CSR in companies - corporate culture The Economist

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1 CSR in companies - corporate culture References: Braendle (2005), No change at the top: Culture wins, Business Strategy Review, Dr Udo C Braendle 2002 The Economist 1 Culture is a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems. (Schein, 1992) Only slow changes over time 2

2 Evolution Culture evolves as a result of the turnover of group members Changes in the company s market environment General changes in society Strong corporate cultures do not evolve overnight Different corporations have different cultures Weak or strong Dependent on investment levels of employees Some concepts go back to the 1920s but it took until the 1980s that the topic was taken up by academic research 3 Evolution Two perspectives Differences between corporations across national cultures Culture within corporations Does a geographic region further distinguishes among organizations within a single industry? Even employees in different national offices reflect national culture more than corporate culture (Hofstede, 1984) => corporate culture should not run in the opposite direction of national culture (Scholz, 2000) Multiple cultures and subcultures Different functional and geographic groupings 4

3 Differences between definitions of business culture but common core matter fuzzy set of attitudes, beliefs, behavioural norms, and basic assumptions and values that are hared by a group of people, and that influence each member's behaviour and his/her interpretations of the meaning of other people s behaviour. Shared phenomenon learned product of group experience and is therefore found within groups with a significant history 5 Core matters Different levels of corporate culture Visible level encompass behaviour patterns, the physical and social environment and the written and spoken language used by the group Invisible level Group value Goals and concerns that shape a group s sense of what ought to be. Can vary greatly in different groups 6

4 How do new members learn corporate culture? Informally from the existing employees and formally through induction training programmes In environment of strong group and peer pressure, the individual adopts the employees norms. Whereas when the group pressures are weak, the individual is likely to accept the norms encouraged by management 7 Effects and changes in corporate culture Strong culture results in higher organizational effectiveness (Peters and Waterman, 1982) can as well be a source of problems, especially when the organizational environment changes quickly defines a normative order that serves as a source of consistency and can be seen as a social control mechanism provide group members with a way of giving meaning to their daily lives, setting guidelines and rules for how to behave, and, most important, reducing and containing the anxiety of dealing with an unpredictable and uncertain environment. (Schein, 1992) 8

5 Benefits of a strong corporate culture Facilitates social control within the company Employees will enforce corrective actions by themselves Informal social control is likely to be more effective and cost less than formal control structures Enhance motivation and performance of employees Enhance goal alignment Better coordination 9 Pitfalls difficulties to convert according to the new position new management may find that the strong corporate culture that served well with the old strategy is no longer appropriate Delta, AT&T Difficulty recognizing the need for change the lack of variety limits the organization s ability to adapt to changes in the environment. (Denison, 1984) countercultures may be less likely to emerge and persist in firms with a strong culture A coherent statement of who we are makes it harder 10 for us to become something else. (Weick, 1985)