Organizational Culture Definition, Importance & Theories

Here in this article, we will discuss some important topics about organizational culture, as it is one of the important area of ACCA F4.

What Is Organizational Culture

If we look at the Organizational Culture definition which was given by Schein, He says

• It is a set of common, implicit assumptions held by a group that shapes how it views (makes the assumption, believes about) and reacts to its surroundings

Whereas Hofstede says

• It is a combination of programming of vision which differentiates the people of one category of people from another.

Elements of Organizational Culture

Observable conduct encompasses both observable and stated cultural components. These include:

• Behavior: Within an organizational culture, the customs and standards are considered “acceptable.” One example could be that everyone in the organization, regardless of seniority, has lunch together in the same hall.
• Artifacts: Concrete manifestations such as workplace design, dress codes, and symbols. The organization’s surface is littered with artifacts. Logos, architecture, structure, processes, and corporate dress are examples of visible features of an organization. This could include all employees, regardless of their position within the company, wearing formal attire. Not only are these obvious to employees, but they are also visible and recognized to outsiders.
• Attitudes: Standards of conduct such as welcome styles, social rites, and commercial protocols are examples of attitudes. Staff attitude, for example, selecting employees every month depending on the effectiveness and efficiency of operation, resulting in healthy rivalry among employees who are all intent on doing well.
• Values & Beliefs: These are principles that have been adopted, such as conscious plans, aims, and philosophies. How does the business articulate and publicize its plans, aims, and philosophies? Staff training is values-based and the organization’s idea that any job must be handled with honesty may be used to transmit values. Employees could also be informed about the company’s anti-corruption and anti-bribery policies.
• Assumption: They are the key to comprehending why things occur as they do. These fundamental assumptions are based on deeper aspects of human existence, such as human nature, human relationships and activities, reality, and truth. The organization’s unwritten and often taken-for-granted rules and standards. The fundamental underlying beliefs are strongly ingrained in organizational culture and reflect the identity and unconscious behavior.

Importance of Organizational Culture

Organizational culture is essential since it is made up of agreed views and beliefs that are developed by executives and then conveyed and promoted through a variety of means, ultimately influencing employee attitudes, actions, and awareness.
A strong organizational culture that strives to improve and improves on a regular basis has a substantial impact on a firm’s performance.
Philosophies, attitudes, expectations, and experiences are all examples of organizational culture.
Organizational culture determines how members of a team behave or connect and goes a great way toward encouraging good rivalry within the company.

Handy Organizational Culture Theory

As per Charles Handy, an organization’s culture can be classified into four categories based on the names of Greek goddesses who represent the culture.

Power Culture

This style of culture was connected by Handy with Zeus (Greek god). The concentration of power in the hands of individuals is known as the ‘boss.’ This culture is common in small, family enterprises, especially where the company name and the boss’s name are the same. – Tasks more quickly, but they may be unplanned. Because these judgments are not shared with various people with diverse talents, decision-making may be quick, but it may not include all of the factors because the owner would not confer with other employees. – Because of the demands on a person’s time and ability as a firm grows, this becomes more challenging for one individual to hold ultimate power.

Role Culture

The structure is clear, and the operations are predictable. This usually results in a functional structure, in which employees know their jobs, report to supervisors (who have similar skill sets), and place a premium on efficiency and correctness. This culture was tied to Apollo, the lord of role culture and bureaucracy, according to Handy.

Task Culture

This civilization was tied to the goddess Athena, according to Handy. – Teams are organized to address certain issues. Membership in teams with the expertise to carry out a task confers power. – A matrix structure is widespread due to the importance of specified responsibilities and a lot of small teams in play.

Personal Culture

This civilization was tied to the god Dionysus, according to Handy. Horizontal structures are more appropriate in this culture. Each individual is valued as valuable as, if not more valuable than, the company. This can be challenging to maintain since the company may suffer as a result of conflicting persons and priorities.

Hofstede’s Cultural Dimension Theory

He discovers characteristics of culture that may have an impact on corporate behavior. He discovered four characteristics or ‘cultural dimensions.’

Power Distant

Simply put, power distance refers to how much influence a superior may wield and how hard it is for subordinates to challenge them.
Top management with complicated hierarchies has a high power distance. Flatter companies have a low power distance because bosses and employees are treated practically equally.

Uncertainty Avoidance

Uncertainty avoidance refers to a company’s willingness to take risks. If businesses with a high level of uncertainty avoidance do not accommodate changing external conditions, they may find themselves unable to change and lose market share. Organizations with a low level of uncertainty avoidance are more receptive to change and creativity, as well as more adaptable to changing external variables.

Masculinity Vs Femininity

In an organization, this relates to how behaviors are classified as “masculine” or “feminine.” An assertive and high society, for example, is likely to be considered masculine. Career balance, standards of living, and professional relationships will encourage employees in a feminine culture.

Individualism Vs Collectivism

It refers to the fact that in certain nations, people work alone, whilst, in others, the same activity is done in groups or collectively.
A high Individualism score implies that persons who are not part of a primary “family” have poor connections. People here accept less responsibility for the acts and effects of others. Members in a collectivist society, on the other hand, are expected to be responsible in the group, and the group will protect their interests in return. The group is usually broader, and everyone is responsible for each other’s well-being.

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