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16e-Chapter13

The biggest levers youve got to change a company are strategy, structure, and culture. If I could pick two, Id pick strategy and culture.

Wayne Leonard, CEO Entergy Corp.


An organi ations capacity to e!ecute its strategy depends on its hard infrastructure " its organi ation structure and systems " and on its soft infrastructure " its culture and norms.

Amar Bhide Chapter 13 Roadmap

Instilling a Corporate Culture that Promotes Good Strategy Execution Identifying the Key eatures of a Company!s Corporate Culture Strong "ersus #ea$ Cultures %nhealthy Cultures &igh-Performance Cultures 'dapti"e Cultures Culture( 'lly or )*stacle to Strategy Execution+ Changing a Pro*lem Culture Grounding the Culture in Core ,alues and Ethics Esta*lishing a Strategy-Culture it in -ultinational Companies

Chapter 13 Roadmap

.eading the Strategy Execution Process Staying on /op of &o0 #ell /hings 're Going Putting Constructi"e Pressure on the )rgani1ation to 'chie"e Good 2esults and )perating Excellence .eading the 3e"elopment of 4etter Competencies and Capa*ilities 3isplaying Ethical Integrity and .eading Social 2esponsi*ility Initiati"es .eading the Process of -a$ing Correcti"e 'd5ustments #efining $haracteristics of $orporate $ulture Core "alues6 *eliefs6 and *usiness principles Ethical standards )perating practices and *eha"iors defining 7ho0 0e do things around here8 'pproach to people management 7Chemistry8 and 7personality8 permeating 0or$ en"ironment )ft-told stories illustrating Company!s "alues

.ecturer( /herese 4aptiste-Cornelis

16e-Chapter13 4usiness practices /raditions %eatures of the $orporate $ulture at &al'(art


3edication to customer satisfaction 9ealous pursuit of lo0 costs rugal operating practices Strong 0or$ ethic 2itualistic Saturday morning meetings Executi"e commitment to ,isit stores .isten to customers Solicit employees! suggestions %eatures of the $orporate $ulture at )eneral *lectric

&ard-dri"ing6 results-oriented atmosphere pre"ails 'll *usinesses are held to a standard of *eing :1 or :; in their industries as 0ell as achie"ing good *usiness results Extensi"e cross-*usiness sharing of ideas6 *est practices6 and learning 2eliance on 70or$out sessions8 to identify6 de*ate6 and resol"e 7*urning issues8 Commitment to Six Sigma <uality Glo*ali1ation of the company %eatures of the $orporate $ulture at +ccidental ,etroleum

Entrepreneurship of employees Empo0ered employees are encouraged to 4e inno"ati"e Excel in their fields of speciali1ation 2espond =uic$ly to strategic opportunities Creati"ely apply state-of-the-art technology in a manner to promote operating excellence %eatures of the $orporate $ulture at -ordstroms

3eli"er exceptional customer ser"ice to customers Company motto 72espond to %nreasona*le Customer 2e=uests8 )ut-of-the-ordinary customer re=uests "ie0ed as opportunities for 7heroic8 acts Promotions *ased on outstanding ser"ice Salaries *ased entirely on commission Identifying the .ey %eatures of $orporate $ulture

.ecturer( /herese 4aptiste-Cornelis

16e-Chapter13

A companys culture is mani ested in . . .


,alues6 *usiness principles6 and ethical standards preached and practiced *y management 'pproaches to people management and pro*lem sol"ing )fficial policies and procedures Spirit and character permeating 0or$ en"ironment Interactions and relationships among managers and employees Peer pressures that exist to display core "alues Its re"ered traditions and oft-repeated stories Its relationships 0ith external sta$eholders &here #oes $orporate $ulture $ome %rom/

ounder or early leader Influential indi"idual or 0or$ group Policies6 "ision6 or strategies )perating approaches Company!s approach to people management /raditions6 super"isory practices6 employee attitudes )rgani1ational politics 2elationships 0ith sta$eholders

0ole of 1tories at (icrosoft +ft'told stories focus on . . . .ong 0or$ hours of programmers Emotional pea$s and "alleys in encountering and o"ercoming coding pro*lems Exhilaration of completing a complex program on schedule Satisfaction of 0or$ing on cutting-edge pro5ects 2e0ards of *eing part of a team responsi*le for a popular ne0 soft0are program /radition of competing aggressi"ely

!o" #s a Companys Culture $erpetuated%


Selecting ne0 employees 0ho 0ill 7fit8 in Systematic indoctrination of ne0 employees Senior management efforts to reinforce core "alues6 *eliefs6 principles6 $ey operating practices Story-telling of company legends Ceremonies honoring employees 0ho display cultural ideals ,isi*ly re0arding those 0ho follo0 cultural norms

&orces Causing Culture to E'ol'e

>e0 challenges in mar$etplace 3

.ecturer( /herese 4aptiste-Cornelis

16e-Chapter13 2e"olutionary technologies Shifting internal conditions Internal crisis /urno"er of top executi"es ' ne0 CE) 0ho opts to change things 3i"ersification into ne0 *usinesses Expansion into foreign countries 2apid gro0th that in"ol"es adding many ne0 employees -erger 0ith or ac=uisition of another company $ompany 1ubcultures2 ,roblems ,osed by -ew Ac3uisitions and (ultinational +perations

,alues6 *eliefs6 and practices 0ithin a company can "ary *y 3epartment Geographic location 4usiness unit Su*cultures can clash if /hey em*race conflicting *usiness philosophies Key executi"es use different approaches to people management 3ifferences *et0een a company!s culture and recent ac=uisitions ha"e not *een ironed out Existence of su*cultures does not preclude important areas of commonality and compati*ility *eing esta*lished in different countries

(ypes o Corporate Cultures


$haracteristics of 1trong $ulture $ompanies Conduct *usiness according to a clear6 0idely-understood philosophy Considera*le time spent *y management communicating and reinforcing "alues ,alues are 0idely shared and deeply rooted &a"e a 0ell-defined corporate character6 reinforced *y a creed or "alues statement Careful screening?selection of ne0 employees to *e sure they 0ill 7fit in8

!o" )oes a Culture Come to Be *trong%


.eader 0ho esta*lishes "alues and *eha"iors consistent 0ith Customer needs Competiti"e conditions Strategic re=uirements ' deep6 a*iding commitment to espoused "alues6 *eliefs6 and *usiness philosophy Practicing 0hat is preached@ Genuine concern for 0ell-*eing of Customers

.ecturer( /herese 4aptiste-Cornelis

16e-Chapter13

Employees Shareholders

Characteristics o Wea+ Culture Companies


.ac$ of a 0idely-shared core set of "alues e0 *eha"ioral norms e"ident in operating practices e0 strong traditions >o strong sense of company identity .ittle cohesion among departments #ea$ employee allegiance to company!s "ision and strategy

Characteristics o ,nhealthy Cultures


&ighly politici1ed internal en"ironment Issues resol"ed on *asis of political clout &ostility to change '"oid ris$s and don!t scre0 up Experimentation and efforts to alter status =uo discouraged 7>ot-in"ented-here8 mindset B company personnel discount need to loo$ outside for 4est practices >e0 or *etter managerial approaches Inno"ati"e ideas 3isregard for high ethical standards and o"er1ealous pursuit of 0ealth *y $ey executi"es $haracteristics of 4igh',erformance $ultures

Standout cultural traits include ' can-do spirit Pride in doing things right >o-excuses accounta*ility ' results-oriented 0or$ climate in 0hich people go the extra mile to achie"e performance targets Strong sense of in"ol"ement *y all employees Emphasis on indi"idual initiati"e and creati"ity Performance expectations are clearly identified for all organi1ational mem*ers Strong *ias for *eing proacti"e6 not reacti"e 2espect for the contri*utions of all employees

!allmar+s o Adapti'e Cultures


#illingness to accept change and em*race challenge of introducing ne0 strategies 2is$-ta$ing6 experimentation6 and inno"ation to satisfy sta$eholders Entrepreneurship is encouraged and re0arded

.ecturer( /herese 4aptiste-Cornelis

16e-Chapter13 unds pro"ided for ne0 products >e0 ideas openly e"aluated Genuine interest in 0ell-*eing of all $ey constituencies Proacti"e approaches to implement 0or$a*le solutions

)ominant (raits o Adapti'e Cultures


Any changes in operating practices and *eha"iors Must not compromise core "alues and long-standing *usiness principles Must be legitimate in the sense of not ha"ing an inappropriate or unfair impact on the *est interests of $ey sta$eholders Customers Employees Shareholders Suppliers Communities $ulture2 Ally or +bstacle to 1trategy *!ecution/

' company!s culture can contribute to B or hinder B successful strategy execution ' culture that promotes attitudes and *eha"iors that are 0ell-suited to first-rate strategy execution is a "alua*le ally in the strategy execution process ' culture 0here attitudes and *eha"iors impede good strategy execution is a huge o*stacle to *e o"ercome &hy $ulture (atters2 5enefits of a Tight $ulture'1trategy %it

' culture that encourages actions and *eha"iors supporti"e of good strategy execution Pro"ides employees 0ith clear guidance regarding 0hat *eha"iors and results constitute good 5o* performance Creates significant peer pressure among co-0or$ers to conform to culturally accepta*le norms ' culture im*edded 0ith values and behaviors that facilitate strategy execution promotes strong employee commitment to the company!s ,ision Performance targets Strategy +ptimal +utcome of a Tight $ulture'1trategy %it

' good 5o* of culture-*uilding *y managers Promotes can-do attitudes 6

.ecturer( /herese 4aptiste-Cornelis

16e-Chapter13 Encourages acceptance of change Instills strong peer pressure for strategy-supporti"e *eha"iors Enlists enthusiasm and dedicated effort to achie"e company o*5ecti"es

The Perils of Strategy-Culture Conflict


Conflicts *et0een culturally-appro"ed *eha"iors and *eha"iors needed for good strategy execution send mixed signals Should employees *y loyal to the culture and company traditions and resist actions and *eha"iors promoting *etter strategy execution+ Or should they support the strategy *y engaging in *eha"iors that run counter to the culture+ $reating a 1trong %it 5etween 1trategy and $ulture

-enu o Culture.Changing Actions


-a$e a compelling case 0hy a ne0 cultural atmosphere is in *est interests of *oth company and employees Challenge status =uo Create e"ents 0here employees must listen to angry $ey sta$eholders Cite 0hy and ho0 certain *eha"ioral norms and 0or$ practices in current culture pose o*stacles to good execution of ne0 strategic initiati"es Explain ho0 ne0 *eha"iors and 0or$ practices to *e introduced 0ill *e more ad"antageous and produce *etter results

*u/stanti'e Culture.Changing Actions


2eplace $ey executi"es strongly associated 0ith old culture Promote indi"iduals 0ho ha"e desired cultural traits and can ser"e as role models 'ppoint outsiders 0ho ha"e desired cultural attri*utes to high-profile positions Screen all candidates for ne0 positions carefully6 hiring only those 0ho fit in 0ith the ne0 culture -andate all company personnel attend culture-training programs to learn more a*out ne0 0or$ practices6 operating approaches6 and *eha"iors 1ubstantive $ulture' $hanging Actions 6continued7

Push hard to implement ne0-style 0or$ practices and operating procedures 3esign compensation incenti"es to re0ard teams and indi"iduals 0ho display the desired cultural *eha"iors

.ecturer( /herese 4aptiste-Cornelis

16e-Chapter13 Grant generous pay raises to indi"iduals 0ho lead the 0ay in adopting desired 0or$ practices6 displaying ne0-style *eha"iors6 and achie"ing pace-setting results 2e"ise policies and procedures in 0ays to dri"e cultural change

*ym/olic Culture.Changing Actions


.ead *y example B #al$ the tal$ Emphasi1e frugality Eliminate executi"e per$s 2e=uire executi"es to spend time tal$ing 0ith customers Ceremonial e"ents to praise people and teams 0ho 7get 0ith the program8 'lter practices identified as cultural hindrances ,isi*le a0ards to honor heroes )rounding the $ulture in $ore 8alues and *thics

' culture *ased on ethical principles is "ital to long-term strategic success Ethics programs help ma$e ethical conduct a 0ay of life Executi"es must pro"ide genuine support of personnel displaying ethical standards in conducting the company!s *usiness ,alue statements ser"e as a cornerstone for culture-*uilding Approaches to *stablishing *thical 1tandards

ormal "alues statement and a code of ethics #ord-of-mouth indoctrination and tradition 'nnual reports and #e*sites -a$ing sta$eholders a0are of a commitment to ethical *usiness conduct is attri*uta*le to Greater management understanding of role these statements play in culture *uilding 2ene0ed focus on ethical standards stemming from recent corporate scandals Gro0ing num*ers of consumers 0ho prefer to patroni1e ethical companies

(est 0our 1no"ledge


&hich of the following topics would least likely be a topic or element of a companys statement of its core values/

.ecturer( /herese 4aptiste-Cornelis

16e-Chapter13 'F ' dedication to superior customer ser"ice6 top-notch =uality6 product inno"ation6 and?or technological leadership 4F 'n expectation that company personnel 0ill display creati"ity6 exercise initiati"e6 and accept responsi*ility CF Prohi*iting gi"ing or accepting *ri*es6 $ic$*ac$s6 or gifts 3F ' commitment to exhi*iting such =ualities as integrity6 fairness6 trust0orthiness6 pride of 0or$manship6 Golden 2ule *eha"ior6 and respect for co-0or$ers EF ' commitment to ma$ing the company a great place to 0or$

(est 0our 1no"ledge


&hich of the following topics would least likely be contained in a companys code of ethics/ 'F Expecting all employees to not di"ulge trade secrets or proprietary information to outsiders 4F Expecting all company personnel to display honesty and integrity in their actions and a"oid conflicts of interest CF >ot dealing 0ith suppliers that employ child la*or or engage in other unsa"ory practices 3F Committing to create a 0or$ en"ironment characteri1ed *y team0or$ and employee empo0erment EF -andating full compliance 0ith all la0s and regulations

(est 0our 1no"ledge


&hich of the following topics would least likely be contained in a companys code of ethics/ 'F Expecting all employees to not di"ulge trade secrets or proprietary information to outsiders 4F Expecting all company personnel to display honesty and integrity in their actions and a"oid conflicts of interest CF >ot dealing 0ith suppliers that employ child la*or or engage in other unsa"ory practices 3F Committing to create a 0or$ en"ironment characteri1ed *y team0or$ and employee empo0erment EF -andating full compliance 0ith all la0s and regulations Techni3ues to Transform $ore 8alues and *thical 1tandards into $ultural -orms Screen out applicants 0ho do not exhi*it compati*le character traits Incorporate "alues statement and ethics code in employee training programs Strong endorsement *y senior executi"es of the importance of core "alues and ethical principles at company e"ents and in internal communications %se "alues statements and codes of ethics as *enchmar$s to 5udge appropriateness of company policies and operating practices

.ecturer( /herese 4aptiste-Cornelis

16e-Chapter13 -a$e the display of core "alues and ethical principles a *ig factor in e"aluating employee performance Techni3ues to Transform $ore 8alues and *thical 1tandards into $ultural -orms 6continued7

-a$e sure managers at all le"els are diligent in stressing the importance of ethical conduct and o*ser"ance of core "alues Encourage e"eryone to use their influence in helping enforce o*ser"ance of core "alues and ethical standards &old periodic ceremonies to recogni1e indi"iduals and groups 0ho display the "alues Institute ethics enforcement procedures

Esta/lishing a *trategy.Culture &it in -ultinational and 2lo/al Companies


Institute training programs to Communicate the meaning of core "alues and Explain the case for common operating principles and practices Create a cultural climate 0here the norm is to 'dopt *est practices %se common 0or$ procedures Pursue operating excellence Gi"e local managers lexi*ility to modify people management approaches or operating styles 3iscretion to use different moti"ational and compensation incenti"es to induce personnel to practice desired *eha"iors

&or )iscussion3 0our Opinion


Identify one cultural trait that you would like to see at the company you decide to go to work for when you graduate/ &hy is this cultural trait important to you/

4umerous Roles o *trategic Leaders


9eadership Activities of $hief 1trategy Implementer 1F Stay on top of 0hat!s happening ;F Put constructi"e pressure on company to achie"e good results 3F .ead de"elopment of stronger core competencies and competiti"e capa*ilities AF Exercise ethics leadership and lead social responsi*ility initiati"es CF /a$e correcti"e actions to impro"e o"erall strategic performance .ecturer( /herese 4aptiste-Cornelis 1H

16e-Chapter13

Role 513 *tay on (op o Whats !appening


3e"elop a *road net0or$ of formal and informal sources of information /al$ 0ith many people at all le"els 4e an a"id practitioner of -4#' )*ser"e situation firsthand -onitor operating results regularly Get feed*ac$ from customers #atch competiti"e reactions of ri"als 0ole :;2 ,ut $onstructive ,ressure on $ompany to Achieve )ood 0esults

Successful leaders spend time -o*ili1ing organi1ational energy *ehind Good strategy execution and )perating excellence >urturing a results-oriented 0or$ climate Promoting certain ena*ling cultural dri"ers Strong sense of in"ol"ement on part of company personnel Emphasis on indi"idual initiati"e and creati"ity 2espect for contri*utions of indi"iduals and groups Pride in doing things right Approaches to Instilling a 1pirit of 4igh Achievement

/reat employees 0ith dignity and respect -a$e champions out of people 0ho excel Encourage employees to use initiati"e Set stretch o*5ecti"es and expectations that employees are to gi"e their *est %se tools of *enchmar$ing6 *est practices6 *usiness process reengineering6 /<-6 and Six Sigma =uality to focus attention on continuous impro"ement %se full range of moti"ational techni=ues and compensation incenti"es to Inspire employees >urture a results-oriented climate Enforce high-performance standards Cele*rate indi"idual6 group6 company successes 0ole :<2 ,romote 1tronger $ore $ompetencies and $apabilities

/op management inter"ention is re=uired to esta*lish *etter or ne0 2esource strengths and competencies Competiti"e capa*ilities Senior managers must lead the effort *ecause Competencies reside in com*ined efforts of different 0or$ groups and

.ecturer( /herese 4aptiste-Cornelis

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16e-Chapter13 departments6 thus re=uiring cross-functional colla*oration Stronger competencies and capa*ilities can lead to a competiti"e edge o"er ri"als

Role 563 )isplay Ethics Leadership and Lead *ocial Responsi/ility #nitiati'es
Set an excellent example in 3isplaying ethical *eha"iors 3emonstrating character and personal integrity in actions and decisions 3eclare support of company!s ethics code and expect all employees to conduct themsel"es in an ethical fashion Encourage compliance and esta*lish tough conse=uences for unethical *eha"ior 0oles of a (anager in *nforcing *thical 5ehavior

Set an excellent ethical example Pro"ide training to employees a*out 0hat is ethical and 0hat isn!t 3eclare une=ui"ocal support of ethics code 'ct as final ar*iter on hard calls 2emo"e people from $ey positions if found guilty of a "iolation 2eprimand people lax in monitoring ethical compliance 1tructuring an *thics $ompliance and *nforcement ,rocess

orm an ethics committee to gi"e guidance on ethics matters 'ppoint an ethics officer to head compliance effort Esta*lish an ethics hotline?#e* site employees can use to 'nonymously report a possi*le "iolation Get confidential ad"ice on a trou*ling ethics-related situation Conduct an annual ethics audit to measure extent of Ethical *eha"ior and Identify pro*lem areas .ey Approaches to *nforcing *thical 5ehavior

&a"e mandatory ethics trainings for employees )penly encourage employees to report possi*le infractions "ia 'nonymous calls to a hotline or

.ecturer( /herese 4aptiste-Cornelis

1;

16e-Chapter13 Posting to a special company #e* site Conduct an annual audit to assess Each manager!s efforts to uphold ethical standards 'ctions ta$en *y managers to remedy deficient conduct 2e=uire all employees to sign a statement annually certifying they ha"e complied 0ith the ethics code -a$e sure ethical "iolations carry appropriate punishment6 including dismissal for egregious "iolations

(est 0our 1no"ledge


Assuming that a companys senior e!ecutives are really serious about enforcing high standards of ethical behavior, then they probably need to consider doing all but which one of the following/ 'F 'ppointing a committee of high-profile employees to ser"e on a committee or tas$ force that is charged 0ith IaJ *eing champions of high ethical standards6 I*J finding 0ays to ingrain high ethical standards as a cultural norm6 and I3J heading up the company!s ethics enforcement process 4F &a"ing mandatory ethics training programs for employees CF Conducting an annual audit of each manager!s efforts to uphold ethical standards and re=uiring formal reports on the actions ta$en *y managers to remedy deficient conduct 3F 2e=uiring all employees to sign a statement annually certifying that they ha"e complied 0ith the company!s code of ethics and ma$ing sure that ethical "iolations carry appropriate punishment6 including dismissal if the "iolation is sufficiently egregious EF )penly encouraging company personnel to report possi*le infractions "ia anonymous calls to a hotline or e-mails sent to a designated address

(est 0our 1no"ledge


Assuming that a companys senior e!ecutives are really serious about enforcing high standards of ethical behavior, then they probably need to consider doing all but which one of the following/ 'F 'ppointing a committee of high-profile employees to ser"e on a committee or tas$ force that is charged 0ith IaJ *eing champions of high ethical standards6 I*J finding 0ays to ingrain high ethical standards as a cultural norm6 and I3J heading up the company!s ethics enforcement process 4F &a"ing mandatory ethics training programs for employees CF Conducting an annual audit of each manager!s efforts to uphold ethical standards and re=uiring formal reports on the actions ta$en *y managers to remedy deficient conduct 3F 2e=uiring all employees to sign a statement annually certifying that they ha"e complied 0ith the company!s code of ethics and ma$ing sure that ethical "iolations carry appropriate punishment6 including dismissal if the "iolation is sufficiently egregious

.ecturer( /herese 4aptiste-Cornelis

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16e-Chapter13 EF )penly encouraging company personnel to report possi*le infractions "ia anonymous calls to a hotline or e-mails sent to a designated address

&or )iscussion3 0our Opinion


&hat would your reaction be if your employer re3uired you to sign a statement annually certifying that you have complied with the companys code of ethics/ Actions #emonstrating $ommitment to a 1trategy of 1ocial 0esponsibility Craft a strategy that positi"ely impro"es 0ell-*eing of employees6 en"ironment6 communities6 and society %se social and en"ironmental metrics to e"aluate company performance /ie social and en"ironmental performance to executi"e compensation /a$e special pains to protect en"ironment /a$e an acti"e role in community affairs Generously support charita*le causes and pro5ects *enefiting society Support 0or$force di"ersity and commit to o"erall 0ell-*eing of employees 0ole :=2 9ead the ,rocess of (aking $orrective Ad>ustments

2e=uires deciding When ad5ustments are needed What ad5ustments to ma$e In"ol"es 'd5usting long-term direction6 o*5ecti"es6 and strategy on an as-needed *asis in response to unfolding e"ents and changing circumstances Promoting fresh initiati"es to *ring internal acti"ities and *eha"ior into *etter alignment 0ith strategy -a$ing changes to pic$ up the pace 0hen results fall short of performance targets

.ecturer( /herese 4aptiste-Cornelis

1A