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ORGANISATIONAL CULTURE: DEFINITIONS AND TRENDS Article · November 2018

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ORGANISATIONAL CULTURE: DEFINITION AND TRENDS

Introduction

Organization culture is the characteristic and the tangible personality originated inside every organization. Even If we are not familiar with companies like Starbucks, Google or WWF. Their names represent the taste of their workplaces, the attitude, the unwritten protocol of interactions and the company values. While some might think of organisational culture as the result of the organization's people and processes, something that cannot be controlled or quantified, the truth is, organisational culture is unexpectedly tangible. It can be deliberately designed and leveraged. It affects morale and employee engagement. It governs revenue rates and influences company performance and it affects profitability. Organizational culture differentiates the extraordinarily successful companies from all the rest. It can be a powerful, competitive advantage. The organizations’ culture is always distinct, but the big winners, consistently, it is the organizations that make culture a priority. This article will discuss some of the general cultural definitions and will go on following some specific cultural definitions for organizations. Looking at the question how the organisation culture affects the innovation strategy of the organizations. The article will also depict the influence of the trends and developments on the organisation structure. And the relationship between the organizations’ structure and culture. The article will also give examples of current trends and developments and different methods that are currently used to help organizations create the required change in their culture or structure.

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ORGANISATIONAL CULTURE: DEFINITION AND TRENDS

Organization culture defined

Culture definition varied through the years. For example, more than four decades ago, Herskowits conceived a wider definition of culture by suggesting that culture was a »human-made part of the environment« (Herskowits, 1955). Trying to interpret his definition, we may talk about »objective culture« (e.g., tables, computers, trains) and »subjective culture« (e.g., norms, roles, values). (Treven, Mulej, & Lynn, 2008) In a recent article in Harvard Business Review, the writers said that, Organizational culture is the collective effect of the common beliefs, behaviours, and values of the people within a company. Those norms within any organization regulate how employees perform and serve customers, how they co-operate with each other, whether they feel motivated to meet goals, and if they are sincerely into the company's overall mission. How are employees getting their work done? Independently or collaboratively? Do employees feel inspired, committed, and engaged, or annoyed, overworked, and underappreciated? (Groysberg, Lee, Price & Cheng, 2018) When we talk about organizational culture, we are talking about the employee experience, the internal view. What do the employees think? What is it like, to work here? How can the leadership keep them engaged, loyal, and devoted? Organizational culture, the employee experience, is a steady setting for every organization’s daily operations. It does not matter if the organizations develop a high-quality product or plan a killer kick-off meeting, if there is an underlying attitude of unpleasantness, resentment, or boredom, the long-term outlook for the organisation will not be good. Organization culture is the filter through which everything else happens. Meanwhile creating a positive employee experience is a universal goal, but there is more than one way to get there. And the lines between functions and duties are often blurred. (Brown, Melian, Solow, Chheng & Parker, 2015) We could define culture through four filters. The first being every culture is unique, and there is no single right answer. Even if different organizations have the same goal of creating happy employees, how they get there can be quite different. Second, cultures give us a clear guideline for finding potential employees who will be a good fit. When companies hire people, who are more likely to thrive in those environments, they significantly increase their odds of success. Third, cultures are fluid like and growing organic. They need to be grown and nurtured like any relationship. Sometimes cultures evolve as external factors alter, or as the company simply grows and expands. If the mission changes, the culture might need to adjust to the mission too. Other times companies fight to keep their cultures from evolving away from their core values. The point is, organizations need to watch their cultures and control when and if they change, rather than leaving that to chance. Fourth, some organizations can raise their internal cultures to become part of their external identity and set themselves apart. When we think about companies like Facebook, Coolblue or Whole Foods, we see that those brands are a straight reflection of the energy and spirit found inside the company. Their internal cultures distinguish them and power their financial success. These four qualities help us round out the definition of organizational culture. It reflects the employee experience, and it often determines whether companies win or lose. (Weiner, 2018)

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Why organizational culture matters

From a landmark research study about corporate culture and performance. Scientists looked at operational data from 207 large US companies in 22 industries across 11 years and compared the results of companies that dynamically led their cultures versus those that did not. Companies that managed culture well enlarged their stock prices by 901% versus 74% for those that did not. Culture-focused companies increased their income over the 11-year period by 682% versus 166%. Net revenue also saw a growth of 756% for companies that managed culture well versus 1% for companies that did not. That makes a powerful statement. Investing in your organizational culture can have an undeniable effect on productivity. (Cui & Hu, 2012) Companies that reach position between their culture and innovation strategy do better financially than those that do not. Jaruzelski, Loehr, and Holman categorized a sample of 1,000 world-wide innovating companies based on the degree of alignment between their culture and their innovation strategy. Companies with a high degree of alignment, when compared with those with a low degree of alignment, saw their enterprise value grow 12 per cent faster per annum over five years and their gross profit grow 7 per cent faster per annum. That significant difference was related directly to a company’s ability to fund innovation projects. (Grant & Shamonda, 2013)

Trends & Developments and Culture Change examples

As organizations grow and adapt to innovative technologies and practices, happened by the globalization of businesses increase. The current developments require from organizations to not only to react to the trends but also be proactive and start internally. There is a trend towards increased complexity in organizational structures and inter-departmental interactions. The introduction of cross-functional teams is another contributing factor. This has been the case for years, which needs new skills to adapt. As noted by the Society for Human Resource Management (SHRM); “there is a growing need for Organization Development professionals skilled in organizational design and change management required to effectively implement enhanced organizational structures.” (DeRosa, 2017) The way high-performing organizations run today is radically different from how they operated 10 years ago. Yet many other organizations continue to run according to industrial-age models that are 100 years old or more, weighed down by legacy practices, systems, and behaviours that must be confronted and discarded before true change can take hold. The structure of the legacy organization, which is for example composed of over 2,200 employees under a traditional command-and-control model, is not right for coping with latest developments and trends. The organization should set up a flexible organizational and governance structure centred around the Agile method: a network of teams grouped by product functionality, technical domains, and operational readiness, reporting to program leaders with the authority to approve final decisions. These organization should both hire new talent and assign the current employees to the change program, empowering them to make decisions in the best interest of the change program with little or no influence from the legacy organization.

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ORGANISATIONAL CULTURE: DEFINITION AND TRENDS Most essentially, the organization had to restructure itself to enable greater teamwork, communication, employee empowerment, and information flow. To make further progress, organizations focus on building a new leadership mindset, that rewards innovation, experimentation, learning, and customercentric design thinking. In short, if what a company needs to know and do is constantly changing, then the organization’s structure must change as well. only 14 percent of executives believe that the traditional organizational model—with hierarchical job levels based on expertise in a specific area—makes their organization highly effective. Instead, leading companies are pushing toward a more flexible, team-centric model. (Bersin, McDowell, Rahnema & Van Durme, 2018) For example, Philips Lighting conducted a series of workshops around the world to help their company identify its traditional current and future values to build alignment around a new, more innovative culture. The company created a common manifesto around four new cultural values (Pioneering, Caring, Fast, and External Focus) to help the company empower teams, rapidly innovate, and move into lighting services and a new market for Internet-based lamination. For instance, a large telecommunications company in Asia has embraced real-time dashboards that measure customer acquisition, customer satisfaction, hiring, employee satisfaction, and financial profitability across all 1,000 of its small business teams. This infrastructure, built on top of its SAP backbone, gives the entire company transparency, accountability, and the ability to adapt quickly. In the past five years, the gig economy has become a major trend changing the global workforce, and has created a new kind of diversity, with full-time permanent employees working side-by-side with freelancers. Platform-based talent markets might supply a solid structure to help supplement and even replace traditional hierarchies. They could also greatly alter how matrix organizations work. Workforce platforms are therefore likely to supply extensive stability in unpredictable environments. As the old view of hard and dotted lines begins to fade, companies might choose to group employees by their strongest activities and skills. Agile companies tend to have more fluid structures, in which day-today work is organized in smaller teams that often cut across business lines and market segments. From this functional home, they could be “rented,” via a talent market, by business-line and project leaders. The result would be at once more stable, since employees would be associated with familiar homes, yet more dynamic, as platform-based talent markets would help companies to reallocate their labour resources quickly when priorities and directions shift. (De Smet, Lund & Schaninger, 2016) As a result, and cause of the undeniable demographic’s math: As national populations age, challenges related to engaging and managing the older workforce will increase. Corporations that ignore or resist them may not only suffer reputational damage and liabilities, but also risk falling behind those organizations that succeed in turning long life into a competitive advantage. Based on these findings and

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ORGANISATIONAL CULTURE: DEFINITION AND TRENDS our anecdotal observations, we believe there may be a significant hidden problem of age bias in the workforce today. Left unaddressed, perceptions that a company’s culture and employment practices suffer from age bias could damage its brand and social capital. (Deloitte Insights, 2018) Millennials meet Generation Z in the workplace. Both generations will continue to put pressures on companies to transform the office, reward employees, embrace flexibility, and align the companies interests with a cause. ("Managing Gen Y and Z | Randstad USA", 2017) With the increase of millennials being in the workforce. There are range of programs aimed at not only protecting employee health, but actively boosting performance as well as social and emotional well-being. These now include innovative programs and tools for financial wellness, mental health, healthy diet and exercise, mindfulness, sleep, and stress management, as well as changes to culture and leadership behaviours to support these efforts. (Deloitte Insights, 2018)

("Managing Gen Y and Z | Randstad USA", 2017)

Increased Reliance on Smartphone Apps for Managing the Organization Smartphones and other mobile devices have become increasingly ubiquitous over the last few years. The prevalence of smartphone and tablets have led to the explosive development of apps for not only individual entertainment, but for businesses as well. Teamwork and productivity applications abound on app-enabled devices—giving organizations options for managing activities. However, organizational development experts can also use these mobile apps to help implement and guide change in their organizations. For example, team collaboration apps can be useful for communicating and enacting both organization-wide and subsystem changes quickly. Also, these apps can be used to collect data on overall progress towards change goals— such as incremental improvements in productivity or the percentage of employees who have completed a specific online training course. The coming digitization of the workforce—and the powerful economics of automation—will need a sweeping rethink of organizational structures, influence, and control. The current premium on speed will continue, to be sure, even as a new organizational challenge arises: the disruption of the way people works. (De Smet, Lund & Schaninger, 2016) (Deloitte Insights, 2018)

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ORGANISATIONAL CULTURE: DEFINITION AND TRENDS Neuromanagement uses neuroscience to continuously ignite organizational practices for high performance and engagement. Leaders need to create the circumstances in which individuals want to spend their effort, energy, and creativity to move the organization toward its objectives, creating the opportunity to express one’s intrinsic motivation and achieve high performance (Norton, Mochon, & Ariely, 2011) Neuroscience studies are interested in, for instance, better understanding the neural mechanisms that influence ethical decision-making in relation to a range of relevant issues, such as trust, altruism, fairness, revenge, social punishment, social norm conformity, social learning, and competition (Rilling and Sanfey 2011). Emotions and emotional moments of moderate intensity are a kind of lifeblood of organizations and their employees. As the graph shows. While slightly positive emotions— section of the curve that is marked with 1—have an incredibly positive impact on creativity and performance, an excess of them causes impulsiveness and thoughtless behaviours. Then, we (Reisyan, 2016) are inclined to do or say things that we often later regret. All by ourselves—we do not need any external help or push to gain such insights. It happens because we calm down and gain back our ability to make full use of those structures of our brains that allow us to perform our most advanced thinking and to access our most advanced knowledge to reflect what happened as sophisticated as we can. Back in 2004, Zak's lab was the leading to discover that the brain chemical "oxytocin facilitated trust, generosity, connection to others." Zak's team discovered that trust is a significant part that really makes work exciting, productive, and innovative. As it turns out, trust is a chemical. Neuromanagement worked with organizations to implement management policies, procedures, and systems that enhance trust. Zak's lab data shows that trust substantially boosts an organization’s performance, employee engagement, retention, and well-being. Organizations that sustain a prominent level of trust have substantially greater engagement by colleagues, an effect that has been measured multiple ways. This shows that organizational trust should be considered a valuable asset that can be measured and managed to sustain a competitive advantage over rivals. Leadership practices and organizational policies, systems, and processes affect interpersonal interactions that either facilitate or inhibit (Zak, 2018) Oxytocin release. Neuroscience now provides insights 2016) about specific practices and behaviours that can directly improve organizational performance by nurturing a culture of trust.

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Conclusion

The definition for culture changed significantly over the years from being a description of collective behaviours and norms within an organisation, that could not be influenced. The definition evolved to the understanding that an organisational culture is unexpectedly tangible and can be deliberately designed and leveraged as an employee experience. Culture-focused organisations increased their income as research showed over an 11-year period, by 682% versus 166% for organisations who did not focus on their culture. Organisations culture requires focus and attentions from leadership and should be consciously embedded in the organisational structure. Some organisations started this change earlier than others and they reap the benefits of being successfully adaptable to the rapid changes of the world and its trends, creating continuous value for their customers, their employees, and their organisation. They continuously attracted, develop, and retain loyal employees that fit their culture and strengthen their workforce. With the recent technology to support the organisation culture also new data is created. Data is playing a big part in understanding the current issues and opportunities related to the organisation culture and structure. Neuroscience combined with this new type of data and this data analysis in addition to the rise of artificial intelligence and further digitalizing of the organisations, we ask ourselves the question: “How will organisations’ cultures look like in the future?”

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