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Organizational culture and performance

Corporates the world over agree that culture and performance are intricately interwoven and yet the relationship is so complicated and not so obvious for executives to decisively act on this important aspect of business. Many research projects trying to find the secret behind some companies’ superior performance over a period of time when compared to not so successful contemporary companies operating in the same industry segments have emphasized the softer aspects of business such as values, beliefs and management philosophy as the underlying difference between the two.

Culture - the organizational context
Culture in the organizational context can be described as the collective behaviours or styles of people, their attitude towards various constituents of business such as customers, co-workers, shareholders and so on and so forth and the common values that they share among themselves, which in fact acts like a binding force between them.

One is actually observing the culture of an organization, when he or she is using words such as hardworking, friendly, professional, ethical etc. to describe the general behaviour of the people. The culture decisively influences the priorities set by the organization, as it is the underlying value system in the organization that emphasizes things like customer focus, innovation, cost reduction, strong alliances, empowerment and control in response to the various business stimuli.

Shaping the culture
Typically, culture building starts with the tenets of conduct valued by the founders and overtime people develop a particular point of view of running the day-to-day operations. Certain traits and patterns of behaviour can be seen to develop based on what is encouraged by leaders at different levels.

Patterns of behaviour typical to a company have their origin in the solutions that worked for the company in the past. Repeated success with a set way of working, gives rise to certain ideas and behaviours which gets embedded in the culture of the company. It is easy to conclude that past performance and success shape organizational culture.

Power of culture
Culture enables people to see the goal alignment and motivates them to higher levels of performance, as shared values make people feel good about the organization and commit their capability and potential sincerely for the company. Such strong culture acts like intrinsic motivator. Empowerment, decisiveness, learning attitude, and team working are some of the attributes of strong organizational culture. Culture at this level is the real driver for superior performance and a definite source of competitive advantage that is very difficult for competitors to emulate. Toyota’s lean production system is as much of tools, systems and processes as it is of the culture of the people there. Many companies have tried to copy the famed production system but none could do it with the same effectiveness. The reason – companies could copy the management systems in place but not the underlying cultural strength rooted deep in the business philosophy of the company – understanding customer value, identifying value stream, one piece flow, pull system and striving for excellence.

Culture and performance - the relationship
Culture and performance have mutually reciprocating relationship. If strong culture helps building high performance company, the past performance and successes shape influence people behaviours which with time become part of the culture.

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