Corporate Culture
Article Index
Corporate Culture
Expert Opinion
Survey and Research
Example Cases
Measure and Evaluate
Self-Assessments
Summary
References

Expert Opinion

High performance cultures are keenly sought after by many organisations. Dr. Howard Risher, a management consultant based in the United States, cites Dave Ulrich, who identified practices that enhance employee emotional commitment and lead to organisational success. [2, 3] Ulrich defined emotional commitment as “engagement or dedication.” In addition, he believed that committed employees tend to strongly identify with the goals of an organisation, and that they are proud to work in it. He suggested the following elements for building employee commitment:

 

  • Vision – employees want to find vision or purpose in their work
  • Opportunity – employees want the opportunity to learn, grow, advance, and become more skilled in their jobs
  • Impact – employees enjoy working in an environment in which they can see the impact of their efforts
  • Community – workplaces are a social environment, and employees tend to be more committed when they feel part of a team, and work with people with whom they feel connected
  • Communication – well informed people tend to become more committed
  • Entrepreneurship – employees tend to be more committed when they have some degree of control over how they do their work
  • Incentives – money and rewards become stronger motivators when tied to specific goals.

The behaviour of the leaders of an organisation is of prime importance for developing a consistent corporate culture. Warwick Cavell, managing director of Australian consulting firm Linnergy, believes that an organisation’s culture is represented by the sum of the behavioural norms of its various work groups. [4] Culture is embodied in the phrase “this is the way we do things around here,” or more precisely, organisational culture is “what people perceive they have to do to fit in, be accepted, and rewarded around here.” Culture defines accepted behaviour. Of course, this behaviour underpins the performance throughout the organisation (i.e. what gets done and how it gets done) – and this in turn reflects upon the organisation’s reputation. In basic terms, managing an organisation’s culture involves the management of the day-to-day messages that need to be conveyed through consistent and aligned behaviour, systems, and symbols.

New Leaders and New Cultures

The culture of an organisation basically relates to the way that people behave as they engage in their work within that organisation. A workplace may be people-oriented or task-oriented, consultative or authoritative, customer-focused or process-focused. According to Donna Van Alstine, senior vice-president of Canadian Right Management Consultants, organisations must be able to clearly articulate their culture to effectively manage, and in order to hire the most appropriate staff. [5] Introducing a new leader into an organisation is a risky business. A survey of 826 human resource directors by Right Management in 2003 revealed that about 40 per cent of new leaders fail to meet the expectations of management. The main reasons given for this failure were:

  • an inability to build effective relationships with peers and subordinates (82%), and
  • a lack of internal political skills (50%).

Both of these issues are specifically connected with a failure to assimilate successfully, which means an inability to mesh with an organisation’s existing culture. The results of such a mismatch can be expensive, with the cost of replacing a failed appointment being estimated as from 1.5 to 3 times the employee’s annual salary. Other detrimental effects were also reported, including the impact on the organisation of below-par performance, tactical and strategic errors, decreased employee morale, and increased turnover. Van Alstine suggested that new leaders need “local” guides or mentors to help them to interpret an organisation’s current culture. Otherwise, without realising it, new leaders can easily find themselves challenging an organisation’s deeply rooted customs, practices or attitudes.

A guide can provide new executives with answers to questions such as:

  • How do people get things done? Are formal chains of command used – or informal networks?
  • How does your boss’s boss make decisions?
  • How does the organisation communicate? What is the most effective way of getting a message across?
  • Are top-level managers visible and accessible?
  • Does the organisation have a short-term or a long-term perspective?
  • How are inconsistencies in performance dealt with? Are they tolerated?
  • Are people rewarded for thinking “outside the box” – i.e. for thinking laterally?
  • How are differences of opinion dealt with: openly, covertly – or are they just ignored?
  • What are the prevailing social traditions, and how do these affect work? What is expected in terms of holiday gifts, social events, etc?
  • What are the landmark moments, stories or legends that serve as touchstones for people?
  • What are the values of the organisation or business unit? (Creativity? Risk taking? Loyalty? Harmony? Quality? Efficiency?)

Healthy and Unhealthy Cultures

Culture plays an important role in organisational performance. Booz Allen Hamilton principals Georges Chehade (London), Decio Mendes (New York), and Deanna Mitchell (Chicago) believe that most organisations fit into one of the cultural categories contained in Figure 1 below: [6]

corporate_culture_figure_1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The four “unhealthy” categories describe organisations that are unable to operate effectively, while the three “healthy” categories relate to more desirable cultures. Chehade and colleagues describe a systematic methodology for accomplishing cultural change, one which is based on specific, actionable adjustments to each of the following organisational components:

  • Decision rights, i.e. the underlying processes through which decisions are made, and by whom
  • Information relating to determining how and what performance criteria are measured and how knowledge is transferred
  • Motivators, i.e. the objectives, incentives, and career alternatives available to employees, and what factors within the organisation really influence employees, and
  • Structure, or the overall organisational model employed.

Chehade believes that “the most resilient and consistently successful companies have discovered that the devil is in the details of their organisation and its culture. For these successful organisations, cultural change isn’t some amorphous, feel-good exercise – it’s a tried and true method for delivering real, measurable results.” [6]

The Seven S’s Methodologies

Both the culture and the operating systems of an organisation need to be carefully integrated to support its strategic mission. Philip Atkinson director of Learning Strategies Ltd., and Dara Clarke, CEO of the White Clarke Group, suggest that rapid changes in business performance can only be effectively achieved by carefully crafting a strong cultural foundation that underpins powerful processes and systems. [7] The “Seven S’s methodology” was developed by McKinsey’s Consultants, who understood that organisations are made up of both business and social systems, and that these systems need to be viewed concurrently.

The Seven S’s methodology addresses:

  • The hard “S’s” of strategy, structure and systems, and
  • The soft “S’s” of style of management, staff, skills, and shared values.

A weak or ill-defined culture creates indecision for staff and managers alike; it also tends to create an ambiguity of values and focus. In contrast, a strong, positive culture leads to clarity and precision for employees.

Atkinson and Clarke suggest the following questions when exploring potential gaps in business plans: [7]

  1. Strategy: Have the strategic objectives been clearly articulated? Are all staff engaged or committed towards achieving the organisation’s strategic priorities? Do they understand what is expected of them? Have priorities been appropriately shared across business functions?
  2. Structure: Are there any structural factors that hinder the achievement of strategic objectives? Do current reporting relationships delay—or even damage—decision-making processes?
  3. Systems: Are processes under-performing and putting customer services/business at risk? What systems, protocols or technical solutions require significant investment to outperform competitors?
  4. Staff: How can developing and experienced staff be best used? How can best practices be transferred throughout the organisation?
  5. Skills: How can core competencies be capitalised upon to improve customer satisfaction and profitability? How can the synergies of cross-functional teams be maximised?
  6. Style: How can managers/supervisors become facilitators of change? Does the organisation’s management style encourage growth, engagement, and trust? Does it address performance issues?
  7. Shared values: In what ways might the future of the business be enriched through the use of shared values? How might the organisation grow while working closely with suppliers and customers?

Rick Filsinger and Megan Kreller, from the Walter Fedy Partnership in Kitchener, Canada, believe that developing a meaningful and attractive corporate culture is the best way to retain talented employees. [8] If the organisation’s culture is based on the values held by its employees, they will be more likely to identify with that culture and respect it. The development of such a culture requires an effort to really get to know employees. Once the values have been identified, they need to be continually nurtured to retain the desired corporate identity. All future decisions should relate back to established cultural principles. This will ensure that all matters touching the organisation will also reflect its corporate culture.

Cultural Audits

In his role as senior manager at PricewaterhouseCoopers in Johannesburg, South Africa, Sean De La Rosa believes that cultural audits are useful ways of assessing the integrity and ethical values of boards of directors. [9] This is important because these factors are the building blocks of an organisation’s culture, and have a strong influence how staff will conduct themselves. A sound organisational culture encourages its employees to do the right thing, both legally and morally. This also creates a compliance-supporting culture. A sound organisational culture also helps staff to navigate “grey areas” in which there are no specific compliance rules or guidelines by promoting the willingness of staff to seek assistance and to report issues to management before reaching the point of no return.

Gauging the effectiveness of an organisation’s culture can often be a complex exercise, since the causes of control breakdowns are commonly attributable to a combination of factors. Cultural surveys should be applied across all levels of the business to gauge the organisation’s ethical climate. For example, the following five categories may be used to assess an organisation’s cultural strength (substitute cultural statements that are relevant to your organisation as appropriate):

  1. Lack of awareness/understanding of business risks throughout the enterprise;
  2. The perspectives of business risk and control by leadership are not aligned with the perspectives of front-line employees (i.e. there is a communication disconnect between the leadership and the workforce);
  3. Inability to implement risk management strategies with action plans that align key business initiatives with systemic risks;
  4. Inappropriate ethics and compliance practices;
  5. Poor people-related strategies.

Results can be consolidated and graphed to identify areas within an organization’s culture that require attention, as depicted in Figure 2, below adapted from De La Rosa:

corporate_culture_-_figure_2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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