Discuss about Analysis of the Culture of Organization for Sustainable and Safe Business.
The aim of this organization is to operate a sustainable and safe business. The annual productivity of the company is 114 million tonnes of crude steel (Corporate.arcelormittal.com. 2016). The business of the company is expanded over 60 countries and currently, the company is having total 210000 employees (Corporate.arcelormittal.com. 2016).
The company has conducted several mergers and acquisitions in its long business life and it is fond to produce high quality steel. The company invests huge amount of money for the purpose of research and development. As per the last year’s data, it has invested total $227 million in the research and development. As the financial data available in 2015’s annual report, total equity of the company was US$25.27 billion and total revenue was US$63.57 billion (Corporate.arcelormittal.com. 2016).
However, organizational culture is the most important factor behind the success of a company. The term organizational culture refers to the values, beliefs and assumptions that are shared by the organization while operating its business. Therefore, analyzing the culture of a company is very important in today’s context.
The report starts with the discussion on the theoretical frameworks regarding the organizational culture. In the discussion, the Hofstede’s model is described and compared with another model related to the organizational culture and that is Schein’s model. The conclusion of the report is derived by considering the overall findings of the analysis and at the same time, the report has also provided some possible suggestions for the future betterment of organizational culture at ArcelorMittal.
Organizational culture is the main factor that originates the sense of unity, loyalty indentify and competition among the employees of a company. At the same time, organizational culture determines efficiency level of the employees (Wiedenhöft, Luciano & Testa, 2015). However, among all of the theoretical frameworks of organizational culture, the most popular is the Six Dimensional Model suggested by Professor Geert Hofstede. According to the Hofstede’s model, six different dimensions influence the culture of an organization. These six dimensions are – Power Distance Index, Individualism versus Collectivism, Masculinity versus Femininity, Uncertainty avoidance index, Pragmatic versus Normative and Indulgence versus Restraint (Alvesson & Sveningsson, 2015).
Figure 1: Hofstede’s Cultural Dimensional Model
(Source: Geerthofstede.nl. 2016)
According to Jippes et al. (2015), the power distance index indicates the distribution of power within the organization. If in a business organization, the power distance index is high, then that organization can be considered as centralized organization with complex hierarchies. On the other side, Sukma, Haryono & Wulan, (2016) stated that if the organization is having low power distance index, then the organization can be considered as a flatter, where the employees and the supervisors are having equal power.
The individualism versus collectivism dimension indicates the interpersonal relationship among the people in the organization. If in an organization, the IDV score is high, then it can be said that the interpersonal relationship among the employees is not much strong and they do not act like a family (Glisson, 2015). The competition within the organization is high if the IDV score is high. However, if the IDV score is low, then the connection among the people in the organization is strong.
The masculinity versus femininity dimension indicates the divisions of roles between the men and women in the organization. If the MAS score in an organization is high, it is considered that the employees have strong egos and the feeling of pride (Wiedenhöft, Luciano & Testa, 2015). At the same time, in this type of organization, the employees focus more on achievement and earning money. On the other side, the low score of MAS indicates the organization focuses more on building good relationship and quality of work (Jippes et al. 2015).
The uncertainty avoidance index indicates the extent to which the employees in the organization can cope up with the uncertain situation. The high score in UAI denotes the people in the organization are rigid and cannot accept the change easily (Naranjo-Valencia, Jiménez-Jiménez & Sanz-Valle, 2016).
The pragmatic versus normative dimension indicates the extent to which employees are related with the nationalism and religiosity. If an organization score high PRA, then it is called pragmatic, which denotes that the employees believe in modesty and they want to know the truth (Tong, Tak & Wong, 2015). On the other side, if the PRA score is less, then the organization’s culture is known as normative, in which the people have strong convictions and they try to talk more about themselves.
The last dimension is indulgence versus restraint. If the organization has high score in this particular dimension, then it can be considered that the employees have free gratification and it the score is low, then it is considered that the employees want to suppress the gratification (Deephouse, Newburry & Soleimani, 2016).
Therefore, in the above discussion, it can be clearly understood that the culture of an organization can be defined from various dimensions. In this study, the culture at ArcelorMittal is analyzed with the help of the Hofstede’s model of organizational culture. This particular model is chosen for the analysis because it allows to identify the scores of the six dimensions that helps to understand the cultural tendencies in an organization. At the same time, this particular model also mentions about the aspects of the culture in an organization. On the other hand, other theoretical framework of organizational culture like, Edgar Schein’s organizational culture model is difficult to understand. Schein’s organizational culture model states about three different levels of organizational culture and these levels are – Assumptions, Espoused values and Artifacts and symbols. This model of organizational culture is critical because identifying the three levels of organizational culture is difficult and it requires in-depth knowledge. Identifying the difference between the assumptions and professed culture is tough (Arnold et al. 2016). However, with the help of the Six Dimensions Model helps to compare as well as contrast the different cultures in an organization, which is not available in the Schein’s model.
Culture is referred as the values and belief, shared by a group of people. Organizational culture can be defined as a particular mechanism that influences the employees to share some common assumptions, beliefs and values while working within the organization. According to Wood and Wilberger (2015), the behavior of the employees is determined by the culture of the organization. At the same time, Ferraro and Brody (2015) mentioned that organizational culture also includes the expectations, philosophies, values and experiences of the organization. In this context, Mazanec et al. (2015) noted that organizational culture displays the collective values and beliefs.
If the culture of ArcelorMittal is analyzed, then it can be said that the company is having cross-culture. The employees at ArcelorMittal are from different countries and they have different religious beliefs and cultures. The employees at ArcelorMittal communicate with each other by using a common language though their native languages are different. As there is cross-culture at ArcelorMittal, several times the company faces problems. The primary issue that the management of ArcelorMittal faces is false communication between the high-level employees and the lower-level employees (Corporate.arcelormittal.com. 2016).
If the culture at ArcelorMittal is analyzed by Hofstede’s six dimensional model of organizational culture, then it can be said that the IDV score is high. High IDV score indicates that individualism is at high level in ArcelorMittal. Due to this, the internal competition is also high, which many times create conflicts between the employees. However, in the words of Alvesson and Sveningsson (2015), competition between the employees is good for improving the performance level of the employees. Therefore, it can be said that high internal competition is another major cultural issue at ArcelorMittal. On the other hand, Koch et al. (2016) argued that high level of internal competition originates the politics at workplace and the workplace politics is one of the main source of false communication. Due to this, it is very important for the company to bring collectivism within the organization and try to reduce the IDV score as soon as possible (Upadhyaya & Rittenburg, 2015). Hence, the management of the company needs to provide some scope to the employees so that they can interact with each other more closely. In order to do this, the management can arrange for some debate competition or discussion session, so that employees can share their values, beliefs and knowledge. At the same time, the management also needs to take some strategies like peer-reviews and 360 degree appraisal system, so that the employees start to acknowledge each other’s accomplishments.
As per the evaluation by Hofstede’s model, it can also be said that ArcelorMittal is having high PDI, which indicates that the organization includes centralized culture. This centralized culture creates another issue within the organization and that is complexity. As the organization is centralized, the relationship between the high-level employees and lower level employees is much formal. Due to this, the relationship gap is large. Jippes et al. (2015) stated that large relationship gap creates misunderstandings or miscommunications between the high-level employees and low-level employees. The management must try to create a friendly working environment, where employees feel free (Peretz, Levi & Fried, 2015).
However, there is no such issue related to the masculinity versus femininity. At ArcelorMittal, the work divisions between male and female employees are equal. Due to this, the employees are fond of achievements and earning more money. This actually helps to improve the overall performance of the organization (Berg, 2015). As the organization ArcelorMittal is having cross-culture, some employees belong from conservative culture and some employees belong from open culture. Due to this, it is very problematic for the organization to bring any change at the workplace. As per the analysis by Hofstede model, it can be said that ArcelorMittal is having high UAI, which indicates that people at ArcelorMittal need to build a flexible nature and culture within the organization (Berg, 2015).
Therefore, the management of the organization must try to convey the expectations clearly and concisely. This will help the company to inform the employees, who are of conservative culture that the organization may bring change if they do not meet the organization’s expectations (Wiengarten et al. 2015). At the same time, the management also needs to motivate the employees towards creative thinking and innovations.
If the culture at ArcelorMittal is analyzed by the pragmatic versus normative dimension of Hofstede model, then it can be understand that the culture at the organization is more like normative. This means the people or employees at ArcelorMittal like to talk more about themselves (Woodard et al. 2016). They are less interested to know the other people and more focused on expressing their own values as well as rights. This again creates issue for the management. As there is cross culture and people want to emphasize on their own culture, the bonding is very weak among the people and the employees are not interested to compromise anything for the betterment of the others. In order to handle this type of cultural issue, the management needs to create a helping environment or culture within the organization. The emphasize must be made on team works and reward needs to provide to the teams not the single person (Arnold et al. 2016). This will help to create strong bonding and helping culture at the workplace.
Along with the issue of excessive self-orientation and weak interrelationship, the organization is facing another issue of dependence on regulations to the higher extent (Corporate.arcelormittal.com. 2016).
As per the cultural evaluation by the Hofstede model, it can be said that the IVR score that means the indulgence versus restraint score is low at ArcelorMittal. Due to this, the people or employees at ArcelorMittal are more depended on regulations and they follow the strict norms of society. Excessive dependence on the regulation reduces the flexibility at the workplace (de Mooij, 2015). The employees do not feel free to take any certain decision. This sometimes creates difficulties to handle any urgent situation. Therefore, the management must try to provide the scope to the employees so that they can take decision at any urgent situation. At the same time, the management of the organization also needs to provide the scope to the employees, so that they can enjoy their personal life.
The above discussion is indicating that the organization that is ArcelorMittal is facing several problems or issues due to its current organizational structure. However, Martins et al. (2015) mentioned that ArcelorMittal is the leading company in the international steel industry and so it can be expected that the working culture or organizational culture at that company is favorable. On the contrary Upadhyaya and Rittenburg (2015) commented that it cannot be said confidently that if a company is a leading company in the industry, it does not have any cultural issues.
In support of that, Alvesson and Sveningsson (2015) stated that the strict organizational regulations make the employees bound to perform better and that is the main factor behind the success of the company. However, this cannot be an acceptable organizational culture. The culture at ArcelorMittal must be friendlier, so that the employees feel free at the time of working. At the same time, it is also important for the organization to have some employees who can take urgent decision. Peretz Levi and Fried (2015) noted that the decision taking capacity of the employees depends on the culture of the organization. Therefore, in order to improve the performance of the employees, it is very important to improve the working culture within the organization.
However, the management at ArcelorMittal has taken several steps to improve the cultural issues within the company. The steps are as under:
The management in the company has started to take different strategies like, best team contest to encourage the employees to work as a team. The management sometimes arranges for the game shows or some common grounds where the employees can share their views and knowledge. This strategies have been provided in order to create a strong interrelationship among the employees. Apart from that, the management of the company has also started to engage the middle level employees in to the decision-making purposes. The management believes that this will help to grow the decision-making capacity within the employees. At the same time, the organization also motivating the employees to respect the knowledge and beliefs of the other people also (Corporate.arcelormittal.com. 2016).
However, the management at ArcelorMittal is still unable to improve the working culture completely. Due to this, the company is still facing the same problem. According to Wood and Wilberger (2015), in order to improve the culture of an organization, it is very important to implement the strategies effectively. On the other hand, in order to take proper strategies and implement the same, the management must have the theoretical knowledge and proper leadership skills (Deephouse, Newburry & Soleimani, 2016).
It has been identified above that the organization that is ArcelorMittal is depended on the strict regulations and the employees are more willing to meet their own needs. At the same time, it has also found out that the employees at ArcelorMittal are not willing to compromise anyting. All of these can be improved with the help of proper leadership. Therefore, in order to improve the organizational culture, the company at first needs to train the leaders or high-level employees (Naranjo-Valencia, Jiménez-Jiménez & Sanz-Valle, 2016). At the same time, the organization also needs to convey the norms of improved organizational culture. The friendly leadership style of the organization will help the employees to work freely within the organization.
Therefore, from the overall discussion, it can be said that the current culture of the organization is rigid and the interrelationship between the employees of higher level and lower level is not that much friendly. Hence, the organization that is ArcelorMittal needs immediate improvements in its culture.
Conclusion
In this report, it has been identified that ArcelorMittal is the leading company in the steel industry in international market. The company is operating its business since ten years and it believes in operating a safe and sustainable business. At the same time, it has also been identified that the financial performance of the company in last year was good. the company is currently producing huge quantity of steel.
As per the discussion made in the report, several theoretical frameworks describe the organizational culture and one of the most popular theoretical frameworks is Hofstede’s Six Dimensions cultural model. As per this particular model, there are total six dimensions that describe the culture of a business organization. At the same time, it has also been found out that Hofstede’s model is better than that of the other theoretical frameworks for understanding the organizational culture.
Along with that, the report has also found out that the culture in the organization that is in ArcelorMittal is cross culture. There are employees of different cultures works together at ArcelorMittal. Due to this, the company is currently facing several issues related to the organizational culture. The interrelationship among the employees is very weak and it creates big issue in the organization. Due to the weak relationship between the high-level employees and lower-level employees, the miscommunication arises within the organization. Apart from that, the strict regulations and excessive dependency of the employees on regulations reduced the employees’ capacity to take urgent decision. Another major issue of the organization is that there is no friendly working atmosphere at the workplace. However, the company has not faced any issues in respect to the work divisions between male and female employees. Therefore, it is very important for the management of the organization to take important steps as soon as possible in order to solve the cultural issues.
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