ORGANIZATIONAL CULTURE IMPACT ON MANAGEMENT PERFORMANCE WITHIN LOCAL COUNCILS

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1 ORGANIZATIONAL CULTURE IMPACT ON MANAGEMENT PERFORMANCE WITHIN LOCAL Elena DOVAL Professor PhD Faculty of Management, Spiru Haret University, Brașov Margareta FLORESCU Professor PhD Academy of Economic Studies, Faculty of Management Rezumat Lucrarea se axează pe determinarea componentelor culturale care au impact asupra performanţei manageriale în cadrul consiliilor locale, având în vedere mediul de dezvoltare durabilă. Lucrarea se bazează pe un sondaj de opinie realizat la nivelul Consiliului local Braşov pe baza chestionarelor completate de salariaţi, având în vedere următoarele obiective: Căutarea tendinţelor dezvoltării durabile în orizontul 2050 care ar putea afecta performanţa consiliilor locale; Identificarea elementelor culturale care trebuie să contribuie la schimbarea managementului culturii şi performanţelor managementului. Cuvinte cheie: Cultura organizaţională, managementul culturii, managementul schimbării, performanţa managerială, consiliul local Abstract This paper is concerned on determining the cultural components that has impact on management performance with local councils anchored in a sustainable development environment. The paper is based on a survey applied on the Brasov county Local Council staff having in view the following objectives: Searching for the world tendencies for a sustainable development within the horizon 2050; Identifying cultural issues to contribute to the change culture management and management performance. Keywords: Organizational culture, management culture, change management, performance management, the local council. JEL Classification: H11, M14 103

2 PUBLIC INSTITUTIONS' CAPACITY TO IMPLEMENT THE ADMINISTRATIVE REFORM PROCESS Bucharest, May 23-24, INTRODUCTION The EU has no jurisdiction to overlap sovereign prerogatives of Member States in public administration, however, the existence of an efficient and democratic administration is one of the most important criteria that define modernity and the development of a country. At this time, Romania does not have such an administration, therefore, a major priority of Government is to achieve, in a few years, a real reform through which the public administration in our country to be at the level of European standards and to be characterized by transparency, predictability, accountability, adaptability and efficiency. The experience of Member States of the European Union shows that the process of democratization involves reforming the entire social life, from the political to the government at both central and local levels. The organization of government differs from one European country to another and therefore the issue of uniformity in the understanding of public administration through the formation of uniform concepts, such as public administration, civil service, public service, civil servants. The trend in this area is the achievement of compatibility between different stages of development of public administration in the Member States of the European Union. The impact of accession on public administration cannot be assessed without taking into account that the transformation process that passes through Romania is one continuous : Administration is undergoing a profound and accelerated the reform process largely due to the need to align it to the other European states; After the accession of Romania and continue to reform the administrative system to manage the conditions imposed by the obligations deriving from the EU membership. In order for an organization to be successful long-term culture should be managed effectively (Altman, 1992). The management systems and management culture defines and makes possible to understand how it affects organizational behaviour. The whole process serves to develop strategies for competitive advantage. The management focuses on following culture directions : Indentifying the real culture of the organization versus what they say or think; Determining what culture should promote behaviours consistent with the purposes of the organization; 104

3 Developing a plan to lead the organization from "where" to "where it needs to be" consistent with the culture. The main variables that influence the organizational culture are (Nicolescu and Verboncu, 1999): Endogenous: the history of the organization, owners, managers, employees, size of organization, technology and the degree of computerization, financial situation, the phase of the life cycle of the organization, purpose and objectives, the management system; Exogenous: the economic environment, institutional environment and national culture. These variables define cultures and organizational and managerial subcultures, varying depending on the values, beliefs, aspirations and expectations of staff, and individual behaviours, group and organizational, and contributing to the performance of organizations and their management The purpose of the investigation is to determine the components that characterize the cultural and management alternatives for adapting and extending to the management of local councils. To this end the following objectives have been set: Searching for sustainable development trends in 2020 that could affect the performance of local councils; Identify cultural elements that must contribute to change management culture and performance management. The research has used theoretical searching, direct observation, survey-based questionnaire, interview, review of documents at the local Brasov, analyze data and information collected. 2. WORLD TRENDS IN SUSTAINABLE DEVELOPMENT: ORIZONT 2050 Developing world economy in the first half of II millennium is targeted globalization. Analyzing the external factors that influence management organizations in the long term can be highlighted the following characteristics and trends (Campeanu, 2004): Political and legal factors Global political climate in distant future will be characterized by instability and insecurity and military policy. World peace will be jeopardized by the increasing level of welfare difference between the developed and developing countries. The role of international bodies (OECD, WTO and UNCTAD) will increase and will require global rules of the competition. European Union will contribute substantially to the creation of an overall policy on 105

4 PUBLIC INSTITUTIONS' CAPACITY TO IMPLEMENT THE ADMINISTRATIVE REFORM PROCESS Bucharest, May 23-24, 2009 cooperation and competition authorities. "Globalization must be all-inclusive(all-embracing) and equitable and necessary policies and measures at national and international levels, formulated and implemented with the effective participation of developing countries and countries with economies in transition, to help these countries to respond favourably to the challenges and opportunities governed by the process of globalization "(Monti, 2003). Economic factors Economic growth in a rate of at least two times faster than the population increase will lead to differential development of the main regions of the world. It is possible that the end of 2050 China to obtain the highest gross domestic product of developing countries, with the highest rate of nurseries and become the most powerful country in the world. The driving force of development remains the industry, while maintaining the mixed economies, where government policies to come up with mechanisms to correct market mechanisms. Increasing productivity and competitiveness will be based on the role of intangible assets and services will have a growing importance. Industrial policy will be based on publicprivate partnership and cooperation, and communication will become the tool of managerial performance. Cooperation will have opening large clusters involving development and networks of small and medium enterprises, banks, universities, research institutes, service providers and local public administrations, based on benchmarking and applying best practices. Technological factors Key factors in sustainable development will be innovation and technological change to increase performance in all areas of economic and social activity, associated with investments in upgrading capabilities of production-particularly in energy and information and communication technology-, marketing and human resources. "Technology will become the key to sustainable development." Progress of technology allows increasing the standard of living (communication, transportation, nutrition and health), create opportunities for more efficient use of resources and reduce pollution. The effects of technology on labour productivity can increase the production of scale, increased in May the accelerated consumption and safety on the labour market. In this sense, the scientific research and the innovation supporting the application of advanced production techniques and of new products, but also opportunities for risk assessment of pollution. Social and demographic factors If the pace of population growth during was 2% per year, from 2.5 billion inhabitants in

5 to 6 billion people in 2000, during is expected to slow down the pace growth, so that the end of 2050 will likely be 9 billion people (source: World watch Institute USA). Growth will be accelerated in India, Africa, Middle East and North America and decreasing in Europe, increased in Eastern Europe and Russia. Differences in standard of living will increase, both among states and within their reach is that a small percentage of world population control and natural resources. Population growth in poor countries in Southeast Asia and Middle East, Latin America and Africa will increase labour migration to industrialized countries, but in terms of reducing water and sources of food, industrialized developed countries will close their borders and will thrive in the enclave. Factors of environment Resource consumption and environmental degradation will accelerate in the industrialized countries. Energy consumption will have a growth rate of 2% per year and will lead to increase by about 50% of emissions of gases that cause the greenhouse effect, where it will stop fossil fuels. Amazon deforestation in the area of forest fires and reduces the mass of forests and seas and oceans are becoming increasingly polluted. Droughts and floods will affect agriculture. The amount of water will fall in 20 years to one third of the water reserves of the world. Foreseeable natural disasters cannot be stopped without the involvement of all nations in severe actions to save the planet's health. In exposed conditions required to promote a strong competition culture (Campeanu, 2004, p.68-70) in order, first to achieve a balance between enforcement and competition policy and considerations concerning the public interest, and second, to combat anticompetitive behaviour and development of national and international cartels, but also for cooperation in controlling transnational mergers. Economic integration has led to a stable macroeconomic framework in Europe, characterized by low inflation, low interest rates and create a large unified market with over 380 million consumers, but also create an extensive network of public institutions that work well both at national and Community. This context was cranky the global financial crisis, but U.S. is still the main country with developed economy in the world with which to measure progress in the European Union. The Lisbon strategy developed in 2000 defined the reform agenda of the European economy, establishing lines of action that focuses on sectored structural reforms, targeting mainly: electronic commerce and electronic money, removing red tape for business, creating a transparent environment for private sector, liberalization of utilities and postal services, ensuring security of energy supply, investment in private pension funds, increased competitiveness. In this context, local councils must take responsibility for societal development, 107

6 PUBLIC INSTITUTIONS' CAPACITY TO IMPLEMENT THE ADMINISTRATIVE REFORM PROCESS Bucharest, May 23-24, 2009 continuous communication with the business and work in partnership with the socio-economic environment. In the process of change to achieve performance in managing change organizational culture plays an important role undeniable. 3. CHANGING CULTURE AND ITS ADAPTATION TO EUROPEAN VALUES 3.1. Case study Brasov County Council In order to evaluate the general cultural elements that influence the performance of management in the local councils has been developed within the research Brasov county, by a survey conducted among employees from a closed questionnaire with 4 sets of questions. The research shows that at the Brasov County is perpetuate a culture that reflects the target rules and rules official, with little flexibility. Employees want more flexibility and a greater openness to the outside organization. They are generally satisfied with their work. They understand that acting for the public is the most important strategic objective. From the questionnaire given to research have arised the following relevant issues that characterise the cultural elements: a) Sets of questions on the definition and understanding of culture: Culture creates consensus, unity and motivate staff to achieve organization goals and values (42%); - The organization becomes more effective if it has a strong culture (31%); Organizational culture represents "the values, beliefs and norms shared by the management organization with employees, creating consensus and lead to the best behaviour of the organization from external environmental factors, supporting the change (42%); There are many factors that determine the beliefs and values in the organization, not only culture management (19%); Organizational culture is a hierarchical model and rational then the local council is currently leading (17%); b) The set of questions concerning the roles and responsibilities of the County Council management of change projects: To encourage employees to tell their opinion and to participate actively in projects, to share responsibility with employees for goals (39%); 108

7 To make a rational analysis and research of internal and external environment before they announce the change (25%); Determine the direction of change, priorities and values in any proposed change (19%); To obtain consensus from the employees, but to control the process of completing the projects (17%). c) set of questions on understanding change in organizational culture and organizational culture change that may be a factor for stability and growth performance: Organizational culture adaptation to European values is a factor of stability and growth performance (92%). Had no impact on employees, with insignificant weights (1-3 selections), answers like this: There is only one solution to solving problems: the continuation of no change; By changing the culture power structure remains unchanged; d) set of questions on what is deemed to be changed in the organizational culture of the County Council to become more performance: Communication (56%); Internal and external relations (19%); Values (14%). Had no impact on employees, with insignificant weights (1-3 selections), answers like this: creeds, hierarchical structure, technology and people. No response has been selected statements: rules, delegation of responsibility, knowledge, ethics, and logic and management decision-making system. The analysis of the allegations county Council staff, working climate and other organizational elements (organization, decision-making system, and internal relations with other organizations, the efforts made to satisfy the Aquis of the European community, etc.) leads to the conclusions that are summarized in Fig. 1. The results obtained in the Brasov County is a basic for analyzing the process of change management and the organizational culture confirms a number of investigations carried out by direct observation to other local councils. 109

8 PUBLIC INSTITUTIONS' CAPACITY TO IMPLEMENT THE ADMINISTRATIVE REFORM PROCESS Bucharest, May 23-24, 2009 Strengths: structure stable and well defined rules and norms accepted and followed strictly; Items ethics well understood and followed without accepting compromises; a clear understanding of the culture concept and its importance in motivating staff and achieving the goals and organization; stable positions without fear of attaint posts; Well-defined decision-making system and supported. Opportunities: Open organizational culture to adapt to European values is a factor of stability and growth performance; Supporting change by top management. Weak points: insufficient communication system of the formal and informal relationships; Poor communication outside the organization and particularly with international organizations; harsh formal relations based on rules and procedures; values are not sufficiently taken into account; Lack of organizational flexibility. Threats and risks: Possible attitude of resistance to changing organizational culture; Possible conflicts and contradictions of a culture. FIG.1 CONCLUSIONS OF SWOT ANALYSIS OF ORGANIZATIONAL CULTURE IN BRASOV COUNTY COUNCIL 3.2. Obstacles in the process of change In changing the culture identifies a number of barriers arising from lack of organizational flexibility, including: Inflexibility - feature individuals tackling problems only in a particular way and not accept other ways of resolving whatever the arguments made; Conformism - feature people who use only the existing patterns of thinking without them restructure or abandon; Obedience - characteristic person s subject obedient; psychological inhibition against new - feature people who are anchored more than necessary practices already validated that concern them as something taboo, of exceeding; Single response - typical of people who think there is always a way to solve problems; Fear of not mistaken - feature people who are afraid not to commit excessive errors or do not have a flop, which paralytic cash imaginative. Also, the lack of cooperation between members of the collective is a major impediment to the pursuit of change. In the process of adaptation to organizational change, a very important role lies with the people, staff that needs to change, to acquire new knowledge to tackle tasks us to improve the degree of 110

9 competence, to change some work habits values and attitude toward the work organization, and effective change can be achieved with true if there is a change of attitude. In changing organizational culture, given the trends summarized in Chapter 1, should be considered two priority issues: communication and relationships. The modern organization have passed several periods of transition In communication towards interaction and global communication, called interactive market and global market (Schultz and Kitchen, 2000). According to the authors the organization needs to learn listening not only for making their messages more prospective and offering benefits to the audience. The speed of communication and the answer to the needs of beneficiary is also essential. In the following were identified obstacles, with a share greater or lesser degree: Lack or failure of standards and rules of internal communication: Vertical: information transmission decisions, training, creation of the image, motivation and promotion of organizational culture; Horizontal: cooperation, mutual knowledge and mutual. The interruption of communication or messages through the distortion channel of communication used. Choosing inadequate communication channels has significant consequences on the effectiveness of communication and determines a specific status within the organization and its external environment. The existence of barriers in the communication process: barriers due horizons of interpretation and expectation, language barriers, barriers due to the difference in status. Reduced effectiveness of policies, strategies and structures dedicated to internal and external communication. The organization s relationships are concerned in its formal and informal relations with its stakeholders. The main obstacles that have been found out regarding public administration relationships are: Non-sufficient channels of electronic communication (internet). Insufficient transparency of the business to the public (closed-door between offices, program short of public relations, etc.). 111

10 PUBLIC INSTITUTIONS' CAPACITY TO IMPLEMENT THE ADMINISTRATIVE REFORM PROCESS Bucharest, May 23-24, 2009 Direct contacts of the staff and managers of departments with the local councils in Europe and worldwide. It is necessary that the management should focus on the organization and itself competences and performance in order to enhance the strengths of the local council s culture and to eliminate the main obstacles highlighted above Performance in local governance The main components of a performance of governance can be considered to be: 1) Guideline Management by "carrying out the public involving: political will, self-management, outsourcing of activities and development of public-private partnerships, management style and staff motivation (transparent recruitment, adequate remuneration systems based awards results, etc.), the rotation of personnel and systems to improve the public ownership. 2) Implementation of the audit of organizational culture, the audit with the following three steps: Collecting and updating data (given as means: interviews and surveys, databases), data analysis and an audit report, which includes elements of culture "real"; Highlight gaps / shortcomings of the existing culture to culture and organization of organization systems, structures and processes that support the current culture and forces who oppose or support a culture new and necessary recommendations for improving the efficiency and performance management, organization); Final presentation and discussion in a workshop. 3) Organizational flexibility. Open systems involving flexibility and guidance to the external environment in which knowledge and adaptability is the order of priority goals, the acquisition of resources (material, financial, human and information). Denison and Spreitzer (1991) calls them "cultural systems of development. The local councils may become a dynamic organization with managers who assume the risks and whose performance is in line with individual initiatives. 4. CONCLUSIONS The main cultural factors that influence the performance of European are: innovation, managerial style (delegating authority and motivation), organizational flexibility and risk. 112

11 Given the orientation of European policies (EU and the European Community) to the social and more intense involvement of local communities in sustainable development, but also to ethics and fair competition management organizations, the main cultural factors mentioned have an influence in changing some notable cultural features in the local councils in Romania. BIBLIOGRAPHY Campeanu, V. (coord), (2004). European and global dimension of sustainable development, Bucuresti: Expert. Denison, D. R. and Spreitzer, G. M. (1991). Organizational culture and organizational development, Research in Organizational Change and Development, 5: Monti, M. (2003). Introductory remarks ICN for the capacity building and competition policy implementation group, Medrida, Mexico, the Declaration of the United Nations General Assembly "Monterrey Consensus", June. Nicolescu, O. and Verboncu I. (1999). Management, Bucharest: Economic Publishing House. Schultz, D. E. and Kitchen J. K. (2000). Communicating Globally. An Integrated Marketing Approach, London: McMillan Press, 6-17, 19-21,