The Balanced Culture Card was developed from different models. The well-known Hofstede model of four cultural dimensions was initially used to determine the differences between national cultures. Hofstede’s model is used as a starting point to come to a final model. Derived from these dimensions is the Diagnoses of Organisational Culture for Strategic Applications (DOCSA).
These approaches functioned as a starting point and were supplemented with the Balanced Scorecard in which the operational and financial drivers as well as the customer approach were assessed. Three of the five P’s of the Marketing Mix that have an effect on the corporate culture were also included. These are Promotion, People and Product. Price and Place are considered less relevant to the corporate culture. As depicted in the figure above, the final analytical model was derived from these four models.
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Expanded continuation (though without tables, figures and appendices and probably some errors):
Since the subject of this study is different from other studies that focus on amalgamations of profit-institutions, it was difficult to find any specific information on two independent cultural organisations under the same roof, in the same industry, that focus on different market segments and are different legal bodies. In order to find the ‘best organisational fit’ with the objective to keep both corporate cultures intact, it is necessary to look at the definition of Culture. From this definition we work via Hofstede’s frameworks, the Balanced Scorecard and the Marketing Mix towards the definitive model that is used to compare two corporate cultures.
In every country, town, company or department there is a certain attitude, symbols are used, beliefs are shared and there is often a specific dress code. All this together can be described as Culture. In 1952, Kroeber and Kluckhohn identified 164 different characteristics of culture. But what is a more exact definition of Culture? Ferraro (1998) uses only one:
Culture is everything that people have, think and do as members of their society
The three verbs in this definition (have, think and do) help to identify three major components of the concept of culture:
Have: Refers to material objects
Think: Refers to ideas, values and attitudes
Do: Refers to patterns of behaviour
The final phrase ‘as members of their society’ serves to remind us that culture is a set of meanings, shared by at least two or more people.
Another definition of Culture is used by Hodgetts and Luthans (1997):
Culture is acquired knowledge that people use
to interpret experience and generate social behaviour.
If we compare the definitions of Ferraro with those of Hodgetts and Luthans, we recognise several similarities; groups and behaviour are important aspects in both definitions. However, for determining a corporate culture, a definition in itself is not good enough and a framework is needed. The Dutch researchers Hofstede and Trompenaars examined several cultural dimensions. Hofstede (1984) describes culture as:
The collective programming of the mind
Hofstede explains that culture lies between human nature and individual personality. Every person’s mental programming is partly unique, partly shared with others.
The first level, Human Nature, is the deepest and is the most difficult to change. The other layers, Culture and Personality, are programmed in the course of education through life. In an organisation, the corporate culture is programmed through stories, values considered normal in the profession, status of the elder employees et cetera.
Between 1967 and 1973 Hofstede conducted the largest ever organisationally based study which culminated in the best known research on the subject of comparison of national cultures. Hofstede gathered data from two questionnaire surveys with over 116,000 respondents from 67 different countries around the world. Analysis of the data revealed four dimensions :
2. Uncertainty avoidance
These four dimensions are used to explain differences between various national cultures. For example, uncertainty avoidance is the lack of tolerance for ambiguity and the need for formal rules. It measures the extent to which people (i.e. employees) in a society (or an organisation) feel threatened by ambiguous situations. To assess uncertainty avoidance, you could ask a citizen if the law should be broken if he thinks it is in the country’s best interest. On an organisational level, you could ask an employee if the company’s rules should be broken if he thinks it is in the company’s best interest. His answer will give an indication about his uncertainty avoidance.
Hofstede was criticised for focussing his research on one company; this would mean that it was the corporate culture that was assessed and not the national culture. He countered this criticism, by explaining that it is the nationality itself that declares the differences between the groups of employees. Hofstede emphasises that you cannot value values. In other words, a culture is not right or wrong.
For this project, the four dimensions of Hofstede are not sufficient. A corporate culture is also determined by strategic issues, the finances (especially in the case of subsidised organisations) and the product and its relationship with the customers.
Culture in itself however does not reveal the total corporate culture, the topic in which we are interested. It is well established that corporate culture is the key to organisational excellence. Schein (1984) highlights that culture:
– is a process of formation and change,
– covers all aspects of human functioning,
– is learned around the major issues of internal integration and external adaptation,
– is an interrelated set of basic assumptions.
To decipher a corporate culture Schein advises:
to interview socialisation agents (i.e. supervisors, older peers)
to identify major periods of cultural formation and analyse responses to critical incidents
to analyse beliefs, values and assumptions of culture creators.
According to Daft (1998), corporate culture serves two critical functions in organisations: Internal Integration and External Adaptation. (Though Schein already used these terms in 1984)
Members develop a collective identity while working together. This collective identity, i.e. culture, determines the day-to-day relationships, the way people communicate, what behaviour is acceptable and how power and status are allocated. This is directly related to Hofstede’s second layer of human mental programming: culture.
Schein (1984) explains that an organisation or a group cannot survive in the case of severe problems with the internal integration. Members should speak the same ‘language’ or else a group is, by definition, impossible. There must be an agreement on the group boundaries to determine who is a member and who is not. Consensus is also important for the allocation of power and status. For the two organisations, this means that they must agree on several organisational issues.
The critical function of external adaptation is to determine how the organisation deals with outsiders and meets its goals. Culture helps to guide the daily activities to meet these goals. It helps the organisation respond to external impulses from customers and competitors. Again, Schein stresses that without an external adaptation an organisation cannot survive. There must be consensus on the core mission, the goals, and the way the goals are accomplished, measured and corrected.
If two corporate cultures do not serve internal integration and external adaptation, this is a reason for concern. Experience has shown that there is a high probability of failure in alliances. Buchanan and Berman (1992) summarise causes of failure in alliances due to:
Inadequate up-front planning. Issues like organisational structure, ownership and control were not agreed upon or not well defined.
Mismanaged expectations. Not only for the alliance or co-operation itself, but also for the expectations of the outside world, e.g. the customers and suppliers.
Lack of balance between the relative contributions. It must be clear and written down which partner contributes what and how much.
These cases of failure are of concern in the process in which two organisations are involved. Especially the internal integration and the expectations of both organisations are of immediate concern. Inadequate up-front planning is not yet an issue, since this report is a first step in this process.
In order to compare the corporate cultures of two organisations, it is important to bear in mind the problems stated above, and the problems with -in the first place- the internal integration and -in the second place- the external adaptation. Depending on the resulting organisational scenario, both organisations will have to deal with internal integration and/or external adaptation.
To build a framework to assess the corporate cultures of two organisations we start with Hofstede’s four dimensions, which focussed on national cultures. His research forms the early database of a set of proprietary culture analysis techniques and programmes called Diagnosing Organisational Culture for Strategic Applications abbreviated to DOCSA (Hoecklin, 1998). This database revealed six dimensions:
Motivation versus Activities Outputs
To be consistent and precise. To strive To be pioneers. To pursue clear and
for accuracy and attention to detail. To compelling aims and objectives. To innovate
refine and perfect. Get it right. and progress. Go for it.
Relationship: Job versus Person
To put the demands of the job before To put the needs of the individual before
the needs of the individual. the demands of the job.
Identity: Corporate versus Professional
To identify with and uphold the To pursue the aims and ideals of
expectations of the employing each professional practice.
Communication: Open versus Closed
To stimulate and encourage a full To monitor and control the exchange
and free exchange of information and accessibility of information and opinion
Control: Tight versus Loose
To comply with clear and definite To work flexibly and adaptively
systems and procedures. according to the needs of the situation.
Conduct: Conventional versus Pragmatic
To put the expertise and standards of To put the demands and expectations of
the employing organization first. To do customers first. To do what they ask.
what we know is right.
These six dimensions of corporate culture, typical for behaviour, resemble the four cultural dimensions of Hofstede. Only the latter two aspects of Ferraro’s definition (have, think and do) are included in the DOCSA.
In the past, organisations developed a mission and a strategy in order to create wealth and to satisfy shareholders by maximising shareholder value. In other words, only financial measures were used to develop an appropriate strategy. In the last years an approach to link strategic goals to specific targets, called the Balanced Scorecard (Kaplan and Norton, 1993), has become popular. The Balanced Scorecard is a tool to translate a vision into a strategy and the strategy into action. The widely recognised Balanced Scorecard uses a stakeholder approach and consists of performance measures which should answer four questions (Grant, 1999):
What must we excel at?
Can we continue to improve and create value?
How do customers see us?
How do we look at shareholders?
These four questions should be identified with 6 to 15 strategic objectives, which address the four perspectives, i.e. processes, employees, customers and finances.
Learning and Growth
For each strategic objective, the drivers should be determined. For the employees an important strategic objective is recruiting. The driver behind recruiting should be measured. For example, a driver can be the number of temporary contracts versus the number of permanent appointments. These drivers should be measured through indicators or targets. These indicators help to translate strategy into operating goals.
Although the strategic objectives of all four perspectives are important for strategic issues, they are not fit for determining a corporate culture. Some of them will not be used in the definitive analytical model as will be shown in the next paragraphs.
In order to compare corporate cultures in case of an alliance, one should look at several aspects of the business. Marketing is one of these aspects. A Marketing Mix is a tactical toolkit that an organisation can control in order to facilitate a satisfying exchange (Dibb et al, 1997). This toolkit is also called the five P’s of marketing and is the mix of the five perspectives Price, Product, People (customers), Place and Promotion.
The perspectives Price and Place are, to a certain extent, less relevant for determining the corporate culture. The Place because of the building that cannot be removed. The Price, though more relevant, is partially covered by the input of the customers since the price visitors want to pay is related to the income, age and education. Customers are attracted by a certain culture and are often a ‘mirror’ from the subculture they live in. The customer’s subculture can be expressed in dress and region.
Product is important for corporate culture, since an alliance between two organisations with different products is doomed to fail if these products are very different. One can even wonder if an alliance is useful if the products are totally different, since each different product needs a different promotion. Exceptions to the rule are complementary products as is the case with Intel and Windows.
Promotion tells us much about the segment an organisation is aiming at. If an organisation attaches flyers to bicycles in front of a university, it can ‘communicate’ with many students, but this does not work with well-paid executives. The way an organisation advertises its products and brand it, says something about the corporate culture.
Final analytical model
The several frameworks are used to formulate a final model, which is suited for this project. The mix of Hofstede’s four dimensions, the DOCSA, the Balanced Scorecard and a part of the Marketing Mix, assesses most drivers that determine corporate culture.
This final model is used in the interviews and must lead to two ‘cards’ that show the differences between the corporate cultures. Therefore, the name Balanced Culturecard is an appropriate name for the final model.
In the extended Balanced Culturecard as shown in the table, 34 drivers influence the corporate culture.
In order to restrict the number of drivers, 18 drivers are selected. For example, under the perspective Processes, the driver long term view is not selected since there is a parallel with strong leadership; a strong leader has a long term view. Some drivers of customers are not interesting for the corporate culture, e.g. whether or not a visitor is from one Dutch town or another is not relevant.
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