Promoting a Positive Organizational Culture Prof. Brian Blume, Ph.D University of Michigan, Flint

1. Promoting a Positive Organizational Culture Prof. Brian Blume, Ph.D University of Michigan, Flint School of Management

2. What factors separate Successful vs. Unsuccessful Schools?

3. Session Goals: Inform, Illuminate & Inspire • Make the business case for “people first” cultures • Explore the evidence which isolates the characteristics of high-commitment, “people first” cultures • Challenge you: How can you help create a higher performance culture at IAF?

4. What is Culture? • Culture is the set of values, beliefs, understandings, and ways of thinking that are shared by members of an organization • Culture 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

5. What is an Organization’sMost Important Asset? 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?

6. The Steak N Shake Lessons What DID differentiate the stores on performance? • High customer service – measured by external raters • High employee engagement – measured by low turnover and surveys • Store manager (drives the first two) • Franchise ownership

7. People are an Organization's Most Important Asset • The central business challenge is recruiting, motivating, and retaining committed managers and employees • Engaged / Committed employees: • Work harder • Work smarter • Are better citizens • Leave less and attract others like them “If people are our most valuable asset, I say we sell them.” Jerry Seinfeld

8. 100 “Best To Work for” vs. Overall Stock Market 1998-2007

9. Seven Key Management Practices (Pfeffer & Veiga, 1999) • Commitment to Talent Development • Decentralized decision-making • Reduced status barriers • Extensive sharing of information • Relatively high and performance-based pay • Employment security • Selective hiring using effective methods

10. Commitment to Talent Development 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 learning • Development Means More Than Training • Candid feedback & coaching • Mentoring from someone “in the loop” • Job experiences

11. Decentralized decision-making • Incredible motivational power of control & ownership & Commitment • Utilize Self- managed teams to increase responsibility & accountability to peers • Discretion to help students learn and do what is right • What decisions could someone else make?

12. Reduction of Status Differences • Symbols- language and labels, physical space, dress • Minimize wage differentials across job levels • Perceptions of Fairness influence behavior • Look for group and organizational rewards that prompt sense of mutual and shared interest

13. Sharing information • Key to developing high-trust culture • Do you know how the organization is doing: financial performance, strategy, operational goals, student outcomes? • Employees desire • Prompt and ample feedback • Some form of input – the opportunity to be heard

14. Relatively High Pay based on Organizational Performance • Surprise: Relatively high pay yields attraction and retention (Obviously, not really a surprise) • Be as transparent as possible with performance criteria • Individual incentives can work in the right context, but may be tricky and dysfunctional • Look for group and organizational incentives • Higher pay can potentially lower labor costs (via higher productivity & lower turnover)

15. Employment Security • 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?

16. Selective Hiring • 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

17. How would you rate IAF on these Practices? Why? • Commitment to Talent Development • Decentralized decision-making • Reduced status barriers • Extensive sharing of information • Relatively high and performance-based pay • Employment security • Selective hiring using effective methods

18. Lessons from Culture Change • Must begin by questioning basic assumptions of thinking behind current behavior and practices • Culture should align with the vision, mission, strategies and goals of the organization • Policies and procedures should be consistent with desired culture change • Involve employees • Culture change requires a lot of time and effort to overcome resistance