Culture also has a pervasive impact on business practices and organizational behaviors. Harrison and Huntington (2000) have provided compelling evidence that national cultures and values shape human progress and influence economic prosperity. For example, Asian values of personal relationships and family ties served East and Southeast Asia well for over three decades but hindered their economic development in the last few years.
In spite of the pervasive influence of national culture, within each nation exist different types of organizational cultures, because the personality and philosophy of the founder/leader may also shape the culture of each corporation. According to Reh (2002), "It is the leader's job to provide the vision for the group. A good executive must have a dream and the ability to get the company to support that dream. But it is not enough to merely have the dream. The leader must also provide the framework by which the people in that organization can help achieve the dream. This is called company culture" (p.1).
Generally, organizational culture refers to the prevailing implicit values, attitudes and ways of doing things in a company. It often reflects the personality, philosophy and the ethnic-cultural background of the founder or the leader. Corporate culture dictates how the company is run and how people are promoted. Leaders and managers need to understand how different types of corporate cultures may either facilitate or inhibit organizational efforts to improve performance and increase productivity. They also need to have the necessary competency to foster corporate cultural change. Cameron and Quinn (1998) pointed out the importance of transforming organizational culture in order to adapt to changing times. They have developed an assessment instrument to identify four types of cultures, namely, market culture, advocacy culture, clan culture, and hierarchy culture.
Toxic organizational cultures
The following organizational cultures are described as toxic because they are dysfunctioning in terms of relationships and adjustment to changing times. They undermine the social/spiritual capital, poison the work climate and contribute to organizational decline.(1) Authoritarian-hierarchical culture - The big boss alone makes all the major decisions behind closed doors. Even when the decisions are harmful to the company, no one dares to challenge the boss. The standard mode of operand um is command and control, with no regard to the well being of employees or the future of the company. In this kind of culture, employees are to be controlled, manipulated and occasionally pacified like little children. Workers are motivated by fear rather than love for the company or passion for the work. They are expected to do what they are told without questioning. The main criterion for promotion is loyalty to the boss, rather than competence and commitment. As a result, star performers who dare to question some of the administration's decisions are sidelined or let go, while those who obey the boss blindly and who are willing be hatchet men get the nod for promotion.
Hierarchies are not necessarily bad in and of themselves. Some sort of hierarchy in terms of decision-making and responsibility is always inevitable. However, when hierarchies are used to control and abuse workers, problems inevitably occur. Hierarchies without accountability tend to have a corrupting influence on ambitious, autocratic leaders. When the boss is dysfunctional and has the power to impose his selfish, irrational decisions on others, the entire company suffers.
(2) Competing-conflictive culture - There is always some sort of power struggle going on. Leaders are plotting against each other and stabbing each other on the back. Different units and even different individuals within a unit are undercutting, backstabbing each other to gain some competitive advantage. There is a lack of trust and cooperation. People often hide important information from each other and even sabotage each other's efforts to ensure that only they will come up on top.
There is no regard for the larger picture and the overall goal of the company. It is everyman for himself. Both management and workers are obsessed with their own survival and self-interests. As a consequence, the organization is fragmented and there is a lot of waste of valuable resources because of duplications and sabotage. Such intense competition within the company creates a climate of divisiveness, conflict and mistrust. A house divided cannot long survive in a highly competitive globe economy.
(3) Laissez faire culture - There is a vacuum at the top, either because the leader is incompetent and ignorant, or because he is too preoccupied with his personal affairs to pay much attention to the company. Consequently, there is an absence of directions, standards and expectations. When there is an absence of effective leadership, each department, in fact, each individual does whatever they want. The leadership void will also tempt ambitious individuals to seize power to benefit themselves. Chaos and confusion are the order of the day. No one has a clear sense where the company is going. Often, employees receive conflicting directions and signals. Often, decisions are made in the morning only to be nullified in the afternoon. Given the lack of direction, oversight and accountability all across-the-board, productivity declines. In this kind of culture, the company either disintegrates or becomes an easy target for a hostile takeover.
(4) Dishonest-corrupt culture - In this culture, greed is good and money is God. There is little regard for ethics or the law. Such attitudes permeate the whole company from the top down to individual workers. Bribery, cheating, and fraudulent practices are widespread. Creative accounting and misleading profit reports are a matter of routine. Denial, rationalization and reputation management enable them carry on their unethical and often illegal activities until they are caught red-handed or exposed by correcting forces of the market. When management are blinded by greed and ambition, their judgment becomes distorted and their decisions become seriously flawed; as a result, they often cross the line without being aware of it. Enron serves as a good example.
(5) Rigid-traditional culture - There is a strong resistance to any kind of change. The leadership clings to out-dated methods and traditions, unwilling to adapt to the changes in the market place. They live in past glory and any change poses a threat to their deeply entrenched values and their sense of security. Workers are discouraged or even reprimanded for suggesting innovative ideas. Their accounting, marketing and delivery systems are no longer competitive with the fast-paced technology-driven market place. Their products and services have not responded to changing market demands. Their mantra is "We have always done things this way." As a result, the world passes them by and eventually they are left with an empty shell of the former self.
The above five types of toxic cultures are not mutually exclusive. For an example, an organization may be both authoritarian and traditional. Similarly, an organization can be both authoritarian and corrupt. When a company suffers from a multiple of diseases, drastic operations are needed to save it from demise. Unfortunately, not many managers are competent in the diagnosis and treatment of toxic organizational cultures.
Reh, F. J. (2002). Lessons learned from Enron: Say "No" to "Yes-men".
