Types of Corporate Cultures - Organisational Behaviour

Cultural elements and their relationships create a pattern that is distinct to an organization. However, organizational cultures have some common characteristics. Of the many frameworks, one of the most useful ones is presented here.

The vertical axis reflects the relative control orientation, ranging from stable to flexible, of an organization. The horizontal axis reflects the relative focus of the attention, ranging from internal functioning to external functioning, of an organization. The extreme corners of the four quadrants represent four pure types of organizational cultures: bureaucratic, clan, entrepreneurial and market.

In a culturally homogenous organization like South West Airlines, one of the cultures will be predominant. At Pepsi Co and other fragmented organizations, multiple cultures are likely not only to coexist but also to compete for superiority.

As is true of organization designs, different organizational cultures may be appropriate at different times and situations, with no one type of culture being ideal for every situation. However, some employees prefer one culture to the other. Employees who work in organizations with culture that fits their own view of an ideal culture tend to be committed to the organization and optimistic about its future.

Bureaucratic Culture

An organization that values formality, rules, standard operating procedures and hierarchical coordination has a bureaucratic culture. Long-term concerns of bureaucracy are predictability, efficiency and stability. Behavioral norms support formality over informality. Managers view their role as good coordinators, organizers and enforcers of written rules and standards. Tasks, responsibilities and authority for employees are clearly defined. The organization’s many rules and processes are spelled out in manuals and employees believe their duty is to follow them.

Clan Culture

Tradition, loyalty, personal commitment, extensive socialization, teamwork, self-
management and social influence are attributes of a clan culture. Its members recognize an obligation beyond the simple exchange of labor for a salary. They understand that contributions to the organization exceed beyond the contractual agreements. Loyalty is rewarded by security. Because the individuals believe that organization will treat them fairly in all respects and aspects, they hold themselves accountable to the organization for their actions.

Longtime clan members serve as mentors and role models for the newer members. These relationships perpetuate organization’s norms and values over successive generations of employees. In this type of a culture, members share a sense of pride in membership.They have a strong sense of identification and recognize the interdependence. Depending on the types of norms, the culture may or may not generate risk taking behaviors or innovation.

Entrepreneurial Culture

High levels of risk taking, dynamism and creativity characterize an entrepreneurial culture. There is a commitment to experimentation, innovation and being on the leading edge. This culture doesn’t just quickly react to change in the environment – it creates change. Effectiveness means providing new and unique products and rapid growth. Individual initiative, flexibility and freedom foster growth and are encouraged and well rewarded.

Market Culture

The achievement of measurable and demanding goals, especially those which are financial and market based (eg., sales growth, profitability and market share) characterize a market culture. Hard-driving competitiveness and profit orientation prevail throughout the organization. In a market culture, the relationship between an individual and the organization is contractual. There is a clear agreement on what one can expect from the other and the formal control orientation is quite stable. The individual is responsible for some level of performance and the organization promises a specified level of rewards.

However, the organization does not promise (or imply) security and the individual does not promise (or imply) loyalty. In this culture, superior’s interaction with subordinates largely consist of negotiating performance – reward agreements and/or evaluating requests for resource allocation. The absence of a long-term commitment of both the parties result in a weak socialization process. Social relations among coworkers aren’t officially emphasized, and few economic incentives are tied to directly cooperating with peers. The pure official relationships shared by the members with each other may not result in personal network. The market culture is often tied to monthly, quarterly and annual performance goals based on profits.

Performance and Organizational Culture

Organizational Culture has the potential to enhance organizational effectiveness, individual satisfaction, the sense of certainty about how problems need to be handled and so on. However, if the culture gets out of step with the changing expectations of the internal and external stakeholders, the organization’s effectiveness can be hindered. An underlying assumption is that an organization’s culture and it’s performance is directly related. Thus the rationale for attempting to change the culture is to create a more effective organization.

It is observed and also experienced that strong and well-developed cultures is an important characteristic of organizations that have outstanding performance records. The term strong culture implies that most managers and employees share a set of consistent values and methods of doing business and conducting themselves.

  1. A strong organizational culture facilitates goal alignment. The idea is that because all employees share the same basic assumptions, they can agree not just on what goals to pursue but also on the means by which they should be achieved. As a result, employee initiative, energy and enthusiasm is all channeled in the same direction. In these organizations, there are few problems of coordination and control, communication is quick and effective and resources are not wasted in internal conflicts. All this means organizational performance is likely to be healthy.
  2. A strong culture leads to high levels of employee motivation. There are two main arguments here. First, it has been suggested that there is something intrinsically appealing about the strong cultures that encourage people to identify with them. Second, it is sometimes thought that strong culture organizations incorporate practices which make working for them rewarding. These practices tend to include employee participation in decisionmaking and various recognition schemes.
  3. A strong culture is better able to learn from it’s past.The idea is that strong cultures characteristically possess agreed norms of behavior, integrative rituals and ceremonies and well-known stories. These reinforce consensus on the interpretation of issues and events based on the past experience, provide precedents from the organization’s history, which help decide how to meet new challenges, and promote self-understanding and social cohesion.

Managing Cultural Diversity

Organizations are becoming increasingly diverse in terms of gender, race, ethnicity and nationality. This growing diversity can bring substantial benefits, such as more successful strategies, improved decision making and greater creativity and innovation. However, along with the benefits, cultural diversity also brings with it costs and concerns. These include communication difficulties, intra organizational conflicts and turnover. There are no easy answers to managing a culturally diverse workforce. However, research has revealed some common characteristics of employee values, managerial philosophy and organizational culture that are present in organizations having effective diversity management programs. Here are some guidelines for managing the cultural diversity successfully:

  1. Managers and employes must understand that a diverse workforce will embody different perspectives and approaches to work and must truly value variety of opinion and insight. Organizational Culture 211
  2. The leadership of the organization must recognize both the learning opportunities and challenges that this diversity present to the organization.
  3. The organizational culture must create an expectation of high performance from everyone.
  4. The organizational culture must stimulate personal development.
  5. The organizational culture must encourage openness.
  6. The organizational culture must make its members feel valued.
  7. The organization must have a well articulated and widely understood mission.
  8. The organization must have a relatively non-bureaucratic structure.

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