- March 14, 2013
- Posted by: essay
- Category: Term paper writing
Modern approaches in management recognize the crucial role of organizational culture in the process of achieving organizational goals. Researchers (Daft, 2009) have proved that there is a strong correlation between outcomes, performance and organizational culture. Such factors as high organizational and financial effectiveness correlate with such manifestations of organizational culture as humanistic, encouraging, high achievement and low avoidance cultures (Rhoades & Covey & Shepherson, 2011). Strong organizational culture and values also allow to reduce the number of dissatisfied workers and employees with negative attitude to work. Leadership and motivation also follow the dynamics of organizational culture.
Thus, companies focusing not only on stakeholder value and financial success, but also cultivating their values, beliefs and mission and delivering these values to the employees are performing better in the short and long run. The purpose of this assignment is to consider the relationship of performance and culture within organizations and to analyze the case of a related organization (Walmart) with regard to shaping a high performance culture.
1. Organizational culture
According to Schein, organizational culture can be defined as “a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems” (Shermerhorn, 2009). Strong organizational culture based on a consistent set of values allowing organizations to improve performance and motivation, loyalty and commitment, increases competitiveness of the organization and drives the company towards achieving its strategic goals. Companies with strong culture tend to be more adaptive, increase revenues and create value for investors at a much faster rate than companies with average or weak organizational culture.
Key characteristics of a healthy organizational culture are (Flamholtz & Randle, 2011):
ïƒ¼ Pride of the organization
ïƒ¼ Communication and teamwork
ïƒ¼ Good employee relationships
ïƒ¼ Orientation towards achievements
ïƒ¼ Effective supervision and leadership
ïƒ¼ Awareness of costs and orientation towards profits
ïƒ¼ High level of consumer satisfaction
ïƒ¼ Education, development and innovations
2. Culture and performance
Strong culture should not be regarded as the opposite to performance-based (and revenue-based) approach. Both short-term perspective (developing strong performance) and long-term perspective (developing strong culture) are important for reaching organizational success. Moreover, in the long-term run companies with strong culture outperform competitors which do not manage their culture (Rosenthal & Masarech, 2003). At the same time, managing culture can not (and should not) replace strategic planning and goal setting. Only those organizations which manage to combine intentionally managed culture and implementation of sound business strategies can reach brand integrity (Rosenthal & Masarech, 2003). According to Exhibit 4 presented by Rosenthal and Masarech( 2003), companies focused both on values-based culture and business performance reach sustainable success through generating bottom-line results and inspiration.
Naturally, both performance-based and value-based approaches have to be implemented into action. There can be various methods of merging these approaches and translating them into particular set of strategies. An impressive model for detecting directions of organizational development and improving performance measures is Denison’s culture model (Fig. 1), which includes such dimensions as organization’s consistency, involvement, adaptability and mission.
Fig. 1. Expanded Denison’s culture model
While Denison’s model allows to identify factors and directions for improving strategy and vision, there are several methods of implementing these decisions. One of them is well-known balanced scorecard approach. According to this approach, there are four perspectives of vision and strategy: customer perspective, internal business processes, financial perspective, and growth/learning perspective (Niven, 2006). For each of these perspectives, objectives, measures, targets and initiatives should be determined (Fig. 2).
Fig. 2. Balanced scorecard approach (Niven, 2006)
The key characteristic of the balanced scorecard method is that it allows to translate strategy and vision into particular actions, and thus allows to improve organizational performance and at the same time empowers the organization to reach its strategic goals. More than 50% of S&P 500 companies apply various forms of balanced scorecard to merge performance and values (Thomson & Baden-Fuller, 2010).