Functions of Corporate Culture
Corporate culture performs a number of functions within an organization.
- Protection– consists of creating a barrier that protects the organization from unwanted external actions. It is implemented through various prohibitions, “taboos,” and restrictive norms.
- Integrative—fosters a sense of belonging to the organization, pride in it, and a desire among others to be included in it. This facilitates the resolution of personnel issues.
- Regulatory—ensures compliance with the necessary rules and standards of conduct for the organization’s members, their interpersonal relationships, and their interactions with the external environment, thereby guaranteeing the organization’s stability and reducing the likelihood of unwanted conflicts.
- Cognitive— involves learning about and assimilating the corporate culture, which takes place during an employee’s adaptation phase; it facilitates their integration into collective activities and determines their success.
- Orientational—improves people’s mutual adaptation to one another and to the organization. It is realized through common norms of behavior, rituals, and ceremonies, which also serve to educate employees. By participating in joint activities, adhering to common behavioral norms, and so on, people find it easier to connect with one another.
- Motivational—creates the necessary incentives for the organization to function effectively.
- Shaping– shapes the organization’s image in the eyes of others.
Types of Organizational Culture
There are many approaches to defining types of corporate culture.
American researcher William Ouchi identified three main types.
- Market culture. Characterized primarily by value-based relationships and a profit orientation. The core values are competitiveness and productivity. The main task of managers is to increase the organization’s productivity and drive it toward results and profits.
- Bureaucratic culture. It is based on the primacy of regulations, rules, and procedures. The organizational culture is formalized and structured. The company’s long-term plans are focused on ensuring stability; they are predictable and profitable. People’s actions are guided by formal rules and official policies. The key values for success are considered to be a clear division of decision-making authority, standard procedures, and control and accounting mechanisms;
- Clan culture. It is based on the organization’s internal values, and traditions serve as the source of authority. Relationships within the organization are based on shared values, goals, cohesion, participation, and a sense of “we” within the organization. This culture is embraced by all employees.
One of the most well-known typologies of management cultures was developed by C. Handy. He assigned the name of a corresponding Olympian god to each type.
- The culture of power (the culture of Zeus).Its defining feature is personal power, which stems from control over resources. Organizations that adopt this culture have a rigid structure, a high degree of management centralization, few rules and procedures, suppressed employee initiative, and strict control over everyone. This culture is characteristic of young commercial organizations.
- Role-based culture (Apollo culture).This is a bureaucratic culture based on a system of rules and instructions. It is characterized by a clear division of rights, duties, and responsibilities among management staff. It is inflexible and hinders innovation, making it ineffective in times of change. The source of authority here is the position, not the personal qualities of the leader. This management culture is typical of large corporations and government organizations.
- Task-oriented culture (Athena culture).This culture is adapted to management under extreme conditions and in constantly changing situations; therefore, the primary focus here is on the speed of problem-solving. It is based on collaboration, collective idea generation, and shared values. Authority rests on knowledge, competence, professionalism, and access to information. This is a transitional type of management culture that can evolve into one of the previous types. It is characteristic of project-based or venture organizations.
- Personality-centered culture (Dionysian culture).It is linked to the emotional aspect and is based on creative values that unite people not to solve work-related tasks, but to achieve individual goals. Decisions are made through consensus, so authority is primarily of a coordinating nature.
Experts believe that, as a rule, a culture of authority predominates in an organization’s management during its inception stage; the growth stage is characterized by a role-based culture; the stage of stable growth—by a task-oriented culture or a culture of individuality; and during a crisis, a culture of authority predominates.
American scholars Kim Cameron and Robert Quinn, based on statistical data from various companies, government agencies, and universities around the world, developed a diagnostic method and a methodology for changing organizational culture.
The authors identify four types of organizational cultures that form a continuum:
- clan-based—a friendly, extended-family atmosphere, leaders perceived as mentors or even parents, team cohesion, a supportive moral climate, goodwill toward customers, and care for employees;
- adhocratic—an atmosphere of entrepreneurship and creativity, a spirit of innovation, encouragement of individual initiative and freedom, leaders as innovators capable of taking risks;
- market-oriented – the organization’s focus on unconditional results and market success; leaders are firm managers, and a competitive spirit prevails within the organization;
- hierarchical (bureaucratic)—rationality, clear rules, stability, and certainty.
If the continuum is bounded by the lines of a square, then each type occupies a specific portion of it (Fig. 4.1). This position is determined by examining changes in an organization’s characteristics along two axes: 1) from left to right—from internal focus and integration to external focus and differentiation; 2) from bottom to top—from stability and control to flexibility and discretion.
K. Cameron and R. Quinn assume that most organizations exhibit characteristics of all cultural types to some degree, although one of them may be dominant.
Fig. 4.1 – Types of organizational cultures according to K. Cameron and R. Quinn
The authors propose the OSAI diagnostic method—a tool for assessing organizational culture. It involves constructing organizational culture profiles.
Here are examples of organizational culture profiles for a business organization and a higher education institution in Ukraine, presented in Figs. 4.2 and 4.3, respectively.
Fig. 4.2 – Organizational Culture Profiles
(current – solid line; desired – dashed line):
a – business organization, b – Ukrainian university
A culture profile is a quadrilateral formed by connecting the ratings marked on the diagonals with a common line. These figures are determined as follows. The evaluator first reviews six groups of responses to questions that characterize the organization’s overall orientation and structure, leadership style, and management of employees, linking the organization’s essence, its strategic goals, and criteria for success. For each of these groups, there are four alternatives corresponding to four types of cultures. It is necessary to assess the extent to which the organization’s existing culture exhibits characteristics of each cultural type, with the total sum of the scores equaling 100 (which can be understood as percentages). These figures are then plotted along the diagonals.
For example, the profile outlined by a solid line in Fig. 7.7a indicates that the organization’s culture is 15% clan-based, 15% adhocratic, 35% market-oriented, and 35% hierarchical.
Then, the same person determines what the profile of the ideal organizational culture—which the organization aims to achieve in a few years—will look like (the quadrilateral outlined by a dashed line).
The type of culture changes over the course of the organization’s history, as well as depending on the demands of the external environment. Thus, at the moment of the organization’s inception—when creating new products or technologies—adhocracy often prevails, followed by a clan, then a hierarchy, and finally a market-oriented culture. At a certain point, when the risk of product obsolescence arises, there is once again a need to strengthen elements of adhocracy, and so on.
The main task is to adapt in a timely manner and restructure the organization’s culture.
The search for an effective model of corporate culture typology at the present stage is based on the fact that the shortcoming of all cultural typologies is an excessive emphasis on purely managerial aspects of the formation and development of corporate culture and insufficient attention to sociocultural aspects, particularly values, ethics, and psychology.
An attempt to address these shortcomings was made by G. Kolesnikov, who proposed a typology comprising eight types of organizational and managerial cultures [26].
- The culture of authority –is based on authority derived from ownership or charisma associated with the leader’s personality. Everyone follows orders.
- The cultureof roles and rules –everything is determined by instructions and documents. Everyone does what is required by their role and the rules.
- Cultureof collegiality— strategic decisions are made at meetings. A manager who is a board member exercises executive authority.
- Culture of an extended family –a culture of Japanese management, characterized by paternalism, a friendly atmosphere, mutual respect, and deference to elders.
- Creative team culture –an organization consists of creative teams focused on innovation.
- Star culture –a focus on stars—individual, charismatic, and loosely managed personalities.
- Task-oriented culture –management is carried out through the setting of goals and tasks. Employees themselves decide on the methods for achieving them.
- Competition culture – management focused on competition and rivalry, both within the organization and between organizations.