Culture Is Both an Asset and Liability - Discuss

“Culture is both an asset and liability.” Discuss.

The implementation of organisational culture can be a valuable asset towards an organisation. However, depending on the situation, this same culture may turn into a liability for the organisation. Therefore, this essay will discuss how organisational culture may be both an asset and a liability. Although are numerous supporting arguments on culture being an asset or liability, this essay will only address culture acting as a control system; the link between culture and leadership behaviour; as well as the positives and negatives of core values such as innovation and outcome-orientated. Also presented are the issues of culture causing barriers to employee diversity and the difficulties for new employees in adapting to the culture; and barriers to mergers and acquisitions.

According to the Financial Times organisational culture refers to the, “the large number of unspoken assumptions and beliefs which managers in the organisation share about ‘the way we do things around here’” (cited directly from Guide to Management Ideas and Gurus (2008), pg. 53) [1]. Culture is intangible and instead based on perception. This refers to how employees perceive the business centred on experiences within the organisation. Hence, this allows each organisation’s culture to be unique, varying from weak to strong.

A benefit of a culture is that it may act as a control system for organisations especially within strong cultures. A strong culture refers to “those in which the key values are deeply held and widely shared – have a greater influence on employees than do weaker cultures." (cited from Management: The Essentials (2012), pg. 146) [2] Furthermore, a stronger and more unified culture means employees accept and is committed to the values of the organisation. Hence, this allows the promotion of acceptable behaviour whilst discouraging unwanted behaviour, as there is an understanding of what is important, thus creating a stable social system. This allows culture (learned and expressed via language, stories, rituals and material symbols or artefacts) to substitute the regulations that guide employees without the requirement of written documentation, policy manuals, organisational charts, constant supervision, etc.; and the organisation would still have a system with order and consistency. This is supported by Tom Tierney who states, “A corporation’s culture is what determines how people behave when they are not being watched.” (cited directly from Guide to Management Ideas and Gurus (2008), pg. 53) [1] Thus, this proves culture is an asset via its importance in guiding employees and their behaviour, improving overall employee and organisational performance via the accepted values.

Similarly, there is a positive link between organisational culture and leadership behaviour. As employees learn the organisational culture, the behaviour of the employees and managers become increasingly similar. This is, as mentioned; culture acts as a control system, reinforcing acceptable behaviour and standards of performance. Thus, employees would act of the same standards as managers, developing consistent leadership behaviour. This is supported as “Excellent leaders are not merely aware of the organisation’s basic assumptions, but also know how to take action” (cited directly from How to Manage Human Resource in Organizations (2007), pg. 180) [3]. Furthermore, this would reduce organisational conflict, creating a positive working environment. Hence, the leadership behaviour and positive working environment generated by culture is an asset for organisations as it would increase productivity and working efficiency, as well as decrease turnover rates as employees gain a sense of identity within the business, along with a commitment larger than self-interest. Some argue that culture is a greatly significant influence to determine success with long-term economic and financial performance (Corporate Culture and Performance (1992)) [4].

With organisational culture, there are many positives impacts of the core values of culture such as innovation. According to the Organizational Culture Profile developed by O'Reilly, Chatman, and Caldwell in 1991, there are seven distinct values including outcome-orientated, detail-orientated, team-orientated, people-orientated, aggressive, stable and innovation. Using an innovative culture for instance, this supports how this can allow an organisation to become leading edge through unique ideas and products. Apple Inc. is an example of a firm that supports and has a culture of innovation and risk taking, producing products the iPhone, Macintosh, iPad, etc. (Think Really Different – Newsweek (2010), pg. 46-51) [5]; and has led to worldwide success and leading edge in technology. Another example is Google, as they allow engineers to allocate 20 percent of their time to chosen projects (Google’s 20 Percent Factor – ABC News (2008)) [6], hence reinforcing their values of innovation and creativity. This culture has proven successful as they are leading edge in internet.

On the other hand, using an outcome-orientated culture for instance supports how culture can be a major liability. Although outcome-orientated culture excels more than those without (What Really Works – Harvard Business Review (2003)) [7], this can lead to performance pressures within employees due to 90 percent of outcome-orientated cultures use a reward system based on employee performance (What Really Works – Harvard Business Review (2003)) [7]. This leads to employee rivalry, unethical behaviours and an overall unhealthy work environment. This type of culture furthermore conflicts with the social pressures of impacting positively and sustainably the ecological environment, society, communities and employees; the pressure of implementing corporate social responsibility. However, if not complied with may affect the brand image, negative publicity and costly fines. For example, Australian Wheat Board had made illegal bribes of 300 million dollars; ignoring ethics whilst being driven via a sales-oriented culture (Lessons learned? – Management Today (2007), pg. 28-30) [8]. This supports how key values such as outcome-orientated may be although be an asset, has various liabilities that an organisation is to consider.

Another argument is that the stronger the culture within an organisation, the less the employee diversity and the more difficult it is for new employees to adapt to the culture. This is as although it is desired that new employees learn and accept the organisational values, placing pressure on employees on the requirement to conform to the culture. Furthermore, the unique qualities, strengths and behaviours in employees that are beneficial to the organisation, would