ORGANIZATIONAL CULTURE, FORMAL REWARD STRUCTURE ...

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ORGANIZATIONAL CULTURE, FORMAL REWARD
STRUCTURE, AND EFFECTIVE STRATEGY
IMPLEMENTATION: A CONCEPTUAL MODEL
Stephen C. Bushardt, University of Texas at Tyler
David W. Glascoff, Spring Hill College
D. Harold Doty, University of Texas at Tyler
ABSTRACT
An organization’s culture can vary from weak to strong depending on the degree to which
it is accepted by and influences individual behavior. Similarly, the degree to which the
organization’s culture is congruent with the organization’s formal reward structure may range
from low to high. This paper presents a model addressing the interaction of these two variables
and how their interaction might impact effective strategy implementation. Research propositions
are presented regarding the static aspects of the model and suggestions for practicing managers
are presented drawn from the dynamic aspects of the model.
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,
Journal of Organizational Culture, Communications and Conflict, Volume 15, No. 2, 2011

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contingent on the level of environmental threat, it is often difficult to separate out the impact of the
leader’s personality as a driving force.
IMPLICATIONS FOR PRACTICING MANAGERS
Managers must devote considerable time and resources to assess environmental
opportunities and threats and to develop organizational goals and objectives consistent with
environmental constraints. However, having done so may be insufficient to ensure the successful
implementation of an organization’s strategy without the commitment and efforts of its members.
Managements’ attempts to realign the formal reward structure with organizational goals and
objectives solely through the human resource function have often failed to energize employees
towards the new goals and objectives. The limited success of realigning the reward structure
reflects an inability to manage individual behavior due to rewards not being administered in a
timely manner, failure to use a variable ratio reinforcement schedule, and the lack of time most
managers face in the challenging jobs of today. Managers would be more effective if they focused
on using formal rewards as means to manage the culture instead of as a means to manage the
individual. Schein (1992) suggests, “[t]he only thing of real importance that leaders do is to create
and manage culture” (p. 5).
Practicing managers need to assess the organizational culture as a part of the strategic
planning process. When goals and objectives change, managers need to implement a systematic,
goal-directed process for shifting the culture. The issue involves whether to gradually change the
culture or to take a revolutionary approach. As practicing managers begin the change process, they
need to identify not only the desired new sets of rule-governed behaviors for building but also the
undesired behaviors for weakening or destruction.
The primary job of a manager is to manage the culture not the individual. Organizational
leadership can manage the culture through the ceremonies, storytellers, heroes, rituals and
gatekeepers that it encourages or discourages by changing activities and by changing incumbents
in key positions. The model presented here illustrates the challenges leaders face – to destroy the
current culture, to strengthen the culture already present, or to create a new culture aligned with the
strategic objectives. An important decision in the change process is the speed by which cultural
change is implemented which is, in part, contingent on the personality of the leader and the degree
of outside threat. The practicing manager’s job is difficult and challenging, requiring constant and
continuous adjustment to ensure cultural alignment with organizational goals.
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