BUSINESS ETHICS

CORPORATE CULTURE

hmmmm,,,,, this time to doing my assignment. This last assignment for us at Business  ethic class. Now I will write my blog about  Corporate Culture. So lets know about what is Corporate Culture first……

so see the explanation….

Cultural understanding by Susanto (2000):

1.      Corporate culture is the values ​​which become the handle human resources in carrying out basic obligations and behave in organizations.

2.      Corporate culture is values ​​that guide human resources to overcome the problems of external adaptation and integration of business within the organization so that they know how they should act or behave.

UNDERSTANDING ORGANIZATION CULTURE

According to Hofstede (1994), culture is the collective mental programs that differentiate group members from other groups. 

Organizational culture is the style and way of life of an organization that is a reflection of the values ​​or beliefs that have been adopted by all members of the organization. 

Organizational culture is a pattern of trust, Period, rituals, myths members wholeheartedly, which     affects the behavior of all individuals and groups within the organization (Harrison & STIKES, 1992)

 

Understanding Corporate Culture 

Corporate culture is one of those focus areas that are not always fully understood and are not optimally utilized either in an organization

A basic definition of organizational culture is the collective way we do things around here. It involves a learned set of behaviors that is common knowledge to all the participants. These behaviors are based on a shared system of meanings which guide our perceptions, understanding of events, and what we pay attention to. As Sun Tzu, a Chinese military general from 3000 BC, indicated in his explanation of strategy, culture forms an integral part of any organizational strategy. It consists of Tao - the created and shared beliefs, values, and glue that holds an organization together, and it also involves the very nature of the organization. Culture is about individuals in a group sharing patterns of behavior. There is no cultural absolute. Because culture is relative, we have the power to create a culture that is the best fit for an organization’s future direction.

Observing Culture

Culture plays out in a variety of ways. We can identify the specifics of it from how information is communicated, feedback is given, performance is managed, and projects are co-coordinated within the organization. It is reflected in the way the corporation or institution is structured; whether work is conducted cross-functionally or within silos, how the hierarchical levels are set up, and the types of job titles used. Culture is often defined by the systems that are used, the processes that are followed, and the rituals, symbols, and stories that abound in the organization. It is even reflected in how meetings are held in an organization.

Aligning Culture for Success

Once a strategy is set for the organization, the way deliverables are produced in the organization needs to be examined and challenged. This is to ensure that every process is geared towards achieving the strategy.

Every component of the corporate culture needs to underpin what is required from all stakeholders in order to realize the strategic goals. There must be a reinforcing stream of communications. All the actions in the organization need to translate into the cultural realities. A culture can be created or reinforced through the use of socialization. Avenues for socialization abound in functions like selection, placement on the job, job mastery, the measurement and rewarding of performance, and recognition and promotion. Reinforcing a culture can emerge through the stories told and the folklore propagated and, most importantly, through the adherence to chosen important values. The key to the success of the above is to ensure that the culture you wish to socialize others into is an ideal one, necessary for breakthrough performance in your work area or organization. If it is not, then you need to involve everyone in the evaluation and creation of a more suitable culture.

And now this  time to article…… I will give an example about.

HP at Cultural Crossroads

The case discusses HP's organization culture and the role of 'HP Way' in strengthening it. It also discusses the steps implemented by the new CEO Carly Fiorina in a bid to cut costs and improve the financial performance of HP, which proved to be a major departure from HP's long cherished culture.

"The HP Way is a tricky thing. It's what makes HP great, but it can also be used as an excuse for practices that are no longer relevant. It can be an excuse for not changing. When you boil it down to its fundamentals, it's about keeping core values constant and frequently changing practices - and a lot of people inside HP and outside HP get confused about that."

- Lewis Platt, former HP CEO, in August 1999.

"The HP Way gave me the courage to change it as quickly as we are. Because it really is all about having this company achieve what it is capable of. It is important, and it is worth doing."

- Carly Fiorina, Chairperson, HP CEO, in February 2001.

A Company in Trouble

During the late 1990s, HP, the second largest computer manufacturer in the world, faced major challenges in an increasingly competitive market. In 1998, while HP's revenues grew by just 3%, competitor Dell's rose by 38%. HP's share price remained more or less stagnant, while competitor IBM's share price increased by 65% during 1998. Analysts said HP's culture, which emphasized teamwork and respect for co-workers, had over the years translated into a consensus-style culture that was proving to be a sharp disadvantage in the fast-growing Internet business era. Analysts felt that instead of Lewis Platt, HP needed a new leader to cope with rapidly changing industry trends.

Responding to these concerns, in July 1999, the HP board appointed Carleton S. Fiorina (Fiorina) as the company's CEO.

Fiorina implemented several cost-cutting measures to streamline the company's operations. Some of the measures included forced five-day vacation for the workers and the postponement of wage hikes for three months in December 2000. In January 2001, HP laid off 1,700 marketing employees.

In April 2001, Fiorina announced that HP's revenues would decrease by 2% to 4% for the quarter ending April 30, 2001 due to the decrease in consumer spending. In yet another move to cut costs, in June 2001, employees were forcibly asked to take pay-cuts. More than 80,000 employees volunteered saving the company $130 million.

A Company in Trouble Contd...

Things became worse when the HP management announced that it would lay off another 6,000 workers in July 2001, the biggest reduction in the company's 64-year history. The management also sent memos saying that the layoffs would continue and that the volunteering for pay-cuts would not guarantee continued employment.

In September 2001, HP and Compaq Computer Corporation announced their merger5. According to company insiders, once the merger was implemented, Fiorina was likely to lay off another 15,000 to 30,000 employees as a part of a major cost saving drive. The merger was expected to yield cost savings upto $2.5 billion primarily because of layoffs.

The steps taken by Fiorina surprised analysts. They said that these steps were a major departure from HP's organizational culture - 'The HP Way' of promising lifelong employment and employee satisfaction.

According to the company insiders, though change was necessary, employees' morale had suffered badly. Many employees had lost faith in Fiorina's ability to execute her plans. They also felt that her changes were destroying much of the company's cherished culture. HP Vice-President for Human Resources Susan Bowick admitted, "Morale statistics are lower than we've ever seen them."

Background Note

Stanford engineers Bill Hewlett and David Packard founded HP in California in 1938 as an electronic instruments company. Its first product was a resistance-capacity audio oscillator, an electronic instrument used to test sound equipment. During the 1940s, HP's products rapidly gained acceptance among engineers and scientists. The company's growth was further aided by heavy purchases by the US government during the Second World War. As their business succeeded, the confidence of Hewlett and Packard increased. The founders, who shared some basic values, also hired and promoted like-minded pe The Carly Fiorina Way

The toughest challenge Fiorina faced was in changing the HP culture, which had been influenced by the company's engineering heritage. The challenge was to keep the edge in engineering and innovation while making the employees more adaptable and responsive. Fiorina immediately introduced several changes to set things right at HP. She demanded regular updates on key units. She also injected the much-needed discipline into HP's computer sales force, which had reportedly developed a habit of lowering sales targets at the end of each quarter. Sales compensation was tied to performance and the bonus period was changed from once a year to every six months.

She linked compensation to improvements in customer-approval ratings. To develop better leadership skills, she instituted the 360-degree feedback concept. This meant that the pay for the company's managers would be based on input from employee surveys.

HP Labs, the company's R&D center, had only been making improvements to the existing products. This was because the engineers' bonuses were linked to the number rather than the impact of their inventions. To encourage innovation and product development, Fiorina increased focus on 'breakthrough' projects. She started an incentive program that paid researchers for each patent filing..

The HP Way Vs. Carly Way

The steps taken by Carly attracted lot of criticism among the analysts. Geoffrey Moore, a high-tech management expert, remarked, "HP was built as a collaborative culture - not a star system. She drives a competence culture, which puts performance ahead of teams, values and intuition. That's a wrenching problem." According to Grinstein, former CEO of Burlington Northern and Western Airlines, "Carly is articulate, with a wonderful style and flair. But in breaking from culture, you cannot elevate yourself too high above it."

Employees had their own share of grievances too. Larry Mitchell complained, "Layoffs had always been kind of non-traditional for HP. HP's culture is definitely changed these days. With the prior culture we probably would have figured out something other than laying off 6,000 people. There are other ways to get rid of performance problems other than just layoffs." The chances of massive layoffs after the HP-Compaq merger has met with stiff resistance from David W. Packard, Dave Packard's son. He was against the merger because of the changes it would bring into HP's egalitarian culture...ople.

You all can read that article guys….. I think it is  a very difficult dilemma between laying off thousands of employees due to cultural change or retain their culture and their employees but the company is threatened, in my opinion is a better hp to maintain their culture and retain employees due to possible improvements in other aspects Hp interchangeable because the effect is too large if hp overhaul the culture, perhaps by creating innovative new products and diversification products that HP can solve the problem.

I think this is my opinion about the article and I apologize if possible in writing this blog there are many shortcomings.

Thank_you ^_^

           
            http://sergaygroup.com/Smart-Talk/What-is-Corporate-Culture.html

http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20Organization%20Behavior/HP-Cultural%20Crossroads-HRM-Case%20Studies.htm

BUSINESS ETHICS

Ethics and Culture

Nucor corporate

The case examines the organizational culture at Nucor and the way in which it led to the success of the company. The policies and mechanisms adopted by Nucor's management to encourage the productivity and profitability are also discussed.

The case takes a close look at Nucor's recruitment, reward systems and the work culture. The case also discusses the various criticisms labeled against Nucor's HR policies.

Nucor – Workers’ Paradise

It makes an unusual cover for an annual report; instead of attractive photographs on the cover page, the company puts the names of all its employees on the front and back cover pages. The company is Nucor Corp (Nucor) - the largest producer of steel in North America.

Nucor is known for its culture and its commitment towards employees. In the age of downsizing and layoffs, Nucor has not laid off a single employee nor shut down any of its plants. It is also credited with not reporting loss in any business quarter for last 30 years (1972 - 2002). Both analysts and company sources attribute the company's success to its culture.

According to company sources, Nucor's recruitment process, reward system and work culture are responsible for the company's success over the years. The Nucor recruitment process focuses on employing people with the right frame of mind rather than people with relevant skill sets. The reward system at Nucor emphasizes fair pay based on productivity.

Further, Nucor also established a fair grievance redressal system which allows any employee to approach the management with his or her complaints. Analysts are of the opinion that Nucor is a perfect example of how a company's organizational culture can influence its performance.

Background Note

The history of Nucor dates back to 1899, when Ransom E. Olds (Olds) established a car manufacturing company called Olds Motor Works. After running Olds Motor Works successfully for seven years, Olds sold the unit in 1906. He established Reo Car Company (Reo), which manufactured trucks and buses in addition to cars. Reo stopped making cars in 1936 and by 1955 formed Reo Holding which merged with Nuclear Consultants Inc to form Nuclear Corporation of America (Nuclear).

Nuclear was originally set up to manufacture nuclear instruments and other electronic gadgets, besides providing expertise in conducting radiation studies. While this business was profitable at the time, it failed to gather momentum. Nuclear then acquired a number of high-tech companies. The company however continued losing money till 1960, when it was acquired by a New York based investment banker.

Organizational Structure

Unlike most Fortune 500 companies which had around 8-10 management layers between the CEO and the employees, Nucor had only four management layers (Refer Figure I). Nucor sought to maintain lean staffing, minimal bureaucracy and a streamlined organizational structure. The most common joke at corporate headquarters was that with four promotions, a supervisor could become CEO.

When Nucor first approached $1 billion in revenues, pressure increased on Iverson to add more layers of management. The same happened when Nucor reached the $2 billion and $3 billion milestone...

Nucor's Success Formula

Nucor's management strongly believed that the company's success was mainly due to its culture and not technology. When asked about the secret behind Nucor's success, Iverson commented, "70% culture and 30% technology. The truth is, I'm not sure if it's 80 to 20 or 60 to 40 percent, but I'm certain our culture accounts for more than half of our success as a business."

Recruitment

Unlike many companies which emphasized more on technical skill set, while recruiting, Nucor recruited people with right mindset even though they lacked technical skills. Commenting on the company's recruitment philosophy, James Coblin, General Manager - personnel services (1995), said, "We can teach 'em to make steel."

Nucor looked for people who could communicate frankly with others and work with minimum supervision.

Reward System

Nucor's employees were paid according to their productivity. Employees were given certain production goals, and their pay depended on realizing these goals. Though the hourly wages at Nucor were only $9 per hour compared to the industry average of $18 per hour, yet, Nucor employees earned more than their counterparts in the industry due to the company's reward system which linked pay with productivity. Commenting on the employees pay at Nucor, Jim Coblin, Vice President HR said, "The only reason to work here is to try to get rich. Money is important to our people."

According to analysts, Nucor's incentive plans not only encouraged the employees to perform well at individual level but also encouraged them to excel at the team level as the incentive plans took the performance of the teams into consideration.

Nucor's incentive plans also resulted in healthy competition among the company's different plants. For instance, workers at Nucor's Hickman plant worked hard to break the production records of Nucor-Yamato plant. The internal competition among Nucor plants was one of the main reasons for Nucor's high productivity. Commenting on the competition among the mills, DiMicco said, "We encourage positive competition that isn't destructive. Everybody wants to have leadership [in the company]. It goes down to the employee level."

Work Culture

Along with a good reward system, Nucor's management also focused on providing conducive work enviornment which fostered trust and teamwork among employees. Nucor empowered its employees to take decisions with minimal interference from the top management. Each plant operated as an independent business unit. The General Managers at Nucor plants were given considerable freedom to take decisions regarding sourcing of raw-materials, finalizing marketing strategies, finding customers, setting production targets and HR requirements. One of Nucor's General Managers remarked, "The beautiful part of Nucor is that we are not constrained. Headquarters doesn't restrict what I spend. I just have to make my contribution to profits at the end of the year." The general managers were expected to generate minimum of 25% return on assets under their control. The managers were also free to use new technology or processes. This encouraged employees to try out new processes and technologies. The management at Nucor made it a point not to punish mistakes and maintained high tolerance levels with regard to failures. For example, one plant manager utilizing his authority chose an induction furnace which cost $10 million. The new induction furnace failed to perform as per projections and broke down frequently. Subsequently, the manager decided to remove the induction furnace and go back to the electric arc furnace . When this decision was conveyed to the top management, the manager was not punished for wastage of $10 million but was supported in his decision to remove the induction furnace. Nucor always supported its employees and had never opted for downsizing or layoffs. However, from time to time Nucor's management asserted that, it would not hesitate to downsize if the situation so demanded. Questioning Nucor's Success Formula Not everyone agreed with Nucor's policies and culture. Some analysts pointed out flaws in Nucor's human resources policies. They felt that Nucor used its recruitment tests to weed out prospects who were sympathetic towards unions. Richard Preston, in his book, 'American Steel' wrote, "Nucor had put Hawley through a psychological test devised by a Nucor psychologist, one John Seres, out of Chicago. Nucor's psychological test, which Nucor gave to all candidates for jobs at the Crawfordsville project, was supposed to identify goal-oriented people, self-reliant people: Nucor material. The test also weeded out applicants who might sympathize with labor unions." If a general manager was appraising a major capital investment project he was also thinking about reducing his short-term income and consequently incentives. Analysts also felt that promotions came very slow. Many managers had occupied their current positions for a long time and Nucor had some problems in developing the skills of its first line supervisors. Commentary I chose these cases because I want to raise the issue of ethics and culture. But here I will discuss about the ethics and culture of the organization because my lecturer said that if the culture is vast and we have to take one pembahasn only. As already exist in theory in his book, Ernie Ernawan is about Culture and Ethics. It is described on: Understanding organizational culture according to Hofstede (1994), culture is the collective mental programs that differentiate group members from other groups. Although the culture is in the mind of every individual, he became crystallized in the institutions and the product of a community, which ultimately strengthens mental programs. Cultural Studies is a pattern of organizational beliefs, values, rituals, myths members wholeheartedly, that affect the behavior of all individuals and groups in organizations (Harisson & Stokes, 1992), adding also that culture affects most aspects of organizational life, such as how decisions are made , who makes them, how the profits were distributed, how people are treated, and how organization respond to their environment. After I studied the article and after I read the above theory so I will try to conclude and give my opinion about the article above. I think that Nucor is a company that already use the ethics and culture is good and right. Because the companies, especially in the work culture there in the country : Along with a good reward system, Nucor's management also focused on providing conducive work enviornment which fostered trust and teamwork among employees. Nucor empowered its employees to take decisions with minimal interference from the top management. Each plant operated as an independent business unit. The General Managers at Nucor plants were given considerable freedom to take decisions regarding sourcing of raw-materials, finalizing marketing strategies, finding customers, setting production targets and HR requirements. One of Nucor's General Managers remarked, "The beautiful part of Nucor is that we are not constrained.  Headquarters doesn't restrict what I spend. I just have to make my contribution to profits at the end of the year." The general managers were expected to generate minimum of 25% return on assets under their control. The managers were also free to use new technology or processes. This encouraged employees to try out new processes and technologies. The management at Nucor made it a point not to punish mistakes and maintained high tolerance levels with regard to failures. Nucor really appreciate worker, he not only think about profit, but also the welfare of employees and value the opinions of employees. Resources: Erni Ernawan, http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20Organization%20Behavior/HROB036.htm (artikel) ^Thanks^