Corporate culture

I believe that corporate culture exists and matters. It matters when it affects decision rights, information flows, and incentives. The culture attracts employees who like the culture and repeals those who want something different. This affects who has the decision rights and may affect information flows. Culture also creates or reinforces intrinsic rewards, thereby affecting incentives. I also believe that employees, like children, are caught more than taught. That is, they learn by example more than lecture. A leader can create and change culture if he or she communicates the vision, leads by example, and recognizes and rewards employees who follow it. However, a statement of corporate values exhorting employees to act with integrity will soon be forgotten if people who lie and cheat get larger pay raises and better promotions than people who do not. The reward structure, not the value statement, will define the culture.

The suggestion by a student in my MBA class that a change of the corporate culture at an organization would solve a problem the organization faced prompted this post.