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Culture is a term that encompasses areas of human activity and interest. It is 'The integration pattern of human behaviour that includes thoughts, communications, actions, customs, beliefs, values and institutions of a race, ethnic, religious or social group.'1
If cultural settings are misunderstood or ignored in different regions, then the risk of failure to a business is enormous. In this age of the global marketplace, aided by the use of the Internet, the need to understand and adapt to cross-cultural issues is at its greatest.
In business terms, specifically a global business with offices throughout the world, culture becomes critical to a firm's success. It is '…where balance between consistency and adaptation is essential'2 and must be addressed in a cohesive and intelligent sense.
This case study will outline the importance of culture and its influence on Reed Elsevier (RE), in terms of its organization, its values and its success.
It will analyse RE's organizational structure, its global reach and the cultures it is influenced by. It will identify the emergence of defining its own specific corporate culture and the unique elements that have emerged from the formulation of its values.
I will also cover the role of the company's CEO and his influence in producing a cultural change within the business. An analysis of the products of this change will be presented and an analysis of the values and characteristics of RE and where the company will have to maintain its focus in the future.
2.0 Reed Elsevier
Reed Elsevier (RE) is an amalgamation of two publishing companies. They originally date back to a Dutch business being formed in Rotterdam in 1880 (Elsevier) and Reed being formed in 1894 in Kent, England. Both companies enjoyed success for the best part of the next 100 years and in 1993 Elsevier NV and Reed International PLC merged.3
'Reed Elsevier's corporate goal is to be the indispensable information provider for our target customers in selected professional markets.'4
Those markets include Science, Education, Legal and Business. Since the merger it has employed an aggressive expansion strategy resulting in being a global publishing presence, employing over 38,000 people across all continents.
The merger of the two companies may have been a troubled time were it not for the fact that the two companies shared many cultural similarities. The management structure of the board of directors represents both the Netherlands and the UK. The reserved British attitude was well matched to the cautious and considered approach of the Dutch.
Today the company is composed of the US, Singapore, Japan and the rest of Europe. Expansion into China and India means cross-cultural factors must be noted and acted upon if success is to occur.
3.0 The emergence of company culture
Culture within an organisation can often be sensed within a few minutes of talking to the company's employees. It is '…the emergent result of the continuing negotiations about values, meanings and properties'5. The company power structure, the rituals, symbols, organisation, and control systems give an identity to the business to the environment outside as well as internally.
This paradigm, or '…constellation of concepts, values, perceptions and practices shared by a community'6, can be a company's secret to success or its undoing.
In 1999, RE employed Sir Crispin Davis as CEO, restructured the management hierarchy and announced a new strategy. At the core of this were the company's five values that would be at the core of every division across the world.
The RE values are;
Passion for winning
Valuing our people
It is important to note that this change or tipping point in a company's culture nearly always involves a new face and new ideas. Change, in this case, occurred over a period of years. Establishing a new look for the brands of the different divisions (Science, Legal, Education and Business) encouraged a change in culture. Innovation working groups and project teams collated ideas from around the world and backed those ideas financially.
Although it took some time to implement, the initial effects were felt within months. The business took on a global air that enabled people from different countries and cultures, to become part of a group that spoke the same language, held the same values7 and achieved goals that were shared by different business units. The emergence of these shared values that were agreeable to every employee facilitated a workforce with a strong unilateral voice. People in Europe understood that those in the US and Asia would be aiming at an RE way of doing business.
It can be said that the re-structuring removed barriers and enabled channels to be opened, thus allowing change to become possible. By creating a vision of the future that employees subscribe to and act upon, an imprint of RE's philosophy is placed upon all those who work there. They may not believe in it but the power of corporate values; crystallize the messages that the heads of a business wish to convey onto all their staff.
'Quantitative analyses have shown that firms with strong cultures out perform firms with weak cultures.'8
4.0 Products of a company culture
The generation of global values brings together different cultures under a common set of beliefs. A physical product of this includes the Personal Development Plan that every employee, in every country, undergoes each year. It monitors performance aligned to the core values of the company.
Internal awards recognise achievements within the business allowing reward for those who exemplify RE's corporate manifesto. The Reed Employee Opinion Survey allows staff to comment critically on their working environment and their superiors in an anonymous online survey.
Corporate Social Responsibility has become a very significant embodiment of what RE tries to communicate by helping charities and operating in an environmentally aware capacity. Scholarships have been set up to allow children of employees to benefit from education.
5.0 Transference of a company culture
These products of company culture are powerful in transferring the values onto the employees, sometimes without their knowledge. The values are echoed down the hierarchy and taken on to each business unit. It could be argued that a company culture is so strong that it begins to replace more localized cultures because of its strength.
RE is an Anglo-Dutch business with its main areas of commerce in the US and Northern Europe. It could be said that these cultures interact with each other on a basis of understanding. The management style of RE is objective orientated; indeed the whole organisation is geared up from the PDP to attain goals agreed between managers and sub-ordinates.
6.0 Leadership and structure
'Leadership: Good managers start with a personal agenda and use their leadership skills to spread it throughout the organisation'9.
When Crispin Davis arrived at RE in 1999 his impact was felt immediately. After ridding the company of expensive and inefficient business units he embarked on a process of changing the organisational culture. He personified the organizations values by personally presenting them to the board members of the four individual divisions. By having a long term vison and great organisational capacity he was able to project areas in the company future where he would like specific objectives to be met.
In 2000 the strategy was communicated throughout the business. A five year plan was orchestrated that provided cohesion, a brand identity and a clarity of purpose to a global group.
Davis became the company's tone of voice; he has embodied how the company talks to its employees. From the position of CEO he has communicated across the board to each of the four business divisions. They in turn have spoken to each of their global boards that have then cascaded the message through each country's business unit.
7.0 Types of corporate culture
Trompenaars identified four types of corporate culture: Family, Eiffel Tower, Guided Missile or Incubator culture. The structure of RE is very hierarchical so has elements of the Eiffel Tower, the highest levels can be seen below, and below each division more layers of management reside. Even in a small department of 25 people, four layers of management may exist.
However, the company also has a strong family culture, based on authority through experience. A firm in Japan and Italy employs this way of doing business, where business leader exerts their power through sub-ordinates of like minds. This can also be seen in RE although it stops short of the sort of adoration that is notable in staff for highly charismatic leaders. General Electric's highly acclaimed Jack Welch whose '…word ran like Holy Writ throughout the GE organisation'10 felt a huge impact when he left the firm. Such was his influence in all areas of the business a vacuum was left when he retired.
A notable point here is that in an ideal firm the top echelons find the best people and delegate the responsibilities down to them. They must still lead in one respect, 'The objectives, ethos and principles of the organisation are, …determined by the words, examples and actions of those at the very top.'11
Reed Elsevier PLC
Reed Business Global
Reed Business UK
In a company of the size of RE, the words and actions of the CEO are always under scrutiny, from the press, the shareholders or the employees. It is hugely important to lead by example in these environments.
The company is largely goal orientated and project led and so the guided missile culture of objective orientated tasks features highly. However, the typical set up of this type of culture normally has a flat structure with a strong emphasis on being cross-disciplinary with a reliance on specialists.12
Although this occurs in RE, particularly in the environments of Marketing, Creative and IT where all departments must work together to deliver projects, individuals are still noticed and changes are made due to seniority and rank. In these scenarios it is often like having two leaders, your departmental boss and the project head. You must try to please both, and risk pleasing neither for the sake of achieving the project goals.
This forms a matrix organisation, where RE has the culture of the Family in terms of authority through experience, the Eiffel Tower in terms of role orientated hierarchy and the Guided missile culture of object orientated goals.
RE shows least similarities with the Incubator culture where self-expression and self-fulfilment are the most important elements to the structure and where existence precedes organisation. The process of innovation and creation is its main focus and although RE has this at its core value, a company of its size finds it hard to embrace this culture. RE is very aware of the power of these types of business and has invested and bought Incubator companies that are useful, from around the world13.
RE exhibits all types of organisational culture as it has so many different types of division across the world. The HQ, in London, and the board of directors are responsible for ensuring that different units are co-ordinated, learn from one another and stay true to the values and identity that gives them a common business language.
RE is a truly international company and not a transnational organisation. The offices around the world are very much in tune and act accordingly, not so much instructed but using the HQ as consultants. Transnational operations lose their centre in favour of influences from their specific regions, IKEA being a good example of this.14
8.0 Analysis of values
A challenge to RE is its own culture, simply by being strong and successful. It is easy for it to become complacent and proud of its achievements whilst ignoring potential ways to cross the cultural divide and become more successful. A strong culture may find it difficult to recognise the need for change.
It has a Universalist view of the world where a right way applies to all. This is opposite to the particularist view of studying relationships and putting these first where necessary. Cultures in the Middle East and Asia are more likely to be particularist and this must be noted if business is to grow in such areas.
A large part of RE is US, a culture that has always proclaimed the way of the individualist, or as Eisenhower put it, 'individual self-realisation is the central goal of American civilisation'15. However RE is more aligned to communitarianism. 'As the information society develops, those with a communitarian ethos disseminate information faster'16.
The company deals with the supply and creation of information and its success relies on the collective and not on the individual. The speed at which knowledge is shared ensures the profitability of an organisation, quick response times with 'boundarylessness' being at the core of the business values.
Employees within RE operate on an outwardly neutral level, in that business discussions are conducted in the North European way of the brain controlling the emotions. An emotive element does become evident with caring for colleagues in an almost family atmosphere of trust and concern for each other's well being. This feature of RE culture is captured in 'valuing our people'. This is a mark of perhaps a global company taking the best elements from all cultures: the business focus on making calculated decisions but the emotive side making sure people are valued and cared for.
This blurring of types of cultures reoccurs where RE's approach is specific in its objective but also diffuse in its attitude to what is needed from its customers. 'Customer focus' in all countries means tailoring your product to fit the requirements of the market and RE does this well, adapting their approach dependant on what type of culture they are dealing with, from oil companies to pig farmers.
Achievement is a value held in high regard at RE, 'passion for winning' bears testament to this. As a FTSE 100 company it has a responsibility to shareholders to keep achieving goals and succeeding. The culture of success then breeds a network of employees who work with others in similar companies and in similar positions in different countries. This is where the ascription factor of the RE culture may begin to occur, where deals are done on the basis of knowing business connections rather than finding better deals. RE categorically states that this practice is in contravention of contract.
'Innovation' is a value that captures the company's future focused approach to technology, new working practices and products. It also encapsulates the Dutch and American view of time being about present performance and future targets.17 Planning, strategy and investment are hinged upon the company's perception of time. Other cultures, including the UK, focus on tradition a lot more, where the past is held up as a benchmark or an ideal. Disregard for this approach towards these countries may be seen as arrogant and confrontational.
Finally the environment is something that RE is aware of and alongside its CSR program is heavily involved in. Its response to the global demand for tighter controls on corporate waste is not surprising. Its policy follows the United Nations Global Pact, '…a voluntary corporate responsibility initiative intended to ensure the protection of human rights, fair and non-discriminatory labour practices and care of the environment.'18
9.0 Future projection
'In the economy of the future, knowledge is king and influence flows from wherever that knowledge resides'19
With e-business becoming a focus for all units, the RE structure may need to adapt quickly if certain opportunities are not to be missed. The Incubator culture is one that the business would do well to adapt to, if only in relevant areas such as online products. The current structure is too rigid and not flexible enough to follow the changes in technology that occur every few months.
Another risk in approaching new cultures such as the Chinese is that we do not go with preconceptions about what we expect in terms of their business behaviour. We risk missing each other as they try to adapt to our culture and we adapt to theirs. The Chinese may be pro-western in their views already and so our stereotypes must not stand in the way of what we wish to communicate.
RE displays all types of organisational structure, elements of all the seven key dimensions of business behaviour but does not fit within a stereotypical type of western company, perhaps because of its global nature. It combines the strength of its size with the nationalities of its employees and tries to take the best influences from different cultures.
The business must be aware that agility will be key in the coming years. The ability to respond quickly to opportunities or threats in the global marketplace will be a crucial factor to RE's continual success.