Organizational Commitment and Organizational Effectiveness - Term Paper Example

Organizational Commitment and Organizational Effectiveness Introduction The present business environment requires the organization to respond to the challenges of new technologies, competitors, markets, and demands for greater performance with various programs like structural change, cost cutting strategy, process change and cultural change that are designed to overcome obstacles and enhance business performance. (Luecke, 2003, p.8-9)1 Organization change is a complex phenomenon and the manager should understand the steps of effective change and any change must be systematic and logical to have a realistic opportunity to succeed.(Ricky W.G, 2007)2 Change is an inherent quality of organizational life and organizational change may be defined as the adoption of the new idea or a behavior by an organization. It is a way of altering an existing organization to increase organizational effectiveness for achieving its objectives. Organizational change is primarily structural in character and it is designed to bring about alterations in organizational structure, methods and processes. (Nilanjan, S et al,3 2006) Change is endemic to all organizations operating in business markets which involve improvements on current ways of doing things, of fine tuning operations and implementing incremental changes on standard operating procedures. (Patrick D, and Constantine A, 2009)4 According to Whybrow (2007,p.5)5 it is necessary to act in times of immediate change, no matter how nasty it may seem or how much it impacts on staff or colleagues. In view of the changing nature of business and risks involved in it which is evident through recession and economic depression occurring time and again challenging the business policies of the top leaders, change is necessary to face new challenges of every facet like accounting, technology, management, etc. There are certain factors that contribute to the change process in an organization like internal forces which include financial constraints, the need to do more with less, cross functional teams, mergers and acquisitions and empowered workers, etc. and external forces like new work force demographics, changing expectations about quality, productivity, and customer satisfaction along with new technologies (APQC, 1999).6 The transformation of bankrupt organization like Chrysler in 1970s to profitability which was possible due to the effective leadership of Iacocca, who revamped the internal politics and systems, changed the management structure, trimmed tens of thousands of employees, won concessions from UAW and transforming the company loser stigma of government bailout into positive cultural shift. It is pertinent to mention here that organizational change is triggered by an event which indicates the need for change like bankruptcy, in the case of Chrysler. However, it is assumed that change is followed by mixed reactions which provide positive impetus for change along with negative resistance from individuals and the organizations like technical systems, political systems and cultural systems (Pagan, 20087 and Rashid, Sambasivan & Rahman, 2003)8 The present paper discusses the role of culture and commitment in organizational change and provides some recommendation to maintain the commitment in the change process. Role of culture and commitment in organizational change Culture is often defined as that which is shared by and unique to a given organization or group and is an integrating mechanism, the social or normative glue that that holds together a potentially diverse group of organizational members.(Warwick Organizational Behavior Staff, 2001, p.322)9 Smircich (cited in Iivari, n.d)10 analyzed different conceptions of organizational culture in relation to anthropological schools which have been conceived either as a variable or as a root metaphor for conceptualizing organization which are further divided into two areas: organizations have been regarded as cultures or having a culture. It is further mentioned that culture contributes to the overall balance and effectiveness of an organization. However many writers and majority of organization practitioners have opted for a ‘materialistic variable’ approach rather than ‘anthropological’ or ‘holistic’ view of the culture. (Banish and Nawaz, 2003; p.11-15)11 Devis (2007) mentioned that each aspect of organizational culture is an important environmental condition affecting the system and its subsystem. Kotler and Schlesinger (2005) mentioned that organizational change efforts run into some form of human resistance. It is further important to mention that though the managers are aware of the change process, few of them still resist and take time to assess the change situation. Parochial self interest, misunderstanding and lack of trust, different assessment by different people in the organization, low tolerance for change due to degradation and lack of development in skills are some of the reasons that create hurdle in the change process. The argument of Peter Drucker (cited in Kotler and Schlesinger 2005, p.44) makes it clear that manager’s inability to change their attitudes and behavior though they understand the need for change, but offer resistance to change, is the major obstacle for organizational growth.12 Agocs (1997) mentioned that individuals resist change because of habit or inertia, fear of the unknown, absence of skills required after the change, and fear of losing power whereas organizations resist change because of inertia, sunk costs, scarce resources, threats to the powerbase of the old dominant coalition, values and beliefs, conformity to norms, and inability to perceive alternatives.13 As mentioned earlier by APQC (1999) above, increased competition, globalization, mergers and acquisitions, alliances and various workforce departments create an environment demanding a greater need of organizational culture.14 Senge et al (cited in Cameron and Green, (2004, p.135) argues that it is not possible for one or two leaders at the top management and shall be held responsible for envisaging and tackling the enormous range of challenges that need to be faced while approaching the fundamental change and instead claims that communities should be developed among interdependent leaders across organizations.15 Further it is mentioned that a fundamental culture change is usually necessary to make organizational change effective, lasting and transformational and it facilitates other change by making workforce comfortable with and receptive to organizational change. The report also mentions that organizational change cannot be effective and sustainable without the active participation and commitment of the organizations workforce. (APQC, 1999) Luecke (2003, p.12) explains two types of approaches to change which is directed towards economic improvement or an improvement in organizational activities that are termed as Theory E and Theory O. The explicit goal of Theory E change it to dramatically and rapidly increase the shareholder value which is measured in terms of improved cash flow and share price. The issue that triggers this approach to change is the financial crisis. According to Smircich (1983) culture is considered to be the background factor, an explanatory variable or a broad framework influencing the development and reinforcement of beliefs. Culture is treated as an independent variable in the field of comparative management where its presence in revealed in the patterns of attitudes and actions of individual organization members. Further organizations are visualized as social instruments that produce goods and services and as by product along with cultural artifacts such as rituals, legends and ceremonies. Culture is defined as social or normative glue that holds the organization together. Various researchers have argued that cultural artifacts and the art of management are powerful symbolic means of communication which can be used to build organizational commitment, convey a philosophy of management, rationalize, and legitimate activity, motivate personnel and facilitate personnel.16 Paul Bate (cited in Banish and Nawaz, 2003) summarizes that no conceptual distinction should be made between strategy for cultural change and strategy for organizational change as cultural change is organizational change, if there is no discrimination between organization and culture. It is further stated that anyone involved in cultural change should view it as an activity of organizational change. It is further stated that culture is movement of one strategy to another and cultural change is therefore conceived as ‘change IN’ (mutation) and ‘change OF’ (transformation) the strategy in use. The cultural change affects strategy, structure and organization and requires the services of organization ‘development’ people along with organization strategists and designers to help plan, formulate and reformulate the change process. Organizational culture appeared to have influence on the attitudes toward organizational change. It is further stated that innovation is the engine of change and the possession of positive cultural characteristics provides the organization with necessary ingredients to innovate (Rashid, Sambasivan & Rahman, 2003). It is further stated that organizational culture plays an important role in the successfulness of the change process. The study conducted by Rashid, Sambasivan & Rahman, (2003) revealed that organizational culture is associated with attitudes towards organizational change and different types of organizational culture have different levels of acceptance on attitudes toward organizational change. Further it is found that mercenary culture have strong positive attitude toward change which is not unreasonable as it can ensure effective and efficient management of organizational goals and objectives and in turn motivating the people to work hard, make things happen and hit the targets to achieve the goal. Further it was also found that network cultural group also plays an important role in organizational change as it develops positive attitude towards change as it makes easier to change the attitude of the people resisting the change in the same group. As mentioned by Luecke (2003, p.12) the goal of Theory O is to develop an organizational culture that supports learning and high performance employee base. It is further stated that companies that follow this approach attempt to invigorate their cultures and capabilities through individual and organizational learning which requires high level of employee participation and strong bonds between organization and its people. As employee commitment to change and improvement are vital elements of Theory O change to work, implicit contracts with employees are considered too important to break which is totally opposite to Theory E which mainly concentrates on the shareholder value. Nehmeh (2009)17 suggests that obtaining effective and normative commitment from employees may have positive effects for the organization. It is pertinent to mention here the employees with high commitment may become barrier for organizational change as they are committed to single set of values and goals and won’t be able to cope with prevalent uncertainties resulting into resistance from them. Organizational commitment, according to Porter (cited in Angle and Perry, 1981) has three major components, i.e., (i) strong belief in and acceptance of the organizations goal, (ii) willingness to exert considerable effort on behalf of the organization and (iii) definite desire to maintain organizational membership.18 Greenwood and Hinings (1996) while explaining the importance of value commitment within the organizations in radical change identified four generic patterns of commitment viz., (i) status quo commitment wherein all groups are committed to the prevailing institutionalized template in use; (ii) indifferent commitment, where groups are neither committed nor opposed; (iii) competitive commitment, where groups support the template in use whereas others prefer articulated alternative, and (iv) reformative commitment, where all groups are opposed to template in use and prefer articulated alternatives. Further it is found during the study undertaken by Greenwood and Hinings (1996)19 that institutional theory does have a role to play in the organizational change process that goes beyond the ideas of inertia and persistence. It has been observed that the action of values, interests, power and capacity within an organization must be brought into play which comes from organizational actors who have positions, skills, commitments and histories that are primarily found in the groups. Change and stability are understood through the ways in which organizational group members react to old and new institutionally derived ideas through their already existing commitments and interests (Greenwood and Hinings, 1996). Alvesson and Willmott (2002)20 mentioned that by defining the role of certain individuals in the organization, it invokes particular identity and conditions in which organizations operate. It is further mentioned defining the person and involving them in decision making process invokes a sense of responsibility, loyalty, work morale, results orientation, and being positive towards the decision of making change in organization. Thus culture and commitment play a vital role in the process of organizational change which is inevitable in any organization in times of socioeconomic and political competitions. Recommendations to maintain commitment in change process As mentioned above, organizational commitment is important factor in the change process as any kind of resistance from any part of the organization can derail the process of organizational change. Griffin, Rafferty and Mason (2004) mentioned that organizations need to become flexible so that they can adapt to the changing environment in the present global scenario. And therefore, in order to enhance adaptability all levels of an organization should be involved in initiating and implementing change. The sources of change i.e. leaders outside the workgroup, leaders within the work group, and employees within the work group; will have different types of change activities as they tend to interpret and perceive differently.21 Therefore, to achieve maximum commitment from different sources of change in an organization, it is recommended that responding to institutionalized resistance to organizational change. As resistance is also a strategy of powerless, a strategy of refusal to collaborate with the oppressive institutions and authorities so that refusal could be dealt effectively. It is suggested to create allies to protect individuals from having to deal alone with attacks, repression and marginalization while seeking common grounds and joint action wherever possible. Further it is important that organization should engage in constructive criticism of change arguments and evidence to ensure that they are as effective as possible. The organization should develop the strategy to tackle the issue, both internally as well as externally by continuing the present sound evidence and arguments to unmask ideological claims made by the authorities about the legitimacy of their resistance. This way the organization will be able to achieve higher level of commitment and trust among the various sources of change and lessen the resistance for change. It is further suggested that existing resources should be used to optimum effect and the authorities should work within the organization to convince the people that change is in their interest and create situations where the decision making could be easier. It is recommended to make full use of the change making possibilities of existing legislations, regulations and organizational policies and practices in such way that it influences positivism traits among the change sources those who are resisting the change process. Political mobilization could also be helpful in order to provide impetus to the legislation so that the policies and regulatory frameworks of the organizations are change suiting somewhat favorable to the opposing party which may provide confidence to them and motivate them to provide support to the change process. The confidence of workforce should be garnered by supporting their claim that their rights will not be affected along with their pay and perks, skills of work, and their position; which may instill the sense of security among the resisting people and clear the confusion that has been created by the decision for organizational change. Additionally, support could be gathered from other private and public institutions to affect the change process from outside the organization. It would be helpful if parallel organizations are built that embodies the values that change advocates are working toward and seek to establish the effectiveness and legitimacy of these new alternatives. (Agocs, 1997) Paul Page (2004) mentions that employee commitments is the most central aspect in organizational change process and maintain any future ongoing programs. Organizations need to overcome barriers in organizational management related to employee commitment by increasing their involvement which shall increase their understanding and decrease any personal uncertainty. However it is further stated when there is a fundamental shift in corporate values that are not shared by the employees, it is suggest on introduce employee socialization so that optimum commitment is achieved. Reinforcement of the change via reward systems need to supported in order to sustain the new desirable behaviors. Further employees must be trained so that they can adopt to change and perform the new behaviors as expected from them towards the growth of organization.22 Schneider, White and Paul (cited Hartkamp, ter Hoeven, and Peiterson, 2008)23 refer supporting environment as service climate which is further defined as ‘employee perceptions of the practices, procedures and behaviors that get rewarded, supported and expected with regard to customer service and customer service quality’. Service climate is expected to facilitate the employees with required resources needed to cope with the organizational change which will further enhance employee commitment to organizational change. Job resources like supplying work units with sufficient staff and work hours ultimately reduces the work load individual employee that motivates them to cope with high demanding processes that works as antecedent of effective commitment to change. As mentioned by Bordia et al (2004) uncertainty is one of the most commonly reported psychological states in the context of organizational change.24 Therefore it is suggested by (Hartkamp, ter Hoeven, and Peiterson, 2008) that managers could provide a vision on how and where to change the management, which can help in reducing the uncertainty among the employees and motivate employee commitment. It is found that participation and management practices are found to have a significant positive relation with affective commitment to change. Nehmeh (2009) mentions that affective and normative commitment from employees can have positive effects towards the organization. Provision for fair and reasonable work practices in cost effective way is recommended to increase employee commitment and the employee should feel valued and recognized by the organization. Induction training and socialization to the newly recruited employees are vital in gaining employee commitment which is essential to reinforce a sense of self worth within newcomers. It is suggested that continuous training should be given to employees in order to give them a sense of recognition and understanding that their development is valued by the organization which leads to job satisfaction which in turn increases the employees commitment and faith in the decision of the organization to adopt change. The commitment can be sustained through employee reward and performance appraisal system, compensation programmes like ESOP and effective HRM policies and practices. Finally, the organization should not miss out on stating that people are its most important asset or the source of its competitive advantage. Thus organization can secure the commitment by engaging in fair HRM practices, more supportive management and reasonable rewards. The secured commitment will further be helpful in creating a sense of belongingness among the employees which will help the management to undergo organizational change without much resistance. Conclusion Change is an inevitable process in the business world which is mainly triggered by cycle of events forcing the company to adopt change. Moreover change is required to overcome the socioeconomic and political problems from time to time which are initially welcomed by strong resistance from internal and external factors. Organizational culture and commitment plays an important role in the change process. As culture affects the overall balance of the organization, strong commitment from the employees has negative as well as positive impact on the organizational change process. Change can be looked upon a positive process providing loads of opportunities to various stakeholders involved in the process. It is important to identify team members who see change in the positive force and remove those who perceive it in negative light as it may derail the process of change. (Harrison, 2007, p.37)25 It is necessary to understand that regular communication with your team can provide key platform for generating support and motivating commitment among the people by taking inclusive approach towards the process of organizational change. (Sir Nick Scheele, 2007)26 References 1. Agocs, C (1997) The goal of Theory O is to develop an organizational structure and strong bonds between the organization and its people. Journal of Business Ethics, Vol. 16, No. 9, Women in Corporate Management, pp. 917-931, Springer 2. Alvesson, M. and H. Willmott (2002).Identity Regulation as Organizational Control: Producing the appropriate individual, Journal of Management Studies 39(5): 619-644 3. Angle L.H and Perry J.L. 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(1983) Concepts of Culture and Organizational Analysis, Administrative Science Quarterly, Vol. 28, No. 3, Organizational Culture, pp. 339-358, Johnson Graduate School of Management, Cornell University 25. Warwick Organizational Behavior Staff, (2001) Organizational studies: critical perspectives on business and management, Volume 1, Routledge, Great Britain 26. Whybrow, J (2007) Change Today, Not Tomorrow, Harvard Business School Press “Managing Change”, Harvard Business Press, United States. Read More