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Organizational Behavior: Solutions for Management
Paul D. Sweeney, University of Central Florida
Dean B. McFarlin, University of Dayton
Corporate Culture: Analyzing and Shaping the Firm's Way of Life

Chapter Outline

  1. Corporate Culture: Analyzing and Shaping the Firm's Way of Life

    2. Culture has become an enormously popular topic in the last few decades.
    1. Many firms have tried to develop strong cultures by either emulating others or developing their own unique approach.
    2. Some of the reasons why companies fail to develop strong cultures include the "bandwagon" effect and the necessity for use of the building blocks skills such as insight, perceptual skills, and communication ability.
  2. Recognizing Corporate Culture
    1. What Is It Exactly?
      • While hard to define exactly, corporate culture can be described as the firm's personality or style; it is like the way of life within the organization.
      • Culture involves the firm's beliefs, values, and behaviors. These send important messages to people both inside and outside the organization.
      • Corporate culture tends to be stable over time and once established, can be difficult to alter.
      • Discussion of examples of strong corporate cultures including:
        1. Proctor & Gamble, 3-M, Hewlett-Packard, Microsoft.
    2. What Can Culture Do for Your Firm?
      1. Pluses of a Definable Culture:
        • Substantive reasons for taking culture seriously include:
          • Provides people with a strong sense of identity with the organization.
            • This can lead to the ability of the organization to attract good people to the firm.
            • Better ability to retain good employees, which in turn, keeps turnover costs down.
          • Reduction or preclusion of destructive infighting and turf battles.
          • Strengthening of employees' focus on customers and other important constituencies.
          • Paying attention to culture can directly impact a firm's financial performance.
      2. Drawbacks of a Strong Culture:
        • Limitations of strong culture include:
          • Built-in resistance to change
  3. How Do You Read A Culture?

    4. Diagnosing a corporate culture is a difficult managerial skill to develop largely due to culture's involvement with the practices, attitudes, and values built into the everyday life of the organization.
    1. Stories and Myths:
      • Stories may be the most common and effective way for a firm to communicate its culture to employees and outsiders alike.
    2. Symbols:
      • Symbols are objects or events that convey some larger meaning.
      • Symbols can be unintended or negative
      • Actions can symbolize some larger trait about a culture
    3. Language:
      • Words or phrases that are commonly used to remind those inside and outside the firm "what we are all about" can be another sign of a strong culture.
    4. Rites, Rituals, and Ceremonies:
      • Rites and rituals are sets of activities that are used over and over again at special times to emphasize key organizational values.
      • Rites of passage: a series of rituals that members must go through.
      • Rites of passage include ceremonies designed to celebrate a change in status or recognize an accomplishment.
    5. Mission Statements:
      • Mission statements: company philosophy and can communicate the culture.
    6. Practical Suggestions for Reading Corporate Culture:
      • Look at the physical setting
      • Put yourself in the customer's shoes
      • Look at other forms of customer interface
      • Read company literature
      • Compare stories
      • Compare behavior
  4. How Do You Keep A Culture Going?

    5. Active mechanisms to ensure the endurance of the culture include selecting people with like minds, closely working with them early in their careers, and reinforcing central cultural elements over time.
    1. Selection of New People:
      • To really manage its values, an organization should fully control the initial selection and entry of employees.
      • Some firms will provide a realistic job preview (RJP) to potential newcomers.
    2. Socialization: Learning the Ropes:
      • Socialization: the process of learning organizationally useful behaviors.
      • Orientation phase: those first few weeks or months on the job.
      • Mentors: individuals who help integrate newcomers into the way of life at the organization.
    3. Evaluation/Rewards: Putting Your Money Where Your Culture Is:
      • A major way to ensure compliance is to measure and reward performance in terms of your culture.
    4. Culture by Example: Behavior Can Speak Louder than Visions:
      • The behavior of top management often determines whether a culture is lived by employees or just talked about.
  5. How Does A Culture Get There In The First Place?
    1. Role of the Founder:
      • There is no one definitive way that distinctive cultures get started.
      • One of the most common mechanisms is the vision of the founder or the person responsible for dramatically growing or moving the company.
      • Even after the founder is gone, he or she can have a continuing role in the corporate culture.
    2. Environmental Influences on Culture:
      • Almost certainly, the business environment in which the firm operates has an important effect on culture, even in the presence of a dominating personality.
      • A Model of How Business Climate Can Direct Culture:
      • Two most important variables in this approach include:
        • Amount of risk inherent in your business
        • Speed with which you feedback about that risk
      • These two variables combine to form four different cultures
      1. Fearlessness Culture:
      • Fearlessness culture: characterizes those businesses in which people put a lot on the line and simultaneously get fast feedback about the risk involved.
      • Examples include:
        • Venture capitalist
        • Homebuilders
      • This culture seems to invite individuals who are willing to take chances.
      • Weaknesses of the fearlessness culture include:
        • People are often abrasive to those they interact with
        • Cooperation is unlikely
        • Mistakes are not considered learning experiences
        • Scoring points off others is de rigueur
      1. Persistence Culture:
      • Persistence culture: people are likely to receive rapid feedback but there is little risk associated with it.
      • Examples include:
        • Salespeople
        • Real estate
      • Problems with this culture type include:
      • Tendency to look for a quick-fix solution
      1. The One-Shot Culture:
        • One-shot culture: less common than the other three; a load of risk; slow feedback.
        • Examples include:
          • Oil business and NASA.
        • People attracted to this type are those who can tolerate uncertainty for long periods of time, respect authority, have a lot of technical competence, and who will be careful.
        • Drawbacks to this type of culture include:
          • People are relatively slow in getting things accomplished.
          • Organization is vulnerable to short-term economic problems.
      2. The Process Culture:
      • Process culture: feedback is slow and there is not much risk involved.
      • A way of life emerges that is centered on company policies and procedures of operations.
      • Examples include:
        • Insurance business, banks, bureaucracies such as government agencies.
  6. When Cultures Need to Change
      • Warning Signs of a Need to Change Culture:
      • Warning signs to watch for include:
      • Is there too much of an inward focus?
      • Is the focus invariably short term?
      • Is morale low?
      • Have people forgotten the culture?
      • Are group relations poor?
      • Is leadership isolated?
    1. Methods for Change:
      • Specific ways a firm may change its culture include:
      • A change in top management especially if top management has been influential in establishing the existing culture.
      • Manufacture a crisis
      • Realignment of the way new people are selected and brought into the firm
      • Transfers or rotations
      • Reward systems
      • Keys to facilitating culture change:
      • Understand your culture before making moves
      • Do not attack the culture head on
      • Encourage the culture catalysts
      • Be patient - do not count on a quick fix




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