Organization behavior is paramount to any organization because it helps in understanding the relationship between the people and the organization. More importantly, it helps to understand how the firm will adapt to changing environment, as the organization culture is challenged. For this reason, a leader who can change the current organization is required for a firm to survive.
In this paper, I examine the differences and similarities of organization culture and employee motivation and engagement practices between Nissan and Renault. The paper also analyses how these concepts of organizational behaviors influenced Ghosn’s effectiveness as a leader in the two companies, and also the changes that Ghosn implemented in Nissan.
Renault takes more risks in order to get more profit in short-term. On the other hand, Nissan culture placed a low value on innovation but longer time orientation is much higher. Nissan tends to organize work activities around teams, while Renault placed a high value on individual work. Both Renault had a rigid culture that allowed little communication. Also, the employees from the two companies were not aggressive. Ghosn introduced cross functional teams that made communication easier.
Nissan employees were not empowered unlike Renault. Ghosn introduced CFT that allowed employees to participate in reviving the company, increasing their motivation. Ghosn also made some changes on Nissan reward system that was based on seniority, and introduced a reward that was based on performance encouraging people to work harder.
Organizational Behavior refers to the study and application of knowledge about how people in the organizations. Organization behaviors help to understand the relationship between people and the organization in order to build a better relationship by achieving both individual and organizational goals (Slocum & Hellriegel 2007). Changes in the organization structure play a significant role in the nature of organization behavior. For this reason, managers are responsible for decisions in relation to organization culture, teamwork, as well employee motivation and engagement practices. These decisions affect a firm effectiveness and efficiency. In the case of Renault and Nissan, Ghosn had to understand the organization behaviors of the two companies so that the necessary changes were made to align with the new business strategy. In this paper, we will focus on organization culture and employee motivation in both companies and how they influenced the effectiveness of Ghosn leadership, as well as the organizational changes that were implemented at Nissan.
Organization culture refers to shared values, beliefs, and assumptions that direct they people act in an organization. These values have a significant impact on the people, as it helps to understand they way people perform tasks (Dasgupta 2014). Every organization develops and maintains a unique culture that provides guidelines on how people should behave in the organization. Organization culture acts as a guide of how to deal with ambiguities that exist in all events, as well as stabilizing the organization (Schein, 1992). Both Nissan and Renault companies had different cultural differences; as a result, the behaviors of the employees of the two organizations were also different.
Some companies have a culture emphasizes the importance of innovation and encourages their workers to take the risk to come up with new incentives in the performance of their jobs (Martins & Terblanche 2003). For instance, Renault takes more risks in order to get more profit in short-term. On the other hand, Nissan culture placed a low value on innovation but longer time orientation is much higher. Ghosn realized that Nissan employees had no sense of urgency. Decision making could take a long time, and as a result, this culture discouraged challenging one another. When Ghosn went to Nissan, he established a survival plan to ensure that the company is recovered in the soonest time possible (Stahl et al. 2012). In other words, the higher time orientation of Nissan culture had to be changed. In this revival plan, Ghosn set short term perspective if the company for the company to survive in changing business environment.
Emphasis on People
A company that places a high value on the importance of decisions as it affects everyone in the organizations. For these companies, it is important to treat their employees with respect and dignity (Martins 2002). Renault management system makes their decisions fast, for instance, Ghosn revival plans included various commitments that would be made in a duration of three years. On the other hand, Nissan culture making decisions took much longer time as the players had to reach a consensus to confirm decisions. As a result, this process took so much time and had caused failure in the past. Ghosn had to make changes by establishing cross-functional teams that consisted of ten people to ensure that decision making is faster and make thoughtful decisions. Through these teams, the Nissan company was able to change its culture from the best elements of its previous culture.
Organization culture is strongly influenced by the country’s culture. Some companies tend to organize work in groups while others emphasize the need for handling work individually (Kilduff & Corley 2000). In this case, Nissan tends to organize work activities around teams, as Japanese society is more of a collective society. Such an organization culture is based on the assumption that a team will work more effectively and enable the firm to reach its goals, not just the individuals. Stahl et al. (2012) indicates that in Japanese companies where groups are considered important, responsibility is often shared. This tends to increase a positive relationship among the co-workers. In such work environment, there is a higher probability of a positive relationship with their employees and managers (Maull, Brown & Cliffe 2001). Ghosn used cross functional teams were given the mandate to implement change. These cross functional teams were powerful because they engaged managers, and the teams were given responsibility and freedom to perform. Consequently, several teams exceeded the targets set by the senior managers.
On the contrary, Renault placed a high value on individual work. As a result, when Ghosn went to Nissan he had to conduct some culturally related changes. For instance, Ghosn introduced a new reward system when he arrived at Nissan that assesses managers based on their results, as well as promotes them based on objectives achievement (Stahl et al. 2012). The new reward system was significant because it encouraged individualism and encouraged initiatives. Also, decision-making process within Nissan changed because as individuals decision making is faster compared to on a group.
Cultures that place high value in stability are rule oriented and are bureaucratic in nature (Robertson & Swan 2003). Both Renault had a rigid culture that allowed little communication. Renault was highly centralized, hierarchal culture. As a result, the meetings lead to unproductive discussions, increased costs, and quality problems. On the other hand, Nissan has a bureaucratic organization culture, with little communication between the layers. Ghosn introduced change to understand employees’ opinions and ideas. He gave an impression of him being a fellow employee instead of a manager, and this allowed people to communicate and engage actively in attaining the revival plan promises. Ghosn’s primary aim was to build a relationship with all employees from all the layers of the organization, and finally, this approach helped to see problems and opportunities early in the process.
Organization culture may determine whether employees are easygoing or assertive. Companies with aggressive culture place a high value on competitiveness (Kilduff & Corley 2000). For instance, before Ghosn joined Renault, the people never focused on why the company had not experienced a real major growth, they were not aggressive enough to achieve more. They only changed when Ghosn called it to their attention. Ghosn felt that the culture of Renault was not structured for growth and change was vital. The Same case was Nissan, the people in the organization had no sense of urgency and they were slow. Decisions took much longer because the organization culture promoted consensus and discouraged challenging one another. Ghosn observed that Nissan was going through a bad time and no one felt responsible, the people were easygoing and no one stepped up to make a change but rather accommodate the situation (Stahl et al. 2012).
Employee Motivation and Engagement Practices
Motivated employees are essential for the success of an organization. Employers can use intrinsic and extrinsic motivation factors to motivate an employee to pursue work tasks and goals. Renault and Nissan employed various factors to ensure that their workers remain competitive.
The Nissan culture was characterized by group harmony, cooperation, avoidance of mistakes, and conscientiousness. As a result, the workers were not empowered to be responsible and make the decision faster. On the other hand, Renault management under Ghosn has cross-functional teams that ensured effective communication. Ghosn had to make some changes on to ensure that employee was motivated. Consequently, he introduced the cross-functional teams to break the group culture without resulting in a culture conflict. This idea was based on the assumption that it would address the issue of motivation and horizontal communication issues in the organization (James Brodersen & Eisenberg 2004). He believed that is the employees can participate in the accomplishment of the reviving the company, they would be motivated (Kamalian, Yaghoubi & Moloudi 2010). He had indicated that Nissan had the right team to achieve profitability in three years; therefore, it was up to them to achieve these. Ghosn encouraged the employees to come up with ideas and take risks. Before Ghosn came to Japan, Nissan organization culture had embedded that people had to reach a consensus before making a decision. The cross functional teams were powerful for getting the line managers see beyond functional duties that defined direct responsibilities. In fact, several teams exceeded the ambitious targets that were set by the senior management. The midlevel managers were able to learn about the business and felt fully engaged in the Nissan change process by giving them a sense of ownership and responsibility during the company turn around.
Rewards and compensation
The Nissan culture valued the duration of time the employee work for the organization, the longer had been with the firm the more responsibility and pay they received. However, this strategy was associated with complacency and prevented the firm from promoting young talents. One the changes that Ghosn did to Nissan organization culture was to change the company compensation system to a Renault approach to allow employee advancement based on performance rather than seniority. As a result, it greatly empowered the talented employees. This greatly empowered the talented employees, which was much needed in this change. Also, since the organization culture promoted teamwork, it became difficult to determine who should make the final decision in the case of a crisis (Tietjen & Myers, 1998). To solve this issue, Ghosn pushed the employees to succeed by stretching them to higher levels and improving their skills. However, he also believed that high returns should be rewarded with high salaries. In fact, Ghosn defended compensation packages and the use of stock options during Nissan’s 2004 stockholders’ Meeting. The rewards were linked to performance and contribution.
Companies should provide a flexible working system that enables the workers to balance between their work and family responsibilities (Lyubomirsky King & Diener 2005). During Ghosn years in Renault and Nissan, he discouraged employees from taking work home. In fact, when he went to Nissan, he made it a rule not to take work home. Ghosn was never available for meetings during the weekend and considered it as family time. Many argued that his leadership philosophy was reflected by his family values (Stahl et al. 2012). He believed that if the working system does that achieve a balance between work and home, the employees will become demotivated.
Research indicates that employees perform better when they can control their space (Dobre 2013). We In facts, companies that allow employees to help the management to decide when and how they should work are more likely to be satisfied, perform better, and have a positive view of the organization. The layers of communication that existed in both Renault and Nissan did not allow the management and employees to communicate effectively. Ghosn gave the role of management to the cross-functional team members the authority to make decisions. Ghosn required these teams to come up with new recommendations to make Nissan profitable. They were given access to all company information. He believed that if people feel responsible for results they need empowerment to achieve them. Nissan Revival Plan helped change the organization towards cross-functional departments servicing a particular product line. As a result, the staff began to focus on success, customer satisfaction, as opposed misleading performance goals.
An effective organization will ensure that there is a spirit of cooperation within the sphere of its influence. Organization goals can only be achieved when cooperation and coordination are achieved. Although Nissan encouraged collaboration it was not effective due to bureaucracy. The creation of the revival plan placed all the employee were on one mission, reviving Nissan. Ghosn created short-term goals, where all the employee were expected to work together. The NRP created tremendous results and boosted motivation in the organization. The short-term wins were communicated to all employees so that they can as part of the company turn around. Creation of short-term goals is paramount as it increases the need for urgency. When Ghosn announced publicly that Nissan would show profits in two years, it encouraged the employees to make a commitment to help in the realization of this promises.
This paper has shown the importance of organization culture and employee motivation in ensuring that the organization meets their objectives. Organization culture is crucial to help the employees to deal with changes. There were several changes in both Renault and Nissan, however, Ghosn was able to communicate with all the employees in different cultures to ensure a successful transition. Employees’ motivation is also crucial; in this case, it helped the employees in taking decisions and taking responsibility for them (Sun 2008). Motivation also brings a sense of commitment and urgency, particularly in the case of Nissan.
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