Corporate culture represents the professional values a company adopts that dictate how it interacts with employees, vendors, partners and clients. The mission strategy of an organization is a summary of how the company perceives its role and the beliefs it uses to achieve its goals. Because the corporate culture is a driving force in how the company does business, it has an impact on developing business strategy.
Risk
The corporate culture dictates how much risk an organization is willing to take when it comes to research and development, client interaction, investing in equipment and any other activity that involves risk. If the corporate culture is one that promotes environmental responsibility, that will impact the risks that the company will take when developing new products. Assessing risk based on boundaries established by the company’s beliefs and sense of responsibility has an impact on corporate planning.Employee Retention
When the company develops a policy of withholding information from employees, that can start to develop a culture of distrust among the staff. The ability to retain employees can be weakened when the promises made by the company in regards to company growth and employee opportunity are compromised by a lack of trust. Allowing the atmosphere of mistrust to become a part of corporate culture makes it difficult to execute employee retention plans as employees tend to not believe what the company tells them.
Incentive Pay
Incentive pay is something that employers use to improve productivity and maintain employee morale. But incentive programs need to be monitored and administered carefully to avoid creating a culture of expectation. If an incentive pay program is set up to reward employees that do not perform, that creates a dangerous culture precedent. For example, a profit-sharing program where every employee gets a bonus check regardless of performance will diminish the motivating effect of the program and cause employees to expect the bonus without having to perform even at baseline expectations. By instituting a system of checks that forces employee to reach certain performance levels before being able to take part in an incentive program, you help to create a culture of performance expectations. This makes the investment of a profit-sharing program viable and makes it into a motivational tool.
Focus
A corporate culture that each employee subscribes to helps to create focus among the staff. When employees abide by the company’s beliefs and values, it gives a unified impression to vendors, clients and partners. The company can then create a business strategy knowing that the entire organization will apply the guidelines in a uniform manner and improve the chances that a strategy will succeed.
The Impact of Corporate Culture on Business Strategy
