UNIT-3

Relationship between Ethics & Corporate Excellence

Life has become one gigantic game. To succeed in this game, we have to struggle. This struggle
is consuming our life silently.

Do not discard success because of the simple reason that the creative process which is installed
in your DNA, has to be allowed to express itself. Creativity has to be encouraged. But in this
process, if you are not alert, your inner joy will be destroyed. Hence, make sure that your
commitment to corporate excellence is based on the foundation of work ethics.

Ethics is not some set of rules based on laws. Ethics is based on goodness. Goodness is not
bound by one’s definition; it is like intelligence; it is free-flowing, but has its intrinsic wisdom.
Ethics is order and action born out of goodness. Goodness in action mode is ethics. It is an
indicator of health to be ethical in an unethical society.

An ethical process is order in motion and hence immensely crucial in the corporate world. An
important aspect of being altruistic is a high degree of integrity. From a spiritual dimension, it is
integrating the physical, emotional, intellectual and spiritual aspects. Abusing the body is
unethical.

Corporate Excellence is defined as the ability of the company to outsmart Competitors

consistently over a long period of time. In this context, successful organizations are different
from excellent organizations. Success may be of one dimensions but excellence is of multiple
dimensional in the company. In the ever-changing business environment, the following are the
critical areas that facilitate the company to achieve excellence

(1) BUSINESS PROCESS REENGINERING:

As the business scenario is fast changing day by day, to meet the ever-changing demands of the
market the organizations need to restructure & redesign their Business processes. The BPR
facilities sweeping changes in all the functional areas of the organization. It reinvents the way
the business is carried out, and ultimately helps the company to engender corporate
excellence. As, striving to become excellent is a continuous process, corporate excellence can’t
be a Destination, it is a journey.

(2) GROWTH – SUSTAINABLE DEVELOPMENT:

The corporate objective of mere growth may just lead to maximization of sales Revenue or
profits, which don’t help the organization to be excellent. Many organizations are growing at a
rapid speed, but they failed to develop consistently. Hence the companies need to redefine
their objectives towards sustainable development.
(3) CORE – COMPETENCE:

A unique strength either in technology or in the processing of functional areas, that an

organization enjoys exclusively and which can’t be copied by the competitors is called – Core
Competence. This unique strength helps the company to get competitive advantage over a long
period of time, which in turn facilitates the company to excel.

Core competencies contribute significantly to customer benefits and satisfaction, which is a

primary aim of any business. Core competencies help the firm in a multifaceted manner. A
company can achieve competence superiority only by means of core competence, and it will
lead to corporate excellence.

E.g.: Honda has got its core competence in the design and manufacturing of automobile
engines.

(4) RESOURCE UTILIZATION:

Excellence in organization can be achieved through proper utilization of the basic Human,
Physical & financial, resources. New and advanced technologies have to be adopted in all the
functional areas like – production, marketing, finance, HRD, of the organization. Organizations
need to strengthen their Research and Development departments in order to embrace latest
technologies.

(5) E-COMMERCE:

As the competition in business area is growing rapidly the business organizations started
redefining their business activities. According to Fortune Magazine – “Electronic Commerce is
the new industrial order. It will change the relationship between consumers & Producers.

As Electronic Commerce involves the exchange of products, Services, and information of

payment through the electronic medium of computers & networks, it facilitates the continuum
relation between the company and the customer, which is a pre requisite for a company to
excel.

(6) CRM (CUSTOMER RELATIONSHIP MANAGEMENT):

In the process of achieving corporate excellence in the present day highly competitive market,
the organizations ability to compete depends on its relationship with its target customers. The
basis for continuity of relation between the company and the customer, over a period & time is
value maximization to customers, which will lead to customer loyalty. In an attempt to achieve
corporate excellence the organizations should try to develop strong Customer Relationship
Management.
(7) SOCIAL CONSCIOUSNESS:

Organizations can achieve corporate excellence by means of contributing to the well being of
the society. As the customers are becoming aware of the cause and effect of polluted
environment, all the business firms should have a concern for society, by introducing
ecologically friendly products or services.

Many companies in India are redesigning their business activities, giving importance to society
and are launching Non-Government Organizations.

Example :- Satyam Computers of Hyderabad started Byrraju Foundation, which is specialized

in the field of rural development. Emergency ambulance services by the name 108 has been a
mega hit in various districts of Andhara Pradesh.

Dr. Reddy’s Laboratories of Hyderabad floated Dr. Reddy’s Foundation in field of youth welfare
and development.

(8) BUSINESS ETHICS:

In order to achieve excellence, the companies should have basics positive values and attitudes.
Ethics deals with what is wrong and what is right in various disciplines of the organization.
Unethical practices may yield short term gains but organization can’t be successful in the long
run. The organization should develop and formulate the right approaches and strategies to
excel. Because it is to be noted that being right in ethical behavior always pays off.

Besides the above said elements, there are certain areas by which corporate excellence is
facilitated in the modern business world. Young entrepreneurs and business mangers must pay
attention to all these areas in order to see their organization excel

(a) EXCELLENCE THROUGH MANUFACTURING:

In the manufacturing area, a new concept called – World Class Manufacturing ( WCM ) has
emerged recently. The companies adopting WCM are able to introduce the products and
services very much closer to the needs and wants of the costumer. This helps the company to
be successful because WCM has the following characteristics:

I) Products of high quality

II) Products with enhanced features
III) Products at the right price.
(b) EXCELLENCE THROUGH MARKETING MIX:

In the ever changing, highly competitive business field new directions have to be shown in
order to strive & ultimately to achieve corporate excellence.

All organizations, irrespective of the product they offer and the service they provide are always
in search of achieving excellence. The basic area of concern to accomplish corporate excellence
is effective management of Marketing Mix of the company. Innovation in product attributes,
reasoning in prices, wide spread & easy reach in placing, the right distribution networks,
objective in promotion, are the fields that a firm seeking excellence should concentrate on.

(c) EXCELLENCE THROUGH HRM:

Among all the organizational resources, the human resources are the most vital and require
constant refinement. Organizational objectives and strategies must match with HR strategies.
Since the change is the fundamental element in achieving corporate excellence, change
management is to be backed by human resources of the firm. The change can be facilitated by
means of HR activity- Training. Hence the training programmes in the new age business
organizations should focus on – Team work, leadership, initiation, interpersonal
communication.

(d) EXCELLENCE THROUGH INFORMATION:

In this present networking era, information has become a major resource after physical,
financial, human resources of the organization. Proper management of information is the best
way to get competitive advantage. Computer based information systems help the organization
to convert raw data in to meaningful information, which helps the manger in taking effective
decisions, which in term improve business performance and ultimately lead to corporate
excellence. Information systems like TPS (Transaction Processing System), MIS (Management
Information Systems), DSS (Decision Support Systems), ESS (Executive Support Systems) if used
intelligently helps the organization to reach the pinnacle in the competition.

Corporate Mission Statement

A good mission statement is useful tool for well-run business. It’s the “why” of business
strategy.

A mission statement define a company’s goals in three important ways:

 It defines what the company does for its customers

 It defines what the company does for its employees
 It defines what the company does for its owners
Some of the best mission statements also extend themselves to include fourth and fifth
dimensions: what the company does for its community, and for the world.

Developing your company’s first mission statement, or writing a new or revised one, is your
opportunity to define the company’s goals, ethics, culture, and norms for decision-making. The
daily routine of business gets in the way sometimes, and a quick refresh with the mission
statement helps a person take a step back and remember what’s most important: the
organization has a purpose.

Don’t waste your time with a bad mission statement

That a traditional business plan often includes a mission statement isn’t a reason to do one.
And make it useful or don’t bother. The vast majority of the mission statements are just
meaningless hype that could be used to describe any business in the category.

1. Start with a market-defining story

You don’t have to actually write the story—it’s definitely not included in the mission
statement—but do think it through:

Imagine a real person making the actual decision to buy what you sell. Use your imagination to
see why she wants it, how she finds you, and what buying from you does for her. The more
concrete the story, the better. And keep that in mind for the actual mission statement
wording: “The more concrete, the better.”

A really good market-defining story explains the need, or the want, or—if you like jargon—the
so-called “why to buy.” It defines the target customer, or “buyer persona.” And it defines how
your business is different from most others, or even unique. It simplifies thinking about what a
business isn’t, what it doesn’t do.

This isn’t literally part of the mission statement. Rather, it’s an important thing to have in your
head while you write the mission statement. It’s in the background, between the words. If
you’re having trouble getting started, make a quick list of what your company does and doesn’t
do.

2. Define what your business does for its customers

Start your mission statement with the good you do. Use your market-defining story to suss out
whatever it is that makes your business special for your target customer.

Don’t undervalue your business: You don’t have to cure cancer or stop global climate change to
be doing good. Offering trustworthy auto repair, for example, narrowed down to your specialty
in your neighborhood with your unique policies, is doing something good. So is offering
excellent slow food in your neighborhood, with emphasis on organic and local, at a price
premium.

This is a part of your mission statement, and a pretty crucial part at that—write it down.

If your business is good for the world, incorporate that here too. But claims about being good
for the world need to be meaningful, and distinguishable from all the other businesses. Add the
words “clean” or “green” if that’s really true and you keep to it rigorously. Don’t just say it,
especially if it isn’t important or always true.

3. Define what your business does for its employees

Good businesses are good for their employees too or they don’t last. Keeping employees is
better for the bottom line than turnover. Company culture matters. Rewarding and motivating
people matters. A mission statement can define what your business offers its employee.

My recommendation is that you don’t simply assert how the business is good for employees—
you define it here and then forever after make it true.

Qualities like fairness, diversity, respect for ideas and creativity, training, tools, empowerment,
and the like, actually really matter. However, since every business in existence at least says that
it prioritizes those things, strive for a differentiator and a way to make the general goals feel
more concrete and specific.

With this part of the mission statement, there’s a built-in dilemma. On the one hand, it’s good
for everybody involved to use the mission statement to establish what you want for employees
in your business. On the other hand, it’s hard to do that without falling into the trap of saying
what every other business says.

Stating that you value fair compensation, room to grow, training, a healthy, creative work
environment, and respect for diversity is probably a good idea, even if that part of your mission
statement isn’t unique. That’s because the mission statement can serve as a reminder—for
owners, supervisors, and workers—and as a lever for self-enforcement.

If you have a special view on your relationship with employees, write it into the mission
statement. If your business is friendly to families, or to remote virtual workplaces, put that into
your mission.

And this is rare in mission statements. The vast majority are focused on messaging for
customers. My recommendation here is not the norm. I include it because it’s good practice,
even though not common.

While I consulted for Apple Computer, for example, that business differentiated its goals of
training and empowering employees by making a point of bringing in very high-quality
educators and presenters to help employees’ business expertise grow. That was part of the
culture and, to my mind, part of the mission; but it wasn’t part of the mission statement. It
could have been.

American Express, however, includes the team in its mission:

“We have a mission to be the world’s most respected service brand. To do this, we have
established a culture that supports our team members, so they can provide exceptional
service to our customers.”

4. Add what the business does for its owners

In business school they taught us that the mission of management is to enhance the value of
the stock. And shares of stock are ownership. Some would say that it goes without saying that a
business exists to enhance the financial position of its owners, and maybe it does. However,
only a small subset of all businesses are about the business buzzwords of “share value” and
“return on investment.”

In the early years of my business I wanted peace of mind about cash flow more than I wanted
growth, and I wanted growth more than I wanted profits. So I wrote that into my mission
statement. And at one point I realized I was also building a business that was a place where I
was happy to be working, with people I wanted to work with; so I wrote that into my mission
statement, too.

However, this element too, as with the suggestion about including employees, is unusual. Few
mission statements do it. That’s understandable, since most mission statements are outward
facing only, aimed at customers and nobody else.

Still, some of the best mission statements incorporate a much broader sense of mission that
includes, or at least implies, the mission of ownership.

Warby Parker, an eyewear company, does a great job at voicing a higher mission that includes
customers, employees, and owners.

“Warby Parker was founded with a rebellious spirit and a lofty objective: to offer designer
eyewear at a revolutionary price, while leading the way for socially-conscious business.”

5. Discuss, digest, cut, polish, review, revise

Whatever you wrote for points two through four above, go back and cut down the wordiness.
Good mission statements serve multiple functions, define objectives, and live for a long time.
So, edit. This step is worth it.

Start by considering developing a full mission statement for internal use and using a customer-
facing subset for general publication. That’s common. Many companies have segmented
mission statements, with sections set aside and categorized by type or goal. Use bullet points or
sections if that works for you. Part of the reason people confuse mission with mantra and vision
is that many businesses use them together, and many others also redefine them to fit their
context. So what a company does for customers is often called vision, despite the formal
definition.

Remember, form follows function, in mission statements, as in all business. Make it work for
your business. Or don’t do it at all. If you want to call it a vision, and that works for employees
and customers, then do that.

As you edit, keep a sharp eye out for the buzzwords and hype that everybody claims. Cut as
much as you can that doesn’t apply specifically to your business, except for the occasional
special elements that—unique or not—can serve as long-term rules and reminders. Unique
itself, the word, means literally, the only one in the world. Use it sparingly. Phrases such as
“being the best possible,” “world-class,” and “great customer service” mean little because
everybody uses them. Having great customer service is way harder than writing that into a
mission statement.

Read other companies’ mission statements, but write a statement that is about you and not
some other company. Make sure you actually believe in what you’re writing—your customers
and your employees will soon spot a lie.

Then, listen. Show drafts to others, ask their opinions, and really listen. Don’t argue, don’t
convince them, just listen. And then edit again.

And, for the rest of your business’s life, review and revise it as needed. As with everything in a
business plan, your mission statement should never get written in stone, and, much less,
stashed in a drawer. Use it or lose it. Review and revise as necessary, because change is
constant.

Code of ethics, Guidelines for developing code of ethics

Code of ethics

A code of ethics is a guide of principles designed to help professionals conduct business

honestly and with integrity. A code of ethics document may outline the mission and values of
the business or organization, how professionals are supposed to approach problems, the ethical
principles based on the organization’s core values and the standards to which the professional
is held. A code of ethics, also referred to as an “ethical code,” may encompass areas such
as business ethics, a code of professional practice and an employee code of conduct.

Both businesses and trade organizations typically have some sort of code of ethics that their
employees or members are supposed to follow. Breaking the code of ethics can result in
termination or dismissal from the organization. A code of ethics is important because it clearly
lays out the rules for behavior and provides the groundwork for a preemptive warning.

Regardless of size, businesses count on their management staff to set a standard of ethical
conduct for other employees to follow. When administrators adhere to the code of ethics, it
sends a message that universal compliance is expected of every employee.

Compliance-Based Code of Ethics

For all businesses, laws regulate issues such as hiring and safety standards. Compliance-based
codes of ethics not only set guidelines for conduct, but also determine penalties for violations.

In some industries, including banking, specific laws govern business conduct. These
industries formulate compliance-based codes of ethics to enforce laws and regulations.
Employees usually undergo formal training to learn the rules of conduct. Because
noncompliance can create legal issues for the company as a whole, individual workers within a
firm may face penalties for failing to follow guidelines.

To ensure that the aims and principles of the code of ethics are followed, some companies
appoint a compliance officer. This individual is tasked with keeping up to date on changes in
regulation codes and monitoring employee conduct to encourage conformity.

This type of code of ethics is based on clear-cut rules and well-defined consequences rather
than individual monitoring of personal behavior. Therefore, despite strict adherence to the law,
some compliance-based codes of conduct do not promote a climate of moral responsibility
within the company.

Value-Based Code of Ethics

A value-based code of ethics addresses a company’s core value system. It may outline
standards of responsible conduct as they relate to the larger public good and the environment.
Value-based ethical codes may require a greater degree of self-regulation than compliance-
based codes.

Some codes of conduct contain language that addresses both compliance and values. For
example, a grocery store chain might create a code of conduct that espouses the company’s
commitment to health and safety regulations above financial gain. That grocery chain might
also include a statement about refusing to contract with suppliers that feed hormones to
livestock or raise animals in inhumane living conditions.
Code of Ethics Among Professionals

Financial advisers registered with the Securities and Exchange Commission or a state regulator
are bound by a code of ethics known as fiduciary duty. This is a legal requirement and also a
code of loyalty that requires them to act in the best interest of their clients.

Guidelines for developing code of ethics

Development Process

The first step in developing a code of conduct is to establish the purpose of the codes and why
they matter. In a KPMG survey of Fortune Global 200 companies, the three most common
reasons for adopting business codes were to comply with legal requirements, create a shared
company culture, and protect and improve the organization’s reputation. KPMG’s survey also
found that the most commonly cited core values of Fortune Global 200 companies are integrity,
teamwork, respect, innovation, and client focus. Schwartz also recommended that code
provisions should be consistent with “six universal moral values” (trustworthiness, respect,
responsibility, fairness, caring, and citizenship), which should prevail over financial objectives.

Once the purpose is established, the framework for developing a code requires a full
understanding of the operational and reputational risks an organization faces. These issues
define the organization’s objectives when developing code content, policies, communication,
and training that address individual and collective responsibilities regarding risk management.

To achieve the organization’s risk management standards it is important to draft a code that
clearly states expectations and guidelines for acceptable behavior, and provides options for
seeking advice and for reporting concerns or suspected misconduct. In his research on the
many dimensions of code development, Schwartz found that employees, managers, and ethics
officers consider codes more effective when they are readable, relevant, and have a positive
tone.

In addition, choosing your language carefully is important, as the authors of an article analyzing
Lehman Brothers’ Code of Ethics concluded: “finding the right words to express ideas and
behaviors is a key strategic action for an organization.” The authors studied Lehman Brothers’
code using the Competing Values Framework (CVF) to reveal the rhetorical elements of the
message, and the Erwin method to rate the code’s tone, readability, and style. They found that
Lehman Brothers’ code’s strengths were on the relational (trust) and informational (facts) side,
as opposed to the transformational (change) and instructional (action) side, of the CVF. This led
to their conclusion that:

The Lehman code of ethics and internal code of conduct do not offer much vision or guidance
to the reader. . . . While it lays out the basic rules expected of all Lehman employees, executives
missed the opportunity to create a unique code expressing strong ethical principles. A more
transformational code might have identified their unique strengths and values, but this would
have to be coupled with transformational leadership and a culture of strong communication.
The Lehman code did a basic job of protecting the organization against illegal actions by
employees, but it did little to advance an ethical culture that might have sustained them.

One of the things the authors found lacking was guidance for employees who are faced with
difficult decisions. The American Management Association proposes using the code of conduct
to guide employees who are conducting business and making decisions in business dealings and
relationships around the globe, by simply recommending that employees ask themselves two
questions:

1. Does this comply with the law, the Code of Conduct and the company’s policies?
2. How would customers, shareholders, general public and co-workers view it?

The best practices for drafting codes of conduct that emerge from these studies include:

 Obtain buy-in across the organization with input from a multidisciplinary team
 Include the organization’s mission statement, vision, and values that reflect its
commitment to ethics, integrity, and quality
 Clarify that the organization expects individuals to act with honesty and integrity in
addition to compliance with legal requirements
 Describe expected behaviors rather than stating prohibitions
 Cover relevant risks, employment practices, protecting corporate assets, and managing
third-party relationships
 Make it user-friendly and applicable to all individuals covered by the code
 Use simple, concise, and easily understood language (and provide translated versions as
needed)
 Describe enforcement and disciplinary procedures
 Solicit feedback on the code from all levels of the organization
 Update to improve content and address new issues or risk areas

But the mere existence of a code of ethics, without more, will not create a sense of shared
values and commitment to ethical behavior.

Implementation

Based on their analysis of the effect that Lehman Brothers’ code of ethics had on its corporate
culture, the authors concluded that “silence can be deadly,” “codes fail when poorly
communicated,” and “codes themselves cannot create ethical organizations.”

In fact, their research found that these two actions are key to code implementation:

 Communicate codes through the right channels and explain why they’re important
 Integrate codes into the organization’s practices and back it up with enforcement
Once drafted, an organization needs to embed the code into its culture. The KPMG report
recommends that the code become a “living” document to guide and create ethical behavior
throughout the organization through:

 Communication and training

 Personnel and other policy measures
 Monitoring, auditing, and reporting
 At the companies KPMG surveyed, training courses were commonly used to:

 Explain the importance of the code

 Reinforce ethical behavior
 Strengthen the moral compass
 Identify and deal with dilemmas
 Provide guidance on how to implement the code more effectively

At Lehman Brothers, the ethical code contained the phrase “compete aggressively in furthering
the interests of the firm.” However, the authors raise the question of whether explaining to
employees the level of acceptable risk in “competing aggressively” would have avoided
leveraging the company “into a lethal situation.”

Effective implementation requires ethical leadership and support, training, and continuous
reinforcement and updates to keep the code current. Ongoing administration and
reinforcement of code standards embeds an organization’s values into its culture, which
stimulates ethical reflection and action, and encourages compliance so that employees speak
up when they see others engaging in unethical behavior. And for the skeptics who question
whether an effective code of ethics is worth all this effort, the bottom line is that good ethics
are good for business.

Organizational Culture

Organizational culture can be defined as the group norms, values, beliefs and assumptions
practiced in an organization. It brings stability and control within the firm. The organization is
more stable and its objective can be understood more clearly.

Organizational culture helps the group members to resolve their differences, overcome the
barriers and also helps them in tackling risks.

Elements of Organizational Culture

The two key elements seen in organizational culture are:

 Visible elements: These elements are seen by the outer world. Example, dress code,
activities, setup, etc.
  Invisible elements: These inner elements of the group cannot be seen by people outside
the group or firm. Example, values, norms, assumptions, etc. Now let us discuss some
other elements of organizational culture. They are:
 Stories: Stories regarding the history of the firm, or founder.
 Rituals: Precise practices an organization follows as a habit.
 Symbol: The logo or signature or the style statement of a company.
 Language: A common language that can be followed by all, like English.
 Practice: Discipline, daily routine or say the tight schedule everyone follows without any
failure.
 Values and Norms: The idea over which a company is based or the thought of the firm is
considered as its value and the condition to adopt them are called norms.
 Assumptions: It means we consider something to be true without any facts.
Assumptions can be used as the standard of working, means the employees prepare
themselves to remain above standard.

Different Types of Organizational Culture

The culture a firm follows can be further classified into different types. They are:

 Mechanistic and Organic culture

 Authoritarian and Participative culture
 Subculture and Dominant culture
 Strong and Weak culture
 Entrepreneurial and Market culture

Mechanistic and Organic Culture

Mechanistic culture is formed by formal rule and standard operating procedures. Everything
needs to be defined clearly to the employees like their task, responsibility and concerned
authorities. Communication process is carried according to the direction given by the
organization. Accountability is one of the key factors of mechanistic culture.

Organic culture is defined as the essence of social values in an organization. Thus there exists a
high degree of sociability with very few formal rules and regulations in the company. It has a
systematic hierarchy of authority that leads towards free flow of communication. Some key
elements of organic culture include authority, responsibility, accountability and direct flow
towards the employee.

Authoritarian and Participative Culture

Authoritarian culture means power of one. In this culture, power remains with the top level
management. All the decisions are made by the top management with no employee
involvement in the decision making as well as goal shaping process. The authority demands
obedience from the employee and warns them for punishment in case of mistake or
irregularity. This type of culture is followed by military organization.
In participative culture, employees actively participate in the decision making and goal shaping
process. As the name suggests, it believes in collaborative decision making. In this type of
culture, employees are perfectionist, active and professional. Along with group decision
making, group problem solving process is also seen here.

Subculture and Dominant Culture

In subculture, some members of the organization make and follow a culture but not all
members. It is a part of organizational culture, thus we can see many subcultures in an
organization. Every department in a company have their own culture that gets converted to a
subculture. So, the strength and adaptability of an organizational culture is dependent on the
success of subculture.

In dominant culture, majority of subculture combine to become a dominant culture. The

success of dominant culture is dependent on the homogeneity of the subculture, that is, the
mixture of different cultures. At the same point of time, some cold war between a dominant
culture and a minor culture can also be seen.

Strong and Weak Culture

In a strong culture, the employees are loyal and have a feeling of belongingness towards the
organization. They are proud of their company as well as of the work they do and they slave
towards their goal with proper coordination and control. Perception and commitment are two
aspects that are seen within the employees. In this culture, there is less employee turnover and
high productivity.

In a weak culture, the employees hardly praise their organization. There is no loyalty towards
the company. Thus, employee dissatisfaction and high labor turnover are two aspects of this
culture.

Entrepreneurial and Market Culture

Entrepreneurial culture is a flexible and risk-taking culture. Here the employees show their
innovativeness in thinking and are experimental in practice. Individual initiations make the goal
easy to achieve. Employees are given freedom in their activity. The organization rewards the
employees for better performance.

Market culture is based on achievement of goal. It is a highly target-oriented and completely

profit-oriented culture. Here the relationship between the employees and the organization is to
achieve the goal. The social relation among the workers is not motivating.
How to Create an Organizational Culture

An organizational culture is created with the combination of certain criteria that are mentioned
below:

 The founder of the organization may partly set a culture.

 The environment within which the organization standards may influence its activities to
set a culture.
 Sometimes interchange of culture in between different organizations create different
new cultures.
 The members of the organization may set a culture that is flexible to adapt.
 New cultures are also created in an organization due to demand of time and situation.

The culture of an organizational can change due to composition of workforce, merger and
acquisition, planned organizational change, and influence of other organizational culture.

Total Quality Management (TQM)

Total Quality Management (TQM) is the continual process of detecting and reducing or
eliminating errors in manufacturing, streamlining supply chain management, improving the
customer experience, and ensuring that employees are up to speed with their training. Total
quality management aims to hold all parties involved in the production process accountable for
the overall quality of the final product or service.

A total approach to quality is the current thinking of today; which is popularly called total
quality management (TQM).

TQM is a philosophy that believes in a company-wide responsibility toward quality via fostering
a quality culture throughout the organization; involving continuous improvement in the quality
of work of all employees with a view to best meeting the requirements of customers.
Advantages of TQM

(i) Sharpens Competitive Edge of the Enterprise

TQM helps an organization to reduce costs through elimination of waste, rework etc. It
increases profitability and competitiveness of the enterprise; and helps to sharpen the
organization’s competitive edge, in the globalized economy of today.

(ii) Excellent Customer Satisfaction

By focusing on customer requirements, TQM makes for excellent customer satisfaction. This
leads to more and more sales, and excellent relations with customers.

(iii) Improvement in Organisational Performance

Through promoting quality culture in the organization, TQM lead to improvements in

managerial and operative personnel’s performance.

(iv) Good Public Image of the Enterprise

TQM helps to build an image of the enterprise in the minds of people in society. This is due to
stress on total quality system and customers’ requirements, under the philosophy of TQM.

(v) Better Personnel Relations

TQM aims at promoting mutual trust and openness among employees, at all levels in the
organization. This leads to better personnel relations in the enterprise.
Limitations of TQM

The philosophy of TQM suffers from the following major limitations

(i) Waiting for a Long Time

TQM requires significant change in organization; consisting of:

1. Change in methods, processes etc. of organization.

2. Change in attitude, behaviour etc. of people

Launching of TQM and acceptance of the philosophy of TQM requires a long waiting for the
organization. It is not possible to accept and implement TQM overnight.

(ii) Problem of Labour Management Relations

Success of TQM depends on the relationships between labour and management; because
participation of people at all levels is a pre-requisite for TQM programme implementation. In
many organizations, here and abroad, labour-management relations are quite tense. As such,
launching, acceptance and implementation of TQM programme is nothing more than a dream
for such organizations.

Basic Principles of TQM

In TQM, the processes and initiatives that produce products or services are thoroughly
managed. By this way of managing, process variations are minimized, so the end product or the
service will have a predictable quality level.

Following are the key principles used in TQM

(i) Top management – The upper management is the driving force behind TQM. The upper
management bears the responsibility of creating an environment to rollout TQM concepts and
practices.

(ii) Training needs – When a TQM rollout is due, all the employees of the company need to go
through a proper cycle of training. Once the TQM implementation starts, the employees should
go through regular trainings and certification process.

(iii) Customer orientation – The quality improvements should ultimately target improving the
customer satisfaction. For this, the company can conduct surveys and feedback forums for
gathering customer satisfaction and feedback information.
(iv) Involvement of employees – Pro-activeness of employees is the main contribution from the
staff. The TQM environment should make sure that the employees who are proactive are
rewarded appropriately.

(v) Techniques and tools – Use of techniques and tools suitable for the company is one of the
main factors of TQM.

(vi) Corporate culture – The corporate culture should be such that it facilitates the employees
with the tools and techniques where the employees can work towards achieving higher quality.

(vii) Continues improvements – TQM implementation is not one time exercise. As long as the
company practices TQM, the TQM process should be improved continuously.