2. “An organization’s capacity
to execute its strategy depends on its “hard”
infrastructure--its organization structure and systems--and
on its “soft” infrastructure--its culture and norms.”
Amar Bhide
“Quote”
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3. What is Organizational Climate?
Climate represents the beliefs about the "feel of the
organization“. This feel is developed when members
seek answers to the following questions:
How well does the leader clarify the priorities and
goals of the organization?
What is expected of us?
What is the system of recognition, rewards, and
punishments in the organization?
How competent are the leaders?
Are leaders free to make decision?
What will happen if I make a mistake?
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4. What is Organizational Culture?
Culture is a long-term, complex phenomenon, which
represents the shared expectations and self-image of
the organization; the mature values that create
"tradition" or the "way we do things here;" the
collective vision and common folklore that define the
institution are a reflection of culture. Individual
leaders, cannot easily create or change culture
because culture is a part of the organization. But,
everything one does as a leader will effect the climate
of the organization.
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5. What Makes Up a Company’s Culture?
• Beliefs about how business ought to be conducted
• Values and principles of management
• Work climate and atmosphere
• Patterns of “how we do things around here”
• Oft-told stories illustrating company’s values
• Traditions
• Ethical standards
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6. Where Does Corporate
Culture Come From?
• Founder or early leader
• Influential individual or work group
• Policies, vision, or strategies
• Traditions, supervisory practices, employee attitudes
• Organizational politics
• Relationships with stakeholders
• Social commitments
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7. How Is a Company’s Culture
Perpetuated?
• Selecting new employees based on how well their personalities “fit” in
• Systematic indoctrination of new employees
• Senior employees’ reinforcement of core values
• Story-telling of company legends
• Ceremonies honoring employees who display cultural ideals
• Visibly rewarding those who follow cultural norms
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8. Culture and Strategy Execution:
Ally or Obstacle?
• Culture can contribute to -- or hinder -- successful strategy
execution
• Requirements for successful strategy execution may -- or may
not -- be compatible with culture
• A close match between culture and strategy promotes
effective strategy execution
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9. Why Culture Matters: Benefits
of a Good Culture-Strategy Fit
• Strategy-supportive cultures
– Shape mood and temperament of the work force, positively
affecting organizational energy, work habits, and operating
practices
– Provide standards, values, informal rules and peer pressures that
nurture and motivate people to do their jobs in ways that promote
good strategy execution
– Strengthen employee identification with the company, its
performance targets, and strategy
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10. • Strategy-supportive cultures
– Stimulate people to take on the challenge of realizing the company’s
vision, do their jobs competently and with enthusiasm, and
collaborate with others to execute the strategy
– Optimal condition: A work
environment that
• Promotes can do attitudes
• Accepts change
• Breeds needed capabilities
Why Culture Matters: Benefits of a
Good Culture-Strategy Fit (continued)
Can
Do!
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11. Types of Corporate Cultures
Strong vs. Weak Cultures
Unhealthy Cultures
Adaptive Cultures
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12. Characteristics of
Strong Culture Companies
• Conduct business according to a clear, widely-understood
philosophy
• Management spends considerable time communicating and
reinforcing values
• Values are widely shared and deeply rooted
• Careful screening/selection of new employees to be sure
they will “fit in”
• Visible rewards for those following norms; penalties for
those who don’t
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13. Values
Customers
Employees
Shareholders
How Does a Culture Come to Be Strong?
• Leader who establishes values consistent with
– Customer needs
– Competitive conditions
– Strategic requirements
• A deep, abiding commitment to espoused values and business philosophy
– Practicing what is preached!
• Genuine concern for well-being of
– Customers
– Employees
– Shareholders
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14. Characteristics of
Weak Culture Companies
• Many subcultures
• Few values and norms widely shared
• Few strong traditions
• Little cohesion among the departments
• Weak employee allegiance to company’s vision and
strategy
• No strong sense of company identity
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15. Characteristics of Unhealthy or Low
Performance Cultures
• Politicized internal environment
• Hostility to change
– Experimentation and efforts to alter status
quo discouraged
– Avoid risks and don’t screw up
• Promotion of managers more
concerned about process and details than results
• Aversion to look outside for superior practices
– Must-be-invented here syndrome
Avoid
risks!
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16. Hallmarks of Adaptive Cultures
• Introduction of new strategies to achieve superior performance
• Strategic agility and fast response to new conditions
• Risk-taking, experimentation, and innovation to satisfy stakeholders
• Proactive approaches to implement workable solutions
• Entrepreneurship encouraged and rewarded
• Top managers exhibit genuine concern for
customers, employees, shareholders, suppliers
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17. • Incorporate values statement and ethics code in employee training
programs
• Screen out applicants who do not exhibit compatible character traits
• Communicate the values and ethics code to all employees
• Management involvement and oversight
• Strong endorsement by CEO
• Word-of-mouth indoctrination
Instilling Values and Ethics
in the Culture
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18. Building a Spirit of High
Performance into the Culture
• Emphasize achievement and excellence
• Promote a results-oriented culture
• Pursue practices to inspire people to excel
• Desired outcome
– Produce extraordinary results with ordinary people
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19. Approaches to Building a
Spirit of High Performance
• Treat employees with dignity and respect
• Train each employee thoroughly
• Encourage employees to use initiative
• Set clear performance standards
• Use rewards and punishment to enforce
high-performance standards
• Hold managers responsible for employee development
• Grant employees autonomy to contribute
• Make champions out of people who excel
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20. People Management Practices That
Promote a Spirit of High Performance
• Belief in the worth of the individual
• Strong commitment to
– Job security
– Promotion from within
• Managerial practices that encourage
employees to exercise individual initiative
and creativity
• Pride in doing the “itty-bitty, teeny-tiny
things” right
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21. Features of the Corporate
Culture at Wal-Mart
• Dedication to customer satisfaction
• Zealous pursuit of low costs
• Belief in treating employees as partners
• Ritualistic Saturday morning meetings
• Executive commitment to
– Visit stores
– Talk to customers
– Solicit employees’ suggestions
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22. • Hard-driving, results-oriented atmosphere prevails
– All businesses are held to a standard of being #1 or #2 in their
industries as well as achieving good business results
• Concept of boundary less organization exists
• Reliance upon “workout sessions” to identify, debate, and resolve
“burning issues”
• Commitment to Six Sigma Quality
• Globalization of the company
Features of the Corporate
Culture at General Electric
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23. Semco Corporation! A Unique Culture
Latin America’s fastest growing organization, which successfully defied an
inflation up to 900% per annum. Acknowledged to be one of the best
companies around the world of it’s size. Has a History of just 12 years under
current management style, and has a backlog of more than 16,000
applications from people who wish to work with Semco. In 12 years, the
company went from a small sized conventional family owned concern to a
diversified and dynamic workplace. Executives from organizations like IBM,
GM, Yashica, Bayer, Nestle, Siemens, Dow Chemicals, Ford and Merck which
themselves are termed as excellent companies visit Semco quite regularly to
learn about this unbelievable company!
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