3.2.3 Managing business culture

Topic 51: Business values and culture

Key ideas

• Business culture is the shared values, beliefs, attitudes and norms of behaviour in an organisation: "the way we do things around here".
• Values promoted by a business (e.g. integrity, customer focus, innovation, sustainability) guide behaviour and decisions and shape the brand.
  • Example: the John Lewis Partnership is owned in trust for its employees, who are called "Partners" and share in profits through a bonus.
• Factors influencing culture:
  • leadership and employee values;
  • leadership style;
  • mission;
  • reward systems: e.g. individual commission creates a competitive culture;
  • organisational structure: tall and centralised structures create a hierarchical, cautious culture;
  • customer expectations.
• Positive culture: engagement, innovation, retention, service quality, attractiveness to recruits.
• Negative culture: low morale, high turnover, unethical behaviour and scandals.
  • Example: the Volkswagen emissions scandal (2015) is widely linked to a culture of pressure to hit targets.
• Changing culture:
  • Reasons: a new leader, poor performance, a merger, scandal, a new strategy, or changing customer expectations.
  • Challenges:
    • Culture is deep-rooted and takes years to change.
    • Staff resist change.
    • It needs consistent leadership, plus changes to rewards and structure.
    • It is costly.
  • Links to Year 13: sophisticated concepts such as Lewin's force field analysis and Kotter and Schlesinger's reasons for resistance to change apply here.
• Impact on competitiveness: culture affects productivity, innovation, quality and service, and so the firm's ability to compete.
• Optional extension: you may meet Handy's four cultures (power, role, task, person) in textbooks. They are useful as a framework, but they are not named in the AQA specification.

Self-test

Q1: Give three factors that influence business culture. A: Leadership style, reward systems, and organisational structure (also mission, employee values and customer expectations).

Q2: Why is changing culture difficult? A: Culture rests on deep-seated values and habits. Employees may resist, fearing loss of status or security. Change needs consistent leadership and changes to structures and rewards, which takes years.

Q3: Assess whether a strong culture always improves competitiveness. (Outline) A: For: it brings shared purpose, motivation and consistent service. Against: a strong culture can be resistant to change or toxic (e.g. target-driven cultures leading to unethical behaviour). Judgement: it depends on whether the culture's values fit the market and strategy.

Assessment checkpoints: 3.2.2 Operations management test; PPE (end-of-year exam) covering all of Year 12.

---