A. Figueroa OLCU 487 Senior Research Project Final Paper_Organizational Culture
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Transcript of A. Figueroa OLCU 487 Senior Research Project Final Paper_Organizational Culture
1
Running head: A RESEARCH STUDY TO UNDERSTAND ORGANIZATIONAL CULTURE
AND ITS AFFECTS ON COMPANIES
A RESEARCH STUDY TO UNDERSTAND
ORGANIZAIONAL CULTURE
and
ITS AFFECTS ON COMPANIES
by
Anthony Figueroa
A research project report
submitted to the faculty of
Brandman University College
in partial fulfillment
of the requirements for the degree of
Bachelor of Arts in Organizational Leadership
August 15, 2014
ORGANIZATIONAL CULTURE 2
TABLE OF CONTENTS
Page
Abstract ................................................................................................................................4
Introduction ..........................................................................................................................6
Statement of the Issue ..............................................................................................6
Background ..............................................................................................................6
Purpose .....................................................................................................................7
Research Questions ..................................................................................................8
Significance of the Study .........................................................................................9
Conclusions ..............................................................................................................9
Literature Review...............................................................................................................11
Research Question 1: What are the factors that affect organizational culture? ....11
Research Question 2: What are the factors that affect organizational culture? ....15
Research Question 3: What is the relationship between profit and growth (the
effectiveness of having a culture that works) and organizational culture? ............20
Conclusions and Recommendations ..................................................................................26
Conclusions: Research Question 1.........................................................................26
Conclusions: Research Question 2.........................................................................27
ORGANIZATIONAL CULTURE 3
Conclusions: Research Question 3.........................................................................29
Recommendations and Action Plan .......................................................................29
References ..........................................................................................................................34
ORGANIZATIONAL CULTURE 4
Abstract
There have been several companies that have not only survived through recessions but
also have had exceptional growth and profit. Many C-level leaders wonder why do these
successful companies do better than others; what is giving them the competitive edge? The
leaders in the successful companies understand organizational culture and that it is one of the
main driving forces for their success. An effective organizational culture is a requirement for
today’s companies and is one of their most important issues for success. The purpose of this
literature review is to address the issues concerned with organizational culture. In answering
three research questions, this paper will show how organizational culture can positively affect
companies by understanding what organizational culture means to them, the factors of
organizational culture, and the relationship between growth and profit and organizational culture.
The literature showed that organizational culture is basically how business is done in a
company; the climate and environment of how people feel and how they conduct their everyday
business. It enormously affects companies in retention, effectives, production and ultimately the
bottom line. C-level leaders must insure organizational culture must be aligned with company’s
values, mission, and vision. Organizational culture once established is easy to maintain. The key
universal factors influencing organizational culture are: Leadership, C-level leadership and
leaders at every level; Connection how people connect and do they have buy in; Trust a factor
that is needed in every organization, Mission Values and Vision must be aligned and with
organizational culture by directed by C-level leadership; Communication, how is the story or
narrative of organizational culture communicated; Right people, getting HR involved; the
Environment or space where people interact. The relationship between profit and growth and
organizational culture had direct correlation. According to Buble (2012) “corporate culture can
ORGANIZATIONAL CULTURE 5
have a significant impact on a firm’s long-term economic performance, is an even more
important factor in determining the success or failure of firms” (p.85).
This research finds and concludes that even though the basic definition and factors of
organizational culture can apply to all companies, C-level leaders of companies need to
understand how their unique organizational culture applies to their company. C-level leaders
must take the knowledge of their organizational culture, and manage it to insure it aligns or fits
their company. All of the authors mentioned came to the same conclusion as Wherry (2014) who
best states “culture is what makes an organization unique or special” (n.p.). Leadership was
found to be one of the biggest key factors for having an organizational culture that is effective
and helps the company be successful. The C-level leaders at the top must align and manage the
organizational culture of the company and leaders at every level must convey that culture
throughout. The other factors play a significant role in organizational culture and needs to be
managing by leaders at every level. The authors all concluded literally that “organizational
culture affects the bottom line” in so far as companies who manage an effective organizational
culture will have positive retention, growth, innovation…etc.
It is recommended that leaders need to conduct self-assessment of their organizational culture,
make organizational culture one of the top priorities, and constantly manage it. Leaders at every
level must learn and understand the factors that influence organizational culture. Human
Resources should screen and test personnel to see if they match companies organizational
culture. More research needs to be conducted on this subject.
ORGANIZATIONAL CULTURE 6
Introduction
Statement of Issues
Defining organizational culture can be seen as “How we do things around here” and is
the underlining meaning of organizational culture in all companies (Gerstner, as cited in
Strategic Communication Management, 2013, p.22). However, because companies are unique,
each of them must have a culture that fits their needs. Companies will not be affective if they
just try to copy another company’s culture. For a company to be successful they must
understand the factors that influence organizational culture. There are many factors like
communication and trust that need to be considered. Innovation or how ideas are treated within
an organization is also an important factor. Additionally, how the culture is aligned with the
vision and mission of the company is a factor that cannot be forgotten about. These are just
some factors that need to be considered. Several companies have utilized their understanding of
the importance of organizational culture to positively affect their company. Amazon, Boeing,
Microsoft, etc.; all have effective organizational cultures and each company is successful
because of the uniqueness of their own culture, even though they utilize many of the same
factors of an effective culture. Companies with an excellent culture that promotes trust,
communication, innovation and customer focus, and also a positive understanding when people
make mistakes, and help them learn from those mistakes, they will be successful. Companies
like these, understand the mechanisms of their organizational culture are effective because of
their understanding and application in managing culture. The overall thought for this research
comes to how organizational culture affects successful companies.
ORGANIZATIONAL CULTURE 7
Background
The 2008 recession has proven that having the right organizational culture will help a
business succeed though hard times. Kotter and Heskett (as cited by Strategic Communication
Management, 2013) state in their book “Corporate Culture and Performance” states,
Those firms with a strong corporate culture, based on a foundation of shared values,
experienced revenue growth that was more than four times faster than average; job
creation that was seven times higher; stock price growth 12 times faster; and profit
performance that was 750 percent higher. (p.22)
An effective organizational culture is a requirement for today’s companies and is one of their
most important issues for success.
Leaders within companies need to truly understand what affect organizational culture has
on them. Wherry (2014) explains “When we think of company culture, we focus on what we can
see and touch – the foosball tables, happy hours, and free lunches. But these are only artifacts,
what our culture produces” (n.p.). Leaders need to get to the heart of what organizational culture
is and how it can positively affect the success of their company.
Purpose / Objective of the Research
The purpose of this research paper is to show how organization culture can positively
affect companies. This paper will investigate what the organizational culture means to
successful companies. Using empirical studies as a source, this paper will determine what is
different, and also, what is the same between different successful companies when it comes to
Organizational Culture. This paper will also outline the key factors of organizational culture;
factors like communication, trust, being people oriented, and utilization of change management,
that have made certain companies successful. This paper will point out several companies that
ORGANIZATIONAL CULTURE 8
have had an effective organizational culture such as Amazon, Boeing, and others, where their
organizational culture has made them very successful. It will identify the uniqueness of these
companies, and what they do that are the same. This paper will show how these companies
understand what to do in managing the organizational culture.
Research Question
What does organizational culture mean to successful companies?
Organizational culture means many things to many leaders. Overall it is how business is done in
a company, the climate and environment of how people feel. Leaders within companies need to
understand organizational culture. A thorough understanding of organizational culture will allow
managers to not only manage the organization, but predict the culture's effects and act
accordingly. Leaders need to know what the unique organizational culture of their company is
and what makes it theirs.
What are the factors that affect organizational culture?
Leaders must also know what factors affect organizational culture so they can properly
manage and develop or sustain it to benefit their company. Each of these factors will influence
the type of culture a company has and whether it makes the company successful or not. Many of
these are common among different companies, but some are also unique the way companies
view them.
What is the relationship between profit and growth (the effectiveness of having a culture
that works) and organizational culture?
Companies that fully understand organizational culture and its effects on their mission or
bottom line will ensure that they manage it to their benefits. Several companies have not only
survived but they also thrived during the recent recession, due to their knowledge on the effects
ORGANIZATIONAL CULTURE 9
of organizational culture. Companies like Amazon, Boeing, Nordstrom, etc…have all been able
to profit and grow because of their own unique organizational culture.
Significance of the study
There has been a shift in the corporations today in understanding the need for leaders who know
how organizational culture is and how it affects their bottom line. The information contained in
this paper can help anyone wanting to understand organizational culture. There are many
reasons leaders would want to know information contained in this paper for improving the
organizational culture of their company. “Fitting in” as to employees fitting into the culture of
an organization is very important. People looking for employment can benefit from the
information in this paper when searching for a job where they where they will “fit in.” Business
owners and entrepreneurs will also benefit from this information in learning how organizational
culture uniquely belongs to a company.
Conclusion
How organizational culture can positively affect companies has become a popular
question for leaders that want their companies to succeed. Knowing what defines organizational
culture and what it specifically means to a company will help in determining what factors are
affecting the culture of your organization. Next, leaders must also know what factors affect
organizational culture so they can properly manage and develop or sustain it to benefit their
company. There are several key factors they must understand. Factors like communication,
trust, being people oriented, and utilization of change management, that have made certain
companies successful. But, leaders must understand how these factors affect their company
specifically. Finally you can see in this paper the relationship between profit and growth (the
effectiveness of having a culture that works) and organizational culture. Companies have
ORGANIZATIONAL CULTURE 10
benefited from understanding how their organizational culture can work for them to improve
their bottom line. Companies like Amazon, Boeing, and others have been able to do this. All of
this information will help readers understand how organizational culture affects successful
companies.
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Literature Review
The Literature Review will use secondary, expert sources to answer the following
research questions.
What does organizational culture mean to successful companies?
What are the factors that affect organizational culture?
What is the relationship between profit and growth (the effectiveness of having a culture
that works) and organizational culture?
What does organizational culture mean to successful companies?
Actual definition of organizational culture can mean many things to many people or
companies. Likewise, organizational culture means many things to many leaders of companies
and organizations. In general, organizational culture is: how things are done, how business is
done in a company, the climate and environment of how people feel. The authors all seem to
feel the same in that “Culture is what makes an organization unique or special” (Wherry, 2014,
n.p.). Understanding organizational culture is essential for knowing how it affects an
organization and how to manage it. Leaders need to know what the unique organizational
culture of their company is; what makes the culture theirs.
Organizational culture is how people behave in their organization based on, norms,
values, perceptions, habits, how they work, dress, their social order or rules on how things are in
the organization and what they feel is acceptable or not. “Culture is an outcome of leadership
styles, beliefs and values at all levels” (Reid, 2013, p.2). Everyone and everything is affected by
the culture of an organization, yet it is specific to each company. Organizational culture can be
entirely different amongst companies in the same industry.
ORGANIZATIONAL CULTURE 12
Numerous sources noted that the organizational culture takes ownership of the company.
Everything people do in the company, the way they behave, their daily actions, is influenced by
the culture of the organization. Strategic Communication Management (2013) suggests
organizational culture is, in a sense, “The way we do things around here” (p.22). People will act
based on the culture, so it is paramount that the culture fosters the best attitudes to encourage the
best performance. Authors also suggest organizational culture is specific and significant to the
company; it can affect communication, hinder or help growth and deter or attract new employees
(Kirby, J., & Stewart, T. A., 2007, p.76; Financial Executive, 2012, p.33). The organizational
culture of one company will not be the same as another’s. Companies cannot use a cookie cutter
approach to organizational culture. Because what works for some companies, such as strict
adherence to policy and order in the military settings, will not work in companies that thrive on
creativity.
Some of the basic factors are the same, but utilized differently they can have different
effects on different companies. All companies have a different perspective on what they feel
their culture should be so they can have an effective organization. Organizational culture must
be unique to each company. “There is no single “right’ culture, but rather the one that is aligned
with a company’s business and innovation strategy” (Financial Executive, 2012, p.33).
Companies cannot just “copy and paste another culture”, a culture needs to be unique to the
organization (Laurin, 2010, p.26). Leaders who understand and connect to the story being told
will have a better understanding of what their companies’ culture means to them.
The organizational perspective. Medical firms, law firms, the Veterans of
Administration, Amazon, and Boeing, all have a values and a mission unique to their
organizations. The same must hold true for their organizational culture, and this culture must
ORGANIZATIONAL CULTURE 13
align with their mission and values of the company. One of the biggest obstacles companies
have is “not having the culture alignment with the “business strategy, mission, vision, and
values” (Reid, 2013, p.3). It is essential for the success of a company to have its culture aligned
with these four critical components of every organization. Amazon is an example of a company
with its culture aligned with its focus on the customer. Customer orientation helps both the
customer and the company and programs like “defect reduction” helps Amazon and its
customers save money. “It is strategically smarter to align yourself with the customer, in today’s
increasingly transparent, information perfection world” (Kirby, 2007, p.77). A company with an
open communication culture would mesh well with a strategy that relies on everyone’s input.
Oppositely, an example of a vision not meshing well with the culture would be a company that
does not foster open communications, but rather values hierarchy and chain of command.
Having a culture that produces what the company wants is the key to a successful
company. Some companies focus on innovation, others on customer service. Innovation and
idea sharing make some companies in the information technology industry succeed. “Google is
famously open to risk and tolerant of failure” (Financial Executive, 2012, p.34). Google does
this to bring out innovation in its top employees. It is important to set up an organizational
culture to bring out these top performers and how to do it. Laurin (2010) states, “creating this
kind of environment involves giving up some authority usually associated with leadership and
even some ownership, whether legal or psychological, in the organization” (p.26). Innovation
might not stand on its own, but a company that fosters it via its culture is on a better track to
success. A company might need in addition to innovation a culture of trust.
Several authors explain that some leaders feel the best culture is one that “in designing
democratic structures; innovation and creativity flourishes” (Laurin, 2010, p.26). C-level leaders
ORGANIZATIONAL CULTURE 14
must understand that an organizational culture will be different for different types of companies.
Types of culture like customer oriented or service oriented like a hotel chain will be different
than one such as Google, which needs a certain type of innovation from its engineers for solving
complex problems.
Background / History. The meaning and focus of organizational culture has changed
immensely over the years. Companies that have grown to understand how organizational culture
affects their bottom line have made efforts to study their culture and work to making it in-line
with their strategies and ultimate visions. In speaking to the background to organizational
culture, Marshall and Adamic (2010) state “A few decades ago, ‘‘corporate culture’’ might have
referred to a company’s dress code or its working hours. Today, however, most business leaders
recognize that organizational culture is both more sophisticated and more powerful than anything
contained in an employee manual” (p.18). This statement has become even more evident four
years later when companies of all sizes have given a higher priority organizational culture.
Leaders recognize that the root of problems is not always policy and procedures but how they are
implemented, how things are done. There is a current lack of studies and the importance of
organizational leadership currently in the business world. Organizational Culture traditionally
was not a priority. Only since 1980s has its priority increase in importance, possibly because of
“misunderstandings that values and other characteristics of organizational culture are something
objectively granted” (Buble, 2012, p.85). This is why now the focus on organizational culture
has grown so considerably. Some feel that once an effective culture is set then it becomes easy
to maintain. “The truth is that corporate cultures are incredibly stable over time. They are self-
perpetuating, because they attract new people who like that kind of culture, while the people who
don’t like it eject themselves” (Kirby, 2007, p.80) This makes it so once a company has the an
ORGANIZATIONAL CULTURE 15
effective culture that is aligned with their mission statement, values and business strategies,
culture must consistently be managed for effectiveness. Nevertheless, to get to this point they
must understand the meaning of organizational culture and the factors that influence it.
What are the factors that affect organizational culture?
Leadership plays a key role in establishing and maintaining an organizational culture that
will be beneficial. The majority of authors feel that it may be one of the most important factors
when it comes to organizational culture. In the article “Something Fishy about Boeing” the
author explains the importance of leadership and how it plays a key role in setting the
organizational culture. Laurin (2010) points out four, “pillars of organizational greatness:
leadership, the business culture, along with the political and reward structures” (p.25). Effective
organizations have a well thought out organizational structure and understand why leadership is
the key to maintaining that structure. The leaders in the organization are the ones that are going
to set the culture of that organization. The author explains that leaders know the effects of
organizational culture; leaders must recognize that “culture is a major contributing factor to a
sustainable competitive advantage…culture fosters and rewards creativity, inventive thinking,
and very bright ideas” (Laurin, 2010. p.26). When leaders know this they will help to set the
tone of the culture by living it themselves. They will also expect their personnel to embrace the
culture as they have. Laurin (2010) discusses the leader’s role, “My job is to connect people to
their future, whatever and wherever that might be” (p.27). By doing this, the author as a leader is
establishing the mindset that people come first in the organization. This enhances the
relationship between the leaders and their personnel. In turn, it helps to establish an effective
organizational culture.
ORGANIZATIONAL CULTURE 16
When leaders in the organization do not understand that leadership is a key factor to
organizational culture it will prevent them from having an effective company. Organizations
need to work through items, like lack of leadership, that prevent or hinder organizational culture.
In the article “Winning workplace cultures” Reid cites results on studies conducted on culture.
Reid (2013) cites: “Waterston’s 2011 Corporate Culture Study, over 90% said leadership is the
number one contributor to culture, that culture is the number one contributor to performance …
and, therefore, leadership drives performance” (p.3). The significance of the amount of the
organization impacted by culture validates the importance of having leadership at every level.
The implementation of leadership must be a priority with leaders at all levels and the
organizational culture must also connect with its people.
Connections. Personnel must connect with the culture and have buy-in. “Culture is
voluntary and cannot be forced on employees” (Garvin, 2014, p.116). Having people that
connect with organizational culture is an important factor that will drive the culture throughout
the organization. One way the author says this can be done is with having a strong participation
with the Human Resource office. It is important for HR to have “cradle to grave” involvement.
Reid (2013) cites an interviewee “people need to believe the success of the organization is
directly related to their success; they need to have clear goals they can believe in” (p.3). Having
this type of connection with its people the organizational culture will be strong and implemented
by everyone. This article also mentions some of the same factors many other articles mention.
There are several more factors besides leadership and having a connection to the culture from its
people that are important to the effects on a company’s organizational culture. Factors like:
trust, values, communication, and respect are all important in building and maintaining an
affective organizational culture.
ORGANIZATIONAL CULTURE 17
Trust is another critical factor in organizational culture. Building a culture of trust is
important in any organization. Trust will help people with connecting and for successful buy-in
into the culture the company wants to establish and maintain. In the article “What is Culture” the
author gives his take on how trust affects culture and why it is a key factor. In understanding
culture, Wherry states “you have to ask these three questions: how is truth defined; is individual
trust given or earned; and where do ideas come from” (Wherry, 2014, n.p.). The importance of
these questions is evident in how trust is understood by a company’s leaders. It is common
knowledge that trust can be given but it is preferably earned; “company leaders must treat
everyone equally and not play favorites” (Natarajan as cited by Garvin, 2014, p.116). Giving
trust means giving “sufficient data and support” and the autonomy for one’s people to make the
right decisions (Wherry, 2014, n.p.). A culture of trust helps build communication,
relationships, collaboration and more. Successful companies understand this point and also
understand the different factors of trust and openness will benefit the company to have an
effective culture.
Values, vision, mission, and organizational culture alignment. Values, vision, and the
mission of the company must align with the organizational culture for the company to be
effective, this factor must be established from the leaders or executives of the company. In the
article “Six components of a great corporate culture” Coleman (2013) feels values are “the core
of the company’s culture. “Value offers guidelines on the behaviors and mindsets needed to
achieve that vision. [They must be authentic]” (Coleman, 2013, n.p.). Many people can be
asked what the company’s mission statement is, or what the values of the company are. They
would read from a prepared card or at logo painted or imprinted on a plaque on the wall. For an
effective organizational culture these must be aligned and the people must truly believe in them.
ORGANIZATIONAL CULTURE 18
The author identifies six components to an effective culture. Coleman (2013) identifies these six
components as: “vision, values, practice, people, narrative, and place” (n.p.). Coleman (2013)
also mentions as many other authors on culture that it needs to be specific to the organization.
“Each culture is unique and myriad factors go into creating one” (n.p.). It is also mentioned in
the article “Customize your Culture” when the authors state “Very successful organizations have
a clear vision and strong set of values, upon which culture ‘hooks’ on to” (Strategic
Communication Management, 2013, p.23). By understanding the numerous factors leaders can
effectively establish an organizational culture that is aligned with the company’s values, their
vision, and a workable mission statement; a mission statement that really connects, one that is
not for show but also is valued by the personnel of the organization.
Communication. Communication is an essential part of leadership, the organization,
and culture. When pertaining to organizational culture that is in need of change, communication
is a powerful factor used to move people towards the new direction in-line with the culture
leaders are trying to establish. The authors Mashall & Adamic (2010) touch on leaders trying to
change bad cultures. “For leaders trying to change a cynical culture … the need for powerful
and persuasive communication is even more acute” (Mashall & Adamic, 2010, p.21). This is
done through communication with their personnel. There are several ways to approach
communication, the best is using one that really sticks or relates to the personnel.
Telling the story or “The Narrative” is one of the best ways of conveying the culture
throughout the organization. The key factor on defining and developing the corporate culture is
by leaders connecting their culture through story telling; much the same way people have done
through folklore (Marshall & Adamic, 2010, p.18). This has been mentioned in several articles.
Story telling is a great way for a message to stick. “Ideally, the story not only reaches its
ORGANIZATIONAL CULTURE 19
immediate audience, but spreads through word of mouth and managers at all levels until it
becomes part of corporate heritage and culture” (p.19). The authors stress how storytelling by a
company’s leaders about the organization, is one of the best ways for people to receive and keep
the message of how the culture in the organization should be. Parker points out (as cited by
Marshall & Adamic, 2010) “People remember stories a lot better than they remember lectures”
(p.19). Through communication and story telling the authors express that leaders can set, or
change the organizational culture into a winning culture. As Reid (2013) states “a winning
workplace culture is imperative for enabling success” (Reid, 2013, p.2). The factors that have
been mentioned so far are the ones that have been most common throughout all the articles.
There are though some additional factors that are worth mentioning because of their importance.
Having the right people. Having the right people is a continuing theme when it comes
to having an effective organizational culture. Getting the right people starts at the beginning.
Coleman (2013) states “Make sure you have the right people to fit and buy into your culture …
[recruiting is a big part]” (n.p.). Then he gives data that is in line with other articles on
organizational culture that shows positive results from having the right culture. Coleman (2013)
refers to a “Monster.com study, which found that applicants who were a cultural fit would accept
a 7% lower salary, and departments with cultural alignment had 30% less turnover” (n.p.). Once
more, this is why many authors feel “corporate cultures are incredibly stable over time. They are
self-perpetuating, because they attract new people who like that kind of culture” (Kirby, 2007,
p.80).
This is the reason why once leaders have established the culture they want in your organization it
is easy to maintain. Repeated throughout this research is that idea that “best firms are “fanatical
about recruiting new employees who are not just the most talented but also the best suited to a
ORGANIZATIONAL CULTURE 20
particular corporate culture” (Coleman, 2013, n.p.). All the successfully large companies like
Boing, Amazon, Costco, are having their HR recruit people that fit their culture. Doing this is
like making sure you are only planting the crops you want and not planting weeds in your garden
that will kill destroy your garden or your company.
Environment, setting or place. Environment setting or places are also to be considered
when assessing organizational culture.
According to Coleman (2013)
Open architecture is more conducive to certain office behaviors, like collaboration.
Certain cities and countries have local cultures that may reinforce or contradict the
culture a firm is trying to create. Place — whether geography, architecture, or aesthetic
design — impacts the values and behaviors of people in a workplace. (n.p.)
The environment where people can have unplanned integration is important. Places within the
company and the company’s geographical location will affect choices of areas where people can
congregate freely. This can be a break or lunch room. The layout of a work center will affect
the culture as in closed off cubicles versus an open floor plan to promote collaboration. Leaders
must understand this applies not only to within their building but the location in the country or
world will also be a factor that affects culture. People in New York City have different values
and act differently than people in Seattle, something that leaders would need to consider when
managing organizational culture. The same will hold true for people of countries who will have
different cultural values. All of these factors are important and must be considered when
understanding and dealing with how they affect organizational culture.
ORGANIZATIONAL CULTURE 21
What is the relationship between profit and growth (the effectiveness of having a culture
that works) and organizational culture?
The benefits of having an effective organizational culture are numerous. According to
Buble (2012) “corporate culture can have a significant impact on a firm’s long-term economic
performance, is an even more important factor in determining the success or failure of
firms”(p.85). Success can be measured in many ways such as in growth, ingenuity, job
satisfaction of employees and of course, the bottom line. In the article “Winning workplace
cultures: An imperative for enabling business success,” the author cites some quantitative
evidences that show the benefits of having an effective organizational culture (Reid, 2013, p.2).
According to Parker (as cited by Reid, 2013) “2013 winners of ‘Canada’s 10 Most Admired
Corporate Cultures’ outpaced the S&P/TSX 60 by an average of 400 %, in terms of a three-year
compound annual growth rate” (p.2). As studies are done on the relationship between profit and
growth and organizational culture; the evidence consistently grows in that there is a correlation
when it comes to performance of a company and culture. Other authors explain and express
more quantitative relationship in that “those firms with a strong corporate culture, based on a
foundation of shared values, experienced revenue growth that was more than four times faster
than average; job creation that was seven times higher; stock price growth 12 times faster; and
profit performance that was 750 percent higher” (Strategic Communication Management, 2013,
p.22).
A culture of innovation. Boeing Corporation is one company used by authors to show
the relationship between an effective organizational culture and innovation. Boeing’s C-17 is
one airframe that has benefited with profit and growth as a result of the organizational culture
their leaders have built. The author Laurin (2010) “explains the top 10% of people in a company
ORGANIZATIONAL CULTURE 22
[are the top performers], and having an organizational culture of innovation; helps to cultivate
top performers, this also encourages thinking and action that drives innovation into your
business” (Laurin, 2010, p.27). Many companies cultivate a culture of innovation, which in turn
helps the business go in the direction they want. A strong culture of innovation helps businesses
such as Boeing, Google, Apple and many others deal with complex problems. Dale and Kennedy
(1982) “concluded that organizational culture is twined into all of an organization’s activities …
Such a significance of organizational culture encourages the conclusion that a strong
organizational culture is the prerequisite for the success and development of modern
organizations” (as cited by Buble, 2012, p.86). This is why successful companies have made the
management of organizational culture a priority right alongside other major programs like
marketing and finance.
Leadership. According to author Schein (1997) ‘‘[Southwest] has developed a
generation of future leaders who daily live the core values and business principles that have
contributed to creating and preserving the Southwest culture’’ (as cited by Marshall & Adamic,
2010, p.21). Southwest understood and utilized effectively the factors of an effective
organizational culture. Companies and researchers of organizational culture look to Southwest
for the relationship of profit and growth.
A non-affective culture. In the article “Interdependence of organizational culture and
leadership styles in large firms” the authors talk about how leadership style can have
consequences to an effective culture. Cameron & Quinn (1999), “demonstrating that most
organizations develop a dominant style of leadership, from whence they developed a model of
mutual relationship between organizational culture, leadership, and efficiency” (Buble, 2012,
p.86). Leaders using the dominant style of leadership will inhibit a culture of innovation. They
ORGANIZATIONAL CULTURE 23
will also inhibit a culture of trust. Having a collaborative conflict management culture works
because it promotes “cooperative behavior…which best serve the interests of the group as a
whole, are rewarded” (Youngyoung, 2013, p.688). On the other hand having a dominant conflict
management culture breeds “open disagreement and competitive behavior”… and resulted in
lower job satisfaction among the sample taken. The author does note one of the limitations to the
study was that “only participants in a service industry area [were surveyed]” (Younyoung, 2013,
p.692). With more research being conducted the effects of leadership style and conflict
management will show more of the relationship of organizational culture and relationship
between profit and growth or bottom line.
More links on how not having the right culture negatively affects profit and growth talks
about a study done in Croatia. According to Buble (2012) the study showed “showed [a large
firm] developing an “authoritative and dominant style of leadership will likely produce excessive
bureaucracy in the organization, which prevents entrepreneurial orientation, and in the large
firms in Croatia, paid less attention to human factors” (Buble, 2012, p.90). Having this type of
leadership has an overall negative affect on the culture and in turn their profit and growth. Buble
(2012) goes on to state that “This can be quite dangerous for further development of this firm,
considering the significant and quick changes in the globalized world” (p.91). It will be
detrimental for IT companies like Apple, Google and Microsoft, to be lead in an authoritative
and dominate style because it will inhibit a creative or innovative culture.
Overall there has not been enough research on organizational culture and its relationship
to factors of leadership (Buble, 2012, p.86). The author in the article “The influence of conflict
management culture on job satisfaction” explains the relationship of organizational culture and
profit and growth. The author explains “researchers showed that effectiveness of conflict
ORGANIZATIONAL CULTURE 24
management culture does relate to the job environment, types of jobs, and cultural differences”
(Rahim, 2002, as cited by Younyoung, p.692). A point leader at all levels needs to understand
when incorporating their leadership style and assessing their conflict management approach.
According to Lawson, Hatch, and Desroches (2013):
Conflict Resolution Dresner’s fourth criterion for a performance-directed culture
concerns conflict resolution. Effective conflict resolution requires the identification of
issues, consideration of all factors involved, and the resolution of the conflict on a fair
and reasonable basis. Unfortunately, effective conflict resolution is the exception rather
than the norm. (p.48).
Conflict resolution and an effective organizational culture are linked. According to
Lawson, Hatch, & Desroches (2013) “There’s a very strong, positive relationship between
having effective conflict resolution procedures in an organization and its achieving benefits from
a CPM system” (p.48). All of these will show a positive relationship to profit and growth. Even
results of the survey showed; “The collaborative conflict management culture had a statistically
significant positive direct effect on job satisfaction, holding all else constant” (Younyoung, 2013,
p.690). Additional surveys show quantitative results on the correlation of a conflict management
culture to job satisfaction. Based on analysis of surveys the Younyoung (2013) conducted
resulted and showed “that a collaborative conflict management culture has a positive effect on
job satisfaction whereas a dominant management culture has a negative effect on job
satisfaction” (Younyoung, 2013, p.687).
Companies such as Apple, Google, 3M, the Palo Alto Research Center Inc. (PARC),
Pixar Animation Studios, P&G and dozens more have demonstrated strong records of innovation
success and the cultures needed to support that success” (Financial Executive, 2012, p.35). All
ORGANIZATIONAL CULTURE 25
of them understand the relationship between an effective organizational culture of the company
and the bottom line. According to Lawson, Hatch, and Desroches (2013) “Technology supports
system effectiveness, but a performance-oriented culture—one that values people, performance,
transparency, and accountability—is key to system effectiveness. Technology is important for a
successful CPM implementation as an enabler of people—not the other way around” ( p.44).
The effective companies all use a culture management program that continuously helps to drive
their success. All the articles researched showed a positive relationship between profit and
growth having an effective organizational culture. The bottom line as Reid (2013) states is “A
winning culture is truly the ultimate competitive advantage” (Reid, 2013, p.2). It is backed up by
many articles containing quantitative empirical evidences supporting this positive relationship.
ORGANIZATIONAL CULTURE 26
Conclusion and Recommendations
Conclusions and recommendations are drawn from the findings of the Literature Review
that explored the following research questions:
What does organizational culture mean to successful companies?
What are the factors that affect organizational culture?
What is the relationship between profit and growth (the effectiveness of having a culture
that works) and organizational culture?
Conclusion
What does organizational culture mean to successful companies? Companies today
who understand what organizational culture means to them and why it is important are
successful. The basic definition of organizational culture is: how things are done or how
business is conducted in a company, the behavior of personnel, the climate and environment of
how people feel. Even though the basic definition and factors of organizational culture can apply
to all companies; C-level leaders of companies need to understand how their unique
organizational culture applies to their company. C-level leaders must take the knowledge of
their organizational culture, and manage it to insure it aligns or fits their company.
All of the authors mentioned came to the same conclusion as Wherry (2014) who best
states “culture is what makes an organization unique or special” (Wherry, 2014, n.p.).
Understanding organizational culture is essential for knowing how it affects an organization and
how to manage it. For the most part, organizational culture is, “The way we do things around
here” (Strategic Communication Management, 2013, p.22). But organizational culture is much
more. It is how people behave in their organization based on norms, values, perceptions, habits,
ORGANIZATIONAL CULTURE 27
how they work, dress, their social order or rules on how things are done in the organization and
what they feel is acceptable or not.
The general meaning of organizational culture can be identical to companies in its basic
form, but it also different to different types of companies. One company might value having a
culture of innovation. Another company might value having a culture of quality control. The
culture of Google and the organizational culture of Amazon will have some the same basic
factors, but these two companies will each have a very different culture.
One thing that will hold true for all companies is that their organizational culture must
align with a company’s mission and values of the company. C-level leaders must have an active
role in this because it is one of the biggest obstacles companies face in being successful. “Not
having the culture alignment with the “business strategy, mission, vision, and values” will
definitely disrupt the company’s effectiveness (Reid, 2013, p.3). It is essential for the success of
a company to have its culture aligned with these four critical components of every organization.
Amazon is an example of a company with its culture aligned with its focus on the customer.
Companies that have aligned their organizational culture did so by managing it with a self-
assessment to understand where they are when it comes to organizational culture.
What are the factors that affect organizational culture? This research has also
provided a practical list of important factors that affect organizational culture of all companies.
First of all, leadership is one of the biggest key factors for having an organizational culture that is
effective and helps the company be successful. Connection is another important factor. Leaders
must connect with their people to effectively influence them. In organizational culture the
personnel of a company must connect with the company’s culture to be effectively influenced by
it. As in most aspects of organizations and leadership, trust is a vital component of
ORGANIZATIONAL CULTURE 28
organizational culture. Next, organization culture must align with values, mission, and vision of
company, as mentioned earlier. A factor that will help leaders convey the culture throughout
their company is how the organizational culture is communicated, “the narrative.” One of the
factors that will help keep the organizational culture the C-level leaders want is to have the right
people. Finally, one factor that often gets overlooked is location or the environment.
The level of importance of these factors can be disputed but in general most of the
authors concluded all of these being important with leadership being the most. Leadership at
every level (C-level, managers, front line supervisor) is important in management of
organizational culture. Leaders are the ones who convey and set the example they wish others to
follow. C-level or executives, leaders at the top of the organization, are the ones that insure
alignment with company’s values, business strategy, mission, and vision. A good leader will
know the effects of organizational culture; leaders must recognize that “culture is major
contributing factor to a sustainable competitive advantage…culture fosters and rewards
creativity, inventive thinking, and very bright ideas” (Laurin, 2010. p.26). In knowing this
leaders will help to set the tone of the culture by living it themselves. They will also expect their
personnel to embrace the culture as they have.
Connection between the people and the culture is another key factor. Personnel within
the company must accept and embrace the culture; it must not just be a fancy slogan on the wall
or website. When they take ownership it becomes self-perpetuating. The author Coleman
(2013) refers to “Monster.com study found applicants who were a cultural fit would accept a 7%
lower salary, and departments with cultural alignment had 30% less turnover” (n.p.). This
quantitative evidence is in partly why many authors feel “corporate cultures are incredibly stable
over time. They are self-perpetuating, because they attract new people who like that kind of
ORGANIZATIONAL CULTURE 29
culture” (Kirby, 2007, p.80). Once leaders have established the culture they want in their
organization, when people are connected to it, it is easy to maintain.
The other factors such as trust, how the culture is communicated, and picking the right
people are also factors that will apply to most companies. Trust is an important factor in every
type of organizational culture. It is one of the foundations for leadership. It ties the
organization, people and culture together. A culture of trust is essential. Without trust the
organization most likely will fall apart. Just as stories have been told throughout time, when
leaders communicate the culture as in a story it will stick in the minds of their people. They are
able to make a better connection with the culture the leaders are trying to establish. Human
Resources must hire individuals that match their organizational culture. Leaders must also
recognize people that just refuse to embrace the organizational culture, counsel, find them
alternative positions, or even possibly let them go. The factor of environment, space or the
location where people meet was not mentioned by many authors, but is important when it comes
to organizational culture. Location, spaces, or the geographical setting refers to the places where
people interact. Cultural diversity also affects these places where interaction occurs and
influences organizational culture. Leaders must consider and manage the spaces where people
interact to help people positively affect organizational culture.
What is the relationship between profit and growth (the effectiveness of having a
culture that works) and organizational culture? In this research one will find that having the
right culture helps the overall effectiveness of the company which in turn helps the bottom line.
Several of the articles showed a correlation between the relationship between profit and growth
(the effectiveness of having a culture that works) and organizational culture. Having the right
organizational culture will yield positive results in their companies. Amazon, Google and
ORGANIZATIONAL CULTURE 30
Starbucks are just some examples of companies who have done well even through the recent
recession that has occurred in this country because of the cultures they have established in their
organization. On the other hand having a wrong culture can inhibit innovation, obstruct effective
communication, and negatively affect the bottom line. The authors all concluded literally that
“organizational culture affects the bottom line” in so far as companies who manage an effective
organizational culture will have positive retention, growth, innovation…etc. Those companies
that do not effectively manage organizational culture will not.
Recommendations
Three points can be made in recommending anyone wanting to effectively manage the
culture in a company or organization. First, C-level leaders need to make organizational culture
a priority and should do an assessment to understand the current culture of their organization. C-
level leaders can create an action plan in doing this and use resources as in “Diagnose Your
Culture” guide in “Building a culture that Energizes Innovation” or similar self-assessment to
establish a base line to determine what is their company’s current organizational culture and
where do they want their company to be (Financial Executive, 2012, p.24). Second, Leadership
should evaluate the type of culture that would be most beneficial for their organization. They
should create an action plan in which executives evaluate the organizational culture to insure that
it is in line with company’s values, mission, and vision. Third, leaders must understand that the
six factors of an effective organizational culture (Leaders involvement, Recruitment,
Communication Trust, Innovation, Location or settings) are universal and all organizations
should incorporate them. Leaders should create an action plan to incorporate these factors by
having leadership involvement in making organizational culture as a priority. This includes
leadership at every level. Also as part of the leader’s action plan he or she should establish
ORGANIZATIONAL CULTURE 31
procedures or tests to insure the company’s recruitment of personnel that fit the organizational
culture. Leaders must learn and understand ways to establish a culture of trust and innovation.
Leaders at every level must learn to communicate the culture and can do so by telling a story.
Additionally, in their action plan they must incorporate and manage the locations or settings and
use them to stimulate the organizational culture a company wants.
Recommendation for Further Research. In addition to the recommendation just
mentioned, further research on organizational culture should be conducted not only by leaders
wanting to manage organizational culture, but anyone studying leadership or behavioral sciences.
“Overall there has not been enough research on organizational culture and its relationship to
factors of leadership” (Buble, 2012, p.86). Even though successful companies today have done
the research on organizational culture and understand the importance of it, it seems not much of
the findings have been added to the recent surge of books on leadership and how to run a
successful company. The information on how to establish, manage and maintain an effective
organizational culture should be a high priority of anyone who is studying leadership, learning
how to run an organization, or C-level leaders and executives wanting to enhance the
effectiveness of their company.
My Personal Action Plan. While attending a transition assistance program prior to
separating from the military I understood that I was leaving the organizational culture I was used
to for 24 years and going to look for employment at a company that would most likely have a
very different culture. What I experienced many also do. One of the findings mentioned was
that organizational culture effects retention. People will be more successful if they take a couple
of steps prior to applying for work at a company to insure they fit into that company’s
organizational culture. My action plan was to create a list of important items to research in
ORGANIZATIONAL CULTURE 32
companies that I plan to apply for work at and use this checklist in my job search. The following
is a list of items anyone should use in researching a company’s organizational culture:
o Get organized! Make a list of companies you might want to work for and find out as
much information you would like to know about them.
o Analyze personal values and compare with those of the company. You can do this
first by looking at the company’s website. Look for the mission statement, posted values,
posted vision, etc. Research who they invest in; what if they invest in a country that
supports terrorism, or child labor? Research what outreach programs they have and also
what have they done to help or hinder the community, environment.
o Analyze work-related values with those of the company. How is life balance viewed
in the company? Do they expect you to be on 24/7 call? How is the leadership in the
company? What is the retention of personnel like? Also should know the size of
company and how many employees the company has.
o Once you have researched all you can about the company online, then call the
company and set up an interview for you to research the company with one of their
employees. You can talk to the Human Resources personnel, but also set up an interview
with someone in the company that has the same position. Have a list of questions ready
and ask about many of the items you research, like company values, work-related values,
etc.
This is just a short list that anyone can do to research a company. One can find more online or in
job search information literature. By doing these individuals can help to ensure they will “fit in”
the organizational culture of the company they are applying to. These will also help the
ORGANIZATIONAL CULTURE 33
company by requiting the right people, and help them in maintaining an effective organizational
culture.
ORGANIZATIONAL CULTURE 34
References:
Buble, M. (2012). Interdependence of organizational culture and leadership styles in large firms/
Management: Journal Of Contemporary Management Issues, (2), 85.
Building a culture that energizes innovation. (2012). Financial Executive, 28(2), 32-35.
Coleman, J., (2013) Six components of a great corporate culture. Harvard Business Review Blog
Network. hardvardbusiness.org
Customize your culture. (2013). Strategic Communication Management, 17(4), 22-25.
Garvin, D. A. (2014). Can a strong culture be too strong? Leaders at an IT services firm
contemplate whether its family-like atmosphere draws talent in or drives it away.
Harvard Business Review, (1-2), 113.
Kirby, J., & Stewart, T. A. (2007). The institutional yes: How Amazon’s CEO leads strategic
change in a culture obsesses with today’s customer. Harvard Business Review, (10), 74-
82.
Laurin, C. (2010). Something “Fishy” about Boeing. Journal for Quality & Participation, 33(1),
25-27.
Lawson, R., Hatch, T., & Desroches, D. (2013). How corporate culture affects performance
management. Strategic Finance, 95(1), 42-50.
Marshall, J., & Adamic, M. (2010). The story is in the message: Shaping corporate culture.
Journal of Business Strategy, 31(2), 18-23.
Reid, J. (2013, Sept-Oct.). Winning workplace cultures: An imperative for enabling business
success. Ivey Business Journal Reprints.
Wherry, E. (2014). What is culture? Forbes Women; Forbes online Retrieved
from: http://www.forbes.com
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YOUNYOUNG, C. (2013). The influence of conflict management culture on job satisfaction.
Social Behavior & Personality: An International Journal, 41(4), 687-692.
doi:10.2224/sbp.2013.41.4.687