ORGANIZATIONAL CULTURE BASIC ELEMENT OF ORGANIZATION PERFORMANCE

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1 Management Marketing - Tourism ORGANIZATIONAL CULTURE BASIC ELEMENT OF ORGANIZATION PERFORMANCE Assist. Mihaela Simona Mărăcine Ph. D Student Constantin Brâncoveanu University of Pitești, Faculty of Management Marketing in Economic Affairs, Pitești, Romania Abstract: The increasing mobility of the socio-economic life and the acceleration of the scientific-technical progress have caused profound changes in society and, implicitly, within organizations. They had to show a great capacity for adaptation, reorganization of activities and flexibility in the attempt to overcome competition and become efficient, a fact which led to changing the management methods, the organizational structures and, implicitly, to changing the organizational culture. It is crucial to know the culture of an organization for its operation, the cultural factor having a strong impact on the management functions and on the manager s actions. The stronger a culture is, the easier the employees accept the organization s values and trust them. JEL classification: M10, M14 Keywords: values, beliefs, efficiency, culture, organizational culture. 1. INTRODUCTION Organizational culture studies have been undertaken since the 40s but once with the corporate cultural boom of the early 80s, they have extended. In the last decade the interest in organizational culture, both from academics and practitioners, has been growing. 41 The concept of organizational culture offered a way business people to discussing the key elements of organization, which are not easy to quantify or integrate in the traditional categories, such as leadership skills or human relations. Thus, organizational culture has gained a permanent place of particular importance in relation to the organizational behaviour. 2. A THEORETICAL APPROACH Organizational culture represents a set of artefacts, values and beliefs that arise from the interaction of the organization s members. 42 Managers and the executives are directly interested in organizational culture, as it often is a means to improve productivity, effectiveness and efficiency. Other managers pay attention to it considering that their own organizational culture is unique and represents an effective tool to attract high quality staff and to distinguish the organization from competition. Employees are directly interested in organizational 41 Alvesson, M., Understanding organizational culture, Sage Publications Ltd., Thousand Oaks, SUA, Lim Bernard, Examining the organizational culture and organizational performance link, Leadership & Organization Development Journal, 1995, Vol. 16, Issue: 5, p

2 Revista Tinerilor Economişti (The Young Economists Journal) culture when they decide on getting a job in a company or another. Each one of us needs to work and we want to work in an environment compatible with our values and ideas. 43 R. K. Dwivedi sees organizational culture as a set of long-lasting features that describes the organization, sets it apart from other organizations and influences the behaviour of its human resources. 44 Edgar Schein considers organizational culture a pattern of basic assumptions, learned, discovered and developed by a certain group, a certain community, in the process of learning how to successfully solve the problems of external adaptation and internal understanding, which worked fairly well for a certain period of time in order to be validated and which will be sent to the new members as the appropriate way to perceive, think and feel concerning those problems. 45 Hofstede G. considers organizational culture a mental programming which distinguishes the members of an organization from the members of another organization. 46 This means that every person presents a certain mental programming, which is stable over time and which determines the person to have approximately the same behaviour in similar situations. The source of our mental programming comes from the social environment in which each of us grew up and from where we gained our life experiences. This programming comes from family, continues with the neighbourhood, school, youth groups, place of work, community. According to this famous Dutch professor, organizational culture is: holistic, meaning that it represents more than the sum of the parts; historically determined, as it reflects the organization s evolution over time; connected to the anthropological elements (symbols, rituals, etc.) socially based, as it is created and maintained by the group of people that make up the organization; difficult to change due to the complex human elements involved. Organizational culture represents the set of symbolic representations (signs and symbols), as well as of the shared values that determine individuals behaviour. 47 Dumitru Constantinescu considers organizational culture a system of common rules, beliefs, values and expectations that bind together an organization s employees, creating shared meanings among them. This system takes the form of customs, norms and habits that represent the firm s values and convictions. Culture reflects the personality of the entity, and, as in the case of people, it allows the attitudes and behaviours of its members to be anticipated. Organizational culture is therefore one of 43 Keyton Joann, Communication & Organizational culture. A key to understanding work experience, 2nd edition, Sage Publications Ltd., Thousand Oaks, SUA, Dwivedi R. K., Organizational culture and performance, M.D. Publications Pvt Ltd., New Delhi, India, Schein E., Organizational Culture and leadership. Jossey Bas Publisher, 4 th ed., San Francisco, SUA, Hofstede G., Hofstede G. J., Minkov M., Cultures and organizations. Software of the mind. Intercultural Cooperation and Its importance for survival, 3 rd ed., McGraw Hill Publishing House, SUA, Șchiopoiu-Burlea A., Managementul resurselor umane (Human resources management), Universitaria Publishing House, Craiova,

3 151 Management Marketing - Tourism the aspects that serves to define the company and to distinguish it from other entities from the same sector. 48 Cultural organization essentially represents a sum of values and norms of the organization (company), of its employees and managers and, especially, those aspects which are shared to the new employees as well. The employees learn about organizational culture both through training from the organization and through what they listen to and watch every day. A successful organizational culture is more than a management technique; it is more than the plan that must be achieved this month, that the employees can ignore and which the management can forget after a while. This is not just a tool or an immediate solution: it is a way of life. 49 Functions and characteristics of organizational culture Organizational culture performs a series of functions within the organization: 1. Targeting function This function of organizational culture refers to the fact that both the entire organization and the employees personal values and attitude are targeted towards organizational objectives. The essence of building an outstanding organizational culture is to create a strong internal mechanism. Achieving such a mechanism determines all the staff to become aware that the organization is struggling to achieve great objectives, which not only give rise to creative tactics and strategies, but they also influence the staff to create individuals able to sacrifice themselves to achieve organizational goals. 2. Standardization function By creating a system of shared values, organizational culture creates a common way of thinking, changing faith in a sort of tendency at a profound psychological level of the staff and then in a sort of response mechanism reconstructed in the transformation process. As long as there is an external signal that stimulates, the positive response is created and it quickly changes into anticipated behaviour. Through coordination and self-control, ( ) the psychological conflict between autonomy and the reality of being controlled is attenuated, leading to the creation of a harmonized organizational culture, united at all hierarchical levels. 3. Conglomerate function Organizational culture is a group awareness created by the entire staff. This function is a type of link that unites people from all points of view, from all hierarchical levels, around the organizational culture. Organizational culture connects the personal thoughts, feelings and values of the employees with the organizational safety. At the same time, the employee has a sense of ownership and acceptance of the organizational culture within the company. 4. Motivation function Organizational culture focuses on people; its nucleus is made up of common values. A remarkable organizational culture means creating an environment supported and respected by everybody. An excellent cultural atmosphere usually creates an incentive mechanism which determines each employee s contribution to be valued and rewarded in time by the leader and other colleagues. This way, by encouraging the 48 Constantinescu D., Management Funcții, Structuri, Procese (Management Functions, Structures, Processes), Universitaria Publishing House, Craiova, Dygert B.C., Jacobs A. R., Managementul culturii organizaționale. Pași spre succes (Organizational culture management. Steps to success), Polirom Publishing House, Iași, 2006

4 Revista Tinerilor Economişti (The Young Economists Journal) employees to dare to commit to the organization, a continuous innovation and a constant progress are achieved in order to create self-value and development. Furthermore, the formation of organizational culture not only influences the company itself, but it also has a certain impact on the public, and also on national and international organizations, it is part of the social culture, improving at the same time the company s popularity; we can briefly state: organizational culture presents extremely important functions. 50 Knowing the functions of the organizational culture is constituting the base of the notification and of revaluating of the major importance that this is having for each company, indifferent of his domain of activity, dimension, economic potential or affiliation to a specific national culture. 51 To create an organizational culture aligned with the global socio-economic requirements, it is necessary to highlight a series of essential features. 52 Table no. 1 Essential features for creating sustainable organizational cultures in the global economy Essential features Description Personal initiative The degree of responsibility, freedom and independence offered to an individual within the organization Risk tolerance The way in which the employees show an attitude of risk taking, flexibility, adaptability Direction The degree to which the organization creates specific performance standards and objectives Integration The way in which the constituent units of the organization work as a whole, correlated and coordinated Support offered by the The manner in which managers offer support and assist the staff, informing management them properly and clearly Control The rules and regulations existing in an organization, as well as the level of direct supervision used to control the employees behaviour Identity The way in which the employees identify themselves with the organization as a whole, rather than with the group they belong to or with their field of professional expertise Reward system The degree to which the rewards (promotions, salary increases, etc.) are granted equitably, according to the level of performance achieved Conflict tolerance The manner in which the organization s members show an open attitude concerning conflict, dealing with criticism constructively Communication The existence of an efficient communication system that contributes to achieving the organizational objectives Source: adapted from Robbins S. P., 2006, quoted Huțu A. C. 50 Zhang X., On how organizational culture impacts its performance and competitiveness, Science Innovation Academic Frontier, Management& Engineering Journal, 2008, p Tureac C., E., Turtureanu G., A., The Culture and her influence over the organization, Megabyte Magazine, 4 th volume, No. 2, Titu Maiorescu University, Huțu C. A., Cultură organizațională și leadership. Fundamentarea capacității competitive a firmei (Organizational culture and leadership). Substantiation of the company s competitive capacity), Economic Publishing House, Bucharest,

5 Management Marketing - Tourism An ideal organizational culture is stable and flexible stable in terms of vision, values and mission of the organization, but, at the same time, flexible concerning its structure and activities; it is the one that focuses both on external adaptation and on internal integration, capable of satisfying the consumers, the market and the employees at the same time. 3. THE LINK BETWEEN ORGANIZATIONAL CULTURE AND COMPANY PERFORMANCE Organizational culture represents a factor of success or of its failure. When we talk about organizational culture we refer to the behaviour patterns and standards that it focuses on. Some organizational cultures encourage productivity, other do not. The culture of our organization shows us what is right, what is wrong, what to believe or not to believe, how to react, what we feel. Organizational culture shows us when we must focus on the quantitative or qualitative aspects. Successful organizations have in common a series of basic values and beliefs. These organizations are careful to the market and to consumer requirements. Regardless of the scale economy argument, which shows that the large companies are more efficient, many successful organizations consider that small equals good. This is based on the belief that work should be satisfactory, that employees can make decisions independently and that the result is thus an increased efficiency. Successful companies are often characterized by a rapid and intense communication, openness, a let yourself carried away attitude of the staff and the feeling of informality. 53 Kotter and Heskett (1992) conducted what is considered probably the most extensive study of the relationship between culture and performance, and they conducted a series of investigations on a number of 207 companies, over a five-year period. The research was based on a series of instruments to measure culture and longterm economic data, each study being built based on the previous survey. The original objective was to examine the relationship between the strong cultures (that have a clear and coherent system of values, with a distinct way of doing things) and the longterm performance. Only a weak correlation was found between the indicators of a strong culture and the long-term performance. However, the subsequent investigations have shown that the companies which were culture-adapted to the external environment have developed better than those which had a strong culture, but which did not take into account the external environment. The authors continued with a study to research the way in which the changing environment affects culture and performance and they discovered that firms with steady economic performance tend to create basic values that underline the importance of adaptive culture. 54 Studies have suggested that organizational culture is a kind of complicated and comprehensive composition element, it is a kind of values that is shared by the members, it is a kind of inherent regulatory faith. It will not only influence people's behaviour but also decide working atmosphere, leadership style and the formulation of strategy. Organizational culture influences the operation of 53 Field M. Llyod, Culture and corporate success. How your organizational climate sets the stage for success, 2007, available online at 54 Popescu I. D., Comportament organizațional (Organizational behaviour), ASE Publishing House, Bucharest,

6 Revista Tinerilor Economişti (The Young Economists Journal) organization on the two aspects of organization and individual, and then it will exert an influence on organizational performance. The impact of organizational culture on organizational performance can be decided by the degree of how much main values and beliefs of organization is accepted deeply and widely, its influence can be divided into three aspects: firstly, cultural direction, it means the accurate degree of how much does organizational culture influencing organization's operation direction; Secondly, cultural permeability, it refers to the degree of how much does organizational culture is shared by all the members in common; Thirdly, cultural intensity, that is the degree of how much does the employees abide by the culture. Source: Zhang X., On how organizational culture impacts its performance and competitiveness, Science Innovation Academic Frontier, Management& Engineering Journal, 2008, p. 393 Figure no. 1. The model of organizational culture impacting on organizational performance As the two important factors that influence organizational performance, employee and customer's attitude and behavior are impacted by organizational culture in some degree, as figure 1 shows. Organizational culture is an effective factor that determines whether the organization can obtain outstanding performance or not, it is an effective factor that determines organization's response and attitude to particular incident and external change of environment too. Organizational culture can influence organizational performance through employees and customers. 4. CONCLUSIONS Although there are many meanings of the cultural organization concept, one aspect is found in all of them, namely the strong impact that organizational culture has on performance, on the final result of the company. Organizational culture allows the identification and description of many real elements, of human nature from the firm s life, with important consequences on the conduct of business. Organizational culture exists regardless of the organization, it is the one binding the organization in a chain of implied significances that provide human specific meanings to all the organizational activities and processes. There is dialectic interdependence between culture and organization. The human group is integrated in the basis of the elements of culture, and through their help action is regulated and control is carried out on individuals. Culture shapes the organization; the organization creates its own culture. The study of an organization s culture will become increasingly necessary in the future because we 154

7 Management Marketing - Tourism cannot lead an organization without knowing its values, the organization being a small nation that has its beliefs and values. Only by knowing the culture of an organization can we act in accordance with it and only by taking it onto account can we change it. REFERENCES: 1. Alvesson, M. Understanding organizational culture, Sage Publications Ltd., Thousand Oaks, SUA, Constantinescu, D. Management Functions, Structures, Processes, Universitaria Publishing House, Craiova, Dygert, B.C., Managementul culturii organizaționale. Pași spre succes Jacobs, A. R. (Organizational culture management. Steps to success), Polirom Publishing House, Iași, Dwivedi, R. K. Organizational culture and performance, M.D. Publications Pvt Ltd., New Delhi, India, Field, M. L. Culture and corporate success. How your organizational climate sets the stage for success, 2007, available online at 0Success.pdf 6. Hofstede, G. Culture s consequences Comparing values, Behaviors, Institutions and Organizations Across Nations, Sage Publications Ltd., Thousand Oaks, SUA, Hofstede, G., Hofstede, G. J., Minkov, M., Cultures and organizations. Software of the mind. Intercultural Cooperation and Its importance for survival, 3 rd ed., McGraw Hill Publishing House, SUA, Huțu, C. A. Cultură organizațională și leadership. Fundamentarea capacității competitive a firmei (Organizational culture and leadership). Substantiation of the company s competitive capacity), Economic Publishing House, Bucharest, Keyton, J. Communication & Organizational culture. A key to understanding work experience, Sage Publications Ltd., 2nd edition, Thousand Oaks, SUA, Lim, B. Examining the organizational culture and organizational performance link, Leadership & Organization Development Journal, Vol. 16 Issue: 5, 1995, available online at Popescu, I. D. Comportament organizațional (Organizational behaviour), ASE Publishing House, Bucharest, Schein, E., Organizational Culture and leadership. Jossey Bas Publisher, 4 th ed., San Francisco, SUA, Șchiopoiu- Managementul resurselor umane (Human resources management), Burlea, A. Universitaria Publishing House, Craiova, Tureac, C. E., The Culture and her influence over the organization, Megabyte Turtureanu, G. Magazine, 4 th volume, No. 2, Titu Maiorescu University, Zhang X. On how organizational culture impacts its performance and competitiveness, Science Innovation Academic Frontier, Management& Engineering Journal,

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