IB Business Management HUMAN RESOURCE MANAGEMENT 2.5 Organisational Culture

Organisational culture
The values, attitudes and beliefs of the people working in an organisation that control the way they interact with each other and with external stakeholder groups
*Power* culture
Concentrating power among a few people
*Task* culture
Based on cooperation and team work
*Role* culture
Each member of staff has a clearly defined job title and role
*Person* culture
When individuals are given the freedom to express themselves and make decisions
*Entrepreneurial* culture
Encourages management and workers to take risks, to come up with new ideas and test out new business ventures
*Influences* on organisational culture:
1. Mission and vision statements
2. The appointment of senior staff
3. The organisation’s *ethical code of conduct*
4. Strategies on social and environmental issues
5. The example the organisation sets (treatment of subordinates, decision-making, etc.)
Common elements in *effective organisational change*:
1. Concentrate on the positive aspects of the business and enlarge these.
2. Obtain the full commitment of people at the top and all key personnel.
3. Establish new objectives and a mission statement that accurately reflect the new values and attitudes.
4. Encourage ‘bottom-up’ participation of workers when defining existing problems and devising solutions.
5. Train staff in new procedures and ways of working that reflect the changed value system of the business.
6. Change the staff reward system to avoid rewarding success in the ‘old ways’ and promote success in the ‘new ways’.
The *importance of organisational culture*:
1. The values of a business establish the norms of behaviour of staff.
2. Culture determines the way in which company managers and workers treat each other.
3. A distinctive organisational culture can support a business’s brand image and relationships with customers.
4. Culture determines not just how decisions are made but also the type of strategic decisions that are taken.
5. Organisational culture has been clearly linked to the economic performance and long-term success of organisations.
*Advantages* of having a strong corporate culture:
1. It creates a sense of belonging and security for staff because they feel as if they are part of the business. This can help improve team work and to raise and increase motivation.
2. Mistakes and misunderstandings can be minimised since staff are familiar with the processes at work.
3. It promotes team cohesiveness whereby people do things because they simply feel that it is the right thing to do.
4. Problems associated with a culture gap, such as conflict between different groups are minimised.
*Charles Handy’s* five types of organisational culture:
1. *Role* culture
2. *Power* culture
3. *Task* culture
4. *Person* culture
5. *Entrepreneurial* culture
Geert Hofstede’s five dimensions of culture:
1.* Power distance*
2. *Individualism* versus *collectivism*
3. *Masculinity* versus *femininity*
4. *Uncertainty avoidance*
5. *Long-term* versus *short-term orientation*
* Power distance* dimension of culture:
Measures the extent to which subordinates expect and accept *unequal distribution of power* with a business. High-power = centralised decision-making; low power = delegation and empowerment of subordinates.
*Individualism* versus *collectivism* dimension of culture:
Measures the extent to which people feel they should care for themselves (individualism) or be supported by colleagues in an organisation.
*Masculinity* versus *femininity* dimension of culture:
Measures the extent to which an organisational culture conforms to traditional gender roles and values. Masculinity:competitive, ambitious, materialistic. Femininity: relationships, family quality of life.
*Uncertainty avoidance* dimension of culture:
Measures the extent to which people in an organisation prefer structured routines (predictability) over flexible structures (uncertainty). High uncertainty avoidance cultures have strong customs and habits, and as such, tend to favour formal structures, rules and regulations, and tend to remain loyal to employers.
*Long-term* versus *short-term orientation* dimension of culture:
The extent to which an organisation and its employees values making sacrifices today for benefits to be gained in the future. Cultures with long-term orientation will invest for the future, have a high degree of perseverance and are patient with the results.
Culture clash
Occurs when there is conflict between two or more cultures within an organisation. This may exist when there is a merger or acquisition and two firms are required to integrate, each with their own unique corporate culture.
Culture gap
The difference between the existing culture of an organisation and its desired culture. Management will use different strategies to reduce this gap.
*Constraints* to changing corporate culture
1. Costs
2. Resistance to change
3. Public opinion
4. National cultures