CHAPTER-2 ABOUT THE PROJECT Introduction

Organizational culture is an idea in the field of organizational studies and management which describes the psychology, attitudes, experiences, beliefs and values (personal and cultural values) of an organization. It has been defined as "the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and withstakeholders outside the organization."Ravasi and Schultz (2006) state that organizational culture is a set of shared mental assumptions that guide interpretation and action in organizations by defining appropriate behavior for various situations. Although its difficult to get consensus about the definition of organizational culture, several constructs are commonly agreed upon that organizational culture is holistic, historically determined, related to anthropological concepts, socially constructed, soft, and difficult to change. Strong culture is said to exist where staff respond to stimulus because of their alignment to organizational values. In such environments, strong cultures help firms operate like well-oiled machines, cruising along with outstanding execution and perhaps minor tweaking of existing procedures here and there. Conversely, there is weak culture where there is little alignment with organizational values and control must be exercised through extensive procedures and bureaucracy. Research shows that organizations that foster strong cultures have clear values that give employees a reason to embrace the culture.

Charles Handy,popularized the 1972 work of Roger Harrison of looking at culture which some scholars have used to link organizational structure to organizational culture. He describes Harrison's four types thus:Power Culture,Role Culture,Task Culture,Person Culture.

Edgar Schein,defines organizational culture as: "A pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way you perceive, think, and feel in relation to those problems"

Robert A. Cooke, PhD, defines culture as the behaviors that members believe are required to fit in and meet expectations within their organization. The Organizational Culture Inventory measures twelve behavioral of norms that are grouped into three general types of cultures:

  

Constructive Cultures Passive/Defensive Cultures Aggressive/Defensive Cultures

Increasing Importance of Organizational Culture

Schein (1992) suggests that organizational culture is even more important today than it was in the past. Increased competition, globalization, mergers, acquisitions, alliances, and various

workforce developments have created a greater need for:

Coordination and integration across organizational units in order to improve efficiency,

quality, and speed of designing, manufacturing, and delivering products and services

Product innovation

Strategy innovation

Process innovation and the ability to successfully introduce new technologies, such as

information technology

Effective management of dispersed work units and increasing workforce diversity

Cross-cultural management of global enterprises and/or multi-national partnerships

Construction of meta- or hybrid- cultures that merge aspects of cultures from what were

distinct organizations prior to an acquisition or merger

Management of workforce diversity

Facilitation and support of teamwork.

In addition to a greater need to adapt to these external and internal changes, organizational culture has become more important because, for an increasing number of corporations, intellectual as opposed to material assets now constitute the main source of value. Maximizing the value of employees as intellectual assets requires a culture that promotes their intellectual participation and facilitates both individual and organizational learning, new knowledge creation

and application, and the willingness to share knowledge with others. Culture today must play a key role in promoting

Knowledge management

Creativity

Participative management

Leadership

Factors and Elements of Organisational Culture G. Johnson described a cultural web, identifying a number of elements that can be used to describe or influence Organizational Culture:

 

The Paradigm: What the organization is about; what it does; its mission; its values. Control Systems: The processes in place to monitor what is going on. Role cultures would have vast rulebooks. There would be more reliance on individualism in a power culture.

Organizational Structures: Reporting lines, hierarchies, and the way that work flows through the business.

Power Structures: Who makes the decisions, how widely spread is power, and on what is power based?

Symbols: These include organizational logos and designs, but also extend to symbols of power such as parking spaces and executive washrooms.

Rituals and Routines: Management meetings, board reports and so on may become more habitual than necessary.

Stories and Myths: build up about people and events, and convey a message about what is valued within the organization.

These elements may overlap. Power structures may depend on control systems, which may exploit the very rituals that generate stories which may not be true. According to Schein (1992), the two main reasons why cultures develop in organizations is due to external adaptation and internal integration. External adaptation reflects an evolutionary approach to organizational culture and suggests that cultures develop and persist because they help an organization to survive and flourish. If the culture is valuable, then it holds the potential for generating sustained competitive advantages. Additionally, internal integration is an important function since social structures are required for organizations to exist. Organizational practices are learned through socialization at the workplace. Work environments reinforce culture on a daily basis by encouraging employees to exercise cultural values. Organizational culture is shaped by multiple factors, including the following:

    

External environment Industry Size and nature of the organizations workforce Technologies the organization uses The organizations history and ownership

Organizational values, role models, symbols and rituals shape organizational culture. Organizations often outline their values in their mission statements, although this does not guarantee that organizational culture will reflect them. The individuals that organizations

recognize as role models set, by example, the behavior valued by the organization. In addition, tangible factors such as work environment act as symbols, creating a sense of corporate identity. The founding of an organization is a critical period in the life of the organization and the development of its culture. An organizations founder or chief executive has an influential impact on the development of the organizations culture since that person is likely to have control in hiring people with the same values and influence the choice of strategy. By screening candidates for a cultural fit, organizations select those employees that will be able to uphold the organizational culture. Additionally, leaders embed culture in organizations by what they pay attention to, measure, and control; how they react to critical incidents and crises; the behaviors they model for others; and how they allocate rewards and other scarce resources. The values of founders and key leaders shape organizational cultures, but the way these cultures affect individuals is through shared practices.

Impact of Organisational Culture Research suggests that numerous outcomes have been associated either directly or indirectly with organizational culture. A healthy and robust organizational culture may provide various benefits, including the following:

    

Competitive edge derived from innovation and customer service Consistent, efficient employee performance Team cohesiveness High employee morale Strong company alignment towards goal achievement

Although little empirical research exists to support the link between organizational culture and organizational performance, there is little doubt among experts that this relationship exists. Organizational culture can be a factor in the survival or failure of an organization - although this is difficult to prove considering the necessary longitudinal analyses are hardly feasible. The sustained superior performance of firms like IBM, Hewlett-Packard, Proctor and Gamble, and McDonald's may be, at least partly, a reflection of their organizational cultures. A 2003 Harvard Business School study reported that culture has a significant impact on an organizations long-term economic performance. The study examined the management practices at 160 organizations over ten years and found that culture can enhance performance or prove detrimental to performance. Organizations with strong performance-oriented cultures witnessed far better financial growth. Additionally, a 2002 Corporate Leadership Council study found that cultural traits such as risk taking, internal communications, and flexibility are some of the most important drivers of performance, and may impact individual performance. Furthermore, innovativeness, productivity through people, and the other cultural factors cited by Peters and Waterman (1982) also have positive economic consequences. Denison, Haaland, and Goelzer (2004) found that culture contributes to the success of the organization, but not all dimensions contribute the same. It was found that the impacts of these dimensions differ by global regions, which suggests that organizational culture is impacted by national culture. Additionally, Clarke (2006) found that a safety climate is related to an organizations safety record.

Adkins and Caldwell (2004) found that job satisfaction was positively associated with the degree to which employees fit into both the overall culture and subculture in which they worked. A

perceived mismatch of the organizations culture and what employees felt the culture should be is related to a number of negative consequences including lower job satisfaction, higher job strain, general stress, and turnover intent. It has been proposed that organizational culture may impact the level of employee creativity, the strength of employee motivation, and the reporting of unethical behavior, but more research is needed to support these conclusions. Organizational culture also has an impact on recruitment and retention. Individuals tend to be attracted to and remain engaged in organizations that they perceive to be compatible. Additionally, high turnover may be a mediating factor in the relationship between culture and organizational performance. Deteriorating company performance and an unhealthy work environment are signs of an overdue cultural assessment. REVIEW OF LITERATURE ORGANISATIONAL CULTURE

There is no single definition for organizational culture. The topic has been studied from a variety of perspectives ranging from disciplines such as anthropology and sociology, to the applied disciplines of organizational behavior, management science, and organizational communication. Some of the definitions are listed below:

A set of common understandings around which action is organized, . . . finding expression in language whose nuances are peculiar to the group (Becker and Geer 1960).

A set of understandings or meanings shared by a group of people that are largely tacit among members and are clearly relevant and distinctive to the particular group which are also passed on to new members (Louis 1980).

A system of knowledge, of standards for perceiving, believing, evaluating and acting . . . that serve to relate human communities to their environmental settings (Allaire and Firsirotu 1984). The deeper level of basic assumptions and beliefs that are: learned responses to the group's problems of survival in its external environment and its problems of internal integration; are shared by members of an organization; that operate unconsciously; and that define in a basic "taken -for-granted" fashion in an organization's view of itself and its environment (Schein 1988).

Any social system arising from a network of shared ideologies consisting of two components: substance-the networks of meaning associated with ideologies, norms, and values; and forms-the practices whereby the meanings are expressed, affirmed, and communicated to members (Trice and Beyer 1984).

Over the past 20 years, researchers have increasingly investigated organizational culture and possible links to organizational performance (e.g., Wilkins & Ouchi, 1983; Denison 1984; Gordon,1985). Denison (1990) indicates that mergers, declining productivity and global competition have all focused attention on the cultures of organizations and the impact they have on organizational effectiveness. Charles Handy (1985) popularized a method of looking at culture which some scholars have used to link organizational structure to Organizational Culture. He describes:

 a Power Culture which concentrates power among a few. Control radiates from the center like a web. Power Cultures have few rules and little bureaucracy; swift decisions can ensue. In a Role Culture, people have clearly delegated authorities within a highly defined structure. Typically, these organizations form hierarchical bureaucracies. Power derives from a person's position and little scope exists for expert power. By contrast, in a Task Culture, teams are formed to solve particular problems. Power derives from expertise as long as a team requires expertise. These cultures often feature the multiple reporting lines of a matrix structure. A Person Culture exists where all individuals believe themselves superior to the organization. Survival can become difficult for such organizations, since the concept of an organization suggests that a group of like-minded individuals pursue the organizational goals. Some professional partnerships can operate as person cultures, because each partner brings a particular expertise and clientele to the firm. Deal and Kennedy(1982) defined organizational culture as the way things get done around here. They measured organizations in respect of: Feedback - quick feedback means an instant response. This could be in monetary terms, but could also be seen in other ways, such as the impact of a great save in a soccer match. Risk - represents the degree of uncertainty in the organization's activities. Using these parameters, they were able to suggest four classifications of organizational culture: The Tough-Guy Macho Culture. Feedback is quick and the rewards are high. This often applies to fast moving financial activities such as brokerage, but could also apply to a police force, or athletes competing in team sports. This can be a very stressful culture in which to operate. The Work Hard/Play Hard Culture is characterized by few risks being taken, all with rapid

feedback. This is typical in large organizations, which strive for high quality customer service. It is often characterized by team meetings, jargon and buzzwords. The Bet your Company Culture, where big stakes decisions are taken, but it may be years before the results are known. Typically, these might involve development or exploration projects, which take years to come to fruition, such as oil prospecting or military aviation. The Process Culture occurs in organizations where there is little or no feedback. People become bogged down with how things are done not with what is to be achieved. This is often associated with bureaucracies. While it is easy to criticize these cultures for being overly cautious or bogged down in red tape, they do produce consistent results, which is ideal in, for example, public services. Olu Ojo(2009) assesses empirically the impact of corporate culture on employee job performance as well as organisational productivity using Nigerian banking industry as the case study. Two hypotheses were advanced: (i) There is no positive relationship between organizational culture and employee job performance, and (ii) There is no positive relationship between corporate culture and organizational productivity in Nigerian banking industry. The study uses survey research method. The findings of this study are that a large number of respondents (57.7%) strongly agree that corporate culture has effect on employee job performance, and that 48.7% of the employees also agree that corporate culture determines the productivity level of the organization. These findings made them to accept two alternative hypotheses and reject the null hypotheses because in both cases the calculated values of chi-square are greater than the tabulated values. According to Pascale (1990), organizational culture, more than any other factor, will dictate a

organizations ability to survive. After several decades of work, Denison (2000) has established organization culture as an important component in explaining organizational success. Studies by Denison (1990), Denison and Mishra (1995) and Kotter and Heskett (1992) all provide support for the link between organizational culture and performance. Fisher and Alford (2000) conclude that research conducted by Denison (1984, 1996) and Fisher (1997) clearly shows that regardless of the size, sector, industry, or age of a business, culture affects organizational performance. In one such study, Gordon and DiTomaso (1992) investigated the relationships between culture strength and values and organizational performance. Culture strength was measured by the consistency of responses to survey items across people, and cultural values were measured by items on the survey that related to either adaptability or stability. The results indicated that both a strong culture and a value placed on adaptability were related to better performance on both criterion measures. The results support Denisons (1990) findings of that strength of culture is predictive of short-term performance.

On the other hand, Lim (1995) examined the causal relationship between organizational culture and organization performance. Despite previous claims of causal relationships, Lim found that the culture-performance link remained unclear. He cited a need to improve on the application of the concepts involved. Lim also discussed methodological issues, such as the influence of moderator variables, for consideration in future research. In their research on organization climate, Lindell and Brandt (2000) reported that although climate quality (average ratings) has been found to be related to organizational outcomes, the effects of climate consensus (the variance of climate ratings) had not yet examined. They tested

relationships of climate quality and consensus with organizational outcomes and found that both had significant correlations with organizational outcomes. However, climate consensus did not contribute a significant increment to the prediction of organizational outcomes. During the 1980s, organizational culture researchers began to use quantitative survey methods similar to those used by organizational climate researchers According to Denison (1996), the culture and climate literatures appear to be describing the same phenomenon. Reichers and Schneider (1990, p. 23) also argue that organizational climate and culture are very similar concepts. Xenikou Athena ,Simosi Maria (2006) examined the relationship between transformational leadership and organizational cultural orientations, as well as the joint effect of transformational leadership and organizational culture on business unit performance. A path analysis showed that the achievement and adaptive cultural orientations had a direct effect on performance. Moreover, transformational leadership and humanistic orientation had an indirect positive impact on performance via achievement orientation. On a practical level the findings suggest that constructive and positive social relations at work need to be accompanied by goal setting and task accomplishment if high organizational performance is to be achieved.