At its core, I agree with the statement “The best-performing
companies worry less about performance and more about their
organizational capabilities” (Bititci, 2015). When it comes to deciding
what to “worry” about, I do agree it makes more sense for companies
to focus less on the numbers themselves, and more on strengthening
capabilities, especially operational and learning capabilities.
I do think that organizational capabilities and performance are
intrinsically linked, which perhaps isn’t captured fully in this quote. In
our textbook, I think Figure 8.1 puts it better; “Organisational
capabilities and culture determine how people interact with
processes that deliver performance” (Bititci, 2015, pp. 143). There is
a cause-and-effect relationship between culture, organizational
capabilities, and performance. In the prompt’s example, a
participative workplace means that employees are engaged and
encouraged to share and pursue ideas. This type of culture creates a
strong learning capability, which means that companies are able to
leverage this employee knowledge and apply it, ultimately increasing
performance measures. So, by strengthening culture and capabilities,
companies should see a corresponding increase in performance too.
Company A’s organizational culture is lacking, as evidenced by losing
15% of their employees last year, minimal investment in training,
development, and advancement, and difficulties in keeping up their
compensation levels. Because of these, employees do not feel
valued, and are leaving for better opportunities. Looking at
capabilities, we see that Company A has outdated technology, and
instead has twice as many baggage handlers, check-in attendants,
and customer service specialists as they really need, resulting in large
personnel costs. While Company A is doing well financially, with 19%
of the market, all-time high revenues, and excellent customer
satisfaction, it seems that their culture and capabilities might actually
be capping their output and performance. By remedying these issues,
Company A could have even greater financial and market success.
Company B does not have a cohesive organizational culture. The
President and IT Manager seem to be the ones spearheading new
initiatives, like the new partnership with the software company. They
are embracing innovation and seem really excited about the
company’s future, even if the President’s ideas are a bit extreme.
However, they aren’t effectively communicating their vision or
gaining employee buy-in, as the sales team is “complacent” with the
status quo, the operations and maintenance crew has experienced
substantial turnover, and there is not adequate transfer of knowledge
from those who are most experienced, who will be retiring in the
near future. Furthermore, Company B uses an outside HR provider,
and does not appear to have any formalized training, development, or
advancement plans. The lack of a unified and energized culture is
limiting Company B’s operational, learning, and dynamic capabilities,
as on-the-ground employees aren’t motivated to explore solutions or
adapt to new ways of doing things. Subsequently, Company B’s
financial performance is not very good, with a 5% decline in seat
occupancy over the last two quarters and relatively flat volume.
References
Bititci, U. S. (2015).
Managing Business Performance
. Wiley
Professional, Reference & Trade (Wiley K&L).
https://wileyplus.vitalsource.com/books/9781119025696
