MODULE V

ORGANIZATION CULTURE

System of shared assumptions, values, and beliefs, which governs how people
behave in organizations. These shared values have a strong influence on the people in
the organization and dictate how they dress, act, and perform their jobs.
Every organization develops and maintains a unique culture, which provides
guidelines and boundaries for the behaviour of the members of the organization.
• shared values and belief that enable members to understand their roles and the
norms of the organization, including:
• observed behavioral regularities as typified by common language, terminology, and
rituals
• norms, as reflected by things such as the amount of work to be done and the
degree of cooperation between management and employees
• dominant values that the organization advocates and expects participants to share,
such as high product and service quality, low absenteeism, and high efficiency.
 A week culture on the other hand could turn its lack of learned routine to advantages,
whereas a strong culture might feel comfortable and rashly self sufficient when confronting
uncertain situations. the impact of a strong culture on performance is admitted to due to
impetus it lend to employee's commitment and motivation and the consistency of rules and
values for the employee vis a vis the management. particularly if its values hinge on customer
service, innovation, and proactively/ flexibility, action orientation, and HR development.
hence, in order to enable organizational culture contributions to organizational
performance and competence, the following measures are to be carried out:
• Aligning culture with organizational objectives and strategy
• changing culture to drive performance
• engaging employee through culture
• using a positive culture to sustain performance in times of major change
• building trust inside and outside the organization with a positive culture
• developing a culture that respect and celebrates diversity
• assessing culture quickly and simply
• benchmarking culture against excellent and successful organizations
 culture and success

Deal and Kennedy argues that culture is the single most important
factor according for success or failure in organization. they identified four key
dimensions of culture
• values
• heroes
• rites and rituals
• the culture network
FUNCTIONS OF ORGANIZATIONAL CULTURE
• Culture provides a sense of identity to members and increases their
commitment to the organization
• Culture is a sense-making device for organization members
• Culture reinforces the values of the organization
• Culture serves as a control mechanism for shaping behavior
 ORGANIZATION CULTURE FOR HIGHER
PERFORMANCE
• Organization culture is the pattern of shared beliefs, norms and values in an organization that
shape the way people act and interact and strongly influence the ways in which things get
done. from the performance management viewpoint one of the most important
manifestation of organizational culture is management style. this refers to the ways in which
managers behave in managing people and how they exercise authority and use their power.
• performance management has the potential to improve the performance of organization and
act as a lever to achieve cultural changes. A focus on performance can bring real rewards for
an organizations. performance management can be the key space or mechanism for dialogue
in an organization.
• The overall objective of performance management is to develop and improve the
performance of individuals and team and therefore organizations. It is an instrument that can
be used to achieve cultural changes in the shape of the creation of a high performance
culture.
• To support cultural changes by creating a performance culture and reinforcing the values of
the organization with an emphasis on the important of these in getting a balance between
"what "is delivered and "how " it is delivered.
CULTURE FOR SUPERIOR PERFORMANCE / HIGH PERFORMANCE CULTURE

• management defines what it requires in the shape of performance improvement, set

goals for success and monitors performance to ensure that the goal are achieved
• alternative work practices are adopted such as job redesign, autonomous work
teams improvement groups, team briefing and flexible working.
• people know what's expected of them - they understand their goals and
accountabilities
• people feel that their job is worth doing, and there is a strong fit between the job
and their capabilities
• people are empowered to maximize their contribution
• there is strong leadership from the top that engenders a shared belief in the
importance of continuing improvement
• a pool of talents ensure a continuous supply of high performance in key roles
• people are valued and rewarded according to their contributions
• people are involved in developing high- performance practices
 REWARD AND PERFORMANCE

• Reward (particularly economic) for productive work have always been considered
prime motivators of individual efforts and achievements.
• reward management refers to the process of formulation, implementation,
maintenance, and communication of strategic and policies with the purpose of
rewarding people fairly, equitably and consistently in accordance with their relative
contributions to the organization and to help the organization to achieve its objective
• There is nothing new about incentives to motivate workers. F.W Taylor popularized the
use of financial incentives- financial reward paid to workers whose production exceeds
some predetermined standard in the late 1800s. maximizing shareholders value under
conditions of enormous competition and turbulence is a necessity today, and this has
produced a resurgence of interest in financial incentive/ pay for performance plans.
• Creating a performance-based reward culture may seem like an abstract vision for
some. However, many senior executives see it an important tool for achieving success.
That’s because it can unlock employee potential, retain and motivate your high-
performers, and ultimately deliver healthier financial results.
• Performance-based reward is not about management setting up a
system, and employees simply following suit. There are key psychological
and emotional realities that have to be in place. In fact, it’s common for
organisations to ask the right questions and build the right system
without thinking about the ‘human side’ of performance pay. Therefore,
for a performance-driven culture to be successful, it’s important to gauge
the attitude of your employees. In general, employees have to:
I) desire higher pay;
II) have the skills and capabilities to improve performance; and
III) trust their employer to administer the scheme fairly, and pay if they
improve their performance. These become incentives for employees to buy
into a performance-based reward system something seen as essential by
companies who have successfully implemented one.
The key business benefits of performance-based
reward include:
• Clearer goal alignment
• Focused development and career planning
• Increased employee engagement and motivation
• Improved retention
• Greater cost savings
 Maslow's hierarchy of need theory
• physiological needs safety needs
• social needs esteem needs
• self actualization needs
Herzberg two factor theory
• hygiene factor
• motivational factor
 REWARD SYSTEM

• An employee’s compensation, usually referred to as tangible returns,

includes cash compensation (i.e., base pay, cost of living and merit pay,
short-term incentives, and long term incentives) and benefits (i.e., income
protection, work/life focus, tuition reimbursement and allowances).
However, employees also receive intangible returns, also referred to as
relational returns, which include recognition and status, employment
security, challenging work and learning opportunities. A reward system is
the set of mechanisms for distributing both tangible and intangible returns
as part of an employment relationship.
• It should be noted that not all types of returns are directly related to
performance management systems. This is the case because not all types
of returns are allocated based on performance. For example, some
allocations are based on seniority as opposed to performance. Let’s define
the various types of returns next
Base Pay
• Base pay is given to employees in exchange for the work performed. The base pay focuses on the
position and duties performed rather than on an individual’s contribution. Thus the base pay is
usually the same for all employees performing similar duties, and ignores differences across
employees.
Short-term Incentives
• Similar to contingent pay, incentives are allocated on past performance. But incentives are not
added to the base pay, and are only temporary pay adjustments based on the review period (e.g.,
quarterly or annual). So incentives are one-time payments, and this is why they are also referred to
as variable pay.
Long-term incentives
• Whereas short-term incentives usually involve an attempt to motivate performance in the short
term (i.e., quarter, year) and involve cash bonuses or specific prizes (e.g., two extra days off), long-
term incentives attempt to influence future performance over a longer period of time. Typically,
they involve stock ownership or options to buy stocks at a pre-established and profitable price.
Allowances
• Benefits in some countries and organisations include allowances covering housing and
transportation. This is typical for expatriate personnel, and is also quite popular for high level
managers in many countries.
OBJECTIVES
– reward people according to what the organizations values and wants to pay
for
– reward people for the value they create for their organizations
– reward the right behaviors and actions of the employees in order to rein
force appropriate behaviors and outcomes
– foster and maintain a high performance work culture
– attract and retain talents the organizations needs
– develop a positive employment relation and psychological contract
COMPONENTS OF REWARD SYSTEM
– Financial reward
– non financial reward
– psychological satisfaction
 LIMITATION

• - Feeling of discrimination or dissatisfaction among employees (if they feel the

reward assessment process is not transparent).
• - Staff morale could fall if there is a large difference in the amount of reward
being paid out to people doing similar work.
• - Staff may become too focused on individually earning those rewards/bonuses
that they forget to work in the best interests of the team as a whole.
Competition can be good but if its too aggressive it can be detrimental.
• - There will always be an element of judgment required to administer such a
system. Someone will have to rate the performance of staff. This judgment may
end up being too subjective rather than objective.
• - Some functions are support roles in nature (and therefore may not attract as
much rewards as other roles such as sales). There must be a good balance of
incentives for these admin/support staff or else they will not feel appreciated.
 LINK BETWEEN PERFORMANCE AND REWARD

• The reinforcement theory suggest that behaviour could be

encouraged through the use of reward and praise and , to a lesser
extent, discouraged through punishments. people will experience
these outcomes and modify their behaviour accordingly. in the eyes
of a behaviorist like skinner, learning only takes place through
external positive and negative reinforcement
• In any organization pay has to be of certain level in order to attract
and retain staff, however, if intrinsic motivations is what stimulates
people, then attention should be focused on how job satisfaction may
be encouraged, rather than spending too much time on reward
mechanisms that incorporate a strong incentive elements, positive
features in any sound remunerations system will include the fact that
is transparent, and therefore staff can see how it operates.
Arguments In Support Of Performance Arguments Against Performance Based
Based Rewards Reward

1. the current system is unfair and reward 1. fair accurate evaluations is difficult because
experience and formal qualifications instead of performance cannot be determined objectively
performance

2. performance based reward improve organizational 2. organization structure becomes hierarchical and
performance and competence by increasing the cooperation between management and employees is
efficiency of resource strained
allocations

3. performance based reward motivates employees to 3. performance based financial incentives do not provide
perform at their best sufficient inducement to
employees to improve their performance

4. performance based reward provides a 4. implementing a performance based scheme is

relatively cost efficient solutions expensive and time consuming.