Evolvement, Measurement and Management of a Corporate Culture

Question 1

Brown (1998) specifies three main sources of corporate culture

Answer 1

 the society in which the company is situated

 vision, personality and style of management of the founder or
an important leader

 form and characteristics of the business model and the
environment

Question 2

Sources of Corporate Culture: Society

Answer 2

 National cultures or regional cultural differences are the basis for any
organizational culture to grow

 There are approaches to measure regional differences, e.g., the cultural
dimensions of Hofstede or Schwartz

 Other aspects of society may be the political or demographic setting an
organization is operating in

Question 3

Sources of Corporate Culture: Leadership

Answer 3

 Organizations are initiated by
individuals (often the founder)

 During the early phase of an organization’s existence founders are in an
extremely privileged position to determine
- what mission is to be pursued and in what business context
- who is recruited
- what rules, systems and procedures will be instigated
- what constitutes acceptable behavior in the workplace

 founders tend to impose their beliefs and
values

Question 4

Sources of Corporate Culture: Business Model and Environment

Answer 4

 Stakeholders
People who have a stake or interest in organization’s success
- Customers: have proved powerful in shaping the organization’s culture,
e.g., by demanding a “quality culture”
- Government: shape culture by regulations, legal frameworks, rulings on
monopoly and mergers, etc.
- Public: pressure to enforce “equality of opportunity”, e.g., for women and
minorities; environmental campaigns
- Shareholders: have surprisingly little actual influence on cultural
developments of an organization; mainly only if when ownership is mainly
held by an individual or a family

 Professional associations
Similarly trained professionals tend to induce similar cultures

 Business strategic factors
E.g., degree of risk and speed of feedback in a business context

Question 5

How is Culture Preserved?

Answer 5

 Self-selection
Personnel with ”fitting” preferences will apply more often

 Recruiting
Companies will try to actively recruit employees with ”fitting”
preferences

 Socialization
Preferences are affected by the work experience in the company

 Integration or rejection
During collaboration it becomes apparent whether preferences fit to the
culture

Question 6

Possible Measurements

Answer 6

Possibilities:
 Employee surveys with standardized questionnaires

 Interview of selected persons in the company, e.g. top management

 Direct observation of employees‘ behavior

 Managers of one firm are asked about culture of other firm and own
firm, e.g. Kotter/Heskett

However:
 Very different concepts of corporate culture

 No generally agreed definition of parts of a culture

 Difficulties when comparing companies

Question 7

Managing Corporate Culture

Answer 7

 Role modelling
Managers should personally demonstrate their ideas, i.e. leading by
example, walk the talk

 Positive reinforcement
Good examples of desired attitudes or behavior should be reinforced, e.g.
by recognition, salary increase, awards

 Communication
Articulate for employees the desired norms and values from glossy
brochures to workshops

 Recruitment and promotion
Hire and promote people who fit into the desired culture

 Organization and physical design
Formal structure, compensation, control systems but also work environment
can reinforce cultural norms and values

Question 8

Success Factors

Answer 8

 Board member commitment

 Linking strategy with values and implementation process

 Interactive engagement of local management

 Fit to local business requirements and leveraging existing
experience

 Focus on individual behavior at all levels of the
organization instead of distributing glossy brochures

Question 9

Problems

Answer 9

 Time lag in implementation/communication process

 Incomplete communication of projects

 Lack of commitment of managers

 Language barriers

 Traditional conflict between headquarter and line operations

 Cultural differences between countries and divisions

 Insufficient involvement of works councils and unions

Question 10

Summary

Answer 10

 Corporate culture may stem from the society, the founder or the
business model and environment

 Corporate culture is preserved through the process of self-selection,
recruiting, socialization, integration or rejection

 Corporate culture can be measured with the help of
- Employee surveys
- Interview of selected persons
- Direct observation
- Examples: Denison’s four dimensions of corporate culture or
Schein’s Ten Step Culture Assessment

 Companies try to manage corporate culture actively.