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DEFINING THE CORPORATE CULTURE 1.1. Meanings of the term The term “organizational culture” has
various meanings. Schein classified most popular meanings as follows:
1.2. Ontological and deontological approaches There are two main approaches in defining of the corporate culture. First approach defines culture as a complex of features emerging from the essence of organization (i.e. what is organizational culture). Another approach defines the culture in terms of duty (i.e. what organizational culture should be). Adopting the analogy from the ethics, I’ll be calling these approaches ontological (i.e. based on the essence of the culture) and deontological (i.e. based on duties). Concerning classification above, Schein notices that all those meanings only reflect the culture, but none of them are the essence of culture. His definition of organizational culture is “a pattern of basic assumptions – invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration – that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relations to those problems.” (Schein 1985, 6). The example on another approach is following: “Emphasis on such principles as open communication, intellectual challenge, and ethical business practices are all part of a firm’s unique culture.” (Messmer 2001, 40). This approach became more popular in last 20 years, with the raise of awareness about the social responsibility. In brief, this approach is based on what is called “Theory Y” by McGregor. The attempts to create corporate culture based on this approach artificially (Rehder 1985) failed. However, we can change the corporate culture, what will be shown in Chapter 3. 1.3. The levels of corporate culture Schein
tries to establish the links that exist among the “elements”
of the corporate culture. He refers to these values and behaviors
as “levels” and tries to arrange them according to their
importance in the organizational culture’s complex. His scheme
(Schein 1985, 14) includes: This model of the corporate culture is similar to Masaaki Imai’s TQM model (cited by Glenn 1992). In Japanese business model the gemba or workplace is described in following terms: machines, materials, method, measurement, human beings. Proceeding up through each level, we are finding out that less and less is quantifiable. Even though Glenn is talking about total quality management, all those elements are included in the organizational culture. The position of personnel on the top of hierarchy corresponds with its role in organizational culture in works of contemporary authors (Rehder 1985, Daskalaki 2000, Sherer 1994). As we saw, the bottom line of all definitions of the corporate culture is shared cognitive approaches, values & etc. Therefore, most authors agree about the critical role of employees in the defining of the culture: “The company is building its corporate culture from the ground up by asking employees what they feel the culture is or should be.” (McCune 1999, 53). 1.4. The early case of corporate culture: Larkin Company The corporate culture becomes a topic of scholar research only in 20th century, but companies realized the importance of organizational culture in their business activities as early as 1870s. One of the most prominent examples of the developed corporate culture was Larkin Co., Buffalo-based soap manufacturing company. Larkin who was a talented entrepreneur invented the idea of personal sells of his products. He established the nationwide network of clubs whose members where women who served de facto as sells agents. “The company called this strategy ‘The Larkin Idea’ and touted it with motto, ‘From Factory-to-Family: Save All Cost Which Adds No Value.’” (Stanger 2000, 408). The point of the his corporate culture was the involvement of all stakeholders – “employees, managers and executives, and customers in what it called a family of ‘Larkinites.’” (Stanger 2000, 408). What concerns employee relations as an important element of corporate culture, Larkin Company “began to adopt a more comprehesive approach toward employee relations. Larkin’s offerings fell into three categories: recreational, educational and financial. Men and women participated jointly in many of the programs but were segregated in athletics, in the Young Women’s Christian Association (YWCA), and in factory and office rest areas.” (Stanger 2000, 425). The company published the magazine called “Ourselves” for the employees and conducted different events which goal was the increasing of employee commitment to company and its values. The significant element of corporate culture, its “physical representation” was the administration building that was built by Frank Lloyd Wright. Its structure “left the executives with no privacy and without the status conferred be being allotted space on the top floor of an office building…All ‘Larkinites’ – employees, executives and guests – dined together in the same open place.” (Stanger 2000, 427-429 The corporate culture of Larkin Company was expressed by words “Co-operation, Economy, Industry, Generosity, Altruism, Sacrifice, Integrity, Loyalty, Fidelity.” Historically, Larkin’s corporate culture is a prototype of those contemporary ones. ANALYSIS OF EXISTING CULTURE 2.1. Functions of culture in the organizations When dealing with the corporate culture, the question “what’s the goal of corporate culture?” emerges. We saw how corporate culture appeared from shared values (i.e. it’s internal issue), but environment “initially determines the possibilities, options and constraints for a group, and thus forces the group to specify its primary task or function if it is to survive at all.” (Schein 1985, 51) So, the core mission of any corporate culture is to adjust the organization to the external environment. This task demands from the group reaching the consensus on various elements of culture mix: core mission, primary task, means, measuring results, remedial and repair strategies etc. (Schein 1985). Another important function of the corporate culture is the internal integration. The corporate culture is “developing a common language and conceptual categories” (Schein 1985, 65) for the whole group. Besides that, corporate culture should deal with the stratification, or the allocation of the influence, power and authority. Messmer (2001) provides an example of FTI consulting, a multi-discipline consulting firm, where employee retentoin as a part of corporate culture is kept high through keen insight and genuine concern for the most important elements of job satisfaction for its consultants. Those employees shouldn’t focus on small pieces of a project but “continually aware of an engagement’s big picture. Keeping all employees actively involved in the entire process sustains their interest and helps them develop their skills.” (Messmer 2001, 43) Daskalaki analyzes the induction programmes in the organizations and suggests that organizational culture “can be manipulated and utilized as a form of ideological control.” (Daskalaki 2000, 211) She stresses the importance of “employee involvement and empowerment as well as the role of flexible, team-based working patterns.” (Daskalaki 2000, 212) In fact, her approach to the corporate culture is influenced by works of Frankfurt school (Adorno, Markuse, Horkheimer). She points out that “induction studies portray a passive employee without a voice and choice, a helpless subject becoming the object of managerial behavioral and attitudinal manipulation.” (Daskalaki 2000, 212-213) Some authors (Conrad et al.) view the main function of the corporate culture as a determinant of business performance. “The ideal mix of cultural elements does exist and is related to the amount of attention a firm devotes to the measurement and management of customer satisfaction.” (Conrad et al. 1997, 672) The aim of corporate culture in this case is the greater customer satisfaction, and the increasing of repeat sales as a consequence of this. 2.2. Classifications of cultures Social groups could be characterized by variety of characteristics. Scholars influenced by Durkheim, German sociologist of early 20th century, suggest to analyze organizations in terms of two dimensions – group and grid (Douglas 1987, cited by Starkey 1998). ‘Group’ “measures the strength of commitment to group membership, the degree of incorporation of the individual into groups… ‘Grid’ is a measure of the degree of regulation by an organization of its constituent groups and reflects the degree of structure imposed on group activity. These dimensions suggest four categories of organizational involvement which form the basis of four types of possible cultures – the central community (high on group and grid), dissenting enclaves (high on group, but low on grid), isolates (high on grid, low on group) and individualists (low on group and low on grid).” (Starkey 1998, 130) Deshpande et al proposed another approach, based on the connection of corporative culture and business performance. Scholars conducted interviews with the employees of the leading Japanese firms and came up with four types of the existing corporate culture: the market culture, the adhocracy culture, the clan culture and the hierarchical culture. (Conrad et al. 1997, 665) First, or the market culture, “was hypothesized as being associated with firms that had the best business performance. Such a culture places great emphasis on both competitive advantage and market superiority. Deshpande et al. identify the dominant attributes of the market culture as competitiveness and goal achievement.” (Conrad et al. 1997, 665) The second best performing culture, or adhocracy culture, emphasizes “innovation, growth, and the acquisition of new resources. Enterpreneurship, creativity and adaptability are the dominant attributes of the adhocracy culture.” (Conrad et al. 1997, 665) The
organizations with clan culture emphasize “a development of
human resources, commitment, and morale”, and the hierarchy
culture is about “order, rules and regulations, and uniformity.”
(Conrad et al. 1997, 666) As we’ll see below, employees view their organizations as having a mixture of these four types of cultures but with emphasis on particular types. 2.3. Exporting corporate culture The
paradigm of the shared values as a basis of the corporate culture
caused a lot of studies devoted to multicultural differences (Adler
& Jelinek 1986, McCune 1999, Applbaum 1999, Deshpandey & Farley
1999). Adler & Jelinek explain the cultural variances and locate
the American cultural perspective within that model. Following Hofstede,
Kluckholn and Strodbeck, they view American model in some scales.
Respectively, American culture has following features: Deshpande & Farley, studying the corporate cultures of Indian and Japanese firms, found out that there is no such phenomenon like “Asian business model.” They found out also that the “most successful Indian firms have entrepreneurial cultures, which is also the most prevalent type of organizational culture among major Indian organizations… In Japan, however, the most successful firms are bothe entrepreneurial and competitive, though the most prevalent organizational culture is consensual.” (Deshpande & Farley 1999, 121) Thus, the company that is going to open its affiliate abroad, should either educate itself about the local culture, or convey its corporate culture to employees. Modern companies choose both ways. For example, Nokia has had all new employees take a “Cultural Awareness” class for Americans to study Finnish culture (McCune 1999, 55). As a rule, modern companies have “one” culture, but it plays differently in various parts of the world. In other words, the core corporate culture of transnational company remains the same, but it enriches with new local elements: say, “Wal-Mart offers stock options to U.S. employees to built esprit de corp. But in Germany, that form of compensation would violate local laws, so the retailer must find other ways to reward employees.” (McCune 1999, 55) It makes the new global cultures hybrids – each overseas operation is a hybrid of the overall corporate culture and the subsidiary’s local culture. THE CHANGES IN THE CORPORATE CULTURE 3.1. Driving the changes: Bell Atlantic case Raymond Smith, former CEO of Bell Atlantic, spent almost ten years at the position of top executive officer. He points that “Today, there’s more change in a month in my business than in any five-year period in the early days of my career with AT&T.” (Smith 1994, 25). The changes are getting more and more important issue in the corporate culture mix. Smith describes the situation when he became a president of AT&T, the mother company of Bell Atlantic: “…my business had budgets, procedures and rate cases – but not strategies. We company presidents weren’t expected to be involved in decisions relating to corporate direction or policy. In the three years I managed those 35,000 people and that multi-billion dollar part of the Bell system, I never once received a call from my boss.” (Smith 1994, 25) By the 1980s , the technology boom changed the telecommunication business forever. That was tremendous risk, but in the meantime “tremendous opportunity.” (Smith 1994, 25). Hopefully, due to clear vision and strong corporate culture Bell Atlantic managed to save and to enlarge their market share. In the
1993 Bell Atlantic decided to join the forces with another telecommunication
giant – TCI. The merger was caused by three threats: However,
Bell Atlantic merged with TCI and managed to keep the largest share
on the cable business and communications. Experience they gained Smith
describes as follows: The situation described by Smith is dealing with the changing of the corporate culture; even though he doesn’t go in depth, we can assume which changes happen during the mergers. 3.2. Changes in corporate culture: mergers There are a lot of works in the Body of Knowledge that devoted to mergers and how they change the corporate culture. Applbaum (1999) in his work refers to the case of merger of American- and French-based advertising agencies. His interest to this study was heightened by two factors: “… the necessity for each agency to adjust its internal arrangements to accommodate cooperation with the partner firm, for each the partner was also oriented differently along perceived (national) cultural differences: language, custom, legal practices… Second, at the time it was enacted, alliances were uncommon in the advertising industry.” (Applbaum 1999, 156). The problems which both agencies faced were not only the differences of their languages, customs and values (i.e., and corporate cultures), but also the roles of CEOs in this process. Two top executive were absolutely different people with different behavioral characteristics and management visions. The special transition team was appointed to work on smoothing the initial problems. They served as crisis management team, coordinating the actions of both agencies and trying to establish the communication between American and French offices (conference calls, negotiations on CEOs level). Theodore Levitte’s prognostication about customers that would prefer “world-standardized products” occurred to be false. Applbaum basically describes the difficulties of two kinds: first is the clash of cultures (described above) and second one is the role of leadership during the changes. In mentioned situation the companies managed the changes, reaching the consensus through shared cultural terms signifying common goals. “If promulgation of nomenclature,” notes Applbaum, “such as globalization, bigger is better, and flexibility constitutes… a regularization process within the firm, it also represents a bureaucratization process in the overall institutional/professional configuration of management in general… The process in which firms adopt from outside themselves techniques, practices, theories and language – what management consultants, who are often the vector for such cross-pollination, call ‘learnings’ – is also the process of expansion of managerial capitalism.” (Applbaum 1999, 164). 3.3.
Different approaches to classification of changes in Jill Sherer in her article “Corporate Cultures: Turning ‘us versus them’ into ‘we’” provides some hints to the organization’s leader how to deal in a case of merger. The tips include: “Be honest and open with employee; create a multidisciplinary transition team composed of executives who will remain in the new organization; conduct action-oriented attitude/climate surveys. Six months to a year after merging, survey employees on specific ways to improve productivity, morale and motivation, and to solidify corporate culture.” (Sherer 1994, 22). Her scholarship investigates the pecularities of the mergers and what kind of corporate culture emerges after the merger of two different companies. After the interview she conducted with employees and executives involved in mergers, she came up with following conclusion: the merger is possible only if companies have shared values. If one entity is larger, its culture most likely will be dominating in the new organization; sometimes it’s possible that new culture emerges, unlike original two. Third possibility is that elements of both cultures could combine, initially expressing the extremes of both cultures. McCune (1999) stresses the importance to be cultural aware for CEO. “This gives them a broader perspective and helps them understand the local corporate culture issues outside the home’s country.” (McCune 1999, 55). The corporate culture of many companies includes the including foreign executives in the Board of Directors, or, at least, people who have been worked abroad long enough. Luthy (1993) is writing about three types of transitions, or changes. His classification includes leadership change: “Properly done, transitioning from one manager or management team to another provides an opportunity for the entire organization to examine itself and assess its strengths, weaknesses, goals, missions and values. During this type of transition the organization can refocus on how it meets its charter – how it accomplishes it purpose.” (Luthy 1993, 3). The second transition, according to Luthy, is internal and external crises: “Crisis management must become a proactive process of transitioning from one status to another, and not simply a case of being driven helplessly before an imposing conflict or difficult circumstance.” (Luthy 1993, 4). And, finally, the last type of changes, or transitions, according to Luthy, is planned change. Schein (1985) refers to the model of corporate culture’s change as to the model of life cycle. He defined that corporate culture passes the stages of growth, succession, organizational midlife, organizational maturity and destruction option. The functions of the culture are different on every stage; the mechanisms of changes, which work between those stages, are different as well. The main conclusion that Schein make here is that change is not but general evolutionary process; the corporate culture is impossible without changes. The changes serve as adaptational and therapeutical process (Schein 1985, 304-305). 3.4. The role of leadership in changes’ management 1990s were the time of ‘new economy’ boom, the blossoming of businesses ruled out by young professionals whose average age was less than 35 years. They changed the face of corporate America, so in the article by Laura Tiffany in the october’s issue of Enterpreneur there was a short table which elements of “old culture” passed away. So, there is no more suit & tie, t-shirt and jeans came instead of that. Two-hour lunch, cubicles and titles like Mr., Mrs. And Ms. Are also became anachronism in the offices of new companies. The emerging of the new economy made the role of the leader even more important than it used to be. Schein sees the unique and essential function of leadership as “the manipulation of culture.” (Schein 1985, 317). Schein desribes the role of leader in the maintaining and developing of the organizational culture, based on his model of culture’s stages of growth. Depending on the stage, the leader needs such a qualities like vision, ability to articulate or enforce it; persistence and patience, stability and emotional reassurance and so on. As it was mentioned before, Schein believes that shared values (the basis of the corporative culture) are strongly depends on the leader who interact with group members. “His personality and belief system” (Schein 1985, 320) is what shapes the collective values. It is interesting to note out that the perception of the leader’s role in the Western and the Eastern cultures is different. On the West “Traditional view of leadership is based on assumption of people’s powerlessness, their lack of personal vision and inability to master the focus of change, deficits which can be remedied only by a few great leaders.” (Master 1992, 11). Meanwhile, the Eastern perception is expressed by Lao Tzu sentence “The great leader is he who the people say, ‘We did it ourselves.’” (Master 1992, 11). The most properly, to my mind, the role of leadership in the model of corporate culture is defined in Keston’s article (1992). She defines the model of changes on the example of the U.S. Army Community and Family Support Center. This
model includes five elements: catalysts for change, or the starting
conditions that was the reason for changes in corporate’s culture;
vision for future (how can we use our advantages in transitions);
strategy choices (what is supposed to be done); leadership (leader’s
vision of a changes) and the results. The contemporary view on the
leadership assumes leadership to be “politically and technologically
astute, situational and views change as norm and encourages risktaking.”
(Keston 1992, 17). Adler,
Nancy J. & Jelinek, M. (1986). Is “Organizational Culture”
Culture Bound? Human Resource Management, 25(1), 73-90. |
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