Leaderhip Vs Management

Organisational Culture:

The key to

Competitive Advantage

Table of Contents

Table of contents 1

Abstract 2

Introduction 3

Discussion

• Defining Organisational Culture 3

• The Relationship between Organisational Culture 5

& Competitive Advantage

• Why is Managing Corporate Culture Important? 6

• Culture as a Source of Competitive Advantage 8

• Cultivating an Effective Organisational Culture 9

• Implications for Managers 10

Conclusions 11

Glossary 13

References 14

Organisational Culture:

The Key to Competitive Advantage

Abstract

This paper examines how corporate culture affects competitive advantage in an organisation and what the implications are for managers. Initially, the definitions of culture and specifically organisational culture are looked into as they are currently understood. (A glossary is included with various definitions). The significance of core values in cultivating an organisational culture is discussed, including the seven dimensions by which corporate cultures may be characterised.

Secondly a brief look into the relationship between organisational culture and competitive advantage leads to the question of why managing corporate culture is important. In this section a distinction is made between adaptive and unadaptive cultures and their significance in determining competitive advantage for organisations. Examples of organisations who have harnessed organisational culture to give them a competitive edge are also included.

Then a brief look into the source of an organisation’s culture is undertaken by looking at the possible elements and factors that comprise company culture.

Ways of cultivating and managing an effective organisational culture are discussed with recommendations by different authors on how managers can achieve this goal.

Finally the implications for managers are given regarding recruitment of managers and other employees to enable organisational culture to be used as the key to competitive advantage.

Introduction

Adapt or die вЂ" organisations and their managers have no other choice.

In the fast changing environment of the 21st century, organisations and their managers must be flexible and adaptable to change. They need to cultivate an organisational culture that embraces change if they wish to survive and be profitable. To remain competitive and have a sustainable advantage, organisations must establish and nurture a corporate culture which encompasses the core values of the company and its people. World class companies use their strong cultures to keep them at the top.

Organisations are “complex social systems of coordinated behaviour” (McAleese & Hargie, 2004) which are made up of systems devised around procedures, rules and regulations in order to reach organisational goals. For many organisations their major strategic goal is achieving a вЂ?sustainable competitive advantage’. This means that the organisation’s main strategic objective is to achieve prolonged success by outperforming its competitors (McAleese et al., 2004). Is this goal achievable? This paper will examine the possibilities.

Defining Organisational Culture

Culture is a difficult concept to define. There are as many views as to exactly what culture is as what there are definitions. A review of the literature finds diverse perspectives and views among both academics and practitioners which add to the complexity of defining the concept (Ogbonna & Harris, 2002).

[A few of the definitions are quoted in the glossary.]

“Organisations are live organisms made up of people interacting in complex social groupings” (Smith, 1995).

In addition, what makes organisational or corporate culture particularly difficult to define, is the notion that the character of every organisation is unique. Therefore every organisation has their own set of values and goals which influence how things are done in that particular organisation. Furthermore, most organisations are recognized to have more than one culture вЂ" or subcultures вЂ" for example different departments in the same organisation may each have their own culture that differs from the overall culture of the organisation (McAleese et al., 2004). Organisational culture can therefore be seen as a term or concept with many interpretations depending on the subjective view of the author. This invariably leads to wide debate of the application of вЂ?culture’ in an organisation.

However, almost every organisation has some core values that are shared among all the members of the entire organisation, in spite of the existence of subcultures within that organisation. It is these shared values that bind the organisation together as a unit and provide it with a distinct identity вЂ" or culture вЂ" which ultimately is essential for the survival of the organisation (Chatman & Jehn, 1994; Collins & Porras, 1991). Chatman et al. (1994) go on to propose that there are seven dimensions by which organisational cultures may be characterized:

1) Innovation

2) Stability

3) Respect for People

4) Outcome (or results) orientation

5) Detail orientation

6) Team (or collaborative) orientation