The Organizational Culture Created by the Leader - Term Paper Example

An organisation’s culture creates both challenges, and opportunities, for managers, impacting on their decisions Introduction Any organized human activity, which is done in-group, will be most times constituted into structure called organization. So, Organization is a ‘structure’ with a ‘collage’ of individuals doing their allocated work under the supervision of a leader, for the benefit of the organization as well as them. This team of individuals like the five different fingers in one’s hand will be different from one another having different characters, attitudes, education, background etc, etc…and the unison of these different humans under a single organization to reach a target is, and will always be a difficult proposition. As these different humans could only create a different working culture, the success rate will be minimal. And, if a common working culture, if correctly said, the perfect, feasible and winnable working culture is ‘operationalised’, through out the organization, the organization will be a success story. And, the script for this success story can only be scripted, by an effective leader or manager. So, this paper will analyze how the organizational culture mainly ‘scripted’ or created by the leader or manager creates both opportunities and challenges, impacting their decisions with particular focus on Starbucks and its Chairman and CEO, Howard Schultz From time immemorial, the success or failure of an organization or any other human activity depends on the role, the leader or manager plays. If the leader or manager follows a set of traits he/ she can ‘sprinkle’ success on many lives, including the individuals in his/her organization. The managerial skills should be visible and should be put to effective use when the leader, as a ‘builder’ builds a group by following a certain organizational culture. A manager will normally take over or preside over or manage an existing organization. That is, the building or recruiting of the ‘group’ of individuals as well as the installation of infrastructure, set up etc, would have already taken place, with the manager only leading and managing the organization. This job of taking an existing set up and managing it, brings in set of challenges, which can be taken care by formulating certain strategies or solutions based on a common and effective organizational culture. Literature Review The first main role of the manager in any organization is to build an academically, technically, practically strong and experienced workforce, who will be able to the assigned work effectively and professionally. That is, what Schein (2004) said, “... best way to build an organization was to hire very smart, articulate, tough, independent people and then give them lots of responsibility and autonomy”. According to Kotter, (1998) the role of manager is to recruit the right person in the right position. When the apt employees are recruited, it is the duty of the manager of the organization to impose his/hers assumptions, ideas, principles, etc on the employees and thereby a form a organizational culture. Typically, the founders as managers have strong assumptions about the nature of the world, the role those organizations play in that world(Schein, 1978, 1983). They will, therefore, be quite comfortable in imposing those personal cultures on employees as part of the organizational culture. “Leadership focuses on developing corporate culture and human capability, patiently building trust and emotional commitment to the company through teamwork and communication.” (Beer and Nohria 2000) But, in some organizations, the challenge to this imposition of a new culture will come in the form of experienced workers who will be slugging out in the same job in the same environment, importantly in the same mindset for years and changing them to accept the new effective assumptions and work culture will be difficult. In that case also, the managers should play an effective and influencing role. “The key to successful leadership today is influence, not authority” (Kenneth Blanchard). After imposing an optimal organizational culture, even incorporating the ethics component, the managers follow that culture by himself/herself, and should be an example for the employees to follow. “Leadership by example: Behaviour from important people that is inconsistent with the vision overwhelms other forms of communication” (Kotler 1996). “Good management consists in showing average people how to do the work of superior people” (Rockefeller). The managers should also involve the workers to play an active part in all the important processes, including the decision making process as part of a constructive and co-operative culture. “The sheer number of decisions that must be made keeps them occupied with the decision making process, necessitating that intermediaries convey these decisions throughout the company” (Carlzon, 1989). Even while allowing them to contribute their inputs to the process, the managers should not meddle. “The best executive is the one who has sense enough to pick good men to do what he wants done, and self-restraint to keep from meddling with them while they do it.” (Roosevelt) Then, when the employees impede or obstacle the growth of the organization particularly the set organizational culture, the managers should show their authority and weeds out these individuals and put the organization on the success path. ” They got the right people on the bus, moved the wrong people off, ushered the right people to the right seats - and then they figured out where to drive it” (Collins 2007). Executives owe it to the organization and to their fellow workers not to tolerate non performing individuals in important jobs” (Drucker) Opportunities Culture Creation One of the important first tasks of a manager in an organization (both in a new organization and in an existing organization) is the creation of a Culture. That is, the task of the manager is to create a working culture, embed the working culture in the working group and environment, sustain it and also rectify it, when faults occur. According to Edgar Schein (2004, p.17), “The culture of a group can now be defined as a pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems”. So, apart from policy formulation and decision-making, it becomes all more important to look at the other side of the manager, in culture creation. This is what Starbucks Chairman, CEO and manager, Howard Schultz did in 1985, when he founded a new organization and formed his own organizational culture. As managers are the man in lead, they usually have a major impact on how the group initially defines and sets into an organization. Typically, the managers have strong assumptions about the characteristics of employees. They will, therefore, be quite comfortable in imposing those views and personal cultures, on their partners and employees. This initial stage imposition of assumptions, as a form of good culture is one of the good managerial skill, because as the employees’ mind will be fresh in their new organizational setup and also as their mind will be willing to make a good beginning, the new culture could be easily adopted. Importantly, after creating an optimal culture, the manager will have good opportunities as Howard Schultz had. Actually, Starbucks Coffee or Corporation, US based coffee chain was founded by three persons Jerry Baldwin, Zev Siegel and Gordon Bowker in 1971. They started of by selling coffee beans and other coffee related equipments. Howard Schultz joined the Starbucks shop at Seattle. He made a trip to Milan, Italy to study the coffee market there, and coming back to Seattle, he advised the Starbucks management of that time, to sell coffee and espresso drinks along with the beans, seeing the potential to develop a similar coffeehouse culture in Seattle (starbucks.com). But, the management team rejected Schultz’s idea under the pretext that entering the beverage business would sidestep the company and divert from its main focus of coffee beans. On the other hand, Schultz was sure that there is a market for coffee-based beverages, and so he left the Starbucks and started the Il Giornale coffee bar chain in 1985. II Giornale was able to create an impression in the market and was able to attract the customers. Howard Schultz developed his organization by imposing its own assumptions and ideas as form of organizational culture, incorporating only minimal influences from Starbucks. These managerial skills in the aspect of organizational culture were rewarded in 1987 as a form of good opportunity, when the original Starbucks management team sold its entire Starbucks unit to Schultz and his company. With the acceptance coming from the same persons who rejected his idea and the Starbucks’ unit in his hand, Schultz renamed Il Giornale with the Starbucks name and aggressively marketed the coffee-based beverages as Starbucks, incorporating his own organizational culture. From that beginning, Starbucks has elevated his status to become the world’s largest Coffee shop chain. Managers should involve the employees in all the processes as part of the organizational culture After the manager creates the culture, follows that culture himself/herself, sets targets and provides the perfect working environment, the individuals will start do their work by following the set organizational culture. The individuals can also be made to follow the organizational culture in an even stronger way, if they are made part of the decision making process by the manager. That is, during the process of decision-making, one of the approaches the manager could try is, putting for discussion his/ hers thoughts among the individuals, and involving them productively. This part of organizational culture is visible in many Australian organizations as many Australian business managers try to build an image of cooperative leadership, without any superiority. This strategy will have unexpected at the same time favourable results, because one may never know from where, when and importantly from whom a great idea could come. “Dont tell people how to do things, tell them what to do and let them surprise you with their results” (Patton). So, involving and allowing co-individuals to play a part in the decision-making, but at the same time being the final authority is a good managerial skill, manager should cultivate, which will ultimately lead to a healthy organizational culture and importantly will provide the manager good opportunities. This skill was fully cultivated and exhibited by Howard Schultz. That is, Howard Schultz optimized or accentuated the performance of Starbucks’ employees by designing and adopting a mission statement, which laid out certain guiding principles. The principles helped its employees (or ‘partners’ as they were known by the Howard Schultz and his management team) to determine their roles in correlation to the company’s goals and also gave them the opportunity to provide their feedbacks about the mission statement. So, the Starbucks management introduced into its organizational culture the practice of introducing a mission statement among the employees particularly the new employees, and forming a final statement after the analysis of the feedback from the employees. “New employees discuss the Starbucks mission statement and do customer-service role-playing.” (Schultz qtd. inc.com). So, the first step taken by Schultz as part of employee centric organizational culture was the actualization of the ‘customer feedback incorporated company’s mission statement’. That is, to increase the involvement of employees in the functioning of organizations and to optimize the performance of the employees, Schultz involved them productively in the formulation of Mission Statement. The formulation of Mission Statement and the employees’ involvement is divided into three stages. In the first stage, the Schultz and the management of the Starbucks distributed a copy of the mission statement and gave comment cards for feedback during the initial orientation of the new employees or “partners”. Then in the second stage, Starbucks related all the decisions that were made inside the organization to the guiding principles. And finally in the third stage, the company formed a “Mission Review” system so that any employee could comment on a decision which was undertaken in relation with the consistency of the six guiding principles. Then based on the comments or feedback given by the employees, Starbuck released a final statement, “people first and profits last”. This practice of involving the employees in the formulation of Mission Statements as part of organizational culture gives Schultz good opportunities in formulating an optimum Mission Statement. Incorporating Ethics as part of organizational culture As part positive managerial skills, the leaders are also expected to be ethically correct in all the decisions they will make. Normally, a leader or manager will be judged by the success he/she achieves. Judged in the sense, he/she will be appreciated, feted, discouraged, hated etc, etc… by the success or the lack of success (failure), he/she gets. In today’s world, success of an organization is mostly correlated with profits, markets share, etc. Even though this perspective is not at all wrong, the bone of contention is how an organization achieves success. Whether, they achieve it through ethical means or by fraud, illegality, etc? In the case of Starbucks and Schultz, this ethics component was incorporated as part of its organizational culture. The opportunity this strategy gave Starbucks was, it was able to fulfil its Corporate Social Responsibility. The ethics and CSR based strategy which was successfully implemented by Schultz as part managerial skills is to build long term productive relationships with farmers who supply the bean for its coffee products. That is, Schultz as a form of caregiver mandated that coffee farmers especially from its major sources in the African countries of Ethiopia, Rwanda, etc, should be paid premium prices, so that it constitutes the concept of Fair Trade and also they have enough money to look after the family, and avoid planting illegal crops. By incorporating ethics as part of organizational culture, Schultz was able to garner many opportunities including rewards. That is, Schultz also implemented various social development programs. The program which involves construction of infrastructure to the needy fulfils ethics issues, because the rich and self-sufficient organizations are expected to do something to the ‘insufficient’ sections. Schultz’s decision to co-operate with CARE has resulted in many beneficial activities to many communities, like construction of many welfare infrastructures including clean-water systems, health and sanitation training and literacy. So, the contribution made by Starbucks helped CARE to implement many society elevating projects, which is still elevating the living condition of the people as well as the company’s image, even receiving an award from CARE. “Schultz was the recipient of the International Humanitarian Award from CARE for his vision and leadership in developing an innovative partnership between Starbucks and CARE to support people in coffee origin countries.” (wpcarey.asu.edu). So, by concentrating on the important ‘partners’ and aiding them as part of the organizational culture, Schultz and Starbucks is getting good opportunities to improve further and also garner rewards. Challenges One of the difficult challenges, manager will face as part of its organizational culture is to stay open to criticism. That is, the managers should not only stay open to criticism but even encourage it, and importantly incorporate into the organizational culture. Because, when one is occupied with managing a big organization with lot of decisions, goals, pressures, individuals etc, etc, the manager sometimes tend to overlook the mistakes or blunders he/ she himself/ herself committed. In that case he/ she should be open to critical views from the subordinates and importantly from the public, then only he can correct it for future use. So, managers without any complex should keep their mind open and be open to criticisms. This trait or practice, which will be challenge to all the managers, should be integrated into the organizational culture because then only there will optimum performance from the individuals and importantly from the manager and the management team. Howard Schultz also faced this challenge when he was criticised by both the public and the press for not being ethically correct. The main decision of Howard Schultz, which shows Starbucks’ lack of ethics and disregard to human health, is its practice of using bovine growth hormone (BGH) treated milk, which is dangerous to human health. That is, if the cow is injected with BGH or rBGH, it will produce higher quantity of milk. But, coffees prepared with BGH treated milk contains substantially higher amounts of a potent cancer tumour promoter called IGF-1, and also contains higher levels of pus, bacteria, and antibiotic, leading to health problems (shirleys-wellness-cafe.com). Despite these alarming harmful effects on human and animal health, Schultz did not take any initiative to correct this problem, as Starbucks needed high quantity milk for its shops and so continued the practice as part of its functioning and organizational culture. As diary farmers provided high quantity by using BGH, they received it, without thinking about the defects. So, Schultz used BGH, even breaking his promise, as outlined in a letter sent to OCA in 2001, to offer hormone free milk upon request in all company owned stores by 2002. So, Starbucks practice of continuing BGH milk as part of organizational functioning and culture, even after a promise was criticized by all. “The Organic Consumers Association (OCA) is deeply disappointed that Starbucks continues to drag its heels on a five-year-old commitment to offer consumers an alternative to milk and dairy products derived from cows injected with Monsantos controversial recombinant Bovine Growth Hormone (rBGH).” (OCA) Conclusion After analyzing all these initiatives of Howard Schultz as part of its organizational culture, it is clear that Schultz indeed exhibited both positive and negative managerial skills (and strategic leadership) creating many opportunities and facing few challenges. Schultz catered, took care and also optimized all the stakeholders of Starbuck. That is, he productively involved the employees by making them give their feedback to the mission statement. He also provided the farmers from African countries, who were the suppliers of the vital coffee beans, many benefits including good prices. Even though, his failure to keep his promise regarding rBGH treated milk lead to many challenges, he got many opportunities by creating, following and establishing an optimal organizational culture, making Starbucks one of the successful companies of the world. Reference Beer, M. & Nohria, N. 2000, Cracking the Code of Change, Harvard Business Review, May-June, 133-141. Blanchard, K, Leadership Quotes, viewed on April 23, 2008 http://www.wisdomquotes.com/cat_leadership.html Carlzon, J. 1987, Moments of Truth, Harper & Row. Collins, J. 2001, Level 5 Leadership: The triumph of humility and fierce resolve, Harvard Business Review, Jan, 66-76 Kotter, J. P. 1988, The Leadership Factor, The Free Press Kotter, J. P. 1996, Leading Change, Harvard Business School Press Patton, G S, Leader values, viewed on March 8, 2008 http://www.famous-quotes-and-quotations.com/leadership-quotes.html Rockefeller, J, D 2001, Church Champions Update, viewed on April 23, 2008 Schein, E. H. 1978, Career dynamics: Matching individual and organizational needs. Reading, MA: Addison-Wesley. Schein, E. H. 1983, The role of the founder in creating organizational culture. Organizational Dynamics, Summer, 13–28. Schein, E. H. 2004, Organizational Culture and Leadership, 3rd. ed Jossey-Bass Drucker, P. Inspirational Business Quotes. , viewed on April 23, 2008 http://www.woopidoo.com/business_quotes/leadership-quotes.htm inc.com, Lasting Impressions, viewed on April 23, 2008 http://www.inc.com/magazine/19980701/968.html OCA 2006, Starbucks Still Serving Up Coffee Drinks Laced with Monsantos Bovine Growth Hormone. , viewed on April 23, 2008 http://www.organicconsumers.org/articles/article_904.cfm starbucks.com 2006, shirleys-wellness-cafe.com. Genetically engineered Recombinant Bovine Growth Hormone (rBGH/BST) in your milk, viewed on April 23, 2008. http://www.shirleys-wellness-cafe.com/bgh.htm Starbucks.com, Fair Trade and coffee social responsibility, viewed on April 23, 2008 http://www.starbucks.com/aboutus/StarbucksAndFairTrade.pdf starbucks.com, 2008, Company Timeline, viewed on April 23, 2008 http://www.starbucks.com/aboutus/Company_Timeline.pdf wpcarey.asu.edu, Deans Council of 100 - Executive of the Year, viewed April 23, 2008 http://wpcarey.asu.edu/community/dc100/exe_year_starbucks.cfm Reference: Blanchard, K. Leadership Quotes. Retrieved on March 6, 2008 from http://www.wisdomquotes.com/cat_managership.html Boyacigiller N.A., Goodman R. A. and Phillips M.E. (2003). Crossing Cultures: Insights from Master Teachers. Routledge. DeSimone, R.L., Werner, J. H., &Harris, D. M. (2002). Human resource development. Orlando:Harcourt College Publishers. Drucker, P. Inspirational Business Quotes. Retrieved on March 6, 2008 from http://www.woopidoo.com/business_quotes/managership-quotes.htm Fullan, M. Leading in a Culture of Change. Retrieved on March 6, 2008 from http://administration.ucok.edu/documents/exe_lbsLeadingInACultureOfChange.pdf HR zone. HR tip: Controlling absence. Retrieved on March 5, 2008 from http://www.hrzone.co.uk/cgi-bin/item.cgi?id=176289&d=1063 Kunda, G. (1992). Engineering culture. Philadelphia, PA: Temple University Press. Patton, George S. Leader values. Retrieved on March 6, 2008 from http://www.famous-quotes-and-quotations.com/managership-quotes.html Roosevelt, T. Be A Well Organized And Capable Leader. Retrieved on March 5, 2008 from http://www.managershipatwork.co.za/Articles/be_a_well.htm Schein, E. H. (1978) Career dynamics: Matching individual and organizational needs. Reading, MA: Addison-Wesley. Schein, E. H. (1983). The role of the founder in creating organizational culture. Organizational Dynamics, Summer, 13–28. Schein, E. H. (2004). Organizational Culture and Leadership, 3rd. ed. Jossey-Bass Read More