The case describes the problems many companies may face during the recession. Superficially, it is the problem that whether Superado should keep giving bonus to its employees in the tough times; indeed, it is more related to complex terms, such as leadership, organizational change and culture. Because whether giving bonus or not, the problem of Superado will not be solved.
If it pays the bonus to its employees, the problem still exists or may be even worse in next year: can the company survive from severe economic times with continuing such bonus system? As the case cited, "Anything we paid out now would have to be made up next year by raising prices, which would send our customers running to Grandplace or other competitors. That would mean even worse results (pp.154)". On the other hand, if Superado does not pay the bonus, the employees would be disappointed. Definitely, their work performance will be affected. This may lead to even worse organizational performance in the next year.
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As mentioned before, though the case Superado is related to many complex terms, this article will focus on one term - culture. Burke and Litwin (1992) defined organizational culture as 'the collection of overt and covert rules, values and principles that guide organizational behavior'. The key to explaining culture is to understand the history, custom and practice of this organization (Schein, 1983). In the case of Superado, the culture is strongly connected with its history. Superado has been governed by Luisa's father for more than 30 years. He had his own management principles, and such principles worked quite well during past 30 years, which kept the sales increased. The bonuses have not stopped for over 30 years. This has almost been a part of Superado's culture. The organizational system, practices and values has been worked successfully for over 30 years so that members in the organization do not prefer to change. However, during the recession nowadays, such strong cultures may become the barriers to deal with the fast changing world.
Figure 1 shows the cultural web, which is presented by Johnson and Scholes (1999), enables people to understand the culture of an organization. The paradigm in the centre refers to commonly held beliefs and values of the organization. Around paradigm, there are six elements which are inter-linked to reinforce the paradigm. It is a useful and ideal tool to make links with the political, symbolic and structural aspects of the organization; it can guide the development of strategy (Sun, 2008).
Figure 1. Cultural Web (Johnson and Scholes, 1999)
Based on the information provided by the case Superado, the writer summarizes seven elements according to cultural web. Figure 2 shows the Superado's Cultural Web.
Figure 2. Superardo's Cultural Web
Figure 2 provides a clear map of various cultural elements in Superado. Among six elements around the paradigm, three of them are significant: stories, ritual and routines, control system. From the stories perspective, it is obvious that the members of Superado are proud of its history - successful strategy and good welfare over 30 years. It is also possible that its members rely on such traditional strategy and experiences. Moreover, employees are used to receive the bonuses. As the case cited, "everyone thinks of the bonuses as part of their salary (pp.154)." These all become the barriers when Superado face the change times.
In the part of ritual and routines, it seems that all the content merely follow what Lusia's father (ex-CEO) did: CEO's routine tour, park in the back, customer first, and steady price. Those ritual and routines are established by ex-CEO and worked for over 30 years. It is the tradition of Superado. Though new CEO, Luisa took over the company, she "vowed to continue the tradition" (pp.153). It is probable that Luisa did not take many new actions to deal with tough times when she took over Superado. The old ritual and routines contribute to shape the traditional and conservative culture. Obviously, during the recession, superado did not prepare well.
As the CEO of Superado, Luisa has the power to promote the change. Unfortunately, she did not. Her conservative management drives Superado to a bonus dilemma. Schein (2004) says that ''leadership and culture are two sides of the same coin", the organizational culture can be shaped by leadership behavior. If the organization's existence is endangered, it is the responsibility of leaders to be aware of it and take action about the situation (Altman and Conceicao, 2011). Nevertheless, the leaders of Superado, Luisa (CEO), Maria (vice president for finance), and Rodrigo (vice president of human resources) even did not reach an agreement on change. Though they already knew the times had changed, they did not communicate enough to figure out the new strategies. Their discussions stay in a superficial aspect: whether giving bonuses or not.
Always on Time
Marked to Standard
In another part, control system of Superado also reveals some drawbacks. Control system refers to emphasizing what is important to monitor in the organization (Johnson and Scholes, 1999). The control system of Superado over emphasizes the visible profit: performance target (profit for company) and bonus (profit for employees). It leads managers and employees focus too much on the visible profits. This may be part of reasons why its employees pay so close attention to its bonuses. It is its control system tells them that the profit is the most important thing to monitor in Superado. Indeed, nowadays, there should be some other important criterions to monitor in Superado, such as creativity and innovation. These are invisible profits for the company. If the company wants to survive from the recession, its culture should be more creative and innovative (Signh, 2011). In the case of Superado, the employee Rosa comes up with creative ideas for increasing sales, but she only get oral praises but without extra rewards. It is obvious that in Superado, the motivations for producing creative ideas are not sufficient. Another drawback of control system is its bonus system, which is designed for benefit almost all employees. This maybe work in the past 30 years, but it does not today. In the recession, sales are decreased; consequently, there is not so much extra money for bonuses. Nevertheless, leaders still keep this system to follow the tradition.
All the elements discussed before revealed two significant points of Superado's culture: traditional and conservative. Leaders prefer to follow the history rather than coming up with new strategies. Employees prefer to maintain the present status and receive bonuses. Such consistency of behavior benefits the organization when it faces a stable environment. However, when facing rapid change environment such as recession, such strong cultures will burden the organization and make it difficult to respond to changes in the environment' (Robbins et al, 2010).
Part 2: Recommendations
To solve the problem facing Superado, one available solution is changing its culture. Many literatures have signified the important influences which culture could bring to the organization performance (Brown, 1998; Burke and Litwin, 1992; Dwivedi, 1995; Johnson, 2001; Robbins et al, 2010; et al). Alvesson (2002) summarizes the most common ideas guiding organizational analysis as 'culture is a kind of tool, social glue, need satisfier, or regulator of social relations'. Supportively, in some organizations, strategy is a product of the culture, and in effect, the culture is managing the strategy rather than the manager (Johnson, 2001). Moreover, Goff and Johns (1998) claims that 'there is no one best culture, only appropriate cultures for a particular set of circumstances'. In the case of Superado, one appropriate culture is an innovative and creative one.
In today's competitive markets, innovation is recognized as one of the prime drivers for company to gain long-term success (Baker & Sinkula, 2002; Lyon & Ferrier, 2002). Innovation in the organization refers to anyone with a desire for change and a willingness to challenge existing ways of working (Endsley et al., 2005). It is not merely inventing new products or launching new services, it should be a positive, constructive, and productive change (Singh, 2011). To gain organization innovation, obtaining an innovation- supportive organizational culture is necessary (Aiken & Hage, 1971; Burns & Stalker, 1994). There are several characteristics for such culture: 'engaging people to value creativity, risk taking, freedom, teamwork, value seeking and solution-oriented, communicative, instil trust and respect for each other, and be quick to uptake in making decisions' (Dobni, 2008). Unfortunately, Superado's culture seems not quite innovation-supportive. It is conservative and traditional, as mentioned before, most of its managers and employees are prefer steady, just like its price setting principles in Superado.
It is the object of
Hard to change