organizational culture and its effect on organizational effectiveness

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Organizational Culture and its Effect on Organizational Effectiveness. -By Priyanka Chadha Roll No. 8219 HR Manager in the making. Flow of the Presentation. What is organization culture? What is organizational effectiveness? - PowerPoint PPT Presentation


Organizational Culture and its Effect on Organizational Effectiveness

Organizational Culture and its Effect on Organizational Effectiveness-By Priyanka Chadha Roll No. 8219 HR Manager in the makingFlow of the PresentationWhat is organization culture?What is organizational effectiveness?7 Primary Characteristics that capture the essence of an organizations cultureElements of Corporate culture formation Examples-Walt Disney and Wal-MartImpact of Organizational Culture on individualsChange and its impact on organizational effectivenessWhy has culture been ignored as an important contributing factor??

Organization CultureOrganization culture represents the basic assumptions, values and norms shared by organization membersIt orients employees to organization goals and suggests the kinds of behaviors necessary for successIt refers to a system of shared meaning held by members that distinguishes the organization from other organizationsThis system of shared meaning is a set of key characteristics that the organization values What is organizational effectiveness? Organizational effectiveness can be defined by how effective an organization is in achieving the outcomes the organization intends to produceOrganizational effectiveness can be viewed as a function of-The values and beliefs held by an organization's membersPolicies and practices used by an organizationThe translation of core values and beliefs into policies and practices in a consistent mannerThe interrelationship of core values and beliefs, policies and practices, and the business environment of the organizationThus, an integrative model taking into account the four cultural aspects along with a focus on change, flexibility, stability, and direction allows us to better understand and predict the impact that an organization's culture will have on effectiveness.7 Primary Characteristics that capture the essence of an organizations culture Outcome orientation-Degree to which mgmnt focuses on results rather than techniques n processes to achieve these outcomes.People orientation-Degree to which mgmnt decisions tk into consideration the effct of outcomes on ppl within the orgnTeam orientation-Degree to which activities are organized around teams than individualsAggressiveness-Aggressiveness n competitive vs. easy goingStability-Status quo vs. growth8Elements of Corporate culture formationLet us answer a few questions.What distinguishes extraordinarily successful firms from the others?How have some organizations been able to make it when others have failed?While Wal-Mart prospered, its largest rivals were forced to sell-off divisions, replace CEOs (more than once), downsize dramatically, and close stores wholesale. Why?

Example: Wal-Mart vs. KmartKmart, a chain of discount department stores was started in the US in 1962Kmart was a market leader at one timeWal-Mart started by Sam Walton in 1969Free entry allowed hence Wal-Mart entered the marketEveryday low pricing by Wal-MartChapter 11 bankruptcy filed by Kmart in Jan 2002 The sustained success of these firms..These companies have developed a distinctive culture that is clearly identifiable by its employees

The organizational culture is developed by the.Example-Walt DisneyThe secret to Disney's success isn't magic pixie dust; it's much easier to replicateIt's a well-trained, enthusiastic and motivated work forceIt's a secret that Walt Disney himself realized years agoEmployees here are valued as individuals and are considered as a vital part of the team

This philosophy of how to treat an employee has been passed on year after year by the likes of Walt Disney The basic belief is that you cannot have happy guests if you do not have happy employees, which is an example of organizational culture and can be an example of human resources practicesWalt Disney saidExample-General ElectricAt GE, culture is considered to be among their innovationsOver decades their leaders have built GEs culture into what it is today a place for creating and bringing big ideas to lifeToday, that culture is the unifying force for the many business units around the world Corporate values are given so much of importance in G.E. that Jack Welch got them inscribed and distributed it to all its employeesThe sum is greater than its parts at GE as both business and people diversity is utilized in a most effective way

So what does all this imply??It implies that organizational culture has a powerful effect on the performance and long-term effectiveness of organizations Organizational CultureHence, it is imperative that those charged with studying and/or managing organizational culture be able to measure key dimensions of culture and to develop a strategy for changing itImpact of Organizational Culture on individualsIndividual effectivenessEmployee moraleEmployee productivityCommitmentPhysical hazardEmotional well-being

Why is it important to study the impact of organizational culture on individuals?

Health care costs are sky-rocketingBurnout is at an all time highErosion of employee loyalty to firms costing millions of dollars a year in replacement and retrainingLost organizational secrets due to sabotage and defectionsLawsuits and other forms of retribution by disaffected employeesSo the next question is why change the organizational culture??ChangeIn the external environmentIn the internal environment24Change has affected the survival of the organization and its effectivenessThere has been a dramatic change in the environment because of the shift in the developed world from an industrial-age economy to an information-age economyThis shift away from industrialization and toward information is also illustrated by the fact that more information has been produced in the last 20 years than was produced in the previous 5000 years The rate of technological change associated with this information explosion has created an environment intolerant of the status quoChange and its impact on organizational effectivenessStability is interpreted more often as stagnation than steadiness, and organizations that are not in the business of change and transition are generally viewed as recalcitrantThe frightening uncertainty that traditionally accompanied major organizational change has been superseded by the frightening uncertainty that is now associated with staying the sameThe conditions in which organizations operate demand a response without which organizational demise is a frequent result. Of the largest 100 companies at the beginning of the 1900s, for example, only 16 are still in existence. Of the firms on Fortune Magazine's first list of the 500 biggest companies, only 29 firms would still be included. During the last decade, 46 percent of the Fortune 500 dropped off the list.So how do organizations respond to change in order to increase their effectiveness?By implementing quality initiatives:But by an large companies have not succeededTo illustrate, Rath and Strong (a consulting firm) surveyed Fortune 500 companies and found that only 20 percent reported having achieved their quality objectives, and over 40 percent indicated that their quality initiatives were a complete flopA study of 30 quality programs by McKinsey found that two-thirds had stalled, fallen short, or failed Most firms labeled TQM a failure and were actually cutting back their quality budgets 2. By downsizing:Downsizing has been another attempt to improve productivity, efficiency, competitiveness, and effectivenessA survey of corporate executives in six industrialized countries found that less than half had achieved their cost-cutting goals, and even fewer met operating objectives such as improved productivityAnother survey found that 74 percent of senior managers in downsized companies said that morale, trust, and productivity suffered after downsizing, and half of the 1468 firms in still another survey indicated that productivity deteriorated after downsizing 3. Re-engineering-an attempt to redesign completely the processes and procedures in an organization: This approach to change has also had a checkered success recordA survey was conducted of reengineering projects by the consulting firm that invented the reengineering change process The study reported that 85 percent of those firms found little or no gain from their effortLess than half, for example, achieved any change in market share, one of the primary goalsThe authors concluded that reengineering was not enough to achieve desirable changeWhat does all this mean??The failure of reengineering as well as TQM and downsizing occurred in most cases because the culture of the organization remained the sameThe procedure was treated as a technique or program of change, not as a fundamental shift in the organizations direction, values, and cultureFor all these initiatives to be successful they need to be integrated with an overall approach to changing an organizations culture.The point illustrated with these examples is that without another kind of fundamental change, namely, the change of the culture of an organization, there is little hope of enduring improvement in organizational performanceA primary reason for the failure of so many efforts to improve organizational effectiveness is that, whereas the tools and techniques may be present and the change strategy implemented with vigor, failure occurs because the fundamental culture of the organization remains the same The successful implementation of TQM and downsizing programs, as well as the resulting effectiveness of the organizations performance, depended on having the improvement strategies embedded in a culture changeWhen TQM and downsizing were implemented independent of a culture change, they were unsuccessfulWhen the culture of these organizations was an explicit target of change, so that TQM and/or downsizing initiativ


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