Managing Culture and Change Essay

The present scenario has made the future of organizations uncertain. Companies that are excelling in their relevant industries right now may be pushed out in the near future by upstarts with better ideas and more versatility than them. It has happened so often in the past that the only certainty is that it will keep on happening in the future. The only long term sustainable competitive advantage that organizations can hope to create is through their people, and the behaviour of these people is largely determined by the corporate culture in which they are immersed. A successful corporate culture will see the organization through the near future, but unless the organization is proactive in its bid to keep on adapting to the changing business environment, that same corporate culture may sound the death knell for the organization in the future. CORPORATE CULTURE AND PERFORMANCE The question on every entrepreneur, every CEO, and on every member of the Board of Directors’ mind since before the inception of the concept of an organization as an institution has been: how to make more money? Once this fundamental urge has been recognized one can comprehend the reason behind the actions of the above-mentioned in ensuring the success of their respective organizations, as the evidence of past decades have proved that organizational success is the key determinant of greater financial reward for them; hence stemmed the need to identify the factors that would translate into success for an organization. The idea that an organizations culture would influence its performance is hardly new. ‘Search of Excellence’, published in 1982 and authored by Waterman and Peters made the concept famous, and in 1992 in ‘Corporate Culture and Performance’, Hesket and Kotter compared various organizations and the relation of their performance within a time period with their cultures. But with increasing research being conducted on the correlation between an organizations vision and the employees’ actions, doubt is cast on the efficacy of expecting that an organizations culture will determine its performance. Instead, consensus is being established that a few core values largely determine the success or failure of organizations. SUCCESS Success of an organization can be defined differently depending on the industry in which the organization operates. An organization in a high risk industry can view success as the ability to survive all these years. Another organization may view continuing growth over and above competitors as success, while still another might seek to become the market leader in its particular industry in order for it to be considered a success. Pyramid of Organizational Development Whatever the perception an organization has, in order to be successful an organization needs to follow six steps or tasks at each level of its growth in order for it to succeed at all of those stages. It needs to determine its market niche in which it will operate, develop the product/service accordingly, acquire the relevant resources be they land labour or capital, develops a system of standardized procedures for operations, and then the same for management, and finally, develop a corporate culture that management perceives as being important to lead the firm. Before any further discussion can be carried out, corporate culture must be defined as, a structure of collective values and beliefs that work together with the systems, the organizational structure, and the employees to produce norms, which then turn into what is necessary to the organization, and the processes of getting things done – the how and the why. It is an intangible aspect of an organization that cannot be seen, touched, heard or smelt, but is present nonetheless and which ultimately determines whether that organization will succeed or not. It is the core values that were mentioned earlier, to produce the norms that determine the behaviour of the employees, which ultimately determines the productivity and thus success of the firm. The steps taken together are framed as a hierarchical model into a pyramid of organizational development that emphasizes the importance of each step for the organizations development depending on the stage of growth the organization is in at that point. The last three of the steps form the structure that will be the sustainable competitive advantage of the firm, inimitable by competitors, thus ensuring long term success for the firm. ROLES OF CORPORATE CULTURE Corporate culture by itself plays several roles in the organization. It develops a cultural identity in an employee by establishing a commitment of the employee to achieving the organizations goals and objectives. That identity serves to increase the devotion and involvement of the employee by making him/her reconcile the organizations success as his/her own. Corporate culture also uses a deductive approach to align an employee’s behaviour with acceptable norms that have been already determined by the organization so that it need not worry about policing the employee to do what is right according to the organization. Instead of the management having to interfere now the employee’s peers can bring a maverick back in line with acceptable behaviour as determined by the values of the organization. In addition to these, an organizations culture acts as a motivational tool that is more effective than managerial insistence. However, if the organization’s stated values are out of sync with the culture that is being promoted the employees will become disillusioned with the organization and its stated commitment to quality of work life as the rewards will be based on the stated values as opposed to what the prevailing organizational culture promotes. TYPES OF CORPORATE CULTURE Strong The desired roles that the culture of the organization is to play and reality may starkly differ depending on the type of culture that is prevalent in the organization. A Strong Culture is reminiscent of an organization that spends a significant amount of time and resources in communication and reinforcement by management of the values of the organization to the various employees. This is facilitated by having well-defined vision and mission statements that have been established with the help of both the top and bottom rung of the organization. In addition, these statements and their espoused values are adopted by top management and thus succeed in their task of influencing the employees by convincing them of their commitment to the organization and its value system. Weak On the other hand a Weak Culture is quite the opposite, in its lack of cultural identity and the divergence of employee behaviour and organizational goals. A weak culture also involuntarily imparts an image of punishing those employees that might be working towards organizational success, through the actions of their peers who have this weak corporate value system ingrained into them. Thus there is little allegiance to the organization and little unity inside it. Unhealthy An Unhealthy corporate culture rests on the basis that change is undesirable. In such an environment risk-taking and experimentation for the sake of innovation is frowned upon, and so the organization has to seek ideas outside the firm for better practices and approaches. This is a costly result of the politicized environment that prevails in such an organization, where decisions are made based on the power wielded by the participants and not on the value of their respective input. Adaptive The fourth type of culture in an organization is an Adaptive one which is contrary to the unhealthy culture in its regard for entrepreneurial activities. Such an organization is a proactive entity that actively seeks out innovative and experimental solutions to any issues that might have to be faced. Risk taking is encouraged to the extent that employees might be funded to bring their ideas to life, in the recognition that successful adaption to the environment through risky enterprises enable the organization to prosper over its competitors. CONFLICT IN CORPORATE CULTURE An organizations culture is influenced by the social power of relationships, more specifically, the potential loss of those relationships. This invokes cognitive dissonance in a person more than does any other action, and thus motivates us the most to make sure that such a situation does not arise. From this motivation an organizations culture is developed as a means to protect these relationships, leading to the theory of conflict resolution and culture development. Social influences in the form of formal and informal networks, family networks, relationships with leaders, and legal regulations are what determine the behaviour of a person in an organization with regards to conflict resolution. Although conflict invariably leads to closer bond in relationships than before, it can also lead to rejection or coercion by one or both party. The conflict can only be resolved when both parties either cooperate in or reject the relationship. The eventual conflict resolution results in a differing viewpoint held by the onlookers as either a matter of public discourse or of private thought, which viewpoints are shared with others depending on the closeness of their relationship. And while cooperative conflict resolutions foster greater trust and unity, competitive conflict resolution in hierarchically dominated organizations, where management often passes judgement rather than mediates, results in a chasm between formal and informal cultures that causes a drop in organizational performance. HUMAN RESOURCE MANAGERS Human Resource Management has become an increasingly important function in organizations with the findings of several researches supporting the relation between high-performance and HR practices. The recognition through these researches that the only long term sustainable competitive advantage that an organization enjoys is the capabilities of its human resource has further caused organizations to reinvent this previously neglected function as well as resulted in an increase in the perceived advantages of a strategically-focused Human Resource Department. Amongst these, cultural management is an important benefit that pertains to the development, communication, reinforcement, and change of the corporate culture to the employees. SUCCESSFUL CORPORATE CULTURE An organization’s corporate culture can either hinder or contribute to the success of a firm by influencing the behaviours and attitudes of employees with respect to the overall organizational strategy. A corporate culture that promotes behaviours that are aligned with the company’s values provides guidance to the employees with respect to the accepted norms of the organization and reinforces those peer actions that support the desired culture. The HR as the manager of the corporate culture aligns its own practices in an effort to increase commitment amongst employees towards achieving the desired vision of the organization by reaching their performance targets, and by engaging in adaptive and innovative entrepreneurial activities. A successful corporate culture is one which supports the organizations execution of its strategy, with the help of HR managers, who align the desired values of the organization with the values that are actually prevalent. While some organizations seek to prescribe specific corporate values that will lead to greater performance, it has been discovered that instead it is the fit of these values to the internal and external realities of the organization – the employees’ behaviour and the business environment – that the HR must focus on as a culturally compatible management system. To do so, the practices of the HR Management, more specifically, the staffing, training and development, incentive and payment packages, performance appraisals and job design, all become areas where HR can influence the cultural communication strategy. As a company that dedicated its existence to the production and sale of coffee, Starbucks has experience phenomenal growth to reach its current market leadership position. From generating sales of $122 million in 1993, Starbuck’s has grown to such an extent that its competitors have less outlets in all of the United States than Starbucks has in California. And the stated reason by its CEO, Howard Schultz, for this success is its people. â€Å"The way we treat our people affects the way they treat our customers and, in turn, our financial performance. † In lieu of this statement Starbucks offers good quality of work life to its employees, adopts diversity as an integral part of doing business, maintains a high standard in its production processes, develops its customers, engages in Corporate Social Responsibility, and recognizes the importance of maintaining profitability as a means of continued success. NOT-SO-SUCCESSFUL CORPORATE CULTURE Unfortunately, discovering the right fit of values that an organization can use as a component of its successful corporate strategy can become ‘the winner’s curse’ if left unmonitored, for while it is difficult to change any culture in any organization, changing a seemingly successful culture is next to impossible. No one wants to mess with a winning formula, whether due to superstition, the belief that it will weather any competition, or due to inability to accept that the environment has changed. Whatever the reason, history is replete with examples of how successful companies were brought to their knees by a more versatile competitor. The US automobile industry was indifferent of the lower-costing, higher-quality Japanese cars until it was too late, believing that the Japanese cars were just a momentary novelty. In the same way, until sales started decreasing fast Sears remained ignorant of the changes brought to the organizations environment by Wal-Mart. The McDonnell Douglas Corporation is another example of a company that failed to adapt to the changing environment, and was acquired by Boeing. Core Rigidities Inducting the use of Standard Operating Procedures as a means to increase production by cutting down on wastage of time and resources, while beneficial in producing economies of scale can be harmful to the future success of the firm as well. These procedures and routines can serve as a source of suitable solutions to any problems that might be faced, but in doing so negate the possibility of searching for knowledge and innovation outside the organization. Consequently the core competency of the firm is transformed into the core rigidity as exploration is shelved for exploitation. In addition to which, the feedback from the use of SOPs is ignored due to selective filter of already existing procedures which siphon out any corrective measures that the feedback might have been trying to highlight. This is largely due to the fact that no firm can keep changing forever. There is an absorptive capacity for every organization beyond which it is incapable of adapting to any more change. Crisis The only way to break out of such a potentially hazardous ‘advantage’ is for there to be an existence of a crisis that jolts the organization out of its routine. Some companies even try to introduce the perception of a crisis in the organization in order to stimulate innovation, such as Hewlett Packard, following the story by Sturgeon, ‘Microcosmic God’ in which Sturgeon talks of a miniature world which is introduced to numerous difficulties such as earthquakes, and droughts, and whose inhabitants are forced to either evolve or die out. While such practices might seem unethical it is disputed whether it is more advisable to let a firm fail because the leader of the organization could not bring it upon himself/herself to fool the employees for their future benefit. CONCLUSION If an organization’s successful culture eventually ends up costing the organization in the future, can it really be deemed a ‘successful’ corporate culture? Up to the limit of an organization’s absorptive capacity, a successful corporate culture should be redefined as a culture that while maintains all the characteristics as mentioned previously, is also a culture that can recognize that no matter what the fit of the organization’s culture is at present, that fit can change, and the possibility of that change should not be ignored, rather it should be actively sought out. And while it is a difficult thing to change a culture at any point, the organization should be ready to do so if it is to maintain its competitive advantage and not be replaced by a more nimble and recent competitor like Sears was by Wal-Mart. BIBLIOGRAPHY Cummings, T. G. & Worley, C. G. (2005) Organization Development and Change. USA. Thomson South-Western. Davenport, T. H. & Prusak, L. (2000) Working Knowledge. Harvard Business Press Hassard, J. & Pym, D.(1993) The Theory and Philosophy of Organizations. Routledge Hitt, M. A. , Hoskisson, R. E. & Ireland, R. D. (1998) Strategic Management: Competitiveness and Globalization. Cengage Learning Kono, T. & Clegg, S. (1998) Transformations of Corporate Culture. Walter de Gruyter Kotter, J. (1992) Corporate Culture and Performance. Free Press. Thompson, A. A. Jr. , Strickland III, A. J. & Gamble, J. E. (2006) Crafting and Executing Strategy. United States. McGraw-Hill Balkaran, L. (1995) Corporate Culture. Find Articles [Internet]. 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