Organizational Culture

The Impact of Culture on an Organization

Culture is a malleable component of an organization that can adapt and evolve through influences to create value.

Learning Objectives

Identify the central components of an organization or company that result from the influence cultural dispositions

Key Takeaways

Key Points

Culture, particularly in large organizations that have a great deal of momentum, can be difficult to influence or change.
Understanding how to change an organizational culture requires some insight into what creates culture in the first place and how altering those components may impact meaningful cultural development.
Some examples of organizational facets that influence culture are mission and vision statements, control systems, organizational structures, power hierarchies, symbols, routines, and internal stories and myths.
When integrating culture change, it is important to update mission and vision statements, ensure buy-in from upper management, update control systems and power hierarchies, hire people representative of the desired culture (and remove those who are not), and update the corporate ethos.

Key Terms

paradigm: A system of assumptions, concepts, values, and practices that constitutes a way of viewing reality.
joint venture: A cooperative partnership between two individuals or businesses in which profits and risks are shared.
inertia: The property of a body that resists any change to its uniform motion; equivalent to its mass. Figuratively, in a person, unwillingness to change.

Culture, particularly in large organizations that have a great deal of internal momentum, can be difficult to influence or change. The size of an organization and the strength of its culture are the biggest contributors to cultural inertia. Big and strong organizational cultures will have a powerful tendency to continue moving in the direction they are already moving (momentum). Therefore, managers must understand not only how to create culture, but also how to change it when necessary to ensure a positive, efficient and ethical culture.

Cultural Factors

Understanding how to change an organizational culture requires some insight into what creates culture in the first place and how altering those components may impact meaningful cultural development. Gerry Johnson's cultural web offers great clarity about how an organizational culture responds to and reflects influencing factors. These include:

The paradigm: The mission statement, vision, ethics statement, and other overt definitions of culture.
Control systems: The processes in place to monitor what is going on, such as an employee handbook.
Organizational structures: This comes down to the hierarchy, or who reports to whom and why.
Power structures: Similar to the organizational structure above, this pertains to who has the power to make decisions.
Symbols: Most organizations have brand images and other symbols which represent what the culture stands for (logos, etc.).
Rituals and routines: In the business setting this is simply the way in which group interactions are organized. One example is the weekly staff meeting.
Stories and myths: CEOs and other figureheads often have stories or legends associated with them; this generates culture through idolatry.

While these are only a few of the elements of culture, they capture a wide variety of components that managers can use to influence and change the general cultural predisposition.

Implementing Culture Change

Cummings and Worley identify a useful way to frame the stages or steps in integrating broad organizational change through cultural reform in six stages, which correlates well with the factors identified above. These stages include:

Ensure clarity in the strategic vision. This means making sure that the mission statement, vision statement and overall strategy work together to create one strong culture statement. The vision in particular must describe the new culture forcefully and persuasively.
Ensure buy-in from the top down. This means communicating (and often determining) specific aspects of needed culture change at the upper managerial level.
Lead by example. Top management needs to exhibit the kinds of values and behaviors that they want to see in the rest of the company.
Identify areas in the organizational structure and control systems which require updates to conform with the new or adapted culture. This includes altering employee handbooks, compensation strategies, hierarchy, decision-making authority and other central components of structure.
Follow through on the mandate. Terminating employees who do not conform to the desired culture is difficult. But it allows you to bring in new talent that aligns better with your desired culture. Ensuring proper emphasis on the new culture in training materials is useful in this process.
Finally, ensure that the ethical and legal implications of the adapted culture are understood, planned for and in line with corporate ethics.

Joint ventures and mergers and acquisitions usually require large cultural changes. When different cultures come together it is wise to expect some degree of culture-clash and differences of opinion. Managers, particularly upper management, must be aware of the implications of cultural change, the facets of organizational culture and the steps involved in altering it. While this model describes a long process that is generally more applicable to large cultural overhauls, the general strategy is useful for managers leading meaningful cultural change at all levels.