Promoting a Positive Organizational Culture

Prof. Brian Blume, Ph.DUniversity of Michigan, Flint

School of Management

What factors separate Successful vs. Unsuccessful

Schools?

1. Make the business case for “people first” cultures

2. Explore the evidence which isolates the characteristics of high-commitment, “people first” cultures

3. Challenge you: How can you help create a higher performance culture at IAF?

Session Goals: Inform, Illuminate &

Inspire

Culture is the set of values, beliefs, understandings, and ways of thinking that are shared by members of an organizationCulture serves 2 basic functions:

internal integration to integrate members so they develop a collective identity external adaptation to help the organization meet goals and deals with outsiders by responding rapidly to customer needs

What is Culture?

Exercise: Steak N Shake Restaurants recently completed an in-depth study comparing their stores that rank in the top quartile in sales and profitability and those stores that rank in the bottom quartile. What factors were consistently NOT different across stores?What consistent predictors or indicators of high financial performance did they find?

What is an Organization’s

Most Important Asset?

What DID differentiate the stores on performance?

(1)High customer service – measured by external raters

(2)High employee engagement – measured by low turnover and surveys

(3)Store manager (drives the first two) (4)Franchise ownership

The Steak N Shake Lessons

The central business challenge is recruiting, motivating, and retaining committed managers and employeesEngaged / Committed employees:

Work harderWork smarterAre better citizensLeave less and attract others like them

“If people are our most valuable asset, I say we sell them.” Jerry Seinfeld

People are an Organization's Most Important Asset

100 “Best To Work for” vs. Overall Stock Market 1998-

2007

1. Commitment to Talent Development 2. Decentralized decision-making3. Reduced status barriers4. Extensive sharing of information5. Relatively high and performance-

based pay 6. Employment security 7. Selective hiring using effective

methods

Seven Key Management Practices (Pfeffer & Veiga,

1999)

What if we train all these people and they leave? What if we don’t and they stay?” Sends signal of investment Creates environment of growth and ideas and learningDevelopment Means More Than Training

Candid feedback & coaching Mentoring from someone “in the loop”Job experiences

Commitment to Talent Development

Incredible motivational power of control & ownership & Commitment Utilize Self- managed teams to increase responsibility & accountability to peersDiscretion to help students learn and do what is rightWhat decisions could someone else make?

Decentralized decision-making

Symbols- language and labels, physical space, dressMinimize wage differentials across job levelsPerceptions of Fairness influence behaviorLook for group and organizational rewards that prompt sense of mutual and shared interest

Reduction of Status

Differences

Key to developing high-trust cultureDo you know how the organization is doing: financial performance, strategy, operational goals, student outcomes?Employees desire

Prompt and ample feedbackSome form of input – the opportunity to be heard

Sharing information

Surprise: Relatively high pay yields attraction and retention (Obviously, not really a surprise)Be as transparent as possible with performance criteriaIndividual incentives can work in the right context, but may be tricky and dysfunctional Look for group and organizational incentivesHigher pay can potentially lower labor costs (via higher productivity & lower turnover)

Relatively High Pay based on Organizational

Performance

The case for it includes: encourages innovation discourages layoff thinking incents more careful hiring creates longer-term perspectives

Does not mean keep low performers -- but all leavers go with respect and dignity Challenges conventional wisdom

Top employees ask: Is there a place for me to be promoted to within the organization?

Employment Security

How to attract more applicants? Need to be more than great place to work – need to be known as great place to work

Hire for fit – Exceptional results with ordinary people.

How do you determine fit? What values & skills are key to the position & organization?

Broaden input on hiring decisions (e.g., fellow employees, customers) Understand the evidence on selection predictors

Selective Hiring

1. Commitment to Talent Development 2. Decentralized decision-making3. Reduced status barriers4. Extensive sharing of information5. Relatively high and performance-

based pay 6. Employment security 7. Selective hiring using effective

methods

How would you rate IAF on these

Practices? Why?

Must begin by questioning basic assumptions of thinking behind current behavior and practicesCulture should align with the vision, mission, strategies and goals of the organizationPolicies and procedures should be consistent with desired culture changeInvolve employeesCulture change requires a lot of time and effort to overcome resistance

Lessons from Culture Change