Companies' culture aligned with business strategy impacts profitability: Report

NEW DELHI: Organisations with a strong strategy-culture alignment have higher prospects of profitability than their peers, according to a report by Tata Strategic Management Group.

The report on Strategy-Culture Alignment, conducted across sectors, shows that organisation culture aligned with business strategy impacts its profitability.

"Companies with strong strategy culture alignment reported 5 per cent more profitability than companies with low strategy culture alignment," the report said.

The study said more than half of the organisations with turnover exceeding Rs 500 crore agreed that their existing culture was not something they had envisaged as business leaders.

"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," Tata Strategic Management Group Chief Executive Officer Raju Bhinge said.

The study, conducted across 96 organisations, used the Organisational Culture Assessment Instrument (OCAI) to gauge organisational culture trends.

The organisations covered include those with a turnover of Rs 100 crore and less, those with turnover of Rs 100 crore to 1,000 crore and those with turnover of over Rs 1,000 crore.