Management Principles
Explain the term ‘corporate (or organizational) culture’ and discuss its importance to the operational success, or failure, of organizations.
Corporate culture refers to the act of developing intellectual and moral talents, especially by way of education. It can also include the moral, social, and behavioral standards of an organization based on the beliefs, attitudes, and priorities of its members. Every organization has its own exclusive culture or set of values. Most organizations don’t deliberately try to create a certain culture. The culture of the organization is usually created instinctively, based on the values of the top management or the founders of an organization (Corporate Culture, n.d.).
The significance of corporate culture is growing as the result of several recent happenings in the business world. Companies are encouraging employees to be more responsible and act and think like owners. They are often being given more flexible work schedules in exchange for always being on-call. With the demise of more traditional communities, companies are filling employees’ need to belong to a community. At the same time companies are supporting teamwork and the structure of teams. As a result, organizational leaders shouldn’t ignore corporate culture. Instead, it should be addressed in the organization’s mission, vision, and goal statements. It should also be highlighted in company sponsored training and company communications (Corporate Culture, n.d.).
It is very important that an organization has a strong corporate culture because a good culture promotes happy employees. If the employees within an organization are content and feel as if they are part of a good organization then they will produce at higher levels. There will be less absenteeism and less turnover, which are both costs savers for any company. Organizations with strong cultures find that they have high moral among their employees. Having a good culture is one of the biggest keys to a productive and successful business.
2. Examine and summarize the cultural shifts that occurred in the ANZ over this period and the benefits they brought to the various stakeholders.
By developing a healthy culture, one which includes values, beliefs, and behaviors, effective leaders can build a solid foundation that enables them to foster truly committed employees with high morale, and in turn, enhanced performance and genuinely satisfied customers (Aragon, 1993).
In the beginning the culture at ANZ was very negative. Employees were very unhappy and moral was low. T he public’s view of banks was poor, with criticism of bank fees, closure of branches and loans scandals. Employees and ANZ had internalized these views and thus felt as if they were not doing anything that was productive. The company felt that a change needed to take place before it was too late.
The introduction of the Breakout program was what the company used to try and turn things around. The goal was to come up with initiatives that could be instituted to encourage a shift in employees’ mindset. ANZ’s culture change efforts took on a comprehensive approach. They addressed all key stakeholders including shareholders, employees, customers and the community. They looked at it as a culture transformation instead of just a culture change. Transformation implies having changed forever.
Since the beginning of this program employee satisfaction has been high. The goals now is to figure out how to move from satisfaction to commitment and then to engagement. The Breakout program is constantly being monitored in order to make sure that it is working as expected and to develop any enhancements that might need to be done as it goes along. Not only has employee satisfaction increased over this period so has external customer satisfaction. Both of these shifts have allowed ANZ to increase its reputation ranking as well.
3. Evaluate the leadership style/s that would have been used by McFarlane and other senior executives in ANZ to implement this cultural shift in the ANZ and describe other leadership style/s that may not have been beneficial in doing so.
The leadership style that McFarlane used in ANZ was that of participative or democratic. This leadership style is generally the most effective. Democratic leaders offer leadership to group members, but they also partake in the group and allow input from other group members. Participative leaders often support group members to participate, but retain the final say over the decision-making procedure. Group members feel connected to the process and are more motivated and creative (Cherry, 2010). The key to a successful culture change is to make the employees feel that their input means something. If everyone feels that they are part of the same team they are more likely to embrace a change and make it work. On the other hand if they feel as if they are being made to change they are more likely to resist the change and in the end it will fail.
One type of leadership style that would not have worked in the ANZ case is that of authoritarian. Authoritarian leaders supply clear expectations for what needs to be done, when it has to be done, and how it should be done. There is also a clear division between the leader and the followers. Authoritarian leaders make decisions alone with little or no contribution from the rest of the group. Researchers have found that decision-making was less creative under authoritarian leadership. It has also been found that it is more difficult to move from an authoritarian style to a democratic style than the other way. Exploitation of this style is usually viewed as controlling, bossy, and dictatorial. Authoritarian leadership is best when used in circumstances where there is not enough time for group decision-making or where the leader is the most well-informed member of the team (Cherry, 2010).
4. Discuss the challenges faced by McFarlane and his executive team in introducing change across the ANZ.
Cultural change is neither easy nor infallible. It can take time, at least one year, more likely between three and six years, and it takes effort and vigilance. A great deal of endurance and long-term support is needed. Communication is key to the successes and should be used to support larger efforts. Sometimes, it is necessary to start changing small parts of organization first, later expanding efforts. Chrysler did this by starting with their engineering teams and moving on to other areas. The supporters of change must carefully represent the behavior they want to see in others. If they do not send a constant message and keep that message clear and prevailing over time, cultural change may be seen as just another fad. Commonly, change becomes harder when the organization starts move in another direction. Contentment is an ever-present danger when changes start to kick in (Organizational Culture, 2009).
While there are many dramatic results that can be realized but there are also bound to be some challenges you will face when implementing change. Anticipating and planning for them will lead to true enhancements in an organization. One challenge is to maintain the energy and enthusiasm of employees throughout the change journey. A second challenge is to ensure that the organization adjusts to change and does not backslide into any old ways of doing things. A third challenge is to make sure and prioritize organizational projects and resources. A fourth challenge is understand the science of quality and implementing it as an art. A fifth challenge is to make sure to manage the cultural shift in order to create and sustain organizational change. Managing all of these different challenges will ensure that an organization undergoes a successful culture change (Stanleigh, n.d.).
5. Discuss whether or not the executive management instigated changes to the culture of the ANZ are ethical.
Managers in most organizations normally strive to encourage ethical practices not only to ensure moral conduct, but also to gain any business advantage there may be in having possible consumers and employees think that the company is ethical. Generating, allocating, and continually improving a company’s code of ethics is one step that managers can take to create an ethical workplace. Another thing that managers can take is to fashion a special office or department with the accountability of ensuring ethical practices within the organization. Managers can take accountability for creating and sustaining conditions in which people are likely to behave ethically and for decreasing conditions in which people might be lured to behave unethically. Two practices that frequently inspire unethical behavior in organizations are giving abnormally high rewards for good performance and unusually harsh punishments for poor performance. By eliminating such factors, managers can reduce much of the pressure that people feel to perform unethically (Social Responsibility and Organizational Ethics, 2010).
ANZ did a very good job when they set out on their change the culture project to make sure that everyone across the company was included. Everyone was allowed to participate through the entire process. They did a good job of creating an ethical environment in which they worked. This set the tone for the employees to also carry out ethical behavior. Changing the culture of an entire organization is not an easy task. It is not one that should be undertaken under unethical or false pretenses. If the culture is bad enough to start with that the company feels that a change is necessary then the last thing that they want to do is be unethical about it. This would do nothing but make a bad situation worse.
6. Determine the organizational structure that would best facilitate the implementation of these new practices.
The best organizational structure that ANZ could use to implement their new practices would be that of a line and staff structure. The to identify a set of guidelines for the people directly involved in completing the organization’s work. This type of structure combines the flow of information from the line structure with the staff departments that service, advise, and support them. Line departments are involved in making decisions regarding the operation of the organization, while staff areas provide specialized support. The is necessary to provide specialized, functional assistance to all managers, to ensure adequate checks and balances, and to maintain accountability for end results (Organizational Structure, 2010).
A staff department, on the other hand, has employees who advise and assist, making sure the product gets advertised or that the customer service representative’s computer is working. Based on the company’s general organization, have a centralized chain of command. The line and staff managers have direct authority over their subordinates, but staff managers have no authority over line managers and their subordinates. Because there are more layers and presumably more guidelines to follow in this type of organization, the decision-making process is slower than in a line organization. The line and staff organizational structure is generally more formal in nature and has many departments (Organizational Structure, 2010). This type of structure would allow them to keep the employees as involved in the as possible and keep them engaged. When changing the culture it is very important to make sure that employees feel connected and valued. This allows for positive attitudes and high moral.
7. Explain the importance of informal groups in achieving the managerial objective of cultural change.
In addition to formal organizational structures, an organization may also have a hidden side that doesn’t show up on its organizational chart. This hidden informal organization is defined by the patterns, behaviors, and interactions that stem from personal rather than official relationships. In the informal organization, the emphasis is on people and their relationships; in the formal organization, the emphasis is on official organizational positions. The leverage, or clout, in the informal organization is informal power that’s attached to a specific individual. On the other hand, in the formal organization, formal authority comes directly from the position. An individual retains formal authority only so long as he or she occupies the position. Informal power is personal; authority is organizational (the Informal Organization, 2010).
The informal organization of a firm may be more important than a manager realizes. Although managers may think that the informal organization is nothing more than rumors that are spread among the employees, it is actually a very important tool in maintaining company-wide information flow. Results of studies show that the office grapevine is 75% to 90% accurate and provides managers and staff with better information than formal communications (the Informal Organization, 2010).
Rather than ignore or try to suppress the grapevine, managers should make an attempt to tune in to it. In fact, they should identify the people in the organization who are key to the information flow and feed them information that they can spread to others. Managers should make as big an effort to know who their internal disseminators of information are as they do to find the proper person to send a press release. Managers can make good use of the power of the informal organization and the grapevine (the Informal Organization, 2010).
References
Aragon, Randall. 1993, “Positive organizational culture; a practical approach.” Viewed 27 May 2010,
Cherry, Kendra. 2010, ” Lewin’s Leadership Styles.” Viewed 27 May 2010, < http://psychology.about.com/od/leadership/a/leadstyles.htm>
“Corporate Culture.” n.d., Viewed 27 May 2010,
“Organizational Culture.” 2009, Viewed 27 May 2010, http://www.toolpack.com/culture.html
“Organizational Structure.” 2010, Viewed 27 May 2010,
“Social Responsibility and Organizational Ethics.” 2010, Viewed 27 May 2010, < http://www.answers.com/topic/social-responsibility-and-organizational-ethics>
Stanleigh, Michael. n.d., “The Challenges and Opportunities for Accelerating Organizational Change – Part 1.” Viewed 27 May 2010, < http://www.bia.ca/articles/ChallengesandOpportunitiesforAcceleratingOrgChange-1.htm>
“The Informal Organization.” 2010, Viewed 27 May 2010, < http://www.cliffsnotes.com/study_guide/the-Informal-Organization.topicArticleId-8944,articleId-8877.html>
