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An Overview of Organizational Culture and Organizational Change*
Dr.T.S.Devaraja Associate Professor & Head Department of Commerce
University of Mysore, Hassan-573220, Karnataka State, India.
Tel: Mobile: +91-98807-61877 : +91 – 8172-65100
Fax: +91-8172-240674 Web: http://devaraja.me
Email: [email protected]
Venugopal
Research Scholar, Department of Commerce
Post Graduate Centre University of Mysore
Hassan, India
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This research report has been a part of the ongoing research study carried out by the authors
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An Overview of Organizational Culture and Organizational Change
This Version – May 2012
Abstract
Culture influences people in good and bad ways. Culture creates the identity for
the organization itself. Vendors, customers, employees and other external agencies
factor in the organization culture of these organizations when they make their business.
To observe the culture of an organization, one has to study the visible signals and
symbols along with invisible values, attitudes etc. This has a percolating effect in the
organization and gets carried out to the lowest rung of the organization. Just as an
individual is known through his / her personality, organizational culture is the personality
of the organization. Corporate culture which is synonymously same as organizational
culture which can be looked at as a system with input, output and through put with a
feedback arrangement. The specific collection of values and norms that are shared by
people and groups in an organization and that control the way they interact with each
other and with stakeholders outside the organization. The identification of competencies
also allows the organization to focus on its new markets and the organizational changes
require serving these markets. Many organizations are re-designed or restructured, on
the assumption that this is all that is needed to achieve major change. If the
organization has a dysfunctional culture, and the culture is left unchecked members will
simply continue to act as they had under the old structure, regardless of their new
responsibilities and response requirements.
Keywords: Organizational Culture, Cultural Changes, Identity, values, attitudes, Vendors, customers, employees
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1. Introduction
The existence and emergence of organizations is not a new phenomenon. But the
study of organization is relatively of recent origin. Any study on Organization and its
manifestation should necessarily start with Fayol, Taylor and Bernard. Organizations are
made of members who bring in their emotions, egos and complex personalities.
Organization culture is the sum of all these personalities, which creates a common
ideology or identity for the organization. Some aspects of organization culture get
created along the way, while most aspects are evolved by the founders and leaders of
the organization stated in simple terms organizational culture is the culture that exists in
an organization.
In the modern days, it is highly necessary to understand organization culture, for
various reasons – some of which are purely academic and others for the benefit of
organizations themselves. Culture influences people in good and bad ways. Culture
creates the identity for the organization itself. Vendors, customers, employees and other
external agencies factor in the organization culture of these organizations when they
make their business decisions. Organization culture also helps the company to relate to
these external entities. It helps the company to gear up for ever increasing competition.
Potential business partners study the organization culture before making any strategic
moves. Even valuation of business is influenced by the organization culture, as can be
seen in mergers, acquisitions and takeovers.
Organization culture is the confluence of various ideologies (brought by all its
participants), beliefs, languages, customs and these collectively form guidelines for
conformed behavior. All implicit and explicit behaviors form the foundation for
organization culture. To observe the culture of an organization, one has to study the
visible signals and symbols along with invisible values, attitudes etc. For instance, do
most people of the organization belong to a particular section of the society? What are
the merits and awards instituted in the company? What is the value system that is
strongly carried out by members of the organization? What are the guiding principals for
the organization and answers to such questions generally describe the culture of the
organization.
Apart from the visible signs and symbols, organization culture can also be seen in
the value system instilled by the founder members as well as its leaders of the
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organization. Senior management is responsible for creating a viable organization culture
that suits the needs of the business and sends a meaningful message to all who matter
to the organization both internal and external. Hence, certain values are enforced by
seniors by setting examples and by propagating with the help of symbolic behaviors.
This has a percolating effect in the organization and gets carried out to the lowest rung
of the organization. Sometimes organization culture shapes itself with the entry of new
employees. Values and beliefs get redefined and a new form of organization culture
emerges. Many a times, a controlling mechanism is to be in place so that desired outputs
are cultivated and undesirable outputs are weeded out. Then how can be organization
culture controlled? The organization culture needs change if there is an influx of
inappropriate organization behavior or when there is an erosion of organization values.
There cannot be a culture change without the support of top management. Every
department has to make a conscious effort to manage the change process. Specific steps
must be incorporated in the change plan with intermediate feedback mechanisms.
Cultural change takes a long period of time and its effects are seen over much longer
periods. Hence it must be ensured that the cultural change process is attended to,
keeping future in mind.
Just as an individual is known through his / her personality, organizational culture
is the personality of the organization. Culture is comprised of the assumptions, values,
norms and tangible signs (artifacts) of organization members and their behaviors.
Members of an organization soon come to sense the particular culture of an
organization, Culture is one of those terms that is difficult to express in clear terms, but
everyone knows it, when they sense it. That is, only few facets of an organization can be
explained, but many facets still remain un-described and unexplained. While discussing
the elements of organizational culture the HR issues such as employee engagement,
ability, task identity, work-life balance are to be considered. Accordingly these become
the parameters associated with major variables. While discussing the leadership issues in
the context of organizational culture, the concepts of transactional and transformational
leadership, trust, empathy are taken care of. At the macro level learning orientation,
absorptive capacity and virtual corporateship are also involved.
Corporate culture which is synonymously same as organizational culture which can
be looked at as a system with input, out put and through put with a feedback
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arrangement. The process is based on one’s assumptions, values and norms, e.g. values
on money, time, facilities etc. Outputs or effects of one’s culture e.g., organizational
behaviors, technologies, strategies, products, services etc. is seen at the end part of the
organization. The concept of culture is particularly important when attempting to
manage organization-wide change. Practitioners are coming to realize that, despite the
best-possible plans, organizational change must include not only changing structures and
processes, but also changing the corporate culture as well.
2. Organizational Culture and its Constituents
There are numerous ways of defining organization culture. One commonly
accepted definition is as follows.; It is a pattern of shared employee beliefs, values,
behaviors and ways of doing and thinking about the organization. Such beliefs, values
etc. are learned, shared and transmitted by and through organization employees. A more
comprehensive definitions “Organizational culture refers to a system of shared meaning”.
In every organization there are patterns of beliefs, symbols, rituals, myths and practices
that have evolved over time. These in turn create common understanding among
members as to what the organization is and how its members should behave. Hence
following are generally considered on the constituents of organization culture.
a. Individual initiative
b. Risk tolerance
c. Direction
d. Integration
e. Management Support
f. Control
g. Identity
h. Reward System
i. Conflict tolerance
j. Communication patterns
The first source of organizational culture is its founding fathers. An organization's
current culture, customs, traditions are largely due to what has been done before and
also its success in doing so. i.e. successful traditions, practices continue for more time.
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Founding fathers have a vision / mission when they establish an organization.
Typically all organizations start as small organizations. (example is that of Infosys which
started as group i.e. an organization of husband / wife and few friends and now is an
organization of more than 1 lakh employees) .Hence it is relatively easy for founding
fathers to disseminate their values and beliefs. Original founders have not only the idea
of its creation, but also the means of fulfilling these. Thus the resultant culture is one of
founders' ideas / beliefs and the first employees' reaction to founders' ideas / beliefs.
Once it is created, the question of its management arises.
Following guidelines are useful in managing (i.e. planning, creating, sustaining)
organizational culture.
Formulate a clear strategic vision
Display Top management commitment
Model, culture change at the highest level
Modify the organization to support organizational change (i.e. modifications
in structure, HR resources, information and control system
Select and socialize new-comers and terminate deviants (When a cultural
change has to be brought in, it is necessary to remove such people who
cannot match with new values, beliefs; and it is also necessary to bring in
such people who subscribe to organization's values and beliefs.)
Develop ethical and legal sensitivity: It is obvious that no culture shall
exceed the limits set by ethics that they cherish and laws which they have
to abide by.
3. Necessity of Cultural Change
Organizational culture, comprising of the attitudes, experiences, beliefs and values
of an organization, has been defined as follows. The specific collection of values and
norms that are shared by people and groups in an organization and that control the way
they interact with each other and with stakeholders outside the organization. From
organizational values, develop organizational norms, guidelines or expectations that
prescribe appropriate kinds of behavior of the employees, in a particular situation and
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control the behavior of organizational members towards one another. This implies the
fact of necessity of cultural changes in an organization.
4. The Cultural Change Process
Before the change process can occur, there must be a “felt need for change” by
key leaders in the organization, to stir the organization out of its comfort zone. Where
the culture is strongly molded, de-stabilization may be needed to shake employees out of
their complacency and ‘feel’ the need for change. This de-stabilization also however
generates resistance to change. The transformational leader is usually capable of
overcoming this resistance. Then do so as under.
Initially they identify and develop the organization’s distinctive competencies and
channel resources to where they can be most effective. This identification of
competencies also allows the organization to focus on its new markets and the
organizational changes require serving these markets. The organization is often
restructured during this stage.
As the change progresses, the leader enlists commitment to the change by
assisting staff through the painful process of letting go of the old practices and adopting
the new. They do so by:
Involving them in the development of change strategies,
Demonstrating how the new vision will meet their individual needs (e.g. for
job security, professional development),
Modeling the new behaviors he / she needs them to adopt, and
Using early successes in some parts of the organization to reinforce further
change.
Symbolic gestures such as public statements about the change, awards or parties
to celebrate or launch a new strategy can also be helpful at this stage. Finally the change
is institutionalized by building it into the management process, structure and reward
systems of the organization.
5. The Difficulties in Organizational Culture Change
In excellent organizations, people unconsciously comply with the values and
beliefs of a common culture and it is this compliance that maintains the organization.
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Organizations develop cultures made up of values and beliefs about how people should
behave. Employees associate these values and beliefs with the organization’s success
and don’t need to be tell what to do or what not to do to comply with the culture. As
long as the culture remains relevant to the organization benefits – managers are relieved
of much of the work associated with controlling or directing staff. However, if the
environment in which the organization is operating changes, the culture can become
dysfunctional and at times harmful also. Employees in a dysfunctional culture will then
use same old strategies to new problems denying their uselessness and blaming external
causes and other individuals for their failure. Left uncontrolled, this behavior can
continue, until the culture causes the organization to extinguish rather than adapt.
Many organizations are re-designed or restructured, on the assumption that this is
all that is needed to achieve major change. If the organization has a dysfunctional
culture, and the culture is left unchecked members will simply continue to act as they
had under the old structure, regardless of their new responsibilities and response
requirements.
6. Pre-requisites For Successful Organizational Culture
In order that organizational culture change is smooth and also in order that
direction is forward, certain pre-requisites are necessary:
According to Harigopal.K (2001) the following aspects have to be taken care
before proceeding for cultural change:
Formulate a clear picture of the firm’s new strategy and of the shared
values, norms and behaviors needed to make it work.
Take a close look at the inner functioning of the organization and
determine if culture change is necessary.
Identify aspects of the current culture that could still be valid and other
aspects that need to be modified or changed.
Communicate the change translated into goals, sub goals, activities and
behaviors.
Make changes from top down. The top management’s commitment must
be seen and felt.
Involve employees in the change process.
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Check on the leadership and support process to overcome anxiety among
managers in giving up their earlier responses
Monitor the progress from time to time; build momentum in terms of initial
success.
Defuse resistance. Despite this, expect certain causalities to occur (for
example, some employees may leave the organization)
7. Making best use of Cultural Changes
For the organizations, accepting the inevitability of cultural changes, following can
be used as appropriate leverages:
Performance: Performance related or competence related pay scheme;
performance management processes; gain sharing; leadership training,
skills development;
Commitment: Communication, participation and involvement programmes;
developing a climate of co-operation and trust; clarifying the psychological
contract.
Quality: Total quality programme, such as ISO 9000, 14000 etc.;
Customer service: Customer care programmes; Customer feed back
programme
Team Work: Team building; Team performance management; Team
rewards.
Organizational learning: Taking steps to enhance intellectual capital and
the organization’s resource based capability, by developing a learning
organization.
Values: Gaining understanding, acceptance and commitment through
involvement in identifying values, performance management process and
employee development interventions.
8. Organizational Culture and Industries
Organizations are open systems in constant interaction with their many
environments, and they consist of many sub-groups, occupational units, hierarchical
layers, and geographically dispersed segments, also geographically spread departments.
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If we are to locate a given organization's culture, where one should look for and how to
generalize the concept one looking for?
In the present study, two factors that are common to the whole study are
The Nature of the organization which is ‘Industrial’ and
They are geographically located in the State of Karnataka, in India
Culture can be viewed as a descriptive feature of an independently defined stable
social unit. That is, if one can demonstrate that a given set of people have shared a
significant number of important experiences in the process of solving external and
internal problems, one can assume that such common experiences values, beliefs etc.
have led them, overtime, to a shared view of the World around them and their place in
it-and in the present context it is the industrial undertakings, under study. There has to
be a large shared experience to have led to a shared view and this shared view has to
have worked for long time to have come to be taken for granted and works without
awareness. Culture, in this sense, is a learned product of group experience and is
therefore to be found only where there is a definable group with a significant history.
Here also, all the industrial undertakings studied, have a long history behind them.
Though it is the members who form and sustain the culture of an organization,
the ownership of organization by way of Public, Private and MNCs have a significant role.
By way of its principles and assumptions, each sector influences the culture of the
organization of which it is the owner.
Organization culture has many layers with distinct externalities and many
internalities. At the outermost layers, it is the artifacts, symbols which furnish the outer
world, with a meaning to understand. However, it is inner layers in the form of values,
attitudes and beliefs which ultimately affect, the performance- both economical and
organizational in the form of production, profit , morale, motivation etc.
The study covered Nine industrial undertakings chosen from different sectors as
well as different districts of the State of Karnataka. The study has covered, as widely as
possible the external and internal manifestations of organization culture. The parameters
under internal and external manifestations are elucidated in the questionnaire.
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9. Gaps In Existing Research
Structure of the organization being a determinant of organization is also a
determinant of organizational culture and is also a determinant of corporate
governance. Apart from the legal provisions, it is the self-regulated code of
practices which play a crucial role in better corporate governance, which in turn is
influenced by the organizational culture. Since many studies are not available,
particularly in the Indian context, the present study is expected to bridge such
gaps.
Research on organizations culture being descriptive as well as highly abstract has
advanced to the stages of prediction. Hence any measurement of otherwise highly
descriptive and abstract elements, as is the case with studies related to
organizational culture, can lead to better predictions.
Higher employee turnover has been usually studied more as an HR issue than as in
issue of organizational culture. Hence a good number of researches on employee
turnover vis-a-vis HR policies are available .The present study of the organizational
culture is expected to establish a link between HR policies and organizational
culture as far as employee turnover is considered.
Organizational culture research being sufficiently studied across the globe has
definitely preceded the “Corporate culture boom” of the last few years. Traditional
organization research, often highly abstract, has concentrated on the organizations
as an entity of the environment in which it is operating. Very few studies have
been done taking nature of the organization into consideration. The present study
is expected to fill such a gap, as it has been done on organizations, the nature of
which are industrial.
Comparative studies on the organizations, which may be similar with respect to the
business they carry out, but working under different structural (such as Public
sectors, Private sector etc.) arrangements, are also few in number. The present
study is expected to bridge such gaps of comparative studies.
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10. Conceptual Frame Work
a. Organizational Culture and its levels
Though organizational culture is all pervasive, for ease of understanding two
levels are considered. At the outer level, it is the observable symbols, ceremonies,
stories, slogans, behaviors, dress,, physical setting etc. which constitute organizational
culture This is denoted as Explicit Dimension in the present study. At the inner level
culture of exists the values, assumptions, beliefs, attitudes and feelings. This is denoted
as Implicit Dimension in the present study. In the backdrop of above description
internal integration and external adaptation are examined.
Internal Integration of organization culture means that members develop a
collective identity and know how to work together effectively. External adaptation of
organizational culture refers to how the organization meets goals and deals with
outsiders, such as vendors, customers etc.
Application of above concepts in the present study is seen in the description of
symbols, ceremonies etc. (Explicit) on one hand and description of values, assumptions,
beliefs etc. (Implicit) on the other hand.
Organizational culture by definition is “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 (Schien, 1983)
When a study of internal integration vis-à-vis external adaptation is made,
automatically we would have described the organization culture. Thus this concept is
applied through out the study.
b. Organizational Effectiveness in Relation to Organizational Culture
Irrespective of the type and nature of inputs, it is the effectiveness of those inputs
which matter. Organizational Effectiveness is the degree to which an organization attains
its short and long term goals, the selection of which, reflects strategic constituencies, the
key interest of the evaluator and the life stage of the organization (Stephen P
Robbins, 2003). The relationship between organizational effectiveness and
organizational culture is to be seen through ‘the degree of alignment among culture,
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strategy, environment and technology. Stronger the culture, more perfect the alignment
is. This concept finds its application while a study is made on government organization or
a public sector organization. For e.g. alignment between such organization’s strategy and
the environmental requirements. It is to be noted that though organizational culture is a
common perception held by its members, it is not in equal measure. As a result of this,
there will be the existence of both dominant culture and sub-culture.
Dominant culture is a set of core values shared by a majority of the organizational
members. On the other hand a sub-culture is a set of values shared by a minority,
usually a small minority of the organizations members. Such dominant and sub-cultures
can be seen at company’s level and departmental level respectively. The presence of
dominant culture and sub-culture is felt when a department or an office is working away
from the head office, as the effect of dominant culture at company’s level is least felt at
departmental level, resulting in sub-culture.
c. Descriptive Concept V/S Evaluative Concept
Though organizational culture is concerned with how the employees or members
of an organization perceive the characteristics of it , evaluation can still be possible on a
common scale. However to this extent organizational culture is limited to description.
However, the descriptions when compared on common criteria with reference to its
performance, can also be evaluative and there by predictive also. An organization will
necessarily have a leader- formal or informal. Leadership is the ability to influence a
group towards the achievement of a vision or set of goals. Leadership conveys
organizational culture both through the words and deeds. The concept of leadership is
applied when the performance of organizations are evaluated, as it is considered as a
significant variable affecting the performance in financial, production and related areas.
d. Transformational Leadership, Organizational Culture and their
Interplay
Transformational leadership and organizational culture and their inter play have
become popular topics over the several years. Some researchers have suggested that
these topics contain the key to understanding organizational effectiveness (Barney
1986; Bass & Avoilo, 1992). Transformational leaders are presupposed to inspire and
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motivate the followers to contribute beyond expectation (Bass & Avoilo, 1992; Yukl,
1994). These leaders provide followers with a focus and appropriate levels of support,
involvement and appreciation designed to encourage the follower to adopt the leader’s
vision as their own and be committed to making it a reality (Bryman, 1992).
Organizational culture in this context can also be defined as the deep-rooted beliefs,
values and assumptions widely shared by organizational members and powerfully shape
the identity and behavioral norms for the group. When a group of members is
considered for the study, the concept of leadership necessarily comes into play. Positive
organizational cultures have been linked to increased staff alignment, resulting in
enhanced organizational effectiveness, heightened consensus regarding strategic
direction, increased employee productivity and advanced levels of employee commitment
(Barney, 1986). Only when a critical mass of their employees has taken ownership and
responsibilities for the needed changes, can an organization assure a competitive
advantage in today’s challenging marketplace. Leadership and organizational culture are
purported to be highly interlinked (Peters and Waterman, 1982). Leaders must have
a deep understanding of the identity and impact of the organizational culture in order to
communicate and implement new visions and inspire follower commitment to the vision
(Schein, 1990). Transformational leaders help shape and maintain the desired culture
of an organization (Schein, 1990). Some researchers have suggested that
transformational leadership and organizational culture contain the key to understanding
organizational effectiveness (Barney 1986; Bass & Avoilo, 1992).
e. Transformational Leadership Vis-À-Vis Organization Effectiveness
After having described about leadership in relation to organization culture, now its
association with organizational effectiveness is described. Yukl (1994) defined
transformational leadership as the process of influencing major changes in the attitudes
and assumptions of organizational members and building commitment for the
organization’s mission, objectives and strategies. More recent studies on the subject of
leadership have focused on transformational leadership which concern the leader’s effect
on followers (Bass & Avolio, 1992). Followers of a transformational leader feel trust,
admiration, loyalty and respect towards the leader and they are motivated to do more
than they originally expected to do (Yukl, 1994). This, then leads to the desired
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organizational effectiveness. A six-stage process that managers need to adopt if they are
to function as transformational leaders as suggested by Ulrich (1987) is worth noting.
(1) Creating and communicating the need for change, (2) overcoming resistance to
change, (3) making personal commitment and sacrifices for change(4) articulating a
vision (5)generating commitment to the vision and (6) institutionalizing the vision.
With the parameters (as discussed in detail in the above paragraphs) taken into
consideration, a pictorial frame work (Fig.3.0) comprising of these concepts is proposed
in this study for an enhanced view of organization culture.
a. Explicit dimension
b. Implicit dimension
c. Internal integration
d. External integration
e. Organizational effectiveness
f. Dominant culture
g. Sub-culture
h. Descriptive parameters of organization culture
i. Evaluative parameters of organization culture
j. Transformation leadership
k. Organizational effectiveness
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Fig. 1 : Pictorial Frame Work Of Inter-Relations Among The Elements Of
Organizational Culture
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11. Dimensions of Organizational Culture
A study by Angel A Berrio (2003) on dimensions of organizational culture in
Ohio State University can be referred in the context of major variables, considered for
the present study.
The author uses the competing values frame work to assess the dominant
organization culture based on widely accepted four culture types viz. Class, Hierarchy,
Adhocracy and Market cultures. The study included as to what type of culture is or is
being exhibited in current situation and preferred situation. The study was descriptive
co-relational with N = 965. The questionnaire used by the author was the modified
version of organizational culture assessment instrument developed by Cameran and
Quinn (1999).
Six dimensions were analyzed by the organizational culture assessment instrument
using the competing values framework. The highest mean score for each of the culture
types in both current and preferred situations for Ohio State University (OSU) Extension
personnel are shown in table3.0. In the current situation, the highest mean score
exhibited by OSU Extension personnel was in the criteria for success dimension (Mean =
34.07), while the lowest mean score recorded was in the organizational glue dimension
(Mean = 26.90).
Table 1- Highest Scores on the Organizational Culture Dimensions
Dimension Current Situation Preferred Situation
Mean S.D Culture
Type Mean S.D Culture Type
Dominant Characteristics
27.49 14.62 Clan 28.83 11.61 Adhocracy
Organizational Leadership
30.05 14.55 Hierarchy 30.07 11.39 Clan
Management 30.64 13.84 Clan 35.19 12.71 Clan Organizational Glue
26.90 15.07 Clan 31.98 12.63 Clan
Strategic Emphasis
28.90 11.85 Adhocracy 32.08 9.82 Adhocracy
Criteria for Success
34.07 17.60 Clan 37.19 14.33 Clan
Mean Scores could range from 0 to 100, representing a percentage out of 100. (Source: Angel A Berrio ,2003)
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The major findings of the above study indicate that three dimensions of
organizational culture displayed a distinctive profile from the overall culture profile of the
organization in current and preferred situations. The dimension labeled as “Dominant
Characteristics” is concerned with what the overall organization is like. The Adhocracy
classification in the preferred situation is not in agreement with the overall culture profile
of the organization, but in agreement with the finding that no statistically significant
difference was found between the mean scores of the Clan and Adhocracy cultures in the
preferred situation.
The dimension labeled as “Organizational Leadership” is related to the dominant
leadership style and approaches used by leaders and administrators in the organization.
The Hierarchy classification in the current situation of this dimension is not in agreement
with the overall culture profile of the organization. In terms of the leadership style the
employees perceive its leaders and administrators as currently having a Hierarchical type
of culture, wanting them to change to a preferred Clan culture type.
The dimension labeled as “Strategic emphasis” is concerned with the definition of
areas of emphasis that drive the organization’s strategy. The Adhocracy classification in
both the current and preferred situations are not in agreement with the overall Clan
culture exhibited by the organizations, but are in agreement with the finding that no
statistically significant difference was found between the mean scores of the Clan and
Adhocracy cultures in both current and preferred situation.
As can be seen from the above findings, it is the dominant cultural factors,
leadership factors and strategy factors, which have lead to the majority of organizational
culture. All the three factors have also formed the important variables of the present
study also along with other factors.
12. Corporate Governance Reflected through Organizational
Culture
Corporate governance, through may be studied as a separate concept, the code of
conduct and ethical part of it lend themselves to be included in the study of
organizational culture. The code of conduct is generally explicitly stated, for an
organization.
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The corporate governance practices vis-à-vis organizational culture have also been
included as one of the objectives of the present study.
The model in the form of a framework proposed herein is to be fitted against the
leadership of the organization. It is through the organizational leadership, the corporate
governance is reflected. The present study has questions related to leadership, ethics
and corporate Governance. (For detailed questionnaire please refer to appendix)
Venugopal, et al (2011) have explored theoretical framework while examining
ethics leadership in the context of organizational culture. They argue that there is an
imminent imperative for the organizational leadership in the form of change in
perception. It is not the set of activities which create a value for the organization (and
thereby the society). But it is action; accordingly the perception should be revised to
‘Actions’.
Following is the list of such desired changes for an organization, seeking itself for
its increased effectiveness.
Existing Perception Revised Perception
Activity Action
Individualistic approach Collaborative approach
Fear of failure in reaching goals Joy of scaling new heights
Hard work Wise work
Imposing order Enlisting co-operation
Organizational productivity Social productivity
Non-conformity Conformity
Organization profit Beneficiary profit
The revised perception is essential not only for the economic prosperity but also
for the ethical prosperity of an organization. Out of the above list of perceptions, it is the
social productivity perception which leads to enhanced corporate governance.
They argue that morals or ethics, while taking the view of distributive justice
would ensure equitable distribution of benefits. Benefits, though include both tangible
and intangible elements, can be conveniently equated with economic benefits also,
which is one of the primary reasons for the existence of business. The revised perception
would also fit the Utilitarian theory of ethics viz. the principle that every one should act
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to generate the greatest benefits for the largest number of people. Hence it can be
argued that high ethical standards are supplementary to economic prosperity also. A
group can be conveniently construed as an organization. The leadership which emerges
as an offshoot of organization, which in turn operates in a society, is in fact shaping the
organizational culture through the organizational members i.e. employees.
Diagrammatically when depicted it would result in a triangle with individual
(employee), organization and society at the three apexes and leadership having a central
pivotal place. Thus the when the effect of corporate governance is seen in society, it is
to be understand that it can neither be above nor below the other two apexes of
triangle, namely individual (employee) and organization. However, it needs to be
emphasized that it is the organizational leadership, which has to balance all these three
apexes to an heightened degree.
Fig 2: Triangular Relationship Among Society, Individual And
Organization With Leadership At The Core
Leadership – for corporate
Governance
Society
Individual (Employee)
Organization
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13. Conclusion
Organizational culture being an important determinant of organizational performance
needs to be studied, not only for its description; but also for prediction. The business of
the organization whether in manufacturing or service, is dependent on how the cultural
elements are managed in the company. The study and findings come in handy for an
organization, while it looks to change its technology or strategy.
Several of the factors of ethics and corporate governance are shaped by
organizational culture and they also in turn shape organizational culture. It was studied
with respect to the following associated elements.
a. Ethical conduct and honesty
b. Conflict level, the employees feel while confiding with their superiors
c. Senior members understanding of their own decisions and its implications
d. Empowerment of employees
e. Effectiveness of decision making process.
The values cherished by the organization, the style in which it is imbibed and
propagated through various leadership styles are important aspects of organizational
culture. A large part of organizational culture can be directly traced to internal factors or
internalities as explained elsewhere. Many of the dimensions in the form of stories,
jargons, rituals etc., are explicit also. As can be conjectured organizational culture is a
combination of both. However both of them needs to be integrated properly for the
betterment of the organization.
22
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