Business Management [IB] 2.5 Organization Culture

Corporate Culture
Can be defined as what is considered ‘normal’ to an organization.

Represents the character and personality of an organization.

Example: How workers behave within the business.

Elements of organizational culture
The acronym NORMS can be used to remember the interrelated determinants of organization culture.

– Nature of the Business: Culture is shaped by the purpose and direction of the organization.

– Organizational structure: Tall firm structures tend to have lots of small teams that work well independently. Flatter structures may benefit from collaborative teamwork.

– Rewards: Employees remunerated for their efforts, are more likely to develop a strong and united culture.

– Management styles: Culture in decentralized organizations tends to benefit from works able to deal with their problems themselves.

– Sanctions: Organization with few sanctions can encourage staff to be slack.

Cultural intelligence or cultural quotient
The ability of an individual to blend into occupational, corporate and national cultures.
Advantages to a business that has a strong corporate culture
– Creating a sense of belonging and security for staff because they feel part of the organization.

– Promoting cohesiveness so people do things as they feels that it is the right thing to do.

– Reducing mistakes and misunderstandings as staff are familiar with the processes at work.

– Minimizing problem with a culture gap so that conflict between different groups are curtailed.

Charles Handy
– Power cultures: Exist when there is a dominant individual or group holding decision-making power.

– Role cultures: Exist in highly structured organization with formal rules and procedures.

– Task cultures: Exist in organizations where the focus is on getting results from the work done.

– Person cultures: Exist in organizations when staff in similar positions with similar expertise form groups to share their knowledge and skills.


Cultural clashes
Cultural clashes exist when there is conflict or incompatibility between two or more cultures within an organization.
Reasons for organizational cultural clashes
Growth of firms – The internal growth of firms is likely to lead to a more formal and hierarchical organizational structure.

Mergers and acquisitions – Organizational cultures can clash or change when there is external growth. For example, a merger or takeover. In theory, mergers should help the organizations to gain from economies of scale.

Change in leadership – Leadership style is a factor affecting corporate culture: a change in leadership can easily result in a change in the organizational culture.

Consequences of organizational culture clashes
Misunderstanding and miscommunications – Cultural clashes and culture gaps often result in problems due to employees not understanding the reasons for change.

Unhappy staff – Cultural clashes and the potential conflict that results will tend to make people unhappy.

Resistance to change – This happens because staff are likely to resent changes to the culture that they are used to, perhaps due to fear of the unknown or due to a lack of understanding the benefits of change.

High costs of training staff and implementing change – Training costs may be necessary for businesses that adopt teleworking or diversify their operations.

National culture clashes/disputes – National culture may be so strong that any attempts to change the way things are done can cause conflict and resentment.

Compromises must be reached – In order for the business to move forward, conflict needs to be resolved.

Individuals and organizational culture
The challenge for leaders is to influence people within the organization to follow or to shape a shared vision and corporate culture. Achieve this one must be a MOVER.

Mentor – Leaders act as mentors by sharing knowledge and expertise, and supporting their people to mould a healthy organizational culture.

Outreach – Communicating the vision (and desired culture) to all members of the organization, so everyone moves in the same direction and stands for the same values.

Vision – Without knowing where the business wants to be, it is impossible and pointless trying to guide and motivate staff.

Engaging – The desired corporate culture must engage and excite the workers; perhaps by the leader nurturing a sense of self-worth and commitment to the strategic goals of the organization.

Role modelling – By being a role model to others in the organization, the leader can drive and develop the desired culture.

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