Managing organizational

culture

CMI LEVEL 6 MANAGEMENT AND LEADERSHIP

1

Contents How organizational culture can impact on organizational behavior ...................................................... 2

The concept of culture to organizations ............................................................................................. 2

The traits of power, culture, role culture, task culture and person culture ....................................... 5

Internal and external factors that could influence organizational culture, including national

cultures ............................................................................................................................................... 7

The relationship between organizational culture, strategy and performance ....................................... 9

Values and cultures that encourage behaviors consistent with organizational strategy ................... 9

Personal managerial behaviours that reference organizational values and cultures ...................... 13

How to communicate organizational values to the organizational that motivate the organization to

apply these values ............................................................................................................................. 19

The techniques of culture development ............................................................................................... 20

The tools available to an organization to identify and develop its culture ...................................... 20

Methods of dealing with messages and behaviours which are in conflict with organizational values

.......................................................................................................................................................... 28

Legitimate strategies and tactics to influence people in support of organizational values ............. 29

2

How organizational culture can impact on organizational behavior

The concept of culture to organizations Organizational culture is defined as the underlying beliefs, assumptions, values and ways of interacting

that contribute to the unique social and psychological environment of an organization.

Organizational culture includes an organization’s expectations, experiences, philosophy, as well as the

values that guide member behavior, and is expressed in member self-image, inner workings,

interactions with the outside world, and future expectations. Culture is based on shared attitudes,

beliefs, customs, and written and unwritten rules that have been developed over time and are

considered valid (The Business Dictionary).

Culture also includes the organization’s vision, values, norms, systems, symbols, language,

assumptions, beliefs, and habits (Needle, 2004).

Simply stated, organizational culture is “the way things are done around here” (Deal & Kennedy,

2000).

While the above definitions of culture express how the construct plays out in the workplace, other

definitions stress employee behavioral components, and how organizational culture directly

influences the behaviors of employees within an organization.

Under this set of definitions, organizational culture is a set of shared assumptions that guide what

happens in organizations by defining appropriate behavior for various situations (Ravasi & Schultz,

2006). Organizational culture affects the way people and groups interact with each other, with clients,

and with stakeholders. Also, organizational culture may influence how much employees identify with

their organization (Schrodt, 2002).

In business terms, other phrases are often used interchangeably, including “corporate culture,”

“workplace culture,” and “business culture.”

HOW IS ORGANIZATIONAL CULTURE CREATED AND COMMUNICATED?

Business leaders are vital to the creation and communication of their workplace culture. However, the

relationship between leadership and culture is not one-sided. While leaders are the principal

architects of culture, an established culture influences what kind of leadership is possible (Schein,

2010).

Leaders must appreciate their role in maintaining or evolving an organization’s culture. A deeply

embedded and established culture illustrates how people should behave, which can help employees

achieve their goals. This behavioral framework, in turn, ensures higher job satisfaction when an

employee feels a leader is helping him or her complete a goal (Tsai, 2011). From this perspective,

organizational culture, leadership, and job satisfaction are all inextricably linked.

3

Leaders can create, and also be created or influenced by, many different workplace cultures. These

differences can manifest themselves is a variety of ways including, but not limited to:

Person culture and market culture

How members of an organization conduct business, treat employees, customers, and the wider

community are strong aspects of person culture and market culture. Person culture is a culture in

which horizontal structures are most applicable. Each individual is seen as more valuable than the

organization itself. This can be difficult to sustain, as the organization may suffer due to competing

people and priorities (Boundless, 2015). Market cultures are results-oriented, with a focus on

competition, achievement, and “getting the job done” (ArtsFWD, 2013).

Adaptive culture and adhocracy culture

The extent to which freedom is allowed in decision making, developing new ideas and personal

expression are vital parts of adaptive cultures and adhocracy cultures. Adaptive cultures value change

and are action-oriented, increasing the likelihood of survival through time (Costanza et al., 2015).

Adhocracy cultures are dynamic and entrepreneurial, with a focus on risk-taking, innovation, and

doing things first (ArtsFWD, 2013).

Power culture, role culture, and hierarchy culture

How power and information flow through the organizational hierarchy and system are aspects of

power cultures, role cultures, and hierarchy cultures. Power cultures have one leader who makes rapid

decisions and controls the strategy. This type of culture requires a strong deference to the leader in

charge (Boundless, 2015). Role cultures are where functional structures are created, where individuals

know their jobs, report to their superiors, and value efficiency and accuracy above all else (Boundless,

2015). Hierarchy cultures are similar to role cultures, in that they are highly structured. They focus on

efficiency, stability, and doing things right (ArtsFWD, 2013).

Task culture and clan culture

How committed employees are towards collective objectives are parts of task cultures and clan

cultures. In a task culture, teams are formed with expert members to solve particular problems. A

matrix structure is common in this type of culture, due to task importance and the number of small

teams in play (Boundless, 2015). Clan cultures are family-like, with a focus on mentoring, nurturing,

and doing things together (ArtsFWD, 2013).

HOW AND WHY DOES ORGANIZATIONAL CULTURE CHANGE?

Organizational culture is not stagnant. Members of an organization develop a shared belief around

“what right looks like” as they interact over time and learn what yields success and what doesn’t.

When those beliefs and assumptions lead to less than successful results, the culture must evolve for

the organization to stay relevant in a changing environment.

Changing organizational culture is not an easy undertaking. Employees often resist change and can

rally against a new culture. Thus, it is the duty of leaders to convince their employees of the benefits

of change and show through collective experience with new behaviors that the new culture is the best

way to operate to yield success.

Cummings & Worley (2004) proposed six guidelines for culture change:

4

Formulate a clear strategic vision. This vision gives the intention and direction for the future culture

change.

— Vice President, Customer Support, jetBlue

Display top-management commitment. The top of the organization must favor the culture change in

order to actually implement the change in the rest of the organization.

Model culture change at the highest level. The behavior of the management needs to symbolize the

kinds of values and behaviors that should be realized in the rest of the company. Change agents are

keys to the success of this cultural change process and important communicators of new values.

Modify the organization to support organizational change. This includes identifying what current

systems, policies, procedures and rules need to be changed so alignment with the new values

and desired culture can be achieved.

Select and socialize newcomers and terminate deviants. Encouraging employee motivation and

loyalty to the company will create a healthy culture. Training should be provided to all employees to

help them understand the new processes, expectations, and systems.

Develop ethical and legal sensitivity. This step can identify obstacles of change and resistant

employees, and acknowledge and reward employee improvement, encouraging continued change

and involvement.

WHAT ARE ORGANIZATIONAL SUBCULTURES?

Rather than changing an entire organization’s culture, an organization can be adaptable and agile by

allowing certain types of subcultures to emerge. Organizational subcultures are groups whose

common characteristic is a shared norm or belief (Boisnier & Chatman, 2002).

Subcultures are classified as enhancing, orthogonal, or counterculture, each exemplifying a different

level of congruence with the dominant culture’s values (Martin & Siehl, 1983). Members of enhancing

subcultures adhere to dominant organizational culture values even more enthusiastically than

members of the rest of the organization. Members of orthogonal subcultures both embrace the

dominant culture’s values and hold their own set of distinct, but not conflicting, values. Finally,

members of a counterculture disagree with the core values of the dominant culture and hold values

that directly conflict with core organizational values.

While having a deeply embedded organizational culture is usually associated with higher performance,

these organizations may not be adaptive enough to ensure their long-term survival. Organizations

may, therefore, become more agile by allowing subcultures to emerge.

CONCLUSION

While there is widespread agreement that organizational cultures do exist and that they are a key

driver in shaping organizational behaviors, pinpointing an exact definition of the concept is a difficult

undertaking.

An absolute definition would allow not only for a more rigorous study of organizational culture, but

also increase our understanding of how it influences other organizational outcomes such as

productivity, employee engagement, and commitment. One thing is undoubtedly known about

culture: It is constantly being created, changed, and splintered to ensure the success of its parent

organization.

5

The traits of power, culture, role culture, task culture and person culture Power Culture

In an organisation with a power culture, power is held by just a few individuals whose influence

spreads throughout the organisation.

There are few rules and regulations in a power culture. What those with power decide is what

happens. Employees are generally judged by what they achieve rather than how they do things or how

they act. A consequence of this can be quick decision-making, even if those decisions aren't in the best

long-term interests of the organisation.

A power culture is usually a strong culture, though it can swiftly turn toxic. The collapse of Enron,

Lehman Brothers and RBS is often attributed to a strong power culture.

Role Culture

Organisations with a role culture are based on rules. They are highly controlled, with everyone in the

organisation knowing what their roles and responsibilities are. Power in a role culture is determined

by a person's position (role) in the organisational structure.

Role cultures are built on detailed organisational structures which are typically tall (not flat) with a

long chain of command. A consequence is that decision-making in role cultures can often be painfully-

slow and the organisation is less likely to take risks. In short, organisations with role cultures tend to

be very bureaucratic.

6

Task Culture

Task culture forms when teams in an organisation are formed to address specific problems or progress

projects. The task is the important thing, so power within the team will often shift depending on the

mix of the team members and the status of the problem or project.

Whether the task culture proves effective will largely be determined by the team dynamic. With the

right mix of skills, personalities and leadership, working in teams can be incredibly productive and

creative.

Person Culture

In organisations with person cultures, individuals very much see themselves as unique and superior to

the organisation. The organisation simply exists in order for people to work. An organisation with a

person culture is really just a collection of individuals who happen to be working for the same

organisation.

7

Internal and external factors that could influence organizational culture, including

national cultures We've summarised below some key points that students should consider when revising the the factors

influencing the culture of an organisation and cultural differences within an organisation:

Definitions

• Culture: “The way we do things around here"

• Sub-culture: group of people within a culture (whether distinct or hidden) which

differentiates them from the larger culture to which they belong

• Mission: a formal statement of an organisation's fundamental purpose (similar to vision,

purpose)

• Core values: the essential and enduring guiding principles of an organisation.

• Vision statement: a picture of an organisation in the future (aspiration, inspiration) which sets

the framework for strategic planning.

• Paradigm: the set of assumptions held in common & taken for granted in an organisation.

Often unspoken.

Key Theories / Concepts

• Charles Handy: four types of culture

• Power : focus on personal charisma & risk-taking

• Role: focus on position, bureaucracy, hierarchy

• Task: focus on problem-solving, teamwork, creativity

• Person: focus on individual needs, independence

• Edgar Schein: 4 layers of organisational structure: Values | Beliefs | Behaviours | Paradigm

• Johnson & Scholes: Cultural Web (Symbols, Power Structures, Organisational Structures,

Control Systems, Rituals & Routines, Stories)

Factors Influencing Culture of an Organisation

• Influence of the founder (“shadow of the leader")

• Size & development stage of the business (e.g. start-up, multisite, multinational)

• Leadership & management style

• Organisational structure, policies & practices

• Employee & management reward structures (e.g. pay, bonuses, individual v team rewards)

• Market /industries in which it operates

• Working environment & nature of tasks (e.g. physical, office, remote working, flexible

working)

• External environment (e.g. legal, economic, social)

8

• Attitude of organisation to risk-taking & innovation

• Sector: e.g. service, manufacturing

Cultural Differences Within an Organisation

• Subcultures develop within an organisation based on occupations, product lines, functions,

geographies and echelons in the hierarchy.

• Some firms: sub-cultures are stronger than overall organisational culture

• Managing Sub-cultures has become more important & challenging:

• Mergers, takeovers, joint ventures more common

• Globalisation: many firms now multi-cultural based on nationality, language

• Technological complexity: depts. more specialised; more remote & flexible working

Key Examples / Evidence

• Barclays: impact of powerful sub-culture at investment banking division (came to dominate

retail bank)

• Apple / Disney: role of culture of innovation & secrecy; shadow of the leader – Steve Jobs,

Walt Disney

• HP (“HP Way"), Toyota (“Toyota Way") – long-established cultural programmes, including

induction

• NHS: public sector organisation with complex cultural challenges – combination of role & task

culture?

• Walmart: a common approach to employee (“shareholder") engagement across the globe

• Google: has deliberately maintained existing culture of acquisitions (e.g. YouTube & Zappos)

• Ikea: has developed a consistent culture among employees around the world who “love the

values"

Depends on Factors

• Organisations will vary significantly in terms of the strength and depth of their culture: this

will depend on:

• Strength & clarity of the organisation founder

• Amount and intensity of shared experiences that organisation members have had

• How much success the organisation has enjoyed

• The history/heritage of the business

Further Evaluation Opportunities

• Much academic research on what organisational culture is – but little agreement, so

theoretical models can only be a guide.

9

• Culture is a complex concept which is difficult to understand = a challenge for business

leaders!

• There is no absolute criterion for a “better" or a “worse" culture – it depends on what is “right"

for the organisation

The relationship between organizational culture, strategy and

performance

Values and cultures that encourage behaviors consistent with organizational strategy When you think of your company’s values, what comes to mind?

Do they serve as a compass for your organization? A manifesto? Do they hold any weight at all or are

they meaningless words on a wall in the lobby of your building? Even worse, are the actions of your

organization so misaligned with your “values” that people actually make jokes about it?

In the organizational development field, and particularly in my work in organizational culture, the

importance of a solid set of core values, fundamental beliefs about what “right” looks like, in your

company cannot be overstated. Unfortunately, many companies today still struggle to create

meaningful values in their organizations despite their best efforts.

Rather than actionable corporate values statements that truly capture the essence of the organization,

leaders often lean on single, powerful words or phrases that they think people want to hear. Examples

of this might be “Integrity, Community or Service.” They look good. They sound good. But they are all

but meaningless if people within the organization fail to live them in their day-to-day interactions.

Ideally, an organization’s core values explicitly define how people will behave with each other and

with customers. When values succeed, the daily behaviors of your people will embody the core values

you set forth. When they fall flat, as Patrick M. Lencioni wrote in his Harvard Business Reviewarticle

on the topic, “Empty values statements create cynical and dispirited employees, alienate customers,

and undermine managerial credibility.”

10

MORE FROM FORBES

UNICEF USA BRANDVOICE

How Breastfeeding Could Save More Than 820,000 Young Lives Annually

Civic Nation BRANDVOICE

Three Community College Opportunities That Will Surprise You

When your culture and values don’t align, your employees, customers and bottom-line business

performance may suffer. So, how do you create values statements that will help align your employees

and organizational culture in order to drive performance?

Creating More Meaningful Values Statements

I recently read a fascinating article by my colleague Levi Nieminen, Director of Research and

Development at Denison Consulting. In it, he outlines two tests business leaders can take to pressure

test their organizational values to help ensure they aren’t “bland, toothless or just plain dishonest.”

Here is what he offers:

1. Avoid the “feel-goods.” This is based on the idea that values cannot be battle-tested by success.

Rather, companies should think about their values in relation to difficult situations they’ve faced.

“Recall the three most challenging situations your organization [or team, etc.] has faced in the last few

years and what the organization did in response to these situations. Now answer the following

question: Do the values help to make sense of what was done and why?”

If the honest answer is no, it may be time to reexamine what’s really valued in your organization. By

trying to develop a set of values that can be used as a framework to guide decision-making, leaders

can help their teams understand why decisions are being made.

2. Look at the “illogical” side. Many organizations today are moving away from values-based decision-

making in favor of big data and analytics. But, in the absence of hard data we have to fall back on

something to serve as our guide for action.

When data isn’t present, or we don’t have all the facts, we have no choice but the fall back on our

values.

“Recall the last three times when your organization [or team] made a decision ‘shooting from the hip,’

that is, when you didn’t have the intel that you wanted. In each case, describe the decision that was

made and how the decision was reached. Now answer the following question: Do the values help you

to explain or justify what was decided and why?”

There is a lot of value in quantitative data analysis and the information it provides, but data is

becoming increasing more accessible to people as time goes on. Meaning, you and all your

competitors will likely have access to identical data to inform your decisions.

When that playing field of available information is level, the “illogical,” human-side of your decisions

will ultimately be what sets you apart from the competition.

Values With Teeth

Values are meant to be more than a poster on the wall.

11

In order to create values that succeed in driving behavior in your company, you must start thinking

critically about how they will inform your culture, decisions that are made on a daily basis and the

behaviors that they will drive in the field. Consider how the policies you have in place will help support

them, and ensure your leadership team is both communicating and exemplifying your values to your

team.

Don’t expect employees to rally around a set of hollow values when those ideas aren’t practiced and

upheld by the leaders in your organization. Your organization will be better for considering these

exercises, and determining whether or not your values really have any teeth.

Competitive advantage depends on the ability to move quickly, decisively and efficiently in sensing,

responding to and exploiting change in the business environment.

Values, arguably the most important component of culture, help employees understand what an

organization stands for and what is expected of them. Values that are well-defined, consistent with

leadership actions and behaviors, and woven into the fabric of the organization provide the

foundation for culture. When employees understand, share and embrace the values of the

organization, they are more likely to act in a way that is in the best interest of the organization and to

exhibit discretionary work behavior.

In this latest study, 82% of respondents from high-performance organizations indicated that their

employees share the organization's values, compared to only 45% of those from lower performers.

But which shared organizational values matter most and what can your organization do to foster

them?

The five that really matter

Five shared values move the needle the farthest and are most predictive of agility. Companies with

deeply rooted and visible commitment to one or more of these values are more likely to be effective

at agility than those without them, and respondents from high-agility organizations are 10x more likely

to indicate that all five values are embedded in their culture.

Together, when embedded in every aspect of how an organization operates, these five values provide

the right environment for agility to thrive:

1. Innovation

Cultures that value and promote innovation--supporting it through processes, leadership, technology,

training, recruiting, and rewards--are more successful at creating and sustaining innovation capability.

Further, organizations that value risk-taking and encourage or even reward failure are significantly

more agile and innovative than those that don’t. Essentially, leadership needs to allow their

employees to test ideas and learn from their mistakes.

Recommendation: Reward well intentioned failure--possibly with opportunity to act on lessons

learned--and even the smallest of innovations, not just the earth shattering ones.

12

2. Transparency

Encouraging open communication across the organization and soliciting feedback from and involving

employees in making decisions requires trust. Trust is the foundation for building a strong culture--

trust in leadership, trust in teams and trust in individuals.

Transparent communications build trust that influences both employee support and acceptance of

change. It also provides a sense of safety for employees to allow creativity and innovation to be

stimulated, accepted and promoted.

Recommendation: Make the criteria for high-potential consideration visible to all. Great companies

do not hide what it takes to be a Hi-Po, they are clear on this and transparent about it.

3. Creativity

Creativity enables problem solving through the integration of divergent thoughts and perspectives.

This was one of the ten practices that was found to significantly influence innovation effectiveness.

4. Diversity

The mere existence of a diverse group of individuals does not directly lead to creativity, but not having

it is an impediment. Innovation is most likely to occur when there is diversity of thought and

experience, as well as true familiarity with the issues needing to be addressed. A key component to

corporate agility is having a diverse and inclusive culture. Organizations that value diversity and make

it a priority are able to "quickly consider a challenge or opportunity from a wide variety of options and

perspectives, and select the most beneficial response while avoiding the blind spots that may exist in

any single individual or cultural group lens," according to D&I expert Joseph Santana.

Recommendation: Create metrics to gauge the impact of D&I initiatives. Be aware of the current talent

mix and uncover whether hiring choices are supporting diversity efforts.

5. Collaboration

A collaborative work environment engages employees at all levels in finding solutions for customers.

Collaboration is not about exchanging information (knowledge sharing) or achieving structural

harmony, but rather it's about using combined resources to create something new.

Recommendation: Design work with teams in mind and consider implementing quality circles. Quality

circles allow the focus of your teams to shift from division of labor and leading by authority to a more

participative approach in which team members identify problems that need to be solved and suggest

solutions.

Culture is the heartbeat of an organization. Prosperity and growth comes to those organizations that

continually invest in their people, place value on things that align to organizational goals, and reward

those who exemplify the culture's values.

Combined, the five values outlined above should help enable higher levels of organizational agility,

and should be included in hiring models and performance management processes (including rewards).

13

Personal managerial behaviours that reference organizational values and cultures How often have you heard somebody — a new CEO, a journalist, a management consultant, a

leadership guru, a fellow employee — talk about the urgent need to change the culture? They want

to make it world-class. To dispense with all the nonsense and negativity that annoys employees and

stops good intentions from growing into progress. To bring about an entirely different approach,

starting immediately.

These culture critiques are as common as complaints about the weather — and about as effective.

How frequently have you seen high-minded aspirations to “change the culture” actually manage to

modify the way that people behave and the way in which they work? And how often have you seen

noticeable long-term improvements?

What Is Corporate Culture?

At its worst, culture can be a drag on productivity. At its best, it is an emotional energizer. Here's how

companies can use it to gain a competitive advantage.

If the answer to these last two questions is “rarely,” it wouldn’t surprise us. We don’t believe that

swift, wholesale culture change is possible — or even desirable. After all, a company’s culture is its

basic personality, the essence of how its people interact and work. However, it is an elusively complex

entity that survives and evolves mostly through gradual shifts in leadership, strategy, and other

circumstances. We find the most useful definition is also the simplest: Culture is the self-sustaining

pattern of behavior that determines how things are done.

Made of instinctive, repetitive habits and emotional responses, culture can’t be copied or easily

pinned down. Corporate cultures are constantly self-renewing and slowly evolving: What people feel,

think, and believe is reflected and shaped by the way they go about their business. Formal efforts to

change a culture (to replace it with something entirely new and different) seldom manage to get to

the heart of what motivates people, what makes them tick. Strongly worded memos from on high are

deleted within hours. You can plaster the walls with large banners proclaiming new values, but people

will go about their days, right beneath those signs, continuing with the habits that are familiar and

comfortable.

But this inherent complexity shouldn’t deter leaders from trying to use culture as a lever. If you cannot

simply replace the entire machine, work on realigning some of the more useful cogs. The name of the

game is making use of what you cannot change by using some of the emotional forces within your

current culture differently.

14

Source: The Katzenbach Center

For further insights: See strategy-business.com/10PrinciplesCulture

Infographic: Opto Design/Peter Stemmler

• Twitter

• LinkedIn

• Facebook

• Google Plus

Three dimensions of corporate culture affect its alignment: symbolic reminders (artifacts that are

entirely visible), keystone behaviors (recurring acts that trigger other behaviors and that are both

visible and invisible), and mind-sets (attitudes and beliefs that are widely shared but exclusively

invisible). Of these, behaviors are the most powerful determinant of real change. What people actually

do matters more than what they say or believe. And so to obtain more positive influences from your

cultural situation, you should start working on changing the most critical behaviors — the mind-sets

will follow. Over time, altered behavior patterns and habits can produce better results.

15

You may be asking: If it is so hard to change culture, why should we even bother to try? Because an

organization’s current culture contains several reservoirs of emotional energy and influence.

Executives who work with them can greatly accelerate strategic and operating imperatives. When

positive culture forces and strategic priorities are in sync, companies can draw energy from the way

people feel. This accelerates a company’s movement to gain competitive advantage, or regain

advantages that have been lost.

Research shows that companies that use a few specific cultural catalysts — that is to say, those that

use informal emotional approaches to influencing behavior — are significantly more likely to

experience change that lasts. Of the companies that reported consciously using elements of their

culture in Strategy&’s 2013 Global Culture & Change Management Survey, 70 percent said their firms

achieved sustainable improvement in organizational pride and emotional commitment. That

compares with 35 percent for firms that didn’t use culture as a lever. Although there is no magic

formula, no brilliant algorithm, no numerical equation that will guarantee results, we have gleaned

some valuable insights through decades of research and observation at dozens of enterprises,

including some of the most successful companies in the world. By adopting the following principles,

your organization can learn to deploy and improve its culture in a manner that will increase the odds

of financial and operational success.

1. Work with and within your current cultural situations. Deeply embedded cultures cannot be

replaced with simple upgrades, or even with major overhaul efforts. Nor can your culture be swapped

out for a new one as though it were an operating system or a CPU. To a degree, your current cultural

situation just is what it is — and it contains components that provide natural advantages to companies

as well as components that may act as brakes. We’ve never seen a culture that is all bad, or one that

is all good. To work with your culture effectively, therefore, you must understand it, recognize which

traits are preeminent and consistent, and discern under what types of conditions these traits are likely

to be a help or a hindrance. Put another way, there’s both a yin and a yang to cultural traits.

For example, a European pharmaceutical company with a solid product development pipeline had a

tendency to be inward-looking. It had great execution capabilities and an excellent record of

compliance with regulators around the world. However, when new products were ready to be

launched, the company had a hard time marketing them to physicians and healthcare providers.

Rather than bemoaning the company’s ingrained insularity — for example, its collective tendency to

value the opinions of internal colleagues more than those of outside experts — the leaders decided

to use this feature of its culture to its advantage. They set up a program through which employees

were acknowledged and rewarded by colleagues for “going the extra mile” to support customers. By

recognizing a new kind of internal authoritativeness, the company tapped a powerful emotional

trigger already in place, and engendered a new (and strategically important) behavior in its sales force.

2. Change behaviors, and mind-sets will follow. It is a commonly held view that behavioral change

follows mental shifts, as surely as night follows day. This is why organizations often try to change mind-

sets (and ultimately behavior) by communicating values and putting them in glossy brochures. This

technique didn’t work well for Enron, where accounting fraud and scandal were part of everyday

practice, even as the company’s espoused values of excellence, respect, integrity, and communication

were carved into the marble floor of the atrium of its global headquarters in Houston. In reality,

culture is much more a matter of doing than of saying. Trying to change a culture purely through top-

down messaging, training and development programs, and identifiable cues seldom changes people’s

beliefs or behaviors. In fact, neuroscience research suggests that people act their way into believing

rather than thinking their way into acting. Changes to key behaviors — changes that are tangible,

actionable, repeatable, observable, and measurable — are thus a good place to start.

16

Some good examples of behavior change, which we’ve observed at a number of companies, relate to

empowerment (reducing the number of approvals needed for decisions), collaboration (setting up

easy ways to convene joint projects), and interpersonal relations (devising mutually respectful

practices for raising contentious issues or grievances).

Neuroscience research suggests that people act their way into believing rather than thinking their way

into acting.

• Share to:

• Twitter

• LinkedIn

• Facebook

• Google Plus

A telecommunications company was seeking to improve its customer service. Rather than trying to

influence mind-sets by, for example, posting signs urging employees to be polite to disgruntled

customers, or having employees undergo empathy training, the company focused on what

psychologists call a “precursor behavior” — a seemingly innocuous behavior that reliably precedes the

occurrence of problem behavior. Leaders had noticed that poor teaming led to poor customer service,

so the company rolled out a plan to encourage better and more effective teaming within call centers.

To accomplish this, they set up regular design sessions for improving practices. When employees felt

they were part of a happy team, and sensed a greater level of support from colleagues, they began

treating their customers better.

In another example, a resources company in the Middle East was seeking to make its workplace safer.

Rather than erect placards threatening workers with consequences, the company focused on a

relatively basic precursor behavior: housekeeping. It organized a litter drive. Picking up trash as a team

helped employees take greater pride in the workplace, which engendered a greater sense of care for

fellow employees and made them more likely to speak up when they noticed an unsafe situation.

Changed behavior, changed mind-set.

3. Focus on a critical few behaviors. Conventional wisdom advocates a comprehensive approach —

everybody should change everything that’s not perfect! But companies must be rigorously selective

when it comes to picking behaviors. The key is to focus on what we call “the critical few,” a small

number of important behaviors that would have great impact if put into practice by a significant

number of people. Discern a few things people do throughout the company that positively affect

business performance — for example, ways of starting meetings or talking with customers. Make sure

those are aligned with the company’s overall strategy. Also check that people feel good about doing

these things, so that you tap into emotional commitment. Then codify them: Translate those critical

behaviors into simple, practical steps that people can take every day. Next, select groups of employees

who are primed for these few behaviors, those who will respond strongly to the new behaviors and

who are likely to implement and spread them.

At an Asian banking company, rapid inorganic growth had led to diverse ways of working across

different units and geographies. To focus on improving teaming, customer outcomes, and the ability

to realize synergies, the CEO and leadership embarked on a culture-led evolution program. They

targeted just three critical behaviors: taking extra steps to delight customers, valuing performance

over seniority, and backing up and supporting one another.

17

They then converted these three general behaviors into specifics for each part of the company.

Delighting customers, for instance, was translated into frontline staff collaborating with other

colleagues to solve client problems and prioritizing the implementation of process improvements that

affected customer outcomes. For all three behaviors, leadership recognized and celebrated examples

in which people made an extraordinary effort. Senior leaders acted as role models, explicitly modeling

these three new behaviors. The company also identified influential frontline, client-facing employees

who could demonstrate these new behaviors in action.

4. Deploy your authentic informal leaders. Authority, which is conferred by a formal position, should

not be confused with leadership. Leadership is a natural attribute, exercised and displayed informally

without regard to title or position in the organizational chart. Because authentic informal leaders, who

are found in every organization, are often not recognized as such, they are frequently overlooked and

underused when it comes to driving culture. It is possible to identify such leaders through interviews,

surveys, and tools such as organizational network analysis, which allow companies to construct maps

of complex internal social relations by analyzing email statistics and meeting records. Once identified,

these leaders can become powerful allies who can influence behavior through “showing by doing.” In

fact, when companies map out their organizations, they can identify leaders who exhibit different core

leadership strengths (see “Four Types of Authentic Informal Leaders”).

Four Types of Authentic Informal Leaders

Every organization has people who influence and energize others without relying on their title or

formal position in the hierarchy to do so. We call them “authentic informal leaders.” They are a

powerful resource in spreading a critical few behaviors from the bottom up. Among the many types

of informal leaders present in organizations, the following are seen most frequently.

Pride builders are master motivators of other people, and catalysts for improvement around them.

Often found in the role of line manager, they understand the motivations of those with whom they

work. They know how to foster a sense of excellence among others. They can be found at every level

of a hierarchy; some of the most effective pride builders are close to the front line, where they can

interact directly with customers as well as employees. Pride builders often have powerful insights

about the culture and about what behaviors are likely to lead to improvement.

Exemplars are role models. They bring vital behaviors or skills to life, and others pay attention to them.

They are well respected and are effective peer influencers in the middle and senior management

cohorts.

Networkers are hubs of personal communication within the organization. They know many people,

and communicate freely and openly with them. They serve as links among people who might not

otherwise share information or ideas. If you want to see an idea travel virally through an enterprise,

enlist your networkers.

Early adopters enthusiastically latch onto and experiment with new technologies, processes, and

ways of working. Involve them in your performance pilots, or whenever you are trying to demonstrate

impact quickly.

At one major oil company, an informal leader named Osama became known as the “turbo-

collaborator.” His role gave him very little formal influence. But when he began working at the

refinery, he walked the plant with the engineers, maintenance technicians, and operators, and took

copious notes.

18

As a result, he knew everyone and developed relationships across disciplines. Whenever somebody

wanted to know how the place really worked, they would speak to Osama — who would either have

the answer in his notebook or know precisely the right person to ask. When the company formed a

buddy program between operations and maintenance aimed at using greater collaboration to improve

plant reliability, it knew it needed Osama at the heart of it. He connected people, defined templates

to encourage collaboration, and captured success stories. Identifying, engaging, and nurturing such

informal leaders allows companies to harness their talents and further the company’s transformation

efforts.

5. Don’t let your formal leaders off the hook. Most organizations tend to shunt culture into the silo

of human resources professionals. But leaders in all parts of the company are critical in safeguarding

and championing desired behaviors, energizing personal feelings, and reinforcing cultural alignment.

The signaling of emotional commitment sets the tone for others to follow. If staff members see a

disconnect between the culture an organization promulgates and the one its formal leadership

follows, they’ll disengage quickly from the advertised culture and simply mimic their seniors’ behavior.

The people at the top have to demonstrate the change they want to see. Here, too, the critical few

come into play. A handful of the right kind of leaders have to be on board to start the process.

When Jim Rogers was CEO of GE Motors in Fort Wayne, Ind., he became frustrated because his senior

leadership group of more than 15 leaders seldom functioned together as a “real team.” As described

by Jon Katzenbach and Douglas K. Smith in The Wisdom of Teams: Creating the High-Performance

Organization (Harvard Business School Press, 1993), a real team is one with a high level of emotional

commitment; the leadership role shifts easily among the members depending on their skills and

experience and the challenges of the moment, rather than on any hierarchical positions. Team

members hold one another accountable for the quality of their collective work. Interestingly, at GE

Motors the senior leadership group members often demonstrated real team capabilities in running

their individual business units and functions. So Rogers decided to find ways to break them into

subteams of three or four members to address specific cross-organizational issues facing the larger

group. Over time, he mixed the subgroupings to match emerging issues. By working in different

subgroup settings, the executives developed camaraderie, which in turn improved the effectiveness

of the group as a whole.

6. Link behaviors to business objectives. When people talk about feelings, motivations, and values

— all of which are vital elements of strong cultures — the conversation can often veer into

abstractions. It may then range far afield of what it takes to succeed in the market. Too many

employees walk away from culture-focused town halls or values discussions wondering how the

advice on how to be a better person actually translates into the work they do. To avoid this disconnect,

offer tangible, well-defined examples of how cultural interventions lead to improved performance and

financial outcomes. Select behaviors that are aimed specifically at improving business performance

and can be measured over time.

19

How to communicate organizational values to the organizational that motivate the

organization to apply these values Every company has values, but not every company truly lives (and works) by them. It’s those very

beliefs that help build a strong team foundation and an even stronger company culture. However, a

company’s moral code can easily get lost in the hustle and bustle of the work day.

The key to bringing organizational values front and center is to convert them into specific, behavioral

examples. By modeling and rewarding behaviors that demonstrate each value, employees are

constantly reminded of what their company stands for and how to better work by those principles.

Additionally, these observable behaviors make it easier for employers to measure and manage

company standards.

Don’t let organizational values sit on the company career page and in the new hire handbook. Here

are four easy ways to bring them to life:

1. Put values front and center.

It can be easy to lose sight of company values when focused on the task at hand. They should guide

all aspects of business, from the decisions we make to the talent we source to the way we interact

with customers. But they can’t be applied if they’re not remembered.

So how can employers make company values stick?

Keep the company’s moral code at the forefront of everyone’s mind by making it prominent within

the workplace. In addition to featuring it on the company website and in the employee handbook

(neither of which employees look at on a daily basis), post it where employees often gather

(conference rooms, snack rooms, etc.). At ClearCompany, we have them painted on the walls

throughout the office, along with our logo, to serve as a daily reminder for our team.

Reminding employees of values doesn’t stop after crafting, laminating and posting posters throughout

the office, however. They need to be communicated from the top on a regular basis.

2. Hire based on values.

Building a workforce that lives and works by the company moral code starts with hiring based upon

values. For each of the company’s values, develop a list of questions designed to assess a candidate’s

character and potential fit.

For instance, one of our values at ClearCompany is that we’re team entrepreneurial. Asking interview

questions related to a candidate’s ability to be enterprising is essential to finding talent that shares

and fulfills our values.

People are often predisposed to sharing (or not sharing) the company’s beliefs, so using the interview

process to identify people who have similar principles is crucial to building a workforce that can

successfully apply company ethics to everything they do.

3. Work (and play) by values.

The best way to bring organizational values to life is to model them. In other words, don’t just let them

sit on the wall and call it a day. Live, work and play by them on a daily basis.

One of software company VMware’s values is to give more. The company does this by giving

employees 40 hours of paid time off each year to volunteer.

20

In addition to volunteering together, the company even has its own charitable foundation based on

service learning, social investments, matching donations and milestone awards.

Actively model company values by aligning them with company culture activities, such as taking time

off to volunteer together. Most important, lead by example. Show employees how it’s done by using

company character to guide business decisions and empowering employees to do the same.

4. Reward and promote values.

Last, but certainly not least, promote organizational values by rewarding behaviors that demonstrate

them. Don’t hesitate to publicly reward someone for exhibiting behaviors that are in line with the

company’s character. Not only does this make the individual feel good, it also pushes the rest of the

company to follow suit.

One way we reward employees at ClearCompany is by featuring employees who demonstrate our

values on our company website. Whether it’s by making individuals “employee of the month,”

featuring the employee in the company newsletter, blog and/or website or by giving them a simple

pat on the back, just be sure the behavior doesn’t go unnoticed. After all, there’s no better way to

promote great behavior than to reward it.

The techniques of culture development

The tools available to an organization to identify and develop its culture You already understand the importance of having a strong company culture, but even with the desire

to build one, it's not always obvious what steps to take.

Here are ten easy, actionable steps you can take today to improve company culture, both in the short

and long term.

1. Embrace transparency

Transparency isn't just positive for employees. The effects of a transparent company culture impact

the entire organization and the people it serves.

In a post she wrote about building a transparent company culture, TINYPulse's Sabrina Son provided

a great explanation of why transparency makes such a positive impact:

"It's giving employees unfiltered insight into a company's operations and future. It's giving employees

a voice. And most of all, it's trust."

Trust is truly the foundation of a great company culture.

21

Sabrina shared a few ways to improve the transparency in any organization, but one in particular stood

out:

Implement modern communication and collaboration tools

Outdated communication tools can be a major barrier to transparency. It's imperative that your team

has an easy and efficient way connect with one another and to share crucial information.

There are some excellent options available for any size company. Here are a couple great options to

start with:

Chat and collaboration

Slack

HipChat

Yammer

Google Apps for Business

Video conferencing

Skype

Google Hangouts

Project management

For more examples of modern collaboration tools, check out this list the team at Time Doctor put

together. In addition to improving your communication and collaboration tools, another crucial step

to take is simply defaulting to transparency.

This is primarily a mental, rather than a logistical shift. Instead of asking "is it absolutely necessary to

share this?" ask, "is it absolutely necessary to conceal this?" It's that easy.

Share success. If you're going to share one thing, start with this. Openly share the successes of the

organization, its teams, and its individuals with everyone. It's a major motivation boost for the team

to hear the positive results of their hard work.

Share challenges. You hired the best and smartest people in the room for a reason. By sharing the

challenges your company faces, you're opening up the possibility for your team to offer brilliant

solutions that you may never have considered.

This doesn't mean you need to share every minutia of every logistical challenge, but when it comes to

solving complicated challenges, several minds are often more powerful than one.

2. Recognize and reward valuable contributions

22

Did you know that companies that have a recognition-rich culture also tend to have dramatically

lower turnover rates?

In a seminal article he wrote for Forbes, Josh Bersin shared some astounding statistics from some

recent research Bersin by Deloitte conducted, namely that the top 20 percent of companies with a

recognition-rich culture have a 31 percent lower turnover rate.

Employee recognition doesn't have to come exclusively from the top. It's often even more impactful

when recognition comes from all around — from leaders, from peers, from everyone.

Peer-to-peer is the most effective method of infusing recognition into your culture.

Peer recognition dramatically reduces the managerial overhead required to make sure everyone's

being recognized for the work they do. It's also a great way to organically build stronger relationships

between coworkers — which is the next step towards building an outstanding company culture.

3. Cultivate strong coworker relationships

Having a strong relationships at work drives employee engagement, but it doesn't happen

automatically. Building strong coworker relationships takes time and effort.

Employees shouldn't scatter the moment their leader approaches the water cooler.

In fact, some research suggests you could benefit from doing the exact opposite, and create spaces

that encourage, and even generate what Ben Waber, Jennifer Magnolfi, and Greg Lindsay refer to as

"collisions," in their fascinating Harvard Business Review piece, "Workspaces That Move People."

As they explain in the article:

"We’ve learned, for example, that face-to-face interactions are by far the most important activity in

an office...our data suggest that creating collisions — chance encounters and unplanned interactions

between knowledge workers, both inside and outside the organization — improves performance."

Think about both the physical and cultural environment in your own organization. Is it conducive to

building strong relationships? If it isn't, make the shift. It's easy to engineer spaces and situations that

promote coworker interaction.

23

4. Embrace and inspire employee autonomy

No one likes to be micromanaged at work. It's ineffective, inefficient, and does little to inspire trust in

your company culture.

Trust your employees to manage their responsibilities effectively, and let go of the idea that work has

to happen a certain way at a certain time.

Intuit's "5 Ways to Give Workers More Autonomy (and Why It's Important)" mentions a few ways that

you can inspire employee autonomy, like allowing employees to exercise choice, letting go of the 40-

hour work week concept, establishing autonomous work teams, creating decision-making

opportunities, and reining in overzealous bosses and coworkers who tend to hover or bully others.

Embracing your team's autonomy allows them to make the sometimes difficult, but incredibly

rewarding leap from being held accountable to their responsibilities to embracing accountability as

they take on, and own, initiatives.

5. Practice flexibility

Many companies have begun to understand the value of providing their employees with added

flexibility. It can improve morale and reduce turnover.

In a recent CareerBuilder survey, of nearly four thousand workers, flexibility proved to be one of the

biggest drivers of retention:

24

Workplace flexibility could mean many things, from a parent stepping out for a few hours to watch a

school play, to work-from-home opportunities, or an employee taking a much-needed sabbatical.

If you're unsure how to begin implementing a policy of flexibility in your workplace, Gabriel Bristol's

Business 2 Community article "Three Steps to Creating a Flexible Corporate Culture" is a great place

to start.

6. Communicate purpose and passion

Do your employees see work as a way to make an impact? Are they passionate about the work that

they do?

25

Imperative's "State of HR: Why You Should Fill Your Payroll with Purpose-Driven People" explains how

purpose-driven employees find the act of work inherently meaningful and rich in purpose.

It's possible to find purpose in any type of work.

We met with Arthur Woods recently, who shared an excellent explanation:

“We find that purpose is derived from your relationships, your sense of impact, and your sense of

personal growth,” he said. “If you think about it, those three things are possible in any job. Anyone

can build deep, nourishing relationships; anyone can feel like their work matters, and anyone can push

themselves to develop in any setting.”

There are no "purpose professions." You may need to find out what's important to your employees,

and that goes back to forging relationships.

The better you understand their goals and aspirations, the better you can help your team to see the

purpose in their work.

7. Promote a team atmosphere

If you aren't already, it's time to think of your employees and your coworkers not as simply a group

of other people you work with, but as integral members of your team.

In his post "The 4 Elements that Make a Great Culture" on the KISSmetrics blog, Zach Bulygo makes a

great point about using the word "team" rather than employees:

"The difference between being a team and just a bunch of individuals is that the individuals see

themselves as separate from each other. Helping others is forced because you normally operate on

your own projects, or your own part in a larger project.

Teams work together on all work related projects and help where necessary. It doesn't matter who

gets credit for what because you accomplish everything together. You're knit together, not

separated."

This shift in mentality from people (or siloed groups of people) working toward individual goals to a

unified team, all pulling in one direction can make an enormous difference in the results of your work.

26

8. Give and solicit regular feedback

OfficeVibe's Employee Feedback: The Complete Guide is a great resource on getting the most out of

this precious commodity.

In short, employees don't get enough feedback, and when they do it's often vague or perceived as

inauthentic. You may be thinking, "We do annual performance reviews. Feedback: covered."

I've got news for you. Once-a-year feedback doesn't come close to providing an employee with the

tools they need to improve and grow.

Once-a-year feedback doesn't come close to providing an employee with the tools they need to

improve and grow.

At the recent HR Innovators summit, timely feedback and its impact on performance management

was a recurring theme across companies of all sizes.

Giving helpful, timely feedback is a benefit to everyone. You can reward good behaviors and results

as they occur, encouraging more of the same.

If an employee is consistently having trouble meeting management's expectations, that crucial

feedback shouldn't come as a surprise at the end of the year. They need feedback and most

importantly support when it's easy to make a correction.

The best managers and leaders are listeners and facilitators.

It's vital to give employees the tools they need to understand when and why they're doing well, and

how to fix it when they're not.

27

9. Stay true to your core values

Real core values are much more than a list of bullet points on a company's 'about us' page. Core values

are a company's guiding light. They're the inseparable principals at the heart of an organization.

As such, they're not fleeting thoughts brainstormed during a heavily caffeinated group meeting with

your web designer. They're not something you pick because they sound good.

Lolly Daskal wrote a great article for Huffington Post about this. In it, she described the concept

perfectly:

"Your values determine what is important and meaningful to you. They align with your purpose, and

speak loudly and passionately to others — and to yourself — about who you are and what you're

called to do in this world."

If your culture is going to stick, you need to develop genuine core values and stay true to them.

10. Give culture building the effort it deserves

Few things will have a greater impact on your organization than its culture.

28

Building a company culture takes time and energy. It doesn't just happen. Your culture should align

with your mission and values —and it should resonate with everyone in the organization.

Failing to allocate the necessary time and effort into building a company culture you can be proud of

will leave you with a company culture you simply accept, or worse, dislike.

Failing to allocate the necessary time and effort into building a company culture you can be proud of

will leave you with a company culture you simply accept, or worse, dislike.

There's no finish line. A truly amazing company culture is a constant work in progress, because as a

company evolves, so do its constituents.

Devote time to nurturing your company culture. Exemplify it in every way you can so that your team

will be able to recognize and emulate it.

In summary

Building an outstanding company culture is one of the most rewarding tasks you can take on. A great

culture attracts the best workers, increases overall retention, improves performance, and lowers

costs, just to name a few things.

Methods of dealing with messages and behaviours which are in conflict with

organizational values Conflict is inevitable in small businesses. Conflict can arise from a variety of sources, and between

supervisors and subordinates, between co-workers, and between employees and customers.

Managers and organizations can choose to see conflict as inherently negative, acting to suppress it at

every opportunity, or as inherently positive, leveraging conflict to affect positive change.

Positive Perspective

Accept conflict as a natural growth process and influence your company culture to view constructive

conflict positively. Conflict can be an asset to your small business if it is handled properly. It can help

your organization to learn from its mistakes and identify areas of needed improvement. Innovation

can be inspired from creative solutions to internal or external conflicts, and new ways of thinking can

emerge.

Grievance Procedure

Create a formal grievance procedure for all employees. Let employees at all levels of your organization

know that their voices will always be heard, and respond promptly and reasonably to employees'

issues. This can prevent bad feelings from festering and growing into resentment and bitterness.

Conflict is best handled quickly and openly. If your company culture is sufficiently friendly toward

constructive conflict, your staff should see the value of letting their complaints, ideas and issues be

heard.

Get to the Cause

Focus on deep-rooted causes rather than superficial effects when assessing conflicts. Parties to a

conflict often claim to have issues with the behavior of co-workers or the outcome of company policies

and work procedures, but these issues are likely being caused by something deeper. Attempting to

resolve the conflict by addressing surface issues will rarely create meaningful change or lasting

solutions. Look deeper to address the reasons that incidents occur.

29

As an example, if a supervisor finds himself constantly in conflict with a loyal employee due to falling

productivity levels, the supervisor may naturally want to address the employee's behavior head-on.

Upon closer analysis, however, the supervisor may realize that the employee has been increasingly

dissatisfied with his job ever since last year's disappointing performance review. Revisiting the review

with the employee may be much more effective than creating incremental performance goals for him.

Equal Voices

Give all parties to a conflict an equal voice, regardless of their position, length of service or political

influence. Conflict participants can become defensive if they feel they are being marginalized or are

going through a process leading to a predetermined outcome. It can be tempting to take the word of

managers over front-line employees, or to take the word of a loyal employee over a new employee,

but remember that your most trusted associates are not necessarily infallible. Go beyond simply giving

everyone an equal chance to speak; give their arguments an equal weight in your mind when

mediating a conflict.

Resolution Participation

Involve all parties, if possible, when drafting conflict resolutions. The theory of Management By

Objectives (MBO) states that employees are generally more committed to goals that they have helped

to create. The same holds true for conflict resolutions. There is more than one side to every conflict,

and all sides should benefit from conflict resolution. Seek resolutions that will prevent the conflict

from occurring again, rather than simply delaying a repeat occurrence.

Legitimate strategies and tactics to influence people in support of organizational values Bases of Power

Having power and using power are two different things. For example, imagine a manager who has the

power to reward or punish employees. When the manager makes a request, he or she will probably

be obeyed even though the manager does not actually reward the employee. The fact that the

manager has the ability to give rewards and punishments will be enough for employees to follow the

request. What are the sources of one’s power over others? Researchers identified six sources of

power, which include legitimate, reward, coercive, expert, information, and referent (French & Raven,

1960). You might earn power from one source or all six depending on the situation. Let us take a look

at each of these in turn, and continue with Steve Jobs from the opening case as our example.

30

People who have legitimate power should be aware of how their choices and behaviors affect others.

Segagman – Steve Jobs 1955-2011 – CC BY 2.0.

Legitimate Power

Legitimate power is power that comes from one’s organizational role or position. For example, a boss

can assign projects, a policeman can arrest a citizen, and a teacher assigns grades. Others comply with

the requests these individuals make because they accept the legitimacy of the position, whether they

like or agree with the request or not. Steve Jobs has enjoyed legitimate power as the CEO of Apple.

He could set deadlines and employees comply even if they think the deadlines were overly ambitious.

Start-up organizations often have founders who use their legitimate power to influence individuals to

work long hours week after week in order to help the company survive.

Reward Power

Reward power is the ability to grant a reward, such as an increase in pay, a perk, or an attractive job

assignment. Reward power tends to accompany legitimate power and is highest when the reward is

scarce. Anyone can wield reward power, however, in the form of public praise or giving someone

something in exchange for their compliance. When Steve Jobs ran Apple, he had reward power in the

form of raises and promotions. Another example of reward power comes from Bill Gross, founder of

Idealab, who has the power to launch new companies or not. He created his company with the idea

of launching other new companies as soon as they could develop viable ideas. If members could

convince him that their ideas were viable, he gave the company a maximum of $250,000 in seed

money, and gave the management team and employees a 30% stake in the company and the CEO 10%

of the company. That way, everyone had a stake in the company. The CEO’s salary was capped at

$75,000 to maintain the sense of equity. When one of the companies, Citysearch, went public, all

employees benefited from the $270 million valuation.

Coercive Power

In contrast, coercive power is the ability to take something away or punish someone for

noncompliance. Coercive power often works through fear, and it forces people to do something that

ordinarily they would not choose to do. The most extreme example of coercion is government

dictators who threaten physical harm for noncompliance. Parents may also use coercion such as

grounding their child as punishment for noncompliance. Steve Jobs has been known to use coercion—

yelling at employees and threatening to fire them. When John Wiley & Sons Inc. published an

unauthorized biography of Jobs, Jobs’s response was to prohibit sales of all books from that publisher

in any Apple retail store (Hafner, 2005). In other examples, John D. Rockefeller was ruthless when

running Standard Oil Company. He not only undercut his competitors through pricing, but he used his

coercive power to get railroads to refuse to transport his competitor’s products. American presidents

have been known to use coercion power. President Lyndon Baines Johnson once told a White House

staffer, “Just you remember this. There’s only two kinds at the White house. There’s elephants and

there’s ants. And I’m the only elephant” (Hughes, Ginnet, & Curphy, 1995).

31

Expert Power

Expert power comes from knowledge and skill. Steve Jobs has expert power from his ability to know

what customers want—even before they can articulate it. Others who have expert power in an

organization include long-time employees, such as a steelworker who knows the temperature

combinations and length of time to get the best yields. Technology companies are often characterized

by expert, rather than legitimate power. Many of these firms utilize a flat or matrix structure in which

clear lines of legitimate power become blurred as everyone communicates with everyone else

regardless of position.

Information Power

Information power is similar to expert power but differs in its source. Experts tend to have a vast

amount of knowledge or skill, whereas information power is distinguished by access to specific

information. For example, knowing price information gives a person information power during

negotiations. Within organizations, a person’s social network can either isolate them from information

power or serve to create it. As we will see later in this chapter, those who are able to span boundaries

and serve to connect different parts of the organizations often have a great deal of information power.

In the TV show Mad Men, which is set in the 1960s, it is clear that the switchboard operators have a

great deal of information power as they place all calls and are able to listen in on all the phone

conversations within the advertising firm.

Referent Power

As the 44th elected president of the United States, Barack Obama has legitimate power. As

commander-in-chief of the U.S. Armed Forces, he also has coercive power. His ability to appoint

individuals to cabinet positions affords him reward power. Individuals differ on the degree to which

they feel he has expert and referent power, as he received 52% of the popular vote in the 2008

election. Shortly after the election, he began to be briefed on national security issues, providing him

with substantial information power as well.

32

Wikimedia Commons – CC BY 2.0.

Referent power stems from the personal characteristics of the person such as the degree to which we

like, respect, and want to be like them. Referent power is often called charisma—the ability to attract

others, win their admiration, and hold them spellbound. Steve Jobs’s influence as described in the

opening case is an example of this charisma.

What Is Influence?

Starting at infancy, we all try to get others to do what we want. We learn early what works in getting

us to our goals. Instead of crying and throwing a tantrum, we may figure out that smiling and using

language causes everyone less stress and brings us the rewards we seek.

By the time you hit the workplace, you have had vast experience with influence techniques. You have

probably picked out a few that you use most often. To be effective in a wide number of situations,

however, it’s best to expand your repertoire of skills and become competent in several techniques,

knowing how and when to use them as well as understanding when they are being used on you. If you

watch someone who is good at influencing others, you will most probably observe that person

switching tactics depending on the context. The more tactics you have at your disposal, the more likely

it is that you will achieve your influence goals.

Al Gore and many others have spent years trying to influence us to think about the changes in the

environment and the implications of global warming. They speak, write, network, and lobby to get

others to pay attention. But Gore, for example, does not stop there. He also works to persuade us with

direct, action-based suggestions such as asking everyone to switch the kind of light bulbs they use,

turn off appliances when not in use, drive vehicles with better fuel economy, and even take shorter

showers. Ironically, Gore has more influence now as a private citizen regarding these issues than he

was able to exert as a congressman, senator, and vice president of the United States.

OB Toolbox: Self-Assessment

Do You Have the Characteristics of Powerful Influencers?

People who are considered to be skilled influencers share the following attributes.

How often do you engage in them? 0 = never, 1= sometimes, 2 = always.

• present information that can be checked for accuracy

• provide a consistent message that does not change from situation to situation

• display authority and enthusiasm (often described as charisma)

• offer something in return for compliance

• act likable

• show empathy through listening

• show you are aware of circumstances, others, and yourself

• plan ahead

If you scored 0–6: You do not engage in much effective influencing behavior. Think of ways to enhance

this skill. A great place to start is to recognize the items on the list above and think about ways to

enhance them for yourself.

33

If you scored 7–12: You engage in some influencing behavior. Consider the context of each of these

influence attempts to see if you should be using more or less of it depending on your overall goals.

If you scored 13–16: You have a great deal of influence potential. Be careful that you are not

manipulating others and that you are using your influence when it is important rather than just to get

your own way.

Commonly Used Influence Tactics

Frequency of Use Resistance Compliance Commitment

Rational persuasion 54% 47% 30% 23%

Legitimating 13% 44% 56% 0%

Personal appeals 7% 25% 33% 42%

Exchange 7% 25% 33% 42%

Ingratiation 6% 41% 28% 31%

Pressure 6% 56% 41% 3%

Coalitions 3% 53% 44% 3%

Inspirational appeals 2% 0% 10% 90%

Consultation 2% 18% 27% 55%

Source: Adapted from information in Falbe, C. M., & Yukl, G. (1992). Consequences for managers of

using single influence tactics and combinations of tactics. Academy of Management Journal, 35, 638–

652.

Researchers have identified distinct influence tactics and discovered that there are few differences

between the way bosses, subordinates, and peers use them, which we will discuss at greater depth

later on in this chapter. We will focus on nine influence tactics. Responses to influence attempts

include resistance, compliance, or commitment. Resistance occurs when the influence target does not

wish to comply with the request and either passively or actively repels the influence

attempt. Compliance occurs when the target does not necessarily want to obey, but they

do. Commitment occurs when the target not only agrees to the request but also actively supports it

as well. Within organizations, commitment helps to get things done, because others can help to keep

initiatives alive long after compliant changes have been made or resistance has been overcome.

34

1. Rational persuasion includes using facts, data, and logical arguments to try to convince others

that your point of view is the best alternative. This is the most commonly applied influence

tactic. One experiment illustrates the power of reason. People were lined up at a copy

machine and another person, after joining the line asked, “May I go to the head of the line?”

Amazingly, 63% of the people in the line agreed to let the requester jump ahead. When the

line jumper makes a slight change in the request by asking, “May I go to the head of the line

because I have copies to make?” the number of people who agreed jumped to over 90%. The

word becausewas the only difference. Effective rational persuasion includes the presentation

of factual information that is clear and specific, relevant, and timely. Across studies

summarized in a meta-analysis, rationality was related to positive work outcomes (Higgins,

Judge, & Ferris, 2003).

2. Inspirational appeals seek to tap into our values, emotions, and beliefs to gain support for a

request or course of action. When President John F. Kennedy said, “Ask not what your country

can do for you, ask what you can do for your country,” he appealed to the higher selves of an

entire nation. Effective inspirational appeals are authentic, personal, big-thinking, and

enthusiastic.

3. Consultation refers to the influence agent’s asking others for help in directly influencing or

planning to influence another person or group. Consultation is most effective in organizations

and cultures that value democratic decision making.

4. Ingratiation refers to different forms of making others feel good about themselves.

Ingratiation includes any form of flattery done either before or during the influence attempt.

Research shows that ingratiation can affect individuals. For example, in a study of résumés,

those résumés that were accompanied with a cover letter containing ingratiating information

were rated higher than résumés without this information. Other than the cover letter

accompanying them, the résumés were identical (Varma, Toh, & Pichler, 2006). Effective

ingratiation is honest, infrequent, and well intended.

5. Personal appeal refers to helping another person because you like them and they asked for

your help. We enjoy saying yes to people we know and like. A famous psychological

experiment showed that in dorms, the most well-liked people were those who lived by the

stairwell—they were the most often seen by others who entered and left the hallway. The

repeated contact brought a level of familiarity and comfort. Therefore, personal appeals are

most effective with people who know and like you.

6. Exchange refers to give-and-take in which someone does something for you, and you do

something for them in return. The rule of reciprocation says that “we should try to repay, in

kind, what another person has provided us” (Cialdini, 2000). The application of the rule obliges

us and makes us indebted to the giver. One experiment illustrates how a small initial gift can

open people to a substantially larger request at a later time. One group of subjects was given

a bottle of Coke. Later, all subjects were asked to buy raffle tickets. On the average, people

who had been given the drink bought twice as many raffle tickets as those who had not been

given the unsolicited drinks.

35

7. Coalition tactics refer to a group of individuals working together toward a common goal to

influence others. Common examples of coalitions within organizations are unions that may

threaten to strike if their demands are not met. Coalitions also take advantage of peer

pressure. The influencer tries to build a case by bringing in the unseen as allies to convince

someone to think, feel, or do something. A well-known psychology experiment draws upon

this tactic. The experimenters stare at the top of a building in the middle of a busy street.

Within moments, people who were walking by in a hurry stop and also look at the top of the

building, trying to figure out what the others are looking at. When the experimenters leave,

the pattern continues, often for hours. This tactic is also extremely popular among advertisers

and businesses that use client lists to promote their goods and services. The fact that a client

bought from the company is a silent testimonial.

8. Pressure refers to exerting undue influence on someone to do what you want or else

something undesirable will occur. This often includes threats and frequent interactions until

the target agrees. Research shows that managers with low referent power tend to use

pressure tactics more frequently than those with higher referent power (Yukl, Kim, & Falbe,

1996). Pressure tactics are most effective when used in a crisis situation and when they come

from someone who has the other’s best interests in mind, such as getting an employee to an

employee assistance program to deal with a substance abuse problem.

9. Legitimating tactics occur when the appeal is based on legitimate or position power. “By the

power vested in me…”: This tactic relies upon compliance with rules, laws, and regulations. It

is not intended to motivate people but to align them behind a direction. Obedience to

authority is filled with both positive and negative images. Position, title, knowledge,

experience, and demeanor grant authority, and it is easy to see how it can be abused. If

someone hides behind people’s rightful authority to assert themselves, it can seem heavy-

handed and without choice. You must come across as an authority figure by the way you act,

speak, and look. Think about the number of commercials with doctors, lawyers, and other

professionals who look and sound the part, even if they are actors. People want to be

convinced that the person is an authority worth heeding. Authority is often used as a last

resort. If it does not work, you will not have much else to draw from in your goal to persuade

someone.

From the Best-Seller’s List: Making OB Connections

You can make more friends in two months by becoming interested in other people than you can in two

years by trying to get other people interested in you.

Dale Carnegie

How to Make Friends and Influence People was written by Dale Carnegie in 1936 and has sold millions

of copies worldwide. While this book first appeared over 70 years ago, the recommendations still

make a great deal of sense regarding power and influence in modern-day organizations. For example,

he recommends that in order to get others to like you, you should remember six things:

1. Become genuinely interested in other people.

2. Smile.

3. Remember that a person’s name is to that person the sweetest and most important sound in

any language.

36

4. Be a good listener. Encourage others to talk about themselves.

5. Talk in terms of the other person’s interests.

6. Make the other person feel important—and do it sincerely.

This book relates to power and politics in a number of important ways. Carnegie specifically deals with

enhancing referent power. Referent power grows if others like, respect, and admire you. Referent

power is more effective than formal power bases and is positively related to employees’ satisfaction

with supervision, organizational commitment, and performance. One of the keys to these

recommendations is to engage in them in a genuine manner. This can be the difference between being

seen as political versus understanding politics.

Impression Management

Impression management means actively shaping the way you are perceived by others. You can do this

through your choice of clothing, the avatars or photos you use to represent yourself online, the

descriptions of yourself on a résumé or in an online profile, and so forth. By using impression

management strategies, you control information that make others see you in the way you want to be

seen. Consider when you are “being yourself” with your friends or with your family—you probably act

differently around your best friend than around your mother (Dunn & Forrin, 2005).

On the job, the most effective approach to impression management is to do two things at once—build

credibility and maintain authenticity. As Harvard Business School Professor Laura Morgan Roberts puts

it, “When you present yourself in a manner that is both true to self and valued and believed by others,

impression management can yield a host of favorable outcomes for you, your team, and your

organization” (Stark, 2005).

There may be aspects of your “true self” that you choose not to disclose at work, although you would

disclose them to your close friends. That kind of impression management may help to achieve group

cohesiveness and meet professional expectations. But if you try to win social approval at work by

being too different from your true self—contradicting your personal values—you might feel

psychological distress.

It’s important to keep in mind that whether you’re actively managing your professional image or not,

your coworkers are forming impressions of you. They watch your behavior and draw conclusions about

the kind of person you are, whether you’ll keep your word, whether you’ll stay to finish a task, and

how you’ll react in a difficult situation.

Since people are forming these theories about you no matter what, you should take charge of

managing their impressions of you. To do this, ask yourself how you want to be seen. What qualities

or character traits do you want to convey? Perhaps it’s a can-do attitude, an ability to mediate, an

ability to make a decision, or an ability to dig into details to thoroughly understand and solve a

problem.

Then, ask yourself what the professional expectations are of you and what aspects of your social

identity you want to emphasize or minimize in your interactions with others. If you want to be seen

as a leader, you might disclose how you organized an event. If you want to be seen as a caring person

in whom people can confide, you might disclose that you’re a volunteer on a crisis helpline. You can

use a variety of impression management strategies to accomplish the outcomes you want.

37

Here are the three main categories of strategies and examples of each:

• Nonverbal impression management includes the clothes you choose to wear and your

demeanor. An example of a nonverbal signal is body art, including piercings and tattoos. While

the number of people in the United States who have body art has risen from 1% in 1976 to

24% in 2006, it can hold you back at work. Vault.com did a survey and found that 58% of the

managers they surveyed said they would be less likely to hire someone with visible body art,

and over 75% of respondents felt body art was unprofessional. Given these numbers, it should

not be surprising that 67% of employees say they conceal body art while they are at

work(Society for Industrial and Organizational Psychology Inc., 2008).

• Verbal impression management includes your tone of voice, rate of speech, what you choose

to say and how you say it. We know that 38% of the comprehension of verbal communication

comes from these cues. Managing how you project yourself in this way can alter the

impression that others have of you. For example, if your voice has a high pitch and it is shaky,

others may assume that you are nervous or unsure of yourself.

• Behavior impression management includes how you perform on the job and how you interact

with others. Complimenting your boss is an example of a behavior that would indicate

impression management. Other impression management behaviors include conforming,

making excuses, apologizing, promoting your skills, doing favors, and making desirable

associations known. Impression management has been shown to be related to higher

performance ratings by increasing liking, perceived similarity, and network centrality

(Barsness, Diekmann, & Seidel, 2005; Wayne & Liden, 1995).

Impression management includes how a person dresses, how they stand, and the way they behave at

work.

Andrew Pearson – Professional – CC BY-SA 2.0.

Research shows that impression management occurs throughout the workplace. It is especially salient

when it comes to job interviews and promotional contexts. Research shows that structured interviews

suffer from less impression management bias than unstructured interviews, and that longer

interviews lead to a lessening of the effects as well (Tsai, Chen, & Chiu, 2005).

38

Direction of Influence

The type of influence tactic used tends to vary based on the target. For example, you would probably

use different influence tactics with your boss than you would with a peer or with employees working

under you.

Upward Influence

Upward influence, as its name implies, is the ability to influence your boss and others in positions

higher than yours. Upward influence may include appealing to a higher authority or citing the firm’s

goals as an overarching reason for others to follow your cause. Upward influence can also take the

form of an alliance with a higher status person (or with the perception that there is such an alliance)

(Farmer & Maslyn, 1999; Farmer et al., 1997). As complexity grows, the need for this upward influence

grows as well—the ability of one person at the top to know enough to make all the decisions becomes

less likely. Moreover, even if someone did know enough, the sheer ability to make all the needed

decisions fast enough is no longer possible. This limitation means that individuals at all levels of the

organization need to be able to make and influence decisions. By helping higher-ups be more effective,

employees can gain more power for themselves and their unit as well. On the flip side, allowing

yourself to be influenced by those reporting to you may build your credibility and power as a leader

who listens. Then, during a time when you do need to take unilateral, decisive action, others will be

more likely to give you the benefit of the doubt and follow. Both Asian American and Caucasian

American managers report using different tactics with superiors than those used with their

subordinates (Xin & Tsui, 1996). Managers reported using coalitions and rationality with managers

and assertiveness with subordinates. Other research establishes that subordinates’ use of rationality,

assertiveness, and reciprocal exchange was related to more favorable outcomes such as promotions

and raises, while self-promotion led to more negative outcomes (Orpen, 1996; Wayne et al., 1997).

Influence takes place even before employees are hired. For example, ingratiation and rationality were

used frequently by fire fighters during interviews (McFarland, Ryan, & Kriska, 2002). Extraverts tend

to engage in a greater use of self-promotion tactics while interviewing, and research shows that

extraverts are more likely to use inspirational appeal and ingratiation as influence tactics (Cable &

Judge, 2003; Kristof-Brown, Barrick, & Franke, 2002). Research shows that ingratiation was positively

related to perceived fit with the organization and recruiters’ hiring recommendations (Higgins &

Judge, 2004).

Downward Influence

Downward influence is the ability to influence employees lower than you. This is best achieved

through an inspiring vision. By articulating a clear vision, you help people see the end goal and move

toward it. You often don’t need to specify exactly what needs to be done to get there—people will be

able to figure it out on their own. An inspiring vision builds buy-in and gets people moving in the same

direction. Research conducted within large savings banks shows that managers can learn to be more

effective at influence attempts. The experimental group of managers received a feedback report and

went through a workshop to help them become more effective in their influence attempts. The control

group of managers received no feedback on their prior influence attempts. When subordinates were

asked 3 months later to evaluate potential changes in their managers’ behavior, the experimental

group had much higher ratings of the appropriate use of influence (Seifer, Yukl, & McDonald, 2003).

Research also shows that the better the quality of the relationship between the subordinate and their

supervisor, the more positively resistance to influence attempts are seen (Tepper et al., 2006). In other

words, bosses who like their employees are less likely to interpret resistance as a problem.

39

Peer Influence

Peer influence occurs all the time. But, to be effective within organizations, peers need to be willing

to influence each other without being destructively competitive (Cohen & Bradford, 2002). There are

times to support each other and times to challenge—the end goal is to create better decisions and

results for the organization and to hold each other accountable. Executives spend a great deal of their

time working to influence other executives to support their initiatives. Research shows that across all

functional groups of executives, finance or human resources as an example, rational persuasion is the

most frequently used influence tactic (Enns & McFarlin, 2003).

OB Toolbox: Getting Comfortable With Power

Now that you’ve learned a great deal about power and influence within organizations, consider asking

yourself how comfortable you are with the three statements below:

• Are you comfortable saying, “I want to be powerful” to yourself? Why or why not?

• Are you comfortable saying, “I want to be powerful” to someone else? Why or why not?

• Are you comfortable having someone say, “You are powerful” to you? Why or why not?

Discomfort with power reduces your power. Experts know that leaders need to feel comfortable with

power. Those who feel uncomfortable with power send those signals out unconsciously. If you feel

uncomfortable with power, consider putting the statement in a shared positive light by saying, “I want

to be powerful so that we can accomplish this goal.”

Key Takeaway

Individuals have six potential sources of power, including legitimate, reward, coercive, expert,

information, and referent power. Influence tactics are the way that individuals attempt to influence

one another in organizations. Rational persuasion is the most frequently used influence tactic,

although it is frequently met with resistance. Inspirational appeals result in commitment 90% of the

time, but the tactic is utilized only 2% of the time. The other tactics include legitimizing, personal

appeals, exchanges, ingratiation, pressure, forming coalitions, and consultation. Impression

management behaviors include conforming, making excuses, apologizing, promoting your skills, doing

favors, and making associations with desirable others known. Influence attempts may be upward,

downward, or lateral in nature.