QUESTION 1

CASE 2: FALCOM COMPUTER COMPANY

Falcom Computer was a small but rapidly growing company located in the Silicon Valley area of California. The CEO thought it would be timely for a young company still in the start-up phase to create and instil an appropriate culture. The CEO and a small group of top executives met regularly on Wednesday mornings to develop a statement capturing what they considered to be an ideal Falcon Culture. After several weeks of brainstorming, debating, and revising, they eventually produced a 2-page document called Falcon Values that covered such topics as treatment of customers, relations among work colleagues, interpersonal communication, decision-making processes, and the nature of the working environment. The values document was posted in prominent places and distributed to all company employees. Department heads were asked to explain the document to employees in their department meetings.

Peter Richards read the Falcon Values statement shortly after he was hired as a software trainer. After observing managerial and employee behaviour at Falcon for a few weeks, he was struck by the wide discrepancy between the values expressed in the document and what he observed as an actual practice within the company. For example, the Falcon Values document contained the following statement about quality: Attention to detail is our trademark; our goal is to do it right the first time. We intend to deliver defect-free products and services to our customers on the date promised. However, Peter learned that design flaws caused many defects during the manufacturing process, slowing production. Moreover, some of the defective computers were being shipped to customers without being prepared. When Peter inquired about this problem, he learned that employees were pressured to get the product out the door quickly, so the company could generate more sales. People were afraid to incur the wrath of the production manager by pointing out the quality defects. Peter experienced the quality problems himself when he borrowed four brand-new Falcon computers for use in a training class and found that only two of them started correctly without additional technical work on his part.

Another example of a discrepancy between the Falcon Values document and actual practice concerned interpersonal communication. The document contained the following statement Managing by personal communication is part of the Falcon way. We value and encourage open, direct, person-to-person communication as part of our daily routine. Peter had heard the open communication buzzword a lot since coming to Falcon, but he hadnt seen much evidence of it. Peter believed that the real organisational culture at Falcon was characterised more by secrecy than openness.

Contrary to the ideal open, two-way communication, all of the meetings he observed used a formal arrangement, with an executive at the front of the room who did most of the talking. Employees were not encouraged to suggest ideas or express concern about the decisions reached by top management. Even the Falcon Values statement had been created in secret without input from anyone not in the top-management group.

Peter learned that most employees did not take the values document seriously, and he soon became disillusioned himself. Employees understood what was really emphasised in the organisation, namely hierarchy, secrecy, and expediency. For some employees, the disparity between the values statement and the actual culture was so obvious it was a subject of cynical humour. Meanwhile, customers were becoming dissatisfied with the poor quality and late delivery of Falcon computers. Sales begin to decline, and before long, the company was losing $2 million a month. Despite his frustration, Peter stayed with Falcon Computers until it filed for bankruptcy two years later. As he cleaned out his desk, he reflected on the failure of top management to create the culture depicted in the value statement

1.Analyse the possible differences between the actual culture of the organisation and the written values document, stating the reasons for the large variation. 2.Assess the mistakes made by top management in their effort to change the culture 3.Consider what could have been done to make the culture more consistent with the values statement.