Corporate Culture and Leadership

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Corporate Cultureand Leadership
Chapter
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The Defining Characteristics of a Companys
Culture

• Its core values, beliefs, and business principles
  
• Patterns of how we do things around hereits
  style of operating and ingrained behaviors of
  company personnel
• Oft-told stories illustrating companys values
• Its approach to people management
• Ethical standards
• Internal politics
• Traditions

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What to Look for inIdentifying Corporate
Culture

• A companys culture is manifested in . . .
• Values, beliefs, and business principlesmanagemen
  t preaches and practices
• Official policies and procedures
• Its revered traditions and oft-repeated stories
• Attitudes and behaviors of employees
• Peer pressures that exist to display core values
• Its politics
• Approaches to people management and problem
  solving
• Its relationships with external stakeholders
• Chemistry and personality permeating work
  environment

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How Is a CompanysCulture 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 employeeswho display
  cultural ideals
• Visibly rewarding thosewho follow cultural norms

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Culture Ally or Obstacleto Strategy
Execution?

• A companys culture can contriute t 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 that embraces attitudes and behaviors
  which impede good strategy execution is a huge
  obstacle to be overcome

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Why Culture Matters Benefitsof a Tight
Culture-Strategy Fit

• A culture that encourages actions and behaviors
  supportive of good strategy execution
• Provides employees with clear guidance regarding
  what behaviors and results constitute good job
  performance
• Creates significant peer pressure among coworkers
  to conform to culturally acceptable norms
• A culture imbedded with values and behaviorsthat
  facilitate strategy execution promotesstrong
  employee commitment to the companys
• Vision
• Performance targets
• Strategy

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Types of Corporate Cultures
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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 newemployees to
  be sure they will fit in

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Creating a Strong FitBetween Strategy and
Culture
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Fig. 13.1 Changinga Problem Culture
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Grounding the Culture inCore Values and
Ethics

• A culture based on ethical principles isvital to
  long-term strategic success
• Ethics programs help make ethical conduct a way
  of life
• Executives must provide genuine supportof
  personnel displaying ethical standardsin
  conducting the companys business
• Value statements serve as acornerstone for
  culture-building

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(Fig 13.2) The Two Culture-Building Roles of
a Companys Core Values and Ethical Standards
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How a Companys Core Values and Ethical
Principles Positively Impact the Corporate
Culture (Fig 13.3)
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Lessons in Leadership from Colin Powell

• Leadership is the art of accomplishing more than
  the science of management says is possible.
• Some other thoughts, some counterintuitive

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Leadership Roles (Activities) of theStrategy
Implementer

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

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Contemporary Leadership Theory

• Leader-member Exchange (LMX)
• Transformational Leadership

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Leader-member exchange (LMX)

• Leaders give autonomy, involvement
• In exchange for commitment, effort, performance

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• LMX An evaluation (7 questions).
• 1. Do you know where you stand with your
  managerdo you usually know how satisfied your
  manager is with what you do?
• 1 Rarely
• 2 Occasionally
• 3 Sometimes
• 4 Fairly often
• 5 Very often

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• 2. How well does your manager understand your job
  problems and needs?
• 1 Not a bit
• 2 A little
• 3 A fair amount
• 4 Quite a bit
• 5 A great deal

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• 3. How well does your manager recognize your
  potential?
• 1 Not at all
• 2 A little
• 3 Moderately
• 4 Mostly
• 5 Fully

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• 4. Regardless of how much formal authority s/he
  has built into his/her position, what are the
  chances your manager would use his/her power to
  help you solve problems in your work?
• 1 None
• 2 Small
• 3 Moderate
• 4 High
• 5 Very high

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• 5. Again, regardless of how much formal authority
  your manager has, what are the chances that s/he
  would bail you out at his/her expense?
• 1 None
• 2 Small
• 3 Moderate
• 4 High
• 5 Very high

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• 6. I have enough confidence in my manager that I
  would defend and justify his/her decision if s/he
  were not present to do so.
• 1 Strongly disagree
• 2 Disagree
• 3 Neutral
• 4 Agree
• 5 Strongly agree

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• 7. How would you characterize your working
  relationship with your manager?
• 1 Extremely ineffective
• 2 Worse than average
• 3 Average
• 4 Better than average
• 5 Extremely effective

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Leader-member exchange (LMX)

• Two types of followers
• Cadre (In-group)
• Hired hands (Out-group)
• Based on trust, dependability, competence,
  compatibility with leader, fit with mission,
  culture
• Generally, we think of the leader as making this
  choice (whos in, out)

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Leader-member exchange (LMX)

• In-group Lots of latitude, higher performance,
  lower turnover, higher satisfaction
• Out-group Little latitude, lower performance,
  higher turnover, lower satisfaction
• When performance assessed by supervisor not by
  differences in objective indicators of
  performance.

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Transformational leadership

• Three characteristics
• Charisma
• Individualize consideration
• Intellectual stimulation
• Go beyond routine accomplishments
• Employees go beyond their expectations

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Charismatic leadership

• Five characteristics
• Vision
• Personal risk (conviction, self-sacrifice)
• Environmental sensitivity/perceived as a change
  agent
• Sensitivity to followers needs
• Unconventional behavior
• A return to focusing on Leaders rather than
  managers

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Building Enduring Greatness Level 5 Leader
(Good to be Great Collins, 2001)

• Level 5 Level 5 Executive -- builds enduring
  greatness through a blend of personal humility
  and professional will
• Level 4 Effective leader -- catalizes
  commitment to and vigorous pursuit of a clear and
  compelling vision, stimulating higher performance
  standards
• Level 3 competent manager organizes people and
  resources toward the effective and efficient
  pursuit of pre-determined objectives
• Level 2 contributing team member contributes
  individual capabilities to the achievement of
  group objectives and works effectively with
  others in a group setting
• Level 1 highly capable individual makes
  productive contributions through talent,
  knowledge, skills, and good work habits.

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Building Enduring Greatness Level 5 Leader

• Level 5 Level 5 Executive -- builds enduring
  greatness through a blend of personal humility
  and professional will
• Level 4 Effective leader -- catalizes
  commitment to and vigorous pursuit of a clear and
  compelling vision, stimulating higher performance
  standards
• Level 3 competent manager organizes people and
  resources toward the effective and efficient
  pursuit of pre-determined objectives
• Level 2 contributing team member contributes
  individual capabilities to the achievement of
  group objectives and works effectively with
  others in a group setting
• Level 1 highly capable individual makes
  productive contributions through talent,
  knowledge, skills, and good work habits.

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Two Sides of Level 5 Leadership
Will Humility

• Creates superb results, a clear catalyst in the
  transition from good to great
• Unwavering resolve to do whatever must be done to
  produce the best long-term results (no matter how
  difficult)
• Sets the standard of building an enduring great
  company, will settle for nothing less
• Takes responsibility for poor resultsdoesnt
  blame other people, external factors, or bad luck

• Demonstrates a compelling modesty, shuns public
  adulation, not boastful
• Acts with quiet, calm determination relies
  principally on inspired standards, not inspiring
  charisma, to motivate
• Channels ambition into the company, not the self.
  Sets up successors for even greater success
• Gives credit for success to other people,
  external factors, and good luck

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So, what can we learn from this?

• Leadership is more than just effective leadership
  (Personal humility, Professional will, Ambition
  for the organization)
• Organization and plans dont really accomplish
  anything. People do. (Motivation)
• Picking people Look for intelligence, judgment,
  and the capacity to anticipate. Also, loyalty,
  integrity, and a drive to get things done.
• Great leaders are almost always great
  simplifiers.
• Act when you have enough information to ensure a
  40-70 chance of being right (Satisficing).
• Organization charts and fancy titles count for
  next to nothing.
• Fit no stereotypes. Dont chase management
  Fads.
• Have fun in your leadership but, it is lonely.