Unit-5

Organizational culture and effectiveness

Introduction:
Organizational culture works a lot like this. Every company has its own unique
personality, just like people do. The unique personality of an organization is referred to as its
culture. In groups of people who work together, organizational culture is an invisible but
powerful force that influences the behavior of the members of that group.

Defining Organizational Culture:

 Organizational culture encompasses values and behaviors that "contribute to the

unique social and psychological environment of an organization."

 According to Needle (2004), organizational culture represents the collective values,

beliefs and principles of organizational members and is a product of such factors as
history, product, market, technology, and strategy, type of employees, management
style, and national culture. Culture includes the organization's vision, values, norms,
systems, symbols, language, assumptions, beliefs, and habits.

 Ravasi and Schultz (2006) wrote that organizational culture is a set of shared
assumptions that guide what happens in organizations by defining appropriate behavior
for various situations. It is also the pattern of such collective behaviors and assumptions
that are taught to new organizational members as a way of perceiving and, even,
thinking and feeling.

Thus, organizational culture affects the way people and groups interact with each other,
with clients, and with stakeholders. In addition, organizational culture may affect how much
employees identify with an organization.

 Organizational culture is the pattern of shared basic assumptions—invented,

discovered, or developed by a given group as it learns to cope with its problems of
external adaptation and internal integration—that has worked well enough to be
considered valid and, therefore, to be taught to new members as the correct way to
perceive, think, and feel in relation to those problems (Schein 1985a).

 Organizational culture is a system of shared assumptions, values, and beliefs, which

governs how people behave in organizations. These shared values have a strong
influence on the people in the organization and dictate how they dress, act, and
perform their jobs. Every organization develops and maintains a unique culture, which
provides guidelines and boundaries for the behavior of the members of the
organization. Let's explore what elements make up an Organization’s culture.

MBA I SEMETER 1
Organizational culture is composed of seven characteristics that range in priority from high to
low. Every organization has a distinct value for each of these characteristics, which, when
combined, defines the organization's unique culture. Members of organizations make
judgments on the value their organization places on these characteristics, and then adjust their
behavior to match this perceived set of values. Let's examine each of these seven
characteristics.

Characteristics of Organizational Culture

The five characteristics of organizational culture are:
1. Innovation (Risk Orientation) - Companies with cultures that place a high value on
innovation encourage their employees to take risks and innovate in the performance of
their jobs. Companies with cultures that place a low value on innovation expect their
employees to do their jobs the same way that they have been trained to do them,
without looking for ways to improve their performance.

2. Attention to Detail (Precision Orientation) - This characteristic of organizational culture

dictates the degree to which employees are expected to be accurate in their work. A
culture that places a high value on attention to detail expects their employees to
perform their work with precision. A culture that places a low value on this
characteristic does not.

3. Emphasis on Outcome (Achievement Orientation) - Companies that focus on results,

but not on how the results are achieved, place a high emphasis on this value of
organizational culture. A company that instructs its sales force to do whatever it takes to
get sales orders has a culture that places a high value on the emphasis on outcome
characteristic.

4. Emphasis on People (Fairness Orientation) - Companies that place a high value on this
characteristic of organizational culture place a great deal of importance on how their

MBA I SEMETER 2
 decisions will affect the people in their organizations. For these companies, it is
important to treat their employees with respect and dignity.

5. Teamwork (Collaboration Orientation) - Companies that organize work activities

around teams instead of individuals place a high value on this characteristic of
organizational culture. People who work for these types of companies tend to have a
positive relationship with their coworkers and managers.

The three levels of organizational culture

Because it’s pervasive, and also subterranean, Schein suggests there are, in fact, 3 levels on
which organizational culture makes its presence felt:

 Typical organizational Behaviors form the most observable level of culture, and consist
of behavior patterns and outward manifestations of culture, such as perks provided to
executives, dress codes, the level of technology utilized (and where it is utilized), and the
physical layout of work spaces. Some notable characteristic behaviors may have considerable
longevity – such as rites, ceremonies, organizational myths, and “shop talk.”
 Values underlie and, to a large extent, determine behavior, but they are not directly
observable (as behaviors are). There may be a difference between stated and operating values
(the values the organization espouses, and those that are actually “in use”). Organizational
values are frequently expressed through norms–characteristic attitudes and accepted behaviors
that might be called “the unwritten rules of the road”–and every employee quickly picks them
up.
 To really understand culture, we have to get to the deepest level: the level
of Fundamental Assumptions. An organization’s underlying assumptions grow out of values,
until they become taken for granted and drop out of awareness.

Creating and Maintaining Organizational Culture:

MBA I SEMETER 3
6 Steps for Creating a Strong Company Culture:
1. Transparency.
2. Time to disconnect.
3. Empowerment and a sense of freedom.
4. Physical space.
5. Talking to customers and employees.
6. Your organizational design.

Organizational Effectiveness

Concept of Organizational Effectiveness:

Organizational effectiveness is the concept of how effective an organization is in

achieving the outcomes the organization intends to produce. Organizational
Effectiveness groups in organizations directly concern themselves with several key areas. They
are talent management, leadership development, organization design and structure, design of
measurements and scorecards, implementation of change and transformation, deploying smart
processes and smart technology to manage the firms' human capital and the formulation of the
broader Human Resources agenda.

If an organization has practices and programs in the areas above, the OE group does
many or all of the following roles.
- Examines alignment between the areas and improves them
- Improves trade-offs between reliability, speed and quality in the above areas
- Strategizes for higher adoption rates in these areas
- Facilitates/initiates/catalyses capability building: structure, process and people

Rapid advances in social sciences and technology aided by clever experimentation and
observation is bringing several truths to the light of society. There are several disciplines of
social sciences that help the OE Practitioner be successful.

Four of them, are outlined below

–Decision Making - Ways in which real people make decisions, enabling them real time to make
good decisions, improving quality of decisions by leveraging adjacent disciplines ( for example-
Behavioral economics) and replicating relevant experiments, creating new ones and
implementing their results to make organizations effective

–Change & Learning – Ways in which real people learn, change, adopt and align, get “affected”
by dynamics in the environment and leveraging this knowledge to create effective organizations
that are pioneers of change and learning

MBA I SEMETER 4
–Group Effectiveness – Ways in which real people work well together, especially in bringing
new ideas and innovation, working of people to people protocols, impact of digitization and
virtualization in organizations on these protocols

–Self-Organizing & Adaptive Systems– Ways in which self-organizing systems and highly
networked systems work, learning from them and the tangible ways by which they can be put
to play to make organizations more effective

Definition
The efficiency with which an association is able to meet its objectives. The main measure of
organizational effectiveness for a business will generally be expressed in terms of how well
its net profitability compares with its target profitability. Additional measures might include
growth data and the results of customer satisfaction surveys.

Highly effective organizations exhibit strengths across five areas: leadership, decision making
and structure, people, work processes and systems, and culture. The research and ideas shared
here explore these areas in depth, providing useful resources for leaders looking to improve the
effectiveness of their organizations.

Determining Criteria of Effectiveness

There are many ways to measure the effectiveness of an organization. Campbell (1977) lists
over 30 different criteria from productivity, profits, growth, turnover, stability and cohesion.
Different theoretical perspectives can account for the diversity in usage of effectiveness
measurements.

Rational perspectives emphasize goal attainment and focus on output variables such as quality,

MBA I SEMETER 5
productivity, and efficiency. Natural system perspectives focus on the support goals of the
organization such as participant satisfaction, morale, interpersonal skills, etc. Open system
perspectives focus on the exchanges with the environment -- this includes information
processing, profitability, flexibility, and adaptability.

Effectiveness criteria also vary with time, and often subgroups have different effectiveness
criteria. Also often there are different evaluation criteria applied by those who assign tasks and
those who evaluate performance Often effectiveness criteria involve self-interest, are stated as
universalistic and objective, and cause conflict and disagreement among subgroups.

Market and Non-market Organizations

Many people emphasize the difference between market and non-market organizations .The
traditional view is that in properly functioning markets, effectiveness can be readily measured
in the marketplace and are directly influenced by customer satisfaction. Fligstein (1990) argues
however those markets, like all structures, are socially constructed and vary over time and
space, so that conceptions of efficiency or effectiveness also vary.

Public organizations often operate in non-market conditions. Often this means that there is no
direct link between the services an organization provides and the income it gets for providing
those. Controls over these organizations emphasize control over process than over outcome.
While there have been attempts to evaluate government agencies, it proves very difficult, and
there continues to be rising discontent with the performance and responsiveness of public
agencies. Many of these services have been "privatized" and contracted out to independent
businesses.

High Reliability Organizations

Complex organizations that require a high level of reliability are vulnerable to "normal
accidents" (Perrow, 1984), inevitable failures due to the overly complicated and tight control
mechanisms in some organizations.

MBA I SEMETER 6