Academic journal article Journal of Organizational Culture, Communications and Conflict

Organizational Culture, Formal Reward Structure, and Effective Strategy Implementation: A Conceptual Model

Academic journal article Journal of Organizational Culture, Communications and Conflict

Organizational Culture, Formal Reward Structure, and Effective Strategy Implementation: A Conceptual Model

Article excerpt

INTRODUCTION

The increasingly competitive and complex global environment poses increasing challenges to organizations today (Dimitriades, 2005; Lopez, Peon & Ordas, 2004; Raymond, 2003). Because of the downturn in the global economy, traditional rewards such as merit pay, bonuses, and promotions are increasingly in short supply in most organizations. Therefore, organizations might want to consider other things, such as organizational culture, as a means to help them achieve their goals and effectively implement their strategies (Barger,(Barger, 2007).

In order to develop goals and objectives consistent with environmental opportunities and threats, many organizations are devoting an increasing amount of resources to environmental scanning and to the strategic planning process. While many organizations have struggled with the strategic planning process, many others have encountered problems when members of the organization do not support the organization's new goals, objectives, or strategy resulting from the planning process. Kerr and Slocum (1987) identified organizational culture and formal rewards as two key aspects of organizations that encourage and drive members of the organization towards accepting (or rejecting) a new strategy thereby achieving (or failing to achieve) the newly developed organizational goals and objectives.

Once the strategic planning process has created new goals, objectives, and/or strategy for the organization, the traditional approach has been for management to realign policies on raises, promotions, awards programs, and sanctions (Benhalm, 1999; Holbeche, 2009; Kerr & Slocum, 1987). This realignment is usually developed in the human resources department and is often viewed as an essential component of changing the behavior of the organization's members. However, new policies per se are seldom sufficient to change employee behavior because the primary determinant of employee behavior has been shown to be organizational culture (Bushardt & Fowler, 1987; Bushardt, Lambert & Duhon, 2007; Cummings, 1984; Lorsch, 1985; Schwartz & Davis, 1981). While top management can control the organization's formal reward structure, it can only influence organizational culture.

Therefore, given this background, the purpose of this article is to examine the role of the organizational culture/formal reward structure congruence when examined in the light of its interaction with the strength of the organizational culture. In particular, we provide a model showing how this interaction impacts on the effectiveness of organizations achieving their strategic goals and suggest that a high level of organizational culture/formal reward structure congruence results in a more effective strategy implementation than a strong organizational culture alone. Research propositions developed from the model are also presented and the dynamic aspects of the model are discussed to demonstrate how practicing managers may apply the model to achieve desired strategy implementation.

ORGANIZATIONAL CULTURE

In cognitive terms, organizational culture is often broadly defined as the shared values, beliefs, ideologies, and norms held by organizational members that influence their behavior (McKenna, 1992; Sackmann, 1991; Schein, 1992; Schultz, 1995). In behavioral terms, organizational culture can be defined simply as a set of contingencies of reinforcement applicable to members of an organization who share a common knowledge (Skinner, 1971). Organizational learning is defined as the addition to or change of the shared common knowledge of the organization's culture.

"The culture continuously monitors behavior and offers timely rewards through the members of the organization who mete out rewards and sanctions" (Bushardt & Fowler, 1987, pp. 33-34). Arvey and Ivancevich (1980) found that, in most organizations, future rewards tend to be administered to members of a culture on a variable ratio reinforcement schedule while sanctions tend to be administered on a continuous reinforcement (fixed interval or avoidance learning) schedule. …

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