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Organizational Culture Change Effectiveness

Conference Paper · November 2013

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 Organizational Culture Change Effectiveness.
Prof. Dr. Fendy Suhariadi., MT. Psi.
Psychology Faculty – Airlangga University

ABSTRACT

Organizational culture on this paper refers to a system consist of values, beliefs and
habits that exist in the organization and interact with the formal structure in order
resulting behavior norms in organization (Suhariadi, 2002). Every organization
always as a part of social system, which it means changing in organizational culture is
always happened. That change can be because of interaction between organization
and external environment, this situation also happened in Airlangga University.
Airlangga University established since 1954, in which until 2006 still using
bureaucratic organizational culture because of Indonesian’s government asked for
that. However, on September 2006 through the government’s regulation number
30/2006 about State-Owned Legal Entity (Badan Hukum Milik Negara), which brings
significant changing in Airlangga University. This changing gives greater autonomy to
the university to manage their self, such as in managing academic, financial, human
resources and also their students. Moreover, this changing also has an impact to the
changing in organizational culture, which is from the bureaucratic culture to the
more corporate culture.

The author provides experiential learning paper, which it means based on author’s
experience in term of guarding organizational culture change in Airlangga University
this paper is using qualitative method. Moreover, related to the data collection this
paper using participative observation, then case study and also phenomenology
approach as a data analysis techniques. In the early 2007, there are changing in the
managing university in term of achieving university’s vision and missions, which are
independent university, innovative, leading both in national and international level,
pioneer in science development, technology, humanity and art based on religion
moral. In other words, organization culture value in which trying to develop on this
university is “excellence with morality”.

There are some fundamental changes in Airlangga university, first is restructuring

organization into corporate model, it can be seen from several positions which are
new, such as directorate and sub directorate. Main task and function also has been
adjusted based on organization challenges, and also focused on some problems that
need to solve immediately. Next, second change is can be seen from how university
decide the top level managers in the university, which is when doing selection and
redundancy based on competency in order to see the top level manager’s abilities
track record, performances and also the candidate’s vision and missions. Third
change is related to the determining performance targets for every faculty or units,
and then all these targets are evaluated annually. Implementation of this system of
course followed by the implementation of reward and penalty system as a
consequence.
According to Bass & Avolio (1993), organizational culture change can be realized if
controlled by the leaders who have vision in order to make organizational culture
transformation success and effectively. In every step of organizational culture
change, transformative leaders always controlled and also proactive in each step
especially if there is a problem can be solved immediately and stay on organization’s
vision. At this situation, demand for the leader’s commitment in every operational
form could be as prominent requirement for the successful organizational culture
change (Allen & Mayer, 1991).

As a result of organizational change culture, Airlangga University has been reached

greater achievement such as significant increase in university rank such as QS-World
University Ranking and Web-o-metric, both in world, regional and also national level.
In 2011, Airlangga University reached rank 86 at the Top 200 Asian University
Ranking, rank 466 at the World’s Top University based on QS-WUR, and also at the
rank 4 in higher education in Indonesia.

A. BACKGROUND

In September 2006, Airlangga University received new status from Indonesian

Government, through Government’s Regulation Number 30 in 2006, Airlangga
University has been changed into State-owned legal entity. As state-owned legal
entity university, main principal for the Airlangga University are independency and
morality (according to articles number 6, Government’s regulation number 30/
2006), independency means autonomy in managing academic, financial, human
resources management things, and all assets that Airlangga University have. Before
getting this status, all about managing assets in Airlangga University handling by
ministry of culture and education, in other words every little things about managing
assets in Airlangga University should be discussed and consolidated with ministry of
culture and education first.

The most challenging in changing management and takes longer time is changing in
human resources management practices, especially related to the work paradigm.
Previously, when this university as a state university many employees working as
government’s civil servants, in which in their working live never shown a high
performance and motivation. It can be seen from University performance as a
whole, which is at this period Airlangga University never reach world’s class
university ranking. Because, employees working in the standard way and trapped
into their routine daily activity and also less challenging working climate.

However, since the Airlangga University changing into state-owned legal entity
status, there is significant change happened which is from bureaucratic like
university to corporate like university, as a consequences in order to manage their
human resources, Airlangga university adopt competency and performance based. In
other words, every employee should have their performance indicator, to see
whether they do their work successful or not. This approach assumed that if the
employees have good performance it will be giving impact to the their unit’s
performance and at the end of the day will also giving impact to the university’s
performance. But, changing into this situation is not easy et al, because previous
organization culture, which is bureaucratic culture already strong influenced in
working activities. There are several basic human resources management practices
should be changed such as recruitment and selection, organization structure, reward
and punishment system and also human resources development. Moreover, in term
of achieving this changing, university should have great leadership, which is different
style of leadership with previous culture.

Thus, after discussing about the background of this paper, there are several question
asked, first how the Airlangga University can change their working paradigm? What
kind of practices they already did to make it successful? , Another question is,
related to the leadership issues, because the success of changing also influenced by
a leader, thus what kind of leadership style can be successful bring university to this
changing?

B. THEORETICAL BACKGROUND

In term of discussing the changing in Airlangga University, this paper will refer to the
two theories, first related to the organizational culture, and what kind of culture
adopt in Airlangga University, and secondly related to the changing itself, in which
author choosing Lewin’s change theory as a background. In organizational culture
theory, Hofstede (1997 cited by Yuwono et al, 2005) described that culture in
organization is refer to the collective phenomena, in other words culture is believed
together with people in same place in which that culture to be learned. Hofstede
also explained that culture is the collective mental program in which can make one
group are different with the other group. Moreover, Robbins (2007) explained
organizational culture as a shared meaning in every member in organization, in
which makes organization different with other. Another explanation given by Schein
(2010), according to Schein, organizational culture as set of value system, beliefs and
assumptions, and norm that already applied for longer time, agreed, and followed by
organization’s members as guidance for the member in every aspects of behavior or
problem solving in organization, and adapting both in internal and external
environment. Thus, based on all of explanations above, on this paper organization
culture is a system in which consist of values, beliefs and habits that interact with
formal structure resulting behavior norms in organization (Fendy, 2002).

In Airlangga University context, the culture adopted by this organization is

“excellence with morality”. Main principal on this culture is every layer in
management and employees doing their tasks and functions should be perform
excellently, but all of these excellence performances should be based on morality
values. In general, there are several key values that directing individual and
organizational behavior which are (Draft of Airlangga University Strategic Plan,
2011): (1.) Religious values; (2.) Noble Academic and Profession Ethics, (3.) Integrity,
Critically Thinking, and Honorable, (4.) Independent, Intentions and Innovative, (5.)
Having commitment in humanity values and truth. All of these culture is the new
culture on this university, before that the university does not has any stated culture
both in writing and applying in individual and organizational behavior.

Previously, before having state-owned legal entity status, in term of managing their
human resources the university using Law of staffing in Republic of Indonesia
number 8 year 1974 as a basis. At this system, all about individual and organizational
behavior rigidly ruled by government, then all of behavior occurs is so bureaucratic
and rigid. The staffing models are using hierarchy and strict command and control.
This situation creates consequences that organizational behavior cannot stimulate
excellence performance because of less motivate people to bring their creativity to
their job and adapting changing in organization.

Next, we will discuss about changing theory itself, on this paper the author using
basic assumption of changing from Lewin’s theory in which commonly called as a
“force-field models”. According to Lewin, changing in organization occurred because
of pressure from the outside of organization to the every person, group in the
organization itself. All of these pressures occurred in term of making organization
strengthen in order to adapt with external environment. There are three steps in this
approach, in which all of steps explained how changing happened in organization
from beginning, until how to make sure that changing already happened. In the
changing process involves activities about how to learn something new, and at the
same time learning about how to stop current behavior and attitude in which
undesirable for the organization. These three steps are:

1. Unfreezing, this is a beginning process in changing organization, start with

creating member’s motivation to change. At this step, the situations occur
are directed to move into desirable situation. This step is intentionally
creating by leader because of need to change in organization to the better
situation. The need of change itself should be covering every layer in
organization both from top levels manager to operational level. As a
consequences on this step is there is disequilibrium between part of
organization who want to change and part of organization who resistance to
change. This situation creates uncertainty and sometimes also creates
tensions within organization’s members.

2. Changing, (or it can be said as step in which learning about new concept,
new meaning for the old concept and new appraisal standard). At this step,
desire changes are occurred in organization. People in organization can
understand why organization needs to change. Moreover, a new systems and
rules are applied on this step, and every people start to adaptation to this
new situation. In order to create same perceptions about new systems and
rules, there are some activities to support this changing, such as socialization
about new system and rules and also training to the employees.

3. Refreezing, or it can be said as process of internalization of new concepts,

new meanings and new standards of the organization (Refreezing of the
values of organization). At this step drive power to create changing are
stronger than power whom resist to change. Every people on this step
starting to have new motivation because of uncertainty and obscurity are
disappeared. People in organization start to accept changing. Leader should
be doing this step through managing organization system and groups
dynamic with desirable changing in organization. However, the stabilization
of this situation is not automatically happened, in other words a leader
should be driving employees to create desirable change. If this desirable
 situation achieved, thus this situation should be maintained through new
regulations or rules, new compensation system, and another new practices of
managing organization. As a consequences amount of people who resist to
change will decrease and conversely amount of people who support to
change will increase.

C. RESEARCH METHOD

This paper is using qualitative approach through experiential learning in term of the
author guiding organizational culture change in Airlangga University. Data collection
method is being used on this paper is participative observation and unstructured
interview with decision maker in Airlangga University, such as Head of Academic
Senate, Rector, Vices Rector and also board of director in University which include
director of academic and student, and also director of financial. Moreover, related to
the analysis method, this paper is using case study analysis and phenomenology.

D. RESEARCH RESULT

From early 2007, system of managing organization has been done to achieve
university’s vision: to be university which independent, innovative, well-known in
national and international level, pioneer of: science development, technology,
humanities and art based on moral of religion. In general, there are two changes in
Airlangga University. The first changing is done on system of university management
(hardware) which is applied on organizational structure change, and followed by the
change of recruitment and selection system, and coordination between job roles. In
addition on the first change, new units are formed to accommodate several
university activities to overcome environmental demands as the ability of Airlangga
University to adapt. The second change is done on behaviors and cultures of the
officers (software). In this change, behavior regulation and ethic in campus are
formed. This change process needs a strong leadership competency in order to
maintain the change process according to what have been planned before.

a. Organizational Change

The most fundamental change is organizational change. When the status of

Airlangga University was public university, rector position on organizational
management is really central, have a full power and furthermore rector works
without any supervision. Rector conducts a function of executive who run the
organization according to the plan. On the other hand, rector also conducts a
function of legislative, as head of senate: making and supervising the rules of
organizational management.

This kind of organization is not healthy. There are several reason for this: rector is
only supervise by Indonesian minister of education, rector is chosen by the senate of
academic which the leader is the rector itself, and rector is chosen by voting not
based on its competency.
Conducting his/her duty, rector is help by three vise rectors. The first vice rector
responsibility is to manage education and academic issues at university. The second
vice rector is responsible to manage university’s resources include human, asset and
financial resources. The third vice rector responsible manages university’s students
and alumni. Managerial wise, there are three heads of bureaus below rector
position: academic and educational bureaus, general and financial bureaus, and
planning and system information bureaus. Below the head of these bureaus, there
are head of departments which is according to nomenclature of National Ministry of
Education. Recruitment and selection for each rank role is made according to job
rank as it is ruled on Airlangga University list of job rank (Daftar Urutan Kepangkatan
(DUK)). Selection method that had happened is not according to candidate
competency or performance, but more toward job rank of the candidate.

On the faculty as unit level of university, structure of organization is made as it is on

the university level. Dean is help by three vice deans, and their job is similar with the
vice rectors. Dean is chosen based on majority voters of senate on faculty level. Vice
deans are chosen according to the suitability with the dean. This system of
recruitment and selection is worse compare to recruitment and selection based on
competency or performance because dean and vice deans are chosen by faculty
senate, therefore it is common that the direction of university and faculty are not
well integrated. Performance of the dean is supervise by faculty senate and rector
performance is supervised by senate on university level, this condition could creates
the poorly integration between faculty goals and university goals.

University as a system of organization becomes unbalance because rector and the

set of structures on the university level have a strategy and a way of managing that
are not the integrated with dean and the set of structures on the faculty level. Based
on this condition after Airlangga University becomes state-owned legal entity (Badan
Hukum Milik Negara (BHMN)), those systems were changed. There are several forms
of change:

1. On the university structure, commissaries (or Majelis Wali Amanah herafter will
be called MWA) is formed which its members are Minister of culture and
education, Academic Senate, Rector, Lecturer representative, Educational
employee representative. MWA consist of 21 people, the leader is Mr. Sudi
Silalahi (Minister of Secretary Cabinet, Indonesian Republic). The duties of MWA
are (according to PP No.30/2006 Article 17):

i. to determine the general policy to manage university

ii. to design and determine university budgeting and its changing

iii. to authorize strategic planning, work planning and yearly budgeting

iv. to ask academic senate to conduct a selection of rector candidates

v. to choose and to employ and to unemploy rector

vi. to employ and to ston employment of the head, the secretart and the
members of auditor board.
 vii. to authorize the member and the head of academic senate

viii. to conduct supervisory and general control of university management

ix. to evaluate university yearly performance

x. to evaluate the end repot of rector, academic senate and auditor board.

xi. to ensure the fulfillment of university funding according to the law

xii. to overcome university problem, include financial problem which could not
be solved by the others smaller level of university organization.

The duties of Auditor Board are (according to PP No.30/2006, article 20):

i. To determine university’ internal and external audit policies of the non

academic aspect.

ii. To evaluate the result of university internal and external auditory

iii. To make a decision toward the result of university internal and external
auditory.

iv. To recommend some consideration and suggestion about non academic

aspect to the MWA.

The duties of academic senate are (according to PP No. 30/2006, article 22):

i. To formulate academic’ norm and ethic; and to supervise its

implementation.

ii. To give a recommendation about punishment toward the violator of norm

and ethic to the rector.

iii. To establish policies about academic freedom, academic pulpit freedom, and
scientific autonomy.

iv. To give advice to the MWA about rector’s performance evaluation on the
implementation of academic policies.

v. To give consideration to MWA about strategic planning, work planning and

yearly budgeting.

vi. To determine the member of MWA which represents academic’s senate and
community representative.

vii. To determine policy about academic’s position and to authorize professor

position.

viii. To formulate policies about research, service toward society and to

supervise its implementation.

ix. To formulate policy of giving and revoking academics title and award.
 After the element of MWA, Academic senate and Auditor Board are determined, the
element of university which is lead by rector. Their duties are (according to PP
No.30/2006, article 24):

i. To lead the implementation of education management, research

management and community service management as it is according to
university’s vision and mission.

ii. To arrange strategic planning, work planning and yearly budgeting of the
university

iii. To conduct coaching toward lecturers, academic staffs and students

iv. To develop relationship between government, business world, alumni and

society in general.

v. To develop international cooperation with foreign governments,

international institution and bossiness world

vi. To employ and to stop the employment of vice rector, dean, vice dean,
director, the head and the leader of smaller organizations within university.

vii. To submit yearly report and report on the end of work period to MWA about
university’s management.

viii. Together with the MWA designs university’s yearly report which will be
submitted to the minister.

ix. To determine carrier position, and to employ and to stop the employment of
lecturer and academic staff.

x. To determine whether to accept or not to accept students.

xi. To authorize and to revoke academic title from the university.

According to the duties above, fundamental change will emerges on the university
managing system. In these conditions above, rector do not have absolute power
anymore because rector’s performance has to be in control of MWA, and have to be
coordinated with academic’s senate. Moreover, rector also supervised by auditor
board.

2. Inside the structure of university

As what has mentioned above, in the end rector back to the executive role and do
not cross over the roles of judicative and legislative, which makes rector focus more
toward executive activities. Therefore, organizational wise rector manage the
structure of organization in by creating several element as it is declared on PP
No.30/2006, article 14, verse 3 and 4. As it is mentioned below:

Verse 1, University’s organization consist of:

a. University element
 b. University executor element

c. University supporting element

d. Others elements which determine based on university needs.

Verse 3. The element of university executor, consist of:

a. Planning and development department

b. Internal auditor

c. Center of quality assurance

d. Faculty

Verse 4. The element of university support, consist of:

a. Directorate

b. Library

c. Institution

All of elements that have been mention above are formed and authorized to conduct
their function as it is determined on PP No. 20/2006 article 32 until article 37. All off
the element are directly responsible toward rector.

3. Recruitment and selection system

Although systematically as an organization Airlangga University has been changed

both from top level management to operational level, but principally in term of
managing human resources especially about choosing people to fill some positions
are not because of the employee’s level or status but more based on needs,
competency and also performance. Start from determining rector to lowest level
managerial and operational, in order to select people based on competency this
University always using instrument of selection such as psychological and
competency test.

For the Rector’s position, after following the selection process, which is long process
then election process continued to the MWA. But, for several positions such as vice
rector, dean, vice dean, director and head or secretary of unit or applied unit in
Airlangga University, all of those position elected by Rector based on the result of
psychological and competency test. Rector, directly choose from the number of
nominee in every position through interview process, which is doing by the Rector
itself as a “user”. As mentioned by Boyatzis (1982) said that the selection process in
which based on competency and performance will lead to excellence people in doing
job and fit with what organization needs or common called as “person-organization
fit”.
B. Organization Culture Change

Basically, Airlangga University management has been changed, but the most
important thing is how to change the behavior of people in organization, in which
from bureaucratic culture that usually difficult to adapt with external environment
to corporate like culture in which can be said more flexible in term of adapting
external environment change. Organization culture change can be faster if there is a
leader who can stimulate the change itself, especially lead to Indonesian people’s
characteristics who have high power distance and high collectivity (Hofstede et al,
2010).

Organization culture change in Airlangga University happened faster than it

predicted before if there is a leader who have visions and control the change itself,
then the transformation process in culture change can be done effectively (Bass and
Avolio, 1990). In every steps of culture change in organization, transformative leader
can control and responsive if there is special case or problem and also ensuring that
this problem can be solved based on new vision of the organization. At this situation,
the leader commitment to the change process is required to make culture change in
organization works and success (Allen and Mayer, 1994).

As already mentioned by Suhariadi (2007) according to Skinner who explained that in

term of shaping individual behavior should be through external factors such as
through reinforcement or punishment. Shaping the behavior through reinforcement,
according to Skinner is relatively permanent in changing individual behavior. On the
contrary, based needs theory, Maslow proposed that in order to shape individual
behavior, organization have to understand what actually their members needed.
But, because of every person have their different needs, then how to shape their
behavior should be considering individually persons by persons. Fishbein and Ajzen
(2004) stated that shaping and changing individual behavior should be creating trust
from the other to the objects first, then changed behavior will occur. This trust lead
to influenced person to trust with those objects. Then, attitude to the objects will
create person intention to do something. Finally, this intention can be seen as covert
behavior of person in organization.

Moreover, Suhariadi (2007) also explained that there are two models in change,
which are top-down models and bottom-up models. Skinnerian approach more
stressed on top-down models, in which pay more attention in leader’s role in doing
changing in organization. The most important thing in leader’s roles is how the
leader describe to their members about the organization values that members
should have and how to make it relatively permanent. In every chance interaction
with their member, leader should communicate those new values in organization. At
the same time, leader’s behavior should be reflect those new values, to make it
consistent and members can understand and trust to the university with these new
values. Another leader’s role in which very important is commitment. Commitment
here refers to broad meaning, because not only related to the tangible things but
also intangible things. The demands on leader’s commitment not only just because
as a mandatory for the organization, but leader should reflect their behavior that
university is the most important in the leader’s life in order to achieve University
goals. At this point, leaders not only reflect new values on its behavior or attitude,
but the leader should also show his/her effort seriously even if the leader should
sacrificing its time, energy and cost.

Suhariadi (2007) also pointed the reason about culture in Indonesia context have
high power distance. Compare with Anglo-saxon’s culture, leader in Indonesia
context is play important roles in organization. Leader in high power distance culture
such as Indonesia not only about privileges but also as a role models for their
subordinate. Thus, Integrity can be as a crucial issue here, consistency between
organization’s values and leadership behavior is the crucial thing as well.

C. Successful Culture Change

Organization culture change that happened in Airlangga University recently, leads to

reach some achievements. One of proudest achievement that achieved by this
University is significant increase in world rank university, both in QS-World
University Ranking and Web-o-metric. On 2011, Airlangga University achieved rank
number 86 from Top 200 Asian University Ranking, and rank number 466 at World’s
Top University conducted by QS-WUR, or in national rank Airlangga University at the
number 4 in Indonesia (based on Airlangga University Self Evaluation, 2010).

Officially, this achievement already announced by Rector of Airlangga University in

graduation ceremony in undergraduate, postgraduate and doctoral program at
March, 31st and April 1st 2012. Furthermore, Rector also conveyed that this year
Airlangga University achieved the best of three Universities in Indonesia, slightly
below University of Indonesia and Gadjah Mada University, in which these two
Universities are older than Airlangga University. Moreover, to ensure its quality,
Airlangga University is the only one University in Indonesia who has three
certification from external auditor, which are ISO 9002, IWA-2 and Malcolm
Baldridge. Especially in Malcolm Baldridge, Airlangga University reached 526,6 point,
it means Airlangga University at the step industrialist. These achievements achieved
by Airlangga University because of this University applied standardization of
management process, this process is to ensure its quality through AIMS
(abbreviation from Airlangga Integrated Management System). Through AIMS all of
management aspects in University which are consist of academic, financial, student,
human resources, information system and managing assets ruled in order to
determine its quality from policies to practices.

According to the Rector of Airlangga University, this achievement in excellence

performance because of new status in Airlangga University which is state-owned
legal entity that makes University more independent and autonomous in term of
managing their resources.

E. SUMMARY

In summary, in order to adapt with external environment and facing challenges in

higher education, and also because of new regulation in higher education in
Indonesia, Airlangga University should be change. Changing here not only about
managerial things such as academic, finance, human resources and student but also
changing their organization’s culture as well. Here, since Airlangga University has
new status as state-owned legal university, there are significant changing both in
management and culture. In management for example it can be seen from the
practices in recruitment and selection, performance management, and so on and so
forth. In cultural change, Airlangga University has been changed from bureaucratic
culture to corporate culture like organization. In other words, first more rigid in
employment and less motivated, but latter stressed on competency and
performance not only in top level management but also in operational level. All of
these change cannot be done if there is no transformative leader who guiding these
change and make it successful, like happened in Airlangga University which reach
some prestige ache

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1. Undang Undang Pokok kepegawaian Republik Indonesia Nomor 8 tahun 1974

2. Peraturan Pemerintah Republik Indonesia Nomor. 30 Tahun 2006 tentang
penetapan Universitas Airlangga sebagai Badan Hukum Milik Negara
3. Draft Rencana Strategis Unair, 2012-2017
4. Laporan Evaluasi Diri Universitas Airlangga tahun 2010
5. Laporan Evaluasi Diri Universitas Airlangga tahun 2011

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