Project on Organizational Culture

ORGANIZATIONAL CULTURE

ORGANIZATIONAL CULTURE THE GLUING FACTOR

SUBMITTED TO: Prof. Mousami Bhattacharya&Dr. Nilanjan Sengupta

SUBMITTED BY: Group No. 6 Arun Aggarwal(6) Krishna Kant(12) Nithya Sridhar(18) Preeti Jaiswal(24) Sachin.V(30) Shashank(36) Sobhonson(42) Swagatika(48) V.Deepika(54) Yatindra(60) 1|P a g e


ACKNOWLEDGEMENT

We wish to convey our heartiest thanks to Prof.Mousumi Bhattacharya & Dr. Nilanjan sengupta who has given us all an opportunity to work on this project. We are grateful to them for their constant guidance throughout the project. It was a fight in the beginning to gather all the information from various organizations about their cultures; however, through the constant efforts of our team members, we made this project a success. Working on this project has given us an insight about how the various organizations formulate their cultural values. We have been able to connect our theoretical knowledge with the practical working conditions of various organizations. It has been a boon working on the following project and we once again wish to thank our faculty members and the team, without whom this project would not have been a success.

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ORGANIZATIONAL CULTURE: Organizational culture is defined as a pattern of basic assumptions invented, discovered or developed by a given group, as it learns to cope with the problems of external adaption and internal investigation that has worked well enough to be considered valid and therefore is to be taught to the new members as the correct way to perceive, think, and feel in relation to those problems. Organizational culture is a set of shared understandings, norms, values, attitudes and beliefs of an organization which can foster or impede change. When people join an organization, they bring with them the values and beliefs that they have been taught. Quite often, however these values and beliefs are insufficient for helping the individual succeed in the organization. The person needs to learn how the particular enterprise does things. A common misconception is that an organization has a uniform culture. However, at least as anthropology uses the concept; it is probably more accurate to treat organizations ³as if´ they had a uniform culture. ³All organizations have culture, in the sense that they are embedded in specific societal cultures and are part of them.´ According to this view, organization culture is a common perception held by the organization¶s members. Everyone in the organization would have to share this perception. However, all may not do so to the same degree. As a result, there can be a dominant do minant culture as well as subcultures throughout a typical t ypical organization. A dominant culture is a set of core values shared by a majority of the organization¶s members. The values that create dominant cultures in organizations help guide the day-to-day behavior of the employees. Important, but often overlooked, are the subcultures in an organization. A subculture is a set of values shared by a minority, usually a small minority of the organization¶s members. Subcultures typically are a result of problems or experiences that are shared by members of a department or unit. Subcultures can weaken and undermine an organization if they are in conflict with the dominant culture and overall objectives. Successful firms, however find that this is not the case always. Most subcultures are formed to help the members of a particular group deal with the specific day-to-day problems with which they are confronted. The members may also support many, if not all, of the core values of o f the dominant culture.

A NEW CONCEPT: WHISTLE BLOWING Whistle blowing is commonly defined as "the disclosure by organization members (former or current) of illegal, immoral, or illegitimate practices under the control of their employers, to 3

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persons or organizations that may be able to effect action". While whistleblowing includes disclosures both internal and external to the organization, organizations benefit when employees choose to report internally. Internal reporting facilitates early detection of misconduct and creates opportunity for timely investigation and corrective action. Internal reporting also positions organizations to proactively manage, or even avoid public embarrassment, government scrutiny, costly fines, and litigation. To encourage internal reporting organizational ethics and compliance programs often include the availability of an anonymous or confidential reporting channel that enables employees the opportunity to report, without fear of retaliation, their concerns regarding organizational conduct ranging from slight indiscretions and unprofessional behaviors to criminal acts warranting felony convictions. Employee utilization of these reporting channels, however, is limited, and it has been found that the majorities of employees who become aware of individual or corporate wrongdoing never report or disclose disclose their t heir observations to anyone. Numerous variables have been studied in the literature for their relationship to whistleblowing. An employee's decision to report individual or organizational misconduct is a complex phenomenon that is based upon organizational, situational, and personal factors.

A FEW DIMENSIONS OF ORGANIZATIONAL CULTURE VIGILANCE Prior to pondering whether or not to communicate an ethical, compliance, or legal concern, an employee must first be in a position to detect violations. "What are the standards in this organization?" "What is my role in upholding these standards?" Accordingly, the first step in supporting employee communication and reporting behaviors is to influence a culture that promotes not only awareness of an organization's commitment to integrity, but a shared understanding of organizational standards. A look out for threats to organizational integrity also must be cultivated among organization org anization members. Thoughtful attention to training employees on the values and standards outlined in the organization's code of conduct will facilitate awareness building. However, the most fundamental and powerful values of an organization are not written down and exist only in the shared norms, beliefs, and assumptions reflected in the organization's culture. These norms, beliefs, and assumptions guide how organization members think and act. The organizational culture informs members how to relate to each other and to outsiders, how to analyze problems, and how to respond to situations encountered in the organization. To promote a shared understanding of which "code" to follow, the formal code of conduct or the unwritten code of 4

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culture, the dynamics of organizational culture on an employee's ability to accurately interpret the ethical standards of the organization org anization must be addressed. To support a culture of vigilance, employees also must be educated on the relationship between organizational integrity and the organization's strategic positioning. Employees who observe wrongdoing may not report it because they cannot fully estimate the resulting damage. Therefore, the organization should ensure employees are in a position to identify the potential consequences of ethical, compliance, and legal breaches, including opportunity costs and harm to the organization, its reputation, and stakeholders. stakeho lders.

ENGAGEMENT The cultural dimension of engagement is multifaceted and complex. Engagement is concerned with organizational and individual factors that contribute to a personal state of authentic involvement in the organization. Organizational processes used to recruit, orient, socialize, and manage employees influence engagement. Employee¶s sense making, psychological contracts, and perceptions of fairness in organizational dealings influence the degree of authentic involvement by them. Managing these organizational processes and individual perceptions to facilitate high degrees of organizational commitment and identification encourages a culture of engagement that supports internal whistle blowing. If an organization member is not committed to high ethical standards there may be a tendency to rationalize questionable behavior as a common or even necessary practice in performing job duties. On the other hand, if an employee has high ethical standards that are not supported by the organization, there is a tendency for the employee to experience internal conflict. Such conflict will arise when organizational demands on employees are inconsistent with personal or professional values. The result is decreased commitment and an unwillingness to exert effort on behalf of the organization. Once employees enter the organization, socialization methods, including training on ethical standards can be used to deepen employee commitment to organizational organizat ional values and norms.

CREDIBILITY A culture of engagement that supports organizational commitment and identification, however, may not be sufficient for prompting employee disclosures. An employee will also seek to "test" the organization's commitment to integrity. Leadership behavior is a key determinant of employee perceptions and beliefs be liefs..

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The most powerful strategy that can be relied upon to facilitate credibility is employee belief in espoused ethics and values including organizational expectations for employee disclosure, attending to and monitoring congruence in the organizational culture. The role of leadership is central to this th is strategy. Aligning leadership behaviors with formal policies and consistent modeling of espoused values are important practices for fostering credibility. Demonstrating personal commitment to organizational values builds trust and creates a safe environment for employees to come forward and report concerns.

ACCOUNTABILITY Accountability for communicating knowledge of wrongdoing will be carefully judged by employees. "Is it my job to report?" "Isn't this someone else's responsibility?" "Why should I get involved? After all, I am not the only one aware of o f what is going on here." Again, values, beliefs, and norms embedded in the organizational culture and picked up by employees will influence employee reflections.

HOW DID ORGANIZATIONAL CULTURE START While organizational cultures developed in different ways, the process usually involves some version of the following steps: A single person (founder) has an idea for a new enterprise ent erprise The founder brings in one or more other key people and creates a core group that shares a common vision with the founder The founding core group begins to act in concert to create an organization by raising funds, obtaining patents, incorporating, locating space, building and so on At this point, others are brought into the organization and a common history begins to be built Most of today¶s successful corporate giants in all industries basically followed these steps. Three well-known representative examples are Motorola, McDonald¶s and Wal-Mart. McDonald¶s: Ray Kroc worked for for many years as a salesperson salesperson for a food food supplier. He learned learned how retail food operations were conducted. He also had an entrepreneurial streak and began a sideline business with a partner. They sold multimixers, machines that were capable of mixing up to six frozen shakes at a time. One day Kroc received a large order for multimixers from the McDonald brothers. The order intrigued Kroc and he decided to look in on the operation the next 6

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time he was in their area. When he did, Kroc became convinced that the McDonald¶s fast food concept would sweep the nation. He bought the rights to franchise McDonald¶s units and eventually bought out the brothers. At the same time, he built the franchisee on four basic concepts: quality, cleanliness, service and price. In order to ensure that each unit offers the customer the best product at the best price franchisees are required to attend McDonald University, where they are taught how to manage their business. Here they learn the McDonald cultural values and the proper way to run the franchisee. This training ensures that the franchisees all over the world are operating their units in the same way. Kroc died several years ago, but the culture he left behind is still very much alive in McDonald¶s franchisees across the globe. In fact, new employees receive videotaped messages from the late Mr. Kroc. Wal-Mart: Sam Walton, founder of Wal-Mart Stores, Inc., opened his first Wal-Mart store in 1962. Focusing on the sale of discounted name brand merchandise in small town markets, he began to set up more and more stores in the Sun Belt. At the same same time, he began developing effective inventory control systems and marketing techniques. Today, Wal-Mart has not only become the largest retailer but also one of the biggest firms in the country. Although Sam died a few years ago, his legacy and cultural values continue. To ensure that these values get out to all the associates, the company has a communication network worthy of the Pentagon. It includes everything from a six-channel satellite system to a private air force of numerous planes. Everyone is taught this culture and is expected to operate according to the core cultural values of hard work, efficiency and customer custo mer service.

LEVELS OF CULTURE: ARTIFACTS VALUES BASIC ASSUMPTIONS

ARTIFACTS: Artifacts are the most visible and accessible level of culture. It is symbol of culture in the physical and social work environment of o f the organization. Artifacts of culture are: PERSONAL ENACTMENT RITES AND CEREMONIES STORIES AND LEGENDS 7

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RITUALS SYMBOLS

PERSONAL ENACTMENT: Personal enactment is a behavior that reflects the value of organization, through the examination of the behavior of organization o rganization members.

CEREMONIES AND RITES: Set of activities that are enacted time and again on important occasion.It provides the opportunity to reward and recognize the employees whose behaviors are according to the values of the organization. Rites to the employees can be awarded as Rites of passage rites of renewal Rites of integration Rites of conflict reduction Rites of degradations

RITES OF PASSES: Rites of passes show the changed status stat us of individuals in the respected organization. Retirement dinner

RITES OF RENEWAL: Rites of renewal show the holistic changing in organization by enhancing the dedication towards learning and growth.

RITES OF INTEGRATION:

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It emphasize on the commitment of the employees by uniting diverse group within the organization.Company function, annual picnic, cultural fest are the rites of integration in the organization.

RITES OF COFLICT REDUCTION: Its primal objective is to dwindle the disagreements and keep up with the positive environment inside the organization by satisfying the tangible t angible and intangible needs of the employee. Grievance hearing, negotiation of union contracts co ntracts isrite of conflict reduction.

RITES OF DEGRADATION: It is basically punishment oriented and organization people may be punished visibly if they don¶t follow the organizational norms. no rms. Ribbon of shame, demotion in the organizational post, reduction in salary can be under the rites of degradation.

STORIES AND LEGENDS: Stories are the most effective way to reinforce the organizational values. it give meaning and identity to the organizations and very helpful in orienting new employees. Stories can be delivered in different d ifferent ways Stories about the boss Stories about getting fired fired Stories about company details Stories about employees Stories about rules

RITUALS: Rituals are unwritten and shows the way the employee follow the things to be done in the organization. These are the everyday organizational practices repeated over and over .

SYMBOLS: Symbols are again one important artifact of the organization which communicates about the organizational culture by unspoken messages. 9

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VALUES: Values reflect a person¶s underling believes in the organization, it is often consciously articulated both in conversation and the company¶s mission statement or annual report. a firm¶s values and how it promotes and publicizes them can also affect workers feeling about their job and themselves.

ASSUMPTIONS: Assumptions are deeply held believes that guide behavior and awakens the members of the organization how to perceive and go about the things.

FUNCTIONS OF ORGANIZATIONAL CULTURE: These are the functions being served by the organization Sense of identity Sense ± making device Reinforcing the values in organization Control mechanism for shaping behavior

SENE OF IDENTITY: Culture provides a sense of identity to the members and enhances their commitment towards the organization.

SENSE MAKING DEVICE: Culture in the organization provides the employees to interpret the meaning of the organizational events.

VALUE REINFORCEMENT: Values in the organization can be reinforced by the cu ltural activities. activities.

CONTROL MECHANISM: In shaping the behavior of o f members in the organization culture plays p lays the big role.

CULTURAL PERPECTIVES: 10 | P a g e


THE STRONG PERSPECTIVE THE FIT PERSPECTIVE THE ADAPTATION PERSPECTIVE

THE STRONG PERSPECTIVE: The strong culture facilitates performance with the intensity visible to the outsiders.It states that organization with strong culture performs better than other ot her organizations.

THE FIT PERSPECTIVE: Fit perspective argues that the culture of the organization is valid, if it fits the industry or firm¶s strategies. It is useful in explaining short term performances.

THE ADAPTATION PERSPECTIVE: The cultures that help organizations adapt to environmental change are deeply associated with excellent performance. It encourages confidence and risk taking capacity among the employees.

LEADERS ROLE IN SHAPING CULTURE: WHAT LEADERS PAY ATTENTION TO HOW LEADERS REACT TO THE CRISES HOW LEARERS BEHAVE HOW LEADERS ALLOCATE REWARDS HOW LEADERS HIRE AND FIRE PEOPLE

ORGANIZATIONAL SOCIALIZATION: Another process that perpetuates culture is the way it is handed down from generation of employees. Newcomers learn the culture through organizational socialization ± ³The process by which newcomers are transformed from outsiders to participating, effective members of the organizations´. The process is also a vehicle for bringing newcomers into the organizational culture.

STAGES OF THE SOCIALIZATION PROCESS The organizational socialization process is generally described as having three stages: 11 | P a g e


Anticipatory Socialization. Encounter. Change and Acquisition.

ANTICIPATORY SOCIALIZATION The first stage encompasses all of the learning that takes place prior to the newcomer¶s first day on the job. It includes the newcomer¶s expectations. The two concerns at this stage are: Realism. Congruence. Realism is the degree to which a newcomer holds realistic expectations about the job and about the organization. One thing newcomers should receive information about during entry into the organization is the culture. Information about values at this stage can help newcomers begin to construct a scheme for interpreting interpreting their organizational experiences. There are two types of Congruence between an individual and an organization: Congruence between the individual¶s abilities and the demand of the job, and the fit between the organization¶s values and the individual¶s values. Value Congruence is particularly important for organizational culture. It is also important in terms of newcomer adjustment.

ENCOUNTER The second stage of socialization, encounter, is when newcomers learn the tasks associated with the job, clarify their roles, and establish new relationships at work. This stage commences on the first day at work and is thought tho ught to encompass the first six to nine months on t he new job.

TASK DEMAND Task demand involves the actual work performed. Learning to perform tasks is related to the organization¶s culture. In some organization¶s, newcomers are given considerable latitude to experiment with new ways to do the job, and creativi creat ivity ty is valued.

ROLE DEMAND Role demand involves the expectations placed on newcomers. Newcomers may not know exactly what is expected of them or may receive conflicting expectations from other individuals. The way newcomers approach these demand depends in part on the culture of the organization.

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INTERPERSONAL DEMAND Interpersonal demand arises from relationships at work. Politics, Leadership style, and group pressure are interpersonal demand. All of them reflect the values and assumptions that operate within the organization.

CHANGE AND ACQUISITION In the third and final stage of socialization, change and acquisition, newcomers begin to master the demands of the job. They become proficient at managing their tasks, clarifying and negotiating their roles, and engaging in relationship at work. The end of the process is signaled by newcomers being considered by themselves t hemselves and others as organizational insiders.

OUTCOMES OF SOCIALIZATION Newcomers who are successful socialized exhibit good performance, high job satisfaction, and the intention to stay with the organization. In addition, they should exhibit low levels of distress symptoms. High levels of organizational commitment are also marks of successful socialization. Successful Socialization is also signaled by mutual mutua l influences. When socialization is effective, newcomers understand and adopt the organizations values and norms. This provides employees a context for interpreting and responding to things that happen at work. Newcomers adopt the company¶s norms and values more quickly when they receive positive support from organizational insiders.

SOCIALIZATION AS CULTURAL COMMUNICATION Socialization is a powerful cultural communication tool. While the transmission of information about cultural artifacts is relatively easy, the transmission of value is more difficult. The communication of organizational assumption a ssumption is almost impossible. The primary purpose of socialization is the transmission of core values to new organization members. Newcomers are exposed to these values through the role models they interact with, the training they receive, and the behavior they observe being rewarded and punished.

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ACCESSING ORGANIZATIONAL CULTURE Although some organizational scientists argue for assessing organizational culture with quantitative methods, others say qualitative methods yield better results. Quantitative methods such as questionnaires are valuable because of their precision, comparability and objectivi o bjectivity ty.

ORGANIZATIONAL CULTURE INVENTORY The OCI focuses on behaviors that help employees fit into the organization and meet the expectations of coworkers. Using Maslow¶s motivational need hierarchy as its basis, it measures twelve cultural styles. The two underlying dimensions of the OCI are task/people and security/satisfaction. security/satisfaction. There T here are four satisfaction satisfaction cultural styles st yles and eight securities cultural styles.

KILMANN-SAXTON CUKTURE-GAP SURVEY The kilmann- saxton culture-gap survey focuses on what actually happens and on the expectations of others in the organization. Its two underlying dimensions are technical/human and time. With these two dimensions, the actual operating norms and the ideal norms in four areas are assessed. assessed. The areas are task support task innovation social relationships and personal freedom.

TRIANGULATION A study of a rehabilitation centre in a 400-bed hospital incorporated triangulation to improve inclusiveness and accuracy in measuring the organizational culture. Triangulation has been used by anthropologists, sociologists and other behavioral behaviora l scientists to study organizational culture. Its name comes from the navigational technique of using multiple reference points to locate an object.

CHANGING ORGANIZATIONAL CULTURE Changing situation may require changes in the existing culture of an organization. With rapid environmental changes such as globalization, workforce diversity and technological innovation, the fundamental assumptions and basic values that drive the organization may need to be altered. One particular situation that may require cultural change is a merger or acquisi acqu isition tion.

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EMPOWERMENT OF EMPLOYEE TO EXCEL IN PRODUCT AND SERVICE QUALITY Empowerment unleashes employees¶ creativity Empowerment requires eliminating traditional hierarchical notions of power

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y

Involve employees in decision making

y

Remove obstacles to their performance

y

Communicate the value of product and service quality


CISCO CULTURE CASE STUDY ABSTRACT: The case focuses on Cisco's organization culture, which many feel, was responsible for Cisco bouncing back to profit after recording losses during the tech meltdown of 2001. The case looks at Cisco's growth through the years, the drivers of Cisco culture, and the characteristics of work culture at Cisco. Incorporated in 1984, Cisco had a culture based on the principles of customer focus, transparent communication, employee empowerment, integrity, and frugality. The work culture, which epitomized fun and fostered a spirit of employee involvement, ensured that employee turnover was way below industry norms. Continuous Learning, an element of the Cisco culture, was taken care of even through acquisition and partnerships. The case also looks into the role played by the company's CEO, John Chambers, in the evolution of the Cisco culture.

CASE: Cisco Systems Inc. (Cisco), the leader in Internet Protocol (IP)-based networking technologies and networking gear, recorded $2.2 billion in revenues and a market capitalization of $9 billion in 1995. By March 2000, market capitalization went up to $ 531 billion while revenues in 2000 were $19 billion. In 1995, Cisco accounted for 15% of the networking industry's profit and this figure went up to 50% in 2000. But with the tech meltdown of 2000-01, telecom companies and Internet service providers stopped purchasing telecom te lecom equipments from Cisco. Cisco was thus on a free fall, a situation the top management did not expect. "If somebody would've told me then that we'd go from 70% growth to minus 30% growth in 45 days, I'd have said it was mathematically impossible," said John T. Chambers (Chambers), President and CEO, Cisco Systems Inc.5 Though the company recorded losses in 2001, it bounced back with net profits the next year. Cisco's net sales for fiscal 2004 were $22.0 billion, an increase of 16.8 percent from the $18.9 billion for fiscal 2003, while net income for fiscal 2004 was $4.4 billion or $0.62 per share, compared with $3.6 billion or $0.50 per share for fiscal 2003 (Refer Exhibit I for stock market movement of Cisco between 1990 and 2005). Industry observers were quick to point out that it was the organization culture of Cisco that helped it survive the tough periods of meltdown. Cisco was founded on a culture based on the principles of customer focus, open communication, empowerment, trust, integrity, and giving back to the community. This culture ensured that Cisco was on the list of the Fortune magazine's '100 best places to work' for eight consecutive years, starting 1998. 16 | P a g e


BACKGROUND NOTE Headquartered at San Jose, California, US, Cisco was incorporated on December 10, 1984. The company was founded by a group of computer scientists, who designed software named IOS (Internet Operating System), which could send streams of data from one computer to another. This was loaded into a box containing microprocessors specially designed for routing. In 1985, the company started a customer support site from where customers could download software over FTP6 and also upgrade the downloaded software. Cisco, on its site, also provided a database that contained information about potential software problems to help customers and developers. By 1991, Cisco's support centre was receiving around 3,000 calls a month, which increased to 12,000 by 1992. To deal with the large volume of o f transactions, it built an online customer support system on its site. In 1993, Cisco installed an Internet-based system for large multinational corporate customers. The system allowed customers to post queries related to their problems. Cisco also installed a trigger function called the 'Bug Alert' on o n its website. The 'Bug Alert' sent e-mails on software problems within 24 hours of their discovery. Encouraged by the success of o f its customer support site, in 1994, Cisco launched Cisco Information Online, a public website that offered o ffered not only company and product pro duct information but also technical and customer support to customers. In 1995, it introduced applications for selling products or services on its website. This was done mainly to transfer paper, fax, and e-mails to the web to save time for employees, customers, and trading partners, besides broadening Cisco's market reach. In 1996, the company introduced a new Internet initiative, 'Networked Strategy' to leverage on its enterprise network to foster interactive relationships with prospective customers, partners, suppliers, and employees. In August 1996, Cisco launched transactional facilities including product configuration and online order placement connected to Cisco's ERP systems. In 1997, it introduced the dial-in access from desktop computers that enabled customers to place orders without accessing the Internet. In the same year, it also introduced customized business applications for its customers' corporate Intranets and automated the ordering process by linking directly to Cisco's internal systems. Commenting on the growth of Cisco in the late 1990s, Jeremy Duke, analyst at market research firm In-Stat7 said, "They are entering into the zone of the great phone companies, as moneymakers and as builders of infrastructure. There's nobody like them. 17 | P a g e


WHAT DRIVES CISCO'S CULTURE? CUSTOMERS FIRST Cisco's success has been attributed to its relationship with its customers. Cisco professed a 'worship of customers', which was a part of the company's culture right from its inception. "This is a culture where the customer comes first. If the customer has a problem, we drop everything," said Pete Solvik (Solvik), Senior Vice President and Chief Information Officer (CIO), Cisco. Cisco viewed the assessment of customer satisfaction as a continuous process. One of the elements of this assessment was getting regular customer feedback, which helped Cisco employees to be proactive in identifying problem areas, rather than waiting for an annual customer satisfaction survey. Cisco's field teams designed the questionnaires that were used to assess customer satisfaction. satisfaction.

THE WORK CULTURE The organizational structure of Cisco fostered a spirit of employee involvement. "Very often it's most efficient to just work with the person involved, without the formality of passing through every layer of management. But that requires a level of trust that not all organizations have," mentioned Solvik. If a Cisco employee wanted the top management support for an innovative idea, he had to discuss the idea with an employee decision-making team and get its assent. If the decision-making team accepted the idea, the top management gave the green signal. "They (the decision-making teams) are empowered to make that decision because we put the authority, the responsibility, responsibility, and the accountability at the t he same layer.

RECRUITMENT AT CISCO Cisco's recruitment practices reflected the company culture. Cisco's recruiting team identified candidates whom they felt the company 'should hire' and then designed its hiring processes to attract them to the company. In the late 1990s, the company was hiring at a rate which averaged 1000 new employees every month. For recruiting candidates who fit into the culture of Cisco, a selection criterion was developed which targeted candidates who were frugal, enthusiastic about the future of the Internet, and were not obsessed with status - all hallmarks of the Cisco culture.

'BUILT TO LAST' According to some analysts, Cisco faced the risk of diluting its culture due to the influences of new recruits who brought in behaviors from past job experiences. "We're focusing on what it will take to communicate the culture and preserve it. That's another learning experience: Culture is not automatic. 18 | P a g e


That it follows a principle of customer focus, transparent communication, employee empowerment, integrity and fragility. fragility. It is the culture where customer comes first but in CISCO it¶s also the product that works and matters. Here engineer counts as much as culture. So CISCO¶s betting big on collaboration that draws manager input from all levels as the main drivers for its strategy to grab new market. Its taking a decentralized form, rather than working on a single leader dec ision ision making. In conclusion, Cisco Systems appeals to businesses and employees in similar ways by offering a standard to be the best provider and staying ahead of the competition. Their cultural presence is felt by worldwide leadership in technology by bringing jobs, as well as, communications to countries and government structures. Cisco offers a strong customer-responsive organization that blends with cultural needs and service to t o its employees. Thus it has a fit culture perspective where custo mer and competitors comes first. Although customer is the top priority in CISCO¶s culture but it gives equal importance to its employees. Its decentralized system of decision making & futuristic approach are the major gluing factor in retaining employees.

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3M CASE STUDY ABSTRACT: The case examines the organizational culture at 3M and the way in which it facilitated innovation at 3M. The policies and mechanisms adopted by 3M's management to encourage the spirit of innovation in its employees are also a lso discussed. The case takes a close look at 3M's environment of innovation; the culture of knowledge sharing; and the reward system. It also a lso discusses the steps implemented by the new CEO, James McNerney, to accelerate growth at 3M. The T he impact of cultural change at 3M on the spirit of innovation is also discussed.

ONE HUNDRED YEARS OF SUCCESSFUL INNOVATION It was celebration time at 3M! The company completed 100 years in business in 2002. For many, 3M represented the house of innovation. For 100 years, 3M formula for growth - recruit the right people, provide them with the right environment to work and let them do their things - resulted in around 55,000 products and over thousands of patents for the company. company. Analysts Analysts attributed attributed 3M's success to its commitment to innovation. They pointed out that 3M gave its employees the freedom to conduct research in areas of their choice even if that research was not related to their official projects. By thus nurturing the talents of its employees and fostering a climate of innovation, 3M became one of the most innovative companies in the world. In 2001, James McNerney Jr. (McNerney) took over as Chairman and CEO of 3M and announced several initiatives to revive the stagnating growth rate of the company. He initiated cost cutting measures, rationalized purchases, and implemented process improvement programs in the company. He gave a centralized direction to the company from its earlier laissez-faire working style. Analysts cautioned that the changes brought about by McNerney might harm the 100-year old culture at 3M that fostered innovation and sustained its growth over the years. However, McNerney pointed out that the changes brought about in 3M would provide the company a strategic direction in a volatile business environment without harming its organizational culture.

INVENTING 3M In 1902, five businessmen founded Minnesota Mining and Manufacturing (popularly referred to as 3M) in Two Harbors, US. The new company was in the business of mining corundum, a mineral best suited for making sandpaper and grinding wheels. In 1904, when an artificial 20

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abrasive replaced corundum, 3M decided to manufacture sandpaper. Edgar Ober (Ober), one of the founding members of 3M, approached his friend Lucius Ordway (Ordway), a successful businessman for funds for the new venture. Ordway agreed to invest $25,000 in the company, on condition that he won't wo n't be involved in the day-to-day affairs of the co mpany. However, by 1906, Ordway had invested around $200,000 in 3M and had become involved in the day-to-day affairs of the company. co mpany. In the same year he became beca me the President of the company. When 3M realized that the corundum owned by it was a low-grade anorthosite, it decided to shut down the mine and shift to Duluth in 1905. In the same year, 3M decided to import garnet5from Spain. 3M received its first shipment of garnet in 1907 and started producing sandpaper. By 1911, 3M reported sales of $212, 898 and in the same year Ober appointed William L. McKnight (McKnight), who joined the company in 1907 as assistant bookkeeper as sales manager. In 1911, 3M brought out its first breakthrough product, Three-M-ite cloth. Three-M-ite became the company's first profitable product. The Carborundum Company, which had developed artificial abrasive coated emery cloth before 3M, filed a patent infringement suit against the company. co mpany. 3M hired Paul Carpenter; a Chicago based lawyer and expert in patent law, and won the case against Carborundum. Due to Three-M-ite's success, 3M became debt free and announced its first dividend of 6 cents per share in 1916. In the same year, McKnight became vice-president. In the 1920s, 3M recruited people with diverse backgrounds and expanded its product portfolio. It also introduced two breakthrough products, waterproof sandpaper and Scotch masking tape, invented by Francis Okie (Okie) and Dick Drew (Drew) respectively. In 1922, 3M entered the English market and reported sales of $68,000 in the first year of its operations. In order to consolidate its presence in global markets, 3M established research laboratories, and a sales and marketing network across Europe.

EXPERTS FOSTERING INNOVATION From its early days, 3M fostered a culture of innovation in its organization. McKnight tried to create an organization that would encourage its employees to take the initiative and come up with new ideas.

RECRUITING AND RETAINING TALENT 3M recruited people who were creative and had a broad range of interests. According to company sources people who had a broad range of o f interests were willing willing to learn and explore new ideas. In additi add ition, on, they brought bro ught a multi-disciplinary approach to their work. To make it easy for recruiters, 3M codified the six traits of innovative peop le in its recruiting brochure: 21

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Creativity Broad interests Self motivated Resourceful Hard working Problem solvers

CREATING A CHALLENGING ENVIRONMENT Initially 3M was organized into various product divisions. As these divisions increased in size, McKnight noticed that there was a slowdown in innovation; not much time was devoted to new product development. To increase the pace of new product launches, McKnight introduced the philosophy of divide and grow. In line with this philosophy, new businesses were spun off and new management teams were devoted to the spun off units. As a result, these new units were able to grow quickly. When these new businesses were spun off, the established divisions had to develop new products and find new markets to achieve their growth objectives to make up for contributions from the businesses that had become independent. This mechanism, which analysts called 'Renewal,' resulted in increased diversification at 3M.

KNOWLEDGE SHARING In addition to providing an environment that stimulated innovation, 3M also took steps to encourage knowledge sharing among its employees. According to analysts, innovation could flourish in 3M because the management encouraged its employees to talk. 3M employees never experienced any communication co mmunication barriers.

REWARDING INNOVATION In addition to recruiting innovative people, creating a challenging environment for employees, and encouraging a culture of knowledge sharing, 3M also focused on rewarding employees. To encourage the spirit of innovation among employees 3M realized it was necessary to reward them appropriately. The dual ladder career path adopted by 3M, created two career ladders - technical and management. This approach allowed even a technical person to get promoted to the vice-president level without taking on managerial and administrative responsibilities responsibilities. From the 3M case we reach at the c onclusion that though McNerney wanted to make the decision system a bit centralized but he preferred employees taking initiatives. Creativity, hard work & problem solving attitude are given importance at 3M. It focused focused on rewarding rewarding 22 |

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employees and there was not any communication barrier which encouraged the process of knowledge sharing. It basically followed an adaptive culture where employees were the main priority. 3M recognized that a strategic commitment to innovative products would pay off if it were tied to creating a culture that allowed its employees to be innovative and creative. When an employee at 3M made a mistake or had an idea that didn't work, he or she discussed it at a team meeting and the entire team celebrated the learning learning experience. Over time, a culture culture evolved where risk and innovation were viewed as necessary and complementary. 3M managed to link strategies to management and employee actions. It successfully linked linked corporate success to the development of new products and a lesser dependence on mature products. It linked its HR systems to its strategic framework by creating a set of HR strategies that provided; innovative compensation and reward systems, creative organizational structures, training and development plans tied to strategic outcomes, and targeted employee skills. Through over 90 years of trial and error, 3M has developed a culture cu lture that effectively supports both quality and innovation. So there was a cultural overhaul in the 3M system with the entry of McNerney which resulted in:

CULTURE OVERHAUL By the late 1990s, 3M's growth rate started slowing down. According to reports, the stock price of 3M dropped from $83.00 in 1996 to $71.13 in 1998 and the price-earning ratio (P/E ratio) of the company also declined dec lined considerably. It was reported that during 1995-2000, earnings per share grew at an average of only 8.8% and shareholder returns fell far behind Dow and the S&P 500. Analysts felt that 3M was unable to respond to market conditions. Commenting on 3M's performance during the decade, Bob Burgstahler (Burgstahler), chief of Business development, said, "We have not produced elite results that correspond to the view that this is an elite organization." In December 2000, 3M announced the appointment of James McNerney Jr. (McNerney) of General Electric as its CEO. For the first time, an outsider was appointed as CEO of 3M. The stock markets responded ositively to the appointment of McNerney and 3M's stock price closed at $120.50, the highest in the decade. 3M has been encouraging a culture of innovation from the very beginning where employees are given freedom to work without any pressure. They are given full freedom to implement new ideas ith no or very less questioning. There is no communication barrier in the organization. These are the major gluing factor in 3M which has retained its employees since so long.

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SOUTHWEST AIRLINES Southwest Airlines was incorporated in Texas and commenced Customer Service on June 18, 1971, with three Boeing 737 aircraft serving three Texas cities - Houston, Dallas, and San Antonio. Today, Southwest operates more than 500 Boeing 737 aircraft between 67 cities. Southwest topped the monthly domestic originating passenger rankings for the first time in May 2003. Yearend results for 2008 marked Southwest¶s 36th consecutive year of profitability. Southwest became a major airline in 1989 when it exceeded the billion-dollar revenue mark. Southwest is the United States¶ most successful low-fare, high frequency, po int-to-point int-to-point carrier. More than 38 years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline. They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good g ood time doing it, people p eople will fly your airline.

CULTURE DONE DIFFERENTLY For more than 38 years, the Southwest Culture has thrived, but it hasn¶t been easy. The longevity has been both their biggest accomplishment and their most significant challenge. At Southwest, They think of Their Culture in a positive light, but every company has a culture, whether that culture is supportive or stifling, stifling, active or passive, fun or discouraging. The way the y keep their Culture supportive, active, and fun is by making Southwest¶s Culture everyone¶s responsibility. In fact, they ask everyone to ³own it.´ The Culture Committees are just the beginning of what separates them from the way other companies approach their culture. One of the most significant ³Southwest differences´ in their pursuit to preserve and promote their Culture is the way it is embedded in every aspect of the Company. Hardly any company make having a ³Fun-Loving Attitude´ Attitude´ a key pillar of their leadership expectations. Those same expectations include ³The Golden Rule´ and possessing a ³Servant¶s Heart.´ The annual annual Performance Appraisal Appraisal for for all of their their Employees includes includes asection on Southwest Culture. From an Employee¶s initial interview until the day he or she retires, the Southwest Culture is an ingrained part o f daily life. And finally, their Culture encourages celebration. First, they celebrate their Veterans on the month of Nov. America would be a much different place without the courage of their Veterans. They then celebrate t he blessings of the past year on Thanksgiving. Southwest's no-layoff response to September 11 was a reminder to its employees of the organization's tradition of caring for its people. When asked to comment on this, an official 24 |

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explained, "Its part of our culture. We've always said we'll do whatever we can to take care of our people. So that's what we've tried to do."1 Southwest's organizational culture was shaped by Kelleher's leadership. Kelleher's personality had a strong influence on the culture of Southwest, which epitomized his spontaneity, energy and competitiveness. Southwest's culture had three themes: love, fun and efficiency. Kelleher treated all the employees as a "lovely and loving family". Kelleher knew the names of most employees and insisted that they referred to him as Herb or Herbie. Kelleher's personality charmed workers and they reciprocated with loyalty and dedication. Friendliness and familiarity also characterized the company's relationships with its customers...

BUILDING RELATIONSHIPS Since its inception, Southwest attempted to promote a close-knit, supportive and enduring family-like culture The Company initiated various measures to foster intimacy and informality among employees. Southwest encouraged its people to conduct business in a loving manner. Employees were expected to care about people and act in ways that affirmed their dignity and worth.

ARTIFACTS The artifacts which are the symbols of culture in the physical and social work environment can be seen in the way the Southwest Company treats its employees. To help keep the Culture at the forefront, they have two groups: Local Culture Committees and the Corporate Culture Committee. Both groups put on o n low-cost Employee events throughout the year. The Employees roll up their sleeves to help out their area Ronald McDonald Houses at Thanksgiving. Colleen Barrett who is the former President of southwest airlines sent cards to all employees on their birthdays... The CEO joins with the Employees E mployees to wish Happy Thanksgiving. Instead of decorating the wall of its headquarters with paintings, the company hung photographs of its employees taking part at company events, news clippings, letters, articles and advertisements. Customers are not assigned seats; rather, they are assigned to one of three "boarding groups" depending on their check-in time (earlier check-ins get to board earlier), and are left to choose their own seats on the plane, which helps the airline to board passengers faster 25 |

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VALUES Company Values ... Core Values LUV Code word for treating individuals, employees, custo mers Dignity, respect and caring loving attitude. att itude. Appeared on banners and posters po sters at company facilities Fun Entertaining behavior of employees in performing per forming their jobs. The ongoing pranks and jokes. Frequent company-sponsored parties and celebrations. celebrat ions. Charity benefit games, chili cook-offs cook-o ffs,, Halloween parties part ies

THRIVING UNDER PRESSURE Post-September11, 2001, when most airlines in the US went in for massive layoffs, Southwest avoided laying off any employee. Even before before the September 11 crisis hit, hit, Kelleher had explained his philosophy regarding layoffs in an interview to Fortune magazine. He said, "Nothing kills your company's culture like layoffs. Nobody has ever been furloughed [at Southwest], and that is unprecedented in the airline industry. It's been a huge strength of ours. It's certainly helped us negotiate our union contracts. One of the union leaders«.came in to negotiate one time, and he said, "We know we don't need to talk with you about job security." We could have furloughed at various times and been more profitable, but I always thought that was shortsighted. You want to show your people that you value them and you're not going to hurt them just to get a little more money in the short term. Not furloughing people breeds loyalty. It breeds a sense of security. It breeds a sense of trust. So in bad times you take care of them, and in good times they're thinking, perhaps, "We've never lost our jobs. That's a pretty good reason to stick around."... Southwest was the only airline to remain profitable in every quarter since the September 11 attack. (Refer Exhibit VIII for financial position of Southwest.) Although its stock price dropped 25% since September 11, it was still worth more than all the others big airlines combined. Its balance sheet looked strong with a 43% debt-to-equity ratio and it had a cash of $1.8 billion with an additional $575million in untapped credit lines. The company left no stone unturned to boost employee loyalty and morale.

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South West Airlines has follows a fun loving attitude. Their culture is all about care, friendliness and familiarity this resulted in the thinking of the employees that ³they value us´ and thus we need to stick around. This is the main gluing factor of the organizations culture. cu lture.

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CONCLUSION Organizational culture is a pattern of basic assumptions that are taught to the personnel as the correct way to perceive, perceive, think and act on a dayTo-day basis. Some of the important characteristics of organizational culture are observed behavioral regularities, norms, values, rules, philosophy and so on. While everyone in the organization will share the organization's culture, not all may do so to the same degree. There can be a dominant culture, but also a number of subcultures. Some organizations have strong cultures and others have weak cultures. The strength of the culture will depend on sharedness and intensity. In some cases organizations find that they must change their culture in order to remain competitive and even survive in their environment. With reference to the cases in this project, we had analyzed the value system of the organization like CISCO, 3M and SOUTH WEST AIRLINES. 3M has built its i ts organizational culture which holds its employees together in line with the vision and mission of the organizationsouthwest airlines has built an organization of repute - an enterprise that stands apart which even during the last economic downturn was unshaken. While CISCO has given its culture an innovative and futuristic approach with customer as the top priority.

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BIBLOGRAPHY: www.icmrindia.org Organizational Behavior by Nelson Quick Organizational Behavior by K.Aswathappa

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Project on Organizational Culture

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