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
why is it difficult to change a culture ?
- beliefs and values ingrained, staff attitudes formed over long period of time = difficult to change (staff are most important share holder to convince)
- respect and trust leader to enact change
- only attempt major overhaul if really necessary
- employees worked somewhere for years = resist change cant see need for it/unnecessary (fear job security)
-major culture overhauls hard to do and often fail, long race culture evolves slowly momentum is hard to sustain
barriers to cultural change
traditions and set ways
fear of
tradition and set ways:
- loyalty to existing relationships
- fail to accept need for change
- insecurity
- preference for existing arrangements
- different person ambition
fear of:
- loss of power, skills, income
- unknown
- inability to perform as well in new situation
- break up of work groups
strategies to achieve/change culture
- financial stability
- commercial DNA (strong)
- external recruitment
- change organisational structure/leadership team, make strategic decisions
- delayering
- consulting with staff
- quality circles
- internal communication = industrial relations (employees&employers)
- rewards systems aligned with goals (score cards)
5 ways to changing culture
- start with clear and consistent vision
- communicated at all layers of hierarchy especially middle managers, objectives management by objs
- get staff buy in involve them in change
- requires a clear business strategy
- takes time
