Organizational Culture: Definition, Levels, and Importance

What is Organizational Culture?

Organizational culture can be defined as the collection of attitudes, beliefs, and values that guide the behaviors of employees in the workplace. How managers and employees interact with each other in every-day business operation is dependent on the company’s culture. An organizational culture is composed of the sets of actions, features, and practices that make an organization what it is. What the company represents in terms of norms and values can be shown through various elements of its culture and practices. A positive organizational culture leads to improved performance while a dysfunctional culture may hinder strategic success of the company. Organizational culture can be manifested in the daily activities and relationships of employees within the organization.

The Four Levels of Organizational Culture

There are basically four levels of organizational culture in an organization: artefacts, assumptions, espoused values and norms, and enacted values.

Artefacts: these are the things that can be felt and seen that represent the organization. It includes logo, slogans, colors, facilities, procedures, dress codes, ceremonies, and rituals. Outsiders can just see symbolic artefacts and can relate each artefact with the organization, but they may not know what the artefact stands for. A good example of an artefact is the red and yellow colors and M-logo of McDonald’s restaurant.

Espoused values and norms: the second level of organizational culture is the espoused values and norms of the organization. Values include those things that describe the company in a specific way, including respect, innovation, creativity, responsibility, and integrity. Espoused norms and beliefs also include ideals, purpose, aspirations, and goals of the organization. For instance, an organization philosophy of using innovation to improve customer experience reflects its espoused values and beliefs.

Enacted Values and Norms: these represent the third level of organizational culture. They include practical behaviors that employees exhibit in their daily tasks. They are the attitudes, behaviors and values that are manifested in daily interactions within the workplace. For instance, employees’ attitudes can be manifested through team activities when running a particular project.

Assumptions: These are the organizational values that are incorporated into the company’s culture and are difficult to eliminate. They include tacit knowledge, beliefs and values that are unofficial and invisible, but are engrained into the organizational culture as important ways being, doing, and feeling.

The Value or Importance of Organizational Culture

Organizational culture plays a significant role in guiding behaviors and improving performance within the organization. The collectively-held beliefs and values of the organization determine how the company is structured. Organizational culture also affects strategic decision making and how the company is structured to implement strategy.

A positive organizational culture provides employees with proper guidelines on how to do their work and interact with others to achieve common goals. It creates a sense of unity and cooperation to enable employees to work effectively as a team to achieve the organization’s objectives. Organizational culture also strengthens good values and reduces conflicts in the workplace, leading to improved productivity and organizational performance.

Furthermore, a good organizational culture enhances motivation among employees because it provides rewards to those who promote the values of the organization. Lastly, organizational culture enhances a good work environment where employees are sufficiently motivated to work towards the achievement of the organization’s objectives.

Creating and Maintaining Organizational Culture

Organizational culture is often created and maintained through the collective efforts of managers and employees. Creating organizational culture takes a slow, consistent and deliberate action of leaders. It usually emanates from the founders of the organization. The company’s values and actions are often guided by the initial vision and aspirations of the founding members of the organization. Furthermore, an organizational culture takes shape over time and evolves according to the changing business environment. However, it always reflects the values and business practices that have enabled the organization to be successful in its initial stages of development.

Leaders maintain organizational culture by constantly communicating the vision, purpose and goals of the organization to all employees. A company’s HR team plays a critical role in hiring and retain talented employees who have attitudes that match the organization’s culture.

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