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Functions of Organizational Culture

Lesson Transcript
Instructor: John McLaughlin
An organization's Organizational Culture is its system of beliefs that govern behavior. Examine functions, and the significance of the group's sense of identity, definition of boundaries, commitment, and rules and standards to the organization. Updated: 09/17/2021

The Functions of Organizational Culture

Jane has a decision to make. She recently started her job at Carlson's Department Store as a sales associate. At Carlson's, all new sales associates must start in the returns department, and this is the first time Jane has been left in charge of the returns desk without a supervisor. Standing in front of her is an unhappy customer who is holding a broken clock radio and loudly demanding a full refund. The clock radio appears to be several years old and is missing some knobs from the front.

The irate customer does not have a receipt or any proof that he bought the clock radio at Carlson's. As Jane begins to ask the customer questions, he tells her if he doesn't get his money back right away, he will never shop at another Carlson's. Jane is not sure if her store even sells clock radios, but she must decide quickly whether or not to refund the money the man is demanding. What will Jane do?

The decision Jane makes will not be based on the training she received from Carlson's or from any written store policy. Jane's decision as to whether or not to provide a refund to this angry customer will be guided by her perception of the value that the culture of Carlson's places on customer satisfaction. Before we find out Jane's decision, let's find out more about organizational culture.

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  • 0:06 Functions of…
  • 1:53 The Sense of Identity
  • 2:46 Definition of Boundaries
  • 3:58 Generation of Commitment
  • 5:13 Rules and Standards
  • 6:27 Lesson Summary
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What Is Organizational Culture?

Organizational culture is a system of shared assumptions, values, and beliefs that governs how people behave in organizations. The culture of an organization is difficult to measure or observe, but it performs many important functions within an organization. Let's find out how culture can impact members of an organization.

What Does Organizational Culture Do?

The Sense of Identity

The first function that organizational culture performs is providing group members with a sense of identity. The culture of an organization provides its members with a way to 'define who we are.' Because the culture of every organization is unique, being a part of an organization gives members a sense of identity that is shared only by the people who belong to that organization.

Jane was told during her orientation that the number one goal of Carlson's is to delight customers by providing them with the best service possible at all times. When Jane puts on her Carlson's name tag, she feels like she is representing the high value that Carlson's places on customer service. When Jane goes the extra mile to assist a customer, she feels like her efforts match the goals of everyone who works at Carlson's.

Definition of Boundaries

The next function that organizational culture performs is that it defines the boundaries for members of an organization. These invisible boundaries are the way members of an organization determine 'what makes us different' from other organizations. The culture of an organization gives members of that organization a sense of belonging to the group and a feeling that the organization they belong to is different than any other organization. This sense of belonging is strengthened when members of an organization observe contrary behaviors from members of an opposing organization.

When Jane shops at stores other than Carlson's, she always notices the differences between the way things are done at Carlson's and the way they are done at other stores. On her last visit to Fink's Department Store, for example, she saw a sales associate standing outside the front of the store talking on his cell phone. Although Carlson's has no written rules against it, Jane has never seen a Carlson's employee take their break anywhere but in the break room. It is understood by members of the Carlson's organization that the only time you should be in the presence of a customer is when you can provide them with assistance.

Generation of Commitment

Another function of organizational culture is that it generates commitment from the members of an organization. This causes members of an organization to feel dedication to the group. The unique culture of an organization provides its members with a feeling that they share common goals. Achieving the goals of the organization often becomes a higher priority than the individual goals of group members. This shared feeling of commitment gives group members a reason to perform their tasks at their highest ability.

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