Defining Characteristics of Corporate Culture

1
Defining Characteristics of Corporate Culture

• Core values, beliefs, and business principles
• Ethical standards
• Operating practices and behaviors defininghow
  we do things around here
• Approach to people management
• Chemistry and personality permeatingwork
  environment
• Oft-told stories illustrating
• Companys values
• Business practices
• Traditions

2
Where Does CorporateCulture Come From?

• Founder or early leader
• Influential individual or work group
• Policies, vision, or strategies
• Operating approaches
• Companys approach to people management
• Traditions, supervisory practices, employee
  attitudes
• Organizational politics
• Relationships with stakeholders

3
How Is a Companys Culture Perpetuated?

• Selecting new employees who will fit in
• Systematic indoctrination of new employees
• Senior management efforts to reinforce core
  values, beliefs, principles, key operating
  practices
• Story-telling of company legends
• Ceremonies honoring employees who display
  cultural ideals
• Visibly rewarding those who follow cultural norms

4
Forces Causing Culture to Evolve

• New challenges in marketplace
• Revolutionary technologies
• Shifting internal conditions
• Internal crisis
• Turnover of top executives
• A new CEO who opts to change things
• Diversification into new businesses
• Expansion into foreign countries
• Rapid growth that involves adding many new
  employees
• Merger with or acquisition of another company

5
Types of Corporate Cultures
6
Characteristics ofStrong Culture Companies

• Conduct business according to a clear,
  widely-understood philosophy
• Considerable time spent by management
  communicating and reinforcing values
• Values are widely shared and deeply rooted
• Have a well-defined corporate character,reinforce
  d by a creed or values statement
• Careful screening/selection of new employees to
  be sure they will fit in

7
Characteristics of Weak Culture Companies

• Lack of a widely-shared core set of values
• Few behavioral norms evident in operating
  practices
• Few strong traditions
• No strong sense of company identity
• Little cohesion among departments
• Weak employee allegiance to companys vision and
  strategy

8
Characteristics of Unhealthy Cultures

• Highly politicized internal environment
• Issues resolved on basis of political clout
• Hostility to change
• Avoid risks and dont screw up
• Experimentation and efforts to alter status quo
  discouraged
• Not-invented-here mindset company personnel
  discount need to look outside for
• Best practices
• New or better managerial approaches
• Innovative ideas
• Disregard for high ethical standards and
  overzealous pursuit of wealth by key executives

9
Characteristics ofHigh-Performance Cultures

• Standout cultural traits include
• A can-do spirit
• Pride in doing things right
• No-excuses accountability
• A results-oriented work climate in which people
  go the extra mile to achieve performance targets
• Strong sense of involvement by all employees
• Emphasis on individual initiative and creativity
• Performance expectations are clearly identified
  for all organizational members
• Strong bias for being proactive, not reactive
• Respect for the contributions of all employees

10
Hallmarks of Adaptive Cultures

• Willingness to accept change and embrace
  challenge of introducing new strategies
• Risk-taking, experimentation, and innovation to
  satisfy stakeholders
• Entrepreneurship is encouraged and rewarded
• Funds provided for new products
• New ideas openly evaluated
• Genuine interest in well-being of all key
  constituencies
• Proactive approaches to implement workable
  solutions

11
Culture Ally or Obstacleto Strategy
Execution?

• A companys culture can contribute to or hinder
  successful strategy execution
• A culture that promotes attitudes and behaviors
  that are well-suited to first-rate strategy
  execution is a valuable ally in the strategy
  execution process
• A culture where attitudes and behaviors
  impedegood strategy execution is a huge obstacle
  to be overcome

12
Substantive Culture-Changing Actions

• Replace key executives strongly associated with
  old culture
• Promote individuals who have desired cultural
  traits and can serve as role models
• Appoint outsiders who have desired cultural
  attributes to high-profile positions
• Screen all candidates for new positions
  carefully, hiring only those who fit in with the
  new culture
• Mandate all company personnel attend
  culture-training programs to learn more about new
  work practices, operating approaches, and
  behaviors

13
Substantive Culture-Changing Actions
(continued)

• Push hard to implement new-style work practices
  and operating procedures
• Design compensation incentives to reward teams
  and individuals who display the desired cultural
  behaviors
• Grant generous pay raises to individuals who lead
  the way in adopting desired work practices,
  displaying new-style behaviors, and achieving
  pace-setting results
• Revise policies and procedures in ways to drive
  cultural change

14
Symbolic Culture-Changing Actions

• Lead by example Walk the talk
• Emphasize frugality
• Eliminate executive perks
• Require executives to spend time talking with
  customers
• Ceremonial events to praise people and teams who
  get with the program
• Alter practices identified as cultural hindrances
• Visible awards to honor heroes

15
Approaches to Establishing Ethical Standards

• Formal values statement and a code of ethics
• Word-of-mouth indoctrination and tradition
• Annual reports and Websites
• Making stakeholders aware of a commitmentto
  ethical business conduct is attributable to
• Greater management understanding of role these
  statements play in culture building
• Renewed focus on ethical standards stemming from
  recent corporate scandals
• Growing numbers of consumers who prefer to
  patronize ethical companies

16
Techniques to Transform Core Values and
Ethical Standards into Cultural Norms

• Screen out applicants who do not exhibit
  compatible character traits
• Incorporate values statement and ethics code in
  employee training programs
• Strong endorsement by senior executives of the
  importance of core values and ethical principles
  at company events and in internal communications
• Use values statements and codes of ethics as
  benchmarks to judge appropriateness of company
  policies and operating practices
• Make the display of core values and ethical
  principles a big factor in evaluating employee
  performance

17
Techniques to Transform Core Values and
Ethical Standards into Cultural Norms
(continued)

• Make sure managers at all levels are diligent in
  stressing the importance of ethical conduct and
  observance of core values
• Encourage everyone to use their influence in
  helping enforce observance of core values and
  ethical standards
• Hold periodic ceremonies to recognize individuals
  and groups who display the values
• Institute ethics enforcement procedures

18
Numerous Roles of Strategic Leaders
19
Leadership Activities of ChiefStrategy
Implementer

• 1. Stay on top of whats happening
• 2. Put constructive pressure on company to
  achieve good results
• 3. Lead development of stronger core
  competencies and competitive capabilities
• 4. Exercise ethics leadership and lead social
  responsibility initiatives
• 5. Take corrective actions to improve overall
  strategic performance

20
Role 1 Stay on Top of Whats Happening

• Develop a broad network of formal and informal
  sources of information
• Talk with many people at all levels
• Be an avid practitioner of MBWA
• Observe situation firsthand
• Monitor operating results regularly
• Get feedback from customers
• Watch competitive reactions of rivals

21
Role 2 Put Constructive Pressure
onCompany to Achieve Good Results

• Successful leaders spend time
• Mobilizing organizational energy behind
• Good strategy execution and
• Operating excellence
• Nurturing a results-oriented work climate
• Promoting certain enabling cultural drivers
• Strong sense of involvement on part of company
  personnel
• Emphasis on individual initiative and creativity
• Respect for contributions of individuals and
  groups
• Pride in doing things right

22
Role 3 Promote Stronger CoreCompetencies
and Capabilities

• Top management intervention isrequired to
  establish better or new
• Resource strengths and competencies
• Competitive capabilities
• Senior managers must lead the effort because
• Competencies reside in combined efforts of
  different work groups and departments, thus
  requiring cross-functional collaboration
• Stronger competencies and capabilities can lead
  to a competitive edge over rivals

23
Role 4 Display Ethics Leadership and Lead
Social Responsibility Initiatives

• Set an excellent example in
• Displaying ethical behaviors
• Demonstrating character and personal integrity in
  actions and decisions
• Declare support of companys ethics code and
  expect all employees to conduct themselves in an
  ethical fashion
• Encourage compliance and establish
  toughconsequences for unethical behavior

24
Role 5 Lead the Process ofMaking
Corrective Adjustments

• Requires deciding
• When adjustments are needed
• What adjustments to make
• Involves
• Adjusting long-term direction, objectives, and
  strategy on an as-needed basis in response to
  unfolding events and changing circumstances
• Promoting fresh initiatives to bring internal
  activities and behavior into better alignment
  with strategy
• Making changes to pick up the pace when results
  fall short of performance targets