Does Organizational Learning Impact Organizational Performance?

I interviewed a good friend and former General Manager I previously worked with, Mr. Arvind Sachdev, for a Masters research paper I was writing about Organizational Learning and whether it had an impact on organizational performance.

My research paper centered around two fundamental questions:

• What is the importance of organizational learning in organizations?
• How does organizational learning impact organizational performance?

I aim to provide a gist of my research paper in this article to add to the existing data and research around this ubiquitous subject.

But first, what is Organizational Learning? And I quote:

"Organizational learning is the process of creating, retaining, and transferring knowledge within an organization and this knowledge is broad, covering any topic that could better an organization where it can be created from four different units: individual, group, organizational, and inter organizational."

Organizational learning enables organizations to increase their ability to react quickly and adapt to fast-changing market conditions while embracing the lessons that can be learned from its own failure.

It is enabling its own ability to study its own processes while getting more knowledge and insight on best practices from within or externally, all with the aim of addressing the learning and knowledge needs of its employees, teams and the organization as a whole.

Impact of Organizational Learning on Organizational Performance

There is significant research available that study and assess the impact of organizational learning on organizational performance in different cultures, contexts and perspectives.

According to Mr. Sachdev:

“You need to have a certain amount of formal learning process in place which can marry your overall cultural definition or vision and then you say, ‘How will I take people around that?’, because people are only good listeners when they are in the classrooms together, or they have certain projects to run, or they have certain timelines to meet and examinations to give, and a little bit of stress is required around that to be able to work together, maybe in a group, maybe individual."

"That’s why you’re learning cannot be formalized learning only and cannot be just functional learning about the products but also about leadership, about HR [Human Resources], about whatever your culture needs to drive at. Whether it’s a highly ethical and compliance culture, you must have formalized training but then you also need to have informal sessions, listening sessions.”

When asked if organizational learning is important in an organization, Mr. Sachdev says:

“It is very, very important to any organizational success that you have a clear informal environment creation, without people knowing that there is something specifically being targeted, so you create townhalls, meetings, internal network interactions and all those discussions.

The human interaction has never changed, we always love to be together. So the informal knowledge environment creation is the key for many leaders and most of the HR [Human Resources] leaders fail in that, because they are so functionally connected.”

"Organization learning is so important to build the culture and I will devise them in two different ways. One, organizational learning is where we create an environment of learning and people continuously learn from each other, whether they learn from debates, discussions, meetings, functional meetings, non-functional meetings and so they draw knowledge from each other, vertical and horizontal both."

"They draw knowledge from outside world, they may be meeting the customers, external parties so that organizational knowledge learning will come from there and the individuals are drawing it from a very informal environment. That informal environment creation is like [for example] ‘Okay, can I have a breakfast meeting with a group of ten people?,’ Why do I need to do that all the time? I was drawing enough learnings from the people into myself and then I was disseminating them to the rest of the company that I learned something new and I also had the opportunity to give my knowledge back out to the people, the ones who are sitting around me.”

When asked about the impact of organizational learning in organizations, Mr. Sachdev further shares:

“It does (drive growth), always. If you don’t have a motivated culture in the organization, how will you drive growth? So to me as a leader, I always believe in creating an environment where people get motivated and self-motivated to do things and they believe in it, and they enjoy it and there has to be a certain level of passion.”

“If [employees] are motivated, they will come to you with the ideas, they will come to you with the creativity which you have never seen. If my culture is highly-motivated, people are enjoying the environment they operate in, knowledge, learning or changes or whatever it is functionally, and if I throw a small spark in the group of people, ‘Go and do it, here is the way we think can be done but now you exploit it further.’ They do it, I don’t have to sit and do that, they come back to me with ten ideas and we select one. But this is a cycle, this is an environment in which will keep going and get bigger and bigger and bigger, [and then] you add value.”

On whether organizational learning has an impact to organizational performance, Mr. Sachdev adds:

“It’s important that there is an emotional bonding creation happening in the company, because there has to be some part of it, some part of your soul [as an employee] that has to say I would love to do this or I like doing this, and I like this environment, I want to work in this environment, I am happy to work, and maybe there are some who will come in as a catalyst of change, but then you will still need a plan and thinking to change it."

"But once you have changed the environment, will that help growth? Will that propel growth? I can guarantee you a thousand percent it will, there is no way it will not. Let’s say you have a demotivated, demoralized organization, you will fail. That’s why we say, how is the morale of the organization? Is the organization motivated? Is the organization happy?”

Based on the insights from this interview from a seasoned leader, organizational learning is extremely important in an organization and has a positive impact to individual performance which builds up to team performance and lastly, organizational performance. The importance of building a learning culture where individuals and teams can learn in addressing learning needs or gaps cannot be overemphasized.

Building a culture that promotes, harnesses, facilitates and nourishes knowledge sharing and organizational learning is key in increasing productivity of employees, either via increased efficiency or effectiveness, as it impacts both performance and engagement levels.

A learning organization increases employee morale, motivation, boosts energy and ultimately builds up value for the organization in terms of driving growth both in the short or in the longer term.