The Internal Environment: Corporate Culture

The internal environment within which  managers work includes corporate culture, pro- duction technology, organization structure, and physical facilities. Of these, corporate culture  surfaces as extremely  important to competitive  advantage. The internal culture must fit the needs of the external environment  and company strategy. With  this fit, highly committed  employees create a high-performance  organization  that is tough to beat.

Most people don’t think about culture; it’s just “how we do things around here” or “the way things are here.” But managers have to think about  culture  because it typically  plays a significant role in organizational success. The concept of culture  has been of growing con- cern to managers since the 1980s, as turbulence  in the external environment  has grown, often requiring new values and attitudes. Organizational culture has been defined and stud- ied in many and varied ways. For the purposes of this chapter,  we define  culture as the set of key values, beliefs, understandings,  and norms shared by members of an organization.37

The concept of culture helps managers understand the hidden, complex aspects of organiza- tional life. Culture  is a pattern of shared values and assumptions about how things are done within the organization. Members learn this pattern as they cope with external and internal problems and teach it to new members  as the correct  way to perceive, think, and feel.

Culture can be analyzed at three levels, as illustrated in Exhibit 2.5, with each level be- coming less obvious.38 At the surface level are visible artifacts, which include things such as manner of dress, patterns  of behavior, physical symbols, organizational ceremonies, and office layout. Visible artifacts are all the things  one can see, hear, and observe by watching members of the organization. At a deeper level are the expressed values and beliefs, which are not observable but can be discerned from how people explain and justify what they do.

Members of the organization hold these values at a conscious level. They  can be inter- preted from the stories, language, and symbols organization   members use to represent them.

Some values become so deeply embedded in a culture  that members no longer are con- sciously aware of them. These basic, underlying  assumptions and beliefs are the essence of culture and subconsciously guide behavior and decisions. In some organizations,  a basic assumption might be that people are essentially lazy and will shirk their duties whenever possible; thus, employees are closely supervised and given little freedom, and colleagues fre- quently  are suspicious of one another. More enlightened organizations operate on the basic assumption that people want to do a good job. In these organizations,  employees are given more freedom and responsibility  and colleagues trust one another and work cooperatively. Take the New Manager Self Test see  how well you might do in a new organizational culture.

The fundamental  values that characterize an organization’s  culture  can be under- stood through the visible manifestations  of symbols,  stories,  heroes,  slogans,  and ceremonies.


A symbol is an object, act, or event that conveys meaning to others. Symbols can be con- sidered a rich, nonverbal language that vibrantly  conveys the organization’s important val- ues concerning  how people relate to one another and interact with the environment.39 For example, managers at a New York–based start-up that provides Internet solutions to local television broadcasters wanted  a way to symbolize the company’s unofficial mantra of “drilling down to solve problems.”  They bought a dented old drill for $2 and dubbed it The Team Drill. Each month, the drill is presented to a different  employee in recognition of exceptional work, and the employee personalizes the drill in some way before passing it on to the next winner.40

Buildings  and office layout also can be symbolic. The headquarters of RadioShack Corp. used to have 22 separate entrances and five parking lots, with employees higher up the hierarchy having more convenient parking and building access. When the com- pany built its new headquarters, top managers asked that it be designed with one park- ing garage and a single front door for all 2,400 employees. The door spills onto a “main street” corridor  that connects all departments. Executives who once took a private eleva- tor to their top floor, marble-clad suite now ride the elevator with everyone  else and are  located close  to  rank-and-file employees.  The  new headquarters  symbolizes RadioShack’s new cultural  values of egalitarianism, horizontal collaboration, teamwork, and innovation.41


A story is a narrative  based on true events and is repeated frequently  and shared among organizational  employees. Stories are told to new employees to keep the organization’s primary  values alive. One of Nordstrom’s  primary  means of emphasizing the importance of customer service is through corporate storytelling. An example is the story about a sales representative  who took back a  customer’s   two-year-old blouse  with  no questions asked.42

A frequently told story at UPS concerns an employee who, without authorization, or- dered an extra Boeing 737 to ensure timely delivery of a load of Christmas packages that had been left behind in the holiday rush. As the story goes, rather than punishing the worker, UPS rewarded his initiative. By telling this story, UPS workers communicate that the company  stands behind its commitment to worker autonomy and customer service.43


A  hero is a figure who exemplifies the deeds, character, and attributes of a strong  cul- ture. Heroes are role models for employees to follow. Sometimes  heroes are real, such as  the female  security  supervisor who once challenged  IBM’s chairman because he wasn’t carrying the appropriate clearance identification to enter a security area.44 Other times they are symbolic, such as the mythical sales representative  at Robinson Jewelers who delivered a wedding  ring directly to the church  because the ring had been ordered late.

The deeds of heroes are out of the ordinary, but not so far out as to be unattainable  by other employees. Heroes show how to do the right thing in the organization. Companies with strong cultures take advantage of achievements to define  heroes who uphold key values.

At 3M Corp., top managers keep alive the heroes who developed projects that were killed  by top management. One hero was a vice president who was fired earlier in his career for persisting with a new product  even after his boss had told him, “That’s  a stupid idea.

Stop!” After the worker was fired, he would  not leave. He stayed in an unused office, work-ing without a salary  on the new product idea. Eventually he was rehired,  the idea suc- ceeded, and he was promoted  to vice president. The lesson of this  hero as a major  element in 3M’s culture is to persist at what you believe in.45


A slogan is a phrase  or sentence that succinctly  expresses a key corporate  value. Many companies  use a slogan or saying to convey special meaning to employees. H. Ross Perot of Electronic  Data Systems established the philosophy of hiring the best people he could find and noted how difficult it was to find them. His motto was, “Eagles don’t flock. You gather them one at a time.”

Averitt Express  uses the slogan “Our driving force is people” to express its commitment to treating employees and customers well. Cultural values also can be discerned in written public  statements, such as corporate mission  statements or other formal statements that express the core values of the organization. The mission statement for Hallmark Cards, for example, emphasizes values of excellence, ethical and moral conduct in all relationships, business innovation, and corporate social responsibility.46


A ceremony is a planned activity  at a special event that is conducted for the benefit of an audience. Managers hold ceremonies to provide dramatic examples of company  values. Ceremonies  are special occasions that reinforce  valued accomplishments, create a bond among people by allowing them to share an important event, and anoint and celebrate heroes.47 Wal-Mart founder Sam Walton initiated  a ceremony in 1962 that thrives to this day and remains the heartbeat of Wal-Mart’s culture.48

In summary, organizational  culture represents the values, norms, understandings, and basic assumptions that employees share, and these values are signified by symbols, stories, heroes, slogans, and ceremonies. Managers help define important  symbols, stories, and he- roes to shape the culture.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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