Creating a strong organizational culture is imperative in the global business world which is undergoing changes like never before. With corporate mergers and acquisitions becoming a common scene, MNCs face the task of integrating diverse employees from different cultural backgrounds, requiring effective communication and sensitivity to cultural differences. They must also manage global change while aligning their culture with evolving market dynamics. Indian family businesses, on the other hand, grapple with balancing familial traditions and modern practices, navigating family dynamics, and ensuring smooth knowledge transfer across generations.

Despite these challenges, both MNCs and Indian family businesses recognize the importance of investing in strategies that prioritize cultural integration, employee engagement, and shared values. By doing so, they can create a cohesive and harmonious work environment that fosters innovation and adaptation, enabling long-term success in global and local markets.

ET this month examines 'Building Organizational Culture: Challenges in MNCs and Indian Family Businesses.'

In the Thinking Aloud section, Jay explores the significance of culture in organizations, focusing on leaders, and the challenges of cultural shifts. On the Podium, Founder of Human Endeavour Associates, Prasad Kumar shares different ways on how organizations can effectively communicate and embrace their core values and culture across different regions and countries. In the We Recommend section, we review Engineered in India an inspiring memoir by BVR Mohan Reddy, the founder of Cyient and his contributions to the Indian IT industry with an emphasis on social responsibility.

In Figures of Speech, Vikram's toons try to address the elephant in the room!

Please also Click Here to check out our Special issue of ET, which is a collation of selected themes that were featured over the years highlighting the changing landscape of the business world. This special edition has been well received and can be Downloaded Here for easy reading and is a collector's item.

As always, we value your opinion, so do let us know how you liked this issue. To read our previous issues, do visit the Resources section on the website or simply Click Here. You can also follow us on Facebook, Twitter & LinkedIn - where you can join our community to continue the dialogue with us!

It is fairly common now to attribute success (or failure) to the presence of an x factor, be it in sports, or business, or society in general. This x factor is an invisible but potent element loosely termed as culture. While it is not easy to comprehend, it is perhaps illustrated best in the words of the anthropologist, Ruth Benedict, that 'the crucial differences which distinguish human societies and human beings are not biological. They are cultural.'

In today's world, business organizations are a vital part of any society, and therefore a good place to examine how social beings operate as a community that indulge in goal directed behaviour. Interestingly, while social mores varied significantly across countries in the agricultural world, in today's post-industrial society, one is struck by the similarities that we find across nations when it comes to the manner in which businesses function. Perhaps, this is no surprise as a certain organizational or business culture has become universal across the globe. Let's take a closer look at this.

While the word culture is an all-encompassing term that brings into its fold aspects of language, social behaviour, beliefs, attitudes, customs, etc., it refers to the acceptable manner for a group or community to fashion their existence. Perhaps the most unsophisticated definition says it best, as culture refers to 'a way of life', or, 'the way we do things here', meaning the common practices that everyone adheres to in a setting, say an organization. Usually unwritten, it evolves over a period of time and becomes the de facto norm for the community which has come together to meet their common objectives. Violating these norms is frowned upon, and even may lead to extreme punishment when the radicals are seen to be recalcitrant.

As in other organizations, the business world too is impacted by the long shadow of the leader. In a family business, the likes and whims of the patriarch soon gets imprinted upon the fabric of the group. If the patriarch has a very extended innings in the business, the tone and texture that he sets continues to exist for decades after his passing. Usually his successors hesitate to tamper with the template that has succeeded and, taken to the extreme, these practices now become de rigueur in the system. Considered sacrosanct, these traditions are frozen in time, and often seem stifling to a new generation that questions all aspects. All organizations have value systems, but if openness and candid conversation is not one of them, then this lack of communication can be the first step in the slippery slope downhill that creates fissures in the family business.

Global multi-national firms too are not immune to vicissitudes in corporate culture. Here also a singularly strong personality at the helm can be the driver of cultural change. Witness the transformation of GE under Jack Welch in the 1980s and 1990s, or the more recent devastation of Twitter under Elon Musk.

The democratization of the workforce began well before the pandemic and old structures were already under strain in the face of the expectations of Gen Z and Millennials. It is no surprise that the world we are living in has been branded the BANI world, a state characterised by Brittle relationships, all-round Anxiety, Non-linear complexities, both internal and external, and Incomprehensible (well, almost). Clearly, in the post-covid world, organizations are being compelled to hit refresh, and if necessary should undertake a total reboot, as old models are clearly not working.

Let us consider some of the key elements that are integral to creating the culture of an organization. We touched on values and communication but two others that deserve attention are psychological environment and sense of purpose.

In a situation of flux – such as the current social milieu we find ourselves – the aspect of unity of purpose is difficult to create. As a nation we are now upwardly mobile and many find themselves in the trishanku zone, as it were, wedged between traditional mores, and the uber-westernization that is sweeping across society. At home too, many youngsters are challenged by their desire to be modern, and their parents being anchored to older traditions. To dramatize this a little, I find that they are unsure of themselves, trapped as they are between the selfie culture of their generation, and the still portraits of their parents, or superiors at the workplace. Covid tested their resilience more than ever as the enforced isolation for this connected generation meant an escape into a virtual world, far away from the boundaries permitted by their limited economic means. Finding very little in common with the older generation at the work place (or home) which preaches patience and steadfastness of a tortoise, the young hare finds it suffocating, to say the least.

There was a time when safety meant a physical dimension but now in a world of mental challenges, the need for providing psychological safety has become paramount. The subject of mental health is emerging as extremely important, both at work and home. The easy polarization of society on vague grounds through the vehicles of social media, has also created divisions at a time when principles of diversity and inclusion are being championed. From accepting new facets of gender, or the rainbow world of people, society continues to grapple with a multitude of issues as a new culture, fit for the twenty-first century, has yet to take full shape.

That great visionary, Mahatma Gandhi, stated that, 'a nation's culture resides in the hearts and in the soul of its people'. Ditto for business organizations that are now desperately seeking their soul in a world where artificial intelligence (AI) looms large. All the opportunities that technology brings is not visible yet, but a pall of fear is being drawn rapidly by those conservatives who dislike change, and dread the thought of modifying their life by redrawing their cultural maps. To such timid minds, I would only appeal that they should stay optimistic about the resilience and inventiveness of the human mind. We will continue to strive towards glory by reshaping our culture, as the best is yet to come!

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ET:  How can organizations ensure that their core values and culture are effectively communicated and embraced by employees across different regions and countries?

PK:  It is important to elaborate a few dimensions before we can answer this question.

At the outset, it is important to underscore that values contribute to business effectiveness, Institutional character, Performance and Health.

Values may categorize as follows:

1. Business Values – these values codify and regulate how we do our business and "how we do whatever we do". Examples are Quality, Excellence, Teamwork, Integrity, and Customer First and so on.
2. Institutional Values – these values define the character of the organization itself, irrespective of the business and defines "Who we are". These accrue over the organization history, founders' values and critical incidents, deeply rooted in organization memory. Examples are Enterprising, Humility, Deliver the Promise, Social Responsibility, Progressive, Inclusive, Ethical, Frugal, and so on.
3. Demonstrated Values – these values are part of the lexicon and are already demonstrated to differing degrees within the Business or Institution.
4. Aspirational Values – these are values that do not see currency in the present culture of the Business or Institution. They codify a future state of culture and behaviors.
   Aspirational Values are likely to show a greater gap between intent and demonstration - these require change of mind sets, habits, and processes.

ORGANIZATION MODELS

Broadly, organizations fall into four models based on their organizing philosophy:

1. Centralized operations and centralized ethos
2. Centralized operations and decentralized ethos
3. Decentralized operations and centralized ethos
4. Decentralized operations and decentralized ethos

The extent to which companies will build and sustain a strong, coherent organization culture across different regions and countries will directly depend on which model they have chosen to adopt.

DIVERSIFIED OPERATIONS ACROSS DIFFERENT REGIONS / COUNTRIES

Goals give impetus to business values and it is important that values support priority goals of a corporation.

On the other hand, Institutional values should remain the same across regions / countries for the same company. As pointed out earlier, these values define the character of the organization, no matter which location they operate from. If Institutional Values vary with each location, the identity of the organization gets diffused and erodes the Corporate Brand and credibility.

INSTITUTIONAL VALUES

There are multiple ways to encourage communication, values implementation, and congruence in an organization.

1. Leaders must walk the talk and be role models.
2. Value Champions, Anchors and Ambassadors – They are a core set of organization members who have imbibed the values deeply. They take proactive, regular, and systematic action to reach out and coach / mentor new leaders and recent hires.
3. Town Halls – Chairman and CEO's evangelizing values at Town Hall meetings
4. Staff Meetings and Skip Level Meetings – provide an opportunity for two way dialogue as well as a pulse check
5. Education through Values Workshops – these workshops when creatively designed have the potential to educate and inspire. Live caselets of actual incidents will help clarify and commit. The pedagogy must ensure that there is no "tell and sell" and no one is "preaching from the pulpit"- inclusive co-creation is absolutely critical
6. Storytelling – is a powerful inspiration to assimilation.
7. Values/ Ethics Surveys – well designed surveys and improvement actions must reach the Board for attention.
8. Hiring Filters – ensuring that during the hiring process, lack of value congruence and culture fit is given "black ball" status.
9. Talent Reviews and potential assessments – these forums can help identify and promote those who pass stiff standards of being high on both performance and values.
10. Feedback from customers, suppliers and other stakeholders – is a valuable source of information and regulation.
11. Code of conduct – a code of behaviors with adherence agreements are useful as a back stop.
12. Whistle Blower and Speak Up mechanisms – to keep a vigil on non- compliance and keep the guard rails in place.
13. Ombudsperson – this role helps anchor the whistle blower and Speak Up process.
14. Zero Tolerance Policy – not compromising and being lenient with an excellent performer who also erodes values.

It is essential to have a resource person providing focused attention to this aspect of Organization Development. Whether full time or part- time will depend on the size of the organization. A strong preference is to locate this person in the Chairman or CEO office.

ET:  As an expert who has helped family businesses address issues of generational growth, what are the unique values that are distinct in Indian family businesses?

PK:  COMPLEXITY

Family Businesses grapple with the complexity of seamlessly integrating Ownership, Business and Family dimensions through multiple generations.

The most prominent risk is when the major shareholders (read Promoters) do not see eye to eye. Shareholder discord can be a terminal risk, as opposed to business risks, that may be problematic but more easily resolved.

Affinity and Alignment are two key variables that determine Shareholder synergy.

THE RANGE OF VALUES

Values that family businesses learn to live by are in three areas:

1. Family Values
2. Business Values
3. Ownership Values

Some typical values that emerge in each of these areas are:

The Top Seven

Often these values are combined, in a mix and match format, to arrive at a list of five to seven values that reflect the priorities for the Family Business for that phase of its maturity.

While arriving at the top five to seven values Family Businesses consider the following:

1. If the Ownership is a risk to the Family and Business dimensions – Ownership Values bring the tilt.
2. If the Business is a risk to Ownership and Family dimensions – Business Values take precedence.
3. If the Family is a risk to Ownership and Business dimensions – Family Values take prominence.

Review for relevance

These value sets are reviewed from time to time and may change as the Family Business moves through their intergenerational passage.

ET:  What are some of the unique challenges that multinational corporations face in building an organizational culture across different countries and cultures?

PK:  CULTURE – GEERT HOFSTEDE

Culture is the collective programming of the mind which distinguishes the members of one group or category of people from another.........Geert Hofstede

Culture is learned, not inherited.

Hofstede's seminal framework provides vital leads to understanding intercultural cooperation. For a quick recall his model is given below:

1. Power distance index (PDI): The power distance index is defined as "the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally". A higher degree of the Index indicates that hierarchy is clearly established and executed in society, without doubt or reason. A lower degree of the Index signifies that people question authority and attempt to distribute power.
2. Individualism vs. collectivism (IDV): This index explores the "degree to which people in a society are integrated into groups". Individualistic societies have loose ties that often only relate an individual to his/her immediate family. They emphasize the "I" versus the "we". Its counterpart, collectivism, describes a society in which tightly integrated relationships tie extended families and others into in-groups. These in-groups are laced with undoubted loyalty and support each other when a conflict arises with another in-group.
3. Uncertainty avoidance (UAI): The uncertainty avoidance index is defined as "a society's tolerance for ambiguity", in which people embrace or avert an event of something unexpected, unknown, or away from the status quo. Societies that score a high degree in this index opt for stiff codes of behaviour, guidelines, laws, and generally rely on absolute truth, or the belief that one lone truth dictates everything and that people know what it is. A lower degree in this index shows more acceptance of differing thoughts or ideas. Society tends to impose fewer regulations, ambiguity is more accustomed to, and the environment is more free-flowing.
4. Masculinity vs. femininity (MAS): In this dimension, masculinity is defined as "a preference in society for achievement, heroism, assertiveness, and material rewards for success." Its counterpart represents "a preference for cooperation, modesty, caring for the weak, and quality of life." Women in the respective societies tend to display different values. In feminine societies, they share modest and caring views equally with men. In more masculine societies, women are somewhat assertive and competitive, but notably less than men. In other words, they still recognize a gap between male and female values. This dimension is frequently viewed as taboo in highly masculine societies.
5. Long-term orientation vs. short-term orientation (LTO): This dimension associates the connection of the past with the current and future actions/challenges. A lower degree of this index (short-term) indicates that traditions are honoured and kept, while steadfastness is valued. Societies with a high degree in this index (long-term) view adaptation and circumstantial, pragmatic problem-solving as a necessity. A poor country that is short-term oriented usually has little to no economic development, while long-term oriented countries continue to develop to a level of prosperity.
6. Indulgence vs. restraint (IND): This dimension refers to the degree of freedom that societal norms give to citizens in fulfilling their human desires. Indulgence is defined as "a society that allows relatively free gratification of basic and natural human desires related to enjoying life and having fun". Its counterpart is defined as "a society that controls gratification of needs and regulates it by means of strict social norms".

Hofstede goes on to further elaborate the differences in detail across multiple contexts and settings.

MULTINATIONAL CORPORATIONS

Multinational Corporations face challenges in all the areas described by Hofstede when building and sustaining an organization culture.

These challenges occur when:

1. Starting a fully owned subsidiary or a joint venture/ merger in a host country – acculturation of employees is a unique challenge, including cross assimilation of the culture of the local partner.
2. Policy formulation – embedding cultural nuances that will enable effective policy implementation.
3. Introducing change – all change initiatives need to embed cultural differences.

SOME SIMPLE ILLUSTRATIONS @ WORKPLACE

Exploring each of these dimensions at the work place may be illustrative:

Western and Eastern cultures typify these differences sharply.

These differences require a careful and curated approach to policy formulation and implementation in multinational corporations.

Change management particularly requires very specially skilled personnel to be able to succeed with minimal dissatisfaction and toxicity.

Leaders need training in "cross cultural" dynamics to be successful global managers who are adept in navigating intercultural nuances and deploying them for cooperation and growth.

ET:  In your opinion, what role do leaders play in building and sustaining a strong organizational culture?

PK:  Fundamental Leadership Belief

"Culture eats strategy for breakfast" is a famous quote from legendary management consultant and writer Peter Drucker. To be clear, he did not mean that strategy was unimportant- rather that a powerful and empowering culture was a surer route to organizational success.

Experience has demonstrated that good culture precedes good performance.

Values are the bedrock of culture.

Leaders need to be committed to this way of thinking to be able to lead, build and sustain a strong organizational culture.

Demonstrates Commitment

Having crossed the threshold of the right mind set, they must demonstrate this commitment in various ways:

1. A zero-tolerance position on values transgression is crucial. Turning a blind eye to individuals who erode company values, is anathema to sustaining a values-based culture. Leaders must not promote or tolerate such individuals, even if they are high performers or possess crucial information.
2. Leaders can ensure that the company hires for attitudes and culture fit.
3. Walk the talk and be role models for values.
4. Be vocal advocates of the company values at town halls, staff meetings and employee connect opportunities.
5. Review their own and top management decisions for values mismatch.
6. Filter joint venture and M & A opportunities for values compatibility beyond strategic fit alone.
7. Examine if all external stakeholders are aligned to company values.
8. Reward those who demonstrate strong values and applaud "moments of truth."
9. Ensure that they review and engage actively with whistle blower complaints/ Speak Up comments and support the Ombudsperson.
10. Ensure that the results of the Values and Culture survey are presented and discussed thoroughly at Board meetings.
11. Ensure best in class Corporate Governance and ethical standards.
12. Take a long-term view of the business and organization.

It is a reasonable ask of leadership to be values and principle centred, ethical, equitable, and noticing and system oriented. They must believe that what is good for the organization is the best for them. Narcissism is the bane of leadership and will always fail the test.

The test of a policy is how it ends, not how it begins.

ET:  Can you tell us about your company, Human Endeavour Associates? What are some of the services provided by you to help family businesses to build and sustain themselves?

PK:  Human Endeavour Associates is a niche consulting firm offering specialised, insightful and state-of-the-art advisory services and facilitation in the following areas:

• Family Business Advisory and Governance
• Building Organizations for Growth and Renewal
• Board and Top Team Effectiveness
• Process Consultation and Expert Facilitation

More details at www.humanendeavour.in

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"Engineered in India: From Dreams to Billion-Dollar Cyient" is a memoir that takes readers on a journey through the life and achievements of BVR Mohan Reddy, the Founder and Chairman of Cyient. The book chronicles the evolution of Cyient, an Indian engineering and technology solutions company, from its modest beginnings to its status as a global leader.

In the early 1990s, Reddy founded Cyient, formely known as Infotech Enterprises in Hyderabad. With a focus on engineering, manufacturing, networks and operations, Cyient quickly gained recognition in the industry. Standing tall, the company employs over 17,000 people and caters to clients in diverse sectors. The author's journey to success was backed by a vision, hard work, and a will to make a change. Prior to starting Cyient, he held prominent positions in organizations like the DCM Group, MICO Bosch, HCL, and OMC Computers Limited.

In his memoir, Reddy describes his humble origins in Andhra Pradesh and his upbringing in a middle-class family. His academic prowess led him to graduate from the Indian Institute of Technology, Kanpur, from where it was an onward journey that shaped the course of his life and the Indian IT industry.

"Engineered in India" also looks into Reddy's personal story while also providing valuable insights into the corporate world. He shares his thoughts on the importance of innovation, urging Indian companies to move beyond services and become global leaders in product development. He highlights how Cyient harnessed technological advancements and spearheaded groundbreaking solutions, effectively establishing itself as a leading player in the industry.

The read throws light on the author’s leadership philosophy and the importance of fostering a positive organizational culture, in the power of collaboration, creativity, and continuous learning. He champions the idea of empowering employees to take risks, explore new ideas, and make a difference. Through his own experiences, Reddy demonstrates how a strong leadership foundation and a supportive work environment can drive success and foster growth.

Beyond his corporate achievements, Reddy is deeply committed to social responsibility. The memoir highlights his philanthropic initiatives, showcasing his dedication to contributing to charitable causes, particularly in the areas of education, healthcare, and poverty alleviation.

Engineered in India is an engaging read, peppered with Reddy's storytelling skills. It offers a balanced mix of triumphs and failures, providing valuable lessons applicable to any business or career path. However, certain events and timelines could have been presented in a more cohesive manner. Additionally, the technical jargon and industry-specific terminology may prove challenging for readers unfamiliar with the field. Overall, the read will inspire anyone interested in entrepreneurship backed by a dream fueled by hard work and a vision.

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