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Great organisational culture starts with ethical decision-making

09 Feb 2015 - {{hitsCtrl.values.hits}}

Increasing number of evidence suggests organisational culture affects the strategic organisational decision-making. The evidence suggests that in a specific cultural context a particular form of participate decision-making is more appropriate than others.

Organisational culture comprises the unwritten customs, behaviours and beliefs that determine the ‘rules of the game’ for decision-making, structure and power. It’s based on the shared history and traditions of the organisation combined with current leadership values. In effect, culture dictates the way business is done. With a strong organisational culture, employees do things because they believe it’s the right thing to do and feel they’ll be rewarded for their actions. However, if the leadership team lacks integrity or crushes diversity, powerful cultures can morph into cults, cliques and insider clubs.

There are four organisational cultural types:
Creative. In creative cultures, the primary driver is ‘self-expression’. Leaders focus on creative brilliance and celebrate individuals and teams who break the mould with new innovations. The fluid organisation structure typically contains self-organising work teams and collaborative project groups. Creative cultures foster an environment where discontinuous innovation is possible. The unbalanced form of power in creative cultures can be like cults, fashioned after a dynamic and visionary leader who can inspire the team to success after success. Their favoured functions are research and development and professional services.

Collaborative. In collaborative cultures, the primary driver is ‘teamwork and building consensus’. Leaders tend to base decision-making on building a shared view of desired results. They value trustworthiness and teamwork above creativity and aggressiveness. Collaborative organisations seek to develop deep, long-lasting relationships with their clients and often use customer satisfaction as a metric for the organisation. Typical collaborative companies use matrix management and complex double and triple line reporting structures. The unbalanced form of a collaborative culture can be insider clubs and analysis paralysis where the company invests unwarranted time and effort to reach group consensus.

Their favoured functions are marketing and customer service.Competitive. In competitive cultures, the primary driver is ‘personal and team achievement’, often defined as winning. Leaders concentrate on beating the competition and often create quarterly competitive hit lists to squash the competitive enemy of the month.

They value personal knowledge and killer instincts. Competitive cultures celebrate individual achievement more than teamwork. This culture and its leaders love management dashboards, which show competitive trends and market-share gains. The organisation structure usually develops tiger teams tasked to achieve specific, measurable goals. Companies that want to win at any cost are an unbalanced form of the competitive culture. Overly competitive cultures may form cliques organised around sales superstars. Their favoured functions are sales and product development.

In controlled cultures, the primary driver is ‘order and alignment’ based on clear goals and objectives. Leaders create hierarchical reporting structures where power and authority are vested at the top. They value quarterly improvement metrics and benchmarks to determine operational excellence. The organisation highly values annual and quarterly business plans and key performance measurements. Overly controlled cultures can lead to excessive bureaucracy, red tape and rules. The worst form of an unbalanced, controlling culture develops into a mafia mentality where loyalty and direction from the top-level godfather overrules personal morals and convictions. Their favoured functions are finance and manufacturing or supply chain.

On the upside, organisational culture helps team members prioritize activities and make decisions by way of the unwritten code of behaviour. The downside of culture comes from unbalanced forms of power, which exclude individuals and teams from decision-making. The majority in an unbalanced culture may reject minority employees or groups who challenge group norms or shun them as a negative influence.Controlled.

Commonsense rules
Bad decisions made by a leader can damage a business and a career, sometimes irreparably. So, it may be interesting to find out where such bad decisions come from? In many cases, they can be traced back to the way the decisions were made—the alternatives were not clearly defined, the right information was not collected, the costs and benefits were not accurately weighed. But sometimes the fault lies not in the decisionmaking process but rather in the mind of the decision-maker. The way the human brain works can sabotage the decisions.

Researchers have been studying the way our minds function in making decisions for half a century. This research, in the laboratory and in the field, has revealed that we use unconscious routines to cope with the complexity inherent in most decisions. These routines, sometimes known as ‘commonsense rules’, serve us well in most situations. In judging distance, for example, our minds frequently rely on a commonsense rule that equates clarity with proximity. The clearer an object appears, the closer we judge it to be. The fuzzier it appears, the farther away we assume it must be. This simple mental shortcut helps us to make the continuous stream of distance judgments required to navigate the world.

Yet, like most commonsense rules, it is not foolproof. On days that are hazier than normal, our eyes will tend to trick our minds into thinking that things are more distant than they actually are. Because the resulting distortion poses a few dangers for most of us, we can safely ignore it. For airline pilots, though, the distortion can be catastrophic. That’s why pilots are trained to use objective measures of distance in addition to their vision.

Today, we have identified a whole series of such flaws in the way we think in making decisions. Some, like the heuristic for clarity, are misperceptions. Others take the form of biases. Others appear simply as irrational anomalies in our thinking. What makes all these traps so dangerous is their invisibility. Because they are hardwired into our thinking process, we fail to recognize them— even as we fall right into them.

For leaders, whose success hinges on the many day-to-day decisions they make or approve, these psychological traps are especially dangerous. They can undermine everything from new-product development to acquisition and divestiture strategy to succession flaws in the way they think in making decisions. Some, like the commonsense rule for clarity, are sensory misperceptions. Others take the form of biases. Others appear simply as irrational anomalies in the thinking. What makes all these traps so dangerous is their invisibility.While no one can rid his or her mind of these ingrained flaws, anyone can follow the lead of airline pilots and learn to understand the traps and compensate for them.

What can you do about it?
Always view a problem from different
perspectives. Try using alternative starting points and approaches rather than sticking with the first line of thought that occurs to you. Think about the problem on your own before consulting others to avoid becoming anchored by their ideas. Be open-minded. Seek information and opinions from a variety of people to widen your frame of reference and to push your mind in fresh directions.

Be careful to avoid anchoring your advisers. The ‘advisors’ may include consultants and others from whom you solicit information and counsel. Tell them as little as possible about your own ideas, estimates and tentative decisions. If you reveal too much, your own pre conceptions may simply come back to you.

Be particularly wary of anchors in negotiations. Think through your position before any negotiation begins in order to avoid being anchored by the other party’s initial proposal. At the same time, look for opportunities to use anchors to your own advantage— if you’re the seller, for example, suggest a high but defensible price as an opening gambit.

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Great organisational culture starts with ethical decision-making

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