The Importance of Managing Organizational Culture

Pages: 7 (2187 words) Published: April 8, 2012
Managing People & Organisations
This essay will argue that organizational culture can and, should be managed. Increased business competition, amalgamations, globalization, acquisitions, business alliances, and other developments have created the need for management of organizational culture. The context of management of organizational culture is fundamental to much of the successive work on organizational efficiency.

A central issue in management of organizational culture is how to overcome the Principle-Agent Problem and how to deal with the institutional theory. If a business is to effectively deal with an expanding government, it must make sure that its culture is well managed. To do so, organizational managers must learn how to prevail over the Principal Agent problem and the institutional theory. The Principal Agent problem is a description of a conflict of interests; that the principle (principle stakeholders, shareholders, etc.) earns profits on the performance of the organization whereby the agents (employees) usually earn unconditional wages. They are parallel but conflicting wants; the principle seeks the greatest return for the least pay whereby the agent seeks to do the least work for the greatest pay. The Principle-Agent Problem is found in many employer/employee associations especially when stakeholders employ top executives of corporations (Jackson and Carter 2000). The principle must always settle conflicts between organizational objectives and the incentives of the different subgroups within the organization. Good managers employ incentives, commands, and organizational culture to make sure that this is achieved. On the other hand, institutional theory deals with the deeper and more flexible features of social structure. It lays emphasis to the procedures through which structures, regulations, norms, and customs develop as reliable guiding principles for social behavior. It finds out how these elements are developed, diffused, implemented, and adapted in an organization. The notion of Institutional theory and organizational culture is important in organizations. The building blocks of institutions and cultures have the capacity of carrying with them different meanings even in a single organization or culture. Differences in interpretations of mutual symbols support the multiplicity on which cultures flourish and institutions rely. In the theory of organizational culture, issues of diversity are mainly dealt with through studying the different subcultures while institutional theory deals with diversify in institutional logistics (Jackson and Carter 2000). Therefore, the management has a role to play in mediating between these two issues (Principle-Agent Problem the institutional theory). This essay develops the argument that organizational culture can and should be managed in corporations in five sections. • Section 1 defines the meaning of organisational culture • Section 2 outlines the importance of organisational culture • Section 3 describes how organisational culture can be managed • Section 4 describes Culture and Management of Organizational Change Section 5 describes the implications for culture management This essay will thus show that organizational culture should be managed since it leads to improved coordination and integration in organizations with the result being improved organizational effectiveness. What is Organizational Culture?

Organizational culture refers to the set of mutual values, beliefs and expectations that govern the way members of an organization approach their duties in the work place and interrelate with one another. Research shows that organizational culture is quite different from other world cultures. It lays emphasis on how workers describe their colleagues and the kind of stories they share with one another. According to Schein 1980, organizational culture is “a pattern of...

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