In order for an organization to continue functioning, it must cultivate an effective culture. A culture in an organization can be defined as “the shared values, beliefs, expectations, and norms learned by becoming a part of and working in company over time” (Oden 3). It covers a wide range of behaviors, from methods of production to attitudes and values in the workplace. A corporate culture binds members of an organization together by incorporating both informal and formal norms. When employees have been in a company for a long time, culture becomes second nature to them. Thus, when new comers and maladjusted members of an organization ignore the organization’s culture, they are seen as a bad fit for the organization or unable to adapt the culture of the firm (Denison 28). Therefore, understanding a company’s corporate culture is essential for employees to perform effectively in a company.
A culture is made up of four elements, including artifacts, perspectives, values, and assumptions. Artifacts are the tangible aspects of a culture, such as a slogan (Denison 32). Employees manifest the company’s culture when they share verbal, behavioral, and physical artifacts. Perspectives are the socially shared rules and norms in an organization. These shared norms are the ways members interpret organizational situations and come up with solutions when faced with common organizational problems. Values emphasize an organization’s goals. In doing so, values evaluate members’ performance. Assumptions are the members’ implicit beliefs about the nature of the organization and include the member’s relationships with each other. These four elements constitute an organization’s corporate culture.
Furthermore, a corporate culture is divided into two levels: upper level and lower level. A culture’s upper level is observable. It is composed of artifacts, patterns of behavior, speech, and the use and production of physical objects (Oden 3). On the other hand, the lower level is hidden or less observable. It includes the mental frameworks, ideas, beliefs, values, attitudes, assumptions, and ways of perceiving the work environment. Compared to the observable features, the hidden aspects of the culture have a bigger influence on members’ behavior because they are more embedded in members’ consciousness. Even though these two levels are different, they are of the same entity, which makes them hard to separate from each other. These two levels help members of an organization distinguish the different natures of a culture and help them understand the ways in which a culture is understood.
A corporate culture exists because it helps the company deal with its external and internal aspects. It aids a company to adapt to the external environment by providing solutions, such as creating a sense of purpose and affiliating objectives and strategies to achieve the company’s mission. Moreover, a company must also incorporate the culture to adapt to the internal environment. A culture helps a company address internal issues such as organizational structure, human resource development, and work process management. By addressing issues from the external and internal environment, corporate culture stimulates a company’s growth.
For a corporate culture to have its full effect on employees, it must be well incorporated. Implementing an organizational culture takes process. A company has to continuously develop core values and relate management practices to its main beliefs. This is to maintain behavioral outcomes so that employees can perform their tasks according to the company’s norms and values. Maintaining the behavioral outcome can be a challenge as it requires the company to influence employees’ way of thinking.
A company can affect the ways employees think by applying the culture in both implicit and explicit aspects of a company. For instance, an organization’s philosophies, rules, norms, values, climates, and symbols reflect the company’s culture (Oden 3). By engaging in many aspects, the culture provides the meaning of an organization’s basic values, beliefs, and vision. Only after employees understand the basic beliefs of a company can they perform based on the company’s norms. As a result, the culture can direct employees’ behavior. For instance, a culture influences how employees and managers approach problems, serve customers, deal with suppliers, react to competitors, and otherwise conduct activities now and in the future (Oden 3). This suggests that a company’s shared values and beliefs influence the pattern of activities, opinions and actions within the company. Under such specific and uniform guidelines, employees can perform towards organizational effectiveness.
To carry out an effective culture, a company must first construct a cultural plan. Cultural planning in a company means setting the culture to achieve organizational goals, such as innovation and effectiveness. This includes determining cultural goals, developing plans to achieve those goals, and implementing these plans. These long-term propositions can only be done well with organized long-range planning (Oden 9). There are five ways to formulate a corporate culture towards organizational success.
The first step in cultural planning is identifying and assessing the current outputs of the firm’s cultural planning, such as the vision, core values, and guiding principles of the company (Oden 12). This determines the position of the company and its success. The second step is conducting an external analysis. This step focuses on analyzing the company’s strategy, including its mission, strategic objectives, and strategic plans. This is to determine what type of organizational culture is required to support the organization’s strategy.
The third step is analyzing internally. This compares the current corporate culture with the culture that best supports the firm’s strategy. After that, the company has to assess the organization’s capability to make the required change. The fourth step is to develop and evaluate cultures and offer alternatives when the analysis suggests that the current culture does not serve the company’s interest. The fifth step is to implement the corporate culture to the whole employee of the company. This last step must be carried out effectively for the corporate culture to benefit the company.
Cultural planning benefits a company to the extent that it determines and clarifies a company’s vision and core values. A vision states the objective for a company’s internal environment on a continuing basis (Oden 13). By emphasizing the company’s vision, cultural planning identifies any error which requires a cultural reconstruction. Additionally, cultural planning provides guidelines to construct and manage the cultural changes necessary to achieve the intended goals. This evaluation process drives the company to achieve its mission.
Moreover, cultural planning describes how a company’s core values can be achieved. Core values are the organization’s essential and enduring small set of general values (Oden 9). These values are fundamental and they cannot be changed. Cultural planning establishes the professional standards for the work done inside the organization. It also specifies the relationship between people in the organization on all levels. Thus, it guides employees’ behavior to achieve core values, vision, and mission.
A culture is an integral part of a company, because it provides behavioral guidelines for employees to achieve the company’s goals. A corporate culture plays a role in helping companies analyze what it claims to stands for. In other words, a corporate culture connects a company’s basic beliefs with the behavior and values of the employees. By doing so, a culture allows the organization’s system to have an impact on individuals and vice versa. This demonstrates that a corporate culture greatly influences a company as it drives employee performance towards organizational success.
Out of the many objectives of company, a corporate culture has the biggest influence on organizational effectiveness. Organizational effectiveness is “the consistency that comes from a set of shared values and beliefs, which are coordinated action within an organization” (Denison 7). As previously mentioned, a corporate culture guides employees’ behavior to achieve success. To attain corporate goals, a company must direct the employees to act based on company’s norms and values or the corporate culture. There are four principles that describe the process by which an organization’s culture influences its effectiveness: the involvement, consistency, adaptability, and mission hypotheses.
Employee involvement is a key feature in an effective company. Employees’ participation level increases when employees have a sense of ownership and responsibility (Denison 6). Involvement benefit both the company and employees as it manages strategies for effective performance and a better work environment. When employees have less restriction to be involved in a company, they become more committed to it; thus, improving their performance. An example of the relation between employee involvement with organizational effectiveness can be seen in People Express Airlines. The company implements a high-involvement culture as it relied on informal control system rather than a formal control system. People Express Airlines employs a “self-management” practice, where employees were considered as managers and were able to manage the firm’s assets (Denison 6). With a mild control system, employees become more committed to the company. Hence, they can perform effectively. This demonstrates that a corporate culture which encourages employee involvement produces effective employee performance.
Aside from involvement, a culture that reinforces consistency also generates organizational effectiveness. When the whole company understands and accepts the shared system of beliefs, values, and symbols, the company can reach consensus and carry out coordinated actions (Denison 8). This hypothesis suggests that consistency coordinates action through implicit control system, which are based on internalized values. Companies Procter & Gamble and Texas Commerce Bancshares provide examples of highly consistent culture. These companies have highly committed employees, key central values, a distinctive method of doing business, a tendency to promote from within, and a clear set of “do’s and don’ts” (Denison 9). These characteristics help create a strong culture that is well understood by the members of the organization. When employees have a strong tendency to perform based on the common framework of values and beliefs, they are able to communicate effectively. Therefore, a strong culture, with well-socialized members, improves corporate effectiveness because it facilitates the exchange of information and coordination of behavior. That being said, a strong culture develops consistency which affects organizational performance.
Moreover, a corporate culture that emphasizes the company’s adaptability improves the company’s effectiveness. A company’s norms and values that support the capacity of a company to receive and interpret signals from its environment into internal behavior increase its chance for survival, growth, and development (Denison 11). This means that a corporate culture can influence a company’s adaptation process by enabling the company to respond to its external and internal environment. Additionally, a corporate culture of adaptability also means having the capacity to restructure and re-institutionalize a set of behaviors when a company needs to adapt to the changing environment. Detroit Edison’s culture demonstrates this adaptability hypothesis. As a public utility in an industrial region, the company operated under conditions of stable, predictable growth. However, the 1970s’ the energy crisis and declining demand and economic growth caused the company to change from a technical focus, concerned primarily with adding new capacity to meet increasing demand, to a political focus, primarily concerned with linking itself to a diverse set of constituents (Denison 12). This suggests that a culture with the capability to change when faced with new environments allows a company to grow. Hence, a company must be able to implement an adaptive response to perform effectively.
Lastly, a corporate culture with a clear organizational mission drives a company to achieve organizational effectiveness. This hypothesis suggests that mission influences the functioning of a company by providing purpose and meaning, and it also provides a clear direction and goals (Denison 13). As a result, a culture that highlights the company’s mission defines the company’s goals and vision so that employees become goal-directed and focused to achieve organizational goals. An example of a company with a clear mission is Medtronic. This company, a manufacturer of cardiac pacemakers, supports pro-health and it has a technical mission to “contribute to human welfare by application of biomedical engineering” (Denison 13). Even though the company faces many changes, it remains closely bound to its original mission. As a result of this defined common goals, employee behavior becomes coordinated and they perform effectively to meet the company’s mission. This demonstrates that a shared sense of the broad long-term goals of the firm helps to structure behavior which directs employee to improve the company’s effectiveness.
Denison, Daniel R. Corporate Culture and Organizational Effectiveness. AVIAT, Inc., 1997.
Oden, Howard W. Managing Corporate Culture, Innovation and Intrapreneurship. Quorum Books, 1997.