Definitions and Significance of Organizational Culture

In addition to their formal organizational structure and the rules and standard operating procedures used to support and operate the structure, organizations also rely heavily on their organizational culture as an important tool in controlling and coordinating the activities of their members (e.g., executive, managers and employees) and providing incentives and reasons for them to act in ways that the leaders of the organization considers to be necessary in order to achieve and sustain organizational effectiveness and comply with the requirements and expectations of the organization’s external environment.  A number of definitions of organizational culture have been offered; however, if managers and employees are consulted they may simply respond that culture is “how we do things around here”.  There is obviously truth to such a statement but it would be a mistake to ignore the breadth and scope of the issues that are influenced by cultural norms and values—how activities within the organization are carried out, how members communicate with one another, who is accepted into the organization and who is ostracized, and what is the organization’s overall morale.  The latest CMS Working Paper summarizes various definitions of organizational culture and the overall significance of the topic for managers.

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