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DOES A COMPANYS CULTURE AFFECT ORGANIZATIONAL PERFORMANCE AND EFFECTIVENESS?

Over the past few decades, both academics and practitioners have spent time focusing on the issue of corporate culture and whether a companys culture does in fact impact its overall performance and effectiveness. Experiential literature and research meant to establish a direct relationship between organizational culture and effectiveness can be traced back to earlier studies addressing culture and change. In 1983, in a study of organizational change, R.M. Kanter (The Change Masters, Innovation for Productivity in the American Corporation), demonstrated how companies with progressive HR management practices outperformed those with less progressive practices. In 1984,using survey-based measures, Daniel R. Denison (Corporate Culture and Organizational Effectiveness), demonstrated that apparent involvement and participation on the part of a companys employees predicted current and future financial performance. Denison also suggests that culture can be studied as an integral part of the change process and that certain cultural traits may be utilized as predictors of an organizations performance and effectiveness (Toward a Theory of Organizational Culture and Effectiveness By Daniel R. Denison and Aneil K. Mishra - Organization Science, Vol. 6, No. 2, March-April 1995). In illustrating a theory of the relationship between culture and effectiveness, there are four major cultural traits that are typically examinedinvolvement, consistency, adaptability and mission. Involvement and consistency focus mainly on the organizations internal composition and mission while adaptability and mission focus on the correlation between the organization and external environmental factors. However, despite the attention being given to organizational culture in both academic and business management literature over the past several decades, it continues to be an area that has not yet been fully researched and understood. Organizational culture consists of shared beliefs and values established by the organizations leaders and then communicated and reinforced through various methods, ultimately shaping employee perceptions, behaviors and understanding. Simply speaking, a

companys structure and design can be viewed as its body, and its culture as its soul. Because industries and situations vary significantly, it would be difficult and risky to propose there is a one size fits all culture template that meets the needs of all organizations. Nonetheless, research does propose that if an organizations culture is to improve its overall performance and effectiveness, its culture must be strong and provide a strategic competitive advantage and its beliefs and values must be widely shared and firmly upheld. Arguably, an organization that develops and maintains a strong organizational culture can certainly realize many benefits such as: o Enhanced mutual trust and cooperation. o Fewer disagreements and more efficient decision-making processes. o An informal control mechanism. o Facilitation of open communication. o A strong sense of identification. o A shared understanding. o Assisting employees in making sense of their behaviors by providing justification for behaviors. In closing, it is worth mentioning that regardless of whether or not significant research and supporting evidence exist to establish a definitive link between culture and effectiveness, valuing different viewpoints and styles as well as developing concrete ways to facilitate organizational learning from differences can still prove to be highly beneficial in maximizing organizational structure, procedures and processes. Professional Pointer: The personal example of leaders can send a powerful message to employees. Strengthening that example through education and coaching will help others adopt desired behaviors and values.