3.4.2 Corporate Culture

Corporate culture

🔗 The values, attitudes and beliefs of people in a business controlling how they interact with each other and external stakeholders.

Ways in which culture is reflected

• Customer satisfaction (how they are treated by staff)
• Motivation (whether they feel empowered by delegation or not)
• Staff retention/turnover
• The personality and style of the workforce
• The responsiveness and methods of communication
• The nature and style of marketing material
• The number of layers in the management hierarchy

Strong and weak culture

Strong culture

🔗 Core values are deeply embedded into the ways a business does things and are widely accepted by employees.

• Less need for detailed policies and procedures -> Saves time and money
• Employees feel valued by the business and are therefore driven to succeed -> motivation -> improved productivity
• Reduces the chance of error or miscommunication due to familiarity with values
• Low labour turnover -> time isn't wasted recruiting replacements

Weak culture

🔗 Where values are not clearly defined, communicated or widely accepted by employees.

• Greater need for policies and procedures
• Demotivation of staff due to no sense of identity
• More chance of errors and miscommunication due to unfamiliarity with values
• High labour turnover -> Higher costs and time wasted on recruitment

What determines culture

• Employees
• Age of the business
• Manager/leader
• Type of business/industry

4 types of culture (Charles Handy)

• Power culture 🔗 Concentrating power among a few people, usually the centre of an organisation.

• Task culture 🔗 Based on cooperation and teamwork, teams are empowered.

• Person culture 🔗 Individuals are given power and freedom (which could cause conflict between ideas).

• Role culture 🔗 Each member of staff has a clearly defined role, so power comes from a person's position.

Problems of changing culture

• Staff prefer old core values and are resistant to change -> Lower staff retention
• Time to adjust to a new culture and dynamic -> Loss of productivity in the short term Cost of adjusting corporate culture financially