Reasons for changing organisational culture

A business may change its culture to restore reputation, arising from negative publicity as highlighted by Barclays and their ‘aggressive pursuit of profit’ culture.
It is this pursuit that has seen Barclays deceive its customers, and its staff perform illegal acts. Their culture worked so that the most profit could be made, workers miss-sold PPI to customers that they didn’t know they had bought, they thought nothing of manipulating the interest rates in their favour. Bosses at the bank overlooked this – as it gave them large returns, which in effect, meant they could get their large bonuses.

The cost to Barclays is just over £2billion, to repay customers for miss-selling of insurance, while its managers got huge bonuses. In an attempt to fix its reputation Barclays has tried to repay most customers, but after a significant drop in profits from £5.9billion to just £246million in 2011 as well as a huge loss in market share, it seems that its once loyal customer base has gone elsewhere.
It’s likely that Barclays will have to wait a while before consumers return their trust, and the newly appointed CEO has to show the customer that the business is changing. If Barclays don’t change, it will impact on share price – as both customers and investors have lost their trust, sales – because their competitors will have gained the customers that have left, and a repeated lowering of profits; this will occur as the cycle continues, if the bank doesn’t change in time, the customers will lose more trust, the investors won’t see it as a worthwhile investment and the sales will drop once more.  This cycle will heavily impact on where Barclays goes from here, as a bank it wanted to avoid government intervention, to keep itself private and keep the bonuses rolling in. It is likely that if the culture doesn’t change and the cycle comes into effect, there will be some sort of intervention, giving the taxpayer the control. The success of the change depends on the new CEO’s communication to the employees, and this will need to be a quick change as media pressure mounts to overcome the resistance from the employees that are so used to Bob Diamonds profit and bonus centred business.

Another reason for a business to change its culture is to increase competitiveness in response to its rivals. This is highlighted by Kodak and their culture of internal focus and complacency.
In 1996 Kodak’s profits peaked at £16billion, had a 90% market share, and developed the first ever digital camera. Despite creating the first, it never used the technology leading competitor Fujifilm to take advantage of this complacency.
Fujifilm has a culture of innovation and risk-taking, to them, the digital camera was a brilliant, if not risky opportunity but it eventually paid off. 

Kodak refused to change its culture to take risk, which was also seen when they failed to recognise the importance of sponsoring the LA Olympic Games – again Fujifilm took advantage of this and created huge brand awareness.
The significance of both of these actions of complacency from Kodak have meant the business has had to retreat from loss making markets, such as their cameras and their digital film processing, as the company suffered its 9^th consecutive quarterly loss in 2012, with a latter of £222million showing that customers have really had their last ‘Kodak moment.’ The continual loss making and retrenchment strategy has occurred because Kodak failed to respond to change. This has had significant impact on the reputation of the business and the film industry; Fujifilm have taken over all of Kodak’s losses and have gained huge amount of market share, custom and profits.  The likelihood of Kodak being able to fully recover is doubtful, the company has been far too complacent for far too long. Its competitor, Fujifilm, has been netter at taking risks and advantage of Kodak’s losses. It is this that Kodak will have to adopt in order to grow again and save the company. One way of changing organisational culture is through training existing employees into the new ways of the company.

A business may change its culture because of the entry of a new leader. Leadership is a key factor in what the culture of a business is like. Often, the culture is built upon the values and beliefs that the leader has, and whether these are bad or good depends on the company. For example, Herb Kelleher ex-CEO and founder of Southwest Airlines; he built the culture of the business to make ‘every person count.’ Herb made it his priority to know every member of staff, and to make ‘work fun and home like work.’ This culture heavily motivates the employees and builds a strong sense of trust; Herb tried his hardest to never make any redundancies. Having such a strong positive culture has helped Southwest Airlines become the 4^th largest airline in the United States with a 15% market share, and the only airline to have 40 years of consecutive profits.
In contrast, Jeff Skilling created a culture at Enron that eventually led to its closure. He believed that the money was everything; he tried to buy loyalty and rewarded those who embraced his aggressive profit hungry culture even if was unethical and illegal. He promoted selfishness and greed. This led to the company to deceive its customers and lie about its debts. This culture was toxic, and Skilling now faces a prison sentence.