The Role and Importance of Organization Culture - Essay Example

Running Head: THE ROLE AND IMPORTANCE OF ORGANIZATION CULTURE THE ROLE AND IMPORTANCE OF ORGANIZATIONAL CULTURE WITHIN COMPANIES OF THE 21ST CENTURY (Authors’ Name) ___________________ University THE ROLE AND IMPORTANCE OF ORGANIZATIONAL CULTURE WITHIN COMPANIES OF THE 21ST CENTURY From local retailing to corporations, organizations are now expanding very fast. Long gone are the organizations that have the perspective of “Radical-Marxism” where most of the managers or leaders of the organization makes decisions based on retaining their power by remaining in the capitalist class, keeping power and resources for themselves1. Managers who refuse to create legacy or disseminate and distribute their authority are usually receptive to change and are usually left behind. Now, most of management strategies of many businesses, in consideration with “Multiple Perspective” of the organization, practice the “Radical-Contingency” perspective where its direction and goal is geared towards efficiency of its processes and maintenance of the organizational status quo2. These are because most companies nowadays are not only involved in local transactions but businesses now require cross-country activities. And this is made possible by the continuing development in communication and information technology, which has brought geographically, dispersed individuals and groups into closer contact3. These mean that many of the employees or workforce must have contact with those involved in international business – either with the producers of goods and services required or with the customers. In fact, the very reason that many of call centers sprouted all over the world is because of this new direction of most businesses, which is globalization. Meaning, the market is global and multinational companies ‘must operate in a multicultural setting’4. Some place their business on countries who offered lower labor cost and some is for geographical reasons. For example, Ray Kroc, the founder of McDonald’s shared among students of MBA that his business is not the hamburger business but real state because in his business plan, Kroc knew that he should never lost sight of the location of each franchise he sells. He knew that the real estate and its location was the most significant factor in the success of each franchise5. Thus, with franchises distributed around the world, customers may have different preference for the taste of their burgers. With businesses crossing the boundaries of their lands, managements must learn how they could cope with the differences in culture and unify the direction of the organization and its workforce. If managers wish to meet the direction of the company, this complex situation serves as a challenge for managers. New forms of organizing (NFO) are now being introduced to cope with a world that is fast-changing, increasing multinational, multicultural and dynamic6. Long-ranged planning of five to ten years and traditional corporate structures with vertical management flow (in terms of decision-making) are now being replaced with more active global strategies operating on short time forecast through more flexible, and less formal organizational structures. A good example of a company who had undergone rapid changes and new form of organizing (horizontal management) to meet corporate objective is that of the case of Fremap using the lens of Human Resource Perspective. The new management structure from centralized and bureaucratic organization to decentralized structure were made possible by the activities spearheaded by the HR management team from the headquarter (HQ) of Fremap7. The change being introduced to the said organization was when they changed the cross-functional departments (various department performing specific task) in serving their client to putting all responsibilities and clerical or administrative task under one person with the title of ‘integral agent’. The personnel of Fremap can perform several functions but is still aligned to the company’s direction or company culture. And accordingly, the corporate culture is the driving force behind the firm’s organizational innovations. Fremap’s common aim, which is cascaded among all its branches are to reshape the organization and processes to achieve its corporate goals (i.e. efficiency) more effectively. And as it seems, HRM were effective in implementing ‘high-performance practices’ among it’s employees and resulted to enhanced intensive professional development. They made it possible by HRM having the sole responsibility in selecting new employees for different territorial branches based on the acceptance of the corporate culture or belief, and not on experiences. In a sense, the profiles, qualifications and orientation of employees became standardized. They groomed integral agents through stringent trainings and rallied for the support of old employees to streamline the procedures on territorial branches of Fremap by giving them intensive training, and uplifting their morale with professional development and upgrade of skills and positions. Also, they clearly showed that with the new procedure, they will definitely embody the mission of the company to provide quality service to their customers. If we would look at the case cited above, corporate culture or organizational culture played a strong role in the development and mobilization of an organization and maintaining its direction by practicing same corporate beliefs enforced by HRM among all its employees. It is easy for organizations to initiate change for improvement if the culture of the company fosters development and consistently supports effectiveness. Even companies who practices Total Quality Management (TQM) requires that the culture introduced in the organization must be consistent8. TQM means a point that the quality of everything in the business is of importance. The implications of the word total applies to the quality of the strategic thinking exhibited by the executives, to the quality of the firm’s ethics, to the quality of training, to the quality of technology management, and even to the quality of communication. In TQM, the direction of the company is affected by how the entirety of the organization views their mission and direction. Accordingly, organizations that have no sense of mission and purpose, that are not values-driven will not generally be able to construct a vision of their future. Vision-mission is an integral part of an organization’s culture. Thus, we may say that the culture of an organization does not only unify but provides direction. To pave another point of a theory of comparative organizational behavior, let us look at how managers of organizations develop strategies in a global perspective. Culture influences managers’ strategic choices and strategic operations. In the conception of management strategy, the think-tanks must scan the environment for available information, selecting relevant data and interpreting it, building a prototype and implementing it. Schneider stressed that ‘assessments of the environment and the organization are not necessarily “objective” but are a function of perceptions and interpretations which will, in turn affect strategic behavior’9. This is how Shelley Lazaruz dealt with the situation in Ogilvy & Mather Advertizing when she took over the dwindling case of the said company. As she remarked about the founder of the firm, she quoted “He had very clear ideas on how to build and run an organization. It was all based on valuing the individual. A company is only as good as the people it can attract and keep. Everything else flows from that, so create an environment to make those people as successful as they can be.”10 Ogilvy & Mather Advertizing in New York was the largest profit contributor to Ogilvy network, which markets hair-care products. A hostile takeover at Ogilvy had caused cost-cutting throughout the company and mass resignation of its talent, resulting to continuous loss of clients. When Lazarus took over Ogilvy as president, the situation of the company was similar to a sinking ship where clients are leaving everyday and staff are on their feet having their resumes ready for the street because morale was so low. What Lazarus did was she identified the problem within the organization that seems overwhelming, divided it into challenges that are doable to an individual, and created small successes to restore the morale of Ogilvy’s people and made them feel good about said successes. Lazarus approach to creating a culture of belief and trust to individual capabilities rooted from her own values of being brave and this rallied the people of Ogilvy to follow in her stead. As Maxwell putted it in his book ‘The 21 Indispensable Qualities of A Leader’, people in the organization follows leaders whom they believe in and trust. Followers do not trust leaders whose character they know to be flawed, and they will not continue following them11. And this is apparently true for Lazarus. She first believed that the company can overcome its hurdles and showed it to her people and so they followed her. Deducting from the experience of Ogilvy and similar industries, we may say that culture of an organization emanates from the values of the leaders or from members of the management. And leaders’ character and formed culture of an organization is a strong determinant of its success. According to an article review of how businesses or organizations last, the BTL (Built-to-Last) concepts that apply to multinational or global companies transcend through many and different cultures within one organization. Accordingly, the truly reliable source of stability is a strong inner core and the willingness to change and adapt everything – except the core12. The significance of core values from practices and strategies is critical in maintaining the sense of the company’s social mission while undergoing and adapting to dramatic changes, in addition to increasing competitiveness within its people and operations. This implies facilitating continuous changes without losing sight of the core ideals. And many of the companies in this century acknowledge the strong impact of culture to the success of the company. Culture proves to be a critical component in understanding the process of planned change and transformation in colleges and universities today13. The importance of culture is clearly seen during implementation of institutional change or transformation. Transformation, according to Eckel, Hill & Green (1998) is a planned change and organizational culture is one of four primary elements of said change. They state that institutional transformation: "1) alters the culture of the institution by changing select underlying assumptions and institutional behaviors, processes, and products; 2) is deep and pervasive, affecting the whole institution; 3) is intentional; and 4) occurs over time.”14 An organizations culture as defined earlier, involves all of the assumptions, beliefs, and values that its members share and is reflected through "what is done, how it is done, and who is doing it"15. However, some does not fully understood its bearing to the decisions made by the management, on the strategies employed to meet the goal of the organization and the behaviors of the members within the organization until external factors presented disturbing issues that affects the performance of the organization. Thus, in introducing change, it is critical to consider and let the people understand the culture of the organization and the behaviors common among its members. Farmer (1990) stated that "failure to understand the way in which an organizations culture will interact with various contemplated change strategies thus may mean the failure of the strategies themselves". Some companies and organizations exerting effort to change company systems for improvement reveal that organizational culture can be a facilitating factor or it can inhibit development, depending on the fit between existing culture and the proposed change. To ensure effectiveness of change and to minimize resistance, management must have an extensive review of the existing organizational culture, check reception of members to introduced change, level-off with employees or members as to the reasons why change is being implemented and let them see its effect and impact to the organization if done properly. If change is still not yet supported by its members, then culture of the company might be against the introduced change or vise versa. In this instance an organization may either revisit their Mission-Vision to check its applicability to the current problem faced by the organization. Or change might be working against the Mission-Vision of the organization. To check its applicability, management or initiator of change must consider the institutional leadership, resource allocation, institutional structure, the flow of decision-making, and ties to external organizations. This way, an understanding of the organizational culture will be generated. It would be better if the initiator of change has an experience of the organizations’ culture or an immersion will come in handy. Some management style is that they employ a consultant who is not an integral part of the organization for an objective observation and to eliminate bias. Whatever approaches the management would employ, in introducing transformation or change, organizational culture is an integral part of the process. Work Cited Daft, Richard L. (1992) ‘Organization Theory and Design’, Singapore: West Publishing Co., pp. 21-22 2 Gioia, Dennis A. & Pitre, Evelyn (1990) ‘Multiparadigm Perspective on Theory Building’, in Academy of Management Review 15, pp.584-602. 3 Allen, T. J. and Hauptman, O. (1990) ‘The substitution of communication technologies for organizational structure in research and development’, in J. Fulk and C.W. Steinfield (eds) Organizations and Communication Technology, Newbury Park, CA: Sage. 4 Rao, A. and Schmidt, S.M. (1995) ‘Intercultural influence: an Asian perspective’, Advances in International Comparative Management 10:79-98. 5 Kroc, Ray (1974) in Kiyosaki, Robert T. and Lechter, Sharon L. (2001) Rich Dad Poor Dad, U.S.A.: Warner Books. 6 Cray, David & Mallory, Geoffrey R. (1998) ‘Making Sense of Managing Culture’ London, UK:International Thomson Publishing 7 Quintanilla, Javier & Sanchez-Runde, Carlos J. (2000), New Forms of Organizing through Human Resource Management: The Case of Fremap. The Innovating Organization. Pettigrew A., Fenton E., London: Sage. 8 Barett, Derm (1994) ‘Fast Focus on TQM’ Productivity Press, Inc., Portland OR 97213-0390. 9 Schneider, S.C. (1989) ‘Strategy formulation: the impact of national culture’, Organizational Studies 10:149 – 68. 10 Bartiromo, Maria (2006), “Money Makers” in Readers’ Digest, November 2006 Ed., Singapore 914010, Readers’ Digest Asia. 1 Maxwell, John C. (1999), ‘The 21 Indispensable Qualities of A Leader: Becoming the Person Others Will Want to Follow’, Nashville, Tennessee: Thomas Nelson Publishers. 2 Collins, James C. & Porras, Jerry I. (2004) ‘Built to Last’ in PMAP Newsletter Ed. July 2004, Philippines: Personnel Management Association of the Philippines. 3 Keup, Jennifer R. - Walker, Arianne A. - Astin, Helen S. - Lindholm, Jennifer A. (2001), ‘Organizational Culture and Institutional Transformation’, ERIC Digest. Retrieved on November 5, 2006 at http://www.ericdigests.org/2003-1/culture.htm. 4 Eckel, P., Hill, B. & Green, M. (1998). ‘On change: En route to transformation’, Washington, D.C.: American Council on Education, An occasional paper series of the ACE project on leadership and institutional transformation. 5 Farmer, D.W. (1990) ‘Strategies for change. In D.W. Steeples (Ed.), Managing change in higher education (pp. 7-18). New directions for higher education, Vol. 71. San Francisco: Jossey-Bass Publishers. Read More