Blog

Jan 17

Organizational Culture, Leadership and Rules

Every organization has a culture.

Organizational culture represents the collective attitudes, customs, values, beliefs and principles of the team and is a product of such factors as history, products/services provided, market, technology, strategy, type of employees employed, and management style. All of which should be the result of what has been set and established by the organization’s leadership and corporate vision.

Organizational culture also defines workplace standards and sets procedures to give the organization, and furthermore, the employees direction as they conduct their daily business. Culture unifies people, allowing them to work cohesively, learn from one another and strive to be the best they can be.

No company exists without an organizational culture. The culture of a workplace makes the organization what it is. Organizational culture creates a unique brand for the business which helps it stand out among other similar businesses.

A strong organizational culture contributes to greater success and profitability, greater employee engagement, improved individual performance and lower turnover. 

Strong organizational cultures exist when employees respond because of their alignment to organizational values. In such environments, strong cultures help firms operate like well-oiled machines, engaging in outstanding execution with only minor adjustments to existing procedures.

Conversely, there is weak culture when there is no clarity of vision, poor leadership, little alignment with organizational values, and control must be exercised through extensive procedures and bureaucracy.

Given that all organizations have an organizational culture; given that organizational culture has huge influence on success (the degree or lack thereof), then the first organizational culture question is: Is your organizational culture one by design or one by accident?

If your organizational culture is not a topic you have given any thought to or proactively worked to create, then you have an organizational culture by accident. And this could well account for the frustrations, lack of progress, employee-related stress and the turnover you experience. Given that organizational culture is a choice, then it makes sense to have one by design rather than accident or happenstance.

The second organizational culture question is: Which organizational culture is the best for me?

There is a wide range of organizational cultures to explore and choose between. On one end of the spectrum is the authoritative or dictatorial culture. On the other end of the spectrum is the participatory or transparent culture. And of course there are a myriad of ones in between.

Which to choose? It is important to note that any and all organizational cultures will be undermined and/or destroyed by rumor, gossip and misunderstanding. Rumor, gossip and misunderstanding exist when employees have only part of the information and then are left to “fill in the blanks” about what is really going on or true.

Therefore, the authoritative or dictatorial culture and the participatory or transparent culture are the only two choices where rumor, gossip and misunderstanding are least likely to exist.

In the authoritative or dictatorial culture, rumor, gossip and misunderstanding don’t exist because no one knows anything about anything other than their own job and duty. In the participatory or transparent culture, rumor, gossip and misunderstanding don’t exist because employees have all of the information, and there is no need to guess, speculate or make stuff up.

The authoritative or dictatorial culture is where everyone follows orders or rules: “do as you are told, follow the rules.” The military is an example of this type of culture. The key differentiator of this culture is: the employees are not to think, management or the higher-ups know best.

The participatory or transparent culture is where there is a lot of communication, everyone knows what is happening, is involved in the decision-making process and everyone has a participatory (contributing) role to play. The key differentiator of this culture is: the employees are encouraged/expected to think.

The third organizational culture question is: To think or not to think?

The fact that you are in the “service” business, means you really only have one choice. The fact that every working day employees constantly need to make decisions that best support your customers/clients and the organization’s best interests, means you really only have one choice. The fact that it is impractical for you to make all decisions, means you really only have one choice. You must develop an organizational culture that is participatory and transparent. You need employees who:

  • Can/are encouraged to and will think, and
  • Are supported and given permission to think (within the context of your vision, mission, purpose and values), even if it means making a mistake, which becomes a teaching/learning opportunity.

It is a new paradigm, a new way of thinking: you pay your employees to think, not just to get the job done or do what they are told. When employees are valued for their brain, they stay; they are more committed; they are more engaged.

The alternative is to experience what recently happened to United Airlines. From a follow up article about United Airlines and the incident with Dr. Dao and his wife:

“United Continental Holdings Inc. follows strict rules on every aspect of handling its passengers. Deviating from the rules is frowned upon; employees can face termination for a foul-up, according to people familiar with the matter. This has helped create a rules-based culture where its 85,000 employees are reluctant to make choices not in the “book.”

Meaning employees are not to think, just follow the rules. The decisions that led to the crisis were fueled by employees following rules. So, from that standpoint, no one did anything wrong.

“Employees followed the policy, said a person familiar with United’s executive suite. United’s flat-footed reaction must become a defining moment in the history of United Airlines pivoting to customer service and customer delivery.”

As a service based/customer-based business, you cannot be rules first. Rules must be secondary to thinking; rules are what you fall back on as needed.

Having established that a participatory and transparent organizational culture where employee thinking is valued and encouraged and is best for service-based businesses, the task now becomes one of refinement.

Geert Hofstede, a social psychologist and authority on global and organizational cultures, provides the following six dimensions to consider as you refine and strengthen your organizational culture:

Means- vs. goal-oriented
A means-oriented culture places importance on how work gets done. The focus is on the way people do work and an emphasis on avoiding risk. On the opposite end of the spectrum, a goal-oriented culture identifies with what work gets done. There is a strong focus on achieving an end result. Of the six dimensions, this dimension correlates most strongly with organizational effectiveness; organizations with goal-oriented cultures are more effective than those with means-oriented cultures.

Internally vs. externally driven
Employees within an internally-driven culture see themselves as experts; they feel they know what is best for the client and customer and act accordingly. As Steve Jobs put it, “A lot of times, people don’t know what they want until you show it to them.” On the other side, employees working in an externally-driven culture are very customer-oriented and will do whatever the customer wants. Their favorite metric for customer satisfaction and mantra might be, “the customer is always right.” 

Easygoing vs. strict work discipline
Work discipline refers to the amount of structure and control. In an easygoing culture, the approach to work is informal, loose, unpredictable, and these characteristics facilitate a high level of innovation. With this approach, you better like surprises and be willing to improvise and adapt! In a strict culture, there is a fair amount of planning, which leads to efficiency and productivity. People take punctuality seriously and delegate work with detailed instructions. 

Local vs. professional
In a local organizational culture, employees identify with their boss and their teammates. This type of environment risks having a low level of diversity, since there are social pressures to act, look, and talk in a certain way. However, these defined norms allow for a great amount of predictability. In a company with a professional culture, employees identify with their profession or the content of the work. 

Open vs. closed system
In an open system, newcomers are welcomed easily. People are inclusive and take the approach that anyone will fit in well with the organization. A closed system is more exclusive, where newcomers have to prove themselves. Open cultures have managers and leaders who are approachable, and thus tend to see higher employee satisfaction. 

Employee- vs. work-centered
In a culture with an employee-centered management philosophy, leaders take responsibility for the happiness, well-being, and satisfaction of their employees. This is true even if it is at the expense of productivity. In a work-centered culture, a focus on high task performance can come at the expense of employees. In this environment, there is a low level of empathy for personal problems.

Conclusion
An organization’s culture is the systematic way employees, leaders, and work groups behave and interact with each other. Organizational culture is collectively composed of values, beliefs, norms, language, symbols, and habits.

Knowing and understanding your company’s culture (or another company’s culture) can be quite useful. A fit between your personality and your company’s culture is of critical importance to your happiness and your success, as well as that of your employees. If people don’t feel welcome or that they belong, it will impact professional relationships, individual drive and contribution, the desire to excel and long term retention.