organisation - introduction to corporate culture
Richard Bowett introduces the concept of corporate culture
What is Corporate Culture?
Hundreds of books and thousands of pages have been written on the subject of corporate culture, and the danger is always that no-one is quite sure what it means. Perhaps the best definition is ‘the way we do things around here’.
Businesses are not separate entities, but collections of people. All collections of people produce certain common and important patterns of behaviour. So the topic of corporate culture is really about people and the way they behave when in groups together.
Businesses have a history which consists of experiences shared by the people who belong to the business. This shared history sets constraints to the values of the group, the way the group thinks about things, and the way rewards operate. A shared history is a common feature of any group of people, whether it be a business, or a football team, or a friendship group or a family group. So you should be able to understand exactly what is going on here.
There are strengths and weaknesses to the constraints that affect a particular group.
For example, all groups have problems and problem members. The question is how these problems are dealt with. The danger is that they are not dealt with because they have become taboo. For example, Sarah Smith’s bitchiness may be a well-known problem of a social group, but no-one is prepared to tackle it because all have agreed that the untimely death of her father is to blame, and no-one wants to upset her by reminding her of that sad event. Similarly, Auntie Norah’s drinking may remain undiscussable in a family group. In a business the marketing department’s total lack of original thought may become, like the weather, just ‘one of those things’ that have to be lived with. This may go beyond what is talked about, and actually effect what is thought about, so a group becomes unaware of other possibilities. This could put a business at a serious disadvantage. On the other hand, there will be strengths to a particular group and their habits of speech and thought.
People have a powerful need to belong. A newcomer is quickly ‘encultured’ into the way of the group, and learns to conform to the prevailing patterns of behaviour. The reason for this is that ‘breaking the rules’ will result in ostracism to some degree. You have to be very brave or very right to risk this. Most people will accept a standard they know perfectly well to be daft if it avoids confrontation and exclusion from the group. All groups reward certain patterns of behaviour, and punish other patterns, and we all follow these patterns because the social rewards of acceptance and peer-approval are so powerful. A business is no different. In fact, it can be more so, because managers have power and status, and pleasing them (even by agreeing to arrant nonsense) is even more rewarding.
It follows from this analysis that ‘Business Culture’ is all about how groups of people that happen to be in a business together set up and follow certain rules of behaviour and thought. Any one set of rules has advantages and disadvantages. The business then needs to play down the disadvantages and play up the advantages. But the prevailing culture, the ‘way we do things around here’, sets up constraints so that some options are closed down before they have even been properly considered. So, the business either needs to work around the constraints or remove them.
At certain times in a business’ development and growth it becomes apparent that the business culture is completely inappropriate for the future. Often this realisation comes when a new management team is appointed to take a business forward into a new stage, especially if had become clear that the previous management team wasn’t up to the job. So the business culture has to be changed. This is extremely difficult. People don’t like change. However daft the old system, many people will cling to the old system because it is known territory and they have spent years learning how to manipulate it to their own advantage; they feel comfortable with it. So convincing people that change is both necessary and desirable is very difficult, and requires management skills of a high order. People are very good at passively sabotaging something (as you all know very well) they don’t approve of. Sometimes the only solution is to replace the entire work-force, but that, too, is difficult and expensive.
All change produces winners and losers ie people who are better off under the new arrangements and people who were better off under the old arrangements. The first group of people can be relied upon to be broadly supportive of the change (whatever they say to their colleagues over coffee). The question then is ‘how many of them are there, and are they a majority? Who are they, and do they include sufficient key staff?’ The second group need understanding, and their losses compensated, possibly but not necessarily financially. More importantly they need winning over. So communication is vital. When a business is going through change gossip becomes a very damaging source of information if management don’t communicate properly. Leadership is also vital, and too many managers are in fact administrators rather than leaders. In a sense, it is a marketing job, as the new arrangements have to be ‘sold’ to a sceptical audience. Part of this is re-assurance, because people will naturally fear the unknown future and assume it will be worse for them personally.
This whole area is well-researched and discussed. There are copious case-studies showing how real businesses have tackled this difficult area and made a good job, or a complete mess, of it. It is, fundamentally, a people issue and solving the people problems is at the heart of solving the whole business problem. Too many businesses spend a lot of time and energy brilliantly solving the technical and logistical problems of re-organisation but with too little thought about the people side. The temptation is to think that if the managers think it a good idea, everyone else will too.
In other revision notes on this topic, we look at the importance of business culture, how businesses can build a positive culture and some criticisms of the concept.
Click here for the second revision note
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