Managing Transition in TQM

Steps in Managing the Transition
Beckhard and Pritchard (1992) have outlined the basic steps in managing a transition to a new system such as TQM: identifying tasks to be done, creating necessary management structures, developing strategies for building commitment, designing mechanisms to communicate the change, and assigning resources.
Task identification would include a study of present conditions (assessing current reality, as described above); assessing readiness, such as through a force field analysis; creating a model of the desired state, in this case, implementation of TQM; announcing the change goals to the organization; and assigning responsibilities and resources. This final step would include securing outside consultation and training and assigning someone within the organization to oversee the effort. This should be a responsibility of top management. In fact, the next step, designing transition management structures, is also a responsibility of top management. In fact, Cohen and Brand (1993) and Hyde (1992) assert that management must be heavily involved as leaders rather than relying on a separate staff person or function to shepherd the effort. An organization­wide steering committee to oversee the effort may be appropriate. Developing commitment strategies was discussed above in the sections on resistance and on visionary leadership.
To communicate the change, mechanisms beyond existing processes will need to be developed. Special all­staff meetings attended by executives, sometimes designed as input or dialog sessions, may be used to kick off the process, and TQM newsletters may be an effective ongoing communication tool to keep employees aware of activities and accomplishments.
Management of resources for the change effort is important with TQM, because outside consultants will almost always be required. Choose consultants based on their prior relevant experience and their commitment to adapting the process to fit unique organizational needs. While consultants will be invaluable with initial training of staff and TQM system design, employees (management and others) should be actively involved in TQM implementation, perhaps after receiving training in change management which they can then pass on to other employees. A collaborative relationship with consultants and clear role definitions and specification of activities must be established.
Institutionalization of TQM
Ledford (cited in Packard & Reid, 1990) has proposed a model including four processes which are forces which determine whether a change will persist through the phases of institutionalization. These processes are concerned with congruence among these variables: the change (TQM) with the organization, the change with other changes initiated at the time, the change with environmental demands, and with the level of slack resources in the organization. TQM needs to be congruent with the organization's current culture, and with other changes occurring in the organization. In this period of diminishing resources, organizations are likely to be trying to cope, by downsizing or other methods. In some organizations there are increasing demands for quality or client service improvements. Many such changes are likely to be driven by environmental demands, and TQM may be more likely to be successful than at times of less environmental pressure. Unfortunately, the fourth element, slack resources, is less likely to be present: under current conditions, extra resources (money and staff time) are less likely to be easily available. The challenge is to find a way to make the initial investment outlay to start a process which will pay off in the long term.
Institutionalization may also be enhanced by overlaying another, but compatible, change model: the learning organization (Senge, 1990). This involves, at both the micro and systems levels, staff always learning how to do better and management learning how to be more responsive to staff and the community. Leaders help staff develop their own visions and align these with the organization's vision of quality.
Beckhard and Pritchard (1992) emphasized top management commitment to the change, and Cohen and Brand (1993) apply this specifically to TQM by recommending finding and nurturing a core group which is interested in organizational change. They also emphasize the importance of personal leadership and example: managers need to apply TQM in their daily work and to get people to think about and use the concepts and tools. Ongoing monitoring, and action research to make changes as needed, will be required. And, once again, the systems perspective must be noted: TQM must be built into other systems, particularly those involving planning and rewards. Leaders should expect a long term process, including a transition period. They will need to be persistent, using constant reinforcement, for example, through continuous training. Cohen and Brand suggest that TQM should eventually be made an "invisible" part of the organization, permeating all areas and the responsibility of everyone. TQM may be instituted organization­wide or started in one unit or program and then expanded. Diffusion occurs as TQM is spread from its initial application to other units. Dynamics of resistance mentioned earlier will have to be addressed at this stage.
Some Do's and Don'ts
Following are some miscellaneous do's and don'ts which are based on experiences with TQM in the public sector and the human services. Many are drawn from Cohen and Brand (1993), Hyde (1992), and Chaudron (1992).
First, don't "do TQM": a canned approach is likely to be met with skepticism and ultimately fail because it is not adapted to the uniqueness of a particular organization. TQM is particularly susceptible to this phenomenon, because some adherents adopt almost a religious fervor, (they have been described by one observer as "Deming lemmings" (Reid, 1992). "Deming as demigod" is another way this phenomenon has been described: a statement takes on an added aura when prefaced by "Dr. Deming said..." (Chaudron, 1993). Don't copy any particular model but use relevant basic principles such as an emphasis on quality, continuous analysis of tasks to improve performance, and work with suppliers to enable the organization to start with high quality supplies. TQM should be seen as a process, not a program. It should be integrated into ongoing agency operations, and the focus should be on how an organization can better accomplish its goals and objectives. At the tactical level, don't overemphasize techniques such as statistical process control and the use of charts. Focus instead on the systems ­ the analysis and improvement of processes ­ not on statistics or individual variations.
Whereas some large­scale organizational change efforts are often driven by a centralized steering committee or group of executives, in TQM it may be best to not centralize the effort and establish a separate quality management bureaucracy ("qualiticrats", according to Hyde). Don't believe that top management support is necessary at first, as is axiomatic in organization development. While an organization needn't start TQM at the top, successes in particular units or programs should set the stage for diffusion in other directions. Change from below may be appropriate for those at lower levels who want to initiate TQM. It may work best to start TQM with a temporary task force and then hire trainers, expose staff, and hope that managers will be motivated to learn more. People responsible for leading shouldn't devote full time to TQM; they should maintain their regular work as well. Cohen and Brand believe that TQM is best taught by people doing it day to day in their work. Implement it gradually to ensure meaningful culture change, and use frequent feedback to ensure that change isn't just superficial. There is no need for a "grand plan" (a quality council, etc.); just start where the organization is.
Perhaps the most important "do" worth repeating is to involve employees in the decision making process, at whatever stages and levels possible. As a specific aspect of this, advance negotiations and discussions with any unions present should occur. Create "atmosphere of amnesty" (Cohen & Brand, 1993, 202) so workers and managers feel free to share improvement needs. Tell people what the quality standards are so that inspection and review isn't necessary. Emphasize client feedback and both quantitative and qualitative performance tracking. Make sure quality teams have the necessary tools and resources, such as training, facilitation, and time to meet. In large organizations, regional offices in particular will need lots of support in order to keep the process alive and thriving.
Several suggestions may be offered to managers. First, understand the direct service work of your organization. "Management by walking around" is a useful way to stay in touch with direct service workers and their needs. Practice what you preach: use TQM on your own processes. Meet frequently with middle managers regarding their personal efforts to use TQM. Focus on the nature of the work and try to establish in employees' minds excitement about a new way of working. TQM training will be needed for all involved work groups. Also, horizontal and vertical communication training may be useful to get groups communicating with each other. Team building is a core element of the process, to ensure employee involvement and effective problem solving. Build analysis into the culture: "stop and think about how we work," according to Cohen and Brand. Insist on objective measures of results. Look for visible improvement, but not optimization; and try to generate some quick results in terms of time or money saved. Constantly check with employees to assess their comfort with the process. If people are feeling threatened, slow down. Human resources aspects such as team functioning and analysis must be kept in balance. Prevent or watch for schisms between TQM and human resources functions or other parts of the organization.
Summary
In summary, first assess preconditions and the current state of the organization to make sure the need for change is clear and that TQM is an appropriate strategy. Leadership styles and organizational culture must be congruent with TQM. If they are not, this should be worked on or TQM implementation should be avoided or delayed until favorable conditions exist.
Remember that this will be a difficult, comprehensive, and long­term process. Leaders will need to maintain their commitment, keep the process visible, provide necessary support, and hold people accountable for results. Use input from stakeholder (clients, referring agencies, funding sources, etc.) as possible; and, of course, maximize employee involvement in design of the system.
Always keep in mind that TQM should be purpose­driven. Be clear on the organization's vision for the future and stay focused on it. TQM can be a powerful technique for unleashing employee creativity and potential, reducing bureaucracy and costs, and improving service to clients and the community.
References
Beckhard, R. & Harris, (1987). Organizational Transitions: Managing Complex Change. (2nd ed.) Reading, MA: Addison­Wesley.
Beckhard, R. & Pritchard, W. (1992). Changing the Essence. San Francisco: Jossey­Bass.
Bennis, W. (1989) On Becoming a Leader. Reading, MA: Addison Wesley.
Bennis, W., Benne, K, & Chin, R., Eds. (1985). The Planning of Change. 4th Ed., New York: Holt, Rinehart, & Winston, 98­105.
Bennis, W. & Nanus, B. (1985). Leaders. New York: Harper & Row.
Brager, G. & Holloway, S. (1992). "Assessing the Prospects for Organizational Change: The Uses of Force Field Analysis." Administration in Social Work. 16(3/4), 15­28.
Chaudron, D. (1992). "How OD can help TQM." OD Practitioner. 24(1), 14­18.
Chaudron, D. (1993, June). Organization Development Does not Equal Total Quality Management. Presentation to the San Diego Organization Development Network.
Cohen, S. & Brand, R. (1993). Total Quality Management in Government. San Francisco: Jossey­Bass, Inc.
Ezell, M., Menefee, D., & Patti, R. (1989). "Managerial Leadership and Service Quality: Toward a Model of Social Work Administration," Administration in Social Work. 13(3/4), 73­98.
Gilbert, G. (1992). "Quality Improvement in a Defense Organization," Public Productivity and Management Review. 16(1), 65­75.
Hyde, A. (1992). "The Proverbs of Total Quality Management: Recharting the Path to Quality Improvement in the Public Sector," Public Productivity and Management Review. 16(1), 25­37.
Kanter, R. (1983). The Change Masters. New York: Simon & Schuster.
Martin, L. (1993). "Total Quality Management: The New Managerial Wave." Administration in Social Work. 17(2), 1­15.
Milakovich, M. (1991). "Total Quality Management in the Public Sector," National Productivity Review. 10, 195­213.
Nanus, B. (1992). Visionary Leadership. San Francisco: Jossey­Bass.
Osborne, D. & Gaebler, T. (1992). Reinventing Government. Reading, MA: Addison­Wesley.
Packard, T. (1989). Participation in decision making, Performance, and job satisfaction in a social work bureaucracy. Administration in Social Work. 13(1), 59­73.
Packard. T. & Reid, R. (1990). "OD in a Fire Department: Lessons in Using Parallel Structures and Institutionalization," Consultation. 9, 167­184.
Pruger, R. & Miller, L. (1991). "Efficiency," Administration in Social Work. 15(1/2), 42.
Rapp, C. & Poertner, J. (1992). Social Administration: A Client­Centered Approach. New York: Longman.
Reid, R. (1992). Personal communication.
Robey, D. (1991). Designing Organizations 3rd ed., Homewood, IL: Irwin, p. 42.
Senge, P. (1990). The Fifth Discipline. New York: Doubleday Currency.
Sugarman, B. (1988). "The Well­Managed Human Service Organization: Criteria for a Management Audit," Administration in Social Work. 12(2), 17­27.
Swiss, J. (1992). "Adapting TQM to Government," Public Administration Review. 52, 356­362.
Tichey, N. (1983). Managing Strategic Change. New York: John Wiley & Sons.
Vroom, V. and Yetton, P. (1973). Leadership and Decision Making. Pittsburgh: University of Pittsburgh Press.

Force Field Analysis in TQM

The analysis of the force field involves looking at which driving forces may be strengthened and which restraining forces may be eliminated, mitigated, or counteracted. If it appears that, overall, driving forces are strong enough to move back restraining forces, adoption of TQM would be worth pursuing. The change plan would include tactics designed to move the relevant forces.
It is also important to note and validate any points of resistance which are, in fact, legitimate, such as the limited amount of staff time available for TQM meetings. Klein (cited in Bennis, Benne, & Chin, 1985) encouraged change agents to validate the role of the "defender" of the status quo and respond to legitimate concerns raised. This will allow appropriate adaptations of the TQM process to account for unique organizational circumstances. Sell TQM based on the organization's real needs, note legitimate risks and negatives, and allow improvements in your own procedures. This should enhance your credibility and show your openness to critically looking at the process.
Another way to address resistance is to get all employees on the same side, in alignment towards the same goal. Leadership is the mechanism for this, and specific models known as transformational or visionary leadership (Bennis & Nanus, 1985) are most effective. Research on change implementation (Nutt, cited in Robey, 1991) has identified four methods. The first, "intervention," involves a key executive justifying the need for change, monitoring the process, defining acceptable performance, and demonstrating how improvements can be made. This was found to be more successful than "participation," in which representatives of different interest groups determine the features of the change. Participation was found to be more successful than "persuasion" (experts attempting to sell changes they have devised) or "edict," the least successful. Transformational or visionary leadership, the approach suggested here, is an example of the intervention approach. This would involve a leader articulating a compelling vision of an ideal organization and how TQM would help the vision be actualized. These principles will be discussed in more detail in a later section, as a framework for the change strategy.
A powerful way to decrease resistance to change is to increase the participation of employees in making decisions about various aspects of the process. There are actually two rationales for employee participation (Packard, 1989). The more common reason is to increase employee commitment to the resultant outcomes, as they will feel a greater stake or sense of ownership in what is decided. A second rationale is that employees have a great deal of knowledge and skill relevant to the issue at hand (in this case, increasing quality, identifying problems, and improving work processes), and their input should lead to higher quality decisions. A manager should consider any decision area as a possibility for employee participation, with the understanding that participation is not always appropriate (Vroom and Yetton, 1973). Employees or their representatives may be involved in decision areas ranging from the scope and overall approach of the TQM process to teams engaging in quality analysis and suggestions for improvements. They may also be involved in ancillary areas such as redesign of the organization's structure, information system, or reward system. Involvement of formal employee groups such as unions is a special consideration which may also greatly aid TQM implementation.
A change agent should understand that, overall, change will occur when three factors (dissatisfaction with the status quo, desirability of the proposed change, the practicality of the change) added together are greater than the "cost" of changing (time spent in learning, adapting new roles and procedures, etc.) (Beckhard and Harris, 1987). This is represented in the formula in Exhibit II. Any key group or individual will need a level of dissatisfaction with the status quo, must see a desired improved state, and must believe that the change will have minimal disruption. In other words, the change (TQM) must be seen as responding to real problems and worth the effort or cost in getting there. Conditions favoring change may be created by modifying these variables. The change agent may try to demonstrate how bad things are, or amplify others' feelings of dissatisfaction; and then present a picture of how TQM could solve current problems. The final step of modifying the equation is to convince people that the change process, while it will take time and effort, will not be prohibitively onerous. The organization as a whole and each person will be judging the prospect of TQM from this perspective. A variation of this is the WIIFM principle: "What's in it for me?" To embrace TQM, individuals must be shown how it will be worth it for them.

TQM As a Tool to Affect Organizational Change

Introduction
While Total Quality Management has proven to be an effective process for improving organizational functioning, its value can only be assured through a comprehensive and well­thought­out implementation process. The purpose of this chapter is to outline key aspects of implementation of large­scale organizational change which may enable a practitioner to more thoughtfully and successfully implement TQM. First, the context will be set. TQM is, in fact, a large­scale systems change, and guiding principles and considerations regarding this scale of change will be presented. Without attention to contextual factors, well­intended changes may not be adequately designed. As another aspect of context, the expectations and perceptions of employees (workers and managers) will be assessed, so that the implementation plan can address them. Specifically, sources of resistance to change and ways of dealing with them will be discussed. This is important to allow a change agent to anticipate resistances and design for them, so that the process does not bog down or stall. Next, a model of implementation will be presented, including a discussion of key principles. Visionary leadership will be offered as an overriding perspective for someone instituting TQM. In recent years the literature on change management and leadership has grown steadily, and applications based on research findings will be more likely to succeed. Use of tested principles will also enable the change agent to avoid reinventing the proverbial wheel. Implementation principles will be followed by a review of steps in managing the transition to the new system and ways of helping institutionalize the process as part of the organization's culture. This section, too, will be informed by current writing in transition management and institutionalization of change. Finally, some miscellaneous do's and don't's will be offered.
Members of any organization have stories to tell of the introduction of new programs, techniques, systems, or even, in current terminology, paradigms. Usually the employee, who can be anywhere from the line worker to the executive level, describes such an incident with a combination of cynicism and disappointment: some manager went to a conference or in some other way got a "great idea" (or did it based on threat or desperation such as an urgent need to cut costs) and came back to work to enthusiastically present it, usually mandating its implementation. The "program" probably raised people's expectations that this time things would improve, that management would listen to their ideas. Such a program usually is introduced with fanfare, plans are made, and things slowly return to normal. The manager blames unresponsive employees, line workers blame executives interested only in looking good, and all complain about the resistant middle managers. Unfortunately, the program itself is usually seen as worthless: "we tried team building (or organization development or quality circles or what have you) and it didn't work; neither will TQM". Planned change processes often work, if conceptualized and implemented properly; but, unfortunately, every organization is different, and the processes are often adopted "off the shelf" ­ "the 'appliance model of organizational change': buy a complete program, like a 'quality circle package,' from a dealer, plug it in, and hope that it runs by itself" (Kanter, 1983, 249). Alternatively, especially in the under­funded public and not­for­profit sectors, partial applications are tried, and in spite of management and employee commitment do not bear fruit. This chapter will focus on ways of preventing some of these disappointments.
In summary, the purpose here is to review principles of effective planned change implementation and suggest specific TQM applications. Several assumptions are proposed: 1. TQM is a viable and effective planned change method, when properly installed; 2. not all organizations are appropriate or ready for TQM; 3. preconditions (appropriateness, readiness) for successful TQM can sometimes be created; and 4. leadership commitment to a large­scale, long­term, cultural change is necessary. While problems in adapting TQM in government and social service organizations have been identified, TQM can be useful in such organizations if properly modified (Milakovich, 1991; Swiss, 1992).
TQM as Large­Sale Systems Change
TQM is at first glance seen primarily as a change in an organization's technology ­ its way of doing work. In the human services, this means the way clients are processed ­ the service delivery methods applied to them ­ and ancillary organizational processes such as paperwork, procurement processes, and other procedures. But TQM is also a change in an organization's culture ­ its norms, values, and belief systems about how organizations function. And finally, it is a change in an organization's political system: decision making processes and power bases. For substantive change to occur, changes in these three dimensions must be aligned: TQM as a technological change will not be successful unless cultural and political dimensions are attended to as well (Tichey, 1983).
Many (e.g., Hyde, 1992; Chaudron, 1992) have noted that TQM results in a radical change in the culture and the way of work in an organization. A fundamental factor is leadership, including philosophy, style, and behavior. These must be congruent as they are presented by a leader. Many so­called enlightened leaders of today espouse a participative style which is not, in fact, practiced to any appreciable degree. Any manager serious about embarking on a culture change such as TQM should reflect seriously on how she or he feels and behaves regarding these factors. For many managers, a personal program of leadership development (e.g., Bennis, 1989) may be a prerequisite to effective functioning as an internal change agent advocating TQM.
Other key considerations have to do with alignment among various organizational systems (Chaudron, 1992; Hyde, 1992). For example, human resource systems, including job design, selection processes, compensation and rewards, performance appraisal, and training and development must align with and support the new TQM culture. Less obvious but no less important will be changes required in other systems. Information systems will need to be redesigned to measure and track new things such as service quality. Financial management processes may also need attention through the realignment of budgeting and resource allocation systems. Organizational structure and design will be different under TQM: layers of management may be reduced and organizational roles will certainly change. In particular, middle management and first line supervisors will be operating in new ways. Instead of acting as monitors, order­givers, and agents of control they will serve as boundary managers, coordinators, and leaders who assist line workers in getting their jobs done. To deal with fears of layoffs, all employees should be assured that no one will lose employment as a result of TQM changes: jobs may change, perhaps radically, but no one will be laid off. Hyde (1992) has recommended that we "disperse and transform, not replace, mid­level managers." This no layoff principle has been a common one in joint labor­management change processes such as quality of working life projects for many years.
Another systems consideration is that TQM should evolve from the organization's strategic plan and be based on stakeholder expectations. This type of planning and stance regarding environmental relations is receiving more attention but still is not common in the human services. As will be discussed below, TQM is often proposed based on environmental conditions such as the need to cut costs or demands for increased responsiveness to stakeholders. A manager may also adopt TQM as a way of being seen at the proverbial cutting edge, because it is currently popular. This is not a good motivation to use TQM and will be likely to lead to a cosmetic or superficial application, resulting in failure and disappointment. TQM should be purpose­oriented: it should be used because an organization's leaders feel a need to make the organization more effective. It should be driven by results and not be seen as an end in itself. If TQM is introduced without consideration of real organizational needs and conditions, it will be met by skepticism on the part of both managers and workers. We will now move to a discussion of the ways in which people may react to TQM.
People's Expectations and Perceptions
Many employees may see TQM as a fad, remembering past "fads" such as quality circles, management by objectives, and zero­based budgeting. As was noted above, TQM must be used not just as a fad or new program, but must be related to key organizational problems, needs, and outcomes. Fortunately, Martin (1993) has noted that TQM as a "managerial wave" has more in common with social work than have some past ones such as MBO or ZBB, and its adaptations may therefore be easier.
In another vein, workers may see management as only concerned about the product, not staff needs. Management initiatives focused on concerns such as budget or cost will not resonate with beleaguered line workers. Furthermore, staff may see quality as not needing attention: they may believe that their services are already excellent or that quality is a peripheral concern in these days of cutbacks and multi problem clients. For a child protective service worker, just getting through the day and perhaps mitigating the most severe cases of abuse may be all that one expects. Partly because of heavy service demands, and partly because of professional training of human service workers, which places heavy value on direct service activities with clients, there may be a lack of interest on the part of many line workers in efficiency or even effectiveness and outcomes (Pruger & Miller, 1991; Ezell, Menefee, & Patti, 1989). This challenge should be addressed by all administrators (Rapp & Poertner, 1992), and in particular any interested in TQM.
Workers may have needs and concerns, such as lower caseloads and less bureaucracy, which are different from those of administration. For TQM to work, employees must see a need (e.g., for improved quality from their perspective) and how TQM may help. Fortunately, there are win­win ways to present this. TQM is focused on quality, presumably a concern of both management and workers, and methods improvements should eliminate wasteful bureaucratic activities, save money, and make more human resources available for core activities, specifically client service.
Sources of Resistance
Implementation of large­scale change such as TQM will inevitably face resistance, which should be addressed directly by change agents. A key element of TQM is working with customers, and the notion of soliciting feedback/expectations from customers/clients and collaborating with them, perhaps with customers defining quality, is a radical one in many agencies, particularly those serving involuntary clients (e.g., protective services). Historical worker antipathy to the use of statistics and data in the human services may carry over into views of TQM, which encourages the gathering and analysis of data on service quality. At another level, management resistance to employee empowerment is likely. They may see decision making authority in zero­sum terms: if employees have more involvement in decision making, managers will have less. In fact, one principle in employee involvement is that each level will be more empowered, and managers lose none of their fundamental authority. There will undoubtedly be changes in their roles, however. As was noted above, they will spend less time on control and more on facilitation. For many traditional managers, this transition will require teaching/training, self reflection, and time as well as assurances from upper management that they are not in danger of being displaced.
Resistance in other parts of the organization will show up if TQM is introduced on a pilot basis or only in particular programs (Hyde, 1992). Kanter (1983) has referred to this perspective as segmentalism: each unit or program sees itself as separate and unique, with nothing to learn from others and no need to collaborate with them. This shows up in the "not invented here" syndrome: those not involved in the initial development of an idea feel no ownership for it. On a broader level, there may be employee resistance to industry examples used in TQM ­ terms like inventory or order backlog (Cohen and Brand, 1993, 122).
Dealing with Resistance
There are several tactics which can be helpful in dealing with resistance to TQM implementation. Generally, they have to do with acknowledging legitimate resistance and changing tactics based on it, using effective leadership to enroll people in the vision of TQM, and using employee participation.
A useful technique to systematically identify areas of resistance is a force field analysis (Brager & Holloway, 1992). This technique was originally developed by Kurt Lewin as an assessment tool for organizational change. It involves creating a force field of driving forces, which aid the change or make it more likely to occur, and restraining forces, which are points of resistance or things getting in the way of change. Start by identifying the change goal, in this case, implementation of TQM. Represent this by drawing a line down the middle of a piece of paper. Slightly to its left, draw a parallel line which represents the current state of the organization. The change process involves moving from the current state to the ideal future state, an organization effectively using TQM. To the left of the second line (the current state), list all forces (individuals, key groups, or conditions) which may assist in the implementation of TQM. These may include environmental pressures leading to reduced funds, staff who may like to be more involved in agency decision making, and the successful applications of TQM elsewhere. On the other side, list restraining forces which will make the change implementation more difficult. Examples may be middle management fear of loss of control, lack of time for line workers to take for TQM meetings, and skepticism based on the organization's poor track record regarding change. Arrows from both sides touching the "current state" line represent the constellation of forces. Each force is then assessed in two ways: its potency or strength, and its amenability to change. More potent forces, especially restraining ones, will need greater attention. Those not amenable to change will have to be counteracted by driving forces.

Six Sigma in Motorola

For Motorola, the originator of Six Sigma, the answer to the question "Why Six Sigma?" was simple: survival. Motorola came to Six Sigma because it was being consistently beaten in the competitive marketplace by foreign firms that were able to produce higher quality products at a lower cost. When a Japanese firm took over a Motorola factory that manufactured Quasar television sets in the United States in the 1970s, they promptly set about making drastic changes in the way the factory operated. Under Japanese management, the factory was soon producing TV sets with 1/20th the number of defects they had produced under Motorola management. They did this using the same workforce, technology, and designs, making it clear that the problem was Motorola's management. Eventually, even Motorola's own executives had to admit "our quality stinks,"[i]
Finally, in the mid 1980s, Motorola decided to take quality seriously. Motorola's CEO at the time, Bob Galvin, started the company on the quality path known as Six Sigma and became a business icon largely as a result of what he accomplished in quality at Motorola. Today, Motorola is known worldwide as a quality leader and a profit leader. After Motorola won the Malcolm Baldrige National Quality Award in 1988 the secret of their success became public knowledge and the Six Sigma revolution was on. Today it's hotter than ever.
It would be a mistake to think that Six Sigma is about quality in the traditional sense. Quality, defined traditionally as conformance to internal requirements, has little to do with Six Sigma. Six Sigma is about helping the organization make more money. To link this objective of Six Sigma with quality requires a new definition of quality. For Six Sigma purposes I define quality as the value added by a productive endeavor. Quality comes in two flavors: potential quality and actual quality. Potential quality is the known maximum possible value added per unit of input. Actual quality is the current value added per unit of input. The difference between potential and actual quality is waste. Six Sigma focuses on improving quality (i.e., reducing waste) by helping organizations produce products and services better, faster and cheaper. In more traditional terms, Six Sigma focuses on defect prevention, cycle time reduction, and cost savings. Unlike mindless cost-cutting programs which reduce value and quality, Six Sigma identifies and eliminates costs which provide no value to customers: waste costs.
For non-Six Sigma companies, these costs are often extremely high. Companies operating at three or four sigma typically spend between 25 and 40 percent of their revenues fixing problems. This is known as the cost of quality, or more accurately the cost of poor quality. Companies operating at Six Sigma typically spend less than 5 percent of their revenues fixing problems (Figure 1). The dollar cost of this gap can be huge. General Electric estimates that the gap between three or four sigma and Six Sigma was costing them between $8 billion and $12 billion per year.
Figure 1: Cost of Poor Quality versus Sigma Level
What is Six Sigma?
Six Sigma is a rigorous, focused and highly effective implementation of proven quality principles and techniques. Incorporating elements from the work of many quality pioneers, Six Sigma aims for virtually error free business performance. Sigma, s, is a letter in the Greek alphabet used by statisticians to measure the variability in any process. A company's performance is measured by the sigma level of their business processes. Traditionally companies accepted three or four sigma performance levels as the norm, despite the fact that these processes created between 6,200 and 67,000 problems per million opportunities! The Six Sigma standard of 3.4 problems per million opportunities[1][1] is a response to the increasing expectations of customers and the increased complexity of modern products and processes.
If you're looking for new techniques, don't bother. Six Sigma's magic isn't in statistical or high-tech razzle-dazzle. Six Sigma relies on tried and true methods that have been around for decades. In fact, Six Sigma discards a great deal of the complexity that characterized Total Quality Management (TQM). By one expert's count, there were over 400 TQM tools and techniques. Six Sigma takes a handful of proven methods and trains a small cadre of in-house technical leaders, known as Six Sigma Black Belts, to a high level of proficiency in the application of these techniques. To be sure, some of the methods used by Black Belts are highly advanced, including the use of up-to-date computer technology. But the tools are applied within a simple performance improvement model known as DMAIC, or Define-Measure-Analyze-Improve-Control[1][2]. DMAIC can be described as follows:
D
Define the goals of the improvement activity. At the top level the goals will be the strategic objectives of the organization, such as a higher ROI or market share. At the operations level, a goal might be to increase the throughput of a production department. At the project level goals might be to reduce the defect level and increase throughput. Apply data mining methods to identify potential improvement opportunities.
M
Measure the existing system. Establish valid and reliable metrics to help monitor progress towards the goal(s) defined at the previous step. Begin by determining the current baseline. Use exploratory and descriptive data analysis to help you understand the data.
A
Analyze the system to identify ways to eliminate the gap between the current performance of the system or process and the desired goal. Apply statistical tools to guide the analysis.
I
Improve the system. Be creative in finding new ways to do things better, cheaper, or faster. Use project management and other planning and management tools to implement the new approach. Use statistical methods to validate the improvement.
C
Control the new system. Institutionalize the improved system by modifying compensation and incentive systems, policies, procedures, MRP, budgets, operating instructions and other management systems. You may wish to utilize systems such as ISO 9000 to assure that documentation is correct.

Infrastructure
A very powerful feature of Six Sigma is the creation of an infrastructure to ensure that performance improvement activities have the necessary resources. In this author's opinion, failure to provide this infrastructure is the #1 reason why 80% of all TQM implementations failed in the past. Six Sigma makes improvement and change the full-time job of a small but critical percentage of the organization's personnel. These full time change agents are the catalyst that institutionalizes change. Figure 2 illustrates the required human resource commitment required by Six Sigma.
Figure 2: Six Sigma Infrastructure
Leadership
Six Sigma involves changing major business value streams that cut across organizational barriers. It is the means by which the organization's strategic goals are to be achieved. This effort cannot be led by anyone other than the CEO, who is responsible for the performance of the organization as a whole. Six Sigma must be implemented from the top-down.
Champions and Sponsors
Six Sigma champions are high-level individuals who understand Six Sigma and are committed to its success. In larger organizations Six Sigma will be led by a full time, high level champion, such as an Executive Vice-President. In all organizations, champions also include informal leaders who use Six Sigma in their day-to-day work and communicate the Six Sigma message at every opportunity. Sponsors are owners of processes and systems who help initiate and coordinate Six Sigma improvement activities in their areas of responsibilities.
Master Black Belt
This is the highest level of technical and organizational proficiency. Master Black Belts provide technical leadership of the Six Sigma program. Thus, they must know everything the Black Belts know, as well as understand the mathematical theory on which the statistical methods are based. Master Black Belts must be able to assist Black Belts in applying the methods correctly in unusual situations. Whenever possible, statistical training should be conducted only by Master Black Belts. Otherwise the familiar "propagation of error" phenomenon will occur, i.e., Black Belts pass on errors to green belts, who pass on greater errors to team members. If it becomes necessary for Black Belts and Green Belts to provide training, they should do only so under the guidance of Master Black Belts. For example, Black Belts may be asked to provide assistance to the Master during class discussions and exercises. Because of the nature of the Master's duties, communications and teaching skills are as important as technical competence.
Black Belt
Candidates for Black Belt status are technically oriented individuals held in high regard by their peers. They should be actively involved in the process of organizational change and development. Candidates may come from a wide range of disciplines and need not be formally trained statisticians or engineers. However, because they are expected to master a wide variety of technical tools in a relatively short period of time, Black Belt candidates will probably possess a background including college-level mathematics and the basic tool of quantitative analysis. Coursework in statistical methods may be considered a strong plus or even a prerequisite. As part of their training, Black Belts receive 160 hours of classroom instruction, plus one-on-one project coaching from Master Black Belts or consultants.
Successful candidates will be comfortable with computers. At a minimum, they should understand one or more operating systems, spreadsheets, database managers, presentation programs, and word processors. As part of their training they will be required to become proficient in the use of one or more advanced statistical analysis software packages. Six Sigma Black Belts work to extract actionable knowledge from an organization's information warehouse. To ensure access to the needed information, Six Sigma activities should be closely integrated with the information systems (IS) of the organization. Obviously, the skills and training of Six Sigma Black Belts must be enabled by an investment in software and hardware. It makes no sense to hamstring these experts by saving a few dollars on computers or software.
Green Belt
Green Belts are Six Sigma project leaders capable of forming and facilitating Six Sigma teams and managing Six Sigma projects from concept to completion. Green Belt training consists of five days of classroom training and is conducted in conjunction with Six Sigma projects. Training covers project management, quality management tools, quality control tools, problem solving, and descriptive data analysis. Six Sigma champions should attend Green Belt training. Usually, Six Sigma Black Belts help Green Belts define their projects prior to the training, attend training with their Green Belts, and assist them with their projects after the training.
Staffing Levels and Expected Returns
As stated earlier in this article, the number of full time personnel devoted to Six Sigma is not large. Mature Six Sigma programs, such as those of Motorola, General Electric, Johnson & Johnson, AlliedSignal, and others average about one-percent of their workforce as Black Belts. There is usually about one Master Black Belts for every ten Black Belts, or about 1 Master Black Belt per 1,000 employees. A Black Belt will typically complete 5 to 7 projects per year. Project teams are led by Green Belts, who, unlike Black Belts and Master Black Belts, are not employed full time in the Six Sigma program. Black Belts are highly prized employees and are often recruited for key management positions elsewhere in the company. After Six Sigma has been in place for three or more years, the number of former Black Belts tends to be about the same as the number of active Black Belts.
Estimated savings per project varies from organization to organization. Reported results average about US$150,000 to US$243,000. Note that these are not the huge mega-projects pursued by Re-engineering. Yet, by completing 5 to 7 projects per year per Black Belt, the company will add in excess of US$1 million per year per Black Belt to its bottom line. For a company with 1,000 employees the numbers would look something like this:
Master Black Belts: 1
Black Belts: 10
Projects: = 50 to 70 (5 to 7 per Black Belt)
Estimated saving: US$9 million to US$14.6 million (US$14,580 per employee)
Do the math for your organization and see what Six Sigma could do for you. Because Six Sigma savings impact only non-value added costs, they flow directly to your company's bottom line.

Implementation of Six Sigma
After over two decades of experience with quality improvement, there is now a solid body of scientific research regarding the experience of thousands of companies implementing major programs such as Six Sigma. Researchers have found that successful deployment of Six Sigma involves focusing on a small number of high-leverage items. The steps required to successfully implement Six Sigma are well-documented.
1. Successful performance improvement must begin with senior leadership. Start by providing senior leadership with training in the principles and tools they need to prepare their organization for success. Using their newly acquired knowledge, senior leaders direct the development of a management infrastructure to support Six Sigma. Simultaneously, steps are taken to "soft-wire" the organization and to cultivate an environment for innovation and creativity. This involves reducing levels of organizational hierarchy, removing procedural barriers to experimentation and change, and a variety of other changes designed to make it easier to try new things without fear of reprisal.
2. Systems are developed for establishing close communication with customers, employees, and suppliers. This includes developing rigorous methods of obtaining and evaluating customer, employee and supplier input. Base line studies are conducted to determine the starting point and to identify cultural, policy, and procedural obstacles to success.
3. Training needs are rigorously assessed. Remedial skills education is provided to assure that adequate levels of literacy and numeracy are possessed by all employees. Top-to-bottom training is conducted in systems improvement tools, techniques, and philosophies.
4. A framework for continuous process improvement is developed, along with a system of indicators for monitoring progress and success. Six Sigma metrics focus on the organization's strategic goals, drivers, and key business processes.
5. Business processes to be improved are chosen by management, and by people with intimate process knowledge at all levels of the organization. Six Sigma projects are conducted to improve business performance linked to measurable financial results. This requires knowledge of the organization's constraints.
6. Six Sigma projects are conducted by individual employees and teams led by Green Belts and assisted by Black Belts.
Although the approach is simple, it is by no means easy. But the results justify the effort expended. Research has shown that firms that successfully implement Six Sigma perform better in virtually every business category, including return on sales, return on investment, employment growth, and share price increase. When will you be ready to join the Six Sigma revolution?

The High Return on Valued Employees

Sam Walton of Wal-Mart Stores Inc. has been quoted as having said it takes just seven days for new employees to start treating customers the way they are treated at work. All the customer service skills and training in the world can be undone in only one week if an employee is treated poorly by his or her co-workers or boss.
Companies spend countless amounts of time and resources on developing quality customer service techniques. Employees are taught that the customer is always right. They are taught to do whatever it takes to get and keep a customer's business. What is often overlooked is internal customer service. Companies talk the talk to the outside world, but don't walk the walk with their own people.
Do you give your internal customers a positive or negative service message? Ask yourself these questions:
How do managers react when there's an external customer service problem? A manager's job is to be sure his team is providing good service externally, but does he support them when there's a problem? Some managers place blame, become angry and step in with the customer, making it obvious to everyone that the person on the line did a poor job. Better managers support their people and provide whatever backing the employee needs to make the customer happy. Instead of finding fault, they help find solutions. In the end, the customer is happy, the employee maintains his dignity and, ideally, the employee learns how to do better the next time.
Is your staff empowered to make decisions? The classic scenario of no empowerment is a car salesperson constantly checking with the sales manager to obtain approval during negotiations. This type of environment teaches employees that they have little or no say in the decision and it sends a message to the customer that he is dealing with the wrong person. As a customer, don't you wish you could just talk directly to the sales manager and save the hassle? If employees are empowered to make decisions and solve problems on the spot, the customer will go away satisfied most of the time.
Do co-workers support each other? Most people don't work alone; they rely on others to help them get the job done. When someone needs information from a co-worker, is it delivered on time? If people don't deliver on deadline internally, the end product will be late to the customer. When that happens, co-workers start the process of covering their own skins and placing the blame on others -- nobody takes accountability for the missed deadline.
Do your employees have the tools to do the job? Perhaps that car salesperson had to keep running to his manager because he didn't know enough about the dealership's negotiation policies to make the deal on the spot. While you're training the staff on how to satisfy customers, also consider training on team-building, time management and other techniques to help the staff work as a cohesive unit.
How do you match up against your competitors? Is your competition using your weaknesses against you in a sales pitch? If your staff feels like they're getting beat up by the competition, their attitudes can slip quickly. Poor morale around the office leads to lower incentives to do a good job for the customer, making the situation spiral downward. Don't just sit back and let the competition tell your story, work on problems internally so your employees feel confident out on the street.
Do your employees think service is important? Top management needs to send the message that service is a priority, both internal and external service. People must be accountable for their actions and must be motivated to do their best work. Some companies think tactics such as "Employee of the Month" recognitions are corny; but for many employees, that internal recognition goes a long way in goodwill -- goodwill that is passed on to the customer.
How are customers treated behind the scenes? If your top customer was a fly on the wall in your office, would he or she still be a customer? Companies that allow employees to bad mouth customers are breeding an environment of mistrust. If a junior employee hears a top executive trashing a customer, he is going to lose sight of the fact that the customer is your company's livelihood. Employees in that environment are more likely to talk bad about their co-workers and engage in back-stabbing behavior.
A company's culture is set by top management; employees learn what's acceptable by watching what those at the top say and do. Therefore, if you set a tone for support and service, it will pay off in satisfied customers, inside the company and out.

Even the US is Losing it Intellectual Capital

The land to which people immigrated for its educational and employment opportunities is losing an increasing number of potential citizens. In 1991, 1.82 million people immigrated to the United States, according to the U.S. Department of Homeland Security’s Office of Immigration Statistics. By 2000, that figure had dropped to 849,807. Although it was back up some to 1.06 million in 2002, it had dropped again to 705,827 by the end of the 2003 fiscal year.
David Heenan is the author of "Flight Capital," a forthcoming book discussing this phenomenon. He says that despite the decrease in foreign nationals immigrating to the United States, more of those who do immigrate are choosing to return to their homelands to live out their white-collar careers there rather than here in the United States compared with a couple of decades ago. That, he says, is going to take its toll on corporate America’s intellectual capital.
"These people who immigrated to the United States with the notion that they would work here and never go back (to work in their home countries) started to see their former home countries move up the economic ladder and create what turned out to be some very interesting opportunities," Heenan says. Others have been disenchanted with raising their children here. "One guy described to me that the MTV generation, with its bare midriffs and vulgar languages, made him want to raise his kids in an environment that was less stressful and less fast-paced," he says.
"This trend I am describing in terms of flight capital began as a trickle in the mid-1990s, but now has picked up speed," Heenan says. "Many of these people are going back to Ireland, Israel, Singapore and China and are feeling very good about that decision."
But the United States is not just losing Joe and Jane Scientist. It’s losing their kids too. "If you look at USA Today’s all-American student list or look at National Merit Scholars, about 60 percent of those are kids of foreign nationals," Heenan says. "When the parents go back, the kids go back. This is the exodus of America’s best and brightest. If you do a projection, by 2010 there will be a significant shortage of high-end talent as we have not been developing our own Americans."
Beyond those leaving the United States after some time spent in corporate America, there are also those foreign nationals who just aren’t coming in the waves that they once did.
The number of immigrant scientists, engineers, academics and other employer-sponsored professionals and skilled workers dropped 54 percent from 179,000 for fiscal year 2000 to 82,000 in fiscal year 2003, according to data from the Office of Immigrant Statistics. Figures for 2004 have not yet been released, but given that in October 2003 the U.S. government capped H-1B status--the visa used for employee-sponsored immigration of professionals--at 65,000, the nation cannot expect the same high number of immigrants it saw in the first part of this decade.
Heenan, a former senior executive with Citicorp and Jardine Matheson who also served on the faculties of the Wharton School, the Columbia Graduate School of Business and the University of Hawaii, says, "We are also losing that guy who is now in China seeing these people coming back and they say, ‘Gee, if they are coming back and moving up the scale, why do I have to go to the United States in the first place?’ "
Jobs aplenty in China Ames Gross is president of Pacific Bridge, a Bethesda, Maryland, recruiting firm and consultancy specializing in placing Asian returnees with companies. He says the quality of life in China is much better than it was a couple of decades ago. The pay is also a lot better, he says, in part because of the increased number of multinational companies with operations there paying good salary with benefits.
Gross points out that in China there are probably three to five job openings per one educated Chinese person. It is an ideal situation for returnees who often feel that they hit the glass ceiling while in the United States.
"The main reason many go back is because of the opportunity for more senior positions and more bang for the American buck," Gross says. "A Chinese from Taiwan or China who worked his way up in the U.S. knows he is only going to get so far if he speaks broken English and doesn’t go to the right country club. Whereas if he goes back to China he might have more opportunity"--even within an offshore division of an American company.
Many of these countries like Singapore, Ireland and China have created attractive incentives to lure their natives back home. From tax incentives to housing incentives, especially for people in the sciences like medicine, biotech and information technology and software development--these natives with foreign work experience are in tremendous demand all around the world.
Home is beckoning In order to lure home Western-educated talent, the Thai government devised the so-called "Reverse Brain Drain Project." The project, developed by the Ministry of Science, Technology and Environment, is designed to recruit educated Thai citizens in Japan, North America and Europe to return to Thailand. Scientists, engineers, and doctors are the main targets.
One way to lure these professionals is to have them return as lecturers in the universities, according to a report by Pacific Bridge. Unfortunately, the starting salary of a lecturer with a doctorate at a public university is only around $4,500 per year, the report reveals. According to the Bangkok Post, Thai professionals would consider returning if the government offered such incentives as housing loans or subsidies, a competitive salary, tax subsidies for research equipment, or relocation compensation.
"Their governments know that if they are going to make it in innovations, they need these blue-chip personalities and will go to great lengths to bring them home," says Heenan, who traveled to several countries conducting interviews for his book.
Enterprise Ireland, a Dublin-based economic development and recruiting agency with offices in New York, periodically holds seminars aimed at enticing people in the biosciences to go back to Ireland to work. It targets those who immigrated to the United States from Ireland five years ago or even 30 years ago who now work for Merck or Pfizer. About 60 percent of the audience attending a recent conference was prepared to go back to Ireland for at least five years for the right incentives.
Wyeth Pharmaceuticals, which in 2004 opened a $1.5 billion bio-pharma center in Ireland, was one of several companies speaking to the crowd about working for U.S. companies back in Ireland. The biopharma campus on a 90-acre site currently employs 1,000 and for 2005 is looking to hire another 300--whether local, returnee or expatriate--a corporate spokesperson says.
A very convenient way for foreign nationals to go home without losing a lot in terms of risk is to return with a multinational company such as 3M or Motorola. If they are Japanese returnees, they can go back with 3M and stay in the company loop as they continue with their U.S. employers. Many of them, however, get picked off by local companies because their worldwide experiences make them attractive.
Hot commodities The United States is also making it more difficult for some foreign nationals to come to this country if they wanted, Heenan says. The number of foreigners with advanced degrees or exceptional skills allowed into the country plummeted 65 percent last year, he says, while international student enrollments fell for the first time since the early 1970s. An important reason he gives is the length of time it now takes to get a visa--often six months or more.
Thirty percent to 40 percent of U.S. companies report serious delays in bringing skilled employees and customers to the country, according to data in Flight Capital. Many say their businesses will be in jeopardy--and so will the jobs of many Americans. What’s more, U.S. immigration policy is heavily skewed toward reuniting families. More than 70 percent of annual visas go to family reunifications, while only 20 percent are given to professionals and skilled workers, Heenan writes.
"My point is you better take care of these guys," he says in an interview. "In the old days if they went back to Brazil with General Motors, chances are they’d stay with GM the rest of their lives. But when these returnees go back today they are hot commodities. There are a whole lot of other options out there with the government incentives, local companies and venture capitalists who will be all over them. So companies need to take care of these people and let them continue their career paths and salary progression. This book is a wake-up call for America."

Bridging The Talent Gap

n the weeks following the September 11 terrorist attacks, Nicholas Santangelo of the Fire Department of New York spent days and nights searching for bodies at the site of the collapsed World Trade Center. Sleep was an afterthought for Santangelo and his fellow New York City firefighters as they tirelessly combed through the rubble of the Twin Towers 24 hours a day.
The FDNY had lost 343 of its 11,300 firefighters after two hijacked planes slammed into the 110-story Twin Towers, killing 2,749 people and plunging the city into a state of shock. It was the biggest loss of life the department had ever experienced in a single disaster. But two weeks after the attacks—which included another hijacked plane hitting the Pentagon in Washington, D.C., killing 184 people, and a plane going down in Shanksville, Pennsylvania, killing 40—acting Fire Chief Daniel Nigro and Fire Commissioner Thomas Von Essen called a meeting with Santangelo, the chief of the department’s fire academy, at its headquarters on Randall’s Island in New York City.
"They told me that we have to start to rebuild," Santangelo says. "It was time to get the academy in full swing."
Despite the enormity of the terrorist attacks, it was critical for the FDNY to not only quickly replace the firefighters it lost, but to revamp its training program to address the new threats that September 11 revealed.
That meant new training on terrorism awareness and handling hazardous materials. But the huge loss of life caused by the attacks also exposed a greater need for leadership development, talent management and succession planning pro­cesses to ensure that if a disaster of such magnitude happened again, the FDNY would have the people in place to continue doing its job.
The events of September 11 revealed similar needs at other organizations. Succession planning and leadership development have become top priorities at the Port Authority of New York and New Jersey, says Michael Massiah, the port’s director of management and budget.
The Port Authority, which had 2,000 employees working at the World Trade Center, lost 84 people, including its executive director, Neil Levin. "Succession planning was important before 9/11, but after the attacks it became evident that we always need to have an available pool of talent," Massiah says.
Executives at Marsh & McLennan Cos., which lost 295 of its 1,900 employees at the Twin Towers, were forced to rethink how they defined people’s positions and which employees could fill these roles, says Kathryn Komsa, vice president of global human resources.
"We began to look internally at our talent more than we ever did before," she says.
In many ways, the events of September 11, 2001, forced organizations to come up with better talent management processes to meet today’s challenges: the aging workforce and what many companies see as an impending talent shortage, observers say.
William J. Morin, chairman and CEO of WJM Associates, a New York organizational consulting firm, saw the number of requests for talent assessments double in the wake of September 11.
"That morning made everyone realize how much can change in one minute," he says.
Rebuilding Marsh & McLennan spent the weeks after the terrorist attacks reaching out to families of employees, reassuring clients, offering counseling and figuring out where to put its displaced employees.
Early on, executives realized how drastically its business had changed as a result of the events. "All of a sudden clients needed things like terrorism insurance," Komsa says. "Our clients’ priorities had changed, and thus so did our work priorities."
It also became clear that the talent pool in New York had changed dramatically in the wake of September 11. People didn’t want to work in New York anymore, Komsa recalls.
"Between having a talent market that was different and a change in our work priorities, we realized we had a whole new set of skills and roles we didn’t have before," Komsa says.
Executives began looking at Marsh & McLennan’s own people to fill new and existing positions.
"We really took on this attitude of ‘Let’s stretch people,’ " Komsa says. That often meant taking a chance on employees who were not necessarily ready for a larger role, but giving them support and training to help them do it.
In other instances, it meant combining positions. If there was a duplication of roles in Chicago and New York, the Chicago manager was asked to take on all the responsibilities.
Focusing more on internal promotions and expanding employees’ responsibilities served a dual purpose, Komsa says. On one level, it was a business imperative. It also was a way to get employees moving beyond the tragedy, she says.
Recruiting also took on a new context at the Port Authority after September 11. The agency didn’t have problems getting people to apply, but the terrorist attacks caused the agency to emphasize different qualities in candidates, Massiah says.
Specifically, the Port Authority put greater emphasis on a candidate’s dedication to public service.
"Beyond everything else, we have to provide a service to the public no matter what the circumstance is," Massiah says, noting that he didn’t go home for five days following the attacks. "It wasn’t until Sunday that I could heal with my family."
Project management skills also became more important after September 11, Massiah says. The agency had to allot more of its budget to security and hire more police, which meant cutting costs in other areas. This meant employees had to be able to use resources efficiently and juggle multiple roles at once, Massiah says. Port Authority officials developed two several-day training sessions teaching such skills to staff members.
Today, managers are evaluated on 10 competencies, emphasizing project management and productivity improvement. The agency stresses a commitment to public service in its evaluations of new hires.
A focus on training Like the Port Authority, the FDNY didn’t have recruiting problems in the weeks after September 11. For every candidate who decided not to be a firefighter anymore, there were one or two who wanted to join, Santangelo says.
To address new terror threats, the FDNY extended the orientation training from 11 to 13 weeks.
"We began offering more training around what would happen if some kind of national incident occurred," he says. Counseling sessions were also offered at the academy.
Because of its losses, the FDNY increased its orientation class size to get firefighters on the job faster. The first class that began training in October 2001 had 300 firefighters, double the normal class size.
Current firefighters are required to return more frequently for training than before September 11. It’s partially because of the additional requirements triggered by the terrorist attacks, but also because so many firefighters just started their careers, Santangelo says.
Today, a firefighter attends training at least 12 times a year, up from five times annually before September 11, he says. To accommodate greater class size and more classes, the department increased its number of instructors from 170 to 220.
The FDNY also has implemented a formal performance management system to test firefighters on their skills. Today, every firefighter has an annual review, which was not the case before September 11, Santangelo says.
The FDNY estimates it lost 4,440 years of experience the day of the attacks. But developing leaders also is critical to the FDNY because about 4,000 firefighters have retired during the past five years, Santangelo says. Many retirees had exceeded their 20 years of service, the minimum to receive their pensions.
The FDNY has expanded its management training to develop leaders within the department. This entails working with outside parties, like the U.S. Military Academy at West Point. It also requires trainees to participate in rescue operations with other groups, as it did last fall when personnel went to New Orleans after Hurricane Katrina.
"We have expanded our management team training so our people are prepared to work with outside parties," Santangelo says. "We need to be part of a national team to respond to major incidents."
It has become a greater challenge in recent months because it has gotten harder to fill orientation classes, Santangelo says.
In June, as a result of contract negotiations, the FDNY had to cut its starting salary from $36,000 to $25,000, he says. After the 13-week training program, salaries increase to $32,700.
"We are definitely starting to feel the effects," Santangelo says.
But Farrell Sklerov, an FDNY spokes­man, says there has been no difficulty recruiting firefighters, noting that more than 7,000 applicants have passed the entrance test in the past four years.
"We aren’t having a problem finding enough people," Sklerov says. He says that it’s too soon to say whether the new salary structure has had an effect on recruiting, but emphasizes that starting salaries actually end up around $37,000 because new hires get automatic overtime and holiday pay.
Regardless of why it’s harder to fill classes, Santangelo and his team are working to get new firefighters up to speed faster.
To do this, the department is sending out mobile training vehicles to different stations. The department has three on the road and hopes to add more in coming months.
Santangelo believes the increased focus on training and development in the wake of 9/11 has helped prepare the department for the aging workforce issues it’s experiencing now.
The Port Authority’s increased emphasis on training and development and succession planning has helped the agency cope with its aging workforce today, Massiah says.
"We review candidates and do more leadership development than we did five years ago," he says.
But at an agency where the average age is 45, "the challenge continues to be leadership continuity," Massiah says. "We have the right programs in place now, but we have to keep our focus on it."

Examples Of Strong Corporate Cultures

Corporate culture has become increasingly important to firms in the past 20 years. Despite its intangible nature, its role is meaningful, affecting employees and organizational operations. And while culture is not the only factor guaranteeing success, positive cultures offer significant competitive advantages over rivals.
Corporate culture has become increasingly important to firms in the past 20 years. Despite its intangible nature, its role is meaningful, affecting employees and organizational operations. And while culture is not the only factor guaranteeing success, positive cultures offer significant competitive advantages over rivals.
Dominant set of norms
People come from diverse social, cultural and ethnic backgrounds, with different personalities and experiences. In a work environment, these factors manifest themselves in a wide variety of ways, and over time a dominant set of norms arise which guide the way work is accomplished. Deal and Kennedy popularized the notion of developing positive corporate cultures in their 1982 book Corporate Cultures, and since then the concept is seen playing as a central role in corporate strategy.
Corporate culture has many definitions as it is heavily influenced by the industry in which it operates, geographical location, history, employee personalities, etc. Some formal definitions have arisen, but essentially a corporate culture has several key elements: it offers a clear corporate vision; it is supported by corporate values consistent with the aims of the company and aligned with the personal values of organization members; a high value is placed on employees at all levels and there is extensive employee interaction across many levels; and the culture is adaptable, adjusting to external conditions, and consistent, treating all employees equally and fairly. These characteristics cannot exist without widespread employee support. And even though there may be strong sub-cultures within the company, the dominant culture must be strong enough for sub-culture members to embrace it.
Cultural categories
But how to categorize culture? In 1988 Sonnenfeld defined four types: the academy (exposing members to different jobs so they can move within the organization), the club (which is concerned with people fitting in), the baseball team (with its well-rewarded stars who leave for better opportunities) and the fortress (concerned primarily with survival). Goffee and Jones’ (1996) model takes a different route, suggesting a corporate culture is determined by levels of sociability (friendliness among community members) and solidarity (a community’s ability to pursue shared objectives) and developed a survey that quickly slots companies in on this scale in four categories: networked, mercenary, fragmented and communal.
High-sociability, low-solidarity network culture individuals feel like family and socialize often, with promotions and work achieved by informal networks or internal sub-cultures (similar to Sonnenfeld’s club culture). Mercenary cultures have low sociability and high solidarity, with workers united in support of business aims (like the baseball team). The fragmented culture’s low sociability and solidarity tend to work with office doors shut, like a law firm or a downsizing company (the fortress). A communal organization has high sociability and high solidarity, often seen in small start-up firms, where colleagues are close socially and professionally, identifying closely with the corporate culture (the academy).
Categorizing cultures helps managers in several ways: it gives a better understanding of the pros and cons of that particular culture, helps managers to recruit the most suitable applicants and helps managers determine what cultural changes are necessary.
Cultural benefits
Organizations able to maintain positive cultures enjoy many benefits. Morale is improved, and the work environment more enjoyable, with increased teamwork, openness to new ideas and sharing of information. This activates learning and continuous improvement because of the free flow of information. It also helps attract and retain good employees.
Examples of companies benefiting from the positive effects of corporate culture include:
Wal-Mart. Founder Sam Walton’s concern and respect for staff from the foundation of the company creates an environment of trust that persists to this day. Walton met staff, calling them by their first name and encouraged change to maintain the competitive edge. To this day, staff think about “how Sam would have done it”.
Southwest Airlines. Its relaxed culture can be traced back to unconventional CEO Herb Kelleher, who encourages informality and wants staff to have fun at their jobs. Employees are valued, with Kelleher acknowledging births, marriages and deaths by notes and cards. Staff are encouraged to pitch in and help out, especially at check-in, giving Southwest turnaround times less than half the industry average.
Hewlett Packard. Problems several years ago encouraged HP to change its culture; staff are required to formulate three personal and three professional goals each year, and are encouraged to cheer those that meet them, such as getting away early to be with family. Two years into the program, HP reports no loss in productivity despite staff working shorter hours and there is an increased staff retention rate. The program has been marked by the extent to which managers bought in, and modeled it in their personal lives.
It is obviously easier to model a corporate culture during a firm’s infancy, but in practice culture can be changed for the better. This can be done by surveying employees, meeting staff outside their departments and learning what they really think is going on. This helps managers identify the existing culture and identify areas of improvement.
Then, managers should institute cultural change by modeling the behavior they wish to encourage, then reinforce the desired culture with visionary statements/slogans, celebrating employees’ successes or promotions, distributing newsletters, hiring culture-compatible staff, etc.
Positive corporate culture is now a prerequisite for success rather than a competitive advantage; it allows the hiring and retention of top-quality staff. Ideally established at a company’s infancy, it can be changed over time as the authors’ example show. If a corporate culture is lowering morale, a top-down approach is needed, setting out the vision from the top and demonstrating acceptable behavior. Improving workplace culture makes employees’ experience happier and this in turn leads to improved profitability (or, in the HP example, no reduction in profitability!).
A well-structured study, combining a sound theoretical base with three case studies involving corporate culture change in top US companies, the article is of use both to academics and managers as it charts the concept of corporate culture and its positive and negative effects on organizations.
Comment
This is a review of “Developing corporate culture as a competitive advantage,” by Golnaz Sadri and Brian Lees of California State University, which first appeared in the Journal of Management Development, Vol. 20 No. 10, 2001.

On The Burger Culture

The fast food industry originated in the United States as "hamburger joints," but has become a global industry. As the industry has grown, so has the menu of a typical fast-food outlet, in number and variety of items. This trend has produced an opening for a fast food chain that concentrates on preparing a few items well, offering those items with superior quality at a competitive price. For purpose of discussion, this concept has been called Basic Burger.
Competitive Analysis of the Industry:
The fast food industry is an important and growing segment of the broader food-service industry, which can broadly be defined as providing ready-to-eat meals, as distinct from food items to be prepared at home, or snack foods requiring no preparation before eating. Fast food in some form is as old as sidewalk food vendors, but in the form we know it now it appeared in the United States in the 1950s, as particularly suited to drive-up or drive-through service.
Originally provided by individual stand-alone outlets or small local chains, since the 1960s it has been dominated by nationwide and then global chains, of which McDonald's is dominant. The primary advantage of large chains is branding (Bodine). Branding in turn implies a reliability of experience. A stand-alone outlet might well be better than any chain, but is at least as likely to be worse. At a McDonald's or KFC outlet, customers know what they can expect.
In addition to competing with one another, fast foods face competition from two sides. On one side, they are challenged by convenience stores or grocery stores offering food, sometimes heated. On the other side, they are challenged by the lower-priced and simpler-service end of the conventional restaurant spectrum, which (particularly in the United States) itself includes chains, such as Coco's, often located along highways.
This second group of restaurants have been a particular point of competition for the fast-food industry, which originated from "burger joints" appealing especially to teenagers. As the industry has grown it has broadened its scope, particularly in variety of items offered. Some of this growth has come in the form of chains that emphasize items different from the traditional hamburger-centered menu, such as KFC, which concentrates on chicken. The hamburger-centered chains, such as McDonald's, however, have tended over time to greatly increase the number and variety of their menu items, for example fish items and salads.

The Basic Burger Concept:
The expansion of fast-food menus has had important implications for their operations. As the menu grows, the kitchen operation becomes more complex. The imperatives of operating with a small and generally low-skilled kitchen staff have tended to push preparation back along the supply chain, so that handling and preparation within the outlet is minimized. The end result, for the customer, is blander and more "synthetic" food.
Fast food was never intended or expected to be a gourmet dining experience. However, Americans old enough to remember the earlier, simpler "burger joint" experience remember it fondly, while younger Americans have a sense that they are missing something. In other countries where American-style fast food has penetrated, the comparison is drawn to traditional local forms of convenient informal dining. Fast-food chains such as McDonald's are widely viewed as symbols of "globalization" in its negative sense, even while people around the world eat in them.
At the heart of the Basic Burger concept is menu simplification, and exploitation of the resulting simpler kitchen operation to provide a tastier, higher-quality product at a price point equivalent to existing fast-food items, particularly the McDonald's Big Mac. This, and its counterparts at other chains, along with a few other items such as french fries, continue to account for a large share of all fast-food items sold.
The center of the fast-food industry remains the United States, and the concept (including the name "Basic Burger") has been formulated with the American market in mind. However, the same concept could well be applied elsewhere, and if originating in a different national market, could draw on local casual-dining traditions rather than the American-style hamburger.
Assuming that the concept is first applied in the American market, subsequent global expansion might seem to be hampered by recent international consumer resistance to American-identified brands (Emling). Much of this recent resistance is due to US foreign policy, specifically the war in Iraq. As American public opinion has now also turned against the war and the Bush administration, however, this point of resistance can be expected to be a thing of the past before a new brand, having established itself in the American market, is ready to extend a global reach.
Returning to the Basic Burger concept, the trade-off, naturally, will be in having fewer items offered. Customers not interested in the handful of menu choices offered will have to go elsewhere. However, by offering popular items of superior quality at a competitive price, Basic Burger will still be positioned to capture a substantial proportion of fast-food customers, providing a substantial market niche that is in less competition with other segments of the food service industry such as conventional restaurants.
The Basic Burger Operation:
By selling only a few key items, the outlet can concentrate its effort on them. The kitchen and storage areas, not requiring provision for a large variety of items, can be designed with emphasis on the core competency. Less preparation at distant central distribution centers will be required, allowing greater emphasis on on-site preparation, in turn allowing delivery of fresher, more "natural" meals to the customer.
It should be noted here that some menu variations have minimal impact on operational complexity. For example, small, medium, and large hamburgers are made the same way, so this type of variety can be offered without substantially increasing the overhead of operational complexity.
Funding Mechanism and Price. The central concept of Basic Burger, as outlined above, is to reduce complexity of kitchens and supply chains, and apply the resulting savings to provide superior quality within a given price point. From the customer's-eye point of view, this can be expressed simply by saying that the offering of Basic Burger would most likely be about the size of a Big Mac, and offered for the same price, but tasting noticeably better, and in particular more natural.
It may be found in practice that a somewhat larger or smaller offering is the optimum, and as suggested above, offering two or even three sizes imposes minimal overhead. Larger sizes are generally advantaged, since the labor input is more or less identical for all sizes. It may also be found that the quality is sufficient to allow for a modest price premium as compared to other chains' similar-size offerings. However, the Basic Burger concept is not dependent on being able to charge such a premium.
Employee Management. Employee training can likewise focus on the core competency, simplifying operations. Cashiers, for example, will only have to deal with a few items. Moreover, smaller kitchen staffs will allow higher pay, at least in some positions, for example drawing cooks with a higher skill level. Additionally, though the number of items is restricted, some scope for individual skill will be available in these positions, making the outlets a reasonable entry level for cooks intending to move on to general restaurants, something that is not the case with conventional fast-food outlets today.
A reputation for quality will also tend to foster employee morale. The Basic Burger operation will not be a radical departure from fast-food operations. Thus it can draw on well-established management procedures for ensuring consistancy of quality in the product. At the same time, the focus on core competency will open the potential for pushing a bit beyond the standard, e.g., in allowing some scope for skill in cooking. The whole operation will be distinctly on the high end of the fast-food spectrum, with all the advantages that this can convey in employee management and relations.
Customer management. Customers are familiar with fast-food characteristics and operations. Thus, the Basic Burger concept is not requiring them to learn how to respond to an experience that is new to them. The customer will place orders and pick up food in the same way as at other fast food outlets. The one element of customer education required is with respect to the available variety of offerings, which will be considerably smaller than at McDonald's or other similar outlets.
In large part, this education will be handled by the advertising and overall branding, as in the proposed name, Basic Burger. People have an intuitive grasp that if you only make a few things, you probably make them better. Moreover, in a world where they are bombarded with choices, people will respond to "old-fashioned" quality and simplicity. These will be at the heart of the Basic Burger message.
Likewise, for customers who are unfamiliar with the offerings, the simplicity of the menu will simplify their task. They will see at a glance whether they want what is offered; if it isn't, their time and energy won't be wasted. More often than not they will want what is offered, and the quality of the product will bring them back.

Can Corporate Culture Be a Competitive Advantage?

Introduction
Corporate culture has become an important topic in business primarily during the last two decades. While corporate culture is an intangible concept, it clearly plays a meaningful role in corporations, affecting employees and organizational operations throughout a firm. While culture is not the only determinant of business success or failure, a positive culture can be a significant competitive advantage over organizations with which a firm competes. This paper will review how the concept of corporate culture became popular, define corporate culture, show how it affects real-world organizations (both positively and negatively), and consider ways in which cultural change may be brought about.
The rise of corporate culture
People come from a variety of ethnic backgrounds and cultural heritages, have a variety of personalities, and have been shaped by a diverse range of experiences. When people from diverse backgrounds are brought together in a work environment, these factors will manifest themselves in an infinite variety of ways. Over time a dominant set of norms will emerge, guiding the way in which work is accomplished within the organization. This phenomenon gives rise to the concept of corporate (or organizational) culture. Corporate culture only began to be studied and appreciated in the USA during the last two decades. An influential book entitled Corporate Cultures: The Rites and Rituals of Corporate Life (Deal and Kennedy, 1982) popularized the notion of understanding, establishing, and fostering a positive corporate culture. In less than two decades since the time that this book was published, culture has gone from a relatively unknown concept to being widely recognized as playing a central role in corporate strategy. Literally hundreds of books and thousands of articles have been devoted to the subject (a recent search for books on corporate culture through a large Internet book retailer turned up 803 matches). It is clear that corporate culture has become an important consideration for top management, and therefore it is worthwhile to consider the definition of corporate culture in more detail.
Corporate culture defined
There are many ways to define corporate culture because it is influenced heavily by factors such as the industry in which the company operates, its geographic location, events that have occurred during its history, the personalities of its employees, and their patterns of interaction. Some of the formal definitions offered include “a cognitive framework consisting of attitudes, values, behavioral norms, and expectations” (Greenberg and Baron, 1997), “the collective thoughts, habits, attitudes, feelings, and patterns of behavior” (Clemente and Greenspan, 1999), and “the pattern of arrangement, material or behavior which has been adopted by a society (corporation, group, or team) as the accepted way of solving problems” (Ahmed et al., 1999). In more useful terms, a positive corporate culture typically encompasses several key elements. First, it is fostered not merely by a mission statement, but by a clear corporate vision, which is a mental picture of the company’s desired future (Qubein, 1999). Corporate visions are most effective when clearly communicated by top organizational leaders who exhibit strong values and have dynamic, charismatic personalities (Greenberg and Baron, 1997). Second, corporate culture is supported by corporate values that are consistent with the purpose of the company and aligned with the personal values of organizational members (Qubein, 1999). Corporate vision and values permeate all levels of the organization and are consistently modeled by top management. Third, employees are highly valued at all levels of the organization (they are often referred to as “associates” or “team members”), and there is extensive employee interaction both within and across functional departments (Clemente and Greenspan, 1999). Fourth, the culture is adaptable, adjusting quickly in response to external conditions and is consistent, treating all employees equally and fairly (Ahmed et al., 1999). Finally, corporate culture is perpetuated in some way, perhaps through tangible symbols, slogans, stories, or ceremonies that highlight corporate values (Greenberg and Baron, 1997).
The aforementioned characteristics of a positive culture cannot exist without widespread employee support. Even within an organization that has a strong overall culture (the “dominant culture”), there will also be many subcultures (Greenberg and Baron, 1997). These could form for many reasons, perhaps due to functional differences in the organization (finance, sales, marketing), or to ethnic or geographic differences among employees. The dominant culture in the organization must be strong enough for members of various subcultures within the organization to identify with, accept and embrace it. This necessarily requires that the values of the dominant culture be aligned with the values of each of the subcultures as well as the personal values of each individual.
Categorizing corporate culture
In order to provide a basis for further analysis, researchers have sought to place corporate cultures into general categories. One such categorization by Sonnenfeld (1988) defines four types of cultures: the academy, the club, the baseball team, and the fortress. The academy exposes employees to many different jobs so that they can move around within the organization. The club is very concerned with how people will fit in to the organization. The baseball team consists of talented people or “stars” that are rewarded heavily for their accomplishments but who will readily leave the organization when a better opportunity comes along. The fortress is an organization that is concerned mainly with survival.
Goffee and Jones (1996) offer another categorization, postulating that corporate culture is determined by levels of sociability (a measure of sincere friendliness among members of a community) and solidarity (a community’s ability to pursue shared objectives quickly and effectively) and they have developed a survey that can aid in understanding where an organization fits on this scale. The combination of these dimensions gives rise to categories that they have labeled as networked, mercenary, fragmented, and communal .None of these categories is considered to be better than the others. Instead, they serve as a way for management to determine where their culture fits relative to other types of cultures. A networked culture is distinguished by high sociability and low solidarity. Individuals in this type of culture feel like family and socialize often. Promotions are achieved and work is accomplished via informal networks or subcultures within the organization. This corresponds loosely with Sonnenfeld’s club category. A mercenary culture has low sociability and high solidarity. Individuals do not interact socially but are united in supporting strategic business objectives. They do not tend to exhibit a strong degree of loyalty, staying only as long as their personal needs continue to be met. This category is similar to Sonnenfeld’s baseball team. A fragmented culture has low sociability and low solidarity. People in this type of organization rarely interact. They may work with their office doors shut or from home. This type of culture might be found in a law office or in a company that is downsizing. This category would be similar to Sonnenfeld’s fortress. Finally, a communal organization has high sociability and high solidarity. This type of culture is often found in small start-up companies. Members of such an organization work very closely together for long hours and will likely socialize together. They strongly identify with the corporate culture and have a high sense of fairness so that rewards are shared equally. This category is most similar to Sonnenfeld’s academy.
Categorizing an organization’s culture can help managers in several ways. First, categorizing the culture is a precursor to better understanding the pros and cons of that particular type of culture. Second, a clear understanding of their corporate culture can assist managers in getting the correct person-organization match when recruiting for new employees. Third, knowing where a company is right now can assist managers in making decisions about and progress toward cultural change.
Benefits of a positive culture
An organization that is able to maintain a positive culture is likely to enjoy many benefits. When organization members identify with the culture, the work environment tends to be more enjoyable, which boosts morale. This leads to increased levels of teamwork, sharing of information, and openness to new ideas (Goffee and Jones, 1996). The resulting increased interaction among employees activates learning and continuous improvement because information flows more freely throughout the organization. Additionally, such a culture helps to attract and retain top employees (Greger, 1999), evidenced by books such as The 100 Best Companies to Work for in America (Levering, 1993) in which culture is emphasized as a primary determinant of the attractiveness of an employer. When considering corporate culture, it is helpful to consider actual companies that have demonstrated the positive effects that a corporate culture can have.
Wal-Mart
Wal-Mart’s founder, Sam Walton, showed concern and respect for his employees from the company’s inception (Discount Store News, 1999). This created an environment of trust that persists to this day. Walton also modeled the behavior that he desired from his employees, especially customer service (both to internal and external customers), by visiting his stores, meeting customers, and greeting employees by their first names. Walton also embraced and encouraged change in order to remain competitive, and developed employees by having them work in a variety of positions (Discount Store News, 1999). Wal-Mart considers its culture the key to its success, and to this day employees continue to think about “how Sam would have done it” when making decisions.
Southwest Airlines
Another good example of a positive corporate culture is Southwest Airlines. The company’s relaxed culture can be traced directly to its CEO and co-founder Herb Kelleher. Kelleher encourages employees to be very informal and have fun at their jobs. This is evident to anyone who has flown on Southwest and heard the jokes that the stewardesses tell. Kelleher fosters this type of culture by engaging in unusual acts, such as arriving at shareholder meetings on a motorcycle wearing jeans and a t-shirt, or holding a 2 a.m. barbeque for the company’s mechanics who work the night shift (Donlon, 1999). He even challenged another company’s CEO to an arm-wrestle to settle a dispute over the use of a slogan. Kelleher also strives to value Southwest’s employees, acknowledging births, deaths, marriages, and other events in their lives by sending a note or card. Employees are encouraged to pitch in where needed, a fact that is evident in airports where pilots are often seen checking passengers, for example. This has allowed Southwest to have a turnaround time at airport terminals that is less than half the industry average. In order to maintain the culture, prospective employees are carefully screened to make certain that they will fit in.
Hewlett Packard
Hewlett Packard is an example of a company that has been successful in improving its culture. A few years ago, employees at the company’s Great Lakes division had begun to feel the stress and pressure of their jobs. Attrition rose to 20 per cent and over 50 per cent of employees surveyed reported feeling “excessive pressure” on the job. This led the company to make some unusual changes in order to improve the culture. Employees are now required to formulate three business and three personal goals each year. Employees are encouraged to cheer on fellow employees who achieve personal goals, such as spending time with their children or getting away for a round of golf. Only two years into the program, the company reports no loss in productivity despite the reduced hours employees now work and has seen an increase in its retention rate. This success is attributed to the fact that managers strongly supported the program and modeled it in their own personal lives (Cole, 1999).
Changing corporate culture
The preceding examples show that a positive culture can make a significant contribution to organizational success while a negative one can lead to failure. While it is easiest to establish a desirable corporate culture during a company’s infancy, it has been shown in practice that culture can be changed for the better. In order to go about changing corporate culture, top management must first understand the culture, as it exists today. This can be accomplished by surveying employees on important topics such as their perceptions of and identification with the corporate values and mission, interactions with other employees both inside and outside of their departments, beliefs about whether they are treated fairly, and so on. This will help management to determine the type of culture that exists and to identify areas for change.
Once the current culture is understood, management must decide how the culture should be changed in order to improve results. For a culture to be effective, it should be consistent with the business environment in which the organization operates (Goffee and Jones, 1996). For example, high technology firms tend to operate better using a culture that encourages sharing of information (to support research and development) and that responds quickly to external events. As discussed previously, sharing of information and quick response to external events are fostered by frequent interaction among employees across organizational functions. If management wishes to encourage this type of behavior, they should plan events that foster more interaction among employees such as social events and ceremonies.
Management should seek cultural change by modeling the behavior that they wish to encourage, and then reinforce the desired culture by taking steps such as developing visionary statements and/or slogans, celebrating employees’ successes or promotions, distributing newsletters and videos that reinforce the culture, recruiting new people into the organization that are compatible with the desired culture, changing dress codes, and so on.
Conclusion
This paper defined the term corporate culture and considered the rise in popularity of corporate culture in recent decades. We also looked at two different ways in which corporations can categorize their culture, and considered the benefits of a positive culture to organizations such as Wal-Mart, Southwest Airlines and Hewlett Packard. Finally, we suggested that while a positive culture should be established during a company’s infancy, it is possible to change a corporation’s culture should it be necessary to do so. Today’s globally-competitive business environment has made a positive corporate culture a critical aspect of success for firms. No longer just a competitive advantage, it has become a prerequisite for success, allowing companies to attract and retain top employees. We strongly recommend that organizations of all sizes assess and categorize their corporate cultures, looking in particular at the impact of that culture on employee productivity and morale. Where the culture is serving to lower morale, we recommend that management take proactive steps to change the corporate culture using a top-down approach, establishing a new vision and demonstrating new behavior consistent with the revised vision. Much like national culture, our understanding of corporate culture and its impact on employee behavior is still in its infancy but one thing is for sure, culture can have a tremendous positive impact on employees. In conclusion, we urge companies to shape their corporate culture to their advantage in improving both their employees’ experience of the workplace and, in turn, improving their own profitability.