high-performing organisations. Thus, managing culture involves fostering these attributes within the organisation.
For instance, a tech start-up having an organisational culture typifying Deal and Kennedy's 'Work-Hard Play-Hard' culture, would mean quick feedback and high-rewards are expected. Understanding this allows management to align their reward system accordingly with frequent recognitions and incentives. Similarly, if a company reflects 'Masculinity' as highlighted in Hofstede's model, competitive spirit and performance might be prevalent. Management can use this insight to design role recognitions and competitive events to drive performance.
Decoding the Importance of Managing Organisational Culture in Today's Business World
In the fast-evolving business world, managing organisational culture bears significant influence on a company's success trajectory. Recognising this can unlock numerous benefits:
| Benefits of Managing Organisational Culture | |
| Fosters Employee Engagement: | A culture that resonates with employee values fosters greater employee engagement and commitment. |
| Drives Performance: | Positive organisational culture can energise employees and drive superior performance. |
| Attracts Talent: | Companies known for their positive culture tend to attract and retain superior talent. |
| Facilitates Change: | A flexible organisational culture can facilitate the implementation of strategic business changes and transformation. |
| Promotes Innovation: | An organisational culture that encourages risk-taking and experimentation can foster innovation. |
\[ Organizational \ Success = f(Managed \ Organizational \ Culture) \]. The interpretation? An adeptly managed organisational culture can be a significant determinant of an organization's success.
Companies like Google and Facebook are known for their employee-friendly organisational cultures. They create an environment of collaboration, innovation and balance between work and play. Their managed organisational culture, apart from being a talent magnet, promotes performance and innovation. This has been instrumental in their global success in the tech industry.
Managing Organisational Culture - Key takeaways
- Managing organisational culture is central in performance management as it drives employee behaviour, influencing overall output.
- Organisational culture aids in strategic management by aligning the workforce with the company's strategic vision, motivating employees and facilitating change management.
- There is a significant relationship between organisational culture and performance outcomes, such as operational efficiency, innovation, financial outcomes and customer satisfaction.
- In the context of change management, organisational culture can aid in managing resistance, fostering understanding, building commitment, and driving behavioural change.
- Models and effective management of organisational culture are essential in understanding and navigating the complex domain of business studies.
Learn faster with the 21 flashcards about Managing Organisational Culture
Sign up for free to gain access to all our flashcards.
Frequently Asked Questions about Managing Organisational Culture
About StudySmarter
StudySmarter is a globally recognized educational technology company, offering a holistic learning platform designed for students of all ages and educational levels. Our platform provides learning support for a wide range of subjects, including STEM, Social Sciences, and Languages and also helps students to successfully master various tests and exams worldwide, such as GCSE, A Level, SAT, ACT, Abitur, and more. We offer an extensive library of learning materials, including interactive flashcards, comprehensive textbook solutions, and detailed explanations. The cutting-edge technology and tools we provide help students create their own learning materials. StudySmarter’s content is not only expert-verified but also regularly updated to ensure accuracy and relevance.
Learn more