Friday, May 27, 2016

Metrics and Personality Create Organizational Culture

Organizations are not built by official policies but by the implicit knowledge that is transferred by how people are promoted and the personalities of key stakeholders. The total information come from the environment will determine how the employee interprets what it takes to get ahead and the appropriate activities are. When most employees have the same impression you have corporate culture.

Corporate culture is the unwritten rules and expectations of the workplace that move beyond the formal written expectations. Many companies fail because changes in the formal structure are not accepted in the corporate culture and the organization begins to not adapt to its environment. Changing corporate strategy means changing how people are paid and the personalities that influence the outcomes.

It is hard for companies to figure these problems out because 1 + 1 doesn't equal 2. It takes considerable experience and knowledge to understand how these subtle influences work. Yet they may actually be the most important part of how the business runs.

Consider a company that has formal rules but there is an active culture where people are paid for some activities and not for others. It would make sense that everyone from the employee to the senior leadership seek out additional rewards and compensation. If the metrics used to determine performance are misaligned with the organizations mission it is only a mater of time before problems arise.

The same can be said for personalities. One bad apple in a leadership position can poison all the other apples in the bunch. In essence, the perception of that bad apple emulates throughout the company and the department. In the end an entire social network can be formed that has almost nothing to do with what the company is seeking to accomplish.

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