What is organizational culture?
The term organizational culture refers to the values and behaviors that contribute to the unique social and psychological environment of an organization.
Organizational culture includes an organization's expectations, experiences, philosophy, and values that hold it together, and is expressed in its self-image, inner workings, interactions with the outside world, and future expectations. It is based on shared attitudes, beliefs, customs, and written and unwritten rules that have been developed over time and are considered valid. Also called corporate culture, it's shown in:
(1) The ways the organization conducts its business, treats its employees, customers, and the wider community
(2) The extent to which freedom is allowed in decision making, developing new ideas, and personal expression
(3) How power and information flow through its hierarchy
(4) How committed employees are towards collective objectives.
It affects the organization's productivity and performance, and provides guidelines on customer care and service, product quality and safety, attendance and punctuality, and concern for the environment.
Key Characteristics of an Organizational Culture
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Innovation and risk taking. The degree to which employees are encouraged to be innovative and take risks.
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Attention to detail. The degree to which employees are expected to exhibit precision, analysis, and attention to detail.
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Outcome orientation. The degree to which management focuses on results or outcomes rather than on technique and processes.
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People orientation. The degree to which management decisions take into consideration the effects of outcomes on people within the organization.
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Team orientation. The degree to which work activities are organized around teams rather than individuals.
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Aggressiveness. The degree to which people are aggressive and competitive rather than easygoing.
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Stability. The degree to which organizational activities emphasize maintaining the status quo in contrast to growth.
Implications for Managers
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Employees form an overall perception of the organization based on such factors as team emphasis, and support of people.
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This overall perception becomes, in effect, the organization’s culture or personality.
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These favorable or unfavorable perceptions then affect employee performance and satisfaction, with the impact being greater for stronger cultures.
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Just as people’s personalities tend to be stable over time, so too do strong cultures. This makes strong cultures difficult for managers to change.
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One of the more important managerial implications of organizational culture relates to selection decisions. Hiring individuals whose values don't align with those of the organization is not effective for long term objectives.
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An employee's performance depends to a considerable degree on knowing what he or she should or should not do – socialization provides much of this type of information.