mrpronan.weebly.commrpronan.weebly.com/uploads/3/7/8/3/37835975/... · Web view"Southwest turns a plane faster than any other airline and they're making money. They're clearly market

2.6. Organizational Culture A relatively straightforward definition of organisational culture is one proposed by Hellreigel et al, (1992) who defines it as the philosophies, ideologies, values, beliefs, assumptions, expectations, attitudes and norms shared by the members of an organisation. It includes the following dimensions:

Observed behaviour when people interact and the language commonly used

The norms shared by working groups throughout the organisation The dominant values held by an organisation, such as product

quality or price leadership The philosophy that guides an organisation’s policy towards

employees and customers The rules that a newcomer must learn in order to become an

accepted member The feeling or climate conveyed in an organisation by the physical

layout and the way in which its members interact with customers or other outsiders.

Examples of the six dimensions of company culture

Observable patterns of behaviour: calling employees by their surname, casual dress, wearing a formal suit, trousers not allowed for women

Norms or standards: making decisions in teams, regular decision meetings, work late to finish a job

Main values: quality, excellence, speed of delivery Philosophy: environmentally friendly, customers always right,

wide range of products/services Rules: never leaving the office unattended, specified tea breaks,

attendance at social events Feeling or climate: friendly or distant, relaxed or stressful, creative

or oppressive

None of these dimensions alone represent the culture of an organisation but taken together they help to understand the meaning of the concept of organisational culture.

QuestionExplain the factors which can influence the development of an organisation's culture.

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How to evaluate and influence organisational Culture

Knowledge management culture is deep-seated and difficult to change, but leaders can influence or manage an organisation's culture. It isn't easy, and it cannot be done rapidly, but leaders can have an effect on culture.

 Some specific steps leaders can employ are:

What leaders pay attention to, what they measure and control.

Something as simple as what is emphasised or measured, over

time, can have an effect on an organisation's culture. One example

of this is an emphasis on form over substance. If leaders pay more

attention to form, an organisational culture can develop where

people start to believe that the substance of a recommendation is

less important than the way it is presented. Where do you think

people will focus their efforts once it becomes accepted that a slick

presentation is what the leaders are looking for? How could you go

about changing that aspect of the organisation's culture?

The way leaders react to crises says a lot about the organisation's

values, norms and culture. A crisis not only brings a great deal of

attention, it also generates a great deal of emotional involvement

on the part of those associated with the organization, particularly if

the crisis threatens the organization's survival. This increases the

potential for either reinforcing the existing culture, or leading to a

change in the culture. Such a crisis can provide an opportunity for a

leader to influence the organization's culture in either a positive or

a negative way.

Deliberate role modelling, teaching, and coaching. Nothing can

take the place of leaders "walking the walk." The personal example

of a strategic leader can send a powerful message to the members

of an organisation, particularly if it is ethical and consistent.

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Reinforcing that example with teaching and coaching will help

others to internalise the desired values and produce the desired

results.

The consequences of behaviour - what behaviour is rewarded and

what is punished - can significantly influence culture. If the

organisation reacts to new ideas by ridiculing the ideas and those

who propose them, it won't take long before people believe that

new ideas are not welcomed or desired. If you are an organisation's

strategic leader, what steps could you take to alter the reward

system to change this aspect of the culture?

Criteria for recruitment, selection, promotion, retirement and

excommunication. One of the powerful ways of changing an

organization's culture is through the type of people brought into,

retained and advanced in the organization. You should be able to

establish a desired culture base in an organization by bringing in

and advancing individuals with the values you want, and

eliminating those with undesired value bases.

Modifying the organization's basic structure may be a way of

changing the existing norms, and hence the culture. For example, a

culture of mistrust between the leaders and the members of an

organization may be exacerbated by a "line" structure that

discourages vertical communication.

Design of physical space, facades and buildings. Which

organization do you think will have a more open and participative

culture, one where top executives have reserved parking spaces,

top floor offices, a special elevator and an executive dining room,

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or one where the executive offices are not separated from the rest

of the company and executives park and eat in the same place as

their employees?

Stories about important events and people. This is a way that

culture is perpetuated in an organization, in that it helps define and

solidify the organization's identity.

Formal statements of organizational philosophy, creeds, and charts.

This is the way that leaders most often try and influence their

organizations, and encompasses the vision or mission statement

and statements of the organization's (or the leader's) values and

philosophy. By themselves, however, formal statements will have

little effect on the organization's culture. They must be linked to

actions to affect culture.

An understanding of culture, and how to transform it, is a crucial

skill for leaders trying to achieve strategic outcomes in the

management of knowledge.

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Culture Types One way of comparing and contrasting cultures was suggested in the work of Charles Handy (1976) who developed a typology of common culture types. He identified four theoretical cultural types as follows: Power, role, task and people, which are represented diagrammatically below.

Power OrientationThis type of organisation attempts to dominate its environment, and those who are powerful within this organisation strive to maintain absolute control over subordinates. Work is divided by function or product and the organisation structure tends towards the traditional framework, presented as a web structure.

The functions or departments are represented by lines radiating out from the centre, but the essential feature is that there are also concentric lines representing communications and power. The further away from the centre, the weaker the degree of power and influence. This structure is dominated from the centre and therefore is typical of small entrepreneurial organisations. Decisions can be taken quickly but the quality of the decision depends to a large extent upon the ability of managers in the inner circle who in turn, are dependent upon their affinity and trust, both within suppliers, customers and other key influencers. Employees are rewarded for effort, success and compliance with essential values. Change is very much determined by the central power source.

This type of culture places a lot of faith in the individual but this organisation operates with apparent disregard for human values and general welfare, and is highly competitive. It is often seen as tough or

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abusive, but may well suffer from low morale and high turnover in the middle layers as individuals fail or opt out of the competitive environment.

Power cultures are usually found in family run businesses, small companies with a dominant manager and entrepreneurial ventures.

Role Orientation An organisation that is role-oriented aspires to be as rational and orderly as possible. In contrast with the wilful autocracy of the power culture, there is preoccupation with legitimacy, loyalty and responsibility as the culture is built around defined jobs, rules and procedures generally, described as a bureaucracy. People fit into jobs and are recruited for this purpose, hence rationality and logic are at the hear of the culture which is designed to be stable and predictable.

This culture is represented by the greater temple design since the strengths of the organisation are designated to be in the pillars which are coordinated.

However, although the strength of the organisation is in the pillars, power lies at the top. There is a strong emphasis upon hierarchy and status with rights and privileges defined and adhered to. This culture is most often found in semi-state organisations and the civil service.

There are several strengths. As well as being designed for stability, the structure also allows for continuity and change of personnel, thus dramatic changes are less likely than more gradual ones. Conflict is regulated by rules and procedures, predictability is high and stability and respectability are valued almost as much as competence.

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High efficiency is possible is stable environments but Handy states that this structure is less suitable for dynamic environments or situations. A weakness is that communication goes up and down the structure but is less likely across the structure between departments or sections. Another possible weakness is that decisions are made at the top which may mean that leader satisfaction is high but that people lower down the hierarchy may feel frustrated and lacking in status. Task orientation In such organisations, functions and activities are all evaluated in terms of their contribution to organisational goals. Management in the task culture is concerned with the continuous and successful solution of problems, and performance is judged by the success of task outcomes. The culture is depicted as a net because, for particular problem situations, people and other resources can be drawn from various parts of the organisation on a temporary basis.

Once the problem is dealt with, individuals will move on to different tasks and, as a consequence, discontinuity is a key element.

The attainment of goals is the persuasive ideology in task-oriented organisations. Nothing is allowed to get in the way of task achievement. If individuals do not possess the necessary technical skills or knowledge, they are retrained or replaced. Emphasis is placed on a rapid and flexible organisation, hence project groups and collaboration between groups is commonplace. Expertise is the major source of individual power and authority, and will determine an individual’s relative power in a given situation.

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This culture is extremely adaptable and individuals retain a high degree of control over their work. It is successful in highly volatile or ever-changing environments.

One overriding feature of this culture is its cost to the organisation. Due to its reliance on meetings and discussion, experimentation and learning by trial, it is highly expensive to introduce and maintain over extended periods of time. Person Orientation This type of culture differs completely from the other three, since the organisation in this instance exists primarily to serve the needs of its members.

The organisation provides a service for individual specialists, which they could not provide for themselves. Authority in the environment sense is redundant although, where necessary, it may be assigned on the basis of task competency, but this practice is kept to a minimum.

Instead of formalised authority, individuals are expected to influence each other through example and helplessness. Consensus methods of decision-making are preferred as the figure illustrates, and roles are assigned on the basis of personal preferences and the need for learning and growth.

Individuals in this orientation are not easy to manage as there is little influence that can be brought to bear on them; being professionals, alternative employment is often all too easy to obtain. The psychological contract thus stipulates that the organisation is subordinate to the individuals and depends on the individual for its existence.

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Clearly, many organisations cannot exist with this kind of culture since organisations tend to have objectives over and above the collective objectives of those who comprise them. This culture is often found in clubs, societies, professional bodies and small consultancies.

Culture of Organisations

Name Description of Culture

Characteristics Advantages Disadvantages

Apollo Role Formalised, rule-based, focused on individual specialisms

Stable, predictable, visible

Stable, predictable

Zeus Power/Club Entrepreneurial, focused on single leader; autocratic style

Little structure to prevent dynamism

Little logic to what is done, total dependence on one person

Athena Task Group gathered with common purpose

Creative, dynamic

Expensive to maintain, needs constant stream of new tasks and highly qualified people

Dionysus Existential Organization that shares resources but where people are not dependent on each other

Allows each to be self-determining, little structure

Relies on individual responsibilities and risks, needs high level of personal development

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Question on comparing and contrasting cultures The unique culture that occurs within an organisation is determined by a wide range of factors including, for instance, the size, structure and nature of an organisation's business. The three different types of organisation listed below are each likely to exhibit a different cultural type:

1. E Company is a small entrepreneurial organisation run by an owner-manager.

2. F Company is a large bureaucratic organisation, structured by function.

3. G Company is a project-based organisation

Compare and contrast the types of culture that are most likely to be evident in each of the three companies.

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Four Types of Organizational Culture

According to Robert E. Quinn and Kim S. Cameron at the University of Michigan at Ann Arbor, there are four types of organizational culture: Clan, Adhocracy, Market, and Hierarchy.

Clan oriented cultures are family-like, with a focus on mentoring, nurturing, and “doing things together.”

Adhocracy oriented cultures are dynamic and entrepreneurial, with a focus on risk-taking, innovation, and “doing things first.”

Market oriented cultures are results oriented, with a focus on competition, achievement, and “getting the job done.”

Hierarchy oriented cultures are structured and controlled, with a focus on efficiency, stability and “doing things right.”

There’s no correct organizational culture for an arts organization. All cultures promote some forms of behaviour, and inhibit others. Some are well suited to rapid and repeated change, others to slow incremental development of the institution.

For example, Quinn and Cameron associate the lower two cultures (Hierarchy and Market) with a principal focus on stability and the upper two (Clan and Adhocracy) with flexibility and adaptability. A Hierarchy culture based on control will lead mainly to incremental change, while a focus on Adhocracy will more typically lead to breakthrough change.

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The right culture will be one that closely fits the direction and strategy of a particular organization as it confronts its own issues and the challenges of a particular time.

The importance of organisational culture: The values of a business establish the norms of behaviour of

staff. Culture determines the way in which company managers and

workers treat each other. A distinctive organisational culture can support a business's brand

image and relationships with customers. Culture determines not just how decisions are made but also the

type of strategic decisions that are taken. Organisational culture has been clearly linked to the economic

performance and long-term success of organisations.

Advantages of having a strong organisational culture: It creates a sense of belonging and security for staff because they

feel as if they are part of the business. This can help improve team work and to raise and increase motivation.

Mistakes and misunderstandings can be minimised since staff are familiar with the processes at work.

It promotes team cohesiveness whereby people do things because they simply feel that it is the right thing to do.

Problems associated with a culture gap, such as conflict between different groups are minimised.

Question on role culture and changing organisational culture

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ABC Company has for many years been a long standing household name, designing and manufacturing electrical appliances for use in the kitchen. It has developed a strong culture over the years which can be best typified as a role culture. However, this culture is now acting as a barrier to the company’s ability to adapt to become more flexible so that it is able to respond quickly to changes in the environment and initiatives taken by its competitors in product design.

In particular, the company is falling behind its new competitors when it comes to innovations in new product development and design. Effective new product development requires staff to work together across functional boundaries but this is becoming hard to achieve in ABC Company where people now fiercely protect their functional specialism and will only work on the tasks specified in their job descriptions.

a. Describe the key characteristics of a role culture, explaining why this type of culture is no longer appropriate for ABC Company

b. Recommend, with reasons, the type of culture to which ABC Company now needs to change

Culture ClashesCulture clash: Occurs when there is conflict between two or more cultures within an organisation. This may exist when there is a merger or acquisition and two firms are required to integrate, each with their own

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unique corporate culture.

Culture gap: The difference between the existing culture of an organisation and its desired culture. Management will use different strategies to reduce this gap.

Culture is everything," said Lou Gerstner, the CEO who pulled IBM from near ruin in the 1990s. When he took the helm in 1993, Big Blue was on the verge of being diced up division-by-division into a collection of "Baby Blues." Gerstner stopped that transformation but pushed another one -- a transformation of corporate culture. "I came to see in my time at IBM that culture isn't just one aspect of the game; it is the game," Gerstner wrote in Who Says Elephants Can't Dance?, a memoir of those turbulent turnaround days. 

Culture change may have brought IBM back from the brink, but does it always impact corporate effectiveness? Yes, it does, says Angelo Kinicki, professor of management at the W. P. Carey School of Business.  Kinicki teamed with researchers Chad Hartnell and Amy Yi Ou to see if different types of corporate cultures achieve the results that management gurus expect. In fact, the team found that sometimes cultures bring surprising outcomes. Even so, Kinicki said this study reaffirmed his belief that leaders "need to create a match between culture and corporate strategies." Our way of doing things In textbook terms, Kinicki defines culture as "the set of shared, taken-for-granted, implicit assumptions that a group holds and that determines how it perceives, thinks about and reacts to its environments." In simpler terms, he says it's "the shared beliefs, values and assumptions we have about where we work."  To evaluate culture's impact on organizational effectiveness, Kinicki and his colleagues started with what management scholars call the "competing values framework" (CVF), so named because it measures organizational values  along two axes: The horizontal axis evaluates whether companies are internally or externally focused. The vertical axis looks at degrees of flexibility and self-discretion versus stability and control.  

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Put together, the two axes form four quadrants into which the CVF framers placed four corporate culture types. For instance, flexible but internally focused organizations are said to have a "clan" culture that focuses on collaboration and teamwork, invests in employee development and empowerment and generally results in high employee morale and commitment. "Hierarchy" cultures also are internally focused, but more centered on stability. In such organizations, the focus is on control, the means used to achieve it is process orientation and the result, presumably, is an efficiently run organization.  In an "adhocracy" culture, the organization leans toward the flexibly end of the vertical axis, but it is more externally focused. The main goal of such an organization is to create; adaptability, creativity and agility are encouraged, and the result is a high degree of innovation. Finally, there's the "market" culture. It, too, is more externally focused, but it also tends to impose more control on employees. In market cultures, the focus is to compete, the means to succeed includes strong focus on customers, productivity and competitiveness, and the expected result is increased market share and profitability. Considering the CVF, the W. P. Carey School researchers wondered if market cultures really were more profitable and, given their customer focus, more likely to have high quality goods and services. Likewise, were clan cultures more likely to have higher employee satisfaction and commitment than adhocracy and market cultures? Would adhocracy cultures top clan and market cultures in producing  innovation?  Such were the questions the team sought to answer because, when they started the research, no one had accumulated research regarding the relationship between culture types and measures of organizational effectiveness. Rather, there were a lot of anecdotal and qualitative conclusions about this important relationship. The team wanted to let the data speak for itself.  Paper chase Kinicki and his team used meta-analysis, a statistical methodology in which researchers combine results from all available empirical studies to probe their hypotheses. Noting that there have been some 4,600 papers written on corporate culture since 1980, this team spent three years reading papers, pulling out data that applied to their investigation, assigning numeric codes to the relevant findings so that results could be statistically compiled and then crunching the numbers.

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 All told, the researchers coded results from 84 studies reporting results from a combined total of over 1,000 organizational units or samples. Meta-analysis requires a variety of studies on a topic to be meaningful and, as Kinicki points out, hierarchy cultures aren't as often studied as other cultures, so the team felt they had insufficient data to include such cultures in the final analysis.  But, the other cultures were mapped against nine measures of corporate effectiveness, including employee attitudes of job satisfaction and organizational commitment,  innovation, quality of products and services, and various measures of financial performance.  Market leaders "Clan cultures had a more positive relationship with employee attitude variables, like job satisfaction and organizational commitment. There, organizational theory worked," Kinicki says. Adhocracy cultures, where organizational theorists would expect to see the greatest amount of innovation, came in second behind market cultures for this measure. As predicted, market cultures did have strong correlations with quality of services and goods. Market cultures beat adhocracy cultures in this area, as expected, but they didn't significantly trump the quality results from clan cultures. The quality-oriented strength of clan cultures was an unanticipated finding. However, market cultures did have "significantly stronger positive associations with profit than clan and adhocracy cultures," the team found. In terms of generating targeted results and proving their effectiveness, "market cultures were the best," Kinicki says. "They had the highest innovation, the second highest quality of products, and they were the most profitable. That was a surprise to us."  But, it wasn't a complete surprise. Based on his research and consulting experience, Kinicki says he's seen companies with blends of cultures that should, according to organizational theorists, be in conflict, yet the companies thrive. He believes this occurs when companies learn to mesh different and conflicting culture types into a cohesive esprit de corps.  "Take Southwest Airlines," he says, noting that this carrier is one of the few, if not the only, major player in the airline industry that has managed to remain consistently profitable over the last decade . In fact, 2010 was

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the airline's 38th consecutive year of profitability, and the carrier also has had the lowest ratio of passenger complaints to the U.S. Department of Transportation among domestic carriers since 1987. Although clan and market cultures are supposed to clash according to the management experts, this company makes the two cultures work in harmony.  "Southwest turns a plane faster than any other airline and they're making money. They're clearly market focused," Kinicki notes, adding that most market-focused companies reward employees with individual bonuses. "But, Southwest is just the opposite. Their reward is profit-sharing, everybody working as a team … clan culture."  Kinicki believes this is how Southwest and other companies achieve stellar results. "Clan and market cultures are based on conflicting values, but we found they're actually correlated. What this means to me is that companies are figuring out how to overcome incompatible cultural values.  Southwest was able to get competing culture types to work together by making modifications in their policies and procedures," he explains. According to Kinicki, this is the "secret elixir" that could turn any company around. "You really don't want to have just one type of culture," he continues. "You want a combination, but the combination should be based on what the organization is trying to accomplish—it's corporate strategy.  So, if you're interested in innovation, encourage adhocracy and market cultures. Clan won't hurt you on that one either. But, if it's financial performance you seek, I'd say build a market culture, then add cultural characteristics associated with a clan culture to the mix." Rise and fall Building a culture could take three years or more, he adds. And, if you try to make your company change culture too quickly, it will cost you. As an example, Kinicki turns to Bob Nardelli, who was fired as CEO of Home Depot after alienating fellow business leaders and losing market share. "What was he known for at GE? Market culture and centralization of power and authority at the corporate offices. These practices are indicative of  market and hierarchy cultures. But Home Depot's founders believed in empowering the individual stores to make their own policy. Nardelli comes in and pushes his own strategy and guess what? It failed because the culture was inconsistent with his strategy." 

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According to Kinicki, strategies that conflict with culture are bound to fail. "Senior executives need to consciously discuss and evaluate the type of culture that will be consistent with strategies."  The same is true on a smaller scale for lower-level managers. "Culture exists at a department or unit level, so if I'm a unit manager, I can create and reinforce the culture I want," he continues.  Embedding a culture can be done in big and small ways, he adds. Incentives, for instance is one of the big sticks. Role modeling and story-telling are smaller ways unit-level leaders could influence culture change. "It's incremental," Kinicki says. While companies tend to have an over-riding culture, geographic locations, departments, functional areas or other units are likely to have subcultures, and that's just fine by Kinicki. "What we concluded from this study is that market cultures may be the best from a broad view, but it's really the interactions of the culture types that can lead to the highest success," he notes. The biggest error is under-appreciating corporate culture's importance or ignoring it all together when charting out strategy. "That's a mistake," Kinicki says, adding a popular Peter Drucker quote: "Culture eats strategy for breakfast." Bottom line

 Organizational theorists expect different types of corporate cultures to deliver differing results that reflect cultural focus.

According to organizational theory, market cultures are expected to be more profitable than others; clan cultures should have higher employee morale and commitment; adhocracy cultures should be more innovative; hierarchy cultures are expected to be more efficient.

Researchers at the W. P. Carey School of business examined results from dozens of studies to test organizational effectiveness at created the expected results from various culture types.

The team found that clan cultures did produce higher employee satisfaction than others, but market cultures produced the best financial results and innovation, as well as the second highest degree of product and service quality.

Consequences of Culture Clashes:Many businesses have turned themselves around, converting potential bankruptcy into commercial success. Very often this transformation has

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been achieved by changing the culture of the business. The existing culture of a business can become inappropriate and clash with new objectives needed to achieve growth, development and success. 

For example: A product-led business needs to respond to changing market

conditions by encouraging more staff involvement. A team or task culture may need to be adopted.

A merger or takeover may result in one of the businesses having to adapt its culture to ensure consistency within the newly created larger business unit.

Declining profits and market share may be the consequence of poorly motivated staff and a lack of interest in quality and customer service. A person culture may help to transform the prospects of this business.

Culture Clashes

PeopleSoft managing styles couldn't be more different

Benjamin Pimentel, Chronicle Staff Writer Wednesday, December 15, 2004

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What do you get when you combine a company run by an Armani-clad executive known for take-no-prisoners tactics with a firm led by a fatherly founder who hands out bagels and lets his workers wear flannel to work? That will be one of next year's biggest questions in Silicon Valley as Oracle Corp. absorbs PeopleSoft Inc.

The $10.3 billion merger will turn the Redwood City firm into the second- largest business applications software company in the world with a bigger and heftier army of engineers and salespeople serving a broader base of corporate customers.

The new firm will find itself going head to head with other tech giants, led by Germany's SAP, in the market for software used by businesses for such tasks as maintaining payroll and keeping track of financial transactions. But for the merger to succeed, Oracle faces the tough task of creating a cohesive company out of two firms with distinct, even contradictory, cultures -- and it must do this after a bitter 18-month hostile takeover battle.

"This is a marriage of convenience, not of mutual desire," said analyst Erin Kinikin of Forrester Research. "I think pretty quickly, the PeopleSoft employees are going to divide themselves into (those who say) 'I think I can work for Oracle' and 'I don't ever want to work at Oracle.' "

Oracle executives led by Chief Executive Officer Larry Ellison have repeatedly assured PeopleSoft customers that the new company will continue to support their information technology systems.

He has also promised PeopleSoft employees that they will be treated fairly in the transition. He specifically cited the importance of PeopleSoft's engineers and sales force who, analysts say, will be key in preventing a mass exodus of PeopleSoft customers. But absorbing PeopleSoft employees into Oracle won't be easy.

Ellison is known for his hyper-aggressive management style while PeopleSoft founder and outgoing CEO Dave Duffield was known for his casual and paternalistic approach. He signed his company e-mails with his initials, "DAD,” and helped form a foundation to help abandoned dogs and cats. He choked back tears Monday as he announced the sale to his employees.

"They are two different cultures," said Richard Stiller, a Cupertino human resources consultant who has been involved in more than 20 mergers. Referring to Oracle, he said, "They're the barbarians. It's take no prisoners. A guy like Ellison never lets them relax."

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On the other hand, he said, PeopleSoft is much like the old Hewlett- Packard Co., whose founders popularized the famed HP Way, which put heavy emphasis on the welfare of employees.

Kinikin said, "I think a lot of those people who wanted to manage by walking around and having bagels every Friday are probably going to leave -- because that's not the Oracle way. The Oracle way is about survival of the fittest."

But Oracle President Charles Phillips noted that many PeopleSoft employees came from Oracle, so they would be familiar with the Redwood City Company’s culture.

"People get on board once the new team has been formed," he told The Chronicle on Monday. "People get on board and they want to be part of it."

A major drawback to Oracle-PeopleSoft merger is the little time the two firms have had to plan their marriage, compared with the last major Silicon Valley merger, HP's 2002 purchase of Compaq Computer. In that transaction, a team of more than 1,000 HP and Compaq employees spent more than six months planning virtually every detail of the merger.

"It's better to take the pain up front," said HP Chief Information Officer Gilles Bouchard, who was involved in that process. "It made the integration easier."

The merits of that friendly merger are still being debated, and some analysts point out that the nasty public battle that marked Oracle's pursuit of PeopleSoft is bound to make that marriage tougher to pull off. Oracle's biggest challenge, Stiller said, is keeping PeopleSoft's best and brightest.

"When you lose the installed memory of all these people and their relationships with customers, the biggest disaster is that PeopleSoft employees get so turned off by Oracle and a number of them leave and Oracle won't be able to pick up that business effectively," he said.

That would give more openings to Oracle's rivals, led by SAP, which posted robust profits over the past 18 months, largely due to the confusion around the merger battle. The two firms are slugging it out for big contracts with major businesses that use their software suites to help manage their back- office operations.

"I think we can expect SAP to have another good quarter," Kinikin said.

Even smaller companies see opportunities in the uncertainty over the Oracle-PeopleSoft merger.

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"It's good for us," said Michael Lodato, chief marketing officer of QAD Inc., which makes software applications for manufacturing companies. "There is always initial confusion when companies come together that we have been able to capitalize on."

Kinikin said "visible customer defections," involving big PeopleSoft customers such as Verizon Communications or Cox Communications, will be the key indicators that the merger is failing. But Lodato said he expects PeopleSoft customers to take a wait-and-see attitude and Ellison to do everything he can to keep them. "Larry is probably doing a fine job making sure that somebody is picking up the phone," he said. "He certainly has sent the message saying, 'Hey, don't worry. I'm going to be there for you.' "

Questions

(1) What does a take no prisoners’ philosophy mean?

(2) Oracle PeopleSoft will become the second largest business Applications software company but who will remain in the No.1 position?

(3) What are the two major problems that this merger faces?

(4) What two groups of employees at PeopleSoft are likely to feel greater job security?

(5) Contrast the management styles of the two CEOs.

(6) Oracle President Charles Phillips believes that the merger will not be as difficult to realize as some people believe. Why?

(7) How does the Oracle PeopleSoft merger process compare to HP and Compaq’s merger?

(8) According to HP Chief Information Officer Gilles Bouchard, what was PeopleSoft’s greatest asset?

(9) Why did SAP’s profit rise in the last 18 months?

(10) How will one determine whether the merger has succeeded in one year’s time?

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