VI. managing corporate culture
Learning objective 6
Identify strategies for effectively managing corporate culture. (Text pages 160-167)
A. The word “culture” has many meanings.
1. culture is the set of important
understandings (often unstated) that members of a community share.
2. In an organization, culture is similar to a human’s personality.
3. An organization’s culture is transmitted through:
a. long-standing, unwritten rules
b. shared standards
c. standards for social etiquette and demeanor
d. established customers for relating to peers, subordinates, and superiors
e. other traditions
4. corporate culture communicates how people in an organization should behave by establishing a value system conveyed through rites, rituals, myths, legends, and actions.
5. Or, more simply, corporate culture means “the way we do things around here.”
B. Cultural Forms of Expression
1. Culture has two basic components;
a. substance, the meanings
contained in its values, norms, and beliefs
b. forms, the practices whereby these meanings are expressed, affirmed, and communicated to members
C. How Does Culture Originate?
1. The cultures of some organizations originate with one person who provides a living example of the major values of the organization.
a. However, more than half of an
organization’s culture develops in response to the environment and the needs of employees.
b. The four distinct factors discussed below contribute to an organization’s culture.
2. History
a. Culture is built on awareness of the organization’s history.
b. Humans tend to embrace beliefs and values and to resist changes.
3. Environment
a. Environment shapes culture
because all organizations interact with their environments.
b. Example: deregulation of the telecommunications industry in the 1980s.
4. Staffing
a. Organizations tend to hire, retain, and promote people who are
similar to current employees.
b. This organization “fit” ensures that current values are accepted and challengers are screened out.
c. Example: Medtronic’s leader Bill George
5. Entry socialization
a. The organization’s values, norms, and beliefs are rarely written down.
b. New employees must be taught the culture.
c. entry socialization is the adaptation process by which new employees are introduced and indoctrinated into the organization.
D. Strong and Weak Corporate Cultures
1. A strong corporate culture:
a. is clearly defined
b. reinforces a common understanding about what is important
c. has the support of management and employees
2. In weak cultures, individuals often act in ways that are inconsistent with the company’s way of doing things.
Progress Check Questions (Text page 163)
9.  Define the term “culture.”
10. Where does organizational culture originate?
11.  Explain the four distinct factors that contribute to an organization’s culture.
12.  Summarize the characteristics of a weak organizational culture.
E. Identifying Culture
1. Researchers have identified seven characteristics that define an organization’s culture:
a. individual autonomy
b. structure
c. support
d. identification
e. performance-reward
f. conflict tolerance
g. risk tolerance
2. Culture can be grouped into one of four basic types, determined by:
a. the degree of risk associated with the organization’s activities
b. the speed with which the
organization and its employees get feedback on their decisions
3. The tough-person, macho culture is characterized by individualists who regularly take high risks and get quick feedback on whether their decisions are right or wrong.
a. Teamwork is not important, and the value of cooperation is
ignored.
b. People who need to gamble do well in this culture.
4. The work-hard/play-hard culture encourages employees to take few risks and to expect rapid feedback.
a. Activity and persistence are the keys to success.
b. Team players who are friendly and outgoing thrive.
5. The bet-your-company
culture requires big-stake
decisions with considerable time
passing before the results are known.
6. The process culture involves low risk with little feedback.
a. Employees must focus on how things are done rather than on the outcomes.
b. In this atmosphere employees
become cautious and protective.
7. Organizational subcultures
a. Organizations often have multiple subcultures.
b. The values, beliefs, and practices can vary from one part of the
organization to the other.
c. Even with different subcultures, some values are consistent.
8. Incompatible cultures are one reason promising mergers fail.
Progress Check Questions (Text page 166)
13.  Which seven characteristics capture the essence of an organization’s culture?
14.  Explain the four basic types of organizational culture.
15.  Think of the organization you currently work for (or one you have worked for in the past.) Which of the four basic types of culture most accurately describes that organization? Provide an example to support your selection.
16.  Define the term “organizational subculture.” / PowerPoint 6-16
Managing Corporate
Culture
(Refers to text pages 160-161)
lecture link 6-3
The Culture of the Real Rocket Scientists
For 40 years the Jet Propulsion Laboratory has planned interplanetary missions for NASA guided by a few key rules. See complete lecture link on page 6.32 of this manual.
PowerPoint 6-17
How Does Culture
Originate?
(Refers to text pages 161-163)
TEXT Figure 6.11
Characteristics of a Strong Corporate Culture
(Text page 163)
TEXT Figure 6.12
Characteristics of a Weak Corporate Culture
(Text page 163)
PowerPoint 6-18
Identifying Culture
(Refers to text pages 164-165)
TEXT Figure 6.13
Generic Types of
Organization Culture
(Text page 164)
CASE INCIDENT 6.2
The Way We Do Things (Text page 166)
The Fitzgerald Company has been the industry leader in producing consumer products for years. However, sales and market shares have been in decline now for the past several. The company is now considering changing the company culture to redefine itself and regain the success it has enjoyed in the past.
1. Describe, in general terms, the corporate culture at Fitzgerald Company.
The corporate culture for the Fitzgerald Company has been one of work-hard-play-hard, where activity is the key to success. Rewards accrue for persistence and the ability to find a need and fill it. Because of the need for volume, team players who are friendly and outgoing (sales types) thrive.
2. What’s wrong with a business philosophy based on the belief “that customer relations and a strong selling orientation are the keys to business success”?
Meeting the needs of the customer is essential to success in areas such as product design, implementation, and delivery. Creating and selling products that please the customer impacts the company’s total revenue. However, revenue is not the same thing as profit. Profit is what is left after costs have been subtracted from revenue. Unless a product can be produced in a cost-effective way, more sales won’t do a thing for profit.
3. What does Valerie mean when she says Fitzgerald Company may have to change its culture? What are some of the necessary changes?
For the Fitzgerald Company, its corporate culture has been successful in the past. However, losses in sales and market shares have now prompted its president to look at how the company culture affects sales and expenses. Changing a company culture will be a difficult process for many reasons.
Based on research, the Fitzgerald Company may have to change several characteristics of the company to foster a new culture. These characteristics include individual autonomy (degree of responsibility/ independence for individuals in the organization), structure (rules and regulations), support (managers to subordinates), identification (employee identification to the organization as a whole), performance-reward (rewards for performance), conflict tolerance (willingness to hones and open about differences), and risk tolerance (degree at which employees are encouraged to be aggressive/innovative and risk seeking).
4. Discuss the problems the company may encounter in attempting to implement changes.
The biggest challenge the Fitzgerald Company will face is the length of time it will take to implement and change its corporate culture. This process usually takes 6 to 15 years. It is also expensive. Because of the cost, time, and difficulty in changing culture, some might argue that it is easier to change the people within the organization. This assumes businesses promote people who fit their organization, and the easiest way to change the organization’s culture is to change the people. However, it makes more sense to strengthen or fine-tune the current cultural structure.
F. Changing Culture
1. It usually takes from 6 to 15 years to successfully change organizational culture.
2. According to Allan Kennedy, there are only five reasons to radically change organization culture.
3. It is possible to strengthen or fine-tune the current culture without wholesale cultural changes.
4. The easiest if not the only way to change an organization’s culture is to change its people. / PowerPoint 6-19
Changing Culture
(Refers to text pages 166-168)
Bonus Case 6-2
Turning Tyco Around
After Tyco’s former CEO Dennis Kozlowski’s conviction for looting $600 million from the company, Ed Breen was brought in to rescue the troubled company. See complete case, discussion questions, and suggested answers on page 6.41 of this manual.