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Culture for Quality – An Empirical Examination in I srael.

Valerie Isaak, Dana R. Vashdi & Eran Vigoda-Gadot

Division of Public Administration & Policy School of Political Sciences

University of Haifa Haifa 31905, Israel

Abstract

This study examines the relationship between organizational culture, standards of

quality management, and performance in the public sector. We ask whether effective

implementation of quality related change leads to better organizational performance and higher

citizens-as-customer satisfaction. A theoretical model is suggested and examined empirically in a

field study of 103 units from 12 public organizations in Israel. Hierarchical Linear Models

(HLM) statistics are used to examine several hypotheses about the relationship between

organizational culture, standards of quality management, and performance. The findings of this

study support the hypotheses regarding the role of public organizational culture in quality improvement

processes. Specific cultural values were found to add to organizational performance, and these were also

affected by the type of quality process implemented in the unit. Implications of the findings for public

organizations are discussed theoretically and methodologically.

Keywords: Culture, Performance, Quality Implementation, NPM.

Introduction

The theoretical framework of this study is New Public Management (NPM), an approach

formulated by Hood (1991). This administrative approach presents ideas as to how the public

sector should operate. NPM encourages the use of experience that already exists in the private

sector and in other public sector disciplines to improve efficiency, effectiveness and general

performance in the public sector (Vigoda, 2000; 2003). The approach is a result of reforms

instituted the 1980s, such as quality reforms and privatization (Maesschalck, 2004), and

customer orientation (Sanderson, 2001; Vigoda, 2002). It has become common to adopt

performance improvement techniques as part of those reforms (Brignall & Modell, 2000). We

must also remember that the organizational culture plays an important role and influences the

implementation of these reforms (Heinrich, 2002).

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These changes have led to repeated adjustments in the public sector both in management

culture and systems. The changes have included changes in goals, in social values and in public

institutions. Many studies have demonstrated the theoretical approaches to organizational

changes, particularly in the public sector. These studies have found that both the manager and

human resources make an important contribution to change (Fernandez & Rainey, 2006). Peters

& Waterman's (1982) research focused on the importance of values shared among members of

the organization as essential to the success of the change in public organizations. Another aspect

that is vital to the success of changes in the public sector is learning from business organizations

by combining technology and work processes which also affect the values of the organizational

members and lead to success of the change (Kernaghan, 2003).

There is a global trend in the public and private sectors as organizations seek performance

management systems that will match the existing infrastructure. This trend has appeared in Israel

in the last two decades and efforts have been made to encourage organizations to adopt

techniques and tools to help them manage quality and achieve excellence in performance. These

systems combine tools and techniques to manage the content, quality and performance

measurement processes (Cole, 1999). When the the quality of implementation is high, these

systems lead the organization to constantly improving performance (Spencer, 1994). However

when implementation fails, this may affect organization performance negatively (Beer, 2003).

Thus, there is a need to examine what factors help the successful implementation of quality-

based performance management systems in organizations. It appears that few studies have

examined the factors that affect the quality of implementation of these systems in public

organizations.

In this study we will examine how the culture "becomes ready" to implement quality and

excellence processes (such as ISO, quality improvement teams and EFQM) (Prajogo et al., 2005)

and what impact implementation has on the organizational performance. The "maturity" of

organizational culture is directly linked to its core values (Dennison, 1984). Wide research

literature exists on the relationship between organizational cultures and performance

(Marcoulides et al., 1993; Henri, 2006; Nahm et al., 2004), including reference to the type of

organizational culture which contributes to organizational performance. However, no study has

examined the role of successful implementation of performance management systems based on

quality and excellence on these relations. We assume that when specific values (to be presented

later) are strong, the implementation of a quality performance management system based on

quality and excellence will also be strengthened and will improve organizational performance.

This research will contribute to the theoretical literature by explaining at least a measure of

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the interrelationship between organizational culture and performance in terms of the success of

implementing a performance management system based on quality and excellence. To date, the

research literature has only offered alternative explanations regarding the factors contributing to

this relationship. These include the internal or external environment of the organization, the

presence or absence of resources, and, of course, factors like management style and

organizational commitment. The role of the success of implementing a performance

management system based on quality and excellence in understanding this relationship, is

important, given the substantial focus on organizational quality and excellence in the literature.

A theory that explains the contribution of culture strength to performance by focusing on

successful implementation of a performance management system can offer an additional

dimension to the study of organization performance.

The practical contribution of the research is that it provides a diagnostic tool to be used by

organizations to examine the strength of their organizational culture and values before

implementing a performance management system based on organizational quality and excellence

in order to ensure that implementation quality is high, which will contribute to organizational

performance. This tool will help managers in general and quality managers in particular in their

decision to implement such systems and when building the organizational infrastructure needed

to improve organizational performance.

Background and Theory

Quality Management in Organizations

In recent years, quality management has become a vehicle for organizations to achieve

competitive advantage in the local and global arena (Anderson et al., 1995). The assumption in

quality management is that the organization must produce products and services of the highest

possible quality (Connor, 1997). Thus, in the last century there has been a growing interest in the

issue of quality management in organizational theory and practice (see: for example, Carr &

Littman, 1993; Cohen & Brand, 1993). The research literature agrees that proper implementation

of a quality and excellence based management system can drastically affect company

performance (Deming, 1986; Juran, 1989; Hackman & Wageman, 1995). Two important studies

recently focused on the relationship between quality and excellence based management systems

and performance (Hendricks & Singhal, 1997; 2001). In both studies, quality appears to make a

central and important contribution to long term organizational performance. This leads to the

suggestion that implementing a performance management system based on quality and

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excellence is a long term process requiring the support of management and the organizational

culture (Beer, 2003). In his theoretical research, Beer (2003) investigated why organizations’

efforts to implement quality processes fail. He concluded that blame does not lie with

management philosophy but with managers’ motivation to lead such a process throughout the

organization and in the organizational values which are unsuited to the proposed implementation.

However, these claims have not been tested empirically.

Despite the growth in the quantity of research on quality management and its influence on

organization management performance, few studies have focused specifically on examining

quality management practices (e.g., quality improvement teams, presentation of statistical data to

management and staff as a way of monitoring performance, quality processes, staff involvement

in organizational processes, and EFQM) (Flynn et al., 1994). The research of Saraph et al. (1989)

differs as they provide a model of quality management practices with valid and reliable

measurement techniques for measuring successful implementation of these practices. Their

instrument enables general managers and, above all, quality managers, to measure organizational

growth and the stage of implementation of each quality practice separately. However, as the

measurement by the general manager or quality manager may provide biased results, as he/she is

assessing his/her own organization, other stakeholders such as the workers or customers should

be included in measuring the success of implementation of a quality and excellence based

management system in the organization (Flynn et al., 1994). Therefore, researchers have tried to

find quality management systems that include less biased assessment processes already

embedded in the system itself. For example the ISO system includes assessment of adherence to

ISO standards by stakeholders outside of the organization (e.g., The Standards Institution).

Adopting such standards has been shown to focus the organization on achieving quality

objectives and performance and improving customer satisfaction (Meirovich et al., 2007).

However, no research has examined the factors contributing to the successful implementation of

quality and excellence based management systems in general (Bou-Llusar et al., 2003; Davies et

al., 2007; Deshpande' et al., 1993; Deret et al., 2000) and the contribution of organizational

culture to such success in particular. This research therefore proposes to investigate whether the

“strength” of an organizational quality culture, in terms of the dominance of certain quality

related values, influences the success of the implementation of a quality and excellence based

management system and thus enhance different aspects of performances within the organization.

Organizational Culture and Values

No clear consensus is found in the literature as to the definition of organizational culture

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(see: Howard, 1998; Zammunto et al., 1991). Most researchers in this field adopt Schein’s

definition (in Jones et al., 2005) which suggests that organizational culture is a pattern of basic

assumptions shared or accepted by an organization’s members (Schein, 1992). This enables

organization members to interpret and shape organizational reality in the same way (Pettigrew,

1979). Schein (1992) used the metaphor of an onion with three layers to explain the meaning of

organizational culture where the outer layer represents artifacts, the inner layer represents values,

and the innermost layer represents the basic assumptions that are often unconscious.

This research will focus on the values layer. This layer includes the values that reflect

organizational orientation and the culture’s stability in adapting to organizational change in

general and to implementing a performance management system based on quality and excellence

in particular. When implementing a management system based on quality and excellence aimed

at constantly improving performance, it is important to consider which values can contribute to

the success of the implementation of such a system. A large body of research in the literature

examines the cultural values needed at times of change (Kotter, 1996; Jones et al., 2005 &

Schein, 1992). However, no study deals with the specific values that are especially important

when implementing a quality and excellence based management system. A change that involves

implementing a performance management system based on quality and excellence, differs from

other organizational change for several reasons: (A) In contrast to other management dictated

changes, this type of change is generated from within and depends on staff openness to critically

examine their own performance, (B) The nature and pace of change depends on the

organization's employees compared with other changes where pace is decided by management,

(C) The employees examine the success of the change involving implementation of a

performance management system based on quality and excellence whereas other changes are

examined by strategic stakeholders.

An example of a value likely to contribute to the quality of implementing a management

system based on quality and excellence is transparency. An organization which does not have

transparency will have difficulty advancing a process that expects all employees to be exposed at

the same time to important information which will help learning processes that will lead to

organizational change as the quality model suggests (Bou-Llusar et al., 2003).

The next section examines the values we claim are essential to such quality related

change. The three values are: quality values, transparency, team work quality and customer

orientation. The last two values have been theorized by Deming (1986) as being important in

implementing philosophies of quality.

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Quality Values

This study argues that strong quality-based values in an organizational culture will improve

the implementation quality of performance management systems based on quality and

excellence. A "strong" value has been defined by Anjard (1995) as a value that is articulated on a

high level in the organizational culture. Although this may sound obvious, several values

associated with quality can contribute more than others. Among these are the quality of team-

work, and customer orientation.

Since most of the application process is done by managers and employees, it seems that

team work is necessary for implementation of quality processes. Today complex organizations

place a high value on the potential of teams for innovation, for problem solving and for

implementing changes (Nembhard & Edmondson, 2006). Teamwork is known to have many

benefits, such as increasing productivity and creativity, and increasing employee satisfaction. It

is well known that employees who are team members cope with new situations more

successfully and are capable of doing things better. In other words, they take on jobs that have

changed innovatively in ways that improve their performances (Rousseau et al., 2006). From a

review of studies on the benefits of teamwork on organizational performances it seems that

teamwork contributes to organizational effectiveness in four main areas: perceptual, behavioral,

operational and financial (Delarue et al., 2008).

Thus, teamwork plays an important role in organizational performance. However, it appears

that sometimes even when the members of the organization do not work as a team, teamwork

may still be a value in the organizational culture. In fact, cognitively and emotionally, the

individual should be motivated to join a team so that team thinking and team commitment exist

even before the individual has joined the team (Lembke & Wilson, 1998). Turner (1987) adds

that the process in which the individual becomes a member of the team is an organized cognitive

and emotional process. Thus, a situation may exist in which the individual is not a member of a

team but thinks and acts out of team vision. Anjard (1995) argues that teamwork is essential to

the organization's cultural architecture and is a condition for the successful implementation of

models of quality. There are studies that highlight the difficulty in making a distinction between

the mere existence of actual practice among organization members and the existence of an

organizational culture (Homburg & Pflesser, 2000). However, Anjard (1995) found that the

existence of significant values is no less important than a high level of actual practice. The value

team work quality (Team Work Quality-TWQ) is a concept developed by Hoegl et al. (2001)

which deals with the relationships that exist among team members. They claimed that

relationships are an artifact of six aspects: communication, coordination, balanced contribution

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of team members, mutual support, solidarity and effort. These provide a means to measure the

quality performance of the teamwork and its effectiveness. They also proved that when the level

of these aspects improves, the quality of the teamwork performance rises (Guzzo & Shea, 1990;

in: Dunnete & Hough, 1992). Each team member contributes his talents and his personal best to

achieve success of the application. The success of the implementation is affected by the quality

level of the teamwork that is achieved. Therefore, the hypothesis we have suggested is as

follows:

H1.a: A positive relationship will be found between the dominance of the organizational

value of team work quality and the quality of implementing a performance management system

based on organizational quality and excellence

The purpose of a performance management system based on quality and excellence is not

only to improve the quality of the products, but also to improve customer service (Dean, 2007).

Customer orientation has been proposed by Deshpande' et al. (1993) as a set of beliefs that

emphasizes the needs of the customer over and above others, without ignoring other

stakeholders' needs, such as those of owners, managers and employees. This concept emphasizes

the long range while understanding that focus on the customer is one of the basic assumptions of

the organizational culture. In organizations where the cultural orientation is based on customer

needs, a higher performance level can be found (Homburg et al., 2000). This argument relies on

Kotter & Heskett (1992) who found that organizations in which the culture was oriented towards

customers, employees and owners, with strong leadership, demonstrated high long term

performance. Dean's (2007) study showed a positive relationship between high customer

orientation and quality service. Therefore, it seems that the value of being customer oriented may

be important when implementing a performance management system based on quality and

excellence. The hypothesis we have suggested is:

H1.b: A positive relationship will be found between the dominance of the organizational

value of customer orientation and the quality of implementing a performance management

systems based on organizational quality and excellence.

Learning Values - Transparency

The learning culture of an organization constitutes a culture with strong values of

investigation, openness, and trust (Argyris & Schon, 1978). Popper & Lipshitz (1998) identified

five hierarchically organized values relating to organizational learning: continuous learning,

valid information, transparency, issue orientation, and accountability. Learning that improves

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performance requires complete and valid information which is not distorted. Obtaining valid information

increases the likelihood that no one will be tempted to manipulate the information (Argyris & Schon,

1978). One of the aims of continuous learning is a continuous effort to improve the objectivity of

information available after control by the mechanisms of culture and socialization (Popper & Lipshitz,

1998). However, in order for the information to be valid it must be available to everyone so the value of

transparency is essential. Transparency is the willingness to hold oneself open to inspection in order to

receive feedback. Transparency serves the attainment of valid information by allowing others to (a) add

information and (b) offer different interpretations for valid information. Organizational design which

allows everyone to clearly see how things are done and understand the role of each action is an expression

of transparency (Prokesch, 1997). Transparency is also the ability of the organization to clarify what the

product or service that it provides is, how it is to be provided and the costs (Bruijn, 2002).

Transparency is a key tool for examining organizational performance. With transparency the public

sector expresses its openness to audit of its performances by internal and external bodies (Koppell, 2005).

Research conducted on organizational learning by Larsson et al. (1998) indicated that the value of

transparency, together with acceptance are the basic conditions for a partnership among stakeholders and

they are the ones who will improve the learning process. Therefore, the value of transparency in the

organizational culture is a condition of learning processes and partnerships.. In addition, it must be

remembered that one of the manager's main tasks in a learning organization is to expose failures and

effectively encourage objections. This requires willingness to display and to evaluate information without

being affected by irrelevant aspects such as status or rank. The type of change that is examined in this

study, requires that some of the principles of the quality model, such as strict attention to full transparency

will be applied throughout the process from planning to implementation. The European model of

performance management (EFQM), for example, requires a complete self-assessment once a year to

enable the organization to make improvements. Therefore, the value of transparency is likely to be helpful

for successful implementation in a variety of organizational units and that is why, from the learning

values that Popper & Lipshitz (1998) have presented, we have chosen to focus on the value of

transparency. We therefore hypothesize that:

H1.c: A positive relationship will be found between the strength of the organizational

value of transparency and the quality of implementation of a performance management system

based on organizational quality and excellence.

Organizational Performances

Every organization, public and private alike, is measured on the basis of performance. We

can identify a number of organizational performances: financial performance, operational

performance quality and customer performance. We have chosen to focus on quality

performance which constitutes a central measure of all processes of quality embedded in

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organizations of all types, and customer performance which provides an important criterion for

organizational performances.

Customer's performances are performances related to how customers perceive the

organization. Customer perception is currently measured using two main aspects: customer

satisfaction and perception of service quality as presented by Brady et al. (2002).

Customer satisfaction is defined as customer surprise after the purchase, as this surprise

leads to less dynamic behavior of the customer. In fact, Oliver (1980) specified customer

satisfaction as influencing the customer's behavior, his/her intentions to purchase and his/her

evaluation of the service received. There is a consensus among researchers that customer

satisfaction is a positive behavior type that affects the organizational performances and we must

foster it (Luo & Homburg, 2007).

Parasuraman et al. (1985) defined service quality as a gap between early expectations of the

customer from the service and the service experience itself. .Johnston (2004) explained that the

service quality constitues an estimatation of the service that the organization provides to the

customers. In his opinion, excellence in service is expressed when the organization is considered

as keeping its promises; when it provides personal attention and when it gives in-depth attention

to problems that arise and to the solutions it provides. Svensson (2004) adds that the customer's

perception of quality service is the result of an interactive process that occurs between a

customer and the service person when the service encounter takes place. Thus, from a

management point of view, we must relate to the quality service as it is perceived by the

customer, when the gaps between the customer and the service provider may lead to a negative

evaluation of service quality and may affect its profitability.

Quality Performances are the various operational and managerial performances that

organizations are inclined to measure. Flynn et al. (1995) point out that the organization

outcomes can be considered quality performance in accord with Garvin's (1988) approach.

However, they suggest relating to aspects such as service quality / product and service quality of

the organization in relation to results that are achieved by competitors. In their opinion, quality

of performance contributes to creating a competitive advantage for the organization (Flynn et al.,

1995). In contrast, Saraph et al. (1989) define quality performance as a level of results in several

dimensions that exist in the organization. They proposed an eight dimensional model that they

feel are necessary to measure the quality in organizations. These dimensions are: leadership,

training, product design, service, management processes, quality of data and reporting, employee

relations, quality management and quality department role. Using these, we can obtain an image

of organizational quality performance. This research will focus on three types of quality

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performance: leadership, quality of data and reporting, employee relations.

leadership refers to the role that the manager takes in designing quality policy and his/her

involvement in efforts to improve, particularly regarding quality (Saraph et al., 1989). It seems

that the manager plays a significant role in quality processes and other researchers such as Flynn

et al. (1995) attach importance to his/her influence. The model developed by Flynn et al. (1995)

positions managerial support and involvement in infrastructure quality as necessary to implement

quality practices. Naor et al. (2008) found that this makes a significant contribution to the quality

performance of the organization.

Quality data and reporting is an expression of the degree to which use is made of quality

measures when using information. It seems that the quality of information is determined by the

measure to which the information helps managers and employees in decision-making and

problem solving, measurement quality and evaluation of quality performance of employees and

managers (Saraph et al., 1989). Flynn et al. (1995) related to the quality of information as a core

process necessary for implementing quality practices. Naor et al. (2008) found that qualtiy data

makes a significant contribution to the performance quality of the organization. Chung et al.'s

(2008) research also examined the contribution of quality information as a quality practice and

they found it to be a positive factor affecting an organization's operational performances.

Employee relations reflects the organization's ability to integrate employees in quality

circles, the ability to include employees in decision-making related to quality and to maintain

staff accountability on quality issues. The employees are focused on quality processes initiated in

the organization while recognizing the importance of quality performance (Saraph et al., 1989).

This aspect of involvement and commitment of employees to quality were also examined by

Flynn et al. (1995) and it would seem that this attitude of employees regarding quality issues

importantly contributes to the organizational performance.

Organizational Culture and Performance

In terms of the role of organizational culture in organizational performance, it is regularly

maintained that organizations with a “strong culture” due to efficient integration and an effective

system of specific values, beliefs, and behavior patterns will function and perform at a very high

level (Balthazard et al., 2006; Denison et al., 1995; Dennison, 1984). Bates et al. (1995)

discovered that organizational culture can be a key factor in developing and implementing

organizational strategies, and that culture plays an important role in determining the success or

failure of mergers and acquisitions (Weber et al., 1996). Nevertheless, to the best of our

knowledge, no research has examined the contribution of organizational culture to a combination

of organizational results: quality performance and customer-oriented performance (satisfaction).

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The cultural values proposed above may be linked to good performance in a wide range of

organizational results. For example, the “customer focus” value will lead the organization to seek

ways to fulfill customer expectations, thus increasing customer satisfaction. Likewise, when this

value is strong it will attract new customers which in turn boosts financial results. We can

therefore hypothesize that the organizational values proposed above will be linked to quality

performance, customer-related performance, and financial performance. Thus we hypothesize

that

H2: There will be a positive relationship between the strength of organizational values:

teamwork quality, customer orientation and transparency; and customer satisfaction.

H3: There will be a positive relationship between the strength of organizational values:

teamwork quality, customer orientation and transparency; and quality performance.

Organizational Culture, Quality of Implementation of a Performance Management

System, and Organizational Performance

Hendricks & Singhal (1997;2001) examined the link between the implementation of total

quality management (TQM) and organizational performances (financial and operational). They

found a positive relationship between them. Saraph et al. (1989) claimed that in an organization

which operates a TQM program effectively in all units, will be able to identify high quality

performances. The idicators they identified are: leadership, the role of the quality manager in the

unit, training, product / service design, management processes, quality of information and

working relationship.

We argue that it is important to examine the contribution of quality of implementation of a

performance management system on all organizational performances in order to receive a

holistic view of the organization. In this study we have examined customer satisfaction and

quality of performances. Thus we hypothesize that

H4: There will be a positive relationship between quality of implementation of a

performance management system and organizational performances(customers satisfection and

quality of performances: leadership, quality of data and reporting, employee relations) .

Over the years the literature has shown a positive relationship between organizational culture

and organization performance (Marcoulides et al., 1993; Henri, 2006; Nahm et al., 2004). Other

studies have examined the link between organizational performance and the implementation

quality of systems based on quality and excellence and have found a positive relationship

between them (Benson et al., 1989; Brady et al., 2002; Hendricks et al., 1997; Saraph et at.,

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1989). But, no research has examined the effect of successful implementation of performance

management systems based on organizational quality and excellence on the relationship between

culture and performance. We claim that the success of implementation of a performance

management system based on quality and excellence will have such a mediating effect for

several reasons. First, it creates a common organizational language related to quality. Second, it

requires developing joint quality goals. Third, it produces goal- and measurement-based work

plans and finally it requires periodic assessment and objective examination by outside parties.

Theses aspects can develop only when the foundations of the quality and learning organizational

culture are strong and at the same time these aspects have an impact on organizational

performance. Thus, we hypothesize that

H5: The level of implementation of a performance management system based on quality

and excellence will mediate the relationship between organizational culture and quality

performance and customer satisfection.

Culture, quality of implementation and performances:

Model and hypotheses

Insert Figure 1 about here

Method

Sample and procedure

A cluster sample of Israeli public sector units was used in this study. The sample consisted

of 103 units representing 12 Israeli public organizations including: hospitals, public offices and

the army.

Data collection was conducted between February 2008 and February 2009 and was based on

a field survey. Our survey method included four types of questionnaires that were distributed to

employees (culture values), customer's satisfaction, unit managers (quality if implementing

quality program) and organization quality of performances. We located units that implemented

various quality programs: e.g., improvement teams, ISO (International Organization for

Standardization), the appointment of a quality manager and EFQM (European Foundation for

Quality Management).

Variables

Independent variables

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In this study we focused on three cultural values: team work quality, customer orientation

and transparency.

Team work quality was defined based on Hoegl et al. (2001: p.436) as a comprehensive

concept of the quality of intersections in teams. A questionnaire based on Hoegl et al. (2001)

examined the level of team work quality in the unit. The items were measured on a scale from 1

(do not agree at all) to 7 (always agree). Sample items are: (1) the team members were happy

with the usefulness of the information received from other team members; (2) discussions and

controversies were conducted constructively; Reliability of the scale was .92.

Customer orientation was defined, based on Deshpande' et al. (1993: p.27) as the set of

beliefs that puts the customer's interest first. A questionnaire based on Miron et al. (2004)

examined the level of customer orientation in the unit. The items were measured on a scale from

1 (do not agree at all) to 7 (always agree). Sample items are: (1) customer requirements are the

basis for setting quality levels for services; (2) changes in customers' needs influence the

solutions given; Reliability of the scale was .72.

Transparency was defined, based on Prokesch (1997: p.162-3) as the willingness to hold

oneself open to inspection in order to receive feedback. A questionnaire based on Ellis et al.

(1999) examined the level of transparency in the unit. The items were measured on a scale from

1 (do not agree at all) to 7 (always agree). Sample items are: (1) unit members tend to sweep

their mistakes under the rug; (2) when unit members fail to meet targets they prefer to keep it to

themselves; Reliability of the scale was .69.

Dependent variables

Customer satisfaction - This variable was defined, based on Oliver (1980: p.460) as the

surprise a customer experiences after a purchase and that this surprise eventually becomes an

input to a less dynamic attitude. A questionnaire based on Brady et al. (2002) examined the level

of customer satisfaction with the unit. The items were measured on a scale from 1 (worse than I

expected) to 9 (better than I expected). Sample items are: (1) the reliability, consistency and

dependability of the employee were…; (2) the competence of the employee was…; Reliability of

the scale was .95.

Quality performance – This variable was defined, based on Saraph et al. (1989:p.818)

related to 3 variables: quality of data and reporting, employee relations and leadership.

Quality data and reporting – This variable was defined, based on Deming (1986) as using

statistical methods to improve quality continuously. A questionnaire based on Saraph et al.

(1989) examined quality of information in the unit. Items were measured on a scale from 1 (very

low) to 5 (very high). Sample items are: (1) availability of cost of quality data in the division; (2)

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extent to which quality data, control charts, etc. are displayed at employee work stations;

Reliability of the scale was .82.

Employee relations – This variable was defined, based on Deming (1986) as removing all

barriers to worker's pride in a working relationship. A questionnaire based on Saraph et al.

(1989) examined the working relationships in the unit. Items were measured on a scale from 1

(very low) to 5 (very high). Sample items are: (1) extent to which quality circle or employee

involvement type programs are implemented in the division; (2) extent to which employees are

held responsible for error-free output; Reliability of the scale was .80.

Leadership – This variable was defined based on Deming (1986) as management's

permanent commitment and obligation to implement a new philosophy towards defects, mistakes

and defective materials. A questionnaire based on Saraph et al. (1989) examined the quality of

leadership of the manager unit. Items were measured on a scale from 1 (very low) to 5 (very

high). Sample items are: (1) specificity of quality goals within the division; (2) degree of

comprehensiveness of the quality plan within the division; Reliability of the scale was .89.

Mediator variable

Quality implementation of the model for managing performance based on quality –

This variable was defined, based on Santos-Vijande et al. (2007:p.23) as excellent results with

respect to performance, customers, people and society which are achieved through leadership

driving policy and strategy that is delivered through people, resources, and processes. A

questionnaire based on the EFQM questionnaire (EFQM, 1999) examined the level of

achievement for each of the nine criteria of the EFQM model in each unit. The items were

measured on a scale from 1 (didn't start yet) to 5 (completely achieved). This questionnaire was

validated in the past by Santos-Vijande and Alvarez-Gonzalez (2007) and received both high

reliability and validity. Sample items are: (1) leaders personally assess the application and

progress of total quality principles; (2) resources are allocated to achieve strategic objectives;

Reliability of the scale was .88.

Control variable

As we were interested in the relationship between culture, implementation, and

performance beyond such influences as unit size, type of technique of quality that the unit

implements, terms of implementation, and the manager's period of service as manager of the

unit, we controlled for these variables: Unit size is measured by the number of employees in the

unit. Type of quality that the units implement is measured by the following categories: EFQM,

ISO, improvement team.

15

Data analysis

In order to examine the research hypotheses we used Hierarchical Linear Modeling as we

had to take into consideration the fact that the units under examination are nested in different

organizations. HLM takes into consideration that units from the same organization can be more

similar to each other than units in different organizations (Bryk & Raudenbush, 1992). We will

use the SAS procedure proc Mixed to fit the HLM model which will enable us to model both unit

and organization level variances. We used Bauer, Preacher and Gil's (2006) method for

analyzing moderated mediation in multilevel models.

Findings

The means, standard deviations, and correlations among the variables are displayed in Table

1.

Insert tables 1-4 about here

Before testing the hypotheses we examined a model with only the control variables. Model 1

and 3 (Table 2), Model 5 (Table 3), Models 7 and 9 (Table 4) are models which examine the

relationship between the control variables and each of the dependent variables. This step was

important so that when we examined the impact of the independent variables and the mediator on

each dependent variable, we could show that the effect was above and beyond the effect of the

control variables. In addition, in each model we examined the estimate for the organization's

random variance. This estimate was not significant, indicating that no differences between

organizations affect organizational performances (customer satisfaction and quality

performances: leadership, quality of data and reporting, employee relations).

Hypothesis 1a predicted a relationship between the dominance of the organizational value of

team work quality and the quality of implementing a performance management system based on

organizational quality and excellence. As can be seen in Model 2 of Table 2, team work quality

had no significant impact on quality of implementing a performance management system based

on organizational quality and excellence.

Hypothesis 1b predicted a relationship between the dominance of the organizational value of

customer orientation and the quality of implementing a performance management system based

on organizational quality and excellence. As can be seen in Model 2 of Table 2 customer

16

orientation had no significant impact on quality of implementing a performance management

system based on organizational quality and excellence.

Hypothesis 1c predicted a relationship between the dominance of the organizational value of

transparency and the quality of implementing a performance management system based on

organizational quality and excellence. As can be seen in Model 2 of Table 2 transparency had a

significant positive impact on quality of implementing a performance management system based

on organizational quality and excellence (Estimate = 0.28, p<0.05). This model was significantly

different from the model including only the control variables (∆-2loglikelihood= 0.171, p<0.01)

indicating that quality implementation is significantly related to transparency above and beyoned

the control variables.

Hypothesis 2 predicted a relationship between the strength of organizational values: team

work quality, customer orientation and transparency; and customer satisfaction. As can be seen

in Model 4 of Table 2 only team work quality had a significant positive impact on customer

satisfaction (Estimate = 0.62, p<0.05). This model was significantly different from the model

including only the control variables (∆-2loglikelihood= 0.171, p<0.01 ) indicating that customer

satisfaction is significantly related to team work quality above and beyoned the control variables.

Hypothesis 3 predicted a relationship between the strength of organizational values: team

work quality, customer orientation and transparncy; and quality performance measured by

leadership, quality data and reporting, and employee relations. As can be seen in Model 6 of

Table 3 only team work quality had a significant positive impact on quality data and reporting

(Estimate = 0.25, p<0.05). This model was significantly different from the model including only

the control variables (∆-2loglikelihood= 0.169, p<0.05) indicating that team work quality is

significantly related to quality data and reporting above and beyoned the control variables.

Hypothesis 4 predicted a positive relationship between quality of implementation of a

performance management system and organizational performances (customer satisfaction and

quality perfornances: leadership, quality data and reporting and employee relations). As can be

seen in Model 8 of Table 4 quality implementation had a significant positive impact on

leadership (Estimate = 0.24, p<0.01). This model was significantly different from the model

including only the control variables (∆-2loglikelihood= 0.136, p<0.05 ) indicating that quality

implementation is significantly related to leadership above and beyoned the control variables. As

can be seen in Model 10 of Table 4 quality implementation had a significant positive impact on

quality data reporting (Estimate = 0.15, p<0.05). This model was significantly different from the

model including only the control variables (∆-2loglikelihood= 0.087, p<0.05) indicating that

quality implementation is significantly related to quality data reporting above and beyoned the

17

control variables.

Hypothesis 5, posited that the level of implementation of a performance management system

based on quality and excellence will mediate the relationship between organizational culture and

quality performance and customer satisfection. However as the cultural values related to quality

of implementation were different than those related to the performance measures, there was no

relationship to mediate.

Discussion and Implications

This study examined the impact of organizational culture on an organization's ability to

implement a performance management model based on quality and excellence, in public

organizational units and whether implementation leads to improved performance of public

servants and higher satisfaction of citizens as clients.

The study examined organizational units from 12 different organizations: government

ministries, health institutions and the army. These units are affected by the quality reforms which

are now being applied in the public sector in Israel. These reforms are based on a decision

enacted in 2001 by the State Service Commission, to adopt the European model of performance

management (EFQM) public systems in addition to other quality techniques, such as ISO, quality

improvement teams and the appointment of office quality managers. The findings show that the

level of implementation/organizational performance is not affected by the type of organization.

This indicates a high degree of generalizability of findings above and beyond any particular

organization in the public sector.

We hypothesized that there would be a positive relationship between the strength of the

organizational values: team work quality, customer orientation and transparency; and the level of

implementation of a performance management system based on quality and excellence. Up to

now studies which have dealt with the contribution of culture to the quality of implementation

focused on types of cultures rather than identifying specific values (Henri, 2006; Marcoulides et

al., 1993; Nahm et al., 2004).

Regarding customer orientation, we did not find any link to the quality of implementation.

This is surprising and it is contradictory to the approach of Deshpande' et al. (1993). In addition,

we did not find a link between team work and the quality of implementation. This contradicts

Anjard's (1995) approach, claiming that team work is an essential value of the cultural

18

architecture of the organization and is a condition for the success of implementing models of

quality.

Another hypothesis was that a positive relationship would be found between strength of

cultural values: team work quality, customer orientation and transparency; and customer

satisfaction. In reality, we found that there was a link between the strength of the value of team

work quality and customer satisfaction. This finding is innovative because, up to now, research

has investigated the contribution of the implementation of team work on organizational

performance (Rousseau et al. 2006; Delarue et al. 2008) while our research has found that the

very existence of the value itself contributes to customer satisfaction. When we examined the

values of customer orientation and transparency, we did not find a link between these and

customer satisfaction. This is in contrast to the views of Dean (2007) and Homburg et al. (2000)

which highlight the importance of customer orientation in the organizational culture in relation to

organizational results. However, this finding can be partly explained by the approach of

Lengricks-Hall's (1996) research, which argues that understanding the needs of the client is

significant and important to organizational performance rather than the value of customer

orientation.

Another important finding was related to the link between cultural values: team work quality,

customer orientation and transparency; and quality of performance. We found a link between

team work quality and the quality of data and reporting which partially confirmed the research

hypothesis. This finding can be explained by the research of Hoegl et al. (2001) dealing with

mutual relations between team members which contribute to organizational performance, and in

this case, the quality of data and reporting. The more effort and coordination between the

members of the team, the higher the quality of data and reporting will be.

We also examined the relationship between the quality of implementation of a performance

management system based on quality and excellence and organizational performances: customer

satisfaction and quality of performance (quality data and reporting, leadership, and employee

relations). We found that the higher the quality of implementation the more performance quality

increases. This finding reinforces the findings of Hendricks & Singhal (1997) indicating that the

higher the quality of implementation, the higher the operational performance of the organization

will be. Although their research dealt with operational performance, we can conclude that the

same contribution will be obtained when we discuss quality of performance.

Finally at the basis of the proposed model of this study was the hypothesis that the quality of

implementation will mediate the relationship between cultural values and organizational

performances. Although we found a link between transparency and the quality of

19

implementation, and between quality of implementation and quality of performance (leadership

and quality data and reporting), because we did not find any relationship between transparency

and quality of performances we could not examine a mediating relationship. In fact, this research

indicates that there are values that are related to the implementation level of quality and

excellence models, and other values which are related to customer satisfaction and quality of

performance. Specifically, transparency was found to be related to level of implementation of

quality and excellence models, and team work quality was found related to customer satisfaction

and quality of performances. Although it is clear that organizations will gain from encouraging

as many cultural values as they can, importance should be attributed to certain values before

implementing organizational changes. In fact, when an organization implements changes, it must

make sure that the specific values important for the change exist in the organizational culture.

In sum, this study emphasizes that specific values play a role in the implementation of

specific quality programs and on organizational performances. Thus, it is not enough to theorize

regarding effective cultures in general but rather to focus on the specific values that affect the

type of change or performance the organization strives for.

The main theoretical contribution of this research to the new public management approach

(NPM) is in understanding that public administration reforms related to quality processes aimed

at the customer's needs and at improving performance management require the preparation of a

cultural infrastructure based on the values of quality team work and transparency. It appears that

these reforms will only be successful if the values are strong enough to support the process of

implementation. This requires a change in the cultural infrastructure of public administration to

succeed in carrying out these reforms. In addition, these values have also been found to

contribute to customer satisfaction. It would seem that the successful implementation of these

reforms can contribute to changing the public's attitude toward the public sector organizations

and even increase their competitiveness against alternative services offered by the private sector.

Another contribution relates to the team work quality. Many studies have discussed the

importance of teamwork and the contribution of teamwork to the team members and to

organizational performances. In this study, we found that nurturing the value of team work

quality is of primary importance to organizational performances (customer satisfaction and

quality data and reporting). In other words, if you want to improve the performance of the

organization it is important to nurture the quality of teamwork in the organizational unit first.

The practical contribution of this research is the tool which was developed to measure the

strength of values that exist in a particular organizational unit. Its importance is in its potential to

help various organizations which are implementing different quality types to identify the strength

20

of the values: team work quality, transparency and customer orientation. On a practical level we

help organizations to understand that implementing systems of quality and excellence is not

enough. Organizations should invest in their cultural infrastructure, in order to implement the

model better.

Finally, several limitations of the study should also be mentioned. The ability to generalize

the findings beyond Israeli borders is limited considering the unique characteristics of the Israeli

public sector. Future research may want to examine whether these findings are apparent in other

countries.

Regarding the cultural values investigated: We focused on three values; team work quality,

customer orientation and transparency; which have been considered central in the literature

concerning the quality of implementation of quality and excellence systems and organizational

performances. Actually, choosing to focus on these values means that we have received only an

incomplete picture. Therefore, it would be advisable to investigate other values in continuing

research, such as initiative, openness to change, standardization and others that are mentioned in

the literature as important when introducing changes to the organization.

Performance measures for this research: Because we have chosen to focus on two groups of

performances, further research would appear to be necessary referring to the financial

performance of the organization in addition to the performances investigated this study.

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