IB Business and
Management
2.6 Organisational and
Corporate Culture (HL)
Corporate / Organisational Culture
Corporate culture is
defined as what is
‘normal’ in an
organisation
Simply…. ‘The way we do
things here’
Corporate culture is
based on the set of
values, beliefs and
attitudes of both
employees and
management
Why is culture important?
culture will impact on decision making and
behaviour within organisations.
• Culture can affect many aspects of the business:
• Flexibility
• Response to change
• Level of innovation
• Productivity
• Labour turnover
• Worker relations
Culture is often ingrained and can be very difficult
to change
Culture in the classroom…..
• Each class has its own culture.
Individuals will behave differently
depending on the class they are in
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Amount of work produced in class
Behaviour
Is homework completed?
Achievement at GCSE
• What factors affect this?
Task
• What affects the culture of an
organisation
• Think of as many things as you can
Johnson and Scholes - Cultural
Web
• The Cultural Web identifies six interrelated elements
that help to make up the "paradigm" – the pattern or
model – of the work environment.
• By analysing the factors in each, you can begin to
see the bigger picture of your culture: what is
working, what isn't working, and what needs to be
changed.
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Stories – The past events and people talked about inside and outside
the company. Who and what the company chooses to immortalize
says a great deal about what it values, and perceives as great
behaviour.
Rituals and Routines – The daily behavior and actions of people that
signal acceptable behavior. This determines what is expected to
happen in given situations, and what is valued by management.
Symbols – The visual representations of the company including logos,
how plush the offices are, and the formal or informal dress codes.
Organisational Structure - This includes both the structure defined by
the organisation chart, and the unwritten lines of power and
influence that indicate whose contributions are most valued.
Control Systems - The ways that the organisation is controlled. These
include financial systems, quality systems, and rewards (including the
way they are measured and distributed within the organisation.)
Power Structures - The pockets of real power in the company. This
may involve one or two key senior executives, a whole group of
executives, or even a department. The key is that these people have
the greatest amount of influence on decisions, operations, and
strategic direction.
Paul Hoang’s cultural N.O.R.M.S
Paul Hoang identifies 5 factors that
influence the culture in an organisation:
Nature of the Business
Organisation structure
Rewards
Management Styles
Sanctions
Nature of Business
• What the business does
• How old is the business
• What are the business
vision/mission/objectives
• How competitive is the
industry
Organisational structure
Tall vs flat structures
Degree of delegation
Degree of teamwork
Level of internal
promotion
• Level of skill of the
staff
• Young vs old workforce
• Level of staff
motivation
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Rewards
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Pay rates
Opportunities for promotion
Financial rewards
Non financial rewards
Management styles
• Charisma of leader
• Theory X vs Theory Y
• Autocratic Vs
Democratic Vs
Laissez Faire
• Level of monitoring
Sanctions
• What punishments are there?
• How rigid are these policies
Strength of Culture
• The strength of a culture is dependent
on how unified workers are
• Culture will be strongest when workers
share the same values and beliefs
• Businesses try to achieve a strong
corporate culture by trying to create a
common goal amongst workers
Benefits of a strong culture
Staff feel secure
Good working environment
Improved teamwork and motivation
Misunderstandings and mistakes are
reduced as staff all know the ‘way
things are done’
• Conflict is reduced
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Culture is likely to be strong
where:
• The business is well established as
cultures develop over time
• The business employs a homogeneous
workforce
• Vision and purpose are well
communicated
Theories on Culture
Charles Handy
Deal and Kennedy
Kotter and Heskett
Goffee and Jones
Geert Hofstede
Charles Handy - 1978
• An Irish author/philosopher whose work
focuses on organisational behaviour
• Argued that there is not one type of culture
that is best
• Different types of businesses need different
types of culture
• Identified 4 types of organisational culture:
• Power Cultures
• Role Cultures
• Task Cultures
• Person Cultures
Power Culture
• In an organisation with a
power culture a powerful
individual or small group
determines the dominant
culture.
• This is often found in small
companies where the founder
determines the way the
organisation operates, or in
larger companies that have a
charismatic leader.
Role Culture
• This tends to be found in
bureaucracies which are
governed by rules and
procedures rather than by
the values of particular
individuals
• Power, authority and
respect are obtained via a
person’s position in the
hierarchy
Task Culture
• The organisation’s values
are related to a job or
project.
• Focus is on results
• In this culture the
emphasis is on the group,
through team work and
adaptability
• Workers are empowered
Person Culture
• Managers and employees
support each others
personal development and
progress
• This tends to be found in the
professions where the
organisation exists as a
vehicle for people to develop
their own careers and
expertise; for example, in
accountancy and legal firms
Task
• Complete the work sheet – Types of
Culture
Task
• Look at the organisations on the sheet.
• What type of Handy’s cultures would
you expect them to have ?
Deal and Kennedy (1982)
• Deal and Kennedy categorise
corporate cultures based on 2
variables:
• Feedback and Reward
• Risk
Based on these variables they
suggested 4 types of
organisational culture:
• Tough guy-macho culture
• Work-hard, play-hard culture
• Bet-the-company culture
• Process culture
Feedback and Reward
• A major driver of people in companies
and hence their culture is the general
feedback and specific rewards that tell
them they are doing a good or bad job.
• If this feedback is immediate or shorterterm, it will quickly correct any ineffective
behavior and hence lead to a consistent
culture.
• If the feedback takes longer to arrive,
then can leave mistakes uncorrected
Risk
• Uncertainty and risk are something that some
people hate and some people thrive on.
• Where the risk is low, people may be willing to
take risks up to their acceptable limit.
• Where they are high, the risks need to be
managed or accepted.
• High risk companies are more likely to include
people who enjoy the frisson of taking a
gamble.
• These firms can be stressful to work in.
Work-hard, play-hard
culture
‘Fun and action are the rule here, and
employees take few risks, all with quick
feedback; to succeed, the culture
encourages them to maintain a high level
of relatively low-risk activity’
This has rapid feedback/reward and low
risk, leading to:
• Stress coming from quantity of work
rather than uncertainty.
• High-speed action leading to high-speed
recreation.
Tough-guy macho
culture
‘A world of individualists who regularly take high
risks and get quick feedback on whether their
actions were right or wrong’
• This has rapid feedback/reward and high risk,
leading to:
• Stress coming from high risk and potential
loss/gain of reward.
• Focus on the present rather than the longerterm future.
Bet-the-company
culture
‘Cultures with big-stakes decisions, where
years pass before employees know
whether decisions have paid off. A highrisk, slow-feedback environment’
• This has slow feedback/reward and high
risk, leading to:
• Stress coming from high risk and delay
before knowing if actions have paid off.
• The long view is taken, but then much
work is put into making sure things
happen as planned.
Process culture
• A world of little or no feedback where employees find it
hard to measure what they do; instead they concentrate
on how it’s done. We have another name for this culture
when the processes get out of control – bureaucracy!
• This has slow feedback/reward and low risk, leading to:
• Low stress, plodding work, comfort and security. Stress
may come from internal politics and stupidity of the
system.
• Development of bureaucracies and other ways of
maintaining the status quo.
• Focus on security of the past and of the future.
Task
• Look again at the sheet of
organisations.
• Which of the cultures identified by
Deal and Kennedy are they likely to
have?
Kotter and Heskett (1992)
• Wrote a book entitled ‘Corporate Culture
and Performance’
• Suggested that there are 2 types of
culture
• Adaptive cultures – Receptive to change
and risk and new ideas encouraged. No
blame culture
• Inert cultures – Resistant to change.
Reactive rather than proactive in
responding to changes within the market
Task
• Look again at the sheet of
organisations.
• Which of these companies are more
likely to be Inert and which ones do
you think are Adaptive?
Goffee and Jones
Argued that the ideal culture involves high solidarity and high sociability
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Solidarity
Solidarity is the degree to which people think together in the same
ways, sharing tasks and mutual interests.
The main driving force in decisions is logic.
Positive solidarity gets the job done efficiently and effectively.
Negative solidarity does not care for other people and can have
high levels of internal conflict or inefficient self-interest.
Sociability
Sociability comes from mutual esteem and concern for ones
colleagues.
The main driving force in decisions is emotion and social concern.
High sociability is people-based, low sociability has a greater task
focus.
Positive sociability is people helping one another to succeed.
Negative sociability is covering up for other people and tolerating
poor performance in the name of friendship or ‘saving face’.
Geert Hofstede
• An expert on culture
• Did research on both
international cultures as well as
corporate cultures and found 5
dimensions of culture:
• Power Distance
• Individualism vs Collectivism
• Masculinity vs Femininity
• Uncertainty avoidance
• Long Term vs Short term
orientation
Task – Where do you think these
national cultures would fit?
Hofstede’s findings
• When Hofstede looked at how societies scored on these
dimensions he found four major clusters within Europe:
• A Germanic group (Germany, Austria, Switzerland), tending
towards high masculinity and low power distance.
• A mainly Scandinavian group (Sweden, Finland, Norway,
Denmark but also the Netherlands) tending towards high
individualism, low masculinity and low power distance.
• An Anglo-Saxon group (Britain and Ireland) with high
individualism and masculinity and low power distance and
uncertainty avoidance.
• A mainly Latin group (France, Spain, Italy, Portugal, Greece,
but also Belgium) with high uncertainty avoidance and high
power distance.
• By comparison outside Europe, Japan scored highly on
masculinity and uncertainty avoidance, while the USA scored
highly on individualism but low on uncertainty avoidance.
Task - Research
• Research the corporate culture at the
following companies:
• Nokia
• Walmart
• Innocent Drinks
• Outline the corporate culture
• What factors do you think have contributed to
this corporate culture
• Is the corporate culture positive/negative
• How does the culture fit into Charles Handy’s
4 types of culture….. Explain your answer