Corporate culture 3.4.2 Flashcards
What is corporate culture?
The values, beliefs and standards shared by people and groups within an organisation. These will impact on the way that people within the organisation interact with each other and with other stakeholders.
The culture of a business is reflected in many ways, e.g;
- How employees are recruited - the cultural factors that make one applicant more suitable than another
- The way that visitors and guests are looked after
- How the working space is organised
- The degree of delegation and individual responsibility (effects decision making)
- How long new employees stay in a business (retention)
- How contracts are negotiated and agreed
- The personality and style of the sales force
- The responsiveness of communication (impacts staff motivation)
- The methods used for communication (impacts staff motivation)
- How staff address each other (first name, last name etc)
- The speed in which decisions are made (effects decision making)
- The number of layers in the management hierarchy
- How performance is rewarded in the workplace
- How competitive the business e.g. through innovation
- How is brand image perceived
What is a strong and weak culture?
Is one which is deeply embedded into the ways a business or organisation does things. With a strong culture, employees and management understand what is required of them and they will try to act in accordance with the core values.
This can arise when the core values are not clearly defined, communicated or widely accepted by those working for the organisation. It can also occur if there is little alignment between the way things are done and the espoused values. This can lead to inconsistent behaviour of people in the organisation which in turn results in inconsistent customer experiences!
What are the features of a strong culture?
- Staff respond positively to cultural values
- A shared sense of responsibility towards vision, mission and objectives
- A motivated and loyal workforce
- Greater efficiency
- Accept roles and responsibilities willingly
- Abide by policies
- “Everyone buys into it”
- Consistent behaviour
- Low staff turnover
- Strong internal communication
- Change is welcomed
- Mistakes are seen as a learning process
- Customer needs are at the centre of the business
What are the features of a weak culture?
- Little alignment with cultural values
- Employees have to be forced to perform duties
- Greater management control and supervision lead to a bureaucracy and strict procedures
- Treat the organisation as a source of income only
- Inconsistent behaviour
- The needs of the business are put before the customer’s needs
- Communication is weak
- Staff turnover is high
- Mistakes are about blame, not learning
- Change is seen as a problem
- Staff doubt the business’s mission and ethos
What are the 4 types of cultures?
- Power
- Role
- Task
- Person
What is power culture?
Usually, a strong culture in a business comes from the centre and concentrates power among a small number of people (Centralised decision-making and Autocratic leadership) whose influence spreads through the business. There are few rules as those with power decide the rules. Employees are judged by what they achieve rather than how they do their jobs. The decision can be taken quickly through leadership can become very toxic.
What are the strengths and weaknesses of power culture?
Benefits include quick decision-making, few rules and bureaucracy, and if the business gets the culture right then employees have high levels of satisfaction and commitment to corporate objectives.
Drawbacks are that it can lead to high levels of employee dissatisfaction if employees do not learn and meet the needs of the business and it can quickly become a hostile place to work if things go wrong.
What is role culture?
A business where power depends on the person’s status or role in within the business; normally businesses with a high level of detailed rules on how people should interact. Clear rules and procedures result in a clear hierarchy (Bureaucratic relationship) where the organisation functions based on each individuals role within a clearly defined structure. The organisation has a tall structure with long chains of command. Personal power is frowned upon, with the allocation of work and responsibility more important than individual personalities.
What are the strengths and weaknesses of role culture?
Benefits include offering employees security and the opportunity to acquire specialist skills, and good employee performance yields appropriate pay and promotion rewards.
Drawbacks include the culture being frustrating for ambitious employees and it being overly bureaucratic, which leads to slow-decision making.
What is task culture?
When a business creates teams (delegation) to resolve specific issues or projects and power then shifts to team members (Matrix structure). Emphasis on achieving set outcomes through cooperation and teamwork. The success of this culture depends on the team dynamics, including the mix of skills, personalities and leadership qualities. There will be no single power source, with teams developing their own objectives.
What are the strengths and weaknesses of a task culture?
Benefits include the organisation being very flexible and sensitive to the market environment, it can be a highly creative experience for staff, and it is particularly suited to short product life cycles and dynamic markets as there is a rapid reaction to changing competitive markets.
Drawbacks include problems in achieving economies of scale or depth of expertise and controlling the organisation is difficult as senior managers may concentrate on allocating projects rather than day-to-day control of teams.
What is person culture?
A business which is only there to support and help individual employees who perceive themselves as unique or superior (decentralised decision-making) and have power over it (democratic leadership); often consists of independent professionals such as doctors or lawyers with similar levels of training and expertise. Risk-taking and innovation are actively encouraged and rewarded, whilst failure is not criticised.
What are the strengths and weaknesses of a person culture?
Benefits include the organisation being highly creative and individual, with a strong emphasis on customer wants and needs. It is also very quick to deal with the changing needs of the market.
Drawbacks include staff are difficult to manage, staff are in demand so turnover can be high, staff are difficult to influence, and corporate objectives are difficult to achieve if they are at odds with individual goals.
The factors that influence the formation of corporate culture include:
- The founder of the business - For example, the “Bill Gates way” or the “Alan Sugar way” may influence things years after the founder has left.
- Size and development stage of the business - small businesses or start-ups may have a far more entrepreneurial culture than large multinationals.
- Leadership and management style.
- Employee and management reward structures - For example, at John Lewis staff (‘partners’) all share in the business’s profits.
- The external environment, such as legal, economic or social factors - for example, at British Nuclear Fuels, which disposes of nuclear waste, the culture is based firmly on the very tight legal framework which governs how, where and when the company disposes of highly dangerous materials.
