What Makes CarMax Great?
Organizational culture forms part of the influencing factor towards the success of an organization. Within every organization, there are practices, which are considered the norm, and dictates how operations in an organization are carried out. Organization culture also depends on the type of leadership within an organization. CarMax organization culture has contributed greatly to its performance, which has seen it become famous in all of its locations to the extent of being ranked among the top companies in Fortune 500 magazine. Its culture revolves various artefacts such as language, physical structure, values, ceremonies and rituals. The success of the company is realized from benefits of organizational culture, which include increased sales, productivity, customers’ loyalty and efficient service delivery. Therefore, positive organizational culture should be promoted within organizations.
Organizational culture is as a set of attitudes, norms, beliefs and practices that are shared by employees as well as the management in any organization or company (McShane, & Von, 2014). The culture generally includes various factors such as how customers, suppliers, employees and other stakeholders are treated when making decisions within an organization in addition to speed, level and process of decision-making (Ovidiu-Iliuta, 2014). Moreover, the culture encompasses the level of control and formality that is applied when carrying out operations and rewards giving to good performances within an organization.
CarMax IncOrganizational culture plays an important role within organizations whereby it helps in outlining the behaviors that are appropriate for employees and other operation practices. An organization that has clearly defined it culture ensures that the members of the organization know what the company or organization expects from them and stakeholders expect from the company (McShane, & Von, 2014). Organizational culture simply helps in defining an organization and its employees and giving it identity. The sense of identity is also communicated to the customers of the company, the employees of the company, the suppliers as well as the general public that constantly interact with the company.
All stakeholders, both external and internal, know who a company or an organization is through the culture that is communicated to them by the company or organization (Ledimo, 2013). Furthermore, it is to be noted that organizational culture helps in giving employees the sense of identity and provides the overall goals and objectives of the organization. Organizational culture is what holds the company or organization together through hard times and easy times (CarMax, Inc. SWOT Analysis, 2014).
CarMax is one of the largest retailers of used cars in the United States and is one of the Fortune 500 Companies. The first location of the company was opened up in the year 1993, and since then, it has experienced increased growth (CarMax Business Services, LLC, 2014). The CarMax Company had 128 locations by January 2014, clearly an indication that the company has grown over the years. The growth in the company can greatly be attributed to the organizational culture and values among other factors, which have propelled the company to the current position.
CarMax Company is a retailer based in the United States. The language that is generally used for business in the United States is the English language (Ovidiu-Iliuta, 2014). As part of the language used at CarMax, the slogan used which helps in giving identity to the company is “The way car buying should be.” The employees work as team, which is evidenced by high interpersonal relationships among them. The interpersonal relationship is also extended to customers where employees’ high communication skills are maintained across all departments.
Apart from the language that is used within the company for business and interactions between the associates and even with customers and other stakeholders, ceremonies are part of the organizational culture within the company. It is the culture of CarMax that whenever employees perform well, they are reward for their efforts. The rewards do not only just come in form of presents and other rewards; instead, the company always organize for steak cookouts for the employees. The steak cookouts are conducted regularly every time there are employees to be reward for great performance within the company. This provides an opportunity for the employees to interact with one another and share their ideas for the improvement of their performance and success of the company.
Furthermore, it is also part of the organizational culture to ensure that the associates within the company have fun in addition to the customers. The company organizes for regular pizza parties and steak outs for its employees and encourages an atmosphere that is friendly driven by the focus of the company on integrity towards the customers and the employees of the company (McShane, & Von, 2014). Employees are rewarded with benefits such as holidays, time away, and paid vacations. Furthermore, the company offers rewards such as purchase of cars and accessories at discounted prices, discounts on childcare, appliances, fitness memberships, cell phones, travel, and furniture among others that help the employees save money. Consequently, The company employees show high respects for their customers and address them calmly. This has seen the company develop loyalty and build emotional connections with its employees, which contributes to its success.
When hiring, CarMax normally conducts telephone interviews before face-to-face interviews. It is also the culture at CarMax when recruiting to conduct panel interviews as well as behavioural interviews for new employees. To set itself apart from other companies, CarMax also offers testing to interviewees before they can be employed. This ensures only the most qualified are employed. The hiring process is quote intensive ensuring that employees with the relevant skills are employed. This has been one of the contributing factors towards the success of the company because there is no compromise on the quality of staffs employed.
CarMax operates in what are known as superstores whereby a typical store is about 59,000 square feet (5,500 m2), and it carries about 300 to 400 vehicles. Furthermore, CarMax has a home office that appears like a glass box that has been modernized and is slipped in a forest (ADD Inc, 2014). The office located in such a way that there is access to daylight. It also has energy-efficient systems that regulate and control the energy consumption within the structures. The home office is designed in such a way that it appears beautiful in its natural surroundings.
The structures are constructed using a campus plan which helps in minimizing the impact of its size whereby four-storey parking has been used. The inside of the building is constructed in such a way that it has strategically located points of interaction for the associates and customers. This helps in building a culture of collaboration and collegiality within the company. The headquarters of the company is a five-story office building that is made up of 243,000 square feet for offices, in addition to 19,000-square-foot used as a fitness facility.
The building is located in a 3,500-acre piece of land in West Creek Business Park in the county of Goochland. The building is surrounded with trees and has a pedestrian connector that simply joins the office building and a parking deck that can host 1000 cars (ADD Inc, 2014). As part of the physical structure, CarMax uses yellow, navy blue and white colour as part of its identity. The company logo is made up of the colours mentioned; giving it unique looks that distinguishes it from other companies. The staffs of the company also put on uniforms, mostly t-shirts, that bear the logo of the company and the colours of the company. This also helps in uniting the employees by giving the identity of being equal.
The main fundamental principle that guides the culture at CarMax is integrity, which is normally reflected in the way the company serves the customers, deliver its products to consumers as well as how employees within the company treat each other. Shared values are considered to be the foundation on which the operations of the company are built on CarMax Business Services. Through the various values that are shared within the company, the company seeks to ensure equal treatment of its investors, customers, and associates in terms of ethical practices and trustworthiness (Great Place to Work, 2014). The employees are involved in decision-making in addition to respect of customers and being honest as major ethical practice.
The values that are shared within the company include diversity, customer focus, communication, teamwork, associate development, and improvement. It is the culture of the company to conduct its operations in a customer-focused way, which is aimed at providing customers with great experience. On the value of respect, the company promotes individual knowledge among the associates and values the contribution that they make towards the company. Teamwork is also another value that is encouraged within the company. The employees and the management of the company normally work together for the interest of the company and also for the interest of the customers of the company. Communication is highly encouraged according to a survey conducted by Greatrated.com (2014).
The survey observed that 93% of the employees agree that there is great communication within the company. Sharing of information, soliciting for feedback and exchange of ideas within the company is also another organizational culture that is highly encouraged (CarMax, Inc. SWOT Analysis, 2014). Diversity is also another value that is practiced and encouraged as part of the organizational culture at CarMax Company. The uniqueness of the associates and employees is well integrated into the company and work is done to ensure that everyone in the company feels respected and valued despite the diversity in terms of beliefs, race, and gender among other aspects of diversity (Great Place to Work, 2014).
Diversity within the company is promoted through various ways from the associates, the customers and even the community. For the Associates of the company, CarMax ensures that it hires, promotes and trains only the qualified associates who possess diverse attributes. Furthermore, the associates are treated with lots of respect, their contributions are respected and valued by the company and are always provided with benefits that help in supporting their diversity within the workforce. In addition to that, the associates are provided with an inclusive and collaborative environment that helps in encouraging the ideas and inputs of the associates.
Diversity is also promoted among the customers whereby it is the culture of the company to welcome all its customers in all the stores if the company (McShane, & Von, 2014). Customers are also treated with utmost respect with an aim of providing them with exceptional experience. As part of the culture within the organization, all customers of the company are offered competitive and ethical offers that meet the needs of the customers. The community is also not left out on the issue of diversity at CarMax Company.
It is the organizational culture of the company to make positive contributions towards the communities, which it operates, and its employees live in (Na, & Morris, 2014). This is done through the promotion of leadership in the youths, promoting education and wellness in the communities. CarMax supports diverse organizations and programs within the communities through internships, grants, volunteer activities and offering of sponsorships to the needy in the communities. Another organizational culture that is practiced at CarMax is that of associate development.
Everyone from the junior employees to the top management is provided with opportunities for professional growth and development. The development of the associates and employees is done through coaching, sponsored trainings as well as mentoring of the employees. This has helped to improve the skills and work-performance of employees over the years. This can also be considered to be a contributing factor towards the tremendous growth experienced by the company in terms of its expansion and performance over the years.
According to the survey by Greaterated.com (2014), it is observed that about 86% of the associates and employees at CarMax agree that they are offered great opportunities that help them to develop professionally and become better people. The positive culture within CarMax is generally attributed to the leadership with which about 94% of the employees according to a survey by agree that the bosses are great to work with. It is to be noted that the values that are practiced at CarMax start from the top management within the company whereby the leadership of the company is considered to be down-to earth and focused on the associates of the company (CarMax Business Services, LLC, 2014). The type of leadership that is found within an organization is an important factor that influences the type of organizational culture that is found within an organization.
Furthermore, it is also to be noted that CarMax offers its employees what is known as flexible time-away (CarMax, Inc. SWOT Analysis, 2014). This is a policy whereby employees are allowed to have some few weeks away from work before they resume their duties (Greaterated.com, 2014). This is a culture that to some extent is not good considering that the employees are not offered time for vacations. This culture should instead be changed to that of offering vacations, which will provide the associates with enough time to relax and build their lives.
The company’s culture has contributed to its increased that has seen it being ranked position 54 among the Fortune 500 Companies list (Fortune 500 Magazine, 2014). An average employee within the company normally gets time away whenever they are in need of time to rest. Employees work in shifts whereby there are those that take the morning shift while others take the evening shift, but on rotational basis.
Consequently, organizational culture is made up of shared assumptions within an organization. Employees normally share assumptions, which translate into being part of the organizational culture. In the sae of CarMax, the employees share the assumption that they own the company. This is based on the reason that the employees are constantly involved in the decision making process within the company. The employees are made to feel comfortable by allowing them to take part on decision making especially on matters dealing with the sales of the company and how they can increase their performance. Furthermore, the other assumption that is shared about the company is that all the customers get satisfied with the products that the company offers to them at all times.
Organizational Culture and Performance of the Company
Organizational culture and behaviour has been identified as one of the contributing factors towards the success of an organization. When there is positive organizational culture in a company, there are high chances that the company will be able to succeed (Niamh Ring, 2014). In the case of CarMax, the organizational culture that is practiced has been a contributing factor towards its growth over the years in the United Sates market. The organizational culture at CarMax can be said to have positive impact on the performance of the company in terms of employee turnover and customer attraction.
The revenues of the company have been on the increase over the years, which mean that the organizational culture of treating customers with respect, and valuing their diversity has been of great help (Janićijević, 2013). It is also to e noted that the company has been able to retain most of its employees over the years (Reuters.com, 2014). This can be attributed to the positive organizational culture of empowering employees, valuing their contributions in the company and helping them improve professionally through trainings, coaching and mentoring (Niamh Ring, Jun 20, 2014). The impact of the organizational culture that is practiced at CarMax Inc can be seen through the number of stores that the company has been able to open up over the years. As of the year 2014 January, CarMax had about 128 superstores across the United States.
A strong organizational culture is beneficial to a company, the employees as well as the customers of the company (Büschgens, Bausch, & Balkin, 2013). When a company has a strong and positive organizational culture, the productivity of the company is likely to improve as well as the performance of the employees (Reuters.com, 2014). Employees become motivated to work for the company therefore resulting in increased productivity. An average employees works for eight hours a day for a five-day long week. This ensures that employees are not overworked and have free time for recreational. This strong and positive organizational culture has helped to provide customers with high quality products CarMax (Narrative Science, 2014). When customers are provided with high quality products, satisfaction is guaranteed, which means that the company will continue to make sales from the customers as well as expand its operations to other markets, as observed in the case of CarMax.
The organization culture practiced by CarMax has impacted positively to its economic growth. The company has maintained high number of customers across America thus commanding a significant market shares in the industry of used cars. It has also given the company competitive advantage over other companies selling second handcars. This has been evidenced by its ever-growing sales and market share over years. Hence, the company should maintain its culture and try to improve its customer service by concentrating on customer loyalty, which make sure that customers are emotionally connected with all its products. The strategy will see it dominate in the market just like Apple, Philips and Nike that are widely known for their brand loyalty.
Every company has its own organizational culture that is practiced by the employees and determines how a company operates. Considering that organizational culture has great impacts on the success of an organization, companies should build and encourage positive organizational cultures that benefits all the stakeholders. CarMax attributes its success to the positive organizational culture that it has been able to build and maintain over the years. Therefore, the overall conclusion from the case analysis of CarMax with regard to organizational culture is that companies need to have positive organizational cultures that generate benefits.
ADD Inc (2014), CarMax Home Office http://www.addinc.com/portfolio/project-page.aspx?projID=105&PortID=2 on 10th September 2014.
Büschgens, T., Bausch, A., & Balkin, D. B. (2013). Organizational Culture and Innovation: A Meta-Analytic Review Organizational Culture and Innovation: A Meta-Analytic Review. Journal Of Product Innovation Management, 30(4), 763-781. doi:10.1111/jpim.12021
CarMax Business Services, LLC (2014) About CarMax; Our culture and values, viewed from http://www.carmax.com/enUS/company-info/culture.html on 10th September 2014.
CarMax, Inc. SWOT Analysis. (2014). CarMax, Inc. SWOTS Analysis, 1-9.
Great Place to Work® (2014), What Makes CarMax Great, viewed from http://us.greatrated.com/carmax on 10th September 2014.
Greaterated.com (2014), 2014 Fortune 100 Best Companies to Work For List, viewed from http://us.greatrated.com/2014-fortune-100-best-companies-to-work-for-list on 10th September 2014.
Janićijević, N. (2013). The mutual impact of organizational culture and structure. Ekonomski Anali / Economic Annals, 58(198), 35-60. doi:10.2298/EKA1398035J
Ledimo, O. (2013). Managing Organizational Culture Through an Assessment of Employees’ Current and Preferred Culture. Proceedings Of The European Conference On Management, Leadership & Governance, 161-168.
McShane, S. L., & Von, G. M. A. Y. (2014). Organizational behaviour. McGraw-Hill Higher Education
Na, F., & Morris, T. (2014). Organizational ambidexterity strategy and firm performance: the moderating role of organizational capital. Academy Of Management Annual Meeting Proceedings, 1138-1143. doi:10.5465/AMBPP.2014.22
Narrative Science (2014). Earnings expected to increase for CarMax, viewed from http://www.forbes.com/sites/narrativescience/2014/04/02/earnings-expected-to-increase-for-carmax/ on 10th September 2014.
Niamh Ring (Jun 20, 2014), CarMax Soars as Earnings, Revenues Top Analyst Estimates, viewed from http://www.bloomberg.com/news/2014-06-20/carmax-soars-as-earnings-revenues-top-analyst-estimates.html on 10th September 2014.
Ovidiu-Iliuta, D. (2014). The link between organizational culture and performance management practices: a case of it companies from romania. Annals Of The University Of Oradea, Economic Science Series, 23(1), 1156-1163.
Reuters.com (2014) Carmax Inc (KMX), viewed from http://www.reuters.com/finance/stocks/companyProfile?symbol=KMX on 10th September 2014.