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Business Culture: Ins and Outs

September 23rd, 2020
Negotiation

Business Culture: Ins and Outs

September 23rd, 2020
Negotiation

What is culture?

Organizations build a sense of identity through tradition, history, and structure. This identity is kept alive through the organization’s culture: its rituals, beliefs, legends, values, meanings, norms, and language.

Corporate culture determines how “things are done around here.”Culture provides a shared view of what an organization is (the intangibles) and what it has (the tangibles). It is the “story” of the organization: a narrative reinforced through idiosyncratic languages and business-specific symbols. In the 1940s, human relations experts began to consider organizations from a cultural point of view, drawing inspiration from earlier sociological and anthropological work associated with groups and societies. However, the term “organizational culture” only became part of the business lexicon in the early 1980s, following the publication of Culture’s Consequences by the Dutch cultural psychologist and management expert Geert Hofstede. Looking closely at an organizational structure for the first time, Hofstede observed that it is shaped by and overlaps with societal culture. He identified five dimensions of culture that influence business behavior: power distance, individualism vs. collectivism, uncertainty avoidance, masculinity vs. femininity, and longvs. Short-term orientation.

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Five cultural dimensions

The first of Hofstede’s dimensions—power distance—refers to the distance in authority between managers and subordinates. Business cultures that have a high power distance tend to be rule-driven and hierarchical (everyone “knows their place”). In Russia, for example, employees have little access to executives (power distance is high). Conversely, in low power-distance cultures, such as many companies in Australia, decision making is distributed more evenly throughout the organization. Anthropologists have long theorized that collectivist cultures control members through external societal pressure (shame), whereas individualistic cultures control their members more through internal pressure (guilt). In his second dimension, Hofstede proposed that this tendency toward collectivism or individualism can be most clearly seen in the difference between Asian and US companies. When problem-solving, US businesses tend to look to the individual for a solution, whereas Asian companies prefer to pose the problem to a group. Masculinity and femininity, Hofstede’s third cultural dimension, are viewed differently from one organization to another. Someplace great emphasis on masculine traits (such as status, assertiveness, and advancement), while others accord feminine traits (such as humanism, cooperation, collegiality, and nurturance) greater value. Italian organizations, for example, tend to have assertive, competitive cultures. The fourth of Hofstede’s dimensions are known as uncertainty avoidance. This is the extent to which workers feel threatened by ambiguous situations. The more uncomfortable people are with “not knowing” how to react in a certain scenario, the more rules, and policies the company will need to introduce to reduce that uncertainty. Companies with a low degree of uncertainty avoidance are likely to thrive in more uncertain and ambiguous situations such as COVID-19. British organizations, for example, are considered fairly at ease with unstructured and unpredictable situations. Hofstede’s fifth dimension, longness. Short-term orientation is the extent to which organizations privilege the short-term (profit) over the long-term.

What are the benefits of a strong culture in crisis for a business?

Strong cultures give staff a sense of belonging, which in turn brings benefits, such as job satisfaction and staff retention even in crisis. At Nike, staff are considered rookies if they have been at the company for less than a decade. Moreover, culture defines “the rules of the game,” simplifying priorities. Decision making is faster and easier if everyone understands company values, beliefs, and vision. Deeply embedded cultures also improve the customer experience; if staff believes in the product, they will transfer this belief to customers. Culture also protects an organization from the whims of charismatic leadership and the fickleness of fashion. A leader may influence corporate culture, but a successful culture should endure even when management changes.

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What are the disadvantages of a strong cooperate culture?

Strong organizational cultures can suffer from problems of groupthink (everyone is too like-minded), insularity (too narrow a vision), and arrogance (a belief that everything the company does is right). Culture can become a source of power and resistance; necessary change may be resisted simply because “that’s not the way we do things.” Terrence Deal and Allan Kennedy’s 1982 publication Corporate Cultures outlined a range of cultural phenomena. The authors suggested that culture is composed of a framework of six interlocking elements: a company’s history; its values and beliefs; its rituals and ceremonies; its stories; the heroic figures whose words and actions embody corporate values; and the cultural network.

A most important element in organizational culture in COVID-19:

Flexibility

If there’s one thing that COVID-19 working conditions have shown us, it’s that the standard nine-to-five working day has become more difficult to apply universally among staff (and increasingly unnecessary with available technology).

While many professionals today are juggling work with home-schooling arrangements and changes to childcare hours, in the longer term, some workers might be left feeling enlightened by the benefits that ditching the daily commute could bring to their work-life balance.  

Companies that support flexible working practices and telecommuting to suit individual needs are likely to be in the spotlight long after the immediate impacts of COVID-19 are over – with the potential to attract and retain the most talented workers.

To prepare for this potential cultural shift on a large scale, companies should develop clear policies as well as invest in technology and training at all levels of the corporate hierarchy to ensure productivity and effective working practices are maintained. The restrictions surrounding the COVID-19 pandemic have quickly shifted the goalposts for companies that take their organizational culture seriously. As a manager, perhaps ask yourself: “What do I want to be remembered for coming out of this crisis?” Remember, if you’re the leader, you set the tone. By adapting to change now, companies could not only deliver more positive working experiences today but also be better equipped for tomorrow’s future world of work. 

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