Corporate Culture

      Plekhanov Russian Academy of Economics

      Department of Management 
 
 
 
 
 
 
 
 
 
 

      Research work on the topic:

      “Corporate Culture” 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

      Student: Tsukanov Leonid,

      group 1406

      Tutor: Kozlova A.A. 
 

      Moscow 2010 

      Contents. 

    

1. Introduction…………………………………………………………………………………..2 стр.
2. What Is Organizational Culture? …………………………………………………………….3 стр.
1. The Antecedents of Culture…………………………………………………………………5 стр.
2. Culture as a Tool of the General Manager………………………………………………7стр.
3. Culture, Capabilities and Disabilities……………………………………………………7 стр.
3. When Understanding an Organization’s Culture Is Particularly Important………………….8 стр.
1. What to Look for When Joining a Different Company…………………………………8 стр.
2. Evaluating Culture in Mergers and Acquisitions………………………………………9 стр.
3. The Role of Cultural Differences in Managing Cross-Functional Processes.............10стр.
4. When Strategic and Cultural Change are Required……………………......................11 стр.
5. How culture alignment accelerates strategy execution…………………………………12стр.
4. Conclusion…………………………………………………………………………………..15 стр.
5. Bibliography…………………………………………………………………………………16стр.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

      Introduction.

      Variability of outdoor environment creates demand of regular communications with partners, consumers and with employees. Increase of education, qualification demand more difficult and light methods of management, therethrough we need to manage of people’s thoughts and feelings and form public opinion. This approach of management suppose leading of communications with different groups of people such as partners, mass media, local public, government and of course employees. In work time with employees arise requirement to create integrated system of values, norms and rules id est corporate culture, culture of organization which help to achieve goals of the company and help to self-actualize to their employees.

      Culture is a unique characteristic of any organization. While the phenomenon of organizational culture is difficult to define succinctly, understanding it can help a manager predict how his or her organization is likely to respond to different situations; to assess the difficulties that the organization might experience as it confronts a changing future; and to identify the priority issues for the leadership to address as they prepare the organization to compete for the future. Organizational culture affects and regulates the way members of the organization think, feel and act within the framework of that organization. Culture is the result of common learning experiences. Because culture forms the basis of group identity and shared thought, belief, and feeling, one of the most decisive and important functions of leaders—particularly the founders of a company—is the creation and management of its culture.

      Managers in Russia didn’t use definition of the organizational culture long time, but it doesn’t mean that in our country we haven’t organizations with strong corporate culture. We can find this organizations in machine industry, secondary industry and in other organizations of key industries. This is a big organizations with a great history of existence and with huge establishment. In condition of high competition environment and dynamic  business environment we can hear discussion about importance of generation philosophy of company and development of organizational culture.

      Actuality of work.

      In organizational psychology and theory of management we can’t find more difficult definition than definition of organizational culture.

      I personally found this book very interesting & helpful for me in my future career because it really gives valuable advice on how to make successful organization. I believe it’s very important for any manager working in any area(sphere) of business. 
 

      What Is Organizational Culture?

      Because culture is such an important organizational phenomenon, many scholars have proposed definitions of what culture is. These include: observed behavioral regularities that occur when people interact, the norms that evolve in close working groups, the dominant values espoused by an organization, the philosophy that guides an organization’s policy toward employees and customers, the rules for getting along with other people in the organization, and the feeling or climate of a particular organization. However, MIT’s Edgar Schein, one of the world’s foremost scholars of organizational culture, argues that while these meanings might reflect an organization’s culture, they fail to capture its essence.

      Schein concludes that culture is a property of an independently defined social unit—a unit whose members share a significant number of common experiences in successfully addressing external and internal problems. Because of these common experiences, over time this group of people will have formed a shared view of the way that the world surrounding them works, and of the methods for problem solving that will be effective in that world. This shared view of the world has led to the formation of basic assumptions and beliefs that have worked well enough and long enough to be taken for granted. These basic assumptions and beliefs are learned responses to the problems that the group has encountered as its members have tried to work together to survive in the face of challenges encountered in the external environment and in response to tasks that recur in the internal environment. Beliefs about how to solve these problems have become taken for granted because they have worked repeatedly and reliably. Because Schein defines culture as a learned result of a group experience, he asserts that culture is only found where there is a definable group with a significant history of togetherness.

      Culture is dynamic, in that it can evolve with new experiences. This change can occur in two ways: as the result of a clear and present crisis—the “burning platform” syndrome—or through a managed evolution under a skilled and sophisticated manager. Occasionally, an organization may fail repeatedly in attempting to solve problems in the way that historically had led to success. If the resulting crisis is severe enough, members may be galvanized to understand and question the continued usefulness of what historically had been useful assumptions. However, Schein asserts that managers who want to shape their organization’s culture do not necessarily have to wait for—or precipitate—a crisis deep and powerful enough to generate this forced “unlearning”. Instead they can lead their organizations through a more organized and deliberate cultural change process if they do two things. The first is to direct significant effort toward understanding the present culture’s antecedents—the initial evolution of the organization’s culture that came from successfully solving particular problems. With this understanding as a foundation, the second thing that managers can do is to find or create a set of new problems that the organization must confront repeatedly and successfully. These problems must demand a different pattern of response, which pattern ultimately will constitute the basis of a changed culture.

      It is important to pause here and ensure that we are clear and precise as to what we mean when we talk about culture. In order to avoid conceptual confusion, Schein is careful to distinguish between the artifacts of an organization’s culture, and the culture itself. Schein defines organizational culture as “a pattern of basic assumptions—invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration - that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.” The visible manifestations of culture are the physical and social environment of the organization—both tangible and intangible. These observable characteristics can include physical space, the technological output of a group, artistic productions, he way people dress, the hours and patterns of work schedules, the fringe benefits, the end-ofquarter beer busts, or the overt behavior of its members. One may observe that in one organization, for example, people tend to challenge each other openly. In other organizations, people may be more “polite”—they don’t openly disagree or criticize. In some organizations employees may wear casual or even sloppy clothes, while in others they may dress more formally. In some organizations people may work continuously in 24-36 hour bursts while in others they take frequent stress-reducing ping pong breaks and in still others they work in “normal” 8 hour shifts. Based upon these observable characteristics, we might be tempted to label one organization’s culture as “informal” and the other’s as “formal.” These are all only artifacts, however. What a thoughtful manager must be careful to observe are the processes and priorities that people instinctively employ when solving problems and making decisions. An ostensibly informal group (as characterized by norms of dress, language and décor) may actually be very rigid about the way people are expected to work together, to make decisions, and so on. This is because these artifacts are manifestations of the culture, but are not the culture as we will use that word here.

      Just as all organizations have a culture, each of them has both an external and an internal culture.The external cultural experience has to do with the stories you hear about an organization: its awards your own experience, media and advertising. This might include logos, uniforms, office space, jargon, jokes, technology, products and services, published values, observable rituals, ceremonies, market/financial conditions, competition, and so forth. All of these impact the strategy of an organization.

      But the internal cultural experience – the shared habits, values, beliefs, assumptions, rules of conduct, etc. – is more likely to profoundly impact the strategy.

      To put this into perspective, Burns employs an iceberg metaphor from the work of leading culture scholar,

      Edgar Schein: what is seen (above the water line) is only a fraction of the cultural mass below the waterline. “The areas of greatest strategic impact (and conversely, lowest awareness) are the internal cultural experiences beneath the water line.”

      What is experienced

        

      The Antecedents of Culture.

      Essentially, there was a time in every organization’s history when its members first encountered a problem or a challenge that they needed to resolve. That challenge might have been, “How do we develop a new product?” It might have been, “How do we deal with this customer’s complaint?” or “Should we delay introducing this product until we’ve been able to go through one more round of field testing?” In each instance, the members responsible for resolving the problem sat down and decided, more or less explicitly, how they would work together to get the job done. In the course of their attempt to solve the problem, they also had to reach decisions together. They decided upon methods—again, more or less explicitly—that they would follow in order to reach those decisions. This included the definition of the criteria they would use for making important decisions, such as “How will we prioritize our customers?” “Whose demands will we pay attention to, and whose will we ignore?” “When will we say that this is good enough; let’s ship it?”

      At the end of their initial efforts to address the sorts of problems described above, using methods of working together and the decision-making criteria that they had decided upon, the group may not have been very successful. In that case, the next time that the problem presented itself, the group was likely to devise a different way for working together to solve the problem. If that way of doing it proved successful, however, then the next time they had to do it, they probably were inclined to go about it in the same way. And if they succeeded again by working together in that way, then when they had to do it again, they were even more inclined to use the same methods and the same criteria for decision-making that had served them so well in the past, and so on.

      Schein notes that there comes a point in the history of an organization whose members have successfully addressed particular tasks over and over again, when the same task arises and the group doesn’t even pause to ask explicitly, “Should we solve this one the same way we solved all the others?” Instead, they just assume that they will use the same processes of working together, and the same bases for making decisions, as those that led to past successes. It is when these methods of problem-solving are adopted by assumption, rather than explicit debate and decision, that they become the culture of the organization. In other words, culture is comprised of processes, or ways of working together, and of shared criteria for decision-making, which at one point in the organization’s history were explicitly debated, but which have been employed so successfully so often, that they come to be adopted by assumption.

      The shared criteria for decision-making are what we may call the priorities of the organization. Within the context of an organization, these priorities serve as normative, moral, and functional guidelines that help members of the group deal with certain situations. Priorities grow and develop within an organization as its members use different criteria for making decisions that lead to better or worse outcomes. The exercise of these criteria for prioritization in decision-making generally requires the definition and acceptance of certain metrics as measures of value—of goodness or badness, of better and of worse.

      Initially, the founder of the organization usually has personal opinions such as, “This is better than that,” or “This way of doing it is better than that way of doing it;” and so on. However, the employees in the organization must collectively experience for themselves the validity of this problem-solving methodology and of criteria for decision making. Ultimately, if the founder’s methods for reaching solutions work reliably and successively for the group, they come to be taken for granted—and become the culture of the group. It happens that in most successful organizations, the founder’s opinions about how things ought to be done were more often right than wrong (at least for the situations the organization confronted in its formative years). As a result, founders exert an extraordinary influence on the culture of their organizations. But it is through the repeated, successful application of the founder’s initial inclinations that they become embedded in the organization’s culture.

      “Basic assumptions, in the sense in which I want to define that concept, have become so taken for granted that one finds little variation within a cultural unit,” writes Schein. In fact, if a basic assumption is strongly held in a group, “members will find behavior based on any other premise inconceivable.” These basic assumptions about processes and priorities become non-debatable and non-confrontable and form the foundation of an organization’s culture. 

      Culture as a Tool of the General Manager

      Strong culture is one of the most powerful tools that a skilled manager can wield. As his or her organization grows, it soon becomes impossible for the general manager personally to be involved in every important decision, such as who to hire or promote, when to kill an ageing product line, or whether to bid or not bid on a particular order. The most the manager can hope for is that all of the people making decisions in the organization will make them in a way that is consistent with the goals of the company. The sum of the many autonomous decisions made by various employees must have the cumulative effect of taking the organization where the manager wants it to go. The only way this can happen is if the organization has developed clear priorities that employees instinctively employ as criteria in their dispersed decision-making activities. In other words, strong culture is essential to consistent decision-making as the organization’s size and scope expand.

      Similarly, it becomes impossible for the general manager to participate in or oversee every process that solves problems and creates value in the organization, such as the new product development process or the process for following up on new sales leads. Inevitably, as an organization grows, these things must be done by more and more people, and yet the manager must ensure that the quality of the output of each of these processes is consistent with the company’s strategic goals. Again, a strong culture—within which the best ways of getting the job done are instinctively assumed by all members of the organization—is a powerful tool by which effective managers ensure consistency. 

      Culture, Capabilities and Disabilities

      The general manager’s dilemma is that while culture is a powerful tool for consistently pursuing a particular set of goals, culture can constitute a disability at times when change is critical to addressing new competitive or technological challenges from unexpected directions. Pursuit of a different strategy often requires ways of working and criteria for making decisions that are not in agreement with the beliefs that the members of the organization developed through prior successful work. This means that the organization’s culture, which constitutes a powerful capability in addressing certain types of problems, can constitute an equally powerful disability in addressing others. This is true even though the same people, working in another organization’s context, might be perfectly capable as individuals of succeeding at the new strategy. 

      When Understanding an Organization’s Culture Is Particularly Important

      Schein discusses four specific instances in which it is extremely important for a manager to understand an organization’s culture in a rigorous, detailed way. These include: 1) when he or she first joins a new organization as a manager; 2) when one company acquires another; 3) when the manager is coordinating the efforts of different functional groups within his or her organization; and 4) when the manager is confronting the need to fundamentally change the company’s strategic direction, and by implication, its culture. 

      What to Look for When Joining a Different Company

      When encountering a new culture, its visible manifestations have a powerful impact on the observer. Many of the observer’s senses are stimulated in some way or another; some are positive and others are negative. What type of feel does this organization have? Rude? Impersonal? Comforting? Establishments and organizations “look and feel different” from one another. New managers should especially be careful to observe when such tone or behavior is actually “purposive and patterned.” This becomes apparent when it is observed that a number of people act in the same way and that other people in the same setting treat this behavior as normal and expected. Rather than judge such patterns to be good or bad, productive or counter-productive, the new manager should remember that these patterns had their genesis in a set of problems that the group repeatedly confronted and successfully resolved. Understanding what these problems were, and the context in which they were resolved, is the starting point for determining whether the organization’s culture will enable it to succeed in the future. The artifacts or manifestations of culture are not random.

      Schein offers four other ways to develop a deeper understanding of a group’s culture when joining it from outside. First, he observes that most groups have boundaries, and that as culture becomes well-defined, consensus develops about who is included in the group and who is not. Understanding the de facto rules for inclusion often reveal many of the important cultural aspects of a particular group. “A way of determining a group’s core assumptions and values is to ask present members what they really look for in new members and to examine carefully the career histories of present members, to detect what accounts for their inclusion in the group,” writes Schein. A second way to understand a group’s culture is to study the power structure of the organization. Based on its cultural assumptions, an organization must develop a consensus on the criteria and rules that determine how a person can obtain, maintain, and lose power. Third, Schein notes that one of the most important characteristics of a culture is its reward and punishment system. “Once one has identified what kinds of behavior are ‘heroic’ and what kinds of behavior are ‘sinful’, one can begin to infer the beliefs and assumptions that lie behind those evaluations.” The fourth way is to examine the sorts of problems the organization has repeatedly confronted and successfully addressed in the past. The problems in many ways are the mirror image of the culture. The culture is the organization’s response to the problems that it has confronted.