Nicolás Gómez R.: Module 2: Organizational culture (Summary)

“Corporate culture describes the whole collection of assumptions, practices and norms that people in an organization adopt over time.” Corporate culture is comprised by the assumptions, values, norms and tangible signs of organization members and their behaviors and in many times it defines the way that the organization is going to be conducted. Having a clear well defined corporate culture may have many benefits or in some cases disadvantages but anyway we must have clear that it is going to affect the company’s performance.

Organizational culture is composed by several levels, from the deepest aspects of a company (as its mission, vision and identity) until the most external ones (rituals, symbols, norms, slogans, etc). In the middle of these two extremes we can also find aspects like the shared values, beliefs, capabilities and knowledge. All these aspects take time to be successfully developed.

Defining the corporate culture of a company can help to both have an internal integration (allowing the members to know how to relate to one another) and external adaptation (to help organization to adapt to external environment).

Organizational or corporate culture is strongly tied to National culture. This is due to the fact that the basis for the whole organizational culture are settled at the very beginning steps of company’s foundation and at this stage entrepreneurs set the norms and rules based on the context of values and assumptions they have from their own National culture. This fact has to be taken into account when trying to change the culture of an organization. Here is where many mistakes are done by managers and is a very common case when mergers and/or acquisitions appear. In many cases the new manager doesn’t take into account the huge cultural differences that may exist between both companies and simply tries to impose his own culture, normally leading to giant failures (which in business terms means millionaire loses).

We can see different kinds of cultures such as: entrepreneurial culture (based on values innovation, creativity and risk taking); mission culture (which has a clear vision of purposes and how to achieve them); clan culture (it focuses on needs of employees as a route to performance); and bureaucratic culture (that supports a methodical approach to business and efficiency).

Developing a good organizational culture has many strong advantages. It is linked with the good performance of the company, it generates motivation, core values are intensely held and widely shared, reduce potential conflicts and make a good environment in which the employees will work hard willingly. Nevertheless it has also some weak points because it could also generate an inflexible barrier, an instinct against the change and may bring the people together in a defensive way. That’s why it is very important to understand it and to know how to develop it in order to achieve an equilibrium that allows to profit the benefits without being victim of the disadvantages.