The culture and structure of an organization develop over time and in response to a complex set of factors. We can, however, identify a number of key influences that are likely to play an important role in the development of any corporate culture. These include: history; primary function and technology; goals and objectives; size; location; management and staffing; and the environment.
- History: The reason, and manner in which, the organization was originally formed, its age, and the philosophy and values of its owners and first senior managers will affect culture. A key event in the organizations history such as a merger or major reorganization, or a new generation of top management, may bring about a change in culture. Corporate history can be an effective induction tool to assist a growth programme, and to help integrate acquisitions and new employees by infusion with the organizations culture and identity.
- Primary function and technology: The nature of the organizations ‘business’ and its primary function have an important influence on its culture. This includes the range and quality of products and services provided the importance of reputation and the type of customers. The primary function of the organization will determine the nature of the technological processes and methods of undertaking work, which in turn also affect structure and culture.
- Goals and objectives: Although a business organization may pursue profitability, this is not by itself very clear or a sufficient criterion for its effective management. For example, to what extent is emphasis placed on long-term survival or growth and development? How much attention is given to avoiding risks and uncertainties? Or how much concern is shown for broader social responsibilities? The organization must give attention to objectives in all key areas of its operations. The combination of objectives and resultant strategies will influence culture, and may itself be influenced by changes in culture.
- Size: Usually larger organizations have more formalized structures and cultures. Increased size is likely to result in separate departments and possibly split-site operations. This may cause difficulties in communication and inter-departmental rivalries with the need for effective co-ordination. A rapid expansion, or decline, in size and rate of growth, and resultant changes in staffing will influence structure and culture.
- Location: Geographical location and the physical characteristics can have a major influence on culture – for example, whether an organization is located in a quiet rural location or a busy city center. This can influence the types of customers and the staff employed. It can also affect the nature of services provided, the sense of ‘boundary’ and distinctive identity, and opportunities for development.
- Management and staffing: Top executives can have considerable influence on the nature of corporate culture.However, all members of staff help to shape the dominant culture of an organization, irrespective of what senior management feel it should be. Culture is also determined by the nature of staff employed and the extent to which they accept management philosophy and policies or pay only ‘lip service’. Another important influence is the match between corporate culture and employees’ perception of the psychological contract.
- The environment: In order to be effective, the organization must be responsive to external environmental influences. For example, if the organization operates within a dynamic environment it requires a structure and culture that are sensitive and readily adaptable to change. An organic structure is more likely to respond effectively to new opportunities and challenges, and risks and limitations presented by the external environment.