SYNTHESIS REPORT /
LITERATURE REVIEW ON
IMPACT OF ORGANIZATIONAL
& CORPORATE CULTURE TOWARDS PERFORMANCE
INTRODUCTION
The purpose of this
synthesis is to examine what the impact of organizational and corporate culture
towards performance from the earlier day when people start knew the culture in
organization exist and give impact to employees. This report paper will study of the
literature review from previous researches how true the organizational and
corporate culture can give impact to employee performance.
Culture
has been characterized by many authors as “something to do with the people and
unique quality and style of organization” (Kilman et al., 1985), “the way we do
things around here” (Deal and Kennedy, 1982), or the “expressive non-rational
qualities of an organization”.
The
beginnings of formal writing on the concept of organizational culture started with
Pettigrew (1979). He introduced the anthropological concept of culture and showed
how related concepts like “symbolism”, “myth” and “rituals” can be used in organizational
analysis. Dandridge et al. (1980) showed how the study of these myths and
symbols aid in revealing the “deep structure” of an organization. More recent researchers
include Denison and Mishra (1995), Schein (1985a, b), Siehl and Martin (1988,
1990) and Wallach (1983), who have introduced various definitions of the
culture concept.
This
plethora of research definitions is due to the different research framework
adopted by the various authors. Smircich (1983) identified four scientific
lenses through which the body of culture research can be viewed. This includes
the view of culture first as an external variable, led by proponents like Ouchi
(1981) and Pascale and Anthony (1981). Culture can also be viewed as an
internal variable of an organization, which is the most common definition used
by researchers like Collins and Porras (1994) and Peters and Waterman (1982).
From
the anthropological school, culture is conceptualized either as a system of shared
cognitions (Rossi and O’Higgins, 1980) or as a system of shared symbols and meanings.
Culture
has been examined with performance and effectiveness. According to Reichers and
Schneider (1990), while culture researchers have devoted numerous articles to
the nature and definitions of culture, relatively fewer articles have been
contributed towards culture and performance research. One reason for this was the
difficulty in operationalizing the culture construct.
Any examination of an
agency culture is an extremely difficult task. This is merely an attempt to
raise thoughts and ideas that can help an organization gauge its relevancy to
its belief system. If it stimulates interest in examining the consistency of
its cultural beliefs, it will have achieved some measure of success. While it
appears focused on examining one organizational culture, we believe that
organizational improvements will not surface unless we understand the dynamics
of change involved in every aspect of its delivery of service system, whether
it stems from the public or private sector.
The emergence of change in
society will transform not only who is in the workplace, but client
relationships and its product/service delivery system. We claim that the status quo in policing has
and will continue to be altered by our hand or those who demand the need for
its services and protection.
To
work together effectively, individuals need to understand things like power,
status, rewards, and sanctions for specific types of behaviours. While the individuals are experiencing a new
situation, the organization may be attempting to influence those persons. If new members come to an organization
expecting to find a certain set of norms, they are looking for those
expectations to be affirmed.
If
these expectations reflect the actual norms of that organization, the
integration process for both the new members and the organization is relatively
painless. New members often find that the norms are unclear, confusing, and
restrictive. As a result, they may react
in different ways when entering an organization.
At
one extreme, a new member may choose to conform to all the norms of the
organization, resulting in uniformity of behaviour and complete acceptance of
organization values. In an
organizational this conformity may result in stagnation, non responsiveness,
and a loss of creativeness. At the other
extreme, a new member may choose to rebel, to reject all values, or to leave
the organization altogether.
Another
less obvious alternative is for new members to accept the pivotal (prime) norms
and seriously question the peripheral (minor) norms, which Schein has termed
creative individualism. This is the
ideal behaviour for a healthy and effective organization, but it is often
difficult for a newcomer to correctly determine which norms are peripheral and
which are pivotal. What may be a pivotal
norm in one department may be peripheral norm or not a norm at all in another
department of the same organization. Since norms are changing and dynamic, it
requires an awareness on the part of the organization member to discern the
differences between pivotal and peripheral norms.
The term of culture
includes the notion of the informal system, which including feelings, informal
actions and interactions, group norms, and values. In some ways the informal systems is the
hidden or suppressed domain of organizational life. The covert part of the organizational
iceberg. Traditionally, this hidden
domain either is not examined at all or is only partially examined.
Organization
development efforts focus on both the formal and the informal systems, but once
the organization development program is legitimated through the formal system,
the initial intervention strategy is usually through the informal system in the
sense that perceptions, attitudes, and feelings are usually the first data to
be confronted.
ORGANIZATIONAL CULTURE
Organizational
cultures are created, maintained, or transformed by people. An organization's
culture is, in part, also created and maintained by the organization's
leadership. Leaders at the executive level are the principle source for the
generation and re-infusion of an organization's ideology, articulation of core
values and specification of norms. Organizational values express preferences
for certain behaviours or certain outcomes. Organizational norms express
behaviours accepted by others. They are culturally acceptable ways of
pursuing goals. Leaders also establish the parameters for formal lines of
communication and message content-the formal interaction rules for the
organization. Values and norms, once transmitted through the organization,
establish the permanence of the organization's culture.
Normative beliefs
include three facets: Content or the behaviour these beliefs sanction,
intensity of the degree of consensus among organizational members about
acceptable and unacceptable behaviour, and pervasiveness or the scope of the
norms. Organizations can lack shared
beliefs as may be true in new organizations, beliefs may be highly
differentiated and sub-cultural, or they may be widely shared. Cultural patterns are reflected in degrees of
pervasiveness and intensity of beliefs. Patterns of cultural should also be
related to member attitudes and role perceptions such as whether one has clear
or conflicting expectations about what is expected of him/her, one’s perceived
fit with the organization, satisfaction, propensity to stay in the
organization, and whether one would recommend it to another person as a good
place to work (Cooke & Rousseau, 1988).
(Kotter and Heskett,
1992; Denison, 1990; Soerensen, 2002), refine and qualify the aforementioned
relationship. Thus, a strong culture – understood to be a ‘system of values
widely extended and intensely shared in the organization’ (O’Reilly et al.,
1991: 493) – may even be detrimental to success if the consistency it involves
leads to slavish adherence to routine and conformist attitudes.
Organizational culture has been defined as the
“normative glue” that holds an organization together (Tichy, 1982). Forehand
and von Gilmer (1964) suggest that culture is the set of characteristics that describe
an organization and distinguish it from others. Schein (1990), in a more
comprehensive fashion, defines culture as values and behaviours that are
believed to lead to success and are thus taught to new members.
In any case the impact of a strong culture on
performance is admitted to be due to the impetus it lends to staff commitment
and motivation, the social control it facilitates (O’Reilly and Chatman, 1996),
the consistency of rules and values for staff vis-à-vis management, and so on (Gordon
and DiTomaso, 1992).
Denison (1996) argued that many researchers
were limited by the artificial paradigm separation between climate and culture
research. For instance, he described that climate research was associated with
surveys and statistical analysis while culture research was usually done
through qualitative field studies. He argued persuasively that climate and
culture research studies are frequent investigations of different manifestations
of the same construct.
Organizational researches take four
perspectives on culture. Some focus on
its manifestations through myths, stories, and language (e.g. Martin, Feldman,
Hatch, & Sitkin, 1983; Martin, 1992); while others observe rites and
ceremonials (e.g. Trice & Beyer, 1984, 1993). Some researchers examine symbolic
interactions (e.g., Glaser & Strauss, 1967; Hatch, 1993), and others look
at shared norms and beliefs about behaviour (e.g., Cooke & Rousseau,
1988). The research reported here
focuses on culture as norms and beliefs.
The human relations
perspective drew its inspiration from even earlier anthropological and
sociological work on culture associated with groups and societies (see Geertz
1973; Mead 1934; Durkheim 1964; Weber 1947, 1958).
The
organizational culture provides a way of meeting and getting along with
organization members. Three important
aspects of socialization when joining an organization are:
i)
deciding
who is a member and who is not;
ii)
developing
an informal understanding of behavioural norms; and
iii)
separating
friends from enemies.
A pattern of shared
basic assumptions that the group learned 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
to perceive, think, and feel in relation to those problems (Schein 1992:12).
Denison (1990)
identifies four basic views of organizational culture:
·
The idea that a common perspective, shared beliefs
and communal values among the organizational participants will enhance internal
coordination and promote meaning and a sense of identification on the part of
its members.
·
The idea that a shared sense of purpose, direction,
and strategy can coordinate and galvanize organizational members toward
collective goals.
·
The idea that involvement and participation will
contribute to a sense of responsibility and ownership and, hence,
organizational commitment and loyalty.
·
The idea that norms and beliefs that enhance an
organization’s ability to receive, interpret, and translate signals from the
environment into internal organizational and behavioural changes will promote
its survival, growth, and development.
It is arguable that the academic acceptance of
culture, without the usual squabbles and scepticism associated with new
concepts, is a major indication of the perceived importance of the concept
(Alvesson, 1990). However, this is not to infer that there is consensus on the
meaning and relevance of the concept. On the contrary, there is widespread
disagreement on the definition and scope of the organizational culture concept.
Consequently, it is pertinent to note three main issues.
First, many researchers note that treating
culture as a unitary concept reduces its value as an analytic tool (for
example, Martin, 1992; Ogbonna and Harris, 1998a; Pettigrew, 1979). Second,
culture cannot be equated to power and politics or climate (Denison, 1996;
Riley, 1983; Schein, 1986); and, third, there is disagreement on whether
organizational culture can be easily changed (Legge, 1994; Ogbonna, 1993).
More recent research by Chatman and Jehn
(1994), Denison and Mishra (1995) and Kotter and Heskett (1992), have,
therefore, contributed to the field of culture-performance studies by
explicitly acknowledging that culture is being treated as variable for a
specific research purpose. For instance, Denison and Mishra (1995), utilizing a
more rigorous methodology, discovered that cultural strength was significantly
associated with short-term financial performance while Kotter and Heskett
(1992) refined the culture-performance framework.
Kotter and Heskett (1992) found that firms
with “adaptive values” are strongly associated with superior performance over a
long period of time as compared to just short-term performance. This finding
holds out the value of “adaptiveness” in determining organizational
performance. This hypothesis was given support by both Collins and Porras
(1994) and De Geus (1997) in their work in long lived, financially successful
companies. Denison and Mishra (1995) contrasted between internal integration
and external adaptation, and between change and stability.
Saffold’s (1988) discussion on strong culture,
having a strong sense of mission (long-term vision) and being adaptable
(capacity for internal change), resembles Kotter and Heskett’s (1992) discussion
on adaptable culture. These results suggest that culture can affect organizational
performance if it is “strong” (wide consensus, deeply internalized and socialised)
and appropriate to its environment (relevant to its industry and business conditions).

Figure 1 : Hard and Soft Model of Organisational
Concept
CORPORATE CULTURE
Corporate culture is
part of organizational culture which give strength refers to how widely and
deeply employees hold the company’s dominant values and assumptions. In a
strong organizational culture, most employees across all subunits hold the
dominant values.
These values are
also institutionalized through well-established artefacts, thereby making it
difficult for those values to change. Furthermore, strong cultures tend to be
long-lasting; some can be traced back to company founder’s values and
assumptions. In contrast, companies have weak culture when the dominant values
are short-lived and held mainly by a few people at the top of the organization.
Corporate culture is the system of shared values, beliefs, and habits
within an organization that interacts with the formal structure to produce
behavioural norms. It is the pattern of
basic assumptions, values, norms, and artefacts shared by organizational
members. Corporate culture embodies the
values and standards that guide people’s behaviour. It determines the organization’s overall
direction.
Corporate culture governs what the company stands for, how it allocates
resources, its organizational structure, the systems it uses, the people it
hires, the fit between jobs and people, and the results it recognizes and
rewards.
The culture also decides what the company defines as problems and
opportunities and how it deals with them.
As human resource executives become more like strategic partners, they
will be major players in shaping the cultures of organizations.
A strong corporate culture potentially increases a company’s success by
serving three important functions:
i)
Control System: Organizational
culture is a deeply embedded form of social control that influences employee
decision and behaviour. Culture is pervasive and operates unconsciously.
ii)
Social glue: Organizational
culture is the ‘social glue’ that bonds people together and makes them feels
part of the organization experience. Employees are motivated to internalize the
organization’s dominant culture because this helps fulfil their need for social
identity. This social glue is increasingly important as a way to attract new
staff and retain top performers.
iii)
Sense-making: Organizational
culture assists the sense-making process. It helps employees understand what
goes on and why things happen in the company. Corporate culture also makes it
easier for them to understand what is expected of them and to interact with other employees who know the
culture and believe in it.
People are constantly surrounded by culture.
It forms the background (often invisible) of our work-lives, colouring
everything in an organization. Organizational culture also provides a powerful
mechanism for controlling behaviour by influencing how we attach meaning to our
world and how we interpret events.
JOB PERFORMANCE
According
to Campbell (1990), job performance can be defined in terms of whether
employees’ behaviours contribute to organizational goals (cited in Daniels
& Harris, 2002). The author’s of the thesis see the two definitions
complementing each other and it is necessary to have them both since they
define better the meaning of performance and make it clearer. Further in the journal, when the author
mention the term “performance”, they imply job performance of employees.
In
addition, performance can be seen as an individual, group, or organizational
task performance. Organizations have a
vital need to understand how to improve employee’s performance, and therefore
they try to find an explanation as to why employees fail to perform (Muchinsky,
1993). The authors of the journal concentrate in the individual workers’ job
performance.
While
the evidence of a job performance link is largely anecdotal, considerably more
research has empirically examined the organizational culture–performance relationship.
Indeed, an examination of the literature is likely to conclude that organizational
culture is one of the most popular concepts in the fields of management and
organizational theory. One reflection of the popularity of the culture concept
is the increasing number of theoretical perspectives (Martin, 1992) and
organizational disciplines which utilize the concept (Harris and Ogbonna,
1999).
One
of the major reasons for the widespread popularity of interest in organizational culture stems from the
argument (or assumption) that certain organizational cultures lead to superior
organizational financial performance. Many academics and practitioners argue
that the performance of an organization is dependent on the degree to which the
values of the culture are widely shared, that is, are ‘strong’ (Deal and
Kennedy, 1982; Denison, 1990; Kotter and Heskett, 1992; Ouchi, 1981; Pascale
and Athos, 1981; Peters and Waterman, 1982).
According
to Scholz (1987), the claim that organizational culture is linked to
performance is founded on the perceived role that culture can play in
generating competitive advantage. Krefting and Frost (1985) suggest that the
way in which organizational culture may create competitive advantage is by defining
the boundaries of the organization in a manner which facilitates individual
interaction and/or by limiting the scope of information processing to
appropriate levels. Similarly Ogbonna (1993), it is argued that widely shared and
strongly held values enable management to predict employee reactions to certain
strategic options thereby minimizing the scope for undesired consequences .
Theorists
also argue that sustainable competitive advantage arises from the creation of
organizational competencies which are both superior and imperfectly imitable by
competitors (Reed and DeFillippi, 1990). To this end, it is argued that the ‘uniqueness
quality’ of organizational culture makes it a potentially powerful source of generating
advantage over competitors. Indeed, many commentators have advised organizations
and researchers to exploit the multiple advantages which could be offered by
culture rather than focusing on the more tangible side of the organization (for
example, Johnson, 1992; Prahalad and Bettis, 1986).
By
the 1990s, researchers assessing the links between culture and performance were
more cautious. For example, Gordon and DiTomaso (1992) and Denison (1990) both propose
that there is a link between certain organizational culture characteristics and
performance but each add a number of provisos. In particular, they note that
culture will remain linked with superior performance only if the culture is
able to adapt to changes in environmental conditions. Furthermore, the culture
must not only be strong (widely shared), but it must also have unique qualities
which cannot be imitated.
However,
more recently, it has been suggested that the relationship between culture and Ogbonna
and Harris: Leadership style, organizational culture and performance is tenuous
(Hop et al., 1992; Lewis, 1994; Lim, 1995; Ray, 1986; Willmott, 1993). Indeed,
the growing popularity of the resource-based view of competitive advantage
suggests that the degree to which a culture can be theorized to determine a
sustainable advantage is dependent upon the value, rarity, limitability, and sustainability
of the culture concerned (Barney, 1986, 1991).
Performance Ability and Motivation
A
person’s performance is also always a
function of abilities and motivation; one without the other won’t suffice. Abilities come in many types. Mental abilities include intelligence and its
building blocks like memory, inductive reasoning, and verbal comprehension. Psychomotor abilities include dexterity,
manipulative ability, eye-hand coordination, and motor ability. Motivation can be defined as the intensity of
a person’s desire to engage in some activity.
Along
with personality, perception, and ability it is a major determinant of
behaviour and performance at work.
Motivation theories that explain the cause of motivation can be
classified as need-based theories, cognitive process theories, expectancy theories,
and reinforcement theory.
CONCLUSION
An examination
of the literature in the fields of organizational and corporate culture finds that they have independently linked to
performance. For example, researchers have examined the links between organizational
and corporate culture and performance (Deal and Kennedy, 1982; Denison, 1990; Ouchi,
1981; Pascale and Athos, 1981; Peters and Waterman, 1982; Kotter and Heskett, 1992).
As far as the
concept of culture is concerned, it has either been left undetermined outside
of whether it is weak or strong, sapped of meaning by equating it to working
climate, or defined in an uncomprehensive manner, based on a rather short suite
of values, often with no substantiation that they represent ‘the whole
picture’.
With regard to
success or results (performance, organizational effectiveness) – and here I
refer not to specific results, such as organization/personality adjustment
(O’Reilly et al., 1991) – they are limited to the strictly financial domain.
This, however, diminishes the conceptual scope, because an organization
produces not only financial results but at the same time more or less solvency,
more or less human resource development, more or less innovation.
Furthermore,
numerous aspects of the organizational culture literature allude to the role of
leaders in ‘creating’ and ‘maintaining’ particular types of culture (for example,
Schein, 1992; Siehl, 1985). Equally, the literature on leadership suggests that
the ability to understand and work within a culture is a prerequisite to
leadership effectiveness (see Hennessey, 1998).
Furthermore,
what management or shareholders may define to be a success may be perceived as
a failure by staff threatened with layoffs, or as fraud by consumers. Taking
account of all values and stakeholders is imperative to any measure of
effectiveness. Otherwise, the culture–success relationship or its parallel,
strong culture–success, would be biased from the outset, regardless of which of
the various possible perspectives is adopted: the ‘natural systems model’, emphasizing
objective equilibrium, the ‘rational or goal-achievement model’, emphasizing
the instrumental nature of the organization, the ‘decision-making model’,
emphasizing the fact what organizations do primarily is to process information
and decisions, or the ‘population ecological model’, emphasizing environmental
control aspects (Denison, 1990: 36).
A fuller and
more comprehensive approach is needed, then, as regards performance and culture
both. The mere consideration of the chief components of the organization or
constituencies (management, staff, clientele, shareholders, suppliers, the
organization itself) involves defining performance as meeting both the
organization’s financial and its not strictly financial goals (values). Indeed,
neglecting the latter will ultimately have a detrimental effect on financial
success and overall performance.
A common
approach to improving productivity has been to concentrate on enhancing
efficiency at the worker level by returning disabled individuals back to full
employment within an appropriate time, depending on the individual situation.
Culture today
must play a key role in promoting:
·
Knowledge
management
·
Creativity
·
Participative
management
·
Leadership
·
Communication
·
Employee ability
·
Motivation
Strategies for
effecting cultural change include (Schein 1999):
·
Unfreezing
the old culture and creating motivation to change.
·
Capitalizing
on propitious moments—problems, opportunities, changed circumstances, and/or
accumulated excesses or deficiencies of the past.
·
Making
the change target concrete and clear.
·
Maintaining
some continuity with the past.
·
Creating
psychological safety through a compelling positive vision, formal training, informal
training of relevant groups and teams, providing coaches and positive role models,
employee involvement and opportunities for input and feedback, support groups, and
addressing fears and losses head on selecting, modifying, and creating
appropriate cultural forms, behaviours, artifacts, and socialization tactics.
·
Cultivating
charismatic leaders.
·
Having a
realistic and solid transition plan.
·
Exercising
risk management by understanding and addressing the risks and the benefits as
well as the potential inequitable distribution of these risks and benefits.
Overall, the
literature on organizational culture is rich and diverse. Much of the richness
is founded on the claim by many researchers that culture is linked to organizational
performance. While, some theorists have questioned the universality of a culture–performance
link, sufficient evidence exists to suggest that organizational culture is
associated with organizational performance.
Authors like
Deal and Kennedy (1982) and Peters and Waterman (1982) had taken a prescriptive
approach towards culture management. They argued that adopting certain common
cultural traits would result in superior performance. However, successful
cultures may in fact be very difficult to imitate due to their many
interlocking elements. In addition, resource-based theory suggested two other reasons
why culture may be extremely difficult to imitate.
First,
cultural norms and values are subject to path dependency. From Schein’s (1985a,
b) life cycle theory of cultural evolution, it can be seen that cultural development
and strength depends on the historical development of the company itself. Thus,
the assumptions, values and interlocking elements were built up over a period
of time. Competitors cannot duplicate all these elements in a piecemeal
fashion. They must, therefore, be built up in ways that are difficult to
imitate. Second, organizational capabilities like culture are casually ambiguous.
It is extremely difficult for an outside competitor to pinpoint what the valuable
resource really is. This is because the cultural impact on performance could be
due to a wide range of social interactions among organizational members.
The concept of organizational culture has drawn attention
to the long-neglected, subjective or ‘soft’ side of organizational life.
However, many aspects of organizational culture have not received much
attention. Instead, emphasis has been placed primarily on the cultural and
symbolic aspects that are relevant in an instrumental/pragmatic context. The
technical cognitive interest prevails. Culture then is treated as an object of
management action. In this regard, Ouchi and Wilkins (1985: 462) note that ‘the
contemporary student of organizational culture often takes the organization not
as a natural solution to deep and universal forces but rather as a rational
instrument designed by top management to shape the behaviour of the employees
in purposive ways’. Accordingly, much research on corporate culture and
organizational symbolism is dominated by a preoccupation with a limited set of
meanings, symbols, values, and ideas presumed to be manageable and directly
related to effectiveness and performance. This is in many ways understandable,
but there are two major problems following from this emphasis. One is that many
aspects of organizational culture are simply disregarded.
It seems strange that literature should generally disregard
such values as bureaucratic-‘meritocratic’ hierarchy, unequal distribution of
privileges and rewards, a mixture of individualism and conformity, male domination,
emphasis on money, economic growth, consumerism, advanced technology,
exploitation of nature, and the equation of economic criteria with rationality.
Instrumental reason dominates; quantifiable values and the optimization of
means for the attainment of pre-given ends define rationality (Horkheimer and
Adorno, 1947; Marcuse, 1964). Mainstream organizational culture thinking – in
organizations but also in academia – tend to take this for granted. The values and
ideas to which organizational culture research pays attention are primarily connected
with the means and operations employed to achieve pre-defined and unquestioned
goals. A second problem is that subordinating organizational culture thinking
to narrowly defined instrumental concerns also reduces the potential of culture
to aid managerial action. Organizational culture calls for considerations that
break with some of the assumptions characterizing technical thinking, for
example. the idea that a particular input leads to a predictable effect.
All the literature
reviews if apply in real world, I can say some of them are really happened in
the real life. For example in my firm I
attached with. The value and norms of corporate culture whereby whatever A
class performances showed or have it ended with only the member or we called
`cronies’ only easier without word hard will get the increment, high bonuses,
learn new technologies and and fast promotion.
They only person that management listened. Wrong or write they did no
punishment or argument. This is culture that new members or even old one will
have to adapt. Minorities with not in
`cronies’ try very hard to survive.
In my
observation that the management who the one allowed this happened. They let the bad values became virus in the
company. My question is who will ended
this unhealthy culture? Who to blame if
this happened? Management or employees who brought these cultures in and accept
them. Employees will emotion feeling
down and this impact to their performance and productivity or even reduce and
maybe failure of organization objective. But we have to remember after all the
research found, the management has to be strict on systems conducted in the
organization. They must open eyes what
is going on in the organization, not bias is the point here. Minorities have two choice either try to play
along to sustain or leave the company.
Cultures can be measured on the single dimension of ‘strength’
deprives the concept of analytic and interpretive capacity: culture is a complex
web of meanings, not a bundle of muscles. We have to separate between good and
bad culture, which is positive and which is negative. We also must increase the knowledge about
culture in organization for management to study deep into it. Whatever it is, culture truly gives a huge
impacts towards job performance.
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