Organizational Structure and Organizational Culture in Hotel Organizations

Transcription

1 International Journal of Arts and Sciences 3(12): (2010) CD-ROM. ISSN: InternationalJournal.org Organizational Structure and Organizational Culture in Hotel Organizations Nor Khomar Ishak, Universiti Tun Abdul Razak, Malaysia Fakhrulzaman Abdullah, Universiti Tun Abdul Razak, Malaysia Abstract: Effectiveness of the hotel organizations depend on the quality of service delivered to their customers. Two factors play important roles in ensuring quality service delivery: the willingness and ability of the human resource and the human resources management practices that support the needs of the human resources. The roles played by the human resources should be within the specified boundaries. The organizational structure and the organizational culture specify the boundaries of acceptable behaviour. Thus, the overall objective of the study is to examine the relationships between the organizational structure orientation, which focused on the approaches in handling human resources, and the organizational culture orientation which emphasized on human resource behavioural aspects. The orientation of these two variables should be similar for optimum performance effectiveness. The study proposed that there should be similarity in orientation between organization structure and organization culture, and if there is similarity then performance effectiveness, as measured by the turnover rate, would be low. The variables were examined in 21 hotel organizations with specific focused on the variables pertaining to frontline employees. Findings indicated partial support for the proposition since similarity was found in 43% of the sample. Overall, both the organization structure and organization culture orientation were found to be slightly open indicating support for employees interest. Keywords: Organization Structure, Organization Culture, Turnover, Centralization 1. Introduction Human Resource Management (HRM) practices relate specifically to how employees are managed with the aimed of meeting organizational objectives and satisfying employees. Current thinking strongly believed that human resources are uniquely important in sustaining the success of service organizations such as hotel operations. Strategic success depends on the organization culture that supports and reinforces human resources efforts to provide quality services. An organization culture exits within the scope of the organizational structure and both must support the human resources efforts. The organizational culture reflects the collective employees norms and behaviour while the organizational structure defined their authority and responsibility scopes. There should thus, be similarity in the organizational structure orientation and the organizational culture orientation. The objective of the research was to examine those two orientations. Specifically, the study aimed to explore the orientations of both variables and to relate them to the employees turnover rate, as a measure of employees acceptance to work within the parameters of the structure and norms. Numerous studies have indicated that the organization s internal processes must be aligned for the organization to be effective. This study examined the relationship between two internal processes: organizational structure and organizational culture with the indicator variable, the turnover rate.

2 2. Literature Review Dalton et. al. (1980) considered organizational structure as the anatomy of the organization which provides a foundation within which the organization functions and it has an effect on the behavior of employees. Perrow (1967) referred to structure as organizational setting where the individual member must interact with others, with arrangements or relationships that permit coordination and control of work. Organizational Structure, according to Child (1977), was the descriptions on the allocation of tasks and responsibilities among individuals and department; it designates the nature and means of formal reporting relationships, as well as the groupings of individuals within the organization. Schaffer (1984) viewed it as the parameters which defined the way an organization is assembled. He added that it is through an organization s structure that a framework for integrating the organization s strategic plans for the allocation of its resources is achieved. Olsen, West and Tse (1998) indicated that conceptually, it can be defined as composing of the following elements: the degree of centralization, formalization, complexity, configuration, and flexibility in the firm. In essence, organizational structure referred to the way organizations organized their work. Formalization, as indicated by Pugh et. al.(1963) includes statements of procedures, rules, roles, and operating procedures. Tse (1989) stated that, in essence, formalization refers to what one is asked to do, while standardization refers to how one is to do it. According to Miller and Drodge (1986) formalization is often made up of variables such as the use of specialized positions, formal policies, job descriptions, organization charts, and cost and quality controls. Centralization, as indicated by Dev and Olsen (1989) is related to the concentration of decision-making power in the organization, where the locus of decisionmaking can be assessed by levels and degree of dispersions. Miller and Drodge (1986) indicated that centralization can be considered as the opposite extremes of delegation, and delegation refers to the distribution of decision-making power in the organization. Hage and Aiken (1967) defined centralization as either the degree of participation in decision-making, or the degree of reliance on the hierarchy of authority. They added that centralization may also be measured in terms of the amount of participation that is granted to members at lower organizational levels in work planning and organizational decision-making. Miles (1980) also viewed it as the degree of participation employees are allowed in decision-making as it relates to their choice of work. Hall et al. (1967), defined complexity by the degree of internal segmentation, as reflected in the division of labour, the number of hierarchical levels, and the spatial dispersions of the organization. Similarly, Miles (1980) referred to complexity as the number of different organization s components and the degree of differentiation within it. Organizational culture, as observed by Deshpande and Webster (1989), is pattern of shared values and beliefs that provides the norms for employees behaviour in working in the organization. The culture of an organization makes members behave and act in a certain way and that culture is a defined set of values and norms that are well understood and accepted by the majority of employees in an organization (Olsen, West and Tse,1998). 3. Study Approach The organization structure orientation for this study is measured with three dimensions: Formalization, Centralization, and Complexity. The organization culture orientation is tapped on the combination 3 variables: Employee Relations, Creativity or Risk-taking, and Emphasis on Efficiency or Pride. The employees turnover rate is a measure of employees acceptance

3 to work within the parameters of the structure and norms. The study proposed that when there was similarity in structure and culture orientation, the turnover rates would be low. Findings of the study would enhanced practitioners and academicians understanding on the structuralcultural relationships and appreciate the need to relate the two variables in ensuring employees satisfaction. The following framework depicted the relationship among the three variables. Chart 1: Study Framework Relationships among Organization Structure, Organization Culture and Turnover Rate Organizational Structure Formalization Centralization Complexity Organizational Culture Employee Relations Creativity/Risk taking Efficiency/Pride Turnover Rate 4. Research Methods The case study design was selected to gauge the extent of relationship between hotels organizational structure and organizational culture. Fifty hotels were solicited for participation in the study and 21 hotels responded. The variables were examined in 4- and 5- star hotels in the suburb of the city of Kuala Lumpur, Malaysia. A cross-sectional design was used where primary data was collected via mail survey over a 3-week period. The respondents represented those who held at least executive level positions in the hotels human resource management department/division. Instrumentation and Scale: The instruments for the study consisted of structured questions on: (1) Organizational Structure Orientation Formalization: Employees allow discretion on job Employees allow bigger responsibilities Employees allow to lead team Employees to adhere to SOP Rules and Regulations for employees Policies and procedures are guides Centralization Participate in decision making Opportunity to voice opinion Employees know who their supervisor is Supervisor considers employees opinion Decisions made only by supervisors Employees are trusted Organization is hierarchical Proper channel for grievances

4 Complexity High percentage of Part-time A lot of power play and lobbying Management is result-oriented Employees participate in decisions Employees feel pressured Scale: 1= Low/Disagree; 4= High/Agree (2) Organizational Culture Orientation Employee Relations Employees trust management Employees have interdependence on job Organization encourages closeness Work is meaningful for employees Creativity/Risk Taking Management encourages creativity Employees are innovative Employees feel able to do the job Organization believes in taking risks Management cautious in trying new ideas Efficiency/Pride Emphasis Focus on efficiency improvement Organization is established in industry Employees feel safe in organization Employees proud to work in organization Scale: 1= Low/Disagree; 4= High/Agree (3) Turnover Rates Frontline Employees: Restaurant outlets Front Office Division Housekeeping Division Scale: Good (turnover rate less than 20%) Average rate (turnover rate ranges from 20% to 25%) Poor rate (turnover rate more than 25%) (4) Hotel Profiles Number of Rooms Number of Full-Time Employees Number of First Level Employees 5. Findings An analysis of respondents profiles indicated that 67% held positions as either personnel executive or training manager, 19% were human resource managers, while 14% were human resource supervisors. The hotels, on average had 395 rooms. The average number of full-time employees was 190 of whom 63 or 33% were frontline employees at the front-office, housekeeping or restaurant outlets.

5 5.1 Organization Structure Variable The first variable, organizational structure was measured with three dimensions: Formalization, Centralization, and Complexity. Formalization is referred to the extent to which jobs within the organization were standardized in terms of written rules, procedures and instructions. The findings, as shown in Table 1, indicated that employees were allowed some discretion in solving job-related problems, within larger responsibility areas which include leading their work teams. They also had to adhere to standard operating procedures, but the respondents indicated that the hotels do not have that many rules and regulations. However, there were extensive policies and procedures for employees in guiding the execution of their tasks. Overall, the hotels were moderately formalized. Table 1: Formalization 1 Employees allow discretion on job Employees allow bigger responsibilities Employees allow to lead team Employees to adhere to SOP Rules and Regulations for employees Policies and procedures are guides 1.71 Formalization 2.49 Centralization was defined in this study as the degree of employees participation in decisionmaking and the concentration of decision-making power in the organization. As indicated in Table 2, employees had limited opportunity to participate in the decision making process and their opinions were seldom considered in job-related decisions; in spite of being allowed some opportunity to voice their opinions within the limited channels available for voicing their grievances. The supervisors, however, indicated that they did trust their employees. Therefore, the hotels had a mixed decision-making structure, where some functions were based on hierarchy, while other tasks were based on projects or cross-functional work teams. Thus, overall the centralization variable showed an inclination towards a mixed preference with some in support for employees interest, whilst others were in the organization s interest. Table 2: Centralization 1 Participate in decision making Opportunity to voice opinion Employees know who is their supervisor Supervisor considers employees opinion Decisions made only by supervisors Employees are trusted Organization is hierarchical Proper channel for grievances 1.95 Centralization 2.72 Organization complexity in this study referred to the degree of specialization within an organization and it is measured by the number of occupational specialties, which included the required length and extensiveness of training. Findings, as shown in Table 3, indicated that the hotels had quite a high ratio of part-time employees. There was some intensity of organizational politics and lobbying efforts. Management was result-oriented and employees

6 felt somewhat pressured to perform well. Thus, on average, the hotels were rated slightly above average in complexity or specialization. Table 3: Complexity 1 High percentage of Part-time A lot of power play and lobbying Management is result-oriented Employees participate in decisions Employees feel pressured 3.00 Complexity 2.79 Based on the overall assessment, the hotel organizational structure is considered slightly open. They were more inclined towards more formalized structure as shown in Table 4 and Illustration 1. Some practices were found to be conservative, while others seemed to be more proactive in meeting the dynamism of environmental changes. The hotels were considered just slightly above average on the complexity level. Table 4: Organization Structure 1 Formalization Centralization Complexity 2.79 Organizational Structure 2.67 Illustration 1: Organization Structure Formalization Formal 2.49 Informal Centralization Hierarchical 2.72 Flat Complexity Simple 2.79 Complex ORGANIZATIONAL STRUCTURE Closed 2.67 Open 5.2 Organization Culture Variable: The organizational culture orientation was tapped on 3 dimensions: Emphasis on Employee relations, Creativity or Risk taking, and Efficiency or Pride. Employee relations reflected the level of trust or closeness between management and employees. It was encouraging to note that employees trusted the hotels management in spite of the management s lack of effort in

7 encouraging the close rapport, as shown in Table 5. It was encouraging to note that employees considered their work to be quite meaningful and that they need some degree of interdependence in performing their tasks. Thus, overall the hotels were in support for employee relations activities. Table 5: Employee Relations 1 Employees trust management Employees have interdependence on job Organization encourages closeness Work is meaningful for employees 3.80 Employee Relations 3.57 The Creativity or Risk taking dimension was aimed at determining the hotels support for employees creativity and the employees suggestions on job related improvements. As indicated in Table 6, the hotels did encouraged employees creativity and innovativeness and they were willing, with caution, to take risks in following through employees suggestions. The employees however, were somewhat apprehensive on their ability to do their jobs well. Thus, overall the findings indicated that there were some support for employees creativity and risk taking activities. Table 6: Creativity/Risk Taking 1 Management encourages creativity Employees are innovative Employees feel able to do the job Organization believes in taking risks Management cautious in trying new ideas 2.57 Creativity/Risk Taking 2.80 Efficiency/Pride dimension was intended to gauge the hotels emphasis on efficiency, and employees feeling towards their jobs and the organizations. The findings, as shown in Table 7, indicated that the hotels over emphasized on efficiency. However, employees were proud to work for the hotels. They felt that they have secured jobs since their hotels were quite established in the industry. Table 7: Efficiency/Pride Emphasis 1 Focus on efficiency improvement Organization is established in industry Employees feel safe in organization Employees proud to work in organization 3.38 Efficiency/Pride Emphasis 2.80 The organizational culture was quite open as reflected in the close rapport and the trust between management and employees and the hotels support for activities that brought management and employees closer. The findings also support for creativity and risk taking activities, with employees feeling proud to work for the hotels, as indicated in Table 8 and Illustration 2.

8 Table 8: Organization Culture 1 Employee Relationships Creativity/Risk Taking Efficiency/Pride Emphasis 2.80 Organizational Culture 3.06 Illustration 2: Organization Culture Employee Relationships Alienate 3.57 lose Creativity/Risk Taking Conformance 2.80 Creative Efficiency/Pride Emphasis Not bothered 2.80 Pride ORGANIZATIONAL CULTURE Conformance 3.06 Open 5.3 Organizational Structure and Organizational Culture Relationship: In examining the extent of relationship between organizational structure and organizational culture orientations, the hotels were more inclined towards a somewhat open organization structure orientation. The organizational culture similarly encouraged closeness among employees and relationships with the management. Illustration 3: Relationship between Organizational Structure Orientation and Organizational Culture Orientation ORGANIZATIONAL STRUCTURE ORIENTATION Closed 2.67 Open ORGANIZATIONAL CULTURE ORIENTATION Conformance 3.06 Open The variables were examined in 21 hotels as illustrated in Table 9. A Good Fit (where the variances is two means score is less than 0.26) between organization structure and organization culture orientations was found in a total of 3 hotels or 14%, an Average Fit (where the variance fell between 0.26 and 0.50) was found in 13 hotels or 62%, whilst there was a Poor Fit (where the variance was over 0.50) in 5 hotels or 24%. Therefore, it can be concluded that in a majority (76%) of the hotels, there was a good or an average fit between the organization structure orientation and the organization culture orientation.

9 For the frontline employees turnover rate, it was considered Good (where the rate was below 20%) in 9 hotels or 43%. An Average rate (the range from 20% to 25%) was found in 8 hotels or 38%, and a Poor rate (turnover rate was above 25%) was found in 4 hotels or 19%. TABLE 9: Relationships between Organizational Structural Orientation and Organizational Cultural Orientation with Turnover (A) Structure Orientation (B) Culture Orientation (C) Category of Similarity (D) Category for Turnover Rate (C AND D) Alignment (A-B) Turnover Cases Variance Rate Category 2 18 Category 1 NO Category 3 15 Category 1 NO Category 2 23 Category 2 YES Category 1 18 Category 1 YES Category 3 30 Category 3 YES Category 2 19 Category 1 NO Category 2 21 Category 2 YES Category 2 45 Category 3 NO Category 2 7 Category 1 NO Category 2 25 Category 2 YES Category 2 29 Category 3 NO Category 2 22 Category 2 YES Category 1 20 Category 2 NO Category 2 24 Category 2 YES Category 3 27 Category 3 YES Category 3 21 Category 2 NO Category 1 12 Category 1 YES Category 2 16 Category 1 NO Category 2 19 Category 1 NO Category 3 22 Category 2 NO Category 2 16 Category 1 NO Mean NO In comparing the extent of relationship between the organizational structure-culture orientations with the turnover rates as illustrated in Table 9, it was found that there was relationship in 9 of the 21 hotels or 43%. Of the 9 hotels, 2 were hotels considered in the Good category (Good Fit on structure-culture variables with low turnover rate). In 5 hotels, an Average category was found where there was an Average Fit between structure-culture variable with average turnover rate. In another 2 hotels, a Poor Fit was found between structure-culture relationships with a high turnover rate. Thus, the proposition on the similarity between the organizational structure with the organizational cultural orientations could only be partially accepted since a match was found in 43% of the cases. 6. Conclusions The objective of the study was to examine the extent of hotels organizational structure and organizational culture relationship. The organizational culture and organizational structure were relatively open with the management in support for employee-management relationships and team work, employees creativity and innovativeness. Policies and procedures were mainly used as reference source for employees. The relationships between organizational structure-culture orientations with the turnover rate were found in 43% of the cases, thus lending partial support for the study s proposition. The findings of the study had contributed to a better understanding of the human resource management practices that relate

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