Chap 012 sm mba sem 3

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Arthur A Thompson

Margaret A Peteraf

John E Gamble

A J Strickland IIIArun K Jain 1eCopyright © 2012 The McGraw-Hill Companies, Inc.Copyright © 2012 The McGraw-Hill Companies, Inc.

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1e

Chapter 12CORPORATE CULTURE AND LEADERSHIP: Keys to Good

Strategy Execution

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1$ %e able to identif& the ke& features of a firm'scorporate culture and appreciate the role of a

firm's core (alues and ethical standards in

building corporate culture$

!$ Gain an understanding of ho) and )h& a firm'sculture can aid the dri(e for proficient strateg&

e*ecution and operating e*cellence$

#$ +earn the kinds of actions management can take

to change a problem corporate culture$

,$ -nderstand )hat constitutes effecti(e managerial

leadership in achie(ing superior strateg&

e*ecution$

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INTI!!ING " C#$%#$"T& C'!T'$&TH"T %$#M#T& G##( T$"T&G)

&*&C'TI#N

+ Corporate Cltre

Is the meshing o share/ ales, elies,siness principles, an/ tra/itions that imes

a irms operating style, ehaioral norms,

ingraine/ attit/es, an/ wor3 atmosphere.

Is important ecase it inlences the irms

actions an/ approaches to con/cting

siness.

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4ey 5eatres o a 5irms Corporate Cltre

Strength of peer

pressure to

conform and

obser(e norms

Actions and

beha(iors

encouraged

and re)arded

Traditions and

stories and /ho)

)e do things

around here0

o) the firm

treats its

stakeholders

2eatures of a 3orporate 3ulture

4alues5 principles5

and ethical

standards

in actual use

Management

practices and

organi6ational

polices

Atmosphere and

spirit embodied

in the firm's )ork

climate

o) managers and

emplo&ees interact

and relate to one

another

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1!$1 The T)o 3ulture8%uilding 9oles of a 3ompan&'s 3ore 4alues

and Ethical Standards

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Transorming Core 6ales an/ &thicaltan/ar/s into Cltral Norms

+ $ecrit an/ hire applicants with ales an/

ethics compatile to those o the irm.

+ Incorporate the ales statement an/ the co/e

o ethics into orientation an/ training programs.

+ Hae senior e7ecties re8ently reiterate an/

stress the irms ales an/ ethical principles.

+ 'se ales statements an/ co/es o ethics as

enchmar3s or the irms polices an/ practices.

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Transorming Core 6ales an/ &thicaltan/ar/s into Cltral Norms 9cont/:

+ 'se core ales an/ ethical principles when

ealating each persons ;o perormance.

+ &ncorage all employees to help enorce the

oserance o core ales an/ ethicalstan/ar/s.

+ %erio/ically hae ceremonial occasions to

recogni<e in/ii/als an/ grops who /isplaythe irms ales an/ ethical principles.

+ Institte strict ethics enorcement proce/res.

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%erpetating the Cltre

Screening and

selecting ne)

emplo&ees

S&stematic

indoctrination of

ne) members

4ocal support b&

senior managers

9e)arding those

)ho displa&cultural norms

3eremonies

honoring

emplo&ees

Telling and

retelling of thefirm's legends

Perpetuating

the 3ulture

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5orces That Case a 5irmsCltre to &ole

=e) challenges in

the marketplace

Merger or ac>uisition

of another firm

Shifting internal

conditions

3auses of

3ultural

3hange

?i(ersification into

ne) businesses

=e) or re(olutionar&

technologies

9apid gro)th

of the firm

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Company Cltres Can =e tronglyor >ea3ly &me//e/

+ Strong83ulture 2irm Has /eeply roote/

wi/ely-share/ ales,

ehaioral norms, an/operating approaches.

Insists that its ales

an/ principles e

relecte/ in the /ecisions

an/ actions ta3en y all

company personnel.

+ @eak83ulture 2irm !ac3s ales an/

principles that are

consistently preache/or wi/ely share/.

Has ew or no

tra/itions, elies,

ales, common

on/s, or ehaioral

norms.

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(eelopment o a trong Cltre

3ommitment

b& the firm to

ethicalbeha(ior

2ounder or

strong leader

)ith strong(alues

Strong

3ulture

3losel& aligning corporate culture )ith the re>uirementsfor proficient strateg& e*ecution merits the full attention

of senior e*ecuti(es$

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>hy Corporate Cltres Matter tothe trategy &7ection %rocess

+ " cltre well matche/ to the re8irements o the

strategy e7ection eort ocses the attention o

employees on what is most important to this eort.

+Cltre-in/ce/ peer pressre in/ces personnel to /othings in a manner that ai/s goo/ strategy e7ection.

+ " cltre consistent with the re8irements or goo/

strategy e7ection can energi<e employees, /eepen

their commitment to e7ecte the strategy, an/ enhancewor3er pro/ctiity.

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Healthy Cltres That "i/Goo/ trategy &7ection

Good Strateg&

E*ecution

Adapti(e

3ultures

igh8Performance

3ultures

3ommitment to

achie(ing stretch

obecti(es and

accountabilit&

@illingness to accept

change and take on

challenges

Performance

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'nhealthy Cltres That Impe/eGoo/ trategy &7ection

3hange8resistant

cultures

IncompatibleSubcultures

Politici6ed

cultures

-nhealth&

3ultures

Insular5 in)ardl&

focused cultures

-nethical and greed8

dri(en cultures

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Changing a %rolem Cltre?The $ole o !ea/ership

+ " strong, ot o sync, or nhealthy cltre mst

e change/ in or/er to e7ecte strategy

sccesslly.

+ Competent lea/ership at the top is necessaryor cltre-change eorts to sccee/.

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1!$! Steps to Take in 3hanging a Problem 3ulture

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Ma3ing a Compelling Caseor Cltre Change

+ elling the Change

&7plain why an/ how certain ehaioral norms an/

wor3 practices are ostacles to goo/ e7ection o

strategic initiaties. &7plain how new ehaiors an/ wor3 practices will

e pro/ce etter reslts.

Cite reasons why the crrent strategy has to e

mo/iie/, i the nee/ or cltral change is /e to achange in strategy.

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stantie Cltre-Changing "ctions

+ $eplace 3ey e7ecties who are stonewalling nee/e/organi<ational an/ cltral changes.

+ %romote in/ii/als who a/ocate or cltral shits an/

can sere as a role mo/el or the cltral ehaior.

+ "ppoint otsi/ers with the /esire/ cltral attrites to

high-proile positions.

+ creening can/i/ates or positions carelly, hiring only

those who appear to it in with the new cltre.

+ Man/ate that all personnel atten/ cltre-training.

+ (esign compensation incenties that oost the pay o

teams an/ in/ii/als.

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ymolic Cltre-Changing "ctions

Top e*ecuti(e

and upper

managementbeha(iors

3eremonial

e(ents to honor

e*emplar&emplo&ees

Ph&sical s&mbols

that represent

the ne) culture

3hanging the culture

of an organi6ation

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How !ong (oes It Ta3e to Changea %rolem Cltre@

+ Changing a prolem cltre is neer a short-term

e7ercise.

+ " sstaine/ an/ persistent eort to reinorce the

cltre at eery opportnity throgh wor/ an/ /ee/is re8ire/.

+ It ta3es time or a new cltre to emerge an/

preailA it ta3es een longer or it to ecome /eeply

eme//e/.

+ 5i7ing a prolem cltre an/ instilling a new set o

attit/es an/ ehaiors can ta3e two to ie years.

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!&"(ING TH& T$"T&G) &*&C'TI#N%$#C&

+ !ea/ing trategy &7ection re8ires?

taying on top o what is happening an/

closely monitoring progress.

%tting constrctie pressre on the

organi<ation to e7ecte the strategy well

an/ achiee operating e7cellence.

Initiating correctie actions to improestrategy e7ection an/ achiee the

targete/ perormance reslts.

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taying on Top o How Things "re Going

+ Management y >al3ing "ron/ 9M=>": Is se/ y lea/ers to stay inorme/ aot how well

the strategy e7ection process is progressing.

Inoles spen/ing time with people at companyacilities, as3ing 8estions, listening to their opinions

an/ concerns, an/ gathering irsthan/ inormation

aot how well aspects o the strategy e7ection

process are going.

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%ressring #rgani<ational 'nits to &7ectetrategy >ell an/ "chiee #perating &7cellence

+ Treat employees as ale/ partners.

+ 5oster an esprit /e corps that energi<es memers.

+ 'se empowerment to create a lly engage/ wor3orce.

+ Ma3e champions ot o the people who spearhea/ new

i/eas an/Bor trn in winning perormances.

+ et stretch o;ecties that re8ire personnel to gie their

est in achieing perormance targets.

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%ressring #rgani<ational 'nits to &7ectetrategy >ell an/ "chiee #perating &7cellence

+ 'se enchmar3ing, reengineering, TM, an/ i7 igma

to ocs attention on continos improement.

+ 'se motiational techni8es an/ compensation

incenties to inspire, nrtre a reslts-oriente/ wor3climate, an/ enorce high stan/ar/s.

+ Celerate in/ii/al, grop, an/ company sccesses.

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!ea/ing the %rocess o Ma3ingCorrectie "/;stments

A thorough

anal&sis of the

situation

Good business

udgment indeciding )hat

actions to take

Good

implementationof the correcti(e

actions

Making correcti(e actions

successfull& re>uiresB

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" 5IN"! >#$( #N !&"(ING TH& %$#C&#5 C$"5TING "N( &*&C'TING T$"T&G)

+ It is /iiclt to separate lea/ing the process o e7ecting strategy

rom lea/ing the strategy process.

+ Crating, implementing, an/ e7ecting strategy is a continos

process that re8ires mch a/;sting an/ ine-tning o the

strategy to it changing circmstances.

+ The tests o strategic lea/ership are whether the irm has a goo/

strategy an/ siness mo/el, whether its strategy is competently

e7ecte/, an/ whether the irm is achieing its perormance

targets.+ I these three con/itions e7ist, then the irm has goo/ strategic

lea/ership an/ is a well-manage/ enterprise.

Documents

Chap 012 sm mba sem 3