McGraw-Hill/Irwin © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

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Chapter TitleChapter Title

15/e PPT15/e PPT

Corporate

Culture and

Leadership

Screen graphics created by:Jana F. Kuzmicki, Ph.D.

Troy University-Florida Region

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Defining Characteristics of Corporate Culture

Core values, beliefs, and business principles Ethical standards Operating practices and behaviors defining

“how we do things around here” Approach to people management “Chemistry” and “personality” permeating

work environment Oft-told stories illustrating

Company’s values Business practices Traditions

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A company’s culture is manifested in . . . Values, business principles, and ethical standards preached

and practiced by management Approaches to people management and problem solving Official policies and procedures Spirit and character permeating work environment Interactions and relationships among managers and

employees Peer pressures that exist to display core values Its revered traditions and oft-repeated stories Its relationships with external stakeholders

Identifying the Key Featuresof Corporate Culture

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Founder or early leader

Influential individual or work group

Policies, vision, or strategies

Operating approaches

Company’s approach to people management

Traditions, supervisory practices, employee attitudes

Organizational politics

Relationships with stakeholders

Where Does CorporateCulture Come From?

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Types of Corporate Cultures

Strong vs. Weak CulturesStrong vs. Weak Cultures

Unhealthy CulturesUnhealthy Cultures

High-Performance CulturesHigh-Performance Cultures

Adaptive CulturesAdaptive Cultures

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Conduct business according to a clear, widely-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 newemployees to be sure they will “fit in”

Characteristics ofStrong Culture Companies

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Characteristics of Weak Culture Companies

Lack of a widely-shared core set of values

Few behavioral norms evident in operating practices

Few strong traditions

No strong sense of company identity

Little cohesion among departments

Weak employee allegiance tocompany’s vision and strategy

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Highly politicized internal environment Issues resolved on basis of political clout

Hostility to change Avoid risks and don’t screw up Experimentation and efforts to

alter status quo discouraged “Not-invented-here” mindset – company

personnel discount need to look outside for Best practices New or better managerial approaches Innovative ideas

Disregard for high ethical standards and overzealous pursuit of wealth by key executives

Characteristics of Unhealthy Cultures

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Standout cultural traits include A can-do spirit Pride in doing things right No-excuses accountability A results-oriented work climate in which people go the extra

mile to achieve performance targets

Strong sense of involvement by all employees Emphasis on individual initiative and creativity Performance expectations are clearly identified for all

organizational members Strong bias for being proactive, not reactive Respect for the contributions of all employees

Characteristics ofHigh-Performance Cultures

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Willingness to accept change and embrace challenge of introducing new strategies

Risk-taking, experimentation, and innovation to satisfy stakeholders

Entrepreneurship is encouraged and rewarded

Funds provided for new products New ideas openly evaluated Genuine interest in well-being

of all key constituencies Proactive approaches to

implement workable solutions

Hallmarks of Adaptive Cultures

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A company’s culture can contribute to – or hinder – successful strategy execution

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 where attitudesand behaviors impedegood strategy execution is ahuge obstacle to be overcome

Culture: Ally or Obstacleto Strategy Execution?

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Fig. 13.1: Changing a Problem Culture

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A culture based on ethical principles isvital to long-term strategic success

Ethics programs help make ethical conduct a way of life

Executives must provide genuine supportof personnel displaying ethical standardsin conducting the company’s business

Value statements serve as acornerstone for culture-building

Our ethicsprogram

consists of . . .

Grounding the Culture inCore Values and Ethics

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Fig. 13.2: The Two Culture-Building Roles of aCompany’s Core Values and Ethical Standards

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Fig. 13.3: The Benefits of Cultural Norms StronglyGrounded in Core Values and Ethical Principles

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Establishing a Strategy-Culture Fit in Multinational and Global Companies

Institute training programs to Communicate the meaning of core values and Explain the case for common operating

principles and practices

Create a cultural climate where the norm is to Adopt best practices Use common work procedures Pursue operating excellence

Give local managers Flexibility to modify people management

approaches or operating styles Discretion to use different motivational and compensation

incentives to induce personnel to practice desired behaviors

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Develop a broad network of formaland 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

Role #1: Stay on Top of What’s Happening

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Successful leaders spend time

Mobilizing organizational energy behind

Good strategy execution and

Operating excellence

Nurturing a results-oriented work climate

Promoting certain enabling cultural drivers

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

Role #2: Put Constructive Pressure onCompany to Achieve Good Results

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Top management intervention isrequired to establish better or new Resource strengths and competencies

Competitive capabilities

Senior managers must lead the effort because Competencies reside in combined

efforts of different work groups and departments, thus requiring cross-functional collaboration

Stronger competencies and capabilitiescan lead to a competitive edge over rivals

Role #3: Promote Stronger CoreCompetencies and Capabilities

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Role #4: Display Ethics Leadership and Lead Social Responsibility Initiatives

Set an excellent example in

Displaying ethical behaviors

Demonstrating character andpersonal integrity in actions and decisions

Declare support of company’s ethics codeand expect all employees to conductthemselves in an ethical fashion

Encourage compliance and establish toughconsequences for unethical behavior

Our ethicscode is . . .

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Role #5: Lead the Process ofMaking Corrective Adjustments

Requires deciding When adjustments are needed

What adjustments to make

Involves Adjusting long-term direction, objectives, and strategy on

an as-needed basis in response to unfolding events and changing circumstances

Promoting fresh initiatives to bring internal activities and behavior into better alignment with strategy

Making changes to pick up the pace when results fall short of performance targets