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Online Edition — November 2003

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Corporate Culture and Survival
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Corporate Culture and Survival

Lost among the reports of layoffs and financial losses that have accompanied the latest recession was the announcement that Southwest Airlines, the fourth largest carrier in the United States, posted a profit in the fourth quarter of 2001. No doubt much of Southwest’s success stems from its no-frills operating tactics, including not serving meals on flights. This cuts costs and also reduces turnaround times at gates, which keeps more planes in the air for more hours. But Southwest also boasts a corporate culture that helps it endure economic downturns better than its competitors—even those that claim to be equally, if not more, committed to eliminating waste and keeping expenses down.

In fact, corporate culture greatly influences how organizations respond to recessions and other threats to their viability, just as it affects how they respond to opportunities. And recessions, though they can be painful, actually can present an opportunity—a burning platform—for organizations to better align their cultures with their long-term strategies and goals.

Levers for Changing Corporate Culture

Before undertaking a change in corporate culture, try reviewing the following influence systems. The descriptions below represent ideal conditions for change.

Goals and Measures
The organization’s measures reinforce and support the desired direction and behaviors. Measures are in place to ensure that the right things are being done in the proper fashion.

Rewards, Awards, and Recognition
Employee pay/compensation and awards reinforce the desired direction, behaviors,
and expectations.

Communications
Communications convey the organization’s new direction and meaning through the most effective mediums and channels.

Training and
Competency Development
Training plans and competency development support the organization’s strategy, direction, priorities, and expectations.

Organization Structure
How the organization is organized—where resources and authority reside—facilitates
its new direction, strategies, priorities, and expectations.

Senior Leadership
Senior leaders model, demonstrate, and reinforce—both formally and informally—the behavioral prescriptions of the organization’s new direction, strategies, priorities, and expectations.

Rules, Policies, and Protocols
Rules and policies provide effective guidance and boundaries for the expected behaviors.

Physical Environment and Layout
The physical environment promotes and facilitates the desired behaviors and expectations.

Staffing and Selection
Selection criteria and succession plans insure positions are filled with people capable of working effectively in accordance with the desired direction, strategies, behaviors, and expectations.

Information Systems
and Knowledge Management
The current infrastructure insures that employees have access to information and knowledge required to implement the desired behaviors and expectations.

Operational and Process Changes
Operational and process development efforts permit and facilitate employee behaviors
that are in line with the desired strategies and expectations.

Ceremonies and Events
The themes that underlie the organization’s ceremonies and events reinforce, promote,
and model the desired behaviors and expectations.

Patterns of Behavior
To many people, corporate culture is simply a fancy term for employee morale. Corporate culture certainly affects morale, but it is much more involved than that.
At the observable level, culture is a set of behavior patterns, thoughts, and practices that are predictable and enduring. These extend into the language of the organization—how and when we communicate with each other, what we communicate about, and what the communication means.

Underpinning these behaviors are beliefs and values that the organization has formed about work and people. These influence many different aspects of the organization and ultimately end up affecting and directing how people behave—in both productive and unproductive ways.

There’s no “good” or “bad” corporate culture; they all have strengths and weaknesses. The real question is whether the culture can support the goals an organization is trying to accomplish and the strategy it is attempting to follow. This is a matter of “fit.”

The role that corporate culture plays is particularly evident during a recession when the very existence of an organization may be at stake. Consider two companies: Ben & Jerry’s Ice Cream and U.S. Steel. If the bottom fell out of the economy, the reaction at Ben & Jerry’s probably would be much different from that at U.S. Steel. Their focus, the issues that would be urgent to them, and what they would see as problems and solutions—in effect, their entire approach to the situation—probably would be vastly different.

Much has been written in business literature to justify the argument that culture is one of the bigger competitive advantages in organizations and a huge modifier of performance.

A Matter of “Fit”
Perhaps because economic downturns often force organizations to make significant structural and strategic changes to maintain a competitive advantage, many of them can and do use recessions to make some serious attempts at changing their corporate culture. A recession does provide a good incentive for change, presenting an opportunity to look at how business can be conducted differently.

For example, some organizations have used downturns to turn their businesses over to employees. They’ve implemented programs such as open-book management, disclosing financial information so that employees understand what’s happening to the organization.

This type of change has some tremendous benefits. It reduces uncertainty and helps people feel more in control. When there’s low uncertainty and high control, people are more willing to act; when there’s high uncertainty and low control, people have a tendency to “freeze.”

Using new techniques can be very invigorating for employees, but before embarking on a new approach, organizations should ask a question: “Is this a strategy or a way of operating that we think would make us a better company over the long term?” If it is, a recession can be a great time to implement the approach.

For some organizations, pursuing such a new strategy will require a complete transformation of corporate culture. For others, a minor transition will be all that’s necessary. Either way, organizations need to understand the culture they have and determine how well that culture will support the strategy they want to pursue.

Influence Systems
Given that every culture has its advantages and disadvantages, an organization considering changing its culture needs to define what the desired culture should look like. The question to ask is: “What specifically would we like to see happening, as opposed to what’s going on now?” There are many tools and methodologies that can be used to answer this question, but first and foremost, a gap analysis needs to be conducted. After that, there are three basic steps the organization should take.

  • Look at the organization’s infrastructure and determine what about it has to change in order to make the desired culture more achievable.
    Infrastructure means the organization’s structure, its reward and performance systems, physical layout, facilities, information and communication systems, and leadership systems. There are 12 influence systems (see sidebar) that the organization should review and ask, “To what degree do these influence systems support the current culture, and how must they change to support the desired culture?” The answers lead to a whole
    host of changes that should be focused on when creating a new environment.
  • Get leaders to model, reinforce, and express new behaviors that are consistent with the desired culture.
  • Develop a strategy that aligns with becoming very performance-minded and cost focused, as well as very top- and bottom-line focused.

A Caution
Be aware that most organizations say the right things about corporate culture and have all the right programs in place, but some organizations view the programs as ends in themselves, rather than as the means to reinforce certain behaviors. These organizations have a culture of installing programs versus influencing behaviors, and difficult times like recessions highlight these flaws. Change agents can help organizations better understand the role that corporate culture plays and the value of aligning strategies, goals, and programs to not only get through recessionary periods, but also to improve capabilities for the long term.

KELLY PETROCK is president of the General Systems Consulting Group. He works with organizations to design and implement large-scale organizational change. He can be reached at ksprock@aol.com .

 

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