Introduction to Organisational Culture – Elements | Features | Functions

Organisational culture refers to the collective values, beliefs, behaviors, and norms that define how things are done within an organization. It embodies the shared assumptions and expectations of members, influencing how they interact, make decisions, and solve problems. This culture is often expressed through rituals, language, practices, and symbols that help to unify members and give the organization a distinct identity. Effective organisational culture aligns with the organization's goals and strategies, shaping its approach to innovation, customer relations, and employee engagement, thereby playing a crucial role in its overall success and adaptability.

Tables of Contents 

1. Introduction
2. Features of Culture
3. Organisation Culture
4. Features of Organisation Culture
5. Factors Determining Organisation Culture
6. Functions of Organisation Culture
7. Levels of Organisation Culture
8. Elements of Organisation Culture
9. Transmission of Organisation Culture
10. Strong/Weak Cultures
11. Developing Organisation Culture
12. Maintaining Organisation Culture
13. Changing Organisation Culture
14. Types of Organisation Culture
15. Performance and Organisation Culture
16. Organisation Climate
17. Organisational Justice

Check out Taxmann's Organisational Behaviour which represents a comprehensive effort to understand the foundations of organisational behaviour and its practical implications. Its student-friendly presentation aims to equip readers with the necessary tools to analyse and apply behavioural concepts effectively in organisational settings.

1. Introduction

The word ‘culture’ comes from the latin word “colere”, which means to build on, to cultivate, to foster. Culture focuses on values and attributes of a given group, and individual acquisition of those values and attributes.

Culture is

“a shared behaviour which is important for us as it systematises the way people do things, thus, avoiding confusion and allowing co-operation so that groups of people can accomplish what no single individual could do alone”.

Culture has the following three layers:

1. The first layer, artifacts and products, is the most explicit of all layers including language and food, architecture, and style, etc.
2. The second inner layer is norms and values. Norms explain “what is right and wrong”. Values represent “what is good and bad”.
3. The third inner most layer represents the core assumptions of what life is about; how to handle everyday problems that have become self-evident.

Culture has great impact on thinking, language, non-verbal communication, values, behaviour, norms, rules, social groupings and relationships amongst people.

2. Features of Culture

• Culture is all-encompassing and integrated.
• It covers each of us and touches every aspect of our lives.
• It is systematic and integrated (it is not a random phenomenon).
• It teaches us to share core values that shape the personality of individuals within a culture.
• It is a ‘wardrobe of signs’.
• It is a whole way of life, a structure of feelings.
• It uses rituals and artifacts to sustain its concern.
• It is the process at work that lends continuity and meaning to lives.

3. Organisation Culture

Culture is

“that complex whole which includes knowledge, belief, art, morals, law, custom, and other capabilities and habits acquired by man as a member of society.”

Culture refers to how refined or civilised a group or organization is. When we talk about organization culture, we mean the set of values that shows what the organization believes in, how it operates, and what it considers important. It is the personality of the organization that sets it apart from others. The culture of an organization gives a sense of what it is like. It represents the common view that people in different parts of the organization share. They all see the culture in similar ways.

Organisational culture means that people in a group or organization see the same things as good or bad. They all have similar ideas about what is right or wrong. Individual people have their own values, which are their personal beliefs about what is important, groups in society have their values and organizations also have their own values. These values help them work well with their customers, suppliers, and other important people. When people in the organization and the organization itself have similar values and work together to achieve their goals, it creates corporate culture.

So, corporate culture is a shared set of values and beliefs that help both the organization and its members work together effectively to reach their goals.

Culture is a powerful force that affects how well the organization works and how successful it is in the long run. It is organisation’s unique personality and plays a big role in how it operates and succeeds.

“Organisation culture refers to a system of shared meaning held by members that distinguishes the organisation from other organisations.”

Companies with strong culture do better than those with a weak one. When a company has strong culture, it influences how motivated, well-behaved, and productive its employees are. Everyone agrees on what the company is all about, its goals, rules, values, and what it does. This makes people feel loyal and committed to the company

4. Features of Organisation Culture

1. Shared meaning: It represents common understanding and agreement amongst people in the organization. They all see things the same way because of what they’ve experienced and learned over time. These beliefs and understandings are not written anywhere; they are implied.
2. Values and norms: Everyone in the organization knows the values and norms as rules of the group. These values guide how, when and where people should act. People are proud to follow these guidelines.
3. Behavioural consistency: The culture makes sure that everyone behaves in a similar way. This helps reduce conflicts and tensions among the members.
4. Descriptive: It defines the personality of the organization. It represents how employees see the organization as its own unique institution.
5. Organisational philosophy: This defines the organization’s beliefs about how it should deal with customers, employees, and others.
6. Sense of belonging: The organization culture makes people feel as part of a team. There are clear rules that everyone must follow. They agree with organization’s plans, rules, and procedures, and see themselves as a valuable part of it. It creates a strong sense of belonging

5. Factors Determining Organisation Culture

1. Founder’s influence: The organization culture often begins with its founders. Whatever values and beliefs the founders hold tend to stick around for a long time. For instance, if the founders believe in treating employees fairly, this idea will stay with the organization.
2. Corporate success and shared experiences: When a company achieves success, it creates a strong culture around its name and how it operates. People share their experiences of success, which becomes a lasting part of the organization culture.
3. Innovation and risk-taking: Organizations with innovative and risk-taking employees tend to have a strong culture. These employees bring a sense of adventure and creativity to the organization.
4. Focus on outcomes: When managers prioritise results over specific methods to achieve those results, it strengthens the organization culture.
5. People and team orientation: Managers who consider how their decisions affect individual people and teams build a strong culture of care and teamwork.
6. Competitiveness: Organizations with competitive employees tend to have a stronger culture than those with easy-going or non-competitive employees. Competition drives a sense of determination and ambition.
7. Shared perceptions: If all members of the organization see its values and norms in the same way, it fosters a strong culture.
8. Market reputation: The organization culture is shaped by how it establishes its reputation in the market. Some companies are known for their quality, others for their affordability. Customers are willing to pay more for quality or make trade-offs for a lower price. For example, Apple products are known for their quality, and customers are willing to pay a premium for it.

6. Functions of Organisation Culture

Organization culture is the personality of a company, and helps in the following ways:

1. Uniqueness: It makes each organization different from others and gives it a special identity or brand.
2. Identity: It helps employees feel that they belong to the organization. They feel proud to be a part of it.
3. Commitment: It encourages everyone to work together towards the company’s goals. People put the company before their own interests.
4. Standards: It sets rules and expectations that everyone in the organization follows.
5. Control: It keeps everyone on the same path, so everyone works together.

Companies like Infosys, Airtel, Apple Inc. are known for their culture that makes them special in their products.

7. Levels of Organisation Culture

The levels refer to the degree to which the cultural phenomena are visible to the observer. Edgar Henry Schein identifies three distinct levels in organisational culture:

1. Artifacts and shared Behaviour: Artifacts are the visible parts of a culture, and they’re what people notice first. When employees look neat and follow the dress code, it gives a good impression of the organization, but if employees look shabby or don’t pay attention to customers, it can make the organization look bad.

Artifacts include the way the workplace looks, like the design, furniture, and cleanliness. This level consists of symbols in the form of words (jargon or slang), gestures, pictures, or other physical objects that carry meaning with the culture. They also cover how people dress, which can tell a lot about the workplace culture. For example, some workplaces have strict rules about how employees should dress, like wearing a uniform or dressing very professionally. Others are more relaxed, and employees can dress casually.

They make first impression on outsiders. Lazy, shabbily dressed, employees negatively affect the image of the organisation, and we tend to lose interest in such organization.

2. Espoused values: Espoused values are the rules and values that an organization believes in. They are officially stated as important in how they act and what they stand for. These values are shown through how members of the organization behave with each other and with people outside the organization. These values are found in documents like the mission statement, vision, and the organization goals. They are nicely displayed on posters at important places within the organization. They are the official beliefs and identity that the organization wants to show to the public.

For example, a mission statement explains why it exists and what it wants to achieve. It guides all the decisions the company makes, and is meant for shareholders, leaders, employees, and customers. It tells everyone what the company aims to achieve in the future.

A vision statement describes the company’s purpose and values and gives direction to how employees should behave. It is a source of inspiration for everyone in the company.

Both mission and vision statements help in looking at how the organisation is growing, its work environment, the people, and how it operates.

In professional organizations, employees at all levels usually share the same espoused values. If the values stated by leaders don’t match with what is happening in the organisation culture beneath the surface, it can lead to problems.

3. Assumptions: Assumptions are the hidden beliefs shared by everyone in the organisation. These beliefs are deep-rooted, and people don’t think about them consciously. They are the core of the organization culture.

These assumptions are so well ingrained in the way people work that they are seen in the actions of employees and management. They are the inner values of individuals and have a big impact on the organization.

For example, if employees are honest, dedicated, and willing to go the extra mile for the organization, it reflects positively on the culture but if employees refuse to work or there are instances of discrimination, it reflects negatively about the organization culture.

These behaviours and practices are not openly discussed but are understood in the organization. Thus, how people behave inside can really shape the culture of an organisation.

8. Elements of Organisation Culture

1. Paradigm: This is the big picture of what the organization is all about. It includes its mission and values, that explain what it stands for.
2. Control systems: These are the set of rules and processes that explain what is happening in the organization. In some cultures, there are lots of rules to follow, while in others, there is more freedom for individuals.
3. Organization structure: This shows who reports to whom and how work flows through the company.
4. Power structures: This tells us who holds the decision-making power in the organization, how widespread that power is, and what it is based on.
5. Symbols: Symbols are the signs and images that represent the organization. This includes logos and reserved parking spaces for important people.
6. Rituals and Routines: These are the regular meetings and reports that happen in the organization. Sometimes, they become habits because they’ve always been done like that in the past.
7. Stories and Myths: These are the tales and legends about people and events in the organization that tell what is important and valued within the company.

These elements can often overlap and influence each other. For example, power structures can depend on control systems, and rituals can create stories that shape the culture. All these elements together define what an organization is like.

9. Transmission of Organisation Culture

Organisation culture transmits in the following ways:

1. Stories: These stories help shape how employees behave by showing them what is expected in the organization culture. Stories about how an organization follows its values, rules, and practices create positive impression of its culture. These stories often describe real events and show how the organization does things. When we hear these success stories again and again, we start to connect them with how we should behave. For instance, if a company is known for being ethical, and there’s a story about an employee who got fired for being dishonest with customers, hearing this story repeatedly makes employees think about being ethical. They realise that if they act unethically, they might lose their job.

2. Symbols: Symbols send messages that words alone might not be able to express. For example, ‘V’ as a symbol, might mean that the company always wants to win and never give up. This symbol can represent qualities like hard work, honesty, and determination that employees should have.

Another company might use symbols like ‘currency’ to show that it is financially strong or ‘buildings’ to highlight its strong infrastructure. The symbols convey important ideas about the company’s values and strengths.

3. Language: Many organizations have their own special words and phrases that their members use. This language helps members feel connected to the organization culture. They learn these special words and use them to talk about customers, equipment, and suppliers.

Using this unique language brings members together and makes the organization culture stronger. For instance, they might say ‘V’ to refer to a very important client who needs special attention or use ‘hypo’ for a high-potential customer. These special words help them communicate efficiently and be part of a special group.

4. Rituals: Many companies have special traditions to celebrate their successes. For example, they often hold an annual event where they talk about all the great things they’ve achieved over the year. This event shows that they are determined, optimistic, and hardworking. It motivates employees by letting them know that good work is recognised and rewarded. These rituals create a positive and motivated atmosphere in the company.

5. Ceremonies: Companies share their culture through different ceremonies. For instance, an inauguration ceremony marks the launch of a new product or design. It’s a special event to show everyone something new and exciting.

10. Strong/Weak Cultures

A strong culture exists when employees follow the organisational values and beliefs. They align themselves with what the company stands for. A weak culture means that employees don’t actively follow the organisational values, and the company relies on lots of rules and bureaucracy to control things.

When a culture is strong, people do things because they genuinely believe it’s the right thing to do, but there’s a risk called “groupthink.” Groupthink happens when people in a close-knit group care more about agreeing with each other than coming up with new and innovative ideas. It can occur when there’s a powerful leader or when everyone in the group thinks the same way to avoid conflicts.

It is

“a quick and easy way to refer to a mode of thinking that people engage in when they are deeply involved in a cohesive group, when members’ strivings for unanimity override their motivation to realistically appraise alternative of action.”

People do not challenge organisational thinking and there are low innovative thoughts. There is heavy reliance on a central charismatic figure or a belief in avoidance of conflict. Groupthink is very common, it happens all the time, in almost every group. Members who are defiant are often turned down or seen as negative influence by rest of the group, because they bring conflicting ideas and disturb the central culture. In cultural studies, we often think that our own culture is the best, which can make groupthink even stronger. Stronger the culture, higher is the chance of groupthink.

11. Developing Organisation Culture

Organisation culture develops in response to two major challenges.

• External Adaptation and Survival: External Adaptation and Survival in organizations is about how they fit into the changing outside world. It includes these important things:

1. 1. Mission and Strategy: Figuring out why the organization exists and deciding on plans to achieve its mission.
   2. Goals: Setting specific targets that the organization aims to reach.
   3. Means: Deciding on the ways to reach those goals, like how the organization should be organized and how people should be rewarded.
   4. Measurement: Establishing ways to measure how well individuals and teams are doing in reaching their goals.

It is about making sure the organization can thrive and survive in a constantly changing
world.

• Internal Integration: Internal Integration in organizations is about keeping good relationships among its members. It involves the follwing:

1. 1. Language and Concepts: This means making sure everyone in the organization uses the same words and understands important ideas in the same way. It helps everyone think and communicate in a similar manner.
   2. Group and Team Boundaries: Deciding who should be part of different groups and teams in a way that encourages people to work together and think alike.
   3. Power and Status: Figuring out the rules for how people get, keep, and use power and status within the organization.
   4. Rewards and Punishments: Developing systems to reward good behaviour and discourage bad behaviour among the members of the organization.

It ensures that everyone in the organisation works together and understands how things should work inside.

Organisation culture emerges when members share knowledge and assumptions as they cope with external adaptation and internal integration. The customs and social norms of the country also shape culture of its organisations.

According to David Dreman, twelve key factors shape the culture of a company:

1. Influence of a dominant leader
2. Company history and tradition
3. Technology, products and services
4. The industry and its competition
5. Customers
6. Company expectations
7. Information and control systems
8. Legislation and company environment
9. Procedures and policies
10. Reward systems and measurements
11. Organisation and resources
12. Goals, values and beliefs

12. Maintaining Organisation Culture

Keeping the organization culture intact depends on how the organization operates. It can be done in the following ways:

1. Attention from managers and teams: One of the strongest ways to maintain culture is by making sure that managers, individual employees, and teams pay attention to it. This means focusing on the actions and behaviours that people notice and talk about. When certain things from managers are noticed and talked about, it sends a clear message about how people should behave, and employees tend to act in a comparable way. It involves setting a good example from the top and making sure everyone follows it.
2. Reaction to incidents and crises : How managers and employees respond to crises and incidents tells a lot about organization culture. It either strengthens the existing culture or introduces new values and norms that can alter the culture. Thus, how people in the organization manage tough situations shows what the organization is all about.
3. Role modelling, teaching and coaching : Managers and teams make sure that important cultural messages are included in training programmes and everyday coaching at work. They teach and remind employees about the values and behaviours that are important for the organization.
4. Rewards and status: Employees understand the culture by looking at how the organization rewards and punishes people. What gets rewarded and what gets punished shows what individuals, managers, and the organization consider important and valuable.
5. Recruitment, selection, promotion and removal: The culture of an organization can be upheld through its personnel policies. Decisions about who gets certain jobs, who receives promotions, and why, as well as who might leave through early retirement, all reflect various aspects of organization culture.
6. Rites, ceremonies and stories: Special events and traditions like rites, ceremonies, and rituals are significant in understanding organization culture. They often express the fundamental beliefs and values of that culture. They are shared by the organization to show and teach its culture to new members.

13. Changing Organisation Culture

Changing organization culture means the company wants to create a new image. It can use the same methods used to maintain the culture to make changes. However, it is not easy because understanding the current culture itself is not easy.

Many large organizations have more than one culture. They have diverse cultures in various global divisions, called sub-cultures.

Every organization typically has at least three cultures:

1. Operating Culture: This is how the regular employees who do the day-to-day work view the world.
2. Engineering Culture: This is the culture of the technical and professional people who focus on specialised tasks.
3. Executive Culture: This is the culture of the top managers who make important decisions.

These cultures come from different perspectives and beliefs of these groups of people.

Changing organisation culture takes a lot of effort, time, and skill. It needs a well-planned change programme to change the culture of an organisation.

Successfully changing organisation culture requires the following:

1. Understand the old culture: Before one can create a new culture, it’s crucial to understand the existing culture.
2. Set realistic goals: Make sure our goals for the new culture are achievable.
3. Provide support: Support employees and teams who have ideas for improving the culture and are willing to act on them.
4. Model the sub-culture: Find the most effective sub-culture within the organisation and use it as an example for others to learn.
5. Top-down changes: Implement changes starting from the top management, so that consistent messages are delivered from all leaders.
6. Include employees: Involve employees in the process because people tend to support what they help create.
7. Remove old reminders: Get rid of situations or things that remind employees of the old culture.
8. Support new norms: Help employees and teams do their jobs effectively with the new cultural norms.
9. Use vision as a guide: Treat the vision for the new culture as a guiding principle for change, not as a quick solution.
10. Patience: Recognise that significant changes take time. Culture does not change overnight.
11. Lead by example: Live the new culture because actions speak louder than words. People need to act in line with the new norms.
12. Diversity: Allow people from diverse cultural backgrounds to represent behaviours and attitudes that others should follow.

14. Types of Organisation Culture

Different organizations have unique cultures, shaped by their values, customs, and how people interact within them. These cultures can be better suited for different situations, and employees often have their preferences for the kind of culture they like. Corporate culture can be of the following types:

1. Bureaucratic Culture: In this type of culture, organizations value formal relationships, strict rules, set procedures, and a clear hierarchy. They want everything to be predictable, efficient, and stable. People in bureaucratic culture tend to follow formal behaviour and avoid informality.

Managers mainly focus on coordinating tasks, organizing things, and making sure everyone follows the rules. They ensure that each person’s responsibilities and authority are clearly defined. All the rules and processes are written in manuals, and employees are expected to follow them closely.

2. Clan Culture: In this culture, traditions, loyalty, personal commitment, and teamwork are highly valued. People believe in working together and supporting each other. They think of their organization as more than just a place to work; they feel a strong sense of duty to it.

People trust that the organization will treat them well, so they also feel responsible for doing their best for the organization. Loyalty is rewarded with job security.

Experienced members often act as mentors and role models for new members. This helps pass down the organisational value and customs to the next generation of employees. Clan culture members take pride in being part of the organization and feel a strong connection to it and its members.

3. Entrepreneurial Culture: In this culture, people are committed to trying out new things, being innovative, and showing leadership. They take risks, are dynamic, and come up with creative ideas. Individuals in this culture are encouraged to take the initiative, be flexible, and have the freedom to make decisions. They are not only encouraged but also well rewarded for their contributions. This culture values thinking outside the box and being bold in trying new approaches to achieve success.

It actively seeks to make changes happen. Being effective in an entrepreneurial culture means offering new and unique products or services and growing quickly.

4. Market Culture: In this type of corporate culture, the main focus is on setting clear and measurable goals, especially financial like sales, profitability, and market share. The organization is driven by a strong sense of competition and desire to make profits.

Relationship between individuals and the organization is based on clear agreement about what each expects from the other, and there is formal and stable system of control. Individuals are responsible for achieving certain levels of performance, and the organization promises specific rewards based on that performance. However, there’s no promise of job security, and individuals don’t commit long-term loyalty to the organization.

Interaction between managers and employees often involves negotiating agreements about performance and rewards or evaluating requests for resources. Since there is not strong sense of long-term commitment, there’s not much focus on building deep social relationships within the organization. People don’t have strong personal networks, and economic incentives are often tied to individual performance rather than teamwork.

15. Performance and Organisation Culture

Organisational culture affects how well a company works and how satisfied its employees are. If the culture does not keep up with changing needs of the people inside and outside the organization, it can affect its effectiveness.

Usually, culture and performance go hand in hand. When a company tries to change its culture, it aims to make the organization work better. Strong cultures have outstanding performance records as managers and employees share consistent values.

1. A strong organization culture helps everyone share the same basic assumptions. They all agree not just on what goals to pursue but also on how to achieve them. Everyone works together toward the same objectives. People are motivated, energetic, and there are fewer problems with coordination and control. Communication is fast, and resources are used efficiently, which leads to good performance.
2. A strong culture boosts motivation. People like being part of a strong culture because it helps them feel connected to the organization. Strong cultures include practices that make work more rewarding. These can involve employees having a say in decisions and various recognition programmes that make people feel valued.
3. A strong culture learns from past norms of behaviour, integrative rituals, ceremonies and well-known stories. They reinforce consensus on events based on past experience, provide precedents from history and decide how to meet new challenges, self -understanding and social cohesion

16. Organisation Climate

Organisational climate and organisational culture are different concepts in the workplace. They both create a working environment and motivate people, but they have some key differences:

1. Concept: Organization climate is about the current atmosphere within the organization. It focuses on giving employees opportunities to perform according to their skills and offers rewards. Organization culture is about the long-term atmosphere that has developed over years. It takes considerable time for an organization to build culture, whereas climate reflects shorter time periods and the current situation.

2. Evolution: Organization climate changes as the organization needs to adjust to its surroundings. It reflects how things are in the organization right now, showing the current atmosphere.

Organization culture develops over many years, gives the organization its unique reputation and character. Culture is the organization’s personality, as it reflects what the organization is all about.

3. Focus: Organization climate looks at how work is done based on the current values and norms in the organization. These values and norms are shaped by the organization culture. So, culture sets the stage for the climate, determining what is considered important and how things should be done in the workplace.

4. Manipulation: Organization climate is more flexible and can be adjusted to meet the organisational needs and adapt to employee behaviours. It can change when necessary to respond to the environment.

Organization culture is not easily changed. It takes years to develop the culture, so significant changes only happen when they are absolutely required. Culture is the organization’s deep-rooted personality, which is hard to alter quickly.

5. Perspective: Organization culture is the larger framework that shapes how an organization operates over long term. It is the organization’s identity.

Organization climate is a short-term view that focuses on day-to-day functioning of the organization. It’s about how employees experience the organization at a particular moment in time.

It reflects how employees feel about the organization right now, while organization culture represents how everyone, both inside and outside the organization, sees what the organization stands for.

17. Organisational Justice

Organisational justice is about how fairly an organization treats its people. This fairness can be related to three things: outcomes (rewards or punishments), procedures (how decisions are made), and how people interact with each other.