Chapter

13
Corporate Culture and Leadership
Screen graphics created by: Jana F. Kuzmicki, Ph.D. Troy State University-Florida and Western Region
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Chapter Roadmap
 Building a Corporate Culture that Promotes Good Strategy

Execution
          
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What to Look for in Identifying a Company’s Culture Culture: Ally or Obstacle to Strategy Execution? Types of Cultures Creating a Strong Fit Between Strategy and Culture Grounding the Culture in Core Values and Ethics Establishing a Strategy-Culture Fit in Multinational Companies Staying on Top of How Well Things Are Going Pushing Company to Achieve Good Results Keeping Internal Organization Focused on Operating Excellence Exercising Ethics Leadership Making Corrective Adjustments

 Leading the Strategy Execution Process

 Its core values, beliefs, and business principles

The Defining Characteristics of a Company’s Culture

 Patterns of “how we do things around here”—its style of  Oft-told stories illustrating company’s values  Its approach to people management  Ethical standards  Internal politics  Traditions
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operating and ingrained behaviors of company personnel

A company’s culture is manifested in . . .
 Values, beliefs, and business principles        
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What to Look for in Identifying Corporate Culture

management preaches and practices Official policies and procedures Its revered traditions and oft-repeated stories Attitudes and behaviors of employees Peer pressures that exist to display core values Its politics Approaches to people management and problem solving Its relationships with external stakeholders “Chemistry” and “personality” permeating work environment

How Is Culture

a Company’s Perpetuated?

 Selecting new employees who will “fit” in  Systematic indoctrination of new employees  Senior management efforts to reinforce core values,

beliefs, principles, key operating practices

 Story-telling of company legends  Ceremonies honoring employees

who display cultural ideals who follow cultural norms

 Visibly rewarding those
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Culture: Ally to Strategy
successful strategy execution

or Obstacle Execution?

 A company’s culture can contribute to – or hinder –  A culture that promotes attitudes and

behaviors that are well-suited to first-rate strategy execution is a valuable ally in the strategy execution process
 A culture that embraces attitudes and

behaviors which impede good strategy execution is a huge obstacle to be overcome
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Why Culture Matters: Benefits of a Tight Culture-Strategy  A culture that encourages Fit actions and behaviors
supportive of good strategy execution
Provides employees with clear guidance regarding what behaviors and results constitute good job performance  Creates significant peer pressure among coworkers to conform to culturally acceptable norms

 A culture imbedded with values and behaviors

that facilitate strategy execution promotes strong employee commitment to the company’s
Vision  Performance targets  Strategy

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Types of Corporate Cultures
Strong vs. Weak Cultures Unhealthy Cultures

Adaptive Cultures
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 Conduct business according to a clear, widely-

Characteristics of Strong Culture Companies

understood philosophy
 Considerable time spent by management communicating

and reinforcing values
 Values are widely shared and deeply rooted  Have a well-defined corporate character,

reinforced by a creed or values statement
 Careful screening/selection of new

employees to be sure they will “fit in”
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Creating a Strong Fit Between Strategy and Culture
Responsibility of Strategy Maker –
Select a strategy compatible with the sacred or unchangeable parts of organization’s prevailing corporate culture

Responsibility of Strategy Implementer –
Once strategy is chosen, change whatever facets of the corporate culture hinder effective execution
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Fig. 13.1: Changing a Problem Culture

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Grounding the Culture in Core Values and Ethics
 A culture based on ethical principles is

vital to long-term strategic success
 Ethics programs help make

Our ethics program consists of . . .

ethical conduct a way of life
 Executives must provide genuine support

of personnel displaying ethical standards in conducting the company’s business
 Value statements serve as a

cornerstone for culture-building
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Fig. 13.2: The Two Culture-Building Roles of a Company’s Core Values and Ethical Standards

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Fig. 13.3: How a Company’s Core Values and Ethical Principles Positively Impact the Corporate Culture

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Instilling Values and Ethics in the Culture
 Incorporate values statement and ethics

code in employee training programs  Screen out applicants who do not exhibit compatible character traits  Frequent communications of the values and ethics code to all employees  Management involvement and oversight  Strong endorsement by CEO  Ceremonies and awards for individuals and groups who display the values  Institute ethics enforcement procedures
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Establishing a Strategy-Culture Fit in Multinational and Global Companies
 Institute training programs to
 Communicate  Explain

the meaning of core values and

the case for common operating principles and practices

 Draw on full range of motivational and

compensation incentives to induce personnel to adopt and practice desired behaviors
 Allow some leeway for certain core values and principles

to be interpreted and applied somewhat differently, if necessary, to accommodate local customs and traditions
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1. Stay on top of what’s happening

Leadership Activities of the Strategy Implementer

2. Put constructive pressure on company to achieve good results 3. Keep company focused on operating excellence
Carly Fiorina 4. Lead development of stronger core Hewlett-Packard competencies and competitive capabilities

5. Exercise ethics leadership 6. Take corrective actions to improve overall strategic performance
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Role #1: Stay on Top of What’s Happening
 Develop a broad network of formal and informal sources

of information
 Talk with many people at all levels  Be an avid practitioner of MBWA
 Observe

situation firsthand

 Monitor operating results regularly  Get feedback from customers  Watch competitive reactions of rivals
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Role #2: Put Constructive Pressure on Company to Achieve Good Results
 Successful leaders spend time
 Mobilizing

organizational energy behind

 Good strategy execution and  Operating excellence
 Nurturing

a results-oriented work climate certain enabling cultural drivers

 Promoting

 Strong sense of involvement on part of company

personnel
 Emphasis on individual initiative and creativity  Respect for contributions of individuals and groups  Pride in doing things right
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 Promote openness to improving

Role #3: Keep Organization Focused on Operating Excellence

how things are done  Support mavericks with creative ideas to improve ways of operating  Ensure rewards for successful champions are large and visible  Use all kinds of ad hoc organizational forms to support experimentation  Use tools of benchmarking, best practices, reengineering, TQM, and Six Sigma to focus attention on continuous improvement
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 Top management intervention is
 Resource

Role #4: Promote Stronger Core Competences and Capabilities
strengths and competences capabilities

required to establish better or new
 Competitive

 Senior managers must lead the effort because
 Competences

reside in combined efforts of different work groups and departments, thus requiring cross-functional collaboration competencies and capabilities can lead to a competitive edge over rivals

 Stronger
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Role #6: Lead the Process of Making Corrective Adjustments  Requires deciding
 When  What

adjustments are needed adjustments to make

 Involves
 Adjusting

long-term direction, objectives, and strategy on an as-needed basis in response to unfolding events and changing circumstances fresh initiatives to bring internal activities and behavior into better alignment with strategy changes to pick up the pace when results fall short of performance targets

 Promoting  Making
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