This activity is important because as a manager, you should know the impact of the organizations rules, norms, and values. This shared knowledge shapes the attitudes and behaviors of employees, for good or for bad. Organizational culture can be strong and beneficial, resulting in high employee commitment and performance. Culture can also be strong but detrimental, ultimately causing negative results in outcomes like employee performance and commitment.

The goal of this activity is to demonstrate your understanding of culture strength by reading a case and answering questions.

Read the case about Enron and General Electric and answer the questions that follow.

General Electric. Enron. Not two companies that you would expect to be mentioned in the same breath. After all, General Electric is repeatedly in the top of Fortune magazine's "Most Admired companies, and Enron will go down in history as one of the greatest failures and financial scandals in U.S. corporate history.

So why would we mention both of these firms together? Because the fact is that throughout the 1990s and into the early 2000s, these companies actually approached their businesses and treated their employees in very similar ways. Both were extremely successful enterprises whose stock performance rewarded investors handsomely and caused them to be recognized as companies of excellence by numerous publications of all types. On the surface, both companies used terms like "creativity," "competitiveness," "people," "integrity," and "excellence" to describe their core values. On an annual basis, GE and Enron both fired managers who were at the bottom of their performance scales, with Enron removing the bottom 20 percent of performers and GE removing the bottom 10 percent.

Employees were paid well above average market levels, and managers received large bonuses that were tied directly to performance goals. Both had strong-minded and well-respected leadersGE was led by Jack Welch, who has been described as a legend, a hero, and one of the world's greatest business leader, and Enron was led by Jeff Skilling, known as a brilliant visionary and perhaps one of the smartest CEOs on the planet.

Underneath the surface though, these two organizations could not have been more different. What was it that made these two companies move in such opposite directions? One potential answer lies with organizational culture. Whereas GE's culture led to continued success, high levels of employee commitment and performance, low employee turnover, and generally a perception as one of the top companies in the world, Enron's culture failed miserably over the long term on almost every level. Many blame Enron's failure on a culture of greed that favored maximizing real or perceived profits to boost stock prices. In the late 1990s, an Enron task force put together to help communicate Enron's "Visions and Values" considered replacing words such as "integrity," "excellence," "trust," and "respect" with words like "smart," "bold," and "aggressive." The changes were never made, but the fact that they were considered says quite a bit about the growing culture within Enron.

Enron CEO Jeff Skilling and members of his executive team created a corrupt coalition focused on greed, deception, and unethical behaviors. This small coalition took over the organization and guided Enron into a new phase that altered the overall culture. At the same time, GE transitioned its culture to better respond to the fast-paced market, employee engagement, and globalization.

2e. The idea that employees would quit working...

The idea that employees would quit working for Enron if their values were different than those at the company is consistent with the

Multiple Choice

• socialization principle.

• communal culture.

• ASA framework.

• strong cultures.

• mentorship framework.