The Organisational Culture and Effectiveness of Companies involved in Public Sector Housing Construction in Hong Kong

Transcription

1 CIB TG 23 International Conference, October 2003, Hong Kong Page 1 of 11 The Organisational Culture and Effectiveness of Companies involved in Public Sector Housing Construction in Hong Kong Vaughan Coffey vaughan.coffey@housingauthority.gov.hk PASS Control Unit, Hong Kong Housing Department, G/F, Block 2, 33 Fat Kwong Street, Homantin, Kowloon, Hong Kong Introduction Several researchers and authors have presumed a link between organisational culture and corporate performance and some of these research studies have established evidence of such a link and thus concluded that it does indeed exist (Denison 1990;Gordon & DiTomaso 1992;Kotter & Heskett 1992;Petty et al. 1995;Wilderom & van den Berg). However, other critical reviews of the methodologies and findings used in such research challenge such conclusions, Lim (1995). Following a detailed examination of 10 studies conducted into the OC performance link in Europe and the United States since 1990, Wilderom, Glunk and Maslowski (2000) state evertheless, the great intuitive appeal of the C-P linkage, the preliminary evidence found so far and the many research challenges involved in obtaining the evidence give some reason to still believe in this link. These authors observed that whilst there are some similarities in the organisational culture dimensions investigated/measured, of the variety of performance measures used, most relied on financially based data sets. It was this previous predominant use of financial measures to evaluate company success, coupled with the criticisms evident in the extant literature on measuring organisational effectiveness in this manner that prompted me to use a different measurement base, particularly in view of the fact that companies being evaluated were in the construction sector and there was an apparent lack of available financial information specifically related to their work in the public housing sector (i.e., most of the companies were not publicly listed and had parent companies whose financial results were generated based on their total development sector performance).

2 CIB TG 23 International Conference, October 2003, Hong Kong Page 2 of 11 Research Model and Hypotheses The Research Model Figure 1 below presents the research model developed and used in the study, however in a short paper it is not possible to fully state all of the nine hypotheses which constitute the model and so the description which follows is restricted only to the three basic research questions giving rise to the various hypotheses. Based on the research objectives and main research problem described in the introduction of this paper, the resultant research questions were: (Question 1) Do Hong Kong construction companies possessing relatively high combined levels of the four organizational cultural traits i.e. adaptability, involvement, consistency and mission (as indicated by the Denison Organizational Culture Model) perform more successfully on public housing projects than those exhibiting lower levels of those traits? (Question 2) Are any of the four traits more significant in contributing to success levels than others? (Question 3) Are any combinations of the four traits, based on a horizontal or vertical split of the Denison Organizational Culture Model, more significant in contributing to success levels than others?

3 CIB TG 23 International Conference, October 2003, Hong Kong Page 3 of 11 Figure 1. Research Model ORGAIZATIOAL CULTURE 3rd and 4th Quartile Denison Scores Adaptability H1 Involvement H2 H3 Consistency H4 Mission H5 SUCCESS OUTCOMES measured based on company position in PASS Score league Adaptability/ Mission H6 H7 Involvement/ Consistency H8 Involvement/ Adaptability H9 Consistency/ Mission ORGAIZATIOAL CULTURE Coffey (2003) Organisational Culture Following a detailed investigation of the wide range of definitions of organisational culture that exist in the literature, a fairly concise operational definition of culture taken from Bates and Plog (1990) was used for this study Culture is the system of shared beliefs, values, customs, behaviours, and artifacts that the members of society use to cope with their world and with one another, and that are transmitted from generation to generation through learning. Several methodologies and instruments used previously for measuring organisational culture were examined and the Denison Organizational Culture Survey (DOCS) was eventually selected as being the most suitable to use in the context of this research due to its suitability for use in, and wide acceptability by the business environment. Based on 15 years of research drawn from data obtained from over 1,000 high and low-performing organizations, Denison and Mishra (1996) found that the following four culture traits have a significant impact on organizational performance:

4 CIB TG 23 International Conference, October 2003, Hong Kong Page 4 of 11 Involvement Consistency Adaptability Mission Figure 2 below shows the operational dimensions of DOCS. Figure 2. Denison Organisational Culture Model Denison and eale (1994) According to Brislin (1976), there are problems relating to the use of such instruments due to the difference in emic and etic perspectives and as it was necessary to allow respondents to DOCS to input in English and/or Chinese and in order to overcome any potential translational equivalence problems, DOCS was taken through a decentering and back-translation process as shown diagrammatically in Figure 3 below. Figure 3 Adaptation of the DOCS for use in the Hong Kong Contractors Study Original English Chinese characters Back-translated English #1 Chinese characters version #2 Back-translated English #2 Coffey (2003)

5 CIB TG 23 International Conference, October 2003, Hong Kong Page 5 of 11 Organisational Effectiveness As discussed briefly in the introduction of this paper, much of the previous research on organisational effectiveness undertaken since the early 1970s has relied on the use of financial measures to determine performance levels, typically individual accounting indices such as return on investment (ROI), return on assets (ROA) and return on equity (ROE) have been used (Grinyer & orburn 1975;Karger & Malik 1975;Thune & House 1970). Longitudinally measured multiple financial accounting indices were used in some later studies (Hitt, Ireland, & Stadter 1982;Rumelt 1974) and the capital asset pricing model performance indicators evolved by Lubatkin (1983) were also used as a basis for research by Hitt and Ireland (1984). Despite the popularity of such models and indicators, their use to represent organisational effectiveness has been criticized over the last twenty years. Hitt (1998, p. 30) notes that they have deficiencies as true indicators and their use does not capture the essence of organizational effectiveness. As had been the case with the lack of consensus amongst both researchers and managers on defining organisational effectiveness, a similar dilemma existed in relation to agreement on the most effective measurements of the phenomena (Bourgeois 1980;Cunningham 1977;Hrebiniak 1978;Molnar & Rogers 1976;Steers 1975;Tsui 1981). Some researchers questioned whether in view of the lack of agreement on such fundamental questions as definitions and measures, organisational effectiveness should even be researched at all Hannan and Freeman, 1977; Bluedorn, 1980). In an attempt to utilise measures which were determined on a non-financial basis and also reflected customer satisfaction, the objective dependent variables used to operationalise organisational effectiveness in this research, were the success ratings of building contractors employed on public sector housing contracts awarded and operated by the Hong Kong Housing Authority (HKHA). These variables were measured by means of two interlinked systems operated on the HKHA s List of Building Contractors, as follows: The Performance Assessment Scoring System (PASS) scores of contractors that measure the quality of built output against the specification requirements, over the period from 1997 to The Premier League System (PLS) - a scored and ranked matrix developed by the HD to determine it s preferred quality partners for future tendering exercises; Four mini-case studies were also carried out on the most successful, least successful and most-improved companies and two open-ended questions included within the

6 CIB TG 23 International Conference, October 2003, Hong Kong Page 6 of 11 DOCS on values and self-performance perceptions in order to inform the quantitative data. A simplified model of the constituent measures used in PASS to generate an effectiveness (i.e. performance) score is shown in Figure 4 below. Figure 4. Simplified model of PASS 1997 Version COTRACTOR PASS SCORE Score for Project A Score for Project B Score for Project C MPA does not contribute to Project Score Works Output Score Other Obligations Score Management Input Score Maintenance Period (MPA) Score Architectural Works Score Structural Works Score (Coffey 2003;Hong Kong Housing Department 1997) Research Method Sample The survey was distributed to all 53 building contractors on the HKHA s list in the Building (ew Works) Category and the total number of returned survey sets was 29 (54.7%) and of these some 23 sets were eventually useable in the study data set (43.40%), based on post-return established cut-off criteria. Results and Discussion Tables 1, 2 and 3 below represent the research question test results. Question 1 explores the overall theoretical concept of a presumed link between organisational culture (OC) and organisational performance (OC) and so correlation was investigated between the overall organisational culture raw scores of contractors and their PASS-measured performance.

7 CIB TG 23 International Conference, October 2003, Hong Kong Page 7 of 11 Table 1 Pearson correlation results for OC and OP scores Correlations Overall Cultural Score Overall PASS Score (00-01) *. Correlation is significant at the 0.05 level (2-tailed). Overall Overall PASS Cultural Score Score (00-01) * * (Coffey 2003;Hong Kong Housing Department 1997) As can be seen, a positive correlation was established between the overall cultural score and overall PASS score. Based on the above results, the null hypothesis was rejected. Question 2 explored the original concept proposed by Denison (1990) and further developed with eale (Denison and eale, 1994) that the four cultural traits of Mission, Consistency, Involvement and Adaptability have a strong influence on organisational performance. The 4 cultural trait scores obtained from the DOCS and success levels of the respondent contractors measured as their overall PASS scores was tested and the results are shown in Table 2 below. Table 2 Pearson correlation results for four OC traits and overall PASS scores Correlations Overall PASS Score (00-01) Involvement Consistency Adaptability Mission *. Correlation is significant at the 0.05 level (2-tailed). **. Correlation is significant at the 0.01 level (2-tailed). Overall PASS Score (00-01) Involvement Consistency Adaptability Mission *.543*.526* **.795**.756** *.796** **.798** *.795**.737** ** *.756**.798**.820** (Coffey 2003;Hong Kong Housing Department 1997) The Pearson correlation analysis shows a positive relationship between each of 3 cultural traits of Consistency, Adaptability and Mission with the overall PASS score at the 5% significance level. Out of these three trait measures of organizational culture strength, Adaptability has the strongest correlation; Consistency has the least correlation, whilst Mission is of moderate significance. Only the correlation between Involvement and overall PASS score cannot be justified in this research study.

8 CIB TG 23 International Conference, October 2003, Hong Kong Page 8 of 11 Question 3 explores the generic theoretical concept proposed by Denison and others (Denison & Cho 2000;Denison, Hoojiberg, & Quinn 1995;Denison & Mishra 1996) that there are a set of tensions and contradictions existing within organization, which depending on if they are well or badly managed, also have a significant effect on organisational performance. In DOCS, four meaningful combinations of the cultural traits and their directions of influence can be made as follows: External focus: Adaptability + Mission Internal focus: Involvement + Consistency Flexible: Adaptability + Involvement Stable: Mission + Consistency Measurement of the four combinations was obtained by taking average of the corresponding constituent cultural scores. The correlation was then investigated between them and company success represented by overall PASS score. The results of the correlation test are summarised in Table 3 below. Table 3 Pearson correlation results for four combined OC traits and overall PASS scores Correlations Overall PASS Score (00-01) External Focus Culture Internal Focus Culture Flexible Culture Stable Culture *. Correlation is significant at the 0.05 level (2-tailed). **. Correlation is significant at the 0.01 level (2-tailed). Overall PASS External Internal Focus Flexible Score (00-01) Focus Culture Culture Culture Stable Culture *.463*.486*.543* * **.927**.952** *.853** **.911** *.927**.925** ** *.952**.911**.866** (Coffey 2003;Hong Kong Housing Department 1997) From these results, it can be seen that all four combinations of the cultural traits correlate positively with the overall PASS score at 5% significant level. Comparitively, External Focus and Stable Cultures correlate much better than Internal Focus and Flexible Cultures. These results are interesting as they do appear to underpin those obtained when testing Question 2 in the previous study, i.e., Involvement does not correlate with PASS performance. Involvement locates in the Denison Model in the sector bounded by Internal Focus and Flexible Managerial style. It is therefore logical that these dimensions

9 CIB TG 23 International Conference, October 2003, Hong Kong Page 9 of 11 will not correlate as strongly with success when Involvement also has a less significant relationship with overall PASS scores. External Focus and Stable Managerial styles are more related to the trait of Mission that correlated strongly with success, which appears to provide further support for the efficacy of the Denison Model. Conclusion The main findings from the research are: (1) A high level of company effectiveness is positively associated with strong organisational culture; (2) A high level of company effectiveness is positively associated with the cultural traits of consistency, adaptability and mission but not with involvement trait; and, (3) A high level of company effectiveness is positively associated with the combined cultural traits represented by the dimensions of external focus and stable culture. These findings support the previous research of (Denison 1990;Gordon & DiTomaso 1992;Kotter & Heskett 1992;Petty, Beadles, Lowery, Chapman, & Connell 1995;Wilderom & van den Berg) and underpin the robustness and reliability of the DOCS for use in multicultural settings and in a technological business sector (construction) other than those such as commerce, production, manufacturing and information technology where the instrument had been previously tested. More research is needed to obtain a more detailed and deeper understanding of the organisational culture of the construction industry where study has so far been somewhat limited and longitudinal use of the DOCS and PASS in the research population established for this research would develop and hopefully strengthen the findings described in this paper. References Bates, D. G. & Plog, F. 1990, Cultural anthropology., 3rd. edn, McGraw-Hill Education., ew York. Bluedorn, A. C. Cutting the Gordian knot: a critique of the effectiveness tradition in organizational research. Sociology and Social Research 64,

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