Page 150 - Performance Leadership

Chapter 9 Values and Culture • 139

• Social system stabilizers. Organizational culture and values are
social glue, to keep the organization, or collaboration between
organizations, together.
• Sense-making and control instruments. They guide and shape
the attitudes and behaviors of organization members.

An understanding of an organization’s values provides guidance to
the right strategy. Let’s look at an example. A large nationwide chain
of car dealers needed to improve its cost structure. After years of spec-
tacular growth through a number of acquisitions, it was time to reap
the benefits of economies of scale. The business case for a project to
centralize the back office for various administrative processes showed
a very positive return on investment, which would greatly contribute
to the strategic goal. The company went forward, but after a while
noticed adverse effects. Customer satisfaction dropped and back office
employees were not very effective in working certain back office
processes. The problem was that the project did not support the values
of the organization, which all revolved around catering to many very
specific customer needs, ranging from special car options to specific
financing needs. The back office people were distanced from the oper-
ations, and they were no longer able to be flexible. A new project was
then started. The new project involved a somewhat more expensive vir-
tual back office that local employees could log onto from their loca-
tion; this proved much more successful. Although the cost savings for
the second project on paper looked less attractive, the chance of achiev-
ing the goal was much higher.
This example shows how values guide making the right decisions. The
top-down metric “return on investment” drove the wrong behavior.
Understanding the corporate culture and values helps performance man-
agement in two ways. First, it helps predict dysfunctional behaviors when
implementing new strategic initiatives or performance indicators. Up-front
countermeasures can be taken. Second, it helps to put together initiatives
or indicators to drive and reward the right behaviors from the outset.

Values and Culture Are Not “Soft”
Values and culture are often called soft factors, but in reality they are
not. Values and culture have a very tangible impact on an organiza-
tion’s performance. New employees that join an organization and do