How leaders build the corporate culture for firms

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Robert Nardelli's task to change the social architecture at Home Depot was difficult but he pulled through using personal leadership, mixing encouragement with ultimatum and fostering desired cultural norms like accountability through his own behavior. He also used several operating tools which changed the human side of the equation: people's behavior, beliefs, social interactions, and the nature of their decision making.

He used metrics to emphasize new cultural priorities. These metrics made the managers and the employees understand more their business, the financial impact of their decisions, and made them realize the weaknesses of the processes they thought were doing well. It also replaced anecdotal reports with quantifiable data. It brought about the culture of collaboration and accountability. The quantifiable performance management system made it easier for managers to assess the employees honestly and fairly, enabling them to make tough calls and put the right people in the right jobs.

To integrate the new culture, Nardelli introduced new processes like the Monday morning conference calls with the company's top executives, aimed to create cooperation and accountability. 'The Same Page', a broadcast of the Monday Conference output, created a link between each store's activities and the bigger picture. He also implemented the Strategic Operating and Resource Planning (SOAR) which not only made the manager's decide strategically for the following year, but also integrated HR planning so that decisions about human resources were aligned with the business decisions. The HR head, Dennis Donovan, made sure that the processes instilled analysis and rigor into the organization.

Programs were also initiated to build support for the culture change. Donovan set up a series of five-day learning forums for the store managers to 'role play' what they would do when put in circumstances similar to what the company was experiencing. It was like "putting them in Nardelli's shoes". Leadership-training programs like Future Leaders Program, Store Leadership Program, and the Merchandising Leadership Program, were done to sustain the employees' commitment to the new culture that was being introduced.

The structure of the company was also modified by Nardelli to create a framework for the new culture. He involved the managers in centralizing the purchasing division to cut on bureaucracy and planted the seeds of communality, candor, and decisiveness. It was a bold and risky business move but it worked.

All these operating tools were done with speed. Nardelli was swift, decisive and bold because he believed that the company didn't have the luxury of moving at its own rate as external factors dictate the tempo. He also made some wrong decisions but was quick to rectify them.

Finally, to sustain the culture, Nardelli made sure that the employees were affected by the change and that they were part in defining the problem and designing the solution. His concept of accountability and collaboration among the different parts of the organization, created a company-wide interest in sustaining the change.


Herb Kelleher's success as Southwest Airlines President and CEO can be attributed to his strong leadership and friendly management style. He helped made the airline the fourth largest carrier in the US today.

Kelleher cultivated a fun loving attitude at the company. This can be inferred from their insightful, outrageous, fun-filled Halloween corporate day as mentioned by Ron Kirk, Dallas Mayor. When he was made aware that a night shift could not attend company celebrations due to their schedules, he turned up at an airport at two o'clock in the morning to throw a special barbeque.

Southwest Airlines has a reputation of employees who work hard but happy to do so. This could be a mirror to Kelleher's up and down journey from the time he thought of starting a low fare airline in 1966 until the time he stepped down as CEO and President in 2001. He was faced with a lot of competitive opposition and economic challenges but he was able to deal with them all and remained optimistic. He admitted to acting fast when needed to and he approached all things prepared for all possible scenarios that might happen.

Kelleher also has a strong belief on empowering the employees and customers. He implemented the rule that if somebody has an idea, it should be read quickly and responded instantaneously. Every negative answer should be explained well. He strongly advocated respect for people's ideas.

Herb instilled a corporate culture where employees are clearly the priority and he was one with them. When asked who came first-customers, shareholders, or employees-he said, "Employees come first; and if employees are treated right, they treat the outside world right, the outside world uses the company's product again, and that makes the shareholders happy". The union leader, Tom Burnett, even recalled a story to the Wall Street Journal that Kelleher went to the cleaners' break room at 3 a.m. on one Sunday morning passing out doughnuts, and at one time, put on a pair of coveralls to clean a plane. This management style translated to the company being voted as Fortune Magazine's Best Place to Work in America in 1998, and having the reputation of employees working longer and harder than any other airline.

Kelleher said that Southwest hires employees with good outlook, eagerness, and sense of humor. He considers the company culture as "the core" of their success and that "dedication, devotion, loyalty" of employees cannot be bought and matched. Articles written about Southwest employees have all been extraordinary. From an employee who allegedly stopped to help a stranded traveler change his tire, to flight attendants visiting passengers in the hospital, to a reservation agent driving an 85-year-old woman so that she could make her flight connection.

The airline was also reported to be generous in giving compensation and benefits to the employees. In fact, the company was the first carrier to offer profit-sharing plan; with employees owning 13 percent of the company's common stock. This arrangement created an unusually cordial relationship between management and labor.

All these strategy worked for Kelleher and it brought Southwest Airlines to what it is today, admired by many for its profitability and out of the ordinary corporate culture.

Look at your own organizational leader/founder. How did he shape the culture of your organization? What cultural artifacts/practices/values, norms etc. can be attributed to him?

Value Care Health Systems, Incorporated (VCHSI) was established in June 1997 by a group of Filipino-Chinese doctors headed by Dr. Charles C. Chante. He became, and still is, the Chairman of the Board. His leadership and management is generally a Chinese way of running business, and so the present company culture is so much a mirror of it.

Even at the start, Dr. Chante introduced the company to the HMO industry as 'ValuCare', a shortened version of the corporate name, so as to make it comprised by eight letters, which is deemed to be lucky in the Chinese culture because it sounds like the word 'pinyin' which means 'prosper'.

The first clients of the company are those owned by Filipino-Chinese businessmen as well. This is very typical in the Chinese business world where "Guanxi", which literally means "relationships", is very evident. The Chinese businessmen mentality is very much one of "you scratch my back, I'll scratch yours" and so they prefer to deal with people they know and trust. The predominantly Filipino-Chinese Board of Directors (BOD) of the company has set this as a requirement for choosing clients or renewing business with them. If a client company sticks to the HealthCare Agreement, it is taken as trustworthiness and the BOD, through the management team, will usually deal with them again.

This relationship is not just practiced with regard to client companies but also in the choice of people working in the company. ValuCare management is made up of people closely related with the BOD. The present Chief Operating Officer is the sister-in-law of the BOD's President, while the Finance Officer is the daughter of Dr. Chante. The previous head of the Human Resources Department is the son of Dr. Chante.

Being on top of management, Dr. Chante practices the typical Chinese paternalistic leadership style, which is a family-styled cooperation to maintain order and stability within the company. Hierarchy is followed to the hilt. Decision making is cascaded from top down. Moreover, just like in a family, he has inculcated a strong company culture of harmony among workers. Disagreements are avoided and employees are encouraged to straighten conflicts quickly and quietly, not allowing it to reach top management, more so the BOD's attention.

Although the tag line of the company is "Quality healthcare with compassion", Dr. Chante also practices, and has influenced the company's workforce to do the same, the value of non-emotionality in decision making, that is objectivity rather than subjectivity; to use moral over legal solutions; to honor trust, reliability and duty function in order to prevent conflicts among the employees and between the company and its clients. He always quotes the Chinese proverb that says: "If there is righteousness in the heart, there will be beauty in the character. If there is beauty in the character, there will be harmony in the home. If there is harmony in the home, there will be order in the nation. When there is order in the nation, there is peace in the world".

ValuCare's management is also very much into Feng shui. The present location of the head office was chosen using this Chinese practice, as well as all the structural arrangements within. The company logo and color which is red, was also chosen using this, so are the offices of the management team and the areas used for business meetings.

Other 'Chinese ways' that are very evident in the company are the BOD's preference for face-to-face meetings rather than written or telephonic communication. The BOD prefers to meet with the management team, even if it is often, to discuss matters, rather than receiving written reports. They do not want to discuss business matters during social events. They have clearly expressed the demarcation between business and socializing.

Dr. Chante also always arrives at meetings on time or slightly early. It's an implication of the Chinese virtue of punctuality where arriving late is an insult and speaks negatively of one's commitment and sincerity. He is also non-confrontational. He, and the rest of the BOD, will not overtly say 'no', instead, they will say 'they will think about it' or 'they will see'. Business is so hierarchical that decisions are not made during meetings with them.

Gift giving and rewarding is a common practice in the company, something that is also very Chinese in nature. Management is very open in giving incentives in the form of bonuses, material gifts during events like Christmas, Anniversaries, Chinese New Year and others.

All these Chinese-rooted practices shaped the culture of ValuCare and they have been perfectly blended with the new management practices that the company has been adopting in the recent years to maintain its competitive edge in the industry.


It is evident from the stories of Nardelli of Home Depot, Kelleher of Southwest Airlines and Dr. Chante of ValuCare, that organizational leaders have great influence on the culture of an organization. Their principles and values dictate the conduct and eventual performance of the organization. The more they create a culture based on values that encourages a strong sense of employee involvement, the lesser will be their administrative burden, and the more likely that the company will be able to reach its goals. This is evident from the employees' motivation, their familiarity of the organization's mission and vision, and how committed they are to these goals.

An organization's culture is comprised of years and years of history, which includes successes and failures as well as good and bad decisions made by the leaders. All of the experiences become the foundation of a set of norms that ultimately defines the ethos of the organization.

Employee well-being and commitment requires effective corporate leadership. Clearly, if an organization is looking to increase its capabilities, then addressing its leadership culture is perhaps the best place to start. This traditionally means starting at the top of the organization with those who can most greatly influence and shape culture. The two corporate leadership issues today are lack of trust and poor communication - specifically poorly communicated, misunderstood, and unclear corporate goals, vision, mission, direction, values and critical success factors. Combined, these two elements seem to be at the root of leadership duress and main cause of poor organizational performance, poor morale, and internal confusion.

Organizational leaders must therefore define expectations through a clear and well-communicated vision of what the company's personality is to be. Every employee in turn, must be thoroughly involved in understanding, maintaining, and evolving the corporate identity that is of clear benefit to him or her. This high-involvement culture leads to high productivity because employees invest the largest part of their waking lives at work and the workplace is the only venue where they have the opportunity to realize their potential. Hence, when they are given the opportunity for development on the job, they almost always respond gratefully through enhanced productivity and loyalty.

Changing an organizational culture is challenging. It must be done gradually with utmost consideration until the stakeholders realize that the change is for the better. In the process, employees choose either to be part of the change or would rather leave.  People who's power is vested in the culture as it exists, or whose work is made simpler by the existing culture, or who can "hide" in the cultural organization, have no interest in changing and can slow or block change easily.

Leaders should use corporate culture as the mechanism to communicate the company's mission and vision and what they expect from the employees.  They should be able sustain the culture, and make the necessary adjustments as needed depending on the needs of the organization.

The most important element of a sound organizational culture is the shared feeling of trust among stakeholders. This can achieved through the openness of the leaders to their employees regarding organizational matters that concerns them. It can also be fueled by a company's commitment to invest in the development of its employees.

In essence, corporate leadership and culture are important to an organization's success. Leaders who are sensitive to the needs of the organization and are willing to listen to any stakeholder regardless of position, are in a better stance to make smart and strategic decisions. Smart decisions in turn translate into a healthy business culture that benefits the entire organization.