Organizational Culture

Why It Matters: Organizational Culture

Why learn about the impact organizational culture has on individuals and the workplace?

Organizational culture is present in our daily lives. Whether or not you recognize it, organizational culture can be found in every family unit and in any group dynamic you are a part of. Understanding how culture is developed can give insight into each working part of an organization. There are both internal and external factors that contribute to an organization’s cultural identity. Recognizing these factors and learning how to adjust them to change culture is a valuable skill to have, not only in your personal relationships, but also in your professional ones.

The ability to identify a positive or negative company culture can assist you when applying for jobs and when deciding on a career path. While organizational culture can change, there are a number of internal and external factors that need to be considered and adjusted in order to successfully invoke change. Organizational culture may seem like a fancy business term but you will soon learn that it plays a role in your everyday life.

Organizational culture sets the tone for an organization. It depicts acceptable behaviors and defines the appropriate way to act. Culture is formed by an organization’s values and beliefs which are infused throughout the organization from upper management through entry-level employees. Culture sets the stage for everything an organization does and helps to outline their operational procedures. Since there is such a wide variety of industries and organizations, there is no exact right or wrong type of culture to have. Organizational cultures will differ from business to business just as the organizational culture within family units can be dramatically different from one family to the next.

So if there is no perfect, one-size-fits-all culture for an organization, how does organizational culture impact a company’s success? In order to dissect this, we first need to discuss the varying degrees of company culture. While every organization has a culture all their own, some cultures are stronger or weaker than others. A company with a stronger culture, centered around their values and mission, tend to be more successful than companies with a lackluster approach to their values and goals. It is not enough to simply establish a mission, values and goals; instead, these components must be integrated into every daily process and ingrained within every member of the organization.

Imagine a sports team where each player is focused on their own preferred way of doing things. If everyone on the team is operating differently, will they be successful in a game? Most likely not. If each player is focused on their own objective as opposed to the mission of the team, it is evidence of a weak culture. To help strengthen the culture, the coach needs to bring the team together and realign everyone to the team’s mission. While there will still be players responsible for different roles, by communicating a game plan and guiding the team along the way, the coach has the opportunity to strengthen the culture and overall success of the team. But it doesn’t end there. Culture is not something that can be changed quickly. It requires constant follow-up and follow-through in order to both change and maintain culture. Organizational culture needs to be nurtured and valued throughout an organization in order to establish a strong and healthy culture.

Before we explore external factors that influence organizational culture, it is important to mention that a strong culture can be a bad thing for an organization if it is built on a corrupt foundation. Just as positive values and goals should be infused in an organization, bad habits and condoned bad behavior can permeate into the culture of an organization. If not handled in a quickly and timely manner, unethical or corrupt practices may become part of an organization’s culture.

Organizational culture incorporates how a company operates on every level. In order to truly understand an organization’s culture, you must be able to dissect each component. The first step to a deeper understanding of organizational culture is to define and understand external and internal factors that influence organizational behavior. Let’s get started by exploring external factors and the role they play in establishing culture.

Edgar Schein presented three levels of organization in his 1991 article, “What is Culture?” He grouped organizational culture into three levels including artifacts, values, and underlying assumptions. To recap, Schein created three levels of organizational culture. First, at the top of the pyramid are artifacts. While they have been defined as the visible part of an iceberg, they are hard to decipher. Artifacts include organizational structures and processes that are apparent and visible. Right below the top of the iceberg, in the middle of his cultural pyramid is the values level. Values include the “why” behind why a company operates the way they do. It includes company goals, strategies and philosophies that drive a company’s mission. Finally, the level that is the hardest to understand is the bottom of the pyramid which Schein labels “underlying assumptions.” These underlying assumptions create the foundation for the values and artifacts levels. They take time and energy to fully decipher and understand and include thoughts, beliefs and perceptions that establish culture (Organizational Communication Channel, 2017).

There are two types of factors that influence organizational culture: internal and external. External influences and factors play a large role in how organizations choose to operate. Understanding these external factors and how companies need to adapt to them will help explain the inner workings of an organization. While there are a number of internal factors also at play, external factors help to shape how organizations choose to manage and account for internal factors.


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Organizational Behavior by Icfai Business School is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.