Organisation culture aligned with business strategy impacts profitability: Study

MUMBAI: A study done by Tata Strategic Management Group conducted across sectors, finds that organisations with a strong strategy-culture alignment have higher profitability than peers with little strategy-culture alignment. The report called – 'The Strategy-Culture Alignment' can be used as a guide for organizations to align their culture to their business goals.

The report showed that companies with a stronger strategic-culture alignment showed 5% more profitability than those with lesser strategy-culture alignment. The study also said that more than 50% of the firms with turnover more than Rs 500 crore that their current culture was not what their business leaders had planned.

The study, conducted across 96 organisations, used the Organisational Culture Assessment Instrument ( OCAI) to gauge organisational culture trends. The organisations covered were of various sizes—those with a turnover of Rs 100 crore and less, those with turnover of Rs100 crore to Rs1,000 crore and those with turnover of over Rs 1,000 crore, stated the release.

"For organisations to effectively execute their business strategy, the organizational 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," said Raju Bhinge, chief executive officer, Tata Strategic Management Group in the statement.