Research Bullet Points

Factors influencing the culture of an organisation and cultural differences within an organisation.

Factors influencing culture:

• The founder
• Size & development (start up, multi-national)
• Leadership & management style
• Organisational structure, policies and practices
• Employee & management relations
• Market/industry - demand
• Working environment
• External environment
• The staff
• Competition
• Type of product

Cultural differences within an organisation

• Sub-cultures develop within an organisation based on occupations, product lines, functions, geographies. Some firms: sub-cultures are stronger than others.
• Managing sub-cultures has become more difficult - mergers, takeovers, joint ventures becoming more common. 
• Globalisation - many firms now multi-cultural based on nationality, language etc.
• Technological complexity

• May have different attitudes to risk taking and decision making
• Resistance to change that threatens the existing culture
• One culture will provail
• De-motivated staff & managers for the culture which is changed/damaged

Depends on ... & evaluation opportunities

• Strength and clarity of the organisations founder
• Amount and intensity of shared experiences that employees have
• How much success the organisation has had
• The history/heritage of the business
• Culture is a complex concept which is difficult to understand - for business leaders
• The is no 'criteria'

Definitions

• Culture - "the way we do things"
• sub-culture: group of people within a culture that do things that differentiates them from main 

 Key theories and concepts

• Power 
• Role
• Task
• Person

• Barclays - impact of powerful sub-culture at investment banking division
• Apple / Disney - role of culture of innovation and secrecy; shadow of the leader Steve Jobs & Walt Disney
• HP / Toyota - long established cultural programmes, including induction (HP Way and Toyota Way)
• NHS - public sector organisation with complex cultural challenges - role and task culture
• Walmart - a common approach to employee engagement across the globe
• Google - has deliberately maintained existing culture of aquisitions
• Ikea - has developed a consistant culture among employees around the world who "love our values"

The impact of organisational culture on business strategies and performance

Features of positive/successful culture

• A source of competitive advantage and potentially the most important intangible asset
• Clear set of values, mission and goals
• Performance orientated
• Encourages suitable risk-taking and innovation
• Strong internal communication
• Engaged employees - higher motivation and loyalty
• Better connection between deptartments and 

Features of a negative/toxic culture

• Toxic culture - questionable morals and unethical behaviour. May arise within a sub culture or within the business as a whole
• Features of a weak culture - little alignment with business values; inconsistant behaviour; a need for extensive bureaucracy. 

Depends on ... & evaluation opportunities

• Larger, more established firms have more complex cultures, consisting of sub-cultures, individuals and groups. 
• Having clear, well communicated and accepted set of core values helps to estalish a common, positive culture.
• A flawed business model or strategy is unlikely to result in business success, even if the culture is strong and healthy.
• A culture that fails to adapt to the changing external environment may hasten the failure of an organisation.
• successful businesses often recognise that the business model/strategy and culture are interdependent - the whole system is aligned.
• Better performing firms pay attention to nurturing culture - they are disaplined.
• Leadership plays a large role in the culture: Schien "the only thing of real importance that leaders do is to create and manage culture."

Definitions

• Intangible asset: non-monetary asset without physical substance which generates economic benefits - culture
• Strong culture - a consistent culture; understood and felt by people inside and outside the organisation. 

Key theories and concepts

• Employee engagement - employees' drive and commitment to use their energy, skills and resources which benefit the firm
• Competitive advantage - sustainable differences compared with the main competitors
• cultural glue - organisational culture is what keeps an organisation together

Negative:

• News of the World - phone hacking scandal 
• RBS & Fred Goodwin - Reckless external grwoth and lending created banking crisis 2008/09
• GlaxoSmithKline - record $3bn fine for misselling of drugs and bribary 
• Enron & Jeff Skilling - US's 7th largest firm turned out to be an elaborate scam and culture of greed
• Barclays - Libor scandel & PPI misselling leads to departure of CEO Bob Diamond and new CEO trying to change the business 'the GO TO bank'

Positive:

• Zappos - defines its culture in terms of 10 core values made part of everyday working life - "culture is the brand"
• IKEA - clear link between strong culture, the business model and sucess ("To visit IKEA is to visit Sweden"). IKEA's vision and values ("To create a better everyday life for the many people") drvies the way the culture operates. 
• Southwest Airlines - A strong culture based on employee engagement has helped to make it the most profitable, low-cost airline in the world. Herb Kelleher "The business of business is people"

The reasons for change in organisational culture

• Improving business performance
• Inadequate returns on investments
• declning profits and sales
• low quality or standards of customer service 
• respond to change
• market changes
• political/legal changes 
• change of ownership 
• change of leadership
• economic conditions
• changes in the market/competition
• staff may not be happy with current culture
• shareholder conflict
• mergers/takeovers
• changes in aims/objectives
• bad press - toxic culture

Signs of disfunctional culture

• internal fighting 
• high levels of voluntary staff turnover and hard to retain high talent
• greater absenteeism
• decling customer service 
• communication becomes closed and restricted
• revolves around rewards - Barclays PPI
• Toxic 

Definitions

Static culture - a culture that does not change - Nokia, Marks and Spencers

Dynamic culture - a culture hat evolves in response to chnages in the external environment - Apple

Key theories and concepts

• Bonus culture - emphisis on rewards

Depends on factors and further evaluation:

• evolves naturally but depends on pace and nature of change 
• managing that cultural evolution is one of the primary tasks of an organisations leadership.
• is step change only necessary if a business is in "distress"?
• culture is not an entity or a thing, it cant simply be changed by pulling different levers
• culture of society is changing all the time 
• a decision to make a planned change to organisational culture should derive from a clear shortfall in business performance or a decision to change business strategy. 

Culture may have contributed to failure:

• Kodak - too late to embrace the rapid shift from film to digital photography; bankrupt in 2012
• Nokia - long time dominant market leader in phones failed to sport fast moving challengers
• Sony - silo mentality arising from market leadership reduced the incentive to innovate
• Toyota - culture of complacency contributed to quality problems in 2011/12
• Blackberry - believed their market dominance would last

Changing organisational culture:

• Royal Mail - regulatory change and privatisation force a substantial change programme
• NHS - political pressure for modernisation and high profile care scandals
• BBC - pressure from frozen licence fee income, restricted commercial activies and fall out from Jimmy Savile scandal.
• RBS - significant retrentchment following nationalisation
• Santander UK - restructuring and rebranding to integrate three serparate financial services takeovers

Ways of changing organisational culture

Methods of successful cultural change:

• recognise what contributes to making the culture (vision, values)
• invest in and nurture what matters to the desired culture
• aim to maintain cultural distinctiveness and competitive edge
• owning the culture is part of every day employee's role

Ways to measure culture and effect of change

• external surveys; customer testimonials; % of repeat staff; customer referrals; employee surveys; focus groups; staff retention and staff turnover
• How employees feel about the organisation
• How employees feel about and communicate with the manager
• What employees feel about trainnig and their future
• How employees feel about stress, pressure at work, and work life balance
• Employees feelings towards their immediate colleagues and how well they work together.
• The extent to which employees feel their organisation has a positive impact on society.
• How happy employees are with their pay and benefits.

Depends on ... & evaluation opportunities

• Lots of evidence that culture management is not optional - so leaders have to find a way 
• Organisational culture is soft management - it is not easily measured or controlled - but it is a mistake therefore not to take it seriously
• Organisational culture is becoming less predictable - like other elements of the external environment - because of the way that work is changing.
• It is too easy to under-estimate the challenge of trying to change/improve organisational culture
• Culture change is not straight forward. It is slow and often painful process.
• You cannot "create" a new culture in an organisation that has already evolved a culture. 

Definitions and theories/concepts:

Change management: a structured approach in an organisation for ensuring that changes are smoothly and successfully implemented, and that the lasting benefits of change are achieved.

Lewins force field analysis: driving forces and restraining forces create equilibrium. Driving forces needed to be stronger to create change. 

Step change and incremental change - quick and long.

• Royal Mail - Moya Green, the need to bring in new people "if you have the right people, you can overcome organisational problems. But if you do not have the right people, an organisation that is brilliant is not going to get you there."
• ITV, Asda - Archie Norman, "Understand the DNA of the company and what - culturally - led it to be in a failed situation. Behind all financial failures is organisational failure."
• Kraft - Irene Rosenfeld, the need to drive change quickly. "I think anybody who has been involved in a transformation typically wishes he or she had gone faster. You have to move quickly to have all the pieces come together."

Problems of changing organisational culture

• Mergers and takeovers
• Generational differences
• National/geographical
• Departmental
• Strategic or leadership change
• Failure to accept the need for change
• insecurity
• preference for the existing arrangements 
• different person ambitions
• Loss of power
• loss of skills
• loss of income
• fear of the unknown
• inability to perform as well in a new situation
• Break up of work groups

Problems of changing organisational culture

• Staff will be used to old culture
• retraining
• traditions
• long term employees
• leadership skills
• differences in values and beliefs

Reasons for culture clashes

• Language barriers
• organisational structure
• leadership/management styles
• religion/beliefs
• behaviours
• different artifacts
• national/geographical boundries

Depends on ... & evalutation opportunities

• Organisational culture is deep - there is a danger that if management treat it as superficial and assume it can be changed at will, they will fail.
• culture is normally and inherently stable. Humans do not like chaotic, unpredictable sotiatopms - and they naturally work hard to stabilise things - resistance to cultural change!
• If an orgnaisation is to change, then it has to unlearn something before it can learn something new. The same goes for cultural change - the "unlearning" is painful and causes resistance to change.
• Recognise that a culture is in a continuous state of flux responding to change in the external environment.
• Aiming to create, change or protct culture is challenging and takes time
• Successful cultural change requires a clear business strategy and a strong set of corporate values. 

• Daimler and Chrysler - "I think part of it is the culture, because you had an upight, hierarchal approach to things at Daimler Benz and Chrysler was a risk taking, entrepreneurial, loose organisation."
• Barclays and RBS - can the big banks change their culture? is the risk taking inherent in investment banking part of the DNA of banks?
• Google taking over YouTube
• Disney taking of Pixar
• Cadbury's and Schwepps - failed
• Cadburys and Kraft - successful so far
• Coca Cola and Innocent Smoothies
• Land Rover and Tatar Motors