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Organizational Culture IB Business Management
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A full breakdown of IB Business Management's Unit 2.5 Organizational Culture (HL).
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Organizational CultureOrganisational culture or corporate culture is the sum of values, attitudes,
beliefs, expectations and assumptions of an organisation. It could be defined as
what is expected of, or is considered ‘normal’ in an organisation.
Key elements of organisational culture:
Vision of the organisation: The aim and mission of an organisation often mark
the first step of building a successful corporate culture. A successful business
must have a corporate culture consistent with the mission of the organisation.
(Ex: Ikea’s thrifty and hardworking culture thoroughly supports their mission
statement.)
Values: Values are the core of the organisational culture. Values help achieve the
vision of the organisation.
(Ex: The consulting firm McKinsey & Company communicates its core values to
the majority of the stakeholders for absolute consistency within an organisation.)
Practices: Companies should put their values into practice. If an organisation
professes to be environmentally supportive, then it should be evident in their
practices.
(Ex: Body Shop conscientiously supports community farming and fair trade in
support of their commitment.)
People: Another element of organisational culture is how the most valuable
resource of a company is hired. Practices of internal or external recruitment, and a
thorough recruitment process, strive to find the right employee with a similar
vision, and influence the corporate culture of a company.
(Ex: Google is very particular in their recruitment process.)
History and folklore: Every great organisation has a unique history to influence
future employees and to inspire a workforce.
(Ex: F-1 company Ferrari created a theme park in Abu Dhabi to tell its unique
history and to invite all the fast car enthusiasts to have a Ferrari Experience. )
, Types of Organizational Culture
Power Culture
Decision making is centralized around the CEO or a few senior managers who
have a great deal of control over the organization.
Nature of culture:
● Autocratic leadership approach
● Strong personality of CEO or senior managers
● High-pressure working environment
● Reliance on financial incentives to motivate employees
Example: an investment bank dominated by a very powerful CEO.
→ An individual or a selected group of people makes decisions for the
organisation.
→ Procedure and formal rules are not dominant, so communication is highly
centralised.
→ Results are considered the most crucial factor in assessing the merit of an
employee.
→ Centralised decision-making often speeds up the process, but could be
detrimental to the long-term benefit of the organisation.
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