Skip to main content
Select Source:

Organizational Culture

Organizational Culture

An organizational culture is defined as the shared assumptions, values, and beliefs that guide the actions of its members. Large organizations usually have a dominant culture (shared by the majority of the organization) and subcultures (represented by groups of individuals with unique values or beliefs that may or may not be consistent with the dominant culture). Subcultures that reject the dominant culture are called countercultures. Organizational culture tends to be shaped by the founders' values, the industry and business environment, the national culture, and the senior leaders' vision and behavior.

THE IMPORTANCE OF ORGANIZATIONAL CULTURE

As people work together to accomplish goals, groups develop into organizations. As goals become more specific and longer-term, and work more specialized, organizations become both more formal and institutionalized. Organizations tend to take on a life of their own and widely held beliefs, values, and practices develop, differentiating one organization from another and often affecting the organization's success or failure. As one commentator has noted, Most organizational scholars and observers now recognize that organizational culture has a powerful effect on the performance and long-term effectiveness of organizations.

The importance of organizational culture is a relatively new phenomenon. While organizational psychologists began developing theories of organizational behavior during the 1950s and 1960s, it wasn't until the 1980s that the culture of the organization was recognized as a key determinant of behavior and effectiveness. The interest in organizational cultures was largely created by William Ouchi's 1981 best-seller, Theory Z: How American Business Can Meet the Japanese Challenge. Ouchi considered organizational culture to be a key factor in creating an effective organization. In 1982 two other best-sellers, Terrance Deal and Allan Kennedy's Corporate Cultures: The Rites and Rituals of Corporate Life and Thomas Peters and Robert Waterman's In Search of Excellence, supported the idea that excellent companies tended to have strong cultures.

Throughout the 1980s, management scholars began attempting to describe these belief systems, which they referred to as organizational or corporate cultures. Interest in organizational culture has remained strong in subsequent decades as managers and executives continue to recognize the impact an organization's culture can have on such key factors as morale, productivity, and profit.

A STRONG ORGANIZATIONAL CULTURE

Strong organizational cultures are those where the core values of the dominant culture are strongly believed by the great majority of organizational members. A strong culture tends to increase behavior consistency and reduce turnover.

There are many practices within an organization that tend to keep a culture alive and measure the cultural fit between the organization and its employees. Many of the human resource practices such as selection, performance appraisal, training, and career development reinforce the organization's culture. Organizational beliefs also tend to influence the work norms, communication practices, and philosophical stances of employees. Organizations use a process called socialization to adapt new employees to the organization's culture. If employees do not adapt well, they feel increasing pressure from supervisors and from coworkers who are better acculturated. They might stay and fight, stay and become isolated, or leave the organization, voluntarily or involuntarily, and look for a different organization whose culture they fit better.

In contrast, employees who understand and share the organization's values have a better basis for making choices that match the firm's goals. Many organizations compete through innovation. When most employees understand and support the organization's expectations, less time is spent explaining, instructing, and building consensus before trying something innovative. Moreover, the error level will be lower in most cases. Employees who are well acculturated also find their work more meaningful: They are part of, and contributing to, something larger than themselves. Thus, a good cultural fit between employees and the organization contributes to employee retention, organizational productivity, and profit. However, strong cultures may be less adaptive to change, may create barriers to diversity, and may create barriers to successful acquisitions and mergers.

MEANS OF CONVEYING CULTURE

Organizations often convey cultural values explicitly by means of mission statements or corporate credos, or to a lesser extent through slogans, logos, or advertising campaigns. Leaders and managers also show what the organization values by what they say and do, what they reward, who they make allies, and how they motivate compliance. Other elements of culture appear tacitly in symbols and symbolic behavior. For instance, meeting protocols, greeting behavior, allocation and use of space, and status symbols are a few areas where organizational norms often develop. Culture can regulate social norms as well as work or task norms.

The new-employee orientation typically offered by organizations conveys selected cultural elements of which management is both aware and proud. Some cultural elements might be initially unpalatable, however, and some others might be hard to put into words. For instance, an orientation would rarely say outright that the culture rewards neglect of one's personal life and demands a sixty-hour work week, although these expectations are not unknown in corporate life. Perceptive new employees learn about tacit cultural elements through observation and through questioning trusted employees or mentors. This is not one-time learning; employees must continue to watch for signs that the rules are changing.

These organizational rules include explicit policy statements, but also a much larger and less evident set of unwritten organizational expectations. Attentive employees figure them out sooner than others. They listen to the metaphors, images, and sayings that are common in the organization. They watch, for example, the consequences of others' mistakes to reach conclusions about appropriate behavior.

Organizations also communicate values and rules through displayed artifacts. For example, in some organizations, the CEO's office displays many symbols of wealth, such as expensive original art or antiques. In others, the CEO's workspace is very spartan and differs little from that of other executives and higher-level managers. In the former case, a manager with other sources of income might be able to afford similar status symbols but would be unwise to display them since this might be perceived as competing with the CEO. In the latter case, display of personal wealth by people in general would probably be counter to organizational values.

Even the way a physical plant is laid out communicates cultural messages: Is it an open area where everyone can see everyone? Are there cubicles? Are there private offices? Is it easy or difficult to move and communicate between functional areas? Have ergonomics and convenience been considered or ignored? Are there adequate neutral spaces for people to meet to make decisions and solve problems? Do the break rooms and lunch rooms invite or discourage use?

SOME COMPONENTS OF CULTURE

The idea that organizations have cultures came originally from ethnography, the study and description of human social cultures. Researchers in organizational culture have borrowed some of that language. Individuals in societies took on specific roles, such as ruler, priest, historian, or teacher. In organizations, similar roles emerge. The historian or storyteller, for instance, is usually a longtime employee who narrates inspirational stories about the company's early years or its evolution. Embodied in the stories are many of the core values that permeate the organization. This organizational folklore includes oft-repeated stories about the founder, a long-term CEO, a dramatic firing, or an individual who rose through the ranks very quickly owing to some attribute highly valued by the firm. The stars of an organization are comparable to a social culture's heroes. An organization's success stories yield role models for the ambitious.

Organizations develop rites and rituals comparable to traditional activities within an ethnic culture. Whereas some organizations might emphasize award ceremonies, others might de-emphasize explicit recognition and affiliation behaviors. Still others might foster management by walking around, whereby managers spend frequent one-on-one time away from their desks giving praise or criticism to individuals. As another example, lunch with the president might be a longstanding tradition, although the amount of actual communication will vary from organization to organization according to unwritten rules about who talks to whom.

Although all organizations have both formal and informal communication networks, organizational culture strongly affects the content, reliability, and influence of

the informal network or grapevine. When information through formal channels is scarce, the grapevine carries heavier traffic. Leaders aware of culture's importance try to find ways to tap and monitor the grapevine and sometimes use the grapevine by adding information to it.

CULTURE CHANGE

An organization's culture is composed of relatively stable characteristics that are based on deeply held values that are reinforced by many organizational practices. However, an organizational culture can be changed, and increasingly, such changes are becoming more frequent. Because of the fast-paced and dynamic nature of the twenty-first century's global environment, changes in organizational structure are today seen as just as important as constancy and steadfastness were in the previous century. As Cameron and Quinn point out in their 2006 book Diagnosing and Changing Organizational Culture, Stability is interpreted more often as stagnation than steadiness, and organizations that are not in the business of change and transition are generally viewed as recalcitrant.

Beginning in the early 2000s, a number of books were published to guide organizations in changing their cultures. Such works as Managing Change and Transition, Strategic Organizational Change, and The Corporate Culture Handbook: How to Plan, Implement, And Measure a Successful Culture Change Programme have come to define the discussion of organizational culture. One example of when organizations must adapt their culture is when organizations become multinational. With the increase in global organizations, it has become clear that national cultures impinge on organizational cultures. Besides language differences, employees bring to the job many radically different assumptions about such aspects as the dignity of work, the proper relationship between employee and supervisor, the value of initiative, the treatment of unwelcome information, and the voicing of complaints. Organizations with international customers, and even more, those with global operations, have needed to learn how to adapt to a multicultural environment. Failure to adapt jeopardizes an organization's chance of success abroad.

Despite their importance and even necessity, cultural changes are not necessarily easy to decide upon or implement. Cultural changes are most likely to occur when there is a dramatic setback such as a financial crisis or when there is a turnover in top leadership. Also, younger and smaller organizations and organizations with a weak culture are more amenable to change.

Deliberate and major culture change occurs by executive fiat, by implementation of a plan, or a combination of these means. When leadership changes or when existing leadership commits to change, employees learn that the old assumptions which they were comfortable are no longer safe. After a merger or acquisition, for example, how we do things here will change, sometimes quickly and radically. A wise leadership team implements a planned culture-change process. The process usually consists of a series of two-way communications that elicit the prevailing assumptions, reassure employees that the changes can benefit them, introduce (sometimes gradually) the new vision, and work to gain employees' commitment and support. Leaders also must model the new culture for others and change the organization's structure and management practices to support the new culture. If the leaders skip the process or do an inadequate job, employees at all levels experience stress, confusion, and anger. When change is introduced so as not to arouse fear and resentment, however, transition may be relatively smooth.

To summarize, organizational culture is the shared assumptions, beliefs and values held by most members of an organization. Culture is conveyed in both explicit and implicit ways. Newcomers to an organization must quickly assimilate a great deal about the culture. Veteran employees must remain aware of cultural change too, especially when the leadership changes. A strong culture that is aligned with the organization's strategic context and is adaptive to environmental changes can enhance an organization's long-term financial performance.

SEE ALSO Organizational Behavior; Organizational Development; Theory Z

BIBLIOGRAPHY

Cameron, Kim S., and Robert E. Quinn. Diagnosing and Changing Organizational Culture. San Francisco, CA: Jossey-Bass, 2006.

Deal, Terrence E., and Allan A. Kennedy. Corporate Cultures: The Rites and Rituals of Corporate Life. Reading, MA: Addison-Wesley, 1982.

Graf, Alan B. Building Corporate Cultures. Chief Executive, March 2005, 18.

Hofstede, Geert, and Gert Jan Hofstede. Cultures and Organizations: Software of the Mind. 2nd ed. New York: McGraw-Hill, 2004.

LaRue, Bruce, and Robert R. Ivany. Transform Your Culture. Executive Excellence, December 2004, 1415.

LeFranc, Fred. A Dynamic Culture Can Make a Franchise System Successful. Franchising World, February 2005, 7577.

Luecke, Richard. Managing Change and Transition. Boston, MA: Harvard Business School Publishing, 2003.

O'Donovan, Gabrielle. The Corporate Culture Handbook: How to Plan, Implement, And Measure a Successful Culture Change Programme. Dublin: Liffey Press, 2006.

Ouchi, William G. Theory Z: How American Business Can Meet the Japanese Challenge. Reading, MA: Addison-Wesley, 1981.

Panico, C. Richard. Culture's Competitive Advantage. Global Cosmetic Industry 172, no. 12 (2004): 5860.

Peters, Thomas J., and Robert H. Waterman, Jr. In Search of Excellence: Lessons from America's Best Run Companies. New York: Harper & Row, 1982.

Wright, Gordon. Realigning the Culture. Building Design & Construction 46, no. 1 (2005): 2634.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Organizational Culture." Encyclopedia of Management. . Encyclopedia.com. 26 Jul. 2017 <http://www.encyclopedia.com>.

"Organizational Culture." Encyclopedia of Management. . Encyclopedia.com. (July 26, 2017). http://www.encyclopedia.com/management/encyclopedias-almanacs-transcripts-and-maps/organizational-culture

"Organizational Culture." Encyclopedia of Management. . Retrieved July 26, 2017 from Encyclopedia.com: http://www.encyclopedia.com/management/encyclopedias-almanacs-transcripts-and-maps/organizational-culture

School Climate

SCHOOL CLIMATE


Anyone who spends time in schools quickly discovers how one school can feel different from other schools. School climate is a general term that refers to the feel, atmosphere, tone, ideology, or milieu of a school. Just as individuals have personalities, so too do schools; a school climate may be thought of as the personality of a school.

The concept of organizational climate has a rich history in the social science literature. In the early 1960s George Sterns was one of the first psychologists who saw the analogy with individual personality and used the concept of organizational climate to study institutions of higher education. The use of the concept quickly spread to schools and business organizations, each with a somewhat different conceptual view of climate. Although there are a variety of conceptualizations, there is general agreement that organizational climate arises from routine organizational practices that are important to an organization's members, that it is defined by member perceptions, and that it influences members' attitudes and behavior. Thus, school climate is a relatively enduring character of a school that is experienced by its participants, that affects their actions, and that is based on the collective perceptions of behavior in the school.

Measuring School Climate

Andrew Halpin and Don Croft's pioneering analysis, The Organizational Climate of Schools, has had a great impact on the study of school climate. They developed the Organizational Climate Description Questionnaire (OCDQ), a sixty-four-item Likertscale questionnaire that is used to assess the teacherteacher and teacheradministrator interactions found in elementary schools. Teachers and administrators are asked to describe the extent to which key behaviors occur, such as how frequently (rarely, sometimes, often, or very frequently) "The principal stays after school to help teachers finish their work," "The principal looks out for the personal welfare of teachers," and "The teachers accomplish their work with great vim, vigor, and pleasure." Thus, school climate is defined in terms of educators' perceptions of the leadership behavior of the principal and interactions among teachers. Patterns of principal and teacher behaviors are then arrayed along a rough continuum, ranging from open to closed school climates. An open school climate is one in which teacher and principal behavior is supportive, genuine, and engaged, whereas a closed climate is characterized by lack of authenticity, game playing, and disengaged behavior. There were a number of limitations to early versions of the OCDQ. For example, it only measured the climate of elementary schools, and the validity of some of its subtests was questioned.

Subsequent revisions of the OCDQ have addressed these issues, and three new and simplified versions of the questionnaire have been formulated for use in elementary, middle, and secondary schools. The revised OCDQ was conceptualized using the same framework of open versus closed climates and behaviors. For example, open principal behavior in elementary schools is measured through items that describe supportive principal behavior that is neither directive nor restrictive, and open teacher behavior is that which is collegial, intimate, and committed to teaching and learning.

Another climate framework uses a health metaphorschool climate is measured in terms of healthy interpersonal dynamics. In the tradition of the OCDQ, the Organizational Health Inventory (OHI) is a set of descriptive statements that tap productive relationships in school. There are three versions of the OHIelementary, middle, and secondary. This broad climate perspective examines the relationships between the school and environment, the leadership of the principal, relationships among teachers, and relationships between teachers and students. For example, the secondary version maps seven aspects of school climate:

  1. Institutional Integrity is the extent to which the school is able to manage its constraints from the community
  2. Consideration is principal behavior that is genuinely collegial, friendly, open, and caring toward the faculty
  3. Initiating Structure is principal behavior that is oriented toward both tasks and achievements through clearly articulated work expectations and performance standards
  4. Principal Influence describes the principal's ability to influence superiors
  5. Resource Support is the ability of the principal to obtain classroom materials and supplies needed by teachers
  6. Morale is the collective sense of friendliness, openness, and enthusiasm among members of the teaching staff
  7. Academic Emphasis is the extent to which the teachers and students are committed to academic excellence

A pattern of high scores on these variables defines a healthy school climate. There are, of course, other measures of school climate, but the openness and health frameworks have generated the bulk of the systematic research on school climate.

School Climate and Outcomes

Empirical evidence has linked school climate with achievement. Though school climate is often defined differently in various studies, the research evidence using the OCDQ and the OHI measures of climate is encouraging. Openness of school climate has been linked primarily to expressive characteristics in schools. For example, the more open the school climate, the more committed, loyal, and satisfied the teachers are. Similarly, the more open the climate of the school, the less alienated students tend to be. School climate, from the health perspective, has been positively related to school effectiveness. Most of the health variables correlate significantly with general subjective measures of effectiveness, and the variable of academic emphasis has consistently been related to student achievement in high schools, middle schools, and urban elementary schools. In fact, the relationships hold even controlling for the effects of socioeconomic status.

Trends, Issues, and Controversies

School climate has become a global construct that researchers often use loosely to group together studies of school environment, learning environment, learning climate, sense of community, leadership, academic climate, and social climate. This broad application reveals both the strength and weakness of school climate studyit is a useful integrating concept on the one hand, but it also suffers from a lack of clear definition. Like so many other terms that are bandied about, the word climate threatens to become meaningless. Because its referents are so diverse, the word sometimes obscures, rather than creates, understanding. School culture is a related term that has been use to describe the work environment; in fact, climate and culture are often used interchangeably by some educators to refer to the distinctive workplace of a school. A useful distinction is that culture consists of shared values and assumptions, whereas climate is defined by shared perceptions of behavior.

In many studies, after a small number of "effective" and "ineffective" schools are identified, researchers catalog each school's organizational characteristics and attempt to find consistent differences between the two types of schools. Not surprisingly, the differences vary from study to study when such post hoc methods are used, and the list of effective school attributes grows as such studies accumulate. In addition, organizational characteristics are defined differently in each study, so that reviewers use general terms to summarize the characteristics of effective schoolsterms such as positive school climate and strong leadership, which are often defined quite differently in various studies.

What is missing in much of the research on school climate is the theoretical linkage that explains these relationships. It is important, for example, not only to know that climate is related to student achievement, but also to ascertain why this is so. What are the generalizations and mechanisms that explain higher achievement? These are critical questions, and their answers will provide a deeper understanding of the dynamics of organizational life in schools and suggest more effective and lasting solutions to the problems of practice. Evidence is beginning to suggest, for example, that a school climate with open, healthy, and collegial professional interactions and strong academic emphasis empowers teachers and creates norms of collective efficacy that shape the normative environment of schools and influence teacher behavior. When teachers believe that they can organize and execute their teaching in ways that are successful in helping students learn, and when the school climate supports them, teachers plan more, accept personal responsibility for student performance, are not deterred by temporary setbacks, and act purposefully to enhance student learning. It is important to try to understand how specific school climate attributes influence critical teacher behaviors that improve teaching and learning in the classroom.

See also: Principal, School; School-Based Decision-Making; Social Organization of Schools.

bibliography

Bandura, Albert. 1997. Self-Efficacy: The Exercise of Control. New York: Freeman.

Brookover, Wilbur B., and Colleagues. 1987.

"Elementary School Social Climate and School Achievement." American Educational Research Journal 15:301318.

Bossert, Steve T. 1988. "School Effects." In Handbook of Research on Educational Administration, ed. Norman J. Boyan. New York: Longman.

Goddard, Roger D.; Hoy, Wayne K.; and Woolfolk Hoy, Anita. 2000. "Collective Teacher Efficacy: Its Meaning, Measure, and Impact on Student Achievement." American Educational Research Journal 37:479507.

Goddard, Roger D.; Sweetland, Scott R.; and Hoy, Wayne K. 2000. "Academic Emphasis of Urban Elementary Schools and Student Achievement in Reading and Mathematics: A Multi-Level Analysis." Educational Administration Quarterly 36:683702.

Halpin, Andrew W., and Croft, Don B. 1963. The Organizational Climate of Schools. Chicago: Midwest Administration Center of the University of Chicago.

Hoy, Wayne K., and Miskel, Cecil G. 2001. Educational Administration: Theory, Research, and Practice, 6th edition. New York: McGraw-Hill.

Hoy, Wayne K., and Sabo, Dennis J. 1998. Quality Middle Schools: Open and Healthy. Thousand Oaks, CA: Corwin.

Hoy, Wayne K.; Tarter, C. John; and Kottkamp, Robert B. 1991. Open Schools/Healthy Schools: Measuring Organizational Climate. Beverly Hills, CA: Sage.

Sweetland, Scott R., and Hoy, Wayne K. 2000. "School Characteristics and Educational Outcomes: Toward an Organizational Model of Student Achievement in Middle Schools." Educational Administration Quarterly 36:703729.

Wayne K. Hoy

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"School Climate." Encyclopedia of Education. . Encyclopedia.com. 26 Jul. 2017 <http://www.encyclopedia.com>.

"School Climate." Encyclopedia of Education. . Encyclopedia.com. (July 26, 2017). http://www.encyclopedia.com/education/encyclopedias-almanacs-transcripts-and-maps/school-climate

"School Climate." Encyclopedia of Education. . Retrieved July 26, 2017 from Encyclopedia.com: http://www.encyclopedia.com/education/encyclopedias-almanacs-transcripts-and-maps/school-climate

Corporate Culture

Corporate Culture

Corporate culture refers to the shared values, attitudes, standards, and beliefs that characterize members of an organization and define its nature. Corporate culture is rooted in an organization's goals, strategies, structure, and approaches to labor, customers, investors, and the greater community. As such, it is an essential component in any business's ultimate success or failure. Closely related concepts, discussed elsewhere in this volume, are corporate ethics (which formally state the company's values) and corporate image (which is the public perception of the corporate culture). The concept is somewhat complex, abstract, and difficult to grasp. A good way to define it is by indirection. The Hagberg Consulting Group does just that on its Web page on the subject. HCG suggests five questions that, if answered, get at the essence:

  • What 10 words would you use to describe your company?
  • Around here what's really important?
  • Around here who gets promoted?
  • Around here what behaviors get rewarded?
  • Around here who fits in and who doesn't?

As these questions suggest, every company has a culturebut not all cultures (or aspects of them) help a company reach its goals. The questions also suggest that that companies may have a "real culture," discernible by answering these questions, and another one which may sound better but may not be the true one.

EMERGENCE AND CHARACTERISTICS

The concept of corporate culture emerged as a consciously cultivated reality in the 1960s along-side related developments like the social responsibility movementitself the consequence of environmentalism, consumerism, and public hostility to multinationals. Awareness of corporate culture was undoubtedly also a consequence of growth, not least expansion overseaswhere corporations found themselves competing in other national cultures. The U.S. competition with Japan, with its unique corporate culture, was yet another influence. So was the rise to prominence of management gurus the dean of whom was Peter Drucker. As corporations became aware of themselves as actors on the social scene, corporate culture became yet another aspect of the business to watch and to evaluatealongside the "hard" measures of assets, revenues, profits, and shareholder return.

Corporate culture by definition affects a firm's operations. It is also, by definition, something that flows from management downward and outward. In many corporations, the "culture" was set very early on by the charismatic activity and leadership of a founder. But as major tendencies become deeply institutionalized, corporate culture also becomes an institutional habit that newcomers acquire. In actual practice "reinventing" the corporation from the top down, therefore, is difficult to achieve, takes time, and happens only under strong leadership.

Observers and analysts of the phenomenon tend to subdivide culture into its various expressions related either to major constituencies (employees and workers, customers, vendors, government, the community) or to methods or styles of operation (cautious, conservative, risk-taking, aggressive, innovative). A corporate culture may also, by overstepping certain bounds, become suicidalas the case of Enron Corporation, the energy trader, illustrates. In the Enron culture an aggressive, creative, high-risk style led to fraud and ultimate collapse. Analysis is helpful in understanding how a corporate culture expresses itself in specific areas. However, the concept is social and culture, as the phrase itself implies. It does not lend itself to reorganization by a rearrangement of standard building blocks.

CULTURE IN SMALL BUSINESSES

Culture can be a particularly important consideration for small businesses. A healthy company culture may increase employees' commitment and productivity, while an unhealthy culture may inhibit a company's growth or even contribute to business failure. Many entrepreneurs, when they first start a new business, quite naturally tend to take on a great deal of responsibility themselves. As the company grows and adds employees, however, the authoritarian management style that the business owner used successfully in a very small company can become detrimental. Instead of attempting to retain control over all aspects of the business, the small business owner should, as consultant Morty Lefcoe told Nation's Business, strive to "get everybody else in the organization to do your job, while you create an environment so that they can do it."

In a healthy culture, employees view themselves as part of a team and gain satisfaction from helping the overall company succeed. When employees sense that they are contributing to a successful group effort, their level of commitment and productivity, and thus the quality of the company's products or services, are likely to improve. In contrast, employees in an unhealthy culture tend to view themselves as individuals, distinct from the company, and focus upon their own needs. They only perform the most basic requirements of their jobs, and their mainand perhaps onlymotivation is their paycheck.

Since every company is different, there are many ways to develop a culture that works. Following are several main principles that small business owners should consider in order to create a healthy corporate culture:

Prevailing corporate culture begins at the top. Entrepreneurs need to explain and share their vision of the company's future with their workers. "Let your vision for the company become their vision for the company," stated John O'Malley in his article "How to Create a Winning Corporate Culture." He goes on to say that "a company without a vision is reactive in nature, and its management is seldom confident addressing competitive threats and stepping into the future." In addition, small business owners should be aware that their own behavior and attitudes set the standard for the entire workforce. Small business owners who set poor examples in areas such as lifestyle, dedication to quality, business or personal ethics, and dealings with others (customers, vendors, and employees) will almost certainly find their companies defined by such characteristics.

Treat all employees equally. Entrepreneurs should treat all employees equally. This does not mean that business owners can not bestow extra rewards on workers who excel, but it does mean that interactions with all employees should be based on a foundation of respect for them. One particular pitfall in this area for many small business owners is nepotism. Many small businesses are family-owned and operated. But bloodlines should be irrelevant in daily operations. "Successful businesses constantly place 'you are no different' expectations on family members they employ," noted O'Malley. "Doing otherwise quickly undermines employees' morale. Showing favoritism in the workplace is like swimming with sharksyou are destined to get bitten."

Hiring decisions should reflect desired corporate culture. The wise small business owner will hire workers who will treat clients and fellow employees well and dedicate themselves to mastering the tasks for which they are responsible. After all, "good attitude" is an essential component of any healthy corporate culture. But entrepreneurs and their managers also need to make sure that hiring decisions are not based upon ethnic, racial, or gender issues. Besides, businesses typically benefit from having a diverse workforce rather than one that is overly homogeneous.

Two-way communication is essential. Small business owners who discuss problems realistically with their workforce and enlist employees' help in solving them will likely be rewarded with a healthy internal environment. This can be an important asset, for once a participatory and engaging culture has been established, it can help propel a small business ahead of its competition.

On the other hand, problems with the corporate culture can play a major role in small business failures. When employees only perform the tasks necessary to their own jobs, rather than putting out extra effort on behalf of the overall business, productivity declines and growth comes to a halt. Unfortunately, many entrepreneurs tend to ignore the developing cultures within their businesses until it is too late to make needed changes.

In an article for Entrepreneur, Robert McGarvey outlined some warning signs of trouble with the company culture, including: increased turnover; difficulty in hiring talented people; employees arriving at work and leaving for home right on time; low attendance at company events; a lack of honest communication and understanding of the company mission; an "us-versus-them" mentality between employees and management; and declining quality and customer satisfaction. A small business exhibiting one or more of these warning signs should consider whether the problems stem from the company culture. If so, the small business owner should take steps to improve the culture, including reaffirming the company's mission and goals and establishing a more open relationship with employees.

see also Corporate Ethics; Corporate Image

BIBLIOGRAPHY

Barrier, Michael. "Building a Healthy Company Culture." Nation's Business. September 1997.

"Corporate Culture: Telling the CEO the Baby is Ugly." Hagenberg Consulting Group. Available from http://www.hcgnet.com/research.asp?id=6. Retrieved on 2 February 2006.

Grensing-Pophal, Lin. "Hiring to Fit Your Corporate Culture." HRMagazine. August 1999.

Hindle, Tim. Field Guide to Strategy. Boston: Harvard Business/The Economist Reference Series, 1994.

McGarvey, Robert. "Culture Clash." Entrepreneur. November 1997.

O'Malley, John. "How to Create a Winning Corporate Culture." Birmingham Business Journal. 11 August 2000.

Phegan, Barry. Developing Your Company Culture: The Joy of Leadership. Context Press, 1996.

                                Hillstrom, Northern Lights

                                 updated by Magee, ECDI

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Corporate Culture." Encyclopedia of Small Business. . Encyclopedia.com. 26 Jul. 2017 <http://www.encyclopedia.com>.

"Corporate Culture." Encyclopedia of Small Business. . Encyclopedia.com. (July 26, 2017). http://www.encyclopedia.com/entrepreneurs/encyclopedias-almanacs-transcripts-and-maps/corporate-culture

"Corporate Culture." Encyclopedia of Small Business. . Retrieved July 26, 2017 from Encyclopedia.com: http://www.encyclopedia.com/entrepreneurs/encyclopedias-almanacs-transcripts-and-maps/corporate-culture

organizational culture

organizational culture The values, norms, and patterns of action that characterize social relationships within a formal organization. This concept came to the fore in a series of British and American management texts of the 1980s, which attempted to explain either (or sometimes both) the difficulties of Western businesses in coping with economic recession, and the challenge of the Japanese. Many of these texts— including best-selling accounts by William G. Ouchi (Theory Z, 1981)
, Thomas J. Peters and and Robert H. Waterman (In Search of Excellence, 1982)
, Walter Goldsmith and and David Clutterbuck (The Winning Streak, 1984)
, Richard Tanner Pascale and and Anthony G. Athos , The Art of Japanese Management, 1981)
, and Terence Deal and and Alan Kennedy (Corporate Cultures, 1988)
— simply reiterate the insights of the Human Relations perspective on industrial relations. ( Ouchi, for example, explicitly calls for ‘a redirection of attention to human relations in the corporate world’.) Deal and Kennedy, on the other hand, largely reiterate the analysis and conclusions reached earlier by Tom Burns and and G. M. Stalker (in The Management of Innovation, 1961)
, notably those regarding the workings of plural social systems within organizations, and the necessity of matching management systems to their economic and political environments. In short, this is an extensive and curiously influential concept and literature, given that it seems to be just so much rediscovering of some commonplace sociological wheels. See also CONTINGENCY THEORY.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"organizational culture." A Dictionary of Sociology. . Encyclopedia.com. 26 Jul. 2017 <http://www.encyclopedia.com>.

"organizational culture." A Dictionary of Sociology. . Encyclopedia.com. (July 26, 2017). http://www.encyclopedia.com/social-sciences/dictionaries-thesauruses-pictures-and-press-releases/organizational-culture

"organizational culture." A Dictionary of Sociology. . Retrieved July 26, 2017 from Encyclopedia.com: http://www.encyclopedia.com/social-sciences/dictionaries-thesauruses-pictures-and-press-releases/organizational-culture

culture, organizational

culture, organizational See ORGANIZATIONAL CULTURE.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"culture, organizational." A Dictionary of Sociology. . Encyclopedia.com. 26 Jul. 2017 <http://www.encyclopedia.com>.

"culture, organizational." A Dictionary of Sociology. . Encyclopedia.com. (July 26, 2017). http://www.encyclopedia.com/social-sciences/dictionaries-thesauruses-pictures-and-press-releases/culture-organizational

"culture, organizational." A Dictionary of Sociology. . Retrieved July 26, 2017 from Encyclopedia.com: http://www.encyclopedia.com/social-sciences/dictionaries-thesauruses-pictures-and-press-releases/culture-organizational