Organisational Culture

This page on organisational culture is part of a wider discussion of the nature of organisations in general and overlaps the related area of organisational structure.

What is culture?

Culture is expressed by Handy as being: 'the way we do things around here'. This means the sum total of the belief, knowledge, attitudes, norms and customs that prevail in an organisation.

• Organisations have distinctive cultures, and behaviour acceptable in one organisational culture may be inappropriate in another - think about the different cultures in the different accountancy firms, for example. 
• Also cultures develop over time or can change instantly as a result of a single major event, e.g. death of company founder, threatened takeover, etc.

On this page we consider the topic of organisational culture in terms of the following areas:

Components of culture

The key elements of organisational culture are:

• Norms guide people's behaviour, suggesting what is or is not appropriate (the 'done thing'.) - e.g. informal dress codes.
• Symbols or symbolic action, e.g. rituals such as buying the office a cake on your birthday.
• Beliefs underlie the culture by identifying what is important, e.g. a belief in the importance of people as individuals.

The factors that shape the culture of the organisation

The six major influences on the culture of an organisation are as follows:

• Size - How large is the organisation - in terms of turnover, physical size, employee numbers?
• Technology - How technologically advanced is the organisation - either in terms of its product, or its productive processes?
• Diversity - How diverse is the company - either in terms of product range, geographical spread or cultural make-up of its stakeholders?
• Age - How old is the business or the managers of the business - do its strategic level decision makers have experience to draw upon?
• History - What worked in the past? Do decision makers have past successes to draw upon; are they willing to learn from their mistakes?
• Ownership - Is the organisation owned by a sole trader? Are there a small number of institutional shareholders or are there large numbers of small shareholders?

Other influences on culture

There are other, more subtle influences:

• The degree of individual initiative - is it encouraged or are decisions always referred upwards?
• The degree of risk tolerance - are managers only allowed to follow low-risk strategies?
• Clarity of direction - is there a clear focus; are these clear objectives and performance expectations?
• The degree of integration between groups - are different units encouraged to work together? Are management aloof or approachable; is communication clear to lower level staff?
• The reward system - are individuals rewarded for succeeding, i.e. are rewards based on performance criteria?
• Conflict tolerance - are employees encouraged to air grievances?
• Communication patterns - is there a formal hierarchy or an informal network?
• Formalisation of clothing and office layout - are there strict rules over this?
• The kind of people employed (graduates, young, old, etc.).

Writers on culture

 Please click on the following for further details:

• Schein  
• Handy  
• Hofstede 

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