Leadership of Culture, Diversity, and the Learning Organization Chapter 10 Leadership of Culture, Diversity, and the Learning Organization Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Summary of Lecture 21 & 22 Role of leadership in strategic management process Relevance of internal and external environment Importance of a vision and mission statement Relationship between corporate objectives and strategies Importance of strategy evaluation Risk Assessment Process Crises Leadership and Management Need for Change Phases of the change process Major reasons for resisting change People and task-oriented techniques for overcoming resistance to change Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning 2

Learning Objectives The power of culture. Distinguish between a weak and strong culture. Low and high performance cultures. Symbolic and substantive leadership actions. The four cultural value types. Framework for understanding global cultural value differences. Primary reasons for embracing diversity. Leader’s role in creating a diverse culture. Leader’s role in creating learning organization. Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Organizational Culture Great culture is differentiating factors among low and high performance companies High-performance companies have high- performance cultures Strong corporate culture improve performance through consistent behavior High performance corporate have people, structure, management system and culture Culture is the source of competitive advantage Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Culture The set of key values, assumptions, understandings, and ways of thinking that is shared by members of an organization and taught to new members Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

CULTURE Each organization has unique culture Based on the values & principles displayed by leaders Has its own stories & myths Determines how to responds to threats & opportunities in both the external & internal environment Deeply rooted (employees follow unconsciously) Core essence of organization How to approach problem and make decisions Organizational culture is enduring and can be said as warming, friendly, open, innovative, conservative, aggressive, harsh etc Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

CULTURE Power structure in organization Procedure and criteria for allocating resources Many components of culture are expressed in written from in policies, statements, philosophies Often first expounded by founder Wal-Mart Culture: Customer satisfaction, pursuit of low cost, strong work ethics Wal-Mart: Executives visit to stores and Saturday morning meeting to exchange ideas Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

CULTURE & STRATEGY Culture must match with strategy and external environment For example: Product innovation and technological leadership need supportive culture of innovation, embracing change, risk taking and challenging status quo Energized members to do their jobs When out of sync Reduces efficiency & effectiveness When culture is well matched to strategy Can lead to successful organization Creates internal unity (set of norms to guide behavior) Culture compatible behaviors are rewarded otherwise discouraged Helps organization to adapt to external environment Creates strong member identification with the organization mission, goals and objectives Ensures that organization respond to market changes and competitors moves quickly Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

CULTURE Weak: Little agreement on values & norms of member behavior Because leader did not communicate the vision Lack of self identity Manipulation, favoritism, intense internal competition Autonomy promises but whereas reality is otherwise (lip service) Strong: Clear, explicit set of principles & values Used to conduct business, decision making and guide appropriate behaviors Management communicates values & principles, continuously Shared throughout organization Does not significantly change when new leader is chosen Strong culture is destructive if it is not adapted to environment and strategy For example: IBM focus on strong bureaucratic and mainframes culture Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

FACTORS FOR STRONG CULTURE 1 Strong founder or leader develops principles, practices, & behavior for: Customers’ needs Strategic requirement Competitive environment 2 Total organizational commitment To operating under these values 3 Unwavering commitment from: Employees Customers Shareholder Other stakeholders Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Characteristics of Low-Performance Cultures Weak culture means low performance 1 Insular thinking (avoid to look outside for benchmark, relying too much on past success, more inward thinking fail to adapt to environment changes, top management unaware of employees needs pursuing their personal goals) 2 Resistance to change (maintain status quo, avoiding risk) 3 Politicized Internal Environment (influential managers operate their departments in their own way, self interest is above of corporate interests) 4 Unhealthy promotion practices (promoting employees without considering job demands and personality fit, promoting hard worker but lacks leadership skills, transactional skill-set managers expert in day to day routine operations promoted to job where transformational skills needed) Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Characteristics of High-Performance Cultures Culture reinforcement tools (ceremonies, slogans, stories, language, and policies, ensures that employee and culture is compatible) Intensely people oriented treats employees with respect and dignity Give autonomy one to one relationship with high performers mentors programs increased responsibility to best employees (job enrichment) celebrate employee achievements Held manager responsible for subordinate growth Allow to take initiatives to perform their job Clear and reasonable performance standards Results oriented Emphasis on achievement and excellence Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Characteristics of High-Performance Cultures Results oriented Employee who achieve standards are rewarded Performance appraisal system Employee set goals with consultation of managers and held accountable At GE and 3M creative workers are supported and encouraged In high performance culture who do not performs are fired or reassigned Emphasis on achievement and excellence management follow policies that inspires to do their best Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Leadership Actions for Shaping Culture Leadership responsibility to craft organizational culture Leader first identify which aspects of culture are supportive for strategy implementation and which are not? In second phase leader must communicate where change is required At third stage leader should take action Implementation of new culture may need modification in human resources areas, policies, and office design Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Symbolic Leadership Actions for Shaping Culture Leaders serve as role models Ceremonial events for high achievers Special appearances by leaders (at meetings and trainings and parties) Organizational structure (it symbolizes culture, for example decentralized structure belief in individual initiatives and centralized culture reflect that leader knows every thing) Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Substantive Leadership Actions for Shaping Culture Replace members of old culture with new members Change dysfunctional policies and practices Reengineer strategy-culture fit (example of Mergers and Acquisition) Realign rewards/incentives, resources (rewarding performance consistent with strategy, reallocation of resources to new projects) Facilities design (common lunch area, no special parking areas, and similar office represent equality, office layout) Develop a written statement code of ethics and values in written form In mission statement see Exhibit 10-4 Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Types of Organizational Culture Degree of Environmental Turbulence Culture is not bad or good more In dynamic market best to follow market oriented culture S t r a e g i c F o u s External Competitive Culture External Adaptive Culture Bureaucratic Culture Cooperative Culture Internal Static Stable Dynamic Environment Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Discussion Questions Discussion Question 1: What is culture? Discussion Question 2: What are different types of culture? Discussion Question 3: Define the role of leader in defining culture? Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Summary The power of culture Distinguish between a weak and strong culture Low and high performance cultures Symbolic and substantive leadership actions The four cultural value types. Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning