3.4.2 Influences on business decisions: corporate culture Flashcards
company culture
norms and values of a business
Charles Handy “ the way we do things around here”
‘toxic culture’ fails
factors influencing culture of an organisation/how culture is formed?
- leadership style
- founder = well respected = set values
- market they operate within/industry
- size of business/development
- legal structure/organisational structure, policies, practices
- values/stance
- reward structures (pay/bonus)
- working environment and nature of tasks (physical office, remote/flexible
- attitude of organisation to risk taking and innovation
strong culture
values and beliefs that are widely shared and significantly influences people’s behaviour
- good internal communication with employees
- clear core values/mission/goals
- culture is usually based around history/tradition/founders
- encourages risk taking and innovation
- engage loyal staff (consistency)
- not easily copied
weak culture
values and beliefs either dont exist or are not widely shared so don’t significantly influence people’s behaviour
- leads to business failure
- exhibit a demotivated work force = may be poorly managed
- little alignment with values
- inconsistent behaviours
- very bureaucratic (lots of paper/work systems) lack of flexibility to respond to dynamic market
power culture
autocratic
web structure
-power concentrated at centre, central figure make decision
-only few people have decision making power
-few rules and little bureaucracy
-competitive attitude to gain power
-quick decisions possible, focus on achievement
-central source of power responsible for decision making e.g. single founders of a small firm
role culture
autocratic or paternalistic
-long chain of command, tall
hierarchical/functional structure = closely managed
-employees clearly defined role in formal structure and high control
-rules and procedure
-power derives from someone’s role in business (job title)
-links to a tall structure with long chains of command
-decision making can be slow (very bureaucratic)
-decisions made through well established rules and procedures can be bureaucratic with clear roles e.g marketing director
task culture
paternalistic/democratic
- focus on projects
- matrix organisation teams are formed to solve problems/work on projects
- no single source of power/can shift
- power comes from expertise within a project team (accomplish task)
- dynamic culture - organisation structure changes depending on project
-power lies with those who can accomplish task depends on expertise rather than roles, teams often formed with experts who get the job done
person culture
democratic
- individual employees believe themselves to be superior to the business
- similar skills and expertise - power lies in individuals
- employees are highly skilled, professionally qualifications training and experience
- e.g. solicitor, accountant, management consultant, lawyers
-no of individuals that have expertise and see themselves as superior to organisation, organisation exists to enable individuals to carry out their work
risk averse culture
-staff likely to reject decisions that involve taking significant risks e.g. diversifying or launching new products
toxic culture
-behaviour and attitudes of staff can damage a firms reputation and lead to unethical behaviour
pros of Handy’s approach to culture
- suggest 4 types, power person role task
- useful for analysing existing situations
- used by managers in many part of world
cons of Handy’s approach
- overly focused on leaders/leadership
- takes narrow view of culture, ignores ethics and risk taking
- ignore issue of cultural change
difficulties in changing corporate culture
- may be set of attitudes = tough to overcome
- need to ensure all staff believe change is genuinely going to happen at it is the right one
- middle managers = crucial = hold back from supporting
- need to have clear consistent message everyone believes = far more likely to support it
- new leaders assume change in culture is essential = unsuccessful
4 reasons why resist change in culture due to
1-self interest
2-low tolerance to change
3-misunderstanding of proposed change
4-different assessments of need to change
4 ways to ensure cultural change to be successful …
1-clear purpose
2-education and training
3-consistency of communication
4-effective communication
