Organizational culture

A number of years back an executive was asked to tell what he thought of organizational culture or what it meant. He replied essentially the same way a supreme court justice once gave in attempting to define pornography: “I can’t define it, but I know it when I see it.� This executive’s approach to defining organizational culture isn’t acceptable for our purposes. We need a basic definition to provide a point of departure for our quest to better understand the phenomenon. In this article we propose a specific definition and review several peripheral issues that revolve around this definition.

A Definition

There seems to be wide agreement that organizational culture refers to a system of shared meaning held by members that distinguish the organization from other organizations. This system of shared meaning is, on closer examination, a set of key characteristics that the organization values. The research suggests that there are seven primary characteristics that, in aggregate, capture the essence of an organization’s culture.

1. Innovation and risk taking: The degree to which employees are encouraged to be innovative and take risks.

2. Attention to detail: The degree to which employees are expected to exhibit precision, analysis, and attention to detail.

3. Outcome orientation: The degree to which management focuses on results or outcomes rather than on the techniques and processes used to achieve those outcomes.

4. People orientation: The degree to which management decisions take into consideration the effect of outcomes on people within the organization.

5. Team orientation: The degree to which work activities are organized around teams rather than individuals.

6. Aggressiveness: the degree to which people are aggressive and competitive rather than easy going

7. Stability: The degree to which organizational activities emphasize maintaining the status quo in contrast to growth.

Each of these characteristics exists on a continuum from low to high. Appraising the organization on these seven characteristics, then, gives a composite picture of the organization’s culture. This picture becomes the basis for feelings of shared understanding that members have about the organization, how things are done in it, and the way members are supposed to behave.

The idea of viewing organizations as cultures—in which there is a system of shared meaning among members—is a relatively recent phenomenon. Until the mid-1980s, organizations were, for the most part, though of simply as rational means by which to coordinate and control a group of people. They had vertical levels, departments, authority relationships, authority relationships, and so forth. But organizations are more. They have personalities too, just like individuals. They can be rigid or flexible, unfriendly or supportive, innovative or conservative. General Electric offices and people are different from the offices and people at General Mills. Harvard and MIT are in the same business – education – and both located in Cambridge, Massachusetts, but each has a unique feeling and character beyond its structural characteristics. The IITs and IIMs are world class institutions in India, but both have a unique culture of their own. Organizational theorists now acknowledge this by recognizing the important role that culture plays in the lives of organization members. Interestingly, though the origin of culture as an independent variable affecting an employee’s attitudes and behavior can be traced back more than 50 years ago to the notion of institutionalization.

When an organization becomes institutionalized, it takes on a life of its own, apart from its founders or any of its members. Ross Perot created Electronic Data System (EDS) in the early 1960s, but he left in 1987 to found a new company, Perot Systems. EDS has continued to thrive despite the departure of its founder. Sony, Gillette, McDonald’s, and Disney are examples of organizations that have existed beyond the life of their founder or any one member.

In addition, when an organization becomes institutionalized, it becomes valued for itself, not merely for the goods or services it produces. It acquires immortality. If its original goals are no longer relevant, it doesn’t go out of business. Rather, it redefines itself. A classic example is the March of Dimes. It was originally created to fund the battle against polio. When polio, was essentially eradicated in the 1950s, the March of Dimes didn’t close down. It merely redefined its objectives as funding research for reducing birth defects and lowering infant mortality. Similarly, Mother Teresa founded Nirmal Bhavan to care for the lepers of Kolkata, even after her death the institution continues its good work.

Institution operates to produce common understandings among members about what is appropriate and, fundamentally, meaningful behavior. So when an organization takes on institutional permanence, acceptable modes of behavior become largely self-evident to its members. As we’ll see, this is essentially the same thing that organizational culture does. So an understanding of what makes up an organization’s culture, and how it is created, sustained and learned will enhance our ability to explain and predict the behavior of people at work.