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NotesBusiness Management HLTopic 2.5Importance and impact of culture (HL only)
Back to Business Management HL Topics
2.5.210 min read

Importance and impact of culture (HL only) (Business Management HL)

IB Business Management • Unit 2

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Contents

  • Strong and weak cultures
  • Why a strong culture helps
  • Culture, decisions and recruitment
  • When culture works against the business
  • Exam-style question
Two shops, one bakery: At the High Street shop nobody needs telling. Yesterday's bread goes to Second Helpings at closing time, regulars are greeted by name, and on Aisha's day off the counter staff do everything exactly as they would with her there.

At Park Road, the newest shop, it depends who is on. One assistant puts yesterday's loaves back on the shelf, another bins them. Nadia, who started a month ago, has had three different answers to the same question.

Same company, same prices, same bread from Mill Lane.

In 2.5.1, a business's culture was its beliefs, norms, customs and habits: the way things are done here. Every business has one, and so does every shop inside it. What differs is how strong it is.

Strong culture: High Street

  • Most staff share the same values and hold them firmly
  • People behave the same way whether or not a manager is watching
  • A newcomer picks up the way things are done from colleagues within days
  • Staff tell the same stories about what the shop stands for

Weak culture: Park Road

  • Values differ from person to person, and few are held firmly
  • Rules are followed when someone checks, and not otherwise
  • A newcomer gets a different answer from each colleague
  • Nobody could say in a sentence what the shop stands for

So a culture is strong when the values are widely shared and firmly held, so that they guide what people do (a strong organizational culture). It is weak when they are not (a weak organizational culture). Any of the four types in 2.5.1 can be strong or weak: a power culture is strong when everyone accepts that the founder decides, and weak when half the staff quietly ignore her.

Strong does not mean good: A strong culture is only as good as the values in it. If every High Street assistant firmly believed that yesterday's bread could be sold as today's, that would be a strong culture too, and a harmful one.

'Strong' tells you how widely and firmly the values are shared. Whether they help the business is a separate question.

How can you tell how strong a culture is? Watch what people do when nobody is checking, listen to the stories they tell about the business, notice what gets praised, and see how a newcomer is treated in the first week. At High Street, a new assistant learns the way things are done from the others. At Park Road, Nadia is still guessing.

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Lena does not need a survey to see the difference between her two shops. She can read it in a year of her own records.

Over the last yearHigh Street (strong culture)Park Road (weak culture)
Counter staff who leftNone of fourTwo of three
Café orders that went out wrongOneSix
Days before a new assistant could work aloneAbout threeAbout ten
Days lost to sickness per personTwoSeven

What a strong culture gives a business

1

A sense of belonging and security

Staff feel part of something they understand and know where they stand. At High Street, the assistants talk about 'our shop', not 'the job'.

2

Higher motivation

People who believe in what the business does work harder for it without being pushed. Nobody at High Street has to be told to greet a regular.

3

Teamwork and cohesiveness

Shared values pull people together. When the morning queue is out of the door, the High Street staff cover for each other without a word.

4

Fewer mistakes and misunderstandings

Everyone already knows how things are done, so fewer things are done wrongly. One wrong café order at High Street in a year, six at Park Road.

5

Easier communication

When values are shared, less needs saying and less is misread. Aisha can leave a two-line note; at Park Road the same note starts an argument.

6

Lower labour turnover

People who feel they belong tend to stay. Fewer leavers means less spent on advertising, hiring and training replacements.

Where it all ends up: productivity: Add the benefits together and the business gets more done with the same people and the same wage bill (higher efficiency or productivity).

High Street's four assistants serve a longer queue than Park Road's three, with fewer mistakes and no time lost training replacements. That is the business case for a strong culture.

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Nobody to ask at 3 a.m.: At 3 a.m. at the Mill Lane bakehouse, a batch of 80 rye loaves comes out of the oven too dark. Priti is at the far end of the bakehouse with the van orders.

Maya does not wait. She sets the batch aside and starts another, because at Mill Lane everyone knows that nothing leaves the bakehouse that Priti would not sell herself.

Nobody told Maya what to do. The culture did.

A culture works like an unwritten rulebook. When staff share the values, they can decide without asking a manager, and decide the way the business would want. Decisions are quicker, more of them are taken by the people closest to the problem, and they are more consistent from one shift to the next. Culture also sets what kind of decisions get taken: how much risk feels normal, and whether the customer or the cost comes first.

Decisions

  • Staff decide without waiting for a manager, so decisions are quicker
  • Decisions are consistent from one shift and one shop to the next
  • The culture sets how much risk feels normal and what comes first

Recruitment

  • A clear culture attracts people who share its values
  • New staff who fit settle in faster and need less training
  • People who fit tend to stay, so fewer jobs need filling again

Customers

  • Customers get the same service whoever serves them
  • A good experience brings them back and builds the business's reputation
  • Staff who believe in the product sell it better

When Lena hires a baker, Priti asks more than 'can you bake?' She asks what the candidate would do with a batch that came out slightly wrong. Someone who answers 'sell it cheap and say nothing' may be a good baker and still not fit the bakehouse. Choosing people whose values match the culture (hiring for fit) keeps the culture strong, and new bakers who fit settle faster and stay longer.

Culture shows up in performance: Every effect in this section ends in the same place. Quicker decisions, the right people and customers who come back all show up in sales, costs and profit.

So when a question asks about the impact of culture, follow the chain: what the culture makes people do, then what that does for the business.
The gluten-free idea: Last spring Lena suggested a small range of gluten-free loaves. The answer came back from Mill Lane within the hour, from every baker at once: 'We are bakers, not a health shop.' Nobody tried a test batch.

In the summer Goldcrust launched gluten-free loaves, and they sell well at its bakery two streets from Park Road.

The bakehouse has a strong culture, and on most nights that is its strength. This time the same shared values closed the door on a good idea. A strong culture has costs as well as benefits, and a weak one has its own.

When a strong culture works against the business

1

Slow to change

Firmly held habits are hard to shift. When the market moves, a strong culture can keep people doing what used to work. Rosa has baked the same way for eleven years.

2

Everyone thinks alike

When everyone shares one view, nobody questions it, so a bad decision goes unchallenged (groupthink). No baker asked whether gluten-free might sell.

3

The same kind of person hired

Hiring for fit can mean hiring people who all think the same way. Newcomers with different ideas feel like outsiders and leave, and fresh thinking leaves with them.

4

Harmful values spread fast

If the shared values are bad ones, such as cutting corners on hygiene, a strong culture spreads them to every new starter just as quickly as good ones.

A weak culture costs too: A weak culture has the opposite problems. Each shop, or each assistant, does things differently, so customers get uneven service. Staff feel less loyal and leave sooner, so labour turnover is higher.

Managers also have to check more, because nothing can be taken for granted. At Park Road, Jonas spends time every morning checking what at High Street simply gets done.
Strong cultureWeak culture
MotivationHigher: people believe in what they doLower: the job is just a job
DecisionsQuick and consistent, but can shut out new ideasSlow, and different from person to person
RecruitmentAttracts people who fit, but can hire the same typeHarder to keep people; turnover is higher
ChangeHard if the change goes against the shared valuesLess resistance, but nothing holds people together

So the useful question for Lena is not 'strong or weak?' but 'strong in what?' A strong culture built on care for the bread gives her the benefits of the High Street shop. Whether it also leaves room for a new idea decides whether it helps her next year as much as it helps her tonight.

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How this comes up: A case describes a business with a strong organizational culture, and the first short question asks you to state two benefits from having one. Two benefits, one mark each, and no explanation or application is needed.

The same ideas come back in longer answers: explain how culture helps or hurts a named business, or weigh its effect on motivation, decisions and recruitment in a discussion.

The two-mark pattern

  • Read what is asked. Benefits of a strong culture: what the business gains. Not what a strong culture is, and not which type it is.
  • Pick two that are clearly different. One about the people (belonging, motivation, lower labour turnover), one about the work (fewer mistakes, easier communication, productivity).
  • A few words each. 'It reduces labour turnover' is a whole answer. The marks are for the benefit, not for a paragraph about it.
Two traps: One benefit said twice. 'Staff are happier' and 'staff are more satisfied' are the same point in two wordings, and count once. Take the second benefit from a different corner of the list.

A description, not a benefit. 'Staff share the same values' is what a strong culture is. 'It is a task culture' names a type. Neither says what the business gains.
IB-style questionState[2 marks]

State two benefits from having a strong organizational culture.

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Marlow House is a family-run hotel with 60 staff, many of whom have worked there for over ten years. They take pride in greeting every returning guest by name.

two benefits of a strong organizational culture for a business such as Marlow House.
[2 marks]

Related Business Management HL Topics

Continue learning with these related topics from the same unit:

2.1.1The role of HRM, HR planning and change
2.1.2Recruitment and selection
2.1.3Training and development
2.1.4Appraisal and performance management
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