In the following situations, corporate culture contributes
significantly to a crisis.
Corporate culture does not correlate with major changes in
the society
When major changes in society leave a corporate culture behind,
a fundamental conflict develops between the company’s
climate and the surrounding world. Although this doesn’t
occur often, the consequences of such a situation are rather
significant. The conduct of company management (such as short-term
personal interests, asset-stripping) was not the only cause
of these companies’ crises. Their reluctance to change
their corporate cultures also contributed.
Company enlargement
A small business, at the beginning of its existence, has a
specific corporate culture which reflects the value of its
founders. The establishment of a business is often accompanied
by the attempt to implement the business plan and entrepreneurial
enthusiasm. An increase in staff that does not yet have a
personal relationship with the company results in a corporate
culture that will undergo changes. The failure to understand
these changes and to create an adaptable company culture becomes
the source of crisis situations.
Subcultures that have a negative effect on the company
Despite the fact that in some situations it is intentionally
developed, the corporate culture is not likely to be monolithic.
Within certain company subcultures, major deviations from
the developed and desirable corporate culture may occur and
personal interests opposed to the company goals may be pushed
forward. Consequently, the lack of support of the company
strategy can lead to crisis states.
Company mergers
Mergers are not just a fusion of companies, but also of corporate
cultures. If handled poorly, this leads to communication problems
between the employees, the development of conflicts at workplaces,
the formation of cliques and groups of employees from former
companies, mutual controversies between them and the unwillingness
to cooperate. The company merger must be connected to a change
in strategy, and subsequently results in the establishment
of a either new corporate culture or the move toward the culture
of one of the merging companies.
Company management instead of leadership
 In
a company where managers focus on the in-company management
(hierarchical structure) instead of leadership (vision formulation)
more oriented towards the customer and his or her needs. The
corporate culture of these companies is vastly different.
In the first type of company, management concentrates on internal
processes and their efficiency, whereas in the second, leadership
is concentrating on the company outcomes. In the management-centric
companies, the staff are not able to respond in a flexible
way to the changing conditions and customers' needs and to
modify their systems of values, all as a direct result of
their corporate culture.
Change of the company strategy or its transformation (process reengineering)
Each change within a company requires the support of the company
management and the largest possible number of employees. If
the corporate culture does not correlate with future plans,
you can expect not only an aversion to changes, but also obstruction
of their implementation. If the management succeeds in implementing
changes, they only last for a short period of time and there
is a general inclination to return to "the old routine."
Major changes in the company management or ownership
A change in the company management usually brings not only
changes in strategies and goals, but also the change in the
corporate culture. Often, there are conflicts between the
new management and the "conservative" personnel
of the company that threaten the new strategy and company
goals.
Extensive replacement of employees
If a substantial and fast replacement of a great number of
employees occurs in the company, it might lead to the development
of subcultures corresponding to the employees' age groups.
The relations between the subcultures are reflected in poor
communication and cooperation, and the new staff might refuse
to get used to the current company values.
We can notice the negative impact of a poorly constructed
company culture in
- The absence of support in the area of company goals and
non-identification with these goals
- Preference of personal interests and goals
- Problems in communication and cooperation with individuals,
groups and organisational units
- Interest in power, development of cliques
- Creation of an environment that does not promote creativity
and innovation and that is not oriented towards customers
and their needs
- Resistance to all change.
Experience shows that those companies where the management
systematically deals with the corporate culture are more successful
in their business activity, and the corporate culture does
not pose a danger.
Increasingly, business practice shows that strong corporate
culture is one of the major factors in achieving competitive
corporate advantages. It is unique and authentic, and if the
company succeeds in its purposeful development and continuous
improvement, it will lead to the reduction of crisis states.
Roman Zuzak is research assistant at the Faculty of Agricultural
Economics and Management, University of Agriculture, Prague,
Czech Republic. He can be reached at zuzak@pef.czu.cz.
Read the full article at http://www.krisennavigator.de/crisisnavigator.org/atcm6-e.htm#Author.
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