What is Organizational Culture?

For many employees if someone was to ask them to describe the organizational culture in their organization, there is a good chance that they would need time to stop and consider what the culture is. That is because organizational culture is a shared perception that is intangible. Similar to if someone were to ask you to describe your personality, you would need time and you would describe traits you possess, but not be able to explain something that is tangible. What’s more, it would be hard for you to explain where your personality ends and your biological brain begins. In the same way for organizational culture, it can be hard to know where this “personality” of the organization ends and where the structural components, such as performance management, begin. Much debate has occurred on exactly how to define organizational culture (Watkins, 2013).

Nonetheless, organizational culture can have a notable impact on organizations and their employees. It affects many areas of daily life within an organization, such as how mistakes are handled and how competitive employees are with one another. Being in a highly competitive and detail-focused culture is high pressure for many employees, whereas being in organizational culture that has an emphasis on cooperation and learning from your mistakes is lower pressure.

Watkins (2013) summarized many views, and in his opinion, organizational culture is actually a a combination of these definitions.

• Organizational Culture = What the organizational members do (the tangible and repeated practices of the organization)
• Organizational Culture = What is incentivized in the performance management system (the practices that we do because we will receive a good review or a reward)
• Organizational Culture = What the organizational members collectively use to “make sense” of situations (or helps its members know how to act in alignment with the organizational purpose)
• Organizational Culture = The combination of the stories, practices (or rituals), and language organizational members use to talk about the organization; these things are the glue that holds the members together.
• Organizational Culture = The workplace’s “social control system” that guides how its members should and should not behave.
• Organizational Culture = “The organization’s immune system” as it guards the organization against thinking and behaviours that would counteract its purpose.
• Organizational Culture = A microcosm of the society surrounding the organzation that highlights parts of that society more and less than other organizations, but nonetheless, holds the societal view.
• Organizational Culture = Multi-dimensional because different functional areas (e.g., accounting vs marketing) within the organization have their own subcultures.
• Organizational Culture = An organism that can adapt to the world around it in order to thrive.

Whether there is one view of organizational culture above that stands apart or its the combination of these things that make organizational culture, organizational culture is an ever-present component of the organization and the lives of its employees. To understand what organizational culture looks like in an organization, it is important to understand its dimensions, where it comes from, and also what makes it stronger. After having an understanding of those, then it is easier to examine how organizational culture affects ethical decision-making and management.

Dimensions of Organizational Culture^[1]

To understand your own personality, it is sometimes helpful to talk about how much your personality has certain traits. Correspondingly, to understanding an organizational culture it is helpful to use a set of values that helps us identify, measure, and manage that culture more effectively. One framework that provides insight into the different types of organizational culture is the seven-dimension Organizational Culture Profile (OCP). The OCP is an instrument initially developed by consultants Charles A. O’Reilly III, Jennifer Chatman, and David F. Caldwell to assess person-organization fit. In theory, employees should have the same basic cultural assumptions and values as the company for which they work.

If I wanted to compare myself to say a friend in terms of our personalities, it would be helpful to look at a given trait, such as extroversion, and then, each of use could say how extroverted we feel that we are. Similarly, when we look at how much of the value a company we can better understand “the personality” of the organization and how it impacts its members. According to the OCP, every corporation can be described as one of the following.

Detail-oriented

Not surprisingly, detail-oriented companies are all about meticulous attention to details. These companies tend to be in customer-oriented industries in which such precision is valued. For example, Four Seasons hotels are dedicated to providing customers with exactly the service they prefer, and they keep records on each guest’s experiences, preferences, and expectations. Employees working for Four Seasons must have an eye for detail and thrive on keeping meticulous records.

On the other hand, organizations could have low or moderate detail orientation and still be effective because: (1) the industry does not demand detail, (2) their work is pioneering and some mistakes with details are to be expected, or (3) a focus on detail could prevent them from focusing on more important things. For example, in the arts industry for post-modern art, there is some attention to detail, but also artists generally see mistakes as “happy” mistakes or opportunities for their works to have uniqueness. Being too focused on detail could actually stifle the artist creative process.

Innovative

Individuals who want opportunities to invent new products or services should consider working for companies such as W.L. Gore and Associates, maker of GORE-TEX, or 3M. These companies not only encourage innovation but give employees company time to work on their own projects. This approach can result in a wide range of exciting new products developed by engineers or scientists working on their own. Companies who are highly innovative allow their employees opportunities to express their creativity and to pursue opportunities.

While that might sound exciting, some organizations cannot be highly innovative because by doing so they might interfere with their ability to do the work well. For example, we would not want our transit bus operator to try new ways to drive the bus or the person taking our blood to see if they can find veins in a new way. Innovation is important for a lot of companies, but for other companies, maintaining consistency on their goal is also very important.

Aggressive

Although some companies value cooperation, others value aggressive competition. Stratasys, a maker of 3D printers, has been willing to make enemies in order to survive and thrive. Stratasys expanded rapidly through growth, takeovers, and mergers to gain a dominant position in the 3D printer industry. Sometimes, Stratasys’ aggressive approach has gotten the company into legal battles—but the company has continued to perform well. Many companies encourage competitiveness in their employees by incentivizing them with sales bonuses or other performance measures.

Organizations that are low in aggression, or in other words put their emphasis on cooperativeness, often do so because it helps them be more effective in their work. For example, for a walk-in clinic medical practice, it would be counter-productive for the doctors to compete with each other, and if they competed, it could actually lead to worse patient outcomes. Having cooperativeness in these types of organizations is imperative for the organization to accomplish its purpose.

Outcome-oriented

Outcome-oriented businesses are all about results. At RE/MAX, for example, employees are trained to sell products, and they are evaluated on their sales performance. RE/MAX, short for “Real Estate Maximums,” is an American international real estate company that operates through a franchise system. The company has held the number-one market share in the United States and Canada since 1999. Companies that are very high in their outcome-oriented can be myopically focused on getting the outcomes. This can lead to taking short-cuts or even compromising ethics in order to achieve the outcomes.

Organizations, that are low in outcome orientation focus on the process as much, or even more than the outcomes. This is especially important when working with clients in vulnerable settings. For example, in a rehabilitation centre for people struggling with addictions, it is very important for the employees to focus on how they treat their clients and how they implement their work with the utmost ethical and humane standards. The number of people who successfully beat their addiction is not necessarily in their control, or their only goal.

There are also organizations that balance outcome orientation and process focus. These organizations would take good care of their clients and also want to achieve their outcomes. For instance, for a graphic design firm, it is just as important for them to listen and take time with their clients while preparing their design as it is for them to produce a good design. If a company were to produce a good design without good customer service, they could get a bad reputation.

Stable

Employees at a stable corporation know exactly who is in charge, who to report to, and what they are expected to accomplish. Kraft Foods, for example, is a very stable organization with a strong bureaucracy. Like most organizations that highly value stability, Kraft is not known for innovation or creativity. However, because Kraft has such a large share of the market, it does not have to worry about adapting and innovation as much. Their goal is have stability because it leads to efficiencies, which in turn lead to higher profit margins.

Companies in unstable environments in which they have a lot of competition and/or changes with the PESTEL factors need to change and adapt. Therefore, their organizational cultures need to be low to moderate in stability to ensure that their employees are flexible to deal with the changing circumstances around them and to innovate, which of course requires change (i.e., not keeping things stable).

People-oriented

If you work for a people-oriented corporation, you can expect the company to care about you. They value fairness and are supportive of individuals’ rights and dignity. Software company SAS is a good example of a people-oriented company that offers employees a wide range of individualized benefits, including on-site childcare. CEO Jim Goodnight’s philosophy is, “Treat employees like they make a difference, and they will.” The result: a loyal and dedicated workforce.

Organizations that are low in people-orientation are often so because they are more focused on outcomes than the people in the organizations. Many large manufacturing companies are much more focused on production rather than employees overall well-being. These companies will meet the safety requirements for the employees, but are not likely to go above those.

Team-oriented

Employees who like to collaborate and cooperate with team members do well in team-oriented companies. Whole Foods, for example, expects its employees to function as members of teams—and to support other members of the team when necessary. This creates strong, solid relationships within working groups.

For some companies, they focus on the individual’s performance and not the team’s performance or maybe do not even use teams. This can be because they encourage aggressiveness (see the trait information above) or the nature of the work is individual. As an example of something that is more individual work, a food manufacturer will have a few individual specialists who do the same job but work on different shifts. These individuals cannot work together given their varying shift, but also the work does not require them to do so. They only need to complete the set work for their shift. The same would be true for almost all positions in production in this company. So, team-orientation while valued by many employees is not always possible.

Conclusion on Cultural Dimensions

There is no one “best” type of corporate culture. How these cultural traits should be expressed in order to be effective depends a lot on the industry the company is in, its competitors practices, and the company’s need to compete against them, and the amount and type of change in the PESTEL factors.

It is also important to recognize that many organizations actually exhibit more than one culture. These are called subcultures. For example, the sales department may be high in aggressiveness and low in attention to detail, whereas marketing is more team-oriented, people-oriented, and less focused on detail.  Subcultures can also be different based on the geographic region of the company. For instance, the western Canadian region of a company may be more balanced in their outcome and people orientation than the eastern Canadian region’s workers.

This uniqueness in subcultures and the customized manner in which all companies express these traits allows there to be countless combinations of the traits, or countless types of organizational cultures. When thinking about how these dimensions relate to ethical decision-making and management, there are some traits that facilitate ethics more readily. These will be discussed in this chapter’s section, “Culture Factor – Ethical Nature of Organizational Culture.”

Strength of Organizational Culture

Before we talk about the reinforcers that make organizational cultures strong, it is important to recognize what a strong organizational culture actually is. A strong organizational culture is a culture that highly influences its organizational members to exhibit the culture’s traits. Whereas in an organization with a weak culture, the culture does not influence employees’ behaviour day-to-day as much as other factors, such as their individual preferences or structural variables. In companies with weak cultures, employees find it hard to describe their culture. In companies with strong cultures, almost all, if not all, employees could describe the culture and be able to talk about its influence.

Most of us have seen videos of Google employees going down a slide or Lululemon employees doing yoga together, and it is easy for us to see that they have a strong culture that influences their employees’ behaviour. While that makes a strong culture look fantastic, it is important for us to realize that not all strong cultures have those fun traits. In reality, there are organizations whose cultures are highly aggressive, outcomes-focused, attentive to detail, and not at all team-oriented.

The corporate law field, for example, is highly competitive. Consequently, many of the organizations in that field have very strong cultures that reinforce high amounts of competitiveness, devotion to results over process, attention to detail, and putting yourself above a team. These cultures, while not desirable for most, are quite strong and have a direct impact on their employees. An associate in an organization like this would not hesitate to cut out another associate to get ahead because they know if they do not, they may be looked over when it comes time for a promotion.

Thus, while we think of strong organizational cultures, it is important for us to remember that these cultures are not all rosy and cheerful. Rather, strong cultures are ones in which the culture create an environment in which the individual conforms to the culture. This brings up, then, what makes an organizational culture strong? This is discussed in the next section.

Reinforcers of Organizational Culture

The reinforcers of organizational culture are summarized in the figure below. Essentially, the more evident that these reinforcers are in the organizational culture, the stronger the organizational culture is. However, it is important to remember that the strength of an organizational culture is on a spectrum with very strong on one end and very weak on the other. In each of type of culture on that spectrum, it is likely that some of these reinforcers exist. So, while considering the reinforcers, we must consider how prevalent each one is and how many reinforcers in total there are.

Originator(s)

When looking at the originator, we are considering, “Is it clear from whom the organizational culture is coming?” If it is clear that a person and group of people are the underlying sources of the culture, then it is a good indicator that the organizational culture is strong, whereas if no one can be identified, it can indicate a weaker culture.

Originators can be any one or combination of the following.

• The company’s founder – The founder can be an originator when the core traits (e.g., OCP) are consistent with what the founder has established.
• Top management – The founder can be an originator when the core traits (e.g., OCP) are consistent with what the top management expects.
• The powerful – The powerful can be people not in leadership, but who have a lot of influence in the company (e.g., charasmatic leaders or leaders of office political groups). The powerful can the originator when the core traits (e.g., OCP) are consistent with what these powerful people want.
• The majority – If most people share the same ideals about what the culture should be, then the majority can be the originator.

If the originators are clear and their influence is apparent, then it is a good indicator of a strong culture. If they are somewhat clear and maybe vaguely apparent, then it is probably a moderate culture. If the culture has countless originators (or in other words, no clear originators), then it usually indicates a weaker culture.

Hiring

If the culture is so strong that the company uses it to differentiate between applicants when hiring, then it reinforces the organizational culture. Let’s look at an example of two applicants with similar educational backgrounds, but varying work experience and personal traits.

• Pam has 5 years of experience as an executive assistant, but does not exhibit the personal traits that seem to align with the organizational culture.
• Erin has only 4 years of experience, but her personality matches with the traits of the company culture.

A company with a strong organizational culture would most likely hire Erin over Pam. A company with a weaker culture would hire Pam. If a company is hiring based on whether or not the applicant fits with organizational culture, then they are reinforcing the culture by making sure the people they hire fit within it. Weaker cultures do not tend to consider organizational culture fit very highly in the selection process.

Performance Management

To reinforce their culture, strong cultures will evaluate employees performance based on the expected outcomes for their role and their fit within the organizational culture. Alternatively, weak cultures tend only to evaluate their employees based on the employee’s expected outcomes. To illustrate this, let us look at Company DM’s regional branch – SCR. The regional branch SCR has a strong culture, that has a low attention to detail, high people-orientation and stability, and a balance of outcome and process focus. In this company, we have two salespeople.

• Jim meets his sales quotas every month, but never exceeds expectations. Jim fits within the company culture and can even be seen as glue for his regional office.
• Dwight often wins the top sales award, but unfortunately, he rubs a lot of his co-workers the wrong way. He does not seem to fit within the company culture as well.

At SCR, the boss Michael wants to reinforce the company culture in order to make it stronger, the boss, Michael, would recognize Jim for his contributions to the morale and culture of the team, not penalizing him for his bare minimum sales. Michael, while commending Dwight for his sales, would also focus on providing feedback to Dwight about how to fit into the culture better. If Dwight were not to change his behaviour, there would likely be some kind of punishment involved. On the other hand, if Jim did not improve his sales, there would likely not be a punishment.

Now, if there are some of you reading identified the culture and references to the popular certain 2000s TV show, then please bear in mind that the branch on the show probably has a moderately strong culture (not a strong culture as in the example above). The TV show illustrates a moderately strong culture with a low attention to detail, high people-orientation and stability, and a balance of outcome and process focus, which is why the show is fun to watch.

Socialization

Socialization reinforces the culture by making the culture a part of the every day life of the organizational members. The most common manners in which to socialize employees are highlighted below with examples.

• Use of Internal Language – “In Disney, for example, employees are ‘cast members’ and ‘customers’ are ‘guests.'” (Ket de Vries, 2019, ¶ 5).
• Rituals or practices – Required cheers and chants for corportate events or rites of passage for new employees (¶ 6). For example, in some accounting firms, when prospective CPAs pass their multi-day exams, their tie is cut in half.
• Icons or symbols – Google using the simple font and colours for all of their corporate work, including their logo and many other materials they use.

While socialization can make a strong culture, there are some, like Ket de Vries, who highlight that it can go to far and become like a cult. In doing so, it adds stress and pressure to employees and limits their abilities to think for themselves. While socialization is not the only reason strong cultures can be detrimental, it is a key one.

Decisions

When making the decisions, employees in strong organizational cultures naturally consider the organizational culture in their decision-making. Meaning, they would not intentionally make a decision that contradicts or weakens the culture, but rather would endeavour to enhance the organizational culture through their decisions. Employees in weak or moderate cultures would not directly reference the organizational culture in their decision or weight it as highly in their consideration.

Goals and Plans

When making the goals and plans for the organizations, managers who want to reinforce the culture and make it strong will consider the organizational culture in their goals and plans. Meaning, they would not choose goals or plans that went against the culture, but would look to make goals and plans that enhanced the organizational culture. If reference to the organizational culture does not seem apparent in company’s goals and plans, then it is likely that the culture is not strong, perhaps even weak.

Culture Factors’ Affect on Ethical Decision-Making and Management

As seen in the PICS Framework below, there are four main areas in organizational culture that affect the likelihood of an employee acting ethically.

These factors while unique from one another, often influence one another. How each of them influence ethics and their inter-relatedness will be discussed in the next few sections.

Culture Factor – Ethical Nature of Organizational Culture

If the organizational culture has the following characteristics, it is more likely to be a culture that promotes ethical behaviour.

• Balanced focus between the process of achieving the outcomes and the outcomes itself
• Ability to innovate and adapt to new information and situations
• Promotion of the collective good more than the promotion of competition among employee

But these characteristics on their own are not enough. It is important that the organizational culture also represents the diversity of its employees and promotes inclusivity in the culture. While the three characteristics above promote ethical decision-making, if the organization were not to be inclusive, it would only promote ethical decision-making:

• As defined by the originator or group of originators (i.e., dominant group) and not a diversity of ideas and/or
• Easily for the people like the originators.

Therefore, it is important that we examine the culture to make sure it has inclusivity as its base so that these ethical traits have a strong foundation.

Culture Factor – Strength of Organizational Culture

If a culture is strong, it tends to have a greater influence on its employees (think: peer pressure). As it relates to ethical decision-making:

• Strong organizational cultures that do not support ethical processes are hard to oppose and will discourage employees from being ethical.
• Strong organizational cultures that promotes ethical decision-making will influence its employees, even the less individually ethical, to make ethical decisions.

A strong organizational culture can also be particularly detrimental if the culture only represents the originators or people like the originators. In this case, those who are different from the originators would find it hard to express their differences and might feel even less empowered to oppose the strong culture.

Culture Factor – Empowerment in the Organizational Culture

If the organizational culture empowers people from diverse backgrounds to contribute by building an inclusive environment, then all of its employees are more likely to choose ethical decisions. However, if it is not inclusive, it may hinder an individual’s ability or perception of his/her/their the ability to make ethical choices.

Culture Factor – Socialization of Ethics in the Organizational Culture

If the organization uses socialization and “walks the talk” about the ethical values and company values, then it encourages ethical behaviour in its employees. Unfortunately, some company cultures promote socialization that:

• Is only based on the originators and people like them, excluding people who are different from the originators from socialization opportunities.
• Is based on token inclusivity, meaning it says it wants to be inclusive, but in the socialization aspect actually excludes people different from the originators.

Therefore, it is of the utmost importance that managers ensure that the source or origin of the company culture is based on inclusivity.

How to Build a Culture that Promotes Ethical Decision-Making

The good news is that managers can directly impact the organizational culture as well as influencing it to develop in a manner that support ethical decision-making by:

• Supporting an ethical culture by emphasizing a/an:
  • Balanced focus between the process of achieving the outcomes and the outcomes itself
  • Ability to innovate and adapt to new information and situations
  • Promotion of the collective good more than the promotion of competition among employees
• Building a strong organizational culture by:
  • Having clear organizational culture values that are representative of the people in the organization,
  • Using organizational culture as a consideration when hiring someone,
  • Considering organizational culture as a factor in performance management,
  • Integrating organizational culture in the organizations goals and plans,
  • Facilitating the socialization of the values through activities such as building rhythms that support the culture, using common language, and promoting relational mentorship in the organizational culture.
• Actively working to decolonize and build inclusive work environment that promote the empowerment and participation from employees from diverse backgrounds.
• Ensuring that managers and employees are not expected to just know the values, but are expected to embody them; in particular, it is very important for managers to model the ethical cultural values.

So, while for Personal Factors and Issue Factors, managers have a more indirect influence; in organizational culture, they have the opportunity to cultivate a culture that supports ethics and social responsibility.

References

Ket de Vries, M.F.R. (2019). Is your corporate culture cultish? Harvard Business Review. Retrieved from: https://hbr.org/2019/05/is-your-corporate-culture-cultish

Watkins, M.D. (2013). What is organizational culture? And why should we care? Harvard Business Review. Retrieved from: https://hbr.org/2013/05/what-is-organizational-culture