Top Banner
Ch:9 Corporate Culture & Values
61
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: Group 1 - Ch 9 and 10

Ch:9 Corporate Culture & Values

Page 2: Group 1 - Ch 9 and 10

What is Culture ?

• Culture (definition) is a set of values, norms, guiding beliefs and understanding that is shared by members of an organization and taught to new members as the correct way to think, feel, and behave

• Culture is intangible , It defines how the belief system of people/workers in the company. It obviously can’t be measure, yet people hold on to it

Page 3: Group 1 - Ch 9 and 10

Levels of Organizational Cultures

Observable SymbolsCeremonies, Stories, Slogans,

Behaviors, Dress, Physical Settings

Underlying Values,

Assumptions,Beliefs, Attitudes,

Feelings

Page 4: Group 1 - Ch 9 and 10

Example

The Building was built in a gallery concept, with beautiful architectural design and concept.The Onix Setting in front of the gallery funtction as a lighting system for the gallery

Surface Level :Visible Artifact

Underlying Values

The Onix Setting values are :The onix itself is a solid rock, yet the design is made to similize wave (yet philosophy), whuch represent the organization adaptibilty to change and commitment to personalize services

Page 5: Group 1 - Ch 9 and 10

Emergence and Purposes of Culture

• Culture emerges through early leader who articulates and implements particular ideas and values of vision, philosophy or business strategy

• There are 2 critical function of culture in organization : Internal Integration : Integrate members

(communication and working habit) External Adaptation : Adapt to external

environment (customer needs or movement of competitors)

Page 6: Group 1 - Ch 9 and 10

Observable aspects of organizational cultures:

Power Relationships

Symbols

Organization Structures

Control Systems

Stories and Myths

Rites and ceremonies

Organizational Culture

Page 7: Group 1 - Ch 9 and 10

1. Rites and Ceremonies Rites and cermonies conducted to perform a dramatic

examples of a company values There are 2 types of rites :

Rite of passage Picking up of new employee and introduction to the Board Of Managers

Rite of Integration We can, We Will yell everyday after Morning Briefing

Ceremonies Promotion Ceremonies Company Birthday Celebration

Observable aspects of organizational cultures :

Page 8: Group 1 - Ch 9 and 10

2. Stories and MythsNarratives based on true events that are frequently shared among employee and told among new employee. The point is to keep the company values alive and true in the eyes of the employee

Example : The “Horse Statue” of LEXUS Indonesiawhich eventually are known towards the LEXUS

Global

Observable aspects of organizational cultures :

Page 9: Group 1 - Ch 9 and 10

Observable aspects of organizational cultures :

3. SymbolsSomething that represent other things, which include stories , rites and also a physical artifact. Symbols can be both positive and negative Example : In all Toyota company, all the working

place design with no doors and specific chambers, to simplify the coordination and communication process

4. Organization StructuresThe organizational design either its mechanistic or organic reflect the organizational culture (hierarchy and communication)

Page 10: Group 1 - Ch 9 and 10

Observable aspects of organizational cultures :

5. Power RelationshipWho influences or manipulates? Consider aspect of formal or informal, hierarchy, and expertise.

• Example: at Tobacco Company, we highly regard: 1) Sales; 2) Customers; 3) Suppliers

6. Control SystemsThe inner working of how the organization controls people and operations.

• Example: at Tobacco Company, we highly focus on increasing sales, while maximizing cost efficiency, and maintaining compliance.

Page 11: Group 1 - Ch 9 and 10

Relationship of Environment and Strategy to Corporate Culture

Needs of the EnvironmentSt

rate

gic

Focu

s AdaptabilityCulture

ClanCulture

BureaucraticCulture

MissionCulture

FlexibilityExternal

Internal

Stability

Page 12: Group 1 - Ch 9 and 10

Relationship of Environment and Strategy to Corporate Culture

1. Adaptability CultureStrategic focus on the external environment through flexibility and change to meet customer needs.

• Example: Google & Apple

2. Mission CultureEmphasis on a clear vision of the organization’s purpose and on the achievement of goals.

• Example: at Philip Morris Indonesia, all Employees are given the same mission: To be regarded as the most respected Company in Indonesia.

Page 13: Group 1 - Ch 9 and 10

Relationship of Environment and Strategy to Corporate Culture

3. Clan CulturePrimary focus on the involvement and participation of the organizations’ members and on rapidly changing expectations from the external environment

• Example: Gucci & Alexander McQueen

4. Bureaucratic CultureInternal focus and a consistency orientation for a stable environment

• Example: BUMN

Page 14: Group 1 - Ch 9 and 10

Culture Strength

Degree of agreement among member about the importance of specific values

• Does a widespread consensus exist? The culture is

strong

• Is there little agreement? Weak culture

Page 15: Group 1 - Ch 9 and 10

Strong Culture Typically associated with:

Ceremonies Symbols Stories Heroes Slogan

Page 16: Group 1 - Ch 9 and 10

Subculture: Culture within Culture

• It reflects common problems, goals, and experiences that members of a team share• Subculture = Basic values of culture +

additional unique values• Conflict: Subculture values > Corporate

culture values

Page 17: Group 1 - Ch 9 and 10

Culture, Learning, and Performance

Strong culture:• Enable learning and innovative response• Enhances organizational performance• Must be adaptive to environment changes

Page 18: Group 1 - Ch 9 and 10

Check This Out

Working for Google.mp4

Page 19: Group 1 - Ch 9 and 10

Can Culture Drive High Performance?

• Studies show positive relationship between culture and performance:

• Kotter and Heskett, Corporate Culture and Performance: companies that intentionally managed cultural values outperformed similar companies that did not

• Caterpillar, Inc: CAP (Cultural Assessment Process), gives data about millions of dollars in savings that comes from cultural factors.

Page 20: Group 1 - Ch 9 and 10

Adaptive vs Non-adaptive Corp. Culture

Adaptive Non-adaptive

Core Values Managers care about customer, stockholder, and employee They value people and processes

Care mainly about themselves. They value orderly and risk reducing management process

Common behavior

Pay attention to customer Initiate change when needed

Tend to be somewhat isolated, political, bureaucratic. Do not change strategies quickly.

Page 21: Group 1 - Ch 9 and 10

Ethical Values and Social Responsibility

• Ethicscode of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong

• Managerial EthicsPrinciples that guide the decisions and behaviours of managers with regards to whether they are right or wrong.

Example : A north American manufacturer operating

abroad was asked to make cash payments (a bribe) to government officials and was told it was consistent with local customs, despite being illegal in North America.

Page 22: Group 1 - Ch 9 and 10

Source of Individual Ethical Principles and Action

History

Religion, Philosophy, Geographic, Environment, Nationality, Society, Culture

Society

Laws, Codes, and Regulations

Societal norms and values

Local Environment

OrganizationsGeographic Regions/Community

Family/Clan

Individual Ethics and Actions

History leads to development of society morality

History leads to development of society morality

The Local environment shapes individual behaviour

Page 23: Group 1 - Ch 9 and 10

Rule of Law & Ethical Dilemma

Rule of Law Arise from a set of codified principles and regulations that describe

how people are required to act, that are generally accepted in society, and that are enforceable in the courts.

Current law often reflect combined moral judgments, but not all moral are codified into law

Relationship between the Rule of Law

and Ethical Standard

Ethical Dilemma Ethical Dillema arises in a situation concerning right and wrong in

which values are in conflict . Right or wrong cannot be clearly identified in such situations.

Example , A salesperson at the beauty supply store , the value conflict is

between being honest with customers and adhering to the boss’s expectations.

Legal Requirement

Ethical Standards

Source : LaRue Tone Hosmer, The Ethical of Management, 2nd ed ( Homewood, III.; Irwin, 1991 )

Page 24: Group 1 - Ch 9 and 10

Johnson & Johnson Credo

Page 25: Group 1 - Ch 9 and 10

Many of the recent scandals in the news have dealt with people and corporations that broke the law

• XeroxDistrict Court of New York charges Xerox manipulated the financial statements from 1997 to 2000 with increased revenue of 3 billion dollars and raise pretax profit of 15 billion dollars.Xerox’s financial and tax consultants KPMG then replaced by PriceWaterhouseCooper. Xerox was fined 10 million dollars for the infraction.

• Olympus$ 1.7 billion accounting fraud at the company and the camera maker's medical equipment.

• Enron• Worldcom

Page 26: Group 1 - Ch 9 and 10

How Leaders Shape Culture and Ethics• Ethical companies, top management in providing

commitment, leadership, and examples for ethical behaviour

• Values can be communicated in a number of ways – speeches, company publications, policy statement, and especially, personal actions.

• Top leaders are responsible for creating and sustaining a culture that emphasizes the importance of ethical behavior for every employee.

• Managers throughout the organizations need to espouse and model ethical value. Formal ethical program are worthless if leaders do not live up to high standards of ethical conduct.

Page 27: Group 1 - Ch 9 and 10

Values-Based Leadership• Organization value are developed and strengthened

primarily through value-based leadership, a relationship between a leader and followers that is based on shared, strongly internalized values that are advocated and acted upon by the leader.

• Every act and statement of managers has an impact on culture and values.

• Employees learn about values, beliefs, and goals from watching managers.

• Action speak louder than words• Employees learn from and model the behaviours of people

they admire.Examples

John Tu and David Sun, co-founders of Kingston Technology Company, illustrated values-based leaderships in action. From then business not about the money, but about relationships. When they sold 80% of Kingstons to Softbank Corp of Japan for $ 1.5 billion, they set a sid $100 million of the proceeds to employee bonuses

Page 28: Group 1 - Ch 9 and 10

Characteristics of Values – Based Leaders

Values – Based Leader

Treat people with careBe helpful and kindSupport othersMaintain positive relationship

Hold self to high ethical standardsStrive for honesty, humility, integrity,Accept responsibility for ethical failings

Articulate and communicate ethical visionHold people accountablePut ethics above short-term interests

Treat everyone equitablyNever be condescendingAccept others’ mistakes

Organizational Leadership

Fairness with Others

Interpersonal Behaviour Organizational Culture

Page 29: Group 1 - Ch 9 and 10

Formal Structure and Systems Structure

1. Ethics Committee• To oversee company ethics,• Rulings on questionable ethical

issues, • Assumes responsibility for

disciplining wrongdoers,• Signals the importance of ethics

Page 30: Group 1 - Ch 9 and 10

Structure (cont’d)

2. Chief Ethics Officer in Ethics Department

• An executive to oversee all aspects of ethics,• Communicating ethical standards,• Sets up ethical training programs, supervises the

investigation of ethical problems,• Ethical training programs, • Advises ethical aspects of corporate decisions.3. Ethics Hotline• For employees seeking guidence, • Report questionable behaviour,• Tool for making ethical decisions,

Page 31: Group 1 - Ch 9 and 10

Disclosure Mechanisms

• Use of confidential hotlines.• Wistle-blowing: Employee disclosure of illegal,

immoral, or illegitimate practices on the part of the organization.

• Companies are looking for ways to protect whistle-blowers. When there are no protective measures, whistle-blowers suffer, and the company may continue its unethical or illegal practices.

Page 32: Group 1 - Ch 9 and 10

Code of Ethics

• A formal statement of the company’s values concerning ethics and social respnsibility; it clarifies to employees what the company stands for and its expectations for employee conduct.

• Although written codes of ethics and value statements are improtant, it is essential that top managers support and reinforce the codes through their actions, including rewards for compliance and discipline for violations.

• Otherwise a code of ethics is nothing more than a piece of paper.

Page 33: Group 1 - Ch 9 and 10

Training Programs

To ensure that ethical issues are considered in daily decision making.

• Includes case examples.• Includes framework for ethical decision

making. • Moral development.

Page 34: Group 1 - Ch 9 and 10

CORPORATE CULTURE AND ETHICS IN A GLOBAL ENVIRONMENT

Organizations operating on a global basis often face particularly tough ethical challenges because of the various cultural and market factors they must deal with.

The greater complexity of the environment and organizational domain create a greater potential for ethical problems or misunderstandings.

Page 35: Group 1 - Ch 9 and 10

CORPORATE CULTURE AND ETHICS IN A GLOBAL ENVIRONMENT (cont’d)

Employees from different countries may have varied attittudes and beliefs that make it difficult to establish a sense of community and cohesiveness based on the corporate culture.

National culture has a greater impact on employees than does corporate culture, and differences in national culture also create tremendous variance in ethical attitudes.

Page 36: Group 1 - Ch 9 and 10

CORPORATE CULTURE AND ETHICS IN A GLOBAL ENVIRONMENT (cont’d)

How do managers translate the ideas for developing strong, ethical corporate cultures to a complex global environment?

1. Emphasis on multicurltural rather than national values,

2. Basing status on merit rather than nationality,

3. Being open to new ideas from other cultures, 4. Showing excitement rather than trepidation

when entering new cultural evironments,5. Being sensitive to cultural differences without

being limited by them.

Page 37: Group 1 - Ch 9 and 10

CORPORATE CULTURE AND ETHICS IN A GLOBAL ENVIRONMENT (cont’d)

Social audits. Measures and reports the ethical,

social, and environmental impact of a company’s operations.

Page 38: Group 1 - Ch 9 and 10

Ch:10Organizational Innovation

Page 39: Group 1 - Ch 9 and 10

10-39

Forces Driving the Need for Major Organizational Change

More Large-Scale Change in OrganizationsStructure change Mergers, joint ventures, consortiaStrategic change Horizontal organizing, teams, networksCulture change New technologies, productsKnowledge management, enterprise New business processesResource planning E-commerceQuality programs Learning organizations

More ThreatsMore domestic competitionIncreased SpeedInternational competition

Global Changes, Competition and Markets• Technological Change• International Economic Integration• Maturation of Markets in Developed

Countries• Fall of Communist and Socialist

Regimes More OpportunitiesBigger marketsFewer barriersMore international markets

Page 40: Group 1 - Ch 9 and 10

10-40

Incremental vs. Radical Change

Continuousprogression

Paradigm-breakingburst

Through normal structure and managementprocesses

Transform entireorganization

Affect organizationalpart

Create new structureand management

Technologyimprovements

Breakthroughtechnology

Productimprovement

New products,new markets

Incremental Change Radical Change

Page 41: Group 1 - Ch 9 and 10

Technology- Changes in production processProducts and Services- Changes in outputsStrategy and Structure- Administrative changesCulture- Changes in values, attitudes, behaviors

Four Types of Change

Page 42: Group 1 - Ch 9 and 10

10-42

Sequence of Elements for Successful Change

EnvironmentSuppliersProfessionalassociationsConsultantsResearchliterature

CustomersCompetitionLegislationRegulationLabor force

1. Ideas

2. Needs

3. Adoption 4.Implementation

5. Resources

InternalCreativity andInventions

PerceivedProblems orOpportunities

Organization

Page 43: Group 1 - Ch 9 and 10

Technology Change

• Company continually developing, acquiring, adapting new technology

• Characteristic of innovative organization Flexibility and empowered employees

Attributed to people’s freedom Encourage innovation process

The absence of rigid work rules

Page 44: Group 1 - Ch 9 and 10

The Ambidextrous Approach

General Manager

Creative Department

Expand capabilities – Explore and

develop new idea(Organic

Structure)

Using Department

Exploit capabilities – Routine application

of new ideas(Mechanic Structure)

How does an organization solve the dilema between innovation creation and innovation utilization?

Page 45: Group 1 - Ch 9 and 10

Techniques for Encouraging Technology Change

Switching structures

Creative departments

Venture teams

Corporate enterpreneurshi

p

An organization creates an organic structure when such a stucture is needed for the initiation of new ideas. It found creative ways to be ambidextrous, establishing organic conditions for developing new ideas

Departments that initiate change are organically structured to facilitate the generation of new ides and techniques. Departments that use those innovations tend to have a structure more suitable for efficient production

A technique used to give free rein creativity within organizations. Venture teams are often given a separate location and facilities so they are not constrained by organizational procedures.

It attempts to develop an internal enterpreneurial spirit, philosophy, and structure that will produce a higher than average number of innovations. Managers can create systems and structures that encourage enterpreneurship.

Page 46: Group 1 - Ch 9 and 10

New Product and Services• New products are designed for sale in the

environment, so that the uncertainty about the suitability and success of an innovation is very high (1 project in 8 returned a profit to the company).

• How to success ? Innovation to customer needs Making effective use of technology Having influential top managers support the

project

Page 47: Group 1 - Ch 9 and 10

Horizontal Coordination Model

• The effective design for new product innovation is associated with horizontal coordination across departments, involves to 3 components:• Specialization: highly competent in

Dept: R&D, marketing, and production• Boundary Spinning: excellent linkage

with relevant sectors in the external environment.

• Example: Kimberly-Clark• Horizontal Coordination

Page 48: Group 1 - Ch 9 and 10

Example:1) Toyota : uses a product development technique called obeya. The idea behind

obeya is to change the way people think about product innovation and development by changing how they share information.

2) P&G, W. L. Gore, and Boeing routinely turn to customers and other organizations for advice.

3) Famous innovation failures—such as McDonald’s Arch Deluxe or the baby-food company Gerber’s Singles for Adults—usually violate the horizontal linkage model

Page 49: Group 1 - Ch 9 and 10

Need For Speed• Time based competition - Russell Stover got a

line of low-carb candies, called Net Carb, on tore shelves within 3 months after perfecting the recipe (in the past it was 12 months)

• Fast cycle teams - GM has cut its time from concept to production on a new vehicle model down to a mere 18 months from 4 years

• Across geographical regions - a new Häagen Dazs flavor, dulce de leche, developed primarily for sale in Argentina, has quickly become a favorite in the United States

Page 50: Group 1 - Ch 9 and 10

Strategy and Structure Change

Dual Core Approach

Page 51: Group 1 - Ch 9 and 10

• Downsizing and restructuring are nearly always managed top down. • Example when the president of Oracle Corp. split the sales

force into 2 teams (database software & applications), cut out two levels of management, and placed himself directly in charge of U.S. sales

• The implementation of administrative innovation was extremely difficult in organizations that had an organic technical core

• To use a top-down change process• Top-down change means initiation of the idea occurs at

upper levels and is implemented downward. • It does not mean that lower-level employees are not

educated about the change or allowed to participate in it

Organization Design for Implementing Administrative Change

Page 52: Group 1 - Ch 9 and 10

Organization Design for Implementing Management Change

The finding from research comparing management and technical change suggest that a mechanistic organization structure is appropriate for frequent management, including changes in goal, strategy, structure, control system and human resources.

Type of Innovation Approach :Management Core•it has a larger administrative ratio, are larger in size, and centralized.•It uses top down implementation and Mechanistic structure•e.g : the implementation of six sigma methods, application balanced scorecard etc.Technical Core•It uses Bottom up Implemention and Organic structure•Lower lever employees have more freedom and autonomy hence .

Page 53: Group 1 - Ch 9 and 10

Dual core approach to organization change

Page 54: Group 1 - Ch 9 and 10

Culture Change• Change in strategy, structure, technologies, product and

also change in people as well. Achieve a new way of thinking requires a focused change in underlying corporate culture values and norms.

• Changing culture can be particularly difficult because it challenges people’s core value and established ways of thinking and doing things.

• For example : Merger and acquisition

Forces for culture change:• A number of recent trends have contributed to a need for

cultural makeovers at many company, e.g. reengineering and the shift to horizontal forms of organizing. Those require greater focus on employee empowerment, collaboration, information sharing and meeting customer needs.

• Mutual trust, risk taking and tolerance for mistakes become key cultural values in horizontal organization.

• Another force for cultures the diversity of today’s workforce• A growing emphasis on learning and adaptation in

organization calls for new cultural values

Page 55: Group 1 - Ch 9 and 10

Culture Change

Organization Development Culture Change Interventions:Organization Development (OD) is focused on the human and social aspect of the organization as a way to improve the organization’s ability to adapt and to solve problems.

Today, OD concept has been enlarged to examine how people and groups can change to an adaptive culture in a complex and turbulent environment.Organization Development intervention involve training of specific groups or everyone in the organization

Page 56: Group 1 - Ch 9 and 10

Techniques for improving skills through OD :

Large group Interventionmore attuned to bringing about radical or transformational change in organization in complex environment.As a whole system in the room, to brings together participants from all parts of the organization (include stakeholders) in an off site setting to discuss problems or opportunities and plan for change.

Team Building Team Building promotes the idea that people who work together can work as a team for example discuss conflict, goals, the decision making process, etc. Team building activities can enhance communication and collaboration and strengthen the cohesiveness of organizational group and teams.

Interdepartmental activitiesRepresentative from different departments are brought together in a mutual location to expose problems or conflicts, diagnose the causes and plan improvement in communication and collaboration.

Page 57: Group 1 - Ch 9 and 10

Strategies for Implementing Change

Leadership for Change

The need for change within organizations and the need for leaders who can successfully manage change continues to grow.Leaders also build organization-wide commitment by taking employees through three stages of the change commitment process, illustrated in Exhibit 10.8.

Page 58: Group 1 - Ch 9 and 10

Strategies for Implementing Change

Barrier to Change1. Excessive focus on costs. Management may possess the mind-set that costs

are all-important and may fail to appreciate the importance of a change that is not focused on costs—for example, a change to increase employee motivation or customer satisfaction.

2. Failure to perceive benefits. Any significant change will produce both positive and negative reactions. Education may be needed to help managers and employees perceive more positive than negative aspects of the change. In addition, if the organization’s reward system discourages risk taking, a change process might falter because employees think that the risk of making the change is too high.

3. Lack of coordination and cooperation. Organizational fragmentation and conflict often result from the lack of coordination for change implementation. Moreover, in the case of new technology, the old and new systems must be compatible.

Page 59: Group 1 - Ch 9 and 10

Strategies for Implementing Change

Barrier to Change (cont’d)

4. Uncertainty avoidance. At the individual level, many employees fear the uncertainty associated with change. Constant communication is needed so that employees know what is going on and understand how it affects their jobs.

5. Fear of loss. Managers and employees may fear the loss of power and status—or even their jobs. In these cases, implementation should be careful and incremental, and all employees should be involved as closely as possible in the change process.

Page 60: Group 1 - Ch 9 and 10

Strategies for Implementing ChangeTechniques for Implementation

1 Establish a sense of urgency for change

Once managers identify a true need for change, they need to thaw resistance by creating a sense of urgency that change is really needed

2 Establish a coalition to guide the change.

Top management support is crucial for any major change project, and lack of top management support is one of the most frequent causes of implementation failure. In addition, the coalition should involve lower-level supervisors and middle managers from across the organization.

3 Create a vision and strategy for change

Leaders who have taken their companies through major successful transformations often have one thing in common: They focus on formulating and articulating a compelling vision and strategy that will guide the change process

4 Find an idea that fits the need

Finding the right idea often involves searchprocedures—talking with other managers, assigning a task force to investigate the problem, sending out a request to suppliers, or asking creative people within the organization to develop a solution

5 Develop plans to overcome resistance to change

Many good ideas are never used because managers failed to anticipate or prepare for resistance to change by consumers, employees, or other managers. To increase the chance of successful implementation, management must acknowledge the conflict, threats, and potential losses perceived by employees.

Step Action Description

Page 61: Group 1 - Ch 9 and 10

Strategies for Implementing Change

Techniques for Implementation (cont’d)

6 A task force can be created to see that implementation is completed. The task force can be responsible for communication, involvement of users, training, and other activities needed for change.

Create change teams

7 Foster idea champions

Step Action Description

One of the most effective weapons in the battle forchange is the idea champion. The most effective champion is a volunteer champion who is deeply committed to a new idea. The idea champion sees that all technical activities are correct and complete