What is Organisational Culture?

A set of understandings or meanings shared by a group of people that are largely tacit among members and are clearly relevant and distinctive to the particular group which are also passed on to new members (Louis 1980).

What Makes up Company Culture? 

• Beliefs about how business ought to be conducted
• Values & business principles of management
• “How we do things around here”
• Official policies
• Traditions
• Approaches to stockholder relationships
• Company politics
• Peer pressures . . . Taboos & political don’ts
• Oft-told stories illustrating company’s values
• Ethical standards

Where does Corporate Culture come from?

• Founder or early leader who articulated beliefs, principles, values, practices
• Influential individual, work group, or division
• Values or vision statement rigidly adhered to
• Over time, these values, principles, practices are shared widely by all employees
• A company’s culture is a product of internal social forces

Multiple Cultures within a Company 

• Values, beliefs, practices vary by
  • Department
  • Geographic location
  • Division
  • Business unit
• Company subcultures can clash or not mesh well

Why Culture Matters?

• A strong strategy-supportive culture
  • Provides system of informal rules & peer pressure
  • Motivates people to do their best
  • Provides structure, standards, & value system
  • Promotes strong company identification
• Job of strategy implementer -
  • Decide if culture is or is not strategy-supportive

Characteristics of strong Culture Companies

• Clear & explicit philosophy about how business will be conducted
• Lots of time spent communicating values & beliefs
• Existence of creed or values statement
• Values & norms widely shared & deeply rooted
• Careful screening/selection of new employees

Characteristics of Low performance Cultures 

• Politicized internal environment
  • Autonomous fiefdoms operated by influential managers who resist change
  • Issues resolved on basis of turf or coalitions
• Hostility to change
  • Experimentation discouraged
  • Managers discouraged from exercising initiative to alter status quo
  • Avoiding risks & not screwing up more important than innovativeness
  • Entrenched, multi-layered bureaucracies
• Promoting managers who understand structures, systems, & controls better than vision, strategies, & culture-building
  • Inside-out thinking & strategies
• Aversion to looking outside firm for superior practices
  • Insular thinking
  • Inward-looking solutions
  • Must-be-invented here syndrom

Importance of a Strategy Culture-fit

• Beliefs, goals, & practices underpinning a strategy’s success may or may not be compatible with company’s culture
  • When they are not, culture may impede or even defeat successful implementation
• Strong cultures
  • Promote good performance when fit exists and
  • Hurt performance when little fit exists

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