A Notion of Corporate Culture and Its Impact on Organizations Performance - Literature review Example

Strategy management Place A notion of corporate culture and its impact on organization’s performance It is increasingly recognized that corporate culture impacts organizational success. Defined as a consistent and observable pattern of behavior in an organization, it is manifested almost everywhere within such organization and its artifacts (Flamholtz & Randle, 2011). At a more visible level, corporate culture is the style of an organization that all employees should be encouraged. Though it is not the same as organizational strategy or structure, its patterns are sometimes used interchangeable as they play an important role within an organization along with the competitive and regulatory environment that shapes employees’ behavior (Kotter, 2008). It is also shaped by such incentives as monetary and non-monetary rewards and is a process of the collaborative actions that create shared awareness and understanding out of different individuals’ perspectives and varied interests (Watkins, 2013). Corporate culture is also defined as the social control system where focus is made on the promoting and reinforcing of the right thinking and behavior as the main drivers of organization success. Sun (2008) states that culture within an organization plays essential role in the everyday operations as it refers to the pattern of beliefs, values and shared basic assumptions that a group or a team learns through experience of solving common problems. Corporate culture is also a sort of collective programming of the mind that acts in the same direction and for reaching the same goals. Since culture influences on people behavior, it is important to support the idea that organizational development is able to promote humanistic values and it should be combined with organizational culture in order to make employees work efficiently (Hofstede, Hofstede & Minkov, 2010). The functions of corporate culture create the feeling of identity among the employees and their commitment to the certain organization. It is also suggested that these functions create a competitive edge that enables the members within an organization to better understand the acceptable behavior and social system stability (Lukic, Dzamic, Knezecvic, Alcakovic & Boskovic, 2014). In using different sources and processes to guide behavior and change, corporate culture plays the indirect role that makes an impact on behavior utilizing reasonable managerial tools, such as goals, tasks, strategic directions and decisions making that are designed to do things. Finally, the role of corporate culture is in the influence it has on the running of a certain organization. Shahzad, Luqman, Khan and Shabbir (2012) state that development of strong culture in the organizations is recommended by managers in order to improve the performance of the employees and the organization. Where the greater part of the employees holds the same beliefs and values of the organization, they are able to create a strong culture. It is also an advantage for an organization to have strong corporate culture as it best contributes the company’s needs through innovation and thus is a valuable asset. However, when strict rules are imposed to the employees of the organization, they create the diversity between people’s personal objectives and can promote in creating of a weak corporate culture. One of the advantages of a strong corporate culture is that it manifests itself as a driver for improvement of organizational performance and it is able to enhance the self-confidence and commitment of employees. It is also able to reduce the job stress and leads to the improvement of ethical behavior of the employees (Van den Berg & Wilderom, 2004). Xiaoming and Junchen (2012) argues that strong organizational culture has a positive impact on the employees’ performance and while every individual has different culture and norms and values, the common adoption of corporate culture is helpful for the job to be executed efficiently. Positive development for the organization is easier to reach whether there is a common approach of everyone within a company. There is also a limitation of a strong corporate culture connected with the difficulty of changing it. While an organization has certain values, which are widely shared, once the company decides to change them, it may face numerous challenges. The employees should learn how to adhere new rules and be able to adopt changes as soon as possible, thus creating certain limitation (Rudani, 2013). Certain institutionalized behavioral norms are the most hard changeable; hence, corporate culture negatively impacts and discourages employees. In addition, despite the words of a new mission are glorious, they may not make employees believe in the new values, which determine the commitment of employees to the company’s goals. Ethical dimension in strategic management While there is an increasing research that suggests that ethics and corporate social responsibility can be profitable, it is not easy to understand whether these dimensions are in the strategic ways (Husted & Allen, n.d.). Some authors argue that ethics and social responsibility positively impact business performance and certain conditions call for the corporate responsibility to be a strategic investment by the company that creates competitive advantage for an organization. While the term strategy refers to art of winning at war, corporate strategy is focusing on making plans to complete successfully in business. Determination of the long-term goals and objectives, the adoption of the course of action and the allocation of the necessary resources cannot exist without ethics and socially responsible aspects. Hence, organizational strategy and ethics are the integral parts of corporate success. Though the strategic management literature frequently asked about the problems of representation and social behavior, top managers are judged by their ability to meet strategic goals along with ability to meet social needs (McWilliams & Siegel, 2000). Elms, Brammer, Harris and Phillips (2010) state that ethics strategy increases and improves company’s ability to deal with ethical problems and the central to this strategy part is the understanding of the main values of the company’s culture. These values determine how successful ethics strategy can be and how to align it to the company’s culture. Since the collapse of Enron, the concepts of corporate governance, social responsibility and business ethics have emerged as the main for the business success. Taysir and Pazarcik (2013) consider these trends to become popularized since 1990s as companies have realized the connection between profit and meeting of social needs. Moreover, it is the predisposition of the current effective business to build a corporate strategy on a foundation of ethical reasoning and putting ethics in its right place at the center of discussions about the strategic management (Elms, Brammer, Harris & Phillips, 2010). Thus, such notions as value to customers, quality improvement rates, corporate culture and environmental problems are the main non-financial issues that top managers should consider. Hence, strong ethical policies would not only uphold the law but will also add great value to the brand, whereas the failure to make a good thing may cause social, economic and environmental damage. That means that ethics should be embedded in the organizational strategy and decisions making processes. It is, however, not easy task to incorporate ethics and social responsibility into the strategy of a particular organization due to the poor marketing performance and potential costs of legal violations and damaging publicity. Besides, many managers consider that as marketing ethics and social responsibility are not viewed as organizational performance issues, they cannot be included into strategic planning process (Ferrel & Hartline, 2012). Besides, there are different considerations of every single individual about ethics at the workplace. However, in order to take socially right decisions and sustain high reputation of the organization, ethics and social responsibility aspects should be included into companies’ strategic management. Many present companies are implementing the ethical doctrines as a part of their strategic management, focusing mainly on compliance-based ethics programs the goals of which are to prevent, detect and punish any legal violations. However, ethical aspect into strategic management does not imply to only provision to employees a rule book that will address the underlying problems. Rather, companies should foster the climate that would encourage exemplary behavior and go beyond the punitive legal compliance stance (Paine, 1994). Instead, without an active management support for ethical practice, strategic management will not succeed in reaching some employees’ reaction to contextual forces. Such forces are dictated by the concept of ethics as a driving force for the integrity of strategy. However, according to Haberberg and Rieple (2008), no considerable evidence reveal the real impact of companies’ ethical behaviors on their financial performance. Though much is said about the social responsible performance benefits the society, pursuing corporate ethical rules makes decisions of companies to be poorer while managers are target to guide them and thus think of less profit. Besides, ethics within strategic decisions harmfully impacts companies as managers, who may be not experts in certain areas, should still consider about the abiding of social responsibilities within their strategies. Thus, in promoting educational programs within certain strategic plan it can create certain problems for the managers who are effective experts in other area of business. The role of power and politics in the strategic management process In reaching of better strategic outcomes, managers should be able to influence the behavior of employees. Hence, a leader or manager should impact on the decision making process, the allocation of resources in order to bring organization to its strategic intent. For that reason, power is the critical notion in enabling managers to make an impact on own employees, other managers and all the stakeholders within and outside an organization (Carter, Clegg & Kornberger, 2010). The role of power for stakeholders is determined by the extent of their influence on the decisions, events and actions that will lead to the desired outcomes. While the structures of power are horizontal and vertical distributions, it affects behaviors since actors are able to use their desire and will in the decision-making. Mitsyhashi and Greve (2004) state that power is important in strategic change production since the decisions that change organizational strategies and structures come under the influence of the internal actors with the vested interests and the implementation that involve mobilization and deployment of resources. It is also widely acknowledged (White, 2004) that power is the formal authority in the management process and it includes power derived from ability to offer rewards, power taken from offering punishment, the expert power, power associated with the personality, power achieved from the ability to sort information in the most efficient way, control of resources, power gained from the ability to impact the decisions and actions and power of control of decision making processes. Since organizational politics are the activities where managers are involved in order to enhance their power, political skills are necessary to reach objectives and to prevent others from taking power. These are the specific tactics that managers use to enrich their power (Buchanan & Badham, 2008). Despite the negative pattern of the politics term for many people, the positive force in it is that effective managers engage in politics in order to achieve support needed for changes. Careful examination allowed choosing developing the formulation of political skill of interpersonal influence, networking ability and apparent sincerity. Politically skilled people are able to convince other and are experts to influence people around them. Interpersonal influence is about adapting and calibrating of their behavior to different conditions. While individuals with political skill are able to identify and develop the diverse contacts and networks of people, they tend to hold assets those valuable and necessary for the successful objectives. Political competence as another skill appears to others as the high levels of integrity and is crucial when the influence attempts are going to be successful (Ferris, Treadway, Perrewé, Brouer & Douglas, 2007). Conflict is the integral part of a business environment since goals of different stakeholders are incompatible. Hence, it is important for managers to develop skills that would help them to manage conflicts effectively and affect the organizational performance in the most effective way. Scarce resources are one of the sources of conflict and it refers to the acquiring, developing and using f the resources for organizational effectiveness. According to (Ferris, Davidson & Perrewe, 2005) different stakeholders set different goals and time horizons within an organization that can differ from each other. Therefore, compromise and collaboration are the main actions that are possible when each party is concerned about the goal accomplishment and wants to handle it in order to satisfy these goals. Conflicts are sometimes resolved when management changes an organization’s structure or culture. Besides, such strategies as emphasizing on the superordinate goals and focus on the problem and interests can encourage integrative bargaining and thus resolve the organizational conflict. In the present business environment and strategic management, the increased integration between human resources and business strategy is one of the most important demands (Sluijs & Kluytmans, n.d.). Human resources are the main asset for an organization and lead to the success. Hence, such social system should not be underestimated within strategic process. However, while there is an absent of power to manage human resources, the implementation of organizational goals will fail. In addition, when managers increase their power, they tend to become less inclined to different adjustments I conducting a business. Durel and Durel (2005) consider that policies, programs and practices, which have proved themselves in the past, become more limited and thus lead to the assigned strategies creation where no careful evaluation of the organizational effectiveness is done. References Buchanan, D. and Badham, R. 2008. Power, Politics and Organizational Change: Winning the Turf Game, SAGE Ltd. Carter, C., Clegg, S. and Kornberger, M. 2010. Re-framing strategy: power, politics and accounting, Accounting, Auditing & Accountability Journal Vol. 23 No. 5, Emerald Group Publishing Limited, , [pdf] Available at: http://martinkornberger.com/includes/10_reframing_strategy.pdf [Accessed on May 3, 2015]. Durel, J. and Durel, A. 2005. Strategic Planning: Essential Questions Before You Start, Quality Management to a Higher Power Elms, H., Brammer, S., Harris, J. and Phillips, R. 2010. 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