The Five Most Important Things You Need to Know About Corporate Culture

Whether you're involved in a merger deal -- or dealing with everyday people problems on the shop floor here are 5 things every manufacturing exec needs to know about corporate culture. (BTW, culture isn't only important for the folks in HR!)

Merger and acquisition (M&A) activity is starting to skyrocket. A lot of the action is happening in manufacturing, as many companies are doing deals to gain economies of scale and acquire smaller firms -- and their people to fill capability gaps.

It's time again to consider corporate culture.

Culture is all about people. Importantly, research has shown that it's the people component that makes mergers work ... or fail dismally! Make no mistake: culture counts, but not only in M&A deals, joint ventures, and outsourcing partnerships. Culture management is also critical to maximize the everyday output of work teams and to minimize productivity-killing conflict that's so prevalent in many companies' day-to-day operations.

Let's look at the five most important things every manufacturing executive needs to know about corporate culture in order to manage it for strategic gain.

Culture: "How We Do Things Around Here"

The problem with culture is that it's just so hard to get your arms around.

Corporate culture has been colloquially defined as "How we do things around here." To me, however, the question has always remained: what are those "things" -- namely, the traits that business leaders typically refer to when characterizing their cultures?

In global research conducted by my company, 30 of the most common traits of corporate culture were identified through a content analysis of several hundred online information sources. The goal: identifying the principal components of culture for assessment and management purposes. The process of unearthing the significance of these traits in cultural analysis we call Organizational Archaeology.

5 Things To Know About Culture

1. Culture analysis starts with identifying the "artifacts" in your organization.
   "Artifacts" is the term introduced by the eminent M.I.T. social psychologist Edgar H. Schein in his landmark writings on organizational culture and leadership. These are the core business activities, management processes, and philosophies that characterize how a company does business on a day-to-day basis. Artifacts can be considered the "things" that are done in the cultural characterization, "how we do things around here." They are a combination of factors common to all organizations and unique to your specific company.
2. "Shared assumptions and beliefs" underlie the artifacts.
   These concepts comprise the core of leading theorists' views on culture. Shared assumptions and beliefs typically originated with an organization's founders and leaders. Most importantly, they tie specifically to proven principles -- that is, guidelines for doing business that were established based on what has been successful in the past in terms of dealing with external market challenges and issues of internal integration (e.g., operational best practices).
3. Culture is conveyed through communication and a common language.
   All businesses develop their own ways of communicating. This refers not only to "what" is communicated, but also "how," "by whom" and through which formal and informal information channels. Understanding your culture, therefore, requires studying the modes of communication that are used to convey business guidance and procedural protocols. (Keep in mind that shared assumptions and beliefs are passed on and reinforced through communications.)
4. Cultures evolve over time. A key aspect of culture is that it is enduring.
   But cultures do change as new product and service lines are launched (often requiring new manpower to support them), new divisions are formed, companies are acquired, and new market challenges drive updated ways of doing businesses. Taken together these factors create new shared assumptions and beliefs based on what has enabled the organization to succeed in the marketplace. Culture change is a slow-moving phenomenon. But culture change can in fact be effected to address new strategic imperatives. This leads to the next point ...
5. Leadership and culture are "two sides of the same coin."
   This is the central message of Schein's writings on culture. The chief role of business leaders -- at any level of an organization -- is to understand, analyze, and actively guide culture.

A leader's culture-related mandate, therefore, is three-fold: assess current ways of doing business based on best-practices that are unique to the organization (assumptions and beliefs); objectively evaluate what may no longer be working in light of shifting external forces and internal operational realities (e.g., resource allocation issues); study and monitor how people interact with one another -- in terms of communication content and channels -- to ensure effective day-to-day problem-solving and continuous learning.

Even if you're not involved in an M&A deal, it's essential to understand the criticality of culture. Addressing people management and process issues from a cultural perspective is crucial to help you succeed today and -- just as important -- to prepare for the strategic challenges of tomorrow.

Mark N. Clemente is president of Clemente Communications Group, a consulting, training and publishing company.