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A market culture is an organizational culture that seeks to increase employee performance by creating internal competition that resembles free markets. The following are common examples of how this is done.MeritocracyHiring and promotions based on talent and potential alone.
Business Unit AuthorityA shift of authority away from administrative teams such as HR towards business units.Competitive FundingSetting the funding of business units according to results and potential results.RetrenchmentQuickly exiting businesses and projects that aren't working out.Stretch GoalsSetting aggressive targets for employee performance.
Ranking EmployeesA system of regularly identifying top performers such as identifying sales leaders each month. Some organizations will go so far as to rank all employees in a team such that lower performers are identified too.Internal Clients A culture where stakeholders in your work have the position of a customer such that they can cancel their business with you if they are dissatisfied. For example, an organization where internal IT teams compete for contracts with business units.
Team CompetitionDesigning an organizational structure with similar teams that need to compete for funding, authority and mandates.Turnover TargetsTeams that have a high turnover target as opposed to firms that try to minimize turnover. This originates with the sense that a job with low turnover is too easy.High Long Term Compensation Generally speaking, employees do not like intensely competitive work environments that have high turnover. As such, firms that need talented employees and want to create a highly competitive environment also need to offer unusually high compensation to the survivors.
Asymmetric CompensationLarge bonuses for high performers and low bonuses for mediocre performers.Role CompetitionOrganizational structure that places multiple people in similar roles where they are likely to compete with each other. For example, having 5 software architects all at the same level as opposed to a chief architect that manages 2 senior and 2 junior architects.Role FreedomBasing performance reviews on results alone with little supervision. For example, allowing employees to choose their own hours. This again resembles a market where employees could innovate to achieve work-life balance and high performance.
Corporate EntrepreneurshipAllowing all teams and individuals to propose things on a competitive basis.NotesOrganizational culture is an intangible social thing that isn't directly controllable by management. As such, attempts to create a market culture can easily have unintended consequences. For example, if you set a minimum turnover for a team a manager may fire all high performers because they feel they are a threat or because they engage in cronyism where they promote friends.|
| Type | | | Definition | An organizational culture that seeks to increase employee performance by creating internal competition that resembles free markets. | | Related Concepts | |
Corporate Culture
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