Capitalizing on Investments in People: A Study of the Relationship between Team Culture and Team Performance

Abstract

In order to determine how organizations can capitalize on investments in people, this paper explores the relationship between team culture and team performance. Despite the fact that organizational culture has long been considered a key factor influencing organizational effectiveness, studies indicate that a large percentage of executives do not believe in the strategic value of Human Resource Management. One reason might be that the processes through which human resource decisions create value are complex and not well understood. To expand the understanding of culture in organizations, it is suggested that team culture should be considered a subculture within a more dominant organizational culture. The study adopts a resource-based approach to strategy in which people are considered the single most important asset in the organization. Through analyses of theory related to inter alia high-performing teams, social capital, and team identity, successful teams are found to share a number of cultural traits. The findings are supported by a case study of three teams at Herlev & Gentofte Hospital, which establishes several links between team culture and performance outcomes. In particular, the paper recognizes social capital as a central determinant of team performance. By investing in team social capital, organizations can increase performance outcomes, which, in turn, may lead to the achievement of business objectives. As such, the paper emphasizes the strategic importance of Human Resource Management and, more importantly, recognizes that people are at the heart of the organization.