Chapter 13: Corporate Culture and Leadership

Corporate Cultureand Leadership13ChapterScreen graphics created by:Jana F. Kuzmicki, Ph.D.Troy State University-Florida and Western Region Chapter RoadmapBuilding a Corporate Culture that Promotes Good Strategy ExecutionWhat to Look for in Identifying a Company’s CultureCulture: Ally or Obstacle to Strategy Execution?Types of CulturesCreating a Strong Fit Between Strategy and CultureGrounding the Culture in Core Values and EthicsEstablishing a Strategy-Culture Fit in Multinational CompaniesLeading the Strategy Execution ProcessStaying on Top of How Well Things Are GoingPushing Company to Achieve Good ResultsKeeping Internal Organization Focused on Operating Excellence Exercising Ethics LeadershipMaking Corrective AdjustmentsThe Defining Characteristics of a Company’s CultureIts core values, beliefs, and business principles Patterns of “how we do things around here”—its style of operating and ingrained behaviors of company personnelOft-told stories illustrating company’s valuesIts approach to people managementEthical standardsInternal politicsTraditionsWhat to Look for inIdentifying Corporate CultureA company’s culture is manifested in . . . Values, beliefs, and business principlesmanagement preaches and practicesOfficial policies and proceduresIts revered traditions and oft-repeated storiesAttitudes and behaviors of employeesPeer pressures that exist to display core valuesIts politicsApproaches to people management and problem solvingIts relationships with external stakeholders“Chemistry” and “personality” permeating work environmentHow Is a Company’sCulture Perpetuated?Selecting new employees who will “fit” inSystematic indoctrination of new employeesSenior management efforts to reinforce core values, beliefs, principles, key operating practices Story-telling of company legendsCeremonies honoring employeeswho display cultural idealsVisibly rewarding thosewho follow cultural normsCulture: Ally or Obstacleto Strategy Execution?A company’s culture can contribute to – or hinder –successful strategy executionA culture that promotes attitudes and behaviors that are well-suited to first-rate strategy execution is a valuable ally in the strategy execution processA culture that embraces attitudes and behaviors which impede good strategy execution is a huge obstacle to be overcome Why Culture Matters: Benefitsof a Tight Culture-Strategy FitA culture that encourages actions and behaviors supportive of good strategy executionProvides employees with clear guidance regarding what behaviors and results constitute good job performanceCreates significant peer pressure among coworkers to conform to culturally acceptable normsA culture imbedded with values and behaviorsthat facilitate strategy execution promotesstrong employee commitment to the company’sVisionPerformance targetsStrategyTypes of Corporate CulturesStrong vs. Weak CulturesUnhealthy CulturesAdaptive CulturesCharacteristics ofStrong Culture CompaniesConduct business according to a clear, widely-understood philosophy Considerable time spent by management communicating and reinforcing valuesValues are widely shared and deeply rootedHave a well-defined corporate character,reinforced by a creed or values statementCareful screening/selection of newemployees to be sure they will “fit in”Creating a Strong FitBetween Strategy and CultureResponsibility of Strategy Maker –Select a strategy compatible with thesacred or unchangeable parts of organization’s prevailing corporate cultureResponsibility of Strategy Implementer –Once strategy is chosen, changewhatever facets of the corporateculture hinder effective executionFig. 13.1: Changinga Problem CultureGrounding the Culture inCore Values and EthicsA culture based on ethical principles isvital to long-term strategic successEthics programs help make ethical conduct a way of lifeExecutives must provide genuine supportof personnel displaying ethical standardsin conducting the company’s business Value statements serve as acornerstone for culture-buildingOur ethicsprogramconsists of . . .Fig. 13.2: The Two Culture-Building Roles of a Company’s Core Values and Ethical StandardsFig. 13.3: How a Company’s Core Values and Ethical Principles Positively Impact the Corporate CultureInstilling Values andEthics in the CultureIncorporate values statement and ethicscode in employee training programsScreen out applicants who do notexhibit compatible character traitsFrequent communications of thevalues and ethics code to all employeesManagement involvement and oversightStrong endorsement by CEOCeremonies and awards for individualsand groups who display the valuesInstitute ethics enforcement proceduresEstablishing a Strategy-Culture Fit in Multinational and Global CompaniesInstitute training programs toCommunicate the meaning of core values andExplain the case for common operatingprinciples and practicesDraw on full range of motivational andcompensation incentives to induce personnelto adopt and practice desired behaviorsAllow some leeway for certain core values and principles to be interpreted and applied somewhat differently, if necessary, to accommodate local customs and traditionsLeadership Activities of theStrategy Implementer1. Stay on top of what’s happening 2. Put constructive pressure oncompany to achieve good results3. Keep company focusedon operating excellence4. Lead development of stronger corecompetencies and competitive capabilities5. Exercise ethics leadership6. Take corrective actions to improve overall strategic performance Carly FiorinaHewlett-PackardRole #1: Stay on Topof What’s HappeningDevelop a broad network of formal and informal sources of informationTalk with many people at all levels Be an avid practitioner of MBWA Observe situation firsthandMonitor operating results regularlyGet feedback from customersWatch competitive reactions of rivalsRole #2: Put Constructive Pressure on Company to Achieve Good Results Successful leaders spend time Mobilizing organizational energy behindGood strategy execution andOperating excellence Nurturing a results-oriented work climatePromoting certain enabling cultural driversStrong sense of involvement on part of company personnelEmphasis on individual initiative and creativityRespect for contributions of individuals and groupsPride in doing things rightRole #3: Keep OrganizationFocused on Operating ExcellencePromote openness to improvinghow things are doneSupport mavericks with creativeideas to improve ways of operatingEnsure rewards for successful championsare large and visibleUse all kinds of ad hoc organizational formsto support experimentationUse tools of benchmarking, best practices, reengineering, TQM, and Six Sigma to focus attention on continuous improvementRole #4: Promote Stronger Core Competences and CapabilitiesTop management intervention isrequired to establish better or newResource strengths and competencesCompetitive capabilitiesSenior managers must lead the effort becauseCompetences reside in combinedefforts of different work groups and departments, thus requiring cross-functional collaborationStronger competencies and capabilitiescan lead to a competitive edge over rivalsRole #5: ExerciseEthics LeadershipSet an excellent example in Displaying ethical behaviors andDemonstrating character and personalintegrity in actions and decisionsMake it a duty for employees toObserve ethical codesReport ethical violationsEncourage compliance and establish toughconsequences for unethical behaviorOur ethicscode is . . .Role #6: Lead the Process ofMaking Corrective Adjustments Requires decidingWhen adjustments are neededWhat adjustments to makeInvolves Adjusting long-term direction, objectives, and strategy on an as-needed basis in response to unfolding events and changing circumstancesPromoting fresh initiatives to bring internal activities and behavior into better alignment with strategyMaking changes to pick up the pace when results fall short of performance targets