Kerr_Corp_Culture[1] - Academy of Management Executive,...

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Managing corporate culture through reward systems Jeffrey Kerr and John W. Slocum, Jr. The concept of corporate culture has captured the imagination of executives and researchers alike. 1 For executives struggling to manage organizational change, corporate culture has become an important tool. They realize that significant strategic or struc- tural realignment cannot occur if it is not supported by the organization’s values and behavioral norms. 2 Yet, culture has proved to be a subtle, intangible phenomenon—pervasive but difficult to manage or influence. Many managers have found that culture cannot be manipulated directly. 3 Most have an intuitive understanding of culture. Anthropologist Clyde Kluckhohn has defined cul- ture as “the set of habitual and traditional ways of thinking, feeling and reacting that are character- istic of the way a particular society meets its prob- lems at a particular point in time.” (p. 86) 4 A corpo- ration’s culture simultaneously determines and reflects the values, beliefs, and attitudes of its members. These values and beliefs foster norms that influence employees’ behavior. While most managers are aware of their companies’ cultures, they are unsure about how it is maintained, trans- mitted, or influenced. We believe that the reward system represents a particularly powerful means for influencing an or- ganization’s culture. Much of the substance of cul- ture is concerned with controlling the behaviors and attitudes of organization members, and the reward system is a primary method of achieving control. The reward system defines the relation- ship between the organization and the individual member by specifying the terms of exchange: It specifies the contributions expected from members and expresses values and norms to which those in the organization must conform, as well as the re- sponse individuals can expect to receive as a re- sult of their performance. The reward system—who gets rewarded and why—is an unequivocal statement of the corpora- tion’s values and beliefs. As such, the reward sys- tem is the key to understanding culture. An anal- ysis of reward systems can provide executives with a basis for effectively managing long-term cultural change. In this article, we will describe the reward systems operating in a sample of firms and show how these systems reinforced and influ- enced cultural values and norms. We will then link reward systems and culture to the corporate strat- egies pursued by top managers in these firms. 5 Examining Reward Systems Reward systems are concerned with two major issues: performance and rewards. Performance in- cludes defining and evaluating performance and providing employees with feedback. Rewards in- clude bonus, salary increases, promotions, stock awards, and perquisites. Of course, large corporations with several differ-
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This note was uploaded on 09/08/2011 for the course MGMT 605 taught by Professor Seminarinorganizationalbehavior during the Spring '11 term at S.F. State.

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Kerr_Corp_Culture[1] - Academy of Management Executive,...

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