Orgn culture stories

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Chapter TitleChapter Title

16/e PPT16/e PPT

CorporateCulture and

Leadership

Screen graphics created by:

Jana F. Kuzmicki, Ph.D.Troy University-Florida Region

McGraw-Hill/Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.


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The biggest levers youve got

to change a company are

strategy, structure, and

culture. If I could pick two, Idpick strategy and culture.

Wayne Leonard, CEO Entergy Corp.


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An organizations capacity

to execute its strategy depends

on its hard infrastructure its

organization structure and systems

and on its soft infrastructure

its culture and norms.

Amar Bhide


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Chapter 13 Roadmap

Instilling a Corporate Culture that Promotes Good Strategy

Execution Identifying the Key Features of a Companys Corporate Culture

Strong versus Weak Cultures

Unhealthy Cultures

High-Performance Cultures Adaptive Cultures

Culture: Ally or Obstacle to Strategy Execution?

Changing a Problem Culture

Grounding the Culture in Core Values and Ethics

Establishing a Strategy-Culture Fit in Multinational Companies

Leading the Strategy Execution Process Staying on Top ofHow Well ThingsAre Going

Putting Constructive Pressure on the Organization to Achieve Good Results

and Operating Excellence

Leading the Development of Better Competencies and Capabilities

Displaying Ethical Integrity and Leading Social ResponsibilityInitiatives

Leading the Process of Making Corrective Adjustments


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INSTILLINGA

STRA

TEGYINSTILLINGA

STRA

TEGY--SUPPORTIVE CORPORATESUPPORTIVE CORPORATE

CULTURECULTURE


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Defining Characteristicsof Corporate Culture

Core values, beliefs, and business principles

Ethical standards

Operating practices and behaviors defining

how we do things around hereApproach to people management

Chemistry and personality permeating

work environment

Oft-told stories illustrating

Companys values

Business practices

Traditions


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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

Features of the CorporateCulture at Wal-Mart


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Hard-driving, results-oriented atmosphere prevails

All businesses are held to a standard

of being #1 or #2 in their industries as

well as achieving good business results

Extensive cross-business sharing of ideas, best

practices, and learning

Reliance on workout sessions to identify, debate,

and resolve burning issues

Commitment to Six Sigma Quality

Globalization of the company

Features of the CorporateCulture at General Electric


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Entrepreneurship of employees

Empowered employees are encouraged to

Be innovative

Excel in their fields of specialization

Respond quickly to strategic opportunities

Creatively apply state-of-the-art technology in a mannerto promote operating excellence

Features of the CorporateCulture at Occidental Petroleum


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Deliver exceptional customer service to customers

Company motto

Respond to UnreasonableCustomer Requests

Out-of-the-ordinary customer requests

viewed as opportunities for heroic acts

Promotions based on outstanding service

Salaries based entirely on commission

Features of the CorporateCulture at Nordstroms


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A companys culture is manifestedin . . .

Values, business principles, and ethical standards preached

and practiced by management

Approaches to people management and 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

Identifying the Key Featuresof Corporate Culture


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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

Where Does CorporateCulture Come From?


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Role of Stories at Microsoft

Oft-told stories 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 on cutting-edge projectsRewards of being part of a team responsible

for a popular new software program

Tradition of competing aggressively


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Selecting new employees who will fit in

Systematic indoctrination of new employees

Senior management efforts to reinforce corevalues, beliefs, principles, key operating practices

Story-telling of company legends

Ceremonies honoring employeeswho display cultural ideals

Visibly rewarding those

who follow cultural norms

How Is a Companys Culture Perpetuated?


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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


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Company Subcultures: Problems Posed byNew 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 companys culture and recentacquisitions have not been ironed out

Existence of subcultures does not preclude important areas

of commonality and compatibility being established in

different countries


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Types of Corporate Cultures

Strong vs. Weak Cultures

Unhealthy Cultures

High-Performance Cultures

Adaptive Cultures


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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,

reinforced by a creed or values statement

Careful screening/selection of new

employees to be sure they will fit in

Characteristics ofStrong Culture Companies


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How Does a Culture Come to Be Strong?

Leader who establishes values and behaviors

consistent with Customer needs

Competitive conditions

Strategic requirements

A deep, abiding commitment to espoused

values, beliefs, and business philosophy Practicing what is preached!

Genuine concern for well-being of Customers

Employees

Shareholders

Values

Customers

Employees

Shareholders


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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


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Highly politicized internal environment Issues resolved on basis of political clout

Hostility to change Avoid risks and dont screw up

Experimentation and efforts toalter status quo discouraged

Not-invented-here mindset companypersonnel discount need to look outside for

Best practices New or better managerial approaches

Innovative ideas

Disregard for high ethical standards andoverzealous pursuit of wealth by key executives

Characteristics of Unhealthy Cultures


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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

Characteristics ofHigh-Performance Cultures


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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

N

ew ideas openly evaluated Genuine interest in well-being

of all key constituencies

Proactive approaches to

implement workable solutions

Hallmarks of Adaptive Cultures


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Any changes in operating practices and behaviors

Must notcompromise core values and long-standing business

principles

Must be legitimatein the sense of not having an inappropriate orunfair impact on the best interests of key stakeholders

Customers

Employees

Shareholders

Suppliers

Communities

Dominant Traits of Adaptive Cultures


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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 strategyexecution is a valuable allyin the strategy

execution process

A culture where attitudesand behaviors impede

good strategy execution is a

huge obstacle to be overcome

Culture: Ally or Obstacleto Strategy Execution?


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A culture that encourages actions and behaviors

supportive ofgood strategy execution

Provides employees with clear guidance regarding what

behaviors and results constitute good job performance

Creates significant peer pressure among co-workers to

conform to culturally acceptable norms

A culture imbedded with values and behaviors

that facilitate strategy execution promotes

strong employee commitment to the companys

Vision

Performance targets

Strategy

Why Culture Matters: Benefitsof a Tight Culture-Strategy Fit


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A good job ofculture-buildingby managers

Promotes can-do attitudes

Encourages acceptance of change

Instills strong peer pressure forstrategy-supportive behaviors

Enlists enthusiasm and dedicated

effort to achieve company objectives

Closely aligning corporate culture with theClosely aligning corporate culture with the

requirements for proficient strategy executionrequirements for proficient strategy execution

merits the full attention ofsenior executives!merits the full attention ofsenior executives!

Optimal Outcome of aTight Culture-Strategy Fit


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Conflicts between culturally-approved

behaviors and behaviors needed for good

strategy execution send mixed signals

Shouldemployees by loyal to the culture and company

traditions and resist actions and behaviors promoting

better strategy execution?

Orshould they support the strategy by engaging in

behaviors that run counter to the culture?

When a companys culture is out ofsync withWhen a companys culture is out ofsync with

what isneeded forstrategic success, the culturewhat isneeded forstrategic success, the culture

has to be changed as rapidly as can be managed!has to be changed as rapidly as can be managed!

The Perils of Strategy-Culture Conflict


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Creating a Strong FitBetween Strategy and Culture

Responsibility of Strategy MakerResponsibility of Strategy Maker

Select a strategy compatible with theSelect a strategy compatible with the

sacred or unchangeable parts ofsacred or unchangeable parts of

organizations prevailing corporate cultureorganizations prevailing corporate culture

Responsibility of Strategy ImplementerResponsibility of Strategy Implementer

Once strategy is chosen, changeOnce strategy is chosen, change

whatever facets of the corporatewhatever facets of the corporate

culture hinder effective executionculture hinder effective execution


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Make a compelling case why a new cultural

atmosphere is in best interests of both company and

employees

Challenge status quo

Create events where employees

must 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

Menu of Culture-Changing Actions


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Replace key executives strongly associated with

old culture

Promote individuals who have desired cultural traits

and can serve as role modelsAppoint 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

Substantive Culture-Changing Actions


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Push hard to implement new-style work practices

and operating procedures

Design compensation incentives to reward teams

and individuals who display the desired culturalbehaviors

Grant generous pay raises to individuals who lead

the way in adopting desired work practices,

displaying new-style behaviors, and achievingpace-setting results

Revise policies and procedures

in ways to drive cultural change

Substantive Culture-Changing Actions(continued)


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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

Symbolic Culture-Changing Actions


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A culture based on ethical principles is

vital to long-term strategic success

Ethics programs help make

ethical conduct a way of life

Executives must provide genuine support

of personnel displaying ethical standards

in conducting the companys business

Value statements serve as a

cornerstone for culture-building

Our ethics

program

consists of...

Grounding the Culture inCore Values and Ethics


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Formal values statement and a code of ethics

Word-of-mouth indoctrination and tradition

Annual reports and Websites

Making stakeholders aware of a commitment

to 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

Approaches to EstablishingEthical Standards


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Test Your Knowledge

Which of the following topics would leastlikely be a topic or

element of a companys statement of its core values?

A. A dedication to superior customer service, top-notch quality,

product innovation, and/or technological leadership

B. An expectation that company personnel will display creativity,

exercise initiative, and accept responsibility

C. Prohibiting giving or accepting bribes, kickbacks, or gifts

D. A commitment to exhibiting such qualities as integrity,fairness, trustworthiness, pride of workmanship, Golden Rule

behavior, and respect for co-workers

E. A commitment to making the company a great place to work


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Test Your Knowledge

Which of the following topics would leastlikely be contained in

a companys code of ethics?

A. Expecting all employees to not divulge trade secrets or

proprietary information to outsiders

B. Expecting all company personnel to display honesty and

integrity in their actions and avoid conflicts of interest

C. Not dealing with suppliers that employ child labor or engage in

other unsavory practices

D. Committing to create a work environment characterized by

teamwork and employee empowerment

E. Mandating full compliance with all laws and regulations


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Fig. 13.2: The Two Culture-Building Roles of aCompanys Core Values and Ethical Standards


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Techniques to Transform Core Values andEthical 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 companypolicies and operating practices

Make the display of core values and ethical principles a

big factor in evaluating employee performance


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Techniques to Transform Core Values and EthicalStandards 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 inhelping enforce observance of core values and

ethical standards

Hold periodic ceremonies to recognize individualsand groups who display the values

Institute ethics

enforcement procedures


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Fig. 13.3: The Benefits of Cultural Norms StronglyGrounded in Core Values and Ethical Principles


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Establishing a Strategy-Culture Fit inMultinational and Global Companies

Institute training programs to

Communicate the meaning of core values and

Explain the case for common operating

principles 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 management

approaches or operating styles

Discretion to use different motivational and compensation

incentives to induce personnel to practice desired behaviors


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For Discussion: Your Opinion

Identify one cultural trait that you would like to see at

the company you decide to go to work for when you

graduate? Why is this cultural trait important to you?


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STRATEGIC LEADERSHIPSTRATEGIC LEADERSHIP


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Visionary

Chief

Entrepreneur& Strategist Capabilities

Builder

Resource Acquirer &

Allocator

Culture

Builder

Chief

Administrator

& Strategy

Implementer

Process

IntegratorCoach

Crisis

Solver

Taskmaster

Spokesperson

Negotiator

Motivator

Arbitrator

Consensus

Builder

PolicymakerPolicy

Enforcer

Mentor

Head

Cheerleader

Numerous Roles of Strategic Leaders


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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

Leadership Activities of ChiefStrategy Implementer


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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

Role #1: Stay on Top of Whats Happening


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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

Role #2: Put Constructive Pressure onCompany to Achieve Good Results


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Treat employees with dignity and respectMake champions out of people who excel

Encourage employees to use initiative

Set stretch objectives and expectations that employees are

to give their bestUse tools of benchmarking, best practices, business process

reengineering, TQM, and Six Sigma quality to focusattention on continuous improvement

Use full range of motivational techniques

and compensation incentives to Inspire employees

Nurture a results-oriented climate

Enforce high-performance standards

Celebrate individual, group, company successes

Approaches to Instilling aSpirit of High Achievement


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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 requiringcross-functional collaboration

Stronger competencies and capabilities

can lead to a competitive edge over rivals

Role #3: Promote Stronger CoreCompetencies and Capabilities


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Role #4: Display Ethics Leadership andLead 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 tough

consequences for unethical behavior

Our ethics

code is...


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Set an excellent ethical example

Provide training to employees

about what is ethical and what isnt

Declare unequivocal support of ethics code

Act as final arbiter on hard calls

Remove people from key positions

if found guilty of a violation

Reprimand people lax in monitoring ethical compliance

Roles of a Manager inEnforcing Ethical Behavior


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Structuring an Ethics Complianceand Enforcement Process

Form an ethics committee to give guidance onethics matters

Appoint an ethics officer to head compliance effort

Establish an ethics hotline/Web site employees canuse to Anonymously report a possible violation

Get confidential advice on a

troubling ethics-related situation

Conduct an annual ethics audit

to measure extent of Ethical behaviorand

Identify problem areas


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Have mandatory ethics trainings for employees

Openly encourage employees toreport possible infractions via

Anonymous calls to a hotline or

Posting to a special company Web site

Conduct an annual audit to assess

Each managers efforts to uphold ethical standards

Actions taken by managers to remedy deficient conduct

Require all employees to sign a statement annuallycertifying they have complied with the ethics code

Make sure ethical violations carry appropriatepunishment, including dismissal for egregious violations

Key Approaches toEnforcing Ethical Behavior


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Test Your Knowledge

Assuming that a companys senior executives are really seriousabout enforcing high standards of ethical behavior, then they

probably need to consider doing all but which one of the following?A. Appointing a committee of high-profile employees to serve on a committee or

task force that is charged with (a) being champions of high ethical standards,

(b) finding ways to ingrain high ethical standards as a cultural norm, and (3)heading up the companys ethics enforcement process

B. Having mandatory ethics training programs for employees

C. Conducting an annual audit of each managers efforts to uphold ethical

standards and requiring formal reports on the actions taken by managers to

remedy deficient conduct

D. Requiring all employees to sign a statement annually certifying that theyhave complied with the companys code of ethics and making sure that

ethical violations carry appropriate punishment, including dismissal if the

violation is sufficiently egregious

E. Openly encouraging company personnel to report possible infractions via

anonymous calls to a hotline or e-mails sent to a designated address


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For Discussion: Your Opinion

What would your reaction be if your employer

required you to sign a statement annually certifying

that you have complied with the companys code of

ethics?


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Actions Demonstrating Commitmentto a Strategy of Social Responsibility

Craft a strategy that positively improves well-being ofemployees, environment, communities, and society

Use social and environmental metrics to evaluatecompany performance

Tie social and environmental performance to executivecompensation

Take special pains to protect environment

Take an active role in community affairs

Generously support charitable causesand projects benefiting society

Support workforce diversity and committo overall well-being of employees


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Role #5: Lead the Process ofMaking 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 andbehavior into better alignment with strategy

Making changes to pick up the pace when results fall

short of performance targets

Orgn culture stories

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