Managing Corporate Culture for Strategic Success

Corporate culture is one of those amorphous business concepts that leaders too often neglect because of its sheer intangibility. Yet culture — an effective culture — is arguably the most valuable intangible asset a company can own.

Effective corporate cultures have several traits. They are marked by high levels of employee productivity, creativity and commitment. These in turn drive increased quality, innovation and profitability. Ideally, all leaders strive to develop cultures that generate these beneficial results.

But dynamic cultures don't just emerge by themselves. They must be actively forged by the people charged with ensuring a company's strategic and financial success.

Managing Culture
Organizational leaders manage their operations and finances. They must manage their cultures as well.

In his landmark book Organizational Culture and Leadership, the noted cultural theorist Edgar H. Schein writes: “Culture not only explains many organizational phenomena … it is also something that leaders can manipulate to create a more effective organization.” Schein emphasizes that culture can be actively administered to advance corporate aims.

Managing culture is a central responsibility of leaders today. What's more, it must be an ongoing process if they are to keep pace with ever-changing markets, customer needs, and competition.

Culture management is especially relevant when you consider a company's macroenvironment and microenvironment. The macroenvironment contains all the external forces (i.e., socio-economic, regulatory, geo-political) that are beyond management's control. The microenvironment includes all the internal variables that are within management's control (i.e., decisions on staffing, resource allocations, or corporate development strategies). Culture falls squarely in the realm of the microenvironment.

So if culture is something leaders can control to shape their companies' future success, why don't more of them do so? There is one key reason why.

Core Challenge: Defining Culture
Many executives do not proactively manage culture because they simply can't get their arms around it. “If something can't be readily characterized or grasped,” they say, “how can it be managed?”

Despite the many fine studies that have addressed organizational culture, one commonly accepted definition has never emerged. Nor have any truly workable tools that can be used to cultivate culture for strategic success. (This represents a notable void in the business literature.) Nonetheless, there have been innumerable characterizations of corporate culture. Allow me to set forth another — a definition that is focused acutely on culture's strategic significance:

Corporate culture is the series of employee beliefs, attitudes and modes of behavior that collectively define a company's character and which determine its ability to achieve optimal operational efficiencies and sustainable growth.

The operative phrase here is “employee beliefs, attitudes and modes of behavior.” From a practical standpoint, more specificity is needed to understand and act upon these concepts managerially. That is why, for the book I am now writing, research is being collected to identify the key aspects of employee sociology and psychology that spawn effective cultures. Much more investigative work needs to be done. But the preliminary results are in.

The early findings suggest that there are three key traits of highly effective corporate cultures. They are all people-related:

– There is clarity of vision, mission and values among employees throughout the enterprise
– Employees at all levels firmly understand their individual and inter-dependent roles in attaining the corporate vision
– There is strong alignment between employee attitudes and strategic goals and objectives.

When leaders can characterize these factors in their own organizations, they can begin to alter them for culture management purposes. Importantly, as we will see, managing culture has as its foundation the ongoing development of employees … the people who collectively power corporate growth.

Why Worry About Culture?
Many middle managers have told me that culture is not relevant to them. They view it as being decidedly high-level and something that relates to the workings of an entire enterprise. Those are apt descriptors.

But the fact is individual groups emerge within companies. They often represent cultures of their own. Subcultures. These groups (i.e., regional divisions, business units, or large departments) each exhibit cultural traits. Hence, each can be understood and managed in cultural terms. It is for this reason that all executives, not just CEOs, should understand how culture can be influenced to achieve a business entity's objectives.

Next month we will explore the aforementioned traits of effective cultures, as well as how to assess where your company stands relative to each one.

Mark N. Clemente consults with companies and professionals in the areas of sales and marketing, organization development, and leadership. A former director of communications for Coopers & Lybrand, he is the author of four books and dozens of journal articles on management development and corporate growth. His clients have included professionals from Big Five and middle-market accounting and management consultancies, as well as Fortune 500 companies. Mark speaks worldwide before professional and academic groups, and holds a master’s degree in strategic communication and leadership. Visit his firm’s website at www.clementeonline.com or contact him at [email protected]