Management 455

1. Management 455 Corporate Culture and Leadership Chapter 12

2. INSTILLING A STRATEGY-SUPPORTIVE CORPORATE CULTURE 12-2

3. Defining Characteristics of Corporate Culture • Core values, beliefs, and business principles • Ethical standards • Operating practices and behaviors defining“how we do things around here” • Approach to people management • “Chemistry” and “personality” permeatingwork environment • Oft-told stories illustrating • Company’s values • Business practices • Traditions

4. Features of the CorporateCulture at Wal-Mart • Dedication to customer satisfaction • Zealous pursuit of low costs • Frugal operating practices • Strong work ethic • Ritualistic Saturday morning meetings • Executive commitment to • Visit stores • Listen to customers • Solicit employees’ suggestions

5. Identifying the Key Featuresof Corporate Culture A company’s culture is manifestedin . . . • Values, business principles, and ethical standards preached and practiced by management • Approaches to people managementand problem solving • Official policies and procedures • Spirit and character permeating work environment • Interactions and relationships among managers and employees • Peer pressures that exist to display core values • Its revered traditions and oft-repeated stories • Its relationships with external stakeholders

6. Where Does CorporateCulture Come From? • Founder or early leader • Influential individual or work group • Policies, vision, or strategies • Operating approaches • Company’s approach to people management • Traditions, supervisory practices,employee attitudes • Organizational politics • Relationships with stakeholders

7. Role of Stories at Microsoft Oft-toldstories focus on . . . • Long work hours of programmers • Emotional peaks and valleys in encountering and overcoming coding problems • Exhilaration of completing a complex program on schedule • Satisfaction of working oncutting-edge projects • Rewards of being part of a team responsiblefor a popular new software program • Tradition of competing aggressively

8. How Is a Company’s Culture Perpetuated? • Selecting new employees who will “fit” in • Systematic indoctrination of new employees • Senior management effortsto 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

9. 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

10. Company Subcultures: Problems Posed by New Acquisitions and Multinational Operations • Values, beliefs, and practices within a company can vary by • Department • Geographic location • Business unit • Subcultures can clash if • They embrace conflicting business philosophies • Key executives use different approaches to people management • Differences between a company’s culture and recent acquisitions have not been ironed out • Existence of subcultures does not preclude important areas of commonality and compatibility being established in different countries

11. Types of Corporate Cultures Strong vs. Weak Cultures Unhealthy Cultures High-Performance Cultures Adaptive Cultures 12-11

12. Characteristics ofStrong Culture Companies • Conduct business according to aclear, 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,reinforced by a creed or values statement • Careful screening/selection of newemployees to be sure they will “fit in”

13. Characteristics of Weak Culture Companies • Lack of a widely-shared core set of values • Few behavioral normsevident in operating practices • Few strong traditions • No strong sense of company identity • Little cohesion among departments • Weak employee allegiance to company’s vision and strategy

14. Characteristics of Unhealthy Cultures • Highly politicized internal environment • Issues resolved on basis of political clout • Hostility to change • Avoid risks and don’t screw up • Experimentation and efforts toalter 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

15. 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

16. Figure 12.1: Changing a Problem Culture 12-16

17. Menu of Culture-Changing Actions • Make a compelling case why a new cultural atmosphere is in best interests of both company and employees • Challenge status quo • Create events where employeesmust listen to angry key stakeholders • Cite why and how certain behavioral norms and work practices in current culture pose obstacles to good execution of new strategic initiatives • Explain how new behaviors and work practices to be introduced will be more advantageous and produce better results

18. 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 newpositions carefully, hiring only thosewho 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

19. 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 proceduresin ways to drive cultural change

20. 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 andteams who “get with the program” • Alter practices identifiedas cultural hindrances • Visible awards to honor heroes

21. 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 company’s business • Value statements serve as a cornerstone for culture-building

22. 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

23. Establishing a Strategy-Culture Fit in Multinational and Global Companies • Institute training programs to • Communicate the meaning of core values and • Explain the case for common operatingprinciples and practices • Create a cultural climate where the norm is to • Adopt best practices • Use common work procedures • Pursue operating excellence • Give local managers • Flexibility to modify people managementapproaches or operating styles • Discretion to use different motivational and compensation incentives to induce personnel to practice desired behaviors

24. Key Roles in Leading theStrategy-Execution Process • Be out in the field, seeinghow well operations are going • Gather information firsthand • Gauge the progress being made • Be diligent and adept in spotting gridlock • Ferret out problems and issues • Learn the obstacles in the path of good execution and clear the way for progress • Exert constructive, unrelenting pressure on organizational units to • Demonstrate growing consistency in strategy execution • Achieve performance targets

25. Making Corrective Adjustments • Requires deciding • When adjustments are needed • Whatadjustments 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