Organizational Culture has become very important in the last 25 years. Even though it is intangible in nature, it plays a role that is significant and affects employees and organizational operations. It may not guarantee success but companies with strong cultures have almost always, done better than their competition. What is organizational culture?Edgar Schein, a very well known scholar on the subject of organizational culture, defines organizational culture as: “The culture of a group can now be defined as: A pattern of shared basic assumptions that the group learned as it solved 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 1985, pg 373-374) To put it in slightly simpler language - As and when an organization evolves it is faced with 2 major problems: 1.Making the individuals who are part of this organization come together and work in friendly and productive environment i. e. integrating individuals. 2.
And ensuring survival by coping with the external environment. As these challenges are dealt with, a shared learning takes place within the organization; collective beliefs and values surface and start controlling the way the organization works. These collective beliefs and values are termed as “culture”. Why it is so important to have a strong Organizational Culture?Given the demands of the corporate world today, employees often end up spending more time at work than they do with their own families. Now when such a situation occurs the organization needs to understand that in order to maximize productivity and keep employees engaged in their work they need to offer more than just a great salary as the only incentive. This is where a strong culture helps, if the culture is such that the employees are offered more than just a monetary interest then productivity will increase multi fold.
For example: Hewlett Packard had to change its organizational culture as it was facing many problems.As part of this culture change employees had to put down 3 personal and 3 professional goals every year. They were also encouraged to cheer their fellow employees who met these targets. An example of these goals would be - to leaving work early to spend more time with family. Two years into this new program, Hewlett Packard reported no loss in productivity even though their employees were working shorter hours. Their staff retention rate also went up.
The above mentioned example not only tells about how organizational culture affecting productivity, but also how it affects staff retention.Another way in which a strong organizational culture affects organizations is Talent Attraction. An example to prove this point is the perks received by employees of google, or googlers as they are called. These perks include free gourmet all you can eat buffet meals, in-house laundry, a massage every other week.
Due to these perks google has become one of the most desirable employers; in fact it has been voted as the best company to work for in 2007 and 2008 by fortune magazine. It is no wonder then that they attract some of the most brilliant minds on the planet.In fact by designing perks such as free in-house laundry they also ensure that their employees don’t have to be worried about menial household tasks and can focus more on the office and work at hand, hence increasing their performance. Microsoft vs IBM The following example will prove beyond all doubt that organizational culture can be one of the most important means of improving organizational performance. This example shows how a firm with very little market share rose to dethrone the reigning giant of the industry with the help of a strong organizational culture.This is an example from the 1980’s.
At this point in time IBM had complete dominance in the market having a market share of 80%. Microsoft, at that time, was also a good company with revenues in tens of millions but they were much smaller than what they are today. Taking view of their position in the market IBM decided to invest large amounts of money and time in a new software system called the OS/2. This software system was supposed to take over the remainder of the market completely.
In fact there were complains that in view of this domination , innovation in the market would stop completely and IBM would establish a monopoly of sorts. 30 years from the incident, I think we can safely say that this did not happen. But why? With such a great market share(80%) and their own new software, How did IBM not manage to establish a monopoly? One big reason was Microsoft. They have managed to do what IBM was supposed to in the mid 1980s.
What happened was that the OS/2 was not half as good as it was promised to be. Bill Gates took advantage of this mistake made by IBM and took over the market.Due to their overconfidence IBM assumed that everything they were doing was right. Looking back the management at IBM focused completely on internal measures and internal goals and improving production.
They got so hung up on making programmers do more work in a day that the work became about quantity not quality and hence the product suffered massively. Meanwhile, Microsoft’s Organizational culture was not based on bureaucracy, but on getting things done. The aim was to create the best product they could and then make it even better and so on.The employees were actively part of the think tank and were treated as more than just assembly line workers whose sole job was to complete x number of lines of programming a day. They were encouraged to think out of the box, to invent.
Microsoft also aimed at making a product for the consumers not a product that focused solely on profit but also catered to consumer needs. And so we see today that the company that had a strong organizational culture did much better than a rigid overconfident company that had gotten trapped in its own bureaucracy, even though the latter had a much larger market share to begin with.
