3.4.2 Culture

What is Corporate culture?

The way people do things in a firm and the way they expect things to be done. It reflects the firms values and it is an important way to shape attitudes and expectations of staff.

What does corporate culture affect?

Staff behaviour and how they made decisions, planning , objective setting and strategy. Also motivation and productivity

What are Handy's Four Classes of Culture?

Power

Role

Task

Person

What leadership styles are suited to which culture types?

Power + Autocratic

Role + Autocratic/paternalistic

Task + Paternalistic/democratic

Person + Democratic

What is power culture?

- Control radiates from the centre

- Concentrates power among a few

- Few rules and little bureaucracy

- Swift decisions are possible'

- A competitive atmosphere between workers wanting power

- Most communication is by personal contact

In an organisation with a power culture, power is held by just a few individuals whose influence spreads throughout the organisation.

There are few rules and regulations in a power culture. What those with power decide is what happens. Employees are generally judged by what they achieve rather than how they do things or how they act. A consequence of this can be

quick decision-making, even if those decisions aren't in the best long-term interests of the organisation.

A power culture is usually a strong culture, though it can swiftly turn toxic. The collapse of Enron, Lehman Brothers and RBS is often attributed to a strong power culture.

Power cultures may begin to struggle if the business grows and cannot be run from the centre.

Employees are likely to be more resistant to change because they don't have the opportunity to give their opinions on what changes should and shouldn't be made and dont might not have enough faith in senior managers who they feel ere out of touch with the day to day activities of the business.

What is role culture?

People have clearly delegated authorities within a highly defined structure

Hierarchical bureaucracy

Power derives from a person's position

Little scope exists for expert power

Key decisions are made by those with specific job roles

Organisations with a role culture are based on rules.

They are highly controlled, with everyone in the organisation knowing what their roles and responsibilities are.

Power in a role culture is determined by a person's position (role)/job title in the organisational structure, rather than those with desirable skills

Role cultures are built on detailed organisational structures which are typically tall (not flat) with a long chain of command.

A consequence is that there tends to be poor communication between departments, so decision making is slow and they react slowly to change- this can result in them loosing out to competitors in new/expanding markets where strategies need to be implemented quickly

The organisation is less likely to take risks, so change is rare. In short, organisations with strong role cultures tend to be very bureaucratic. Any changes that are brought in will meet resistance as staff are not used to doing things differently.

Businesses with role cultures may find it difficult to adapt to rapidly changing market conditions.

Employees don't have the opportunity to get involved in decision making process

What is task culture?

-Teams are formed to solve particular problems

-Power derives from expertise as long as a team requires expertise

-No single power source

-Matrix organisation

-Team may develop own objectives (a risk)

- Power lies with those with task-related skills

- There is an emphasis on adaptability and teamwork

Task culture forms when teams in an organisation are formed to address specific problems or progress projects

The task is the important thing, so power within the team will often shift depending on the mix of the team members and the status of the problem or project

Whether the task culture proves effective will largely be determined by the team dynamic.

Staff likely to be used to change because of changing teams and working with a variety of people- this means they are likely to be less resistant to change.

With the right mix of skills, personalities and leadership, working in teams can be incredibly productive and creative.

There may be conflict between teams for resources and budgets- it can be confusing if a firm has too many projects/products.

What is person culture?

- People believe themselves to be superior to the business

- Business full of people with similar training, background & expertise

- Common in firms of professionals - e.g. accountants & lawyers

- Power lies in each group of individuals

- individuals with extensive experience and skills are loosely brought together

- Objectives defined by the ambitions of individual workers.

In organisations with person cultures, individuals very much see themselves as unique and superior to the organisation

The organisation simply exists in order for people to work

Decisions are made jointly so employees likely to be accepting and comfortable with change

However, decisions on change can be difficult to make- individuals will often think about what is best for themselves rather than the organisation.

An organisation with a person culture is really just a collection of individuals who happen to be working for the same organisation!

What are Schein: 4 layers of Organisational Culture?

Values, beliefs, behaviours and paradigm

Why should you change culture: Improve Business Performance?

Declining profits and sales

Inadequate returns on investment

Low quality or standards of customer service

Why should you change Culture: Respond to Significant Change?

Market changes (growth, competitors)

Political & legal environment

Change in societal views

Change of ownership (e.g. takeover)

Change of management or leadership (e.g. a new CEO)

Economic conditions (e.g. downturn)

What are the Signs That Organisational Culture May Need Changing?

- Internal fighting; management criticism ("us & them mentality")

- High levels of voluntary staff turnover & hard to retain top talent

- Greater absenteeism

- Innovation is no longer valued

- Evidence of declining customer service

- Leadership show double standards or decision-making becomes inconsistent

- Commuterm-15nication becomes more closed and restricted

What are the Features of a weak culture?

- Little alignment with business values

- Inconsistent behaviour

- A need for extensive bureaucracy & procedures

- Employees may doubt the sincerity of the corporate mission

- A 'them and us' attitude may exist between workers and management

- High levels of staff turnover and low commitment amongst staff may exist

What are the Features of a strong culture?

Visual Features:

- Business specific artefacts e.g. uniforms

- A well know figure as a role model

- Ceremonies, rituals and customs e.g. awards evenings

- Layout of business premises e.g. open plan offices

- The training culture e.g induction and on-going

Norms:

- Core organisational values, e.g. staff wellbeing

- Workplace procedures, e.g. meeting etiquette

- Business specific language e.g. calling workers 'team members' or 'partners'

- Repeating stories that focus on business values and history

- Decision making approach

- Clear set of values, mission & goals

- Performance-orientated

What are the advantages of having a strong culture in the workplace?

A competitive advantage

Encourages suitable risk-taking & innovation

Strong internal communication

Engaged employees: higher motivation & loyalty

Better connection between departments. & divisions

Not easily copied

Employees need less supervision because their behaviour will naturally fit in with business values.

In businesses with a strong culture, it is likely that employees:

- Have a 'can do' attitude and are enthused by their work

- Have a strong belief that the business is a force for good

How is a corporate culture formed?

Corporate culture generally forms over time especially as a business grows

A range of factors contribute to the formation of a corporate culture:

- Leadership style

- Human Resource Policies

- Type of ownership

What are the factors Influencing Culture of an Organisation?

-Influence of the founder

- Ownership

-Size & development stage of the business (e.g. start-up, multisite, multinational)

-Leadership & management style

-Organisational structure, policies & practices

-Employee term-15& management reward structures (e.g. pay, bonuses, individual v team rewards)

-Market /industries in which it operates

-Working environment & nature of tasks (e.g. physical, office, remote working, flexible working)

-External environment (e.g. legal, economic)

-Attitude of organisation to risk-taking & innovation

- History of the business

- Recruitment and promotion of staff

How does the founder influence the culture of an organisation?

if heavily involved, their values and vision of the business are likely to be passed onto employees- creating a strong culture. Their personality may have an influence, e.g a strong minded founder might establish a power culture

This culture could continue even if the founders are no longer involved in the process.

How does the history of the business influence the culture of an organisation?

e.g a firm that has started small and had a lot of success as it grew could have a stronger culture than one that has had a lot of problems and several different owners

How does the Market /industries in which it operates affect a business culture?

for example, a hair salon might have a person culture as each hairdresser has their own customers and aims. however, a firm that makes hair products might have a power culture, as the focus is on making the products- so employees have less say

How does the The recruitment and promotion of staff affect a business culture?

The attitudes of staff that a business chooses to hire and promote can affect the culture that develops within the business e.g a business that hires a lot of creative people may develop a entrepreneurial culture

How does working conditions and rewards affect a business culture?

These can affect employees motivation and attitudes towards the business- when staff feel more values the culture of the business is likely to be stronger.

How does ownership type affect a business culture?

Large public limited companies are likely to adopt a shareholder approach, focusing on meeting the short-term profit maximisation needs of shareholders

Family-owned businesses are more likely to take a longer-term approach, focused on the longevity of the business and perhaps a wider range of stakeholder needs

Why may a business change the corporate culture?

- New leadership- a new manager may want to change the culture to make it more similar to businesses they have worked in before

- More competitive- e.g by becoming quicker to adapt to change, and making employees less resistant to change by adopting a task culture for example (where all the staff are frequently changing roles)

- Increase productivity

- Improve innovation and creativity

- Face a particular challenge

What are the Difficulties in changing established organisational cultures?

- Identifying contributing factors- Identifying the various elements of an organisation's culture can take time and significant insight to fully understand

- The existence of subcultures- Changes to visual elements such as uniforms logos is a relatively straightforward task. The impact of unofficial subcultures such as always undermining management decisions can be harder to change.

- Overcoming resistance to change- employees may think the way they have always done things is better. This requires careful communication in order for commitment to that change to be achieved

- Have to change attitudes and behaviour of staff- complicated

- Difficult to make changes if business already has a strong culture- the culture may be in all aspects of the business, such as its objectives and values.

- Expensive- might involve changing office layout, more training, new processes etc

- HR may need to change recruitment, induction procedures or payment and reward systems