Organizational Culture, How to Define, Implement and Nurture

The decision for combining a discussion of project management structures (you can read it here) and organizational culture can be traced to a conversation I had with two project managers who work for a medium-sized IT firm.

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organizational structure
organizational structure

The decision for combining a discussion of project management structures (you can read it here) and organizational culture can be traced to a conversation I had with two project managers who work for a medium-sized IT firm.

They were developing a new operating platform that would be critical to the future success of their company. When they tried to describe how this project was organized, one manager began to sketch out on a napkin a complicated structure involving 52 different teams, each with a project leader and a technical leader!

In response to my further probing to understand how this system worked, the manager stopped short and proclaimed, “The key to making this structure work is the culture in our company. This approach would never work at company Y, where I worked before. But because of our organizational culture here we are able to pull it off.”

This comment and some research I did, suggest there is a strong connection between project management structure, organizational culture, and project success.

I have observed organizations successfully manage projects within the traditional functional organization because the culture encouraged cross-functional integration. Conversely I have seen matrix structures break down because the culture of the organization did not support the division of authority between project managers and functional managers. I have also observed companies relying on independent project teams because the dominant culture would not support the innovation and speed necessary for success.

What Is Organizational Culture?

Organizational culture refers to a system of shared norms, beliefs, values, and assumptions which binds people together, thereby creating shared meanings. This system is manifested by customs and habits that exemplify the values and beliefs of the organization. For example, egalitarianism may be expressed in the informal dress worn at a high-tech firm. Conversely, mandated uniforms at a department store reinforce respect for the hierarchy.

Culture reflects the personality of the organization and, similar to an individual’s personality, can enable us to predict attitudes and behaviors of organizational members. Culture is also one of the defining aspects of an organization that sets it apart from other organizations even in the same industry.

Research suggests that there are 10 primary characteristics which, in aggregate, capture the essence of an organizational culture:

  • Member identity—the degree to which employees identify with the organization as a whole rather than with their type of job or field of professional expertise.
  • Team emphasis—the degree to which work activities are organized around groups rather than individuals.
  • Management focus—the degree to which management decisions take into account the effect of outcomes on people within the organization.
  • Unit integration—the degree to which units within the organization are encouraged to operate in a coordinated or interdependent manner.
  • Control—the degree to which rules, policies, and direct supervision are used to oversee and control employee behavior.
  • Risk tolerance—the degree to which employees are encouraged to be aggressive, innovative, and risk seeking.
  • Reward criteria—the degree to which rewards such as promotion and salary increases are allocated according to employee performance rather than seniority favoritism, or other nonperformance factors.
  • Conflict tolerance—the degree to which employees are encouraged to air conflicts and criticisms openly.
  • Means versus end orientation—the degree to which management focuses on outcomes rather than on techniques and processes used to achieve those results.
  • Open-systems focus—the degree to which the organization monitors and responds to changes in the external environment.

As shown in the figure below, each of these dimensions exists on a continuum. Assessing an organization according to these 10 dimensions provides a composite picture of its organizational culture. This picture becomes the basis for feelings of shared understanding that the members have about the organization, how things are done, and the way members are supposed to behave.

organizational culture
Organizational culture dimensions

Culture performs several important functions in organizations. An organizational culture provides a sense of identity for its members. The more clearly an organization’s shared perceptions and values are stated, the more strongly people can identify with their organization and feel a vital part of it. Identity generates commitment to the organization and reasons for members to devote energy and loyalty to the organization.

A second important function is that culture helps legitimize the management system of the organization. Culture helps clarify authority relationships. It provides reasons why people are in a position of authority and why their authority should be respected.

Most importantly, organizational culture clarifies and reinforces standards of behavior. Culture helps define what is permissible and inappropriate behavior.

These standards span a wide range of behavior from dress code and working hours to challenging the judgment of superiors and collaborating with other departments. Ultimately, culture helps create social order within an organization.

Imagine what it would be like if members didn’t share similar beliefs, values, and assumptions—chaos! The customs, norms, and ideals conveyed by the culture of an organization provide the stability and predictability in behavior that is essential for an effective organization.

Although our discussion of organizational culture may appear to suggest one culture dominates the entire organization, in reality this is rarely the case. “Strong” or “thick” are adjectives used to denote a culture in Which the organization’s core values and customs are widely shared within the entire organization. Conversely, a “thin” or “weak” culture is one that is not widely shared or practiced within a firm.

Even within a strong organizational culture, there are likely to be subcultures often aligned within specific departments or specialty areas. As noted earlier in our discussion of project management structures, it is not uncommon for norms, values, and customs to develop within a specific field or profession such as marketing, finance, or operations. People working in the marketing department may have a different set of norms and values than those working in finance.

Countercultures sometimes emerge within organizations that embody a different set of values, beliefs, and customs—often in direct contradiction with the culture espoused by top management. How pervasive these subcultures and countercultures are affect the strength of the organizational culture and the extent to which culture influences members’ actions and responses.

Identifying Cultural Characteristics

Deciphering an organizational culture is a highly interpretative, subjective process that requires assessment of both current and past history. The student of culture cannot simply rely on what people report about their culture. The physical environment in which people work, as well as how people act and respond to different events that occur, must be examined.

Study the physical characteristics of an organization.

  • What does the external architecture look like?
  • What image does it convey?
  • Is it unique?
  • Are the buildings and offices the same quality for all employees?
  • Or are modern buildings and fancier offices reserved for senior executives or managers from a specific department?
  • What are the customs concerning dress?
  • What symbols does the organization use to signal authority and status within the organization?

These physical characteristics can shed light on who has real power within the organization, the extent to which the organization is internally differentiated, and how formal the organization is in its business dealings.

Read about the organization.

Examine annual reports, mission statements, press releases, and internal newsletters.

  • What do they describe?
  • What principles are espoused in these documents?
  • Do the reports emphasize the people who work for the organization and what they do or the financial performance of the firm?

Each emphasis reflects a different culture. The first demonstrates concern for the people who make up the company. The second may suggest a concern for results and the bottom line.

Observe how people interact within the organization.

  • What is their pace—is it slow and methodical or urgent and spontaneous?
  • What rituals exist within the organization?
  • What values do they express?

Meetings can often yield insightful information.

  • Who are the people at the meetings?
  • Who does the talking?
  • To whom do they talk?
  • How candid is the conversation?
  • Do people speak for the organization or for the individual department?
  • What is the focus of the meetings?
  • How much time is spent on various issues?

Issues that are discussed repeatedly and at length are clues about the values of the organization’s culture.

Interpret stories and folklore surrounding the organization.

Look for similarities among stories told by different people. The subjects highlighted in recurring stories often reflect what is important to an organization’s culture.

For example, many of the stories that are repeated at Versatec, a Xerox subsidiary that makes graphic plotters for computers, involve their flamboyant co-founder, Renn Zaphiropoulos. According to company folklore, one of the very first things Renn did when the company was formed was to assemble the top management team at his home. They then devoted the weekend to hand making a beautiful teak conference table around which all future decisions would be made. This table came to symbolize the importance of teamwork and maintaining high standards of performance, two essential qualities of the culture at Versatec.

Try to identify who the heroes and villains are in the folklore company.

What do they suggest about the culture’s ideals?

Returning to the Versatec story, when the company was eventually purchased by Xerox many employees expressed concern that Versatec’s informal, play hard/work hard culture would be over-whelmed by the bureaucracy at Xerox. Renn rallied the employees to superior levels of performance by arguing that if they exceeded Xerox’s expectations they would be left alone. Autonomy has remained a fixture of Versatec’s culture long after Renn’s retirement.

It is also important to pay close attention to the basis for promotions and rewards.

  • What do people see as the keys to getting ahead within the organization?
  • What contributes to downfalls?

These last two questions can yield important insights into the qualities and behaviors which the organization honors as well as the cultural taboos and behavioral land mines that can derail a career.

For example, one project manager confided that a former colleague was sent to project management purgatory soon after publicly questioning the validity of a marketing report. From that point on, the project manager was extra careful to privately consult the marketing department whenever she had questions about their data.

With practice an observer can assess how strong the dominant culture of an organization is and the significance of subcultures and countercultures. Furthermore, learners can discern and identify where the culture of an organization stands on the 10 cultural dimensions presented earlier and, in essence, begin to build a cultural profile for a firm.

Based on this profile, conclusions can be drawn about specific customs and norms that need to be adhered to as well as those behaviors and actions that violate the norms of a firm.

Image courtesy of Freepik

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