Changing Culture at Pizza Hut

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Changing Culture at Pizza Hut and Yum! Brands, Inc.

The concept of corporate culture has captured the imagination of executives for years. For executives struggling to manage organizational change, understanding their organization’s culture has become paramount before undertaking such a change. They realize that significant strategic and structural realignment cannot occur if it is not supported by the organization’s norms and values. Organization cultures are created by leaders and, therefore, one of the most important functions of a leader is the creation, management, and sometimes the destruction of a culture. An organization’s culture reflects the values, beliefs and attitudes of its members. These values and beliefs foster norms that influence employees’ behaviors. Organizational cultures evolve imperceptibly over years. Unlike mission and vision statements, they are never written down, but are the soul of an organization. Cultures are collections of unspoken rules and traditions and operate 24 hours a day. They determine the quality of organizational life. Cultures determine much of what happens within an organization. While managers are aware of their organization’s culture(s), they are often unsure about

how to influence it. If cultures are powerful influencers of behaviors, they must be created. One way to analyze shared assumptions is by exploring top management’s answers to the following questions: 1. How do people in this organization accomplish their work? 2. Who succeeds in this organization? Who doesn’t? 3. How and when do people interact with one another? Who participates? 4. What kinds of work styles are valued in this organization? 5. What is expected of leaders in this organization? 6. What aspects of performance are discussed most in evaluations? The purpose of this article is to share with you how senior leaders at Pizza Hut in particular and at Yum! Brands, Inc. (Pizza Hut, Taco Bell and KFC) in general answered these questions and were able to create a new culture after the restaurants were spun off from PepsiCo Inc. Culture change does not occur in a vacuum. It is an integral part of the company’s fabric. To change a company’s culture, rewards systems, leader behaviors, and organizational designs must be created

Acknowledgments: This research was sponsored by a research grant from the OxyChem Corporation. The primary focus of this article is Pizza Hut and how Pizza Hut both generated and experienced the culture change at Yum! It is based, primarily, on the thoughts, reflections and opinions of senior managers who experienced and helped communicate the changes discussed in this article. The authors would like to acknowledge the constructive comments made by Steve Arneson, Leon Avery, Chris Koski, Mike Rawlings and Don, and Leslie Ritter. 319

to support the change, as the experience of Pizza Hut demonstrates.

Started in 1958 by the Carney brothers, Dan and Frank, Pizza Hut played a major role in turning pizza from an Italian specialty into a mass-market, mainstream food. Pizza Hut had developed a reputation for and commitment to product quality that was ‘‘built into the bones’’ of restaurant managers, and with it, great pride in the brand. By the mid 1990s, Pizza Hut had become a powerful brand, with some 8,000 U.S.-based restaurants, 140,000 employees and over $5 billion dollars in system-wide sales. One internal Pizza Hut market researcher estimated that over 90 percent of American pizza eaters had tried a Pizza Hut pizza. One of the key drivers of the success of Pizza Hut was PepsiCo. Along with KFC and Taco Bell, Pizza Hut was and had long been part of the PepsiCo Restaurant Division. PepsiCo had brought its national marketing muscle to the Pizza Hut brand, raising sales and increasing brand visibility. But it had also brought something that had a major impact on Pizza Hut: the PepsiCo management system. Even before Jack Welch made General Electric Co.’s...
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