A central issue in management of organizational culture is how to overcome the Principle-Agent Problem and how to deal with the institutional theory. If a business is to effectively deal with an expanding government, it must make sure that its culture is well managed. To do so, organizational managers must learn how to prevail over the Principal Agent problem and the institutional theory. The Principal Agent problem is a description of a conflict of interests; that the principle (principle stakeholders, shareholders, etc. ) earns profits on the performance of the organization whereby the agents (employees) usually earn unconditional wages.
They are parallel but conflicting wants; the principle seeks the greatest return for the least pay whereby the agent seeks to do the least work for the greatest pay. The Principle-Agent Problem is found in many employer/employee associations especially when stakeholders employ top executives of corporations (Jackson and Carter 2000). The principle must always settle conflicts between organizational objectives and the incentives of the different subgroups within the organization. Good managers employ incentives, commands, and organizational culture to make sure that this is achieved.
On the other hand, institutional theory deals with the deeper and more flexible features of social structure. It lays emphasis to the procedures through which structures, regulations, norms, and customs develop as reliable guiding principles for social behavior. It finds out how these elements are developed, diffused, implemented, and adapted in an organization. The notion of Institutional theory and organizational culture is important in organizations. The building blocks of institutions and cultures have the capacity of carrying with them different meanings even in a single organization or culture.
Differences in interpretations of mutual symbols support the multiplicity on which cultures flourish and institutions rely. In the theory of organizational culture, issues of diversity are mainly dealt with through studying the different subcultures while institutional theory deals with diversify in institutional logistics (Jackson and Carter 2000). Therefore, the management has a role to play in mediating between these two issues (Principle-Agent Problem the institutional theory).
This essay develops the argument that organizational culture can and should be managed in corporations in five sections. Section 1 defines the meaning of organisational culture • Section 2 outlines the importance of organisational culture • Section 3 describes how organisational culture can be managed • Section 4 describes Culture and Management of Organizational Change Section 5 describes the implications for culture management This essay will thus show that organizational culture should be managed since it leads to improved coordination and integration in organizations with the result being improved organizational effectiveness.
What is Organizational Culture? Organizational culture refers to the set of mutual values, beliefs and expectations that govern the way members of an organization approach their duties in the work place and interrelate with one another. Research shows that organizational culture is quite different from other world cultures. It lays emphasis on how workers describe their colleagues and the kind of stories they share with one another.
According to Schein 1980, organizational culture is “a pattern of shared basic assumptions that organizational members learn as it solves its problems of external adaptation and internal integration that works well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems” (Schein 1980:12). The figure below shows that organizational culture is divided into five levels, that is, fundamental assumptions, values, behavioral norms, pattern of behavior and Artifacts and Symbols. [pic]
Figure 1: Levels of Organizational Culture (Adapted from Schein 1980) Importance of Organizational Culture Literature on organizational effectiveness shows that organizational culture plays a significant role in motivating and augmenting the value of intellectuals particularly the employees. The concept of organizational culture is important in knowledge intensive corporations. This paper makes it clear that culture is an essential factor in organizations and helps maximize the value of human resources. Schein 1990 advocates that organizational culture is even more significant in contemporary organizations than it was in the past.
Organizational culture leads to improved coordination and integration in organizations with the result being improved organizational effectiveness. Through organizational culture, an organization is able to process invention and the capacity to successfully bring in new technologies. Organizational culture also enables organizations to effectively control dispersed work units and augment employee diversity. It also allows for cross-cultural management of international ventures and multi-national corporations.
Besides the greater need to cope with the external and interior factors, organizational culture has become increasingly important since, for many organizations, intellectual assets now comprise the major source of value. Augmenting the value of workers as intellectual assets calls for a culture that encourages their intellectual participation and, eases both personal and organizational learning. It also calls for the creation and application of new knowledge and the readiness to share new ideas with others (Sennet 1998). Managing Organizational Culture
With the fast changing environment and ongoing insights into organizational efficiency, business organizations are seriously rethinking how they should manage their cultures to achieve their goals and objectives. It is necessary for these organizations to identify the type of culture that is necessary to accomplish their goals and objectives and make certain the successful execution of the required changes (Ogbonna and Wilkinson 2003). Culture extends over the range of management thinking and corporate culture has been one of the most continuing catchphrases of organizational management.
The appeal of the context is that corporate culture is ostensibly unifying and this clearly appeals to management’s involvement in forecasting an image of the corporation as a community of people’s interests. Possibly, culture penetrates to the core of an organization-it is almost similar to the context of personality regarding an individual and the critical sense of what defines an organization; its mission and core values. As a result, the management of culture should become a critical area of management competency in organizations.
It should, however, be noted that adoption of the best culture is a prerequisite if an organization is to succeed. Managers should determine the most efficient culture for their organization and, if need be how to effectively change these cultures. The success of contemporary business organizations could be highly attributed to corporate culture. Research shows that organizational culture is a major pointer to organizational performance and this culture can be managed to enhance an organization’s competitive advantage. Organizational culture is a good image for an enterprise whose top management would like to develop.
The image of a corporation differs in terms of how one views the organization. Research shows that even organizations with strong cultures have a broad social distance between senior management and employees. Organizational culture is barely planned or predictable; it is the ordinary results of social interrelations and, therefore, evolves and emerges with time. As a result, this should be managed to fit certain strategic ends since organizations have the ability of transforming themselves and the management of culture is such a good way of avoiding such incidents.
According to Ogbonna and Wilkinson (2003), organizational culture should be managed as a device for augmenting company effectiveness (Ogbonna and Wilkinson 2003). Management of organizational culture can be more readily enumerated and empirically evaluated based on the interpersonal and symbolic features of management. This requires deep qualitative management of the organizational lives of every employee. Managers while managing organizational culture should put into consideration certain factors such as change-oriented culture, education culture, inventive culture and project-oriented culture.
Management of organizational culture should identify and develop an organizational culture that allows for agility, encourages alliances, companionships and networks; promotes knowledge management; promotes corporate responsibility and proper integrity and incorporates diversity. Culture and Management of Organizational Change If real change is to take place in corporations rather than short-lived change, then it has to take place at the cultural perspective. Organizational culture has many strong attractions as a facilitator for change.
Firstly, cultures can be plainly created-managers need to be aware of what is needed to change an already existing culture. The capacity of organizations to be culturally inventive is associated with leadership. The top management in any organization must be responsible for developing powerful cultures. This is because organizational leaders develop the social reality of a corporation; they shape organizational beliefs and deal with the drama and visualization of the corporation (Mir and Mir 2009).
Research shows that culture is often counter posed to prescribed rationality- In this sense culture is significant in resolving the predicaments associated with bureaucracy in an organization; formal procedures are vital for organizational integrity though they also restrain autonomy and invention. Today, organizations are growing in an uncertain manner and the adoption of adaptable cultures that are receptive to change to deal with the changing environment and crises has become essential.
Ackroyd and Crowdy, (1990) focus on the relationship between culture and the management of organizational change through the cultivation of friendly interactions at all levels, the amalgamation of individuals with shared goals and dependence on employee responsibility (Ackroyd and Crowdy 1990). Implications for The Management Of Culture In an Organization Research shows that there are two fundamental approaches to the management of culture in organizations and, by implication, this include strategy conforming (upholding order and continuity) and transforming (altering and breaking already existing patterns).
As demonstrated by the successive poor performance of many companies, the efficiency of the selected approach to corporate culture and strategy depends on the conceptual factors relating to both the inner and the exterior business environment. Thus, organizational culture needs to be managed though the adopted strategies are highly determined by the prototype and prospect subscribed to by the manager. In coping with the management of organizational culture, it is important to identify as much as possible the features of the present or new target culture; the illusions, symbols, customs and assumptions that add force to the culture.
Consequently, action can be initiated in any of the key areas listed below:
• Enrollment, selection and substitution- Culture management can be influenced by making certain that appointments make the existing culture stronger or encourage a culture shift; removal and substitution may be used to significantly change the culture of an organization.
• Socialization- stimulation and successive development and training can lead to acculturation to an already existing or new culture. This can also enhance interpersonal exchange of ideas and team work, which is vital in fragmented corporate cultures. Performance management/compensation systems- This can be used to encourage preferred behaviors, which may result to changed organizational values.
• Leadership- Managers can strengthen or assist in the abolishment of existing illusions, symbols, behaviors, and beliefs. • Participation- of all corporate members in cultural rebuilding or management activities and related inputs, decision-making and improvement activities is important if long-term cultural change and management is to be achieved. Interpersonal communication- Meeting the needs of interpersonal interactions is vital in promoting an existing corporate culture and integrating organizational members into that culture.
• Effective teamwork- This encourages change and developments in cultural communication. • Structures, principles, processes, and resource allocation- This need to be compatible with the culture of an organization (Boston, Istensaker and Falkenberg 2007). The above represent several strategies that can be used in corporations to manipulate it in terms of the cultures and subcultures that make it up. The management of organizational culture is based on a complicated comprehension of the tacit and explicit features that make up the already existing culture.
Conclusion This essay has shown that organizational culture can and should be managed. What makes up organizational culture and its alleged role in corporate success are contested, resting on prospects of culture either as traditionally based, change resilient, deep societal system which emphasizes all company strategies and activities. Organizational culture should thus be managed to provide for organizational success.
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 7 January 2017
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