The Culture of Success

From the April 2019 print edition

The increasing reliance of firms on their supply chain has contributed to supplier and contractor selection becoming a strategic procurement function. In turn,

Denis Sanchez, MSc, MA is owner and president of Decan Consulting Ltd.

contractor prequalification has been recognized as having a direct impact on supply chain integration, operational performance and ultimately on the contracting firm’s competitive advantage. As with other supply chain management functions, contractor prequalification is driven by people, whose behaviours and interactions are influenced by organizational culture. This influence extends both cross-functionally—within the contracting organization—and externally to the supply chain.

One of the key areas of interest regarding organizational culture studies has been its influence on organizational success, effectiveness and overall performance. Since organizational culture drives employee attitudes and behaviours, it affects the way we interact with each other and which initiatives we support. In fact, culture is a key element in the success or failure of new corporate initiatives and technical innovation. It also impacts how companies configure their processes and procedures. It influences how teams work with each other to support organizational goals and objectives, which values and principles drive business functions and, ultimately, how business is conducted internally and with customers, suppliers and other third parties. The effect of organizational culture is not limited to the firm but also impacts customer and supplier relationships.
Cultural strength is a key driver of organizational effectiveness. It fosters internal communication and alignment of corporate goals and objectives, thus creates a cross-functional working environment that contributes to interdepartmental efficiencies. Strong company cultures are associated with consistent employee behaviour, which promotes better organizational performance. Companies with a stronger company culture tend to perform better than the rest.

This, of course, depends on which cultural traits prevail. A strong company culture characterized by adherence to internal processes and procedures may drive consistency, but it can also lead to groupthink and an adversity to new ideas. This stifles creativity, innovation and the ability to respond to customer and market changes, it can impede sales and marketing efforts and negatively impact market share in the long run. When it comes to culture, balance is key.

Culture and supply chain
The link between organizational culture and supply chain integration is well documented, however there is limited evidence of cultural studies made specifically on Canadian companies that have implemented contractor prequalification programs. In fourteen years implementing these programs globally, I have seen that many companies fail to look inwards to self-examine their readiness for it. We therefore set out to study companies that had designed and implemented these programs in the past 10 years and surveyed key stakeholders to better understand the cultural traits and profiles of their organizations. The companies studied varied in industry and all had operations across Canada.

The most common organizational culture profile of the companies sampled was a company with a focus on competitive action, where goal and task accomplishment are critical (rational culture) and supported by a combination of adherence to policies and procedures (hierarchical culture) and managers’ guidance to help employees meet their objectives and have positive performance (team culture). These are positive attributes within the context of the implementation of a contractor prequalification program because they help establish the procedural framework for the new program, the involvement of management in guiding compliance and attention to key performance indicators, for example contractor and business unit compliance and risk reduction, as goals and objectives to work towards.

The balance achieved by the combination of the three more predominant culture types is positive to contractor prequalification. Rational cultures encourage individuals to work together both internally, across various functional groups, and externally with their various business partners like their contractors. Team cultures drive the values of teamwork and cooperation, which complement those of rational cultures, both internally and across the supply chain. Hierarchical cultures’ focus on control and compliance are positive ingredients to supply chain integration when present in conjunction with other culture types to form the organization’s cultural profile. Through a balance of these cultural traits, the companies sampled were able to leverage their culture to drive success.
Other companies sampled identified risk taking, focus on innovation, and flexible structures, as characteristic of their organization. These are developmental culture traits and critical assets. Much like supply chain integration in general, contractor prequalification requires cooperation and investment from supply chain partners, which is why companies that focus on short-term goals and quick wins have difficulty achieving supply chain integration effectively, whereas those that recognize that the hurdles of an implementation are part of the path to achieving long-term strategic goals are more willing to work together despite any setbacks along the way.

As managers embark on the design and implementation of a new prequalification program, it is important to examine their own organizational culture, how it compares to other companies that have implemented similar programs and how it can be leveraged to support the implementation. The learnings gained from this process generally benefits many other corporate initiatives.