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Given the rapid changes in Uganda's corporate environment and continued insights into organizational effectiveness most organizations have realized that they have to adopt new cultures everyday in order to retain their most valued and highly performing employees.
Organizational culture can be defined as;
"A pattern of shared basic assumptions that a group has learned as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems.
Employee retention is key or critical for the long term health and success of an organization. Managers agree that retaining your best employees ensure customer satisfaction, product sales, satisfied co-workers and reporting. In this case employee retention can be defined as;
"Those attributes that an employee see as beneficial to him and they make him more attached to his job and committed to the organization."
(Derek Torrington, 2005)
For an organization to be effective and well performing it has to have highly qualified employee. The employees need to feel comfortable while working for the organization so that the organization should make sure it adopts the best practice culture that will blend well with what the employees need. It must emphasize on a culture that is motivating and maximizing the values of human capital.
An employee will stay in an organization that makes him feel comfortable in what he is doing. He or she will stay in an organization that makes him bring out the best out of him. This is made possible by the leadership, career development opportunity and fair and equal reward and compensation.
STATEMENT OF THE PROBLEM
Despite the adaptation of best practice organizational culture by Uganda's organizations for example having performance based pay to individual and teams, work life balance e.g. Pricewaterhouse Coppers. There has been a problem of retaining the best employees due to poor employee retention strategies.
PURPOSE OF STUDY
The aim of this study is to establish the relationship between organizational culture and employee retention.
1.4 OBJECTIVE OF STUDY
1.) To examine the role of culture in an organization.
2.) To find out different strategies of retaining employees in an organization.
3.) To establish the relationship between organizational culture and employee
retention in an organization.
What are the effects of organizational culture on an employee?
What are the different strategies of retaining employees in an
What is the relationship between organizational culture and employee retention in an organization?
SCOPE OF STUDY
The study focuses on the organizational culture and the employee retention strategy.
The study is supposed to cover the year 1998 to present day 2008.
This study will benefit organizations I understanding what type of culture to adopt and how they will affect the employees stay in the organization.
This study will benefit researchers to identify the role of organizational culture in an
organization and make them have a better understanding of organizational culture and advising different organizations in the country which types of culture to adopt so as to reduce on employee turnover.
This study is part of the requirement for the award of Bachelor of Human Resource Management degree by Makerere University.
STRUCTURE OF THE REPORT
Chapter one contains the introduction, background of the study, statement of the problem, purpose of the study, objective of the study, research questions, scope pf the study and significance of the study.
Chapter two contains the methodology, research design, sources of data, data collection, data processing and analysis, data presentation and anticipated limitations.
Chapter three is the literature review which contains introduction of the chapter, definition of concepts, independent variable, dependent variable and the relationship between the independent and dependant variable.
Chapter four contains presentation, discussion and analysis of findings.
Chapter five contains the conclusion and recommendations.
This chapter presents the information required, source of information, how information was obtained, processed and how the findings were presented.
The researcher used descriptive research design to describe the variables that had qualitative data.
The researcher was able to collect the information required from a secondary data source for example text books, journals, research abstracts, magazines, newspapers on business highlights, human resource news and internet.
DATA COLLECTION METHODS
The researcher collected data from already existing information through reading, writing, downloading, printing and surfing on the internet.
2.5 DATA ANALYSIS AND INTERPRETATION
The researcher used the initial stage of data analysis that included the following stages.
The researcher presented data in a research report to determine the effects of culture on consumption patterns.
LIMITATIONS OF THE STUDY
The researcher encountered a number of problems in the process of carrying out the research these included the following.
Financial constraint hindered the research due to the fact that the financing of the study was done by the researcher and had no income generating activity by then.
The time limit for handing in the research was also a hindrance to the researcher since it was rather short.
This chapter reviews the available literature on organizational culture, the role of organizational culture in an organization and how it affects employee retention. It also looks at the different strategies that can be adopted to improve employee retention in an organization.
3.2 ORGANISATIONAL CULTURE
The culture of an organization consists of its customary ways of doing things and its members shared perceptions of issues that affect the organization. A firm's culture evolves gradually, and employees may not be aware that it exists. Organizational culture is important, however, because it helps define how workers feel; about their jobs and how things are done in the organization.
(Schein 1999), defined organizational culture as a pattern of shared basic assumptions that a group learned as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems.
Organizational culture can also be defined as: " A system of shared values and beliefs about what is important, what behaviors are important and about feeling and relationship internally and externally."
Purcell et al (2003)
As a result of greater attention being directed at managing culture, organizations are recognizing the importance of articulating and stressing their fundamental assumptions.
Although all organizations have culture, some may appear to have stronger deep rooted cultures than others. Initially, a strong culture was conceptualized as a set of beliefs, values, assumption and practices embraced by most members of the organization. The emphasis was on;
The degree of consistency of beliefs, values, assumptions and practices across organizational members.
The number of consistent beliefs, values, assumptions and practices.
THEORIES OF ORGANIZATIONAL CULTURE.
According to Denison (1990) there are four different perspectives regarding how organizational culture works. They are translated into four different hypotheses.
The consistency hypothesis - the idea that a common perspective, shared beliefs and communal values among the organizational participants will enhance internal coordination and promote meaning and a sense of identification on the part of its members.
The mission hypothesis - the idea that a shared sense of purpose, direction, and strategy can coordinate and galvanize organizational members toward collective goals.
The involvement/participation hypothesis - the idea that involvement and participation will contribute to a sense of responsibility and ownership and, hence, organizational commitment and loyalty.
The adaptability hypothesis - the idea that norms and beliefs that enhance an organization's ability to receive, interpret, and translate signals from the environment into internal organizational and behavioral changes will promote its survival, growth, and development.
TYPES OF CULTURES.
Charles Handy (1995) distinguished four types of culture in an organization; power, role, task and person. One of these cultures may dominate in an organization or different cultures may exist in different parts of the firm
The power culture comes from a single central source, as in a small business that has begun to expand. Here there are a few rules and procedure and a few committees. All important decisions are taken by a handful of people and precedents are followed.
Role culture is the type that is bureaucratic. It operates through formal roles and procedure and they are clearly defined rules for settling disputes. Organizations dominated by a role culture offer security and predictability but since they are rigidly structured cannot adapt quickly to change.
The task culture is a job or project oriented. There is no single dominant leader; all group member concentrate on completing their collective tasks. A task culture will encourage flexibility in approach and is ideal for an environment of change. Job satisfaction is high and there is much group cohesion.
A people might arise in an organization which exist only to serve the people within it e.g. partnership, consultancy firms and other professional.
ROLE OF ORGANIZATION.
Organizational culture in an organization and each organization must at least have developed a culture. The effects of the organization culture may include the following;
Organizational culture affects the decision making process in an organization, can be clearly be seen in the types of cultures; in the role culture it is only the head who makes decision so that means that even if someone else has an idea as long as the head does not like it then he won't approve it e.g. human resource policies. (Cameron and Quin et all 1999).
Organizational culture determines the type of leadership that should exist. Leadership should be conscious of the culture otherwise they may bring conflicts in an organization for example autocratic type of leadership cannot be used in a task oriented type of culture. (Schein et al 1999).
Organizational culture makes employees have a sense of identity since it is a shared set of beliefs then employees would be aware that it is only in their organization where they do things the way they do.(Schein et al 1999).
Organization culture plays a role in the coordination and integration across organization units in order to improve efficiency quality and speed of designing, manufacturing and delivery products and services. (Kathryn A. Baker 2002).
Denison (1990) found empirical support for the participation/involvement view of culture higher levels of employee participation were correlated with better organizational performance. Employee who worked in organization s where they were consulted about decision performed well than those that do not allow their employees to participate in decision making.
Employee retention is really an element of a more general concern everything that has to do with recruiting, maintaining and developing the necessary mix and levels of skills required to achieve organizational and business objectives. (Clarence & Alex 2004). In this case employee retention can be defined as;
"Those attributes that an employee see as beneficial to him and they make him more attached to his job and committed to the organization."
(Derek Torrington, 2005)
It is estimated that the cost associated with recruiting and training a new employee average between half and one and half times the annual salary for the post in question, depending on the approaches used. (Thompson 2000).
Retention of employee is crucial at present because of the desire to have good talent at an all time high and fierce competition for that limited pool. Therefore employers need to develop strategies for recruiting the right people and retaining the current high performers.
REASONS WHY EMPLOYEES LEAVE ORGANIZATIONS.
Employees leave jobs for variety of reasons many of which are wholly outside the power of the organization to influence. One very common reason for leaving organization is retirement no matter how much it is pushed forward or back it ultimately affects everyone. In many cases people have different reasons for leaving their organizations. The following is one approach of categorizing the main reason why people have for voluntarily leaving a job.
The relationship between job satisfaction and turnover is very visible in turnover studies. (Mobley et al 1979) Indicated that overall job satisfaction is negatively linked to turnover, the main reason for people leaving their employer was for more interesting work elsewhere. It is generally accepted that the effect of job satisfaction on turnover is less than that of organization commitment, wages and conditions.
Griffeth et al (2000) notes that pay and pay related variable have a considerable effect in turnover. He concluded that a high performance is insufficiently rewarded he will leave and that where collective reward programs replace individual incentive this may lead to higher turnover among high performers.
Mobley et al (1979) did a number of studies and concluded a negative relationship between satisfaction with supervision and management then there will be lower staff turnover.
Torrington(2005) explains that turnover can also be as a result of the pull factors that is the attraction of an employee by a rival employers. Here employees leave in order to have better living standards and the notion of career development, the wish to move into new areas of work for which there are and better opportunities.
STAFF RETENTION STRATEGIES.
The straight forward answer of how best to retain staff is to provide them with a beter deal in a broader sense than they perceive they could get working for alternative employers. Organizations should make use these strategies better so as to push off their competitors from stealing their high quality employees. The following strategies would help in retaining employees.
Managing expectation is where by potential employees should gain a realistic job review before they take up a job offer. The purpose of this is to make sure that the new staff who enters an organization they find or get what they were expecting from that the job. Realistic job previews are most important when the candidate for whatever reason cannot know how the job operates and how the organization they want to join runs. (Sturges and Guest 1999).
Effective and timely induction is also often credited for the reduction of turnover in early stages of employment. The purpose of induction is to prepare an employee to work as effective as possible. It helps starters to adjust emotionally to their new working place. Induction makes sure that the new employee of the organization understands the chain of command and the culture in the organization. It acts as a forum in which basic information about the organization is transmitted, these can be mission statements, visions, the health and safety regulations and more information regarding the organization. The important thing about induction is that individuals are introduced to both the organization and their roles in the organization. (Torrington 2005)
Family friendly human resource practices can also be used for retaining employee. Striking balance between an employee job and his social life is very important and so for an organization to make their employees feel that they care about them, then they have offer them these work life balance opportunity. Some these practices include flexi time, paternity leaves and more. (Armstrong 2004).
Training and developing employee is a good strategy for retaining employees. Training opportunities enhance commitment to the organization on the part of the individual employee making them less likely to leave voluntarily than they would if no training was offered. When an employee knows that the organization he is working for is going to help him develop his then he would stay in that organization (Torrington 2005).
Improving the quality of line management and leaders. Most voluntary resignations are explained are explained by dissatisfaction on the part of the employee with the supervisor. This shows that the most effective of reducing staff turnover in an organization is improving the performance of line managers. The management assumes that they managers are capable supervisors without that the role is difficult and does not usually come naturally to people. They should select line managers after the assessment of their supervisory skills. They should make sure that all newly appointed line managers are trained in the art of effective supervision and regularly appraise managers for their supervisory skills in order to encourage others.
The last strategy in this research and one of the most important is the payment levels. According Gomez - Mejia and Bakin (1992) employers who offer the most attractive reward packages have lower employee turnover than those who pay poorly an assumption that led to many organization use pay rates as their prime weapon in retaining employees. Raising pay levels may thus result in greater job satisfaction where people are happy with their work but it will not deter unhappy employees from leaving. As far as employees are concerned, challenging work will compensate for pay, pay will never compensate for doing a boring and unstimulating job (Sturges and Guest et al 1999).
3.9 RELATIONSHIP BETWEEN ORGANIZATIONAL CULTURE AND STAFF RETENTION.
The relationship between organizational culture and staff retention is evident in many organizations. An organization that has a strong and employee friendly culture is always able to retain its employees and thus reduce the cost of labour turnover. (Torrington 2005) An employee would like to stay in an environment where he feels most comfortable. Organizations that tend or have the transformation type of culture tend to be able to retain their younger employees who are instrumental for having new ideas. This is proved by the fact that younger employees like exploring new heights and so if an organization does not give them provision for that they ought to leave.
An organization should devise a culture that makes it hard for an employee to leave for example it can work hard to create a sense of community among the employees. Rhis can be fostered by organizing all manner of out of work activities like sports teams, investments clubs ( this is common in many microfinance institutions in Uganda, for example Kitgum cooperative savings and credit bank limited where female employees have investments have investment clubs). In addition to this a company can try to place employees in closely knit teams where they work and because team members rely on each other it makes it hard for one of them to resign.
Organizations that have an autocratic type of leadership will have a problem dealing with open-minded employees and so will not be able to retain them. (Capelli 2000) and thus the relationship between organizational culture and staff retention.
ANALYSIS AND INTERPRETATION OF FINDING
The study was meant to examine the effects of organizational culture on staff retention and the relationship between the two i.e. organizational culture and staff retention. It is this goal that inspired the three objectives listed below.
To examine the role of culture in an organization.
To find out the difficult strategies of retaining employees in an organization.
To establish the relationship between organizational culture and employee retention in an organization.
FINDINGS ON THE ROLE OF ORGANIZATIONAL CULTURE IN AN ORGANIZATION
According to Schein (1999) defined organizational culture as a pattern of shared basic assumption that a group learned as it solved its problems of external adaptation and internal integration that has worked well to be considered valid and therefore taught to new members as the correct way to perceive, think an feel in relation to those problems.
On the other hand Parcell et all (2003) defined it as a system of shared values and beliefs about what is important, what behaviors important are and about feeling and relationship internally and externally.
From the above definition the researcher came to the conclusion that organizational culture is basically what an organization feels is right to do and pass it on to its members such that the member would understand the type of required attitude, and behavior is needed in the organization, who to report to and understand the hierarchy.
Many definitions of culture give primary information to the cognitive components, such as assumptions, beliefs and values also behavior and artifacts leading to a conclusion that there are visible and hidden levels of organizational culture Schein (1985) clearly shows the levels as shown below.
Figure 1. Levels of Organizational Culture (Adapted from Schein 1980; Schein 1985)
And it is from the above that Schein comes up with the definition of organizational culture.
Organizational culture was initially seen as a means of enhancing internal integration and coordination but the open system view of organization recognized that culture is also important in adaptation to the environment. The traditional view of a strong culture could be contrary to the ability of the organization to adopt and change. Seeing culture as important for facilitating organizational innovations, the acceptance of new ideas and perspectives may require a different view of organizational culture.
Denison's (1990) four distinct hypotheses of organizational culture; the consistency hypothesis, the mission hypothesis, the participation/involvement hypothesis and adaptability hypothesis focus on different aspects of culture but more importantly they stress different functions of culture. The first two hypotheses (consistency and mission hypotheses) tend to encourage or promote stability, the other two (participation and adaptability hypotheses) allow for change and adaptability. The first and third that is (consistency and participation hypotheses) see culture as focusing on internal organizational dynamics; the second and fourth (mission and adaptability hypothesis) see culture as addressing the relation of culture to its external environment.
Stability and control.
Change and flexibility.
In line with the same argument Charles Handy (1995) also distinguishes key types of organizational culture that correspond with different organizations but him he looked at them more from the employee or peoples point of view unlike Denison (1990) which was the organizational point of view.
According to Handy organizational culture has four different parts i.e. the power culture, the role culture, the task culture and then people culture.
The power culture which is where decisions are made by a handful of people is not very appropriate for a growing firm because employees need to feel as though they are part of the organization and so Denison et all participation hypothesis could be most appropriate.
Organizational culture should be transformational that is it changes or quickly adapts to change thus Handy's role culture theory of organizational culture does not apply to an organization that wants to compete with the others in today's market.
Schein (1999) suggests that organizational culture is important than it was in the past. Increased competition, globalization, mergers, acquisitions, alliances and increased workforce diversity has led to organizations making sure that they have the right leaders in their executive boards. He argues that leaders must be able to asses how well a culture is performing and how it is affecting the attitude and performance of employees.
Cameron and Quin et all (1999) conclude that organizational culture affects the way decisions are made this is true because according to Handy (1995) types of culture; he elaborates well that in task culture there is no elected leader the members of the teams are the ones who make decision and this leads to greater job satisfaction in that all of them feel as part of the organization decision makers.
Schein et all 1999 says that organizational culture should determine the type of leadership that should exist. If a new manager has been brought in, out of mission hypothesis classification of culture by Denison 1990 he would be able to manage and lead the organization in line with the missions and vision of the organization. This means that he will have to adopt a culture that is well embedded with the organizations mission. In this line hen will not bring conflict of culture and thus smooth running of the organization.
Kathryn Backer (2002) says that organizational culture helps in effective coordination and integration among the organization units. An organization needs shared basic principles so as these units can coordinate and thus show the importance of culture in an organization.
FINDINGS ON EMPLOYEE RETENTION STRATEGY
Employee retention strategy is the way in which a firm is going to undertake in order to retain its employee. Before coming up with strategies the researcher first established the reasons why employees leave their organization.
Among the findings the researcher found out that employees leave their organizations due to retirement. Though the employees who retire might be old most of them are experienced and so the organization loses very important workforce this can be addressed by pushing the years of retirement age for the good performing employees further.
Job satisfaction is a very big factor in labor turnover. Most employees leave their workplaces due to the dissatisfaction associated with their current situation. Employees who are used to their routine jobs year in year out eventually get bored with their work and so become less productive this leads to looking for opportunities elsewhere that are more challenging.
Another reason for employees leaving the organization is due to compensation reasons. If an employee is paid less than their counterparts in another organization in similar position then the employee will tend to leave the organization for a better paying job elsewhere. An employee would also not be happy working where the compensation does have equality, fairness and related to output.
Staff turnover has also been attributed to the relationship between the supervisor and managers with the employees. It was established by Mobley that if the employees are satisfied with the way they are being supervised by their superiors then they will be more productive and feel more comfortable in their workplaces. It is important to these supervisors and line managers train for supervisory skills which will go along away in reducing staff turnover that could be attributed to supervisors and line managers.
Pull factors were also found to be dominant in increasing labor turnover. This is where an employee is attracted another competitor. This can be due to the performance of the competitors in the market thus making the employee go and work with a performance for example MTN employees may be attracted to work for Safaricom Kenya due tom its successes (it posted a 17 billion shilling pre tax profit and ranked among the best telecommunication companies in East and Central Africa).
In the different strategies to be undertaken the researcher found that out that;
In managing expectation that is giving potential employees a clearer picture of what to expect in the organization this will make them know what to expect and so will put their expectations so high and get disillusioned. This important because many potential employees join companies with high morale but later on as their continue working for the organization realize that the work they are doing is not exactly what they wanted.
In the research the researcher found out that family friendly human resource practices also played a significant role. It was established that employees who are working in organization where they could juggle their family lives and their work life were more committed to the organization than those who do not have such programmes.
Training and developing also was important for retention. Creating a development plan for each individual based on his abilities and needs regardless of the level within the organization could act well as a retention technique. Talented individual are more likely to stay if they have an opportunity to enhance their skills.
4.3 FINDINGS ON THE RELATIONSHIP BETWEEN ORGANIZATIONAL CULTURE AND STAFF RETENTION.
Organization culture affects staff retention directly. In the research conducted the researcher found out those organizations that have cultures that have autocratic leadership styles, unfair compensation, uncoordinated work flows and do not involve their employees in the decision making process. Where line managers abuse their powers and where sexual harassment is not taken serious are likely to have high turnover rates thus not able to retain good employees.
Staff retention was found to be directly related in organizational culture in that employees want a place where they can comfortable in both their professional - social life and a balance of the two. Work life balance is among the aspects that make employees stay at their work places.
Every organization should adopt a transformational i.e. they should be ready for change due the rapid changes. In the business environment during this process the employee should be well educated about the change such that when comes it does not shock them.
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS.
This chapter shows the summary of findings, conclusion and recommendation as well as suggested areas of further studies.
SUMMARY OF FINDINGS
The role organizational culture in an organization.
Due to the changes in he corporate environment organization have formed important to have the right culture to fit the right period of time.
Organizational culture should be strong yet at the same time not resistant to change, when a culture is very strong and resistant it will be a disadvantage to the organization since they will miss out on what other culture changing organizations are enjoying.
Organization culture determines the coordination of activities in an organization. In this line culture has to be shared among the different department in the organization.
Organization culture defines the difference between two organization. The uniqueness of an organization is important because it gives the employees a sense of identity.
Organization culture also determines the relationship between the management and the employees.
Relying on the evidence availed through the literature review, it has been found out that organizational culture can be an important benchmarking tool when coming up with the mission of the organization or the mission can be mould an organization to have a certain culture.
The different employee retention strategy.
In everything that an organization does it must make sure that it retains its best performing employees if it is to have a competitive advantage over its rivals. Loss of employees effect range from losing new ideas to loss of talent.
The researcher found out that for an organization to retain it must make sure that it is paying well or risk losing some of its employees. The organization must pay according to the market rate if it is to be competitive in retaining its employees.
It was also found out that positive reinforcements and recognition played a big role in improving the employee attitude and job satisfaction. This would make them feel more appreciated and thus become more dedicated to the job.
Employees need to be addressed with a respect if an organization wants to retain them. Encouraging diversity while recruiting would be a good way to understand people of different cultures, religion and race.
Employees need proper induction for them to fit in the organization properly. When induction is properly done and the employee would not find it hard to adjust to the new environment.
Relationship between organizational culture and staff retention.
Organizational culture and staff retention are directly related in that an employee would want a stay in an organization that has a culture that is conducive for his survival and development of his career. Culture should be transformational, not rigid but strong. It is a good organizational culture that makes employees comfortable in working intheir organization. When experiencing a high turnover rate should take time and analyse its culture.
Much as organizational culture is looked as a sense of identity for an organization. It should be noted that organization culture is major factor in the performance of the employee. In recent years due to need for product innovation, new strategy and workforce diversity. Organizational culture has been seen as a major effect on how the organization will perform. It should be noted for all the retention strategy discussed in this report to be effective a proper culture (one that is not rigid) must be adopted. As organizations race to outwit the other and get the best personnel they must understand they must understand that these employees will need a place where they feel comfortable and where they feel most. Although some of the retention strategies may be expensive, the cost of losing employees is said to be five times their salaries and so a little investment in human resource can go along way in attain the organization goal through retaining them.