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3-4-2-corporate-culture

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Strong and weak cultures

A strong company culture exists where factors such as attitudes, values and beliefs are easily recognised and embedded into the way that a business operates
Businesses with strong cultures are likely to possess a range of visual features and norms

Visual features and norms in a business with a strong culture

Visual features	Norms
Business-specific artefacts, e.g. uniforms A well-known figurehead as a role model Ceremonies, rituals and customs, e.g. awards evenings Layout of business premises, e.g. open plan offices The training culture, e.g. induction and ongoing training	Core organisational values, e.g. staff wellbeing Workplace procedures, e.g. meeting etiquette Business-specific language, e.g. calling workers “team members” or “partners” Repeating stories that focus on business values and history Decision-making approach

In businesses with a strong culture, it is likely that employees:
- Have a “can-do” attitude and are enthused by their work
- Have a strong belief that the business is a force for good
In a business with a weak culture, these signs may be difficult to identify
- A “them and us” attitude may exist between workers and management
- Employees may doubt the sincerity of the corporate mission
- High levels of staff turnover and low commitment amongst staff may exist

Classification of company cultures

Charles Handy identifies four types of organisational culture

Handy’s four types of organisational culture

Diagram of four circles labelled Power Culture, Role Culture, Task Culture, Person Culture, each with different symbols inside, on coloured backgrounds. — **Charles Handy’s classification of organisational cultures**

In a power culture, decision-making is carried out by one or a small number of powerful individuals, usually at the top of the business hierarchy:
- Few rules exist to determine the decision-making procedure
- There’s a competitive atmosphere between workers vying for power
- Most communication is by personal contact
- It is argued that Alan Sugar’s Amstrad adopted a power culture with Sugar as its powerful decision-maker
In a role culture, key decisions are made by those with specific job roles:
- Power lies with those with particular job titles rather than those with desirable skills
- There is usually a very clear hierarchical structure
- Employees are expected to adhere to rules and understand their place in the hierarchy
- Businesses with role cultures may find it difficult to adapt to rapidly changing market conditions
- Very large organisations in the public sector, such as the NHS, are usually considered to have highly structured role cultures
In a task culture, decisions are made by teams made up of employees with specific skills:
- Power lies with those with task-related skills (e.g. a finance specialist may make decisions related to funding within the group)
- Teams are created and dissolved as projects are started and completed
- There is an emphasis on adaptability and teamwork
- PepsiCo is an example of a business that has a task culture
In a person culture, individuals with extensive experience and skills are loosely brought together:
- These individuals have significant levels of power to determine their own decision-making procedures and often work autonomously
- Organisations with person cultures are very common in professional services such as accounting and law

How corporate culture is formed

Corporate culture generally forms over time, especially as a business grows
A range of factors contribute to the formation of a corporate culture

Forming corporate culture

3-4-2-factors-contributing-towards-the-formation-of-business-culture-1 — **Factors contributing towards the formation of a business culture**

A leader’s attitude can have a significant impact on the culture that forms within an organisation
- For example, the founder of SuperJam developed his business idea with his grandmother, and he has been determined to contribute to the wellbeing of senior citizens as his business has grown
Some businesses adopt particular human resources policies that shape the makeup of their workforce
- For example, Timpson actively recruits prisoners approaching the end of their custodial sentences
  - They provide extensive training and support, and in return, there is a culture of loyalty amongst its staff, grateful at being given a “second chance”

The ownership type of a business can influence the business culture
- Large public limited companies are likely to adopt a shareholder approach, focusing on meeting the short-term profit maximisation needs of shareholders
- Family-owned businesses are more likely to take a longer-term approach focused on the longevity of the business and perhaps a wider range of stakeholder needs
Factors such as the type of product, the environmental factors the business faced when it was created and the market in which it operates can all influence the corporate culture that develops

Difficulties in changing an established culture

From time to time, it may be appropriate and desirable for a business to make changes to its culture to:
- Increase productivity
- Improve innovation and creativity
- Face a particular challenge
- Follow the direction of a new leader
Changing an established culture is a very difficult task for a number of reasons

Difficulties in changing established organisational cultures

Difficulty	Explanation	Example
Identifying contributing factors	Identifying the various elements of an organisation’s culture can take time and significant insight to fully understand	UK train companies plan to remove guards to save salary costs: A change like this is likely to negatively impact passenger wellbeing and lead to weaker customer service Train guards have been recognised as positively contributing to company culture
The existence of subcultures	Changes to visual elements, such as uniforms, logos and mission statements, are relatively straightforward tasks The impact of unofficial subcultures, such as always undermining management decisions, can be harder to change	New headteachers often change uniforms or policies They may not be aware of staff attitudes towards management, and these may be much harder to recognise and change
Overcoming resistance to change	Any change process is uncomfortable and requires employee buy-in This requires careful communication for commitment to that change to be achieved	Executives at Royal Mail have been hampered in their attempts to change working practices and norms within the business, as they have not gained employee buy-in to the process, and their approach and communication to employees has been poor

Difficulty

Explanation

Example

Identifying contributing factors

Identifying the various elements of an organisation’s culture can take time and significant insight to fully understand

UK train companies plan to remove guards to save salary costs:
- A change like this is likely to negatively impact passenger wellbeing and lead to weaker customer service
Train guards have been recognised as positively contributing to company culture

The existence of subcultures

Changes to visual elements, such as uniforms, logos and mission statements, are relatively straightforward tasks

The impact of unofficial subcultures, such as always undermining management decisions, can be harder to change

New headteachers often change uniforms or policies

They may not be aware of staff attitudes towards management, and these may be much harder to recognise and change

Overcoming resistance to change

Any change process is uncomfortable and requires employee buy-in

This requires careful communication for commitment to that change to be achieved

Executives at Royal Mail have been hampered in their attempts to change working practices and norms within the business, as they have not gained employee buy-in to the process, and their approach and communication to employees has been poor

Examiner Tips and Tricks

Case studies contain lots of clues about a firm’s culture.

Look for signs of a strong or weak culture, for example:

Does the business have a clear figurehead?
Is there a particular way that the business carries out its activities?
Are there obvious guiding principles?
Are there visible signs of a culture, e.g. branding or uniforms?

The more clues you can identify, the more likely it is that the business has a strong culture, but:

Do negative subcultures exist?
Is communication effective?
Is everyone “on board“?

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