SOLUTION: Organisational culture and the transformation process

1Session 7: Organisational culture and the transformationprocessLO4Developing Individuals, Teams andOrganisations2Objectives of the SessionBy the end of the session, students should be able to understand:• How organisational culture can be both a facilitator and barrier toeffective performance management• How performance management is used to transformorganisations23Organisational culture and performancemanagementWhat is organisational culture?• Culture gives organisations a sense of identity and determines,through the organisation’s legends, rituals, beliefs, meanings,values, norms and language, the way in which ‘things are donearound here’• Organisational culture, then, is made up of more ‘superficial’ aspectssuch as patterns of behaviour and observable symbols andceremonies, and more deep seated and underlying values,assumptions and beliefs4Organisational culture and performancemanagementWhat is organisational culture?• Organisational Culture is the basic pattern of shared assumptions,values, beliefs, and practices that govern behaviour in anorganisation; these assumptions, values, beliefs and practices aretransmitted (and sometimes adapted) from one generation ofemployees to the next, and observed by all new organisationalmembers• Schein (1985) defined organisational culture as a set of beliefs,values, and assumptions that are shared by members of anorganisation• Another common definition still utilised by many practitioners todayis, simply, “the way we do things around here”3Types of organisational culture5Table 2: The Competing Values Framework of Organisational Culture6Organisational culture and performancemanagementThe internal process model• Involves a control/internal focus in which information managementand communication are utilised in order to achieve stability andcontrol• This model has also been referred to as a ‘hierarchical culture’because it involves the enforcement of rules, conformity, andattention to technical matters• The internal process model most clearly reflects the traditionaltheoretical model of bureaucracy and public administration thatrelies on formal rules and procedures as control mechanisms47Organisational culture and performancemanagementThe open systems model• Involves a flexibility/external focus in which readiness andadaptability are utilised in order to achieve growth, resourceacquisition and external support• This model has also been referred to as a ‘developmental culture’because it is associated with innovative leaders with vision who alsomaintain a focus on the external environment• These organisations are dynamic and entrepreneurial, their leadersare risk-takers, and organisational rewards are linked to individualinitiative8Organisational culture and performancemanagementThe human relations model• Involves a flexibility/internal focus in which training and the broaderdevelopment of human resources are utilised to achieve cohesionand employee morale• This model of organisational culture has also been referred to as‘group culture’ because it is associated with trust and participationthrough teamwork• Managers in organisations of this type seek to encourage andmentor employees59Organisational culture and performancemanagementThe rational goal model• Involves a control/external focus in which planning and goal settingare utilised to achieve productivity and efficiency• This model of organisational culture is referred to as a rationalculture because of its emphasis on outcomes and goal fulfilment• Organisations of this type are production oriented, and managersorganise employees in the pursuit of designated goals andobjectives, and rewards are linked to outcomesNB:• The importance of understanding of types of culture is not that thetypes exist in any pure form in organisations• Organisations can display several cultural types• Such types of culture help in our understanding of predominantcultures and thinking as to what re-balancing is needed if culture isto be shifted to support new practices and values Organisational Behaviour, edited by Christine Cross and Ronan Carbery©Palgrave, Macmillan 2016Types of Organisational Culture Strong CultureWeak CultureA clear philosophy with regard to how the businessis operatedNo clear philosophy exists to guide how thebusiness should operateEmphasis on the communication of core values andbeliefs of the organisationCore values are not clearly defined or wellcommunicatedThe existence of statements, symbols andtraditions which explicitly describe the values of theorganisationFew if any indicators of the values and traditions ofthe organisationA shared sense of values and norms of behaviourexist among membersOnly limited or no evidence of alignment betweenthe way things are done and the espoused valuesof the organisationAttention is paid to the importance of maintainingorganisational culture when recruiting newemployees, for example selection of new membersinvolves screening to ensure they fit with the cultureNo efforts made to retain organisational culture anda greater need for procedures and policies in orderto get to achieve desired results 611Organisational culture and performancemanagementSubcultures• A subculture is one which holds the core assumptions of thedominant culture, as well as supplementary assumptions unique tomembers of that particular section of the organisation• Subcultures tend to develop in different sections of the organisation– for example, different departments or geographic locations – andreflect common issues faced by members of those sections• The larger an organisation grows, the more diffused the culturebecomes and this typically results in more subcultures12Forms of organisational culture• The Competing Values Framework (CVF) developed by Cameronand Quinn (1999) identifies four unique types of organisationalculture:– Hierarchy Culture – has an internal focus, and demonstrates astrong interest in maintaining stability and control. It ischaracterised by formalisation, structures, policies andprocedures– Market Culture – The core assumptions are competitivenessand productivity. Places a strong emphasis on externalpositioning and control– Clan Culture – Typical characteristics are teamwork, employeeinvolvement programmes and corporate commitment to theemployee– Adhocracy Culture – The major goal is to foster adaptability,flexibility and creativity so as to produce innovative products andservices and adapt quickly to new opportunities713Organisational culture andorganizational performance• The culture of any organisation affects the performance of thatorganisation through its impact on individuals and teams at work• Organisational culture should guide employees to form attitudes andconsequently behave in ways that are consistent with its values andbeliefs• Kotter and Heskett (1992) found that strong corporate culturesfacilitated change, and were associated with strong positive financialresults• A common feature of the strongest performing companies werecultures that encouraged leadership, but also empowered everyonein the organisation14Organisational culture and performancemanagementHow organisational culture can be both a facilitator to effectiveperformance management• Performance management practices, as fundamental humanresource management practice, support the view that employeesand managers benefit from the understanding of organizationalculture as a contextual factor• According to Denison & Mishra (1995, cited in Ahmad, 2012) thereare four traits of organisational culture:– Involvement– Consistency– Adaptability– Mission• These are shown in Fig 18Organisational culture and performancemanagementOrganisational cultureInvolvement CultureConsistency CultureAdaptability CultureMission CulturePM PracticesClear and measurable goalsPerformance measurementsystemConsultative PerformanceAppraisalTraining Effectiveness/EvaluationPerformance-basedCompensation15Fig 1 Organisation culture and performance management practices16Organisational culture and performancemanagementHow organisational culture can be both a facilitator of PMInvolvement• Effective organisations empower their people, build theirorganisations around teams, and develop human capability at alllevels• Executives, managers, and employees are committed to their workand feel that they own a piece of the organisation• People at all levels feel that they have at least some input intodecisions that will affect their work and that their work is directlyconnected to the goals of the organisation917Organisational culture and performancemanagementHow organisational culture can be both a facilitator of PMConsistency• Organisations also tend to be effective because they have “strong”cultures that are highly consistent, well coordinated, and wellintegrated• Behaviour is rooted in a set of core values, and leaders andfollowers are skilled at reaching agreement even when there arediverse points of view• This type of consistency is a powerful source of stability and internalintegration that results from a common mindset and a high degree ofconformity18Organisational culture and performancemanagementHow organisational culture can be both a facilitator of PMAdaptability• Organisations that are well integrated are often the most difficultones to change• Internal integration and external adaptation can often be at odds• Adaptable organisations are driven by their customers, take risksand learn from their mistakes, and have capability and experience atcreating change• These organisations are continuously changing the system so thatthey are improving the organisations’ collective abilities to providevalue for their customers1019Organisational culture and performancemanagementHow organisational culture can be both a facilitator of PMMission• Successful organisations have a clear sense of purpose anddirection that defines organisational goals and strategic objectivesand expresses a vision of how the organisation will look in the future• When an organisation’s underlying mission changes, changes alsooccur in other aspects of the organisation’s culture.20Organisational culture and performancemanagementHow organisational culture can be both a facilitator of PM• Organisations with a higher combined measure of the four culturetraits four cultural traits (involvement, consistency, adaptability, andmission) show higher levels of performance which itself is the resultof performance managementResearch has shown that• Organisational culture has a significantly positive relationship withperformance management practices• Cultural traits of involvement, consistency, adaptability, and missionin organisations exert a significantly positive influence onperformance management practices1121How performance management is usedto transform organisationsPerformance management (PM) and transformingorganisations• Regular Feedback – by providing regular feedback toemployees, which should be monitored• Continuous Learning – employees and organisationsexpect continuous learning– Performance management practices should helpemployees learn where to focus and what learning toadopt22How performance management is usedto transform organisationsPerformance management and transformingorganisations• Data for decision making – Important decisions about whom topromote, how much of a raise to give, and whom to move into a newrole are getting easier and better through data– Better data for people decisions, making major progressremoves bias and discretion in promotion and advancement• Local operation – companies operate in teams, so performancemanagement must be local– Performance management practices empower local leaders,create better relationships among teams, and help teams workmore closely together1223How performance management is usedto transform organisationsPerformance management and transformingorganisations• Clarity of organisational goals – the managers need to clearly andprecisely lay down the organisational goals, objectives and ensurethat these are well informed to the managers and other employees– Goals should be translated into individual, team anddepartmental/ divisional goals• Evaluation – the individual, team, department/ divisionalperformance needs to be evaluated on continuous basis– Organisation should develop an evaluation system and process,which is designed and developed on scientific lines24How performance management is usedto transform organisationsPerformance management and transformingorganisations• Cooperation but not control – managers should nurture thepractice of getting work done through the system of obtainingmanagers’ consensus rather than through control or coercion• Self-management teams – management need to encourage theindividual and teams for self-management of their performance– This procedure creates in the managers a sense of responsibilityand develops a spirit to work with commitment and evaluatehis/her strengths and weaknesses from time to time and plan forreducing the performance gaps• Leadership development – the managers need to identify such ofthe managers who have leadership potential and apart from sincerityand honesty to ensure better and effective two-way communicationbetween the managers and the employees1325How performance management is usedto transform organisationsBenefits of performance managementBenefits of implementing proper process management process in theorganisation include the following.• There are direct financial gains which include growth in revenue,reduced cost of operation, and reduction in the costs of projectoverruns• Employees’ action and behaviour get aligned to organisationalobjectives and goals• Performance management decreases the time it takes to createstrategic or operational changes by communicating the changesthrough a new set of goals• It motivates the employees for higher performance which in turnoptimizes their incentive earnings26How performance management is usedto transform organisationsBenefits of performance management• It improves employee engagement because everyone understandshow they are directly contributing for the organisation to achievehigh level goals• It creates transparency in achievement of goals• Employees’ development programs are better aligned directlytowards the achievement of the organisational goals• There is improved management control which is flexible andresponsive to the organisational needs• It results into simplification of the communication process and theclarity of the strategic goals of the organisation becomes better withthe employees• It results into better and systematic recording of the data for effectivemonitoring of the parameters1427How performance management is usedto transform organisationsBarriers to effective performance management• Compensation Package• Reward system• Work life balance• Creative Work Environment28How performance management is usedto transform organisationsBarriers to effective performance managementCompensation Package• Compensation package should alsohelp an employee to fulfil their desire to achieve socialambitions• Due to restrictive pay package policies, employees feeldissatisfied with their current packages1529How performance management is usedto transform organisationsBarriers to effective performance managementReward system• Rewards can be great incentives for employees to work,even go an extra mile• Reward system should link performance and incentives• Different employees doing the same job would earndifferent rewards, depending on performance• Managers will distinguish between employees throughperformance measures or merit ratings, give themfeedback on good and bad performance, anddifferentiate compensation and rewards on this basis30How performance management is usedto transform organisationsBarriers to effective performance managementWork life balance• Work life balance is meaningful achievement andenjoyment in everyday life”• Research has shown that– The experience of work life balance is positively related toemployee’s performance and organisational performance– Work life balance has positive outcomes , such aslow turnover intention, improvement of performance and jobsatisfaction1631How performance management is usedto transform organisationsBarriers to effective performance managementCreative Work Environment• All innovations begin with creative ideas• Employee creativity can be considered to be theproduction of ideas, products or procedures that are– Novel or original and– Potentially useful to the organisation• There are factors (i.e., internal political problems,conservatism and rigid formal structures) that couldimpede creativity amongst individuals32ReferencesAhmad, M.S. (2012). Impact of organisational culture on performancemanagement in Pakistanhttps://pdfs.semanticscholar.org/3512/50351951dad36cb1c0f491ff67047648924b.pdfO’Donnell, O. and Boyle, R. (2008). Understanding and ManagingOrganisational Culturehttps://www.ipa.ie/_fileUpload/Documents/CPMR_DP_40_Understanding_Managing_Org_Culture.pdfChapter 12 – Understanding organisational culture PowerPointhttps://www.macmillanihe.com/resources/…/C/…/slides/OB%20Chapter%2012.pptxWalia, S. (2014). Barriers to effective performance managementhttp://www.academia.edu/12147102/BARRIERS_TO_EFFECTIVE_PERFORMANCE_MANAGEMENT1733ReferencesPerformance Management (233 pages)http://www.pondiuni.edu.in/storage/dde/downloads/hrmiii_pm.pdfOrganization Changehttps://www.hse.ru/data/2010/10/28/…/Lecture%209%20Organization%20Change.ppt(95 Slides)