BUS603: Managing People

1. Factors indirectly influencing organizational culture (macro-environment of an organization).
2. Factors directly influencing organizational culture (micro-environment of an organization).
3. Factor of leader's impact (primary and secondary mechanisms, methods of the change of the organizational culture).

Factors indirectly influencing organizational culture-macro-environment of an organization - consist of economic, social-cultural, political-legal, scientific-technological, natural environment and international events. Factors directly influencing organizational culture can be described as the micro-environment of an organization, which consists of consumers and customers, partners and other organizations. The third factor that impacts the formation and change of organizational culture are leaders of the organization: i. e. beliefs, values and their building techniques brought by organization founders and later by its new leaders.

One of the mysterious aspects of the organizational culture is that two companies, operating in the same environment, producing similar products by means of similar technologies and having similar origin of founders, function quite differently in the long term. The reasons for this are different attitudes, values and goals of the founders and leaders of the organizations. The biggest influence on the formation of organizational culture is exerted by the organization founders. The founders not only design the basic purpose of the organization and the environment in which it functions, they also select other members of the organization, and shift their work and efforts in the direction necessary for the organization. There are managers who create an organization and develop an organizational culture by using such personal characteristics as charisma. Charisma can be described as a  CEO's ability to attract the attention of the subordinates and to pass on to them the most important values and beliefs. However, not all leaders have charisma, therefore, they use other mechanisms in the formation and development of the organizational culture. The Table shows that mechanisms embedding beliefs and values of leaders can be divided into primary (establishment of culture) and secondary (expression and reinforcement of culture) mechanisms. Primary culture-embedding mechanisms are the most important tools that managers can use to train members of the organization, how they should understand, think, feel and behave in line with their own beliefs.

Table. Mechanisms embedding beliefs and values of leaders

All primary mechanisms for the strengthening of organizational culture are closely interrelated and affect one another. Their division into six groups shows how leaders can shape and develop organizational culture. As researcher of organizational culture E. Schein states that there is no need to develop special training courses for the new members to understand and learn the assessed values of the organization: the values of the organization are clearly visible in the daily work.

Secondary cultural expression and reinforcement mechanisms (organizational structure, systems, procedures, rituals, stories) in a young and growing organization maintain and strengthen the primary mechanisms that created organizational culture, but they do not form it. On the contrary, in mature and stable organization the secondary mechanisms become the primary ones for the formation of organizational culture. Secondary expression and reinforcement of organizational culture mechanisms (organizational structure, procedures, rituals, physical space, and stories) are not as strong and clear as the primary mechanisms. In order to properly understand the secondary mechanisms monitoring of organizational leaders and their real behavior has to be undertaken; secondary mechanics also reveal much to the new members about the organization and its culture. It is important that secondary mechanisms may help managers to strengthen primary mechanisms, but forming an organizational culture managers can never start from the secondary mechanisms.

The culture of the company, designed and developed by the leaders, is usually fairly stable and rooted, and is difficult, although possible, to change. Organizational culture is firmly anchored in values and attitudes to which the workers are accustomed and committed. Organizational culture is also protected by many other factors such as rituals of the organization, designed physical space and facilities, philosophy of the statute, promotion and recruitment practices, organizational structure. Thus, the organizational culture can be a direct or at least indirect result of the actions taken by the organization founders/ leaders.

It is important to discuss the root causes, which may lead to the fact that organizational culture must be changed. First, the organizational culture must be replaced because the company's core values due to the change in company's macro-environment and micro-environment are no longer ensuring the success of its operations and competitiveness. In fact, the need to change the organizational culture arises when indicators show the declining efficiency of the organization and it suffers a financial loss. Thus, the organization needs to adapt to the changing environmental conditions or it may not survive. Second, the organization founders and managers do not always develop a strong organizational culture, therefore, in such cases for the company to survive a new leader must be appointed and he/ she will establish a strong organizational culture. In general, to change weak organizational culture is much easier than the strong one, which is deeply rooted in the consciousness of organization members and is placed in the organization under the procedures, physical layout of the buildings, etc.

In organizational culture change process leaders must be change agents and they must be able to change the organizational culture, to convey new values and new ways of behavior to the organization. E. Schein describes in detail the important role of organization leaders' managers: the role of the leader in the organizational culture change process varies depending on the different stages of organization development. It is important to analyze what factors might help leaders to influence organizational culture change. First, managers can change organizational culture by using primary culture establishment and secondary culture expression as well as reinforcement mechanisms. However, when due to the past success organizational culture has stabilized, leaders notice that organizational culture change becomes more and more difficult, cultural change requires more resources, time, efforts and other ways to accomplish it. Thus, depending on the stage of organization development (the establishment and early development, growth and maturity) ten ways to change organizational culture can be identified.

Table. Change mechanisms of organizational culture

In the establishment and early development stages, organizational culture is a positive and strong force, which must be further developed. In the growth stage subcultures form in organization and at this stage managers can choose the acceptable values from subcultures and change organizational culture in the needed direction. In the maturity stage, the major part of the elements forming the organizational culture must be changed.

In order to make the change of the organizational culture effective, employees should be involved; the results already achieved should be constantly highlighted; efforts should be made to infiltrate the organization and feel every aspect of it; it should be shown that there are no losers and every change is only for the best ; employees should be encouraged to devote themselves to the new ideas and the focus on the desired culture should be constantly maintained.

In order to change the organizational culture the leader must first know what elements the culture contains. Employees should be encouraged to change the old organizational culture and implement the new ideas, therefore they should be included into the organizational culture change process, and new organizational culture should not be "imposed" upon them. Organizational culture change "from the grass-roots", takes a considerable time: at least 3-5 years. It is important to remember that values, behavior and actions of the leaders speak for themselves: workers receive significantly more information from their leaders' real behavior than they would obtain only from the words spoken.