2.5: Organisational (Corporate Culture)

What is corporate culture

Corporate culture is the shared beliefs, values, and attitudes that shape an organization's behavior. It influences everything from dress code to communication style and can have a significant impact on employee motivation and performance.
Key factors influencing corporate culture include:
Nature of the business: The organization's mission and purpose shape its culture.
Organizational structure: Hierarchical or flat structures can impact teamwork and decisiaon-making.
Rewards: Compensation and recognition systems can influence employee morale and culture.

The acronym NORMS© can be used to remember the interrelated characteristics of different organizational cultures:
Nature of the business: The organization's purpose and direction influence its culture. For example, a non-profit organization may have a different culture than a profit-driven business.
Organizational structure: Hierarchical or flat structures can impact teamwork and decision-making.
Rewards: Compensation and recognition systems can influence employee morale and culture.
Management styles: Decentralized or centralized decision-making can shape the culture.
Sanctions: The use of punishments or rewards can influence employee behavior and culture.

Handy's "Gods of Management" framework identifies four main types of organizational culture:
Zeus: Power cultures are characterized by a dominant individual or group that holds decision-making power.
Apollo: Role cultures are highly bureaucratic and emphasize formal rules and procedures.
Athena: Task cultures focus on achieving specific goals and objectives.
Dionysus: Person cultures emphasize individual contributions and creativity.

Culture gaps occur when there is a discrepancy between the desired culture of an organization and the actual culture(s) that exist. This can happen due to:
Subcultures: Different groups within an organization may have varying opinions, values, beliefs, and interests.
Organizational growth: Mergers, acquisitions, or expansion can introduce conflicting cultural elements.
Leadership changes: New leaders may have different cultural preferences or values.
Culture clashes arise when there is conflict or incompatibility between two or more cultures within an organization. This can lead to tension, misunderstandings, and decreased productivity.

Internal Growth:
Formalization and Hierarchy: As firms grow internally, they often become more bureaucratic and power-oriented to maintain control and coordination.
Adaptive Cultures: Some organizations embrace change and innovation, fostering a culture of creativity and adaptability.
External Growth (Mergers and Acquisitions):
Culture Clashes: Mergers and acquisitions can lead to conflicts between different organizational cultures.
Dominant Culture: The culture of the more dominant company often prevails in a merger.
Hybrid Culture: A new, blended culture may emerge from a merger.
Leadership Changes:
Cultural Influence: Leaders significantly impact organizational culture through their vision, values, and behaviors.
Leadership Styles: Different leadership styles can shape corporate culture.
Strategic Direction: Leadership changes can lead to shifts in strategic direction and, consequently, culture clashes.

Misunderstandings and Miscommunications:
Cultural clashes and gaps can lead to confusion and resistance to change if not effectively communicated.
Unhappy Staff:
Conflicts arising from cultural clashes can negatively impact employee morale and productivity.
Compromises:
To move forward, organizations may need to find compromises and resolve conflicts through negotiation.
Resistance to Change:
Employees may resist cultural changes due to fear of the unknown or a lack of understanding.
This can intensify workplace conflicts.
Higher Costs:
Implementing cultural changes can be costly, especially for training and addressing resistance.
National Culture Clashes:
Strong national cultures can hinder change efforts, particularly in areas like gender equality or freedom of expression.