13

Chapter Title
Corporate Culture
and Leadership

Screen graphics created by:

16/e PPT Jana F. Kuzmicki, Ph.D.
Troy University-Florida Region

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

 Defining Characteristics
of Corporate Culture
 Core values, beliefs, and business principles
 Ethical standards
 Operating practices and behaviors defining
“how we do things around here”
 Approach to people management
 “Chemistry” and “personality” permeating
work environment
 Oft-told stories illustrating
 Company’s values
 Business practices
 Traditions
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 Identifying the Key Features
of Corporate Culture
A company’s culture is manifested in . . .
 Values, business principles, and ethical standards preached
and practiced by management
 Approaches to people management and problem solving
 Official policies and procedures
 Spirit and character permeating work environment
 Interactions and relationships among managers and
employees
 Peer pressures that exist to display core values
 Its revered traditions and oft-repeated stories
 Its relationships with external stakeholders
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 Where Does Corporate
Culture Come From?
 Founder or early leader
 Influential individual or work group
 Policies, vision, or strategies
 Operating approaches
 Company’s approach to people management
 Traditions, supervisory practices, employee attitudes
 Organizational politics
 Relationships with stakeholders
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Types of Corporate Cultures

Strong vs. Weak Cultures

Unhealthy Cultures

High-Performance Cultures

Adaptive Cultures
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 Characteristics of
Strong Culture Companies
 Conduct business according to a clear, widely-
understood philosophy
 Considerabletime spent by management
communicating and reinforcing values
 Values are widely shared and deeply rooted
 Have a well-defined corporate character,
reinforced by a creed or values statement
 Careful
screening/selection of new
employees to be sure they will “fit in”
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Characteristics of Weak Culture Companies

 Lack of a widely-shared core set of values

 Few behavioral norms evident in operating

practices

 Few strong traditions

 No strong sense of company identity

 Little cohesion among departments

 Weak employee allegiance to

company’s vision and strategy
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 Characteristics of Unhealthy Cultures

 Highly politicized internal environment

 Issues resolved on basis of political clout
 Hostility to change
 Avoid risks and don’t screw up
 Experimentation and efforts to
alter status quo discouraged
 “Not-invented-here”mindset – company
personnel discount need to look outside for
 Best practices
 New or better managerial approaches
 Innovative ideas
 Disregardfor high ethical standards and
overzealous pursuit of wealth by key executives
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 Characteristics of
High-Performance Cultures
 Standout cultural traits include
 A can-do spirit
 Pride in doing things right
 No-excuses accountability
 A results-oriented work climate in which people go the extra
mile to achieve performance targets
 Strong sense of involvement by all employees
 Emphasis on individual initiative and creativity
 Performance expectations are clearly identified for all
organizational members
 Strong bias for being proactive, not reactive
 Respect for the contributions of all employees
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 Hallmarks of Adaptive Cultures

 Willingness to accept change and embrace challenge

of introducing new strategies
 Risk-taking, experimentation, and innovation to satisfy
stakeholders
 Entrepreneurship is encouraged
and rewarded
 Funds provided for new products
 New ideas openly evaluated
 Genuine interest in well-being
of all key constituencies
 Proactive approaches to
implement workable solutions
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 Culture: Ally or Obstacle
to Strategy Execution?
A company’s culture can contribute to – or hinder
– successful strategy execution

A culture that promotes attitudes and behaviors

that are well-suited to first-rate strategy
execution is a valuable ally in the strategy
execution process

A culture where attitudes

and behaviors impede
good strategy execution is a
huge obstacle to be overcome
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Fig. 13.1: Changing a Problem Culture

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 Grounding the Culture in
Core Values and Ethics
A culture based on ethical principles is
vital to long-term strategic success
Our ethics
program
 Ethics programs help make consists of . . .

ethical conduct a way of life

 Executives must provide genuine support

of personnel displaying ethical standards
in conducting the company’s business

 Value statements serve as a

cornerstone for culture-building
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13-14
Fig. 13.2: The Two Culture-Building Roles of a
Company’s Core Values and Ethical Standards

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Fig. 13.3: The Benefits of Cultural Norms Strongly
Grounded in Core Values and Ethical Principles

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 Establishing a Strategy-Culture Fit in
Multinational and Global Companies
 Institute training programs to
 Communicate the meaning of core values and
 Explain the case for common operating
principles and practices
 Create a cultural climate where the norm is to
 Adopt best practices
 Use common work procedures
 Pursue operating excellence
 Give local managers
 Flexibility to modify people management
approaches or operating styles
 Discretion to use different motivational and compensation
incentives to induce personnel to practice desired behaviors
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Role #1: Stay on Top of What’s Happening

 Develop a broad network of formal

and informal sources of information
 Talk with many people at all levels
 Be an avid practitioner of MBWA
 Observe situation firsthand

 Monitor operating results regularly

 Get feedback from customers
 Watch competitive reactions of rivals
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 Role #2: Put Constructive Pressure on
Company to Achieve Good Results
 Successful leaders spend time
 Mobilizing organizational energy behind
 Good strategy execution and
 Operating excellence
 Nurturing a results-oriented work climate
 Promoting certain enabling cultural drivers
 Strong sense of involvement on part of company personnel
 Emphasis on individual initiative and creativity
 Respect for contributions of individuals and groups
 Pride in doing things right
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 Role #3: Promote Stronger Core
Competencies and Capabilities
 Top management intervention is
required to establish better or new
 Resource strengths and competencies
 Competitive capabilities
 Senior managers must lead the effort because
 Competencies reside in combined
efforts of different work groups and
departments, thus requiring
cross-functional collaboration
 Stronger competencies and capabilities
can lead to a competitive edge over rivals
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 Role #4: Display Ethics Leadership and
Lead Social Responsibility Initiatives
 Set an excellent example in Our ethics
code is . . .

 Displaying ethical behaviors

 Demonstrating character and

personal integrity in actions and decisions

 Declare
support of company’s ethics code
and expect all employees to conduct
themselves in an ethical fashion

 Encourage
compliance and establish tough
consequences for unethical behavior
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 Role #5: Lead the Process of
Making Corrective Adjustments
 Requires deciding
 When adjustments are needed
 What adjustments to make
 Involves
 Adjusting long-term direction, objectives, and strategy on
an as-needed basis in response to unfolding events and
changing circumstances
 Promoting fresh initiatives to bring internal activities and
behavior into better alignment with strategy
 Making changes to pick up the pace when results fall
short of performance targets
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