REVIEW
Definition of corporate culture
In today's evolving business landscape, employees prioritize intangible factors over traditional incentives like salary, benefits, or job titles when choosing a company Among these intangibles, corporate culture stands out as a key influence on employee satisfaction and retention.
Corporate culture refers to the shared values, beliefs, and practices within an organization In the early 1970s, American companies began to examine the factors contributing to the remarkable success of Japanese corporations, leading to the recognition of corporate culture as a key element in their global achievements This concept was popularized by organizational research scholars and managers who sought to understand its impact on business performance.
Research into the components of corporate culture and its significant influence on business development began in the early 1900s Various definitions have emerged to describe the concept of "corporate culture."
In his book "Understanding Organizations," Louis Handy defines corporate culture as a collection of shared understandings and meanings that are largely implicit among group members This culture is unique to the specific group and is passed down to new members, highlighting its relevance and distinctiveness within the organization.
Organizational culture, as defined by Donnelly et al (1992), encompasses the influence of group norms, values, philosophy, and informal activities on the workplace environment This concept parallels societal culture, as both are shaped by shared norms, values, beliefs, and behavioral patterns The definition underscores the essential role of values and norms in forming a cohesive organizational culture.
Another definition comes from the International Labor Organization-I.L.O in
2005 that “Corporate culture is the values, beliefs, norms, and traditions within an organization that influence the behavior of its members”.
Corporate culture, as defined by organization research professor Edgar H Schein, is a set of shared basic assumptions developed by a group while addressing challenges of external adaptation and internal integration These assumptions are deemed effective and are subsequently taught to new members, guiding their perceptions, thoughts, and feelings regarding these challenges.
This thesis will take this definition as the standard definition of the study
Forming factors of corporate culture
Corporate processes are essential to how employees collect information, make decisions, communicate, and manage workflow The effectiveness of a corporation is shaped by leadership communication, collaborative decision-making, and structured workflow These processes not only define the organization but also interact with six other key factors that impact corporate culture.
1.2.2 Employees and other tangible assets
A corporation's resources, including its workforce, facilities, equipment, land, inventory, and financial assets, play a crucial role in its operations These tangible elements significantly impact the company's culture, as their quality and availability directly influence overall performance and organizational dynamics.
Corporate culture is significantly influenced by the formal arrangements that dictate how tasks and individuals are organized This includes the enterprise's structure, established procedures, rules, and specific mandated behaviors that guide employee interactions and operations.
The culture of a corporation is heavily influenced by the goals, strategies, and personal traits of its leaders, who make up the dominant coalition The leadership style adopted by these leaders plays a crucial role in shaping employee treatment and their overall job satisfaction.
The social system contributes norms and values to the corporate culture.
Components like employees relationships, the grapevine and the informal organization are also parts of the social system Because people are in the enterprise, their relationships define the enterprise’s character.
The technological processes and equipment employed by a company significantly influence its corporate culture The key consideration is whether the technology is designed to enhance productivity The response to this question reflects the organization's attitude towards the value of its employees, ultimately shaping the workplace environment.
An enterprise's external environment encompasses various forces beyond its boundaries, such as suppliers, markets, competitors, regulators, and organized labor, which directly and indirectly influence its operations These external factors significantly impact the enterprise's goals, resources, and processes, ultimately shaping its organizational culture For example, government regulations play a crucial role in protecting enterprises from competition, thereby profoundly affecting their corporate culture.
Impacts of corporate culture on the development of a corporation
Corporate culture is shaped by various elements, including business philosophy, customs, habits, and even the founder's legacy These components create a unique style that distinguishes one enterprise from another, influencing daily operations significantly A successful corporation's manner and attitude can be easily recognized and leave a lasting impression on outsiders while instilling pride among its members For instance, at Walt Disney, visitors can immediately sense shared values through employee uniforms and specific conversational language, such as the phrase "a nice Mickey."
“You are doing well”), common behaviors (always smile and polite with customers) and common feelings (very proud of doing for Walt Disney).
1.3.2 Creating the centripetal force for the whole company
A strong corporate culture plays a vital role in attracting top talent and enhancing employee loyalty Employees seek fulfillment beyond just financial compensation; they have various needs that must be addressed According to Maslow's hierarchy of needs, fulfilling these diverse human needs is essential for a motivated and committed workforce.
In 1943, a hierarchy of needs was proposed, consisting of five distinct categories arranged in ascending order: basic needs, safety needs, psychological needs, self-actualization, and peak experiences Each category represents a unique aspect of human motivation, highlighting the varying importance of these needs for different individuals.
Employee motivation is driven by various needs that may not align with their life ideals According to A Maslow's model, companies are mistaken if they believe that high salaries alone can attract and retain talent True loyalty and attachment to a company arise when employees find their work engaging, enjoy a positive work environment, and have opportunities to showcase their abilities In a strong corporate culture, all members understand their roles and collaborate towards shared goals.
Figure 1.1 - Maslow’s hierarchy of needs
Within a strong corporate culture, the high self-reliance will be emerged.
Encouraging employees to share their ideas fosters creativity and serves as a foundation for a company's research and development process This support not only enhances individual creative abilities but also cultivates a sense of belonging, motivating employees to remain with the company for the long term.
1.3.4 Creating the competitive advantage of the corporation
To enhance competitiveness, enterprises must focus on four key aspects: flexibility in meeting diverse customer needs, the quality of goods and services—which encompasses technological characteristics, reliability, and industrial design—market speed in terms of order fulfillment and new product development, and cost efficiency that outperforms competitors To achieve these advantages, companies require three essential resources: human resources, capital, and technology, with human resources playing a crucial role in adjusting, selecting, and developing the competitive advantages of the enterprise.
Corporate culture significantly influences each member of an organization, directly impacting human resources This foundational aspect not only shapes individual performance but also indirectly enhances a company's competitive advantages in the marketplace.
Corporate culture plays a crucial role at every level of an organization, shaping its unique identity and character This distinctive culture not only enhances the company's reputation among customers but also aids in differentiating it from competitors, ultimately fostering customer loyalty towards its products and services.
Levels of corporate culture
Corporate culture can be understood through three distinct layers, as outlined by Edgar H Schein in his book "Organizational Culture and Leadership." The first layer, observable artifacts, includes visible elements such as dress code, work environment, and employee interactions The second layer, espoused values, encompasses the stated beliefs and values of the organization Finally, the core layer consists of basic underlying assumptions, which are the unspoken rules and deep-seated beliefs that drive behavior within the company Understanding these layers is crucial for comprehending the full scope of corporate culture.
Figure 1.2 - Levels of Corporate Culture
Visible organizational structure and process (hard to decipher)
Strategies, goals, philosophies (Espoused justifications)
Unconscious, taken-for-granted beliefs, perceptions, thoughts, and feelings (ultimate sources of values and action)
If we regard corporate culture concept as a metaphor, three levels of corporate culture can be described as an iceberg
Figure 1.3-Corporate culture-iceberg’s principle
Edgar H Schein emphasizes that what is often referred to as "corporate culture" is merely the visible tip of an iceberg, with the more significant and complex "essence" of the organization lying beneath the surface This essence consists of the learned, shared, and tacit assumptions that shape employees' daily behaviors While only 10 to 20 percent of the iceberg is visible, the hidden portion, which constitutes 80 to 90 percent, ultimately determines the iceberg's direction This analogy illustrates how the unseen elements of corporate culture can profoundly influence a company's future, highlighting the importance for managers to recognize and address these underlying factors.
The direction of an iceberg is primarily influenced by underground flow rather than wind power, highlighting the significance of basic underlying assumptions in an enterprise Understanding these foundational principles is crucial for effective decision-making This article will explore the three levels of these assumptions in detail.
Corporate culture is primarily reflected through artifacts, which encompass the observable elements of a group's environment These artifacts include the organization’s physical architecture, technology, products, and artistic expressions, as well as its language, styles of dress, emotional displays, and the narratives shared within the organization Additionally, core values, rituals, and ceremonies contribute to this visible layer of culture While these artifacts are easily seen and experienced, understanding their deeper meanings can be quite challenging.
The pyramids of the Egyptians and the Mayans serve distinct cultural purposes, functioning as tombs in one society and as both temples and tombs in the other While observers can describe these structures, understanding their deeper meanings requires insight into the cultural context One perspective suggests that personal responses to physical artifacts, such as architecture and office layouts, can reveal significant cultural images and metaphors However, interpreting symbols is complex, necessitating a deeper engagement with the underlying values and assumptions of a culture Artifacts can be categorized into various elements, including architecture, symbols, language, leadership styles, organizational behavior, customer interactions, and cultural ceremonies.
The next level of corporate culture is about the values Values define what an enterprise needs to do, what is right or wrong There are two kinds of values.
Corporate values can be categorized into two types: objective values that exist independently within the organization and espoused values that management aims to cultivate over time Espoused values encompass the principles, vision, mission, and core beliefs that a company publicly declares as its guiding framework and aspirations.
The initial step in establishing objectives and priorities is to define the corporation's future vision, which represents the desired status the organization aims to achieve A clear vision fosters a shared purpose and coordinated efforts among team members This concept encompasses a spiritual image of the organization's future and typically spans a time horizon of ten, twenty, or even fifty years for a significant vision.
An enterprise's expected vision serves as a clear depiction of its future aspirations, outlining the pathway to achieving excellence This vision encompasses the ideal production methods and quality standards that the company aims to maintain, even in the face of challenges such as a 10% decrease in overall turnover.
To establish a successful corporation, it is essential to first create a clear vision and communicate it to all members Each department within the enterprise should then define specific objectives, methods, and tools to effectively achieve this vision.
Mission explains why an enterprise exists including organization objectives, general activities, to which it serves and by what method
The mission of an organization serves as a roadmap for achieving its vision by outlining key strategies and stages Once the mission is clearly defined, it enables the enterprise to accomplish critical objectives, including determining the necessary human resources, minimizing conflicts in goal pursuit, establishing clear boundaries of responsibility, and supporting overall organizational objectives.
It is essential that organization’s mission is designed for one certain stage of its life.
Business philosophy encompasses the reflective thoughts that capture the essence of business realities, derived from experiences and critical analysis of various business topics It serves as a guiding framework for an organization's activities and is comprised of three key components: the mission and fundamental objectives, the operational approach, and the specific business practices employed.
Business philosophy plays a crucial role in shaping corporate culture, serving as the foundation for a company's development approach It acts as a guiding tool for strategic management while also facilitating the training and development of human resources Additionally, it establishes a distinctive working style that characterizes the organization.
Organization core values are purified essence and are commonly recognized.
Core values significantly influence individual norms, behaviors, and attitudes within a company, serving as the foundation for its vision They act as guiding principles that help employees align their actions with the company’s mission, ultimately driving the organization towards its vision These core values remain constant, even in challenging times, unless the company faces bankruptcy or dissolution.
On January 10th, 2005, Brian Bacon, president of the Oxford Management Institute and former CEO of Australian Coca-Cola, illustrated the concept of core corporate values through a powerful analogy He used a ten-thousand VND banknote to demonstrate that regardless of how one treats the bill—whether holding it, rubbing it, or dropping it—the face value remains unchanged at ten thousand Vietnamese dongs This serves as a metaphor for the unalterable core values of a business, which persist regardless of external circumstances.
Core values are fundamental when there is a collective belief throughout the organization, as they establish norms and standards These values must be unwavering and consistently upheld, supported by myths, rites, or stories that reinforce their significance.
The role of leader – key factor creating corporate culture of an organization
A leader plays a crucial role in shaping corporate culture by transmitting, maintaining, and evolving the organization's core values into a comprehensive guiding system For businesses aiming for success, establishing a solid framework of principles is essential.
These principles are the foundation for enterprises to set their line and actions.
Creating a strong loyalty and attachment within an organization is essential for success, necessitating a commitment to a well-defined values system Leaders must actively engage with employees, providing support while reinforcing these core values to foster a cohesive and motivated workforce.
Leaders play a crucial role in shaping and managing corporate culture, particularly when it comes to adapting values to align with changing strategies When a new strategy is necessary—often driven by external market forces and competitors—it may conflict with existing cultural values Since culture is cultivated by the entire organization, it is generally more effective to adjust the culture to support the strategy rather than the other way around However, transforming an established culture can be a lengthy process, especially when founders are involved Ultimately, aligning corporate culture with new strategies can significantly enhance organizational success.
National culture significantly influences corporate culture, with leaders playing a crucial role in shaping it By effectively managing behaviors and aligning them with organizational goals, leaders contribute to the development of a distinctive corporate culture that enhances overall performance.
STUDY
An overview of Nghe An water supply limited company
Founded in 1957, the Vinh water treatment plant initiated the urban water supply system in Nghe An Over the course of 59 years, the Nghe An urban water supply has navigated numerous challenges and difficulties, consistently meeting its objectives and achieving significant milestones in its development.
In its early days, the Plant operated with a limited capacity of 3,000m³ per day, utilizing basic equipment and facilities The underground water source was not only unsafe but also insufficient to meet the necessary quality and quantity standards, and the workforce comprised just a handful of employees.
As Vinh city developed, the water supply plant underwent significant upgrades, relocating from Truong Thi ward to Hung Vinh ward in 1987, and increasing its capacity to 20,000m³/day using raw water from the Dao River In 1995, it became the Nghe An Water Supply Company, expanding its service coverage to mountainous district towns and enhancing treatment facilities and distribution pipelines in Vinh city Following the Party and State's management reform guidelines, it was transformed into the Nghe An Water Supply Limited Company in 2006.
The company operates the Hung Vinh water treatment plant, which has a capacity of 70,000 m³/day, providing essential water services to residents in Vinh City Additionally, it manages seven water treatment plants in the district towns of Do Luong, Con Cuong, Anh Son, Tan Ky, Quy Chau, and Quy Hop, with a combined capacity of nearly 15,000 m³/day Currently, the company employs a total of 478 staff members, organized into 15 divisions and units.
Nowadays, the company is seving more than 600000 households, nearly 1000 of which are oganizations, recidential blocks of flats, hospitals and schools.
The number of households expressing interest and registering with the company is steadily increasing, indicating that both the quality of credit and services provided are being recognized and accepted by consumers in a market-driven environment The company has continually enhanced its service delivery mechanisms and has upgraded its management practices to better meet the needs of its customers.
Quality control center mountainous water supply enterprise
The board of directors plays a crucial role in shaping an organization's future by making significant policy decisions and setting goals for individuals, groups, and the entire company They are responsible for monitoring progress, implementing necessary adjustments, and ensuring compliance with legal standards, including the companies act, tax regulations, and other essential guidelines.
The Department of Personnel Administration is crucial for managing employee records, organizing and overseeing workforce allocation, and supporting managers in strategic planning It handles clerical tasks, maintains confidentiality, archives essential documents, and ensures compliance with internal policies.
The Department of Finance plays a crucial role in managing the company's financial activities, including organizing expense accounting and mobilizing capital sources to ensure timely project completion It oversees the liquidation process with various entities such as corporations, banks, and customs, while balancing expenditures and income The department is tasked with generating regular financial reports and conducting annual or ad-hoc inspections as required by top management Additionally, it assists the director in financial management and organizes the accounting of company expenses.
The Technique and Planning Department is tasked with analyzing the company's long-term goals, which guides the development of organizational resources and strategic initiatives Additionally, it provides advisory support to the Board of Directors on management and operational matters related to planning and the implementation of information technology.
The business department oversees customer contracts, monitors water usage, and manages billing processes Additionally, it is responsible for reading and checking water meters, collecting payments, and detecting pipeline leaks to ensure efficient water management.
2.2 Levels and manifestations of corporate culture in Nghe An water supply limited company
This article will explore the company's culture using Edgar Schein's framework from 1994 It will begin by examining the visible aspects of culture, known as "artifacts." Next, the discussion will shift to "espoused values," which reflect the company's stated beliefs and principles Finally, the article will identify the "basic underlying assumptions" that influence and shape both the artifacts and espoused values of the organization.
2.2.1 Artifact level and its manifestations
According to Edgar Schein, artifacts include all the phenomena that one sees, hears and feels when one encounters a new group with an unfamiliar culture.
Hence, the artifacts of Nghe An water supply limited company will be classified in the following categories:
Nghe An Water Supply Limited Company, located at 32 Phan Đăng Lưu Street in Vinh City, features a modern design with orange-decorated walls across its three floors The second and third floors are highlighted by glass walls, enhancing the company's contemporary and dynamic atmosphere The directors' offices are situated on the first floor, while the second floor houses various departments, including Finance, Technical and Planning, and Business, which are designed for high interaction and separated by low wooden walls or windows Each department is clearly marked with nameplates, and the meeting rooms are located on the third floor.
Figure 2.1: Nghe An water supply limited company
The decoration of each department in the company is tailored to the available space and the specific roles of employees, with each officer provided a suitable workspace that fosters an open and comfortable environment Although individual cabins are not provided, this layout facilitates efficient document sharing, essential for the company's operations Each room is equipped with air conditioning and features glass doors and windows, ensuring a cooler atmosphere in summer and warmth during winter Additionally, team members create a small altar in their rooms to express sincerity during ritual ceremonies, particularly during the Tet holiday, when they prepare the altar to enhance departmental effectiveness and contribute to the company's success.
2.2.1.2: Brand name, logo, and slogan
NAWASCO’s logo features a distinctive design that includes both a wordmark and a graphic symbol The logo is shaped like a blue water drop, representing the company’s focus on water supply Within this drop, the company’s name and brand are prominently displayed, emphasizing its identity in the water service industry.
NAWASCO, short for Nghe An Water Supply Company, is a prominent brand in the water supply industry The name is derived from the company's full English title, which reflects its commitment to providing essential water services in the Nghe An region.