Participants

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Agenda

1. Presentation on Organisational Culture by Mr Jerome Maybon, Executive Director of E&PC management consultancy firm.

2. Roundtable discussion

i. National culture versus organisational culture.
ii. Dominance of financial incentives in organisational cultures in China.
Discussion points

1. Presentation by Mr Maybon

To view Mr Maybon’s presentation please  click here

Mr Maybon began his presentation by giving working group members a clear explanation of what is meant by the term ‘organisational culture’. He defined it as a set of experiences shared by the organisation’s members which lead to the development of shared subconscious beliefs and values. In turn, these shared values/beliefs generate accepted attitudes regarding appropriate practices and behaviour in various environments within the company and outside it. Mr Maybon explained that, when building an organisational culture, it is more effective to create shared experiences with members than simply to try to influence their attitudes because it is from the former that the latter develop.

The benefits of having a strong organisational culture are numerous. A strong culture helps create a sense of identity for an organisation’s members, thereby acting as a ‘social glue’ that helps hold the organisation together. It also enhances the organisation’s stability by helping to shape employees’ attitudes and behaviour to be in line with that of the company.

An organisational culture has numerous elements that are either observable by all staff or deeply ingrained within a small group of top managers in a company. An example of the former is the manner in which managers communicate verbally with staff. A manager’s tone and choice of words have a very strong impact on how all employees react and feel about their working environment. Since an organisational culture’s deeply ingrained values are shared only between top management, a company with a large number of employees cannot possibly ensure all staff observe these elements of the culture. However, it is the responsibility of the HR department to try to increase personnel’s familiarity with them. An example of such a value is ‘rules about human nature’, meaning the philosophy the company adopts regarding, for example, the organisation of human activity: some companies believe in a strict organisation, others prefer a more flexible culture.

A key challenge in building a company culture is to have a minimum set of values shared by all staff, but it is unlikely all staff will believe in them. These values can be further categorised into instrumental and terminal values. The former are concepts that are good for business, such as ‘the customer is always right’. The latter focus on making personnel feel good when they come to work and so promote harmony in the workplace, for example. Both sets of values are equally important for a company’s success so it is crucial that one is not neglected in favour of the other.

There are many ways in which an organisation can work to maintain its culture. Managerial role modelling is one method: managers must be consistent in applying the culture otherwise employees will see they are not serious about maintaining it. There must also be consistency from one manager to the next. Additionally, a manager’s handling of crises is extremely important because the experience becomes part of the personnel’s collective memory: remembering hardship that the company overcame together helps maintain a sense of unity. Furthermore, staff must feel they are justly rewarded for good performance otherwise they risk forming their own sub-culture that they will not want to change (although it is important to remember that there will always be sub-cultures in companies). Finally, selecting staff that fit the organisation’s culture and integrating them into the company are vital to maintaining the culture.

Problems may emerge if a manager is too charismatic because the company culture will form around his charisma as opposed to his decision-making skills. When he leaves the company, there will be no culture left. The culture must therefore be based on the management decision-making process and not on individual personalities.

Mr Maybon gave an interesting example of two foreign retail companies operating in China with different beliefs about the importance of establishing a company culture. The first came to China, set up two stores and then temporarily stopped developing further in order to build its organisational culture. It is now doing very well and growing. The second company came here and took a large share of the market without building its company culture. Ten years later it is losing money because its unplanned culture is failing.

Mr Maybon discussed successful organisational culture models and advised that the culture should be neither too formal (for fear of being too rigid and generating just one kind of employee) nor too informal (because the culture will not develop enough). A collective culture is preferable to an individual one, so it is better to wait for a number of employees to join the company (if it is newly formed) so that they can experience the culture together. It is also important to be adaptive i.e. to be willing to change the culture’s rules if necessary. This risks losing face but Mr Maybon argued this is necessary to develop the most effective company culture.

Organisational culture can have a significant impact upon a company’s economic performance and will be increasingly important in the coming decade in determining companies’ successes or failures. It is possible to change a company’s culture in order to improve performance, and new managers can often be instrumental in doing this. However, an established culture can be hard to change and so an innovative manager may not survive. Also, employees may be concerned about a change in company culture because people’s brains naturally resist change. Companies can combat this by showing them that the shift to change is safe and therefore worth a try.

2.  Roundtable discussion

i. National culture versus organisational culture

 Members of the working group discussed the relationship between organisational culture and national culture. The Chairman of the working group, Mr Hans Marxen, commented that national culture will always be present and so trying to create a global organisational culture is impossible. Moreover, if you refuse to accept the culture of the country where your company is operating, you will not be able to create a good organisational culture. Other members echoed this call to accept diversity and to respect national culture when operating abroad. Mr Jeffry Leng commented that at his company they first respect the local culture and then try to create an international spirit. 

ii. Dominance of financial incentives in organisational cultures in China

Mr Hans Marxen observed that in his experience young personnel have a strong orientation towards financial rewards. He asked how HR managers can get staff to integrate different values, such as that of working for the company per se. Although one clearly cannot stop people caring about money, it often occurs that when higher salaries are offered, personnel only want further increases. Working group members considered the fact that westerners’ salaries are higher than Chinese employees’ and so it is very difficult to combat the preoccupation with financial rewards, especially because people have little faith in the pension system and so are naturally concerned about their future.  

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