Human Resources: Executive Summary: Corporate Culture

In a very real sense, the corporation is its culture.

The culture, or corporate personality, includes everything that makes up the corporation and gives it its unique identity that distinguishes it from all other businesses, even if they create the same, or similar, products.

Consider some of the edgy startup firms of the 1990s, with their anti-establishment cultures of casual dress, thinking out of the box and emphasis on young brainiacs. They could in no way be mistaken for IBM, with its suits and more established, staid ways, even though both types were highly creative and technology-oriented. Likewise, Starbucks makes a marketing strategy of its corporate culture's concern for the environment, and its trendiness cannot be confused with the local "Joe's Diner" that also sells coffee.

Just taking into account the differences between the startup tech firms and IBM or between Starbucks and Joe's gives an idea of what goes to make up a corporation's culture, from its values and goals to the way those are expressed, both internally and externally.

It's that expression of culture that can ultimately determine the success or failure of a corporation, according to several experts. Mike Chesser, CEO of Great Plains Energy, and Bill Downey, the company's COO, see the culture and strategy as intertwined, with each feeding off the other in a symbiotic relationship. And insurance expert Bruce W. Gordon says the culture must not only be designed with the goal of creativity and innovation, it must also be transmitted to the customer to ensure success.

But how does one create, or change, a culture to ensure that success?

One way is to establish good leadership, a prime factor in determining the corporation's personality. The leader must be flexible to allow and encourage change in an organization and must also be tolerant of mistakes made on the way to change. The leader should also include employees from all levels in any strategic change to help buy-in, according to Chesser and Downey. And infusing diverse employees into a group will also help bring new ideas to the table.

At times, a corporation's culture changes because of other forces, such as a merger. Mergers bring about the clash of two different cultures that must somehow be meshed to make the marriage a success. The failure to merge the cultures can lead to the failure of the merger, according to Bob Wilson, president of the consulting company Bob Wilson & Associates.

Virginia-based consultant Raymond F. Kogan of Kogan & Company LLC agrees that cultural problems can stymie a merger, even before it happens. "Culture is intrinsically woven into the success or failure of the group. What makes an acquisition fail, more often than not, is culture," Kogan has said. "More deals are aborted because [the] firms just weren't culturally compatible."

The merger itself could succeed but still cost employees' jobs if the workers are unable to assimilate into the newly created culture, according to management consultant Kathleen Miller of Louisville, KY. And it is not only newly formed cultures that affect employees. Studies have shown that the culture affects employees in various ways, from their ethics to their willingness to call in sick.

According to the Ethics Resource Center's 2005 National Business Ethics Survey, the number one determinant of ethical conduct is the corporate culture. The more ethical the company's culture, the more integrity employees display. Likewise, the more lax a company, the more prone employees are to break the rules.

An employee's success or failure on the job can also be predicted by how well he or she meshes with the corporate culture. Those who fit in tend to do better than those who do not. And better employees tend to be attracted by the cultures that are deemed more respectful of workers, according to Dr. John Sullivan of San Francisco State University.
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