hrm502 4 organisational culture

M. S. Ramaiah University of Applied Sciences

1 Faculty of Management and Commerce

Module Code: HRM502

Module Title: Organisational Life Cycle Management

Module Leader: Dr. Sandhya Iya

E-mail: [email protected]

Session 4: Organisational Culture



Session Objectives

At the end of this session, students will be able to:

Explain organisational effectiveness and its measurement

Discuss meaning and types of culture

Describe the link between culture and strategy



Session Contents

Organisational effectiveness

Meaning and types of culture

Creating and sustaining culture

Link between culture and strategy



Organisational Effectiveness (OE)



Definition of OE

Organisational effectiveness can be defined as the efficiency with which an organisation is able to meet its objectives. This means an organisation that produces a desired effect or an organisation that is productive without waste.



Evolution of the Concept

Frederick Taylor: Effectiveness is determined by production maximisation, cost minimalisation, technology etc.

Henri Fayol : a function of clear authority and discipline in an organisation

Elton Mayo: A function of productivity resulting from employee satisfaction



Criteria for OE

Time

Near Future (Approx. 1 Yr)

Intermediate

Long term (Approx. 5 Yrs)

Effectiveness Criteria

Effective in achieving goal

Adapt to new opportunities

Able to survive in an uncertain world

Efficient in use of resources

Develop ability of employees and organisation

Source of satisfaction to stakeholders



Approaches to Measuring OE

Goal Approach: Effectiveness is the ability to excel at one or more output goals

Internal Process Approach: The ability to excel at internal efficiency, coordination, motivation, and employee satisfaction

System Resource Approach: The ability to acquire scarce and valued resources from the environment



Approaches to Measuring OE Contd.

Constituency Approach: The ability to satisfy multiple strategic constituencies both within and outside the organisation

Domain Approach: The ability to excel in one or more among several domains as selected by senior managers



Flow Chart of Goal Approach to Organisational Effectiveness

TRANSFORMATION INPUTS OUTPUTS

GOAL APPROACH


11 Faculty of Management and Commerce M. S. Ramaiah University of Applied Sciences


Flow Chart of Internal Process Approach to Organisational Effectiveness


INTERNAL PROCESS APPROACH



Flow Chart of System Resource Approach to Organisational Effectiveness


SYSTEM RESOURCE APPROACH




Flow Chart of Constituency Approach to Organisational Effectiveness


STRATEGIC CONSTITUENCIES APPROACH



COMPARISON OF THE FOUR OE APPROACHES

Approach

Goal Attainment

System Resource

Constituencies

Internal Processes

Definition of OE

Attains stated goals

Acquires needed resources

All strategic constituencies at least minimally satisfied

Combines efficiency and health

When Used

Goals are clear, time-bound, measurable

Clear connection between inputs and outputs

Must respond to demands of powerful constituencies

Easily measured costs, outputs, satisfaction



OE Criteria for Selected Constituencies

Constituency

Typical Criteria

Owners ROI, Growth in Earnings

Employees C&B, Job Satisfaction

Customers Satisfaction with Price, Quality, Service

Suppliers Satisfaction with payments, future sales

Creditors Satisfaction with debt payments

Unions Satisfaction with competitive wages & benefits, working conditions, fairness in bargaining

Community CSR, Environmental consciousness

Govt. agencies Compliance with laws, avoidance of penalty



Models of OE

Contradiction Model

Competing Value Model




The Contradictions Model of Organisational Effectiveness

Trying to characterize a whole organisation as totally effective or ineffective is problematic In any complex organisation some parts may function effectively while other parts may not be as effective




Four Central Assumptions of the Contradictions Model

1. Organisations may fail to meet the multiple and conflicting demands placed by their complex environments

2. They be unable to achieve their multiple and conflicting goals

3. They may fail to satisfy the competing or conflicting demands they face from their multiple internal and external stakeholders

4. Organisations must manage multiple and conflicting time demands. Satisfying short- or long-term demands at the expense of the other may result in sub-optimal performance




Competing Values Model

Organisational goals and performance are defined by top and middle management

The model compared the diverse effectiveness indicators used by managers and researchers

Similar dimensions of effectiveness criteria were found



Competing Values Dimensions I

Focus: whether dominant values concern issues that are internal to the organisation or external to it

Internal focus reflects management concern for well-being and efficiency of employees

External focus reflects an emphasis on the well-being of the organisation itself and its fit with its environment

.



Competing Values Dimensions II

Structure: whether stability versus flexibility is the dominant structural consideration Stability reflects a management value for efficiency and top-down control, while flexibility represents a management value for learning and change



Dimensions of Effectiveness

Structure Flexibility

Control

Focus Internal External

I II

III IV



Four Models of Effectiveness

Quadrant I : Human Relations Model internal focus and flexible structure

Management concern is on the development of human resources

Employees are given opportunities for autonomy and development

Management works toward sub-goals of cohesion, morale, and training opportunities



Four Models of Effectiveness Contd.

Quadrant II: Open Systems Model Combination of external

focus and flexible structure

Managements goals are primarily growth and resource acquisition

Sub-goals are flexibility, readiness, and positive evaluation by the external environment

Dominant value is establishing a good relationship with the external environment to grow and acquire resources

Similar to the Systems Resource Model



Four Models of Effectiveness Contd.

Quadrant III: Internal Process Model reflects the values of

internal focus and structural control

Seeks a stable organisational setting that maintains itself in an orderly way

Well established in environment and just wish to keep their current position

Sub-goals include mechanisms for efficient communication, information management, and decision-making



Four Models of Effectiveness IV

Quadrant IV: Rational Goal Model reflects Management values of structural control and external focus

Primary goals are productivity, efficiency, and profit

Organisation wants to achieve output goals in a controlled way

Sub-goals include internal planning and goal-setting, which are rational management tools

Similar to the Goal Approach



Competing Values

Four different opposing value sets within the organisation

Exist simultaneously

The right balance for the organisation is subject to managerial discretion

Emphasis may change over time, especially as the organisation evolves through its life cycle

e.g.hospitals,airlines



Understanding Culture



Importance of Culture

Guides and gives employees a sense of direction

Influences workplace interactions

Promotes healthy competition

Contributes to brand image of organisation

Brings employees on common platform

Maximises employee contribution



Types of Culture

Mechanistic vs. Organic

Authoritarian vs. Participative

Dominant vs. Sub-culture

Strong vs. Weak culture



Strong and Weak Cultures

Strong Cultures

Employees aligned to organisational values

Organisation functions like a well-oiled machine

Results in high performance

Weak Cultures

Little alignment with organisational values

Need for exercising control through extensive procedures and bureaucracy



Benefits of a Strong Culture

Employees willingly embrace the culture as values are clearly communicated

Better alignment to achieve vision, mission, goals

High employee loyalty

Increased team cohesion

Consistency and efficiency



Culture and Strategy

Culture

Emotional container of strategy

Determines and measures desire, engagement, execution

Fuels the spirit for playing the game

Gives clear competitive advantage

Strategy

Drives focus and direction

About vision, mission, values, expectations

Lays down the rules for playing the game

Gives clear competitive advantage



Creating and Sustaining Organisational Culture (Video)



Summary

Organisational effectiveness can be defined as the efficiency with which an organisation is able to meet its objectives

Approaches to measuring OE are the goal, internal process, system resource, constituency, and domain approaches

Two main OE models are contradictions models and competing value model



Summary

The culture of an organisation is vital to its functioning and effectiveness

Building a strong culture yields many benefits to an organisation

Culture and strategy have a strong link

hrm502 4 organisational culture

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