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Organisational culture at VWF           2015                                                     IndustriesCrisis started ...
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Organisational culture at VWF            20112                                                      IndustriesIn VWF, prod...
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  1. 1. Organisational culture at VWF 2011 Industries LONDON SCHOOL OF BUSINESS & FINANCE Organisational culture at VWF Industries Student Name: Madhumalesh Prakash Student ID: A4036664 Submission Date: 2nd October, 2011 Intake: MBA Batch 8A Module Name: Organisational Behaviour Module Code: OB Assignment Title: Culture change Word Count: 3651A4036664 Madhumalesh Prakash Page 1
  2. 2. Organisational culture at VWF 2012 IndustriesTable of Contents1. Executive Summary ......................................................................................................................... 32. Introduction .................................................................................................................................... 33. Case background ............................................................................................................................. 34. Key findings ..................................................................................................................................... 64.1 Cultural Web ............................................................................................................................... 64.2 Organisational iceberg ................................................................................................................ 84.2.1 External factors .............................................................................................................................. 84.2.2. Internal factors.............................................................................................................................. 95. Recommendations ........................................................................................................................ 116. Conclusion ..................................................................................................................................... 127. References .................................................................................................................................... 14A4036664 Madhumalesh Prakash Page 2
  3. 3. Organisational culture at VWF 2013 Industries 1. Executive SummaryThis report delineates the key issues related to the organisational culture, andrelates it to culture of a manufacturing organisation, VWF industries in India. Wewill discuss about the key internal and external factors which affect theorganisational culture of an organisation and compare culture of two differentunits under VWF. We shall also see how culture of an organisation can bechanged and evaluate the role that organisational design, leadership and someother factors play in facilitating cultural change. 2. IntroductionVijay Wires and Filaments private limited is a medium sized manufacturingcompany based in India. Since its inception in 1979, it has developed areputation as world class manufacturer and supplier to the lighting industry.VWF offers high quality tungsten and molybdenum wires and wire products liketungsten to the lighting industry and diamond dies for the wire drawing industry.Products manufactured in VWF are exported to more than 16 countries includingU.S, Europe and other Asian countries. Exports constitute more than 50% of thetotal production.Raw materials are imported from Japan-Nippon, Osram-Germany and China-Xiamen. From raw materials to finished products VWF incorporates its ownquality checking process in every stage.Employees in the lower level are not highly skilled and educated, as the processof production is not complex. Members in managerial level and maintenancedepartment employees are well educated.VWF industries operated through six units including the main unit. They are (1)VWF main unit, (2) Vijay halocoils, (3) Vijay precision dies, (4)Vijay Literonics,(5) Unique wires, (6) Vijay Inspections (VWF Industries 2010) . 3. Case backgroundVijay Wires and Filaments industry was started by B.R.Pai with a bunch of peoplearound 6 or 7 in 1979, in a small garage type building. The excellentmanagement philosophy of Mr Pai emphasizing respect to individuals,A4036664 Madhumalesh Prakash Page 3
  4. 4. Organisational culture at VWF 2014 Industriescontribution to customers and the community brought up the organisation froma bunch of employees and a small unit to around 600 employees and 6 units atpresent. B.R.Pai headed the company as managing director from 1979 to 1991.The organisational structure contained fewer levels, as the organisation andnumber of employees were small in the beginning. There was direct contactbetween the employees and the owner. Mr Pai adopted the „Management bywalk around (MBWA)‟ policy from the beginning. MBWA is an approach to hands-on, direct participation to hands-on, direct participation by the managers in thework-related to their subordinates or spending significant amount of their timemaking informal visits to the shop floor and listening to the employees (Businessdictionary 2011). He also practised management by objective (MBO). Accordingto Odiorne MBO is, “a process whereby the superior and subordinate managersof an organisation jointly identify its common goals, define each individual’smajor area of responsibility in terms of results expected, and use thesemeasurements as guides for operating the unit and assessing the contribution ofeach of its members” (Kondrasuk 1981). These types of practises made theemployees to get the sense of owning the company.He demonstrated excellent leadership style as a mixture of autocratic anddemocratic leadership style in different situations. In autocratic leadership stylemanager alone exercises decision-making whereas in democratic style all themembers including employees have a greater say in decision making (Mullins2005). Decisions like increasing the capacity of shop floor, changing of shifts wasdone in a democratic way. This again makes the employees to feel the belongingand make them to work hard to achieve the targets set by them. Every year during a famous festival celebrated in the factory, best employeeswere awarded with gold and silver coins and were praised for their work done.This motivated the employees both extrinsically and intrinsically. According toMullins (2005), another classification of motivation to work is Social relationships– such as friendships, group works. This also was satisfied by celebrating all thefestivals in the factory and by arranging trips early once for the employeeswhere they could come along with their families.His way of management can be compared to the Hewlett and Packard way ofmanagement where they relied on terms like integrity, trust, respect toindividuals and teamwork (Dong 2002)As time passed, organisation grew rapidly from one to two, two to four and fourto six units. Organisational structure was no longer simpler like before. Threebest employees in every unit were promoted as shift managers and shiftmanagers were appointed as production head for every unit. As the technologyimproved specifications in machines and processes improved. So, maintenanceengineers were hired to rectify the breakdown of machines.A4036664 Madhumalesh Prakash Page 4
  5. 5. Organisational culture at VWF 2015 IndustriesCrisis started in the year 1991, when B.R.Pai took retirement from thecompany‟s processes. He was still the managing director of VWF industries, butfor the decision making process of the organisation he appointed MrRadhakrishna as the President of VWF industries. Mr Radhakrishna was servingas divisional manager in VWF industries. This change in authority disappointed afew employees for losing Mr Pai as their leader and few top management stafflike Rajendra Pai- nephew of B.R.Pai. The new head Mr Radhakrishna was notable to hold the same type of bond between employee and management like MrPai. He led the organisation with autocratic leadership skills, which made theemployees to lose confidence on him and the organisation. This created de-motivation among the employees. As time passed employees felt that they werelosing the type of organisation for which they worked before.From then till now company has grown with ups and downs. Radhakrishna tookthe company global by attracting a lot of foreign customers. One of the units,Litreronics was merged with a US company and manufactured bulbs and CFLlights. This unit was locked down in late 90s by the labour union for a demand topay rise which was solved eventually. Mr Radhakrishna made the organisation togrow in his way, not in the way company ran from the beginning. He just lookedafter company‟s financial and marketing and knew very less about the employeeproblems. This was managed by the divisional manager for production MrPoovanna, who had similar leadership behaviour like Radhakrishna. Poovannawas also the production manager for unit one. This type of management hascreated discomfort in employees, due to which the permanent employees arenot giving their best for the production and quality.Whereas in the second unit, „Vijay halocoils‟ the production was looked after byMr Jayram who was reporting to Mr Poovanna. Poovanna did not have so muchinvolvement in the production of second unit, and everything was looked afterby Jayaram. This unit had highest production of 92% than all other units.VWF industries were the only company manufacturing tungsten wire till 1991,when Wolfra-tech was incorporated. Being developed as a brand name asbiggest supplier of tungsten wires in South India, having a single competitor wasnot a big deal at that time. But now due to the cultural conflict in VWfenvironment, it is losing its grounds to Wolfra-tech which is attracting thecustomers with better quality and contract employees with better pay and abetter environment.A4036664 Madhumalesh Prakash Page 5
  6. 6. Organisational culture at VWF 2016 Industries 4. Key findingsA popular way of defining culture is „how things are done over here‟. Butorganisational culture is seen in various aspects by different authors:Atkinson explains organisational culture as reflecting and underlyingassumptions about the way work is performed; what is acceptable and notacceptable and what behaviour actions are encourage and not encouraged(mullins 2005) Deal and Kennedy (1982) argue that culture is the most important factor whichaccounts for the success or failure in organisation and Peter and Waterman(1982) suggests that culture can be looked upon as a reward of work: wesacrifice much to the organisation and culture is a form of return (Fincham andRhodes 2005).In order to understand the culture of an organisation, many theories have beenproposed like: Johnson presents a cultural web, which brings together differentaspects (Mullins 2005); and Hellriegal et al (1988), had recognised why peoplebehave as they do at work by viewing an organisation as an iceberg. Let us seethe keys issues which caused change in culture of VWF industries by analysingthese two theories. 4.1 Cultural Web Rituals and Routines: Rituals include informal and formal processes in the organisation and a routine is the way members in the organisation behave towards each other. In VWF, at present situation there is no such bonding between the management staff and employees like how it was in Mr Pai regime and also to bring pressure on permanent employees canteen facilities were stopped, chairs in the shop floor was removed and festivalA4036664 Madhumalesh Prakash Page 6
  7. 7. Organisational culture at VWF 2017 Industries celebration was stopped. Al these things brought a change in the culture of VWF. Stories: These are things told by the members of the organisation about the past of the company. One senior employee remembers his earlier days and says “It was very nice to work before in the organisation, we were actually feeling home and all the employees had a feeling of we are part of „VIJAYA‟ family. But things changed and we are afraid we will not be getting that environment again”. Symbols: VWF industries do not market its product directly to the people so it has very less to do with logos, offices, titles etc. Here, type of language or terminology used can be seen as symbol of the organisation. Power structures: This is most powerful individual or group in the organisation. In this case Mr Radhakrishna and Poovanna can be considered as power structures of VWF industries. As we saw both of them follows autocratic leadership style which may render any aspirations of involvement impossible, and this style can be considered as negative and even a source of bullying and harassment. Bullying is referred as the negative behaviour by the perpetrator on the employees, causing humiliation, offense and distress and which may affect the job performance or create an unpleasant working environment (Hoel et al 2010). Organisational structure: This reflects power structures discussed above and outlines important activities and relationships in the organisation. A poor organisational structure reduces the efficiency of an organisation. For instance, in VWF Poovanna is divisional manager for production, he is responsible for all the production activities in all six units but also, he acts as production manager for unit one. This means he has to concentrate a lot on unit one which reduces his efficiency in tracking production of all other units.A4036664 Madhumalesh Prakash Page 7
  8. 8. Organisational culture at VWF 2018 Industries 4.2 Organisational iceberg Fig: Organisational Iceberg.According to Hellriegel, Slocum and Woodman (1988), “One way to recognisewhy people behave as they do at work is to view an organisation as an iceberg.What sinks a ship isn’t always what sailors can see, but what they can’t see”.In VWF industries also internal factors are more responsible for change in theenvironment and in-turn sinking of the company. Let us identify and discusssome external and internal factors responsible for change in the culture.4.2.1 External factorsCompetition: Competition is increasing with Wolfra-tech and small similarindustries providing similar products with better quality and cheaper price. Dueto this there was huge decline in profit margins and created worries among themanagement, which pressurised them to put pressure on employees.Resources: The raw materials were imported mainly from Japan- Nippon andChina- Xiamen. Xiamen quality was comparatively low than Nippon, and due tothe earthquakes and tsunami in Japan in 2011, flow of input was hugelyaffected.A4036664 Madhumalesh Prakash Page 8
  9. 9. Organisational culture at VWF 2019 IndustriesCustomers: VWF was losing its customers to its competitors, due to whichcompany‟s turnover was decreased and employee turnover was increased. Thiscaused employee lay off‟s and cancellation of pay rises, which created conflictsbetween the employees and management.Rules and regulations: This can be seen as rituals and routines which werediscussed in previous topic. Strict rules were imposed on the employees tocreate pressure.Organisational design: VWF‟s organisational design can be seen as purelyMechanistic model except the fact that labour is not highly specialized.Mechanistic model emphasizes importance of achieving high levels of productionand efficiency through: Extensive use or rules and procedures, Centralisedauthority. The characteristics of mechanistic management system are similar tothose of bureaucracy (Mullins 2005).4.2.2. Internal factorsAttitudes: This can be seen as the way management behaves with theiremployees as well as, employee‟s behaviour towards management. This affectsadversely on the culture of an organisation. Attitude towards the employees hasbeen changed since Radhakrishna has taken the authority. He and Poovannaalso follow MBWA but not with a friendly attitude like Mr Pai, they go to shopfloors and behave negatively with the employees and put pressure.An attempt to change the attitudes of the employees can sometimes result in achange that is opposite to what is expected. According to Heller (1973), nobodylikes to feel easily manipulated, and if a great deal of visual pressure is put on usto change our attitudes we are likely to exert pressure in return, perhaps bydoing opposite. This is often referred to „Boomerang effect‟ (Rollinson 2008). TheBoomerang effect was seen in VWF industries, more the pressure put bymanagement on employees to increase production they were decreasingproduction and quality. This was happening in unit one, whereas in second unitJayaram did not threaten or forced employees to change their attitude. Heshowed positive attitude by explaining the outcomes of the tasks and motivatedthe employees to work over-time and reach the target.Communication patterns: According to Varey, culture and communicationcannot be separated. „For us to communicate and cooperate, we must sharesome common assumptions about the world we live in and some commonstandards by which to judge our own and each other’s actions’ (Mullins 2005).There are different types of communication network like wheel, circle, all-channel and chain network which is suitable for different type of businesses. InVWF, communication pattern is of chain network type where lower levelA4036664 Madhumalesh Prakash Page 9
  10. 10. Organisational culture at VWF 20110 Industriesemployees do not interact with the high level management directly and the flowof information flows in a predetermined channel.Conflicts: Conflicts occur when perceptions of two individual vary. Fewemployees in the organisation were in favour to Mr Poovanna and were loyal tohim, mainly due to some personal benefits and were reporting him all theinformal processes on the shop floor. This created conflicts between theemployees.Conflict also occurs when two individual or group‟s interest are different andwhen one interferes in other‟s activities wilfully. There were divisional managersfor all departments like: Divisional manager for quality- Mr Rajendra Pai,Divisional manager for production- Mr Poovanna, Divisional manager formaterials- Mr Vasanth Kumar. Mr Poovanna pressurised employees forproduction, whereas Mr Rajendra Pai was emphasizing on quality and advisedemployees to see quality instead of production. These sometime createdconflicts between the managers for quality issues and improper supply ofmaterials.Political behaviour: Organisational culture and political behaviour are inter-related. Culture is one of the factors which give rise to political behaviour. Whena culture encourages people to view situation in win-lose terms, any behaviourthat facilitates winning can be justifiable. This prompts the employees to engagein politicking (Rollinson 2008). This can give rise to conflicts.Let us consider a situation in VWF to explain this: In monthly meeting MRRadhakrishna was comparing production levels of unit one and two. Productionof unit one being around 80% and unit two of 92%, he was always criticisingPoovanna as loser in front of Jayaram. This gave rise to political behaviour inPoovanna and being divisional manager he was restricting the flow of rawmaterials to unit two, which created conflicts between him and Jayaram.Personality: Personality is defined by Gordon Allport nearly 70 years ago as,„the dynamic organisation within the individual of those psychological systemsthat determines his unique adjustments to his environment’ (Robbins et al2009). This affects the culture majorly because; personality is the one whichalters the behaviour of an individual in a business environment.From all the key findings we can see that culture in VWF industries has beenchanged from 1991 and it has to be changed again to increase the profitmargins, to hold on the customers, to create a better environment for theemployees.A4036664 Page Madhumalesh Prakash 10
  11. 11. Organisational culture at VWF 20111 Industries 5. RecommendationsWhen an organisation is facing problems, declines in market share, losing itscustomers and employees then it is understood there is some problem in theculture of that organisation.The first step in cultural change is to determine the future and have clear visionof how the organisation is to look like, feel like and sound like. The next step isto find key findings in the present organisational culture and climate.Organisational climate, describes the atmosphere within the organisation andextent to which members work together. Then a plan is made for specific culturechanges needed in particular areas (Dwane 2004). This can be compare to„Lewin‟s force field‟ theory of change can be used in this case. As we discussedproblems is all with the management and forces needed to the organisationalchange is employee‟s emotions. Resisting force is the management itself,behaviour and attitudes of manager.Firstly, proper leadership qualities should be adopted by the management.Management and leadership are closely related. They both overlap andorganisation needs both qualities to get things done through people and createan enjoyable environment.According to Drucker(1984), leadership is the most important factor whichdetermines whether a group or organisation will be successful (Rollinson 2008).Lord Sieff describes it as, „leadership is vitally important at all levels within thecompany, from main board to the shopfloor. Leadership is the moral andintellectual ability to visualise and work for what is best for the company and itsemployees... The most vital thing the leader does is to create team spirit aroundhim and near him, not in a schoolboy sense, but in realistic terms of matureadults... To be effective leadership has to be seen, and it is best seen in action’(Sieff 1991).Due to variable nature there are many alternative ways of analysing leadership.Factors like: risk factors, type of business, nature of the tasks can be consideredto decide which leadership style suits the organisation. In VWF there is a need oftransactional leadership for a period of time and needs to change totransformational leadership. Transactional leadership emphasizes on clarificationof goals and objectives, work tasks and outcomes and is based on mutualdependence and an exchange process: „I will give you this, if you do that‟.Whereas, Transformational is a process of engendering higher levels ofmotivation and commitment among the followers. Many leaders seetransformational leadership as charismatic or inspirational leadership (Mullins2005). Mr Radhakrishna with his autocratic leadership skills he should also adoptdemocratic leadership skills in few situations to motivate the employees.A4036664 Page Madhumalesh Prakash 11
  12. 12. Organisational culture at VWF 20112 IndustriesIn VWF, production percentage is around 80% and rejection is of 35%.Transactional leadership can be applied by a mutual agreement with theemployees, „If production is increased and rate to rejection is reduced then payrise can be seen proportionate to the percentage in production increase‟. Bassproposed a theory arguing, leader transforms and motivated people byexplaining importance of the task outcomes, inducing them to outdo their ownself interests for the sake of organisation and by satisfying their high level needs(Mullins 2005).Motivation can be defined as process that account for an individual‟s intensity,direction and persistence of effort towards attaining a goal. There are manytheories which attempt to explain how and by which people get motivated. Mostwell known theory is Abraham Maslow‟s hierarchy of needs theory whichhypothesises that in every human being there exists a hierarchy of five needs:Physiological, Safety, Social, Esteem and Self-actualisation. As discussed beforerole of the transformational leader is to motivate employees by satisfying lowerneeds and activating high level needs (Robbins et al 2009).An efficient leadership in the management can control all the behaviouralaspects like attitudes of the employees, communication patterns, employee andinterdepartmental conflicts, and political behaviour.Having proper management and leadership, an organisation then can thinkabout formulating different strategies to bring cultural change in it.Organisational design can also be considered to create a neat environment ofworking. As we saw before in VWF it is mechanistic model which is similar tobureaucracy. I recommend it to adopt a hybrid design which is mixture ofmechanistic and organic model. Organic model is a more fluid structureappropriate for changing conditions. This type of model is required whenunforeseen circumstances arise constantly and requires action beyond thedefined roles (Mullins 2005). 6. ConclusionOrganisational culture is a key issue for the success or failure of any type oforganisation. There are many factors which influence the culture in anorganisation. To maintain a proper culture, a manager needs to concentrate onthe behavioural aspects of an organisation which is not seen to the externalworld than the external factors. To do so he needs to see the organisation as aniceberg.Leadership and management play an important role in structuring the culture ofan organisation. A manager of an organisation needs to posses excellent anddifferent styles of leadership in different situations. He should be able tocommunicate properly with his subordinates and give them a clear vision ofA4036664 Page Madhumalesh Prakash 12
  13. 13. Organisational culture at VWF 20113 Industriescompany‟s goals and objectives, manage conflicts, motivate and influencemembers of the organisation to outdo works beyond their role whenever neededto reach the goal.A manager should understand the motivating needs of the employees andshould satisfy them from lower level and keep on motivating them by activatingthe higher level needs.Organisational structure and design also play a key role in the formation ofsuccessful culture in an organisation. Decisions always should not be taken by asingle person. There should be a mixed organisational system of mechanistic andorganic models.A4036664 Page Madhumalesh Prakash 13
  14. 14. Organisational culture at VWF 20114 Industries 7. ReferencesBooks:Fincham, R., Rhodes, P. (2005). Organisational culture: Principles oforganisational behaviour, 4th edition. Oxford University Press: New York.Hellriegel, D., Slocum, J. W. & Woodman, R. W. (1998). OrganisationalBehaviour, 8th edition. South-western: Cincinnati.Mullins, L.J. (2005). Organisational development: Management andorganisational behaviour, 7th edition.Rollinson, D. (2008). Attitudes and emotions: Organisational behaviourand analysis-An Integrated approach, 4th edition. Pearson education:United Kingdom.Robbins, S.P., Judge, T.A., Odendaal, A., Roodt, G. (2009). Personalityand values: Organisational behaviour- global and South Africanperspectives, 2nd edition. Prentice Hall: South AfricaJournals:Dwane, S. (2004). Changing organisational culture: NZ Business, Vol. 18Issue 5, p-36.Hoel, H., Glaso, L., Hetland, J., Cooper, C.L. And Einarsen, S. (2010).Leadership Styles as Predictors of Self-reported and Observed WorkplaceBullying: British Journal of Management, Vol. 21 Issue 2, p453-468.Kondrasuk, J.N. (1981). Studies in MBO effectiveness: Academy ofManagement Review, Vol. 6 Issue 3, p419-430.Internet:Business dictionary (2011). Management by walk around: Definition,[Online]. Available at:http://www.businessdictionary.com/definition/management-by-walking-around-MBWA.html (Accessed on 28th Sep 2011)Dong, J. (2002). The rise and fall of the HP way: Paola Alto Online,[online]. Available at:http://www.paloaltoonline.com/weekly/morgue/2002/2002_04_10.hpway10.html (Accessed on 28th Sep 2011)A4036664 Page Madhumalesh Prakash 14
  15. 15. Organisational culture at VWF 20115 IndustriesVWF Industries (2010). Available at: http://www.vwfindustries.com(Accessed on 28th Sep 2011)A4036664 Page Madhumalesh Prakash 15

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