ABSTRACT
The concept of organisational culture and its role and effect on organisational performance gained a lot of popularity in the 1980s and has remained a subject matter of great interest. Scholars and organisations are interested in organisational culture for many reasons, most commonly, how it affects employee commitment, satisfaction on the job, retention, and performance. Organisational culture has a lot of implications for strategy development, implementation, and organisational performance. It is therefore little wonder that managers are also seeking to understand more and more what organisational culture is and ways to leverage it for performance.
This study’s objectives were to understand the organisational culture of Process and Plant Automation Limited, the organisation’s view of performance and the perception of the way organisational culture and performance relate to one another.
This study employed a mixed method approach using structured questionnaires and structured interviews to understand the culture of PPA LTD premised on four cultural elements namely; adaptability, involvement, mission and consistency. Organisational performance based on financial and non -financial measures of performance and the effect organisational culture has on performance are also explored.
The study found that the culture of the organisation is one of high involvement and mission. The study also found organisational culture to related positively with organisational performance and organisational performance to be a combination of both financial and non-financial indicators.
CHAPTER ONE
Research Background
INTRODUCTION
It is generally known that culture is essential in determining how people behave, their worldview, their attitude towards work and achievement. As culture is commonly defined to be the way a group of people live and interact, organisational culture is how people in an organisation co-exist and go about their business. According to Deal and Kennedy (2000), organisational culture is simply “the way things are done around here”. Rashid et al. (2003) and Mannion et al. (2005) found that the culture impacts an organisation and many studies have shown that culture significantly affects an organisation’s output. Culture influences an organisation’s approach to work and many aspects of work including management decisions as to how to organise work, what work systems are needed, what caliber of people are needed to work with, how promotions are done, who gets rewarded and for what, among other things. These decisions and their outcomes ultimately affect organisational performance. Organisational culture serves as a “cognitive map” by which group members find the systems, rules, and values to internalize and live by (Jones, 1983). As the culture guides what and how, it also impacts on the results. Kotter and Heskett, (1992) note that culture of any organisation is its management philosophy and the way in which organisations are managed to improve overall performance and effectiveness.
Organisational culture thus impacts and informs an organisation’s management style and practices as well as employees’ attitude towards work and performance. Gallagher and Brown (2007) assert that culture is the dominant predictor of exceptional organisational performance. According to Moorman (1995), earlier research shows that organisational culture impact organisational performance in terms of; what a firm considers its outcomes
to be and the means by which these outcomes are attained including how the organisation structures itself and processes and procedures it adopts. Performance is an important subject for every organisation be it for profit or not for profit and managers are continuously seeking ways to improve upon performance. Researchers, Managers and Human Resource Department have long been interested in the factors that influence organisational performance. Indeed, Organisational performance is of key interest to researchers as a dependent variable in management (organisational) studies (Richard et al, 2009).
Organisations define their mission, vision and core values to shape employee behaviour and guide organisations towards the attainment of their strategic goals. Human Resource departments are tasked to nurture desirable organisational cultures and orient their employees to adopt the desired cultures. Managers of organisations are identifying high performance cultures as desirable and seeking to develop these to impact organisational performance. Employees, on the other hand, are looking for a great organisational climate to thrive. To develop high performance cultures, organisations are developing strategic goals at the top, cascading these goals to lower levels to meet performance expectations without a wholistic appreciation of determinants of performance such as culture. As someone once said, “culture eats strategy for breakfast”.
However, culture can be managed for positive results. Groysberg, Lee, Price and Cheng (2018) assert that the first and most important step leaders can take to maximise the value of culture and minimize its risk is to become fully aware of how it works. Understanding the influence of culture on organisational practices and management style and how it
affects employee output is key to increasing organisational overall performance. Good organisational culture has been shown to produce positive performance.
According to Barney (1986), Organisational culture is characterized by a set of core managerial values that provides a firm competitive advantage resulting in sustained superior financial performance. Examining conditions under which a culture brings competitive advantage to an organisation, Barney (1986) concludes that culture should have three characteristics. It should be valuable in that the culture enables members of the organisation to do act in ways that will result in high sales, high margin or add financial value; the culture should also be rare such that its characteristics and attributes are not common to any other organisation’s culture and finally, it should be impossible to imitate because if imitable, its advantage can be replicated in other firms and the advantage will be lost.
Chein (2004) identified human resource policies, organisational culture, job design, motivation, leadership style and the environment as drivers of organisational performance. From a layperson point of view, culture is said to give a group of people an identity which is not technically different from O’Donnell and Boyle (2008) view about the relevance of culture to the organisation. Besides, the realisation of culture and its typologies informs management to be circumspect since every style adapted in running the activities of the organisation corresponds to different expectations.
Researchers have long thought and sought to prove that Organisational culture affects effectiveness in any organisation. Numerous studies have been conducted in this regard to understand the effect organisational culture has on organisational effectiveness or
performance. (Hofstede, 1980); (Deal & Kennedy, 1982); (Peters & Waterman, 1982); (Schein, 1984, 1985); (Denison, 1990); (Kotter & Heskett, 1992); (Denison & Mishra, 1995); and many others. According to Kotter and Heskett (1992), the 1980’s witnessed the emergence of the term corporate or organisational culture. Interest in organisational culture as a business phenomenon in the 1980’s was triggered by the works of: (Ouchi, 1981); (Deal & Kennedy, 1982); (Pascale & Athos, 1982) and (Peters & Waterman, 1982). (Baker, 2002).
Ouchi and Wilkins (1993) assert that organisational culture has become a dominant topic in organisational studies and attribute the rise in studies of organisational culture to the perception in the late 1970’s and 1980’s that Japanese firms had superior operating characteristics. Thus, many scholars sought to examine organisational culture comparing Western cultures with the Japanese culture and trying to draw a relationship between national cultures and organisational cultures.
Organisational culture is important for many reasons. (Nelson & Quick, 2011) identify functions of organisational culture to include giving members a sense of identity; increasing commitment among members; reinforcing the values of the organisation and shaping behaviour of members being a control mechanism. Organisational culture also enables problem solving, telling group members acceptable ways to behave, thinks, believe and act even when faced with challenges. Schein (1984) states that culture provides stability for the internal and external environment of an organisation. Problems of external and internal adaptation exist in every group. External adaptation is that which deals with the problems of a group’s basic survival. These are the conditions in the external environment that no group can exercise control over, and which can to an extent determine
the existence or survival of the group. Problems of internal adaptation on the other hand deal with a group’s ability to bond and function as a group. A group cannot exist unless it can manage itself. Kotter (2012) states that organisational culture can increase employees’ satisfaction on the job and may improve organisational performance. Organisational culture also provides certainty to the organisation about problem solving.
Organisational culture is a “soft tool” for enhancing organisational performance. Even as leaders and organisations consciously seek to influence organisational culture for performance, employees’ perception of and acceptance of the organisational culture as it is and how it impacts performance is also important.
Statement of the Research Problem
Business leaders understand strategy. It is the logical way that they determine how to attain their goals and objectives. It is expressed in the strategic plans they develop, these plans are communicated and executed with timelines and accountabilities specified. Culture on the other hand “is more elusive because much of it is anchored in unspoken behaviours, mindsets and social patterns” (Groysberg et al, 2018). According to Groysberg et al (2018), culture and leadership are inseparable and yet many leaders are confounded by culture. Leaders and by extension organisations can shape the culture consciously and unconsciously. Therefore, it is necessary that organisations are fully aware of how cultures develop and affect employees and ultimately impact organisational performance.
