Armstrong (1999) said that the organizational culture is the pattern of values, norms, beliefs, attitudes and assumptions that may not have been articulated but shape the ways in which people behave and things get done.

Organizational Culture: Introduction, Components, Functions and Barriers


  1. Introduction to Organizational Culture
  2. Organizational Culture ― An Analytical Overview
  3. Beginning of Organizational Culture
  4. Components of Organizational Culture
  5. Functions of Organizational Culture
  6. Adaptation of Organizational Culture by the Employees
  7. Organizational Culture as a Barrier
  8. Organizational Cultures in the 21st Century
  9. Sustaining Basics and Developing Variable Aspects of Organizational Culture- Conclusion

# 1. Introduction to Organizational Culture:

The idea of viewing organizations as cultures—where there is a system of shared meaning among members—is a relatively recent phenomenon. Until the mid-1980s, organizations were, for most part, simply thought of as rational means by which to coordinate and control a group of people, which have vertical levels, departments, authority relationships, and so forth. But organizations are more than that.

They have personalities too, just like individuals which can be rigid or flexible, unfriendly or supportive, innovative or conservative. For example, general electric offices and people are different from the offices and people at general mills. Harvard and MIT are in the same business of education—separated only by the width of the Charles River in Massachusetts, USA, but each has a unique feeling and character beyond its structural characteristics. Organization theorists now acknowledge this by recognizing the important role that culture plays in the lives of organizational members.


Interestingly, though, the origin of organizational culture as an independent variable affecting an employee’s attitude and behaviour can be traced back more than 50 years to the notion of institutionalization. When an organization becomes institutionalized, it takes on a life of its own, apart from its founders and any of its members. For example, Ross Perot created electronic data systems (EDS) in the early 1960s and left in 1987 to establish a new company, Perot Systems.

EDS has, however, continued to thrive despite the departure of its founder. Sony, Eastman, Kodak, Gillette, McDonald’s, and Disney are a few other examples of organizations that have existed beyond lives of their founders or any one member and have developed their own self-initiated organizational cultures over the period of time. Additionally, when an organization becomes institutionalized, it becomes valued for itself and not merely for the goods and services it produces. It acquires corporate immortality. If its goods are no longer relevant, it does not go out of business. Rather it redefines itself.

When the demand for Timex watches declined, the Timex Corporation merely redirected itself into consumer electronics business-making, in addition to watches, clocks, computers, and health care products such as digital thermometers and blood pressure testing devices. Timex Corp took on an existence that went beyond its original mission to manufacture low cost mechanical watches. This sense of redefining itself became a part of Timex’s organizational culture.

Hence, institutionalization operates to produce common understandings among members about what is appropriate and, fundamentally, meaningful behaviour. So when an organization takes on institutional permanence, acceptable modes of behaviour, it becomes largely self-evident to its members. This is almost the same thing that organizational culture does.


Hence; an understanding of what makes up an organization’s culture, and how it is created, sustained, and learned, further enhances the manager’s ability to explain and predict the behaviour of people at work.

# 2. Organizational Culture ― An Analytical Overview:

Armstrong (1999) said that the organizational culture is the pattern of values, norms, beliefs, attitudes and assumptions that may not have been articulated but shape the ways in which people behave and things get done. Values refer to what is believed to be important about how people and the organizations behave. Norms are unwritten rules of behaviour.

This definition emphasizes that organizational culture is concerned with abstractions such as values and norms which pervade the whole or part of an organization. There seems to be wide agreement that organizational culture refers to a system of shared meaning held by members that distinguishes the organization from other organizations. This system of shared meaning is a set of key characteristics that the organization values.

O’Reilly III, Chatman and Caldwell (1991) suggests that there are seven primary characteristics that, in aggregate, capture the essence of an organization’s culture:


i. Innovation and Risk-Taking:

The degree to which employees are encouraged to be innovative and take risks.

ii. Attention to Detail:

The degree to which employees are expected to exhibit precision, analysis, and attention to detail.


iii. Outcome Orientation:

The degree to which management focuses on results or outcomes rather than on the techniques and processes used to achieve those outcomes.

iv. People Orientation:

The degree to which management decisions take into consideration the effect of outcomes on people within the organization.


v. Team Orientation:

The degree to which the work activities are organized around teams rather than individuals.

vi. Aggressiveness:

The degree to which people are aggressive and competitive rather than easy-going.


vii. Stability:

The degree to which the organizational activities emphasize maintaining the status quo in contrast to growth.

Each of these characteristics consists on a continuum from low to high. Appraising the organization on these seven characteristics, then, gives a composite picture of the organization’s culture. This picture becomes the basis for feelings of shared understanding that members have about the organization, how things are done in it, and the way members are supposed to behave.

Organizational culture is, therefore concerned with how employees perceive the characteristics of organization’s culture, not with whether or not they like them. Organizational culture represents a common perception held by the organization’s members. It is widely accepted that individuals with different backgrounds or at different levels in the organization will tend to describe the organization’s culture in similar terms.


It is this ‘shared meaning’ aspect of organizational culture that makes it such a potent device for guiding and shaping behaviour. That is what determines, e.g., Microsoft’s culture which values aggressiveness and risk-taking. This gives the managers the insight and information to better understand the behaviour of Microsoft’s executives and employees.

It can be concluded that organizational culture provides stability to an organization. Furthermore, every organization has a culture and, depending on its strength, it can have a significant influence on the attitudes and behaviours of organization’s members. In order to successfully understand the culture of an organization, it is important first of all to understand how culture begins in an organization.

# 3. Beginning of Organizational Culture:

An organization’s culture does not pop out of thin air. Once established, it rarely fades away. An organization’s current customs, traditions, and general ways of doing things are largely due to what it has done before and the degree of success it has had with those endeavours. This leads to the ultimate source of organization’s culture and its founders.

The founders of an organization traditionally have a major impact on that organization’s early culture. They have a vision of what organization should be. They are unconstrained by the previous customs and ideologies. The small size that typically characterizes new organizations further facilitates the: founder’s imposition of their vision on all organizational members.

The process of culture creation occurs in three ways ― First, founders only hire and keep employees who think and feel the way they do. Second, they indoctrinate and socialize these employees to their way of thinking and feeling. And finally, the founder’s own behaviour acts as a role model that encourages employees to identify with them and thereby internalize their beliefs, values and assumptions. When the organization succeeds, the founder’s vision is seen as a primary determinant of that success. At this point, the founder’s entire personality becomes embedded in the culture of the organization.

To substantiate this, citing the example of Sony will be quite appropriate as Sony can truly be viewed as the Essence of Akio Morita. Akio Morita, Sony Corporation’s co-founder had such a tremendous influence on the company’s culture that people often referred to him as Mr. Sony.


Morita was described as a passionate lover of music and art, a workaholic, a great socialiser, a brilliant observer of people’s behaviour, and a man with an un-bounding energy, a relentless drive, and a determined focus. Morita applied these qualities in pursuing his vision of creating a brand name for products that appealed to people worldwide.

He chose a short, catchy name for his company so people everywhere could easily pronounce and remember it. Morita began his globalization strategy in the United States, where he moved his family so that he could study American culture and increase Sony’s chance of success. Today, Sony is recognized throughout the world as a leading brand name.

Citing another recent example, Southwest Airlines can be aptly described as Herbert Kelleher s passion. The actions of Herbert Kelleher, Southwest Airlines’ Chief Executive, had a strong influence on the company’s casual, fun-loving culture. He stars in the company’s orientation film, where new employees see their leader singing and dancing. Kelleher models the light-hearted behaviour he expects of his employees so they, in turn, know that it is okay as a part of providing exceptional customer service, to have fun with the airline’s passengers.

Similarly, the culture at Hyundai the giant Korean Conglomerate is largely a reflection of its founder Chung Ju Yung. Hyundai’s fierce, competitive style and its disciplined, authoritarian nature are the same characteristics used to describe Chung.

Other contemporary examples of founders who have had an immeasurable impact on their organization’s culture include ― Bill Gates at Microsoft, David Packard at Hewlett-Packard, Fred Smith at Federal Express, Mary Kay at Mary Kay Cosmetics, and Richard Branson at the Virgin Group.

# 4. Components of Organizational Culture:

The culture of an organization represents a complex pattern of shared values, norms and artefacts which are characteristics of the organization. Hence, organizational culture can be said to comprise of three different components viz., values, norms and artefacts.


These terms are further described below:

1. Values:

Values are the beliefs in what is good for the organization and what should or ought, to happen. The ‘value set’ of an organization may only be recognized at top level, or it may be shared throughout the business, in which case the organization could be described as value-driven. The stronger the values, the more they will influence behaviour. This does not depend upon their having been articulated.

Implicit values that are deeply embedded in the culture of the organization and are reinforced by the behaviour of the management can be highly influential, while espoused values that are idealistic and are not expressed in the managerial behaviour may have little or no effect. Some of the most typical areas in which values can be expressed, implicitly, or explicitly are: performance, competence, competitiveness and teamwork.

2. Norms:

Norms are the unwritten rules of behaviour, the ‘rules of the game’ that provide informal guidelines on how to behave. Norms tell people what they are supposed to be doing, saying, believing and even wearing. They are never expressed in writing—if they were, they would be policies or procedures.


They are passed on by the word of mouth or behaviour and can be enforced by the reactions of the people if they are violated. They can exert very powerful influence on the behaviour because of these reactions—people are controlled by the way others react to them. Norms can be very well illustrated by the prevailing work ethics, e.g., ‘work hard, play hard’, ‘come in early, stay late’, look busy at all times’ or ‘look relaxed at all times’.

3. Artefacts:

Artefacts are the visible and tangible aspects of an organization that people hear, say or feel. Artefacts can include such things as the working environment, the tone and language used in letters and memoranda, the manner in which people address each other at meetings or over the telephone, the welcome (or lack of welcome) given to the visitors and the way in which receptionists deal with outside calls. Artefacts can be very revealing.

# 5. Functions of Organizational Culture:

After having described what an organizational culture is, along with its origin and components, it will be appropriate to probe into the wide array of meaningful functions performed by the organizational culture for the organization.

Staw and Cummings (1996) described that organizational culture performs a number of functions within an organization. First, it has a boundary-defining role, i.e. it creates distinctions between one organization and others. Second, it conveys a sense of identity for organizational members. Third, organizational culture facilitates the generation of commitment to something larger than one individual’s self-interest. Fourth, it enhances, social system stability.

Organizational culture is therefore, the social glue that helps hold the organization together by providing appropriate standards of what employees should say and do. Finally, organizational culture serves as a sense-making and control mechanism that guides and shapes the attitudes and behaviour of the employees. The role of organizational culture in influencing employees’ behaviour appears to be increasingly important in today’s work-place.


As organizations have widened the spans of control, flattened structures, introduced teams, reduced formalization, and empowered employees, the shared meaning provided by a strong culture ensures that everyone is pointed in the same direction. For instance, the employees at Disney theme parks appear to be almost universally attractive, clean and wholesome looking, with bright, smiles. That is what the organizational culture at Disney imbibes and conveys.

The company selects employees who will maintain that image. And once on the job, a strong organizational culture, supported by the formal rules and regulations, ensures that Disney-theme park employees will act in a relatively uniform and predictable way. Also, to illustrate the notion of shared meaning, ‘Yahoo! Incorporation.’ presents a good example.

The shared meaning provided by Yahoo Inc.’s strong organizational culture is stated in the company’s motto—’Do what’s crazy, but not stupid.’ The motto guides employees as they develop entertaining programmes and services that grab the attention of today’s internet users. Employee creativity is the key to keeping ‘Yahoo!’ the leading search engine on the internet. ‘Yahoo!’ hires young net enthusiastic who thrive in an informal setting where there are few rules and regulations to stifle the creative process.

# 6. Adaptation of Organizational Culture by the Employees:

How Employees Adopt Culture:

Once an organizational culture is in place, there are practices within the organization that act to maintain it by giving employees a set of similar. Culture is transmitted to employees in a number of forms, the most potent being stories, rituals, material symbols and language.

1. Stories:


During the days when Henry Ford II was the chairman of the Ford Motor Co., one would have been hard pressed to find a manager who had not heard the story about Mr. Ford reminding his executives, when they got too arrogant, that “it’s my name that is on the building.” The message was clear- Henry Ford II ran the company.

Stories such as that circulate through many organizations. They typically contain a narrative of events about the organization’s founders, rule-breaking, rags-to-riches successes, reductions in the workforce, relocation of employees, reactions to past mistakes and organizational coping. For most of the part, these stories develop spontaneously. But some organizations actually try to manage this element of organizational culture’s learning.

For instance, Krispy Kreme, a large doughnut maker out of North Carolina, USA has a full time ‘Minister of Culture’ whose primary responsibility is to tape interviews with customers and employees. The stories these people tell are then put into company’s video magazine that describes Krispy Kreme’s history and values. These stories anchor the present in the past and provide explanations and legitimacy for current practices.

2. Rituals:

Rituals are repetitive sequences of activities that express and reinforce the key values of the organization; which goals are most important, and which people are important and which are expendable. One of the best known examples for organizational rituals is Mary Kay Cosmetics’ Annual Award Meeting. Looking like a cross between a circus and a Miss America pageant, the meeting takes place over a couple of days in a large auditorium, on a stage in front of a large, cheering audience, with all the participants dressed in glamorous evening clothes. Sales women are rewarded with an array of flashy gifts—gold and diamond pins, fur stoles, pink Cadillacs—based on the success in achieving sales quota.

This ‘show’ acts as a motivator by publicly recognizing outstanding sales performance. In addition, this ritual aspect reinforces Mary Kay’s personal determination and optimism, which enabled her to overcome personal hardships, establish her own company, and achieve material success. It conveys to her sales people that reaching their sales quota is important and that through hard work and encouragement they too can achieve success.

3. Material Symbols:

The headquarters of Alcoa, world’s leading producer of primary aluminum, fabricated aluminum, and alumina, does not look like a typical head office operation. It has few individual offices. It is essentially made up of cubicles, common areas, and meeting rooms. This informal corporate headquarters convey to the employees that Alcoa values openness, equality, creativity and flexibility.

Some corporations provide their top executives with chauffeur-driven limousines and, when they travel by air, unlimited use of the corporate jet. Others may not get to ride in limousines or private jets but they might still get a car and air transportation paid for by the company. Only the car is Chevrolet (with no driver) and the jet seat is in the economy section of a commercial airliner.

The layouts of the corporate headquarters, the types of automobiles top executives are given, and the presence or absence of corporate aircraft, are a few examples of material symbols. Others include size of offices,’ the elegance of furnishings, executive perks and dress attires. These material symbols convey to employees who is important, the degree of egalitarianism desired by the top management, and the kinds of behaviour (for example, Risk-taking, conservative, authoritarian, participative, individualistic, social) that are appropriate.

4. Language:

Many organizations and units within the organizations use language as a way to identify its organizational members. By learning this language, members attest to their acceptance of the culture and, in doing so help to preserve it. For example, employees at Tattoo, a marketing services agency in San Francisco, USA use special words to convey the organization’s unique culture.

They call the Tattoo’s three floors of office space the ‘hive’ because it buzzes with activity as employees move between the floors to work on different client projects. They refer to themselves as ‘Tattools’, because the company discourages the formal job titles and other symbols of formal authority.

Unlike most marketing firms that use market research studies and focus groups for developing brand campaigns, Tattoo uses an intuitive approach it calls ‘living the brand’. Employees call client presentations ‘collages’, a blending of music and visuals intended to show the sensory and emotional aspects of brand.

Hence, organizations, over a period of time, often develop unique terms to describe equipment, offices, key personnel, suppliers, customers, or products that relate to their business. New employees are frequently overwhelmed with acronyms and jargon that, after 6 months on the job, have become fully a part of their language. Once, assimilated, this terminology acts as a common denominator that unites members of a given organizational culture.

# 7. Organizational Culture as a Barrier:

Every coin has two sides and so has organizational culture. On the one hand, organizational culture plays a very integral part in the organizations’ overall conduct. Many of its functions are valuable to both the organizations and the employees. Organizational culture enhances organizational commitment and increases the consistency of employee behaviour.

These are clearly benefits to organizations. From an employee’s standpoint, organizational culture is valuable because it reduces ambiguity. It tells employees how the things are done and what is important. On the other hand, organizational culture can also pose to become a barrier to organizational growth and development.

This fact is well-depicted in some potentially dysfunctional aspects of organizational culture and its effects on the organization, especially a strong one, on an organization’s effectiveness:

1. A Barrier to Change:

Culture is a liability when shared values are not in agreement with those that will further the organization’s effectiveness. This is most likely to occur as an organization’s environment is dynamic. When an organization is undergoing rapid change, organization’s entrenched culture may no longer be appropriate.

So consistency of behaviour is an asset to an organization when it faces a stable environment. It may, however, burden the organization and make it difficult to respond to changes in the environment. For instance, JC Penney and Sears once ruled the USA’s retail department store market.

Their executives considered their markets immune to competition. Beginning in the mid-1970s, Wal-Mart did a pretty effective job of humbling Penney’s and Sear’s managements. General Motors’ executives, safe and cloistered in their Detroit headquarters in USA, ignored the aggressive efforts by the Japanese auto firms to penetrate its markets. The result is history. General Motors market share has been in a free fall for three decades.

Toyota, once one of those aggressive Japanese firms that was successfully stealing market share from General Motors, itself became a casualty of its own success. During the first half of 1990s, having been slow to respond to the recreational vehicle market and stuck with a cumbersome vehicle development process, Toyota experienced a serious loss in market share and profit margins.

2. A Barrier to Diversity:

Hiring new employees who, because of race, gender, disability, or other differences, are not like majority of the organization’s members, creates a paradox. Management wants new employees to accept the organization’s core cultural values. Otherwise, these employees are unlikely to fit in or be accepted. But at the same time, management wants to openly acknowledge and demonstrate support for the differences that these employees bring to the workplace.

Strong cultures put considerable pressure on employees to conform. They limit the range of values and styles that are acceptable. In some instances, such as the widely publicized Texaco case (which was settled on behalf of 14000 employees for $ 176 million) in which senior managers made disparaging remarks about minorities; a strong culture that condones prejudice can even undermine formal corporate diversity policies.

Organizations seek out and hire diverse individuals because of the alternative strengths these people bring to the workplace. Yet, diverse behaviours and strengths are likely to diminish in strong cultures as people attempt to fit in. Strong organizational cultures can, therefore, be liabilities when they effectively eliminate those unique strengths that people of different backgrounds bring to the organization. Moreover, strong organizational cultures can also be liabilities when they support institutional bias or become insensitive to people who are different.

3. A Barrier to Acquisitions and Mergers:

Historically, the key factors that management looked at in making acquisitions or merger decisions were related to financial advantages or product synergy, but, in recent years, organizational cultural compatibility has become the primary concern. While a favourable financial statement or product line may be the initial attraction of an acquisition candidate, whether the acquisition actually works seems to have more to do with how well the two organizations’ cultures match up.

A number of acquisitions consummated in the 1990s already have failed. And primary cause is conflicting organizational cultures. For instance, AT and T’s 1991 acquisition of NCR was a disaster. AT and T’s unionized employees objected to working in the same building as NCR’s non-union staff. Meanwhile, NCR’s conservative, centralized culture did not take kindly to AT and T’s insistence on calling supervisors ‘coaches’ and removing executive’s office doors. By the time AT and T finally sold NCR, the failure of the deal had cost AT and T more than $ 3 billion.

Similarly, Word-Perfect Corp. bought Novell Inc. in 1994 to give it a viable word-processing product to compete against Microsoft. But the employees and the managers from the two organizations could never see eye to eye on important issues. When Word Perfect was sold to Corel Corp. in 1996, Novell got $ 1 billion less than it had paid just two years earlier. Hence, it is clearly evident from the above real-life corporate examples that rigid organizational cultures can pose to be significant barriers to the organization’s future growth and development.

# 8. Organizational Cultures in the 21st Century:

Any group of people who have worked together for some time, any organization of long standing, indeed, any state or national body over a period of time develops a philosophy and a series of traditions. These are unique and they fully define the organization, setting it aside for better or worse from similar organizations.

To cite an example from the fast-moving, ever changing information technology world, this article dwells into Hewlett-Packard which is a leading giant in the computer and information technology business. At Hewlett-Packard, whole of its organizational culture goes under the general heading of the ‘H-P Way’.

In general terms, ‘H-P Way’ is the policies and actions that flow from the belief that men and women want to do a good job, a creative job, and that if they are provided with the proper environment, they will do so. But that’s only a part of it. Closely coupled with this is the H-P tradition of treating each individual with consideration and respect and recognizing personal achievements.

This really catches the essence of the ‘H-P Way’. It cannot be described in number and statistics. Basically, it is the spirit, a point of view. It is a feeling that everyone is the part of a team, and that team is Hewlett- Packard. It exists because people have seen that it works, and they believe in it and support it. The belief is that this feeling makes Hewlett-Packard what it is, and that it is worth perpetuating. And this belief forms the crux of Organizational Culture at Hewlett-Packard.

This example provides some insight into the organizational culture of Hewlett-Packard. In many respects, its culture is unique in itself and is very different from that of IBM or Apple Computers or Texas Instruments. In fact, two organizations might be in essentially the same business, be located in the same geographic area, have similar form of organizational structure, and yet be, somehow, very different as places to work.

This difference can be credited, to a large extent, to different organizational cultures unique to an organization itself. This goes on to substantiate the fact that a strong organizational culture can affect employees’ behaviours and commitment to the organization in a significant manner.

# 9. Sustaining Basics and Developing Variable Aspects of Organizational Culture- Conclusion:

In the end, it would be wise to acknowledge the fact that in order to make organizational cultures work for the organization, we have to sustain some of the basic aspects of the organizational culture as they provide stability to the organization, while developing certain variable aspects of organizational cultures in order to equip the organization to survive in a dynamic environment of today’s modern day corporate world.

An organization’s culture is largely made up of relatively stable characteristics. It develops over many years and is rooted in deeply held values to which employees are strongly committed. In addition, they are a number of forces continually operating to maintain a given culture.

These would include written statements about the organization’s mission and philosophy, the design of the physical space and buildings, the dominant leadership style, hiring criteria, entrenched rituals, popular stories about key people and events, past promotion practices, the organization’s historic performance evaluation criteria, and the organization’s formal structure.

Selection and promotion policies are particularly important devices that work for sustaining the basics of organizational culture. Employees choose an organization because they perceive their own values to be a good fit with the organization. They become comfortable with that fit.

Hence, one of the most important managerial implications of organizational culture relates to the selection decisions. Hiring individuals whose values do not align with those of the organization is likely to lead to employees who lack motivation and commitment and who are dissatisfied with their jobs and the organizations.

Employees form an overall subjective perception of the organization based on such factors as degree of risk tolerance, team emphasis, and support of people. This overall perception becomes, in effect, the organization’s culture or personality. These favourable or unfavourable perceptions then affect employee performance and satisfaction, with impact being greater for stronger cultures, just as people’s personalities tend to be stable over time, so too strong cultures do.

This makes strong cultures difficult for managers to change. When a culture becomes mismatched to its environment, management would want to change it. But changing an organization’s culture is a long and difficult process. The result, at least in the short-term, is that managers should treat their organization’s culture as relatively fixed. Robbins (2003) says that culture is largely stable in nature but that does not mean it cannot be changed.

In the unusual case when an organization confronts a survival-threatening crisis— a crisis that is universally acknowledged as a {rue life-or-death situation— members of the organization will be responsive to efforts at cultural change. Hence, changing an organization’s culture is extremely difficult, but cultures can be changed.

Roth (1998) suggests that cultural change is most likely to take place when most or all of the following conditions exists:

First condition is of a dramatic crisis. This is the shock that undermines the status quo and calls into question the relevance of the current culture. Examples of this crisis might be a surprising financial setback, the loss of a major client or customer base, or a dramatic technological breakthrough by a competitor.

Second condition is of turnover in leadership. This happens basically when the new top leadership, which can provide an alternative set of key values, may be perceived as more capable of responding to the crisis.

Third is the case of young and small organizations. The younger the organization the less entrenched its culture will be. Similarly, it is easier for the management to communicate its new values when the organization is small and young.

And finally, there is the case of a weak culture. The more widely held the culture and the higher the agreement among members on its values, the more difficult it will be to change. Conversely, weak cultures are more amendable to change than strong ones.

If the preceding conditions exist, the following actions may lead to change- new stories and rituals need to be set in place by top management; employees should be selected and promoted who espouse these new values and the reward system needs to be changed to support the new values. Under the best of conditions, these actions would not result in an immediate or dramatic shift in the prevailing organizational culture. This is because cultural change is a lengthy process—measured in years rather than in months. But cultures can be changed.