Culture Strength

Culture Strength and Organizational Subcultures

Culture strength refers to the degree of agreement among members of an organization about the importance of specific values.

If widespread consensus exists about the importance of those values, the culture is cohesive and strong.
If little agreement exists, the culture is weak.

A strong culture is typically associated with the frequent use of ceremonies, symbols, and stories, as described here, and managers align structures and processes to support the cultural values.

These elements increase employee commitment to the values and strategy of a company. However, culture is not always uniform throughout the organization, particularly in large companies. Even in organizations that have strong cultures, there may be several sets of subcultures.

Subcultures develop to reflect the common problems, goals, and experiences that members of a team, department, or other unit share.

An office, branch, or unit of a company that is physically separated from the company’s main operations may also take on a distinctive subculture.

For example, although the dominant culture of an organization may be a mission culture, various departments may also reflect characteristics of adaptabilityOpens in new window, clanOpens in new window, or bureaucraticOpens in new window cultures.

The manufacturing department of a large organization may thrive in an environment that emphasize order, efficiency, and obedience to rules, whereas the research and development (R&D) department may be characterized by employee empowermentOpens in new window, flexibility, and customer focus.

This is similar to the concept of differentiationOpens in new window, where employers in manufacturing, sales, and research departments studied by Paul Lawrence and Jay Lorsch developed different values with respect to time horizon, interpersonal relationships, and formality in order to perform the job of each particular department most effectively.

Consider below how the credit division of Pitney BowesOpens in new window, a huge corporation that manufactures postage meters, copiers and other office equipment, developed a distinctive subculture to encourage innovation and risk-taking.

IN PRACTICE
Pitney BowesOpens in new window, a maker of postage meters and other office equipment, has long thrived in an environment of order and predictability. Its headquarters reflects a typical corporate environment and an orderly culture with its blank walls and bland carpeting. But step onto the third floor of the Pitney Bowes building in Shelton, Connecticut, and you might think you’re at a different company. The domain of Pitney Bowes Credit Corporation (PBCC) looks more like an indoor theme park, featuring cobblestone-patterned carpets, faux gas lamps, and an ornate town square-style clock. It also has a French-style café, a 1950s-style dinner, and the “cranial Kitchen,” where employees sit in cozy booths to surf the Internet or watch training videos. The friendly hallways encourage impromptu conversations, where people can exchange information and share ideas they wouldn’t otherwise share. PBCC traditionally helped customers finance their business with the parent company. However, Matthew Kisner, PBCC’s president and CEO, worked with other managers to redefine the division as a creator of services rather than just a provider of services. Rather than just financing sales and leasing of existing products, PBCC now creates new services for customers to buy. For example, Purchase Power is a revolving line of credit that helps companies finance their postage costs. It was profitable within nine months and now has more than 400,000 customers. When PBCC redefined its job, it began redefining its subculture to match by emphasizing values of teamwork, risk-taking, and creativity. “We wanted a fun space that would embody our culture,” Kisner says, “No straight lines, no linear thinking. Because we’re a financial services company, our biggest advantage is the quality of our ideas.” So far, PBCC’s new approach is working. In one year, the division, whose 600 employees make up less than 2 percent of Pitney Bowes’ total workforce, generated 36 percent of the company’s net profits.

IN PRACTICE

Pitney Bowes, a maker of postage meters and other office equipment, has long thrived in an environment of order and predictability. Its headquarters reflects a typical corporate environment and an orderly culture with its blank walls and bland carpeting. But step onto the third floor of the Pitney Bowes building in Shelton, Connecticut, and you might think you’re at a different company. The domain of Pitney Bowes Credit Corporation (PBCC) looks more like an indoor theme park, featuring cobblestone-patterned carpets, faux gas lamps, and an ornate town square-style clock. It also has a French-style café, a 1950s-style dinner, and the “cranial Kitchen,” where employees sit in cozy booths to surf the Internet or watch training videos. The friendly hallways encourage impromptu conversations, where people can exchange information and share ideas they wouldn’t otherwise share.

PBCC traditionally helped customers finance their business with the parent company. However, Matthew Kisner, PBCC’s president and CEO, worked with other managers to redefine the division as a creator of services rather than just a provider of services. Rather than just financing sales and leasing of existing products, PBCC now creates new services for customers to buy. For example, Purchase Power is a revolving line of credit that helps companies finance their postage costs. It was profitable within nine months and now has more than 400,000 customers. When PBCC redefined its job, it began redefining its subculture to match by emphasizing values of teamwork, risk-taking, and creativity. “We wanted a fun space that would embody our culture,” Kisner says, “No straight lines, no linear thinking. Because we’re a financial services company, our biggest advantage is the quality of our ideas.” So far, PBCC’s new approach is working. In one year, the division, whose 600 employees make up less than 2 percent of Pitney Bowes’ total workforce, generated 36 percent of the company’s net profits.

Subcultures typically include the basic values of the dominant organizational culture plus additional values unique to members of the subculture. However, subcultural differences can sometimes lead to conflicts between departments or divisions, especially in organizations that do not have strong overall corporate cultural values, conflicts may emerge and hurt organizational performance.

Cultural conflicts can be particularly challenging in the case of mergers and acquisitionsOpens in new window. Studies by consulting firms such as Hay GroupOpens in new window and McKinsey & CompanyOpens in new window suggest that performance declines in about 20 percent of acquired companies after acquisition.

Some experts estimate that 90 percent of mergers never live up to expectations. One reason is the difficulty of integrating the separate corporate cultures.

For example, after Facebook bought the popular messaging service WhatsApp, disagreements emerged as WhatsApp leaders’ and staff members’ strong cultural belief in protecting user privacy came into conflict with Facebook’s broad data-gathering about user activities.

WhatsApp’s founders eventually left the company, and it remains to be seen if Facebook can effectively blend the Facebook and WhatsApp cultures.

REMEMBER THIS
When widespread consensus exists about the importance of specific values, the organizational culture is strong and cohesive. Even in organizations with strong cultures, several sets of subcultures may emerge, particularly in large organizations. After a merger or acquisition, one of top managers’ toughest jobs is often that of integrating different corporate cultures.

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Culture Strength

Culture Strength and Organizational Subcultures

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