the importance of organisational culture in it …
TRANSCRIPT
Annals of the „Constantin Brâncuşi” University of Târgu Jiu, Economy Series, Issue 6/2019
„ACADEMICA BRÂNCUŞI” PUBLISHER, ISSN 2344 – 3685/ISSN-L 1844 - 7007
THE IMPORTANCE OF ORGANISATIONAL CULTURE IN IT COMPANIES
MARIA MAGDALENA CRIVEANU,
ASSISTANT, PHD, UNIVERSITY OF CRAIOVA, ROMANIA
e-mail: [email protected]
CONSTANTIN RENATO IVANESCU,
PHD STUDENT, UNIVERSITY OF CRAIOVA, ROMANIA
e-mail: [email protected]
Abstract:
Ten years after the economic crisis that affected almost all economic sectors in our country, Romania is facing a
new crisis, i.e. the labour crisis, especially seen in the private environment, where more and more companies choose to
shut down for these reasons. According to official data, Romania is the second country in the world in terms of migration,
after Syria. Such a negative factor impacts the economy, as the latter can only develop with the help of labour, which, in
this case, has become a very scarce and expensive resource. In this context, employers are affected by the fact that
employees easily leave their jobs and cannot be replaced. This is why they are constantly searching for new ways to
prevent such issues and try to find solutions to retain labour force. One of the most important issues to be considered refers
to the notion of organisational culture, as this might be a key component differentiating between companies.
Keywords: organisational culture, labour, crisis, private sector.
Introduction
Romanian private companies are facing a decrease in labour, which has destabilized the
economic environment and has resulted in an exponential growth of deficit. The private environment is
a central factor in the economy of any country, as it frequently finances a range of activities. However,
tax changes resulted in chaos in the private environment, as well as a range of imbalances also seen on
the macroeconomic level. At the same time, the migration phenomenon enhanced this crisis, as trained
labour prefers a less hostile and fragile environment. Private companies are starting a genuine war of
labour, as the lack of available labour force or the employees’ low training generates conflicts
especially between companies in the same sector, where a true hunt for labour is witnessed. Such wars
will not only affect the companies, which will face difficulties in performing their activities, but also
the consumers, who will no longer benefit from the same quality of products and services. Thus, many
managers are less focused on attracting customers, on increasing product competitiveness, on
improving their products or on favourable pricing policies; their major concern is to attract employees.
The difficulties experienced on an organisational level will be projected upon the customer, who will
have to bear the inconveniences: higher prices, also confirmed by national statistics through the
inflation level, as wage increases are seen in the price level; possible delays or mismatches in the
delivery of products and services; customers communicate with different staff members within the
same company, so that the customers’ needs are no longer well known, though the customers are loyal.
All these issues cause a rupture between the company and the customer and results in the customers’
dissatisfaction.
Thus, companies must overcome the labour bottleneck, prevent any obstacles due to labour
migration and apply a management style that motivates employees. Employees must remain connected
to the company irrespective of the offers they may receive from competing companies. The
employee’s main motivation is the wage; however, this war is not favourable for companies, as it
generates high cost fluctuation, instability, the impossibility of making forecasts. Such measures are
primarily harmful for profits and, hence, affect the profitability of activities. At the same time, wages
331
Annals of the „Constantin Brâncuşi” University of Târgu Jiu, Economy Series, Issue 6/2019
„ACADEMICA BRÂNCUŞI” PUBLISHER, ISSN 2344 – 3685/ISSN-L 1844 - 7007
tend to become aligned for each type of activity, so that, in short time, wages will become more or less
equal in all companies for each individual activity. Thus, starting from a unitary wage in all private
organisations, the companies will need to find another criterion to stand out, one that is no longer
based on extrinsic motivation, but on intrinsic drivers. The managers need to prove their leadership
abilities, to impose a favourable management style and to maintain a cohesive and stable team in the
organisation. For this purpose, a manager must hold up-to-date management knowledge, especially in
the field of organisational culture management. A strong culture within a company tends to shape a
well consolidated and cohesive team, so that the employees will find it harder to leave the company.
Literature review
This paper aims at analysing the importance of approaching organisational culture at the level
of IT companies, where labour migration has generated genuine obstacles. Based on ANIS, the
expected turnover for 2019 in the IT industry is 6% of the GDP, which sends an important message on
the expansion of the IT market. However, such an expansion has generated a genuine war on the
labour market, which is unable to meet the demand.
One of the issues refers to the incapacity of the education system to train the human resource
according to market requirements. IT industry develops at an alert pace, so that the most significant
problem is that today’s society is not ready to support this growth. Based on current data, the entire
society is moving on to a new era where the homo sapiens disappears in front of the new Homo
Technium. The demand for IT specialists is almost double compared to the number of IT faculty
graduates, and the much lower salaries in education generate a mismatch between the demand for
teachers and the demand for specialists, so that the Romanian state cannot provide enough teaching
staff. Another problem is, as previously stated, the brain drain, not only for young people who want a
radical change, but also for more experienced employees of organisations, who choose to radically
change their options and go abroad, due to social and political disturbances. At the same time, fiscal
instability has resulted in confusion and dissatisfaction, which practically cancelled the advantage of
the 0 tax in the IT field.
In order to attract more and more specialized labour, the employers inevitably choose to
increase salaries so that attracting employees has turned into a continuous auction aimed at stabilizing
IT labour force. However, such wage increases are not beneficial as long as employees constantly
migrate between organisations; this new capitalization of employees does not imply the addition of
new skills or abilities. In this context, we may speak of an artificial salary growth, which will result
into even more instability and volatility on the labour market. Such an artificial growth, stemming
from the need for employees, not based on higher training, will soon result in a restructuring of IT
companies, so that employers will look for cheaper labour, such as Moldova or Bulgaria, just like
developed countries in Europe, whose higher wages resulted in the use of Romanian workforce. This
hypothesis is supported by numbers showing that most of the turnover, i.e. 75% of the turnover is
generated by the export of software and IT services, as Romania is the first outsourcing country in
Central and Eastern Europe.
Employers are affected by this exponential wage increase, as the data show that the Romanian
IT industry has experienced constant growth, and this pattern follows the same trend. The forecast for
2020 shows an increase in turnover, an increase in productivity and, hence, an increase in the number
of employees. Thus, data provided by ANIS reflect the constant expansion of IT industry.
Table no.1 IT industry expansion
332
Annals of the „Constantin Brâncuşi” University of Târgu Jiu, Economy Series, Issue 6/2019
„ACADEMICA BRÂNCUŞI” PUBLISHER, ISSN 2344 – 3685/ISSN-L 1844 - 7007
2000
−
2010
−
2017
−
2020
−
13.000
employees
56.000
employees
100.000
employees
115.000
employees
$ 253 million
turnover
$ 2,4 billion
turnover
> € 4 billion
turnover
~ € 6,3 billion
turnover
$ 19.000 / employee
productivity
$ 42.000 / employee
productivity
€ 45.000 / employee
productivity
€ 55.000 / employee
productivity
Source: ANIS - the Association of the Software and Services Industry
In this context, assuming that employers will again raise salaries in order to win the
competition for employees does not seem reasonable, since, as already mentioned, wage growth will
result into additional costs, and the Romanian market will no longer be competitive and profitable.
Thus, employers must identify new ways to retain employees, and the state must provide the
possibility to train as many potential employees in education institutions as possible. One of the
negative aspects outlined by employees refers to the Romanian managers’ obsolete management style,
which is not favourable for an organisational climate likely to support the development of human
resource in IT. At the same time, the educational system promotes an individualistic culture, to the
detriment of a team-based culture, characteristic for modern organisations. Thus, large companies
promote a participatory, modern, attractive management style, of which organisational culture is the
key element; it often operates as a solid organizational binding agent, tending to dissolve the meaning
of material earnings, to the benefit of intrinsic earnings.
A Deloitte report shows that employees refer to culture as a challenge, often connected to
financial indicators such as: turnover, productivity.
IT employees experience a high level of organisational culture, having a strong impact on the
improvement of the labour crisis and also resulting in an increase of productivity and performance.
The differences between organisational cultures result in new challenges in the companies fighting to
retain and motivate a more and more diverse workforce. The most important topic in this process is
represented by the job satisfaction which is differently implemented by companies such as those
mentioned above. According to (Dawis and Lofquits, 1984), “satisfaction is the assessment of the
individual appreciation on how the working environment meets an individual’s needs”. Satisfied
employees will influence the progress of an organisation and will make its culture healthier (Lock,
1969). They are the largest resource and play the most important part. In order to stay, they need to be
encouraged for innovation and risks. A culture focused on innovation and engagement will always
encourage employees for work and progress bringing success and profit. In turn, success has an impact
on the employees’ satisfaction.
Large IT companies understand the employees’ need to benefit from a favourable
organisational climate, so that they are looking for a range of methods to create a solid, attractive
organisational culture, focused on the employees’ needs.
333
Annals of the „Constantin Brâncuşi” University of Târgu Jiu, Economy Series, Issue 6/2019
„ACADEMICA BRÂNCUŞI” PUBLISHER, ISSN 2344 – 3685/ISSN-L 1844 - 7007
Google, for instance, provides benefits to employees such as: trips and parties for employees,
gyms, dog-friendly areas. Though investments may seem significant, the advantages triggered by such
an approach are not negligible. On the one hand, such activities promote creative spirit; on the other
hand, the activities connect employees to a solid and cohesive team, as they perform joint activities.
Square Space, another site developer, places a major focus on corporate culture, providing
employees with the feeling that their organisation is interested in their safety, providing health
premiums, relaxation areas, flexible holidays, meals or relaxation areas. Such an open, employee-
oriented culture will make them more involved and, hence, more productive.
Twitter tried to set up a friendly culture, focused on the team, not on the employee. Managers
are highly interested in the employees’ activity, so that the latter develop an outstanding commitment
to the organisational objectives envisaged by the team’s efforts.
Facebook provides a range of advantages to its employees, along with a culture based on
personal development and employee interaction. Thus, they created open work spaces to favour social
relations, as well as other recreation areas where employees may exchange cultural values.
Adobe is another company whose strategy is mostly based on developing a strong culture,
based on trust between employees. They exclude micromanagement, which is seen as an anomaly of
the management, starting from the erroneous perception that careful staff supervision will ensure the
achievement of goals. Thus, employees are assigned complicated projects, developing a culture based
on taking risks and challenges. Employers trust employees, and employees become confident in their
own forces.
Continental, a company with a major influence in the automotive sector, is aware of the
importance of an inspired and open organisational culture, which provides satisfactions. The company
aims at creating a balance between work and the private life of each employee. At the same time, it
focuses on flexible work, irrespective of location or hierarchy in the company. The possibility to take a
sabbatical year reinforces one of the company’s policies based on increasing resistance, raising
awareness of the employees’ health, responsibility and autonomy.
Each organisation adopts its own attributes, but some are essential. One of them is to clearly
define the purpose and direction of the organisation, which results in a better alignment of employees
to the company’s mission and, hence, much more productive and more dedicated staff. Flexibility and
an energetic and enthusiastic work environment, as well as open and simple communication, represent
efficient retention strategies. The positive effects of organisational culture are also closely related to
decisions made within companies, which must be beneficial for both the company and its employees.
Another major aspect is the stability of culture. Any changes have to take place to an extent that is as
low as possible, in order to have an impact on employees. Both team-oriented and individual oriented
work is important. Thus, organisational objectives are reached more quickly, since members are
cooperative, not competitive.
Thus, any organisation, irrespective of its field of activity, must build its own model, a matrix
showing the link between culture and performance. Each type of organisational behaviour finds its
echo in the cultural component, so that a leader must observe the employee’s conduct and then analyse
how can organisational culture mitigate certain behaviours classified as inefficient or, on the other
hand, observe how the type of culture may support positive conduct. Thus, the achievement of
334
Annals of the „Constantin Brâncuşi” University of Târgu Jiu, Economy Series, Issue 6/2019
„ACADEMICA BRÂNCUŞI” PUBLISHER, ISSN 2344 – 3685/ISSN-L 1844 - 7007
individual or group goals is mostly based on how organisational goals are outlined and presented. At
the same time, the reward system may increase the employees’ enthusiasm to fulfil their tasks. Another
topic relates to extrinsic motivation factors, such as work conditions. An adapted, modern, open work
space, favouring team work and discarding differences between employees, such as different
hierarchical positions, provides the premises for the employees’ involvement. The location of desks
has proved to be a major factor in developing homogeneous team work, as well as the employees’
involvement in creative, pleasant activities, usually undertaken outside working hours. The recognition
of merits is an intrinsic motivation factor, increasing the employees’ self-esteem, respect and moral
position within the organisation. At the same time, participatory management, taking risks and
assigning major projects to mixed employee teams generate confidence in one’s own forces, as well as
commitment to the organisation. It has been noticed that, at least in IT organisations, micro-
management, i.e. excessive control, overcomes creativity and imagination and alienates employees
who prefer a less hostile working environment.
Conclusions
Organisational culture is a major element, significantly influencing the labour crisis. Based on
the findings of this research, we may ascertain a significant positive correlation for the impact of
organisational culture on the commitment of a company’s members. Employees may very easily adapt
in a company based on a strong culture. At the same time, a performance-focused environment is
created. A negative culture will increase the number of employees who will leave the company. In
many cases, it is key employees who leave the organisation, which entails significant costs: expenses
to employ new members, less experience, lower productivity. Managers must support employees in
finding job satisfaction, since satisfaction is important in their decision to leave or to stay.
The type of organisational culture promoted by the leaders of a company is the catalyst in
creating a bond between the employee and the company. In most cases, a friendly culture manages to
reduce the importance of material earnings, so that the working environment provides more
satisfaction than revenues. Managers must be aware that a strong culture will determine sustainable
relations between employees and the organisation. The members of the organisation will become
engaged with the environment created by the employer and, in time, will identify themselves with both
the organisation and its objectives.
References:
[1] Atuahene-Gima, K., Market orientation and innovation, Journal of Business Research, pp. 93–103,
1996.
[2] Burduș, E., Căprărescu Gh., Androniceanu A., Miles M., Managementul Schimbării
Organizationale, Editura Economică, Bucureşti, 2000.
[3] Cameron, Kim S., Quinn Robert E., Diagnosing and changing organizational culture-Based on the
Competing Values Framework, Jossey-Bass, A Wiley Imprint, 2011.
[4] Cameron, Kim S., Downsizing, Quality, and Performance. In Robert E.Cole (ed.), The Fall and
Rise of the American Quality Movement. New York: Oxford University Press, 1995.
335
Annals of the „Constantin Brâncuşi” University of Târgu Jiu, Economy Series, Issue 6/2019
„ACADEMICA BRÂNCUŞI” PUBLISHER, ISSN 2344 – 3685/ISSN-L 1844 - 7007
[5] Cameron, Kim S., Techniques for Making Organizations Effective: Some Popular Approches. In
Daniel Druckman, Jerome E.Singer, and Harold Van Cott(eds.), Enhancing Organizational
Performance.Washington, D.C.: National Academies Press, 1997.
[6] Colquitt, J., Lepine, J.A., Wesson, M.J., Organizational behavior: Essentials for improving and
commitment. Boston: Mc graw-Hill Irwin, 2010.
[7] Dawis, R. & Lofquist, L., A psychological theory of work adjustment. Minneapolis, MN:
University of Minnesota Press, 1984.
[8] Denison, D.R., Corporate Culture and Organisational Effectiveness. New York: Wiley.
Development, 22 (8), 708- 708, 1990.
[9] Desphande et al., R. Desphande, J.U. Farley and F.E. Webster, Organizational culture and
marketing: defining the research agenda, J Mark 53, pp. 3–15 [January], 1989.
[10] Desphande et al., R. Desphande, J.U. Farley and F.E. Webster, Corporate cultur customer
orientation, and innovativeness in Japanese firms: a quadrad analysis, pp e, Mark. 23–37, 1993.
[11] Fakhar, Shahzad., Rana, Luqman., Impact of Organizational Culture on Organizational
Performance: An Overview, Interdisciplinary Journal Of Contemporary Research In Business, vol. 3,
no.9, January 2012.
[12] Ghosn, 2001a C. Ghosn, The key for successful alliance is consensus-oriented management,
Hitotsubashi Bus Rev (2001), pp. 164–179 [Winter] [in Japanese]. Ghosn, 2001b C. Ghosn,
Renaissance, Diamond, Tokyo (2001).
[13] Gordon, G. G., The Relationship Between Corporate Culture and industry Sector and Corporate
Performances. In Ralph H. Kilmann and Associates, Gaining Control of the Corporate Culture. San
Francisco: Jossey-Bass, 1985.
[14] Lock, E., What is job satisfaction? Organizational behavior and human performance, 4, 309-336,
1969.
[15] Salman, Habib. , Saira, Aslam. , Amjad, Hussain, & Sana, Yasmeen., The Impact of
Organizational Culture on Job Satisfaction, Employess Commitment and Turn over Intention,
Advances in Economics and Business 2(6): 215-222, 2014.
https://www.anis.ro
336