By Ranjit Singh Malhi, Ph.D.
Various research findings underscore the significance of organizational culture. First, there is a positive correlation between an organization’s culture and long-term financial performance. Second, mergers frequently fail due to incompatible cultures. Third, organizational culture is significantly correlated with employee behaviour and attitude.1
What is Organizational Culture?
Organizational culture is basically a set of shared values and beliefs which interact with an organization’s people, structure and systems to produce behavioural norms. It is the “social glue” that binds an organization’s members together.
Values are principles held in high regard such as customer satisfaction, employee autonomy and innovation. Beliefs are assumptions about what is true, such as quality work will be rewarded and promotions are based on merit. Norms are standards of expected behaviour or established ways of doing things which are developed on the job. Norms flow largely from values. Examples of norms are disagreeing tactfully, sharing information, and helping one another (teamwork).
A healthy corporate culture is one that is appropriate to the success of the organization in its operating environment and the well-being of organizational members.
Importance of Organizational Culture
Main Cultural Attributes of Excellent Organizations
How Leaders Embed and Transmit Culture
Changing Organizational Culture
Organizational culture can be changed as evident by successful turnarounds of Chrysler by Lee Iacocca and Jaguar Cars by John Egan in the 1980s. Both of them created a new culture to match the change in strategies. Nevertheless, changing organizational culture is a difficult and time-consuming process, especially in the case of a “strong” culture where the values are deeply entrenched.
Steps in Changing Organizational Culture
Five Essential Conditions for Successful Cultural Transformation
1. See Robert Kreitner and Angelo Kinicki, Organizational Behavior, 4th ed. (New York: McGraw-Hill, 1998), p. 66.
2. Source: Edgar A. Schein, Organizational Culture and Leadership (San Francisco; Jossey-Bass, 1985), pp. 223-243.
3 Arthur A. Thomson, Jr. and A. J Strickland III, Strategic Management: Concepts and Cases, 11th ed. (Singapore: McGraw-Hill Book Co., 1999), p. 351.
4. See W. Mathew Juechter, Caroline Fisher and Randall J. Alforg, “Five Conditions for High-Performance Cultures”, Training and Development, May 1998, p. 66.
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