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RESEARCH

includes research articles that focus on the analysis and resolution of managerial and academic issues based on analytical and empirical or case research

Executive

Summary

KEY WORDS

Organizational Culture

Organizational Commitment

Retention

Business Process

Outsourcing

Impact of Organizational Culture on Commitment of Employees: An Empirical Study of BPO Sector in India

Sulakshna Dwivedi, Sanjay Kaushik, and Luxmi

Sector in India Sulakshna Dwivedi, Sanjay Kaushik, and Luxmi Retention of employees has become a critical

Retention of employees has become a critical issue in the corporate arena. With the increasing trend of frequent job switching among employees , it is a big challenge for HR Managers today to fulfill the aspirations of each and every employee and to bring congruence between organizational and individual goals. In the BPO sector of India where attrition rate is as high as 55 percent (ASSOCHAM, 2011), the situation is even more difficult for HR Managers.

But the big question is how to make employees feel committed to their organizations especially in such a dynamic work environment where attrition rate is so high and job poaching is the order of the day. An extensive review of literature reveals that employ- ees’ ‘commitment ’to the organization is a function of their interaction and relation- ship with that organization and, to a great extent, a manifestation of the attitude of management towards the employees. This belief is based on the premise that mem- ber’s identity with the organization is a result of a set of carefully designed policies within the cultural pattern of the organization.

An attempt has been made in this research to study the BPO sector to see whether the organizational culture and commitment level of employees differ across the different strata of employees in the BPO sector and finally to explore the relationship between organizational culture and commitment. The research was carried out in 15 BPO units in and around Chandigarh – Chandigarh, Panchkula, and Mohali which covered three strata of BPO units based on the number of employees and from all the three level of employees, i.e. top, middle, and lower level of employees.

Results reveal that employees of smaller BPOs perceive their culture a shade better than medium or larger BPOs. And, as far as overall commitment is concerned, employ- ees of smaller BPOs have significantly more commitment level than employees of me- dium or larger BPOs. As organizational culture is better in smaller BPOs and so is the commitment, these findings give us a cue that organizational culture has definite impact on commitment of employees. Further results reveal that commitment of em- ployees is particularly sensitive to six dimensions of organizational culture viz. proaction, confrontation, trust, authenticity, experimentation, and collaboration. But, the results failed to support the relationship between autonomy and openness with commitment. Further, findings reveal that the focal point in the development of any strategy is directed towards impacting the commitment of employees towards their organizations

VIKALPA • VOLUME 39 • NO 3 • JULY - SEPTEMBER 2014

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O wing to a number of factors such as advancing technology, rising globalization, and changing demographics, fundamental changes have taken

place in the business environment, leading to new op- portunities, challenges, and risks for business managers. Today, the business environment has become more vola- tile with the product lifecycle decreasing and consumers demanding more value at lower prices. The emerging tech- nologies and business models are lowering barriers to entry and facilitating asymmetric competition (McKinsey Quarterly, 2006).

In this scenario, the organizations’ ability to change con- stantly and fundamentally is considered critical for their continued existence, especially in a highly dynamic en- vironment. In this pursuit, to improve efficiency and ef- fectiveness of business activities, managers often resort to re-engineering, outsourcing, and off- shoring. Cost sav- ings and assurance of acceptable quality are the two key reasons for offshoring particular business processes to developing countries (Dossani & Kenney, 2003; Taylor & Bain, 2005).

The Business Process Outsourcing (BPO) industry is about a decade old in India. It is the fastest growing seg- ment of the Indian Information Technology (IT)-BPO sec- tor and India is considered the “electronic housekeeper” of the world (NASSCOM, 2009). BPO services are typi- cally provided by Information Technology enabled Serv- ices (ITeS).

Over the last decade, the BPO industry has grown at a frenetic pace. BPO exports from India grew from $2.45 billion in FY 2002-03 to over $16 billion in FY 2012. Pres- ently, the IT-BPM sector in India is expected to provide direct employment to over 3.1 million employees and gen- erate revenues of over 8.1 per cent of the national GDP of India (NASSCOM, 2014). India’s market share in outsourcing industry spiked from 51 per cent in 2009 to 58 per cent in 2011. The BPO industry has accounted for around 1.5 per cent of India’s incremental GDP in the last decade.

Through portrayal of ‘work as fun’ and ‘workplace as yet another campus’, the potential workers are attracted to and engaged in the BPO sector. The superior image of work in the sector and the vibrant ambience of workplace with sweeping glass and concrete buildings, row of jazzy computers, the company of smart and trendy peers - help in drawing educated and fun-loving youngsters from ur-

ban middle class, who are fascinated with Western ways

of living and modern work environments (Ramesh, 2004).

Notwithstanding these highly encouraging conditions for the establishment of BPO operators, skill shortages and employee turnover have rapidly become major chal- lenges facing the mushrooming industry (Budhwar, Luthar, & Bhatnagar, 2006; Budhwar, Varmam, Singh, & Dhar, 2006). The BPO sector is facing severe dearth of skilled workers, as the rate at which employees are opt- ing out of mid- and low-level jobs has become alarmingly high (ASSOCHAM, 2011).

Attrition remains the most pressing problem. Although officially running at 30-40 percent per annum (NASSCOM, 2006), the real rate is perhaps around 65-75 percent per annum. In fact, the rate of attrition exceeds 100 percent in certain companies and geographical locations and for particular processes.

Similarly, according to a global call centre study, Indian call centres have the highest employee turnover of 40 per cent against a global average of 20 per cent and almost 60 per cent of employees have less than one year of tenure at work (Holman et al., 2007). Attrition rate in the BPO sec- tor in the first quarter of the year 2011 was as high as 55 percent (ASSOCHAM, 2011).

A comparative analysis of call centres in the Asia Pacific

region including China, Korea, India, the Philippines, and Singapore revealed that in 2005, while India had the low- est average full-time customer service agent annual sal- ary (US$2074), it had the greatest level of agent attrition (31%), lowest average employee tenure (11 months), and highest average sick days taken per agent per annum (15 days) (Wallace, 2006).

The long-documented problem of high attrition is an end result of work that is repetitive and subject to short cycle times. Excessive monitoring, prevalence of stiff targets, and infrequency of breaks make work for many as mo- notonous and stressful, often leading to emotional ex- haustion and withdrawal (Deery, Iverson, & Walsh, 2002). Budhwar, Verma, Malhotra, & Mukherjee (2009) suggested monotonous work, stressful work environ- ment, unpleasant working conditions, lack of career de- velopment opportunities and better job opportunities elsewhere as the major reasons of attrition in the Indian call centre industry. Indian BPO firms can successfully battle employee problems like attrition, burnout, and stress by developing and managing levels of employee

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IMPACT OF ORGANIZATIONAL CULTURE ON COMMITMENT OF EMPLOYEES

hope (Combs, Clapp-Smith, & Nadkarni, 2010), enhanc- ing job satisfaction which could further be augmented by work-life balance (Kanwar, Singh, & Kodwani, 2009), and increasing the focus on people (Thaly & Sinha, 2013).

Sengupta and Gupta (2011) found five factors, viz. sub- standard nature of job, personal factors, uncongenial or- ganizational support, dispirited perceptual factors, and hostile organizational culture as significant determinants of attrition in the Indian BPO industry. Boyar, Valk, Maertz, & Sinha (2012) found that employees with com- paratively low financial obligation were more prone to quit the organization.

On the basis of literature reviewed in the BPO sector, it is apparent that most of the studies which are based on interviews with BPO workers point towards different as- pects of organizational culture, work environment, and job design, as antecedents of turnover and lower level of commitment. But these studies are based either on de- scriptive evidence (Budhwar et al., 2006; Taylor & Bain, 2005) or managerial surveys (Batt, Doellgast, & Kwon, 2005). Fewer studies are found in which some statistical relationship between the organizational culture and com- mitment in this sector has been worked out. Overall, the extant literature highlights a strong paucity of research on the management of high attrition rate in BPOs in India especially in Tier III cities. Given the rapid growth in the sector, involvement of a large number of both national and multinational firms and a significant impact of BPO on the global economy, it is important to highlight the organizational culture of BPOs and its impact on com- mitment of employees.

Moreover, some authors like Budhwar et al. (2006) in their study of Indian BPO firms suggested that further research should be conducted with a large sample including dif- ferent levels of managers and employees to obtain a more complete picture of HRM Systems and policies and their impact on different measures of labour turnover such as intention to quit, customer satisfaction, productivity, and overall performance of HRM and their correlation to firms’ performance with more rigorous statistical analysis.

To fill this research gap, this research explored the rela- tionship of organizational culture with commitment of employees in the BPO sector. The study has the following objectives:

VIKALPA • VOLUME 39 • NO 3 • JULY - SEPTEMBER 2014

• To carry an in-depth review of the literature in the area of organizational culture in the BPO sector.

• To assess whether the organizational culture and com- mitment level of employees differ across the three strata in the BPO sector.

• To establish a linkage between organizational culture and commitment level of employees in the BPO sector.

• To recommend workable guidelines and action choices for enhancing organizational culture and com- mitment of employees in the BPO sector.

CONCEPTUAL FRAMEWORK OF ORGANIZATIONAL CULTURE

Organizational culture is a critical element of organiza- tional life. It holds the organization together — it is the fabric of ‘the way we do things around here’. Organiza- tional culture has been presented as an enigma which has held the attention of practitioners and theorists world- wide for at least two decades (Ogbonna & Harris, 1998).

Conceptualizing organizational culture is a difficult task, due to the fact that there is little agreement on what the concept means, how it should be observed and measured, and how it relates to more traditional industrial and or- ganizational psychology theories. The popular use of the concept has further complicated matters by organizations labeling anything, from value statements to common be- haviour patterns as organizational culture (Schein, 1990).

Schein (1985, p. 9) defined organizational culture as

“A pattern of basic assumptions – invented, discovered, or developed by a group as it learns to cope with its problems of external adaptation and internal integra- tion – that has worked well enough to be considered valid and, to be taught to new members as the correct way to perceive, think and feel in relation to those proc- esses.”

Pareek and Rao, (1999, p. 24) defined organizational cul- ture as

“Cumulative, crystallized and quasi stable shared life- style of people as reflected in the presence of some states of life over others, in the response predispositions towards several significant issues and phenomena (attitudes), in the organized ways of filling time in relation to certain affairs (rituals), and in the ways of promoting desired and preventing undesirable behavior (sanctions)”.

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According to Pareek (2004), various terms used in the context of organizational culture include: ‘values’, ‘eth- ics’, ‘beliefs’, ‘ethos’, ‘climate’ and ‘culture’. These can also be seen as multi-level cultural concepts. The core (first level) consists of values which give a distinct iden- tity to a group. This is called ethos of the group, which can be defined as fundamental character or spirit of a culture.

At the second level is climate, which can be defined as the perceived attributes of an organization and its subsys- tems, as reflected in the way it deals with its members, associated groups, and issues. The third concept is cul- ture – the cumulative beliefs, values, and assumptions underlying transactions with nature and important phe- nomena, as reflected in artifacts, rituals, etc.

ORGANIZATIONAL CULTURE IN BPO SECTOR

Indian BPOs are usually distinguished by formal, struc- tured, and streamlined HRM systems with tightly con- trolled organizational structures. HRM plays a strategic role with a focus on employee involvement and commit- ment to work practices (Budhwar et al. 2006).

Various researchers have segregated the call centre genre into various sub-types like the Taylorized mass-produc- tion, professional services, hybrid mass-customization models (Batt & Moynihan, 2002), and repetitive, tightly- controlled, ‘transactional’ work with ‘relational’ customer interaction (Kinnie, Hutchinson, & Purcell, 2000). Thus, BPO processes embrace more routine workflows that have been standardized, permit less room for discretion, and occasion higher levels of monitoring (Taylor & Bain, 2005; Batt, 2002). It could be argued that this state of affairs results in lower levels of job commitment and correspond- ingly higher levels of job attrition (Taylor & Bain, 2005, pp. 265).

As far as the status of employees in BPO sector is con- cerned, the literature depicts a stark distinction between this emerging class of workers and those in more tradi- tional Indian employment sectors (Taylor & Bain, 2005; Mirchandani, 2004; Ramesh, 2004). Ramesh (2004) de- scribed workers in India’s new economy as ‘cyber coo- lies’: ‘insecure’ and ‘vulnerable’ casualties of the new economic order leading a double life – an ‘authentic’, In- dian, daytime life, and a pretentious, Western, night-time one.

McMillan (2006) portrayed Indian call centre workers as ‘the global proletariat’, citing in particular the routiniza- tion of work, the emotional labour that dealing with cus- tomers inevitably involves, and most particularly, the ‘cultural transformations’ that Indian agents need to un- dergo to get their jobs done. For cultural transformations, hypothetical profiles are developed with residential roots in some prominent city in the US.

Customer abuse driven by the political backlash to outsourc- ing and its effects on job losses in Western countries, night shift working (Budhwar et al. 2006), adoption of pseudo- names to mask identity are certain issues leading to em- ployee stress, burnout, and turnover (Mirchandani, 2009).

Issues of the BPO Labour Process

Many labour management problems are rooted in the dis-

tinctive character of the call centre labour process (Taylor

& Bain, 2005). Following are some of the major labour

process issues in the BPO sector.

Work Standardization

The nature of work in India has emerged as a low-cost replication of the most routinized processes in the West (Taylor & Bain, 2005). In view of the fact that offshore business models are mainly driven by cost-reduction strat-

egies and are subject to stringent quality controls in serv- ice level agreements, there is likely to be a keen tension between quantity and quality or volume and value (Taylor

& Bain, 2006). Hence work procedures are quite stand-

ardized and drudgerous leaving no room for job discre- tion.

Low Value job/Under-utilization of Skills

Most routinized jobs are offshored, which are usually re- lated to non-core business processes that involve low value, low skilled, routine, and standardized transac- tional activities (Thite, 2008). Considering that Indian BPO employees are usually more educated than their counter- parts in the Western centres, it is likely that their skills are under-utilized, leading to demonization and higher at- trition.

Rigorous Supervision

Studies of Indian call centre workflows suggest that due to the adoption of intense forms of mass production mod-

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IMPACT OF ORGANIZATIONAL CULTURE ON COMMITMENT OF EMPLOYEES

els employee performance is rigorously monitored and measured via service level agreements. Performance moni- toring tends to be more severe in call centres where tech- nological aids such as silent/remote monitoring and screen capture tools enables the on-going collection of individual productivity data (Holman, Batt, & Holtgrewe, 2007). Hence employees usually remain under close watch of their seniors.

Career Stagnation

Budhwar et al. (2006) mentioned that employees work- ing in Indian call centres do not consider working in call centre as a career option. Mehta and Mehta (2008) con- firmed that both lower and middle level employees em- phasized opportunities for career growth and skill deve- lopment as the most important positive aspect of their job. But in case of negative aspects, middle level employ- ees considered career stagnation as one of their prime concerns. Thus, it seems that employees enter the outsourcing job market for career growth and good sala- ries, but on reaching the middle levels within the organi- zation, they get concerned about their further career growth.

Union Formation in BPOs

The demanding and individualistic nature of work, the inability to intermingle with colleagues or leave work sta- tions, erratic shift patterns (Bain & Taylor, 2002), man- agement control strategies such as close monitoring (Todd, Eveline, Still, & Skene, 2003), and blacklisting of employ- ees with union backgrounds or those previously work- ing in highly unionized firms (Van Den Broek, 2003) have made it difficult for unions to organize workers within call centres.

Previously, BPO Industry labelled their employees as ‘pro- fessional agents’, a term which did not adhere to the con- cept of unionization. For agents, joining a union was improper for the international call centre employees and was seen as rebuffing of key professional values (D’cruz & Noronha, 2009).

However, with the intervention of senior Indian and in- ternational trade union leaders and labour activists, the industry presently has ITPF (IT Professional Forum), CBPOP (Centre for BPO Professionals), and UNITES Pro (Union for ITES Professionals).

VIKALPA • VOLUME 39 • NO 3 • JULY - SEPTEMBER 2014

CONCEPTUAL FRAMEWORK OF ORGANIZATIONAL COMMITMENT

Organizational commitment or member identity is a value laden behaviourally anchored cultural variable of organi- zational environment. Hall, Schneider, and Nygfre (1970) defined commitment as “the process by which the goals of the organization and those of the individual become increasingly integrated or congruent”. Hrebiniak and Alutto (1972) adopting the exchange notion, defined com- mitment as “a result of individual organizational trans- actions, and alterations in side bets or investments over time”. Porter, Steers, Mowday, and Boulian (1974)stated that commitment is “the relative strength of an individu- al’s identification and involvement in a particular organi- zation”.

Buchanan (1974) stated two distinct approaches in de- fining commitment: the psychological approach and the exchange approach. In an example of the psychological approach, Sheldon (1971) defined organizational com- mitment as an attitude or an orientation towards the or- ganizations, which linked or attracted the person to the organization. Becker (1960) exemplified the exchange approach, and advanced the notion of ‘side-bets’ as in- fluences that produced a willingness to remain attached to the object of the commitment. Salancik (1977) defined organizational commitment as “a state of being in which an individual becomes bound by actions to beliefs that sustains activities and involvement”.

Meyer and Allen (1991) held that organizational commit- ment was a multidimensional construct comprising three components: affective, continuance, and normative. Mowday (1999) described organizational commitment as the attachment that was formed between employees and their employing organization. More precisely, organiza- tional commitment can be defined as one’s identification with, and loyalty to an organization. Robbins (2005) stated that organizational commitment was a state in which an employee identified with a particular organization and its goals, and wished to maintain his membership in the organization.

An extensive review of literature reveals that members’ ‘commitment’ to the organization and feeling of identity with the organization, are a function of their interaction and relationship with that organization and is the mani- festation of the attitude of management towards the la-

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bour force. It is believed that members affinity with the organization comes as a result of a set of carefully de- signed policies underlined within the cultural pattern of the organization. The organization works overtime to build attachment behaviour among members. A high de- gree of employee commitment may override employees’ job dissatisfaction, and make them decide to remain in the organization (Mowday, Porter, & Steers, 1982). Allen and Smith (1987) found a positive relationship between affective commitment and employee innovativeness.

The question then arises is that how can the employees be made to feel committed to their organizations espe- cially in a dynamic work environment where attrition rate is so high and job poaching is the order of the day.

RELATIONSHIP BETWEEN ORGANIZATIONAL CULTURE AND ORGANIZATIONAL COMMITMENT

Researchers (Yiing & Ahmad, 2009; Rashid, Sambasivan, & Johari, 2003; Shannawaz & Hazarika, 2004) have es- tablished the relationship between organizational cul- ture and commitment of employees in different regions and different industrial set ups. Sungmin, Henkin, and Egley (2005) found teamwork and trust to be a significant predictor of commitment. Tilaye (2005) assessed perceived job autonomy, procedural justice, distributive justice, or- ganizational support, and employee age as the most im- portant predictors of organizational commitment.

Shannawaz and Hazarika (2004) assessed organiza- tional culture on OCTAPACE Scale of Pareek (1997) in two hospitals and found dimensions of organizational culture as significant predictors of organizational com- mitment. Kwon and Banks (2004) showed strong rela- tionships between organizational commitment and job meaningfulness; task identity was found to have a strong positive relationship with professional commitment while gender and organization size had a positive (negative) influence on organizational commitment. Connell, Ferres, and Travaglione (2003) found perceived organizational support, procedural justice, and transformational lead- ership to be the significant predictors of trust in manag- ers which in turn influenced turnover intent and commitment.

Lok and Crawford (1999) found that organizational sub- culture was more strongly related to commitment than was organizational culture. Satisfaction with the level of

control over working environment had the highest corre- lation with the level of commitment. They found a small positive association between age and commitment. How- ever, participants’ level of education, years in position, and years of experience failed to show any relationship with commitment.

Better organizational culture where one’s higher order needs are satisfied leads to higher level of commitment among employees. Conversely, an organizational culture with coercive authority affects the level of commitment negatively (Singh & Das, 1978).

Sharma (1997) indicated that both situational and per- sonal factors contributed to workers’ commitment towards their organization. Between the two, situational factors contributed more to commitment than person related fac- tors. Glisson and Durick (1988) found two job character- istics, skill variety and role ambiguity, as the best predictors of satisfaction and two organizational characteristics, leadership and organization’s age, as the best predictors of commitment. DeCottis and Summers (1987) found sev- eral aspects of the organization: perceived structure, proc- ess, and climate, as well as job satisfaction to be predictors of commitment. Bhagat and Chassie (1981) examined various determinants of organizational commitment and found satisfaction with promotional opportunities as the best predictor of commitment.

Stevens, Beyers, and Trice (1978) indicated that certain role factors such as tenure and work overload and per- sonal factors such as attitude toward change and job in- volvement had a strong influence on commitment.

On the basis of literature reviewed, the paper proposes that organizational culture has a significant influence on organizational commitment. For organizational culture, OCTAPACE (openness, confrontation, trust, authentic- ity, proaction, autonomy, collaboration and experimen- tation) Scale by Pareek (1997) has been used.

HYPOTHESES

H 1 : Perception of employees about organizational cul- ture in three organizational strata of BPO units un- der study differs significantly.

H 2 : Organizational commitment level of employees in three organizational strata of BPO units under study differs significantly.

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IMPACT OF ORGANIZATIONAL CULTURE ON COMMITMENT OF EMPLOYEES

H 3 : All eight dimensions of organizational culture have a significant influence on organizational commit- ment.

H 3a : Openness dimension of organizational cul- ture has significant influence on organiza- tional commitment. H 3b : Confrontation dimension of organizational culture has significant influence on organi- zational commitment. H 3c : Trust dimension of organizational culture has significant influence on organizational com- mitment. H 3d : Authenticity dimension of organizational cul- ture has significant influence on organiza- tional commitment. H 3e : Proaction dimension of organizational culture has significant influence on organizational commitment. H 3f : Autonomy dimension of organizational cul- ture has significant influence on organiza- tional commitment. H 3g : Collaboration dimension of organizational culture has significant influence on organi- zational commitment. H 3h : Experimentation dimension of organizational culture has significant influence on organi- zational commitment.

These hypotheses were generated after a rigorous review of various studies (Sungmin, Henkin, & Egley, 2005; Tilaye, 2005; Shannawaz & Hazarika, 2004; Lok & Crawford, 2004; Connell, Ferres, & Travaglione, 2003; Rashid, Sambasivan, & Johari, 2003; Sharma & Joshi, 2001; Dick & Metcalfe, 2001; Lok & Crawford, 1999; Singh & Das, 1978; Allen & Meyer, 1990), who suggested that or- ganizational culture and its dimensions are related to organizational commitment.

RESEARCH METHODOLOGY

Scope of the Study

This research was dedicated to assess organizational culture and commitment of employees in the BPO sector in and around Chandigarh. The study has been con- ducted at all the three levels, i.e. top, middle, and lower levels of employees to present a comprehensive picture of organizational culture with respect to the selected BPO

VIKALPA • VOLUME 39 • NO 3 • JULY - SEPTEMBER 2014

units. Data was collected through multi-stage sampling. In the first stage, stratified sampling was used for select- ing BPOs. Out of the total 40 BPO units, 15 BPOs were selected proportionately from the following strata for fi- nal study:

• BPOs having less than 250 employees

• BPOs having 250-500 employees

• BPOs having more than 500 employees

In the second stage, through judgment sampling, employ- ees from top, middle, and lower levels were chosen from these 15 BPOs totalling the sample size of 524 employees. The details of the sample profile of BPOs from each stra- tum are exhibited in Table 1.

Table 1: Sample Profile of BPO Units (from each stratum proportionately)

No.

Strata

Total No.

Sampled

 

of BPOs

BPOs

1.

BPOs having up to 250 employees

27

10

2.

Between 250-500 employees

10

03

3.

Having more than 500 employees

6

02

 

Total

40

15

In Stratum III BPOs, one BPO is a third party outsourced customer service centre while the second is a leader in a BPO call centre for telecom companies and manpower outsourcing. In Stratum II, three BPO units were for re- search and all the three had voice-based and non-voice- based outsourcing services. In Stratum I, a mixed bag of BPOs were considered – e.g. one BPO unit had publish- ers, documentation companies as its clients, another had Insurance as its focus area, and another was general busi- ness consulting BPO, and yet another provided BPO serv- ices to Telecom companies. Another three BPO units were in medical billing services, IT development and related outsourcing services, and telemarketing. The rest two BPO units had their customer service support centre, virtual back office, and field sales operation.

Data Collection

Data was collected from 524 employees in 15 BPOs in and around Chandigarh – from Chandigarh, Panchkula, and Mohali which covered all the three strata of BPOs as discussed above and from all the three levels of employ- ees, i.e. top, middle, and lower level of employees.

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Sources of Data

The study being empirical in nature relied both on pri- mary and secondary data. Primary data was collected through questionnaires and discussions with BPO em- ployees. And, secondary data was collected through re- search journals, magazines, reports, and websites of the respective BPO companies, Software Technology Park of India (STPI) Mohali, NASSCOM, and other related BPO web sites.

Measures

The questionnaire was prepared for the top, middle, and lower level employees of the BPO units for studying the organizational culture and organizational commitment of the employees. The questionnaire started with infor- mation relating to demographic profile of the respond- ents, i.e. age, qualification, gender, marital status, experience in the present organization, total experience, and level of management followed by two sections – the first section was related to eight dimensions of organizational cul- ture (40 items), the second section was comprised of three dimensions relating to organizational commitment (18 items). The 40 variables relating to organizational cul- ture mentioned in the questionnaire have been catego- rized into eight dimensions as depicted in Exhibit 1. In general, a four-point scale was used in Part-I of the ques- tionnaire. The 4-point scale ranged from: 1 = to a very low extent, 2 = to a low extent, 3 = to a high extent, 4 = to a very high extent

The scale used for the purpose of measuring the responses of the employees for organizational commitment was the one developed and revised by Meyer and Allen in 1997. The scale had three dimensions named as affective com- mitment, normative commitment, and continuance com- mitment as depicted in Exhibit 1. The scale had 18 items. And the items were scored on a seven-point Likert scale according to the following response categories:

1 = Strongly disagree, 2 = Moderately disagree, 3 = Slightly

disagree, 4 = Neither disagree nor agree, 5 = Slightly agree,

6 = Moderately agree, 7 = Strongly agree

Questionnaire of the Study

All the questionnaires were used as it is except some modifications in the wordings. Reliability coefficient, i.e. cronbach alpha for the two scales was calculated for a sample of 524 employees and is exhibited in Table 2.

Table 2: Reliability Coefficients of Variables

Organizational

Organizational

Culture

Commitment

No. of Items

40

18

Cronbach Alpha ()

0.801

0.787

ANALYSIS

To arrive at a pertinent result, the collected data was put through a statistical analysis using SPSS(16.0) package. The tools, which were employed to test the drafted hy- pothesis for analysis included: Factor analysis, t-test, analysis of variance (ANOVA), multiple comparison, cor- relation, and regression analysis. The data was tabulated for each variable being studied separately for each BPO unit in three strata of BPO sector.

RESULTS AND DISCUSSIONS

This study tested for the significance of the difference among the sample means through ANOVA. This is done by F-test for testing the significance of the difference of organizational culture and its dimensions in all the three strata of BPO units under study. The results of the analy- sis through SPSS are explained below:

H 1 : Perception of employees about organizational culture and its dimensions differs significantly in three organizational strata of BPO units.

Hypothesis:

H

0 :X s1 =X s2 =X s3 ; H 0 accepted, when probability is 0.05

H

1 :X S1 X S2 X S3 ; H 1 accepted, when probability is < 0.05

where, X S1 , X S2 , X S3 are the mean of organizational cul- ture of Stratum I, II, and III respectively.

As depicted in Table 3, it is evident that probability 0.000

is less than 0.05; therefore at 5 percent level of signifi-

cance, alternative hypothesis may be accepted. The infer- ence is that the perception of employees about organiza- tional culture differs significantly in all the three organi- zational strata of BPO units and this difference is not by sampling or chance. Further, Scheffe method was used to compare the variance. As per Table 4 on post hoc multi- ple comparison, it can be concluded that employees in BPOs of Stratum I perceive their organizational culture more positively than employees of BPOs in Stratum II.

As far as the dimensions of organizational culture are concerned, as given in Table 5, it is clear that there is no

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IMPACT OF ORGANIZATIONAL CULTURE ON COMMITMENT OF EMPLOYEES

Table 3: Analysis of Variance (ANOVA) of Organizational Culture in Three Organizational Strata of BPO Units

Variable

Strata

N

Mean

Std.

 

Deviation

 

<250 employees

240

2.3878

0.30091

Organizational

250-500 employees

136

2.2733

0.31709

Culture

>500 employees

148

2.3130

0.32438

Total

524

2.3370

0.31514

ANOVA:

F-Value:

6.455 (p=0.002)

 

significant difference in the perception of employees about openness (p=0.074), authenticity (p=0.665), autonomy (p=0.266), and collaboration dimension (p=0.440) of or- ganizational culture in three organizational strata of BPO units, since the probabilities are greater than 0.05. Fur- ther, it is clear from the mean and standard deviation values that all these dimensions are high in Stratum I than in II and III.

The perception of employees about confrontation (p=0.006), trust (p=0.032), proaction (p=0.000), and ex- perimentation (p=0.000) dimensions of organizational

culture in three organizational strata of BPO units differs significantly as the probabilities are less than 0.05. The study thus reveals that irrespective of the size of BPOs (in terms of no. of employees), there is no significant differ- ence in openness, authenticity, collaboration, and au- tonomy dimensions of organizational culture. Confronta- tion, trust, proaction, and experimentation dimensions are more in Stratum I than in Strata II and III. This implies that employees of smaller BPOs perceive their culture a shade better than the medium or larger BPOs.

H 2 : Organizational commitment level of employ- ees and its dimensions in three organizational strata of BPO units differ significantly.

As depicted in Table 6, it is evident that the probability 0.004 is less than 0.05; therefore at 5 percent level of sig- nificance, the alternative hypothesis is accepted. The in- ference is that organizational commitment level of employees differs significantly in three organizational strata of BPO units and this difference is not by sampling or chance.

Table 4: Multiple Comparisons between Three Strata of BPO Units for Organizational Culture

Scheffe

Dependent Variable

(I) Organization

(J) Organization

Mean Difference (I-J)

Std. Error

Sig.

 

>500 employees

250-500 employees

0.03966

0.03705

0.564

<250 employees

-0.07481

0.03260

0.073

Organizationalculture

250-500 employees

>500 employees

-0.03966

0.03705

0.564

<250 employees

-0.11447 *

0.03348

0.003

 

<250 employees

>500 employees

0.07481

0.03260

0.073

250-500 employees

0.11447 *

0.03348

0.003

* indicate that the mean difference is significant at 0.5 level.

Table 5: Analysis of Variance (ANOVA) of Dimensions of Organizational Culture in Three Organizational Strata of BPO Units (under study)

Strata

N

Openness

Confrontation

 

Trust

Authenticity

Proaction

Autonomy

Collaboration

Experimentation

 

Mean

Std. Deviation

Mean

Std. Deviation

Mean

Std. Deviation

Mean

Std. Deviation

Mean

Std. Deviation

Mean

Std. Deviation

Mean

Std. Deviation

Mean

Std. Deviation

I

240

2.43

0.476

2.40

0.423

2.42

0.500

2.19

0.390

2.57

0.596

2.17

0.348

2.43

0.422

2.50

0.539

II

136

2.33

0.525

2.25

0.589

2.28

0.577

2.21

0.378

2.29

0.561

2.14

0.483

2.42

0.466

2.27

0.486

III

148

2.33

0.511

2.27

0.459

2.30

0.542

2.22

0.411

2.47

0.653

2.22

0.411

2.38

0.455

2.32

0.515

Total

524

2.37

0.500

2.32

0.485

2.35

0.535

2.20

0.393

2.47

0.614

2.18

0.405

2.41

0.443

2.39

0.528

ANOVA

F-Value:

F-Value:

F-Value:

F-Value:

F-Value:

F-Value:

F-Value:

F-Value:

2.621

5.240

3.464

0.408

9.449

1.327

0.823

10.277

(p=0.074)

(p=0.006)

(p=0.032)

(p=0.665)

(p=0.000)

(p=0.266)

(p=0.440)

(p=0.000)

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Table 6: Analysis of Variance (ANOVA) of Organizational Commitment in Three Organizational Strata of BPO Units

than employees of BPOs in Stratum II.

Variable

Strata

N

Mean

Std.

 

Deviation

 

<250 employees

240

4.1998

0.60485

Organizational

250-500 employees

136

4.0016

0.55834

Commitment

>500 employees

148

4.1862

0.55950

Total

524

4.1445

0.58553

ANOVA:

F-Value: 5.589

(p=0.004)

Further Scheffe’s method is used to compare the variance. As per Table 7 for post hoc multiple comparison, it can be concluded that employees in BPOs of Strata I and III have more commitment level than employees of BPOs in Stra- tum II. As far as dimensions of organizational commit- ment are concerned, as exhibited in Table 8, there is no significant difference in the levels of affective and con- tinuance commitment of employees in these three strata of BPO units as the probability is greater than 0.05. But the respondents’ level of normative commitment in these three strata of BPO units is significantly different.

Further, on the basis of mean and standard deviation values, it can be concluded that employees in BPOs of Strata I and III have high normative commitment levels

Thus the study reveals that irrespective of the size of the BPOs (in terms of no. of employees), there is no signifi- cant difference in affective and continuance commitment of employees in the three strata of BPO units, while nor- mative commitment is significantly more in Strata I and III than in Stratum II. As far as overall commitment is concerned, Stratum I employees have significantly more commitment level than employees of Strata II and III. This finding is in line with Kwon and Banks (2004), who found strong negative relationship between organization size and organizational commitment. As organizational cul- ture is better in Stratum I and also commitment level is higher in Stratum I employees, it gives us a cue that or- ganizational culture has a definite impact on commit- ment of employees.

Impact of Organizational Culture on Organizational Commitment

Correlation between Dimensions of Organizational Culture and Organizational Commitment

Before using regression analysis, the relationship between organizational culture and organizational commitment was investigated using Pearson correlation. Preliminary

Table 7: Multiple Comparisons between Three Strata of BPO Units for Organizational Commitment

Scheffe’s Method

Dependent Variable

(I) Organization

(J) Organization

Mean Difference (I-J)

Std. Error

Sig.

Organizational

>500 employees

250-500 employees

0.18455 *

0.06895

0.029

Commitment

<250 employees

-0.01358

0.06067

0.975

 

250-500 employees

>500 employees

-0.18455 *

0.06895

0.029

 

<250 employees

-0.19813 *

0.06230

0.007

 

<250 employees

>500 employees

0.01358

0.06067

0.975

 

250-500 employees

0.19813 *

0.06230

0.007

* indicate that the mean difference is significant at 0.05 level.

Table 8: Analysis of Variance (ANOVA) of Three Dimensions of Organizational Commitment in Three Organizational Strata of BPO Units

Variable

Affective Commitment

Continuance Commitment

Normative Commitment

Strata

Mean

Std. Deviation

Mean

Std. Deviation

Mean

Std. Deviation

I

4.2097

0.74082

4.0479

0.78657

4.3417

0.75569

II

4.0429

0.62985

3.9069

0.80757

4.0551

0.72466

III

4.1408

0.74680

4.0191

0.77311

4.3986

0.67837

Total

4.1469

0.71735

4.0032

0.78897

4.2834

0.73805

F-Value:2.368

(p=0.095)

F-Value:1.432

(p=0.240)

F-Value:9.345

(p=0.000)

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IMPACT OF ORGANIZATIONAL CULTURE ON COMMITMENT OF EMPLOYEES

analysis revealed that there were no violations of the as- sumptions of linearity or homoscedasticity, and all asso- ciations were found to be significant at 95 percent level, with the strongest association being between organiza- tional commitment and proaction (r=0.481; p<0.05) and weakest with autonomy (r=0.151; p<0.05) as depicted in Table 9.

Multiple Stepwise Regression Analysis of Organizational Commitment and Dimensions of Organizational Culture

To examine the fit of the regression model and to identify the best predictors of organizational commitment, stepwise regression was used with dimensions of organi- zational culture as predictors. In the model, eight dimen- sions of organizational culture, which originally consisted of 40 items, served as independent variables and overall commitment as the dependent variable. Pre- liminary analysis revealed no violation of the assump- tion regarding sample size, multicollinearity, and outliers. The Regression model summary as depicted in Table 10 reports the strength of the relationship between the model and the dependent variable. The Table displays adjusted R 2 and the Durbin Watson test of independence of errors. It can be seen that regression model explained 31.5 per- cent of the variance in the commitment and the value of Durbin Watson test is between 1-3, which fulfills the as-

sumption of independence of errors. Table 10 also sum- marizes the results of an Analysis of Variance. The sig- nificance value of F statistic is less than 0.05, which means that the variation explained by the model is not due to chance.

It can be seen that dimensions of organizational culture fits the data well (Adjusted R 2 =0.315). All the explana- tory variables except openness and autonomy were found to be significant which suggests that in the BPO sector; organizational commitment is driven by a number of di- mensions of organizational culture. A closer scrutiny of the results in Table 10 shows that the key explanatory variables in the organizational culture domain, namely, proaction, confrontation, experimentation, authenticity, collaboration, and trust are significant predictors of or- ganizational commitment in the BPO sector. Therefore, it can be concluded that organizational culture is a signifi- cant predictor of commitment; however, openness and autonomy were not found to be significant in the model.

Hypothesis Testing

From the above results, it can be concluded that Hypoth- eses H 3b , H 3c , H 3d , H 3e , H 3g , and H 3h are supported whereas H 3a and H 3f , i.e. openness and autonomy, have a significant positive influence on organizational commit- ment, are not supported. Further, Table 10 suggests that

Table 9: Correlation-Organizational Culture and Organizational Commitment

 

Openness

Confrontation

Trust

Authenticity

Proaction

Autonomy

Collaboration

Experimentation

Commitment

0.346 **

0.418 **

0.392 **

0.299 **

0.481 **

0.151 **

0.309 **

0.384 **

 

0.000

0.000

0.000

0.000

0.000

0.001

0.000

0.000

Pearson Correlation (Only significant correlations are displayed) ** Correlation significant at 0.05 levels

 

Table 10: Step-wise Regression Analysis - Organizational Commitment

 
 

Dimensions

Standardized Coefficients (Beta)

t

Sig.

Regression Model Summary

 

(Constant)

10.951

0.000

Adjusted R 2 =

0.315

Proaction

0.162

3.225

0.001

Durbin Watson =

1.902

Confrontation

0.140

3.183

0.002

ANOVA(F)

41.148

Model 6

Experimentation

0.152

3.440

0.001

Sig.

0.000

Authenticity

0.135

3.508

0.000

Collaboration

0.118

2.884

0.004

Trust

0.123

2.797

0.005

• Beta co-efficient is the standardized regression coefficient, which allows comparison of the relatives on the dependent variable of each independent variable.

• t-statistics help to determine the relative importance of each variable in the model.

VIKALPA • VOLUME 39 • NO 3 • JULY - SEPTEMBER 2014

87

the dimensions (excluding openness and autonomy di- mension) associated with organizational culture are sig- nificant predictors of overall organizational commitment and have the expected positive sign. Thus, the findings support the results of Sungmin et al., 2005; Shannawaz and Hazarika, 2004; Lok and Crawford, 2004; Connell et

al. 2003; Rashid et al. 2003; Allen and Meyer,1990. But as far as excluding variable (i.e. openness and autonomy) are concerned, results do not support the findings of Tilaye, 2005; Lok and Crawford, 1999; Singh and Das,

1978.

Interestingly, thus, the results failed to support the rela- tionship between autonomy and openness with commit- ment. The explanation for this intriguing finding is not obvious and demands further research.

Overall it can be stated that employees in the BPO sector are particularly sensitive to six dimensions of organiza- tional culture, viz. proaction, confrontation, trust, authen- ticity, experimentation, and collaboration. Thus, more the BPO employees perceive higher level of these dimensions, more will they be committed to their organizations.

CONCLUSIONS AND IMPLICATIONS

The present research tested, supported, and confirmed the hypotheses that organizational cultural variables are positively related to organizational commitment. It pro- vides a clear and comprehensive picture of the relation- ship among dimensions of organizational culture and commitment, particularly in the Indian BPO sector. The study is somewhat limited by its sample, design, and method. Responses with respect to organizational cul- ture and commitment were solicited from the employees of BPOs in and around Chandigarh, and therefore had limited geographical diversity. However, being the first such study, it was relevant in the context of the region. Although there is no compelling reason why the relation- ship would not hold across other samples, generalizability of the findings would be stronger with more diverse sam- ples. Another area of concern is the nature of measures used, which were based upon the perceptions of the par- ticipating employees (self-reports). Therefore, the poten- tial for data inaccuracies due to item misinterpretation or predisposition to certain responses on the part of the par- ticipant as well as social desirability effects does exist. So, this limitation should be considered while interpret- ing the findings.

Tests that verify H 1 and H 2 , i.e. ANOVA and post hoc tests, reveal no significant difference in openness, authen- ticity, collaboration, and autonomy dimensions of organi- zational culture, irrespective of the size of the BPOs, while confrontation, trust, proaction, and experimentation di- mensions are found to be more in Stratum I than in II and III. This implies that the employees of smaller BPOs per- ceive their culture to be a shade better than the medium or larger BPOs. And, as far as commitment and its dimen- sions are concerned, irrespective of the size of the BPOs, there is no significant difference in affective and continu- ance commitment of employees in these three strata of BPO units. While, normative commitment is significantly more in Strata I and III in comparison to Stratum II, the overall commitment is significantly more in Stratum I em- ployees than of Stratum II and III. This finding is in lines with Kwon and Banks (2004), who found strong negative relationship between organizational size and organiza- tional commitment. Thus organizational culture as well as commitment have been found to be more among em- ployees in Stratum I.

Organizational culture is found to be an important input in organizational commitment, explaining the 31.5 per- cent variance. Step-wise multiple regression reveals par- ticularly six dimensions of organizational culture, viz. proaction, confrontation, trust, authenticity, experimen- tation, and collaboration which predicted the commit- ment of employees in the BPO sector. But the results failed to support the relationship between autonomy and open- ness with commitment.

From a human resource managerial perspective, this pro- vided some insight into the structure of the different vari- able sets as they related to dependence relationship. When interpreting the independent variable, the six dimensions provide substantive contributions and thus are the key predictors of the outcome variable. These should be the focal point in the development of any strategy directed towards impacting the commitment of BPO employees towards their organizations so that they stay with their organizations and attrition rate could be reduced.

As Evans et al. (2000) suggested, organizations today are concerned not just with preventing individuals from leav- ing but also with being able to create a sustained and mutually beneficial exchange with employees. This im- plies that retention should be approached as an offensive

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IMPACT OF ORGANIZATIONAL CULTURE ON COMMITMENT OF EMPLOYEES

strategy than just approaching it as a defensive play. Therefore, the focus of the management should be on aug- menting the organizational culture and its correspond- ing dimensions so as to enhance the commitment.

In other words, to make employees more committed to their organizations, changes need to be made in the cul- ture of the organization. The role of HR is crucial as hu- man resources in the BPO sector are the most important resources for competitiveness and growth. It is believed

that if appropriate interventions relating to change in or- ganizational culture are implemented whole-heartedly, they would not only lead to effective utilization of human resources but also help in retaining the employees.

Thus, future studies could delve upon the issue of aug- mentation of organizational culture in the BPO sector. As findings of this research are based only on quantitative research, qualitative research such as in-depth interviews could be attempted in future studies.

as in-depth interviews could be attempted in future studies. Exihibit 1: Conceptual Definitions and Description of

Exihibit 1: Conceptual Definitions and Description of Dimensions of Organizational Culture and Organizational Commitment

Dimensions of Organizational Culture

Openness: A spontaneous expression of feelings and thoughts, and the sharing of these without defensiveness. Openness is in both directions, receiving and giving. Both these may relate to ideas (including suggestions), feedback (including criticism), and feelings.

Confrontation: Facing rather than shying away from prob- lems. It also implies deeper analysis of interpersonal problems. All this involves taking up challenges. The term confrontation is being used with some reservation and means putting up a front as contrasted with putting one’s back (escaping) to the problem.

Trust: Trust is not used in the moral sense. It is reflected in maintaining confidentiality of information shared by others, and in not misusing it. It is also reflected in a sense of assurance that others will help, when such help is needed and will honour mutual commitments and obligations.

Authenticity: Congruence between what one feels, says, and does. It is reflected in owning up one’s mistakes, and in unre- served sharing of feelings. Authenticity is closer to openness. The outcome of authenticity in an organization is reduced dis- tortion in communication. It is the willingness of a person to acknowledge the feelings he/she has, and accept himself/her- self as well as others who relate to him/her as persons. Authen- ticity is reflected in the narrowest gap between the stated values and the actual behaviour. This value is important for the devel- opment of a culture of mutuality.

Proaction: Taking initiative, pre-planning and taking preven- tive action, and calculating the payoffs of an alternative course before taking action. In contrast to reaction, in which action is in response to (and in the pattern of) an act from some source, in proaction, the action is taken independent of the source.

Autonomy: Using and giving freedom to plan and act in one’s own sphere. It means respecting and encouraging individual and role autonomy. It develops mutual respect and is likely to result in willingness to take on responsibility, individual initia- tive, and better succession planning. It is nothing but willing- ness to use power without fear and helping others to do the same. It multiplies power in the system.

Collaboration: Giving help to and asking for help from others. It means working together (individuals and groups) to solve problems. The outcome of collaboration includes timely help, enhanced team spirit, sharing of experiences, improved com- munication, and improved resource sharing.

Experimenting: Using and encouraging innovative approaches to solve problems; using feedback for improving, taking fresh look at things, and encouraging creativity.

Dimensions of Organizational Commitment

Affective commitment. An employee’s emotional attachment to, identification with, and involvement in the organization. Em- ployees with a strong affective commitment will remain in the organization because they want to.

Continuance commitment. One’s awareness of the costs as- sociated with leaving the present organization. Employees whose commitment is in the nature of continuance will remain in the organization because they have to.

Normative commitment. Feeling of obligation to the organi- zation based on one’s personal norms and values. Employees whose commitment to the organization is said to be of the nor- mative type remains in the organization simply because they believe they ought to.

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Sulakshna Dwivedi is presently working as a visiting faculty at the University School of Applied Management, Punjabi University, Patiala. She has a Masters degree in Human Re- source Management and a Diploma in Training and Develop- ment from the Indian Society for Training and Development, New Delhi. She was a Senior Research Fellow at the Univer- sity Business School, Panjab University, Chandigarh and was awarded a Ph.D. degree in 2011. She has to her credit corpo- rate, teaching, and research experience of seven years. Her areas of interests are human resources, organizational behaviour, training and development, and organizational de- velopment. She has published many research papers in na- tional/international conferences and journals of repute.

e-mail: sulakshna_79@yahoo.com

Sanjay Kaushik is Professor of Human Resource Manage- ment at University Business School, Panjab University, Chandigarh. He has more than twenty years of experience in teaching and research and over a dozen research papers in various journals of repute. Currently, he is a member in the

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Yiing, L. H., & Ahmad, K. Z. B. (2009). The moderating effects of organizational culture on the relationships between leadership behavior and organizational commitment and between organizational commitment and job satis- faction and performance. Leadership and Organization De- velopment Journal, 30(1), 53-86.

Editorial board of two journals relating to business manage- ment. He has to his credit various consultancy projects in the State Bank of Patiala, Reserve Bank of India, Chandigarh, HPCL Mittal Energy Limited, Bhatinda, etc. His areas of in- terest include human resource management, industrial rela- tions, and banking.

e-mail: sanjaykaushik.ubs@gmail.com

Luxmi is a Senior Lecturer in Human Resource Management at the University Business School, Panjab University, Chandigarh. She has eleven years of experience in teaching and research. She has to her credit many research papers pub- lished in reputed national journals. She has been awarded doctoral fellowship from Indian Council of Social Science Research (ICSSR), New Delhi in 2002. Her areas of interests include organizational behaviour, human resource manage- ment, and industrial relations.

e-mail: luxmimalodia@yahoo.com

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IMPACT OF ORGANIZATIONAL CULTURE ON COMMITMENT OF EMPLOYEES