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.
THE SPIN-OFF AND PIZZA HUT
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...
Bibliography: For selected works on corporate culture and its impact on organizational performance, see Harrison Trice and Janice Beyer, The Cultures of Work Organizations (Prentice-Hall, 1993); Joanne Martin, Cultures in Organizations (Oxford University Press, 1992); Edgar Schein, Organizational Culture and Leadership, 2nd ed. (Jossey-Bass, 1992); Jackie Freiberg and Kevin Freiberg, NUTS! Southwest Airlines’ Crazy Recipe for Business and Personal Success (New York: Bard, 1966); James Higgins and Craig McAllaster, ‘‘Want Innovation? Then Use Cultural Artifacts that Support It,’’ Organizational Dynamics, 2002, 31, 74–84; Jeff Kerr and John Slocum, ‘‘Managing Corporate Cultures through Reward Systems,’’ Academy of Management Executive, 1987, 1, 99–108; and Jennifer Chatman and Karen Jehn, ‘‘Assessing the Relationship Between Industry Characteristics and Organizational Culture: How Different Can They Be?’’ Academy of Management Journal, 1994, 37, 522–553.
Barry Mike is vice-president, internal communications, for the investment management ﬁrm T. Rowe Price. He previously spent seven years as director, internal communications at Pizza Hut. During his tenure there, he helped communicate his way through three presidents, one spin-off, one major restructuring, a downsizing, and a major culture shift. He has also worked closely during his career with the chairmen of Digital Equipment Corporation and Bell Atlantic. Mike’s educational background includes two master’s degrees as well as completion of his course work for a Ph.D. in Sociology from the University of Pennsylvania. In May 2001, he received his M.B.A. with honors from the Executive M.B.A. program at the Cox School of Business at Southern Methodist University (SMU). John W. Slocum Jr. holds the O. Paul Corley professorship in management at the Cox School of Business, Southern Methodist University. He serves as the co-director for SMU’s Corporate Director’s Institute and is chairperson for the management and organizations department at the Cox School. He is the author of more than 24 books, over 130 articles, and has worked as a consultant in the human resources area for many Fortune 500 companies, including Lockheed Martin, IBM, and Aramark, among others. Currently, he is co-editor of the Journal of World Business, Journal of Leadership and Organizational Studies and associate editor of Organizational Dynamics.
330 ORGANIZATIONAL DYNAMICS
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