1Organizational culture: forces that shape thinking, behavior, and success
Abstract: A critical issue in business is that organizations are composed of individuals and social groups and that organizational outcomes rest on the creativity, efforts, and behavior of these different actors and social units. This chapter considers perhaps the most powerful and decisive aspect of people performance in organizations: organizational culture. The chapter explores the meaning of organizational culture and how culture informs organizational members of the root assumptions, values, and behaviors that constitute the organization’s raison d’être, vision, and future. It considers how cultures evolve within organizations, the pivotal role played by their founding members, and how organizational leadership can change culture, reshaping and refocusing it to contribute to the organization’s continuing survival and success.
Culture is an abstraction, yet the forces that are created in social and organizational situations that derive from culture are powerful. If we don’t understand the operation of these forces, we become victim to them. [1, p. 3]
1.1Introduction
In North America, Europe, and Australia there is a growing trend for business schools to design their curricula with graduate employability in mind. The challenge they confront is to provide a set of skills and competencies that will allow graduates to successfully enter the workplace, advance within it, and productively manage organizations and personal careers [2–4]. Graduate employability is particularly challenging for a number of interrelated reasons: (a) the work world is constantly changing, which makes it difficult to predict the skills and competencies that will be relevant in the future; (b) new knowledge and disruptive technologies are rapidly diffused; (c) the half-life of knowledge in many professional and disciplinary areas is not very long; and (d) computer-based artificial intelligence that renders many human-centered skills and competencies obsolete is being increasingly used [5–7].
Responding to these complex challenges, many business schools are now accentuating broader and more enduring skills, emphasizing critical and fundamental areas in their curricula, and cultivating a commitment to continuous intellectual growth and lifelong learning after graduation [8–10]. Most likely – given the nature of this book and its intended readership – you have made a commitment to lifelong learning. Further, given the predicted readership of this book (those in the scientific and engineering communities), this chapter might cover an area that has not been previously studied or that has not been considered particularly relevant.
This chapter might prove challenging because, unlike many of the “hard” and technically focused topics of conventional MBA programs, organizational culture is a “soft” topic, akin to subjects like organizational communication or interpersonal relationships. Although many science and engineering students prefer the reassuring nature of technically based “hard” areas of study in MBA programs, such as capital budgeting or managerial economics, it is important to realize that in the real work world, especially at middle and senior management levels, the competencies most in demand and most associated with success are those people-centered ones that many generations of business undergraduates have rather dismissively referred to as “soft” subjects [11, 12].
This chapter explores organizational culture by providing a critical working knowledge of the topic. Organizational culture is a very significant aspect of all social aggregations: project teams, work groups, and corporate organizations. An awareness of organizational culture is of critical importance for those who work in, or collaborate with, such groups. This importance is reflected in the simple definition of organizational culture offered by Schneider, who claims that organizational culture is “the way we do things in order to succeed” [13, p. 128, emphasis in original]. Further, the impact of organizational culture, and the profound challenges and opportunities that it presents to managers, is underscored by Edgar Schein, who advises that “the only thing of real importance that leaders do is to create and manage culture...to understand and work with culture...[and] to destroy culture when it is viewed as dysfunctional” [1, p. 11].
This chapter is organized as follows. Section 1.2 provides a broad review of culture at the levels of metaphor and national phenomenon. Section 1.3 considers culture as an organizational reality, while Section 1.4 explores the structure and nested layers of culture in organizational contexts. Section 1.5 examines organizational culture as an espoused value system and organizational climate that is the experienced culture projectedandconfirmedbyorganizationalprocesses, policies, and procedures.Section1.6 considers the role of leadership in organizational culture, including the role played by an organization’s founding leaders, mechanismsforperpetuating culture, and the processes through which present leaders can shift and realign culture. Section 1.7 briefly summarizes some of the main issues developed in the chapter. This final section is followed by a number of short questions that the reader might find helpful in reviewing the chapter. Answers to these questions are provided after the reference section.
1.2The multiple roots of culture
The underlying ideologies of an organization – that is, the “shared, interrelated sets of beliefs about how things work; values that indicate what’s worth having or doing; and norms that tell people how they should behave” [14, p. 33] – are recognized by all of those in the organization, but their cultural origins often remain unconsidered and unappreciated. Indeed, it might be said that the truly acculturated organizational participant is the one who self-identifies with the organization, behaves according to its norms, subscribes to its assumptions and values, and yet remains oblivious to the presence, power, or even existence of the organization’s underlying culture.
The central theme of this chapter is organizational culture. However, it is important to consider the other culture systems within which an organization and its culture are embedded because, to a great extent, cultures do not exist independently or uniquely but are nested in–andmoderatedby–one another. Rather than approaching culture as a singular phenomenon, it is better to think of it as a set of dynamic and fluid forces that come into play at different times, operate at different levels, produce different outcomes, and continuously undergo change even though those changes might seem gradual.
1.2.1Culture as a metaphor
At the outset, it is important to appreciate that when referring to culture (Latin: cultura = cultivation) we are employing a metaphor and that “culture in all of its early uses was a noun of process: the tending of something, basically crops or animals” [15, p. 87]. Metaphorically, the growth of individuals and their development within a social setting has been compared with cultivating crops in fields or tending grapes in vineyards. Culture – as a process and as an outcome – is connected with growing, nurturing, supporting, and caring. However, over time, this agriculturally rooted metaphor has given rise to two different ways in which culture is conceived of in contemporary English:
–Culture as an exclusive quality: In the first sense – in which the roots of the agricultural metaphorical are stronger – culture is associated with a process of deliberate selection, careful propagation, and specific domestication, all designed to develop what are considered more refined human attributes and behaviors. In this older sense, culture is associated with an exclusive high culture as seen in intellectual development, aesthetic refinement, and civilized behavior. Here, culture is regarded as the exclusive domain or preoccupation of an elite social class, and culture differentiates between higher and lower social classes. The outcomes of this process are understood in terms of refinement, cultured minds, and cultured individuals.
–Culture as a common social experience: In the second sense – the sense used in this chapter and in organizational culture studies generally – culture is understood in a less restricted sense and is associated with growing up within a specific context, or with developing within a common social environment. Culture, consciously recognized or unrecognized experience, is encountered by everyone and shapes everyone. As Spencer-Oatey explains, “our notion of culture is not something exclusive to certain members; rather, it relates to the whole of a society. More-over, it is not value-laden.... they [cultures] are [only] similar or different to each other” [16, pp. 15–16].
As a construct, culture has been used in multiple senses, in different contexts, and in various fields of social science. It is hardly surprisingly that no single universally agreed-upon definition of culture has emerged; indeed, there are approximately a hundred different definitions in the literatures of anthropology and sociology [17, 18]. Reviewing these, Spencer-Oatey provides her own definition, although she concedes that any definition is likely to be partial, vague, and fuzzy. She defines culture as follows:
The assumptions and values, orientations to life, beliefs, policies, procedures and behavioural conventions that are shared by a group of people, and that influence (but do not determine) each member’s behaviour and his/ her interpretations of the ‘meaning’ of other people’s behaviour [16, p. 3].
1.2.2Culture as a national expression
Culture is a shared experience that develops in any context where there is prolonged social interaction. In trying to explain how culture develops, a commonly used unit of analysis has been the nation-state. However, in trying to identify distinctive national cultures, there are a number of significant problems: (a) defining the “nation” involved (e.g., its geopolitical borders, historical development, regional integrity and differences); (b) assessing the homogeneity of the national state (e.g., the extent of racial, ethnic, and religious diversity; distinctive social communities, subgroups, and enclaves; historical patterns of immigration and migration); and (c) constructing a set of stable, reliable, and valid dimensions through which different national cultures can be defined, measured, and compared.
National culture is a subject of interest and study in its ow nright,but it is important to appreciate the extent to which national cultural dimensions are expressed in organizations [19]. The key figure in the analysis and measurement of national culture is Gert Hofstede [20, 21], and his major contribution – Culture’s Consequences – specifically focuses on the widely held national values that contribute to comparative managerial differences. Hofstede’swork attempts to identify, define, and measure quantifiable dimensions of national culture. He defines national culture simply as “the collective programming of the mind which distinguishes the members of one group or category of people from another” [20, p. 9].
Hofstede’s approach was based on the statistical analysis of responses to cultural assumptions in different countries. The analysis identified a number of cultural dimensions, which he found present in different degrees in all national cultures. The analysis and cultural dimensions identified are widely used but have been criticized for portraying national culture as a static manifestation rather than as a dynamically evolving system. Many scholars also criticize Hofstede’s basic assumptions, research methodology, and data analysis. These critics express concerns that his attempts to reveal stable, persistent, and static national cultural dimensions have inadvertently resulted in misconceptions, misunderstandings, and plausible, but limited and dangerous, sophisticated stereotypes [22–24]. Despite these persistent criticisms, Hofstede’s national cultural dimensions are widely used:
–Power distance: “The extent to which less powerful members of a society accept and expect that power is distributed unequally” [25, p. 89]. In high power distance cultures, social status and hierarchy are accepted as natural arrangements and the source of personal power, social inequality, and legitimate authority vested in those of higher social rank (compare Malaysia with its high power distance index of 104 and Israel, which scores 13 on the same scale [26]).
–Individualism/collectivism: This is the difference between “people looking after themselves and their immediate family only, versus people belonging to in-groups that look after them in exchange for loyalty” [25, p. 89]. Individualistic cultures focus on the individual, the uniqueness of the “I,” and distinctive projections of self. Collectivistic cultures focus on the group, membership in the collective, cooperative efforts, and a dominant concern with “we” and “us” (compare the United States, with its high individualism index of 91, and South Korea, which scores a low 18 [26]).
–Masculinity/femininity: This dimension emphasizes the role of gender, and “dominant values in a masculine society are achievement and success; the dominant values in a feminine society are caring for others and quality of life” [25, p. 89]. Masculine cultures tend to find expression through the assignment of distinctive gender-based roles, rigid gender-specific activities, and assumptions of male dominance in areas such as leadership, power, and authority (compare Japan, with its high masculinity index of 95, and Sweden, which scores a low 5 [26]).
–Uncertainty avoidance: This is a measure of “the extent to which people feel threatened by uncertainty and ambiguity and try to avoid these situations” [25, p. 90]. In high-avoidance cultures, there is a significant degree of reluctance and sense of discomfort associated with being in situations that involve change, innovation, and risk-taking (compare Portugal, with its high uncertainty avoidance index of 104, and Denmark, which scores a low 23 [26]).
–Long-term vs. short-term orientation: This dimension measures “the extent to which a society exhibits a pragmatic future-orientated perspective rather than a conventional historic or short-term point of view” [25, p. 90]. Long-term-orientation cultures place value on persistence, perseverance, and an investment in the future. Short-term-orientation cultures tend to favor instant rewards and immediate results in the pursuit of either personal happiness or gratification (compare China, with its high long-term-orientation index of 118, and the United States, which scores a low 29 [26]).
National culture is best understood as a statistical construct in which the majority of the population clusters around central values (averages) associated with specific cultural dimensions, for example, high power distance and individualism/collectivism. However, as with all statistical descriptions, (a) there is considerable individual variance about the defined cultural dimension average (country score) and (b) the national culture profile provides a generalized picture and cannot be used to define individuals precisely or to predict their cultural behavior accurately.
National cultures provide a socially perpetuated framework within which inhabitants have a set of generally agreed-upon ways of explaining behavior, identifying values, and understanding “the ways in which we do things.” These generally held assumptions and patterns are recognizable and seem perfectly natural within the country; however, there is considerable individual variation, and there are always distinctive subcultures that differ from national norms.
When individuals who belong to one national culture interact with those of another, they often observe differences and begin to appreciate that they themselves possess cultural perspectives that had been unrecognized, unconsidered, and invisible until the exposure took place. For example, learning a foreign language, working in a different country, or managing foreign nationals all expose national culture differences. Sometimes, national culture differences appear subtly; sometimes, they are recognized dramatically. In a globalized world, especially in the globalized world of business, awareness of national cultural differences and competencies in negotiating them are critical factors for success [27–29].
Since organizational participants generally come from the surrounding national population, it might seem obvious that national cultural values will permeate the organization. However, each organization creates – either spontaneously or in a more consciously and calculated way – its own distinctive set of culture assumptions, beliefs, and behaviors. Organizational culture can be seen as being nested in a broader national culture, and the relative strength, influence, and expression of each culture system can sometimes become a matter of practical concern, rather than simply of academic interest [30, 31]. From a practical perspective, relative cultural strength and possible culture conflict – between national and organizational cultural perspectives – is usually not particularly important. However, culture clash can pose a particular challenge and represent a significant communication barrier for different national units of global companies, for mergers and acquisitions that stretch across national borders and for multinational corporations [32–34].
1.3The culture of organizations
Culture is a socially initiated, sustained, and perpetuated process that comes into play in contexts where there is long-term interaction and social exchange between individuals. These contexts include the formation and development of groups and organizations. Although business organizations can become very large corporations, they usually begin as much smaller units – entrepreneurial microenterprises and startups (with less than ten participants), small and medium-sized enterprises (10–50 participants), and family businesses. Culture develops naturally and spontaneously in all of these organizations but, as they grow, it can also be purposefully created, adjusted, and changed to better suit the growth and success of that organization. Considering stable long-lived groups and organizations, Schein defines culture as follows:
A pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has 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 [1, p. 17].
At any given moment, organizational culture can appear static and stable. However, when considered over a period of time, it can be seen as dynamic and constantly evolving to accommodate the changes that occur in the external and internal environments of the organization. In this evolutionary process, the dominant forces are (a) those of the external world (the task environment) in which the organization exists, primarily involving the struggle to find a viable niche in the shifting external social, political, and economic landscape; and (b) those of the internal world of the organization, predominantly involving efforts to resolve the social and political issues that threaten organizational cohesion or the integration of participants into a purposeful collective.
External and internal forces can threaten the existential future of the organization, and they challenge it to acknowledge these threats, respond to them, and find ways of successfully adapting to them. Organizations that survive and find new and productive opportunities to exploit are those that have an innate capacity for sustained flexibility, ongoing creativity, and openness to innovation. These adaptations are all dynamic organizational responses and altered performances – that is, they are expressions of the organization’s ability to do things differently. To do things differently, however, organizations need to recognize when change is required. As social collectives, organizations need to consider the ongoing necessity for doing things differently and to learn from their history of adaptations. Put simply, they have to constantly be aware of their culture and whether it is leading to success [35–38].
1.4The structure of organizational culture
Organizational culture is a complex phenomenon that has a layered structure, with the surface layers easily identifiable and the deeper layers more significant but less obvious. Schein [1] identifies three such interconnected layers nested in one another: (a) a surface layer of artifacts, signs, and symbols that is quite visible but that can also be easily misunderstood or misinterpreted; (b) a deeper layer of espoused beliefs and values that only emerges from discussions and interactions with organizational members; and (c) a yet deeper and more hidden core of basic assumptions that also emerges from discussions with those in the organization but that is often not referred to directly because these assumptions seem so obvious.
1.4.1Artifacts: visible organizational structures and processes
The most obvious manifestations of organizational culture are to be seen in the physicalworld that the organization creates for itself. These include the architectural design that the business selects for its buildings, the spatial allocations of the building’s interior, the layout of working and production spaces, the selection and arrangement of furniture and equipment, and the design colors and textures that have been selected. None of these features are random and they do not simply materialize – they are selected, preferred, and planned with purpose and reason. The physical way in which the organizational setting has been created can be interpreted as a projection of underlying cultural values and assumptions.
Of course, the projection of the organization’s culture into the physical world is moderated by a design purpose – a functionality that might itself be embedded in, or connected to, organizational culture. Organizational spaces are social spaces that are designed with an intent that might stimulate organizational creativity, define organizational behavior, promote organizational learning, or – most notably in organizations such as colleges and campuses – structurally facilitate preferred ways of teaching and learning. These intentions can often reflect the deeper cultural beliefs and values of the organization [39–41].
Similarly, in any organization, there are numerous visible and observable phenomena that are also deeply rooted in its culture. For example, the language or jargon that is used to communicate with other organizational participants; the technology that is employed and the products that result from organizational efforts; the dress code, either formally articulated or implicitly acknowledged; and such simple taken-for-granted artifacts such as the organization’s logo, letterhead, and web design.
Equally observable, and just as accessible, are the narratives that are perpetuated – the persistent myths about past organizational behavior or the sagas about organizational founders and significant personalities. All of these become obvious in casual discussions with organizational members. Just as obvious – and often quite unique to the organization – are the ceremonies, commemorations, rites, and rituals that it has created. All of these shared expressions reflect a set of understandings and behavioral expectations, even though their origins may be unclear or obscure and even though their meaning and significance may be interpreted differently by organizational insiders and visitors [42–44]. Indeed, especially for the outsider, there is a danger that focusing on the particular, selectively disregarding pieces of the pattern, and projecting personal interpretations can lead to a false reading or misinterpretation of the underlying organizational culture.
For example, the visible and discernable artifacts present in the organization are often regarded as organizational symbols,where symbols “refer to things that stand for the ideas that compose the organization” [45, p. 73]. Rafaeli and Worline [45] note that organizational symbols: (a) have the power to reflect underlying aspects of culture; (b) to elicit internalized norms of behavior from organizational participants; (c) to frame shared experiences; (d) to facilitate communication between those participants; and (e) to integrate the whole organization into what they call a system of significance [45, p. 85].
Viewing the organization through the prism of symbolism and symbolic systems can provide rich and powerful ways of understanding its internal cultural landscape. However, these symbolic approaches need to be used with caution, because there is always the danger that the significance and meaning attached to symbols can be misunderstood by those who are detached from the organization, or who are not embedded in its culture [46, 47]. As Schein cautions, it is “especially dangerous to try to infer the deeper assumptions from artifacts alone, because one’s interpretations will inevitably be projections of one’s own feelings and reactions” [1, p. 27].
1.4.2Espoused beliefs: underlying philosophies and justifications
Organizations, particularly for-profit business corporations, are created to act in the social and economic spheres. They employ people and utilize their skills and talents. They interact with those located inside and outside the organization and enter competitive marketplaceswhere they attempt to attract, retain, and increase a consumer base. As social actors, organizations require a social identity, and that identity is predicated on the beliefs they espouse and the values they to hold to be important and true.
There are two discernible culture layers that should ideally reflect and validate one another but that sometimes do not: (a) a publicly projected set of values and beliefs that are explicitly communicated to the organization’s relevant publics and external stakeholders and (b) an internal set of cultural values and beliefs that are embedded in the narratives, behaviors, and philosophies that the organization espouses and that are recognized by its members.
–Publicly projected and communicated beliefs: To share and communicate their beliefs and values with the external publics and stakeholders, organizations distribute a set of formal statements that serve to identify and particularize them. This is most evident in modern business corporations, which set out a vision statement, a mission statement, and a collection of communications that articulate relevant values, beliefs, and inspirations that identify the corporations and against which their future performance and actions can be assessed. These narratives serve to differentiate one corporation from another by providing a unique and convincing raison d’être for the entity and for those who populate it. Not infrequently, these external narratives are shaped by considerations of public relations, marketing potential, and corporate self-interest. Indeed, these externally projected beliefs are often synonymous with the corporate brand image. These communications are typically enthusiastic and positively and purposefully vague; however, it is important that they accurately mirror – or at least convincingly resonate with – the cultural values held by the organization. Projected beliefs should align with what the organization holds true, what it genuinely wants other social actors and stakeholders to know, and what it expects its own members to believe [48, 49].
–Espoused beliefs and values: Publicly projected organizational beliefs are directed to external audiences, but these narratives are also known to organizational participants. However, this is not the normal way through which organizational members understand the organization’s culture. For them, what the organization believes, what it values, and how it sees the world become evident through an internal process of socialization. For organizational members and for organizational novices, the internal sharing of espoused values is the primary way through which culture is instilled. Ultimately, culture is the “shared basic assumptions, values, and beliefs that characterize a setting and are taught to newcomers as the proper way to think and feel” [50, p. 362]. For newcomers and corporate visitors, the organization’s espoused values become apparent through ongoing interactions with those inside the organization and provide answers to questions of behavioral significance:What do we do? Why do we do this? How does what we do match who we think we are? Culture needs to give clear and consistent answers to these questions, to provide a blueprint for anticipated behavior, and to promote a sense of identity and identification [51–53].
These publicly projected and organizationally espoused projections of corporate values should be similar, if not identical. A damaging deficit can result if they are not or – as will later be discussed – if there is a significant mismatch between what the organization asserts about itself and how others come to perceive it. This potential deficit calls into question either the organization’s integrity and trustworthiness or its ability to view itself and its actions accurately. A potential deficit between espoused and enacted cultural values can result in: (a) reputational damage or a diminished organizational image for external publics and stakeholders; or (b) negative internal consequences such as reduced participant commitment, diminished employee loyalty, increased employee intent-to-leaveandactualturnover, and difficulties in attracting new organizational members [54–56].
1.4.3Deeper assumptions and values
The espoused beliefs and values of an organization are those that have emerged through a process of evolutionary challenge and adaption. Through that process, organizational culture represents what the organization believes about itself, how it believes that it should act, and how its internal constituent members believe they should approach their organizational roles and actions. The word choice is significant.
In modern English usage, “to espouse” means to actively support a cause or point of view, but in its older usage it also means “to wed someone” (a spouse). Both meanings revolve around a common linguistic source (Latin: spondere = to promise, or to betroth). In a sense, participants are wedded to the values and beliefs that give the organization cultural meaning and significance, and these values constitute the basis for a relationship of commitment and mutual responsibility. As with marriage, the arrangement is voluntary rather than imposed. Participants enter into the relationship with their organization on a voluntary basis that changes and reshapes both parties, but the relationship is based on mutual attraction and trust that may change over time, especially if there is a sense that the values and beliefs that formed the basis of the relationship have significantly shifted or were misrepresented.
Underpinning these espoused values are older and deeper ones that represent the core of the organization’s culture. These are fundamental assumptions about the nature of the world within which the organization operates and the relationship between the organization and that world. They include the purpose of the organization, the meaning of organizational participation, and the social identity of the organization and its members. Perhaps at some time these assumptions and values were in dispute. However, over time and through a continuous process of testing and verification, they have become completely accepted, rarely questioned, and essentially taken for granted within the organization and by organizational participants.
Commenting on this level of deep assumptions and values, Schein argues that they are now regarded as basic assumptions within the organization, and that “if a basic assumption comes to be strongly held in a group, members will find behavior based on any other premise inconceivable” [1, p. 31]. In his later work, Schein returned to these deep cultural values and beliefs, describing them as shared tacit assumptions “which were at one time explicit values but, because they worked so well, became taken for granted and increasingly non-negotiable” [57, p. 109].
1.5Enacted values and organizational climate
One of the challenges in understanding organizational culture is that it can be regarded simultaneously as a description and an experience.As a description, organizational culture can be portrayed through it artifacts, espoused beliefs, and underpinning basic assumptions. Descriptions can be relatively objective, but they are also static: culture can all too easily become a series of posed photographs, not a spontaneous video. There is also a tendency in arriving at cultural descriptions to rely on what the organization itself propagates as normative values – expectations of what its culture is supposed to be and projections of what it aspires to be, rather than about what it actually is. Static descriptions of culture as rhetoric or culture as proclaimed often differ significantly from culture as actually experienced by organizational members [1, 50, 58].
For example, the organization might espouse high ethical behavior and a deep commitment to corporate social responsibility. These are the values that will be offered up when organizational participants are interviewed, just as they will refer to espoused theories when they are trying to explain what they do. However, these might not actually be the theories in use that govern what is really done and that only become evident when organizational members are actually observed in the workplace [59]. The actions and behavior of many of those working within the organization might be at variance with espoused values, even though these individuals will claim that they subscribe to the organization’s values and do not dispute them. Organizational members can often be conflicted between competing versions of values as proclaimed and values as enacted. They usually replicate the social norms that they witness and demonstrate the behaviors that they experience, but they are left confused and come to doubt the veracity of the organization’s representation of anticipated organizational behavior [59–62].
One way of exploring organizational culture is through discussions with those who work in the organization; indeed, this is the only way in which the deeper and more hidden aspects of culture can be revealed. However, members usually provide organizational values as espoused rather than values as enacted, especially when dealing with outsiders. This is always a concern because culture should be a mapping of what actually exists and what is at work, not a superficial description of what it is thought to be. Culture contains within it the power to integrate individuals into a social collective, to pattern their behavior, and to orientate their behavior toward collective solutions to the challenges and problems the organization faces. However, to utilize that power, it is important to have a clear and comprehensive understanding of what actually constitutes the organization’s culture.
The actual experience of organizational culture is termed organizational climate. This is what organizational members really feel, see, and do as opposed to what they believe they should think, recognize, and do. Schneider, Ehrhart, and Macey, in a comprehensive review of organizational climate, define it as “the shared perceptions of and the meaning attached to the policies, practices, and procedures employees experience and the behaviors they observe getting rewarded and that are supported and expected” [63, p. 362]. Organizational climate is an expression of the personal, subjective, and experiential understanding of organizational culture that is collectively arrived at by organizational members as they engage with the organization and implement its various policies and practices.
Thus, to come to a useful understanding of an organization, we need to consider two different but interconnected aspects:
(a)The “external” or objective description of its culture and of how the organization as an entity presents itself to insiders and outsiders. This is organizational culture, and it incorporates the assumptions, beliefs, and values that are recognized as important, especially by the leadership of the organization.
(b)The “internal” shared meanings and perceptions that organizational participants have about the organizational entity and their relatedness to it. This is organizational climate, and it incorporates the experiential understandings and associated meanings that have been gathered, especially by organizational members, about what the organization actually believes, values, and rewards.
Both of these perspectives are important, and both of them must be determined. As Schein [64] puts it, “to understand what goes on in organizations and why it happens in the way it does, one needs several concepts...climate and culture, if each is carefully defined, then [sic] become two crucial building blocks for organizational description and analysis” [pp. xxiv–xxv, emphasis in original].
1.6Organizational culture and leadership
Organizational culture is a perpetual work in process that is continuously being reshaped and reexpressed in a process of evolution and adaptation. However, these adaptive changes tend to take place over long time periods, and the changes are often slight and incremental. There are occasions when either the espoused or expressed culture of an organization is unproductive or dysfunctional and needs to be deliberately restructured. How can this restructuring be accomplished and by whom? Before considering the answers to these questions, it is necessary to develop a better appreciation of how leaders and cultures come together.
1.6.1Founders
An organization is not simply a collection of individuals. Instead, it has a separate identity that possesses a distinctive personality or persona. This is most obvious in the formation of the business corporation, which, through the legal process of incorporation, is endowed with “a separate indivisible legal personality” [65, p. 1188].However, all organizations begin their lives with a group of founding members and (usually) with a founding leader who represents or activates the group. Founders are simply “those individuals involved in actualizing the steps of organizational founding” [66, p. 709].
In actualizing organizational creation, founders tend to be motivated by a keen entrepreneurial vision and possess a set of robust theories about how things should be done and about what the organization should accomplish. These theories may appeal to other members of the founding group or be accepted in a more critical and skeptical manner, but initially they are only theories – visions that might be inspirational but that are presently speculative and unrealized. However, the theories and assumptions of founders are quickly put to the test as the organization comes into existence and struggles to survive. In time, “if their assumptions are wrong, the group fails early in its history....If correct, they create a powerful organization whose culture comes to reflect their original assumptions” [1, p. 243].
The creation and perpetuation of a strong culture can result in a powerful and effective organization, but that does not necessarily mean that a strong culture will ensure the continuing growth and relevance of the organization. Solving the culture problem early in its life is a prerequisite for the organization’s survival. But during its existence, the organization may encounter significant challenges to internal integration or external fit that cannot be solved by its original culture. Without such challenges or shocks, the original culture is likely to persist unchanged and to faithfully reflect the theories and assumptions held by its founder.
1.6.2Perpetuating organizational culture
Organizational cultures are not simply created at the time of the company’s founding – they are replicated and perpetuated in subsequent generations of organizational participants. There are a number of policies, processes, and procedures through which perpetuation occurs, with some being purposefully used by the organization and others being somewhat more subtle and spontaneous.
–Perpetuation through selection: One of the outcomes of strong organizational cultures is that those within the organization tend to identify themselves as the “in-group,” and this brings into play a dynamic that seeks to reinforce and perpetuate the characteristics, beliefs, and cultural values of that group. In other words, there is a group and institutional “tendency to favor members of one’s own group over members of other groups” [67, p. 10]. In perpetuating their distinctiveness, identity, and cohesiveness, the in-group and the organization reinforce their identity by making comparisons with out-groups or “others.” At the organizational level, the processes and procedures of employee recruitment, selection, and retention are colored by these considerations – a preference for those who think and behave like we do. Of course, cultural replication through the preferential selection and hiring of “similar” new organizational members needs to be tempered by considerations of discrimination and equal employment opportunity. This can be challenging, especially if the organization is small and lacks the resources or experience of a competent human resource department. Unwittingly and unintentionally, the preferential hiring of like-minded and socially similar individuals can create a pattern of direct or indirect discrimination. Just as dangerously, selective hiring can result in a lack of cultural diversity, a depletion of the internal talent pool, a reduction of organizational talent and creativity, and the exclusion of those who might possess highly advantageous but radically different cultural inputs [68–70].
–Perpetuation through socialization: Those selectively recruited into the organization may be predisposed to accept its cultural values and beliefs, but they are initially unfamiliar with them. Culture is transmitted through the socialization of incoming members in a variety of ways: (a) reward systems that provide direct value for those who comply with cultural values and behaviors; (b) a process of personally mimicking and modeling the organization’s culture; and (c) formal training programs, participation in organizational rites and rituals, and engagement in a system of communications by which the organization repeats, explains, and reinforces its cultural values. Through these processes, incoming and existing organizational participants are gradually brought together and coalesce around the organization’s espoused culture [71–74].
Schein observes that the “initial selection decisions for new members, followed by the criteria applied in the promotion system, are powerful mechanisms for embedding and perpetuating the culture, especially when combined with socialization tactics designed to teach cultural assumption” [1, p. 261]. These mechanisms are undoubtedly effective in accomplishing the explicit goals of perpetuating organizational culture. However, there is little empirical research in this area, and there are undoubtedly many other subtle reinforcing processes at work – all of which reinforce organizational culture, perpetuate it, and make it more resistant to management’s change efforts [75, 76].
1.6.3When organizational culture needs to change
Sometimes, the espoused organizational culture is not reflected in the organizational climate. Sometimes, the espoused culture ceases to provide the organization with any competitive advantage in a changed external environment. In these circumstances, senior management needs to identify the problem and intervene. For example, imagine that a corporation promotes a culture of safety that values the wellbeing of its members and of the consumers it serves. It genuinely believes that safety considerations are paramount and subordinate other organizational goals and behaviors. It prides itself on articulating a safety culture that is recognized and understood by employees and consumers alike. However, employees come to understand these cultural values as more rhetoric than reality because, in their daily work, they encounter a safety climate – the corporation’s safety-related policies, procedures, and practices – that clearly demonstrate that safety is of little organizational importance or that, at best, it is only a peripheral concern [77–80].
Few companies, especially manufacturers of potentially hazardous products, will openly espouse a set of beliefs that ranks safety low and prioritize values related to cost reduction and risk-taking. Many might genuinely believe – at least in the boardroom, marketing department, and public relations office – that safety is the firm’s primary concern. However, a rhetorical declaration does not create an organizational culture, any more than wishful thinking can transform the organizational climate. Managers, supervisors, and workers on the production line might realize that their bonuses, performance, and continuing relationship with the company all rest on cost-cutting and risk-taking expediencies that have little to do with safety and that indeed might compromise it.
The misalignment of organizational culture and organizational climate is not simply an academic issue – it can lead to an erosion of participant loyalty, commitment, and identity. If detected by senior management, misalignments can be changed. If not detected, they can potentially lead to catastrophic outcomes, for instance, in this example, when the firm’s products are implicated in preventable accidents and unintended but predictable deaths. A failure to align organizational culture and organizational climate can result in reputational damage that endangers the viability of the firm in a competitive world. These outcomes are not produced by organizational culture or organizational climate – they are the outcome of both. Both organizational culture and climate need to be understood. Both need to be congruent or complementary to one another, and both need to be actively monitored and managerially changed if they are found to be dysfunctional or if they are inhibiting the growth and viability of the organization [64, 81].
1.6.4Change interventions in organizational culture
In most cases, organizational change management is essentially organizational culture management and is initiated by the organization’s senior leadership. Leadership is a very extensive area of study, and there exist multiple types and theories of leadership.However, leadership in organizations falls into two main types: (a) supervision, in which the main focus is directing organizational members and which can be thought of as leading in the organization; and (b) strategic, in which the focus is on the organization as an entity and which can be considered as the leading of organizations. Changing organizational culture is accomplished by strategic leaders, who usually possess a transformative or a visionary agenda [82–85]. The process is initially destabilizing and fraught with danger for the organization and its members. Throughout the process, leaders must clearly communicate their vision, and that shared vision “serves the function of providing the psychological safety that permits the organization to move forward” [1, p. 323].
Changing organizations and their cultures, and indeed making any significant changes in human-based systems, is informed by the now classic work of Kurt Lewin [86–88]. He advocated a sequence of “unfreeze–change–refreeze” efforts, which prepared the organization for change, initiated change, and then locked the changes into the system. Lewin’s approach was directed toward bringing about profound, planned, and episodic change and not to continuous and low-level shifts. In bringing about significant episodic change, he argued that “to break open the shell of complacency and self-righteousness it is sometimes necessary to bring about deliberately an emotional stir-up” (as quoted in [89, p. 400]).
–Unfreezing prevalent culture: Here, the leader facilitates an organization-wide critical review of the existing culture. The purpose is to identify the cultural values and beliefs that are currently held and to see whether these are truly reflected in the organizational processes, procedures, and reward systems. The review is open-ended, but there is a clear message that the present organizational culture will have to underg odrastic change. This initial stage is disruptive and is inevitably viewed as disturbing and distressing by many organizational members who realize that they will lose power, influence, self-esteem, and perhaps even identity in the changed organization. Part of the leader’s role during this phase is to convert these anxieties into a source of future-orientated motivation [88].
–Initiating change: Schein [1, pp. 332–334] indicates that the active change phase should have eight goals: (a) offer a compelling positive vision and encourage participants to appreciate that their lives will be better if they adopt the news ways of thinking that are being promulgated by senior leadership; (b) provide formal training at the individual, group, and unit levels to explain and demonstrate the implications associated with changing organizational thinking and culture; (c) engage individuals and encourage them to appreciate that it is possible to adapt to and deal with the changes that are taking place; (d) focus on the organizational groups (e.g., teams, project teams) that will have to respond collectively to the new cultural landscape and to operate within it; (e) provide all concerned with the time to learn, practice, and demonstrate their understanding of the new cultural values; (f) identify, promote, and reward individual and group role models who demonstrate that they have adopted the new culture value system and that they have changed their performance and practice; (g) provide support groups, organizational spaces, and safe places in which questions about change can be raised, frustrations vented, and reservations shared and addressed; and (h) institute new organization-wide reward systems that clearly, convincingly, and consistently reflect the new ways of thinking and the new cultural values.
–Refreezing changed culture: This final phase allows the new values and beliefs that have been promoted to become permanent fixtures in the altered landscape of organizational culture. The permanence of the altered culture must be acknowledged by senior leadership, but more importantly the new established culture system must be clear to all organizational members. It is important that verification of the shift in culture should come from both external stakeholders who deal with the organization and from its internal membership. When the new culture has been confirmed and reinforced by these groups, “the new beliefs and values gradually stabilize, become internalized, and, if they continue to work, become taken-for-granted assumptions until new disconfirmations start the change process all over again” [1, p. 328].
Significant change within an organization needs to be a managed process and requires considerable skill and support from the leader. Leaders need to possess a clear vision for the organization, the technical ability to initiate and sustain the change process, and the personal capacity to provide support and encouragement and resolve the multiple tensions, discontent, and anxiety that inevitably accompany significant episodic change. Successful change is often the outcome of a thoughtful, creative, and engaging process in which change is constructively negotiated rather than imposed. Leaders must appreciate this and possess the skills and competencies to inspire and support their followers in this process. Negotiating change usually requires a negotiating culture, but negotiating change is equally a matter of leadership. As Basu observes, “both leadership and culture are critical to understanding organizations....[T]omake them effective, managers cannot ignore one or be complacent about the other” [90, p. 41].
1.7Conclusion
For the undergraduate and graduate business student, organizational culture and its close ally organizational climate are often seen as remote and peripheral subjects [50, 64, 81].However, for practicing managers and leaders, issues of culture and climate become very apparent and particularly powerful in all organizational contexts – including those centered on engineering, technology, and science [91–94].Within the organization, it is impossible for individuals to succeed or advance professionally without understanding the role of organizational culture and the ways in which cultural values are embedded in the workplace. Organization may be described in multiple ways, but fundamentally they are dynamic social arrangements, and – as with all human and social contexts – their cohesiveness, behavior, and existence all hinge on the cultural expectations and norms that they have created.
This chapter has attempted to provide a short but comprehensive introduction to the key issues that come into play when organizational culture is recognized. However, it is only an introduction. It may help the reader to become more sensitive to the organizational forces, challenges, and opportunities connected with organizational culture and to apply that sensitivity to other business and management situations. Business and management education is diffuse and draws upon a wider range of fields that might at first glance seem unrelated. However, this is how management is taught because this is how management – as a complex, varied, and socially based practice – is conducted.
This chapter might accomplish two other goals. First, it might prompt readers to conduct their own assessment of the organizational culture that exists in their educational, work, or professional contexts. If, as has been suggested, culture is critical for personal success within organizations, then it is critical for readers to more accurately and thoughtfully understand the culture that surrounds them and in which they are embedded – even though that cultural dimension might presently be unknown or unconsidered.
Second, after reading this chapter readers might wish to consolidate and expand their understanding or organizational culture more generally. If so, the best starting point is to read the seminal text, Edgar Schein’s [1] Organizational Culture and Leadership, which has informed much of this chapter. There are good reasons why this has become the classic text in the field and why it continues to shed light on both old and new organizational problems. Indeed, the reader will have noted that this chapter began with an epigraph taken from Schein’s work. It might therefor be appropriate to concludewith another of his observations, this one recorded more recently in a discussion with a group of leading organizational culture scholars. After a lifetime of engagement with organizational culture, Schein observes:
In conclusion, I believe the concept of culture can be an important and meaningful construct in organizational psychology and sociology but only if we capture in the definition both the multi-level complexity and dynamic evolutionary quality of the concept. [57, p. 112]
Knowledge revision
Review statements (true or false)
The following statements may be helpful for reviewing this chapter. Each statement requires a true or false response. Answers, together with explanations, can be found after the reference section.
- Organizational culture may be an interesting academic study, but it has little value or practical application for the manager.
- Since most organizations are embedded in a defined nation-state, the culture that develops in an organization more or less mirrors the surrounding national culture.
- A clear understanding of underlying culture can be gained by analyzing the visible artifacts and observable structures and processes of the organization.
- The deeper assumptions and values of organizational culture, whichmight also be referred to as shared tacit assumptions, are relatively fluid and easily changed.
- Organizational climate is the formal statement of how the organization describes its key assumptions, beliefs, and values.
- Organizational culture and organizational climate are two important aspects of the organization, but in most cases they are really the same thing.
- Organizational culture comes into being in a fairly random and serendipitous man-ner, usually without any clear point of origin.
- Organizational culture is transmitted through a process of internal socialization and through selective recruitment and hiring practices that attract and retain individuals who will most likely identify with the culture.
- In almost every case when there is a need for a change in organizational culture, the recognition comes too late and the necessary change cannot be initiated.
- The initiating change phase of the three-stage organizational change model is the most complex and risky.
Please see the answers at the end of the chapter.
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Answers to review statements
- False. An understanding of culture helps people perform successfully and advance their careers. A deeper appreciation of culture is also essential for managers who wish to change how the organization operates and to resolve problems of internal integration and external adaptation in an ever-changing social and economic world.
- True. National culture has a profound impact on organizational culture because the organization’s founders usually belonged to that culture. In multinational settings, there is often a conflict between the national culture of organizational members (in different foreign units) and the organizational culture (domestic headquarters). Organizational culture experienced in foreign units is moderated by national perspectives. One of the methodological conundrums of Hofstede’s [20, 21] studies is that the different national participants he selected belonged to the same global organization (IBM). Apparently, the implication was that participants would identify more strongly with their national cultures than their shared corporate one.
- False. It is true that considerable insight into organizational culture can be gained by considering its artifacts and visible structures and processes. However, especially if you are not actively engaged in the organization’s culture process, it is all too easy to focus on isolated fragments, project your own patterns, and construct a selective and flawed system of symbolic meaning.
- False. The shared tacit assumptions constitute the underpinning values and beliefs of the organization’s culture system. They remain present, uncontroversial, and often unconsidered because they have worked well in the past. In time, these deep-seated assumptions may shift or be replaced through a process of evolution and adaption, but they are usually resistant to sudden change or purposeful manipulation.
- False. Espoused culture is how the organization describes its fundamental assumptions, beliefs, and values. Many organizational members, especially senior management, may genuinely believe that this culture permeates the whole organization and is understood and acted upon by everyone. Organizational climate, however, is the understanding of the fundamental values that those inside the organization gain from their actual experiences of the organization’s policies, procedures, and processes.
- False.Organizational culture and organizational climate are two distinct perspectives that are related but often not congruent, which can be the source of many operational problems. To be effective – and to operate as a cohesive and productive force – culture as espoused by the organization should align with, or at least complement, the climate as experienced by those within the organization.
- False.Organizationalculturecanchangeover time and indeed may have to change significantly to allow the organization to endure, adapt competitively, and succeed. However, the core values of its culture can usually be traced back to its founders, who instituted distinctive and appropriate cultural values that allowed the organization to survive its original and (usually) precarious foundation.
- True. Both socialization and selective recruitment are ways of perpetuating organizational culture. In the short run, these produce cultural homogeneity that can reduce ambiguities and lead to more effective coordination and performance.However, in the long run, increased homogeneity of organizational culture can result in groupthink, the conservation of conformity, and the inability to recognize, question, or reform inappropriate or dysfunctional cultures.
- False. Undoubtedly there are organizations that do not understand that their culture is inappropriate, and they pay the price for that through market failure and bankruptcy. However, the fundamental role of organizational leadership is to continuously scan both external and internal environments and to determine whether their organization’s present culture is appropriate and, if it is not, to undertake proactive change.
- True. The initiating change phase is particularly problematic because it deliberately introduces instability, confusion, and discontent into the organization. There is a truism that “all change is resisted” because change can redistribute power and privilege, alter expectations and rewards, and challenge certainty and identity. This can produce acute personal discomfort, anxiety, and fear, even though those involved may believe that the result of change will benefit the organization as a whole.