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TABLE OF CONTENTS:
Introduction:...........................................................2
Body:......................................................................2
1. Definitions and concepts of corporate culture:...........................2
2. Organizational culture frameworks:............................................4
a. Handys four types......................................................................4
b. Deal and Kennedys typology:....................................................6
3. The functions of corporate culture:.............................................7
4. Impact on management style:....................................................9
5. Case study:...............................................................................10
Conclusion:...........................................................11
References:..........................................................13
APPENDIX:............................................................15
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Introduction:
Since the late 1970s and the early 1980s, corporate culture has gained much
attention as its effects and potential impact on organizational successes andthere are hundreds of articles have been discussed about this subject. There
are a large number of authors attempted to provide comprehensive
organizational cultures concepts and models. It firstly will provide a literature
review on the subject of organizational culture including the definitions,
concepts and frameworks. Then it will analyse the functions of corporate
culture and the impact of corporate culture on management style. Last but not
least, it will introduce the case of CBV Securities Joint-Stock Company and
discuss about its culture.
Body:
1. Definitions and concepts of corporate culture:
Despite the vast amount of studies on organisational culture, it is very difficult
to give a precise definition for this general concept. Before the first major workon organizational culture and management of Peters in 1978, it was just
vaguely mentioned by Blau and Scott (1962) as informal dimensions of an
organisation. Then, Pettigrew (1979) with significant work on this field noted
that cultures in an organization are cognitive systems which determine the
way of thinking, reasoning and making decisions. He also argued that
organisational culture is a complex set of values, assumptions, and beliefs
defining how an organisation operates (Pettigrew, 1990).
Drennan (1992) provided a simple and popular definition of culture as how
things are done around here. Similarly, Atkinson (1990) saw corporate
culture as the underlying assumptions about how the work is done, how
people think and behave in an organisation
A more detailed definitions of organizational culture is organizational culture
is the intrinsic and invisible values of the organization which have a great
influence on shaping individuals behaviour within the organization (Scholz,
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1987), the shared philosophy, ideologies, values, assumption, beliefs,
expectations, attitudes and norms that bring the organization together
(Kilman et al.,1985) , "a system of standard and behaviour chosen as a
means of problem solving (Ahmet et al.,1999) or the human creation that
bring about consensus and value and inspire commitment and efficiency
(Trice and Beyer,1984). According to Roskin (1986), corporate culture is a set
of common code of behaviour and beliefs that combine with organizational
human and structure factors to build up behavioural standard within the
organization.
Another way of defining business culture is to view it based on three levels
which are artefacts, espoused values and basic assumption as suggested by
Schein (2004). On the other hand, Deal and Kennedy (1982) refer to it as
three main dimensions: values, heroes and rituals.
Schein (1985) provided six cultural dimensions to explain the composition of
corporate culture that are: Behavioural regularities, dominant values, norms,
rules, philosophy and climate (further information could be found in the
Appendix). These six dimensions offer a tool to find out the interaction
between culture and organization. The cycle of culture is provided to reflect
this interaction. In this cycle, all the activities happened within the organization
are influenced by specific behaviour and related value patterns that are
created by culture. After that these activities are evaluated based on the
management objectives and then the results will be feed back into culture. If
the culture satisfy management objective it will be strengthen, if not it will be
changed.
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Picture 1: The cycle of culture (Schein, 1985)
2. Organizational culture frameworks:
a. Handys four typesAccording to Handy (1993), corporate culture is a group of shared values
and norms and beliefs that indicated in organizational structure and system.
Based on organizational structure, history and working environment etc.,
Developed from Harrisons study in 1972, Handy categorizes corporate
culture into four different types that are: Power culture, role culture, task
culture and people culture.
Power culture: The Power culture indicated the concentration of power that
often seen in small enterprises. Its structure is seen as a web in which the
power concentrates in the centre and spread out from this point. In this type of
culture, power concentrate on few persons who have absolute influence on
organizational decision-making and problem solving. The successes of the
organizations with power culture are mainly depended on the ability of those
who retain authority.
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Picture2: Power culture (The Web) (Handy,1993)
Role culture: Handy (1993) described the structure of role culture as a Greek
Temple and it is often seen in government institution, local authorities and the
state-owned businesses where job description, procedures, rules and
systems are very important.
In this culture, decision making process mainly based on hierarchy and this
type of culture is bureaucracy, however it is still logic and rational.
Organizations with role culture have two important characteristics that arepredictability and stability. Although job description is important in this culture
and every member in the organization is assigned a particular role, people are
not expected and motivated to overstep the role description.
Picture 3: Role culture (Greek Temple) (Handy,1993)
Task culture: Information and expertise are important factors of task culture.
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This culture stimulates a close link within the organization to fulfil the job and it
care more about effectiveness and efficiency than power and hierarchy. Task
culture is described as a net (or lattice).
In task culture, there is a strong link between departments and functions to
meet the need of the organization. Decision -making and problem solving
process are normally spread through out the lattice and the movement
depends on the task requirement. As it is flexible, it is easier for task culture to
adapt to changes.
Picture 4: Task culture (Lattice or net)(Handy,1993)
People culture: in people culture, human resource is considered as the most
important factor in the organization. All member of organization are treated
equally; organizational structures and environment are built to satisfy
members need.
Picture 5: People culture (cluster)(Handy,1993)
b. Deal and Kennedys typology:Deal and Kennedy (1982) based on the level of risk taken and the speed of
feedback received within the organization on decision making to divide
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organizational culture into four different groups that are: the tough guy
macho, the work hard/ play hard, bet your companyand theprocess culture.
This framework can be seen as a tool for manager to identify their
organizational culture.
Work hard/ play hard culture: this culture concentrates on productivity of
work and it is reflected in organization with low risk and quick feedback. Work
hard/play hard cultures sometimes concern more about the volume than the
quality.
Process culture: organizations with this type of culture pay more attention to
related systems and procedures. The features of process culture are low risk
and slow feedback speed. People working in this culture receive very little
feedback on what they had done thus they are so protective and cautious at
work.
The touch-guy, macho culture: this type of culture often found in high risk
and quick feedback organization. This culture stimulates the role of every
member within the organization and individual ability to achieve objectives is
important. Because of these characteristics, all the individuals have to workunder high pressure and internal competition. Organization with this type of
culture can be successful with quick return and high-risk environment instead
of investing in long-term projects. Turnover rate of staff in touch-guy, macho
culture is high.
Bet your company culture: Technical skill is the most important factor in this
culture. Organizations with this kind of culture take very high risk and receive
very slow respond from the environment. People working in this culture are
required to respect the hierarchy at work and technical competence, able to
co-operate with others to fulfil the task and work under high pressure.
3. The functions of corporate culture:As almost all scholars considered culture as an intrinsic asset of the
organization, there are large numbers of authors attempted to discuss about
the functions of organizational culture. Based on Hampden-Turner (1990),
organizational culture produces suitable behaviours, motivates all the
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members, provides solutions if needed. It also determines the communication
and information process and the relationship within organization. Whereas,
there are some writers consider culture as a liability. Sathe (1985) argued that
as culture is a pattern of shared values and norms, it has a great influence on
the way of doing business, thus it sometimes lead to unsuitable thinking and
actions. From these views, Brown (1995) drew out five main functions of
organizational culture:
Conflict solving: Organizational culture has an important role in
strengthening the relationship within the organization. Culture can be
considered as a guiding star for action and problem solving because it
fosters the stability of shared values and perceptions, help define problems
and evaluate issues and options. Organizational culture promotes internal
integration and consensus to reduce conflict. It also helps all members in
organization reach the common goals by promoting interpersonal relationship.
Co-ordinating and controlling: As culture is a set of shared norms and
behaviour that provides appropriate way for individuals to reach the common
agreement within the organization. Culture even helps organization find out
the most appropriate options when needed and also rejects options that are
incompatible with organizational culture. Culture also plays controlling role by
forming values, perception and basic assumptions. Culture is sometimes
more powerful than rules and regulations.
Uncertainty reduction: All organizations have to face with uncertainty at
work. As culture provides the common way of doing things and behaving, it is
easier for individuals to find out the optimal options and act in the most
suitable way.
Motivation: organizational culture is a significant tool of motivation. A strong
organizational culture can create an enjoyable, belonging and meaningful
feeling at work for employees, encourage them to be loyal and promote high
performance.
Competitive advantage: An organization with strong culture can reduce
conflict, better in coordinating and controlling, reduce uncertainty effectively
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motivate employees, and it also has great influence on the productivity and
the quality at work, thus it is seen as a competitive advantage. Strong
organizational culture provides a better chance for successful competition.
4. Impact on management style:According to Sayeed and Mehta (1981), planning, organizing, controlling and
goal setting are major functions of management in organization. It is
necessary for managers to perform their functions in a way that can satisfy
organizational need and requirements; moreover, their values and attitudes
have a great influence on organizations performance. Organizational culture
has significant impact on management style in terms of their thinking and
actions because it reflects the entire typical characteristics of an organization(Sadri and Lees, 2001).
Viorica (2006) argued that managers working in a strong culture tend to be
more responsible for their decisions, concern more about the order, discipline
and quality at work and they also try to achieve organizational goals. It is also
very important for managers to develop their typical characteristics that are
suitable with corporate culture thus it would be easier for them to perform
effectively and enhance the commitment and quality of the organization
(Rashid et al., 2003).
Prabhu (2005) suggested that different cultures have different values, norm,
underlying assumption and way of behaviour thus organizational culture could
determine negotiation, judgment, decision-making and thinking style of
managers. Moreover, corporate culture also defines the way managers
control, motivate their employees and stimulate commitment within the
organization and also impact on the degree managers concern for employees
non-work related matters (Buch and Wetzel, 2001).
For example, autocratic management style in power cultured organisations
implies that they are likely to suffer from low morale and high turnover of the
middle staff who can not cope with the fierce competitive atmosphere;
however, as these organisations really trust the individual and the emphasis is
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on results, they create an ideal environment for power-oriented individuals to
show full potential and become very successful.
Whereas, a clear impact of role culture on management is the emphasis on
rules and procedures. This implies a management style based on clear
structures and regulations. An advantage of this impact is that the work may
be done efficiently due to the rationality of the work allocation rather than
personal influences. The clear role description and procedures also provide
staff some source of guidance on what to do and how to do their work
correctly. However, the disadvantage of relying on rules and procedures is
that if overused, it may create bureaucracy that negatively affects the
productivity and flexibility of the organisation. Secondly, organisation with role
culture will succeed in a stable environment i.e. management based on rules
and procedures work best when the organisation can control its environment,
where markets are stable and predictable with long product life cycle.
However, this style of management is slow to identify the need for changes
and even if such a need is identified, organisations with role culture may find it
very difficult to react.
Furthermore, Lund (2003) argued that being aware of the organizations
dominant culture can help managers assess inherent strengths and limitations
of their strategies. Because in almost all organizations, attributes of several
cultures are presented and some of which have opposing values and
emphasis, managers who clearly aware of it can conduct more effective
strategies.
5. Case study:Established in 2002, CBV Securities Joint-Stock Company is the leading
securities company in Vietnam (CBV, 2008). CBV has very high level of
loyalty and commitment from both managers and employees. From the very
first time, CBV seriously concern about their staff by applying careful design
health care and welfare program for the whole company. CBVs organizational
culture is consultative and participative. All the individuals in CBV feel free to
raise their voice about any issues and they have very close relationship with
managers. Rules and regulations are very few, people rely on trust and
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conflict is rare. CBV managers are very democratic; they always respect all
the staffs opinions before making decisions and solving problems thus it
creates the feeling of belonging and promote commitment and loyalty among
employees. As a result, company reports no loss in productivity from the very
first time despite the impact of global financial on Vietnam financial market.
However, everything has its two sides, because of the close relationship
between managers and employees, sometimes managers tend to tolerant of
staffs mistakes thus it can affect the performance quality.
Conclusion:In conclusion, since the late 1970s and the early 1980s, there has been a
large number of researchers have provided different definitions and concepts
of corporate culture. Organisations culture is basically known as behaviour,
norms, values, philosophy, rules of the games and feelings (Hellriegel et al,
1998).
Based on Harrisons study in 1972, Handy (1993) categorizes corporate
culture into four different types that are: Power culture, role culture, task
culture and people culture. Deal and Kennedy (1982) based on the level of
risk taken and the speed of feedback received within the organization on
decision making to divide organizational culture into four different groups that
are: the tough guy macho, the work hard/ play hard, bet your companyand
theprocess culture. It is clear that organizational culture is very important for
every organization as it can be use as an useful tool to solve conflict, co-
ordinate and control the whole organization, motivate staffs and stimulate
comparative advantage.
Furthermore, corporate culture also has great influences on management
style, in the way managers making decisions, solving problems, thinking,
motivating employees, promoting commitment within the organization and
conducting business strategies.
As the important roles of culture for every organization, all individuals should
together build up a strong culture to enhance a better performance, inspire
commitment and knit the whole organization together. Moreover, a positive
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corporate culture will also help the organization to enhance executive
effectiveness and to reach the height of success.
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References:1. Ahmed, P.K., Loh, A.Y.E and Zairic, M (1999). Culture for continuous
improvement and learning. Total quality management. 4 (10). pp. 426-434.
2. Atkinson, P.E. (1990), Creating Cultural Change. Management
Services, 34(7), pp. 6 10
3. Blau, P.M. and Scott, W.R. (1962), Formal Organizations: A
Comparative Approach, Chandler, Toronto, Ontario, pp. 2-8.
4. Brown, A (1995). Organizational culture. London: Pitman Publishing.
pp.57-59.5. Buch, K and Wetzel, D (2001). Analyzing and realigning organizational
culture. Leadership and organization development journal. 22 (1).
pp.40-43.
6. Deal, T.E and Kennedy, A.A (1982), Corporate Cultures: the Rites and
Rituals of Corporate life. First edition. Penguin Group
7. Drennan, D. (1992), Transforming Company Culture, London: McGraw-
Hill
8. Handy, C. B (1993), Understanding Organisation,. Four Edition,
Penguin Books
9. Hampden-Turner, C (1990). Corporate culture from vicious to vicious
circle. London. Economist books.
10.Hellriegel, D., and Woodman, R. W (1998), Organisational Behaviour,
Eighth Edition, South-Western College, Cincinnati, OH.
11. Kilmann, R.H., Saxton, M.J., Serpa, R. and Associates (1985),
Gaining Control of the Corporate Culture, Jossey-Bass, San Francisco,
CA
12. Lund, D. (2003). Orgnizational culture and job satisfaction.
Journal of business and industrial marketing. 18 (3), pp.219-236.
13. Pettigrew, A.M. (1979). On studying organizational cultures,.
Administrative Science Quarterly, 24 (3), pp. 570-81.
14. Rashid, M (2003). The influence of corporate culture and
organizational commitment on performance. European journal of
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marketing. 31(5), pp. 356-365
15. Roskin, R. (1986), Corporate culture revolution: the
management development imperative. Journal of Managerial
Psychology, 1(2), pp. 3-9.
16. Sadri, G and Lees, B. (2001). Developing coporate culture as a
comparative advantages. Journal of management development. 20
(10), pp.853-859.
17. Sathe, V. (1985). Culture and related corporate realities.
Homewood, III: Irwin
18. Sayeed, O. B. and Mehta, P. (1981), Managerial Value
Innovation, Leadership Style, and Organizational Health: A Workgroup
Analysis, Indian Journal of Industrial Relations. 16 (7).pp. 531-544.
19. Scholz, C. (1987), Corporate culture and strategy: the problem
of strategic fit. Long Range Planning, 20( 4), pp. 78-87.
20. Schein, E. H. (1985) Organisational Culture and Leadership: A
Dynamic View, Third Edition, Jossey Bass.
21. Trice, H.M. and Beyer, J.M. (1984), Studying organizational
culture through rites and ceremonials. Academy of Management
Review, 9 (5), pp. 653-69.
22. Viorica, M. (2006). Changes in Romanian organizations:a
management culture approach. Journal of organizational change
management. 19 (6), 747-752.
23. www.CBV.com.vn
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APPENDIX:
The dimensions of culture:
- Behavioral regularities: This reflects observable patterns of behavior.
It might include induction ceremonies, the in-group language and the
ritualized behavior patterns that reflect membership of particular groups
or organizations
- Dominant values: These are the specific beliefs expressed by groups
and organization
- Norms: There are general patterns of behavior that all member of a
group are expected to follow
- Rules: are specific instructions of what must be done, whereas norms
are sometimes unwritten and informal accepted. The rules are the
must dos of the organization set out by management. However,
because they must be followed employees may simply comply with
them. This represents the different between doing something because
it is necessary and do it because of a belief that is right or because it
represents a norm of the particular group
- Philosophy: in this context these reflect the underlying beliefs that
people hold about people in general, their beliefs, mentality and the
basis on which they operate. Given that an organization is largely
formed by managers who run it, the philosophy of it naturally tends to
reflect their values. Based on this philosophy managers determine the
policies and practices that will guide the company and help to frame its
culture and operations
- Climate: the physical layout of building, attitudes to open plan as
opposed to enclosed offices, recreation facilities, management style
and design of public areas all help to create atmosphere or climate
within the company.
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