Mubadala Development Company (MDC) - Essay Example

Mubadala Development Company (MDC) Introduction Issues related to organisational culture are very important with regards to the overall performance of the organisation especially during the contemporary period where it can be noted that the business environment is dynamic and it is ever changing. Culture shapes the way people in an identifiable organisation behave and it has a bearing on their day to day performance. Thus, this report seeks to outline and analyse the extent to which organisational culture is supportive or unsupportive of the organisational goals at Mubadala Development Company (MDC). The report begins by describing the historical and industrial background of the organisation. This is followed by a critical analysis of its organisational culture in relation to its stated mission and vision and the way it is implemented in its operations so as to ensure optimal performance of the organisation. Recommendations will also be given at the end so as to suggest the best possible ways that can be implemented to ensure that there is compliance between the organisational culture and its stated goals. Basically, the report seeks to explore the extent to which the concept of organisational culture affects the overall performance of the whole organisation Description of the organisation MDC is a company owned by the government of Abu Dhabi in the United Arab Emirates. MDC is a catalyst for investment by the government of Abu Dhabi and according to its website, it has so far invested in areas including aerospace, health automotive, telecommunication, building of ships and energy among others. It is a catalyst of economic diversification in Abu Dhabi and the company’s strategy is based on the management of long term, capital intensive investments that deliver strong financial returns and tangible social benefits for the Emirates. MDC was established in October 2002 as a Public Joint Stock Company in Abu Dhabi through a decree issued by His Highness Sheikh Mohamed Bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi. The Government of Abu Dhabi is its sole shareholder. As a Public Joint Stock Company, Mubadala functions much like an incorporated entity in the United States or a “plc” in the United Kingdom. For instance, it can issue stock, be traded publicly, and is subject to the same legal rules as other private entities in the UAE. Mubadala has approximately 500 employees, who are organized in groups that serve specific functions. For example, part of the organization is responsible for identifying, screening, developing and pursuing business opportunities and investments; another unit is responsible for managing the company's investments; and a third group handles internal services oriented positions, such as legal, human resources, communications, and finance. In addition to Khaldoon al Mubarak, the senior executives of Mubadala include native Emiratis as well as expatriates from the United States, Asia, Europe, and other Middle Eastern countries. Many formerly served in senior executive positions in leading international companies and financial institutions, such as Barclays Capital, Merrill Lynch, Atlantic Richfield (“ARCO”), and Parkway Health. As going to be outlined in detail in this essay, organisational culture plays a very important role in the day to day operations of an organisation hence the need for it to be constantly checked so as to be better positioned to meet the ever changing business environment in which the organisations operate. It can be noted that the concerns of the workers also ought to be taken into consideration particularly when it comes to decision making since they are the ones who execute the work. Mission: “The Company aims to expose staff to cultures other than their own and to the values that link and transcend particular cultures.” Vision: To become a catalyst for and a reflection of the drive for economic diversification in the Emirate of Abu Dhabi. Organisational culture “Organisational culture refers to a system of shared assumptions held by members of a given organisation which distinguishes it from the other,” (Werner 2003: 25). In simple terms, organisational culture is a system that tries to make a distinction between one organisation from the other and there are various definitions of organisational culture that have been developed over the years. Research suggests that strong, adaptable cultures which value stakeholders and leadership, and which have a strong sense of mission are likely to be associated with high performance over a long period of time (Brown 1998). The study of culture has gained prominence in the operations of organisations and this is primarily aimed at inferring the underlying shared meanings in an organisation that manifest themselves in behaviour, feelings, artefacts and language (Shein 1985). Thus, acquired knowledge through the socialisation process can be used to establish a certain culture in an organisation that can be supportive to the business goals. Job performance is a function of the fit between individual needs and culture. Thus, organisational culture is the sum of all cultures in the organisation and it is not just what the managers want and in the case of MDC, the organisational culture is shaped by espoused values. MDC has a strong culture but dysfunctional when it comes to the organisational goals as a result of different factors. In this case, Hofstede’s model of culture will be used to critically analyse the organisational culture at Mubadala. Hofstede identified four value dimensions namely power distance, uncertainty avoidance, individualism/collectivism and masculinity/femininity (Schultz et al 2003). Large power distance and uncertainty avoidance are the predominant characteristics for this region. This indicates that it is expected and accepted that leaders separate themselves from the group and issue complete and specific directives. The Middle East as a region is classified as a single distinct cluster or score relatively high in collectivism and power distance and responsibility avoidance. The values are lined to different cultures in the adoption and effectiveness of decentralized decision making and self-control mechanism ( Hofstede 1984; Renen and Schenlar 1985). The culture in the Middle East is characterized as sharing high collectivist and power distance orientation and highly centralized decision making. These societies are more likely to follow a caste system that does not allow significant upward mobility of its citizens. They are also highly rule-oriented with laws, rules, regulations, and controls in order to reduce the amount of uncertainty, while inequalities of power and wealth have been allowed to grow within the society which is characteristic to MDC. The leaders have virtually ultimate power and authority, and the rules, laws and regulations developed by those in power reinforce their own leadership and control. In this case, it is not unusual for new leadership to arise from armed insurrection – the ultimate power, rather than from diplomatic or democratic change. The high power distance (PDI) ranking is indicative of a high level of inequality of power and wealth within the society. These populations have an expectation and acceptance that leaders will separate themselves from the group and this condition is not necessarily subverted upon the population, but rather accepted by the society as their cultural heritage. The high Uncertainty Avoidance Index (UAI) ranking of 68, indicates the society’s low level of tolerance for uncertainty. In an effort to minimize or reduce this level of uncertainty, strict rules, laws, policies, and regulations are adopted and implemented. The ultimate goal of these populations is to control everything in order to eliminate or avoid the unexpected. As a result of this high Uncertainty Avoidance characteristic, the society does not readily accept change and is very risk adverse. The MDC operates in this kind of society and this has a bearing on its organisational culture. Many employees have argued that they cannot feel safe and loyal to their team. The relationship is very cold. The new comers explained that they felt that they are not welcomed and people checking them out, as if they are trying to work out their background network before they started talking to them in a friendly way. Under an atmosphere that lacks transparency, it is highly difficult to promote an honest and open discussion environment with a low entrusted team. The Masculinity index (MAS), the third highest Hofstede Dimension is 52, only slightly higher than the 50.2 average for all the countries included in the Hofstede MAS Dimension. This would indicate that while women in the Arab World are limited in their rights, it may be due more to Muslim religion rather than a cultural paradigm. The lowest Hofstede Dimension for the Arab World is the Individualism (IDV) ranking at 38, compared to a world average ranking of 64. This translates into a Collectivist society as compared to Individualist culture and is manifested in a close long-term commitment to the member 'group', that being a family, extended family, or extended relationships. Loyalty in a collectivist culture is paramount, and over-rides most other societal rules. At MDC, all the employees are not equally engaged and this creates a gap among them and there are often problems encountered especially those related to promotion to the next level. It can be noted that there is no diversity at the organisation which is contrary to its mission which clearly states that “The Company aims to expose staff to cultures other than their own and to the values that link and transcend particular cultures.” Organisational culture plays a pivotal role in influencing the behaviour of the employees and their performance. It also plays a role in determining whether it enhances or hampers overall organisational excellence in the attainment of its goals. It has to be noted that the myths, traditions, practices and rituals of a particular organisation are elements that make up the organisational culture (Bates et al 2005). These shape the values that are used as guidelines in the shaping of organisational culture. Values in an organisation are learned and they are shaped and influenced by the members of the organisation. Each organisation has got its own culture which is used to define the policies and support structures required in its operations. There is need in every organisation for the management to implement desired organisational culture which can be used as a manual in its operations. The cultural system at MDC is hierarchical and it is essentially concerned with power and authority. People occupying junior positions are expected to obey the orders from the top. In most cases, organisational culture is used to design policies, codes of conduct, communication channels, and employee support structures. Identifying with the organisation creates greater commitment to organisational goals and objectives where a social system of stability is created. However, at MDC, this is not the case as the workers are not engaged and there are often conflicts when it comes to promotion to the next level of management within the structure of the organisation. It can be seen that the culture of the above mentioned organisation is not that cohesive as far as the attainment of the goals of the organisation is concerned. In order for the members of an organisation to be better positioned to find solutions to challenges they may encounter, they ought to engage in collective learning that creates norms, shared assumptions and beliefs that become organisational culture. Basically, an organizational culture is created by the members who learn and gain experience of doing things from those around them in a given situation. However, in the case of MDC, the employees are not given the autonomy to make decisions which affect their operations in the organisation which is the reason why there is a large gap between ordinary employees and the management. This gap leads to lack of mutual trust and an atmosphere of respect among the workers since they are not given the chance to air their views which gives them a sense of belongingness. Brand (1998), posits to the effect that innovative and supportive culture will encourage creativity while controlling and directive culture will hamper it. From a broader perspective, it can be noted that the culture of an organisation mainly determines whether people from diverse backgrounds feel that they belong to it or not. If the culture of an organisation expresses the tastes and preferences of the dominant groups, those who do not belong to that group may feel alienated and unwelcome to work in the organisation. For MDC, it is imperative that the organisation strives to promote an accommodative culture that is neutral in order to avoid the problems likely to be associated with unfair treatment which can have a negative bearing on the performance of the employees as is the case at the present moment. A close analysis of the organisational culture at MDC shows that the type it uses is power distance. This is an indication of how power is distributed in an organisation (Schultz et al 2005). The organisational structure at MDC is centralised and decision making is vested in the hands of the few who are on top of the hierarchy. It can also be noted that the organisation is comprised of layers of management level where communication is from top to bottom. It is pretty difficult to get promotion especially from the lower management level to the upper level and it can be seen that all the employees are not treated equally. The structure of the organisation does not promote learning in the organisation through sharing of ideas and knowledge but it can be seen that there is a tendency to dictate orders from the top management to the subordinate workers. A high power distance is reflected in more levels of hierarchy, lower opportunities of control by juniors as well as centralised decision making. Is the culture supportive or not? The essence of organisational culture is to create shared assumptions, beliefs, values and feelings which are supportive towards the attainment of the organisation’s goals. However, for various reasons going to be explained in detail, it can be noted that this culture at MCD is not supportive of the organisational goals. At MDC, other workers with less influential positions are not given fair treatment and they do not participate in the decision process of the organisation. Decision making is a preserve for a few people with influential positions. Generally, it can be seen that the employees in the organisation are not highly motivated when it comes to decision making as well as the general treatment they get from their superiors. Employees also need be engaged in the decision making process whereby they can identify with the organisation. Most Asian cultures retain hierarchical structure and traditions. The importance of individual’s place in the hierarchy of social relationship is stressed. A person’s fulfillment of the responsibilities of a given role ensures the other functioning of social hierarchy and relations of subordinates and superiority are considered natural and proper. Loyalty, decency, reciprocity are also required. Respect, seniority, ceremony and various types of business relationship are major factors that characterise this particular culture at MDC. The hierarchical tradition in Arab society has a great impact in knowledge sharing between group and within a work unit. Free communication is limited due to one’s position in the hierarchy. The hierarchical environment is so obvious that one can easily feel it when getting into the organization for the first time. Generally, all the new members in the organisation are obliged to respect the senior employees. And one can easily tell the status of people in office by whether they have their own desk or share with others, whether they make the effort to talk to the people and whether they come to the office early or late every day. Officially, there is another important system that is used to categorise people into different groups by their employment contractual status such as using ID cards with different colours such as white, pink and blue. There are also different levels of access to the company resources. In most cases, junior employees may not openly disagree with the senior employees in order to keep balance of hierarchy. Communication is one sided and it comes from the top to the bottom. This shows that the junior employees have no power to contribute to decision making in the organisation. People have no right to say no or the power to change the style of instructions from top management. The implements the dominant working culture and the ordinary employees are expected to be obedient. This communication style always results in a late response to possible problems. Whilst it is important that that decision makers must have authority, the junior employees must also be given the autonomy to contribute their ideas towards the decision making process. It is doubtful that being obedient and trying to follow will help to achieve innovation or just make it. There is no freedom of expression and this encourages conflicts among the employees and it can be noted that criticism is not allowed. Employees who are given the autonomy to make decisions in an organisation are more likely to be motivated than those who are not given that same opportunity. When the employees are given the autonomy to take part in the decision making process, they will develop a sense of belonging to the organisation since they will also become part of it. There will be high chances of consensus especially on the issues that affect their operations on a daily basis at work. However, the type of organisational culture at MDC is not supportive of the organisational goals since it excludes other people from the making of decisions that would need to be fulfilled through the attainment of the set goals. Other employees may not have a sense of belonging as a result of the structure of organisational culture since they are treated like mere workers who are not valuable to the organisation. This results in demotivation of the workers and they may not be able to put maximum efforts in their performance which undermines the need to attain organisational excellence. The goals may not be attained as would be anticipated. According to Schein, Organization culture is what group learns over a period of time. There are several internal factors that influences organizational culture and these include the organizational climate, structure and environment (Schultz 2003). Organizational climate is rooted in employees acceptance of the prevailing practices such as employee appointment and promotion processes. This affects the extent to which organizational culture values are favored and shared by work members. Organization structure also interacts with cultural and influences the direction and hints of organizational change. The organizational structure refers to the features of the organization that serve to control and coordinate activities including job description, the policies and procedures for employees getting promotion to the next level. In the case of MDC, there is also concern about moving up the ladder through promotion from the lower level of management to the next level as this is treated more like a preserve of the privileged few who already hold influential positions within the organisation. This opportunity is not open to everyone in the organisation regardless of how good or qualified the individual may be. The top management has the power to outsource potential candidates if they are not satisfied with the calibre of employees they have. This kind of scenario in an organisation is not supportive of its organisational goals given that the other ordinary employees are detached from the mainstream events that shape the organisational goals. If these people lack the commitment to fulfil the goals and objectives of the organisation, it may be difficult to attain them. On the other hand, it can be noted that employees within the different units in the organisation are not fairly treated. Indeed, workers may not be all equal in an organisation but there is need for them to get the respect they deserve regardless of their lower qualifications. Those with lower level qualifications are often ill treated by the management and this is counterproductive. The salaries are different even for people occupying the same grade. The culture of looking down upon other employees is not supportive of the organisational goals since these will feel less alienated and less important to the organisation. This will negatively impact on their performance which will also affect the attainment of set goals. Of notable concern at MDC is that their organisational culture is not that cohesive since it is more centralised as a result of the hierarchical structure that exists in the organisation. Implementing decisions with this kind of structure in place is often challenging since the majority of the people will not have a vision for the organisation. The organisation lacks collective action in implementing its goals since the task is only limited to a few people in the organisation. However, the size of the organisation in question is so big such that concerted efforts should be put at every level of the organisation to ensure that every member is given the opportunity to participate in the activities that take place within it. Summary The knowledge of issues related to organisational culture with regards to the overall performance of the organisation is very important particularly during the contemporary period where it can be noted that the business environment is dynamic. A critical analysis meant to explore if the extent to which organisational culture is supportive or unsupportive of the organisational goals at MDC in Abu Dhabi in the United Arab Emirates revealed that its culture needs to be reviewed since the workers are not given the autonomy to influence the culture as well as contribute in the decision making. MDC is a company owned by the government of Abu Dhabi in the United Arab Emirates. MDC is a catalyst for investment by the government of Abu Dhabi and according to its website, it has so far invested in areas including aerospace, health automotive, telecommunication, building of ships and energy among others. It employees more than 500 employees. A close analysis of the organisational structure of MDC shows that the decision making process is centralised and power and authority are vested in the hands of a few people according to the hierarchical structure. Other employees are alienated from this whole process which is counterproductive in the organisation. In some instances, workers working in different departments are not treated fairly. All these factors are not supportive of the organisational goals since they are counterproductive. Conclusion Over and above, it can be noted that, “organisational culture refers to a system of shared assumptions held by members which distinguishes one organisation from the other,” (Werner 2003: 25). In the case of MDC, it can be noted that there are no espoused values that are clearly stated by the organisation as preferred values. In fact, it mainly depends on enacted values which are described as those values that are reflected in the everyday behaviour of employees and managers (Schultz et al 2005). This system does not promote collaboration among the employees. It can be concluded that the organisational culture at MDC is not supportive of its organisational goals and the following recommendations have been suggested. Recommendations Need to improve communication among members of the organisation Communication in any given organisation is significant in as far as attainment of the goals is concerned. There should be an open communication where there should be a two way communication channel which ensures that there is feedback from both ends. In the case of MDC, it has been noted that it is a bit difficult for both the management and other employees to share the same vision of the organisation as well as goals without proper feedback from both ends since the junior employees are distanced from the process of making the decisions. This should be supported by structures that allow the bottom to top communication to take place in a manner that would promote the creation of mutual understanding among the members of the organisation since communication removes barriers that may hinder the organisation from attaining its organisational goals. Need to revise the organisational structure It should be noted that the organisational structure has a bearing on the organisations endeavour to attain its set goals. As noted, the organisational structure for MDC is hierarchical where authority is given top priority. An organisation with a flat structure has the advantage where different tasks are decentralised and are performed by various departments. This would reduce the burden of putting much responsibility in the hands of a selected few people. It is therefore recommended that MDC should take measures to ensure that it has an organisational structure that would allow all its employees to be part of the decision making process so as to create a sense of belonging to the organisation among them. Need to improve leadership style at MSD MDC should adopt democratic, participatory leadership style which is more ideal as it can enhance positive performance of the subordinates if they are given high levels of autonomy in making decisions. Leaders are concerned with influencing the efforts of the other employees to improve on their performance. Bibliography Amos T.L., et al 2008. 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