Organizational Culture And Its Evolution In Organizations Management Essay

Organizational Culture And Its Evolution In Organizations Management Essay

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The literature review sets out to provide a detailed understanding of the relationship between organizational culture and portfolio performance, identifying previous studies on this subject and taking cues from these on how to conduct the research, as well as refining the parameters that will be adopted for the research. It first examines the concept of organizational culture, then the concept of portfolio performance and then eventually ties the two together, examining the relationship that exists. It then concludes with a summary of conclusions derived from the literature reviewed.

Organizational culture and its evolution in organizations.

The concept of organizational culture is one which exists in every organization regardless of size or function, as it is the set of values, norms, artefacts and leadership or management styles, which may or may not be defined, with which a particular set of people behave and get things done (Armstrong, 2006). Other definitions refer to organizational culture as a unique set of rules governing an organisation; the way things are done or even a system or mode of operation. A common quality however is that these values relate to and are shared by a specific group of people which are totally unique in composition. The concept of organizational culture is mostly accepted as one that influences performance and effectiveness in any organization (Faqir et al., 2011). Khan & Afzal (2011) note that organizational culture would even differ by countries with differing connotations as this would reflect their environment, beliefs or mode of thinking.

The culture of any organization, regardless of which country it is located, is mostly formed over a period of time and constantly being reshaped as a result of the development of that organization, with the norms and values shaped with experiences and over time. Some research have shown that organizations develop through different stages or lifecycles which can vary from 3 to 10 different stages (Faqir et al., 2011: 104) over which culture can be formed and shaped; inferring that the culture of organizations will have a linkage to the stage of the lifecycle it is at, at any particular time. Quinn & Cameron (1983), reviewed 9 models of organizational lifecycles and proposed 4 major stages namely: entrepreneurial (i.e. the starting out stage dominated by innovation, creativity and gathering of resources), collectivity (i.e. the structures are more informal, with more face to face communication, high commitment amongst members- putting in long hours with evident commitment), formulation & control (here, procedures and policies become grounded and formalized with emphasis on efficiency) and the elaboration of structure (here more attention is given to expansion and emphasis placed on monitoring external factors/environment) stages. While there is undoubtedly a correlation between the type of culture and the stage an organization is in its lifecycle, this research only focuses on the relationship between an organization's culture and its portfolio performance.

Cameron & Quinn (2011) developed an instrument known as the ''organizational culture Assessment Instrument (OCAI) - used to assess organizational culture; an instrument which has been widely used in research (Fralinger & Olson, 2007; Faqir et al., 2011; Ng'ang'a, & Nyongesa, 2012). The instrument was based on a framework known as the competing Values Framework (CVF) - a theoretical model which was developed initially from a conducted research targeted at major indicators of effective organizations. (Yazici, 2010; 17); and is ''now the dominant framework for assessing organizational culture'' (Cameron & Quinn, 2011: 35). Four major culture types are proposed by Cameron & Quinn (2011), namely the 1) Clan; 2) Adhocracy; 3) Hierarchy and 4) Market cultures. See table 3.2 for full descriptions of the four culture profiles by Cameron & Quinn, (2011). These have been widely acknowledged by researchers and have been found in prevalent literature on organizational culture to depict a holistic view of culture types (O'riley & Moses, 1984; Zammuto & Krakower, 1991, cited in Faqir et al., 2011: 105). Figure 2.0 below shows the competing values and their relationship with the 4 culture types.

Figure 2.0: The Competing Values Framework

Source: Cameron & Quinn, (2006)

The CVF helps reveal an organization's focus, i.e. whether it has more of an internal or external focus or if it goes all out for flexibility & discretion or stability & control. (Berriov, 2003).

Ng'ang'a, & Nyongesa (2012) in their study to assess the Impact of Organisational Culture on Performance of Educational Institutions, endorsed the OCAI model as ''a validated research method of examining organizational culture'', and from their study, conclude that the type of culture existent has great bearing on performance.

Portfolio performance

The concept of portfolio performance could be considered the most important aspect of any organization as this directly relates to the core of its existence, with the results reflecting its performance levels and every organization would normally want to succeed in this regard. Marcoulides & Heck (1993) in their study conclude that in line with many other previous researches, organizational culture has a relationship with performance. this statement has also been validated in the course of this research as more studies have proved a strong linkage between an organization's culture and its performance. Alvesson (2002: 67) notes organizational culture as a key element in all forms of performance. It will be considered valuable if an organization invests in the factors or traits that influence its performance, as such, an investment or lack of, as the case may be, could be beneficial or detrimental to the organization in the area of achieving its purpose, objectives or goals.

2.3.1. Portfolio performance in the public sector.

The performance of portfolio could vary across the different industry types or sectors. In the private sector, it is common knowledge that this is probably the most important factor as that is what drives the business of the organization, while this may be the case in the public sector, the perception may not be as strong. Research conducted by Santora (2009: 104), based mainly on the manufacturing industry context, showed that organizational culture enhances performance by shaping quality practices like supplier relationships and management commitment; the writer then acknowledges the need for more research to link culture and performance, especially in the service sector. These cues could also be adopted in the public sector.

In the public sector, especially relating to government departments there is often a perception that the concept of performance is usually undermined, Hoole & Du Plessis (2002: 255) are of the opinion that many ''government departments are not typical project management environments thus adding to the high failure rate''. Such failure rates could be associated to factors identified by Pinto & Kharbanda (1996: 46-53) such as ignoring the project environment, over management of the project managers and their teams, a lack of post project reviews, putting political agendas before project objectives, failure to understand project tradeoffs & putting a new technology to market too quickly. However, since the 1990s there has been a push for the public sector to become more efficient and effective and to be open to more 'private sector' approaches and management techniques in conducting their businesses. (Stan & Sven, n.d). More broadly, portfolio performance in any context (whether in the private or public sector) would be the ability of the organization to transform its inputs into the desired results or outputs or desired goal. The performance of any organization has to be properly strategized with key performance indicators outlined for success to be achieved; this first starts by deciding and specifying what exactly is regarded as success and ensuring that the scope is defined early enough and that it is clearly understood by the members of the organization; and only then can an attempt be made at its achievement.

It is widely acknowledged that the public sector deals with a varied degree of service providers and suppliers, hence the challenge of tying together performance indicators that will satisfy and meet all stakeholder interests. (Cai & Wang, 2012; Stan & Sven, n.d).

A study by Parry & Proctor-Thomson (2003) examined the New Zealand public sector in relation to leadership, culture and performance and note that the public sector could be more effective (probably even more than the private sector) if it had a more transformational organizational culture, instead of the usual transactional nature; this insinuates that the public sector is perceived to be culturally more bureaucratic in nature. This may have held true for all or most organizations before the 21st century but, based on perceptions, from the case study under review, there is a conscious effort to be more innovative in nature, taking cues from the private sector approach of doing business.

Muldrow, Buckley & Schay (2002) propose that using a survey that is reliable can be an accurate way to help asses an organizations culture and determine employee perceptions; providing a basis for proposing methods of improving culture, based on findings, for better performance, as changes in culture is more likely to initiate changes in employee behaviour. This theory has been proven in the situation of this case study organization (i.e. DFID Nigeria),as the people survey is conducted annually with substantial effort by the leadership or management team, put into addressing any areas perceived to influence employee perceptions for better performance.

Overall, organizational culture is important in the public sector as noted by Parry & Proctor-Thomson (2003: 393) as it either liberates or suppresses the display of leadership - which in turn could be beneficial or detrimental to the organization's performance. This then goes to show that the concept of leadership in any organization can affect its performance, and therefore remains a key variable in the organizational culture definition.

Portfolio management in the Public sector.

The management of portfolios would involve management of the different projects contained in the portfolio, and in the public sector, there are challenges which are different to those experienced in the private sector project management. Waddell, (2010: 102) notes that these challenges are even compounded by the scarcity of capable project managers in the public sector organizations. Notwithstanding, the management of portfolios in the public sector has become a strong focus (with the increasing scrutiny by tax payers) and one that has been recognized by countries' leadership as key to achieving success in areas of transparency & accountability, maintaining public trust & confidence and demonstrating effective governance,. This is evident as countries make conscious efforts in ensuring that government projects and programmes are managed using the appropriate project management principles; e.g. in the UK, the Office of Government Commerce (OGC), was established to help in the "delivery of projects to time, quality and cost, realizing benefits" (Office of Government Commerce, 2008a, cited in Crawford & Helm, 2009: 74).

Most public sector organizations manage projects in similar ways, with the projects going through similar life cycle stages as well as similar performance measurement systems, the project life cycle shows how the different stages in projects (from identification to Clearance or approval , to the Appraisal & design, then to Approval, then to Implementation, Completion and Post completion stages. See figure 1.1 for the different stages of the project management. This framework has since ''become a standard practice for development agencies to organize their activities" in identifying and implementing a project. (Biggs & Smith, 2003: 1743, cited in Landoni & Corti, 2011: 46). During project implementation, the Logical framework [1] is used more as a performance monitoring tool and has been widely adopted by major international agencies of the world such as the Canadian International Development Agency (CIDA), DFID, the Australian Agency for International Development (AusAID) and the United states Agency for International Development (USAID). (Landoni & Corti, 2011). These organizations have modified the logical framework to suit the monitoring needs such that project, programme and portfolio implementation is guided to yield the desired performance, and usually, on an annual basis, reviews are conducted to determine the performance levels of the projects - sometimes the log frame even amended as assumptions change in order for the project to adapt to the changing scenarios. The fact that the Log frame is not a static or definite document or tool enables the possibility of reviews and re- alignment of the project at strategic points of the project life.

While the log frame helps with the monitoring of the projects over the implementation period, there are other factors that could affect the projects significantly: a lack of alignment of the project with the needs of the country in which it is being implemented in (Tadege & Jonny, 2012), using a one-size-fits all trap, a shortage of project management capacity, and the culture trap as highlighted by Ika, (2012), where for example in the African context, the problem of corruption eats into project implementation, hindering success.

Success of the portfolio can be described at different levels of the project life cycle, as each cycle is significant towards achievement of the goal- which is the bigger picture. Most development projects aim at the socioeconomic progress of the recipient countries and if this is achieved, then it is termed success; success could also mean that the project management processes produced efficiency (Khang & Moe, 2008: 72). It is important that projects are managed to yield the desired results by ensuring the right project management capacity is employed and the processes keyed to ensure the results are achieved.

Relationship between organizational culture & portfolio performance.

Most previous researches have shown that there is a linkage or relationship between organizational culture and performance. As mentioned earlier, as organizations expect inputs to directly translate to outputs, an investment in any organization's culture, provided it is strategic and tailored to the nature of business and it targets the desired results; should invariably produce the desired performance, i.e. provided the supporting environment or factors remain stable or become better. There is a need for more research conducted on the role of organizational culture in project management as noted by Yazici (2010); however there has been some effort in researching extensively, project management processes & techniques and its relationship to project leadership. The concept of organizational culture needs more examination. (Yazici, 2010: 15).

Over the years, attempts have been made at bridging the gap; Patanakul & Aronson (2012: 220) arrives at a hypothesis that ''Organizational culture emphasizing commitment, communication, and reward for performance contributes to project success'', hinging on the fact that organizational culture is positively associated with performance both at the organizational level and project level. The results an organization achieves, not only depends on the processes followed, but also on the behaviour of the people involved as they execute tasks; the manner in which a group of people carry out tasks can make the difference between adequate results and outstanding results. (Totsi, 2007: 21).

The importance of human factors in the success of a portfolio cannot be over emphasized (Piyush, Dangayach & Mittal, 2011: 50) and culture can be defined as a people's way of life; therefore organizational culture refers to the values and traits that an organization set aside to guide their business operations and delivery to achieve business objectives. Totsi, (2007: 21), notes that the organization's values 'must be owned and demonstrated by all employee and not just managers' for such values to be attributed to the organization as a part of its culture. More often than not, an organization's culture will permeate through the organization and will be evident in behaviour of its employees, especially if these cultural traits are held in high regard, and vice versa. Suda (2007) suggests that 'when individuals become committed to the organization's beliefs, those beliefs become internalized and individual members hold them as their personal beliefs''. Zuckerman (2002: 158) also notes that when the values are clear and are accepted by the organization's employees, then performance will be enhanced .It then becomes important for those values and beliefs to be continually shaped and guided positively to achieve the desired results. Baker (1980: 51), maintains that 'managers consistently pay attention to shaping culture into a positive force by encouraging those elements that are seen as beneficial and checking or eradicating those that are less desirable', as this will surely have an impact on the success of the organization's portfolio. This is indeed a true phenomenon as it is the modus operandi in the case study organization under research i.e. DFID Nigeria. Results from an annually conducted survey are reviewed and attention paid to areas that are perceived to enhance performance.

Muldrow, Buckley & Schay (2002: 343) also note that an organizations performance is a ''result of the totality of the employees' behaviours'' and a good and clear understanding of the culture could reveal why an organization is at a particular performance level. They also note that in some cases, the relationship that exists between the culture and performance could be indirect, such that the results in performance are also a corresponding change in employee attitudes, which is more a direct result from the culture change. Gordon & Ditomaso (1992) investigated the relationship between the strength of culture & values (measured through surveys over years within an organization) with corporate performance and the results revealed that these traits were indeed predictors of performance and that overall, strong cultures would influence performance in subsequent years. Denison & Mishra (1995), also reviews the relationship based on the four traits of organizational culture - ''involvement, consistency, adaptability, and mission'' with results showing that these were predictors of performance as well as quality and employee satisfaction.

A slightly different view has also been presented by some research: Nikbakht, et al (2012) in their study measured the impact of organizational culture on organizational excellence- with excellence referring to the quality of an organization's methods of assessment, human resources, organizational processes, its strategies, and quality of leadership and found relationships between the culture and all of the above - with the exception of a relationship between organizational culture and 'methods of assessment''. This is unsurprising as 'methods of assessment' can be seen as the tool used to measure the performance levels in the organization.

Other views may even be more contrary - e.g. research conducted by Lim (1995), where he examined previously conducted research on the link between an organization's culture and performance and concludes that there were no indications of a relationship between culture and performance in the short term, much less a causal one between culture and performance. He however admits to some degree that there is some evidence of a correlation between 'adaptive' cultures and longer term performance; and regards culture more as a ''descriptive and explanatory tool rather than a predictive'' tool. (Lim, 1995: 20).

As an organization's success or portfolio performance will mean different things to different organizations, It could be appropriate to then argue that for culture to affect performance, it would have to be tailored or adapted to the organization's context or mode/ type of business in order to achieve the performance levels desired. It is found that in different organizations, culture is either performance related - focusing more on the projects or portfolio and the project management principles applied; while in other organizations, more people oriented, focusing on the employees and providing the relevant support to achieve the desired goal. Andersen & Jessen, 2000, cited in Khang & Moe, (2008: 73) emphasized the need to make separate the ''task- and people-oriented aspects in evaluating the project results'', this will actually provide a basis to determine what areas exactly need attention, and then focus can be placed on that area. Knutson (2001) notes the importance of building a project management culture, and suggests three perspectives from which this can be achieved within a business enterprise which include the endorsement of a culture for successful projects, the construction of a support infrastructure for the successful management of projects and the establishment of the executive's role.; while Combs et al (2006: 502) in their study note that performance can be enhanced through high performing work practices such as employee participation, training, making work arrangements more flexible, as these would motivate employees to perform better. These approaches can then be directly translated to the cultural traits an organization could adopt and groom to achieve the desired results.

While looking at the subject of organizational culture, the variable components like values, behaviours, attitudes, norms, artefacts, people, etc. are more often come across in its definition; with most organizational culture profiles containing a combination of these variables or traits.

Organizational culture and high performing organizations

High performing organizations are evident from the success of their businesses; they are seen to excel in the business they operate. Sharpe, (2001) notes that a characteristic of a high performing organization is the achievement of significant results for the money spent. Reviewed literature has shown a correlation between organizational cultures (or at least with some or many of the attributes of organizational culture - see table 2.1) with high performing organizations. These (high performing) organizations are characterised by the quality of leadership, customer focus, efficient partnerships, articulated mission or strategy, to mention a few. Government departments ought to continually strive to build high performing organizations as highlighted in a forum held by the General Accounting Office (2004), as the challenges of the 21st century arise, and acknowledge that there has to be an effect on the predominantly existent culture to one that is ''more results-oriented, client or customer - focused, and collaborative in nature''. (GAO, 2004: 1). A challenge, as noted by Letts, Ryan & Grossman (1999) faced by non profit organizations is the sustenance or expansion of successful programmes. They note that this can be somewhat tackled by attending to the 'capacities' within the organizations. Taking a slightly different position, it is more likely that more recently the non profit or government or public sector organizations have, to a very reasonable degree addressed the issue of capacity within the organizations; It is seen through, as earlier mentioned, methodologies of adopting more private sector approaches and manners of conducting business where 'results' are more of a focus, especially when accountability has become more paramount and is constantly being demanded by the tax payers as well as in the extensive processes and procedures employees are recruited. High performance can be achieved by adopting cultures that promote high performance i.e. those that are able to sustain the processes and factors or traits that influence desired result. A recent study by the American management association (2007) looked at trends and future possibilities of high performing organizations. The study acknowledged that companies or organizations perform very well as a result of good, efficient and effective leadership and well defined modes of operation, especially when combined with the good traits - such as those of being customer focused along with excellent execution. The study also suggests that the traits of high performing organizations are likely to remain the same over the next 5 years (as it examined the period 2007 - 2017), but the manner in which these are demonstrated in terms of the organization's characteristics will evolve over time i.e. there will likely be possible changes in customer service, leadership competencies, etc (Overholt et al, 2007). This remains an interesting concept that will be worthy of research in the near future. Table 2.1 below compiles traits attributable to high- performing organizations revealed through the literature reviewed.

High- performing organizations.

Traits

Strong customer focus or client responsive, consistent and clear strategy, strong and well defined beliefs & values (i.e. culture), solid structure, consistency, well defined processes, excellent execution, strong leadership, innovation, peer respect, distinctive people characteristics, management systems, vision (which is emotion packed), fair treatment of employees, employee pride, longer term relationships, quality performance measurement, strive to be the best, adaptability, experience fun at the work place, strong mission, respectful of colleagues, make no excuses, frequent constructive feedback systems, ability/desire to crush competitors, involvement,

Table 2.1: traits of high - performing organizations

Source: Overholt et al (2007); (GAO, 2004); Osborne & Cowen (2002);

The traits of high performing organizations cannot be exhausted in a world where theories are ever evolving, and may have different meanings and compositions in different settings, Osborne & Cowen (2002) state that personnel in high performing organizations may even expect to have longer term working relationships rather than frequent job swaps, have can-do attitudes with zero tolerance for excuses, but move to get the job done, and even experience fun at the workplace.

De Waal (2008), states that in high-performing organizations, management will combine varying characteristics to achieve its purpose; some of the characteristics will include maintaining a high quality of management style where employees are treated with respect, and feel valued, management have personal and honest relationships with employees such that they feel they can trust the managers; an open culture with action orientation, such that employees feel they are consulted in matters arising in the organization, and see action being taken as a result of such consultation; long term commitments to partners and employees by being customer oriented and building solid and long term partnerships, also with employees such that there is a sense of job security and a sense of being valued; commitment to continual improvement to make processes better to improve efficiency and be more effective, encouraging innovation and harnessing good traits and competences, also realising and acknowledging gaps and filling these by outsourcing needed competencies to achieve the desired results; investment in quality employees, by ensuring well seasoned employees are recruited with the right skills for the job with programmes in place for continual improvement of employee competencies.

In reality, high performing organizations will most likely contain a high or good mix of these characteristics, as it is doubtful that any one organization can claim credibility for exhibiting all of these attributes, as sometimes, the mode of business may influence to some degree what characteristics an organization can have or even groom to maturity. What remains crucial is that an organization determines what is important to its achieving its goal and then efforts can be targeted towards these so that it attains the high performance it desires. (De Waal, 2008:5)

Organizations are continually seeking ways to improve and better their performance and these processes sometimes involve drastic measures of change, either in their cultures or processes or systems. The capacity of these organizations to manage the change process also depends on whether or not they are high performers, therefore the change process needs to be properly managed to be effective. There are common assumptions that some changes, especially to the more physical or aesthetic structures, will improve an organization's performance. Depending on the nature of business of an organization, this may be a misconception while in some other organization; it may be a step in the right direction. A lot of literature has revealed that there is definitely not one right answer as it is mostly working towards achieving a combination of different traits that catapults an organization into being a high performing one.

Summarily, Kirkman, Bradley & Lowe (1999) in their review of existing literature on high performing work organizations arrive at five characteristics of high performing organizations to have a high level of teams self- managing their work, good/total management of quality, use of efficient technologies to aid business, good employee involvement, engagement and empowerment levels, and awareness of organizations to learn from both internal and external factors in order to improve on methods and systems or adapt to their environment or be prepared for changes to come. Kirkman, Bradley & Lowe (1999; 8) then defined a high performing organization as an ''organizational system that continually aligns its strategy, goals, objectives and internal operations with the demands of its external environment to maximize organizational performance''. This definition based on their findings summarises what a high performing organization should be - i.e. be dynamic in ensuring it achieves its goal. However, in the writer's opinion, the concept of the culture of the organization may have been down played in the above definition; a definition such as ''an organization with a system that continually and collaboratively encourages its people, values, strategies, goals and systems to align with changing internal & external environment with the aim of maximizing organizational performance'' - now has a people dimension to it (as people are the primary resource and will have to be engaged (GAO, 2004: 10) to meet or achieve organizational goals. The definition also ties in culture to the concept of high performance as the culture of any organization will affect the perception and motivation of these people to perform to their fullest capacities.

Impact of environment on Organizational Culture

Wilkins & Ouchi (1983; 468) suggest in their article that organizations also possess cultures that are similar to those in the communities in which they function; this could be a function of the people in the organization, exhibiting some cultural traits within the organizational setting that has been influenced by that of their environment. Sorensen, (2002: 70) in a paper, analyses the effect of strong cultures on the organization in relation to their response to internal and external change and hypothesizes that strong culture organizations will thrive in stable environments but encounter difficulties in more volatile environments. This may not necessarily hold on all occasions, as a 'strong' culture could also mean availability of the capacity required to adapt to the more volatile environments. The literature reviewed (GAO, 2004: 10; Bradley & Lowe. 1999) showed that organizations also need to be able to adapt to both internal and external factors if they are to thrive and excel.

In a recent study, looking at organizational culture, firm's characteristics and external environment of firms (in Turkey) on management Accounting Practices, Alper (2012) notes that organizational culture '' could be considered as a linking pin between society and organization''.

Summary

This chapter examined existing literature in the subject of organizational culture and its relationship with performance to set a background and define the scope for the research Organizational culture was seen to have a wide number of variables. See table 2.2 for a compiled list, which by no means is conclusive, of some of the variable components/traits encountered. The chapter began by examining organizational culture and its evolution in the organizational setting. The subject of portfolio performance was then examined next and narrowed down to the public sector context, as this was most relevant to the research. The concept of portfolio management was also examined in the same public sector and then went on to tie the culture - performance relationship. The concept of high performing organizations was also examined and this was followed by a brief examination of the impact of the environment on an organization's culture.

The literature showed that there is a relationship (of varying strengths across organizations or business sectors) between the various traits of an organization's culture and the performance of its portfolio as the cultural traits support or aid employees in executing their duties, and because success means different things in all organizations, the culture of the organization has to be adapted to meet its business needs. These traits can be influenced by leaders and employees alike, as well as by the environment or location. (Khan & Afzal, 2011). The degree to which these traits are shaped and modified to support the organization will determine their performance level; and this is a continuous process throughout the organizational life cycles as organizations are striving to be high performing at all times.

Organizational culture

Variable components

Organizational culture: the research showed that there are different variable components constituted in a variety of mixes and these vary by organization; especially as the nature of business vary as well.

The various components constituted in organizational culture as encountered in literature reviewed include:

Leadership, organizational strategies, human resources, organizational goals, organizational resources, task organization, organizational structure, organizational purpose, responsiveness, organizational climate, openness, organizational values, organizational processes, methods of assessment, worker attitudes and goals, flexibility, flexibility in employee working patterns, employee involvement, employee participation,

Table 2.2: Variables constituted in the organizational culture definition.