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Saturday, 7 December 2013

Synthesis Report on OD

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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