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Organizational Culture: Banking Industry In Pakistan

4826 words (19 pages) Essay in Management

20/04/17 Management Reference this

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It has been long time since managers are becoming aware of the phenomena of organizational culture. Several studies have been conducted in this regard explaining different types of cultures and the ways that an organizational culture can affect an organization itself and its impact on other employee-related variables such as satisfaction, commitment, cohesion and performance etc. In today’s corporate environment, organizational culture is considered as a powerful tool to represent various aspect of an organization and also determines the functioning of the business. Various researchers have concluded that culture of an organization not only display, guide and change but also can contribute by influencing the performance of organization.

Despite the fact there is a considerable literature on the topic of organizational culture and job satisfaction in several countries but there is very little of it regarding banking especially in Pakistan. We were not able to find out any of the published data on job satisfaction in context of organizational culture regarding banking industry in Pakistan.

Background

Organizational Culture

In management of human resources organizational culture is considered as center and all other factors are derived from it. It is because that culture can influence individuals’ behavior related to organizational outcomes like commitment, satisfaction, morale and motivation. Employees’ job performance and outcomes like job satisfaction, turnover intentions and job involvement depends upon congruency and match among employees’ characteristics and culture of organization.

Concept of organizational culture is quite old and has gained a significant importance in the business world. This concept merged as cornerstone variable in 1980s when managers realized the fact that culture has substantial effect on their employee’s satisfaction and performance of the organization as well. Culture usually comprises of shared thoughts and meanings that are held by the members of an organization and these can vary from organization to organization to organization. Organizational culture if considered as system comprises of various characteristics valued by the organization. Accumulation of beliefs, rituals, values and assumptions shared by the members can be thought of as culture. Culture is also expressed by three very popular W’s i.e. what is done, how it is done and who is doing it. Organizational culture also controls how organizational members interact with each other and outside the organization.

Organizations are considered as separate legal entities just like human beings as a person has personality, organization has culture.

Job Satisfaction

When we come to discuss job satisfaction first thing that come into mind is the monetary benefits of a job. We think that a worker satisfied with monetary aspects of his is a complete satisfied worker but it’s not completely true. There are various and definite non-monetary aspects of one’s job and as much as important as monetary aspects.

Concept of Job satisfaction is also a multidimensional concept like culture. Importance of this concept become obvious as it is not only a topic of concern for management sciences but also investigated by psychology, economics and sociology. Experts of these disciplines believe that level of job satisfaction influence work effort, productivity, employee absenteeism, turnover intentions and behavior of labor markets. Employees with higher level of job satisfaction will be more willing to work efficiently and effectively with less intention to quit. A strong direct relationship is found between job satisfaction and commitment with work (Benkhoff, 1997). Employees with lower satisfaction or dissatisfaction at work will be less loyal and committed with organization and they will more likely to leave to avail some other opportunities. In case other opportunities are not available in the market as it’s the case in most of economies, employees may pullout mentally or emotionally. An organization with dissatisfied, less motivated and less committed workers would never be able to achieve its long term corporate objectives. Such consequences justify that job satisfaction of employees should be dealt very carefully especially in banking sector.

Banking Sector

Banking sector of Pakistan is the one of largest and growing sector in the country. This sector is considered to be very strict and prudent in its working practices. Banking industry in our country operates under strict authority and regulations of SBP that’s why it is most organized and well-functioning sector. Despite the fact of financial meltdown in 2008, banking industry of Pakistan remained stable and performed well.

In a world of global competition no sector of an economy is problem free, banking sector also faces many problems. Loyalty of employees and customers has always been major issues of this sector. A general phenomenon states that banks perform well if other sectors of economy are performing well because banks deal with public’s money. Energy crisis and war on terror have leaded each sector of economy to crisis. Quest for alternative energy sources have drained the profits of most businesses. Number of competitors have increased to such extent that bankers struggles a lot to retain their customers. In order to achieve corporate targets in such a competitive environment bankers sometimes drive their employees beyond their abilities. Such actions may lead employees to job frustration and burnout.

Definitions

Employee Attitude

Attitude in general is a way of expressing favor or disfavor toward someone or something. When people work in an organization, perceptions and attitudes are developed about organization, their jobs and their careers. Job Satisfaction is most important and fundamental attitude from research and practice perspective (Judge, 2004).

Attitudes are evaluative or judgmental statements about people, objects or events (Stephen P. Robbins, 2009). Attitudes are reflection of our feelings about something. When some says, “He likes his job”, he is expressing his attitude about job. Attitudes are expressed very simply like favoring or disfavoring but underlying reasons behind an attitude might not be simple.

Attitudes comprises of three components (Breckler, 1984) – cognitive, affective and behavioral component.

Cognitive- Formulation of belief or description in mind about something

Affective- On the basis of beliefs and description in mind development of emotions and feelings, which are expressed

Behavioral- Emotions and feeling lead individuals to certain behavior about something

One can have hundreds of attitudes about different aspects of his life, but there are three main job attitudes – Job Satisfaction, Job Involvement, and Organizational Commitment (Brooke Jr., Russell, & Price, 1988). These variables are discussed in literature review in detail.

Job Satisfaction

Job satisfaction can be defined as positive and enjoyable feelings and emotions resulted from job experiences.

Attitude of employees toward their organizations, work colleagues, their jobs and other psychological factors of organizational environment considered as Job Satisfaction (Beer, 1964). Favorable or positive attitude towards these factors can indicate Job Satisfaction, while disfavor will lead to dissatisfaction.

Organizational Culture

A system of shared thoughts and meanings held by organizational members is known as organizational culture and it can vary from organization to organization (Stephen P. Robbins, 2009). Culture can be characterized by seven primary components,

Creativity and Risk taking – whether employees encouraged to be risk takers and creative.

Attention to Detail -extent to which attention is paid to accuracy, analysis and details.

Outcome Oriented -whether focus of the management only targets and results or necessary attention is also given to processes and techniques.

People Oriented -extent to which all stake holders are taken into account while making decisions.

Team Oriented -extent to which organization is focused on team orientation.

Aggressiveness -focus from competition to easy going

Stability -extent to which attention is given to being stable rather than growing and exposing itself to new threats

Problem Statement

Our research is about determining the relationship between organizational culture and job satisfaction. We will identify whether cause and effect relationship exist between these two variables. Here organizational culture will be considered as independent variable and job satisfaction as dependent variable.

We will identify how much level of job satisfaction varies across different culture types. In this study we have categorized four types of organizational culture- Clan Culture, Market Culture, Adhocracy Culture, Hierarchy Culture. We combined these cultures into two groups on the basis of some common dimensions. These groups are named as Organic Culture (clan and adhocracy) and Mechanistic Culture (hierarchy and market). For the purpose of research we have developed following hypotheses which are as follows,

Hypothesis

H0: There is a significant relationship between organizational culture and job satisfaction in baking industry of Pakistan.

H2: Employees in organic culture (clan & adhocracy) have high level of job satisfaction than in mechanistic culture (hierarchy & market).

H3: Employees in the mechanistic culture (hierarchy & market) have high level of job satisfaction than in organic culture (clan & adhocracy).

Research Objectives

Through this research we have intended to achieve following objectives,

To have information about bank employees’ perception regarding Organization Culture and its influence to Job Satisfaction

To have information regarding bank employees’ perception about Job Satisfaction.

Determining the relationship between the organizational culture dimensions and job satisfaction among employees.

Identifying the most dominant culture type among banking industry of Pakistan.

Identifying which culture contributes most to job satisfaction among bank employees.

Significance of Study

Although many previous researchers have discussed job satisfaction of bank employees independently but no work has been done on studying job satisfaction in relation to organizational culture.

This study will help to understand the importance of organizational culture and how it is impacting the employees’ job satisfaction and their commitment in banking sector of Pakistan.

This study will help to measure the extent to which job satisfaction level varies among various cultural types.

This study will form a baseline in understanding banking industry culture in Pakistan.

This study will help real time bankers to identify the problems prevailing in banking culture in order to enhance employee satisfaction and thus productivity in turn.

Limitations

Researchers always have to make certain assumptions while conducting a research irrespective the level of research and availability of sources. Every research has certain limitations as well. We have tried our best to make this research definite but we have to make certain assumption and there were certain limitations.

Experimenting or researching on sample size always has been limitation for researchers.

As we tried to define cause-and-effect relationship between Organizational culture and Job Satisfaction, so we just assumed that only organizational culture is affecting job satisfaction. Although there would be other variables that may have effect on job satisfaction, but it was not possible for us to take into account all such variables, because it could lead to more complications to our research.

Chapter 2 (Literature Review)

Introduction:

We have reviewed the previous research articles, publications and thesis related to our thesis topic “influence of organizational culture on job satisfaction”. Most of the research work we reviewed belongs to foreign countries; we found very little work done in this context in our local business environment. Remarkable work has been done internationally because this issue has gained importance due to its sensitivity as ineffective organizational culture effects the employees of that specific organization and which in turn affect their performance as well.

By reviewing the past literature we have tried to determine how the culture of an organization can have impact on the job satisfaction of its employees. As our research is specifically related to banking sector of Pakistan, in our research we will try to find out the cultural type dominant in banking organizations and its impact on job satisfaction.

Organizational Culture

Culture can be referred as inquiry in understanding phenomenon of social order. Culture is a fundamental concept which can explain patterns of life in a society. All organizations have culture just like all people have personality. A culture is a persistent and patterned way of thinking about tasks of human and their relationship within an organization (Benedict, 1934).

Culture is a system of values, beliefs, social ideas, rituals and customs shared by organizational members whether consciously or unconsciously. Beliefs and values are better explained by symbolic term such as myths, rituals, legends, specialized languages and jargons.

Organizational Culture is one of most difficult attribute that can be changed (Schein, 2004). Schein described three levels of culture. The term level can be described as the extent to which phenomenon of culture is visible to observer. Although many other researchers don’t differentiate the culture to such level this leads to confusion that surrounds most of the culture definitions. Levels of culture defined by Schein ranges from the very clear manifestations observable by everyone to basic assumptions lies in the mind unconsciously. These basic assumptions are very essence in development of a culture.

Levels of Culture

Behavior of individuals and organizations as well can be affected by different kinds and levels of cultures. Religious or Hemisphere eastern culture can be the example at macro or global level, which can be the highest level of culture. National cultures like Indian or Pakistani Culture, ethnic cultures like Punjabi or Sindhi culture can be considered as second highest level of culture. However cultures can be divided on gender basis (men and women have different perceptions about life and world), on occupational basis like banking culture, on socio-economic basis like cultures of rich and poor people. Irrespective the level each culture has its own unique characteristics reflected by feelings, values, symbols and languages. As compared to the level of global culture or a culture of a country organizational culture can be thought of least broad and complex. However organizational culture is also very broad and complex in itself and our study is focused on exploring the complexities of this culture. Organizational culture is a composite of prevailing styles of leadership and management, routines, procedures, customs, how thing are value and how success is defined. Organizational culture has three levels from very visible to very tacit and invisible (Schein, 2004), which are as follows,

Artifacts

First level of organizational culture is most manifest and easiest to observe. Artifacts are what you can see, hear and feel in organizational environment. It consist of physical and social aspects of the organization which includes architecture, technology, office layout, manners of dress, visible interactions among staff members and outsiders as well. Even organization’s vision, mission statements, slogans and other important creeds are part of artifacts. Products of an organization, its technology, rituals, customs, ceremonial events, stories and myths popular about organization are also included in artifacts (Schein, 2004).

Espoused Value

Second level in an organizational culture explains the behavioral pattern in the first level. When any culture is observed at this much deeper level, underlying logics and rationales of behaviors and other artifacts expressed explicitly can be understood. Most of the customs and standardized procedures are proposals or ideas given by some early members of organization. Successfulness of these proposals and ideas made them beliefs. Consulting and interviewing senior organizational members about clearly manifested artifacts would enable someone to understand espoused values behind these artifacts (Schein, 2004).

Shared Tacit Assumption

Deepest level of organizational culture is shared tacit assumptions as it is related with the unconsciousness. Espoused or underlying values with the passage of time are transferred to unconscious level and members start to consider them as for granted and known as underlying basic assumptions. These assumptions are most difficult thing to change or relearn in a culture. These assumptions are unseen and unidentifiable for most of the organizational members in their routine work and interactions (Schein, 2004).

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These were different levels of culture when we observe any organization as a whole, however within the organization different functional units, departments, specialized teams and product development groups that may have their own unique attributes. Sometimes these functional units face problems while interacting and coordinating with each other which can be the result of cultural differentiation. Every department in the organization is given targets and goals to achieve within a specific time sometime these targets also create conflicts of interest within departments. It is most common to hear that manufacturing and marketing department of an organization have conflict on certain issues or aggressive headed human resource department is eager to put down the white collars of research and development unit. It is because, with the passage of time each department develop its own way of getting things done and their values, perception also changes slightly. Some of the times such conflicts and differences increases to such a level that organization fails to achieve their goals. However it’s not of our primary interest to assess the cultural difference among different departments but such differences leads to ineffective coordination among individuals of different units resulting in frustration and dissatisfaction. Emphasize on reducing such cultural differences can foster the organization as unit.

An organization can be regarded as hologram in which every part of the picture is a composite of its own unique attributes and attributes of whole image. Similarly each unit’s culture of an organization is a composite of core attributes of organization’s culture in addition to its own unique values and attributes. Some researchers proposed that whole organization’s culture can be assessed by identifying each unit’s culture separately and then finding out their common values and attributes. Aggregate of these common values and attributes will provide an idea of overall organizational culture. In our research we will not focus on sub cultures, we will assess organizations as a whole.

Diagnosing Organizational Culture

Organizational culture has profound effect on organizational performance, scholars spent decades on experimental research in order to proof this correlation. In past managers believed that culture is difficult to change and it has nothing to do with the organizational performance. They were not able to recognize that congruency between organizational culture and employee traits could be an edge over their competitors. Think of Apple Incorporation twelve years ago they were in great chaos, but somehow Steve Jobs was able to leverage the culture of creativity. Apple incorporation not only survived, it also gained competitive edge in the market. They invested in new ventures and explored new markets, developed new products became a highly profitable organization. All of this was because of managing and changing culture. However it is not so easy to change, first organization will to understand its prevailing culture carefully.

Culture is a complicated phenomenon as it is formed by composition of artifacts, attitudes, behaviors, shared values, deep assumptions, customs and rituals. Internal interactions and communications, external relations, individuals’ actions are encompassed by the culture to the extent even organizational members are not aware of it. Researchers like (Schein, 2004) agree that organizational culture is grounded to a group of deep assumptions made by the members about the different aspects of the organization and outside the world. Despite the ethical evolution, a common belief in the business world of being selfish unconsciously influences an organization’s dealings with its suppliers, vendors and outside consultants. However it is not outspoken or manifested to organizational members. So the question here is the possibility of assessing the culture accurately. In past it was considered to be impossible or extremely difficult. However practically it’s nearly impossible to consider all components, only dominant attributes are taken into account.

Number useful and practical approaches for assessing and diagnosing organizational culture have been developed by different researchers. These approaches fall under three categories; Behavioral Approach, Competing values approach and Deep Assumptions approach (Cummings & Worley, 2008), these are most practical and valid approaches. Several researchers have used these approaches in their researches.

Behavioral Approach

Behavioral approach provides specific description about task performance and management of relationships within the organization. This approach deals with behaviors practiced in the organization while assessing the culture. It emphasizes on the behavioral patterns that produce results and other key behaviors related with work, hence this approach deals with surface level of the organizational culture. This approach helps to identify and diagnose the risks and threats when top management seeks for major changes in the organization in order to support and implement newly developed strategy. Whenever an organization tries to implement a new strategy which is not according to the old patterns or tends to change old patterns of behavior, there will be great resistance and chance of failure to implementation are more. Behavioral approach helps the managers to identify such risks and their severity. Manager will be able to decide between whether to change the culture for the implementation of new plan or to modify the plan or goal accordingly.

This approach basically deals with artifact defined by (Schein, 2004), which are the physical and social aspect of the organizational environment.

Deep Assumption Approach

Deep assumptions approach as the name suggest deals with the deepest level of the culture not the tangible one. Researchers assessing culture through this approach start with the artifacts the tangible aspect of the culture and goes down deep to basic underlying assumptions. This approach emphasize on sensitive aspects of culture like for granted value, assumptions that form member’s behavior and these assumptions have powerful influence on members unconsciously.

Competing Values Approach

Competing values approach measures organizational culture by using a set of values. This model is based on the idea that organizational culture can be divided into different sets of similar and related attributes. Competing values as suggested by name that related and similar attributes are grouped separately so that the groups formed are contradictory to each other. These grouped attributes are placed on a cline in order to better understand and identify the culture. These groups comprises of internal emphasize to external emphasize, organic process to mechanistic process, innovation to stability and people orientation to task orientation. These competing values are of such type that organizations always have to prefer one against other like focusing internally on operational efficiency instead of aggressive external competition for continued survival. Too much emphasize on one these can result incompetency internally or externally.

As our study is focused on identifying organizational culture in which people have more job satisfaction and for the identification of organizational culture we will use competing values frame work. Therefore Competing Values Approach will be explained briefly here so that we can understand that how this approach is used in our research method.

Measuring Organizational Culture through Competing Values Framework

John Campbell 1974 and his fellow scholars pointed out 30 important attributes of organizational culture (Quinn & Rohrbaugh, 1983). This list is still practical and helps organizations to identify their own culture. With the help of John’s list of cultural attributes and by investigating several other researches Robert Quinn and John Rohrbaugh proposed a model of competing values framework. This frame work is comprised of two dimensions and better explained by a 2×2 matrix.

When we need to assess the dominant culture of an entity, competing values frame work is the helpful due to its easy implementation. Quinn and Rohrbaugh developed this framework in early 80s. This framework is two dimensional, one dimension distinguishes, emphasize on decentralization of authority, power, pliability, enthusiasm and adaptability from control, centralization of power, order and stability. Some businesses became profitable if they are adaptable, ready to change and organic, on the other hand some are better if focused on stability, control and mechanistic. If we draw these dimensions on a line it would range from pliability and versatility on one end to stability and durability on other end. Selecting among these attributes depends on the circumstances in which an origination is operating and what are it goals.

The second dimension distinguishes emphasize, on internal unification, cohesion, integration and internal alliances from emphasize on competition, distinction and external orientation. Some businesses are effective if they develop internal harmony, on other hand some performs better if they focus on competing with the outside world. If these dimensions are drawn on a scale it would range from organizational unity and consonance on one end to organizational independence and versatility on other end.

When these two dimensional lines are brought on a continuum just like X and Y axis, four quadrants are formed. Each of these four quadrants representing a unique mix of attributes forms four cultural types. Following figure demonstrates how these two dimensional line when crosses each other results four quadrants. These dimensions identify what is valued by organizational members, how the success is determined, how good, right and appropriate are defined, how information is processed and what are the core assumptions used for decision making and taking actions Beyer & Cameron, 1997 in (Druckman, Singer, & Van Cott, 1997).

As it is shown in the figure that vertical axis places dynamism, pliability, discretion on one side while stability, control, and durability on the other. Some organizations like who are new entrants will be effective if they are more adaptive, flexible and ready to learn new things while others who are long lasting should emphasize on stability, control and predictability. In the figure horizontal axis places cohesion, internal focus, consonance on one side while versatility, competition and differentiation on the other side. Some businesses became highly effective by focusing on their internal processes e.g. making better quality products or cutting their costs. Competing in the market aggressively and hitting on rivals’ weak areas are better options for some organizations.

Striking thing about dimensions is that they both have competing and opposite values. One end of cline has opposing values than other end -stability versus flexibility and external versus internal. Combination of these values results cultures which are also different from each other. Horizontal and vertical axis having opposite values results into four quadrants which are competing and contradictory to each other. Quadrant formed with the flexibility and internal focus represents the organizational culture known as clan. Combination of flexibility and external focus forms the organizational culture known as adhocracy. Internal focus and stability represents hierarchy culture whereas external focus and stability represents market culture.

Kim Cameron and Robert Quinn (1999) further defined the relationship of these four quadrants formed by the intersection of two dimensional lines, with organizational cultural attributes (Cameron & Quinn, 2006). These quadrants describe what an organization thinks about itself -the best and appropriate way to operate. In actual competing values framework measure, how organizational members perceive their organization as culture lies on perceptions, beliefs and values. Four cultural types stated above are unique in nature and no one can be considered the best, one type may have certain advantages over others in certain circumstances. Objective of our study is to identify the culture type dominant in the banking industry of our country and level of job satisfaction in relation to identified organizational cultures.

Organizational Culture Assessment Instrument

It is a questionnaire type of the instrument used to measure organizational culture. This tool consists of six dimensions and each dimension has four alternative answers, used to access six key dimensions of an organization (Cameron & Freeman, Cutural Congruence, Strength and Type, 1991). Six key dimensions of this instrument are as follows,

1. Dominant Attributes of the Organization

2. Leadership Style

3. Management of Employees

4. Organizational Bonding

5. Strategic Emphases

6. Success Criteria

In our research we have used these dimensions -Dominant Characteristics, Leadership, Glue (Bonding), Strategic Emphasis, Management of Employees and success criteria in order to identify dominant organizational culture types in banks.

Types of Culture

Create (Adhocracy)

This environment encourages the dynamic and innovative working. People are free to take risks for creativity. The persons who are leading the different teams are also pioneers and free to take risks. The people in the organization conduct regular tests and maintain originality; these are the basics for success. Eminence is the main focus. Development and treat of new means is the objective in the long-run. Developing new products and service and make them available is considered as achievement. The enterprise appreciates ingenuity of the individual and promotes the flexibility in environment (Cameron & Freeman, Cutural Congruence, Strength and Type, 1991).

The ideal form of organizing came out when developed countries moved the industrial age in order to get creativity, to information age. This form of organizing provides the most response to hyper turbulent, because most enterprises of

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