Running Head: WHAT IS ORGANIZATIONAL CULTURE?

What Is Organizational Culture?

by

Anthony Paul Niemann

ELFH 611-50

University of Louisville

Fall, 2007

What is Organizational Culture?

The concept of organizational culture (OC) is difficult to define and measure, but it may be described as underlying values, beliefs, and norms that characterize an organization and provide a context for action (Cameron and Quinn, 2005). OC includes shared assumptions held by a group based on how problems have been dealt with and internalized in the past (Stein, 1992). Simply stated, OC defines the way things are normally done in an organization. Using a systems approach, OC can be examined as an important input variable that will have great influence over what Rummler and Brache (1995) call the three levels of performance: organization; process; and workforce. This paper examined OC as it is displayed in today’s high performance organizations.

OC is formed when founders of an organization “make decisions and take action based on their personal view of the world” (Kaliprasad, 2006, p. 27). Over time OC is formed and embedded throughout the organization. In today’s global economy, organizations must adapt to a changing environment or cease to exist. Changing OC does not come easy, but changes are necessary in order to cope with an ever-changing marketplace. Compare a list of the Fortune 500 corporations in the United States today and see how many companies were on the list 50 years ago. For example, US Steel was the third largest corporation in America in 1955, but is about 150th today. The present state of the US automobile industry highlights why organizations must change if they are to continue to thrive.

Many organizational cultural theorists think academia’s efforts to examine organizations’ management practices, processes, workforce, and job task structures began in the 1980s with investigations of Japan’s corporations after that country emerged as an economic power. Books by Pascale & Athos (1981) and Peters & Waterman (1982) had a great influence on OC being viewed as a primary input for performance improvement that affects other input variables (Barley, Meyer, and Gash, 1988; Chan & Clegg, 2002). The effect of OC on production was considered a relatively new concept in business by some in academia when these books first appeared. As Chan and Clegg (2002) suggested, the concept of OC and its effect on performance had already been well established by the 1920s and 1930s.

The connection between OC and performance of an organization is now accepted by many performance improvement theorists (Kaplan, 2006; Neal 2006; Rogers, 2006). Schein (1992) suggests that OC is more important today than ever before. In order to understand what OC is, it can be examined in high-performance organizations. A high-performance workplace signifies that technologies, processes, and management work together so workers can create more value. “Aligning goals and culture is the prerequisite of a performance measurement system that fully engages employees throughout the organization” (Hofrichter, 1999, p. 26).

The employee and job structure provide important clues about how OC can be categorized in high performance organizations. OC can even determine where organizations are located. A recent study by Doeringer, Evans-Klock, and Terkla (2005) examined US data as it pertained to plant location selection where high performance management practices coupled with supportive high performance management cultures were found. They discovered that locations selected for these plants were different than for plants that were managed in more traditional ways. They also found that “neither high taxes nor high wages are a location deterrent for these firms” (p. 827). This study indicates that a premium value is placed on workforce attitudes that are friendly to the organization’s vision and mission. It is no mystery that many corporations in this country move manufacturing plants to countries where workforce attitudes are in line with organizations’ mission. It is often easier to solve issues that conflict with existing OC by simply moving a manufacturing plant. If workforce salaries are so high that an organization’s mission is threatened, the plant may be moved or eliminated.

There are many frameworks that can be used to describe OC. One framework might classify organizations as public, private, and not-for-profit institutions. Regardless of the framework used to describe OC, traits and characteristics of any high performance organization can be identified. If the mission and vision of an organization are in line with OC, traits and characteristics that support the OC can be defined. A tool can be developed that allows quantifiable measures of traits and characteristics that are present in the workforce, the processes, and the organization. Core values that are present in all types of high performance cultures can be measured in this manner, regardless of the framework.

To understand how the vision and mission statements can affect OC, three hypothetical corporations involved with a computed tomography scanner (CAT scanner) are presented. Each corporation has a unique mission. Corporation X manufactures the scanner, and their mission is to produce a quality product and get good return on shareholder investment. Corporation Y trains technicians how to use the scanner, and their mission is to develop the most competent scanner operators in the country. Corporation Z is a hospital whose primary mission is the human approach in hospital care. They ensure patients experience the most caring and personable technician possible when undergoing a CAT scan. The performance variables for job/performer, process, and organization vary in these corporations due to the mission and vision of each of the corporations. OC has been developed over the years, and it should be congruous with each individual environment.

Kaliprasad (2006) describes two categories of high performance approaches to OC: humanistic and rational process. In humanistic approaches trust and collaboration are important internal inputs to maximize performance, while shareholder interests play a significant external roll. In a rational process organization the important inputs include interpretation of the business environment and flexibility necessary to maintain core values. Kaliprasad used a framework first proposed by Moore (2000) to categorize OC. Two separate diagrams designed by Kaliprasad (2006) labeled Four Cultural Models and Three Core Elements of Healthy Cultures appear in Appendix A. OC can be categorized by an orientation to group or to individuals on one hand, and to subjective or objective processes on another. Within this framework central tendencies are further defined: Competence – individual contributions are valued; Control – systems, processes and procedures are followed with an eye on continuous improvement; Collaboration – emphasis is placed on customers and stakeholders; and Cultivation – a lone individual’s contribution is highly prized, and performance is gained through radically changing the current order in an organization or industry. Typical questions asked by OC categorizations are included in each quadrant of the diagram (Appendix A). Kaliprasad logically maintains that there are elements of all four cultures within any given organization, but that each of these organizations will have a “central tendency” (p. 29) that allows it to be categorized as one type or the other.

Kaliprasad lists three core elements apparent in all healthy, high performance cultures, regardless of the OC type that is being examined: Contribution; Candor; and Constant Learning. Contribution signifies importance of results over effort and performance over political connections. Workers are supposed to take personal responsibility for actions, but tolerance of individual styles is evident. Candor is a quality that is necessary to overcome defensive barriers, an issue within many individuals and organizations. Honest opinions are welcome, even when they conflict with opinions of superiors. Unsupported opinions are challenged. Constant learning denotes continuous improvement.

OC impacts performance improvement in direct proportion to the degree that business strategy is aligned with OC. Each organization has a unique and complex culture consisting of core values and attitudes. Differences between diverse cultures in an organization need to be understood and embraced in light of growing diversity of the workforce. No business strategy will provide significant long-term performance improvement unless it is tightly aligned with OC. On one hand leaders can’t simply guess whether vision and mission statements fit OC, but on the other hand it takes a lot of time and effort to gauge and change OC. Management decisions based on cultural makeup on an organization must be guided and gauged by an organization’s performance.

OC has been defined and examined in this paper. Traits and qualities found in all styles of high performance organizations have been enumerated. This examination can be summarized by considering applications for organizational leaders and Human Resource (HR) managers responsible in hiring the workforce. First, OC must be aligned with organizational mission and vision, which must be aligned with the marketplace. Second, HR managers need to take OC into consideration in the hiring process to ensure a harmonious mix between organization and worker. Third, business processes within the organization should be understood and managed, as suggested by Rummler and Brache (1995). OC is constantly evolving in subtle ways, and change is often necessary. It is the responsibility of HR and other organizational managers to ensure that OC is aligned with mission and strategy, and that change efforts undertaken will improve the organization. For those who want additional information about the topic of OC an annotated bibliography is included in Appendix B. In Appendix C questions are presented to readers.

References

Barley, S., Meyer, G., & Gash, D. (1988). Cultures of cultures: Academics, practitioners,

and the pragmatics of normative control. Administrative Science Quarterly, 33(1),

24-60.

Cameron, K. S., & Quinn, R. E. (2005). Diagnosing and changing organizational

culture: Based on the competing values framework. San Francisco: Jossey-

Bass.

Chan, A., & Clegg, S. (2002). History, culture, and organization studies. Culture and

Organization, 8(4), 259-273.

Doeringer, P., Evans-Klock, C., & Terkla, D. (2005). Managing cultures and regional

development: High performance management and the location of new

manufacturing plants. European Planning Studies, 13(6), 815-830.

Hofrichter, D. A. (1999). Secrets of the rich and famous. The Journal of Business

Strategy, 20(4), 22-26.

Kaliprasad, M. (2006). The human factor II: Creating a high performance culture in an

organization. Cost Engineering, 48(6), 27-34.

Kaplan, B. (2006). Deploying a knowledge convergence framework: Four key elements

for building a performance learning culture. KM Review, 9(3), 18-21.

Lam, D., Paltiel, J. T., & Shannon, J. H. (1994). The Confucian entrepreneur? Chinese

culture, industrial organization, and intellectual piracy in Taiwan. Asian Affairs: An

American Review, 20(4), 205-217.

Moore, G. A. (2000). Living on the fault line. New York: Harper Collins.

Neal, L. N. (2006). Organizational culture guides practice performance. Ophthalmology

Times, 31(12), 58-59.

Pascale, R., & Athos, A. (1981). The art of Japanese management: Applications for

American executives. New York: Simon & Schuster.

Peters, T. & Waterman, R. (1982). In search of excellence: Lessons from America’s

best run companies. New York: Harper and Row.

Rogers, B. (2006). High performance is more than a dream—It’s a culture. T&D, 60(1),

12.

Rummler, G. A. & Brache, A. P. (1995). Improving performance: How to manage the

white space on the organizational chart. San Francisco: Jossey-Bass.

Schein, E. H. (1992). Organizational culture and leadership. San Francisco: Jossey-

Bass.

Appendix A

Appendix B: Suggestions for Additional Readings

Beitler, M. A. (2006). Strategic organizational learning: A practitioner’s guide for

managers and consultants. Greensboro, NC: Practitioner Press International.

This book presents a systematic approach to diagnosing organizational

problems and a step-by-step guide to designing and implementing

interventions.

Harrison, R. & Stokes, H. (1992). Diagnosing organization culture. San Francisco:

Jossey Bass / Pfeiffer.

The authors take the position that different organizations need different

cultures. It helps you identify an organization’s culture, and discusses

how to change an organization’s culture.

Kotter, J. L. & Heskett, J. P. (1992). Corporate culture and performance. New York:

The Free Press.

This book considers the roll that culture can play in major corporations,

causing them to succeed or fail.

Quinn, R. E. (2004). Building the bridge as you walk on it: A guide for leading

change. San Francisco: Jossey Bass.

This author provides a guide for leaders who want to change the culture of

their organization.

Schein, E. H. (1999). The corporate culture survival guide. San Francisco: Jossey

Bass.

Organizational Culture: What it is, how it is created, and how it can be

changed.

Appendix C

Questions for Consideration

There is a prevalent organizational culture found in all organizations. I have two questions for consideration:

1. Using the figure in Appendix A, what is the prevalent organizational culture where you work?
2. If you were the leader of your organization mentioned above, what are a few steps you might take to enhance organizational culture in order to improve performance in your workplace?