Corporate Culture and Corporate Structure Are Power, But Not In The Way You Think
By Mostafa Sayyadi Management Consultant, The Change Leader Consulting Inc | October 27, 2019
Corporate structure has been defined as a pattern by which hotels can divide their activities and tasks as well as control them to achieve higher degrees of coordination. Corporate structure, therefore, refers to the bureaucratic division of labor accompanied by control and coordination between different tasks in order to develop communication within hotels.
Corporate structure can be reshaped by hotel executives when they develop knowledge sharing and inspire employees to create new ideas for a better environment among business-units and departments. An informal structure could facilitate new idea generation to build a more innovative climate within hotels. Hotel executives can implement organizational changes that develop better collaboration among subordinates and managers.
Establishing the Right Structure for Hotels
Centralized versus decentralized decision making is also a topic that hotel executives must deal with. More emphasis on formalized and mechanistic structures can negatively impact the hotel executive's ability to exert such changes. On the contrary, a more decentralized and flexible structure may improve departmental and managerial interactions. The mechanical or centralization at the commanding level of hotel leadership impairs the opportunity to develop relationships among managers, business units, and departments.
Hotel executives can reshape corporate structure to be more effective when the command center of hotels can disseminate information in a decentralized and organic way as opposed to the mechanical and centralized command center. Decentralized structures shift the power of decision-making to the lower levels and subsequently inspire organizational members to create new ideas and even implement them while centralized structures may negatively impact interdepartmental communications and inhibit knowledge exchange.
Recent research affirms that the there is a negative impact of centralization on various knowledge management processes such as knowledge acquiring, creating, and sharing among both managers and departmental units. On the contrary, a more decentralized and flexible structure may enable hotel executives in improving departmental and managerial interactions that can lead to identify best opportunities that can potentially lead to improve knowledge utilization process for hotels. Therefore, hotel executives can positively contribute to organizational knowledge management through building more decentralized structures within hotels.
Knowledge management is a significant indicator of improving financial performance. It can, in fact, improve financial performance through increased customer satisfaction, increased learning opportunities, increased innovation, and increased quality of services. Therefore, if corporate structure is not completely in favor of supporting knowledge management, hotel executives cannot effectively manage organizational knowledge to improve financial performance and hotels may become obsolete or taken over.
Additionally, flexible structures can also directly impact hotel leadership practices. For example, hotel leaders inspire followers to generate new solutions and a better environment. A highly centralized structure has a negative impact on hotel leadership practices, while decentralization positively contributes to hotel executives in developing a more innovative climate. This is enhanced by the crucial role of decentralized structures in facilitating the exchange of ideas and the implementation of more innovative solutions based on stipulating the power of decision-making at all levels of the hotel. Furthermore, highly formalized structures are more bureaucratic, and this negatively contributes to the effectiveness of hotel leadership in changing the existing situations and creating a better environment.
Establishing the Right Culture for Hotels
Corporate culture is a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems. Corporate culture is, therefore, reflected in shared assumptions, symbols, beliefs, values and norms that specify how employees understand problems and appropriately react to them.
Scholars have proven that hotel executives can build a strong corporate culture to improve customer satisfaction through acquiring additional knowledge from customers, developing better relationships with them, and providing a higher quality of service for them. Hotel executives, today, are focusing on corporate culture. Corporate culture is to gather, evaluate, and disseminate information throughout the hotels. Hoteliers can build an effective culture to acquire knowledge from various sources such as suppliers, customers, business partners, and competitors. In doing this, they can manifest themselves as change agents who manipulate corporate culture with the aim of improving knowledge management and financial performance.
Corporate culture includes three dimensions of collaboration, trust and learning. Hoteliers can facilitate collaboration by developing relationships in hotels. They can contribute to the cultural aspect of trust, through considering both employee's individual interests and hotel's essential needs. Also, they identify individual needs of their employees and develop a learning culture by intellectually stimulating them to generate new knowledge and share it with others. Hoteliers can therefore highly manipulate a hotel's culture to conform to the needs and expectations of strategic goals and objectives.
Hotels have found that corporate culture impacts knowledge management. Particularly, the three cultural aspects of collaboration, trust and learning play a critical role in enhancing the effectiveness of knowledge management practices. For example, collaboration provides a shared understanding about the current issues and problems among employees, which helps to generate new ideas within hotels. Trust towards their leader's decisions is a necessary precursor to create new knowledge. The key is for hoteliers to inculcate a culture of trust and transparency of knowledge sharing within hotels so that information can be found and used instantaneously. Moreover, the amount of time spent learning is positively related with the amount of knowledge gained, shared, and implemented.
In turn, hotel executives can reshape, and in some cases, manipulate corporate culture to facilitate knowledge management practices within departmental and business units of hotels. Hotel executives today realize that knowledge is the one of most strategic factors for financial performance. For example, knowledge is shared and synthesized with an aim to providing higher quality services. This can improve financial performance in various metrics such as the customer focus, the quality of services, and the organizational revenue.
Shared knowledge can contribute to the development of a learning organization in which people continuously grow and develop both personally and professionally. It enables hotels to actively respond to environmental changes through developing interactions and awareness from the external environment, which can in turn improve financial performance. As a consequence, corporate culture indirectly improves financial performance through disseminating and managing organizational knowledge that can play a crucial role in enhancing various metrics such as the quality of services and the organizational revenue.
Management can act in a supportive role as leaders but academicians point out that if leaders do not adequately support knowledge dissemination and creation through various mechanisms such as corporate culture, knowledge management cannot be successful. Hotels can now see how corporate culture constitutes the foundation of a supportive workplace to share and synthesize organizational knowledge and subsequently improve financial performance.
In addition, a collaborative culture enhances communications in hotels. Trust and important component of a collaborative culture which could positively contribute to develop and maintain organizational communications is emphasized in this section of this article. For example, both cultural aspects of collaboration and trust can be critical for hotel leadership practices, which are strongly based on developing relationships with subordinates. Moreover, a hotel leader's ability to build a more innovative environment is highly dependent on the extent to which their subordinates trust them. A culture that instills trust in subordinates enables hotel leadership practices through mobilizing their support toward the hotel leadership vision for changing current situations, whereas, distrust will impair the effectiveness of hotel leadership.
This article may be the answer hotel management needs but may also lack the fundamental fortitude necessary to be an all-encompassing model to predict financial performance. Financial performance can be enhanced when management reshapes corporate culture and corporate structure to provide open access to knowledge and information. Each hotel executive plays a critical role in shifting hotels toward the creation of new services.
Through the corporate culture and corporate structure, management can contribute to new services to meet dynamic market needs, through higher expectations and stimulation for new and strategic opportunities to meet the needs of customers in the marketplace. In fact, this article has been focusing on the needs of customers for enhancing financial performance. This article presents hoteliers with corporate culture and corporate structure that can be developed to enhance knowledge management effectiveness and improve financial performance. They can build an effective corporate culture and corporate structure to serve the customer needs and become more profitable.
This article also suggests that corporate culture and corporate structure constitute the foundation of a supportive workplace to disseminate knowledge and subsequently enhance the effectiveness of hotel leadership. I simply extended the current literature by showing how hotel executives can contribute to financial performance by reshaping corporate culture and corporate structure to propel knowledge management processes within hotels.
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