Organizational Culture: The Inner Workings of a Business - Essay Sample

Introduction

Organizational culture refers to all the beliefs, values, assumptions, and interactions that define the social and psychological environment of a business. It also includes the experiences, expectations, and philosophy that guides the behavior of the members of the organization. Organizational culture is expressed in the self-image of the members, the inner working of the business, its interactions with the external world, as well as its future expectations. The culture must be based on shared beliefs, customs, attitudes, and rules, both written and unwritten, that have been developed and validated over time. The vision of the organization is also part of its culture. Organizational culture is critical in the success of a business by increasing the productivity of the employees and enhancing the interactions between the organization and its customers (Siu, 2014). Organizational culture also plays a huge role in recruitment, creation of employee loyalty, job satisfaction, collaborations (Kohll, 2018), among others. Organizations, therefore, strive to create a rich organizational culture. Unfortunately, the creation of rich organizational culture is not an easy task. It calls for cooperation between all the units of an organization and great support from the leadership. This paper seeks to discuss the effect of organizational culture on the success of a business. The strategies that can be used to create a rich organizational culture will also be explored.

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Effect of Organizational Culture

Studies have confirmed that organizational culture affects the performance of an organization directly or indirectly. Some of the benefits associated with a robust organizational culture include team cohesiveness, high employee motivation, enhanced efficiency, and a strong alignment to the goals of the business (Siu, 2014). All these factors directly or indirectly lead to the success of an organization.

Team Cohesion

The modern business environment is increasingly unpredictable and is also characterized by cutthroat competition. Teamwork has proven to be among the most potent tools that a business can use to survive and thrive in this environment. Unfortunately, organizations find it highly difficult to form cohesive teams, especially in diverse workplaces. Conflict becomes common among the team members and the teams ultimately fail in achieving their goals. However, in a firm with a rich organizational culture, the employees hold similar ethical values and beliefs, and hence, are like-minded. Therefore, the organization can leverage this to align the business objectives with shared beliefs and values. This strategy is effective in the creation of cohesive teams since the building of rapport and support between the team members is easy. The bonds formed between the employees help avoid conflicts in the teams, and the greater focus is placed on the completion of the team targets. Productivity, therefore, rises and the organization's performance and position in the market rises. For instance, due to a strong organizational culture, the more than 40,000 employees in Google cohesively work towards the company's goals, a factor that has contributed to the organization's excellent performance over the years (Siu, 2014).

Moreover, studies have linked cohesive teams and innovation. Cohesive teams are more innovative than teams that are plagued by conflicts and divisions. In a business environment, where the consumer tastes and preferences change drastically, and the cost of shifting from one seller to another is low, innovation is a necessity among businesses. A rich organizational culture, therefore, helps spur innovation, which, in turn, improves the performance of the organization.

Employee Motivation and Performance

Following research involving more than 20,000 employees from across the world, 50 major organizations, and many experiments, it was determined that organizational culture affects employee motivation (McGregor & Doshi, 2015). When employees know why they work, they work better. Therefore, by defining the purpose of the business, organizational culture plays a huge role in motivating the employees and enhancing their performance. Employee happiness has also been shown to be higher in businesses with a robust organizational culture. A study conducted by Columbia University revealed that the probability of job turnover in companies with rich culture is 13.9% as compared to 48.4% in companies with poor company culture (Siu, 2014). High employee turnover is usually a costly affair for businesses since they have to spend more on recruitment, and productivity is disrupted. Thus, by preventing employee turnover, organizational culture contributes to the success of a business. Another study by the University of Warwick showed that happy employees are 12% times more productive than average employees (Siu, 2014). Similarly, unhappy employees are 10% less productive than the average employee (Siu, 2014). In general, it is estimated that unhappy employees cost American businesses $300 billion annually (Siu, 2014). Hence, a robust organizational culture has a direct impact on the profits of an organization.

Strategies to Create a Rich Organizational Culture

The dominant culture in an organization is greatly dependent on the environment in which it operates, its objectives, management style, as well as its belief system. Resultantly, there exist various types of organizational cultures. For instance, in well-structured and highly bureaucratic organizations, a culture of extensive controls is dominant. Employees in such cultures must strictly adhere to specific standard procedures and hierarchy, and their roles are well defined. On the other hand, in competitive environments, employees may forego strict hierarchies and instead focus on building strong relationships between the company and the various external parties. This helps achieve a competitive advantage over the other players. Moreover, an organization can choose to adopt a collaborative culture that emphasizes the decentralization of the workforce and integration of different units within the organization to find solutions to different problems within the organization (Brettel, Chomik, & Flatten, 2015).

However, despite the benefits of a rich organizational culture on a firm discussed above, it has been shown that most executives do not know how to manage organizational culture (McGregor & Doshi, 2015). Understanding how culture drives performance and what processes in the organization affect culture is among the most effective ways of creating a robust organizational culture. Studies have determined that purpose, play, emotional pressure, potential, economic pressure, as well as inertia, are the main reasons why people work (McGregor & Doshi, 2015). Play purpose and potential are motives that increase performance, while economic pressure, emotional pressure, and inertia hurt productivity. Therefore, maximizing the good motives is the most effective strategy in creating a culture that enhances employee motivation and ultimately boosts the performance of the organization.

Play refers to when the work itself motivates the employees. The organization, therefore, must seek to make work enjoyable, for instance, by using the right recruitment structures, the right employees are given the right roles, and hence, they discharge their duties better (McGregor & Doshi, 2015). Purpose means that the work given to employees fits their identity. This too is achieved through the use of proper recruitment systems. Finally, the purpose is a situation where the outcome of one's work benefits their identity. For instance, an employee with potential I bound to get promoted. The purpose, therefore, fuels the employees to discharge their duties exemplary (McGregor & Doshi, 2015). Besides, an organization must seek to address the indirect motives to create a strong organizational culture.

Emotional pressure is caused by external forces that threaten the employee's identity. Forms of emotional pressure include peer pressure, fear, and shame. The organization must, therefore, seek to address these forces. Economic pressure refers to a situation where the employee works to avoid a punishment or to gain a certain reward. To avoid this, the organization must ensure that the employee is purpose-driven rather than award-driven. Finally, employees face inertia when their work is far removed from their identity (McGregor & Doshi, 2015). Thus, organizations must strive to align various tasks with the identities of the employees.

The Role of Leadership in the Creation of a Robust Organizational Culture

The leadership of the organization is critical in the creation of a healthy organizational culture. Most importantly, the leadership determines the values, beliefs, purpose, and mission of the organization. These decisions serve as the foundation on which the culture is built. Particularly, the role of leadership is important in new organizations. The founders must establish the norms to be followed as the organization grows. It is also critical when new management seeks to transform the organizational culture. The leadership also sets the tone for employee engagement as well as the business environment and atmosphere, all of which determine the organizational culture (Craig, 2018). The leaders, therefore, must embody the change they want to see in the organization. Their beliefs, values, behaviors, communication styles, and assumptions, must reflect the change they want to bring about in the organization.

The leadership is also responsible for creating a conducive environment to allow the employees to work towards the creation of the intended culture. Therefore, the leadership must focus on the social good and well-being of the employees. The leadership can achieve this by taking good care of the social, physical, financial, and community aspects of the employees' well-being. Measures such as enhancing flexibility, investment in professional development, promotion of socialization, and better leave policies can help achieve this. In turn, the employees own the purpose of the organization and work towards the achievement of its goals. The rate of turnover also falls and productivity rises. Finally, leadership provides the resources required to support the creation and maintenance of the desired organizational culture (Craig, 2018). For instance, they must provide the resources to support recruitment that is aligned with the values and purpose of the organization.

Conclusion

Organizational culture refers to the values, beliefs, assumptions, mission, and purpose that define an organization. As shown in the paper, a strong organizational culture is critical to the success of an organization. It promotes employee motivation, which in turn enhances their performance. However, while a strong organizational culture has been shown to directly contribute to the success of a business, organizations struggle to create it. Understanding the impact of culture on performance and the processes that affect culture is key in creating a strong organizational culture. The leadership must also be involved throughout the process.

References

Brettel, M., Chomik, C., & Flatten, T. C. (2015). How organizational culture influences innovativeness, proactiveness, and risktaking: Fostering entrepreneurial orientation in SMEs. Journal of Small Business Management, 53(4), 868-885. Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1111/jsbm.12108

Craig, W. (2018, September 5). The Role Leadership Has In Company Culture. Retrieved from Forbes: https://www.forbes.com/sites/williamcraig/2018/09/05/the-role-leadership-has-in-c...