Chapter 5 Developing a productive company culture
5.5 Implementing a company culture
Simple form on three pillars
A successful culture depends in part on a relatively simple organization with a small corporate staff. Authority is pushed down to the operating level, where the action is.
IBM (International Business Machines) located in the United States, has a policy of a three-year staff rotation. Those in staff positions know that very soon they will be out in the field working under the policies they helped develop. This has turned out to be a marvelous system of checks and balances.
To meet the needs for efficiency around the basics, regular innovation, and response to major threats, Peters and Waterman suggest a three-pillar approach to
organizational design. The pillar of stability seeks to establish a simple form and develop broad, underlying values for the company.
The second pillar, entrepreneurship, focuses on developing new activities into new, self-contained divisions.
The so-called habit-breaking pillar seeks to encourage a willingness to reorganize regularly on a temporary basis to take advantage of trends in the marketplace or particular management strengths.
Loose and tight
The future-oriented company culture exhibits at one and the same time a tight central direction while maximizing individual autonomy. Certain things are controlled very rigidly. These include the values the company lives by, an action focus, regular communication with rapid feedback, peer pressure, concise paperwork, and a focus on the outside—on the customer.
Holding firm to these ideas allows the organization to encourage, if not demand, looseness in other areas. Experimentation is encouraged, as is informal
communication. Positive reinforcement is given and maximum individual autonomy sought.
Being both loose and tight means knowing what to control and what to let go. This framework, which provides employees with security, also gives them the confidence to become innovative and help move the company forward.
What are the most important characteristics of these businesses? Here it is important to identify how fast these businesses are growing, what the present market share is, and what the competition is like.
What are our goals and strategies for these businesses? Certain basic decisions must be made. Do we intend to lead the industry, to develop a strategy for short or long-term profitability?
What shared values will help implement these strategies? A short-term profit strategy will require a certain type of value system; an emphasis on employee development as the key to long-term profitability will suggest a different set of values.
Implementation of a culture takes place at three levels within the organization: the mission and strategy, the organizational structure, and human resource management.
At the first level, the concern is with developing a culture that is consistent with the overall mission and strategy of the business. At this stage it is also necessary to understand that the mission of the business may very well be influenced by the personal values of the people at the top. There have been instances in which the founders of certain hotel and restaurant companies have held strong beliefs against drinking alcohol. These personal beliefs have translated into policies prohibiting the serving of alcohol in their company-owned properties. In a situation like this, no amount of feasibility analysis will result in a change. The issue is one of values, not economics.
As for organizational structure, there are three concerns. First, there is the need to develop a managerial style consistent with the technical and political structure of the organization. As an example, we can contrast the cultures necessary for a functional or a matrix organization. In the functional organization, the traditional straight-line organizational chart holds true. An example is given in Exhibit 13. In a matrix
organization, power is balanced by both product and function (Exhibit 14). A manager is appointed for each specialized project and given sufficient staff to complete the job.
The project manager is given authority over the staff within that project. The manager in charge of marketing the budget division is responsible to the vice president for the budget division, while indirectly reporting also to the vice president of marketing.
While a more traditional chain-of-command management style is appropriate for the functional organization, the matrix format requires more emphasis on negotiation.
A second concern with organizational structure is in the development of subcultures appropriate to the particular function of a department. Sales and accounting are two obvious extremes. The accounting function concentrates on cost reduction and efficiency. The sales function focuses on filling rooms or seats and making deals. The culture for each will be different. We would not want a conservative sales department or an adventurous accountant.
The third concern is how to blend the various subcultures so that they can coexist for the good of the whole. The key is to develop a company culture strong enough to transcend any departmental subcultures—one culture that everyone can identify with over and above the system within each department.
Fig. 5.2: Exhibit 13: Functional Organization. Universal Hotels, INC
Fig. 5.3: Exhibit 14: Matrix Organization. Universal Hotels, INC
In the third level, human resource management, an impact on culture can be made in selection, development, and rewards. In selecting employees, attention can be placed on how a particular person would fit into and reinforce the culture of the business.
Candidates should be turned down if it is felt that their personality was inconsistent with that of the organization. Companies that use the human resource system to reinforce the culture spend a great deal of time and effort on training and
development. The orientation and socialization process involves a great deal of emphasis on the values of the company. The Disney organization is particularly adept at this. Every employee takes a course entitled Traditions 1, which traces the
development of Disney and stresses the qualities that the company emphasizes in itself and its employees.
Finally, companies reinforce the preferred values system by rewarding and promoting those employees who exemplify what the company wants to champion.