Corporate Culture of a Company: Elements and Evaluation

After reading this article you will learn about Corporate Culture of a Company:- 1. Elements of Corporate Culture 2. Evaluation of Corporate Culture.

Elements of Corporate Culture:

A corporate sector entity is characterised by a system of ‘Shared beliefs’ and ‘Values’ that the people within it hold. Corporate culture is recognised and perceived through “the prevailing philosophies, ideologies and aspirations of the organisation’s collective membership”. There are three determinants of a corporate culture: Leadership, Aspirations and Value Systems. Schematically,

There are five elements of corporate culture:

1. Business Environment:

Depending on products, competitors, customers, technologies, government influences and so on, companies face different realities in the market place.

a. Aspirations’ reflect the direction and potential for significant change.

b. ‘Value Systems’ determine the readiness and capacity for change.

To achieve success in the market place, a company must perform certain activities very well. In some markets, selling activity is to be vigorously pursued; in others, invention and in still others, economic management.

Thus, this element is the single greatest influence in shaping a corporate culture:

2. Values:

These are the basic concepts and beliefs of an organisation—the heart of the corporate culture. “Values define ‘success’ in concrete terms for employees (e.g., if you do this, you too will be a success) and establish standards of achievement within the enterprise”.

3. Heroes:

They personify the culture’s values and provide tangible role models for the subordinates to follow. They show every employee a path—here’s what you have to do to succeed around here.

4. Rites and Rituals:

These are the programmed procedures of day-to-day life in the company. These routines show the employees the kind of behaviour that is expected of them.

5. Cultural network:

It is the ‘carrier’ of the corporate values and an informal means of communication within an organisation. This network is considered as the means to get things done or to understand what is really going on. It is believed that the companies which have developed their individual corporate culture by shaping values, making heroes, spelling out rites and rituals, and acknowledging the cultural network—have an edge in the sense that they have something to pass along— not just profits to make.

Evaluation of Corporate Culture:

For the purpose of evaluation of corporate culture, the management auditor should take into consideration and extend his survey on the following critical dimensions:

1. Clarity of direction:

How well are the company’s goals and plans known, understood and found to be motivating throughout the organisation?

2. Integration of effort:

What is the present state of team-work?

3. Management style:

How and to what extent is the participation in making decisions encouraged at each level of the company’s hierarchy? Too little participation? Too much participation?

4. Decision-making Structure and Processes:

Are the decisions made on the basis of:

a. Sound information?

b. Intuition?

Is the culture:

a. Decision-oriented?

b. Decision-avoidant?

5. Performance orientation:

Do people feel accountable for end results? Are rewards and compensation equitable, fairly administered, motivational and related to performance?

6. Human resources development:

How does this characterize the culture?

7. Corporate vitality:

Does the organisation under review possess (when compared with other organisations):

a. Drive to perform challenging tasks?

b. Sense of urgency and desire to be a winner?

8. Risk-taking—Does the organisation:

a. Encourage their employees to learn from their mistakes?

b. Caution their employees not to make mistakes?

c. Punish their employees for their mistakes committed?

9. Competitive image:

What cultural attributes stand on the image development process to the Four Publics, viz., Shareholders, Employees, Society and the State? Is there any appreciable change or impact on ‘corporate image’ due to change in leadership on account of either resignation or retirement of a leader (‘leader’ may be Chief Executive or other key executives)?

10. Social standards:

(i) What is the language standard acceptable/followed? Are fellow workers to be addressed with a formal prefix (Mr., Mrs., Miss)? Exchanges between seniors and subordinates—easy or difficult?

(ii) How is the decorum when greeting strangers? Does the company tolerate disruptive behaviour? Are outsiders and customers treated courteously? Does interior decoration bear testimony to the corporate values and ideas?

(iii) What is the standard of presentation and format for: Price lists, Memos, Circulars, Reports, Press releases, etc.?

(iv) How is interpersonal behaviour? Are there clear rules to follow? Does the organisation encourage social and cultural functions, and games and sports, etc.?