Factors Determining Organizational Culture

Instructor: Jarvista Rivers

Jarvista has an MBA and a BS in business administration.

Understanding your organizational culture is an excellent way to create an environment of success around you. In this lesson, we will discuss and define some of the factors which determines this organizational culture.

Organizational Culture Defined

Organizational culture is a concept not clearly understood and yet we have many experiences of organizational cultures every day. 'Culture' can be defined as a shared set of values, beliefs, thoughts, behaviors, and habits which creates an experience that is felt, seen and unseen. This experience creates an environment within an entity defined as an organization. Some example of organizations are our families, sports teams, companies, and industries. When there is an agreed-upon set of values, beliefs, thoughts, and behaviors, this creates an organizational culture.

It is important to understand where these values, beliefs, thoughts, and behaviors derive from as it relates to the organization culture. For example, in our families, the matriarch or patriarch's values and beliefs are passed down through generations which creates the family's culture. In a company, the CEO or founder's values, beliefs, thoughts, and behaviors typically sets the tone for the culture of the organization.

These values, beliefs, thoughts, and behaviors are communicated through vision statements, policies, logos, office design, wages, benefits, and the treatment of staff. As people agree to work for this organization, they go through interviews, orientation, and training to conform and adjust to this culture.

Factors Determining Organizational Culture

As discussed earlier, we understand that the founder's values and beliefs are huge components to the creation of the culture. These are considered internal factors. Let's explore other internal factors and take at look at some external factors determining organizational cultures.

Internal Factors

Internal factors happen within the organization. Some of those factors are:

  • Founder's values and beliefs
  • Policies
  • Wages
  • Benefits
  • Incentives
  • Management Style
  • Treatment of Staff

External factors

External factors happen outside the organization and yet still influence the culture within. Some of these factors are:

  • Industry standards
  • Economic conditions
  • Legal ramifications
  • Technology

Examples of Organizational Culture

Example 1

A hypothetical organization named Dynamic Evolutionary, Inc. founded by Nsombi Dynamic. Dynamic Evolutionary, Inc. is a web-based company linking international and domestic vendors and suppliers.

A little background on the founder: Nsombi was bored with traditional school. Therefore she was home schooled to allow for flexibility of learning. She participated in a large, diverse home school community. Nsombi's family supported her creativity which propelled her into entrepreneurship at an early age.

Nsombi incorporated these values of support, fostering creativity, flexibility and diversity in her organization. Those who were independent thinkers and learners, creative, and valued flexibility in their schedules were attracted to Dynamic Evolutionary, Inc. The leadership and management welcomed open discussions for new ideas and ways to implement them. With technological advances, those who chose to work remotely had those options. Staff are compensated very well for their creativity and performance and thus are highly motivated.

Nsombi visits the office and interacts with all staff often. They are always informed of any organizational changes and participates in the decision-making process. They engage in organizational think tanks and skill and team building activities to learn all facets of the organization. There is an open door policy and a great deal of trust and support between management and staff.

Due to the nature of managing vendors and suppliers relationship across boundaries, they maintain knowledge and compliance with various industries standards.

Example 2

A hypothetical organization named Explosions, Inc. founded by Jane Smith. Explosions, Inc. is also a web-based company linking international and domestic vendors and suppliers.

A little background on Jane. Jane was raised in the traditional home setting with mother and father. They had a little family owned business. From an early age, Jane was being trained to take over the family business. However, Jane, really had dreams of being an artist. Her drawing skills were awesome, but not supported or encouraged by her father.

Jane was given a strict work schedule to follow and barely had time to play with her friends or draw. She was always told by her father that you have to work hard to be successful. Jane eventually forgot her passion for drawing and just focused all her energy into school and the family business. The family business made a lot of money and Jane was able to sell it to start her own enterprise.

Jane brought these same values passed down by her father because it symbolized success to her. When Jane started this business, the economic conditions were great. She got a nice penny for the family business and therefore was able to pay her managers an excellent salary.

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