corporate culture and leadership

5/18/2018 Corporate Culture and Leadership

1/39

13-1

Corporate CultureCorporate Culture

and Leadershipand Leadership

1313

Chapter


2/39

13-2

Chapter RoadmapChapter Roadmap

Building a Corporate Culture that Promotes Good StrategyExecution What to Look for in Identifying a Companys Culture

Culture !lly or "#stacle to Strategy Execution$

%ypes of Cultures

Creating a Strong &it Bet'een Strategy and Culture

Grounding the Culture in Core (alues and Ethics

Esta#lishing a Strategy)Culture &it in *ultinational Companies

Leading the Strategy Execution Process

Staying on %op of +o' Well %hings !re Going Pushing Company to !chie,e Good -esults

.eeping Internal "rgani/ation &ocused on "perating Excellence

Exercising Ethics Leadership

*aking Correcti,e !d0ustments


3/39

13-3

The Defning CharacteristicsThe Defning Characteristicso a Companys Cultureo a Companys Culture

Its core values, beliefs, and business principles

Patterns of how we do things around hereits style ofoperating and ingrained behaviors of copany personnel

!ft-told stories illustrating copany"s values

Its approach to people anageent

#thical standards

Internal politics

$raditions


4/39

13-%

Features o the CorporateFeatures o the CorporateCulture at Wal-MartCulture at Wal-Mart

&edication to custoer satisfaction

'ealous pursuit of low costs

(rugal operating practices

)trong wor* ethic

+itualistic )aturday orning eetings

#ecutive coitent to

isit stores

.isten to custoers

)olicit eployees" suggestions


5/3913-/

Features o the CorporateFeatures o the CorporateCulture at NordstromsCulture at Nordstroms

&eliver eceptional custoer service to custoers

0opany otto

+espond to nreasonable

0ustoer +euests

!ut-of-the-ordinary custoer reuests

viewed as opportunities for heroic acts

Prootions based on outstanding service

)alaries based entirely on coission


6/3913-

Features o the CorporateFeatures o the CorporateCulture at MicrosotCulture at Microsot

.ong wor* hours of prograers

#otional pea*s and valleys in

encountering and overcoing coding probles

#hilaration of copleting a cople progra onschedule

)atisfaction of wor*ing on cutting-edge pro4ects

+ewards of being part of a tea responsiblefor a popular new software progra

$radition of copeting aggressively


7/3913-5

What to Loo or inWhat to Loo or in!dentiying Corporate Culture!dentiying Corporate Culture

6 companys cultureis manifestedin 7 7 7 alues, beliefs, and business principles

anageent preaches and practices

!fficial policies and procedures

Its revered traditions and oft-repeated stories

6ttitudes and behaviors of eployees

Peer pressures that eist to display core values

Its politics

6pproaches to people anageent and proble solving

Its relationships with eternal sta*eholders

0heistry and personality pereating wor* environent


8/3913-8

Where Does CorporateWhere Does CorporateCulture Come From"Culture Come From"

(ounder or early leader

Influential individual or wor* group

Policies, vision, or strategies

$raditions, supervisory practices,eployee attitudes

$he peer pressures that eist

!rgani9ational politics +elationships with sta*eholders

0opany"s approach to people anageent


9/3913-:

#o$ !s a Companys#o$ !s a CompanysCulture %erpetuated"Culture %erpetuated"

)electing new eployees who will fit in

)ysteatic indoctrination of new eployees

)enior anageent efforts to reinforce core values,

beliefs, principles, *ey operating practices

)tory-telling of copany legends

0ereonies honoring eployees

who display cultural ideals

isibly rewarding thosewho follow cultural nors


10/3913-1;

Forces and FactorsForces and FactorsCausing Culture to &'ol'eCausing Culture to &'ol'e


11/3913-11

Culture( )lly or *+stacleCulture( )lly or *+stacleto ,trategy &ecution"to ,trategy &ecution"

6 copany"s culture can contribute to> or hinder>successful strategy eecution

6 culturethat prootesattitudes and

behaviors that are well-suited to

first-rate strategy execution is a

valuable ally in the strategy

eecution process

6 culture that ebraces attitudes and

behaviors which ipede good

strategy eecution is a huge obstacle

to be overcoe


12/3913-12

Why Culture Matters( .eneftsWhy Culture Matters( .eneftso a Tight Culture-,trategy Fito a Tight Culture-,trategy Fit

6 culture that encourages actions and behaviorssupportiveofgood strategy execution Provides eployees with clear guidance regarding what

behaviors and results constitute good 4ob perforance

0reates significant peer pressure aong cowor*ers toconfor to culturally acceptable nors

6 culture ibedded with valuesand behaviors

thatfacilitate strategy executionprootes

strong eployee coitent to the copany"s ision

Perforance targets

)trategy


13/3913-13

*ptimal *utcome o a*ptimal *utcome o aTight Culture-,trategy FitTight Culture-,trategy Fit

6good jobof culture-buildingby anagers Prootes can-do attitudes

#ncourages acceptance of change

Instills strong peer pressure for strategy-supportive

behaviors

#nlists enthusias and dedicated effort to achieve

copany ob4ectives

Closely aligning corporate culture 'ithClosely aligning corporate culture 'ith

the re1uirements for proficient strategy executionthe re1uirements for proficient strategy execution

merits the full attention of senior executi,es2merits the full attention of senior executi,es2


14/3913-1%

The %erils oThe %erils o,trategy-Culture Con/ict,trategy-Culture Con/ict

0onflicts between culturally-approvedbehaviors and behaviors needed for good

strategy eecution send ied signals

Shouldeployees by loyal to the culture and copany

traditions and resist actions and behaviors prootingbetter strategy eecution?

Orshould they support the strategy by engaging in

behaviors that run counter to the culture?

When a companys culture is out of sync 'ith 'hatWhen a companys culture is out of sync 'ith 'hat

is needed for strategic success3 the culture has tois needed for strategic success3 the culture has to

#e changed as rapidly as can #e managed2#e changed as rapidly as can #e managed2


15/3913-1/

Types o CorporateTypes o CorporateCulturesCultures

Strong vs. Weak Cultures

4nhealthy Cultures

!dapti,e Cultures

Ch i i


16/3913-1

Characteristics oCharacteristics o,trong Culture Companies,trong Culture Companies

0onduct business according to a clear, widely-understoodphilosophy

0onsiderable tie spent by anageent counicating

and reinforcing values alues are widely shared and deeply rooted

@ave a well-defined corporate character,

reinforced by a creed or values stateent 0areful screeningAselection of new

eployees to be sure they will fit in

Ch i i


17/39

13-15

Characteristics oCharacteristics oWea Culture CompaniesWea Culture Companies

.ac* of a widely-shared core set of values

(ew behavioral nors evident in operating practices

(ew strong traditions


18/39

13-18

Characteristics oCharacteristics o0nhealthy Cultures0nhealthy Cultures

@ighly politici9ed internal environent Issues resolved on basis of political clout

@ostility to change

6void ris*s and don"t screw up

#perientation and efforts to

alter status uo discouraged

copany

personnel discount need to loo* outside for Cest practices


19/39

13-1:

#allmars o#allmars o)dapti'e Cultures)dapti'e Cultures

Billingness to accept change and ebrace challenge ofintroducing new strategies

+is*-ta*ing, eperientation, and innovation to satisfy

sta*eholders

#ntrepreneurship is encouragedand rewarded

(unds provided for new products


20/39

13-2;

Dominant TraitsDominant Traitso )dapti'e Cultureso )dapti'e Cultures

Any changesin operating practices and behaviors

Must notcoproise core values and long-standing

business principles

Must satisfylegitiate interests of *ey sta*eholders

Customers

Employees

Shareholders

Suppliers

Communities

C ti ,t FitC ti ,t Fit


21/39

13-21

Creating a ,trong FitCreating a ,trong Fit.et$een ,trategy and Culture.et$een ,trategy and Culture

Responsibility of Strategy MakerResponsibility of Strategy Maker>>

)elect a strategy copatible with the)elect a strategy copatible with the

sacred or unchangeable parts of organi9ation"ssacred or unchangeable parts of organi9ation"s

prevailing corporate cultureprevailing corporate culture

Responsibility of Strategy ImplementerResponsibility of Strategy Implementer>>

!nce strategy is chosen, change!nce strategy is chosen, changewhatever facets of the corporatewhatever facets of the corporate

culture hinder effective eecutionculture hinder effective eecution

Menu o CultureMenu o Culture


22/39

13-22

Menu o Culture-Menu o Culture-Changing )ctionsChanging )ctions

=a*e a copelling case why a new cultural atosphereis in best interests of both copany and eployees

0hallenge status uo

0reate events where eployeesust listen to angry *ey sta*eholders

0ontinuously repeat essages of why

cultural change is good for sta*eholders

isibly praise and reward people

who display new cultural nors

M C ltMenu o Culture


23/39

13-23

Menu o Culture-Menu o Culture-Changing )ctionsChanging )ctions (continued)(continued)

6lter incentive copensation toreward desired cultural behavior

@ire new anagers and eployees who have

desired cultural traits and can serve as role odels

+eplace *ey eecutives strongly

associated with old culture

+evise policies and procedures

to help drive cultural change

,ym+olic Culture,ym+olic Culture


24/39

13-2%

,ym+olic Culture-,ym+olic Culture-Changing )ctionsChanging )ctions

#phasi9e frugality

#liinate eecutive per*s

+euire eecutives to spend

tie tal*ing with custoers

0ereonial events to praise people and

teas who get with the progra

6lter practices identified as cultural hindrances

isible awards to honor heroes

,u+stanti'e Culture,u+stanti'e Culture


25/39

13-2/

,u+stanti'e Culture-,u+stanti'e Culture-Changing )ctionsChanging )ctions

#ngineer uic* successes to highlightbenefits of proposed cultural changes

Cring in new blood, replacing

traditional anagers

0hange dysfunctional policies

0hange reward structure

+eallocate budget, downsi9ing and upsi9ing

+einforce culture through both word and deed

#nlist support of cultural nors fro frontline

supervisors and eployee opinion leaders

1rounding the Culture in1rounding the Culture in


26/39

13-2

1rounding the Culture in1rounding the Culture inCore 2alues and &thicsCore 2alues and &thics

6 culture based on ethical principles isvital to long-ter strategic success

#thics progras help a*e

ethical conduct a way of life

#ecutives ust provide genuine support

of personnel displaying ethical standards

in conducting the copany"s business

alue stateents serve as a

cornerstone for culture-building

Our ethics

program

consists of . . .

)pproaches to &sta+lishing)pproaches to &sta+lishing


27/39

13-25

)pproaches to &sta+lishing)pproaches to &sta+lishing&thical ,tandards&thical ,tandards

Bord-of-outh indoctrination and tradition 6nnual reports and Bebsites

!rientation courses for new eployees

$raining courses for anagers and eployees

=a*ing sta*eholders aware of a coitentto ethical business conduct is attributable toDreater anageent understanding of role

these stateents play in culture building

+enewed focus on ethical standardssteing fro recent corporate scandals

Drowing nubers of consuers whoprefer to patroni9e ethical copanies

!nstilling 2alues and!nstilling 2alues and


28/39

13-28

!nstilling 2alues and!nstilling 2alues and&thics in the Culture&thics in the Culture

Incorporate values stateent and ethicscode in eployee training progras

)creen out applicants who do not

ehibit copatible character traits

(reuent counications of thevalues and ethics code to all eployees

=anageent involveent and oversight

)trong endorseent by 0#! 0ereonies and awards for individuals

and groups who display the values

Institute ethics enforceent procedures

,tructuring the &thics,tructuring the &thics


29/39

13-2:

ggCompliance and &norcementCompliance and &norcement

%rocess%rocess

&evelop procedures for #nforcing ethical standards and

@andling potential violations

)crutini9e attitudes, character, and wor* history of

prospective eployees #ducate eployees about what is ethical and what is not

#ncourage eployees to raiseissues with ethical diensions

#plain how copany values and the ethicscode apply at all levels of a copany

Insist that copany values and ethicalstandards becoe a way of life

,tructuring the &thics,tructuring the &thics


30/39

13-3;

ggCompliance and &norcementCompliance and &norcement

%rocess%rocess (continued)(continued)

(or an ethics coittee to give guidance on ethicsatters

6ppoint an ethics officer to head copliance effort

#stablish an ethics hotlineABeb site eployees can use to

6nonyously report a possible violation

Det confidential advice on a

troubling ethics-related situation

0onduct an annual ethics auditto easure etent of

#thical behavior and

Identify proble areas

3ey )pproaches to3ey )pproaches to


31/39

13 31

3ey )pproaches to3ey )pproaches to&norcing &thical .eha'ior&norcing &thical .eha'ior

@ave andatory ethics trainings for eployees

0onduct an annual audit to assess

Each managers efforts to

uphold ethical standards

!ctions taken #y managersto remedy deficient conduct

+euire all eployees to sign a stateent annually certifying

they have coplied with copany"s code of ethics

!penly encourage eployees to report possible infractions via

!nonymous calls to a hotline or

Posting to a special company We# site

&sta+lishing a ,trategy Culture Fit in&sta+lishing a ,trategy-Culture Fit in


32/39

13 32

&sta+lishing a ,trategy-Culture Fit in&sta+lishing a ,trategy-Culture Fit in

Multinational and 1lo+al CompaniesMultinational and 1lo+al Companies

Institute training progras to 0ounicate the eaning of core values and

#plain the case for coon operating

principles and practices

&raw on full range of otivational and

copensation incentives to induce personnel

to adopt and practice desired behaviors

6llow soe leeway for certain core values and principles

to be interpreted and applied soewhat differently, if

necessary, to accoodate local custos and traditions

Leadership )cti'ities o theLeadership )cti'ities o the


33/39

13 33

Leadership )cti'ities o theLeadership )cti'ities o the,trategy !mplementer,trategy !mplementer

56 )tay on top of what"s happening76 Put constructive pressure on

copany to achieve good results

86 Eeep copany focusedon operating ecellence

96 .ead developent of stronger core

copetencies and copetitive capabilities

:6 #ercise ethics leadership

;6 $a*e corrective actions to iprove overall strategic

perforance

Carly Fiorina

Hewlett-Packard

Role 45( ,tay on TopRole 45( ,tay on Top


34/39

13 3%

Role 45( ,tay on TopRole 45( ,tay on Topo Whats #appeningo Whats #appening

&evelop a broad networ* of foral and inforal sourcesof inforation

$al* with any people at all levels

Ce an avid practitioner of =CB6

!bserve situation firsthand

=onitor operating results regularly

Det feedbac* fro custoers

Batch copetitive reactions of rivals

Role 46( %ut Constructi'e %ressureRole 46( %ut Constructi'e %ressure


35/39

13 3/

on Company to )chie'e 1ood Resultson Company to )chie'e 1ood Results

)uccessful leaders spend tie=obili9ing organi9ational energy behind

Good strategy execution and

"perating excellence


36/39

13-3

Role 47( 3eep *rgani8ationRole 47( 3eep *rgani8ation

Focused on *perating &cellenceFocused on *perating &cellence

Proote openness to iprovinghow things are done

)upport averic*s with creative

ideas to iprove ways of operating

#nsure rewards for successful chapionsare large and visible

se all *inds of ad hoc organi9ational fors

to support eperientation

se tools of benchar*ing, best practices, reengineering,

$F=, and )i )iga to focus attention on continuous

iproveent

Role 49( %romote ,tronger CoreRole 49( %romote ,tronger Core


37/39

13-35

Role 49( %romote ,tronger CoreRole 49( %romote ,tronger CoreCompetences and Capa+ilitiesCompetences and Capa+ilities

$op anageent intervention isreuired to establish better or new

+esource strengths and copetences

0opetitive capabilities

)enior anagers ust lead the effort because

0opetences reside in cobined

efforts of different wor* groups and

departents, thus reuiringcross-functional collaboration

)tronger copetencies and capabilities

can lead to a copetitive edge over rivals

Role 4:( &erciseRole 4:( &ercise


38/39

13-38

Role 4:( &erciseo e : e c se&thics Leadership&thics Leadership

)et an ecellent eaple in&isplaying ethical behaviors and

&eonstrating character and personal

integrity in actions and decisions =a*e it a duty for eployees to

!bserve ethical codes

+eport ethical violations

#ncourage copliance and establish tough

conseuences for unethical behavior

Our ethics

code is . . .

Role 4;( Lead the %rocess oRole 4;( Lead the %rocess o


39/39

13-3:

Role 4;( Lead the %rocess oMaing Correcti'e )d

corporate culture and leadership

Documents

companys culture culture

corporatefeatures o

op of o

practices trong wor

companys cultureo

core alues

personality pereating

core valuesits politics