Building organizational culture based on competing value ...staff.ui.ac.id/.../2013_oct_apio_building_org_culture_helini_ilham_wh… · Organizational culture is a distinctive feature

Proceedings 5th APIO International Conference, Jakarta , 5 October 2013

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Building organizational culture based on competing value framework to gain

competitive advantage

Helliyani Esterina Hakh, Ikram Fatahillah, and Wustari L. H. Mangundjaya

Faculty of Psychology, Universitas Indonesia

Kampus UI Depok- West Java, 16424, Indonesia

[email protected], [email protected],[email protected]

Abstract

Organizational culture is a distinctive feature and a key success in building a competitive advantage. Nevertheless,

organizational culture is not easily defined, measured, as well as managed. The objective of this study is to discuss

about the process of identifying and building a strong organizational culture within the Competing Value Framework.

The methods of this survey is using OCAI (Organizational Culture Assessment Inventory) questionnaires (Cameron &

Quinn, 2011) Where measuring 6 key dimensions from organizational culture which are dominant characteristics ,

organizational leadership, management of employee, organization glue, strategic emphases, and criteria of success that

in the end it will be able to see the overall condition of an organizational culture in a company. This questionnaire is

followed by structured interviews with the managers. Focus Group Discussion and extended discussion is also

conducted with participant ranging from staffs to directors of PT FX. The results of this study showed that organization

prefer to have a Clan culture. In order to achieve that, actions were developed to achieve a Clan culture that will

synergize the people in organization, such as: workshops; socialization, and organizational events and activities.

Keywords: Organizational Culture, OCAI, Competing Value Framework

Introduction

Due to strong competition between organizations in this globalization era, every company is demanded to

better manage itself in various aspects. This management need to consider growth and competitive based strategy in

order to strengthen company’s stability. In addition, company need to do various improvement efforts in various aspects

of the company in order to meet the standard of quality for national and international competitiveness. Competitions

arise from various parties create the desire to review the company's strengths and weaknesses and then find solutions

that need to be done to improve the dynamics, flexibility, and adaptability as well as the company responsiveness to

external changes that arise.

Many companies realize that the only way to find a radical approach in overcoming company’s problems is by

changing the existing organization culture. Topics about organization culture are widely discussed by researchers and

practitioners (Divan, 2012). More over study shows that 81% of respondents agree that inexistence of the right

organizational culture can cause organization’s failures (Meehan et al., 2008 in Divan, 2012). Lunenburg (2011) also

state that every organization has organizational culture that cans significantly affecting the attitudes and behavior of the

member of organization.

A company must have a conducive organizational culture where this culture can direct employee’s

performances and also can result in high employee’s productivity. Ritchie (2000 in Allame, et al,. 2011) state that the

result of studies about the relationships between the effect of organizational culture with productivity shows a strong

direct relationship that organizational culture affecting employee’s productivity, performance, commitment, confidence,

and moral. This result shows that organizational culture has positive impacts to employee’s attitude and how they are

treated. In addition, Denison (1990, in SIOP 2013) shows data that particular organizational culture index, like mission,

the involvement of organization’s members, consistency of both values and system, and the ability to adapt in a

business environment significantly related with the company’s Return on Asset, sales growth, and customer

satisfactions.

mailto:[email protected]




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Organizational culture is an important feature that become characteristics, establishes competitive advantage

and affecting a company's sustainable financial success (Cameron & Quinn, 2011). Organizational culture is a place for

members of the organization to gain an understanding and a common ground regarding the events at hand, understand

the issues, and know what is expected from their organization (Denning, in the Forbes 2011). If an organization does

not have a strong organizational culture then the result when companies apply strategic plan, without understanding the

processes within the culture itself play the role of individual behaviors in organizational, can only produce temporary

changes and the behavior of individuals is not in accordance with the culture expected to. Although it is difficult to re-

direct the individual towards the desired organizational culture, organizational culture can improve performance in the

presence of a strategy necessary to create an organization that is more adaptive and responsive to the environment

outside the organization (Kotter, 2001 in Divan, 2012).

Understanding about the importance of organizational culture in a company encourages organization to

understand its culture and then define what kind of organizational culture they desired so that it can be suitable and able

to survive in the business environment they are facing. With the desired to make changes in organizational culture level,

companies are hoping to gain a new paradigm based on values that can sustain its going concern (Anderson, Amodeo &

Hartzfeld, 2010). In order for the establishment of organizational culture change’s goal can work well, a diagnosis and

right approach is needed based on company’s believe, vision, and missions.

One of organization who needs strong organizational culture diagnosis in order to be more adaptive and

responsive to market’s need is a company who play in service industry like PT FX. PT FX itself is a growing company

and undergoes a massive expansion for its line of services. This paper will discuss organizational culture in PT FX.

Based on initial interview with Human Resource Development manager, it is a fact that socialization and

implementation of values that are still inconsistent is affecting employee’s misunderstanding about values within the

company. The lack of consistency in socialization and implementation of corporate values, accompanied by the lack of

understanding about organizational culture values in employees, in the end giving a real impact on the daily work

activities both inside and between departments, more over its relation with the system. These impacts are a lack of value

of professionalism that is caused by the lack of discipline among employees in following company’s rules and

regulations.

These facts cause certain difficulties for companies especially in human resource division because at the same

time they are demanded to conduct company’s organizational values implantation program that in accordance with the

direction of the company. This becomes a strategy form company to get a radical approach in overcoming company’s

problems to achieve a sustainable growth. The needs to understand and learn the condition of company’s organization

culture is felt by the companies. Therefore organizational culture diagnosis is needed to identify the factual condition of

company’s organizational culture.

Literature Review

Competing Value Framework

This study aim to diagnose and identity organization culture using Competing Value Framework created by

Cameron & Quinn (2011). Based on the diagnosis a strategy to direct factual organizational culture to the path desired

by company is created.

Based on similar previous studies it is found that competing value framework has a good validity and

reliability level in measuring how employees think, their values and assumptions, and how they process information.

This theory is resulted from 39 indicators in shaping organization’s effectively. However these 39 indicators are

considered to many so that in order to simplify it, the 2 dimension statistical analysis is used. The first dimension

distinguishes Effectiveness criteria that focus on flexibility, policy, and the dynamics of criteria that emphasize on

stability, order, and control. The second dimension distinguishes Effectiveness criteria that focus on internal orientation,

integration, and the unity of criteria that emphasize on external orientation, differentiation, and competitiveness. Based

on these 2 dimension, a four quadrant will be created where each quadrant represent a set of indicators of the

Effectiveness of organization. These four quadrants are as follows:

Figure 1. Typology of Organization Based On Competing Value Framework (Cameron & Quinn, 2011)


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It should be noted that from the four quadrants the four main values are assumed as an opposite or competing

sides. Each continuum sees core values that is an opposite from the value at the other end (flexibility is the opposite of

stability, internal is the opposite of external). Other conclusion is the diagonal quadrants are also opposite or competing

sides. The description of each quadrant is as follows:

1. Hierarchy Culture (Control). This culture emphasize on creating products and services in an efficient manner

where there are focuses on rules, specialization, meritocracy, hierarchy, separate ownership, and

accountability. Based on that, developing a hierarchy or bureaucratic organization will lead to stability,

efficiency, and consistent production of products and services. The result of a relatively stable environment is

that functions and duty can be integrated and coordinated, the variety of products and services can be

controlled, and employees and their work can also be controlled.

2. Market Culture (Compete). This culture focuses on transactions in the external environment such as suppliers,

customers, and contractors. The main operation in the Market Culture is through the mechanism of market

economy, the dynamism of competition, and the exchange of money. Based on this, the main goal of

organization is profit, strong market share, expand the target market, and retain customers so that the main

value from Market Culture is competition and productivity. The basic assumption from Market Culture is that

consumers are interested in the value so organizations try to improve its competitive level, and the main task of

management is to encourage organizations to continue to be productive, improve outputs, and increase profits.

3. Clan Culture (Collaborate). Clan culture identic with family type organization. The basic assumption of Clan

culture is that the best environment can be managed through team cooperation and employee empowerment,

and customers is considered as partner. Organization that intend to have Clan Culture tries to develop working

environment that is humane with the main duty of management is to empower employee and facilitate their

participation, commitment, and loyalty. Leader is considered as mentor and can be treated as parent figures.

This organization is operating with loyalty and tradition as its base. Organization emphasize on long term

benefits in individual development with the main focus is cohesive or high morale. Its success is seen from the

internal climate and its care for employee. This organization emphasize on team work, participation, and

consensus.

4. Adhocracy Culture (Create). This culture has assumption that innovation and initiative lead to success, so

developing new products and services, encourage entrepreneurships, and creativity is the main priorities of

company. Thus culture doesn’t have centralized power or authority relationships. In the contrary, power run

through from individuals to other individuals or from team to other team, depend on what problems are being

handled at that time. An effective leader in this culture is a visionary, innovative and dare to take risk leader.

The glue of organization is commitment to market experiments and innovation. The eagerness to change and

meet new challenge is important. Organization’s long term emphasize is on fast growth and acquiring new

resources. Success is defined as the ability to produce a unique and original products and services.

Based on above framework, Cameron & Quinn (2011) create a tool to predict the tendency of organizational

culture in 4 typologies that are called Organizational Culture Assessment Instrument or OCAI. This measurement tool

measures the tendency of the current organizational culture or desired organizational culture through dimensions that

are fundamental in an organization culture, which are basic assumptions of organization (Dominant Characteristic &

organization adhesive), employees interaction pattern (Leaderships & Employees Management), and the purpose of

organization (Emphasize on strategy and success criteria).


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The result of OCAI organization culture assessments is a general profile of organization culture and the profile

of each dimension constructing the current organization culture which are mapped in a quadrant containing 4 typologies

so company able to know the dominant typology in the company and the advantage of that dominant typology. OCAI

also measures organization culture that the company desired to achieve in the future so OCAI can describe the current

discrepancy of culture with the desired typological culture desired by the company. Then OCAI also identifying the role

of the leader, the level of Effectiveness needed, values that encourage changes, the quality of strategy, and the role of

human resource management for each typology accompanied with interview on managements to find out the goals of

the company in the futures. The result of OCAI can become a clue to make cultural transformation and changes to the

typology that the company desired.

Methods

When doing company diagnosis, we user OCAI questionnaire. Not only does OCAI is the most widely used

instrument to identify the organizational culture in a company (Cameron & Quinn, 2011), the use of OCAI is to

measures 6 key dimensions from organizational culture which are dominant characteristics, organizational leadership,

management of employee, organization glue, strategic emphases, and criteria of success. Moreover, the use of OCAI is

intended to identify the general overview of the current culture and the desired culture by PT FX based on competing

values framework which are clan, hierarchy, market, and adhocracy. Competing values framework also used to find the

degree of similarity between factual condition and desired condition in the scheme where how employees within think,

act, what kind of assumptions are adopted, and the flow of information processing in that company (Cameron & Quinn,

2011). The use of OCAI as preliminary study of our data that later on used as basis for us in making a list of extended

questions to a number of managers, as extended discussion with the directors, and as a material for Focus Group

Discussion with the staff.

Based on the result of OCAI analysis, we then conducting interviews involving 8 out of 9 managers in the

Head office by having a probing interview from the result of that analysis. This position is chosen because it’s

considered the most representative in understanding the direction of the company growth and good in understanding

each employee because the condition of company and its structure is having a short chain of command. Extended

questions are about the condition of PT FX that is related with the result of OCAI Questionnaire.

In details employee, manager, and directors who are involved on the process both in preliminary study and the

extended activities are as follows:

Table 1. Interview, FGD, and Extended Diccussion in PT FX

Position Department Amount

OCAI Questionnaire Interview

Manager HRD 1

Finance 1

IT 1

Marketing 1

Internal Audit 1

Procurement 1

Accounting 1

Safety 1

Total Manager 8

Focus Group Discussion

Staff After Sales 1

HRD 1

Accounting 1

Safety 1

Total FGD 4

Extended Discussion


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Director Bisnis dan Pelayanan 1

Supervisor HRD (people and organizational development) 1

Results

The Result of Organizational Culture Assessment Instrument (OCAI) Survey

The Organizational Culture Assessment Instrument (OCAI) Survey is done to 8 managers of PT FX. After

the questionnaire is filled by the managers, inquiry is conducted to each of managers to the answers that they are given

in the questionnaire. Based on the answers of the managers and the result of inquiry, the typology of PT FX in general

(organizational characteristic, leaderships, employee managements, organizational adhesive, strategic emphasizes, and

success criteria) of PT FX both current and desired by managers based on the concept of Competing Value Framework

(Cameron & Quinn, 2011) are as follows.

General Typology of PT FX

Table 2. General Typology

Typology Current Desired

Clan (A) 29.47 30.83

Adhocracy (B) 17.91 18.85

Market (C) 24.27 24.89

Hierarchy (D) 28.33 25.41

Sample 8 Managers


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In general, PT FX is currently still focusing on the integration within the company which is marked by the

focus to build synergy within its team work, strengthen the relationships between employees as well as between

departments. The Company seeks to form a familial working environment so that employees feel like at home. Other

than that, the internal focus is intended at formalization, generalization, and tight control of work processes in giving

services to its customer. In the other side, the external orientation of the company is identified by the main target of the

company which is to become a market leader and win competition with similar company through the improvements of

company’s competitiveness and expanding company’s reach to its customer by opening additional branches.

From the effectiveness point of view of the organization, PT FX is currently more focus in creating a tight

control and efficiency in each of its business process. Other than that, PT FX seeks to strengthen its position in the

market. This is done by continuously seeks to adapt the kind of services with the needs of market and opening new line

of business that is predicted will give profits to the company.

For the company growth in the futures, managers said that collaboration between departments must be

improved to create a better company performance. In addition, human resources development is needed to create

employees who are ready to compete and able to effectively participate in every discussion regarding company’s policy

in the future

A. Dominant Characteristics

Table 2. Dominant Characteristics

According to its employees, PT FX is already felt like their own home. Employees in the same team or

departments are already like a family. Moreover, the company is considered competitive enough in the market and has a

good control over the working process of its employees.

Dominant

Characteristics

Curent Desired

Clan (A) 30.62 35.62


Market (C) 27.50 20.62


Sample 8 Manajer


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The managers hope that in the future the team work between teams and between departments can be improve

through the participation of employees in discussions regarding policy and regulation, creating an openness of

communication between employees, and employees are more assertive in expressing their opinion. In addition,

managers also hope in the future the attention of the company to process controls is improved beyond the demand for

the achievement of the year end result to make sure every process run efficiently according to company’s ethical rules

and values.

B. Organizational Leadership

Table 3. Organizational Leadership

The managers view the leadership in the company treated its subordinates as if they are their own children in

a family, leader can create cooperation in a team effectively. In addition, managers are considered able to become a role

model in thinking for efficiency in the company. However in the future the managers hope that the leaders in PT FX

are also improving the employee’s professionalism values, not only the togetherness and familial values by acting more

firm in handling the violations of rules or policy of the company that are done by their subordinates.

Organizational

Leaderships Current Desired

Clan (A) 35.62 30.00


Market (C) 20.62 21.25


Sample 8 Managers


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C. Management of Employees

Table 4. Management of Employees

Currently the management of employee in PT FX is controlled heavily by standardization and tight working

control. PT FX also prioritize team work on managing employee’s work. In the future managers hope the management

able to manage the employee so that it more prone to taking risk, more independent in working, more competitive, and

able to make the right decision for the benefit of company’s leadership regeneration.

Management of

Employee Current Desired

Clan (A) 30.00 30.00


Market (C) 21.25 25.00


Sample 8 Managers


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D. Organization Glue

Table 5. Organization Glue

Managers said that this time around, trust and loyalty of the employees in PT FX are the one that strengthen

the bond in the company beside the desired to get bigger, and become the winner of the competition. In the future,

managers hope that control of order of working process and company regulation are more firm and consistent so that

employees are more discipline and productive in their work.

Organization

Glue Current Desired

Clan (A) 30.00 26.87


Market (C) 25.00 21.87


Sample 8 Managers


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E. Strategic Emphases

Table 6. Strategic Emphases

The managers believe that strategy implemented in PT FX are now more intended to strengthen and

integrating the company internally through standardization and formalization of working process. In the future,

managers hope that management can devise the right strategy that is market oriented not internally oriented anymore to

accelerate the competitive behavior of the employee in the market competition through more challenging targets and

more differentiated according to the market.

Strategic

Emphasis

Current Desired

Clan (A) 26.87 23.75


Market (C) 21.87 29.37

Hierarchy (D) 35.00 30.625

Sample 8 Managers


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F. Criteria of Success

Table 7. Criteria of Success

The managers assess that the success criteria of PT FX lies on it’s become the leader in market share and

when the company able to create continuity in the process of service delivery to its customer. The managers hope the

company in the future able to develop its human resources to improve its competitiveness and maximize the quality of

its service to customer.

From the result of OCAI analysis it can be concluded that the organizational culture of PT FX mostly

describing the condition of high familial values. In general, currently the type of the organizations is relatively towards

a clan (29,47%) and hierarchy (28.33%) and it’s obtained that the company is still want its organizational culture

emphasize more on Clan Culture (30.83%).

Results of Interview, Focus Group Discussion, & Extended Discussion

From the result of interview and extended discussion it’s found that the tendency to focus on both values

which emphasize on unity and enjoyable working environment is not complemented with the increase in values on other

cultures such as professionalism. According on the interview done to five managers and a staff, the result is that there

are familial values which are really strong in PT FX but more often this value reducing the professionalism values.

Familial values transforming the leaders in the company to become a father figure for its subordinates. According to one

of the managers this create a positive effect that triggers a good team work and make the working environment,

especially in the team is enjoyable. However in can make the company to become less productive and less discipline.

Criteria of

Success Current Desired

Clan (A) 23.75 29.47


Market (C) 29.37 24.27


Sample 8 Managers


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Familial values make the control for regulation violation and work achievements less effective, this is

identified by the tolerance to regulation violation and inability to achieve target which are too big. In an effort to

achieve target, leaders tend to be more subjective in valuating employees and tend to lower their targets when the

employees are not able to achieve targets that previously assigned to them. One of the managers revealed that PT FX

currently becoming a comfortable place to work for underachieved employees because leaders often give “protections”

to them. For violation of company regulation or things related to discipline, strong punishments are often not being

done according to the rules and it is often only in a form of verbal warning so it’s not really effective.

From the focus group discussion the result is that the employees actually didn’t want to change this culture of

togetherness. They are recommending activities that prioritize togetherness and solidarity within the company. The feel

more productive if there is a strong togetherness even though in the end they agree that the regulation needed to be more

firm and improvement is also needed in the values related to discipline in the company. Culture that they want is

togetherness accompanied by an adequate discipline and professionalism.

After understanding the result of organizational culture diagnosis and the direction of the desired culture by

the company we develop a few steps of recommendation to achieve an internalization of organizational culture in a

company so that it will synergize with all of the employees within. Our recommendation programs to form a Clan

Culture are as follows :

1. Forming a tactical work team for the internalization of company’s organizational culture.

In an effort to make sure the values can be well implemented in a company, a tactical work team is

needed to be form for the internalization of entering culture in a formal structure of the company and under a

direct supervision of Human Resources Department. This is needed so that the activities of this team can be

monitored and controlled. Also targets must be clearly defined before forming the team so the steps and the

purpose of the team are clear.

2. Training & Workshop for the Agent of Change

Actions from top management can affecting the implementation of organizational culture. The

attitudes and behavior of senior executive can create a set of norms such as how to dress appropriately, how to

create promotion, and how to give rewards (Robbins, 2013). Agent of Changes consist of people ranging from

the leader of organization to staff who are reliable and care to the company’s organizational cultures. They are

selected to conduct and successfully implementing organizational culture internalization. With these trainings

and workshops then the Agent of Change know how important is corporate values, and the Agent of Changes

are also given ways and acts that can be done in a daily workaday life which are suitable with the corporate

values of the company so these Agent of Changes can be the role model for other employees.

3. Organizational Culture Meeting in PT FX

Organizational Culture Meeting in PT FX is being held to discuss about the development of

company’s culture internalization programs, what problems that arise in the program, and solutions that can be

given to overcome those culture internalization problems. This Organizational Culture Meeting are attended by

all the Agent of Changes which consist of Directors, Managers, staff representing every department, and staff

of Human Resource Department who are the member of Tactical Work Team for Internalization of Company’s

organizational Culture.

4. Socialization Via The Morning Briefing.

This morning briefing activities can be held by the Agent of Change and responsible or it can be

rotated to each department. This morning briefing can be filled with activities such as morning prayers,

Company’s cultural statement tagline and motto shout out, sharing knowledge and experiences, motivate each

other, guidance from head or managers of the department and many other activities that can increase the

employee’s working spirit. This morning briefing must held in a positive, spirited, and dynamic environment,

based on appreciation culture, sincere, and openness. In addition, Agent of Change and managers of each

department are responsible to make sure the employee memorize company’s corporate values.

5. Socialization Using Company’s Organizational Culture handbook and other socialization media.

This Organizational Culture handbook is a book that contains a complete information regarding

activities of organizational culture implementation that will be and that are currently being done by PT FX.

Start by explaining company’s vision, mission, and the strategic program of organizational culture values

internalization. Description about the tactical work team who are formed to manage the internalization process,

“Team of organizational culture” is also included. Socialization can also be done through visual media and via

company’s intranet ranging from office computers, posters, or event banners.

6. PT FX Culture Community Upward

This is an activities conducted by PT FX that are based on the similarity of passions and hobbies so it

can create solidarity and togetherness between employees outside the office where a good relationships are

created not only outside of the office but also inside the office when working, interacting, coordinating, and


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cooperating. This can improve overall productivity and internalize the organizational culture values which

prioritize spirit of togetherness and describing Clan Culture.

7. Exemplary Employees Award (Karyawan Teladan)

Thisn Championship is held as a form of appreciation to the employees who are considered behaving

in accordance with organizational culture values and in a consistent manner. Employees felt that the

implementation of attitudes and behavior based on SPEED values give a positive impact both on themselves

and the company. Employees also felt appreciated with an award from the company for their effort to

implement the organizational culture attitudes. This feeling of being appreciated can contribute to improving

the level of satisfaction of the employees.

8. Coaching & counseling (C &C)

Coaching & counseling activity are created as a ways to help employees especially staff about their

work problems and give them the right guidance and counseling to improve their effectiveness and employees

can be more thorough in acting in accordance with the organizational culture values.

9. A Web Based Evaluation Feedback and Implementation Feedback

Evaluation consists of two kind of feedback. The first one is Implementation Feedback (IF) that is

intended to determine if the currently running programs are in accordance with the plan and the benefit of the

programs when it was first devised. The second one is Evaluation Feedback (EF) that is intended to find out

whether the programs that had been ran are giving the desired result or not (Cummings & Worley, 2008).

Conclusion

This study is conducted in a company, PT FX, a growing company that undergoes a massive expansion for its

line of services. The needs to understand an learn the condition of company’s current organizational culture is really

needed by the company to achieve sustainable growth. Therefore an organizational culture diagnosis is needed to

identify the factual condition of the company’s organizational culture. This diagnosis is based on Competing Value

Framework who has a good validity and reliability level in measuring how employees think, their values and

assumptions, and how they process information. The Organizational Culture Assessment Instrument (OCAI) is used in

this study. This measurement tool measures the tendency of the current organizational culture or desired organizational

culture through dimensions that are fundamental in an organization culture, which are basic assumptions of organization

(Dominant Characteristic & organization adhesive), employees interaction pattern (Leaderships & Employees

Management), and the purpose of organization (Emphasize on strategy and success criteria). In addition interview,

Focus Group Discussion, and Extended Discussion to directors are also used. From the result of the diagnosis it can be

concluded that the current organization culture of PT FX is Clan Culture and in the future this Clan Culture is still being

adopted. Based on the result of the analysis, We give recommendations to overall activities that can be done to achieve

the Clan Culture which synergize with direction and the needs of the company’s business. Further studies can be done

to obtain more data by using more participants and more appropriately represent in order to get the whole picture of PT

FX’s organizational culture diagnosis. The recommended activities suggested can also be further modified by

describing the purpose, benefits, and the steps needed to be done in a more detailed manner in order to adapt to the

needs of company of which still carry the professionalism and discipline. From these recommendations given, it is

hoped that other recommended activities which support these recommendations are arose so that the internalization

programs for Clan Culture can have more variations and more interesting to all employees of PT FX.

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