Organizational Culture and Human Resource Management Essay Example
Organizational Culture and Human Resource Management Essay Example

Organizational Culture and Human Resource Management Essay Example

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  • Pages: 14 (3675 words)
  • Published: April 27, 2018
  • Type: Research Paper
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Organizational climate were used as measures of employee outcome. Climate is regarded as the collective attitude of individual workers towards their organization . Climate was based on measures capturing non supportive management practice and unfair treatment. The findings suggest that, consistent Organization Climate leads to positive Employee Outcome leading to less work-related stress, increased motivation and a lesser propensity to quit and increased discretionary behavior. Organizational climate has been defined as the ? relatively enduring quality of the internal environment of an organization that a) is experienced by its members, b) influences their behavior, and c) can be described in terms of the values of a particular set of characteristics (or attitudes) of the organization.

Organizational Climate is a very popular subject for research in the domain of indus

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trial and organizational psychology. The origin and the use of the specific term are found to be as old as the original concept of management itself. It has four dimensions intention to quit, worker motivation, quality f work-life and discretionary behavior. The implications of these findings are considered in the study. The purpose of this study is to investigate factors that may contribute to the development of employee performance. The aim of the study was to find the relationship between Organization Climate and employee outcome. The hypothesis assumed was that there exists a positive relationship between Organization climate and employee outcome.

This hypothesis was proved right after conducting the research. The positive relation between the two variables was reinforced by the beta value of 57. 5%. Rajagiri School of Management 7 Master of Human Resource Management

INTRODUCTION & REVIEW OF

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LITERATURE

 A study on impact of organizational Climate on Employee outcomes The Insurance sector plays a vital role in the economic development of our nation. It acts as a mobiliser of savings, financial intermediary, and promoter of investment activities, stabilizer of financial markets and risk manager. India is still an underinsured country in the world.

It is at the 18th position among Life Insurance markets and 28th in Non-Life Insurance markets in the world. This indicates that there is a huge potential, yet to be explored. SIGNIFICANCE OF THE STDUY There has been an extensive research conducted to examine various relationships to develop a better understanding of employee outcome. In studying the key job related outcomes of employees, few researchers have investigated the role of organizational climate. This research is compelling from a managerial perspective because managers prefer employees having high level of outcome which leads to lower turnover and higher performance.

SCOPE For the purpose of the study the researcher had concentrated on Insurance Sales Professionals of various companies in the Ernakulam Region. The purpose of study is to find the influence and the relationship of independent variables (Organization Climate)on dependent variable( Employee Outcome) Rajagiri School of Management 9 Master of Human Resource Management

HISTORY OF INSURANCE IN INDIA

The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Kolkata.

Some of the important milestones in the Life Insurance Business in India are: ? 1912: The Indian Assurance Companies Act enacted as the first statue to regulate the Life Insurance

business. ? 1928: The Indian Companies Act enacted to enable the government to collect statistical information about Life Insurance. ? 1938: Earlier legislation consolidated and amended to by the Insurance Act with the object of protecting the interest of the insuring public. ? 1956: 245 Indian and Foreign Insurers and provident societies taken over by the Central Government and Nationalized.

LIC formed by an Act of Parliament viz. LIC Act, 1956 with a capital contribution of Rs. 5 crore from the Government of India. The General Insurance Business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd. , the first General Insurance Company established in the year 1850 in Kolkata by the British. Some of the important milestones in the General Insurance Business in India are: ? 1907: The Indian Mercantile Insurance Ltd. , set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices.

Rajagiri School of Management 10 Master of Human Resource Management? 1968: The Insurance Act was amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. ? 1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 07 insurers amalgamated and grouped into four company‘s viz. the National Insurance Company Ltd. , the New India Assurance Company Ltd. , the Oriental Insurance Company Ltd. , and the United India Insurance Company Ltd. GIC incorporated as a company. The

funds generated by LIC and Public Sector General Insurers are invested in the avenues that benefit society. They solely acted as public undertaking insurers and catered the life cover and general risk cover of the public till the enactment of Insurance Regulatory and Development Authority (IRDA) Act, 1999.

CURRENT SCENARIO

Global integration of financial markets resulted from de-regulating measures, technological information explosion and financial innovations. Liberalization and Globalization have allowed the entry of foreign players in the Insurance sector. With the entry of private and foreign players in the Insurance business, people have got a lot of options to choose from. Radical changes are taking place in customer profile due to the changing life style and social perception, resulting in erosion of brand loyalty. To survive, the focus of the modern insurers shifted to a customercentric relationship.

REVIEW OF LITERATURE

Organization Climate Climate is regarded as the collective attitude of individual workers towards their organization. It has been defined as the ? the relatively enduring quality of the internal environment of an organization experienced by its members which influences their behavior and can be described in terms of the values of a particular set of characteristics (or attitudes) of the organization. There is growing consensus that such organizational characteristics include support, recognition, trust, fairness, morale, rewards equity, and leader credibility. It can also be explained as the climate is the ? empiricist substitute for the richer term ? culture‘, in that organizational climate is often viewed as a quantifiable concept whereas culture is more qualitative and less tangible In addition, climate is concerned with ? those aspects of the social environment

that are consciously perceived by organizational members. The question arises as to whose view of organizational climate should be considered.

A significant body of research has considered the views of managers alone, reasoning that managers have the greatest influence over work processes and as such, their views should have the most predictive effect on future firm performance Thus, the views of non-managerial workers have been excluded from many notable studies, However, given that managers‘ perceptions of organizational climate tends to be more positive than those of non-managers, we argue that it is important to consider the views of frontline workers along with those of managers in analyzing the effects of climate on individual outcomes.

Trust is regarded as a critical component of an organization‘s climate, and as such is an essential pre-requisite of positive exchanges. Trust has been viewed as ? a Rajagiri School of Management 12 Master of Human Resource Management problem that arises in social exchange because of the unspecified nature of the reciprocal obligations and the often long time that must elapse between the receiving of a favor and the repaying of it.

Trust is: ? the willingness of a party to be vulnerable to the actions of another party based on the expectations that the recipient will perform a particular action important to the trustor, irrespective of the ability of the trust or to monitor or control the recipient. In other words, trust underpins dyadic relationships between two or more individuals where a certain degree of vulnerability or discretionary effort is encountered.

Climate: Developing Empirical Approaches Organizational climate has been defined as the? the relatively enduring quality

of the internal environment of an organization that a) is experienced by its members, b) influences their behavior, and c) can be described in terms of the values of a particular set of characteristics (or attitudes) of the organization.? (Taguiri and Litwin, 1968). The climate is the ? ether? within which an organization exists.

In the literature on climate there has been some confusion about the relevance and definition of the concept and its relationship with organization structure and organization culture (James and Jones, 1974, Schneider, 1990, and Denison, 1996), where the culture is a pattern of knowledge, belief, and behavior that emerges including social forms. In the context of the organization social forms and knowledge in general, culture includes the organizational structure. The organizational culture is the organization itself... the form, beliefs, norms, social patterns, the way things are done, the symbols, rituals, etc.

One reason for the confusion in the literature can be found in use of climate to represents seemingly different concepts. Climate can be seen as organizational climate or psychological climate. Ekvall (1987) states that the organizational climate arises in the confrontation between individuals and the organizational Rajagiri School of Management 13 Master of Human Resource Management situation. James and Jones (1974) say that the organizational climate can be viewed in two different ways: ? a multiple-measurement-organizational attribute approach? or ? a perceptual measurements-organizational attribute approach.?

Both of these approaches are confounded with organizational structure and processes and the general organization situation. The organizational climate is measured using variables like individual autonomy, the degree of structure imposed as the positions, reward orientation, consideration, warmth, and support. This is

also the case in the treatment of organizational climate dimensions presented in Litwin and Stringer (1968) where the organizational climate is measured along the following dimensions: structure, responsibility, warmth, support, reward, conflict, standards, identity, and risk. Poole (1985) states that climate seems to be a feature f, rather than a substitute for culture.

That is, a comprehensive view of culture includes the organizational climate. It is obvious from the above that measures and dimensions of organizational climate and organizational culture can be confused. This has been discussed often in the literature (Schneider,1990 and Denison, 1996). Denison concludes that although the two concepts on the surface look very different, at a deeper level the clear distinctions begin to disappear. With the exception of the first definition for psychological climate, the climate and the culture definitions and measures are confounded or overlapping.

For this study, the two concepts are quite distinct. The climate is the internal atmosphere of the organization. The culture is the pattern of behavior, which includes the organizational form. They are not the same, nor are one contained in the other. The organizational climate is the psychological climate of the organization. The definition of the psychological climate is precise; it refers to the perceptions held by the individuals about the work situation. James and Jones (1974) summarize the psychological climate to be a set of summary or global perceptions held by individuals about their organizational environment.

The Rajagiri School of Management 14 Master of Human Resource Management psychological climate is a summary feeling about actual events based upon the interaction between actual events and the perception of those events. The psychological

climate has been measured using dimensions such as disengagement, hindrance, esprit, intimacy, aloofness, production emphasis, trust and consideration. Koys and DeCotiis (1991) define the psychological climate as ? an experimentalbased, multidimensional, and enduring perceptional phenomenon which is widely shared by the members of a given organizational unit.?

They state that the psychological climate is the description–and not the evaluation–of experience. As such, the psychological climate is different from evaluations, e. g. job satisfaction. In their survey Koys and DeCotiis report more than 80 different dimensions found in the literature which has been labeled a climate dimension. Table 1. Definition of Each of the Eight Dimensions of the Universe of Psychological Climate Perceptions (Koys and DeCotiis, 1991). Dimension name Autonomy Cohesion Definition The perception of self-determination with respect to work procedures, goals, and priorities.

The perception of togetherness of sharing within the organization setting, including the willingness to members to provide material aid. The perception of freedom to communicate openly with members at higher organizational levels about sensitive or personal issues with the expectation that the integrity of such communications will not be violated. The perception of time demands with respect to task completion and performance standards The perception of the tolerance of member behavior by superiors, including the willingness to let members learn 15 Trust Pressure Support Rajagiri School of Management

Master of Human Resource Management from their mistakes without fear of reprisal Recognition Fairness Innovation The perception that member contributions to the organization are acknowledged The perception that organizational practices are equitable and nonarbitrary or capricious The perception that change and creativity are encouraged, including risk-taking into new areas or areas

where the member has little or no prior experience. Development of the Conceptual Framework of Organizational Climate Organizational Climate is a very popular subject for research in the domain of industrial and organizational psychology.

The origin and the use of the specific term are found to be as old as the original concept of management itself. However, over a long period of time there appeared various frameworks, conceptual as well as operational, different sets of dimensions, techniques of measurements, and research findings that are highly diverse and often contradictory. It created considerable ambiguity in the particular area. Up to a certain point of time it had been even confused with another very important concept, ? Organizational Culture‘.

This particular article has put some effort to clear some of the ambiguity in the area of Organizational Climate and has tried to establish it as a single construct. Evolution of the Concept This article mainly emphasized on the relationship between leadership styles and so-called‘ Social Climate‘. This article discussed the development of leadership attitude and its implication through the measurement of behavioral scales. In that article Fleishman discussed ? Leadership Climate‘ as a construct but he did not explain the concept of climate very elaborately. Climate was first very comprehensively defined by Argyris (1958).

In his attempt to diagnose the group Rajagiri School of Management 16 Master of Human Resource Management dynamics in a bank, Argyris introduced the concept of Organizational Climate. In that paper Argyris defined climate in terms of formal organizational policies, employee needs, values, and personalities. This paper also triggered off the popular ambiguity between culture and climate that persisted till

late 70‘s in the realm of organizational studies. The famous book ? The Human Side of Enterprise‘ (1960) opened a new horizon of management science. It introduced many pioneering concepts of organizational and industrial psychology.

McGregor in this book elaborated the concept of managerial climate. He argued that the climate is primarily determined by the managerial assumptions and the relationship between the managers and their subordinates. First, McGregor did not present any technique of measurement of Organizational Climate. Second, it is culture, not climate which are measured by the sets of assumptions . Climate is more dependent on perceptions rather than assumptions. Apart from these principal research works there were also other studies and the collection of all the research work ultimately provided the initial framework of Organizational Climate.

In their research work Forehand and Gilmer (1964) defined Organizational Climate as a ? set of characteristics that

  • (a) describe the organization and distinguish it from other organizations
  • (b) are relatively enduring over time and
  • (c) influence the behavior of people in the organization.

‘ Gregopoulos (1963) defined Organizational Climate as a‘ normative structure of attitudes and behavioral standards which provided a basis for interpreting the situations and act as a source of pressure for directing activities. ‘ In their extensive research work Litwin and Stringer (1966) introduced a very comprehensive framework of Organizational Climate.

They provided six dimensions of Organizational Climate that include i) structure ii) responsibility iii) reward iv) risk v) warmth and vi) support. In another book by Litwin and Stringer (1968) emphasis was given on the concept of climate and its influence

on the McClelland‘s ? need factors‘ of motivation i. e. n. power, n. achievement, and n. Rajagiri School of Management 17 Master of Human Resource Management affiliation. Attempts were also made to establish the operationalization of climate through the assessment of members‘ perceptions. During this time the actual concept of Organizational Climate began to take shape.

In a study by Schneider and Bartlett (1968), attempts were made to develop a measure of climate. The authors conducted extensive empirical study on the employees in life insurance companies by developing two sets of separate dimensions, one managerial level and another for the field agents of the companies. During this time the studies of Organizational Climate has established the fact that it can be conceptualized and measured through the shared perceptions of the organizational members and almost all the contemporary studies embraced the concept.

Another study titled ? Managerial behavior, performance, and effectiveness (1970) made an extensive survey of the existing literature and presented four compact dimensions of Organizational Climate. In their unique effort, James and Jones (1974) reviewed all the previous relevant researches, definitions, conceptual frameworks, and measurement approaches and differentiated them into three principal categories. According to them, all the major theoretical concerns and relevant researches related to Organizational Climate can be divided into three approaches.

Multiple measurement-organizational attribute approach (MMOAA) b. Perceptual measurement-organizational attribute approach (PMOAA) c. Perceptual measurement-individual attribute approach (PMIAA) Each of these approaches carries a number of research works under its belt. The concept of Organizational Climate was established separately under each of these approaches. The categorization has resulted in the re-conceptualization of climate construct and the domains of

researches have become differentiated.

As recommended by James and Jones, the distinction should be made between organizational attributes and individual attributes approach. They also emphasized on the use of the phrase ? Psychological Climate‘ instead of Organizational Climate Rajagiri School of Management 18 Master of Human Resource Management in case of individual attribute approach. The Approaches towards the Research of Organizational Climate A. Multiple Measurement- Organizational Attribute Approach (MMOAA) The most suitable definition of Organizational Climate under this approach was provided ( Forehand and Gilmar ).

They defined Organizational Climate as a ? set Of characteristics that (a) distinguish the organization from the other organizations, (b) are relatively enduring over time, and (c) influence the behavior of the people in the organization. Forehand and Gilmar model of MMOAA can be summarized below: I. Dimensions of Organizational Climate:? Size? Structure? System Complexity ? Leadership Style ? Goal directions II. Research Design? Field Studies? Experimental Studies III. Measurement Procedure? Individual perception? Objective Indices B.

Perceptual Measurements-Organization Attribute Approach (PMOAA) Under this approach the most appropriate definition was given by Organizational Climate was defined as: ? set of attributes specific to a particular organization that may be induced from the organization, deals with its members and its environment. Rajagiri School of Management 19 Master of Human Resource Management For the individual member within an organization, climate takes the form of a set of attitude and expectancies which describe the organization in terms of both static characteristics and behavior outcome and outcome-outcome contingencies.

The researchers proposed four parameters of organizational situations, viz. a) Structural properties b) Environmental characteristics c) Organizational climate d) Formal role characteristics.

They presented four dimensions of Organizational Climate and factors included in each dimension The Dimensions Factors 1. Individual Autonomy? Individual responsibility? Agent independence? Rule orientation? Opportunities for energizing individual initiative 2. The Degree Structure Impressed on Position? Organization structure? Managerial structure? The closeness of supervision 3.

Reward orientation? Reward? General satisfaction promotion achievement orientation? Profit and sales orientation 4. Consideration, Warmth, and Support? Managerial support? Warmth and support Rajagiri School of Management 20 Master of Human Resource Management The PMOAA model suggested that Organizational Climate is individual perception of the organization and the set of properties that governs the individual behavior. Climate itself was perceived as a situational variable or organizational main effect. The perceptual model based on organizational attributes raised some difficulties.

There may be significant differences between actual and perceived situations in terms of behavior and attitude. It is also difficult to establish a direct relationship between objective and perceptual factors. The difficulties encountered by the PMOAA model was tried to be resolved through a model proposed by Indik (1965). The ? linkage model ? stated that the bond between an independent variable and a dependent variable is formed by two sets of processes, organizational processes from the side of independent variable and psychological processes from the side of dependent variable.

C. Perceptual Measurement- Individual Attribute Approach (Pmiaa) Schneider and his associates was the champion of the third approach in the research domain of Organizational Climate. Schneider and Hall (1972) presented organizational Climate as a set of global perceptions held by individuals about their organizational environment. The sets of perceptions are basically the result of interactions between personal and organizational

characteristics. Schneider et al. used systems approach to explain the concept.

They considered individual as an information processor and the inputs used are: a) objective events and characteristics of the organization, b) Characteristics of the perceiver. Organizational Climate was imagined as a summary evaluation of events based upon the interactions between actual events and the perceptions of these events. In another paper, Schneider described climate perceptions as the results of a process of concept formation, based on macro-observations of the organization. This Rajagiri School of Management 21

Master of Human Resource Management conceptualization of Organizational Climate bears many resemblances with the PMOAA model discussed earlier. In both the approaches, Organizational Climate is viewed as the sum total of perceptions based on the interaction between the individual perceptions and organizational environment. In fact the proposed model by Schneider et al. was almost identical to the psychological process model proposed by Indik. But, of course, there exist some points of differences.

The PMOAA emphasized on Organizational Climate from the viewpoint of the organization and put greater emphasis on organizational attributes. PMIAA on the other hand focused on Organizational. Climate as the sum total of the individual attributes neglecting the organizational parts. Employee Outcome From the power dependence theory, the source of supervisory reward power arise from the subordinate‘s dependence on his or her supervisor, which represented that their supervisor has enough ability to provide things that the subordinate strongly desires.

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