Management and the Corporate Culture

  1. Objective 5-6 Describe the development and explain the importance of corporate culture.

Every organization—big or small, more successful or less successful—has an unmistakable “feel” to it. Just as every individual has a unique personality, every company has a unique identity, or a corporate culture, the shared experiences, stories, beliefs, and norms that characterize an organization. This culture helps define the work and business climate that exists in an organization.

A strong corporate culture serves several purposes. For one thing, it directs employees’ efforts and helps everyone work toward the same goals. Some cultures, for example, stress financial success to the extreme, whereas others focus more on quality of life. In addition, corporate culture helps newcomers learn accepted behaviors. If financial success is the key to a culture, newcomers quickly learn that they are expected to work long, hard hours, and that the “winner” is the one who brings in the most revenue. But if quality of life is more fundamental, newcomers learn that it’s more acceptable to spend less time at work and that balancing work and nonwork is encouraged.

Building and Communicating Culture

Where does a business’s culture come from? In some cases, it emanates from the days of an organization’s founder. Firms such as Disney, Walmart, and Starbucks, for example, still bear the imprint of their founders. In other cases, an organization’s culture is forged over a long period of time by a constant and focused business strategy. Pepsi, for example, has an achievement-oriented culture tied to its long-standing goal of catching its biggest competitor, Coca-Cola. Similarly, Google has a sort of “work hard, play hard” culture stemming from its constant emphasis on innovation and growth coupled with lavish benefits and high pay.

Corporate culture influences management philosophy, style, and behavior. Managers, therefore, must carefully consider the kind of culture they want for their organizations and then work to nourish that culture by communicating with everyone who works there.

To use a firm’s culture to its advantage, managers must accomplish several tasks, all of which hinge on effective communication. First, managers themselves must have a clear understanding of the culture. Second, they must transmit the culture to others in the organization. Thus, training and orientation for newcomers in an organization often include information about the firm’s culture. A clear and meaningful statement of the organization’s mission is also a valuable communication tool. Finally, managers can maintain the culture by rewarding and promoting those who understand it and work toward maintaining it.

A photo of the exterior of Walton's 5-10 store.

Sam Walton honed his craft as a retailer at Walton’s Five and Dime. He then used his experience to create a unique corporate culture when he founded Walmart.

Walter Bibikow/Danita Delimont/Alamy Stock Photo

Changing Culture

Organizations must sometimes change their cultures. In such cases, they must also communicate the nature of the change to both employees and customers. According to the CEOs of several companies that have undergone radical change in the last decade or so, the process usually goes through three stages:

  1. At the highest level, analysis of the company’s environment highlights extensive change as the most effective response to its problems. This period is typically characterized by conflict and resistance.

  2. Top management begins to formulate a vision of a new company. Whatever that vision, it must include renewed focus on the activities of competitors and the needs of customers.

  3. The firm sets up new systems for appraising and compensating employees who enforce the firm’s new values. The purpose is to give the new culture solid shape from within the firm.

Continental and United Airlines recently merged into a single, much larger airline. Top managers then developed a plan for creating one new unified corporate culture drawing from the best of the cultures at the two individual airlines. The entire process took more than three years.19

..................Content has been hidden....................

You can't read the all page of ebook, please click here login for view all page.
Reset