American Management Association

CULTIVATING EFFECTIVE CORPORATE CULTURES

A Global Study of Challenges and Strateg es
Current Trends and Future Poss b l t es

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Canada USA Latin America Asia-Pacific Europe Middle East Africa

American Management Association

CULTIVATING EFFECTIVE CORPORATE CULTURES

A Global Study of Challenges and Strateg es
Current Trends and Future Poss b l t es

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Copyright 2008, American Management Association

For more information about American Management Association, visit www.amanet.org

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Table of Contents
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Fore&ord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Introdu't on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
A Review of the Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Early Years of Corporate Culture Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Culture and Corporate Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . !dentifyin" a #Positive$ Corporate Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %

The Fa'tors That Influen'e Cor(orate Culture. . . . . . . . . . . . . . . . . . . . . . . . . . . . &

The State of Corporate Cultures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' (efinin" Corporate Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' Assessin" Today)s Corporate Cultures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' (eterminin" *ow Lon" Corporate Cultures *ave +een ,aintained . . . . . . . . .au"in" the Success of Transferrin" Cultural /nowled"e . . . . . . . . . . . . . . . . . E0ternal (rivers of Corporate Culture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Economic Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Sustaina3ility Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Talent Shorta"es . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 .lo3ali4ation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 6or78Life +alance Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1% 9ther (rivers of Culture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1% ,er"ers and Ac:uisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1% 9utsourcin" Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1& 9r"ani4ational Structure and 9ther ;actors. . . . . . . . . . . . . . . . . . . . . . . . . . . 1'

See) ng State$of$the$Art Pra't 'es for *anag ng Cor(orate Culture . . . . . . . 1<iew Culture from a Performance Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . 21 *arness Culture to ;acilitate Chan"e and ,ana"e Talent . . . . . . . . . . . . . . . . . 21 The ;acilitation of Chan"e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Leadership (evelopment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Talent ,ana"ement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Loo7 +eyond Leadership to Strate"ic (irection and Talent (evelopment . . . . 25 Clearly Communicate Your 9r"ani4ational <alues to Everyone . . . . . . . . . . . . 2& (on)t ;or"et to !nclude Those 6ho 6or7 Remotely . . . . . . . . . . . . . . . . . . . . . 2' To Lead 6ell= Empower 9thers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2>

(evelop Leaders 6ho ,odel (esired +ehaviors and Ali"n Pro"rams with Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Consider ?sin" ,ore ,entorin" Pro"rams . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 !n a ,er"er= Emphasi4e Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ii

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Trac7 +est Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strate"ic !nitiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Leaders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 <alues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Strategy Fore'ast+ The State of Cor(orate Cultures n the ,ear !"%# . . . . . . . . %

Corporate Culture 6ill +ecome ,ore= @ot Less= !mportant . . . . . . . . . . . . . . . The .au"in" of Corporate Cultures 6ill +ecome ,ore Ri"orous . . . . . . . . . . ,ore 9r"ani4ations 6ill (evelop *ealthy Corporate Cultures. . . . . . . . . . . . . /nowled"e Transfer 6ill +e Critical to Cultures. . . . . . . . . . . . . . . . . . . . . . . . . Cultures 6ill @eed to +e +oth Resilient and A"ile . . . . . . . . . . . . . . . . . . . . . . . ,ore Corporate Cultures 6ill Adopt Sustaina3ilityARelated <alues . . . . . . . . . ,ore Employers 6ill Try to Create Cultures That Attract Talent . . . . . . . . . . . Companies 6ill Rely ,ore on (ispersed Employees and <irtual 6orlds. . . . . !nternal Learnin" 6ill Stress Commonalities= 6hile E0ternal & & ' ' > > -

Learnin" 6ill Stress Culture ,ana"ement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Con'lus on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 E( logue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 A((end - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

A3out this Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Tar"et Survey Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Survey !nstrument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 (emo"raphic Buestions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5% Ta3le 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5% Ta3le 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5% Ta3le . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5& Ta3le 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5& Ta3le % . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5' Ta3le & . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5' Ta3le ' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5> Ta3le > . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5> Culture Buestions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Ta3le - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Ta3le 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Ta3le 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %1 Ta3le 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %1 Ta3le 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %1 Ta3le 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %2 Ta3le 1% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . % Ta3le 1& . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %

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Ta3le 1' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %5 Ta3le 1> . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %5 Ta3le 1- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %5 Ta3le 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %% Ta3le 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %& Ta3le 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %& Ta3le 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %' Ta3le 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %> Ta3le 2% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %> Ta3le 2& . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %Ta3le 2' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %-

. bl ogra(hy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . &1 Authors and Contr butors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . &5

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Fore&ord
Culture helps shape our livesCin society= in our national identity= and in the 3usinesses we operate. !t can 3e a powerful force for "ood or "et in the way of the most needed chan"es. American ,ana"ement Association commissioned the !nstitute for Corporate Productivity to help discuss the factors that influence corporate culture= as well as e0plore the actual characteristics of corporate culture and their relationship to 3usiness success= and help e0ecutives develop the 7ind of culture that will cultivate and foster hi"her productivity and profita3ility in an or"ani4ation. Ed"ar Schein= professor of ,!T Sloan School of ,ana"ement= o3served that #!f you do not mana"e culture= it mana"es you= and you may not even 3e aware of the e0tent to which this is happenin".$ The study also loo7ed at those circumstances under which culture may impact the success or failure of strate"ic alliances= ac:uisitions= mer"ers= and the li7e. ;or instance= the study e0amined how the cultures of two mer"in" companies can adversely affect or enhance the prospects of the new or"ani4ation. !t also loo7ed at e0ternal factorsCfor instance= the impact of the multi"enerational wor7force= "lo3ali4ation= corporate reputation in sustaina3ility= ethics= and economic uncertainty. The researchers also trac7ed 3est practices that should assist companies in assessin" their corporate cultures= which then can lead to developin" the ri"ht culture for the or"ani4ation. A,A 3elieves that with the ri"ht initiatives a company can rema7e a culture so people= when they awa7e= want to "o to wor7 3ecause they 3elieve in their company and its mission. 6e hope to use the findin"s of this study to assist the leaders and mana"ers of 3usinesses= as Ed"ar Schein said= to mana"e their culture= and not allow it to mana"e them. Edward T. Reilly President and Chief E0ecutive 9fficer American ,ana"ement Association

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Introdu't on
,any corporations are increasin"ly aware that their corporate cultures affect not only their employees) attitudes and values 3ut also the 3ottom line. As a result= corporate leaders have 3ecome more interested in findin" ways to mold their corporate cultures to 3ecome more powerful drivers of hi"h performance. Yet= many are unsure how to accomplish that "oal. To "ain a 3etter understandin" of the effect culture has on or"ani4ations= American ,ana"ement Association DA,AE commissioned the !nstitute for Corporate Productivity to conduct a "lo3al study of corporate cultures in today)s or"ani4ations. The survey not only e0amined the common and 3est practices displayed 3y or"ani4aAtions 3ut also identified some of the factors that characteri4e the corporate cultures associated with hi"h performance. ;or the purposes of this study= the A,A8!nstitute for Corporate Productivity team melded various definitions of corporate culture into one sentence that was used as the reference point from which survey participants answered :uestions. That oneAline statementF Corporate culture is the shared values and 3eliefs that help individuals understand or"ani4ational functionin" and that provide them with "uides for their 3ehavior within the or"ani4ation. 6hat follows are some of the maGor findin"s from the AMA/Institute for Corporate Productivity Corporate Culture Survey 2008: F nd ng One+ A positive corporate culture is associated wit i! er perfor"ance# The A,A8!nstitute for Corporate Productivity team identified ei"ht characteristics associated with positive corporate cultures. The more that or"ani4ations displayed these characteristics= the hi"her they were ran7ed on the A,A8!nstitute for Corporate Productivity Culture !nde0. And= as it turns out= the hi"her the ran7in"s on the Culture !nde0= the more li7ely it is that or"ani4ations do well in the mar7etplace= 3ased on selfAreports. F nd ng T&o+ $ew co"panies display all ei! t di"ensions of a positive corporate culture to a i! or very i! e%tent# Perhaps most worrisome is the findin" that only a third of the corporations see themselves as havin" a culture that= to a hi"h or very hi"h e0tent= fosters the 3est performance from their wor7ers. vi

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F nd ng Three+ &avin! a "ore positive culture is related to i! er productivity and 'etter talent retention# Positive corporate cultures tend to have more en"a"ed and satisfied wor7ers. F nd ng Four+ Positive corporate cultures are associated wit t e !reater facilita(tion of c an!e initiatives# This findin" flies in the face of conventional wisdom that sees a stron" culture as entrenched and resistant to chan"e. !nstead= the study found the oppositeCpositive corporate cultures are more receptive to chan"e and adapt :uic7ly to meet new challen"es. F nd ng F /e+ )eaders ip style "a*es a difference# Leaders who use an empowerAment style to direct employees show a si"nificant correlation to a positive culture and mar7et performance.
F nd ng S -+ Most co"panies are "ediocre or worse at developin! leaders# The study found that only a3out a third of the or"ani4ations that participated felt their companies are "ood or very "ood at leadership development.

F nd ng Se/en+ In "ost or!ani+ations, e"ployees are not very fa"iliar wit t e 'usiness strate!y# +usiness strate"y is one of the factors most closely associated with mar7etplace success= yet only 2'H of participants were sure their strate"y is well understood 3y all mem3ers of the or"ani4ation. This could represent an opportunity for leaders to ma7e sure employees understand the company)s "oals and to enhance 3uyAin. F nd ng E ght+ -cono"ic conditions is t e *ey outside influence na"ed 'y "ost as influencin! corporate culture# The condition of the economy is not only seen as the num3er one outside factor influencin" today)s corporate cultures= it is also seen as the prime outside influence for the future. F nd ng N ne+ .alent s orta!es are seen as 'eco"in! an increasin!ly i"portant influence on corporate culture# The prospect of losin" top employees as the +a3y +oom "eneration retires already concerns respondents. And= as more +oomers are lost= the need to replace them is e0pected to 3ecome a prime issue within the ne0t decade. Respondents ran7ed this pro3lem second only to the condition of the economy in its influence on the corporate cultures of the future.
F nd ng Ten+ /r!ani+ations wit positive cultures are "ore li*ely to ave successful "er!ers# Yet= it is the rare or"ani4ation that successfully mana"es to com3ine two cultures into a unified cultureConly 22H of respondents whose or"ani4ations

had under"one a mer"er said they had mana"ed to do so to a hi"h or very hi"h e0tent. F nd ng Ele/en+ Success in t e area of talent "ana!e"ent0as well as its *ey co"(ponents0is lin*ed to avin! a "ore positive corporate culture# The study found that talAent mana"ement itself= as well as its various strands Dhirin"= retention= trainin"= etc.E= are all si"nificantly associated with positive corporate cultures.
F nd ng T&el/e+ Corporate culture is a pri"e factor in et ical 'e avior# !nstillin" ethics and values into the wor7force is the characteristic most hi"hly associated with the Culture !nde0 and is the num3er two factor associated with mar7et performance.

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These are only a few of the insi"hts derived from this study= which also contains "uidance a3out the strate"ies successful or"ani4ations are usin" to develop their corAporate cultures. The study analy4es trends and ma7es forecasts a3out the state of corAporate culture in ten years) time. .enerally spea7in"= the A,A8!nstitute for Corporate Productivity team 3elieves that corporate culture is= and will continue to 3e= a prime influence on mar7et perAformance and issues such as talent retention. The team also 3elieves that most or"aniA4ations should strive harder to create the 7ind of healthy= performanceA 3ased corpoArate cultures that will ma7e them more competitive in the mar7etplaces of today and tomorrow.

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A Re/ e& of the L terature

The Early ,ears of Cor(orate Culture Stud es
. e understandin! of corporate cultures in or!ani+ations 'e!an wit researc on 'ot sides of t e Atlantic# . e researc started in 1232 w en 4urt )ewin, a 5er"an i""i!rant on t e faculty of Massac usetts Institute of .ec nolo!y 6MI.7, set out to identify different styles of leaders ip#

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This early research was very influential with other researchers and eventually led to the perceived importance of culture in or"ani4ations. Lewin)s early wor7 esta3lished that there were three maGor leadership stylesF autocratic= democratic DparticipativeE= and laisse4Afaire. *e and his collea"ues discovered that the most effective style was democratic. They found that democratic leaders offer "uidance to "roup mem3ers= participate in the "roup= and allow input from other "roup mem3ers. Researchers also found that contri3utions from mem3ers of the democratic "roup were of a much hi"her :uality DLewin et al.= 1- -I Tannen3aum J Schmitt= 1-%>E. This wor7 created interest in somethin" new and e0citin" for social psycholoA "istsF the study of leadership. !n the summer of 1-5&= Lewin and associates from the ?niversity of ,ichi"an)s Research Center for .roup (ynamics 3ecame involved in leadership and "roup dynamics trainin" for the Connecticut !nterracial Commission. Lewin)s ideas "reatly influenced his collea"ues= who went on to 3ecome leaders in what 3ecame the field of or"ani4ational development D9(E. +y 1-5'= +enne= +radford= and Lippitt created the @ational Trainin" La3oratory in .roup (evelopment in +ethel= ,E= where they continued usin" the techni:ues they had developed. The or"ani4ation evolved into the @TL !nstitute= an or"ani4ation that has contri3uted to furtherin" understandin" of the science of human relations. Researchers were perple0ed 3y the o3servation that attendees of @TL and other similar pro"rams praised the e0perience 3ut were "enerally una3le to translate those e0periences into chan"es in the wor7place DPatten= 1->-E. 6ilfrid +ion of the ?/)s Tavistoc7 !nstitute posited a theory for this phenomenon in his studies of #"roup relaAtions.$ +ion concluded that individuals can neither 3e understood nor their 3ehavior chan"ed outside of the "roups in which they live and survive D1-5>A 1-%1E. +ion 3elieved that "roups 3ehave as a system. Eric Trist applied these and other Tavistoc7 concepts to actual or"ani4ations= translatin" them into what is now 7nown as a sociotechnical approach to restructurin" wor7. This newly identified focus on "roups= teams= and the whole or"ani4ation 3ecame an important connectin" point in the theAory and desi"n of 9( and= eventually= or"ani4ational culture. 9nce culture was on the radar screen of the research and consultin" communiAties= it 3ecame a focus of e0ploration for the ne0t three decades. As early as 1-&'= there are written accounts statin" e0plicitly that leaders and consultants sou"ht to improve culture at TR6 D(avis= 1-&'E. Ro3ert +la7e and Kane ,outon D1-&>E descri3ed clearly and ela3orately how or"ani4ational plannin" and mana"ement development D9(E could 3e cali3rated to yield corporate e0cellence. These early voices did not= however= "ain much traction. That came durin" the 1->1s when many or"ani4ational researchers addressed the relationship 3etween culture= strate"y= and performance D/ennedy J (eal= 1->2I 6il7ins J 9uchi= 1-> I +arney= 1->&I Schein= 1-> I *ofstede= 1->1E. The evidence presented 3y Peters and 6aterman D1->2E identified cultural characteristics of successful companies and 3uilt a theory of e0cellence that opened the door to understandin" the relationship of e0cellence and culture DCarroll= 1-> I <an de <en= 1-> E. (ennison D1->5E= usin" surveyA3ased culture measures= showed that perceived involvement and participation on the part of or"ani4ational mem3ers predicted 3oth current and future financial performance. !n addition= .ordon D1--1E 2

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found that hi"hA and lowAperformin" companies in the 3an7in" and utilities indusA tries had different culture profiles. /ravet4 D1->>E demonstrated that mana"ement practices fosterin" participation= autonomy= and creativity were closely correlated with o3Gective indicators of or"ani4ational performance. Careers at the individual and or"ani4ational level of analysis were a 3i" emphasis in studies done durin" this period. E0amples of or"ani4ationalAlevel writin" include wor7 on the followin"F The ways reward systems motivate mana"ers D6hitley= 1->'E !nternal and e0ternal la3or mar7et theory and demo"raphy D(iPrete= 1->' *achen= 1--2I 9sterman= 1->5I Pfeffer= 1->%E 9r"ani4ational ecolo"y D*aveman J Cohen= 1--5E The use of la3or mar7et theory to lin7 career systems with the strate"ic 3ehavior of companies DSonnenfeld J Peiperl= 1->>E 9r"ani4ational sociali4ation practices are 7ey in 3oth transmittin" and perpetuA atin" or"ani4ational culture DLouis= 1--1I Trice J +eyer= 1-- E. Sociali4ation is typiA cally defined as a learnin" activity= focusin" on what and how newcomers learn as they ma7e the transition from or"ani4ational outsider to insider D;isher= 1->&E. Therefore= sociali4ation is considered effective when newcomers come to understand and accept the or"ani4ation)s 7ey values= "oals= and practices DSchneider J Rentsch= 1->>E. To 3e compati3le with a hi"hAperformance culture= sociali4ation needs to 3e approached as a process of esta3lishin" a relational networ7 that facilitates continuous learnin" in order to understand and meet chan"in" or"ani4ational demands D,aGor= 2111E. 9r"ani4ations that provide newcomers with stron"er support systems find their employees have fewer adverse psycholo"ical issues related to Go3 performance than do new hires in corporations that provide less support DRu3en= 1->&E. Research shows that :uality relationships with or"ani4ational insiders can even help newcomers overAcome the ne"ative effects of unmet e0pectations D,aGor et al.= 1--%E.

Culture and Corporate Performance

Corporate culture is 3elieved to influence 7ey aspects of 3usiness performance= such as innovation= customer focus= adapta3ility to chan"e= and or"ani4ational learnin". Some e0perts say it is also the definin" factor in the areas of employee en"a"ement= loyalty= and retention DTowers Perrin= 211'aI Towers Perrin= 211'3I Roach= 211&I #,ore than Ko3 (emands=$ 211&I Smith= 211%E. 6hen companies #"et the culture ri"ht=$ success often seems to naturally flow DSalt4man= 211'I 6ahl= 211%I Calfee J Sheridan= 211%I Pro3st J Raisch= 211%E. +ut when they "et it wron"= failure often seems inevita3le D@euman= 211'I Pro3st J Raisch= 211%E. A landmar7 1--2 study 3y K. /otter and Kames *es7et concluded that= over a 11A year period= #companies that intentionally mana"ed their culture effectively outA performed similar companies that did not. Their findin"s included revenue "rowth of &>2H versus 1&&H= stoc7 price increases of -11H versus '5H= net income "rowth of '%&H versus 1H= and Go3 "rowth of 2>2H versus &H$ D6arshaws7y et al.= 211&E. Companies that mana"e culture well can also 3enefit in specific performance areas. 9r"ani4ations with innovationAfriendly cultures= for e0ample= tend to 3e more 3

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profita3le= enGoy faster "rowth= create more Go3s= and have a more productive wor7Aforce than their nonAinnovative competitors= even in mature industries D;ran7o= 1->-I Capon et al.= 1--2I +aldwin J (aPont= 1-- E. A recent American ,ana"ement Association DA,AE study= . e 8uest for Innovation D211&E= discusses at len"th the importance of an innovative culture. !n such cultures= customers were found to 3e the num3er one driver of innovation= and the a3ility to focus on customers was viewed as the topAran7ed factor for developin" an innovative culture. !nsurance e0pert +ruce 6. .ordon has stated that a new product)s success depends less on the creation itself than on the culture and its a3ility to "et that across to the customer D.ordon= 211%E.

Culture is also hi"hly related to adapta3ility to chan"e. The literature on culture chan"e tends to 3e"in with Lewin)s threeAsta"e model for chan"e in which the conA cepts of unfree4in"= movin"= and free4in" are hi"hli"hted D1--'E. !n many ways= this model served as the or"ani4ationalAchan"e standard for decades. !mplicit in the model are the premises that D1E there is a culture that must 3e unfro4en so a new and 3etter culture can 3e introduced and D2E stron" cultures are 3etter than wea7 cultures. Culture was seen as a sta3ili4er= a conservative force= a way of ma7in" thin"s meanin"Aful and predicta3le. *owever= over time it was seen that cultures that are intrinsically stron" are also resistant to chan"e. !n fact= Sathe D1->%E and Stre3el D1--5E ar"ued that or"ani4ations with wea7 cultures are actually 3etter in some respects 3ecause they are more fle0i3le and adapt more easily to e0ternal chan"e. Current thin7in" su""ests that some elements of culture can 3e stron" as well as conducive to or"ani4ational fle0i3ility DSathe J (avidson= 2111E. Chan"es in the world have driven the need for fle0i3ility and adapta3ility. +usiness has 3ecome more comple0= more fastApaced and culturally diverse D*essel3ein et al.= 1---I .lo3al +usiness @etwor7= 2112I Schwart4= 211 I ,ichael= 1->%= 1--1E. This means that or"ani4ations and their leaders must 3e a3le to learn :uic7ly and adapt to chan"es. 6ithout "uidance or thou"ht= a chan"in" culture can "row in a ne"ative direction and ta7e the or"ani4ation with it. 9r the or"ani4ation mi"ht not fail per se 3ut simply 3ecome less competitive in the mar7etplace D6arshaws7y et al.= 211&E. Lawler and 6orley say in the openin" of their 3oo7 9uilt to C an!e D211&EF #E0cellence is a3out chan"e. ,ost or"ani4ations simply cannot sustain e0cellent perAformance unless they are capa3le of chan"in".$ They recommend desi"nin" or"ani4aAtions so that they can 3e successful and chan"e as needed. They 3elieve that the maGor reason or"ani4ations are not "ettin" 3etter at e0ecutin" chan"e is that e0istin" theory and practice in or"ani4ation desi"n e0plicitly encoura"e or"ani4ations to see7 ali"nAment= sta3ility= and e:uili3rium. Lawler advocates for an or"ani4ation that encoura"es e0perimentation= learns a3out new practices and technolo"ies= monitors the environAment= assesses performance= and is committed to continuously improvin" performAance DLawler J 6orley= 211&E. 9thers have come to the same conclusion and descri3e these or"ani4ations as #learnin" or"ani4ations.$ This concept is not a new one. !t flourished in the 1--1s= priA marily driven 3y the wor7 of Peter Sen"e D1--1= 1--5E. Current writers D.arvin et al.= 4

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Culture was seen as a sta'ili+er, a conservative force, a way of "a*in! t in!s "eanin!ful and predicta'le#

211>E 3elieve the early wor7 on learnin" or"ani4ations was too conceptual and lac7ed a concrete way for mana"ers to assess where they were and where they needed to "et to. .arvin= Edmondson= and .ino D211>E developed an assessment= . e )earnin! /r!ani+ation Survey, which they descri3e as a tool for 3uildin" a learnin" or"ani4aAtion. .enerally spea7in"= learnin" or"ani4ations have cultures and systems that allow employees to continuously learn the 7inds of thin"s that will help them perform and innovate more effectively= 3oth as individuals and as a "roup.

dentif!ing a "Positive# Corporate Culture

There)s no such thin" as a sin"le #ideal$ corporate culture. Every or"ani4ation has uni:ue features and "oals. +ut the literature "enerally supports the idea that there are aspects of culture that are desira3le to almost every or"ani4ation= especially when these features are associated with hi"her performance. ;or e0ample= (e 6itte and van ,uiGen D1---E su""est that= re"ardless of industry or si4e= an or"ani4ation)s culture should 3e in line with its strate"y. The more that employees can clearly identify and discuss their or"ani4ation)s strate"y= the more li7ely it is that the ri"ht culture can 3e defined and encoura"ed. Another component of culture that is widely pursued 3y many or"ani4ations is the a3ility to innovate and chan"e= as noted a3ove. !n today)s fastApaced "lo3al wor7 environment= or"ani4ations that encoura"e innovation and promote :uic7 responses to needed chan"es are more li7ely to solve pro3lems successfully and not suffer from the conse:uences of infle0i3ility or sta"nation. The idea of or"ani4ational trust is another feature that is widely viewed as a positive feature. Andrew Edelman= a mana"ement consultant and professor at the ?niversity of Phoeni0= ar"ues that most or"ani4ational cultures don)t do a very "ood Go3 of 3uildin" trust and fosterin" a cooperative spirit D211&E. A culture without coopAeration and trust is associated with turnover and reduced profits. ,itchell and Yates D2112E found that trust is especially important when or"ani4ations must maintain partnerships 3etween paid staff and volunteers. !t will 3e interestin" to see if scholarship in this area can ma7e more pro"ress in identifyin" the characteristics of positive cultures. Such research may 3e useful in helpin" or"ani4ations intentionally mana"e their cultures in such a way as to 3oost their levels of overall performance. 6e hope that this report is one step toward achievAin" that "oal.

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The Fa'tors That Influen'e Cor(orate Culture

. e proper "ana!e"ent of corporate culture re:uires understandin! a'out w at drives it, and, even "ore i"portant, w ic drivers are "ost influential 6.ellis et al#, 20087#

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9f course= "iven the encompassin" nature of corporate culture= it)s not possi3le to disAcuss all the factors that influence it in today)s wor7place. This section will= however= focus on a num3er of factors that seem to have a si"nificant impact. +efore those facAtors are analy4ed= we 3e"in with a review of how corporate culture is defined within the conte0t of this study and the status of corporate culture today.

&'e State of Corporate Cultures

Defining Corporate Culture Corporate culture is an amal"am of many thin"s= includin" the values= morals= and codes D3oth written and unwrittenE that reveal #an or"ani4ation)s true internal prioriA ties.$ 6ahl D211%E states= #!t)s everythin" from how leaders communicate with employees= what 7inds of achievements are rewarded and in what way= how accountaA3ility is demonstrated= what 7inds of people are promoted or hired= and who "ets fired Dand howE. These thin"s can 3e su3tly different from one company to the ne0t. +ut ta7en to"ether= they spea7 volumes a3out the way a company does 3usiness= in a very holistic sense and can have ma7eAorA3rea7 results.$
The A,A8!nstitute for Corporate Productivity research team streamlined this and other definitions of corporate culture into a sin"le statement that was communicated to those who participated in the Corporate Culture Survey 2008. !t was defined as followsF the shared values and 3eliefs that help individuals understand or"ani4ational functionAin" and that provide them with "uides for their 3ehavior within the or"ani4ation.

Assessing Todays Corporate Cultures

The A,A8!nstitute for Corporate Productivity team used its scan of the 3usiness literA ature and several focus "roups to help identify ei"ht dimensions associated with what the team terms a #positive corporate culture.$ The more that or"ani4ations display
MA34( 5 67 6,
(elativel! fe) organi*ations score 'ig' on all eig't of t'ese dimensions+ ,enerall! spea-ing. t'e cultures of most organi*ations do not do an e/ceptional 0o1 of fostering trust. encouraging innovation. responding 2uic-l! to c'anges. or 1ringing out t'e 1est in t'eir )or-ers+

these ei"ht characteristics= the hi"her their score on the A,A8!nstitute for Corporate Productivity Culture !nde0. This inde0 was then correlated with other corporate strateA "ies to "au"e whether or not there mi"ht 3e a relationship 3etween havin" a positive corporate culture and success in other areas= from strate"y to mar7et performance. As we can see in ;i"ure 1= these characteristics are si"nificantly correlated with overall mar7et performance= as determined 3y selfAreports in the areas of revenue "rowth= mar7et share= profita3ility and customer satisfaction Dcollectively 7nown as the ,ar7et Performance !nde0 throu"hout much of the reportE. That is= the more li7ely that an or"ani4ation is to have these characteristics= the more li7ely it is to say it perAforms well in the mar7etplace.

9ut of the ei"ht cultureA3ased characteristics= cooperation seems to 3e the area where today)s corporations are most li7ely to e0cel= with nearly half D5>HE of respondents sayin" they #have a cooperative culture$ to a hi"h or very hi"h e0tent. Another 52H said that= to a hi"h or very hi"h e0tent= #our corporate culture is ali"ned with our strate"y.$

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Figure ,

&o )'at e/tent do t'e follo)ing statements descri1e !our organi*ation9s culture:
Percentage (esponding to a ;ig' (esponses or <er! ;ig' E/tent Correlation )it' Mar-et Performance nde/

-e have a cooperative cu.ture

08 1

.2,//

'ur corporate cu.ture is a.igne2 with our strategy

02 1

.20//

-e have a cu.ture that encourages innovation

34 1

.22//

-e have a cu.ture that encourages strategy e5ecution

34 1

.2,//

'ur cu.ture fosters trust

36 1 30 1

.2,// .,4//

-e have a cu.ture that promotes 7uic8 responses to nee2e2 changes

'ur corporate cu.ture brings out the best performance

32 1

.29//

in our emp.oyees

:ecision;ma8ing authority e5ists at a.. .eve.s, not <ust

24 1

.,4//

top management

!he Mar8et )erformance "n2e5 is 2etermine2 by averaging the responses to four mar8et performance 7uestions that cover revenue growth, mar8et share, profitabi.ity, an2 customer satisfaction //significant at p=.0,

Editor9s 6ote A1out Correlations= !he corre.ation coefficient is use2 to measure the strength an2 the 2irection of the re.ationship between two variab.es. For e5amp.e, the c.oser a corre.ation is to >,, the stronger the positive re.ationship between the two variab.es such that an increase in one variab.e is associate2 with an increase in the other. ?ut, <ust because two variab.es are foun2 to be corre.ate2 2oes not mean that a cause;an2;effect re.ationship e5ists. -hen a corre.ation between the two variab.es is significant, for e5amp.e at p=.0@, you are saying that there is on.y a @1 chance that these resu.ts wou.2 have occurre2 by chance. *tate2 2ifferent.y, you can be 4@1 confi2ent that these resu.ts are not in error an2 that you wou.2 get these same resu.ts if you con2ucte2 this research again. -ith a corre.ation of p=.0,, which represents the ma<ority of corre.ations reporte2 in this stu2y, you can be 441 confi2ent that these resu.ts are not in error.

Ta7en as a whole= these data reveal that relatively few or"ani4ations score hi"h on all ei"ht of these dimensions. .enerally spea7in"= the cultures of most or"ani4ations do not do an e0ceptional Go3 of fosterin" trust= encoura"in" innovation= respondin" :uic7ly to chan"es= or 3rin"in" out the 3est in their wor7ers. The fact that only a3out a third of companies said that their culture #3rin"s out the 3est performance in employAees$ to a hi"h or very hi"h de"ree should 3e seen as especially pro3lematic since= out of the ei"ht characteristics= this one is most hi"hly correlated with mar7et performance.

9n the 3ri"hter side= over half of respondents reported that= to a hi"h or very hi"h e0tent= their #or"ani4ation is a "ood place to wor7.$ The A,A8!nstitute for Corporate Productivity team found this to 3e very stron"ly correlated with the Culture !nde0. That is= a company that is viewed as a "ood place to wor7 is also :uite li7ely to 3e seen as havin" a positive culture. 6hereas only 5%H of companies are successfully meetin" their "oals to a hi"h or very hi"h de"ree= those that are doin" so are much more li7ely to score :uite hi"h on the Culture !nde0. This su""ests that the a3ility to meet or"ani4ational "oals is related to havin" a positive corporate culture. >

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Figure 2

&o )'at e/tent do t'e follo)ing statements descri1e !our organi*ation9s performance:
Percentage (esponding to (esponses 'vera.., this organiAation is a goo2 p.ace to wor8 'ur company is successfu..y meeting its goa.s a ;ig' or <er! ;ig' E/tent
@4 1

Correlation )it' Culture nde/

.68//

Correlation )it' Mar-et Performance nde/

.29//

0@ 1

.62//

.33//

-e are operating at our potentia.

//significant at p=.0,

2@ 1

.63//

.24//

Determining How Long Corporate Cultures Have Been Maintained Corporate cultures tend to 3e relatively sta3le over time= su""est the findin"s of the
AMA/Institute for Corporate Productivity Corporate Culture Survey 2008. The maGority of respondents= & H= said their corporations have maintained their current culture for si0 years or more. !t)s worth notin"= however= that many cultures have 3een in place for 11 years or less= and only 2 H of respondents said their corporate cultures have

3een maintained for more than 21 years.

MA34( 5 67 6,
&'ere are no significant correlations 1et)een t'e num1er of !ears t'at a compan! 'as maintained a culture and t'e degree to )'ic' it 'as a positive corporate culture+

There are no si"nificant correlations 3etween the num3er of years that a culture has 3een maintained and the mar7et performance of those companies= the study found. This su""ests that a more sta3le culture is neither "ood nor 3ad in terms of mar7et performance. The study also failed to find a correlation 3etween the a"e of a culA ture and scores on the Culture !nde0.

Gauging the Su ess of Transferring Cultural !nowledge Althou"h the maGority of respondents indicated their corporate cultures have 3een in

place for many years= much of the essential cultural 7nowled"eCwe could term it #cultural artifacts$Cdoes not seem to 3e well 7nown to all or"ani4ational mem3ers. 6hen as7ed how familiar employees are with a list of seven such artifacts= responA dents indicated that employees are most familiar with codes of conduct D%-H said employees are familiar to a hi"h or very hi"h e0tentE and or"ani4ational values D%1HE. +y contrast= relatively few said they thin7 wor7ers are familiar with the company)s compensation system D %HE= e0pectations of communications style D 1HE= and 3usiness strate"y D2'HE to a hi"h or very hi"h e0tent. ?

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Figure 3

;o) long 'as !our compan! maintained its current culture:

23.31 39.@1 @.61 4.81 23.81

B 0 to @ years B 6 to ,0 years B ,, to ,@ years

MA34( 5 67 6,

B ,6 to 20 years

B in More than 20 &'e leaders most organi*ations years seem to 1e ma-ing a serious mista-e 1! failing to clearl! communicate t'e compan!9s strateg! to t'e organi*ation as
a )'ole+

The fact that all these artifacts are hi"hly correlated with the Cultural !nde0 indicates that the more employees are familiar with them= the more li7ely the comApany is to have a positive culture. These findin"s also su""est some maGor pro3lems and opportunities for or"ani4ations. Amon" these artifacts= the one that is most hi"hly correlated with mar7et performance is 3usiness strate"y= yet Gust 2'H of respondents said their or"ani4ations are familiar with such strate"y to a hi"h or very hi"h e0tent. This indiA cates that the leaders in most or"ani4ations are ma7in" a serious mista7e 3y failin" to clearly communicate the or"ani4ation)s strate"y to the or"ani4ation as a whole. !t)s li7ely that doin" so helps ali"n the culture to the strate"y= 3oostin" overall 3usiness performance.

E/ternal 7rivers of Corporate Culture

As stated 3efore= corporate culture is driven 3y many factors. The AMA/Institute for Corporate Productivity Corporate Culture Survey 2008 directly as7ed a3out seven specific e0ternal drivers= their current effect on the or"ani4ation)s culture= and the e0pected influence they will have in 11 years) time. 6hen as7ed a3out the e0tent to which each of seven factors currently influences their or"ani4ation)s corporate culture= respondents "ave their stron"est support to #current economic conditions.$ !t is the only factor that more than half the responAdents rated as havin" a hi"h or very hi"h influence on their culture.
Respondents were ne0t as7ed to predict the influence of those same factors on their corporation)s culture in 11 years) time. Current economic conditions remain the num3er one factor= with &-H sayin" it would influence culture to a hi"h or very hi"h e0tent. Respondents predicted that the other factors would also influence culture to a "reater de"ree in the future. !n fact= the only factor that fewer than half of respondents saw as havin" a hi"h or very hi"h future influence is the need to improve security= at 5%H.

1@

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Figure 0

n !our organi*ation. to )'at e/tent are emplo!ees familiar )it' t'e follo)ing:
Correlation )it' Mar-et Performance nde/ .,0//

Percentage (esponding to a (esponses Co2e of con2uct ;ig' or <er! ;ig' E/tent @4 1

Correlation )it' Culture nde/ .00//

'rganiAationa. va.ues

@, 1

.@6//

.,6//

'rganiAation structure

0@ 1

.06//

.0@

Mission statement

00 1

.0@//

.,0//

Compensation system

3@ 1

.34//

.09//

&5pectations of communication sty.e

30 1

.@9//

.,2//

?usiness strategy

29 1

.@6//

.,4//

!he Cu.ture "n2e5 is 2etermine2 by averaging the responses to eight 7uestions aime2 at 2etermining whether an organiAation has a positive corporate cu.ture. !he Mar8et )erformance "n2e5 is 2etermine2 by averaging the responses to four mar8et performance 7uestions that cover revenue growth, mar8et share, profitabi.ity, an2 customer satisfaction. //significant at p=.0,

Correlation is not causation= 3ut the data indicate that each of the seven drivers is si"nificantly related to the Culture !nde0. These positive correlations su""est that companies that reactCand plan to reactCto these e0ternal drivers are more li7ely to have positive corporate cultures. !n other words= adGustin" to e0ternal drivers ma7es sense from a cultural perspective. That)s especially clear with the concept of wor78life 3alance. !t is ran7ed si0th in importance of the seven factors that respondents 3elieved affect their or"ani4ation)s corporate culture to a hi"h or very hi"h e0tent. *owever= it is num3er one when loo7ed at from the perspective of correlation to the Culture !nde0. !t appears that or"ani4ations that allow wor783alance issues to influence their cultures are more li7ely to have positive cultures 3oth today and in the future. This findin" raises the possi3ilAity that= to create more positive cultures= some companies should

shift to a "reater emphasis on the wor78life 3alance needs of the wor7force. Another interestin" findin" is that #"lo3ali4ation$ is the driver most hi"hly correlated with mar7et performance. The more an or"ani4ation reports that "lo3ali4aA tion influences its culture= the more li7ely it is to 3e a 3etter mar7et performer. Perhaps companies that seriously ta7e "lo3ali4ation into account in terms of how they mana"e their corporate cultures are more li7ely to have success in today)s "lo3al mar7etplace. 11

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Figure @

&o )'at e/tent do t'e follo)ing factors influence !our organi*ation9s culture toda!. and to )'at e/tent do !ou anticipate t'e! )ill influence !our culture in 1@ !ears:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent Correlation )it' Correlation )it' Culture nde/ Mar-et Performance nde/

(esponses &oda!= Current economic con2itions *ustainabi.ity concerns !a.ent shortages %.oba.iAation !he nee2 to improve security !he wor8C.ife ba.ance nee2s of the wor8force Changing 2emographics n 1@ Aears= Current economic con2itions !a.ent shortages Changing 2emographics !he wor8C.ife ba.ance nee2s of the wor8force *ustainabi.ity concerns %.oba.iAation !he nee2 to improve security

6,.3 03.9 03.3 3@.@ 30.8 30.2 3,.6 64.0 66.2 60.3 @4.3 @9.3 @@.6 0@.0

.04// .,@// .2,// .,0// .04// .39// .,4// .,0// .,2// .04// .20// .09// .08// .06/

.02 .0@ .08// .20// .06/ .09// .0@ .06/ .09// .03 .09// .00 .2,// .06/

1L 1L

"n2icates that the corre.ation is significant at the p=.0@ .eve.. "n2icates that the corre.ation is significant at the p=.0, .eve..

" onomi Conditions

As noted 3efore= economic conditions have 3een seen as the main e0ternal driver of corporate culture. This is not surprisin" since financial success is most or"ani4ations)

primary "oal and economic conditions have a direct

MA34( 5 67 6,

"Economic conditions# is t'e onl! factor t'at more t'an 'alf of t'e respondents rated as 'aving a 'ig' or ver! 'ig' influence on t'eir culture+

impact on the a3ility to attain that "oal. ,oreover= economic downturns can deeply influence the manA a"ement of companies. After all= employees may 3e su3Gected to layoffs= wa"e free4es= a decrease in 3enefits= sta"nation in compensation levels= increased hours and duties= or other mana"ement tactics desi"ned to cut

costs. These costAsavin" strate"ies can adversely affect morale as employees wor7 harder and lon"er while fearin" for their Go3s. This can translate to lower overall productivity D(iamond= 211'E= lower en"a"ement DTowers Perrin= 211'3E= poor performance= and hi"her turnover DRoach= 211&E. Those strate"ies can also erode cooperation and trust= 3oth of which are important components of the A,A8!nstitute for Corporate Productivity Cultural !nde0.

Sustaina#ility Con erns 9ne of the more surprisin" findin"s of the survey is that #sustaina3ility concerns$ is 12

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seen as the second most important factor influencin" culture today. ;ortyAfour perA cent said it affects their corporate cultures to a hi"h or very hi"h de"ree. Even more C %'HCsaid sustaina3ility will 3e an important factor in 11 years) time= althou"h its ran7in" on the listin" slips to num3er five. Sustaina3ility remains a relatively new 3usiness concept that is clearly viewed as "ainin" importance in the area of corporate culture. 9ne of the most common ways
MA34( 5 67 6,
"Sustaina1ilit! concerns# is seen as

t'e second most important e/ternal factor influencing corporate culture toda!+

of definin" sustaina3ility can 3e traced to the 1->' 6orld Commission on Environment and (evelopment= also 7nown as the +runtland Commission. Accordin" to that "roup= sustaina3ility is #development that meets the needs of the present without compromisin" the a3ility of future "eneraA tions to meet their own needs$ D. e ;ictionary of

Sustaina'le Mana!e"ent= 211>E. Research has indicated that corporate America has 3e"un em3racin" sustaina3ility as a top issue DA.T. /earney= 211'E and the same is true for or"ani4ations around the "lo3e D;ahey= 211'I @ewton= 211&E. <arious studies= includin" A,A)s Creatin! a Sustaina'le $uture D211'E= show that adoptin" sustaina3ility practices re:uires #em3eddin"$ sustaina3ility values into the corporate culture. 6irten3er" and her collea"ues D211'E found that values related to sustaina3ility were especially evident amon" EuropeanA3ased companies in their samAple. 9ne e0ecutive said= #You can)t tal7 to anyone Min our companyN without them spea7in" a3out doin" thin"s that ma7e a difference for people. So there is this interacAtion 3etween the vision= the mission= and the culture that is all wrapped up in a hisAtory of payin" attention to this 7ind of stuff.$ The relatively important role of sustaina3ility is= of course= tied to increasin"ly prominent issues such as environmentalism De.".= concerns a3out "lo3al warmin" and the pollution pro3lems of hi"hAprofile nations such as China and !ndiaE and the risAin" cost of fossil fuel ener"y. +ut it also influences the a3ility of corporations to attract 3etter talent D(eloitte J Touche LLP ?SA= 211'I 9dell= 211'E and the a3ility of or"anAi4ations to retain employees D6hite= 211%E who tend to say they are more satisfied with their Go3s and have a 3etter view of senior mana"ement D/ene0a Corporation= 211'I *intch= 211&E. !n short= sustaina3ility issues 3ecome lin7ed with talent issues.

Talent Shortages
Talent shorta"es are already of importance when it comes to corporate culture= and they)ll 3ecome more important over time. ;ortyAthree percent of respondents said such shorta"es influence their or"ani4ation)s culture to a hi"h or very hi"h e0tent= and that num3er Gumps to &&H when respondents were as7ed to loo7 11 years into the future.

That means that= out of these seven factors= talent shorta"es are proGected to 3e second only to economic conditions in terms of their impact on culture ten years from now. !t)s li7ely that companies are loo7in" toward certain demo"raphic shiftsCincludin" the retirement of the +a3y +oomer "enerationCand foreseein" talent shorta"es.
This is understanda3le. 6ithout talent= it)s hard= if not impossi3le= to 3e innovative and to produce :uality products. !t)s clear that or"ani4ations will modify their cultures in

13

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order to attract talent. Consider the related concepts of sustaina3ility and corporate social responsi3ility= for e0ample. 9ne survey= 3y ,onsterTRA/= an arm of online Go3Ahunt site ,onster 6orldwide= shows that >1H of youn" wor7ers #are interested in a Go3 that has a positive impact on the environment$ and that -2H would choose to wor7 for #an enviA ronmentally friendly company.$ Another survey= 3y the /ene0a Research !nstitute= indiAcates that wor7ers whose employers have "ood corporate socialAresponsi3ility pro"rams

are happier with senior mana"ement and stay at

MA34( 5 67 6,
4ut of t'e seven factors. talent s'ortages are pro0ected to 1e second onl! to economic conditions in terms of t'eir impact on corporate culture ten !ears from no)+

their Go3s lon"er. /ene0a interviewed wor7ers in +ra4il= China= .ermany= !ndia= the ?/= and the ?.S. D9dell= 211'E. These e0amples su""est that compaAnies may modify certain aspects of their corporate values to draw in new "enerations with new values in order to 3ecome employers of choice durin" times of la3or scarcity. Talent attraction and retention may 3e the most important influence on how en"a"ed employees 3ecome in their Go3s DTowers Perrin 211'aI Towers Perrin= 211'3E. *i"hly en"a"ed employees are less li7ely to :uit their Go3s and are more li7ely to perAform 3etter than wor7ers who are more disen"a"ed DRoach= 211&E. 9n the other hand= a 3ad culture can push employees into 3urnout and contri3ute to hi"h turnover D#,ore than Ko3 (emands or Personality=$ 211&E.

Glo#ali$ation
As noted 3efore= "lo3ali4ation is the driver most hi"hly correlated with mar7et performA ance= and this factor is e0pected to 3ecome considera3ly more important to culture over the ne0t 11 years. As a company e0pands into other countries and hires local employees= those wor7ers will 3rin" their ideas= 3eliefs= and ways of doin" thin"s into the corporaA tion. ,oreover= corporations themselves must 3ecome more diversityAminded and stop seein" issues from the perspective of a sin"le nation or culture. Corporations will also have to adapt to laws "overnin" 3usiness 3ehavior in those countries.

!n some cases= this evolution toward a more "lo3al set of cultural values ta7es place over years= as companies e0pand into new mar7ets and are influenced 3y a newly e0perienced national culture. +ut= in other cases= chan"e comes :uic7ly as ?.S. compaAnies ac:uire 3usinesses in other nations or= as has 3ecome common= forei"n 3usinesses ac:uire ?.S. 3usinesses. !t)s important for companies to do their due dili"ence in such conditions= ta7in" steps to anticipate the 7ind of cultural incompati3ilities that can hinder the success of mer"ers. !n some cases= or"ani4ations will need to put in place new education and communication pro"rams to ma7e

corporate leaders and employAees more sensitive to other cultures and sets of values. !t is not only those companies that "o "lo3al that feel the effect of ethnic diverAsity. As ?.S. companies hire immi"rants= they also 3rin" their ideas and culture into the wor7place. Kust consider= for e0ample= the chan"e in corporate acceptance of ,uslims. Today= a "rowin" num3er of companies provide prayer rooms. 9thers proAvide special foods in the cafeteria= and some provide affinity "roups to let li7eAminded employees "et to"ether. Such pro"rams are 3ound to influence corporate culture. 14

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%or&'Life Balan e Con erns As noted 3efore= wor78life 3alance is more stron"ly correlated to the Culture !nde0 than any other e0ternal driver of culture. Culture plays a maGor role in helpin" people 3alance their personal and professional o3li"ations= especially if there are family o3liA"ations involved.
9ther studies have hi"hli"hted the importance of wor78life 3alance issues. 6or78life 3alance was considered the second most li7ely societal trend to have a maGor impact on the wor7place 3y more than half of 1=2 2 *R professionals surveyed 3y the
MA34( 5 67 6,
Bor-Clife 1alance is more strongl! correlated to t'e Culture nde/ t'an an! ot'er e/ternal driver+

Society for *uman Resource ,ana"ement. ;iftyAone percent of those surveyed considered wor78life 3alance second only to technolo"ical advances in communication in terms of impact. The *R professionals e0pect that employees will demand telewor7in" options= more time off= and fle0i3le wor7 arran"ements in the comin" years= partially 3ecause of the trend amon" .enerations O and Y to value wor78life 3alA

ance more than retirement 3enefits and health care DSchramm= 211&E. Sometimes these 3alance issues are related to family responsi3ilities. ?.S. women are so displeased with the poor :uality of their wor78life 3alance that %2H e0pressed willin"ness to ta7e less pay if it would afford them more time to spend with their famAily= accordin" to a survey 3y the online Go3 site Career+uilder.com. The site)s survey of more than &11 fullAtime female employees found that a3out 51H admitted missin" si"nificant events e0perienced 3y their children durin" the precedin" year D#American ,oms (emand +etter 6or7ALife +alance=$ 211&E.
+ut it isn)t only women who are dissatisfied with wor78life 3alance in re"ard to their children. ,ore fathers have 3een optin" out of wor7 to stay home and care for their chilAdren= with a 2-H increase of such men since 1-- = accordin" to an analysis of ?.S. Census +ureau data 3y Challen"er= .ray J Christmas. ;rom 1-- to 211 = the num3er of men consciously choosin" to 3ecome stayAatAhome dads= with at least one child under the a"e of si0 and their spouse 3ein" the only source of income= rose from 2 1=111 to 11=111. .rowin" interest in wor78life 3alance 3y fathers= especially amon" .enerations O and Y= is causin" employers to consider more fle0i3le wor7 options for men D.urchie7= 211%E.

Time will tell how these trends play out in the future. (ifficult economic times can reduce wor7 options and ma7e it hard for parents and others to 3alance wor7 with personal lives. +ut the data su""ests thatCif they have a choiceCmost people will choose Go3s that "ive them more options in this area.

4t'er 7rivers of Culture

Mergers and A (uisitions

The AMA/Institute for Corporate Productivity Corporate Culture Survey 2008 also in:uired a3out other circumstances that can have a maGor impact on corporate cultures. 9ne of those is mer"ers and ac:uisitions. Amon" respondents to the study= 2&H said their or"ani4ation had "one throu"h a mer"er over the previous five years. 9f those= less than a :uarterC22HCsaid their or"ani4ation was successful to a hi"h or very hi"h e0tent in creatin" a unified corporate culture after a mer"er.

1$

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This is alarmin" 3ut not surprisin". ,er"in" or"ani4ations is e0tremely difficult to pull off and the num3er one reason for failure seems to 3e the cultural clash 3etween the mer"in" parties D+o"lars7y= 211%I Carleton J
MA34( 5 67 6,
&'e stud! s'o)s a strong relations'ip 1et)een scoring 'ig' in t'e Culture nde/ and reporting t'at a merger )as a success in creating a unified culture+

Stevens= 2115E. The failure to

understand and mesh with a company)s corporate culture is the cause of many lost Go3s= especially after mer"ers DSmith= 211%E. The "ood news is that havin" a positive corporate culture seems to 3oost the chances for success. That is= the study shows a stron" relationship 3etween scorin" hi"h in the Culture !nde0 and reportin" that a mer"er was a success in creatin" a unified culture. There is also a hi"h correlation 3etween success in creatin" a unified culture and mar7etAperformance success.

)utsour ing *artnerships As more or"ani4ations 3ecome en"a"ed in outsourcin" relationships with vendors= there)s a dan"er that these relationships could erode or conflict with current corporate cultures. 9utsourcin" the recruitment function= for e0ample= could result in the hirin" of more employees who do not fit well into the current culture. /eepin" such conflicts in mind= the A,A8!nstitute for Corporate Productivity study as7ed respondents a3out the importance that their or"ani4ations attach to their outsource partners) cultures. A3out 5'H said that an outsource partner)s culture is hi"hly or very hi"hly important= and another 2H said it is moderately important.

Figure 6 &o )'at e/tent )as t'e merger successful in terms of creating a unified culture:
3.21

1P
$ot a.. at

2P
,8.@1
,,.@1
Corre.ation with Mar8et )erformance "n2e5 D .39// //significant at p=.0,

*ma.. e5tent

P
Mo2erat e e5tent

23.31 03.61

5P
Eigh e5tent

%P
Corre.ation with Cu.ture "n2e5 D .@0//

#ery high e5tent

1%

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Figure 9 ;o) important is it t'at an! outsource partner9s culture is compati1le to !ours:

8.01 4.@1 ,2.,1 B $ot at a.. B *.ight.y important B Mo2erate.y important 32.31 39.81 B Eigh.y important B #ery high.y important

Corre.ation with Mar8et )erformance "n2e5 D .,0// Corre.ation with Cu.ture "n2e5 D .3@// //significant at p=.0,

9ur analysis found that the hi"her the importance attached to a partner)s culture= the hi"her the respondents tended to score on the Culture !nde0. This su""ests that comA panies that ta7e an outsource partner)s culture into consideration can avoid= or at least lessen= the erosion of culture that potentially comes with outsourcin" arran"ements.

)rgani$ational Stru ture and )ther +a tors

(oes the structure of an or"ani4ation affect corporate cultureQ This study su""ests that the answer is yes. The more hierarchical an or"ani4ation is= the less li7ely it is to score hi"h on the Culture !nde0= even if we ta7e out one of the components of the !nde0 D#decisionAma7in" authority e0ists at all levels= not Gust top mana"ement$E that mi"ht #preGudice$ these findin"s. The study also finds a small 3ut si"nificant ne"ative correlation 3etween the de"ree to which an or"ani4ation is hierarchical and its mar7et performance.

(ecentrali4ation= on the other hand= appears to pay dividends. 9r"ani4ations that say they are decentrali4ed to a "reater e0tent also score si"nificantly hi"her on 3oth the Culture and ,ar7et !ndices. 6hile there are pro3a3ly multiple e0planations for these findin"s= it)s possi3le that= as many mana"ement thin7ers have hypothesi4ed= decentrali4ation is a more effective structure in fastApaced 3usiness environments that re:uire innovation= :uic7 responses to chan"es= and trust. This does not mean= however= that or"ani4ations should fore"o hierarchies altoA"ether. !n fact= only 5H of respondents said their or"ani4ation were not hierarchical at all. +ut too much hierarchy is usually associated with slower decision ma7in"= which mi"ht reduce performance and create a less effective culture. Another findin" worth notin" is that or"ani4ations where #Si0 Si"ma principles are critical$ are more li7ely to score hi"her on the Culture !nde0 and the ,ar7et 18

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!nde0. !n fact= out of the five factors listed in the ta3le 3elow= Si0 Si"ma principles were most stron"ly correlated with mar7et performance. !t appears that or"ani4ations that use these principlesCwhich represent a dataAdriven methodolo"y for reducin" defects in products and servicesCare more li7ely to 3e successful in the mar7etplace. Perhaps a ri"orous orientation toward :uality results in a more professional level of mana"eAment Dand therefore hi"her performanceE= especially in industries such as manufacAturin" where :uality has 3ecome essential for success.

Figure 8

&o )'at e/tent are t'e follo)ing statements true of !our organi*ation:
Percentage (esponding to (esponses a ;ig' or <er! ;ig' E/tent @3 1 Correlation )it' Culture nde/ Correlation )it' Mar-et Performance nde/

"t is hierarchica.

;.33//

;.0@/

"t is in a high.y regu.ate2 in2ustry

@0 1

;.0@

.03

*i5 *igma princip.es are critica.

,0 1

.29//

.,0//

"t has a strong union presence

,3 1

;.06//

;.04//

"t is 2ecentra.iAe2

20 1

.23//

.,0//

/significant at p=.0@ //significant at p=.0,

1>

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See) ng State$of$the$Art Pra't 'es for *anag ng Cor(orate Culture

<e=ve learned t at corporate culture reflects an institution=s distinctive code of 'e avior, lan!ua!e, custo"s, and "anner of operatin!# It distin!uis es t e institution fro" ot er entities, and it is t e e%pression t at can elp deter"ine 'usiness success or failure#

1 ?

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+ut what does it mean to have a stateAofAtheAart cultureQ After all= since virtually every corporate culture is 3oth comple0 and uni:ue= e0perts find it impossi3le to craft a oneAsi4eAfitsAall strate"y for creatin" an ideal corporate culture. 6ithout tryin" to porAtray an ideal culture= this paper will present some of the characteristics of cultureArelated pro"rams that areC3ased on survey results= focusA"roup discussions= and the 3roader literatureCassociated with positive corporate cultures. Specifically= we hi"hli"ht how various practices relate to the Culture !nde0 Dmade up of the ei"ht dimensions discussed in the previous sectionE and the ,ar7et Performance !nde0 Dmade up of selfAreported information on revenue "rowth= mar7et share= profita3ility= and customer satisfactionE. 6e also identify possi3le strate"ic opportunities. Correlation is not the same as causation= of course= and these should only 3e viewed as interpretations of the data. ,oreover= these strate"ies will not wor7 e:ually well for all companies= and mana"ers must Gud"e which ones are most approApriate for their uni:ue or"ani4ations. +ut these strate"ies can li7ely serve as useful startin" points for or"ani4ations that wish to improve their corporate cultures. A"ain= in this report= we define corporate culture as followsF the shared values and 3eliefs that help individuals understand or"ani4ational functionin" and that proAvide them with "uides for their 3ehavior within the or"ani4ation. ;or more informaAtion on the Culture !nde0 and the correlations used in these ta3les= please see ;i"ure 1.

<ie) Culture from a Performance Perspective

A maGority of respondents said their cultures help their or"ani4ations encoura"e ethiAcal 3ehaviors= comply with re"ulations= and 3oost customer satisfaction to a hi"h or very hi"h e0tent. These are clearly critical drivers of corporate culture today and will 3e further discussed in this report. 9nly a minority= however= claimed that their cultures 3oost productivity= ma0iAmi4e R9!= retain hi"hAperformin" wor7ers= or en"a"e wor7ers to a hi"h or very hi"h e0tent. !n short= most companies do not seem to 3e "ettin" a lot of performanceArelated 3ehaviors out of their current cultures. +ut those that do 3elieve their cultures help with some of these performance issues tend to score hi"her on the Culture !nde0. There)s a particularly stron" relationA
MA34( 5 67 6,
f companies focus on generating a more positive corporate culture. t'e! 9re more li-el! to see a 1oost in productivit! and talent retention+

ship 3etween havin" a positive corporate culture and havin" an en"a"ed and satisfied wor7force. +oth improvin" productivity and retainin" hi"hAperformAin" employees are also stron"ly correlated with the Culture !nde0. !n short= it)s possi3le there)s a real opportunity here for companies that wish to 3oost performance. !f they focus on "eneratin" a more posiA

tive corporate culture= they)re more li7ely to see a 3oost in productivity and talent retention. 9r"ani4ations may also 3enefit from cultures that are seen as ma0imi4in" returns on investment DR9!E. The study shows that a stron" correlation 3etween cultures that ma0imi4e R9! and reported mar7et performance. There is also a statistical relationship 3etween mar7et performance and cultures that increase customer satisfaction. 2@

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Figure 4

&o )'at e/tent does corporate culture 'elp !our organi*ation ac'ieve t'e follo)ing:
Percentag e (esponding to a ;ig' (esponses &ncourage ethica. behavior or <er! ;ig' E/tent 64 1 66 1 @2 1 00 1 34 1 38 1 38 1 3 @ 1
3 ,
3 0 2 4
2 4 1

Correlation )it' Correlation )it' Culture nde/ .@@// Mar-et Performance nde/ .,6//

Comp.y with regu.atory po.icies

.30//

.,0//

"ncrease customer satisfaction

.6,//

.26//

?oost resi.iency in the face of cha..enging times

.6@//

.23//

"ncrease wor8force 2iversity

.06//

.04//

(etain high;performing emp.oyees

.69//

.23//

"mprove pro2uctivity

.69//

.2@//

Ma5imiAe return on investment "ncrease satisfaction of emp.oyees ?ui.2 outsourcing re.ationships &ngage emp.oyees effective.y "ncrease g.oba. competencies 20 1

.6,// .92// .03// .93// .34//

.36// .2@// .,3// .22// .22//

:ecrease carbon footprint

.39//

.,6//

//significant at p=.0,

;arness Culture to 5acilitate C'ange and Manage &alent

An analysis of the AMA/Institute for Corporate Productivity Corporate Culture Survey 2008 shows that= while many mana"ement practices have a correlation with

the Culture and ,ar7et Performance !nde0es= these are the strate"ies with the stron"est overall relationshipsF ;acilitation of chan"e initiatives Talent mana"ement Leadership development Yet= only a third or less of respondents rated their or"ani4ations as "ood or very "ood at facilitation of chan"e initiatives D2'HE= talent mana"ement D 1HE= and leaderAship development D 2HE. This illustrates that there)s a si"nificant opportunity for many or"ani4ations to 3oost their performance in these areas 3y harnessin" and nurAturin" a positive corporate culture.

The +a ilitation of Change

The facilitation of chan"e initiatives is especially interestin". Some previous theories a3out culture have assumed that #stron" cultures$ are actually averse to chan"e. That is= the stron"er the culture= the harder it is to transform the or"ani4ation= even if those chan"es are for the 3etter. This study shows= however= that positive cultures Das defined 3y the Culture !nde0E are stron"ly related to the facilitation of chan"e initiatives.

21

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Figure ,0

;o) )ould !ou rate t'e follo)ing management practices in !our organi*ation:
Correlation )it' Percent C'oosing (esponses ,ood or <er! ,ood 0 0 1 Correlation )it' Culture nde/ Mar-et Performance nde/

&mp.oyee training

.0@//

.,,//

(ewar2s an2 recognition

36 1

.@9//

.,4//

ea2ership 2eve.opment

32 1

.60//

.,4//

!a.ent management

3, 1

.6@//

.,8//

Fee2bac8 to .ea2ers Fe.g., assessment, surveys, focus groupsG :iscip.ine process

3 0 1 3 0 1

.@6//

.,6//

.00//

.,2//

Faci.itation of change initiatives

29 1 2 6 1 20 1 2 3 1 2 3 1 2 2 1

.68//

.20//

E( information systems

.39//

.04//

Coaching

.@6//

.,@//

'n;boar2ing

.39//

.,@//

!eambui.2ing e5ercises

.@6//

.,6//

*uccession p.anning

.@,//

.,8//

*e.ection programs

2 , 1

.02//

.,2//

//significant at p=.0,

9ne maGor reason for this= of course= is that havin" a culture that #promotes :uic7 responses to needed chan"es$ is one of the ei"ht characteristics of a positive culAture Dsee ;i"ure 1E. !f 3usiness leaders stress values and attitudes that encoura"e re:uired chan"es= then the culture itself can 3oost adapta3ility. There are= of course= many aspects to 3uildin" chan"eAfriendly corporate cultures. As A,A)s A!ility and >esilience in t e $ace of Continuous C an!e D211&E study shows= there are at least three primary levels on which or"ani4ations should focus when tryin" to create a more a"ile companyF individual= team= and or"ani4ation. They need to focus on an individual)s values and a3ilities 3ecause= #after all= the employee)s psycholo"ical= physical= and intellectual capacitiesCsuch as his or her openness to chan"e and the a3ility to function in hi"hly am3i"uous situationsRwill determine whether and how lon" a strate"ic chan"e initiative can 3e sustained$ Dp. 21E. Companies must also loo7 at the wor7"roup or team levels to nurture cultures that can help facilitate chan"e. A,A)s 211& study notes= #Teams are easily disrupted when leaders and mem3ers chan"e= and each team mem3er)s individual needs can ta7e precedence over his or her commitment to the team when severely stressed. !t is= therefore= impossi3le to thin7 a3out 3uildin" adaptive capacity without tar"etin" 3oth 22

CU !"#A!"$% &FF&C!"#& C'()'(A!& CU !U(&*

++

individuals and teams.$ Teams that are capa3le of :uic7 responses and chan"e should have the followin" characteristicsF +e "ood multitas7ers= capa3le of doin" many thin"s at once *ave "reat persistence +e active learners= :uic7ly ac:uirin" and applyin" new s7ills and 7nowled"e *ave adopted the or"ani4ation)s values and 3eliefs ;unction well durin" pressure and stress +e actionAoriented= :uic7ly ta7in" advanta"e of situations *ave wellAdeveloped "roup s7ills De.".= pro3lemAsolvin"E Companies should also loo7 at or"ani4ationAwide chan"e capa3ilities. This re:uires creatin" not only a set of wellAcommunicated cultural values that favor chan"e and a"ility 3ut also policies= processes= systems= technolo"ies= and structures that allow the culture to e0press itself. ;or e0ample= even if a corporate culture favors chan"e= em3edded technolo"ical systems or corporate structures that slow response times will stymie chan"e initiatives.

Leadership Development
Leadership development refers to any activity that enhances the :uality of leadership within an individual or or"ani4ation. These activities have ran"ed from ,+AAstyle pro"rams offered at university 3usiness schools to hi"hAropes courses and e0ecutive retreats. The success of leadership development efforts has 3een lin7ed to three variA a3lesF individual learner characteristics= the :uality and nature of the leadership develA

opment pro"ram= and the "enuine support for

MA34( 5 67 6,
4nl! a1out a t'ird of respondents said t'eir organi*ations are good or ver! good at leaders'ip development+

3ehavioral chan"e from the leader)s supervisor and or"ani4ation D+aldwin J ;ord= 1->>E. Culture plays a role in all three of these varia3les. That is= culture helps determine the type of mana"ers who are drawn to the or"aniA 4ation and whom the or"ani4ation is willin" to hire. A more positive corporate culture can 3e created if the company recruits leaders who can encoura"e cooperaA tion amon" wor7ers= 3rin" out the 3est performance in wor7ers= 7now how to dele"ate decisionAma7in" authority to ma0imum effect= and encoura"e innovative 3ehaviors. Culture also helps shape the :uality and nature of leadership development pro"rams. !n fact= a 211% "lo3al study of leadership= )eadin! Into t e $uture, 3y the American ,ana"ement Association clearly shows that #inade:uate leadership develAopment pro"ram content$ and #lac7 of supportive culture$ were amon" the top four 3arriers to the successful development of leaders Dp. 2&E. The :uality of leadership development pro"rams is lar"ely determined 3y the or"ani4ation)s

a3ility to develop traits important to the or"ani4ation De.".= the a3ility to ali"n culture with strate"yE. The :uality of such pro"rams is also driven 3y the a3ility of the or"ani4ation to identify hi"hApotential employees who share and e0press the values of the or"ani4aAtion. ,entorin"= coachin"= and feed3ac7 styles are influenced 3y culture as well DLes7iw J Sin"h= 211'E. 23

CU !"#A!"$% &FF&C!"#& C'()'(A!& CU !U(&*

++

And= of course= the culture lar"ely determines the support for 3ehavioral chan"e from leaders. 9ne of the primary characteristics of or"ani4ations with "ood leaderAship pro"rams is simply their commitment to the process. This commitment needs to 3e in"rained in the lar"er corporate culture.

Talent Management Leadership develop is often viewed as a su3set of talent mana"ement or human capital mana"ement. Companies that e0cel in this area are strate"ic and deli3erate in how they source= attract= select= train= develop= retain= promote= and move employees throu"h the or"ani4ation. The term also includes how companies drive performance at the individual levelF that is= performance mana"ement. Talent mana"ement "enerA
MA34( 5 67 6,
6ot onl! talent management 1ut also its components are lin-ed )it' positive corporate cultures+

ally implies a useful inte"ration of these functional components.

!t should 3e noted that a num3er of other talent mana"ement components were also as7ed a3out in the AMA/Institute for Corporate Productivity Corporate Culture Survey 2008# All of these itemsCincludin" trainin"= rewards and reco"nition= coachin"= onA3oardin"= succession plannin" and selectionCare also si"nificantly correlated with a positive corporate culture. +ut why would there 3e such a stron" correlation 3etween a positive corporate culture and talent mana"ementQ There are li7ely multiple answers to this :uestion. ;irst= a positive culture ma7es it easier to attract and retain s7illed and talented perAsonnel. 6or7in" in cooperative and innovative or"ani4ations tends to 3e attractive to s7illed Go3 see7ers. Second= a positive culture is= 3y our definition= one that can #3rin" out the 3est performance$ in wor7ers. This implies effective performance mana"eAment= trainin"= and development systems. Com3ined with en"a"ement and rewards pro"rams= these systems are used to 3oost performance levels. A third reason is that talent mana"ement decisions are often driven 3y a set of or"ani4ational core competencies as well as positionAspecific competencies. The comApetency set may include 7nowled"e= s7ills= e0perience= and personal traits DdemonAstrated throu"h defined 3ehaviorsE associated with the needs within the culture. That is= the competencies wind up reinforcin" the desired culture if the talent mana"ement pro"ram is effective.

Loo- De!ond Leaders'ip to Strategic 7irection and &alent 7evelopment

Some definitions of culture emphasi4e 3ehaviors as well as values and 3eliefs. To shed li"ht on the drivers of 3ehaviors= the A,A8!nstitute for Corporate Productivity study as7ed a3out which or"ani4ational practices influence corporate 3ehaviors. The top

response= 3y far= was that the leadership practices and 3ehaviors are most li7ely to influence other 3ehaviors in or"ani4ations= with &1H sayin" this is true

in their or"ani4ations to a hi"h or very hi"h e0tent. #Communication from senior mana"ement$ was also cited 3y a maGority of respondents D%2HE to that same hi"h e0tent. 24

CU !"#A!"$% &FF&C!"#& C'()'(A!& CU !U(&*

++

Figure ,,

&o )'at e/tent do t'ese organi*ational practices influence 1e'aviors in !our organi*ation:
(esponses Percentage (esponding to a ;ig' or <er! ;ig' E/tent Correlation )it' Culture nde/ Correlation )it' Mar-et Performance nde/

?ehavior of .ea2ers

6, 1

.0,//

.,,//

Communication from senior

management

@2 1

.09//

.,0//

Hey processes in the organiAation

00 1 00 1 03 1 3@ 1 30 1 33 1

.02//

.,3//

*tructure of the organiAation

.38//

.,@//

*trategic 2irection of the company

.@6// .@3//

.,8// .,8//

!a.ent 2eve.opment

MA34( 5 67 6,
.09// .,4// of 7on9t underestimate t'e influence leaders+ &'e! and t'eir communications practices are prime movers of .04// .,6// 1e'aviors in organi*ations+

)erformance measures

!a.ent recruitment

//significant at p=.0,

These responses ma7e it clear that leaders and their communications practices are prime movers of 3ehaviors in or"ani4ations. This is not a "reat surprise= "iven the

hierarchical nature of most 3usinesses today.

Employees are o3li"ated to ta7e their direction from leaders= and this includes not only listenin" to their words 3ut= perhaps even more so= watchAin" their 3ehaviors. .iven these findin"s= we should not underA rate the importance of leadership)s role in drivA in" 3ehaviors. *owever= or"ani4ations should also loo7 3eyond leadership to other practices= especially the #strate"ic direction of the company$ and #talent development.$ 9nly %H of survey respondents said that= to a hi"h or very hi"h e0tent= talent develA opment influences 3ehavior in their or"ani4ation. And Gust 5 H responded that= to a hi"h or very hi"h e0tent= 3ehaviors are influenced 3y the strate"ic direction of the company. Yet= compared with leadership 3ehaviors and communication= these two practices are not only more hi"hly correlated with the Culture !nde0 3ut also= alon" with performance measures= more hi"hly correlated with mar7et performance. These practices may well represent opportunities for or"ani4ations to create more positive corporate cultures. 2$

CU !"#A!"$% &FF&C!"#& C'()'(A!& CU !U(&*

++

!n the talent development process= companies can encoura"e the type of 3ehavAiors associated with positive corporate cultures. Li7ewise= when settin" new strate"ic directions for the or"ani4ation= they can pay "reater attention to what employee 3ehaviors are re:uired to achieve strate"ic "oals. This should aid in the or"ani4ational ali"nment process. A 211' A,A survey on hi"hAperformance or"ani4ations shows that a consistency of strate"ic approach was amon" the 3i""est differentiators 3etween the hi"hAperformin" or"ani4ations and their lowerAperformin" counterparts. That survey found that the sin"le most widely cited strate"ic practice amon" hi"hAperformin" or"ani4ations was #my or"ani4ation)s philosophy statement is consistent with its strate"y.$ And the strate"ic practice in which hi"h performers outstripped low performers the furthest was #or"ani4ationAwide performance measures match the or"ani4ation)s strate"y=$ followed 3y #my or"aAni4ation)s strate"ic plan is clear and well thou"ht out.$

Clearl! Communicate Aour 4rgani*ational <alues to Ever!one

<alues are a critical component of corporate cultures= and nearly half of respondin" or"ani4ations D5>HE said their or"ani4ations provide #clear communication and values to all employees.$ This is not only the most commonly en"a"edAin activity from this

:uestion set= 3ut it is also the one most hi"hly correlated with the
MA34( 5 67 6,
nstilling values and et'ics is vie)ed as one of t'e predominant roles of corporate cultures+

Culture !nde0 and has the secondAhi"hest correlation with mar7et performance. 6e can relate this 3ac7 to the fact that over twoAthirds of responA dents D&-HE reported= to a hi"h or very hi"h e0tent= that their or"ani4aA tional cultures help them #encoura"e ethical 3ehaviors$ Dsee ;i"ure -E. !t)s very clear that or"ani4ations see instillin" values and ethics as one of the predomiAnant roles of corporate cultures. To fulfill this o3li"ation= however= corporate cultures must defend a"ainst sendAin" conflictin" si"nals to employees. 6hen A,A pu3lished its "lo3al study called . e -t ical -nterprise= it as7ed a3out the top three factors most li7ely to cause people to compromise an or"ani4ation)s ethical standards. The most widely cited factor= 3y far= was the #pressure to meet unrealistic 3usiness o3Gectives8deadlines=$ cited 3y '1H of respondents to that study. That report notedF
+oards of directors can 3e unfor"ivin" in their treatment of CE9s who miss 7ey 3usiness o3Gectives. Li7e professional athletes= CE9s are often seen as only as "ood as their last #season.$ So it 3ecomes temptin" for some e0ecA utives to #3end the rules$ to achieve the desired 3usiness results. And the pressure to perform often cascades down the corporate hierarchy= with e0ecutives pushin" their su3ordinates to meet 3usiness o3Gectives that they mi"ht feel can 3e achieved only 3y cuttin" ethical corners Dp. %%E.

The way to prevent such pressure is to ensure that values and ethicsCnot Gust performance "oalsCare clearly communicated throu"hout the or"ani4ations. Leaders who s7ip this essential mana"erial step could easily find that their or"ani4ations 3ecome involved in unforeseen scandals. 2%

CU !"#A!"$% &FF&C!"#& C'()'(A!& CU !U(&*

++

Figure ,2

&o )'at e/tent does !our organi*ation engage in t'e follo)ing activities:
(esponses )rovi2es c.ear communication of va.ues to a.. emp.oyees )rovi2es communication techno.ogies for wor8groups in 2ifferent .ocations )rovi2es training an2 2eve.opment for emp.oyees who wor8 remote.y )rovi2es sufficient bu2get resources for perio2ic face;to;face meetings among team members from 2ifferent .oca.es )rovi2es career 2eve.opment for a.. emp.oyees )rovi2es succession p.anning that inc.u2es remote .ea2ers 3 3 1 .38// .,@// 0 6 1 Percentage (esponding to a ;ig' or <er! ;ig' E/tent Correlation )it' Culture nde/ Correlation )it' Mar-et Performance nde/

08 1

.@6//

.,8//

.32//

.,,//

30 1

.0,//

.,0//

30 1

.@2//

.,@//

23 1

.0@//

.,4//

)rovi2es .ea2ership 2eve.opment that focuses on .ea2ing from a 2istance )rovi2es teambui.2ing opportunities 2esigne2 for remote emp.oyees

,4 1

.00//

.,6//

,6 1

.06//

.,3//

//significant at p=.0,

7on9t 5orget to nclude &'ose B'o Bor- (emotel!

Today= a "rowin" num3er of or"ani4ations are "eo"raphically dispersed 3ut technoA lo"ically connected= if not fully inte"rated. ?nder these circumstances= there)s a dan"er that corporate cultures can 3ecome fractured= splinterin" into many different= and sometimes conflictin"= types of cultures= and potentially causin" dramatic

misali"nAments in or"ani4ations. This study shows that the inte"ration of employees and= especially= leaders who wor7 from remote locations is= in fact= a pro3lem in many or"ani4ations. 9nly a3out a third D 5HE of respondin" or"ani4ations said that their or"ani4aA tions provide #trainin" and development for employees who wor7 remotely$ to a hi"h or very hi"h e0tent= only 2 H said that #succession plannin" includes remote leaders$ to such an e0tent= and Gust 1&H said their companies provide #team3uildin" opportuAnities desi"ned for remote employees$ to a hi"h or very hi"h e0tent. +ut= those or"aniA4ations that en"a"e in these activities are si"nificantly li7ely to score hi"her on the Culture !nde0 as well as on the ,ar7et Performance !nde0. 9ne practice that is especially hi"hly correlated with a positive culture is providAin" #career development for all employees=$ thou"h only 1H of respondents said their companies do this to a hi"h or very hi"h e0tent. So= e0pandin" employee development opportunities mi"ht 3e one way of improvin" corporate cultures. 28

CU !"#A!"$% &FF&C!"#& C'()'(A!& CU !U(&*

++

Figure ,3

&o )'at e/tent do t'e follo)ing statements descri1e leaders'ip st!les Eof <Ps and C-level emplo!eesF in !our organi*ation:
Percentage (esponding to (esponses
!his organiAation rewar2s .ea2ers who are tas8 oriente2

Correlation )it' Culture nde/

Correlation )it' Mar-et Performance nde/

a ;ig' or <er! ;ig' E/tent

34 1

.,6//

.04//

!his organiAation rewar2s .ea2ers who are re.ationship oriente2 30 1 .0@// .,,//

'ur .ea2ers use an empowerment sty.e to 2irect emp.oyees 33 1 .69// .,4//

'ur .ea2ers use a comman2; an2;contro. sty.e of 2irecting

30 1

;.3,//

;.09//

//significant at p=.0,

&o Lead Bell. Empo)er 4t'ers

The style displayed 3y senior leaders influences the type of culture within an or"ani4aAtion. Leaders who #use an empowerment style to direct employees$ show the stron"est correlation to a positive culture and mar7et performance. The relationship to the Culture !nde0 is not surprisin"= "iven that one feature of a positive culture= as this study has defined it= is one where #decisionAma7in" authority e0ists at all levels= not Gust top mana"ement$ Dsee ;i"ure 1E. +ut the correlation with the ,ar7et Performance !nde0 supports the contention that an empowerment style is indeed a si"nature of a hi"hAperformance corporate culture.

7eveloping an Empo)erment St!le of Leaders'ip

'ne way an organiAation can ensure that .ea2ers have an empowerment sty.e is through 2ecision;ma8ing. Eigh .eve.s of emp.oyee empowerment are shown when a wor8group acts in the fo..ow;ing waysI

1P 2P P 5P

:efines the prob.ems it must so.ve or 2ecisions it must ma8e

).ans how it wi.. so.ve prob.ems an2 ma8e 2ecisions *pen2s amp.e time 2iscussing prob.ems that must be so.ve2 an2 2ecisions that must be ma2e "mp.ements an2 eva.uates its so.utions an2 2ecisions

$ote the absence of the wor2 J.ea2erK in this 2escription. )ower has effective.y been transferre2 to the group. Cohesion among group members is another strong in2icator of empowerment. !he group reso.ves conf.icts 7uic8.y. Members cooperate, an2 conf.icts are brief an2 tas8 re.ate2. Fun2amenta. to a 2efinition of empowerment is high performance in the group. -or8 an2 the accomp.ishment of goa.s are the reasons for the team to e5ist.

2>

B
B B

As8ing for c.arification to enhance un2erstan2ing

Acting as a soun2ing boar2 istening more than ta.8ing B (espon2ing with empathy B ?eing accessib.e

$oticing nonverba. behaviors that may signa. une5presse2 concerns of associates

B
B

As8ing for the opinions an2 i2eas of others

Avoi2ing overreaction or other inappropriate emotiona. 2isp.ays CU !"#A!"$% &FF&C!"#& C'()'(A!& CU !U(&*

++

!n contrast= leaders who use a commandAandAcontrol style of directin" are ne"aAtively associated not only with the Culture !nde0 3ut with the ,ar7et Performance !nde0 as well= indicatin" that a commandAandAcontrol style can have ne"ative reperAcussions for companies. !t)s interestin" to note that there is no consensus in these statements a3out leadAership styles. That is= there is no case in which even a maGority of respondents said their leaders display any of these styles to a hi"h or very hi"h e0tent. This is li7ely 3ecause hi"hAlevel mana"ers utili4e a variety of leadership styles= dependin" on the specific conte0t of what they)re mana"in". Empowerment may not 3e the one 3est style of leadership in every circumstance. *owever= this study clearly indicates that= "enerally spea7in"= empowerment and a relationshipAoriented style of leadership are superior in terms of for"in" a positive corporate culture.

7evelop Leaders B'o Model 7esired De'aviors and Align Programs )it' Culture
The A,A8!nstitute for Corporate Productivity survey su""ests that there)s "ood news and 3ad news when it comes to leadership 3ehaviors in today)s or"ani4ations. The "ood news is that a maGority D&5HE of respondents reported that= to a hi"h or very hi"h

&'e C'aracteristics of a ,ood Listener

e0tent= their or"ani4ational leaders are

#hi"hly ethical=$ and %'H said their leadA

ers ali"n wor7 to or"ani4ational 3usiness needs to a hi"h or very hi"h e0tent.

These 3ehaviors are correlated with havA in" a positive culture= and the ali"nment of wor7 to 3usiness needs more stron"ly relates to mar7et performance than any other leadership 3ehaviors listed. The 3ad news is that many of the leadership 3ehaviors considered in this :uestion are not widely e0hi3ited amon" respondin" firms. 9nly a3out a :uarter of respondents reported that= to a hi"h8very hi"h e0tent= their leaders are usin" rewards and reco"nition well or are "ood listeners. 9nly a3out a third D %HE said their leaders are ma7in" sure pro"rams support the culture= and Gust 51H said their leaders are modelin" the desired 3ehaviors.

Yet= many of these are critical leadership :ualities that= when availa3le= are stron"ly correlated with positive cultures. This is especially true of ma7in" sure that pro"rams support the desired culture= modelin" desired 3ehaviors and 3ein" a "ood listener. To the de"ree that or"ani4ations can promote 3etter leadership 3ehaviors in these areas= they pro3a3ly increase their chances of creatin" a more positive and effecAtive or"ani4ational culture. This study supports the oftenAheard contention that it)s important for leaders to #wal7 the tal7.$ Leaders do not Gust ma7e decisions and "ive orders. They are hi"hly scrutini4ed 3y their employees= who see7 out inconsistencies 3etween messa"es and 2?

CU !"#A!"$% &FF&C!"#& C'()'(A!& CU !U(&*

++

Figure ,0

&o )'at e/tent do t'e follo)ing statements descri1e all leaders9 1e'avior in !our organi*ation:
Correlation )it' (esponses Percent C'oosing ;ig' or <er! ;ig' E/tent Correlation )it' Culture nde/ Mar-et Performance nde/

!hey are high.y ethica.

60 1

.04//

.,0//

!hey a.ign wor8 to organiAationa. business nee2s 0, 1

@9 1

.6,//

.2,//

!hey ce.ebrate successes

.@6//

.,0//

!hey mo2e. 2esire2 behaviors FJwa.8 the ta.8KG

0, 1

.66//

.,4//

!hey ma8e sure programs support 2esire2 cu.ture

3@ 1

.90//

.,4//

!hey are strong communicators

32 1

.@4//

.,3//

!hey are emotiona..y se.f;aware

2 9 1

.@4//

.,@//

!hey are goo2 .isteners

2 6 1 2 3 1

.60//

.,@//

!hey use rewar2s an2 recognition

we..

.6,//

.,4//

//significant at p=.0,

3ehaviors so that they will 7now the truth of how to #really act$ within their cultures. Leaders who model desired 3ehaviors send clear cultural si"nals. !n the same vein= leaders need to ensure that pro"rams are consistent with the culture as a whole. That is= they not only need to model consistent 3ehavior= they need to ma7e sure their or"ani4ations) pro"rams= procedures and reward systems reflect the values of the culture as a whole. !f the values state that customer satisfaction is an important value= 3ut a specific procedure or rewards system Dfor e0ample= rewardin" employees for spendin" less time per customer pro3lemE ma7es it difficult for cusAtomers to "et answers to their product :uestions= then there is a disconnect 3etween the procedure and the espoused value. ?ltimately= unless this conflict is remedied 3y a leader= this disconnect will impact the cultural values of the or"ani4ation= sendin" a messa"e to employees alon" the lines of #we li7e to say customer satisfaction is imporAtant 3ut= in reality= it)s not that 3i" a deal.$

Consider Using More Mentoring Programs

9ne of the secrets to hirin" and retainin" top talent is ma7in" certain that employees can 3e successful in the current corporate culture. 6hile most or"ani4ations do the 3asics= such as distri3utin" hand3oo7s to new hires= relatively few respondents said their or"ani4ationsCto a hi"h or very hi"h e0tentC"ive applicants a realistic preview

3@

CU !"#A!"$% &FF&C!"#& C'()'(A!& CU !U(&*

++

Figure ,@

&o )'at e/tent does !our organi*ation use t'ese practices for ne) 'ires:
Percentage (esponding to (esponses :istribution of emp.oyee han2boo8 *tructure2 interview process Fi.e., a.. app.icants as8e2 the same 7uestionsG App.icants given a rea.istic <ob preview before being hire2 ,9 1 38 1 .02// .,3// a ;ig' or <er! ;ig' E/tent @@ 1 Correlation )it' Culture nde/ .2,// Correlation )it' Mar-et Performance nde/ .0@

0@ 1

.30//

;.02

MA34( 5 67 6,

Mentoring program

//significant at p=.0,

Mentoring programs ma! 1e among t'e .@3// .,2// most effective tools for creating a positive corporate culture. one )'ere ne) 'ires 'ave t'e opportunit! to reall! learn t'e culture and t'eir roles )it'in it+

of the Go3 3efore they are hired. This means that new hires are more li7ely to come into a Go3Cand a corporate cultureCwithout 3ein" prepared for it. ?nder these circumAstances= it 3ecomes more li7ely that a new hire will 3e dissatisfied or ineffective once he or she truly understands the Go3 and culture. The study also shows that relatively

few or"ani4ations use mentorin" pro"rams to a hi"h or very hi"h e0tent= even thou"h these are stron"ly correlated with the Culture !nde0. !t appears that mentorin" pro"rams are amon" the most effective tools for creatin" a positive corporate culture= one where new hires have the opportunity to really learn the culture and their roles within it.

n a Merger. Emp'asi*e Communication

Amon" respondents to the AMA/Institute for Corporate Productivity Corporate Culture Survey 2008, a3out a :uarter said their or"ani4ations had "one throu"h a mer"er over the previous five years. Those who had 3een throu"h a mer"er8ac:uisition were as7ed a3out the types of actions that they)d ta7en durin" that period.

;ortyAtwo percent said that= to a hi"h or very hi"h e0tent= #all chan"es were anaAly4ed from the perspective of 3usiness needs.$ This strate"y is not only si"nificantly related to the Culture !nde0 3ut is also the action that was most stron"ly correlated with mar7et performance. 31

CU !"#A!"$% &FF&C!"#& C'()'(A!& CU !U(&*

++

Less commonly cited was a #proactive communication strate"y=$ which was used to a hi"h or very hi"h e0tent 3y only a third of respondents. This strate"y is more hi"hly correlated with a positive corporate culture than any other practice= and it has the secondAhi"hest correlation with mar7et performance. Another important comAmunication practice involves #dialo"ue sessions to wor7 throu"h difficult issues.$ This is also stron"ly lin7ed to the Culture !nde0= yet it was used 3y Gust 2-H to a hi"h or very hi"h e0tent.
MA34( 5 67 6,
Detter communication strategies seem to 1e one clear strateg! for creating a more unified and positive corporate culture after a merger+

This data su""ests that such communication strate"ies are sorely underutili4ed 3y companies durA in" a mer"er= which may help e0plain why only a fifth of respondents said their mer"ers had 3een successful to a hi"h or very hi"h e0tent. +etter communication strate"ies seem to 3e one clear strate"y for creatin" a more unified and positive corporate culture.

!t should 3e noted= however= that all of these actions are correlated with the Culture !nde0 to a si"nificant de"ree= 3ut none of them was used e0tensively 3y a maGority of or"ani4ations that had 3een throu"h a mer"er. This su""ests that there are opportunities here. Companies that wish to 3oost their chances for more successful mer"ers should consider levera"in" such cultureArelated practices to a hi"her de"ree.

Figure ,6

&o )'at e/tent )ere t'e follo)ing actions ta-en during t'e mergerCac2uisition:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent 02 1 3@ 1 Correlation )it' Culture nde/ .00// .30// Correlation )it' Mar-et Performance nde/ .26// .,9//

(esponses A.. changes were ana.yAe2 from the perspective of business nee2s ea2ers who were champions of the new cu.ture were promote2

*ystems an2 processes that 2i2 not support the new cu.ture were rep.ace2 ea2ers who 2i2nLt support the new cu.ture were remove2 A proactive communication strategy was estab.ishe2 E( practices were a.igne2 to the new cu.ture :ia.ogue sessions to wor8 through 2ifficu.t issues were estab.ishe2
!echno.ogy systems that ta.8 to one

3 0 1 3 3 1 3 3 1 3 2 1 24 1 29 1 ,8 1

.00//

.22//

.,4//

.08

.@8//

.20//

.02// .@3//

.,6// .,9//

another as 7uic8.y as possib.e were estab.ishe2 !eambui.2ing practices were use2 //significant at p=.0,

.00//

.,4//

.@3//

.,0//

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&rac- Dest Practices

;or this study= the A,A8!nstitute for Corporate Productivity survey as7ed= #!f you feel your or"ani4ation is "ood at mana"in" its corporate culture= please share any S3est practices.)$ A review of the comments offered 3y survey participants indicates that employees are ta7in" note of how their or"ani4ations promote a positive culture. *undreds of respondents shared their thou"hts concernin" what they 3elieve to 3e the 3est e0amples of fosterin" a worldAclass corporate culture. Common threads runA nin" throu"hout many of the comments included those related to communication= leadership= strate"y= and values.

Communi ation 6hile the mantra to #communicate$ resounds in the ears of most mana"ers= 7nowin" e0actly what to communicate is less clear. ,any respondents focused on the imporA tance of 3oth the style and the content of mana"ement communication as havin" a stron" impact on a company)s culture. 9ne survey participant spo7e to the value of specific feed3ac7F #M6e en"a"e inN constant communication 3etween mana"ers and their direct reports to nip any pro3lems in the 3ud 3efore they "row and 3efore others thin7 that Spro3lem) 3ehavior is Saccepta3le) 3ehavior.$ Another respondent made a case for a constant flow of communication as a way to 7eep important aspects of culture at the forefront of employees) mindsF #This or"ani4ation is e0cellent at maintainin" cultureCdone throu"h eAmailed articles from CE9 and other senior mana"ement= which are discussed in team meetin"s. There are also trainin" sessions for new employees that are 9@LY a3out culture= and there are refresher8su3se:uent short courses. Cultural 3ehavior is part of every employee)s re"uAlar reviews with their mana"er. There are also awards for those employees who e0emAplify culture.$ Strategi ,nitiatives Another commonly shared 3est practice focused on strate"ic initiatives. ,ost employAees 7now that settin" the strate"ic direction of the or"ani4ation is an activity reserved for top mana"ement. That said= respondents e0pressed "enuine appreciation when mana"ement made an effort to enlist their thou"hts Dvia 3lo"s= wi7is= and su""estion forumsE re"ardin" strate"ic chan"es and initiatives and followed up with timely comAmunication. 9ne mana"er said his or her or"ani4ation now consults #the entire or"ani4ation and solicitMsN feed3ac7 on chan"es in MtheN strate"ic plan to enlist supAport of all staff.$
,any other survey participants echoed these thou"hts with 3est practices that tie strate"ic plans to employee 3ehavior and rewards8reco"nition. !n other words= culAture is #Gust tal7$ until it is tied to operatin" procedures and monetary remuneration. 9ne survey participant reported that #performance plannin" and evaluation processes that are tied to strate"ic plannin" and o3Gectives has 3een our most pro"ressive comAmunication tool in an or"ani4ation that is transitionin" from an entrepreneurial or"ani4ation to a hi"hly effective8well mana"ed "rowth company.$

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Leaders
A third cate"ory of 3est practice responses addressed the si"nificance of the role of or"ani4ational leaders in ma7in" a positive culture a reality. #!t all stems from the top downRwhen senior mana"ement wor7s hard= communicates well= and is e:ually invested in e0ecutin" a stellar Go3= everyone on the team is e:ually as dedicated and ultiA mately successful.$ 9ther respondents commented on the fact that if leadership is "oin" to 3e an effective driver of a positive culture= then leadership cannot Gust come from the top of the or"ani4ation. Leadership s7ills and responsi3ilities must 3e pushed down throu"hout the or"ani4ation if the culture is really "oin" to saturate the thin7in" and 3ehavior at each level. To this end= one respondent reported the followin"F

6e have a leadership charter which everyone receives and is e0pected to a3ide 3y= which encoura"es leadership in every sin"le employee. 6e have a detailed code of conduct and ethics reportin" system which holds people accounta3le for all their actions. 6e "ive out a President)s Award annually in 5 cate"ories DSafety Performance= Teamwor7= !nnovation J Service and CommitmentE on a peer nomination 3asis which encoura"es people to strive for success.

-alues ;inally= many of the shared 3est practices addressed the impact of values= ethics= and codes of conduct on the or"ani4ational culture. !n "eneral= the comments su""ested that the more clearly and directly values are identified and communicated= the more li7ely they are to affect employee 3ehavior. 6hile attempts to convey values in a "entle or su3tle manner may 3e well intentioned= employees tend to see this as indecisive and confusin". A stron" culture is a result of clarity in terms of what an or"ani4ation valAues as well as clarity in terms of how those values are communicated. 6hen leaders) 3ehaviors don)t ali"n with espoused values= employees are at a loss as to what is e0pected of them personally. As one respondent stated= #The culture comes from the top= the leaders must wal7 the tal7= preach the company values and reinforce the importance and impact our culture has on the employees= the customers and the supApliers.$ Another survey participant e0plained how his company lin7s values and desired 3ehaviorF #Core values for the firm are clearly articulated= and are a mandaAtory part of the "oals for each employee.$ The ran"e of 3est practices communicated in this study demonstrates how much time and consideration many or"ani4ations put into their thin7in" a3out corA porate cultures. The responses indicated very little s7epticism a3out the concept of corporate culture in "eneral= thou"h some respondents did indicate that their own or"ani4ations have very little in terms of positive practices to offer. !n the end= responses to this :uestion su""est that there is an array of effective methods for mana"in" corporate cultures.
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Strategy Fore'ast+ The State of Cor(orate Cultures n the ,ear !"%#

. is section of t e study is, in essence, a forecast a'out ow t e concept and realities of corporate culture will evolve over t e ne%t ten years# . ese forecasts are 'ased on findin!s fro" t e Corporate Culture Survey 211>= a review of t e literature, and researc tea" discussions#

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Corporate Culture Bill Decome More. 6ot Less. mportant

Some o3servers would li7e the whole idea of a #corporate culture$ to "o away= ar"uin" that it is to too va"ue and amorphous. !n a competitive "lo3al society= however= it will 3ecome more= rather than less= important. That)s 3ecause= in the hi"hly multicultural= technolo"ically mediated or"ani4ations of 211>= it will 3e ever more critical for farAflun" or"ani4ations to for"e uni:ue identities 3oth for customers and employees. This will 3e part of the #3randin"$ efforts that or"ani4ations em3race to maintain and esta3lish mar7et share in an e0tremely competitive world. The 3randin" will not only 3e for customers= it will also 3e a maGor component of the talent mana"ement process= startin" with recruitment and then 3ein" en"rained into the onA3oardin" and development process. Today= companies often say that #people are our "reatest resource.$ They will still ma7e those claims in 211>= 3ut when they refer to #people=$ they will increasin"ly refer to a comple0 we3 of relationAships= values= 3eliefs and 3ehaviors that are uni:ue to their institutions. ?ltimately= it is this we3 that is more important than individual contri3utors to maintainin" a competitive advanta"e.

&'e ,auging of Corporate Cultures Bill Decome More (igorous

,any of today)s or"ani4ations "o to a "reat deal of trou3le and spend considera3le sums of money to survey their wor7forces in order to "au"e factors such as Go3 satisAfaction= wor7force en"a"ement= relationships with peers and supervisors= etc. Such surveys= often called or"ani4ational culture surveys= will 3ecome more widely adopted even as they)re more ri"orously statistically validated. They will focus on ali"nment and performance as well as en"a"ement and satisfaction. Such surveys will 3e 3ased on increasin"ly ro3ust paradi"ms that esta3lish the differences 3etween healthy and unhealthy corporate cultures. There will 3e considera3le de3ate over whether the criteria and responses associAated with such surveys are too ethnocentricCthat is= limited to specific national and re"ional cultures. !n the end= these de3ates will only stren"then the cultureAmeasureAment tools. After all= "lo3al or"ani4ations will 3e on the cuttin" ed"e of these practices and will 3e wor7in" toward corporate cultural methods that apply across a variety of ethnic "roups and nationalities. ,easurin" corporate culture will not= however= 3e done merely throu"h surveys= focus "roups= or similar practices. As talent mana"ement and enterprise resource plannin" technolo"ies 3ecome more sophisticated= data from dayAtoAday operations will increasin"ly 3e fed into internal culture inde0es to see if there are si"ns of une0Apected or unwanted culture chan"es. ;or e0ample= are turnover rates risin" amon" certain se"ments of employeesQ (o &1Ade"ree performance reviews show less trust in supervisorsQ Are customer complaints up= or has there 3een a slowdown in innovaAtionQ Such data can 3e analy4ed on an on"oin" 3asis= "ivin" mana"ers and teams foreAwarnin" a3out cultural chan"es and allowin" them to react more :uic7ly if unhealthy cultural proclivities seem to 3e emer"in". 3%

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More 4rgani*ations Bill 7evelop ;ealt'! Corporate Cultures

6e 3elieve that= in "eneral= or"ani4ations will develop healthier cultures in the future. +ut whether or not this turns out to 3e true depends on many hardAtoApredict varia3les. 6ill the world 3ecome more secure from conflict= terrorism= and other disasters in comA in" yearsQ 6ill a scarcity of natural resources and other factors have a severely ne"ative influence on the "lo3al economyQ 6ill the concept of sustaina3ility "ain more "roundQ

Assumin" that overall economic "rowth continues to rise and the world 3ecomes more rather than less secure= we 3elieve that mar7et competition will result in healthier corporate cultures. These cultures will 3e associated with hi"hA performin" or"ani4ations whose employees show relatively hi"h rates of en"a"ement and producAtivity Dsee ;i"ure -E. 9ne reason for this forecast is that= as this study shows= a more positive culture is lin7ed to hi"h mar7et performance. 9r"ani4ations will imitate the 3est performers in their industries and these performers are more li7ely to have healthy corporate culA tures. Second= as this study clearly shows= talent shorta"es are e0pected to influence cultures to a much "reater e0tent over the ne0t ten years Dsee ;i"ure %E. To woo and retain top talent= or"ani4ations must ensure that they have an attractive and healthy culture that provides them with plenty of development opportunities and that it is 3ased on a spirit of cooperation= trust= and strate"y e0ecution. This study has found that a company that is viewed as a "ood place to wor7 is :uite li7ely to 3e seen as havin" a positive culture Dsee ;i"ure 2E. A third reason for this is that 3oth the research and technolo"ies related to trac7in" culture will 3ecome 3etter= as noted in the previous section. ;inally= demoA "raphic influences will ensure that companies have a more diverse wor7force 3ased on a"e= "ender= nationality= reli"ion= ethnicity= and other factors. ;or corporations to ensure that they ma0imi4e performance in such or"ani4ations= they)ll 3e forced to develop respectful= cooperative= and= yet= performanceAoriented cultures.

Gno)ledge &ransfer Bill De Critical to Cultures

The Corporate Culture Survey 2008 su""ests that there)s no real advanta"e to havin" a sta3le= lon"erAlastin" culture. !t)s not the a"e that mattersI it)s the :uality of the culture itself. +ut 3ein" a3le to transfer 7nowled"e within the company will 3e critical to corA porate cultures. .enerally spea7in"= or"ani4ations will 3e 3etter at communicatin" codes of conduct= or"ani4ational styles= missions= strate"ies= and even preferred comA munication styles. CoAwor7ers who live in many different parts of the world should= despite their "eo"raphic and even cultural differences= 3e a3le to summari4e their or"ani4ation)s overarchin" strate"ies as well as its code of conduct and 3asic mission.

!n ten years= there will 3e plenty of "reat communication technolo"ies at hand= 3ut companies will stru""le with how to communicate tacit 7nowled"e. ,entorin" and= perhaps= internal coachin" will 3ecome more common= since mentorin" typically allows companies to transfer comple0 ideas= values= and even emotions 3etter than do technolo"ically 3ased media. Companies will increasin"ly e0periment with a variety of other tacit 7nowled"e transfer pro"rams as well. 38

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They will also place a "reater emphasis on strate"y communication. Currently= relA atively few companies are "ood at communicatin" their strate"ies to employees= ma7in" it difficult for employees and mana"ers to ali"n their actions and 3ehaviors to the strateA "ic "oals of the or"ani4ation. !n the future= or"ani4ations will ta7e steps to remedy this pro3lem= not only communicatin" strate"y more e0plicitly 3ut also 3uildin" cultural eventsCpicnics= "ames= 3rainstormin" sessions= etc.Caround such strate"ies.

!n the end= the most important driver of corporate culture will not 3e "eo"raA phy= ethnicity= or lan"ua"e. !t will 3e sophisticated and multidimensional communicaAtion strate"ies.

Cultures Bill 6eed to De Dot' (esilient and Agile

9r"ani4ations that 7eep a careful eye on what)s chan"in" their 3usiness environment and that can then :uic7ly respond to Dor even anticipateE those chan"es will have cultures that put them at a competitive advanta"e. The A,A8!nstitute for Corporate Productivity study clearly shows that positive cultures can facilitate chan"e= and this is a critical attri3ute in the year 211>. At the same time= certain features of corporate cultures will need to 3e dependAa3le= such as a commitment to 7ey values. This will allow employees to maintain a sense of e:uanimity and sta3ility amid tur3ulence= and it will allow the or"ani4ation to stay resilient even when it ta7es a psycholo"ical or financial hit in the mar7etplace DA!ility and resilience, 211&E. There will li7ely 3e solid metrics that "au"e 3oth the a"ility and resilience of or"ani4ations. The a3ility to cultivate and maintain healthy corporate cultures will 3ecome a standard component of leadership development pro"rams. At the same time= someone or some team will 3e made responsi3le for trac7in" the #state of the culture.$ This will li7ely fall to whoever is accounta3le for talent mana"ement issues= whether this is the head of *R= chief of talent= or some other title. !n the 3est companies= that person or function will not= however= 3e held solely responsi3le for developin"= maintainin"= or #fi0in"$ a culture. ?ltimately= this responsi3ility will pro3a3ly 3e most effectively e0eA cuted if it is the duty of some lar"er "roup= such as a crossAfunctional team of e0ecutives.

More Corporate Cultures Bill Adopt Sustaina1ilit!-(elated <alues

Amon" the more surprisin" findin"s of the Corporate Culture Survey 2008 was that sustaina3ility is the second most widely cited factor influencin" culture today. There are various factors that are li7ely to raise the importance of this issue over timeF

The e0pandin" "lo3al population The economic "rowth of China= !ndia= and other lar"e nations The rise in pollution levels and natural resource usa"e as a result of "lo3al economic and population "rowth .rowin" 3usiness re"ulation as developin" nations 3ecome developed nations ,ore technolo"ies that allow for the #"reener$ consumption of natural resources and production of manufactured products 3>

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.reater innovation in socioeconomic processes such as emissions tradin" .reater customer and employee desire for socially responsi3le corporate

actions Such values are li7ely to remain stron"est in EuropeanA3ased corporations over the ne0t ten years 3ut will li7ely 3e increasin"ly inte"rated into or"ani4ations 3ased in other nations as well= especially if #"reen$ products and services "ain an everA"reater advanta"e in the "lo3al mar7etplace.

More Emplo!ers Bill &r! to Create Cultures &'at Attract &alent

As the +a3y +oomers retire in the ?.S. and some other lar"e nations= such as China DLane J Pollner= 211>E= deal with talent shorta"es of their own= there will 3e a "reater emphasis on creatin" the type of corporate cultures that appeal to s7illed employees. 6e can call these #talentAma"net cultures.$ They will tend to support cooperation= netAwor7in"= "roup pro3lem solvin"= career development= empowerment= fle0i3ility= and en"a"ement. Such cultures must also value diversity 3ecause the "lo3al talent pool will come in many different nationalities= ethnicities= and cultural values. Corporations will 3e challen"ed to for"e a common= performanceA3ased corporate culture that is= nonetheless= fle0i3le enou"h to encompass people from a wide ran"e of national cultures. These talentAma"net cultures will also have pro"ressive wor78life 3alance proA"rams and policies. Such policies will help draw in talented people who are tryin" to 3alance their wor7 and family o3li"ations or simply wish for more fle0i3le wor7 arran"ements. Research wor7 3y the !nstitute for Corporate Productivity shows that employees in professional roles are the wor7ers most li7ely to re:uest such arran"eAments D!nstitute for Corporate Productivity= 211>E.

Companies Bill (el! More on 7ispersed Emplo!ees and <irtual Borlds

The Corporate Culture Survey 2008 shows that most companies are not very "ood at inte"ratin" employees and= especially= leaders who wor7 from remote locations. This will 3ecome an ever more serious competitive disadvanta"e in the future as companies 3ecome more electronically and "eo"raphically dispersed. +ecause #leadin" from a disA tance$ will 3e so vital= companies will increasin"ly loo7 for #virtual$ or #distance$ leadA ership s7ills. Leadership development pro"rams will emphasi4e these s7ills= and leaders who reside outside the corporate office will need to 3ecome more seriously considered for promotions and more formally inte"rated into successionAplannin" systems.

There will 3e a "reater use of emer"in" technolo"ies such as virtual worlds= which are computerAsimulated environments that users e0plore and inha3it via the use of avatars. !n 211>= most maGor corporations will have some #territory$ in one or more virtual worlds= and these will 3e used not only to recruit and train employees from all over the world 3ut also to 3rand the corporation as a whole and acculturate employees. The virtual representation and operation of a corporation in an online world will help define its culture= creatin" a "reater sense of 3elon"in" and underAstandin" amon" employees wor7in" from remote locations. 3?

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nternal Learning Bill Stress Commonalities. B'ile E/ternal Learning Bill Stress Culture Management
!nternal learnin" pro"rams will increasin"ly help define corporate cultures. Those pro"rams will 3ecome more diverse over the ne0t ten years as learnin" continues to e0pand 3eyond conventional classrooms and 3ecomes more 6e3A3ased= virtual= inforAmal= and GustAinAtime. There will also 3e more #hi"hAtouch$ types of learnin" such as mentorin"= which the A,A8!nstitute for Corporate Productivity study shows is stron"ly associated with a positive culture. +ecause learnin" pro"rams will 3ecome more diverse= learnin" professionals will wish to ma7e sure that there are common threads amon" them. ;or e0ample= corpoArate lo"os will 3e a""ressively attached to all technolo"ically mediated pro"rams. 9nA 3oardin" pro"rams will stress the common values and attitudes of the corporate culAture= and these commonalities will 3ecome touchstones in other learnin" pro"rams. Leadership trainin" pro"rams= for e0ample= will stress the importance of common cultural values that provide "uidance to empowered employees. And companies will "o out of their way to ensure that wor7ers have a "reater understandin" of the or"aniA 4ation)s mission= vision for the future= 3usiness strate"y= and rewards philosophy. This is not to say that much trainin" and development will not 3e outsourced. !t will= 3ut employers will 3rand these e0ternal trainin" opportunities in ways that enhance their 3rand. #9ur culture values learnin"$ will 3e a messa"e that is emphaAsi4ed. ,eanwhile= e0ternal providers of trainin" will increasin"ly focus on teachin" leaders a3out the dynamics of corporate cultures= the styles of leadership that are most effective in different cultures= how to create unified cultures durin" mer"ers and ac:uisitions= how to for"e a common set of values= etc. E0ternal providers will 3e o3li"ed to stay upAtoAdate on the latest research on corporate cultures 3ecause this research will continue to "row and evolve in comin" years.

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E( logue
!f you want to "au"e the nature of your or"ani4ation)s culture= step outside your office and listen to the discussions around you. 6hat are your employees sayin"Q Are they optimistic a3out the success of their proGects and su3se:uent mar7eta3ilityQ (o they feel that they have the support and 3ac7in" of their mana"ers when they meet with them in team discussions and ma7e proposalsQ (o they 3elieve that the company is committed to sustaina3ilityQ (o they 3elieve that their company appreciates their worthCthat they play an inte"ral roleQ And= finally= how do they perceive you and your confidence in the or"ani4ation= its mission= and its employeesQ

6hy does this matterQ !t matters 3ecause the 3ehavior of the mem3ers of your or"ani4ation= includin" yourself= determines the nature of your company)s culture. And the nature of your 3usiness)s culture does affect productivity and profita3ility. So your role is to foster a positive culture. A "ood culture creates an environment in which each employee 3elieves he or she is inte"ral to the success of the or"ani4ation and its "oals. !t also provides a 3lueprint for how to 3ehaveChow to treat customers= how to interpret :uality issues= and any of the other issues that are increasin"ly 3ein" decided at many levels of the or"ani4ation.
This study came to two maGor conclusions. ;irst and foremost= we can e0pect e0terAnal factorsC"lo3ali4ation= technolo"y= sustaina3ility= ethnic diversification= and economic uncertaintyCto influence culture. Second= the study found that leaders will need to 3e more attentive and more focused on those factors that create a "ood cultureCfrom comAmunication of the corporation)s values and strate"ic directions to the development of leaders who can model the 7ind of 3ehavior that inspires a positive culture.

American ,ana"ement Association is committed to wor7in" with you and your employees in addressin" the issues raised in this study and in developin" learnin" opportunities that directly improve your or"ani4ation)s corporate culture. The study clearly shows that the challen"es will 3e "reater in the future= and we are here to partner with you in your efforts to create the ri"ht culture for your or"ani4ation.

Edward T. Reilly President and Chief E0ecutive 9fficer American ,ana"ement Association 43

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A((end A1out t'is Surve!

Target Survey *opulation
9verall= this survey represents usa3le responses from 1=-&' "lo3al survey respondents. The survey was distri3uted via an eAmail lin7 and were completed primarily 3y mana"ers D5%HE= followed 3y directors D21HE. The lar"est percenta"e of respondents came from the *R function D1'HE= followed 3y operations D1 HE and "eneral mana"ement D11HE.

Survey ,nstrument !n this survey= multiple :uestions used the wellAaccepted Li7ertAtype scale= with a 1 ratin" "enerally desi"nated as #not at all$ and a % ratin" desi"nated as #very hi"h e0tent.$ There were 1 :uestions in all= ten "eared toward the demo"raphics of respondents. Some :uestions had multiple parts. *ro edure A lin7 to an online survey was eAmailed to the tar"et population 3y re"ion durin" ,ay and Kune 211>.

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0e1ogra(h ' 2uest ons

&a1le 1

B'at is !our current title:

(esponses C&'C)resi2entCChairman &#)C*#) #ice )resi2ent :irector Manager *upervisor 'ther 4verall (esults 1! Percent @.01 ,.0 @.2 20.0 0@., 3.@ ,4.3

&a1le 2

n )'at function do !ou currentl! )or-:

(esponses E( 'perations %enera. Management Mar8eting *ystemsC"! Finance *a.es (esearch M :eve.opment A2ministrative 'ther 4verall (esults 1! Percent ,9.@1 ,2.4 ,0.0 8.8 8.2 6.4 6.@ 0.6 0., 20.,

4 $

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&a1le 3

B'at is !our organi*ation9s t!pe of operation:

(esponses $ationa. Foperations in one country on.yG Mu.tinationa. Fnationa.Cregiona. operations act in2epen2ent.y of one anotherG %.oba. Fhigh .eve. of g.oba. integrationG 4verall (esults 1! Percent 02.@1

20.2

39.0

&a1le 4

n )'at region are !ou personall! located:

(esponses U*A Cana2a Napan 'ther -estern &urope 4verall (esults 1! Percent 90.,1 ,9.9 2., 2.,

&astern &urope Mi22.e &ast *can2inavia France Unite2 Hing2om Caribbean China %ermany "n2ia 'ther Asia Me5ico 'ceania *outh America Centra. America Horea

.4 .9 .@ .0 .0 .3 .2 .2 .2 .2 ., ., ., .0 .0

4 %

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&a1le $

n )'at sector does !our organi*ation operate:

(esponses 'ther Manufacturing 4verall (esults 1! Percent ,6.21 ,2.,

*ervices Financia. servicesCban8ing )harmaCbiotechCme2ica. 2evice Eospita.Chea.th careCinsurance Ei;techCte.ecom %overnment $onprofit &nergyCuti.ities &2ucation Consumer goo2s &ntertainmentChospita.ity (etai. Chemica.s Foo2 )ro2ucts MiningCagricu.ture Agricu.ture

,0.@ 4.8 9.6 9.3 6.@ 6.0 @.2 3.6 3.2 2.9 2.0 ,.4 ,.9 ,.6 ,.2 ,.0

&a1le %

B'at is t'e si*e of !our )or-force:

(esponses Un2er ,00 emp.oyees ,00;044 @00;444 ,,000;3,044 3,@00;0,444 @,000;4,444 ,0,000 or more 4verall (esults 1! Percent 20.61 23.0 4.@ ,2.6 @.@ 6.6 ,9.8

48

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&a1le 8

n U+S+ dollars. )'at is !our organi*ation9s total revenue:

(esponses ess than O,0 mi..ion O,0 to O20.4 mi..ion O2@ to O04.4 mi..ion O@0 to O44.4 mi..ion O,00 to O204 mi..ion O2@0 to O044 mi..ion O@00 to O444 mi..ion O, to O2.44 bi..ion 4verall (esults 1! Percent ,6.01 ,0.0 8.4 8.0 4.6 9.0 6.9 ,0.6

O3 to O4.44 bi..ion O,0 bi..ion or more

,0.0 ,2.4

&a1le >

B'en compared )it' t'e past five !ears. 'o) )ould !ou rate !our compan!9s performance no):
(esponses (evenue growth Mar8et share )rofitabi.ity Customer satisfaction 6CA 6.81 4.9 4.0 2.8 All-&ime Lo) ,.81 .6 ,.6 .9 Borse ,3.01 8.@ ,@.0 6.2 Same ,9.,1 2@., ,4.8 3@.@ Detter 06.31 06., 00.3 0@.@ All-&ime ;ig' ,@.01 ,0.0 ,0.3 4.0

4>

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Culture 2uest ons

&a1le ?

n !our organi*ation. to )'at e/tent are emplo!ees familiar )it' t'e follo)ing:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent @4.,1 @0.4 0@.3 00., 3@.3 24.6 Correlation )it' Culture nde/ .00// .@6// .06// .0@// .34// .@9// Correlation )it' Mar-et Performance nde/ .,0// .,6// .0@ .,0// .09// .,2//

(esponses Co2e of con2uct 'rganiAationa. va.ues 'rganiAation structure Mission statement Compensation system &5pectations of communication sty.e ?usiness strategy
//p=.0,

26.4

.@6//

.,4//

&a1le 1@

&o )'at e/tent do t'e follo)ing statements descri1e !our organi*ation9s culture:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent 09.41 0,.8 Correlation )it' Mar-et Performance nde/ .2,// .20//

(esponses -e have a cooperative cu.ture 'ur corporate cu.ture is a.igne2 with our strategy -e have a cu.ture that encourages innovation -e have a cu.ture that encourages strategy e5ecution 'ur cu.ture fosters trust

34.0

.22//

38.4

.2,//

3@.6

.2,//

-e have a cu.ture that promotes 7uic8 responses to nee2e2 changes 'ur corporate cu.ture brings out the best performance in our emp.oyees :ecision;ma8ing authority e5ists at a.. .eve.s, not <ust top management

30.3

.,4//

32.0

.29//

24.2

.,4//

4?
//p=.0,

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&a1le 11

;o) long 'as !our compan! maintained its current culture:

Correlation )it' Culture nde/ Correlation )it' Mar-et Performance nde/

(esponses 0 to @ years 6 to ,0 years ,, to ,@ years ,6 to 20 years More than 20 years

Percentage 39.@1 23.8 4.8 @.6 23.3

;.03

;.03

&a1le 12

&o )'at e/tent do t'e follo)ing statements descri1e !our organi*ation9s performance:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent @4.21 Correlation )it' Culture nde/ .68// Correlation )it' Mar-et Performance nde/ .29//

(esponses 'vera.., this organiAation is a goo2 p.ace to wor8 'ur company is successfu..y meeting its goa.s -e are operating at our potentia.
//p=.0,

00.8

.62//

.33//

20.@

.63//

.24//

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&a1le 13

&o )'at e/tent does corporate culture 'elp !our organi*ation ac'ieve t'e follo)ing:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent 64.31 66.2 Correlation )it' Culture nde/ .@@// .30// Correlation )it' Mar-et Performance nde/ .,6// .,0//

(esponses &ncourage ethica. behavior Comp.y with regu.atory po.icies

"ncrease customer satisfaction ?oost resi.iency in the face of cha..enging times "ncrease wor8force 2iversity (etain high;performing emp.oyees "mprove pro2uctivity Ma5imiAe return on investment "ncrease satisfaction of emp.oyees ?ui.2 outsourcing re.ationships &ngage emp.oyees effective.y "ncrease g.oba. competencies :ecrease carbon footprint
//p=.0,

@,.8 34.8

.6,// .6@//

.26// .23//

38.4 38.0 38.2 3@.0 3,.0 30.0 28.4 28.6 ,4.4

.06// .69// .69// .6,// .92// .03// .93// .34// .39//

.04// .23// .2@// .36// .2@// .,3// .22// .22// .,6//

$1

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&a1le 14

;o) )ould !ou rate t'e follo)ing management practices in !our organi*ation:
Percentage C'oosing ,ood or <er! ,ood 34.61 3@.9 Correlation )it' Culture nde/ .0@// .@9// Correlation )it' Mar-et nde/ .,,// .,4//

(esponses &mp.oyee training (ewar2s an2 recognition

ea2ership 2eve.opment !a.ent management Fee2bac8 to .ea2ers Fe.g., assessment, surveys, focus groupsG :iscip.ine process Faci.itation of change initiatives E( information systems Coaching 'n;boar2ing !eambui.2ing e5ercises *uccession p.anning *e.ection programs
//p=.0,

32.2 30.@

.60// .6@//

.,4// .,8//

30.0

.@6//

.,6//

24.@ 29.0 26.2 23.8 23.0 22.4 22., 2,.,

.00// .68// .39// .@6// .39// .@6// .@,// .02//

.,2// .20// .04// .,@// .,@// .,6// .,8// .,2//

$2

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&a1le 1$

&o )'at e/tent do t'ese organi*ational practices influence 1e'aviors in !our organi*ation:
Percentage (esponding to a ;ig' or (esponses <er! ;ig' E/tent 60. 61 @2. 2 Correlation )it' Culture nd e/ Correlation )it' Mar-et Performance nde/

?ehavior of .ea2ers

.0,//

.,,//

Communication from senior management Hey processes in the organiAation *tructure of the organiAation

.09//

.,0//

00. 0 03. @

.02//

.,3//

.38//

.,@//

*trategic 2irection of the company

03. 0 30. 9 33. 8 32. 9

.@6//

.,8//

!a.ent 2eve.opment

.@3//

.,8//

)erformance measures

.09//

.,4//

!a.ent recruitment
//p=.0,

.04//

.,6//

&a1le 1%

;o) important is it t'at an! outsource partner9s culture is compati1le to !ours:

4vera ll (esponses 1! (esponses $ot at a.. Percentage 8.01 ,2. , 32. 3 39. 8 4.@ Correlatio n )it' Culture nd e/ Correlation )it' Mar-et Performance nde /

*.ight.y important

Mo2erate.y important

.3@//

.,0//

Eigh.y important #ery high.y important

$3

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&a1le 18

&o )'at e/tent does !our organi*ation use t'ese practices for ne) 'ires:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent @@.,1 Correlation )it' Culture nde/ .2,// Correlation )it' Mar-et Performance nde/ .0@

(esponses :istribution of emp.oyee han2boo8 *tructure2 interview process Fi.e., a.. app.icants as8e2 the same 7uestionsG App.icants given a rea.istic <ob preview before being hire2 Mentoring program

0@.2

.30//

;.02

39.9

.02//

.,3//

,9.,

.@3//

.,2//

// "n2icates that the corre.ation is significant at the p=.0, .eve..

&a1le 1>

;as !our organi*ation gone t'roug' a merger in t'e last five !ears:
(esponses Pes $o (esults 1! Percent 26.,1 93.4

&a1le 1?

&o )'at e/tent )as t'e merger successful in terms of creating a unified culture:
4verall (esponses 1! Percentage Correlation )it' Culture nde/ Correlation )it' Mar-et Performance nde/

(esponses

$ot at a.. *ma.. e5tent Mo2erate e5tent Eigh e5tent #ery high e5tent

,,.@1 23.3 03.6 ,8.@ 3.2 .@0// .39//

// "n2icates that the corre.ation is significant at the p=.0, .eve..

$4

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&a1le 2@

&o )'at e/tent )ere t'e follo)ing actions ta-en during t'e mergerCac2uisition:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent 0,.41 Correlation )it' Culture nde/ .00// Correlation )it' Mar-et Performance nde/ .26//

(esponses A.. changes were ana.yAe2 from the perspective of business nee2s

ea2ers who were champions of the new cu.ture were promote2 *ystems an2 processes that 2i2 not support the new cu.ture were rep.ace2 ea2ers who 2i2nLt support the new cu.ture were remove2 A proactive communication strategy was estab.ishe2 E( practices were a.igne2 to the new cu.ture :ia.ogue sessions to wor8 through 2ifficu.t issues were estab.ishe2 !echno.ogy systems that ta.8 to one another as 7uic8.y as possib.e were estab.ishe2 !eambui.2ing practices were use2
// "n2icates that the corre.ation is significant at the p=.0, .eve..

3@.0

.30//

.,9//

33.9

.00//

.22//

32.8

.,4//

.08

32.@

.@8//

.20//

3,.9

.02//

.,6//

28.@

.@3//

.,9//

29.0

.00//

.,4//

,9.4

.@3//

.,0//

$$

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&a1le 21

&o )'at e/tent do t'e follo)ing statements descri1e leaders'ip st!les Eof <Ps and C-level emplo!eesF in !our organi*ation:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent 38.91 Correlation )it' Culture nde/ .,6// Correlation )it' Mar-et Performance nde/ .04//

(esponses !his organiAation rewar2s .ea2ers who are tas8 oriente2 !his organiAation rewar2s .ea2ers who are re.ationship oriente2 'ur .ea2ers use an empowerment sty.e to 2irect emp.oyees 'ur .ea2ers use a comman2;an2; contro. sty.e of 2irecting

33.9

.0@//

.,,//

32.@

.69//

.,4//

33.6

;.3,//

;.09//

// "n2icates that the corre.ation is significant at the p=.0, .eve..

&a1le 22

&o )'at e/tent do t'e follo)ing statements descri1e all leaders9 1e'avior in !our organi*ation:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent 63.@1 @9.3 Correlation )it' Culture nde/ .04// .6,// Correlation )it' Mar-et Performance nde/ .,0// .2,//

(esponses !hey are high.y ethica. !hey a.ign wor8 to organiAationa. business nee2s !hey ce.ebrate successes !hey mo2e. 2esire2 behaviors FJwa.8 the ta.8KG !hey ma8e sure programs support 2esire2 cu.ture !hey are strong communicators

00.4

.@6//

.,0//

00.@ 3@.3

.66// .90//

.,4// .,4//

3,.4

.@4//

.,3//

!hey are emotiona..y se.f;aware !hey are goo2 .isteners !hey use rewar2s an2 recognition we..
// "n2icates that the corre.ation is significant at the p=.0, .eve..

26.@ 2@.@ 23.2

.@4// .60// .6,//

.,@// .,@// .,4//

$%

CU !"#A!"$% &FF&C!"#& C'()'(A!& CU !U(&*

++

&a1le 23

&o )'at e/tent does !our organi*ation engage in t'e follo)ing activities:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent 09.81 Correlation )it' Culture nde/ .@6// Correlation )it' Mar-et Performance nde/ .,8//

(esponses )rovi2es c.ear communication of va.ues to a.. emp.oyees )rovi2es communication techno.ogies for wor8groups in 2ifferent .ocations

06.0

.32//

.,,//

)rovi2es training an2 2eve.opment for emp.oyees who wor8 remote.y )rovi2es sufficient bu2get resources among team members from 2ifferent .oca.es for perio2ic face;to;face meetings )rovi2es career 2eve.opment for a.. emp.oyees )rovi2es succession p.anning that inc.u2es remote .ea2ers )rovi2es .ea2ership 2eve.opment that focuses on .ea2ing from a 2istance )rovi2es teambui.2ing opportunities 2esigne2 for remote emp.oyees
// "n2icates that the corre.ation is significant at the p=.0, .eve..

30.0

.0,//

.,0//

32.@

.38//

.,@//

30.0

.@2//

.,@//

22.6

.0@//

.,4//

,8.9

.00//

.,6//

,6.3

.06//

.,3//

$8

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&a1le 24

B'ic' of t'e follo)ing is t'e 1est description of !our compan!9s strateg!:

(esponses :ifferentiation Fsee8ing to ma8e your pro2uctsCservices better than an2 uni7ue from competitorsG $iche Fsee8ing to provi2e the best;performing pro2uct for a narrow target mar8etG Cost focus Fsee8ing to 2eve.op a .ow;cost structure whi.e focusing on a narrow target mar8etG (esults 1! Percent @3.81

22.6

23.9

&a1le 2$

&o )'at e/tent are t'e follo)ing statements true of !our organi*ation:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent @3.,1 04.@ ,3.@ ,3., 20.0 Correlation )it' Culture nde/ ;.33// ;.0@ .29// ;.06// .23// Correlation )it' Mar-et Performance nde/ ;.0@/ .03 .,0// ;.04// .,0//

(esponses "t is hierarchica. "t is in a high.y regu.ate2 in2ustry *i5 *igma princip.es are critica. "t has a strong union presence "t is 2ecentra.iAe2

1L 1L

"n2icates that the corre.ation is significant at the p=.0@ .eve.. "n2icates that the corre.ation is significant at the p=.0, .eve..

$>

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++
&a1le 2%

&o )'at e/tent do t'e follo)ing factors influence !our organi*ation9s culture toda!. and to )'at e/tent do !ou anticipate t'e! )ill influence !our culture in 1@ !ears:
Percentage (esponding to a ;ig' or <er! ;ig' E/tent Correlation )it' Culture nde/ Correlation )it' Mar-et Performance nde/

(esponses &oda!=

Changing 2emographics %.oba.iAation Current economic con2itions *ustainabi.ity concerns !he nee2 to improve security !he wor8C.ife ba.ance nee2s of the wor8force !a.ent shortages n 1@ Aears= Changing 2emographics %.oba.iAation Current economic con2itions *ustainabi.ity concerns !he nee2 to improve security !he wor8C.ife ba.ance nee2s of the wor8force !a.ent shortages

3,.61 3@.@ 6,.3 03.9 30.8 30.2 03.3

.,4// .,0// .04// .,@// .04// .39// .2,//

.0@ .20// .02 .0@ .06/ .09// .08//

60.3 @@.6 64.0 @9.3 0@.0 @4.3 66.2

.04// .08// .,0// .09// .06/ .20// .,2//

.03 .2,// .06/ .00 .06/ .09// .09//

1L 1L

"n2icates that the corre.ation is significant at the p=.0@ .eve.. "n2icates that the corre.ation is significant at the p=.0, .eve..

&a1le 28

&o )'at e/tent do t'e follo)ing factors influence !our organi*ation9s culture toda!. and to )'at e/tent do !ou anticipate t'e! )ill influence !our culture in 1@ !ears:
(an-ing

(esponses Current economic con2itions *ustainabi.ity concerns !a.ent shortages %.oba.iAation !he nee2 to improve security !he wor8C.ife ba.ance nee2s of the wor8force Changing 2emographics

&oda! , 2 3 0 @ 6 9

n 1@ Aears , @ 2 6 9 0 3

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. bl ogra(hy
Agi.ity an2 resi.ience in the face of continuous changeI A g.oba. stu2y of current tren2s an2 future possibi.ities 2006;20,6. F2006G. $ew Por8I American Management Association. American moms 2eman2 better wor8;.ife ba.ance. F2006, May ,0G. Management;"ssues. (etrieve2 from www.management;issues.com Argyris, C. F2008G. !eaching smart peop.e to .earn. ?ostonI Earvar2 ?usiness *choo. )ub.ishing Corporation. A. !. Hearney. F2009, MarchG. J!rueK an2 profitab.e sustainabi.ity management. (etrieve2 from www.at8earney.com ?a.2win, N., M :a)ont, M. F,443G. "nnovation in Cana2ian enterprisesI *urvey of innovation an2 a2vance2 techno.ogy. *tatistics Cana2a, 88, @,3;Q)?. ?a.2win, !., M For2, H. F,488, *pringG. !ransfer of trainingI A review an2 2irections for future research. )ersonne. )sycho.ogy, 0,F,G, 63;,0@. ?arney, N. ?. F,486, Nu.yG. 'rganiAationa. cu.tureI Can it be a source of sustaine2 competitive a2vantageR !he Aca2emy of Management (eview, ,,F3G, 6@6;66@. ?ion, -. F,408;,4@,G. &5periences in groups, ";#"". Euman (e.ations, ,;"#.
?.a8e, (. (., M Mouton, N. *. F,468G. Corporate e5ce..ence through gri2 organiAation 2eve.opment. EoustonI %u.f. ?og.ars8y, C. A. F200@, FebruaryG. @ steps to successfu. mergers an2 ac7uisitions. wor8span, @0;@2.

Ca.fee, :., M *heri2an, *. F200@, *eptemberC'ctoberG. Create a winning strategy whi.e bui.2ing a winning cu.ture. &.ectric ight an2 )ower. Capon, $., Far.ey, N., ehmann, :., M Eu.bert, N. F,442G. )rofi.es of pro2uct innovation among .arge U* manufacturers. Management *cience, 38F2G, ,@9;64. Car.eton, N. (., M *tevens, A. F2000, NuneG. -hen wor.2s co..i2eI !he nee2 for cu.tura. assessment an2 integration. )erformance "mprovement, 38;03. (etrieve2 from www.ispo.org Car.son, . F200@, AugustG. -or8;.ife benefits 2onLt guarantee wor8;.ife ba.ance. &mp.oyee ?enefit $ews. (etrieve2 from www.benefitnews.com Carro.., :. !. F,483G. A 2isappointing search for e5ce..ence. Earvar2 ?usiness (eview, 6,F6G, 98;88. Creating a sustainab.e futureI A g.oba. stu2y of current tren2s an2 future possibi.itiesI 2009;20,9. F2009G. $ew Por8I American Management Association. :avis, *. A. F,469G. An organic prob.em;so.ving metho2 of organiAationa. change. Nourna. of App.ie2 ?ehaviora. *cience, 3F,G, 3;2,. :e -itte, H., M van Mui<en, N. F,444G. 'rganiAationa. cu.tureI Critica. 7uestions for researchers an2 practitioners. &uropean Nourna. of -or8 an2 'rganiAationa. )sycho.ogy, 8F0G, @83;@4@.
:e.oitte M !ouche U*A ). F2009, Apri. ,6G. Companies that he.p %en P emp.oyees vo.unteer their wor8p.ace s8i..s to non;profits can gain recruiting a2vantages, stu2y fin2s. (etrieve2 from www.2e.oitte.com

:e.oitte M !ouche U*A ). F2009G. Eigh.ights of 2009 :e.oitte vo.unteer "M)AC! survey of %en P F,8;26 year o.2sG. (etrieve2 from www.2e.oitte.com :ennison, :. (. F,480G. ?ringing corporate cu.ture to the bottom .ine. 'rganiAationa. :ynamics, ,3F2G, @4;96. :ennison, :. (., M Mishra, A. H. F,44@, March;Apri.G. !owar2 a theory of organiAationa. cu.ture an2 effectiveness. 'rganiAation *cience, 6F2G. :iamon2, M. . F2009, Nanuary ,0G. ?oosting wor8p.ace mora.e 2oesnLt have to be 2ifficu.t. !he C.arion; e2ger. (etrieve2 from www.c.arion.e2ger.com :i)rete, !. A. F,489G. EoriAonta. an2 vertica. mobi.ity in organiAations. A2ministrative *cience Suarter.y, 32, 022;000.

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&2e.man, A. N. F2006, :ecemberG. :oes your company cu.ture 2rive away your best wor8ersR Eow to bui.2 trust, cooperation an2 teamwor8. *upervision, 69F,2G, ,2;,0. !he ethica. enterpriseI 2oing the right things in the right ways, to2ay an2 tomorrow F2006G. $ew Por8I American Management Association. Fami.ies an2 -or8 "nstitute. F2009, Nanuary 2@G. Ma8ing wor8 Jwor8KI $ew i2eas from the winners of the A.fre2 ). *.oan Awar2s for business e5ce..ence in wor8p.ace f.e5ibi.ity, ,0. Fahey, A. F2009, May 2@G. "s greenwashing goo2 for youR %ristmi... (etrieve2 from www.gristmi...grist.org Fisher, C. :. F,486G. 'rganiAationa. socia.iAationI An integrative review. "n %. (. Ferris M H. M. (ow.an2 F&2s.G, (esearch in personne. an2 human resources management, 0,,0,;,0@. %reenwich, C!I NA"C&.sevier )ress. Fran8o, . F,484G. %.oba. corporate competitionI -hoLs winning, whoLs .osing, an2 the (M: factor as one reason why. *trategic Management Nourna., ,0, 004;90. %arvin, :. A., &2mon2son, A. C., M %ino, F. F2008, MarchG. "s yours a .earning organiAationR Earvar2 ?usiness (eview, ,04;,,6. %.oba. ?usiness $etwor8. F2002G. -hatLs ne5tR &5p.oring the new terrain for business. Cambri2ge, MAI )erseus ?oo8s. %or2on, ?. -. F200@, 'ctober 3G. Cutting e2ge pro2ucts begin with cutting e2ge pro2ucts. $ationa. Un2erwriter. ife M Eea.th. %or2on, %. %. F,44,G. "n2ustry 2eterminants of organiAationa. cu.ture. Aca2emy of Management (eview, ,6F2G, 34@;0,@. %urchie8, H. F200@, Nune ,6G. "tLs a.ways FatherLs :ay for stay;at;home 2a2s. E( $ews. (etrieve2 from www.shrm.orgChrnews Eachen, :. *., Nr. F,442G. "n2ustria. characteristics an2 <ob mobi.ity rates. American *ocio.ogica. (eview, @9, 34;@@.
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Authors and Contr butors

*ar) V ')ers is the vice president of research at the !nstitute for Corporate Productivity. *e has written and edited various institute articles and white papers= served as proGect mana"er on numerous research proGects= and held the mana"in" editor position at the *uman Resource !nstitute D*R!E. *e is currently the editor of the !nstitute for Corporate Productivity)s .rend<atc er pu3lication. *e has also authored and coauAthored various periodical articles. *e previously wor7ed as a senior research analyst at *R!= where he focused on a ran"e of social= demo"raphic and wor7forceArelated issues. Contact informationF D'2'E 5%A222& or mar7.vic7ersTi5cp.com. 0onna 34 0enn s5 Ph404= is the ,ana"in" Partner of Leadership Solutions Consultin"= LLC= a firm that speciali4es in leadership and "roup development as well as coachin" and leadAership trainin". (r. (ennis holds a master)s de"ree in education= a Ph.(. in human develAopment= and certification in personality assessment and e0ecutive coachin". Contact informationF D&1-E 5-'A1--' or donnaTleadershipAsolutions.info. 6olly .4 To1(son5 Ph404= is a senior research analyst at the !nstitute for Corporate Productivity. *olly has tau"ht in the mana"ement departments of several universities= includin" the ?niversity of 6ai7ato in *amilton= @ew Uealand= and= most recently= the ?niversity of Tampa. *er research has focused on wor7Alife 3alance and leaderAship development= with an emphasis on trainin" hi"hApotential employees to sustain ma0imum success without 3urnout. *olly is also active in the ?niversity of Tampa)s E0ecutive Education pro"ram= where she is currently a leadership and development coach. Contact informationF D'2'E 5%A222& or holly.tompsonTi5cp.com.

Anne L ndberg is a research analyst and /nowled"e Center mana"er at the !nstitute for Corporate Productivity. She is responsi3le for a ran"e of the !nstitute for Corporate Productivity)s /nowled"e Centers related to le"al= compliance and healthcare issues= and she is the former mana"er for the !nstitute for Corporate Productivity)s Corporate Culture /nowled"e Center. Contact informationF D'2'E 5%A222& or anne.lind3er"Ti5cp.com. Randy 7 ll a1s is mana"in" director of Redmond= 6illiams J Associates= LLC= a firm that helps or"ani4ations esta3lish ris7 miti"ation= ethic= and chan"e pro"rams. Prior to R6A= she was with American E0press for 25 years= where most recently she was the "lo3al corporate om3udsperson reportin" to the CE9 and +oard. Previously= as S<P and Center *ead= she ran maGor operatin" centers= includin" customer service= credit= and data processin" in the ?.S. and Europe. She also led an *R= Buality and Learnin" J (evelopment team. *er pu3lished articles are on her we3site= www.redmondwilliamsassoc.com. Contact informationF D'- E ''A 5- ' or rwa2112Tmsn.com. %4