RESEARCH ARTICLES

 

The interactive role of organisational strategy and culture

 

 

PJ Tsosa

Engen

 

 

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ABSTRACT

The purpose of this paper is to highlight critical factors regarding the interactive role of organisational strategy and culture. It sets out to cover a wide range of important issues which play an interactive role in organisational strategy and culture. The paper furthermore emphasises acquiring insight into the interaction that takes place between the two concepts, and the formulation and implementation of strategy from a strategic management perspective.

Key phrases: culture, technology, questionnaire, environment

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INTRODUCTION

Research into the literature on the interactive role of organisational strategy and culture relates to the impact of corporate image (i.e. attitude towards a company) on employee loyalty. This focus of research does not share the same long traditions as research into employee satisfaction. It is therefore necessary to examine and achieve a clear understanding of the subject matter. The implications of the research findings are also discussed in this paper.

The formulation and implementation of strategy is in some ways opposed to human resource management. Although human resource managers - like all managers -have cheerfully accepted the importance of strategy, few have really come to terms with its implications. Adapting to strategic realities and developing human resource strategies at the same time as retaining credibility in the eyes of all those who work for the business is a central challenge in an age when the organisation as an entity is in retreat.

There are many advantages of strategic management to effective human resource work. There is a clear sense of direction and focus on where the business is going. From that clear sense of direction can stem specific objectives, the collation of necessary information, the anticipation of problems and the assessment of strengths, weaknesses and opportunities. Because of the emphasis on analysis and precision there is a tendency for strategists to concentrate on economic data and overlook the way in which people and their values can influence the implementation - or failure to implement - a chosen strategy. This is where the human resource specialist can be invaluable because:

An 'economic' analysis of strategy fails to recognise the complex role which people play in the evolution of strategy ... strategy is also a product of what people want an organisation to do or what they feel the organisation should be like (Torrington & Hall 1995:28).

Strategy is only partly determined by scrupulous analysis of statistical and economic data. A military analogy helps to understand this point. Napoleon enjoyed a remarkable series of victories because he was, in a psychological sense, personally driven to conquest: but he also realised that battles were won because people wanted to win them. In reflecting on his Spanish campaign he commented that in warfare only a quarter was a matter of material resource; the important three-quarters were human relations and personal character. Strategy is not only a product of human analysis of objective data; it is also a product of people's dreams and ambitions. Its implementation depends on people's commitment, skills, will and collaboration. This is the very stuff of human resource management. The way the human resource specialists make their input is one of the principle drives behind human resource management (Torrington & Hall 1995:29).

 

ORGANISATIONAL CULTURE

The organisation's view of the importance of people and how they should be treated is inevitably an important factor in human resource involvement. For example, does the organisation see people as a cost or an investment? Weeks (1988:116) found that the degree of integration between organisation and human resource strategy is influenced by its philosophy towards people.

Organisation, behaviour and culture

It is in this arena that more choice of techniques is available, and the possibilities include the use of questionnaires to staff, interviews with staff and managerial judgement. Focus groups are an increasingly popular technique where, preferably, the chief executive meets with, for instance, twenty representative staff from each department to discuss their views of the strengths and weaknesses of the organisation and what can be done to improve them.

These approaches can be used to provide information on, for example:

• motivation of employees;

• job satisfaction;

• organisational culture;

• the way that people are managed;

• attitude to minority groups and equality of opportunity;

• commitment to the organisation and reasons for this;

• clarity of business objectives;

• goal-focused and other behaviour;

• organisational issues and problems;

• what can be done to improve; and

• organisational strengths to build on.

Turnover figures, performance data, recruitment and promotion trends and characteristics of employees may also shed some light on these issues. Data relating to current formal and informal systems, together with data on the structure of the organisation, also need to be collected. The effectiveness, efficiency and other implications of these factors need to be carefully considered. Most data will be collected from within the organisation, but data may also be collected from significant others, such as customers, who may be part of the environment. Current employee supply can be analysed in both individual and overall statistical terms.

Analysis may be made for any of the following factors either singly or in combination: number of employees classified by function, department, occupation job title, skills, qualifications, training, age, length of service and performance appraisal results. Forecasting of employee supply is concerned with predicting how the current supply of human resources will change over time, primarily in respect of how many will leave, but also how many will be internally promoted or transferred. These changes are forecast by analysing what happened in the past, in terms of staff retention and/or movement, and projecting this into the future to see what would happen if the same trends were to continue.

Torrington & Hall (1995:87) provide an extremely thorough coverage of possible analysis, on which this section is based. However, although statistical analyses are most well developed for the forecasting of employee supply, behavioural aspects, which we referred to earlier in this section, are also important. These include investigating the reasons why staff leave and criteria that affect promotions and transfers. Changes in working conditions and in human resource policy would be relevant here. Statistical techniques fall broadly into two categories:

• analyses of staff leaving the organisation; and

• analyses of internal movements.

Below is a paraphrased version from Exodus in the Bible, chapter 18, verses 21-23, which in simple terms explain how managers need to manage the employees' concerns and take into account issues of recruiting and promotions within the organisation.

Jethro said to Moses, "... select capable men from all the people - men who fear God, trustworthy men who hate dishonest gain - and appoint them as officials over thousands, hundreds, fifties and tens. Have them serve as judges for the people at all times, but have them bring every difficult case to you; the simple cases they can decide themselves. That will make your load lighter, because they will share it with you... you will be able to stand the strain and all these people will go home satisfied'.

In contrast, job satisfaction seeks to measure affective responses to the work environment. It is concerned with how employees feel about the organisation's expectations, reward practices, methods for handling conflict, and the like. Although the two terms undoubtedly have overlapping characteristics, keep in mind that the term organisational culture is descriptive, while job satisfaction is evaluative.

 

DO ORGANISATIONS HAVE A UNIFORM CULTURE?

Organisational culture represents a common perception held by organisation members. This was made explicit when in the definition of culture as a system of shared meaning. One should expect, therefore, that individuals with different backgrounds or at different levels in the organisation would tend to describe the organisation's culture in similar (shared) terms.

Acknowledging that organisational culture has common properties does not mean that there cannot be subcultures within any given culture. Most large organisations have a dominant culture and numerous sets of subcultures. A dominant culture expresses the core values that are shared by a majority of the organisation members. When we talk about an organisation's culture, we are referring to its dominant culture. It is this macro view of culture that gives an organisation its distinct personality. Subcultures tend to develop in large organisations to reflect common problems, situations, or experiences that members face. These subcultures are likely to be defined by department designations and geographical separation (Robbins 1993:605).

The purchasing department, for example, can have a subculture that is uniquely shared by members of that department. It will include the core value of the dominant culture plus additional values unique to members of the purchasing department. Similarly, an office or unit of the organisation that is physically separated from the organisation's main operations may take on a different personality. Again, the core values are essentially retained but modified to reflect the distinct situation of the separated units (Robbins 1993:605).

If organisations had no dominant culture and were composed only of numerous subcultures, the value of organisational culture as an independent variable would reduce significantly because there would be no uniform interpretation of what represented appropriate and inappropriate behaviour. It is the "shared meaning" aspect of culture that makes it such a potent device for guiding and shaping behaviour. We cannot ignore the reality that many organisations also have subcultures that can influence the behaviour of members (Robbins 1993:606).

One specific result of a strong culture should be lower employee turnover. A strong culture demonstrates high agreement among members about what organisation stands for. Such unanimity of purpose builds cohesiveness, loyalty and organisational commitment. These qualities, in turn, lessen employees' propensity to leave the organisation. A strong organisational culture increases behavioural consistency. In this sense, we should recognise that a strong culture can act as a substitute for formalisation.

Socialisation

No matter how well the organisation performs in recruiting and selection, new employees are not fully indoctrinated in the organisation's culture. Maybe most important, because they are unfamiliar with the organisation's culture, new employees are potentially likely to disturb the beliefs and customs that are in place. The organisation will, therefore, want to help new employees adapt to its culture. This adaptation process is called socialisation (Robbins 1993:611).

Strategy formulation

Operations managers who know what they are trying to do generally are more likely to succeed. Without direction, purpose, or creativity, success is reduced to a matter of chance. However, the major benefit of strategy formulation is even more far-reaching. A credible operations strategy reinforces the centrality of competitiveness in the culture of the organisation. It does this by concentrating on the linkages between overall company strategy, operations objectives, the various operations decisions and the individual resources of the operation. An effective operations strategy should bring the concept and feeling of "competitiveness", or at least "strategic direction", right to the operating staff themselves who are the very heart of the organisation (Slack et al. 1995:850).

Strategy implementation

Too often operations strategies fail at the implementation stage. A strategy may set the direction of the operation but implementation defines how it gets there, which is a more difficult task. Operations managers need to start the task by addressing their implementation deliverables - the list of general questions, whose answers set the basic plan for implementation (Slack et al. 1995:873).

Strategic analysis and choice are of little value to an organisation unless the strategies are capable of being implemented. Strategic change does not take place simply because it is considered to be desirable; it takes place if it can be made to work and put into effect by members of the organisation (Johnson & Scholes 1997:363).

The main emphasis to strategic management has always been on the formulation, evaluation, selection and implementation of appropriate strategies. It is always recognised, however, that none of this analysis is of much use unless the strategies so developed are implemented. It is also often pointed out that in practice managers spend most of their time on implementation rather than formulation and that the failure of strategy is most frequently due, not to poor formulation, but to the difficulties of implementation. Despite the recognition of its importance, however, the question of implementation continues to receive relatively little research attention and some hold that the consequent lack of practical and theoretically sound models to guide managers' actions during implementation is a major cause of implementation failure (Stacey 1996:181).

In several studies of operations strategy implementation, both successful and unsuccessful, a number of key elements recur regularly, either as important prerequisites of success or as omissions which seriously harmed implementation success (Slack et al. 1995:875). We will now consider each of these elements of implementation in more detail.

Top management support

This always comes out as being important, especially at times of 'breakthrough' improvement where the 'champion' role requires top management to allocate and coordinate resources. Continuous improvement requires a different kind of support, emphasising a long-term continuing expectation of improvement.

Business driven

All operations strategy changes are only a means to an end - improved competitiveness. The organisation's overall competitive imperatives must be clearly linked to every part of the operations strategy programme throughout its life.

Strategy drives technology

Competitiveness should drive operations strategy, and not the other way round, so operations strategy determines the way technology is developed.

Change strategies are integrated

Successful operations strategy programmes involve change over several fronts: technological, organisational and cultural. Only considering one aspect is too limiting. Integrating improvement strategies so that they support each other gets the operation 'firing on all cylinders'.

Invest in people as well as technology

Some organisations are reluctant to invest in their human resources even a fraction of the investment in technology. Yet changes in methods, organisation or technology must be supported by changes in attitude by all employees - especially the managerial structure. Technological 'retooling' must always be supported by 'social retooling'.

Manage technology as well as people

Conversely, organisations often seem reluctant to 'manage' technology after the investment decision has been made. Technology needs integrating into the operations on strictly managerial criteria.

Everybody on board

Any effective operations strategy must be understood and supported throughout the organisation, particularly the management structure. Without this, changes are implemented into "unreformed" traditional structures, attitudes and work practices.

Clear explicit objectives

If staff know what is expected of them it is easier to succeed. An obvious point maybe, but since operations strategy usually involves cross-functional change, the need for explicit communication of overall purpose becomes vital.

Time frame project management

Keeping control is a prerequisite for maintaining support. Objective setting, schedules, resource plans and milestones are as important here as for any other project.

In summary, the process of operations strategy is concerned with the act of creating the strategy, whereas the content of operations strategy is concerned with the output from the operations strategy formulation process. Although not all operations have an operations strategy, there is some evidence to suggest that those who do have are more likely to be successful and those operations managers who take part in the strategy formulation process should have obtained a better understanding of the organisation's overall strategy.

There are a number of difficulties in formulating operations strategies. In particular, operations managers tend to be geographically dispersed; they also operate in 'real time' and so therefore need to manage the operation at the same time as they are formulating its strategy; they cannot easily change resources which have consumed considerable investment; and finally, they are often not in the habit of contributing to strategic change. Successfully implementing operations strategies is partly a matter of identifying an implementation deliverable for any change.

 

RESEARCH PROCESS

Effective research involves the following five steps:

• define the problem and research objectives

• develop the research plan

• collect the information

• analyse the information

• present the findings.

Designing a research plan calls for decisions on the data sources, research approaches, research instruments, sampling plan and contact methods (Kotler 1997:117). These four factors are briefly introduced below:

Data sources

The research plan can call for gathering secondary data, primary data, or both. Secondary data are data that were collected for another purpose and already exist somewhere. Primary data are data gathered for a specific purpose or for a specific research project. Researchers usually start their investigation by examining secondary data to see whether their problem can be partly or wholly solved without collecting costly primary data.

When the data needed by the researchers do not exist, or are dated, inaccurate, incomplete, or unreliable, the researcher will have to collect primary data. Most research projects involve some primary data collection. The normal procedure is to interview some people individually and/or in groups to get a preliminary sense of how people feel about the topic in question and then develop a formal research instrument, debug it and carry it into the field.

Research approaches

Primary data can be collected in four ways:

■ observational research: fresh data can be gathered by observing the relevant actors and settings

■ focus group research: a focus group is a gathering of six to ten people who are invited to spend a few hours with a skilled moderator to discuss a research project

■ survey research: while observation and focus groups are best suited for exploratory research, surveys are best suited for descriptive research. Companies undertake surveys to learn about people's knowledge, beliefs, preferences, satisfaction, and so on, and to measure these magnitudes in the general population. We will say more about survey research when we discuss research instruments, sampling plans and contact methods below.

■ experimental research: the purpose of experimental research is to capture cause-and-effect relationships by eliminating competing explanations of the observed findings

Research instruments

The researchers have a choice of two main research instruments in collecting primary data: questionnaires and open-ended questions.

• Questionnaire

A questionnaire consists of a set of questions presented to respondents for their answers. Because of its flexibility, the questionnaire is by far the most common instrument used to collect primary data. Questionnaires need to be carefully developed, tested and debugged before they are administered on a large scale. One can usually spot several errors in a casually prepared questionnaire.

In preparing a questionnaire, the researcher should carefully choose the questions and their form, wording and sequence. A common error is including questions that cannot, would not, or need not be answered and omitting questions that should be answered. Questions that are merely interesting should be dropped because they may exhaust the respondent's patience (Kotler 1997:120).

In addition, the form of the question asked can influence the response. Researchers distinguish between open-ended and closed questions. Closed questions pre-specify all the possible answers, and respondents make a choice between them. Open-ended questions allow respondents to answer in their own words. Closed questions provide answers that are easier to interpret and tabulate. Open-ended questions often reveal more because they do not constrain respondents' answers. They are especially useful in the exploratory stage of research, where the researcher is looking for insight into how people think rather than in measuring how many people think a certain way.

Finally, the questionnaire designer should exercise care in the wording and sequencing of questions. The questionnaire should use simple, direct, unbiased wording and should be presented with a sample of respondents before it is used.

The lead question should attempt to create interest. Difficult or personal questions should be asked toward the end of the questionnaire so that respondents do not become defensive early (Kotler 1997:121).

• Sampling plan

After deciding on the research approach and instruments, the researcher must design a sampling plan. These plans call for three decisions (Kotier 1997:122):

- Sampling unit: Who is to be surveyed? The researcher must define the target population that will be sampled. Once the sampling unit is determined, a sampling frame must be developed so that everyone in the target population has an equal chance of being sampled.

- Sampling size: How many people should be surveyed? Large samples give more reliable results than small samples. However, it is not necessary to sample the entire target population or even a substantial portion to achieve reliable results. Samples of less than 1% of a population can often provide good reliability, given a credible sampling procedure.

- Sampling procedure: How should the respondents be chosen? To obtain a representative sample, a probability sample of the population should be drawn. Probability sampling allows the calculation of confidence limits for sampling error.

• Contact methods

Once the sampling plan has been determined, the researcher must decide how the subject should be contacted. The choices in the study referred to were mail, telephone and personal interviews.

- The mail questionnaire was the best way to reach people who would not give personal interviews or whose responses might be biased or distorted by the interviews. Mail questionnaires require simple and clearly worded questions, and the response rate is usually low and/or slow.

- Telephone interviewing is the best method for gathering information quickly; the interviewer is also able to clarify questions if the respondents do not understand them. The response rate was typically higher than in the case of mailed questionnaires. The main drawback was that the interviews had to be short and not too personal.

- Personal interviewing is the most versatile of the three methods. The interviewer is able to ask more questions and record additional observations about the respondents, such as dress and body language. Personal interviewing is the most expensive method and requires more administrative planning and supervision than the other two methods. It is also subject to interviewer bias or distortion.

Personal interviewing takes two forms, arranged interviews and intercept interviews.

- In arranged interviews, respondents are randomly selected and are either telephoned or approached at their homes or offices and asked for an interview. Often a small payment or incentive is given to respondents in appreciation for their time.

- Intercept interviews involve stopping people at a shopping centre or busy street corner and requesting an interview. Intercept interviews have the drawback of being a non-probability sample, and the interviews must not require too much time from the interviewer (Kotler 1997:123).

In summary, companies can conduct their own research or hire other companies to do the research for them. The research process consists of defining the problem and research objectives, developing the research plan, collecting the information, analysing the information and presenting the findings. In conducting research, researchers must decide whether to collect their own data or use data that already exist. They must also decide which research approach to use. In addition, they must decide on a sampling plan and contact methods.

 

MISSION STATEMENT AND ORGANISATIONAL CULTURE - HOW THE TWO CORRELATE

Organisations develop mission statements to share them with their managers, employees and (in many cases) customers. A well-worked-out mission statement provides company employees with a shared sense of purpose, direction and opportunity. The company mission statement acts as an "invisible hand" that guides geographically dispersed employees to work independently and yet collectively toward realising the organisation's goals.

Good mission statements have three major characteristics.

■ Firstly, they focus on a limited number of goals. The statement, 'We want to produce the highest-quality products, offer the most service, achieve the widest distribution, and sell at the lowest prices" claims too much. It fails to supply guidelines when management faces difficult decisions.

■ Secondly, mission statements stress the major policies and values that the company wants to honour. Policies define how the company will deal with its stakeholders, employees, customers, suppliers, distributors and other important groups. Policies narrow the range of individual discretion so that employees act consistently on important issues.

■ Thirdly, they define the major competitive scope within which the company will operate:

■ Industry scope: The range of industries in which the company will operate.

■ Products and application scope: The range of products and applications that a company will supply.

■ Competence scope: The range of technological and other core competences that a company will master and leverage.

■ Market segment scope: The type of market or customers a company will serve. Some companies will serve only the upscale market.

■ Vertical scope: The number of channel levels from raw material to final product and distribution in which a company will participate.

■ Geographical scope: The range of regions, countries, or country groups in which a company will operate.

Mission statements are at their best when they are guided by a vision, an almost "impossible dream" that provides direction for the company for the next 10 to 20 years.

This section has been concerned with analysing and understanding what many managers might regard as the 'softer' factors which influence an organisation's strategies. This requires both a political and a cultural analysis of an organisation, and how these forces influence the organisation's purposes.

The political analysis starts with understanding the corporate governance framework within which the organisation is operating, since this determines whom the organisation should be there to serve (e.g. the shareholders) and the processes through which their interests become adapted as organisational purposes. In reality the political situation is more complex than this. Organisations have multiple stakeholders with different expectations and different levels of interest in and power over the organisation's purposes. So a political analysis must address this situation -for example, through stakeholders mapping.

The cultural analysis also needs to be undertaken in one way or another. The ethical stance of an organisation will influence the way in which purposes become prioritised. But there are many cultural factors in and around organisations which will influence not only this ethical stance, but also the detailed way in which organisations work and priorities which actually emerge in practice.

This overall set of influence needs to be understood by managers when deciding how statements of purpose should be constructed and used - for example, statements of mission or objectives. These statements can play many different roles, from being broad indications of vision and strategic intent to providing derailed aims and targets for business units, departments or even individuals (Johnson & Scholes 1997:229).

 

CORPORATE STRATEGY: A CULTURE PERSPECTIVE

Hofstede (1994:179) suggests that there is a link between culture and organisational effectiveness - and that there is an assumption that the culture will unite all employees behind the stated goals of the organisation. Some organisations have used this link to try and change the organisational culture in an effort to improve organisational performance - we hear of organisations encouraging a 'performance culture' or a 'learning culture'. This, however, is making one very great assumption -that culture can be managed. Torrington & Hall (1995:295) support this view of culture as a variable that can be controlled as being associated with excellence, and again suggest that it is possible to make a culture strong.

However, there is a strong argument that culture is an independent variable which cannot be manipulated. Hofstede (1994:179) notes that the culture of an organisation is not in the hands of management and therefore it is not a matter of handing down a culture to passive employees. He also suggests that culture is not necessarily static and that management, as opposed to other groups, do have control over some things that will affect the culture, for example logos and mission statements.

This argument can be extended to include systems and processes in the organisation - hence those organisations which attempt to induce cultural change through the introduction of a system, for example a performance management system, or through quality leadership. The impact of such systems on the culture is neither straightforward nor immediate. Another issue to contend with is the fact that in any organisation there are multiple cultures.

Torrington & Hall (1995:296) make the point that strong cultures are not necessarily associated with a more effective organisation, and indicate that the relationship is far more complex. They draw out some contradictions - for example, that a strong culture may stand against flexibility and adaptability. They maintain that culture awareness is important in facilitating strategic decisions.

The mission statement of an organisation defines the fundamental unique purpose of the organisation or the rationale for its existence. It is a charter defining the organisation's business.

Creating an awareness of the organisation's desired state throughout the organisation is but one fact of communication cascading the formulation and implementation of strategy down into the organisation.

 

ENVIRONMENTAL SCANNING

The business can be regarded as a creation of its environment in that its assets, income, problems, opportunities and continued survival depend largely on the environment. Because of changes in the situation outside the environment, management is continually forced to make adjustments. A constant interchange between the business and its environment largely determines how the business will be organised and will function.

Management must guard against overemphasising certain environmental influences whilst disregarding others. This can lead to an imbalance in the business. Although the business is dependent on its environment for survival, the environment is often unstable.

When important environmental factors change, the business is confronted with the choice of either making the necessary adjustments or facing the possibility of stagnation or the cessation of activities. Stagnation and decline can only be prevented if continuous change, adjustment and renewal take place (Kroon 1997:51).

The management environment in perspective

The fast changing environment in which business finds itself requires not only a thorough environmental awareness, but also adaptability in management approach.

The interchange between business and its environment compels business to do systematic, integrated strategic planning. The management environment includes all the internal and external variables that exert an influence on the operations of the business.

The business uses inputs from the environment and in turn delivers outputs for which there is a need in the environment. The management task cannot be carried out thoroughly without taking external factors into account. The environment is known as the decision-making or micro-environment. This micro-environment encompasses, amongst other things, the strategy, business functions, managerial tasks, setting of goals, resource abilities and expectations of interest groups that must be taken into account.

The management must make decisions which relate to the strengths and weaknesses of the business. The elements of the micro-environment can be completely controlled by management (Kroon 1997:53).

The immediate environment outside the business is known as the market environment. The market environment lies between the micro- and macro-environments and serves as a buffer between the two. It is also influenced by both.

The macro-environment encompasses all uncontrollable variables and the implications they hold for management. The business must make strategic decisions with regard to economic, social, technological, physical, political and institutional and international environments, based on the changes in the macro-environment. Management must keep up to date with the latest trends in the market and macro-environment in order to utilise opportunities and overcome threats (Kroon 1997:53).

It is essential for the South African business to do a scan of the international environment. In this context we refer to the international or mega-environment with its distinct economic, legal, socio-cultural and technological variables, which must be explored and taken into account.

 

CLOSURE

Research indicates that many South African executives experience substantial difficulty in strategically aligning their organisations to deal with the changing labour and political landscape. It is certainly true that people make the difference in managing strategic change. It is also true that unless you get people to think and act differently, it will be a case of business as usual and no substantial strategic changes will take place. It is in this regard that most executives experience the greatest difficulty.

Employees interpret organisational change in terms of cultural determinants entrenched in the past. It is contended that management's fundamental role in managing the strategic change process is that of effective leadership, namely assisting employees to let go of the past and venture into the future.

Visionary transformational leadership is what it is all about. In other words, providing employees with a deep sense of mission and mobilising their energy to move organisations towards their desired future state.

In conclusion, it is reiterated that managers and students in the field of management must learn to deal with these complex human elements of change.

 

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