Cultural Controls

In Management Control Cultural controls or mutual-monitoring tap into� social pressure and group norms and values. Cultural controls are effective because members� of a group have emotional ties to one another. Cultures are built on shared traditions;

• norms;
• beliefs;
• ideologies;
• attitudes;
• ways of behaving, etc.

Five ways to shape culture:

• Codes of conduct
  • Codes of ethics; corporate credos, mission statements, etc.;
  • Formal written documents with broad statements of corporate�values, commitments to stakeholders, and the ways in which�top management would like the firm to function.
  • Fundamental guiding principles of the company.
• Group-based rewards
  • e.g., bonus, profit-sharing, employee ownership of company stock;
  • Cultural controls rather than results controls because the link between individual performance and rewards is weak.
• Intra-organizational transfers
  • Improve the socialization of individuals in an organization and�inhibit the formation of incompatible goals and perspectives;
  • Improve identification with the organization as a whole as�opposed to subunit identification.
• Physical and social arrangements
  • e.g., office plans, interior decor, dress codes and vocabulary, etc.
• Tone at the top
  • Top management statements must be consistent with the culture�they are trying to create, and importantly, their behaviors should�be consistent with their statements.