Managing Organizational Culture | Commerce & Accountancy Optional Notes for UPSC PDF Download

Introduction

• Every organization shares certain characteristics with others, but also possesses its own unique set of qualities. This psychological framework of an organization and its sub-units is often referred to as Organizational Culture.
• For the layperson, culture is a familiar concept, and terms like climate, atmosphere, environment, and milieu are often used interchangeably to describe it. In fact, most studies that have attempted to measure an organization's "Culture" have operationalized it in terms of "Organizational Climate". Here are two formal definitions of organizational climate:
• Organizational climate is a relatively stable quality of the internal environment that is experienced by members, influences their behavior, and can be described in terms of the values of a particular set of characteristics of the organization (Renato Tagiuri, 1968).
• Organizational climate is the set of characteristics that describe an organization and (a) distinguish one organization from others; (b) are relatively stable over time; and (c) influence the behavior of people in the organization (Forehand & Gilmer, 1964).
• Now, let's compare these two definitions of "Organizational Climate" with a definition of "Organizational Culture" as provided by Stephen P. Robbins (1986): Organizational Culture is a relatively consistent perception held of the organization. It has common characteristics, is descriptive, can distinguish one organization from another, and integrates individual, group, and organizational system variables.

Perceived Characteristics of Culture and Climate 

• If you closely examine these sample definitions, you will not only be able to identify the commonalities but also see that the abstract concept of culture and the operational concept of climate essentially refer to the perceived personality of an organization in a similar sense as individuals have a personality. Just as you have a personality—a set of relatively stable traits—so does an organization. Just as any culture has some do's and don'ts in the form of totems and taboos that dictate how each member should behave with a fellow member or an outsider, similarly, each organization has a culture that influences the behavior of employees towards clients, competitors, colleagues, supervisors, subordinates, and strangers. In this Unit, we shall be concerned with this relatively stable perceived internal environment of an organization, called Organizational Climate or Organizational Culture (OC).
• It should be noted that Organizational Culture or Organizational Climate (OC) is the perceived aspects of an organization's internal environment, but within the same organization, there may be very different OCs. This might happen because people with different lengths of experience or at different levels of the organization's hierarchy may perceive the internal environment of an organization differently. Personal characteristics such as Values, Needs, Attitudes, and Expectations determine the manner in which an individual is likely to perceive the various aspects of the internal working environment of the organization.

The Dimensions of OC 

In the last two decades, extensive studies have been conducted which have helped us to identify some key factors of OC. Some of these common dimensions are described below:

• Individual Autonomy: This refers to the individual's freedom to exercise his or her responsibility. In other words, individual autonomy is the degree to which employees are free to manage themselves; to have considerable decision-making power; and not to be continually accountable to higher management.
• Position Structure: This refers to the extent of direct supervision, formalisation, and centralisation in an organisation. In other words, position structure is the degree to which objectives of the job and methods for accomplishing it are established and communicated to the individual by supervisors.
• Reward Orientation: This refers to the degree to which an organisation rewards individuals for hard work or achievement. An organisation which orients people to perform better and rewards them for doing so, will have an OC characterised by high ward orientation. Consideration, Warmth and Support: This refers to the extent of stimulation and support received by an individual from other organisation members. In other words, if there is a sense of team spirit among the members of an organisation, the OC is likely to be perceived as considerate, warm and supportive. Organisational Climate and Change
• Conflict: This refers to the extent of conflict present between individuals and the willingness to be honest and open about interpersonal differences.
• Progressiveness and Development: This aspect refers to the degree to which organisation conditions foster the development of the employees, allow scope for growth and application of new ideas and methods.
• Risk-Taking: The degree to which an individual feels free to try out new ideas and otherwise take risks without fears of reprisal, ridicule, or other forms of punishment indicate the risk-taking dimension of OC. This dimension is akin to "cautious" versus "venturesome" quality of an organisation.
• Control: This dimension refers to the degree to which control over the behaviour of organisational members is formalised. In a highly bureaucratic organisation, control systems are well defined. In a low-control organisation, most of the controls are self-regulated, i.e., individuals monitor their own behaviour. You can think of this dimension as the "tightness" versus "looseness" of an organisation.

These eight dimensions account for most of the research findings, but they do not account for all that we intuitively feel to be present in the "Climate" or "Culture" of an organisation. For example, you may perceive an organisation culture to be "paternalistic", or a climate to be "impersonal". Though the fourth OC dimension (consideration, warmth and support) may cover both these different qualities, yet the "richness" that you find in the two qualities is not fully reflected in that dimension. However, the identification of these eight dimensions (which are not absolutely independent of each other) do help us in mapping and measuring OC. Before we move on to the next topic on Determinants of OC take the following pair matching test to check whether you have understood the focus of each dimension.

Determinants of OC

• At the outset of this topic, it's helpful to differentiate between determinants and dimensions of OC. Determinants are the causes, while dimensions are the components of OC. You might say determinants influence, while dimensions are influenced.
• Although OC refers to the internal environment of an organization, the nature of OC is determined by a variety of internal and external factors. One of the fundamental premises of organizational behavior is that external environmental forces influence events within organizations. After acknowledging the dynamics of internal as well as external factors in this section, we'll delve into greater detail about the following seven internal factors. 

You'll find these factors as determinants of OC in the following order:

Economic Conditions

• An organization's position on the economic cycle influences several dimensions of OC. The economic condition of any organization influences whether its budget should be "tight" or "loose." In times of prosperity, when budgets are looser, the organization tends to be more adventurous. 
• On the other hand, a tight budget would lead to an air of caution and conservatism within an organization. Few managers are willing to suggest new programs (probably deserving merit) when the order from above is to exercise tight control over expenses. So, dimensions of OC like "Risk-taking," "Control," "Progressiveness and Development," etc., are directly influenced by economic conditions.

Leadership Style

• The leadership style prevailing in an organization profoundly influences determining several dimensions of OC. The influence is so pervasive that you may often wonder whether OC is a product of the philosophy and practices of prominent persons in an organization.
• Consider, for example, the results of an experimental study where three organizations were "created" by simulation. All these three Organizations—A, B, and C—were identical in terms of the nature of business, size of the organization, characteristics of employees, and initial economic condition. The major difference among these three organizations was the "leadership style." Organization A was characterized by an authoritarian style with high power motivation. Organization B was characterized by a democratic style with affiliation motivation.

Organizational Policies

• Specific organizational policies can significantly influence a particular dimension of OC. For example, if the company policy states that layoffs will be used only as a last resort to cope with business downturns, then it would generally foster an internal environment that is supportive and humanistic.
• Similarly, if you are working in a company where it is agreed that the first beneficiaries of increased profit would be the employees of that organization and shareholders would get second priority, then the OC will be characterized by High Reward Orientation and probably by High Progressiveness and Development.

Managerial Values

• The values held by executives have a strong influence on OC because values lead to actions and shape decisions. 
• Values add to perceptions of the organization as impersonal, paternalistic, formal, informal, hostile, or friendly. You will learn more about managerial values under the topic: Managerial Ethos.

Organizational Structure

• The design or structure of an organization affects the perception of its internal environment. For example, a bureaucratic structure has an OC much different from a System 4 organization. What is a System 4 organization? 
• According to Rensis Likert, all organizations can be classified into four major groups, depending upon the way basic organizational processes are conducted. These major groupings are as follows:
  • System 1 - Exploitative Authoritative
  • System 2 - Benevolent Authoritative
  • System 3 - Consultative
  • System 4 - Participative
• How does one know whether an organization should be categorized as System 1 or 2 or 3 or 4? It depends on the way the following processes are perceived and rated in an organization:
  • Leadership process
  • Motivation process
  • Communication process
  • Decision-making process.
  • Goal-setting process
  • Control process,
• Employees of an organization rate these processes on a rating scale; asking questions like the following:
  • How much confidence is shown in subordinates?
  • Where is responsibility felt for achieving organizational goals?
  • How well superiors know problems faced by subordinates?
  • How much covert resistance to goals is present?
  • At what levels are decisions formally made?
  • Is there an informal organization resisting the formal one?
• Based on the answers to these questions, an organization can be classified as system 1 or 2 or 3 or 4. A bureaucratic structure is likely to be rated as System 2 or System 3. A System 4 organization will have a distinct OC where the main theme would be strong involvement and self-control of all organization members at all levels in all basic organizational processes

Characteristics of Members

• Personal characteristics of the members of an organization also affect the climate prevailing in the organization. 
• For example, an organization with well-educated, ambitious, and younger employees is likely to have a different OC than an organization with less educated, and less upwardly mobile, older employees. The former might inculcate an environment of competitiveness, calculated risk-taking, frankness of opinions, etc.

Organizational Size

• In a small-sized organization, it is much easier to foster a climate for creativity and innovation or to establish a participative kind of management with greater stress on horizontal distribution of responsibilities. On the other hand, in a large organization, it is easier to have a more authoritative kind of management with stress on vertical distribution of responsibilities. This, in turn, leads to distinct environments as has been explained with the help of the concept of System 4 organizations.
• We have now studied seven basic determinants of OC. The list is not exhaustive but these are the basic internal factors determining the internal environment of an organization.

Note that OC is not influenced by factors existing within the organization only. Societal forces help shape OC as well. To understand societal influences on OC, let us consider an example in relation to the changing profile of existing and future employees. You may have noticed at least two changes that are taking place in our society. First, the educational level of employees of all categories is rising. Second, societal values toward recreational and leisure activities are becoming stronger. The effect of the first change is in the expectations of employees. People want more satisfying and fulfilling work which should match their qualifications and abilities. The impact of the second change is that the passion for non-work is increasing: people feel less passionate about job performance. So, while one change is pushing towards increased professionalism, the other change is pulling towards leisure-orientation. Against these backdrops of societal forces influencing the profiles of the employees, the content of the job and the organization processes determine the OC. To sum up, OC is determined by a variety of internal and external factors where internal factors are specific to the organization while external factors refer to a number of societal forces.

Managerial Values and Ethos 

• In the preceding section, we've noted that managerial values affect the perceived characteristics of an organization's internal environment. At this point, you might wonder about some of these values. How do they develop, and how are they passed from one generation of managers to another? In this section, we'll briefly explain some of these issues.
• "Ethos" refers to the habitual character and values of individuals, groups, races, etc. Managerial ethos concerns the character and values of managers as a professional group. Modern managers hold specific values that influence their work, including autonomy, equity, security, and opportunity.
• Individual autonomy is a crucial dimension of OC. Enlightened managers believe that most people prefer to feel free and to do things as they like within the constraints imposed by their group. These managers tend to allow enough latitude to individual employees as long as the use of this freedom does not violate basic norms of the organization. In the last two decades, some management practices have been innovated, which are in keeping with this value of autonomy.
• Equity refers to justice in rewarding performance. Modern managers feel that a person should get a reward proportionate to their input. Deliberate exploitation is to be avoided, and as far as possible, "fairness" is to be maintained.
• Another highly valued principle is security, both economic and emotional. The idea of keeping a person on their toes by making them feel insecure is slowly but steadily getting discredited as a management philosophy. Even societies that have practiced "hire and fire" policies are unmistakably shifting toward providing job security. Providing enough career advancement opportunities to employees is yet another contemporary managerial value.
• For several reasons, many organizations may not be able to create enough vacancies for everybody to advance in their career. However, modern managers encourage themselves and others to continue growing through various modes of education, even if it does not necessarily lead to career advancement.
• In addition to these four values that affect a manager's work, the manager may have a strong "Work Value." Work Value refers to the worth a person ascribes to the opportunity to work. If you have a "strong" work value, you are going to identify the worth or value of work to you in more ways than one. You may view work as an opportunity to: (a) accept challenges, (b) serve others, (c) earn money, (d) enjoy prestige and status, (e) be creative, or (f) be independent, etc.

Managerial Ethos: Its Characteristics

Besides these values, a high-order managerial ethos requires certain other characteristics as well. Let us briefly describe these to you.

• Action goal orientation: Individuals with a strong sense of adequacy have clear goals about their future and are directed by these goals. They usually do not think of their goals in terms of status (i.e., what they would like to be) but in terms of activities (i.e., what they would like to do). For example, when a junior manager thinks that they would like to be the "Chief of Marketing," they are status-goal oriented; but when they think that they would like to influence the marketing policies of the company, they are action-goal oriented.
• Pro-action: Proactive people do things on their own without having to be told by anyone. Such initiative-taking behavior leads to a high level of activity and experimentation. In contrast, reactive persons or conformists spend most of their lives doing what others expect them to do. Reactive people are other-directed, whereas proactive ones are inner-directed. A superior managerial ethos requires more pro-action than reaction.
• Internal resources: Managers with a strong sense of adequacy are aware of their internal strengths and are guided by these strengths. They are also aware of their weaknesses, but this awareness does not deter them from acting positively or from looking for opportunities for continuous self-improvement. They are open to feedback and ready to learn from experience.
• Problem-solving attitude: A superior ethos requires that managers view themselves as problem solvers, rather than problem-avoiders. These managers have a positive orientation to problem situations and do not want to run away from problems. They tend to approach problem situations with optimism because they have an internal locus of control, i.e., a strong belief that they can change the environment through their own efforts.

Before we move on to the next topic on the Socialization Process (How OC and Ethos are transmitted), it would be useful for you to complete some or all of the following suggested exercises.

How Culture and Ethos are Maintained

• Every organization develops its own traditions and customs over time, often without explicitly stating them. These unwritten rules include special moments, social standards, taboos, jargon, and other features, together known as the organization's "culture." This culture is typically perceived uniformly across the organization, sometimes passed down through generations with little change. But how is this uniformity maintained?
• This process of maintaining traditions and customs is called socialization. It's a way of adapting new members to the organization's values, norms, and customs so they become accepted members. While the most intense period of socialization occurs when new members enter the organization, the process continues throughout one's career. Individuals who don't adapt to the organization's culture become targets and may be rejected.

The socialization process has three stages:

• Prearrival: Organizations try to ensure that new members arrive with the right values, attitudes, and expectations. This begins with the selection process, where the "right" people are chosen based on how well they fit the organization's requirements. The views of the organization's founders and current top management influence this selection.
• Encounter: After joining, new members go through an encounter stage where their expectations meet the actual organizational culture. If there's a match, the encounter is smooth, and the member confirms the image. If there's a significant difference, the person either undergoes further socialization or leaves the organization. In both cases, the existing traditions and customs are maintained.
• Metamorphosis: Those who stay and experience a gap between their expectations and the organizational culture enter the metamorphosis stage. They must resolve their issues and adapt to the prevailing system. Successful metamorphosis results in typical or normative behavior, including productivity as per organization norms and commitment to the organization.

However, some individuals may remain non-conformists, continuing to fight the system or alienating themselves. This resistance may result in atypical behavior. Organizations maintain their traditions and customs until these "fighters" succeed in changing them.