Organizational Culture: How It Affects Employee Motivation

I have recently been talking to the leadership team of a product company regarding what challenges they face on a frequent basis and what bothers them the most.

Interestingly what they said is the common challenge in the current scenario across any industry. Here is the list of their challenges:

1. Lack of motivation among the team members even though the company is making a significant investment in their learning.
2. Lack of ideas being shared by the team.
3. A higher attrition rate of the employees.
4. Lack of alignment among colocated team members which is affecting the overall quality and the higher iterations rate of the tasks.

And many more...

While I knew when talking to the leadership team that, at the core of these challenges the company culture is the biggest chunk to look at, despite the fact the leadership is focusing on it at a macro level but lacking the micro touch where everyone in the team feels valued and important.

A couple of days back when I was researching the solution for this given problem which just not talk about a specific challenge and a process to solve it but rather it transforms the organization inside out and the above-listed challenges do not occur again, I came across an article by Harvard Business Review on How Company culture shapes employee motivation, written in 2015.

It is still the best source of learning if you want to Create or Change your company culture to shape your employee motivation.

Here is the extract of my learning from that article:

Have you ever heard the term "organizational culture" and wondered what it really means? Well, it refers to the values, beliefs, and behaviors that exist within a company. A strong organizational culture is crucial for a company's success, but it often seems like a mysterious force that is hard to control. Many leaders rely on their instincts to manage it.

To demystify organizational culture and make it more understandable, we can answer three key questions:

1. How does culture impact employee performance?
2. What is the value of culture?
3. What processes influence culture within an organization?

Let's explore these questions and learn how leaders can create high-performing cultures that have a positive impact on the bottom line.

How does culture impact performance?

After extensive research involving surveys, experiments, and academic studies, it has been found that the reason why we work directly affects how well we work.

For example, a study asked workers to analyze medical images. One group was told the work would be discarded, while the other group was told the images were cancerous tumor cells. The group that perceived their work as meaningful spent more time on each image and produced higher-quality results. This demonstrates that reshaping employees' motives can lead to improved performance.

Researchers have identified six main reasons why people work:

1. Play
2. Purpose
3. Potential
4. Emotional pressure
5. Economic pressure
6. Inertia.

The first three motives—play, purpose, and potential—tend to increase performance, while the latter three—emotional pressure, economic pressure, and inertia—hurt performance.

Companies with renowned cultures, such as Southwest Airlines and Trader Joe's, focus on maximizing positive motives while minimizing negative ones.

What is the value of culture?

Creating a strong culture is not just a feel-good exercise—it has tangible benefits for organizations. By measuring an organization's Total Motivation (ToMo), which is the sum of the positive and negative motives, we can evaluate its impact on performance.

Studies across various industries have shown that cultures emphasizing play, purpose, and potential while reducing emotional pressure, economic pressure, and inertia, lead to better outcomes. This applies not only to customer satisfaction but also to revenue generation in sales-oriented businesses. In one retail organization, the difference in revenue generated by low-ToMo and high-ToMo sales associates was as high as 30%.

What processes influence culture within an organization?

To create a high-performing culture, it's essential to understand the processes that affect employees' total motivation. Leadership is often considered the primary driver of motivation, but other processes can have an even bigger impact.

For example, how a role is designed can significantly influence total motivation. Poorly designed roles can lead to low-ToMo scores, while well-designed roles can boost total motivation. Similarly, the organization's identity, including its mission and behavioral code, and the career ladder structure also play crucial roles.

Companies that excel at culture often implement practices that promote motivation. Toyota encourages play by empowering workers to come up with new ideas, while W. L. Gore & Associates provides employees with resources for innovation. Southwest Airlines fosters play by encouraging flight attendants to turn safety announcements into entertaining performances.

Building a high-performing culture requires an understanding of the interconnections between various elements. For example, the presence of sales commissions may decrease total motivation, but if employees believe their work benefits customers, the commissions can actually enhance total motivation.

What can leaders do?

Senior leaders play a crucial role in creating and maintaining a high-performing culture. By training managers to lead in ways that motivate employees, organizations can see significant improvements. For instance, providing high-ToMo leadership training to bank branch managers resulted in increased sales.

Additionally, team leaders can implement small changes to improve total motivation:

1. Hold regular team meetings: Regular team meetings provide an opportunity to communicate the organization's values, goals, and expectations. It also allows team members to share their ideas, challenges, and successes, fostering a sense of belonging and collaboration.
2. Provide feedback and recognition: Recognize and reward employees for their achievements and efforts. Acknowledging their contributions reinforces a positive culture and motivates them to perform at their best. Regular feedback, both constructive and positive, helps employees understand their performance expectations and areas for improvement.
3. Encourage professional development: Support employees' growth and development by providing training opportunities, workshops, or mentorship programs. Investing in their skills and knowledge not only enhances their performance but also demonstrates a commitment to their long-term success.
4. Foster open communication: Create an environment where employees feel comfortable sharing their thoughts, concerns, and ideas. Encourage open dialogue, active listening, and respect for diverse perspectives. This promotes a culture of trust, transparency, and innovation.
5. Lead by example: Leaders should embody the values and behaviors they expect from their employees. When leaders consistently demonstrate integrity, accountability, and a strong work ethic, it sets a positive tone for the entire organization. Leaders should also be accessible and approachable, encouraging collaboration and teamwork.
6. Empower decision-making and autonomy: Give employees the authority and responsibility to make decisions and take ownership of their work. Empowering employees promotes a sense of autonomy, accountability, and creativity, leading to increased motivation and job satisfaction.
7. Prioritize work-life balance: Encourage work-life balance by promoting flexible work arrangements, providing support for personal well-being, and recognizing the importance of time off. A healthy work-life balance reduces stress, enhances job satisfaction, and improves overall performance.
8. Continuously assess and adapt: Regularly assess the organizational culture and its impact on employee motivation and performance. Collect feedback through surveys, focus groups, or one-on-one discussions. Use the insights gained to make necessary adjustments and improvements to the culture and management practices.

Remember, building a high-performing culture takes time and effort. It requires consistent reinforcement of values, alignment of goals, and an ongoing commitment to employee well-being and development. By prioritizing a positive culture, leaders can create an environment where employees are motivated, engaged, and invested in their work.