Analysis Of Organisational Culture And Performance Business Essay Example

studies like Peters and Waterman (1982) and Kotter and Heskett (1992) have made comparisons; however, they were based on convenience samples from organizations. In contrast, this research seeks to address methodological flaws from previous studies. For instance, it acknowledges the small number of participating administrations as well as selected respondents who may not represent the entire industry accurately. To mitigate these issues, this study will include bank samples representing over 75% of the banking industry's assets or around 30-40 banks in terms of numbers. Simple random sampling will be used to select respondents who can truly reflect the cultural characteristics of all administrations involved in the study. Furthermore, this research focuses specifically on how organizational culture influences organizational performance in an emerging non-western country context – namely IndonesiaThis study is unique because most research on organizational culture is typically conducted in Western countries, especially the USA and Europe. The purpose of this study is to determine if organizational culture can be used as an indicator of banking performance. This information could then be used to shape policies on banking supervision and regulations by relevant parties such as the banking supervisory authority. This rare investigation into organizational culture in the banking industry will benefit not only Indonesia's banking industry but also emerging countries and the global banking industry as a whole.

The survey consists of nine chapters. Chapter one provides an overview of the survey's background, aims, and plan. Chapter two focuses on Indonesia and its banking industry, including its history, development, and current status. It also discusses the structure of the Indonesian banking industry, which includes five bank categorizations. Additionally, this chapter explains how each bank's

performance can be measured using the CAMEL Rating system.

Chapter three centers around a literature review on organizational culture and performance. It critically examines key variables such as organizational culture, organizational performance, and their relationship to each other. This chapter also covers conceptualization and measurement techniques for assessing organizational culture, including national culture considerations.The text will beand unified while keeping the and their contents:

This study includes key empirical studies on organizational culture-performance, major studies on Indonesian culture, and studies on Islamic and conventional banks. In addition, it identifies the limitations of Bing surveys and research, justifies its position in the literature, generates research hypotheses, presents the research design in chapter four, critically presents the strengths and weaknesses of research philosophy, identifies an appropriate research approach and strategy, provides the operationalization of the instrument used, describes and justifies appropriate techniques to test hypotheses.

Chapter five presents the result of the strong culture thesis using overall CAMEL evaluation as the objective of bank performance. Chapter six presents the result of the culture gap thesis using overall CAMEL evaluation as the objective of bank performance. Chapter seven tests the relationship between organizational culture and individual perception of fraud. In chapter eight, it tests whether organizational culture can differentiate between Islamic and conventional banks' performance.

Chapter nine provides a summary of results and conclusions. This chapter discusses implications of the results for theory, practice, Central Bank Indonesia as a banking regulator and supervisorSuggestions and interesting avenues for future research will be provided. The study presents a proposed model in Figure 1, based on the extraction of strong culture and culture diffusion thesis. The rate and speed of change in the

external environment where organizations operate is significant and constant. These environmental pressures and changes, including new regulations, new and existing competitors, information technology, and communication changes, will require organizations to adapt in order to be successful. Through this learning process, organizations gradually gain a better understanding and develop effective and efficient responses. This learning process and demonstrated success become embedded in the organizational assumptions, beliefs, and values. Organizations then develop management policies, systems, and control to maintain this learning success. It is expected that organizations will be able to maintain internal coordination/integration, control, and consistency of internal processes. Strong shared values influence employee motivation and engagement which leads to a greater customer focus and service orientation. As a result, overall bank performance will be influenced. The first hypothesis (H1) states that there is a significant relationship between strong civilizationand overall bank performance as assessed by the overall CAMEL evaluation.
The relationship between perceived culture and preferred culture influences the existence of a cultural gap, which in turn affects employees' understanding of organizational culture and future administration. A larger gap makes it difficult for the organization to control coordination, integration, and control functions. On the other hand, a smaller gap allows for effective adaptive changes and responsiveness to customer demands, ultimately impacting overall bank performance. Hypothesis H2 suggests that a strong culture is significantly related to overall bank performance based on the CAMEL evaluation. In a strong administration culture, individual commitment, motivation, and social control are influenced. Effective control systems require awareness among those being monitored that someone is paying attention and will take action if necessary. Common understandings of appropriate attitudes and behavior within a strong

culture enable it to serve as a means of social control within the administration. The third hypothesis (H3) tests the important relationship between strong civilization and fraud perception among individuals and administration in the Indonesian banking context.Islamic banks are regulated by Islamic law, which forbids participation in loans and deposits. The principle of profit-and-loss sharing is the foundation of Islamic banks. Despite this, both Islamic and conventional banks have similar business natures and operate in the same industry. If there is a correlation between organizational culture and performance in conventional banks, it may also exist in Islamic banks. Therefore, organizational culture can differentiate between Islamic banks and conventional banks.The 4th hypothesis being tested is H4: Organizational culture can differentiate between Islamic Banks and conventional Banks, in the Indonesian banking context.

Environmental pressures and changes: social and industrial culture

Figure 1 A Proposed Model

Overall bank performance (CAMEL evaluation)
H5: Differentiating high and low performance
H5a: Islamic bank and conventional bank

Organizational assumptions, beliefs, and values (Schein, 2004)
Good corporate culture (process): Management policies, system, practices, and controls specifically focus on corporate culture

H1 Administration learning and response (Schein, 2004) Adaptive change and flexibility Black line = Influence Blue line = Feedback Source: Adapted from Kotter and Heskett (1992), Deal and Kennedy (1992), Peters and Waterman (1992), Denison (1990), O'Reilly (1989), Hammer (2004), O'Reilly and Chatman (1991), Cameron and Quinn(2006), Wilderomand Van den Berg(1998),and Gup(1991)

Individual behavior guidanceand performance Culture gap
H3 Good corporate culture: Values Practices Customers focusandservice orientation Fraud perception
H4 Coordination/integration, control,motivation,and engagement Strongculture
H2 Checklist for strongculture by Wallach83 CAMEL Ratingbankconformity.

The evaluation of the Bank's managerial capacity,risk management,and compliance with legal provisionsand commitmentsis known as the rating

of direction.Bank compliance refers to the Bank's adherence to applicable legal provisions, such as the Legal Lending Limit, Net Open Position, and Know Your Customer Principles. In times of increasing disruption and uncertainty, the learning process should be shared among all members of the organization. Organizational midlife is a critical period for managers to address cultural issues and be aware of the organization's current position and future direction. In turbulent environments, flexible cultures that prioritize diversity may be more advantageous than strong cultures (p.144). The impact of OPEC, industry economics, and government regulations on oil companies extends beyond their customers and competitors - they also influence strategies and cultures (p.150). At Lincoln, the company's culture is deeply rooted in its founders' beliefs and developed extensively across various dimensions. This integrative culture permeates the company's structure, compensation systems, physical facilities, relationships with customers and shareholders, and personnel policies (Sethia & Von Glinow referred to it as an "integrative" culture in Chapter Nineteen).Furthermore, the daily behavior of managers and employees is influenced by specialized corporate cultures (p.160). In summary, such cultures offer numerous advantages, including a strong commitment to core values. However, they are less tolerant of differing values which can lead to morale issues and employee turnover. To mitigate these problems, it is important to select and recruit individuals who are predisposed to accepting the existing or new culture. Moreover, specialized cultures struggle to adapt quickly in changing environmental conditions. The benefits of consistency and commitment must be balanced against the drawbacks of potential stagnation and reduced flexibility. Considering that maintaining specialized cultures requires as much effort as creating them, it appears that they may be

more suitable for environments with low chances of significant changes. Additionally, some authors have developed theories of culture change to assist managers in "managing" their cultures. For example, Pettigrew (1979) suggests that leadership plays a vital role in culture change since leaders are the creators of culture. Consequently, a change in leadership accompanies culture change. From another perspective, O'Toole (1979) argues that culture is deeply ingrained in organizational structures like reward systems or hierarchies of authority.Thus, the process of changing culture involves altering the supporting structures and creating new goals and values. This can be done by developing a new set of values or "management philosophy" that is instilled into employees. Leaders can also modify their actions, agendas, or interpersonal styles to reinforce new behaviors. The manipulation of symbols and their associated meanings serves as a catalyst for cultural change. Various authors have proposed similar strategies for altering organizational cultures, but they often focus on specific tactics rather than uncovering the underlying processes of cultural change. Instead, this chapter aims to describe the conditions and processes in which such change occurs without presenting another strategy for managing culture change.Once we understand how culture change occurs, we can explore effective ways to manage it. Our analysis of culture change is based on studying the histories of five organizations that have experienced significant cultural transformations. Changing deeply ingrained beliefs and attitudes is a challenge when it comes to altering culture. People often resist change because they are personally invested in the current way of doing things. If those who hold power and have a long-standing interest in maintaining the status quo are resistant to change, they can

impose their views on the company. Culture is most influential when it goes unnoticed and is taken for granted due to its past effectiveness. To truly transform an organization's culture, change must occur at all levels - assumptions, values, and practices - especially at the level of assumptions. When discussing an "ideal culture," our focus will primarily be on changing assumptions as they prove to be the most difficult aspect of culture to alter. However, our examples will also demonstrate values and practices that align with the assumptions of an ideal culture (Tn ssummary, p.).Even if we acknowledge that the term civilization will always remain unclear and poorly defined, unlike the more superficial and tangible aspects of organizations, it is still important to consider what determines a culture to be good or bad, adaptive or dysfunctional. According to Wallach (1983, p.32), cultures in organizations can be neither good nor bad in themselves. A culture is considered effective if it reinforces the organization's mission, goals, and strategies. It can either be an asset or a liability. An efficient organization benefits from strong cultural norms where everyone understands what matters and how things are done. For a culture to be effective, it must not only be efficient but also suitable for the needs of the business, company, and employees.

The reason why one organization has a highly adaptive culture while another reflects only past practices is not due to luck or misfortune. Instead, it appears that any organization can end up with an outdated culture if its culture is not actively managed. If left unattended, a culture eventually becomes dysfunctional. The success of managerial efforts to create, reinforce

or change a culture within an organization greatly depends on human emotions such as fear, insecurity, sensitivity, dependence,and paranoia being taken into accountThe success of attempts to design or redesign the organizational rewards system depends on their alignment with the culture. If the rewards system aligns with the culture, it will reinforce and motivate it; however, if it doesn't align, it will undermine and hinder the culture. This chapter presents a model of four different types of cultures and their corresponding rewards systems. Managers can use this model to evaluate their organization's current situation and create an appropriate rewards system.