“The thing I leaned at IBM is that culture is everything” Louis V Gerstner Jr
Culture is the most important factor which on its own can determine and organization’s success. It is the identity of the organisation, and the most successful organisations, have rich cultures. Culture establishes a shared view of the organisation’s tangible and intangible assets, its traditions, history and structure.
In the 1940s following sociological and anthropological works on groups and societies, human resource experts began to analyse companies from a cultural view point. Geert Hofstede’s publication “ Culture’s Consequences” in the 1980s established the lexicon “organizational culture” and made it a central in business thinking. He defined five dimensions of organizational culture that affects business performance these are power distance, individualism versus collectivism, masculinity versus femininity, uncertainty avoidance and land-term vs short term orientation.
Every company has a mix of these dimensions. Different parts of an organization may have a different mix and the best business leader are aware of this and even nurture this for the benefit of the organization.
Power distance describes the distance in authority between managers and their subordinates. A hierarchical organization has high power distance. In a collective culture, members are controlled by external societal pressures like shame while members of individualistic cultures are controlled by internal pressure like guilt. When problem solving to you look to an individual or to a group for solutions? This is remarkably different for different business environments. Masculine traits are status, assertiveness and advancement while feminine traits are humanism, co-operation, collegiality and nurturance. A company’s emphasis on these traits indicates where they sit on this divide. When people are uncomfortable dealing with situations of uncertainty rules and policies must be introduced to reduce the uncertainty. This is Uncertainty avoidance and companies with low uncertainty avoidance are better prepared for external uncertainty. They seem to already have contingencies. The last point simply speaks to the value the organization places on short term profits against long term value creation.
In the face of globalization and the increased scope of competition, consolidation of companies through mergers and acquisitions, contemporary workers collaborate over vast geographical distances. This makes fostering a cohesive culture more important but it has become a lot harder. Also, there is the challenge of balance between a global culture or adapting to local cultures.
Staff get a sense of belonging when they work in an environment with strong cultures. It defines the rules and makes everyone more open and relaxed. Culture also anchors and organisiation against the whims of charismatic leaders or fickle fashion and trends.
Strong cultures could have its drawbacks. For instance, it may create as situation where staff are so like minded that the benefits of diversity are diminished. Terrence Deal and Allan Kennedy published “Corporate Cultures” in 1982 where they suggested that culture is derived from six interlocking elements. They are the firm’s history, its values and beliefs, its rituals and ceremonies, its stories, the heroic figures whose words and actions embody corporate values and the cultural network.
While theory suggests cultures are fixed visible and stable, in reality they are a mix which overlap from the various subgroups and is also not static. Managing culture especially in a period of change is difficult. To change an organizational culture one must take small steps. New leaders should understand the culture and find ways to draw on its strengths. This may be more important than any strategy they seek to implement.
“Culture eats Strategy for breakfast” – Peter Drucker
“Eat to nourish your body, not to feed your emotions.”