Organizational Culture of Fannie Mae
Posted by Harry on Mar-19-2020
1. Organizational culture
The organizational culture represents the specific pre-defined policies that provide guidance to the employees and give a sense of direction. It is a complex system that comprises the shared beliefs, values and assumptions, and governs the employees’ behavior within the organization. These underlying assumptions, beliefs and values contribute to the unique and distinct psychological and social environment. In this article, the organizational culture of the Fannie Mae is analyzed in light of Hofsetede’s organizational culture model.
2. Organizational culture of Fannie Mae
The vision statement of Fannie Mae is brief and to the point. This means that the company has not used long dialects and dialogues to delivers its opinion ad stance to the public and relevant stakeholders. The vision statement should be brief and comprehensive – it should communicate the essence of the business, and its future plans to help the stakeholders understand its business philosophy and business strategy.
3. Three levels of organizational culture
If organizational culture is presented in the form of circle, it will have three layers. The outermost will be artefacts, middle will be the values and beliefs and inner most will be the underlying assumptions. Coca-Cola’s organizational culture is its strongest asset, and can be analyzed on three levels:
3.1 Artefacts of Fannie Mae’s organizational culture
The artefacts form the outermost layer of the organizational culture circle. The artefacts are the tangible and visible aspects of the Fannie Mae’s organizational culture. Some examples of the artefacts are- open door policy, office layout and official dress code for the employees. The cultural artefacts of the Fannie Mae are easily observable by the outside world, however they are hard to interpret.
3.2 Values within the Fannie Mae’s organizational culture
The core values are not easily observable. The Fannie Mae’s core values are the shared goals, principles and standards. These core values are accountability, diversity, quality, collaboration, passion, integrity and leadership. The Fannie Mae management understands the importance of communicating the core values so that each employee could accept and modify the behavior accordingly.
3.3 Assumptions within the Fannie Mae’s organizational culture
Assumptions are deeply embedded ideologies and philosophies and provide the foundation to the Fannie Mae’s organizational culture. Employees generally remain unaware of these underlying assumptions, yet they play an important role in formulation of core values and visible behaviors.
4. Why it is important to understand the organizational culture?
It is important to understand the organizational culture because in today’s competitive business environment, the organizational culture plays an important role in gaining the competitive advantage. The organizational culture of Fannie Mae makes sure that all employees share the common purpose and it is well aligned with the broader organizational purpose. The explicit alignment of the behaviors, goals and deeply rooted philosophies enable the Fannie Mae’s employees to put their efforts in right direction, give best performance and ensure strong commitment with the organization.
Main reasons for understanding the organizational culture are:
- It may act as a strategic tool for understanding the Fannie Mae’s willingness to change,
- It shows how employees’ relate to the Fannie Mae’s work culture.
- It may help Fannie Mae in identifying the possible gaps between actual and desired work culture.
5. Organizational culture in light of Hofstede model
The organizational culture model proposed by the Hofsetede holds the seminal importance as it has been frequently applied by analysts to analyze the organizational culture of any company. Fannie Mae’s organizational culture can also be analyzed in light of Hofseted’s cultural model. The model has six dimensions, as listed below:
- Means oriented versus goals oriented
- Internally driven versus externally driven
- Easy going work discipline versus the strict work discipline
- Local versus Professional organizational culture
- Open system versus the closed system
- Employee orientation versus work orientation
In next section, each individual organizational cultural dimension is discussed in detail and related to the Fannie Mae.
5.1 Dimension 1: Means oriented versus goals oriented
5.1.1 What is Mean orientation and Goal orientation?
A highly mean oriented organizational culture emphasizes over ‘how’ the work is carried out, while, the goal oriented culture emphasizes over the results and focus on ‘what’ can be achieved. The mean orientation reflects the people’s risk avoidance behavior, while the goal orientation shows that people’s risk orientation as they remain willing to achieve the desired results even if they involve certain risks.
5.1.2 Analysis of Fannie Mae
The Fannie Mae has successfully attained the right balance between the mean and goal orientation, as it emphasizes over the importance of accomplishing the goals, and meanwhile encourage employees to take risks only if they are worthwhile.
- By focusing on the mean orientation, Fannie Mae ensures that the employees must adopt the ethical and integrate ways for accomplishing the assigned goals because it considers the integrity as its core value. In this way, employees are encouraged to only promote the healthy competition.
- By focusing on the goal orientation, Fannie Mae encourages its employees to put their best efforts for accomplishing the assigned goals. Employees are not punished for sharing new ideas and taking risks. In this way, Fannie Mae has successfully reduced the fear of failure from its employees.
The analysis suggests that the successful organizations like Fannie Mae intend to find the right equilibrium position on the mean and goal orientation continuum.
5.2 Dimension 2: Internally driven versus externally driven
5.2.1 What is an Internally driven and externally driven culture?
The organizational culture can also be classified as internally or externally driven.
- An internally driven organizational culture reflects the employees’ overall perceptions about their expertise and knowledge. In an organization with highly internally driven organizational culture, the employees believe that they know the explicit and implicit needs of customers and act accordingly. The internally driven organizations place high importance to the ethics and integrity, and they do not compromise over these values to achieve the desired results.
- On the opposite end, the organizations with externally driven culture tend to focus on the results and employees in such organization believe that meeting the customers’ demands is more important than business ethics. Consequently, they adopt a more pragmatic rather ethical attitude.
5.2.2 Analysis of Fannie Mae
The Fannie Mae’s organizational culture is more internally than externally driven. Despite ensuring a quick response to the changing customer needs, the top management openly communicates the importance of adopting an ethical attitude while responding to the market needs. The company shares strong commitment to embedding ethics and integrity into its business operations. The internally driven organizational culture has enabled the organization to use its ethical brand image as a tool to get a strong competitive edge over rival firms.
5.3 Dimension 3: Easy going work discipline versus the strict work discipline
5.3.1 What is an Easy going work discipline and the strict work discipline?
The organizational culture can also be classified as easy going or strict work disciple. This cultural dimension denotes the extent to which the organization is internally structured, controlled and disciplined.
- Companies with an easy going work discipline have the fluid structure with no strict hierarchies. The culture lacks the certainty and management can only exert a limited control to ensure the discipline. Such organizational culture is deemed favorable for promoting a creative and innovative work attitude.
- On the other hand, the companies with a strict work discipline tend to have strict hierarchies with high certainty. Management exerts the strong control and employees work in a disciplined work environment with serious attitude.
5.3.2 Analysis of Fannie Mae
The analysis of the Fannie Mae’s organizational culture reveals that the company is more closely related to the disciplined work culture with vertical hierarchy and tall structure. It means the management withholds the decision making authority, and directly controls the employees’ work behavior. The creative and innovative work behaviors are promoted by rewarding the employees with various monetary and non-monetary rewards, but the empowerment and autonomy is limited due to organizations’ inclination towards the strict work discipline.
However, in response to the employees’ growing need for autonomy and empowerment, the management has decided to make a gradual shift from the centralized to decentralized organizational structure. This shift will transfer some authority from top to the bottom, and consequently, the organization will attain a new equilibrium between strict and fluid structure.
5.4 Dimension 4: Local versus Professional organizational culture
5.4.1 What is Local and Professional organizational culture?
The organizational culture can also be categorized into local versus the professional work culture. This cultural dimension denotes the employees’ identification with either the boss/work unit or their profession.
- In companies with a high degree local culture, the employees tend to identify themselves with their organizational units, teammates/colleagues or their bosses. The focus remains internal and short-term and employees have high desire for association and relatedness to the people around them. The strong social control obliges the organizational members to behave alike each other.
- On the opposite side, in companies with a high degree professional culture, the employees tend to identify themselves with their profession or work content. They do not desire to behave alike others and have an external and long-term focus.
5.4.2 Analysis of Fannie Mae
In case of Fannie Mae, the company promotes a professional attitude among its employees. There is no obligation to behave in a particular way. At Fannie Mae, the diversity is promoted and differences are appreciated. It is done to leverage the opportunities offered by such constructive differences. The Fannie Mae’s example shows the importance of cultivating a professional organizational culture to remain successful in a highly diversified environment.
5.5 Dimension 5: Open system versus the closed system
5.5.1 What is open system and closed system culture?
The open versus the closed system dimension denotes the organizations’ accessibility and overall communication climate.
- Organizations with open system tend to welcome the new employees and create an inclusive work culture in which employees from different demographic backgrounds can adjust easily. The organization keeps its door open to the outsiders and integrates the flexibility so that everyone can fit into it. Such organizations value the diversity and integrate it into their business practices.
- On the other hand, the organizations with closed-system tend to make it difficult for newcomers to adjust and develop relatedness. People in such organizations are generally exclusive and diversity is discouraged as only certain kinds of individuals are encouraged to join and fit well in the organization.
5.5.2 Analysis of Fannie Mae
The analysis of the Fannie Mae’s organizational culture shows that the company has a clear inclination towards the open side. In Fannie Mae, there are open communication lines and the organizational culture is flexible and well-diversified. The competitive advantage of the Fannie Mae also lies in its ability to manage a highly diversified workforce.
The open cultural system has enabled the Fannie Mae to ensure a high information flow and leverage the knowledge, skills and competencies of employees from diversified backgrounds. Both these factors are considered important by the multinational organizations like Fannie Mae to timely respond to the changing customers’ needs in different geographic areas.
5.6 Dimension 6: Employee orientation versus work orientation
5.6.1 What is employee orientation and work orientation?
The employee and work orientation reflects the management’s philosophy, prioritization and an overall orientation towards either employee welfare or the accomplishment of work goals.
- An organization with a clear employee orientation reflects the management’s philosophy of putting the employees ahead of customers and shareholders. It is the management philosophy and shares the high relatedness to contemporary era in which the human capital has gained the strategic importance.
- In an extremely work oriented culture, the organizations tend to put excessive pressure on the staff and heavy emphasis is put on maximizing the task performance, even if it comes at the cost of the broader employee welfare.
5.6.2 Analysis of Fannie Mae
The Fannie Mae management truly understands the value of its human capital, and hence prioritizes the employee satisfaction and motivation. Although, employees are assigned with the challenging goals, the management takes care of their concerns and avoids pressurizing them that may lead the employees towards burnout. The equilibrium between the task and employee orientation is attained by:
- Assigning the challenging goals and offering rewards to maximize the task performance
- Providing employees with necessary coaching, mentoring and guidance to accomplished the assigned goals
- Discouraging the employees from making overtime a common norm in the workplace.
- Motivating and training the employees to manage the stress and time, which is important for both- improving the task performance, and improving the psychological well-being.
6. Overall analysis
The overall analysis suggests that these individual cultural dimensions also interact with each other. For example, the Fannie Mae tends to balance its means orientation and goal orientation, and shares a closer inclination to the mean orientation, which is interconnected with its inclination towards the internally driven dimension. Both these dimensions emphasize over the ethics and integrity, and inclination towards one dimension (e.g. mean orientation) automatically predicts the organization cultures’ inclination towards second dimension (e.g. internally driven culture).
7. Hofstede organizational culture model- strengths and limitations
The Fannie Mae’s organizational culture is analyzed in light of Hofstede’s organizational culture model. However, the model has certain limitations that must be considered when applying this model to understand the culture of any organization:
- The organizational culture is broad and complex, and cannot be fully assessed based on a few dimensions.
- These cultural dimensions are obtained by surveying the 20 units of 10 different business organizations. The close-ended survey responses may not be detailed enough to give an insightful information about a company’s culture.
- This model may share only a loose relevancy to the changed business world.
Despite these limitations, the cultural model is still applied by the analysts for following reasons:
- The model is based on the rigorous research design, which means the extensive research is conducted to identify these dimensions.
- The model is believed to have a high relative accuracy as most of the researchers who applied this model offered the consistent results.
- The model is simple and easy to understand, which makes the analysis of organizational culture easier for the general public.
The analysis of the Fannie Mae’s organizational culture shows that the successful business organizations do not adopt an extreme cultural orientation, but try to find the right equilibrium to develop the effective culture. Fannie Mae has successfully created a strong organizational culture that is deeply embedded and widely accepted by its highly diversified workforce.
When an organization successfully creates the alignment between its structure, culture and business strategies, and understands the complex association between underlying assumptions, core values and observable behaviors, it can then use the organizational culture as a tool to gain strategic benefits. Organizations with strong work culture secure their position in the hypercompetitive market, and Fannie Mae is an example of it.
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