Organizational culture includes a large and complex set of elements, many that are difficult to identify, such as values, norms and cultural forms, and these elements can be found embedded across all organizational activities and practices (e.g., direction and control processes, reward systems, communication patterns etc.). The organizational founders and other original members of the organization play an important role in establishing the foundations of an enduring organizational culture; however, organizational culture is also influenced by continuously changing external factors outside of the control of the founding group and by new members who join the organization as time goes by. While the complex nature of organizational culture makes it difficult to “manage”, the importance of culture to the performance and success of the organization means that attention should and must be paid to how culture is passed on and reinforced within the organization and when and how changes in the culture must be introduced in order to cope with changes in the external environment, new types of work activities and different expectations and needs of organizational members.
The International Center for Growth-Oriented Entrepreneurship has just released a chapter on "Managing Organizational Culture" from its Library of Resources for Growth-Oriented Entrepreneurs on Organizational Culture which is available for free downloading and sharing by clicking here. Also, take a look at the Center's article on LinkedIn Pulse discussing important ideas for managing your organizational culture.
A number of definitions of organizational culture have been offered; however, if managers and employees are consulted they may simply respond that culture is “how we do things around here”. There is obviously truth to such a statement but it would be a mistake to ignore the breadth and scope of the issues that are influenced by an organization’s cultural norms and values—how activities within the organization are carried out, how members communicate with one another, who is accepted into the organization and who is ostracized, and what is the organization’s overall morale. The culture of a particular organization is created and maintained by its members, particularly the founders and senior managers, based on a variety of influencing factors—both external and internal—and they are also the ones who can change and transform the culture when they are convinced that such actions are necessary in light of the then-current environment that the organization is facing. Organizational culture should not be underestimated and research has indicated that the culture of an organization has a strong influence on how the organization tackles problems and questions, sets strategy and creates the structures that determine the work activities and relationships of organizational members and also on how members behave when carrying out their organizational activities. There is no single culture that is universally appropriate for all organizations and there is clearly substantial diversity with respect to the dominant cultural attributes among successful and effective organizations. The challenge is to construct a culture that fits well with the overall strategic goals and objectives of the organization and hopefully becomes a core competency for the organization and can be used to distinguish it from competitors in the minds of customers and prospective members.
The International Center for Growth-Oriented Entrepreneurship has just released a chapter on "Introduction to Organizational Culture" from its Library of Resources for Growth-Oriented Entrepreneurs on Organizational Culture which is available for free downloading and sharing by clicking here. Also, take a look at the Center's article on LinkedIn Pulse discussing important things you need to know about organizational culture.
In an op-ed article appearing in The New York Times in August 2015 Weisberg discussed a “new raft of ‘perks’” announced with great fanfare by private equity firms and well-known businesses such as IBM, Facebook and Apple that have been framed as an effort to accommodate the needs of working mothers and women who want to be mothers and maintain their fast-paced career paths. Working women with newborns now have opportunities to have their companies pay for both their baby and a nanny to tag along on business trips during the first year after the baby is born and companies are also willing to ship home breast milk pumped on a work-related junket. Companies have also implemented programs for reimbursement of costs incurred by employees who want to freeze their eggs so that they concentrate on their jobs but keep open the option of getting pregnant in the future.
While Weisberg conceded that progress has been made on providing support for working mothers, she pointed out that while most married workers are dual-income couples, a majority of business leaders, about 80% of whom are men, are not significantly involved in providing care for their children and are able to rely on spouses who do not work full-time outside of the house. Weisberg argued that this situation makes it difficult for male business leaders to understand the multiple roles that most of their employees, particularly women, have to fill it they want to have and support a family and advance and thrive in their careers. Research showing that giving power to people reduces their ability to appreciate the perspective of others only exacerbates the problem.
Weisberg described several surveys that illustrate the challenges associated with effectively implementing work-life balance policies. For example, a survey of over 1,000 men and women in various stages of their careers conducted by Bain & Company uncovered “a deeply ingrained ‘ideal worker’ model” in which the most important characteristics for promotion were “maintaining a high profile in the organization, and an unwavering commitment to long hours and constant work.” As for stubborn adherence to traditional gender roles, while 51% of the respondents in a Pew research survey believed that children were better off if their mother stayed home to care for them, just 8% of the respondents said that children would be better off if their fathers stayed home. Another study of close to 1,000 male managers found that “men in traditional marriages are more likely to have negative attitudes toward women in the workplace” than men in dual-income marriages and rely on their own personal beliefs and marriage structures when they evaluate work-life policies in the workplace.
The bottom line for Weisberg, a senior vice president of the Families and Work Institute at the time the article was written, was that the perks described above were not enough to achieve the work-life balance eluding many women and men in the workplace and that leaders needed to embrace and publicly practice a new set of behaviors that break down the long-standing ideal worker paradigm and empowers people at all levels of the organizational hierarchy to get their work done effectively, remain on their chosen career paths, and confidently step away from their jobs at a reasonable time without guilt or angst to be meaningfully and fully present for their families.
Many companies have adopted work-life policies that are less dramatic than paying for traveling nannies and storing eggs: flextime, telecommuting and other types of working remotely flexibility, paid leaves for parents of newborns, job switching flexibility and childcare subsidies. These are certainly positive steps and a global study of management practices and work-life balance practices involving 732 medium-sized manufacturing firms in the US, France, Germany and the UK found that the best managed firms tended to also have the most progressive work-life policies. While the same study failed to uncover a positive correlation between implementation of such policies and high productivity after adjusting for quality of management, other surveys have provided support for the proposition that businesses that are able to effectively address and management work-life balance issues will see significant increases in productivity among their workers.
Weisberg is one of many who continue to push for changes in organizational culture so that work-life balance coupled with unfettered access to advancement opportunities is embedded among the values and norms of the organization and its members. In many cases, adoption of work-life policies is a response to employee requests or an attempt to remediate problems that have already arisen due to challenges that employees have encountered juggling their personal and professional lives. Rather than being reactive, companies should proactively implement reasonable work-life policies that are responsive to the specific needs of their target human resources pool. The best way to approach this is for the founders of the company to explicitly focus on the type of experience they want workers with families, both women and men, to have if they choose to come to work for the company. This means going beyond the usual elements of the employment relationship—salaries, bonuses, insurance benefits, stock options—to consider the full palette of professional and personal needs of the employee.
Founders should consider that surveys have consistently shown that employees attach great importance to work-life balance, second only to compensation, and that one in five workers would be willing to give up 5% of their salary in exchange for the flexibility to work offsite one or two days a week. Another important factor to consider is that companies that have embraced work-life balance policies have enjoyed higher levels of employee satisfaction and retention, bringing stability to the workplace and allowing firms to retain valuable employees who have built up firm-specific knowledge and experience that would be difficult and expensive to replace. Work-life policies are a natural extension of very real values with an organizational culture—a sense of familial connection in the workplace, loyalty and mutual respect and understanding—and thus must and should be nurtured from the day that the company is launched.
Sources and other resources for this article included A. Weisberg, “What Flying Nannies Won’t Fix”, The New York Times (August 24, 2015); N. Bloom, T. Kretschmer and J. Van Reenen, “Work-Life Balance, Management Practices and Productivity” (April 2006); Work-Life Balance Programs Benefit Employers and Employees; and The Society of Human Resource Management, Workplace Flexibility in the 21st Century (2008). Further information on human resources management is available from the Growth-Oriented Entrepreneurship Project and those interested in receiving regular updates on topics of interest to growth-oriented entrepreneurs are welcome to send a connection request to the author.
Organizational culture is a popular and important topic among researchers working in the area of comparative management studies. In order for comparisons and theories to be meaningful, however, there must be a model of dimensions of organizational culture that can be referred to in collecting and analyzing information and spotting variations and differences between organizations. This report briefly summarizes a series of steps suggested by the writings of Edgar Schein, which include identifying the problems that an organization has with “external adaptation” and “internal integration”, collecting and synthesizing evidence as to how the organization has elected to attempt to “solve” those problems and, finally, investigating the solutions to find common threads that ultimately paint a picture of how organizational members “view their world”. This “world view”, of course, is tied not only to the business environment in which the organization operates but to other important factors that have been studied and compared in great deal over the years, such as the societal culture in which the organization operates.
In a previous post we discussed Definitions and Significance of Organizational Culture including the strong influence that organizational culture has on how members behave when carrying out their organizational activities and the role that organizational culture plays in defining the competitive position of the organization in its environment and the way that the organization is perceived by its stakeholders. The report included with this post builds on these themes by discussing steps that can be taken to evaluate and, if necessary, transform organizational culture.
Organizational culture is
an important aspect of organizational performance and this report continues our coverage of the subject by providing a
list of questions and categories that
organizational leaders, both executives and managers, can use to identify key
issues associated with organizational culture so that they can be explored and
actions can be taken to either strengthen and reinforce desired cultural
characteristics or initiate changes that will hopefully lead to greater member
satisfaction and enhanced organizational performance.
Organizations should continuously monitor their external environmental to determine what changes have occurred that may trigger a need to alter the key design components of organizational structure and culture. For example, changes in technology, customer requirements, economic factors or competition can all change the landscape for an organization and adaptation is necessary for survival. In order for organizational change to be effective a formal change program should be created in advance to ensure that members of the organization are fully informed of the changes and that they understand why change is required and how it will impact them and the entire organization. A change program should incorporate mechanisms for obtaining feedback and constantly reinforcing the changes given that it is often difficult to change accepted behaviors and ways of conducting business.
Has a customized change management program been prepared? The change management program should take into account the specific characteristics of the proposed change and the history and culture of the organization.
Has consideration been given to how the individual members of the organization will react to the proposed changes and how their day-to-day activities for, and interaction with, the organization will be impacted? Consideration of these questions should guide decisions about supporting mechanisms such as communications and training.
Have the lead sponsors for the change initiative been identified and are they at the appropriate level within the organization to be effective? Sponsors should be active and visible leaders of the change initiative with authority to make and monitor all necessary funding and organizational design decisions.
Does the change management plan include an effective strategy for communicating with members and external stakeholders of the organization? An effective communication plan will be targeted to appropriate audiences, rely on various communication channels (e.g., meetings, face-to-face conversations, newsletters, presentations, Intranet Q&A, etc.) and provide for feedback to ensure that the change initiative is understood.
Does the communications program include clear answer to key member questions such as “why are we making this change” and “what will happen if we don’t make this change”? Members may find the broader vision of organization leaders to be interesting; however, they are usually most concerned about what it all means for them personally—another implicit question that each member has is “what’s in it for me”. An effort should be made to preserve and honor the good things of the past even if changes are now thought to be necessary.
Have managers and supervisors been involved in development and implementation of the change management program? Managers and supervisors are crucial to success of any change program because they have close relationships with those that report to them and are best situation to manage how their direct reports experience and respond to the proposed changes.
Does the change management program include adequate training for managers and supervisors? The important role of managers and supervisors has been described above and it is essential that they be given the tools necessary to become and remain effective advocates of the change process.
Does the change management program include strategies and plans for handling resistance that may arise from within the organization? A distinction can and should be made between proactive strategies—which involve anticipating in advance which issues will be raised by members and crafting responses before the program is initiated—and reactive strategies—which include pre-established policies for reacting to unforeseen objections that arise once the program has begun.
Has the organization established systems that will facilitate collection and analysis of feedback and measurement of progress toward the initial goals of the change program? Before the program is launched the goals should be clearly defined in ways that permit objective measurement and feedback tools should be created and tested.
Does the change management program include plans for continuous reinforcement of the proposed changes? Any change in the way that things are down within an organization takes a long time to be absorbed particularly when the change related to deeply embedded values and norms. The program must take a long-term approach and include strategies for reinforcing the new values and norms that the leaders wish to implement.
This material will appear in Alan Gutterman’s publication entitled “Business Transactions Solutions” and is presented with permission of Thomson/West. Copyright 2008 Thomson/West. For more information or to order call 1-800-762-5272. Alan Gutterman is the Founder/Principal of Gutterman Law & Business (www.alangutterman.com), which publishes the Emerging Companies Blog and the Business Counselor Blog, and a Partner of The General Counsel LLC (www.thegeneralcounsel.net).
Last week I did a post that described the key documents that you should obtain and review before you get start a relationship with a new client, either in an in-house role or as an “outside” legal advisor. Just as important as collecting the information is making sure that you try and put everything in some sort of organized context so that you can go back and review the materials again as needed and also reconfigure the information in a way that allows you to begin developing a picture of how the client operates it business and carries out its legal and other compliance activities. One obvious thing that needs to be done is the creation of a filing system for the documents; however, in this post I wanted to cover a couple of other ideas that you should consider.
First, as you’re going through all the public documents and/or proprietary business plans that are not distributed outside of the company you should develop you own “executive summary” that includes the information that will be most essential to your activities and which you will need to know as you are speaking with executives, managers and outside business partners. Some of the information you will need includes the following:
The major current product lines of the company and the domestic and foreign markets in which the company is actively selling and promoting those products;
Key new product or service development areas and the projected geographic and customer-defined markets for such products or services;
Indicators of historical and projected financial performance for the company as a whole and for specific business units;
The current capital structure of the company including issued and outstanding shares and shares reserved for issuance upon exercise of options, warrants and other convertible securities;
Schedules for shareholder and board meetings (including meetings major board committees such as the audit and compensation committees) as well as for regular management meetings within the company (e.g., weekly or monthly meetings of the heads of various business units); and
Contact information for board members, senior executives and key managers.
As you are putting together your executive summary you should take a shot at creating your own short description of the historical development of the business including key milestones such as the release of new products and services, creation or dissolution of major business units, acquisitions and divestitures, and changes in senior personnel. Getting a sense of how the company has evolved over the last few years provides valuable context and can give you a better perspective on why the company operates in specific ways.
Another thing you should do while you are getting up to speed is try and review comparable publicly available information on the company’s competitors. For example, you should obtain the periodic reports and proxy statements of other companies active in the company’s markets to get an idea of how they view the overall business environment and the steps they have taken within the last few years to build, contract and change their businesses, products and services.
Once you have completed all of this preparatory work you are ready for next steps . . . interviewing the key players and putting together your initial agenda of the issues that you would like to tackle during the first few weeks and months of your engagement.
Assume you have been engaged to provide business counseling to a new client or to serve as the new general counsel of a company. One of the first things that you’ll want to do is obtain as much information as you can about the business and operations of the company so that you’ll be able to start making a contribution as quickly as possible. While you’ll eventually want to sit down and speak with all of the key executives, managers and employees, as well as the company’s major outside business partners—a topic we will cover in detail in future posts—the best way to get started is to obtain and review certain basic documents before you actually begin your new assignment. The information in these documents can be used for initial issue-spotting and can also serve as the foundation for asking the right questions in subsequent interviews and understanding how contracts that you’ll be asked to review fit into the overall business plan of the company.
The range of documents that you should review will vary depending on whether the company is a reporting company and thus required to make certain information publicly available in periodic filings with the Securities and Exchange Commission (“SEC”). Assuming that is the case, you should ask for, or download on your own from the SEC website or a commercial service, the following documents:
- The reports on Forms 10-K, 10-Q and 8-K filed by the company over the last three years (or such shorter period that the company was required to file such reports);
- The company’s S-1 registration statement if the company completed its initial public offering within the last three years;
- The proxy statements filed by the company, and disseminated to shareholders, over the last three years (or such shorter period that the company was required to makes such filings); and
- The contracts and other documents that have been filed as exhibits to the company’s SEC filings over the last five years (or such shorter period that the company was required to make such filings).
While you should read everything closely there are certain disclosures that should be carefully reviewed—the description of the company’s business and the risk factors associated with the business, the notes to the company’s financial statements and the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”); the disclosures made in the Form 8-K reports; and projections of future performance and anything else that might be deemed a “forward-looking statement”.
If the company is not subject to the reporting requirements you should ask for copies of comparable documents such as the business plan or offering circular distributed to potential investors and other formal communications to investors and shareholders over the last two or three years that include material information regarding the company. Material contracts for a privately-held company will need to be obtained directly from the CEO and other senior managers of each of the departments. When requesting such information take note of how long it takes to receive the contracts and where they are maintained within the company since you may want to suggest changes in the records retention procedures down the road. When asking for contracts you should apply and explain the same standard of materiality that would be used if the company was required to file the documents with the SEC and that means you should obtain, at a minimum, copies of the charter documents of the company (i.e., articles and bylaws with all amendments); all employment-related agreements, including stock option plans and agreements and change-of-control agreements with senior executives; major real and personal property leases; major contracts with outside business partners (e.g., contracts relating to R&D, manufacturing and sales/distribution); and pension and benefits plans. Stock records, or at least a list of the shareholders and option holders (including the number of shares owned or subject to option), should also be obtained.
Contracts, documents and policies from several other areas should also be obtained regardless of the reporting status of the company. First of all, you should request and obtain copies of “boilerplate” contracts and terms and conditions that are continuously used in business relationships with employees, vendors and customers. For example, make sure you look at the company’s employee confidentiality and assignment of inventions agreement and the company’s personnel handbook and policies. Also review the company’s standard terms and conditions of sale and purchase on its invoices and purchase orders. Second, make sure you review the minutes of the board of directors and the charters of each of the committees established by the board, particularly the audit and corporate governance committees. You should also seek and obtain background information on each of the directors and senior managers including resumes and, the case of management, a timeline of their progress and advancement within the company. Third, ask for copies of communications with the company’s outside auditors regarding legal matters over the last few years. Finally, make sure you review the company’s recent press releases and copies of promotional materials that the company regularly disseminates to the public regarding its products and services.
As noted above, the best idea is to review all of these documents before your assignment begins and you should allow sufficient time to complete the full review and, if possible, prepare your own index of the documents and summary of important recent developments relating to the business, organization and legal situation of the company. For example, you should try and develop a list that includes, in chronological order, major contracts, product introductions and personnel changes. All of this takes a lot of time and concentration and some of what you learn will not be immediately useful to you in the first stages of your assignment; however, by doing your homework early you’ll eventually be way ahead of the game and in a position to demonstrate knowledge and value to your external or internal client. If you’re outside advisor be careful about attempting to charge your client for any of the time spent “getting up to speed.” It won’t be appreciated and you’re probably better off treating the time as a marketing effort.