Practices, processes and performance
D. Tosti
What people do is sometimes less important than how they do it, especially over the long
term. Products, services, and technology – even unique, first-class ones – often give
organizations a short-lived edge over their competition, at best. Sustained success
depends on an organization’s people – on the way those products and services are
delivered.
Organizational values and practices
Values describe “the way we do things around here” or the customs, habits and practices
of people in an organization – what they consider important about their work, and the way
they treat each other. Some writers have referred to a company’s set of business values
and principles as the organization’s culture. Organizational culture is not so much what
people do – the tasks they perform – as the way they do it – how they behave as they
perform those tasks. It refers primarily to behavior patterns that people tend to bring to
any task or decision.
Changing organizational values and practices, then, has the potential for greater longterm, sustained benefits in many organizations than changing products, services, or
delivery methods. Kotter and Heskett (1992), Corporate Culture and Performance,
suggest that this potential is very real. In a study of over 20 firms in 22 U.S. industries,
they found strong evidence that an organization’s business culture is a key factor in its
ability to sustain success in a changing environment.
Much of the early literature on business values focuses on categorizing types of business
cultures and describing them, suggesting that they are difficult and perhaps impossible to
change. It is important to remember that business values – whether or not the
organization has clarified and communicated them – describe behavior – it is the way
people in the organization tend to behave as they go about their work.
Changing business values, then, is changing behavioral practices. And the technology of
behavior change is not new. It is important to emphasize that we are discussing business
values – values that reflect how an organization wants to conduct its business – not
people’s personal values about religion, home, family, or personal relationships.
If business values describe behavior, why does it appear to be so much more resistant to
change than most other kinds of work behavior? There are at least two key
characteristics of behavior patterns that represent an organization’s business values:
The relationship to results may not be clear. People usually know how their task
behavior affects the results of their work. They often do not see how their approach to the
work, or their treatment of their co-workers, affects results. In many organizations
business values have developed over time. For example, in some organizations a value
of competitiveness develops, which affects the way people work with other departments.
In almost every case, the resultant working relationships are less effective than those
guided by a value of cooperation or partnering. The results of the individual departments
– as well as the overall results of the entire organization – are usually less than they
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could be if groups cooperated better. But that connection is not always visible to people
in the organization, who are simply behaving “the same way everyone else does.”
Thus if someone is asked to change specific task-related behaviors – e.g., organize the
information in a business case differently, or assemble equipment in a new sequence –
the change will not usually fly in the face of prevailing norms. If someone is asked to
work differently with others (e.g., consult widely in business case preparation, or share
equipment assembly tasks) it may violate others’ expectations about how things have
“always been done.”
The model below provides a framework for examining the role of values in an
organization and their relationship to results and other facets of the organization.
Strategy
MISSION/VISION
GOALS
Business Values
VALUES
OBJECTIVES
PRACTICES
TASKS
BEHAVIORS
RESULTS/
OUTCOMES
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The model describes two interdependent paths for providing direction – for helping
people move from the global statement of an organizational mission and vision to specific
organizational results:

Strategy: The left-hand path emphasizes what needs to be done: the broad
strategic goals the organization will work toward; the objectives that groups and
individuals must accomplish to carry out those strategies; the activities that must
be performed to meet goals and objectives.

Business Values: The right-hand path emphasizes how things should be done:
the values implied by the mission and vision; the practices that reflect those
values; the specific, day-to-day behaviors that represent the values and practices
to others as people go about their work.
Organizational Alignment
The key implication of this model is that any significant organizational change – whether
driven by strategy or business values or both – must take into account organizational
alignment. Organizational alignment consists in compatibility between the strategic and
business value “paths,” as well as consistency within them. The values held in the
organization should be compatible with strategic goals; a group that strongly values
stability should probably not be setting goals around the gold futures market. People’s
day-to-day behaviors should be consistent with the values that they and the organization
espouse; the behavior of a group that values flexibility should not include responding to
requests with “sorry, that’s not part of my job.”
Organizations have traditionally emphasized the strategic path. Most organizations
invest considerable time and effort in defining strategic goals and objectives. Fewer have
explicitly addressed the values path with clearly defined, published statements of values
– and fewer still have made a consistent effort to examine and support the practices and
behaviors that represent those values. Yet our behavior patterns – the way we do things
– are just as important as our activities – what we do – in determining the results we
achieve.
Organizational values, like organizational goals, are business necessities. For example,
achieving and maintaining market share requires setting relevant goals – and testing
actions and decisions against those goals. It also requires supporting relevant
organizational values, and checking typical practices and behavior against those values.
Examples of values might be openness and innovation, to encourage using new ideas
and information to create a level of customer satisfaction that will help maintain market
share.
Both strategies and values provide important direction and contribute to organizational
success. With increasing competition and decreasing differences among organizations in
their technology and products they provide, customers begin to place more and more
importance on how those products are delivered and supported.
Below is a brief description of each of the components of the organizational alignment
model.
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Mission and vision represent organizational intent. They provide guidance about
organizational purpose, expressed in terms of what the organization is in business to do
(mission), with a picture of the expected impact of the organization’s performance
(vision). For example:
Here is a mission statement for a hypothetical financial services organization:
“We provide products and services to business customers that help them make
well informed, timely financial decisions.”
Accompanying that mission statement, or as part of it, might be a vision its intended
impact:
“We see our customers developing a well-founded confidence in their financial
decisions, and increasing security about their financial futures.”
Those statements provide broad guidance and inspiration to everyone in the organization
in making choices about strategies, customers and markets, products, and services.
Strategic Goals and Values provide further direction about where the organization is
going, and by what route. They define, in broad terms, how the organization intends to
allocate resources to accomplish the mission/vision over time (strategic goals), and how it
intends to behave as it does so (values). For example:
Supporting the mission and vision above might be strategic decisions or goals like these:
“To provide a full line of financial services to small and mid-size organizations.”
“To gain a competitive advantage through top-quality customer service.”
Statements like this provide guidance to people in the organization about where they
should allocate resources, and how they should invest time and effort.
In addition, the organization can make statements about the kinds of values it considers
important such as:
Partnering: “We work in partnership with our customers, freely sharing
information, ideas and plans.”
Initiative: “We encourage people at all levels to take initiative to meet customer
needs and support them in doing so.”
Statements like this provide guidance about how people should behave in working with
customers, and how managers should behave toward customer support personnel.
Mission/vision, value and strategy statements thus serve to tell people “what we are
about,” and to guide members of the organization in setting priorities and choosing how to
behave.
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Objectives and Practices are the institutionalization of strategies and values. They
represent decisions about how to implement those strategies and values: the kinds of
objectives people set for themselves and the results they expect of their work units; the
typical ways in which they interact with customers and others both within and outside the
organization. For example:

Managers can support a strategic goal of marketing to small and mid-size companies
by such actions as setting sales objectives for those markets, or setting product
development objectives around the needs of small and mid-size customers.

Managers can support a value of partnership by such practices as holding regular
joint meetings with clients, or a value of initiative by such practices as providing frontline customer service personnel with resources and authority to take action in meeting
customer needs.
Activities and Behaviors are the execution of intent; the ultimate determinants of
organizational performance. These represent the next level of specificity – what really
happens in an organization on a day-to-day basis: the kinds of activities people choose to
spend their time in and the way they behave as they perform those activities. Statements
of mission and vision, values and strategies are meaningful only insofar as they are
translated into action. For example:
A strategic decision to build a competitive edge through customer service becomes
reality when people throughout the organization engage in activities like these: inviting
and acting on customer feedback; looking for ways to meet unusual customer needs,
rather than explaining why the can’t be met; testing decisions made anywhere in the
organization for their potential impact on customers.
Values of partnership and initiative become reality when people engage in activities like
these: inviting personnel from other groups to planning meetings; taking action to meet
needs as they arise, rather waiting for approval.
Results are the outcomes produced by an organization, as a function of the activities and
behaviors performed. Results can be measured in a variety of ways: financial indicators,
product/service measures, customer satisfaction and retention, sales measures,
employee and customer attitude surveys, measures of market share, etc. The way an
organization chooses to measure its performance will determine its ability to “stay on
track” and its ability to develop support systems and policies that are in line with values
and strategies. For example: An organization that looks at results exclusively in terms of
such outcomes as sales volume and profit measures will have a picture of its short-term
success, but will lack information that may be critical to its long-term health, such as
customer satisfaction and retention measures.
Organizational Influences
The directional paths described do not operate in isolation. They interact with the external
environment in which the organization operates its internal support systems and its
stakeholders. The expansion of the model below incorporates these factors.
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EXTERNAL ENVIRONMENT
Strategic
Input
MISSION/VISION
Values
Input
GOALS
VALUES
Leadership/Management
OBJECTIVES
PRACTICES
Systems
TASKS
BEHAVIORS
RESULTS/
OUTCOMES
STAKEHOLDERS .
External Environment: This includes factors over which the organization has limited
influence, such as the economy, the sociopolitical environment, competition,
governmental policies and regulations, the state of the technology. Any or all may
influence an organization’s choice of strategy or values. For example, heavy competition
in the large corporate market and expensive technology required to penetrate it, may
enter into an organization’s decision to concentrate on the small and mid-size business
market. Increasing recognition of the organization’s impact on the physical environment
may result in placing greater importance on social responsibility as a value.
Stakeholders: These are groups who are significantly affected by the organization’s
performance, such as customers, shareholders, suppliers, even the general public.
These groups have different relationships with and expectations of the organization;
understanding these expectations is a key factoring organizational decision- making. For
example, while shareholders and financial analysts may judge an organization largely in
terms of growth or profits, customers may base their judgments on factors like
responsiveness, quality of services or environmental sensitivity. Organizations need to
take both sets of expectations into account.
Leadership and Management Systems: Leadership behavior as well as management
systems, policies and structures function as “performance levers” that help (or hinder)
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people in carrying out the activities and behaviors required to implement strategies and
values and produce the desired organizational results. These include such factors as
reward and recognition systems; information and measurement systems; organizational
structure and reporting relationships; training; job definition and work design;
administrative policies. For example, compensation systems for salespeople that focus
exclusively on reaching revenue targets can create pressure to violate values about
treatment of customers or to ignore strategic plans for penetrating selected markets.
Similarly, centralized control policies designed to bring about consistency can get in the
way of responding to customer needs unless those policies are flexible and are balanced
by reward systems or other factors that support responsiveness to customers.
Organizational Alignment occurs when strategic goals and business values are
mutually supportive and when key components of the model are linked and compatible
with each other. Market strategies should be consistent with organizational values and so
perceived by members of the organization; group objectives should derived from
organizational strategy and supported by management practices; people’s day-to-day
activities and behaviors should be consistent with mission, strategy and values; and
organizational systems and policies should support those activities and behaviors.
It’s unlikely, and even undesirable, that any organization will reach perfection in all these
areas. The goal should be to achieve a level of compatibility and consistency that allows
people to devote most of their energies toward positive accomplishment of results – with a
minimum of effort directed to overcoming of obstacles and a reasonable amount of effort
devoted to healthy dissent that can help an organization continue to grow and adapt.
The resources and effort invested in organizational alignment – to get all or most of the
organization headed in the same direction – offers enormous potential payoffs to the
organization, its people, and its customers in profits, job satisfaction, quality of service,
and long-term organizational health.
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