ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOUR

SCHOOL OF SOCIAL SCIENCES DEPARTMENT: INSTITUTE OF SECURITY STUDIES, GOVERNANCE & ETHICS COURSE CODE: MJS 5204 COURSE TITLE: ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOUR NAME: JACKSON KIRATHE MACHARIA MGE/L/01011 CAT I Effects of Organizational Culture and behaviour on Organization/Employees performance This paper examines two different but related concepts that are part of modern organization. Organizations operate with societies and are by virtue of their existence expected to be morally right, correct and defined. The paper examines organizational culture and four outlooks on culture and performance to demonstrate their interaction. It then looks at the organizational behaviour. Definition of terms Organizational culture Giberson et al (2009) define organizational culture as a collective phenomenon emerging from organizations’ members’ beliefs and social interactions, containing shared values, mutual understandings, patterns of beliefs and behaviours that tie individuals in an organization together over time. The beliefs and assumptions that are considered valid or effective are passed down through the organization and taught to new members as the way they should perceive, feel and act in the organization. It guides how things are done in an organization and indicates what should be important to the employees. It helps explain what happens in organizations since the behaviours within the company should be consistent (O’Donnell and Boyle, 2008). Organizational Behaviour Organizational behaviour is the study about how people feel, think and act in an organization and consequently how they are affected by the activities within the organization (Thomson, 2005). It is a field of study that investigates the impact that individuals, groups and structure have on behaviour within organization. It is the study and application of knowledge about how people act within organizations. It applies broadly to the behaviour of people in all types of organizations, such as business, government, schools and services organizations. OB covers three determinants of behaviour in organizations: individuals, groups, and structure. Organizational Performance According to Saad and Awadh (2013), the degree of an achievement to which employees fulfil the organizational mission at workplace is called performance (Cascio, 2006). Performance measures of transactional efficiency and effectiveness towards organizational goals (Stannack, 1996; Barne, 1991). Organizational culture and Performance Organizational culture is conceptualized as shared beliefs and values within the organization that helps to shape the behaviour patterns of employees (Kotter and Heskett, 1992). Organization culture is the drive that recognizes the efforts and contributions of the organizational members and provides holistic understanding of what and how is to be achieved, how goals are interrelated, and how each employee could attain goals (Gordon and Cummins, 1979). Performance refers to be the ability, both physical and psychological to execute a specific task in a specific manner that can be measured as high, medium or low in scale. Performance can be used to describe different aspects such as societal performance, organizational performance, employee performance and individual performance (Roe, 1999: Kanfer, 1990). Organizational culture is inherently connected to organizational practices and therefore organizational performance is conditional on organizational culture. Organizational culture can enhance performance in a large scale if it can be understood that [organizational performance] is what sustains a culture (Hellriegel and Slocum 2009). According to Daft (1984), a strong organizational culture supports adaptation and develops organization’s employee performance by motivating employees toward a shared goal and objective and finally shaping and channelling employees’ behaviour to that specific direction. Organizational culture comprises of values, beliefs and behaviours that differentiate one organization from another. Performance of any organization sets it apart from other organizations (Deal 1982). Creativity and innovation trigger the performance of employees. They are facilitated by organizational culture. Here, organizational culture lies at the heart of organizational norms that reflects the influence of organizational culture on creativity and innovation. Organizations culture plays an important role in creating such an environment that enables learning and innovative response to challenges, competitive threats, or new opportunities (Tushman and O’Reilly, (1997). Northouse (2004) claims that organizational culture is one of the very basic components of company’s competitive advantage as well as to sustain performance. All leaders have agenda, a set of beliefs, proposals issues, ideas and values which they wish to push forward. Competitive advantage; the unique selling point of companies’ performance is supported and built up by the leaders and their inputs in organizational culture. Competitive advantage is company’s ability to perform in one or more ways that competitors cannot (Kotler and Keller, 2006). Cultural leaders achieve it by creating organizational culture to make employees believe that the substance of the performance is the most crucial (Schein, 2004). There are five approaches to the relationship between organizational performance and organizational culture. These views are discussed below: Strong Culture approach Being a module in the organizational system, organizational culture represents a unique subsystem made of norms, values, beliefs, and behavioural styles of employees (Alvesson and Berg, 1992). Organizational culture provides meaning, direction, and mobilization; it is the social energy that moves the corporation into social status, the energy that flows from shared commitments among group members and the force controlling behaviour at every level in the organization (Kilmann, 1985: 354). This culture affects behaviour. Strength of a culture influences the intensity of behaviour and the strength of a culture is determined by how many important shared assumptions there are, how widely they are shared and how clearly they are ranked. A strong culture is thus characterized by homogeneity, simplicity and clearly ordered assumptions (Sathe, 1985). Denison (1990) claims that commitment of an organization’s employees and managers to the same set of values, beliefs and norms will have positive effect that the strength of ‘corporate culture is directly correlated with the level of profits in a company. Scholars claim that due to shared homogeneity, simplicity and clearly ordered assumptions, organizations applying this approach to its culture tend to involve almost all employees in decision-making, allowing them some discretion and developing holistic relations toward organizational goals and objectives (Peters and Waterman, 1982). Participation of all organization’s persons in designing goals and means of attaining them creates a sense of responsibility, belongingness, appreciation, motivation and energy. It also develops a sense of ownership in achievement on part of all employees (Ouchi, 1981). Organizational culture as a diagnostic tool Culture of an organization can be applied as a diagnostic instrument, an aid in making wise decisions and avoiding traps. It emphases the deep values and assumptions of organizations, unconscious or half-conscious beliefs and ideals about objectives, relationships to the external world, and the internal relations that trigger behavioural norms (Schein 1985). In this approach, culture informs managers of the difficulties or impossibilities to accomplish and providing ideas for constructive action in the light of culture. Mapping cultural terrain produces a guide for how to orient oneself and reduce making mistakes. Culture of organization is a pattern of basic assumptions invented, discovered, or developed by a given group as it learns to cope with 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, 1985). It provides guiding principles to employees as they strive to achieve organizational goals. Tied to these norms, values and assumptions subconsciously, employees are focused to achieve the best results either knowingly or otherwise. Performance defined culture outlook Some scholars argue that success and achievement develop a unique set of common orientation of values, beliefs and assumptions. High performance is seen to create a strong corporate culture (Wilkins and Ouchi, 1983). Going by stewardship model of corporate governance, employees especially the top management have a sense of duty and responsibility. They are motivated by achievement thus willing to act for the common good of the organization. They are pro-organizational collectivists and have higher utility than individualistic self-serving behaviour and the steward’s behaviour will not depart from the interest of the organization because the steward seeks to attain the objectives of the organization (Davis, Schoorman & Donaldson 1997). As such, high level performance may not necessarily result from incentives and rewards but from values and behaviours inculcated by the culture of organization. Situational/ Contingency approach This view appends organizational culture to situational settings or circumstances suitable for particular cultures. Some organizational settings demand some form of culture that is unique to the traditional organizational culture due to their complexity and ambiguity (Wilkins and Ouchi 1983). Military and bureaucracy for instance have unique performance requirements and varied subcultures fitting to those various tasks. Adaptive culture approach Organizations operate in unpredictable and volatile environment. They too are very dynamic through adoption of technology, mergers and acquisitions, takeovers, reengineering and restructuring. As such, organizational culture must also respond in sync with the environment. As Brown (1995) notes, people in these organizations are willing to take risks, trust each other and work together to identify problems and opportunities. Though adaptability is necessary for survival and success, it must assure an organization of security and stability. However, too much volatility and change bring about loss of direction and instability (Brown, 1995). Adaptive culture in organization has been well demonstrated by the Apple Computer Corporation which has continually developed products fitting in a very competitive market. Innovation has been the principle number one in Apple (Jobs, 2012). Organizational culture adapts overtime to cope up with such dynamic changes and meet the varying demand of employee expectations and satisfactions. Therefore a supportive culture is considered as a motivational instrument which promotes the employees to perform smoothly and ensures better productivity (Ritchie, 2000). Organizational behaviour Approaches to Organizational behaviour Scientific Management Approach Scientific management school is concerned with increasing the efficiency of the worker through good job design and appropriate training of the workers. Through proper job design, worker selection, employee training and incentives, productivity can be increased (Taylor, 1911). This school advocates that efficiency can be attained by finding the right methods to get the job done, through specialization on the job, by planning and scheduling, by using standard operating mechanisms, establishing standard times to do the job, by proper selection and training of personnel and through wage incentives (Gomez-Mejia, et al., 2008). Human Resources (Supportive) Approach This developmental approach centres on the growth and development of people toward higher levels of competency creativity and fulfilment since they are the prime resource in any organizations and society. It helps people grow in self-control and responsibility and then it tries to create a climate in which all employees may contribute to the limits of their improved abilities. It is based upon the premises that expanded capabilities and opportunities for people will lead directly to improvements in operating effectiveness. Work satisfaction will be a direct result when employees make fuller use of their capabilities. Human resources approach means that better people achieve better results (Dessler, 2002). Contingency Approach Situational model of organizational culture argues that the external environment and several aspects of the internal environment govern the structure of the organization and the process of management. Effective management will vary in different situations depending on the individual and groups in the organization, the nature of jobs, technology, the type of environment facing the organization and its structure. If the employees are highly matured and willing to take more responsibility, the managers can follow delegating style and give full freedom to their employees. If the employees are not so matured and avoid taking any responsibility, the managers must follow directing style. Depends upon the situation, maturity, managers will adopt different style of leadership to ensure more successful results (Wilkins and Ouchi, 1983). System approach This model suggests that organizations have input-transformation process-output model with the feedback mechanism. An organization consists of varied coordinated and interdependent elements affecting one another in order to achieve the overall results. Conceptually a system implies that there is multitude of factors in organization with each one of them affecting all the others in complex relationships. An organization is open to its external environment receiving certain inputs from the environment such as human resources, raw materials and engaging in various operations to transform those raw materials into finished products and finally turning out the outputs in its final form to be sent to the environment. The organization, since it is open to the environment, also receives feedback from the environment and takes corrective action as necessary (Drucker, 1993) . Elements of organizational behaviour The principal elements in organizational behaviour are people, structure, technology and the external environment in which the organization operates. People form organizations to accomplish identifiable objectives. Whenever they come together, some kind of infrastructure is essential. They also use technology accomplish jobs. As a result, there is an interaction of people, structure and technology. In addition, these elements are influenced by the external environment, and they influence it (Daft, 2010). People People make up the internal social system of the organization. They consist of individuals and groups. People are the living, thinking, feelings beings who created the organizations (Brook, 2006). Organizations exist to serve people’s objectives. They provide workforce that must be managed. People occupy positions within an organization through the following arrangements: Individual employees performing the tasks allotted to them Dyadic relationships such as superior-subordinate interactions Groups who work as teams and have the responsibility for getting the job done and People outside the organization’s system such as customers and government officials (Kotter and Heskett, 1992) Structures They define the official relationships and interactions of people in organizations. Coordinated tasks are required to accomplish all of an organization’s activities and achieve pre-agreed goals. The board, management, supervisors and subordinates interact through these structures for both communication and coordination purposes. The main structure relates to power and responsibilities. One person may be having authority to make decisions that affect the work of other people (Kottler, 1992). Level of interaction among different categories of employees – people – within an organization determines the level of agreement, coordination and direction. It may either encourage or deter participation, delegation of authority and duty and the feeling of appreciation thus affects performance of employees (Kaplan and Norton, 1992). Organization structure has several principal concepts namely: Hierarchy of Authority: represents the distribution of authority among organizational positions which grants the position holder certain rights including right to give direction, right to punish and reward to others among others. Authority allotted to an employee affects his/her output directly by determining his/her extent of decision making, time taken to make and implement a decision the level of approval required (Baker, et al. 2008). Division of Labour: it is the distribution of responsibilities and the way in which activities are divided up and assigned to different members of the organization. Split of work is considered as an element of the social structure. Span of Control: refers to the total number of subordinates over whom a manager has authority. A certain number subordinates will be required to perform certain amount of work (Luthens, et al., 2007: 54). Specialization: This refers to the number of specialities performed within the organization. It represents mastery of one’s speciality and competence. Specialization is aimed to achieve efficiency and effectiveness, improved performance. Standardization: is the existence of procedures for regularly recurring events or activities Formalization: refers to the extent to which rules, procedures and communications are written down. Centralization: denotes the concentration of authority to make decision. High level of centralization limits autonomy of lower cadre of employers in decision making. Contrary decentralization has been widely championed as the best method of managing bureaucracies and public entities (Douglas, 1987). Complexity: connotes both vertical differentiation and horizontal differentiation. Vertical differentiation outlines the number of hierarchical levels. Horizontal differentiation highlights the number of units within the organization such as departments, divisions (Saffold, 1998). Technology Technology in organizations is applied for communication, decision making and internal specific input processing into finished goods and services. Different organizations have different technological needs. The core technology is the set of productive components most directly associated with the transformation process, for example, production or assembly line in manufacturing firm. Technology provides the physical and economic resources with which people work. The great benefit of technology is that it allows people to do more and better work, but it also restricts people in various ways. It has costs as well as benefits Kotter and Heskett, 1992). Classification of Technology: Thomson (2005) classifies technology into three categories: Long-linked technology, Mediating Technology and Intensive Technology. Long linked Technology: tasks are broken into a number of sequential and interdependent steps, where the outputs of one unit become the input of the next as in the case of an assembly line this facilitates to have high volume of output and efficiency. This technology calls for automatic structures with high levels of specialization, standardization and formalization. Mediating Technology: links different parties who need to be brought together in a direct or indirect way. For example banks use mediating technology to lend money to borrowers by taking money from depositors. Intensive Technology: It is used when a group of specialists are brought together to solve complex problems using a variety of technologies such as developing an intelligent expert system. Experts are drawn from different fields of specializations and their efforts coordinated with the different activities is achieved in the system primarily through mutual adjustment among those engaged in solving the problem in the different units. Organic structures would fit in this system using intensive technology. Environment Organizations exist within external environment which mutually influence each other in a complex system that becomes the life style of the people. It influences the attitudes of people, affects working conditions, and provides competition for resources and power (Deal and Kennedy, 1982). Every organization interacts with other members of its environment. The interactions allow the organization to acquire raw material, hire employees, secure capital, obtain knowledge, and build, lease or buy facilities and equipment. Other environmental actions such as those regulating or overseeing these relationships interact with the organization as well. They are distributors, advertising agencies, trade associations and the government (Brown, 1998). Two types of organizational behaviours Specific Environment: includes the suppliers, customers, competitors, governments’ agencies, employees, unions, political parties etc. General Environment: It includes the economic, political, cultural, technological and social factors in which the organization embedded (Thomson 2005). References Awadh A. M., and Saad, M. A. (2013). Impact of Organizational Culture on Employee Performance. International Review of Management and Business Research. Vol. 2 Issue Bakker, A. (2008).Positive organizational behaviour: Engaged employee in flourishing organizations. 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