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By Theresa Fadero

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LSBF Global MBA Lecture
Core Values and Company Culture are the Foundations of Organizational Success
Why OC is important

Reasons why organizational culture is so important are evident from its various definitions and theoretical perspectives. Organizational Culture (OC) has been studied from a variety of perspectives ranging from disciplines such as anthropology and sociology, to the applied disciplines of organizational behaviour, management science, and organizational communication. (Schein 1988) The contemporary definition of Organizational Culture includes what is valued; the leadership style, the language and symbols, the procedures and routines, and the definitions of success that characterizes an organization. It is a specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization. (Devis 2007) Organisational culture is a system of shared values and beliefs about what’s important and appropriate in an organisation; it also includes feelings and relationships internally and externally. Every organisation’s values are supposed to be unique and are widely shared and reflected in daily practice, relevant to the company purpose and strategy. Every organization’s culture comprises an interlocking set of goals, roles, processes, values, communication practices, attitudes and assumptions; these are the organisational tools needed to be put into play for great results. Focusing on building and sustaining an organisational culture is a way of showing that people are the organisation’s most valuable asset. (Culture Consultancy) The study of OC that is most relevant to the analysis and evaluation of organizational culture views OC as an explicit social product arising from social interaction either as an intentional or unintentional consequence of behaviour. In other words, culture is comprised of distinct observable forms (e.g., language, use of symbols, ceremonies, customs, methods of problem solving, use of tools or technology, and design of work settings) that groups of people create through social interaction and use to confront the broader social environment. (Wuthnow and Witten 1988). Schein 1988 says, to understand culture we must understand the different levels that constitute culture- behaviour and artifacts, values, norms, assumptions and beliefs. OC is manifested in organizations’ strategic decision making and determines organizations’ performance.

One of the most important building blocks for a highly successful organization and an extraordinary workplace is "organizational culture." organizational culture is the set of shared beliefs, truths, assumptions, and values that operate in organizations. Organizational culture has been described as " people behave when no one is looking." Organizational norms, values, principles, goals, strategy drive the development of organizational culture and sustain it. Culture is the result of these key elements which precede it.

".........Organizations will ultimately get only as far as their organizational cultures take them"- Dynamic Foundations 2002.

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Why is organizational culture so important and what does it mean for an organization? Because "behind the scenes" of what happens in the day-to-day life of organizations and employees... is culture. Culture is everywhere. It directly impacts what happens...or does not happen in organizations. Organizational culture primarily determines the results in organization. (Dynamic Foundations 2002) Organizational culture is the most fundamental of all organizational characteristics that reward and encourage collective effort. (The Air University) According to Edgar Schein 1988, an organization’s culture develops to help it cope with its environment. An understanding of the organizational culture is crucial to an organization’s leaders’ success. What an organization assumes, believes, values, accepts, and promotes, produces and the way in which behaviour occurs frames its corporate culture. Culture, the human terrain of an organization, has real bearing on organizational success and performance. (Denison, Haaland, and Goelzer (2004)) It affects communication, co-operation and learning. It can help explain why changes will prompt some employees to quit even when compensation is not affected, why a talented leader may flounder in a cultural mismatch and why incentives and individual psychology alone don’t predict results. Defining and delivering on the promise your organization’s culture can deliver have tremendous internal and market-facing benefits. The importance of corporate culture in success of an organization and longevity cannot be overstated. An organization’s norms and values aren’t formed through speeches but through actions and team learning. Strong cultures have teeth. They are much more than slogans and empty promises. (Verma 2011)

Organizational culture is reflected in the way people perform tasks, set objectives, and administer the necessary resources to achieve objectives. Culture affects the way individuals make decisions, feel, and act in response to the opportunities and threats affecting the organization. It has been proposed that organizational culture may impact the level of employee creativity, the strength of employee motivation, and the reporting of unethical behaviour. Organizational culture also has an impact on recruitment and retention. Individuals tend to be attracted to and remain engaged in organizations that they perceive to be compatible. Additionally, high turnover may be a mediating factor in the relationship between culture and organizational performance. Deteriorating company performance and an unhealthy work environment are signs of an overdue cultural assessment. (wikipedia)

OC is “personality” of an organization that guides how employees think and act on the job – is central to the values, beliefs, inter-personal behaviours, and attitudes to stakeholders that determine how the organization does its job. Culture is a key factor not only in achieving organizational goals, but in attracting and keeping desirable employees, creating a positive public image, and building respectful relationships with stakeholders. A culture that is appropriate to the kind of enterprise in which an organization is engaged – is widely acknowledged to be among the most important determinants of how effective or successful the organization will be. An organization’s culture can be supportive of – or hinder – the implementation of new initiatives and the achievement of its overall goals. Culture is important because it shapes: (Desson 2010)
  • What the organization considers to be “right decisions”
  • What employees consider to be appropriate behaviours and how they interact with each other within the organization
  • How individuals, work groups and the organization as a whole deal with the work assigned to them
  • The speed and efficiency with which things get done
  • The organization’s capacity for and receptiveness to change
  • The attitudes of outside stakeholders to the organization

Devis 2007 specifies a list of the importance of Organizational Culture:
  • It focuses attention on the human side of organizational life, and finds significance and learning in even its most ordinary aspects.
  • It clarifies the importance of creating appropriate systems of shared meaning to help people work together toward desired outcomes.
  • It requires members especially leaders, to acknowledge the impact of their behaviour on the organization's culture.
  • It encourages the view that the perceived relationship between an organization and its environment is also affected by the organization's basic assumptions.

Organizational culture is possibly the most critical factor determining an organization's capacity, effectiveness, and longevity. It also contributes significantly to the organization's brand image and brand promise. Organizational Culture creates energy and momentum. The energy will permeate the organization and create a new momentum for success. Organizations with effective OC experience positive increase in (Culture Consultancy):
  • Greater employee retention
  • Employee engagement
  • Attraction of new customers
  • Revenues
  • Customer satisfaction
  • Reduction in operating costs, etc.

The sustained superior performance of firms like IBM, Hewlett-Packard, Procter & Gamble and McDonald may be, at least partly, a reflection of their organizational cultures. A healthy and robust organizational culture may provide various benefits, including the following (wikipedia):
  • Competitive edge derived from innovation and customer service
  • Consistent, efficient employee performance
  • Team cohesiveness
  • High employee morale
  • Strong company alignment towards goal achievement

Kayla Lowe identifies the following as importance of OC: Unity- shared organizational culture helps to unite employees of different demographics, promote equality and better communication and less conflict. Loyalty- Organizational culture helps to keep employees motivated and loyal to the management of the organization. If employees view themselves as part of their organization’s culture, they are more eager to want to contribute to the entity's success. They feel a higher sense of accomplishment for being a part of an organization they care about and work harder without having to be coerced. Competition- Healthy competition among employees is one of the results of a shared organizational culture. Employees will strive to perform at their best to earn recognition and appreciation from their superiors. This in turn increases the quality of their work, which helps the organization prosper and flourish. Identity- An organization’s culture defines its identity. An entity's way of doing business is perceived by both the individuals who comprise the organization as well as its clients and customers, and it is determined by its culture. The values and beliefs of an organization contribute to the brand image by which it becomes known and respected.

The prevailing culture of an organization will affect business results as well as shape the health, morale and productivity of employees. Linking policies and strategies to everyday expectations and activities gives a variety of best practices and benchmarks available to facilitate culture management that keeps an organization competitive and employees happier and healthier. To improve performance and build capacity, an organization’s culture must align with the vision held by the leadership and be accompanied by a clear way forward and a driving force. A culture is as important to an organization as is a set of wings on an aircraft. They are both essential prerequisites to creating the dynamics required to reach new heights. (Bégin 2007)

A great. OC is worth fighting for

Bégin, Diane Sarah (2007) Organizational Culture Counts [Online] in The Importance of Organizational Culture, 2007, HRSB Concepts Inc., Ottawa. Retrieved from: [Accessed 28 April 2013]
Consultancy Culture, The Importance of Organizational Culture [Online]. Retrieved from: [Accessed 28 April 2013]
Denison, Daniel R., Haaland, S. and Goelzer, P. (2004) "Corporate Culture and Organizational Effectiveness: Is Asia Different from the Rest of the World?", Organizational Dynamics, pp. 98–109
Desson Kenneth (2010) Organizational Culture – Why Does It Matter? [Online]. Presented to the Symposium on International Safeguards International Atomic Energy Agency Vienna Austria, 3 November 2010, Ottawa: Pentor Communications Inc. Retrieved from: Linda (2007) Organizational Culture and its Importance [Online]. Articlesbase, 04 January 2007. Retrieved from: [Accessed 28 April 2013]
Dynamic Foundations (2002) Importance of Organizational Culture [Online]. Dynamic Foundations LLC, Wausau. Retrieved from: [Accessed 28 April 2013]
Kayla Lowe, Demand Media, The Importance of Culture in Organizations [Online]. Houston Chronicle. Retrieved from: [Accessed 28 April 2013]
Schein, Edgar H. (1988) Organizational Psychology, Third Edition, Prentice Hall.
Schein, Edgar H. (1992) Organizational Culture and Leadership: A Dynamic View
//__A Joint Publication in the Jossey-Bass Management Series and the Jossey-Bass Social and Behavioral Science Series__//, Publisher: Proquest/Csa Journal Division.
Schein, Edgar H. (2004) Organizational Culture and Leadership, Third Edition, San Francisco: John Wiley & Sons.
The Air University, Strategic Leadership and Decision Making: Organizational Culture [Online]. Retrieved from: [Accessed 28 April 2013]
Verma Shyma (2011) Why Corporate Culture Matters [Online]. 11 November 2011. Retrieved from: [Accessed 28 April 2013]
Wikipedia, Organizational Culture: Impact [Online]. Retrieved from: [Accessed 28 April 2013]
Wuthnow, R. and Witten, M. (1988) New Directions in the Study of Culture [Online], Annual Review of Sociology, Vol. 14, pp 49-67

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