July 22, 2015

Organisational culture aligned with business strategy impacts profitability, says Tata Strategic Management Group report

Tata Strategic Management Group’s Strategy-Culture Alignment report, conducted across sectors, finds organisations with a strong strategy-culture alignment have higher profitability than peers with little strategy-culture alignment

New Delhi: Tata Strategic Management Group (TSMG), the largest Indian-owned management consulting firm, has unveiled a report, The Strategy-Culture Alignment. The report is a first-of-its-kind attempt in India to assess the impact of strategy-culture alignment on profitability. The report is a guide for organisations to align their culture to their business goals.

Highlights of the report

  • Companies with strong strategy-culture alignment reported 5 percent more profitability than companies with low strategy-culture alignment.
  • More than half the number of organisations, with turnover exceeding Rs500 crore, agreed that their existing culture was not something they had envisioned as business leaders.
  • The intangible and non-quantifiable nature of culture is cited by business leaders as a major gap in being able to assess or align organisational culture to strategy.
  • TSMG assists organisations align their strategy and culture through its unique ‘four pillar’ culture transformation model of changing/aligning culture through organisation structure, leadership, business process, HR systems and work environment.

The report, based on the Organisational Culture Assessment Instrument (OCAI) tool, captures qualitative and quantitative insights by CEOs, CXOs and subject-matter experts on culture trends across industries in India. The report is based on responses across industries, including chemical, automobile and engineering, pharmaceutical and healthcare, consumer and retail, services, logistics, power and infrastructure, IT & ITES, manufacturing and BFSI.

The report helps CEOs to assess their organisational culture vis-à-vis the prevalent industry culture profile. In case of a significant deviation, business leaders are advised to evaluate if the strategy-culture variance is due to unplanned evolution. Such a culture will act as an impediment to an organisation’s profitability, weighing on effective execution of strategy.

Understanding the culture of an organisation and its alignment to strategy and correlation with profitability is a nascent concept in India. To drive awareness on this topic and to help CEOs in India to assess their organisations’ culture and its alignment with their industries’ culture profile, TSMG offered a complimentary web-based diagnostic, supported by a discussion to explain its findings.

TSMG has expertise in culture transformation and alignment and advocates this through the use of four ‘change levers’ Organisation Structure, Leadership, Business Process, and HR systems & Work Environment.

About the study
The study, conducted across 96 organisations, used the OCAI to gauge organisational culture trends. The organisations covered were of various sizes—those with a turnover of Rs100 crore and less, those with turnover of Rs100–1,000 crore and those with turnover of over Rs1,000 crore. The study aims to be a reference point across various sectors.

Commenting on the study, Raju Bhinge, chief executive officer, TSMG, said, For organisations to effectively execute their business strategy, the organisational culture has to be well aligned with the strategy. Quite often, businesses underperform not because of poorly crafted strategies, but because of inadequate alignment of culture with strategy.
Kamalika Mitra, project leader, organisational effectiveness, TSMG, said, “A planned culture, which is significantly modified and created consciously, keeping in mind the organisation’s mission and vision, the external industry climate and the ever evolving varied changing needs of time – could well be any organisation's strongest wheel in the continuous fight for profitability and growth.”