Work Culture

WORK CULTURE &AND GROWTH OF FIRMS

What is work culture?A company's culture is its personality and tells the employees how to do their work. It takes its signals from leaders and underlies motivation, morale, creativity, and marketplace success.

The personality of a companyWork culture is the distinctive personality of the organization that determines how members act, how energetically they contribute to teamwork, problem solving, innovation, customer service, productivity, and quality. It is the culture that makes it safe (or not safe) for a person, division or the whole company to raise issues and solve problems, to act on new opportunities, or to move in new, creative directions. A company's culture is often at the root of difficult people-related problems such as motivation, morale, absenteeism, communications, teamwork, retention, injuries, and insurance claims. Behavior depends upon cultureLike ethnic cultures, work culture tells the employees how to behave, what to do, and what not to do. It is the context that gives meaning to what people do. If you want to understand why people act in a certain way at work, examine their work culture.

Observing the cultureBy observing the way people act in the work environment, one can easily tell how the culture is constructedIf people are open, motivated and engaged, you know that is the nature of the company's culture. In contrast if people are defensive, irresponsible, and passive, you also understand the company's culture.

What is a healthy work culture?More involvement in decisions that affect each workerA feeling of safetymore openness and trust. Better communication and more information. Better teamwork and more cooperation. More focus on getting work done and less on who is doing it, or making comparisons. Clearer tasks, responsibilities, and boundaries, so employee can be personally responsibleLooking forward to coming to work.

Introductions to a new work cultureThrough part-time or other work experiences we have before joining a company, we have a rough idea of work expectations and culture (also through the interview process, observing co-workers interacting, etc)Once we are hired, it doesn't take more than a few days, or a few weeks at most, for us to know what to do, and what not to do, and the type of interactions that are accepted within that culture.

Looking to the bossPeople watch their supervisors for cues about how to behave. Leaders who are open and engaged will encourage this from their workers. Each worksite establishes unwritten expectations. Despite written policies this is why some companies have employees who are engaged, responsible, pleasant, and highly productive. Conversely, other companies have employees who are closed, unengaged, irresponsible, unpleasant, and unproductive. The signals about these expectations come largely from the companys culture, which is established by the companys leadershipthe boss sets the tone!

Disability and work cultureWork cultures that openly communicate about daily problems are more likely to find positive ways to solve accommodation issues.Co-workers and supervisors that feel valued are more likely to value others, including those with disabilities.Sofinding a supportive work culture is very important to our students success!

Healthy organizational cultures

Organizations should strive for what is considered a "healthy" organizational culture in order to increase productivity, growth, efficiency and reduce counterproductive behavior and turnover of employees. A variety of characteristics describe a healthy culture, including:

Acceptance and appreciation for diversityRegard for and fair treatment of each employee as well as respect for each employees contribution to the companyEmployee pride and enthusiasm for the organization and the work performedEqual opportunity for each employee to realize their full potential within the companyStrong communication with all employees regarding policies and company issues

Strong company leaders with a strong sense of direction and purposeAbility to compete in industry innovation and customer service, as well as priceLower than average turnover rates (perpetuated by a healthy culture)Investment in learning, training, and employee knowledge

SURVIVAL AND GROWTH OF FIRMSSurvival of small firms - reasonsLimited economies of scale in some industries such as agricultureBeing ones own boss may accept a smaller profit for the social prestige of working for themselves or to retain control of the businessImmobility in factor markets both geographical and/or occupational such as in cottage industriesGoodwill for personalized servicesTo continue providing specialist services or productsSubcontracting such as in construction industry Niche marketingNearness to market/customerBusiness Growth

15Financing Growth

16Financing GrowthTo grow a firm needs to be able to expand plant, equipment, buildings, human resources, etc.To do this it needs to acquire financeThere are two basic sources:17Internal Sources

Private funds personal savingsProfits retained profit ploughed back into the business. This assumes the business is successfulInternal sources tend to mean growth is slowerFirms like Marks and Spencer have been around for many years, their growth has been primarily internal but has taken time.18External SourcesLoans from banks and financial institutionsVenture Capital specialist groups who provide capital may take over ownership of the firm, build it up then sell it on at a profit in a few yearsLeasing allows a degree of flexibility in finance arrangementsEU/Government Grants19OvertradingSudden growth can mean a sharp increase in demand or be the result of it!The firm may try to cater for this growth but not be able to meet demandInvestment may be made in new capacity which incurs extra cost but customers may not pay at the same rate leading to cash flow problems and possible insolvency

20External Growth

21Mergers and takeoversReasons for mergers and takeoversEconomies of scaleGrowthMarket domination/monopoly powerIncreased market valuationStability/ reduce uncertaintyDiversificationAsset strippingOther reasons opportunity, empire building, broadening geographical base etc.

Types of integrationHorizontal integrationA firm takes over firms in the same industry and at a similar/same stage of productionEliminates competitionMergers of two car manufacturersTypes of integrationVertical integrationWhere firms in the same industry but different stages of production merge Occurs when a firm expands backwards towards its source of supply or forwards towards its marketTo ensure consistent supply of inputs and control over the sale of its productsA car manufacturer merge with a car component parts producer - vertical backwards integration, or takes over a chain of retail showrooms vertical forward integration

Types of integrationLateral growthOccurs when a firm diversifies into a completely different industry or product marketAlso known as a conglomerate growthTo gain economies of scale, risk spreading, increase market shareMay lack expertise away from the core businessCar manufacturer takes over a leisure industry firm operating cinemas and theme parks Conglomerate GrowthConglomerate Growth the acquisition of firms in different production areas from its core market Kingfisher own Comet, B&Q, Woolworths, MVC and Screwfix

Many people may not have recognised Kingfisher plc as a business but are likely to have heard of the branded businesses they own. Sponsorship of Dame Ellen MacArthurs sailing exploits have helped raise the groups profile.

26Internal Growth

27Internal GrowthInternal growth can come from:Innovation new product development, new processes, new systems, etc. which can improve the efficiency of the firm

Competitive Advantage the means by which a firm is able to make itself stand out from its rivals innovation could be one source of competitive advantage

28Others might include:After sales serviceQualityPriceCost advantagesBrand imageEnvironmental consciousness

Managing Growth

30Managing GrowthBusinesses are human organisations humans are difficult to manage!Larger organisations may suffer from diseconomies of scaleLarger organisations may necessitate changing roles for the managers/leader/ownersThere may be a divorce between ownership (the shareholders) and control (the Board)