There are three levels of organisational culture and these are listed as follows:
- artefacts;
- espoused beliefs and values;
- basic underlying assumptions (Schein, 2010, p.24).
The term artefact referred to the visible aspect of culture such as the behaviour of the employees as well as the business process within the firm. Espoused beliefs and values on the other hand are ideas related to the ideology of the firm and the way they explain their business methods.
Finally, the basic underlying assumptions are ingrained ideas and values that cannot be articulated but drives the unconscious or automatic response of the top leaders and managers of the said organisation. When taken together, organisational culture must be carefully considered in order to promote organisational change.
Organisational change is a common occurrence in the business world. Organisational change can come in various forms. Change can come in the form of a corporate expansion or a corporate restructuring wherein employees are forced to retire early. Change can also come in the form of a merger.
Another example of change is the need to adopt a new business process (Dunne, Lusch & Carver, 2011). But in order to appreciate the impact of organisational culture with regards to organisational change one of the best examples to consider is the one wherein a company has to leave the comfort of home and expand overseas. In this example organisational culture collides with the culture of a country and its people.
The importance of understanding the basics of organisational culture in order to promote positive change is an established fact in organisational management. The interaction between these two concepts can be seen in different types of organisations from the army to manufacturing firms. But before going any further it is important to clarify the meaning of organisational culture (Ferrell, 2011).
Organisational culture is the invisible force that holds the members of a group into a tight unit. It is the invisible force that dictates the behaviour of managers and workers. The decision-making process of leaders and the automatic response of employees to a given problem is not only the result of accumulated knowledge and training but by organisational culture.
Their behaviour is dictated by the group’s culture because it has created an organisational climate beforehand. In this atmosphere certain actions and ideas are not tolerated. It has something to do with the way the leaders shaped the mindset of the members of the group.
In the army and in the corporate world the organisational climate is rooted in the organisation’s culture. The culture in turn is reflected in the actions of the members of the said group. The organisational culture of the group is invisible to the naked eye but its impact can be documented through the behaviour of the people within the group (Sethi, 2003).
The expected behaviour of the members of an organisation is made possible by the way the members interpret their group’s culture. Thus, the creation and manifestation of organisational culture is not a by-product of accident. It is the result of a deliberate process.
The group’s behaviour is rooted in the organisation’s shared beliefs and values. When confronted with a problem, members of a group need not consult their manuals. They simply react based on the culture of their organisation that was ingrained in them during times of training with their mentors.
At the same time the action of a member is conformed to the expectations of the organisation. If there is a culture of teamwork then, every member works like a well-oiled machine.
It is impossible to study the effect of organisational culture without examining an example of a company that was able to expand globally and succeeded in the international scene (Kotler & Lee, 2005) It is important to study a company wherein leaders deliberately established a unique organisational culture in order to accomplish a particular goal.
The following pages will examine the secret to IKEA’s success and much of it can be attributed to the culture of the organisation. The overwhelming success of IKEA in the local and international scene can be appreciated through the following figures:
- the company reported total revenue of $27 billion in 2007 alone;
- 82% of sales came from European markets;
- good were manufactured in China, Poland, Italy, Sweden and Germany (IKEA, 2010).
The focus of IKEA’s business model is to provide affordable and yet high-quality products. The business model that they employed is a major reason for their success. But the second major key to their success was the decision of the founder to establish his own unique corporate culture.
The founder of IKEA, Ingvar Kamprad management style is the best example of how organisational culture can be cultivated and sustained for many years.
In order to appreciate the importance of the establishment of corporate culture one has to keep in mind that “In talking about culture we are really talking about a process of reality construction that allows people to see and understand particular events, actions, objects, utterances, or situations in distinctive ways” (Morgan, 2006, p. 134). It is the leader who establishes the culture of the group.
The founder or the CEO must show the way. The leader must actively participate in the creation of a social reality for the group. But it is also important to point out that the leader must identify conflicting ideas and sub-cultures that exist within the group in order to deal with as soon as possible (Hogan, 2007, p. 81).
Thus, I now I understand why the CEO of HF initiated a training program. It was only through the process of education that a person’s mindset was transformed in order for it to be conformed to the social reality of the group. In the case of HF, the CEO sent expatriates to Asian factories and showrooms in order to demonstrate to the locals the essential ingredients of HF’s organizational culture.
Part of the organisational culture at IKEA is the need to innovate and adapt to a changing world. When the company decided to adopt English as the official language of communication within the firm, it created a major disturbance within the company.
But the leaders simply made the decision based on the culture of the organisation. Their group’s culture compelled them to make the necessary changes even if it was a difficult decision to make.
Their headquarters is located in Sweden and therefore it was a difficult to decision to make. But the leaders knew that in order to improve their capability to serve their clients better, there is the need to improve the way they communicate as a group. Since there was the need to expand overseas it was just practical to adopt the English language as the official language of the firm.
It is also important to point out that the establishment of organisational culture at IKEA was the by-product of the collective programming of the mind of the workers (Earley & Sing, 2007, p.18). This process requires workers to understand that there were corporate ideals that they need to learn and value so that they become important and reliable members of the group.
Organisational culture is important because it influences not only behaviour but also the morale of the workers (Moran & Harris, 2007, p. 6). The leader must develop the appropriate strategy in order to unite and inspire a disparate group of people to work more efficiently.
Part of the organisational culture at IKEA is the passion to learn and to innovate. This particular aspect of their culture is made evident during the regular meetings wherein employees are encouraged to learn from one another (IKEA, 2010). The desire to learn and to innovate is complimented with the founder’s reminders that people make mistakes.
Kamprad told his employees that “Only while sleeping one makes no mistakes” (IKEA, 2010). As a result workers are inspired to find solutions to their corporate problems. Part of the culture of the company is their shared values of
- togetherness;
- cost-consciousness;
- respect.
The company is always open to new ideas and they constantly seek ways to improve the business process of the group.
It is not only important to establish the culture of the company. It is also equally important to sustain that corporate culture. IKEA was able to weather the storms but at its core, it remains the same organisation because according to Steen Canter, a former IKEA executive, Kamprad, “…has a core group of people who are culture bearers for the brand, who will go out and fight World War II for him” (Lavin & Cohan, 2011, p.8).
The strength of the company through its corporate culture is the main reason why this particular organisation can open 276 stores in 36 countries and yet maintain the same level of commitment, passion and success (Lavin & Cohan, 2011, p.115).
The importance of culture is more pronounced when it comes to international business because organisational culture collides with social norms and social values. The levels of culture discussed earlier are affected not only by corporate ideologies but also by the social forces that shaped that particular country and its people.
This assertion is supported by a statement made by a management expert who wrote “The business of international business is culture” (Hofstede, 1994, p.1).Therefore, the organisational culture of a firm is also affected by the values of the people and this is manifested in the way the workers and managers conduct their business.
If a company is transplanted from its country of origin to an overseas branch the organisation is required to undergo a process of change. It is imperative that if investors are willing to finance a venture overseas, then, they have to know the requirements and one of the major requirements is the willingness to adapt to a new environment.
The need to expand overseas coupled with a strong business foundation enabled IKAE to open stores in countries like Japan, Russia, and China (IKEA, 2010). It is important to point out that IKEA was able to sustain its organisational culture in the face of difficulties and social influences. They company was ready to expand overseas and when that day came they were able to increase their effectiveness and profitability.
Kamprad is not only well-aware of the importance of organisational culture, he was also aware of the need to deal with the culture of a particular country. Kamprad fully understood that it is impossible to establish an IKEA store, say for instance in South Korea, top management of the company, down to the rank and file employees do not share the values that he believes in.
Thus, Kamprad decided that every time he will open a store he will send only his veteran employees and reliable managers. The company is willing to spend extra money to send their best workers in order to teach new employees in an office located halfway around the world.
The purpose of these employees sent abroad is to help replicate IKEA’s organisational culture in London, Tokyo, Sydney, Hong Kong, Seoul, and others. The expats will continue to work along side new recruits. They will not stop until local managers can handle the problem when they are no longer there to supervise them.
Kamprad also understood the fact that it is impossible to establish organisational culture if the company failed to recognise the intricacies of social norms and values in a given area. The failure to understand culture in the context of social frameworks can mean conflicts that can easily destroy the stability of the company. It is therefore important for managers to understand the meaning of low-context and high-contact cultural patterns.
An example of high-context cultural patterns can be seen in countries like Japan, Malaysia and Mexico (Cheng, 2003, p.4). An example of low-context culture can be found in European societies as well as English speaking nations like the United States and Australia (Cheng, 2003, p.4).
Schein pointed out the different components of an organisational culture. But he was simply referring to a culture that is contained within a firm. Schein’s framework was limited to the ideology and vision established by the founder of the firm or an influential core leader of the said organisation.
But apart from the dynamics of business processes that occurs within an organisation there is another kind of culture that operates within and without.
This culture is related to the sociological aspect of the business environment and this transcends the boundaries of the firm. Nevertheless, there is a way to analyse the relationship of the culture of a particular society and the business environment (Ferrel & Hopkins, 2003).
One way to understand the connection between social norms and the organisation’s culture is through Hofstede’s The Five Dimensions of Culture. This framework is a helpful guide for multinational companies, corporate leaders, and employees sent to establish overseas operations.
Conclusion
The importance of organisational culture to create organisational change cannot be stressed enough. Organisational culture serves as the standard that can be used to regulate the behaviour of a group. It is important to point out that it is the leader who will create the necessary climate needed to empower workers and clients alike. However, in order to produce change it is also important to deal with the culture of the place.
References
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