Introduction
This assignment is a discussion on the topic of organizational culture. In the discussion, I have explored the topic in terms of national and organizational culture using theoretical models of organizational culture and Hofstede’s dimensions of national culture. The discussion also pays attention to the relationship between management and organizational culture as well as how national and organizational cultures affect business.
In the discussion, I have used the BP Company as my organization of choice, to apply the topic in a real-world experience. The discussion, therefore, starts with a summary of my organization of choice, followed by a discussion of Hofstede’s cultural dimensions and rankings. Subsequently, I have discussed organizational culture models and how they apply to my organization of choice as well as how national and organizational culture impact business.
The organization of Choice (BP)
BP is a London-based Oil company dealing with the exploration, refinery, production, distribution, and marketing of Oil and gas products. With its operations in over 80 countries worldwide, BP is the third largest Oil and Gas Company with over 22,000 Oil service stations worldwide and a daily Oil production of over 3 billion barrels (Harvey and Solly, 2006).
The company’s history can be traced back to 1909 when Oil was discovered in Iran, then known as Persia. The company by then was known as Persian Oil Company and was to be renamed Anglo-Iranian Oil Company in 1935. The nationalization of the Oil industry by the Iran government under the leadership of Muhammad Mossadeq in 1951 led to the 1953 coup in which he was overthrown by what analysts believe to be US and British forces, who claimed to be protecting their oil interests through the coup (Harvey and Solly, 2006).
After the coup, the company was renamed British Petroleum and resumed operations in Iran, and expanded to other countries in Europe, Africa, Canada, and the Middle East. The discovery of oil in Prudhoe Bay saw BP move to Alaska in the 1960s. In the late 1980s, the British government sold its shares to the company, which merged with another company known as Amazon. In early 2000, the company acquired other companies namely Arco and Burmah Castrol (Harvey and Solly, 2006).In terms of organizational structure, the company is vertically structured with the CEO at the top. The company has got over 80,000 employees worldwide.
Geert Hofstede’s Cultural Dimensions
In his research, Dr. Geert Hofstede came up with five dimensions of differentiating cultures for different countries. For each country, he analyzed and reported on each of the five dimensions of cultural differentiation. He also gave the average standard for all the dimensions of cultural differentiation (Geert Hofstede Cultural Dimensions. nd). I would briefly describe the five dimensions and then indicate the rankings for the United Kingdom (where my organization of choice, BP is based) and how they compare with the world’s average.
Power Distance Index (PDI). This focuses on the equality or inequality between people in a society. High PDI means that there are a lot of inequalities in wealth and power distribution within the society. This is characteristic of many caste systems in which social upward mobility is very low. On the other hand, a low PDI signifies that there are minimal inequalities in the distribution of power and wealth within a society (Hofstede, 2009).
The other dimension for differentiating cultures is the level of Individualism (IDV) amongst the citizens of the country. It also looks at how the people emphasize individual or collective success and achievement. A high ranking in IDV signifies that individuality is paramount in that society and that the individuals or citizens tend to form very loose interpersonal relationships. A low ranking on the same means that the people are more cohesive and that they value collective success more than individual success. These societies are mostly found in those communities which still value extended familial arrangements, in which everything, work, and success included, is perceived as a responsibility and a product for the collective effort of the people rather than for an individual or few individuals (Hofstede, 2009).
Masculinity (MAS) is the other dimension analyzed by Hofstede. This looks at the extent to which gender differences affect the distribution and control of power and wealth among citizens of a country. In countries where MAS rankings are high, the men dominate virtually all aspects of life in that country. The reverse is true for a country with a low MAS ranking, meaning that the society provides equal opportunities for both men and women to acquire and control power and wealth (International business center. n.d).
The fourth dimension of cultural differentiation is the Uncertainty Avoidance Index (UAI) which focuses on the degree to which the society can tolerate any ambiguous or uncertain situations or events. A high UAI ranking means that the country is guided by clear rules and laws, which are clearly written down and known to everyone, and therefore does not tolerate any ambiguous situations or unclear or uncertain issues. A low ranking in UAI means that the country is open to different opinions, which may not be rules, regulations, or laws governing that country. This means that the society accepts change readily, which may put it at risks associated with some changes which are not part of the countries’ laws, rules, and regulations (International business center. n.d).
The last dimension for cultural differentiation is Long Term Orientation (LTO) which focuses on how the society emphasizes or fails to emphasize long-term dedication to forward-thinking, traditions, and values. A country with a high ranking in LTO implies that it acknowledges hard work and traditions as a basis for the establishment of long-term benefits. This means that an outsider may have difficulties in establishing and stabilizing his or her business due to the adherence to traditions by the people which may impede any change within the system. On the other hand, a low ranking in LTO means that the country does not embrace traditional values which may impede change. This means that the country is open to new ideas and innovations which may make a business thrive very well even for an outsider (Hofstede, 2009).
The table below shows the rankings of UK in cultural dimensions in comparison to the world’s averages:
Sources: World’s Average: International business centre, (2008). (Link provided at the reference list). United Kingdom: Geert Hofstede, (2009). (Link provided at the reference list).
The impact of the national culture of the UK (which is characterized by high ranking in IDV) on BP’s performance in the oil industry is that the high levels of IDV serve as its philosophy towards business. The reason why the organization has been expanding over time can be attributed to its capitalistic nature of operations (which are synonymous with high levels of IDV), which guides it to maximize profits and minimize expenses.
The national culture of the country is therefore duplicated in every country in which the organization opens a new branch. Since the national culture of the United Kingdom does not allow employees to mix work and personal life, the organization easily maximizes on the employees, which enables it to increase its revenues due to high returns by the employees.
Organisational Culture
An organization is a group of people who work together with coordinated efforts to achieve certain objectives or goals. Organizational goals and objectives are of various categories and it is this variation of the goals and objectives which classify organizations into three main categories namely profit-making; service-based and social responsibility-based organizations (Murray, Poole, and Jones, 2006. pp.45-69).
The study of organizations is made possible by the use of organizational theoretical models or approaches. These theoretical models are mainly used to explain organizations in terms of structure and culture. Organizational culture refers to shared beliefs, values, norms, and practices which characterize an organization. Organizational structure refers to how the organization is structured, how power and authority to make decisions are distributed along with the structure of the organization, and who should take what direction or instructions from whom and when (Murray, et al, 2006. pp.45-69).
Organizational culture is a very important aspect of any organization which aspires to realize its vision through the mission. This is because organizational culture determines whether the organization can work together towards the realization of the vision. Organizational culture is closely related to organizational structure in that how decisions are made by the top management influences the relationship between the top management and the other employees, which consequently determines the culture of the organization (Murray, et al, 2006. pp.45-69).
A strong organizational culture is found in organizations in which the employees are committed to the work and discharge their duties with little or no supervision while a weak organizational culture is found in organizations whereby the employees have little commitment to their duties, and they are closely supervised to discharge their duties effectively (Murray, et al, 2006. pp.45-69).
There are various models of organizational culture. One such model is the power culture, which is characterized by the centralization of power to a few people within the organization. This person(s) is usually very influential in the organization and therefore everybody else tends to foster a good relationship with the person(s). In this culture, employees are motivated to the degrees to which they emulate that central person(s). In this type of culture, decisions are made easy because there are not many hierarchical positions in the structure of the organization (Murray, et al, 2006. pp.45-69).
There is also role culture, which is characterized by doing things as per one’s position, meaning that an employee only cares for what is of concern to him or her or what lies under his or her docket. This culture is also characterized by rigidity in decision-making because of the bureaucratic nature of the organizational structure, which leads to inefficiency (Murray, et al, 2006. pp.45-69).
Task culture is characterized by the formation of groups that are composed of people with some expertise or knowledge to perform specific tasks. In this type of culture, therefore, group work is very important and authority, as well as supervision, play little or no role because the teams are trusted by the management with their tasks (Murray, et al, 2006. pp.45-69).
Lastly, there is a person’s culture that is characterized by a feeling of superiority among the employees, who think that they are very valuable to the organization. In such a culture, unity and cooperation among the employees may be rare because each employee thinks that he or she is the best and therefore not ready to share what he or she knows with others without extra remuneration by the organization for the same (Murray, et al, 2006. pp.45-69).
My organization of choice, BP, is structured in a bureaucratic manner, meaning that power and authority emanate from the CEO and flow down the hierarchy to the junior levels. Consequently, the organization has a role culture, which is prevalent in bureaucratic structures. In the organization, every employee takes directions from a particular person, and there is no room for employees’ suggestions regarding their roles and how they discharge their duties. They are supposed to follow directives without questioning their rationality or the consequences of their operations as they discharge their duties, especially regarding the issue of environmental safety and safety at the workplace.
For instance, according to Richard Mauer and Anna M. Tinsley of the McClatchy Newspapers, the organization “discouraged workers from reporting safety and environmental problems”. This information was based on a 2004 report of the Vinson & Elkins law firm, which warned that employees who reported any environmentally-related problems faced some form of retaliation from the company (Mauer and Tinsley, 2010).
The reason why they were discouraged from reporting is that the funds which were supposed to repair any damaged or corroded pipes were injected into the business as capital. This practice has for years enabled the organization to expand and increase its profits, but with a risk of eroding its reputation and popularity among its customers.
Many of the BPs critics have attributed the occasional oil spills, most recently being the Mexican Gulf oil spill, to this culture within the organization. This culture affects the operations of the organization because it seems to be inclined towards utilitarianism, a concept that connotes the maximization of profits in total disregard to any negative effects on the environment of the customers of the organization
This culture affects organizational behavior by making the employees discharge their duties for the sake of it. This is because their views, ideas, and creativity have got no place in the company, but rather, what the organization requires from them is total adherence to rules and regulations. The only motivation in the organization is their remunerations, which are not enough to trigger intrinsic motivation among the employees.
Conclusion
This discussion has highlighted crucial information regarding the topic of discussion. It has emerged that organizational culture and structure are closely related. The four main models of organizational culture discussed are power, role, person, and task cultures. About the organization of choice, it has emerged that BPs organizational culture is role culture, which is characterized by utilitarianism, bureaucracy, and rigidity in decision making (Murray, et al, 2006. pp.45-69).
My view of BPs approach to culture is that the approach is not one of the best because it does not encourage employees’ creativity nor does it allow the employees to give their views and suggestions regarding their safety as well as the safety of the environment. This is very detrimental because the employees do not feel like part of the organization, which leads to lowered motivation and commitment.
With this cultural approach, I think the organization may reach a point in time when their business will start to decline, especially due to their utilitarian approach to business, in disregard to their employees’ and environmental safety or concerns. With the presence of other players in the oil and gas industry, competition is growing stiffer day by day, and unless the organization changes its approach, it may reach a point when its name will be completely damaged in the eyes of the world, thus making it hard to get licenses to operate in new countries.
It may as well have some of its licenses in some countries which are strict with environmental and labor laws canceled due to its disregard for environmental and employee safety. The employees may as well be poached by other competitors, with better packages, and this is how the organization will lose all the benefits it would have gained for all these years.
References
Geert Hofstede Cultural Dimensions. (n.d).Geert Hofstede Cultural Dimensions. Web.
Harvey,W.J.,and Solly, R.(2006). BP Tankers: A Group Fleet History. New York, NY: Chatham.
Hofstede, G. (2009). Geert Hofstede Cultural Dimensions: United Kingdom. Web.
International business centre. (n.d.).GeertHofstede Analysis. Web.
Mauer, R and Tinsley, A.M. (2010). ‘Gulf oil spill: BP has a long record of legal, ethical violations’. McClatchy Newspapers. Web.
Murray,P., Poole, D and Jones, G. (2006).Contemporary issues in Management and Organisational Behaviour. Farmington Hills, MI: Cengage Learning. pp45-69.