Are you a CEO, an HR director or other decision-maker new to Organisational Culture and interested in getting started? Or are you tasked to find information about it on someone's behalf, a consultant who is interested in the topic, or are you simply curious to learn about it for personal growth?
No matter what you are looking for, in this article, you will find what you need to know in order to get started in the area of Organisational Culture.
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Organisational Culture is a fascinating topic. Delving into your Organisational Culture can provide you with valuable and unique insights to confidently take your next steps towards your goals. However, the term in itself, at first glance, can sound somewhat vague. It doesn't help that Organisational Culture is spoken about in very different ways, depending on the source.
At The Culture Factor Group (previously known as Hofstede Insights), we have a very specific approach to Organisational Culture. On this page we explain everything you need to know in order to get started with the topic.
1. What do we mean by "Culture"?
Because culture is a word with many meanings and connotations, in order to avoid confusion, it is necessary for us to define what we mean by it. Our definition follows that of Professor Geert Hofstede's, "the programming of the human mind by which one group of people distinguishes itself from another group". It is always a shared, collective phenomenon, that is learned from your environment.
Culture consists of various layers. We often compare it with an onion.
In the outer layer of the onion, are the symbols.
The next layer consists of heroes.
In the third layer, closest to the core, you'll find rituals.
At the core of culture, is what we refer to as values.
Symbols include things such as food, logos, colours or monuments. Heroes can range from real life public figures, like statesmen, athletes or company founders, to fictional figures, such as Superman, in popular culture. Rituals can include activities done in your spare time, such as sauna or karaoke, or work-related rituals, such as meetings. Values are broad preferences for a certain state of affairs (e.g. preferring equality over hierarchy). Values are transmitted by the environment we grow up in, for example, interactions that we have with our parents or teachers showing us what is acceptable and what isn't.
As culture is a group phenomenon, we use it to analyse the behaviour of groups and make an assessment of the likelihood of groups of people acting in a certain way. That is to say, one person does not represent a whole culture and the culture does not represent the person. However, a group of people from one culture are more likely to act in a way that is appropriate for that culture. Subsequently, people from the same culture tend to act in a similar way, especially when they are together. From a business point of view, this makes The Culture Factor an additional tool of management, with regards to groups of people.
2. What is Organisational Culture and how is it different from National Culture?
The "groups" Professor Hofstede talks about in his definition of culture can refer to a number of entities, and generally we like to talk about The Culture Factor. Perhaps the most important aspects of The Culture Factor are nations and organisations. In the case of National Culture, the groups are the nations themselves and National Culture refers to the programming of the human mind by which the people of one nation distinguish themselves from the people of another nation.
When we talk about Organisational Culture, the groups Professor Hofstede's definition refers to are usually the organisations or, for instance, the different functions of an organisation. We talk about how the members of the organisation relate to each other, to their work and to the outside world. And we are interested in how all this is different in one organisation, or one function of that organisation, compared to another.
Organisational Culture tends to be more straightforward and precise to measure than National Culture. This is because, unlike nations, most organisations have clear objectives and requirements. Most of the activities within the organisation are designed to meet those objectives and requirements.
While differences between National Cultures are most apparent in the values , differences between organisations within the same nation can most clearly be seen in the practices of the organisations. This is also why Organisational Culture, unlike National Culture, can be changed by changing those practices
3. Is Organisational Culture important?
Organisational Culture is one of the most important factors determining business performance. It dictates how things are done in an organisation, and it can be a powerful force for good or bad. If we imagine an organisation as an engine, Organisational Culture would be the oil for that engine. The right culture can be the reason for the success of your organisational strategy while the wrong culture can lead to poor performance or even complete failure.
Unfortunately, many managers fail to understand the importance of Organisational Culture, and instead focus exclusively on strategy. This is a mistake. Organisational Culture should be seen as an important tool that can help to achieve organisational goals. It can either support or hinder your strategy, and should be given the attention it deserves.
It's also the most distinctive aspect of your offering, and helps you stand out from the competition. Even if one can replicate a product, a design, or even a service, they'll never be able to duplicate all of the organisational methods and concepts that impact people's actions and decisions.
The question isn't whether or not you have a culture, but whether or not your culture is helping you achieve your business goals.
4. What are the different types of Organisational Culture?
When going deeper into analysing Organisational Culture, it becomes necessary to make divisions between different types. In our approach, we divide Organisational Culture in four different themes, based on what it is that is being discussed.
1. Optimal culture
Optimal culture is the organisational culture that best supports your organisation's strategy in order to be successful. It should take into account the restrictions that apply to your organisation and the strategy your organisation has. Restrictions such as rules, legislation, economy or other limiting factors should always play a role in designing Optimal culture. It is crucial to keep in mind that optimal culture should always be tailored for each organisation, or function of an organisation. It is never a good idea to try to apply the culture of another organisation as the optimal culture for yours. Your context is unique, the founders of the organisation are different, and the economical landscape is likely to be different.
2. Actual culture
Actual culture should be the basis for all Organisational Culture change projects. It is the culture your organisation or department currently has. In order to guarantee accuracy and objectivity, actual culture should be measured using a valid and objective method, such as our Multi-Focus ModelTM on Organisational Culture. It is an easy to use, yet systematic and data-driven, tool based on sound, scientific research that thousands of global organisations have relied on for shaping their culture, since 1985.
3. Perceived culture
Perceived culture is the culture people in the organisation think it has. It is also the culture you think your organisation has. You can get more insight on the perceived culture by asking others and this might change your perception of your organisation's culture. However, due to the subjective nature of perceived culture, it is not useful for aligning your culture with your strategy as you will most likely not get the complete and correct picture about your organisation's actual culture. Implementing changes based on perceived culture alone, without measuring the actual culture, is one of the reasons why many Organisational Culture change projects fail.
4. Ideal work environment
Ideal work environment is measured exactly the same way as actual culture, except that instead of asking questions about the current work environment, the respondents describe the Organisational Culture they would love to have.
Measuring Ideal work environment gives valuable information about the preferences of the people working in the organisation. It can offer insights into how the targets for Optimal culture should be set and how difficult it will be to reach them. For this reason it is useful to measure, even though it does not offer information about the current state of things nor should it usually be the goal your organisation should strive for.
5. What is the best Organisational Culture to aim for?
There is no one best Organisational Culture to aim for, because the best Organisational Culture is always contextual. The key thing to keep in mind is that the best Organisational Culture your organisation should aim for should be a culture that best supports your strategy.
An up-and-coming start-up will most likely have a very different strategy than an already established international organisation, and the Organisational Culture should reflect that. Similarly, the Optimal Culture of that up-and-coming start-up will probably change over time. Bigger organisations tend to operate in different contexts and face different requirements and restrictions and, therefore, one day there may be a need for more structure and processes. If the Organisational Culture of the start-up remains very flexible and employee oriented, those processes will be difficult to implement.
It is important to note that the National Culture of the organisation always affects how the Organisational Culture is perceived. This is why you should think about The Culture Factor as a whole, even when focusing on the Organisational Culture side of it. An open and approachable Organisational Culture can create an effective self-steering organisation if the National Culture is fairly Individualistic and low on Power Distance (more about the 6 Dimensions of National Culture). But in cultures where seniority-based expertise is expected, it may seem weak and even incompetent.
6. How do leaders influence culture within an organisation?
Leadership is one of the most important aspects of any organisation. What leaders do and how they act sets the expectations for employees and customers alike. When it comes to shaping the culture of an organisation, leadership can play a particularly important role. Who sets the organisational culture of a business are all the people working for it, but the leaders are the ones who have the most influence over shaping it.
If, for instance, the employees are advised to follow strict guidelines and stick to processes but management is known for disregarding these same rules, it is not surprising that this contradictory behaviour trickles down. On the other hand, if leaders are known for living the organisational values, it is likely that employees will follow suit.
It is important for leaders to be aware of how their behaviour is influencing the culture of their organisation. Are they setting the right example? Do their actions align with the organisational values? These are important questions for leaders to consider.
With our Cultural Executive Ownership Programme, leaders can gain invaluable insights into how they're performing and what changes they could make to align their behaviour with the culture of their organisation.
7. What are the dimensions of Organisational Culture?
Organisational Culture is defined as the way in which members of an organisation relate to each other, their work and the outside world in comparison to other organisations. It can either enable or hinder an organisation’s strategy.
Our Multi-Focus Model on Organisational Culture is the result of a study on organisational cultures research which showed that a large part of the differences among the units could be explained by six factors related to concepts within the field of organisational sociology. These six factors became the six dimensions of Organisational Culture.
It is important to keep in mind that, from a strategy and culture alignment point of view, the individual dimensions work together. Each dimension is independent from the other dimension, yet they can reinforce or mitigate each other´s relative impact.
Are you working on Diversity and Inclusion? Dimensions to keep in mind are Organisational Effectiveness, Professional focus and Approachability.
DIMENSION 1: ORGANISATIONAL EFFECTIVENESS
Means-Oriented VS. Goal-Oriented
This dimension is closely connected to the effectiveness of the organisation. In a means-oriented culture, the key feature is the way in which work has to be carried out; people identify with the “how”. In a goal-oriented culture, employees are primarily out to achieve specific internal goals or results, even if these involve substantial risks; people identify with the “what”.
In a highly means-oriented culture, people perceive themselves as avoiding risks and making only a limited effort in their jobs, while each workday is pretty much the same. However, in a very goal-oriented culture, the employees are primarily out to achieve specific internal goals or results, even if these involve substantial risks.
DIMENSION 2: CUSTOMER ORIENTATION
Internally Driven VS. Externally Driven
In a highly internally driven culture employees perceive their task towards the outside world as a given, based on the idea that business ethics and honesty matter most and that they know best what is good for the customer and the world at large.
In a very externally driven culture the only emphasis is on meeting the customer’s requirements; results are most important and a pragmatic rather than an ethical attitude prevails.
DIMENSION 3: LEVEL OF CONTROL
Easygoing Work Discipline VS. Strict Work Discipline
This dimension refers to the amount of internal structuring, control, and discipline. A very easygoing culture reveals a fluid internal structure, a lack of predictability, and little control and discipline; there is a lot of improvisation and surprises. A very strict work discipline reveals the reverse. People are very cost-conscious, punctual and serious.
DIMENSION 4: FOCUS
Local VS. Professional
In a local company, employees identify with the boss and/or the unit in which one works. In a professional organisation, the identity of an employee is determined by his profession and/or the content of the job.
In a very local culture, employees are very short-term directed, they are internally focused and there is strong social control to be like everybody else. In a very professional culture it is the reverse.
DIMENSION 5: APPROACHABILITY
Open System VS. Closed System
This dimension relates to the accessibility of an organisation. In a very open culture newcomers are made immediately welcome, one is open both to insiders and outsiders, and it is believed that almost anyone would fit in the organisation. In a very closed organisation it is the reverse.
DIMENSION 6: MANAGEMENT PHILOSOPHY
Employee-Oriented VS. Work-Oriented
This aspect of organisational culture is most related to the management philosophy. In very employee-oriented organisations, members of staff feel that personal problems are taken into account and that the organisation takes responsibility for the welfare of its employees, even if this is at the expense of the work. In very work-oriented organisations, there is heavy pressure to perform the task even if this is at the expense of employees.
8. Why should you change your culture if you're doing well?
In the realm of business, sustained success often hinges on the willingness to evolve, even during periods of prosperity. This concept is exemplified by Britannia Industries Limited, who proactively refresh their organisational culture in times of stability. Their approach demonstrates the importance of not merely reacting to immediate challenges but preparing for future industry shifts.
Initiating change during periods of success is strategically vital. It enables organisations to thoughtfully refine their culture, free from the urgency of a crisis, thereby nurturing innovation and securing a competitive edge. This proactive strategy ensures organisations are equipped to handle upcoming challenges and capitalise on new opportunities. Leaders are thus encouraged to view success not as a final goal but as part of a dynamic process, requiring ongoing evolution of organisational culture.
Thriving organisations perceive their achievements as stepping stones for further advancement. By actively adapting their organisational culture, they stay agile and resilient, securing their long-term relevance and triumph in a constantly changing business landscape.