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Nextera Energy Culture and Reward Structure

“You get what you pay for” is a very apt truism for organizational culture, employee well-being, and business performance. Organizational culture is what the employees think, how they act, and why they work for the company in the first place. To create and uphold a desirable culture, executives and managers have to find ways of encouraging desirable behavior. There is no single right answer, but the Competing Values Framework provides an excellent system of classifying employees and types of workplace cultures.

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The four types of company culture derived from the Competing Values Framework are the clan, the market culture, the hierarchy, and the adhocracy. Very broadly speaking, the clan is aimed at social relations and human resource development, the market culture concerns itself with a financial performance at the moment above all else, the adhocracy is the disruptive and unstructured firebrand innovator, and the hierarchy is a hyper-structured and rule-based bureaucracy. According to DeGraff (2012), a healthy culture should ideally have some mixture of all four to accommodate workers’ different personalities and be equal to many challenges.

NextEra Energy displays a mix of styles, just as many other companies do. Its most prominent characteristic is that of a clan, with the very close second being a hierarchy. The adhocracy and market culture are tied for the distant third and are represented the least. In practice, that cultural mix means that NextEra Energy is a clan with cordial relationships among employees that favors discretion, unstructured interaction, long-term loyalty, and being cordial and accommodating with their clients. At the same time, it is a hierarchy that has very rigid roles, which favors rules, regulations, and procedures, while disfavoring humanity and discretion. This paradox is likely caused by poor culture management, which brings the worst out of both the clan and the hierarchy: a politics-driven workplace with higher-ups playing favorites, but also with outdated mechanisms to control employees through the excessive bureaucracy.

Corporate culture and reward structure are linked and affect each other. Culture stems from what the management rewards employees for. The current reward structure in NextEra Energy likely favors long-term employment and has a lot of non-financial benefits in addition to base pay. It also likely rewards following rigid KPIs while encouraging employee socialization through corporate events. The two are typical reward structures for hierarchies and clans, respectively, and they aim to achieve sometimes conflicting goals (Janicijevic, 2013). The employee performance metrics likely include very quantitative things, such as time spent in the field by an engineer, but also are supplemented by informal metrics, such as relationships with the leaders and their favorites. This dysfunctional combination is unlikely to have been intentional and probably stems from select personnel making their own hiring decisions that go against the corporate culture set by executives.

A desirable culture would shift from a hierarchy more to adhocracy to reduce oppressive procedures and promote innovative thinking and emergent leadership instead of politics. The current direct material compensation system works well, but, to incentivize innovation, indirect rewards have to exist for non-standard approaches to problem-solving and emergent leadership. The clan structure and its implicit incentives already allow for it, but the system’s hierarchical aspects reward employees for doing the exact opposite. Rigid KPIs have to be restructured to track things accomplished rather than the effort spent accomplishing them. Perhaps more importantly, key figures that benefit from the political hierarchy need to be let go to make way for new leaders to emerge.

Creating a stable company culture that favors what the leaders want and provides the workplace for talent to thrive takes conscious effort. Compensation and culture are linked and influence each other, sometimes in unexpected ways. NextEra Energy’s adherence to a clan structure while rewarding rigid and numbers-based performance metrics has likely produced a pathological combination. Changing it is possible, but it will require acute attention to the employees and making some difficult choices regarding what is important for the company.

References

DeGraff, J. (2012). Competing Values Framework introduction [Video File]. Web.

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Janicijevic, N. (2013). Matching compensation system with the type of organizational culture. Ekonomika preduzeca, 61, 309-324.

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