Organisational culture can have a positive or negative effect on organisational effectiveness. Discuss this statement with reference to management literature and to real world examples.
The term “Culture” is used by anthropologist in order to specify the societies customs and practices which has been followed from decades . There are more than 150 definitions defined for the word “Culture” by experts till now. As defined by Hofstede “culture is a combined programming of mind which separates or differentiates one set of group from others” (Alony , 2009). Organisation culture is the culture which develops its own culture extracted from specific characteristics, knowledge and experiences eg. multinational companies (wood , 2002). Culture has been widely used in organisation by managers to handle people, functions, departments, infrastructure, shareholders, government, internal and external environment, politicians , suppliers and many more. Culture's are practiced in organisation to develop synergies between employees which leads to profitable output. Right kind of culture are practiced in the area's such as culture in quality, culture in customer services. Many researchers believed that culture in any organisation can be understood only by observing the true activities in organisation, when related data collected are similar and makes logic , when they are attempted to define they should generate for advance studies.
Culture is influenced on every individuals in different stages of their life . “National culture” In early childhood, “Occupational” in their adulthood and “Organisational influence” in their later part of life, but this is for a very short period (Alony , 2009). Inattention on the social system in an organisation, failing to recognize the role played by culture - belief, assumptions and norms in an organisation has shown the way for many problems. Differences in culture can be found in any organisation, cultural differences between two individuals in working place, differences in the departments and functions, differences in masculinity and femineity, geographic , religion and age (Rogerson , 2009). The problem in differences can affect the organisational effectiveness. Culture can be organised into different levels in organisation. The level of culture resembles in the form of inverted triangle, were it is believed that some cultures can be easily changed but some are deeply rooted into the organisation system that it becomes impossible to exterminate them from the system. Observable culture is the surface culture of the organisation which tells about ‘How things are done?.' they can be studied through stories, rituals , symbols and languages. Second level culture is Shared values, were every individual learns how to behave with their colleges?, respect their ideas, actions and finding solutions for day today problems they face. Common assumption is commonly shared by individual, it can be the truth about the information shared among each members of organisation as a result of their joint experience. They are deeply rooted and it is very difficult to isolate and they may unalterably cause problem during organisation crisis eg. Merger and acquisitions (Alony , 2009).
Organisational culture can be affected by many factors. Merger and acquisition can be considered as one of the major factor which affects the organisational culture and in return it can affect the organisational efficiency . As nearly as two-third of the newly merged companies failed to create a better market value. The promises made on papers are often failed when it comes to practice, the major reason for this failure is because of “People”. After years of planning for merger, companies often fails to realise how the people of the company are affected by the merger. Companies often focus on strategies for making dollars and cents instead of recognising to build synergies between the functions and to understand the people issues (Krell,2001) . When a newly joined employee of a company starts his/her job ,they are often given some time to know their role in the company, their responsibilities to carry out the job, reporting structure and the organisation internal culture. But what happens when large group of employees get new employer over night? (Edgar et al , 1999).
The positive effect on organisational culture due to merger between Aol and Time Warner were, both Aol and Time Warner are media companies. Merger resulted in sharing of technologies as Aol was providing cables, Time Warner used the cable facilities for broadcasting their channels. Employees got opportunity to share the knowledge of technology. Both companies aim was to attract customers from all over the world to use their service.
Aol and Time Warner two media companies was said to be a merger in fear. But merger with fear have less chances of success .The reasons for the failure of the merger were many. Miss communication with the company shareholders when Mr. Case sold shares soon after the merger, when the price of the shares was high. A profit of 160$ million was made were shareholders grew suspicious and annoyed. The visions were not communicated properly between two large companies. Poor management decisions, poor customer service and at last failed to build the synergies between the two companies. It was said the merger of two company was just a serendipities (ZDNet , 2009). Many companies faced similar failures. Failing to understand the internal organisation culture is the main drawback of every merger failure.
Experts always believed that two cultures can never be the same, combining two different culture is a very painful procedure, sharing of information always depends on clear communication. In other example, IBM and PwC was also considered to be “merger of equal”. But this was a successful story because merger was well documented and planned. IBM and PwC were two companies from different geographical location , Merging 60,000 employees globally. In the first weak the communication and change management team from IBM divided people into two work streams . First group was communication and other group was change and culture. Communication was easy to achieve by teaching every individual but change and culture was a long procedure which took time for employees to adopt. In change and culture, communication and change management team understood the risk assessment. Were risk of the “people” due to integration was focused and it was communicated to other members. Understanding the stakeholder in order to communicate and to understand who will be affected by this merger. Many data were collected for As-is culture assessment by allowing people to communicate each other. With these data collected in As-is culture assessment, To-be culture blueprint was mapped to fill the gap between the two cultures. A periodic climate check were conducted by the experts to measure their present performance with their previous performance (Sara , 2006).
Do's during the mergers - Promoting communication between the leaders to share the information, understanding the strength, weakness, opportunity and treats of an organisation. Providing clear idea to each and every individual about their roles and responsibilities in an organisation. Reengineering the process which has lost their value in the new entity. Make an honest effort to follow through on all commitments made throughout the merger or acquisition process. Acknowledge a person, function or department who is responsible for the change. Don'ts during the mergers are - underestimating the knowledge of a new employees. Expecting success overnight. Panic about the merger and discussing about the estimated financial budget (Edgar et al , 1999).
Service oriented organisation is another good example which follows organisational culture for success. In recent years service sector has grown rapidly. Customer-oriented organisational culture is to be prerequisite if service oriented company have to establish themselves in the competitive market. Service market has become more complex than traditional goods industries because, service cannot be touched , felt, tasted and smelled like food. In case of goods they are first produced and then they are consumed but in case of service they are produced and consumed at the same time. The quality of service varies from consumer to consumer, day to day eg. Meal in restaurant. Service cannot be stored like goods. Certainly success of all firms lies in strong organisational culture. Organisational culture focuses on the hidden internal forces which influences greatly on behaviour and productivity of employees (Parasurama , 1987).
In service oriented company employees can face problems in internal organisation which leads in poor customer services such as Power distance the degree to which people accept a hierarchical or unequal distribution of power in organisations. Uncertainty avoidance the degree to which people prefer structured rather than unstructured situations. Individualism - collectivism the degree to which people focus on working as individuals rather than working together. Masculinity - femininity the degree to which people emphasise so called masculine traits, such as assertiveness, independence and insensitivity to feelings, as dominant values. Long term - short term the degree to which people in a country emphasise values associated with the future over values that focus on the past or present.
In any industry positive outcomes are depended on “people”. Creativity and commitment from people is more important in service oriented company to tackle problems. Service oriented companies obtain profit by satisfying customers and transferring normal customer into loyal customer. This transformation cannot be achieved by single employee of a firm. A service oriented company cannot have a customer-oriented culture unless its culture also shows genuine concern for its employees. It depends on how employees are treated by managers , co-workers and how they feel working in the organisation. Sam Walton, founder of Wal-Mart showed concern to their employees whenever he walked for examination of store. This generated a friendly environment of faith and it is still continued . Watson treated every employees in a friendly manner by calling their first name and by greeting them, he also encouraged change and creativity. Employees were allowed to work in different positions. Wal-Mart considers culture as its key to success (Lees et al, 2001). Another best example is culture adopted in Southwest Airlines. Herb Kelleher, CEO of the firm encouraged employees to have fun at their jobs. Kelleher was engaged in witty acts such as meeting shareholder wearing informal wares such as jeans and t-shirt. He also challenged to wrestle with another company CEO to finalise the dispute on a slogan (Smith , 2004).
Organisation which adopts and maintains positive culture they likely to acquire benefits and profits. When people in organisation understand the role of the culture, the working atmosphere will be more pleasant and boosting. This directs to more information sharing, unity, team work and openness of new ideas. Continuous improvement in communication between worker , interaction among worker can be found due to information flowing within the organisation. By practicing such culture any organisation can help to attract and retain the efficient employees, company shareholders, suppliers and customers. Regardless of improvement in industry and technology, the organisational success is also depended on the organisation culture. The issues evolved during merger and planning should be handled sensitively by making effective decisions by top managers to safeguard the organisational culture. As discussed above managers should avoid Common assumptions which is considered to be the deepest rooted problem in an organisation during merger. customer satisfaction can be created only by developing a trusted organisational culture because customer are the only driving force for any organisation and there are no other alternative way for good customer service. By adopting this organisation can maintain a good relationship with the customers , provide better service and transform them to a loyal customers. Hence equal importance should be given to the organisational culture for effective outcome of an organisation.
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