Ch:9 Corporate Culture & Values

What is Culture ?
Culture (definition) is a set of values,

norms, guiding beliefs and understanding that is shared by members of an organization and taught to new members as the correct way to think, feel, and behave

Culture is intangible , It defines how the

belief system of people/workers in the company. It obviously cant be measure, yet people hold on to it

Levels of Organizational Cultures

Observable Symbols Ceremonies, Stories, Slogans, Behaviors, Dress, Physical Settings

Underlying Values, Assumptions, Beliefs, Attitudes, Feelings

Example

Surface Level :Visible Artifact

Underlying Values

The Building was built in a gallery concept, with beautiful architectural design and concept. The Onix Setting in front of the gallery funtction as a lighting system for the gallery

The Onix Setting values are : The onix itself is a solid rock, yet design is made to similize wave philosophy), whuch represent organization adaptibilty to change commitment to personalize services

the (yet the and

Emergence and Purposes of Culture

Culture emerges through early leader

who articulates and implements particular ideas and values of vision, philosophy or business strategy There are 2 critical function of culture in organization :

Internal Integration : Integrate members (communication and working habit) External Adaptation : Adapt to external environment (customer needs or movement of competitors)

Observable aspects of organizational cultures:

Rites and ceremonies

Symbols

Stories and Myths

Organizational Culture

Organization Structures Control Systems

Power Relationships

Observable aspects of organizational cultures :

1. Rites and Ceremonies

Rites and cermonies conducted to perform a dramatic examples of a company values There are 2 types of rites : Rite of passage Picking up of new employee and introduction to the Board Of Managers Rite of Integration We can, We Will yell everyday after Morning Briefing Ceremonies

Promotion Ceremonies Company Birthday Celebration

Observable aspects of organizational cultures :

2. Stories and Myths

Narratives based on true events that are frequently shared among employee and told among new employee. The point is to keep the company values alive and true in the eyes of the employee

Example : The Horse Statue of LEXUS Indonesia which eventually are known towards the LEXUS Global

Observable aspects of organizational cultures :

3. Symbols
Something that represent other things, which include stories , rites and also a physical artifact. Symbols can be both positive and negative

Example : In all Toyota company, all the working place design with no doors and specific chambers, to simplify the coordination and communication process

4. Organization Structures The organizational design either its mechanistic or organic reflect the organizational culture (hierarchy and communication)

Observable aspects of organizational cultures :

5. Power Relationship Who influences or manipulates? Consider aspect of formal or informal, hierarchy, and expertise. Example: at Tobacco Company, we highly regard: 1) Sales; 2) Customers; 3) Suppliers 6. Control Systems The inner working of how the organization controls people and operations. Example: at Tobacco Company, we highly focus on increasing sales, while maximizing cost efficiency, and maintaining compliance.

Relationship of Environment and Strategy to Corporate Culture

Needs of the Environment
Flexibility Stability

External

Strategic Focus

Adaptability Culture

Mission Culture

Clan Culture

Bureaucratic Culture

Internal

Relationship of Environment and Strategy to Corporate Culture

1. Adaptability Culture Strategic focus on the external environment through flexibility and change to meet customer needs. Example: Google & Apple 2. Mission Culture Emphasis on a clear vision of the organizations purpose and on the achievement of goals. Example: at Philip Morris Indonesia, all Employees are given the same mission: To be regarded as the most respected Company in Indonesia.

Relationship of Environment and Strategy to Corporate Culture

3. Clan Culture Primary focus on the involvement and participation of the organizations members and on rapidly changing expectations from the external environment Example: Gucci & Alexander McQueen 4. Bureaucratic Culture Internal focus and a consistency orientation for a stable environment Example: BUMN

Culture Strength

Degree of agreement among member about the importance of specific values

Does a widespread

consensus exist? The culture is strong

Is there little

agreement? Weak culture

Strong Culture

Typically associated with:

Ceremonies Symbols Stories Heroes Slogan

Subculture: Culture within Culture

It reflects common problems, goals, and

experiences that members of a team share

Subculture = Basic values of culture +

additional unique values Conflict: Subculture values > Corporate culture values

Culture, Learning, and Performance

Strong culture:
Enable learning and innovative response Enhances organizational performance Must be adaptive to environment changes

Check This Out

Working for Google.mp4

Can Culture Drive High Performance?

Studies show positive relationship

between culture and performance:

Kotter and Heskett, Corporate Culture and

Performance: companies that intentionally managed cultural values outperformed similar companies that did not Caterpillar, Inc: CAP (Cultural Assessment Process), gives data about millions of dollars in savings that comes from cultural factors.

Adaptive vs Non-adaptive Corp. Culture

Adaptive Non-adaptive

Core Values

Managers care about customer, stockholder, and employee They value people and processes

Care mainly about themselves. They value orderly and risk reducing management process

Common behavior

Pay attention to customer Initiate change when needed

Tend to be somewhat isolated, political, bureaucratic. Do not change strategies quickly.

Ethical Values and Social Responsibility

Ethics

code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong

Managerial Ethics

Principles that guide the decisions and behaviours of managers with regards to whether they are right or wrong. Example : A north American manufacturer operating abroad was asked to make cash payments (a bribe) to government officials and was told it was consistent with local customs, despite being illegal in North America.

Source of Individual Ethical Principles and Action

History
Religion, Philosophy, Geographic, Environment, Nationality, Society, Culture

History leads to development of society morality

Society
Societal norms and values Laws, Codes, and Regulations

Local Environment
Organizations Geographic Regions/Community Family/Clan

History leads to development of society morality

Individual Ethics and Actions

The Local environment shapes individual behaviour

Rule of Law & Ethical Dilemma

Rule of Law Arise from a set of codified principles and regulations that describe how people are required to act, that are generally accepted in society, and that are enforceable in the courts. Current law often reflect combined moral judgments, but not all moral are codified into law Ethical Standards
Relationship between the Rule of Law and Ethical Standard

Legal Requirement

Source : LaRue Tone Hosmer, The Ethical of Management, 2nd ed ( Homewood, III.; Irwin, 1991 )

Ethical Dilemma Ethical Dillema arises in a situation concerning right and wrong in which values are in conflict . Right or wrong cannot be clearly identified in such situations. Example , A salesperson at the beauty supply store , the value conflict is between being honest with customers and adhering to the bosss expectations.

Johnson & Johnson Credo

Many of the recent scandals in the news have dealt with people and corporations that broke the law
Xerox District Court of New York charges Xerox manipulated the financial statements from 1997 to 2000 with increased revenue of 3 billion dollars and raise pretax profit of 15 billion dollars. Xeroxs financial and tax consultants KPMG then replaced by PriceWaterhouseCooper. Xerox was fined 10 million dollars for the infraction. Olympus $ 1.7 billion accounting fraud at the company and the camera maker's medical equipment. Enron Worldcom

How Leaders Shape Culture and Ethics

Ethical companies, top management in providing

commitment, leadership, and examples for ethical behaviour Values can be communicated in a number of ways speeches, company publications, policy statement, and especially, personal actions. Top leaders are responsible for creating and sustaining a culture that emphasizes the importance of ethical behavior for every employee. Managers throughout the organizations need to espouse and model ethical value. Formal ethical program are worthless if leaders do not live up to high standards of ethical conduct.

Values-Based Leadership

Organization value are developed and strengthened primarily through value-based leadership, a relationship between a leader and followers that is based on shared, strongly internalized values that are advocated and acted upon by the leader. Every act and statement of managers has an impact on culture and values. Employees learn about values, beliefs, and goals from watching managers. Action speak louder than words Employees learn from and model the behaviours of people they admire.

Examples John Tu and David Sun, co-founders of Kingston Technology Company, illustrated values-based leaderships in action. From then business not about the money, but about relationships. When they sold 80% of Kingstons to Softbank Corp of Japan for $ 1.5 billion, they set a sid $100 million of the proceeds to employee bonuses

Characteristics of Values Based Leaders

Interpersonal Behaviour
Treat people with care Be helpful and kind Support others Maintain positive relationship

Organizational Culture
Hold self to high ethical standards Strive for honesty, humility, integrity, Accept responsibility for ethical failings

Values Based Leader Organizational Leadership Fairness with Others

Treat everyone equitably Never be condescending Accept others mistakes Articulate and communicate ethical vision Hold people accountable Put ethics above shortterm interests

Formal Structure and Systems Structure

1.

Ethics Committee To oversee company ethics, Rulings on questionable ethical issues, Assumes responsibility for disciplining wrongdoers, Signals the importance of ethics

Structure (contd)
2. Chief Ethics Officer in Ethics Department
An executive to oversee all aspects of ethics, Communicating ethical standards, Sets up ethical training programs, supervises the

investigation of ethical problems, Ethical training programs, Advises ethical aspects of corporate decisions.

3. Ethics Hotline
For employees seeking guidence,

Report questionable behaviour,

Tool for making ethical decisions,

Disclosure Mechanisms
Use of confidential hotlines. Wistle-blowing: Employee disclosure of

illegal, immoral, or illegitimate practices on the part of the organization. Companies are looking for ways to protect whistle-blowers. When there are no protective measures, whistle-blowers suffer, and the company may continue its unethical or illegal practices.

Code of Ethics
A formal statement of the companys values

concerning ethics and social respnsibility; it clarifies to employees what the company stands for and its expectations for employee conduct. Although written codes of ethics and value statements are improtant, it is essential that top managers support and reinforce the codes through their actions, including rewards for compliance and discipline for violations. Otherwise a code of ethics is nothing more than a piece of paper.

Training Programs
To ensure that ethical issues are considered in daily decision making.
Includes case examples. Includes framework for ethical decision

making. Moral development.

CORPORATE CULTURE AND ETHICS IN A GLOBAL ENVIRONMENT

Organizations operating on a global basis often face particularly tough ethical challenges because of the various cultural and market factors they must deal with. The greater complexity of the environment and organizational domain create a greater potential for ethical problems or misunderstandings.

CORPORATE CULTURE AND ETHICS IN A GLOBAL ENVIRONMENT (contd)

Employees from different countries may have varied attittudes and beliefs that make it difficult to establish a sense of community and cohesiveness based on the corporate culture. National culture has a greater impact on employees than does corporate culture, and differences in national culture also create tremendous variance in ethical attitudes.

CORPORATE CULTURE AND ETHICS IN A GLOBAL ENVIRONMENT (contd) How do managers translate the ideas for developing strong, ethical corporate cultures to a complex global environment? 1. Emphasis on multicurltural rather than national values, 2. Basing status on merit rather than nationality, 3. Being open to new ideas from other cultures, 4. Showing excitement rather than trepidation when entering new cultural evironments, 5. Being sensitive to cultural differences without being limited by them.

CORPORATE CULTURE AND ETHICS IN A GLOBAL ENVIRONMENT (contd)

Social audits. Measures and reports the ethical, social, and environmental impact of a companys operations.

Ch:10 Organizational Innovation

Forces Driving the Need for Major Organizational Change

Global Changes, Competition and Markets Technological Change International Economic Integration Maturation of Markets in Developed Countries Fall of Communist and Socialist Regimes More Threats More domestic competition Increased Speed International competition More Opportunities Bigger markets Fewer barriers More international markets

More Large-Scale Change in Organizations Structure change Mergers, joint ventures, consortia Strategic change Horizontal organizing, teams, networks Culture change New technologies, products Knowledge management, enterprise New business processes Resource planning E-commerce Quality programs Learning organizations
10-39

Incremental vs. Radical Change

Incremental Change
Continuous progression Affect organizational part Through normal structure and management processes Technology improvements Product improvement

Radical Change
Paradigm-breaking burst

Transform entire organization

Create new structure and management Breakthrough technology New products, new markets

10-40

Four Types of Change

Technology
- Changes in production process

Products and Services

- Changes in outputs

Strategy and Structure

- Administrative changes

Culture
- Changes in values, attitudes, behaviors

Sequence of Elements for Successful Change

Environment
Suppliers Professional associations Consultants Research literature

Internal Creativity and

Inventions

Organization
1. Ideas 3. Adoption 4.Implementation

Customers
Competition

2. Needs 5. Resources

Legislation Regulation Labor force

Perceived Problems or Opportunities

10-42

Technology Change
Company continually developing,

acquiring, adapting new technology Characteristic of innovative organization

Flexibility and empowered employees

Attributed to peoples freedom Encourage innovation process

The absence of rigid work rules

The Ambidextrous Approach

How does an organization solve the dilema between innovation creation and innovation utilization?

General Manager

Creative Department Expand capabilities Explore and develop new idea

Using Department
Exploit capabilities Routine application of new ideas

(Organic Structure)

(Mechanic Structure)

Techniques for Encouraging Technology Change

Switching structures Creative departments Venture teams Corporate enterpreneurshi p
An organization creates an organic structure when such a stucture is needed for the initiation of new ideas. It found creative ways to be ambidextrous, establishing organic conditions for developing new ideas Departments that initiate change are organically structured to facilitate the generation of new ides and techniques. Departments that use those innovations tend to have a structure more suitable for efficient production A technique used to give free rein creativity within organizations. Venture teams are often given a separate location and facilities so they are not constrained by organizational procedures.

It attempts to develop an internal enterpreneurial spirit, philosophy, and structure that will produce a higher than average number of innovations. Managers can create systems and structures that encourage enterpreneurship.

New Product and Services

New products are designed for sale in the

environment, so that the uncertainty about the suitability and success of an innovation is very high (1 project in 8 returned a profit to the company).

How to success

Innovation to customer needs Making effective use of technology Having influential top managers support the project

Horizontal Coordination Model

The effective design for new product

innovation is associated with horizontal coordination across departments, involves to 3 components: Specialization: highly competent in Dept: R&D, marketing, and production Boundary Spinning: excellent linkage with relevant sectors in the external environment. Example: Kimberly-Clark Horizontal Coordination

Example: 1) Toyota : uses a product development technique called obeya. The idea behind obeya is to change the way people think about product innovation and development by changing how they share information. 2) P&G, W. L. Gore, and Boeing routinely turn to customers and other organizations for advice. 3) Famous innovation failuressuch as McDonalds Arch Deluxe or the baby-food company Gerbers Singles for Adultsusually violate the horizontal linkage model

Need For Speed

Time based competition - Russell Stover got

a line of low-carb candies, called Net Carb, on tore shelves within 3 months after perfecting the recipe (in the past it was 12 months)
concept to production on a new vehicle model down to a mere 18 months from 4 years

Fast cycle teams - GM has cut its time from

Across geographical regions - a new Hagen

Dazs flavor, dulce de leche, developed primarily for sale in Argentina, has quickly become a favorite in the United States

Strategy and Structure Change

Dual Core Approach

Organization Design for Implementing Administrative Change

Downsizing and restructuring are nearly always

managed top down.

Example when the president of Oracle Corp. split the sales

force into 2 teams (database software & applications), cut out two levels of management, and placed himself directly in charge of U.S. sales

The implementation of administrative innovation

was extremely difficult in organizations that had an organic technical core To use a top-down change process
Top-down change means initiation of the idea occurs at

upper levels and is implemented downward. It does not mean that lower-level employees are not educated about the change or allowed to participate in it

Organization Design for Implementing Management Change

The finding from research comparing management and technical change suggest that a mechanistic organization structure is appropriate for frequent management, including changes in goal, strategy, structure, control system and human resources.
Type of Innovation Approach : Management Core it has a larger administrative ratio, are larger in size, and centralized. It uses top down implementation and Mechanistic structure e.g : the implementation of six sigma methods, application balanced scorecard etc. Technical Core It uses Bottom up Implemention and Organic structure Lower lever employees have more freedom and autonomy hence .

Dual core approach to organization change

Culture Change
Change in strategy, structure, technologies, product and also change in people as well. Achieve a new way of thinking requires a focused change in underlying corporate culture values and norms. Changing culture can be particularly difficult because it challenges peoples core value and established ways of thinking and doing things. For example : Merger and acquisition

Forces for culture change:

A number of recent trends have contributed to a need for cultural makeovers at many company, e.g. reengineering and the shift to horizontal forms of organizing. Those require greater focus on employee empowerment, collaboration, information sharing and meeting customer needs. Mutual trust, risk taking and tolerance for mistakes become key cultural values in horizontal organization. Another force for cultures the diversity of todays workforce A growing emphasis on learning and adaptation in organization calls for new cultural values

Culture Change

Organization Development Culture Change Interventions:

Organization Development (OD) is focused on the human and social aspect of the organization as a way to improve the organizations ability to adapt and to solve problems. Today, OD concept has been enlarged to examine how people and groups can change to an adaptive culture in a complex and turbulent environment. Organization Development intervention involve training of specific groups or everyone in the organization

Techniques for improving skills through OD :

Large group Intervention more attuned to bringing about radical or transformational change in organization in complex environment. As a whole system in the room, to brings together participants from all parts of the organization (include stakeholders) in an off site setting to discuss problems or opportunities and plan for change. Team Building Team Building promotes the idea that people who work together can work as a team for example discuss conflict, goals, the decision making process, etc. Team building activities can enhance communication and collaboration and strengthen the cohesiveness of organizational group and teams. Interdepartmental activities Representative from different departments are brought together in a mutual location to expose problems or conflicts, diagnose the causes and plan improvement in communication and collaboration.

Strategies for Implementing Change

Leadership for Change
The need for change within organizations and the need for leaders who can successfully manage change continues to grow. Leaders also build organization-wide commitment by taking employees through three stages of the change commitment process, illustrated in Exhibit 10.8.

Strategies for Implementing Change

Barrier to Change
1. Excessive focus on costs. Management may possess the mind-set that costs are all-important and may fail to appreciate the importance of a change that is not focused on costsfor example, a change to increase employee motivation or customer satisfaction. 2. Failure to perceive benefits. Any significant change will produce both positive and negative reactions. Education may be needed to help managers and employees perceive more positive than negative aspects of the change. In addition, if the organizations reward system discourages risk taking, a change process might falter because employees think that the risk of making the change is too high. 3. Lack of coordination and cooperation. Organizational fragmentation and conflict often result from the lack of coordination for change implementation. Moreover, in the case of new technology, the old and new systems must be compatible.

Strategies for Implementing Change

Barrier to Change (contd)

4. Uncertainty avoidance. At the individual level, many employees fear the uncertainty associated with change. Constant communication is needed so that employees know what is going on and understand how it affects their jobs. 5. Fear of loss. Managers and employees may fear the loss of power and statusor even their jobs. In these cases, implementation should be careful and incremental, and all employees should be involved as closely as possible in the change process.

Strategies for Implementing Change

Techniques for Implementation
Step 1 Action Description Once managers identify a true need for change, they need to thaw resistance by creating a sense of urgency that change is really needed Top management support is crucial for any major change project, and lack of top management support is one of the most frequent causes of implementation failure. In addition, the coalition should involve lower-level supervisors and middle managers from across the organization. Leaders who have taken their companies through major successful transformations often have one thing in common: They focus on formulating and articulating a compelling vision and strategy that will guide the change process Finding the right idea often involves search procedurestalking with other managers, assigning a task force to investigate the problem, sending out a request to suppliers, or asking creative people within the organization to develop a solution

Establish a sense of urgency for change Establish a coalition to guide the change. Create a vision and strategy for change

Find an idea that fits the need

Develop plans to overcome Many good ideas are never used because managers failed to anticipate or prepare for resistance to change by consumers, resistance to change

employees, or other managers. To increase the chance of successful implementation, management must acknowledge the conflict, threats, and potential losses perceived by employees.

Strategies for Implementing Change

Techniques for Implementation (contd)

Step 6

Action

Description A task force can be created to see that implementation is completed. The task force can be responsible for communication, involvement of users, training, and other activities needed for change. One of the most effective weapons in the battle for change is the idea champion. The most effective champion is a volunteer champion who is deeply committed to a new idea. The idea champion sees that all technical activities are correct and complete

Create change teams

Foster idea champions