[Solved] What is the function of organisational culture?

Tute 8:
Leading culture and diversity
In the preceding topic we looked at Charismatic Leadership, Transformational Leadership and Followership. In this topic, two important aspects of organisations – culture and diversity – will be examined. Culture is important to understand because culture constrains employee decisions and behaviour. In this topic it will be shown that culture is the pervasive unconscious social “glue” that holds the organisation together. While this glue can be hard set and consequently resistant to change, this topic will show how culture change can be led through symbolic and substantive actions. This topic will also introduce the concept of diversity in organisations – the benefits and challenges, as well as strategies for a more developing a more inclusive organisation.
The core questions for this topic are:

What is organisational culture?
What is the function of organisational culture?
What is diversity?
What are the benefits of diversity?

The core questions for this topic will be answered by covering the following parts:

Organisational culture
Leading diversity

Learning resources
Dubrin A.J. (2016). Leadership: Research Findings, Practice, and Skills. Boston: Cengage Learning.
Lussier, R N, Achua, C.F. (2016). Leadership: Theory, Application and Skill Development, 6th edn, Australia: Cengage Learning.
The following reading is also applicable:
Madu, B. (2012), Organization culture as driver of competitive advantage. Journal of Academic and Business Ethics. vol 5, p. 1-9. Available at:
http://www.aabri.com/manuscripts/11791.pdf
Wilson, E. (2013). ‘An impact on business culture’. Training Journal. pp. 50-54.
Nelson, B. (2014). ‘The Data on Diversity’. Communications of the ACM. vol. 57, no. 11, pp. 86-95.
Key terms and concepts

Artifacts
Espoused values
Assumptions
Internal unity
External adaption
Subcultures

Organisational climate
Weak cultures
Strong cultures
Substantive actions
Symbolic actions
Dominant culture

Part 1: Organisational culture

Culture is a nebulous concept – difficult to define and difficult to change, and yet one of the most important aspects of sustaining performance and competitive advantage. Although culture can be consciously created and modified (which we will examine presently), many organisational cultures evolve over time as a result of traditions from past leaders, past events, and heroes. Culture is passed on through successive generations and to new members at three distinct levels according to Schein (1999), probably the most influential voice concerning organisational culture. These levels are:

Artifacts and behaviours – physical structures, stories, dress code, legends and language are all artifacts.
Espoused values – strategies, goals, philosophies (which may be different from enacted values).
Assumptions – unconsciously taken-for-granted beliefs, perceptions, thoughts and feelings, which are the ultimate driver of values and actions. They provide understanding about why things happen the way they do.

There are many definitions of organisational culture, however, the text captures the multi-layered nature of organisational culture in their definition, “the aggregate of beliefs, norms, attitudes, values, assumptions, and ways of doing things that is shared by members of an organisation and taught to new members”, (Lussier & Achua, p. 359). Deal (1999) points out that the complexity of culture is such that no two are the same. Thus, culture differentiates one organisation from another. Organisational culture is often associated with the concept of organisational climate. This is because organisational climate and organisational culture are related. Organisation climate is the way people feel about their organisational culture.

The invisibility of organisational culture

Culture can be difficult to see from inside an organisation. By the above definition, assumptions are taken-for-granted beliefs, including what appropriate behaviour is. What might seem normal in one organisation might look very strange in another. Asking members of an organisation what their organisational culture is (if they have been there for a long time) is akin to asking fish to describe the water in which they swim. This is because understanding comes through knowledge of something different (Sinclair 2005). For example, one understands the meaning of health only when one has been very sick. It may seem strange to us now that last century, women and aboriginals in Australia were second-class citizens who could not vote. However, at the time, it seemed normal and natural to most people. Thus, culture is resistant to change because culture helps people make sense of the way things are.

Despite the resistance of culture to change, both understanding and managing organisational culture is essential for leaders. This is because if leaders do not manage culture, culture will manage them (Schein 2004). On the other hand, the rewards for getting culture right are great because, if you get the culture right, you don’t have to manage the business – followers will manage it for you (Robson & Cooksey 2015).

Activity 2

Listen to the ABC National Radio Podcast on Organisational culture Organisatonal culture. Then, think of two organisations you have worked for or know well. First, write down a few of the artifacts and behaviours of each, and then the kinds of values you heard being espoused. From this analysis, determine what you think the kinds of assumptions underpin organisational culture.

Name of organisation

Artifacts and behaviours

Espoused values

Assumptions

The functions of organisational culture

According to your textbook, culture serves two important functions in organisations:

Internal unity – culture gives members a sense of identity and makes sense of their daily activities. Culture provides guidelines for acceptable behaviour and constrains unacceptable behaviour. Behaviours that are rewarded will thrive. If those behaviours are productive and support innovation, the company will prosper.

External Adaption – culture determines how an organisation responds to changes in its environment. Having the right culture can ensure that an organisation responds quickly to rapidly changing environmental conditions.

Strong versus weak cultures

Weak cultures – Organisational culture is weak when there is little or no agreement about the values, beliefs, and norms governing behaviour. Internal dynamics are highly politicised and promotions are based on relationships rather than merit.

Strong cultures – Principles, values and goals are widely shared, and people are committed to them. Strong cultures are people-centred, learn from mistakes, reinforce good performance with rewards, and are generally high performing.

Subcultures

What is being referred to so far in the discussion is the dominant culture of an organisation – the themes shared most widely by the organisation’s members. However, organisations are also comprised of subcultures located throughout its various divisions, geographic regions, and occupational groups. According to Jermier, Slocum, Fry & Gaines (1991), some subcultures enhance the dominant culture by espousing parallel assumptions, values, and beliefs. Others are resistant and directly oppose the organization’s core values.

Lussier and Achua (2016) assert that subcultures, particularly countercultures, potentially create conflict and dissension among employees, but they also serve two important functions.

Maintenance of performance and ethical behaviour – through surveillance and evaluation of the dominant order. Subcultures can encourage constructive controversy and more creative thinking about how the organization should interact with its environment.
Innovation and regeneration – Subcultures are the spawning grounds for emerging values that keep the firm aligned with the needs of customers, suppliers, society, and other stakeholders. Companies eventually need to replace their dominant values with ones that are more appropriate for the changing environment.

Typologies of organisational culture

According to Lussier and Achua (2016), there is no one best organisational culture. Organisational culture needs to suit the activity of your organisation. A suitable culture is one that supports the organisation’s mission and strategy. However, research has provided four typologies of organisational culture, which are:

Cooperative culture – characterised by mutually reinforcing exchanges and linkages between employees and departments, corporation, teamwork, power sharing and camaraderie.
Adaptive culture – characterised by monitoring of the external environment for emerging opportunities and threats, and adapting to them.
Competitive culture – characterised by the encouragement of a highly competitive work environment. The drive to dominate competitors holds the organisation together.
Bureaucratic culture – Emphasises strict adherence to set rules, policies and procedures, which ensures an orderly way of doing business.

Leadership of organisational culture

As the textbook points out, leaders have a range of tools they can use for changing, modifying or sustaining culture. Your textbook categorises these into substantive and symbolic actions.

Substantive actions

Substantive actions are practical, explicit and highly visible. They are indicators of management’s commitment to a new way of doing things.

Instituting new policies and practices – and replacing people who are resistant
Aligning strategy and structure to culture – and generating an organisational learning culture.
Matching rewards incentives to the culture – reward desired behaviour and performance.
Matching work environment design to culture – the environment should reflect new organisational values.

Symbolic actions

Symbolic actions are not practical changes. Rather, they are consistent with, and support the substantive actions taken.

Modelling expected behaviour – managers should “walk the talk”
Recognising and celebrating accomplishments – reward desired behaviour
Being visible – a chance to emphasise and model desired behaviour

Activity 2

Go to Elon Musk’s presentation of the new battery. Analyse the talk in terms of symbolic actions. View at: Elon Musk

Part 2: Diversity leadership

What is diversity?

Diversity is the inclusion of race, class, ethnicity, age, sexual orientation, sex and gender in organisations.

Sex and gender – Sex is determined by biology whereas gender refers to psychological and emotional characteristics that cause people to assume masculine, feminine or androgynous roles.
Class – sociocultural background.
Age – inclusion of both older and younger workers.

Sexual orientation – Sexual orientation refers to an enduring pattern of romantic or sexual attraction (or a combination of these) to persons of the opposite sex or gender, the same sex or gender, or to both sexes, or more than one gender.

Race and ethnicity – race is a contested concept, however, it generally refers to genetically transmitted physical characteristics of a group of people. Ethnicity is a social classification based on nationality, religion and national language.

(Beebe, Beebe & Redmond 2011)

Benefits of diversity

Diversity in an organisation is the inclusion of all the above groups, at all levels of organisations. As a consequence of feminism, globalisation and immigration, the modern workforce has become more diverse. Therefore, leaders must create an inclusive culture in which everyone can succeed. This is because diversity is good for business.

Activity 3

Listen to the ABC podcast about diversity leadership. How open is your home country to diversty?

The benefits of embracing diversity according to Dubrin (2016) are:

1. Managing diversity well offers a marketing advantage: A diversified workforce offers a greater understanding about how to meet the needs of diverse customers.

Companies with a favourable track record in managing diversity are at a distinct advantage in recruiting and retaining talented people. An organisation with a reputation for valuing diversity can recruit from a larger pool of candidates. An organisation that truly values diversity tends to retain its employees and experience less absenteeism thereby reducing costs.
Heterogeneity in the workforce may offer the company a creativity advantage, as well as improve its problem solving and decision making capability: A diverse organisation will have a broader range of perspectives, experience, knowledge and information to draw on, resulting in better solutions and greater innovation.
Diversity and inclusion programs help local economies thereby boosting social responsibility.
Enhancement of performance: Diverse teams have greater opportunities for synergies through more diverse inputs, cross learning and creativity.

Creating a diversity inclusive organisational culture (Lussier and Achua 2016)

Top management support and commitment – diversity needs to start at the top with managers, executives, boards and CEO’s.
Remove obstacles – diversity inclusive organisations remove “ethnocentrism” (belief that one’s own culture is superior) and “glass ceilings” (lack of promotion of minorities and women).
Organisational policies and practices – policies on recruitment, hiring, training, promotion, compensation and layoffs must be examined to ensure minorities and women are fairly treated (see for example, the ABC Diversity Plan. View at: http://about.abc.net.au/wp-content/uploads/2013/12/ABCEquityandDiversityPlan2012-15-AccessibilityVersion.pdf.
Heightened awareness – it is difficult for the majority to understand the subjective experience of minorities and women. Keeping in touch with employee attitudes and opinions. Repeated exposure to diversity themes aids awareness and promotes diversity as normal and beneficial.
Include diversity as a criterion for measuring success – diversity metrics can be tied to managerial compensation as an incentive
Training and education – training and education about diversity issues and impacts is one of the best ways to help people understand, be sensitive to, and get the most from a diverse workforce.

Activity 4

Diversity is a complex issue. On the one hand literature tells us the benefits of diversity and of women in leadership positions. On the other, only 2% of Australian organisations are led by women (EOWA 2008). Watch Sheryl Sandberg’s TED talk: Why we have too few women leaders. View at:

<http://www.ted.com/talks/sheryl_sandberg_why_we_have_too_few_women_leaders?language=en#t-194522>

Activity 5

To what extent is there diversity in your work place? What do you perceive attitudes towards diversity are in your workplace? To what extent does current leadership support culture inclusive diversity?

Conclusion

This topic examined organisational culture and diversity. Culture is an intangible yet very important aspect of organisations. Culture is difficult to define conceptually and difficult to assess. A simple definition is “the way we do things around here”. Organisational culture is defined in the textbook as the aggregate of beliefs, norms, attitudes, values, assumptions, and ways of doing things that is shared by members of an organisation and taught to new members. Organisational culture can be discussed in terms of three distinct levels – artifacts, espoused values and assumptions. Culture functions to constrain unwanted behaviour and reward behaviour that is congruent with values and assumptions that underpin it. Culture provides internal unity through making sense of, and providing, meaning for daily activities Culture also determines how an organisation responds to change through external adaption. Leaders can influence culture through substantive and symbolic actions. Diversity is the inclusion in organisations of: race, class, ethnicity, age, sexual orientation, sex and gender. The benefits of diversity are a wider recruitment pool, innovation, reduced turnover and absenteeism, synergies from diverse inputs and understanding about how to meet the needs of diverse customers. Leaders can foster and utilise diversity by removing obstacles to inclusion, reviewing organisational policies, training and education, and heightening awareness of diversity issues to maximise benefits through meaningful participation from all groups.

Reference list

Beebe, S, Beebe, S, and Redmond, M 2011 Interpersonal Communication: Relating to Others, Allyn and Bacon, New York

EOWA 2008, Australian Census of Women in Leadership, Equal Opportunity for Women in the Workplace Agency, Melbourne. Viewed at:

https://www.wgea.gov.au/sites/default/files/2008_EOWA_Census_Publication_tagged.pdf

Heenan, D, & Bennis, W 1999, Co-Leaders: The Power of Great Partnerships,
John Wiley & Sons Inc., New York.

Hughes, R, Ginnett, R & Curphy, G 2015, Leadership: Enhancing the Lessons of Experience, 8th edn, McGraw-Hill Irwin, New York.

Jermier, J, Slocum, J, Fry, L, & Gaines, J 1991, Organizational Subcultures in a Soft Bureaucracy: Resistance Behind the Myth and Facade of an Official Culture. Organization Science, 2(2): 170-194.

Lussier, R N & Achua, C F 2016, Leadership: Theory, Application and Skill Development, 6th edn, Cengage Learning, Australia.

Robson, M, & Cooksey, R 2015, Theorising Intuition in Practice: Developing Grounded Theory with Elite Business Leaders In M. Sinclair (Ed.), A handbook of Intuition Research Methods. Cheltenham: Edward Elgar Publishing.

Schein, E M 1999, The corporate culture survival guide: Sense and nonsense about Culture change, Josey-Bass.

Schein, E 2004, Organizational culture and leadership, 3rd. ed., Josey-Bass.

Sinclair, A 2005, Doing Leadership Differently: Gender, Power and Sexuality in a Changing Business Culture, Melbourne University Press, Carlton South.

Feedback to activities

9.1

• Amazon.com—Frugality is clearly a corporate value at Amazon.com. Beyond the online bookseller’s popular website is a drab 1960s four-story headquarters in downtown Seattle. Everyone’s desks are made from doors (total cost: $130). Monitors are propped up on telephone books to avoid paying for monitor stands. Extra chairs are considered an extravagance. “By watching your overhead you can spend more on business expansion,” explains Amazon.com founder and CEO Jeff Bezos.

Name of organisation

Artifacts and behaviours

Espoused values

Assumptions

Amazon.com

Monitors are propped up on telephone books to avoid paying for monitor stands. Extra chairs are considered an extravagance.

Frugality

Less expenditure yields more for expansion.

Being careful with money is good.

Activity 9.2

Go to Elon Musk’s presentation of the new battery. Analyse the talk in terms of symbolic actions. View at: http://www.theguardian.com/technology/2015/may/01/tesla-announces-low-cost-solar-batteries-elon-musk

Musk announces, at the end, that the entire evening was powered by his own batteries and that they had been charged with sunlight from the roof of the building. This is a symbolic action that is consistent with the three behaviours mentioned by the text:

Modelling expected behaviour – managers should “walk the talk”
Recognising and celebrating accomplishments – reward desired behaviour
Being visible – a chance to emphasise and model desired behaviour

Elon Musk is being very visible by launching his company’s new product. He models the behaviour he wants for the world by powering his event with power derived from his batteries. The evening itself is a celebration of the new product as well as a marketing function.

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