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OCTAPACE Organizational Climate (OCTAPACE) An Insight into its effect on Job Satisfaction in the IT (Information Technology) Sector A Dissertation Report submitted in partial fulfillment of the requirement for the MBA degree course of Bangalore University By, Shweta M.L. Reg. No.: 03VWCM6097 (2003-2005) Under the guidance and support of: Prof. Uma Sreedhar Faculty-Management Alliance Business Academy 1
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Organizational Climate (OCTAPACE) An Insight into its effect on Job Satisfaction in the IT (Information Technology) Sector

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Organizational Climate (OCTAPACE)
An Insight into its effect on Job Satisfaction
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Page 1: Organizational Climate (OCTAPACE)  An Insight into its effect on Job Satisfaction   in the IT (Information Technology) Sector

OCTAPACE

Organizational Climate (OCTAPACE)

An Insight into its effect on Job Satisfaction

in the IT (Information Technology) Sector

A Dissertation Report submitted in partial fulfillment of the requirement for the

MBA degree course of Bangalore University

By,

Shweta M.L.

Reg. No.: 03VWCM6097 (2003-2005)

Under the guidance and support of:

Prof. Uma Sreedhar

Faculty-Management

Alliance Business Academy

Alliance Business Academy

Bangalore – 560 076

2003-2005

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TABLE OF CONTENTS

LIST OF TABLES

2

Serial No. Contents Page No.

1. Executive Summary 1 - 2

2.Chapter 1: Theoretical Background and Literature Review 3 - 9

3.

Chapter 2: Design of the study

a. Objectives of researchb. Problem Statementc. Scope of the studyd. Research Methodologye. Research Instrumentsf. Methodologyg. Plan of Analysish. Limitationsi. Operational Definitionsj. Overview of Chapter Scheme

10

10101111131414141517

4.Chapter 3: Industry Profile 19 - 29

5.

Chapter 4: Analysis and Interpretation

a. Descriptive Statisticsb. Correlation Analysisc. 1 - way ANOVAd. t - test

30

31353637

6.Chapter 5: Summary of Findings and Conclusion 39 - 42

7. Bibliography 43

8.. Annexure 44 - 48

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Serial No. Contents Page No.

1. Table 1: Hygiene Issues and Motivators 6

2. Table 2: Sample Distribution 12

3. Table 3 : Indian Software Exports 21

4.Table 4: Top 20 it software & service exporters from India

23

5.Table 5: Constraints Encountered by Indian Software Industries

24

6. Table 6: Gender Distribution 31

7. Table 7: Distribution based on Designation 32

8. Table 8: Qualification 33

9.Table 9: Descriptive Statistics-Age and Experience

34

10. Table 10: Group Statistics 34

11.Table 11: Correlation - Job Satisfaction and Organizational Climate

35

12. Table 12: ANOVA 36

13. Table 13: Results of t-test 37

LIST OF FIGURES AND CHARTS

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Serial No. Contents Page No.

1. Figure 1.1: Organizational Climate Index 7

2. Chart 1: Indian Software Industry 22

3. Chart 2: Growth of Knowledge Professionals 26

4. Chart 3 : Gender Distribution 31

5. Chart 4: Designation / Job Title 32

6. Chart 5: Qualification 33

7. Chart 6: Correlation 36

DECLARATION

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I, Shweta M.L., studying in Alliance Business Academy hereby state that this

report which is submitted in partial fulfillment of the requirement for the MBA

programme to Bangalore University is an original research work carried out

by me under the guidance and supervision of Prof. Uma Sreedhar, Faculty

Guide and that the project or any part thereof has not been previously

submitted for a degree/diploma to any university elsewhere.

Date:

Place: Bangalore

SHWETA M.L.

(Reg. No: 03VWCM6097)

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GUIDE CERTIFICATION

This is to certify that Ms. Shweta M.L., student of MBA 4 th Semester of

our institute has completed the DISSERTATION project titled

“Organizational Climate (OCTAPACE) - An Insight into its effect on Job

Satisfaction in the IT (Information Technology) Sector”.

This work is based on an original project study conducted by her under my

guidance and no part of this report has been submitted for the award of any other

Degree or Diploma to any other Board or University by any one else.

Date:

Place: Bangalore

UMA SREEDHAR

FACULTY

ACKNOWLEDGEMENT

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The materialization of this project has witnessed innumerous

contributions from numerous people in the form of selfless criticism, valuable

suggestions and above all, power packed words of motivation. I am deeply

indebted to all of them and take this opportunity to express my feelings of

gratitude to all of them.

First of all, I place my heartfelt gratitude to Mr. Sudhir Angur, President

and Prof. B.V. Krishnamurthy, Director and Executive Vice President of

Alliance Business Academy for giving me the privilege to carry on this

dissertation project.

I express a profound sense of gratitude to my project guide Prof. Uma

Sreedhar, for her invaluable guidance and support during the ups and downs

of this project. A special thanks to Prof. Vivekanand for his help in analyzing

the results. Also thanks to all the faculty members and the lab-in-charges for

all the help rendered.

Lastly, I would like to thank my family and all my friends who have

been a constant reckoning for this endeavor, helping me by giving useful

comments.

Gratefully,

Shweta M.L.

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EXECUTIVE SUMMARY

The Dissertation provided the Researcher with an opportunity to study

and analyze the impact of Organizational Culture and Climate on Job

Satisfaction. This study aims to find how the eight components of the

OCTAPACE (Openness, Confrontation, Trust, Authenticity, Proactive,

Autonomy, Collaboration and Experimentation) culture impact the level of job

satisfaction of employees in the IT (Information Technology) sector.

The following chapters are included during the course of the research:

INTRODUCTION: In this chapter the researcher has given an overview of the

theoretical concept of organization culture and job satisfaction. It explains the

8 different facets of Organizational Climate i.e. openness, confrontation, trust,

authenticity, proactive, autonomy, collaboration & experimentation

(OCTAPACE). It includes an insight into what job satisfaction comprises of

and how it can be increased. It also gives a brief insight into the various other

past studies done on this subject.

DESIGN OF STUDY: In this chapter the researcher has included the

following: Statement of problem, objectives of study, scope of study, research

methodology, data collection, sampling plan, limitations of the study and the

research process. The data is collected from various respondents in a

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leading software company in Bangalore. The data so obtained was

downloaded in SPSS (Statistical Package for Social Sciences) software

package for all the calculations and analysis.

INDUSTRY PROFILE: In this chapter the researcher had included a brief

overview of the software industry in India, which is growing by leaps and

bounds every day. It gives information about how culture can impact job

satisfaction in the software industry.

ANALYSIS AND INTERPRETATION: The study was carried out at a leading

Bangalore based software company. A sample of 40 employees was taken

and the data were thus analyzed. The data that was collected is analyzed

using SPSS (Statistical Package for Social Sciences) and interpreted

accordingly. The various measures and tools that were used to analyze the

data are Descriptive Statistics, Correlation coefficients, Means, Standard

Deviation, ANOVA and t-Tests.

SUMMARY OF FINDINGS AND CONCLUSION: The last chapter consists of

the summary of the analysis and concludes by providing certain

recommendations that an organization can do to improve its culture and

increase job satisfaction.

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CHAPTER 1:

THEORETICAL BACKGROUND

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AND

LITERATURE REVIEW

Culture is composed of many elements, such a symbols, heroes,

rituals and values. Organization culture starts up with a common life style

adopted by its members in form of shared learning, behaviors, values &

interests & provides the employees with a clear understanding of the way

things are done around them in their organization thus guides their further

actions. It is considered to be a common perception held by the employees

regarding their organization.

Culture in an organization plays at different levels, dominant culture

which is shared & accepted by the majority of the organizations members,

the next level to come are the subcultures that exist at the micro level that

reflect the common problems & situations faced by every member in the

organization within his own group or department.

How does an organizational culture comes into existence?

All this starts with the philosophy of the father figure & the founders of

the organization, who then try to recruit & select the manpower of their

desires who match their frequency when it comes to the thoughts,

philosophies, values & beliefs, thus having a group of people standing

in hierarchy with a common state of mind and this is the stage which is

described as the socialization stage.  (Adapting a culture among members of

the organization).

How does organizational culture benefit an organization?

It has direct links to the performance of an individual, although if one imposes

a culture on the employees the results will never cross the confined

boundaries of minimum specifications as enforcement kills creativity and 13

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makes the job monotonous. On the other hand if the employees are left to

derive their own culture, it makes them feel at ease & adapt more quickly.

Performance increases due to the freedom enjoyed by the employees which

is the most dominating factor for the improvement of their creativity, sense of

belonging to the job and the organization.

A healthy organizational culture is not individual in nature rather a

grouped effort which brings common benefits to all; a slightest mistake might

lose the man and his sense of belonging for ever so when magic words of

organizational culture start they start with openness.

A healthy organizational culture rests on eight strong pillars of

"OCTAPACE" referring to Openness, Confrontation, Trust, Authenticity,

Proactive, Autonomy, Collaboration and Experimentation.

Thus, a healthy organizational culture with an open environment, filled

with the feeling of mutual trust & confidence, with added flavor of authenticity,

sense of collaboration, freedom & autonomy added to the responsibilities,

proactive measures, loyalty, surrendered personal interests before

organizational interests and above all a treatment with respect and

humanitarian consideration for each employee is important.

OCTAPACE values give a sense of direction to the HRD function.

HRD outcomes include: competent people, well developed roles, high

commitment, high job involvement, high job satisfaction, team work and

synergy, problem solving, and good organizational health. The HRD function

should contribute towards organizational effectiveness indicated in the

effectiveness variables such as high productivity, growth and diversification,

cost reduction, profits, and a better image of the organization.

Job Satisfaction is the pleasure and feeling of accomplishment

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employees derive from performing their jobs well. Job satisfaction can be

influenced by a variety of factors, e.g., the quality of one's relationship with

their supervisor, the quality of the physical environment in which they work,

degree of fulfillment in their work, etc.

Increasing job satisfaction is important for its humanitarian value and

for its financial benefit (due to its effect on employee behavior.) As early as

1918, Edward Thorndike explored the relationship between work and

satisfaction in the Journal of Applied Psychology. Bavendam Research has

included measures of job satisfaction in all employee surveys. The results

were as follows:

Employees with higher job satisfaction:

1. Believe that the organization will be satisfying in the long run

2. Care about the quality of their work

3. Are more committed to the organization

4. Have higher retention rates, and

5. Are more productive.

Job satisfaction has been one of the most widely studied concepts in

management literature, accounting for more than 5,000 published works

(Wilson, 1996). Information generated by research into this area had practical

implications for individuals and organizations alike. According to Wilson

(1996), employees want to have the best quality of life possible for

themselves and their families, and managers are confronted with increasing

challenges of managing effective and efficient organizations by utilizing

human, financial, and technological resources available to them.

Understanding job satisfaction and what it means is not only desirable but

also a critical aspect of life for both individuals and organizations.

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Previous studies have shown that organizational climate types are

related to facets of job satisfaction. In his study of non-profit employees,

Deshpade (1996) found that a “caring” organizational climate is associated

with high level of satisfaction with supervisors, and that instrumental and

authoritarian and task oriented climate types have negative influence on

overall job satisfaction as well as satisfaction with promotion, coworkers and

supervisors. Based on these findings one may be able to conclude that

organizational climate types are associated with facets of job satisfaction and

overall job satisfaction.

In a study done by Frederick Herzberg, he theorized that employee

satisfaction depends on two sets of issues: "hygiene" issues and motivators.

Once the hygiene issues have been addressed, the motivators create

satisfaction among employees.

Table 1: Hygiene Issues and Motivators

Hygiene issues (dissatisfiers) Motivators (satisfiers)

Company and administrative policies Work itself

Supervision Achievement

Salary Recognition

Interpersonal relations Responsibility

Working conditions Advancement

Source: Organizational Behavior, 5th Edition, Aswathappa, Pg 206-207

KEY POINTS:

Employee satisfaction affects every aspect of an organization, from

customer satisfaction to overall productivity.

Frederick Herzberg theorized that employee satisfaction has two

dimensions: "hygiene" and motivation.

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Hygiene issues, such as salary and supervision, decrease employees'

dissatisfaction with the work environment.

Motivators, such as recognition and achievement, make workers more

productive, creative and committed.

OTHER STUDIES ON ORGANIZATIONAL CLIMATE

1. Organizational Climate Index

(OCI):

Figure 1.1: Organizational Climate Index

The Organizational Climate Index (OCI) is an easy-to-use tool for quickly

measuring and improving the organizational climate.

Organizational Climate Index:

identifies the readiness for, commitment for, and skills for change.

identifies the values, emotional competencies, and behaviors needed

for success.

alerts managers to needs and opportunities for training,

communication, and development.

helps build strategies for sustainable growth.

is scalable, measurable, and practical.

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The statistically reliable, normed assessment addresses five climate

factors, plus an overlay dimension of Trust:

Accountability and Responsibility

Collaboration and Problem Solving

Perception of Leadership

Alignment to the Mission

Adaptability for Change

The OCI predicts:

47% of Customer Service

27.8% of Productivity

43.4% of Retention

2. A study on Organizational Ethos:

Dr. Phalgu Niranjana and Prof. Biswajeet Pattanayak conducted this

study that made an attempt to ascertain the relative importance of

organizational ethos and its eight dimensions in determining organizational

citizenship behavior. The sample size taken was 600 that were divided into

eight groups. Each group comprised of 75 participants. The statistics used

were descriptive analysis, ANOVA, correlation and step wise multiple

regression analysis to analyze the data and interpret the results.

The study had thrown many interesting results. The major findings

were: there is a significant difference between manufacturing and service

sector on organizational citizenship behavior and organizational ethos.

Manufacturing sector has better organizational culture in terms of openness,

autonomy, collaboration and experimentation whereas service sector has

high organizational citizenship behavior and learned optimism. Based on the

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findings, organizational development and behavioral development

interventions were suggested to increase the performance in the

organization.

TOOLS:

Two tools namely, Citizenship Behavior scale and Organizational Ethos scale

had been used to measure the dependent variables. They were

1. Organizational Citizenship Behavior Scale (Linn Van Dyne, Jill W.

Graham & Richard M. Dienesch in 1994)

2. Organizational Ethos: OCTAPACE Profile (Udai Pareek in 1997)

The results show that organizational citizenship behavior has positive

relationship with organizational ethos. It shows that a positive work culture

and learned optimism will influence organizational citizenship behavior

thereby developing loyalty, obedience and participation in the organization.

Hence, the cultural factors like confrontation and pro-action have

positive impact on organizational citizenship behavior. Organizations do need

to create ethos like confrontation and pro-action and also need to take

initiative to make the employees learn optimism in order to develop

organizational citizenship behavior.

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CHAPTER 2: DESIGN OF THE STUDY

The researcher had read various articles regarding organization 20

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climate and wondered as to how it affects an employee. The researcher

wanted to know why climate is important in an organization. Also the

research wanted to ascertain if organizational climate impacts job

satisfaction. Hence to determine whether organization climate is one of the

factors why employees join a certain organization and continue to work in

that organization, this research study was undertaken. Also various previous

studies have been done on similar topics, more specific to other industries

such as manufacturing, banking, hotels etc. But not many such studies have

been conducted in the IT sector. Thus this study has been conducted specific

to the IT industry in Bangalore.

a. Objectives of the research:

1. To ascertain the impact of organizational culture on job satisfaction in the

IT industry.

2. To understand the correlation between the different variables of

organizational climate and job satisfaction.

b. Problem Statement:

Null Hypothesis: Organizational climate and culture does not impact the

various facets (pay, promotion, work, supervisor and coworkers) of Job

Satisfaction of IT (Information Technology) professionals.

Alternative Hypothesis: Organizational climate and culture impacts the

various facets (pay, promotion, work, supervisor and coworkers) of Job

Satisfaction of IT (Information Technology) professionals.

c. Scope of Research:

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This research is limited only to a certain company in the software industry in

Bangalore due to certain constraints. The findings can be applicable in IT and

related companies in Bangalore. The time that was required to carry out this

research was 1.5 months.

d. Research Methodology:

i. Type of Research:

Causal Research – Here the research aims to understand how

organizational climate and culture impacts job satisfaction in an

organization. Hence, this kind of research is used to determine how

one independent variable affects the other variable that is dependent

on it. Organizational climate is taken as the independent variable and

job satisfaction as the dependent variable.

ii. Sources of data:

Primary Data: This has been collected through standard

questionnaires. Samples were taken from employees at a leading

software organization in Bangalore.

Secondary Data: From previous studies done on similar topics.

iii. Sampling Plan:

The sample used for this study consists of information technology (IT)

professionals in a selected business organization.

Sample Size:

A sample of 50 IT professionals was drawn. The size was

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restricted to 50 due to time and cost constraints.

Sample Distribution:

Table 2: Sample Distribution

Designatio

nAge 22-26 27-31 31-35

Gender M F M F M F

Software Engineer

8 4 3 2 - -

Programmer 5 2 5 1 1 -

Coder 2 1 - - 1 -

Testing - 1 - - - 1

Business Analyst

- 1 1 - - -

Software Associate

- - 1 - - -

TOTAL 15 9 10 3 2 1 40

Source: Primary data

Sampling Method:

The sample was drawn using a simple random sampling

technique. This technique was used since it is an unbiased method

of selection in which each population element has a known and

equal chance of selection.

e. Research Instruments:

Two instruments were used to gather data for this study: The

OCTAPACE Profile (OP) and the Job Satisfaction Questionnaire (JSQ).

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1. OCTAPACE Profile: This was developed by Udai Pareek. It consists of

40 items in which some are negatively worded. It measures organizational

ethos in terms of eight different values- openness, confrontation, trust,

authenticity, proactive, autonomy, collaboration & experimentation. Each

dimension is measured by five items each. Each dimension has a

combination of positive and negative items. Response is collected on four

choices (4-Highly value, 3- Fairly high value, 2-Low value and 1-Very low

value)

Reliability of instrument:

Split- half reliability was found to be 0.84 on the 40 respondents.

Alpha was found to be 0.85.

Respondents were asked to respond to these questions in terms of

how the climates of their organization actually are and not how they would

want the climate to be. The interpretation of this profile is as follows: higher

score on any dimensions indicate the higher perceived value of the

organization. Low scores indicate areas of concern.

2. Job Satisfaction Questionnaire measures job satisfaction and the

instrument contains a total of 19 items; each to be ranked on a scale of 1 to 5

(1-Very Dissatisfied, D-Dissatisfied, 3-Neutral, 4-Satisfied, 5-very satisfied)

Reliability of instrument:

Alpha was found to be 0.92 on the 19 items in the questionnaire.

h. Methodology:

The instruments used to gather data were hand delivered to the

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professionals identified for this study. Of the 50 questionnaires distributed 40

usable questionnaires were returned (i.e. 80%).

g. Plan of Analysis:

The data collected were analyzed using SPSS (Statistical Package for the

Social Sciences), which is a comprehensive and flexible statistical analysis

and data management system. The various tests that were conducted on the

data are: Descriptive Statistics, Means, Correlation, Standard Deviation,

ANOVA and t-Test.

h. Limitations:

1. The time given for the project was not sufficient to carry out an in-

depth study.

2. The sample size had to be restricted to 50 due to time and cost

constraints.

3. The geographical are covered is small.

4. The responses given by the employees may not be true and could be

biased.

i. Operational Definitions of Concepts:

Corporate culture describes a set of values, feelings, attitudes and

expectations that provide meaning, order and stability to members’ lives and

influence their behavior.

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Openness: Spontaneous expression of feelings and thoughts, and sharing of

these without defensiveness.

Confrontation: Facing and not shying away from problems; deeper analysis

of interpersonal problems; taking up challenges.

Trust: Maintaining confidentiality of information shared by the other person

and not misusing it; a sense of assurance that others will help when needed

and will honor mutual obligations and commitments.

Authenticity: Congruence between what one feels, says and does; owning

ones actions and mistakes, unreserved sharing of feelings.

Proactive: Initiative; pre-palling and preventive action; calculation pay-offs

before taking action.

Autonomy: using and giving freedom to plan and act in one’s own sphere;

respecting and encouraging individual and role autonomy.

Collaboration: Giving help to and asking from, others; team spirit, working

together (individual and group) to solve problems.

Experimentation: Using and encouraging innovative approaches to solve

problems; using feedback for improving; taking a fresh look at things

encouraging creativity.

Job Satisfaction is the pleasure and feeling of accomplishment employees

derive from performing their jobs well. Job satisfaction is in regard to one's

feelings or state-of-mind regarding the nature of their work. Job satisfaction

can be influenced by a variety of factors, e.g., the quality of one's relationship

with their supervisor, the quality of the physical environment in which they

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work, degree of fulfillment in their work, etc.

Causal research: When the objective is to determine which variable might

be causing a certain behavior, i.e. whether there is a cause and effect

relationship between variables, causal research is undertaken. In order to

determine causality, it is important to hold the variable that is assumed to

cause the change in the other variable(s) constant and then measure the

changes in the other variable(s).

Correlation the degree to which one phenomenon or random variable is

associated with or can be predicted from another. In statistics, correlation

usually refers to the degree to which a linear predictive relationship exists

between random variables, as measured by a correlation coefficient.

Correlation may be positive (but never larger than 1), i.e., both variables

increase and decrease together; negative or inverse (but never smaller than -

1), i.e., one variable increases when the other decreases; or zero, i.e., a

change in one variable does not affect the other.

ANOVA stands for Analysis of Variance, a method by which the source of

variability is identified. This method is widely used in industry to help identify

the source of potential problems in the production process, and identify

whether variation in measured output values is due to variability between

various manufacturing processes, or within them. By varying the factors in a

predetermined pattern and analyzing the output, one can use statistical

techniques to make an accurate assessment as to the cause of variation in

any process.

The t - test is a statistical test which computes the probability that two groups

of a single parameter are members of the same population. The population

must follow a distribution.

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Simple Random Sampling is a process whereby a sample is chosen from a

population randomly, in which each member of the population has the same

probability of being chosen. In small populations such sampling is typically

done "without replacement", i.e., one deliberately avoids choosing any

member of the population more than once

j. Overview of Chapter Scheme:

Chapter 1 contains a theoretical background to the subject under study. It

describes what Organizational Culture and Climate mean and provides

information on the various aspects that determine culture in an organization.

Then it explains about job satisfaction and what are the various factors that

increase or decrease job satisfaction. It also gives a brief description of some

past studies that have been done on the same subject.

Chapter 2 contains the design of the study with regard to the type of research

done, its objectives, the sampling plan used, the methodology of data

analysis and the limitations of this study. It also the various operational

definitions that have been used in this study.

Chapter 3 gives an overview of the IT (Information Technology) industry in

India. It provides some highlights about the top companies in this industry

and the trends in this industry. It also provides a prediction on the future of

this industry.

Chapter 4 analyzes the data collected. All the tables and graphs are depicted

in this chapter. The inferences obtained from the various tests are mentioned

in this chapter. Various analyses like correlation, ANOVA etc have been

conducted on the data to arrive at conclusions and prove the hypothesis.

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Chapter 5 is the final chapter that gives a summary of all the findings of this

research and suggests certain recommendations. It also provides information

on scope for further research.

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CHAPTER 3: INDUSTRY PROFILE

IT (INFORMATION TECHNOLOGY) INDUSTRY IN INDIA 30

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DEFINITION:

The term ‘IT industry’ generally covers development, production and

services related to IT products. Hence it contains three basic sectors:

software, hardware and services. So, the IT software industry has two

components: IT software and service. According to the definitions given in

Information Technology Action Plan-I (under Recommendation No. 19), IT

Software means any representation of instructions, data, sound or image,

including source code and object code, recorded in a machine readable form,

and capable of being manipulated or providing interactivity to a user, by

means of an automatic data processing machine falling under heading ‘IT

products’, but does not include ‘non-IT products’. IT service is defined as any

service which results from the use of any IT software over a system of IT

products for realizing value addition.

OVERVIEW:

The software industry began in the late 1950s when the use of

computers for business applications expanded rapidly creating a huge

demand for people with programming experience. A number of people who

had learned their programming skills working for computer manufacturers or

for the large companies and government agencies that were the first

computer users saw this as an opportunity to start their own companies and

sell their services under contract.

The number of computers in use and their size and speed expanded

rapidly in the 1960s escalating the demand for software to support the

numerous tasks for which computers were now being used. This provided

enormous opportunities for entrepreneurs to create new companies to serve

this expanding market.

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The 1970s saw the contract programming industry continue to grow at

a rapid pace.  These companies came to be known as "professional

services" firms reflecting the fact that they often provided a broad range of

consulting, analysis and design services in addition to programming.

As global organizations strive to improve the quality of their processes

while managing their bottom lines, Business Process Outsourcing ("BPO" or

"Outsourcing" or "Off shoring") has become the new imperative in the

1990’s and 2000’s. In the recent past, India has emerged as one of the most

preferred BPO destinations of the world. Currently, the BPO industry in India

is at the second stage of its operations. The initial stage, in the late 1980's

and 1990's was marked by the setting up of captive operations in India by

giant multinational corporations ("MNC") like American Express and GE. Now

in the second stage, independent third-party operations are emerging out of

the shadow of the more visible, captive MNC units. The USD 2.3 Billion BPO

segment is growing impressively in India. The most cogent reason for

Outsourcing is to reduce or control operating costs.

The total number of IT Software and Service companies in India is

estimated to be 5000. Of this, 60% of the companies are domestic players,

while 40% are MNCs.

With lack of significant domestic demand, growth in Indian software

industries has been spurred mainly by the growth in export market demand.

The export market is mostly concentrated in the United States and Europe.

Almost two thirds of the software revenue for the Indian companies comes

from servicing the United States market.

The structure of the Indian software exports industry in 2003-04 is as follows:

Table 2 : Indian Software Exports

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Annual turnover No. of companies

Above Rs. 1,000 crore 5

Rs. 500 crore-Rs.1,000 crore 5

Rs.250 crore-Rs.500 crore 15

Rs.100 crore-Rs.250 crore 25

Rs.50 crore-Rs.100 crore 55

Rs.10 crore-Rs.50 crore 220 220

Below Rs. 10 crore 2,483

Source: Nasscom Reports

Much of India’s export of software services is actually carried out at

the client’s site overseas, commonly referred to as ‘onsite services’, rather

than offshore more popularly known as ‘turnkey projects’. Approximately 70%

of export services are onsite work, while only about 30% are offshore type,

although, this is now showing reverse trends.

2003-04 has witnessed increased outsourcing of software

development work by global corporations resulting in a shift in the Onsite:

Offshore ratio. Offshore revenues are higher than onsite revenues. The

important factors taken into consideration by clients for decision on off

shoring of projects are managerial skills, quality control and access to

technology. Today, India is increasingly being seen as a destination where

these parameters are fulfilled as per international standards and

requirements.

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Chart 1: Indian Software Industry

IT MARKET:

The growth in the Indian IT industry was largely driven by exports. The

software and services exports registered a growth of 18.4%, recording

revenues of Rs. 34,800 crores (US$ 7.2 billion) in 2002-03. NASSCOM, the

chamber of commerce of the IT software services and ITES-BPO industry in

India, announced the rankings of Top 20 IT Software and Service exporters

in India (excluding ITES-BPO revenues). According to the survey, Tata

Consultancy Services has emerged as the leader, clocking IT Software and

Services (excluding ITES-BPO) revenues of Rs. 5,503 crores followed by

Infosys at Rs. 4,709 crores and Wipro with Rs. 3,920 crores respectively. The

combined revenue of the top 20 software and service exporters in the area of

IT Services, Products & Technology services is Rs. 26,464 crores (US$ 5.77

billion) in 2003-04 and have witnessed a year-on-year growth of 31.6 per

cent (in dollar terms) compared to the total combined revenue of Rs. 20,668

crores in 2002-03. The software and services exports industry (excluding the

ITES-BPO sector), recorded revenues of US$ 8.9 billion in 2003-04,

registering a growth of 25 per cent over the revenue of US$ 7.1 billion in

2002-03.

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While the top 20 IT software and service exports accounting for nearly

65 per cent of the total IT software and services exports, continue to drive the

overall growth of the Indian IT industry, Small and Medium Enterprises have

also performed well during 2003-04.

Table 3: Top 20 it software & service exporters from India (2003-04)

(Excluding ITES-BPO)

Rank Company

Exports (Rs crore)

Exports (US$ million

)

1 Tata Consultancy Services 5503 1198.9

2 Infosys Technologies Ltd 4709 1026.0

3 Wipro Technologies 3920 854.1

4 Satyam Computer Services Ltd 2472 538.6

5 HCL Technologies Ltd 1895 412.9

6 Patni Computer Systems Ltd 1223 266.4

7 iFlex Solutions 773 168.4

8 Mahindra British Telecom Ltd 727 158.5

9 Polaris Software 579 126.1

10 Perot Systems TSI (HCL Perot Systems Ltd) 544 118.6

11 Digital Globalsoft Ltd 541 117.9

12 NIIT Ltd 538 117.2

13iGATE Global Solutions Limited (Mascot Systems Ltd) 488 106.4

14 Birlasoft Ltd 427 93.1

15 Mphasis BFL Ltd 393 85.5

16 Mastek Ltd 379 82.5

17 Hexaware Technologies Ltd 378 82.4

18 Larsen & Toubro Infotech Ltd 352 76.6

19 Tata Infotech Ltd 345 75.1

20 Hughes Software Systems 321 70.0

Source: Nasscom reports

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MARKET CONSTRAINTS:

With a constant flow of new entrants in the global software industry,

profits from the sale of traditional services, for the Indian software industry,

are likely to fall in the future; revenue growth would depend only on growth in

number of software workers. In order to survive the increased level of

competition in the world market, Indian companies, therefore, would have to

develop new products that are at the high end of the value chain.

Table 4: Constraints Encountered by Indian Software Industries

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Source: Nasscom Reports

Despite challenges such as the volatility of the rupee, Indian IT

companies have witnessed significant growth in their revenues. This has

been possible as Indian companies are increasingly moving beyond

traditional service lines being able to draw more strategic business as well as

bag larger contracts from their customers and tap new geographies.

Indian IT companies, apart from consolidating their presence in

traditional verticals such as BFSI, also diversified into new verticals such as

Telecom, Retail, Utilities and Healthcare. Some leading players also moved

into new services lines in the IT services arena such as IT consulting,

packaged software implementation and systems integration. Apart from the

Indian companies, MNCs are doing an increasing amount of their software

development and design work at their captive centers in India. In the coming

years, IT software and service project execution will take place through a

global delivery model, with most companies offering three-tier delivery and a

network of global centers.

GROWTH AND PROFITABILITY:

In terms of size, Indian IT companies are much smaller although the

top three - TCS, Infosys and Wipro - have just crossed a billion dollar in

revenue. In comparison IBM’s service revenue is $43 billion, EDS’ $22 billion

and Accenture’s is $13 billion. Being relatively younger and operating on a

smaller base, Indian companies are growing faster. In 2003, for example,

TCS’ revenue registered 32 per cent growth over the previous year, Infosys

grew 44 per cent and Wipro’s revenue growth was 26 per cent.

The only global player that came close to these is Computer Sciences

Corporation whose revenue jumped up by 22 per cent last year. All other

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companies, including IBM, EDS, Accenture etc, grew at a much slower rate.

In terms of profitability too Indian companies are far ahead. A research report

prepared by JP Morgan shows that EBITDA (earnings before interest, tax,

depreciation and amortization) margins of Indian companies were 27 per cent

for TCS, 32 per cent for Infosys and 23 per cent for Wipro. In comparison, the

EBITDA margins of global IT majors varied between 13 and 18 per cent.

Moreover, with off shoring going main stream, the volume of business

shifting offshore is large enough to drive growth for Indian vendors for quite a

few years. Naturally, large Indian players like TCS, Infosys, Wipro, etc, who

have developed leaner cost structures and established credentials of

offshore project delivery, are unlikely to be threatened by the global giants or

their Indian operations.

EMPLOYEE PROFILE:

Chart 2: Growth of Knowledge Professionals

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Profile of Employees engaged in the Indian IT Sector

The number of employed IT software and services professionals

increased to 522,000 by the end of 2001-02 compared to 280,000

employed in the year 1998-99. This figure includes professionals, who

are engaged in software, IT services and IT-enabled services

including professionals engaged in software development units in user

organizations.

The hiring of new IT professionals was highest in South India at 41

percent and lowest in the Eastern region at 6 percent.

The overall median age of software professionals was about 25.6

years.

79 percent of software professionals in software companies were men,

whereas 21 percent were women. However, this ratio is likely to be

65:35 (male: female) by the year 2005.

44 percent of the software professionals or knowledge workers

possessed over 3 years of working experience.

There was an average of 6 percent rise in basic salary during 2001.

(This was the lowest rise ever recorded since 1990). Most companies

are increasingly adopting the variable pay concept in order to link pay

to revenues, and control costs.

The skills in demand were in the areas of : Software

engineering/programmers/analysts, Internet and e-commerce

applications, Database administrators, Network specialists and

communication engineers, Digital media, Business applications of

software development, Web based applications, Networking

applications, Java, Data warehousing, Client-networking, Project

management, Quality assurance & technical writing, Legacy systems,

etc.

According to a Forrester study conducted in November 2001, India's

IT strengths are:39

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1. The country's decade-old experience in this area

2. Fluency in English

3. Supportive government policy infrastructure, and

4. High-quality offerings

5. The attractive wage structure in India is of course a very

important point. The average salary for an Indian software

professional is somewhere around 20 to 25 per cent of the

corresponding wages in the US.

This is amplified by a 1999 World Bank study, which says that

India is the only country that figures in the high-quality-low-cost

segment of the quality-cost matrix.

India also has a talent base with enormous potential. It has the

world's second largest pool of English-speaking scientific manpower.

The past year has sliced the software industry into three. There are

the giants, who now have enough scale, marketing and execution prowess to

continue growing at rates in excess of the industry average. Then, there are

the small companies, who specialize and survive. And in between are the

middle-tier companies, who are caught between the need to specialize and

the desire to grow big rapidly. The middle-tier companies run the risk of

becoming the "living dead" unless they achieve rapid growth. Software is one

industry in which consolidation is likely to happen less through mergers and

acquisitions but more through the departure of clients and employees in the

middle-tier companies.

All in all, India's software industry is growing up - fast. The

opportunities are there but so are the challenges. As the euphoria of

skyrocketing stock prices has faded away, there is a growing realization that

while the market opportunity is there, a lot more needs to be done to grab it.

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FUTURE OF THE SOFTWARE INDUSTRY:

The NASSCOM - McKinsey report on India's IT industry is as follows:

1. Software & Services will contribute over 7.5 % of the overall GDP

growth of India

2. IT Exports will account for 35% of the total exports from India

3. Potential for 2.2 million jobs in IT by 2008

4. IT industry will attract Foreign Direct Investment (FDI) of U.S. $ 4-5

billion

5. Market capitalization of IT shares will be around U.S. $ 225 billion

Hence, the value proposition of the Indian software industry can be

summed up as "faster, better, and cheaper."

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CHAPTER 4: DATA ANALYSIS42

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The data has been analyzed using the software SPSS. SPSS

(Statistical Package for the Social Sciences) is a comprehensive and

flexible statistical analysis and data management system. SPSS can take

data from almost any type of file and use them to generate tabulated reports,

charts, and plots of distributions and trends, descriptive statistics, and

conduct complex statistical analyses. It can perform a variety of data analysis

and presentation functions, including statistical analyses and graphical

presentation of data. Among its features are modules for statistical data

analysis, including descriptive statistics such as plots, frequencies, charts,

and lists, as well as sophisticated inferential and multivariate statistical

procedures like analysis of variance (ANOVA), factor analysis, cluster

analysis, and categorical data analysis.

The data was first coded for the descriptive variables and then entered

into the SPSS package to perform the analysis.

a. Descriptive Statistics:43

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1. Gender Wise Distribution of Data:

Table 5: Gender Distribution

Gender Frequency Percent

Male 28 70

Female 12 30

Total 40 100

Source: Primary Data

70%

30%

Chart 3 : Gender Distribution

Male

Female

2. Distribution based on Designation / Job Title:

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Table 6: Distribution based on Designation

Designation / Job Title Frequency Percent

Software Engineer 17 42.5

Programmer 14 35

Coder 4 10

Testing 2 5

Business Analyst 2 5

Software Associate 1 2.5

Total 40 100

Source: Primary Data

43%

35%

10%

5%5% 3%

Chart 4: Designation / Job Title

Software Engineer

Programmer

Coder

Testing

Business Analyst

Software Analyst

3. Distribution based on Qualification:

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Table 7: Qualification

Qualification Frequency Percent

BE 24 60

B Tech 7 17.5

MCA 4 10

B Sc 2 5

M Tech 1 2.5

B.Sc 1 2.5

BCA 1 2.5

Total 40 100

Source: Primary Data

30%

9%

5%3%1%1%1%

50%

Chart 5: Qualification

BE

B Tech

MCA

B Sc

M Tech

B.Sc

BCA

Total

4. Descriptive Statistics with regard to Age and Experience:

Table 8: Descriptive Statistics-Age and Experience

Variable N Minimum Maximum Mean Std.

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Deviation

Age 40 22 35 24.33 2.25

Experience(in months)

40 7 72 18.93 12.68

Experience(in years)

40 .58 6 1.58 1.06

Source: Primary Data

5. Group Statistics: (Mean and Standard Deviation)

Table 9: Group Statistics

Variable Gender N Mean Std. Deviation

OpennessMale

Female

28

12

2.81

2.68

.47

.49

ConfrontationMale

Female

28

12

2.83

2.46

.45

.34

TrustMale

Female

28

12

2.54

2.37

.41

.32

AuthenticityMale

Female

28

12

2.51

2.36

.52

.29

ProactionMale

Female

28

12

3.01

2.93

.44

.55

AutonomyMale

Female

28

12

2.50

2.45

.32

.19

CollaborationMale

Female

28

12

2.80

2.72

.46

.32

ExperimentationMale

Female

28

12

2.73

2.58

.41

.39

Job SatisfactionMale

Female

28

12

3.50

3.56

.54

.61

Organizational

Climate

Male

Female

28

12

2.72

2.57

.30

.26

Source: Primary Data

b. Correlation Analysis:

1. Correlation between Organizational Climate and Job Satisfaction:

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The value of correlation between organizational climate and job

satisfaction is 0.63. This is a two-tailed test conducted at 1% level of

significance.

Inference:

At 1% level of significance, there is a positive correlation between

organizational climate and job satisfaction. The reason for this is that there is

high openness in this organization and also there is a significant level of

collaboration between the employees. This means that better the climate in

an organization, higher is the level of job satisfaction in the employees.

2. Correlation between Job Satisfaction and the 8 variables of

Organizational Climate:

Table 10: Correlation - Job Satisfaction and

Organizational Climate

Source: Primary Data

48

OCTAPACE Variables Job Satisfaction

Openness 0.581

Confrontation 0.521

Trust 0.464

Authenticity 0.123

Proaction 0.572

Autonomy 0.126

Collaboration 0.580

Experimentation 0.422

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Jo

b S

ati

sfa

cti

on

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7

0.5810.521

0.4640.123

0.5720.126

0.580.422

Chart 6: Correlation

Experimentation

Collaboration

Autonomy

Proaction

Authenticity

Trust

Confrontation

Openness

Inference:

At 1% level of significance, it has been observed that there is a

maximum positive correlation between openness and job satisfaction and

minimum positive correlation between authenticity and job satisfaction. The

reason for autonomy and authenticity to have a low correlation with job

satisfaction is that there is no empowerment given to the employees. The

decision making is done mostly by the top management and hence the

degree of autonomy that the employees perceived was low.

c. 1- way ANOVA (Analysis of Variance):

Table 11: ANOVA

Degrees of Freedom F39 19.402

Inference:

The F value obtained is significant at 1% level of significance, which

means that the null hypothesis is rejected. Hence it can be inferred that there

is an impact of organizational climate on job satisfaction.49

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d. t-test:

At 5% level of significance, the various ‘t’ values for the different

variables are obtained:

Table 12: Results of t-test

Variables Calculated t valueSignificance (Two-tailed)

Openness 0.798 0.430

Confrontation 2.547 0.015

Trust 1.282 0.208

Authenticity 0.910 0.368

Proaction 0.447 0.657

Autonomy 0.496 0.623

Collaboration 0.573 0.570

Experimentation 1.041 0.304

Organizational Climate 1.465 0.151

Source: Primary Data

Inference:

All variables in the above table except Proaction and Autonomy have

the calculated ‘t’ value greater than the significant value. Hence, this implies

that the result obtained is significant. Therefore the inference is that the null

hypothesis is rejected and we can conclude that organizational climate does

impact the level of job satisfaction in an organization.

Also it can be noted that if the total of the eight variables that comprise

Organizational climate are taken together, even then the calculated ‘t’ value

is higher than the significant value i. e. 1.465 > 0.151. Hence it can be

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concluded that the results obtained are significant and hence the null

hypothesis can be rejected. Therefore job satisfaction is affected by the

culture and climate of an organization.

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CHAPTER 5

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a. Summary of findings:

1. There is a positive correlation between organizational climate and

job satisfaction. Better the climate, higher the job satisfaction in

employees.

2. Among all the eight variables of organizational climate, there is a

maximum positive correlation between openness and job

satisfaction and minimum positive correlation between authenticity

and job satisfaction.

3. Using ANOVA, it was ascertained that the value obtained was

significant and hence the null hypothesis was rejected which

implies that organizational climate and culture impact job

satisfaction.

4. Using the t – test, the various ‘t’ values were obtained for the

individual variables of OCTAPACE. Of these, all the results were

significant except for two (proaction and autonomy). But the final

conclusion is that since all the eight variables of OCTAPACE

together were significant, the null hypothesis has been rejected

and hence the alternative has been accepted which states that

Organizational climate and culture impact the various facets of job

satisfaction.

b. Recommendations:

1. The authenticity variable in the climate of an organization can be

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improved to increase job satisfaction.

2. Factors like trust can be given higher priority in an organization.

3. More empowerment can be given to people in the organization to

increase job satisfaction.

4. Employees must be given opportunities where their leadership

styles can be displayed. Also they must be given the chance to

bring new ideas without the fear of rejection.

5. Since the IT industry mainly comprises of knowledge workers, such

employees cannot be enslaved but only led. Hence they must be

given the direction and authority to do their job.

6. The employees must be given a feeling that they belong to the

organization. They should work towards a shared vision of the

organization.

7. The employees must have a psychological contract with the

organization. This is because, more the employees feel that he/she

is valued in the organization, greater will be his/her job satisfaction.

c. Conclusion:

In the last one decade, after the liberalization and globalization

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process of the Indian economy, organizational competition has become very

high, throwing thereby a challenge for survival. Most of the organizations are

finding it difficult to sustain their positions, which have been reflected in the

ups and downs trend of Fortune 500 companies in India and abroad.

This is high time that the Indian organizations should understand the

culture specific organizational dynamics that determine the failure and

success of the organizations. Pareek (1994) has rightly pointed out that

culture provides a strong rim for a fast moving wheel, which keeps several

factors integrated and acts as a binding force to move in a difficult terrain.

Sinha (1994) pointed out that the move to get out of the western mould,

through indigenous organizational behavior research in India, has taken

three roots. The first is a religious-philosophical model of human beings who

strive to relate by seeking purity and peace of mind, cultivating a sense of

detachment and accenting work as a duty. The second one emphasizes on

the strategic role of the organization in nation building. The third root yields to

socio-economic and political compulsions and explores how people work in

the organization. This three approaches often overlap and taken together

present a contrast to a western view of culture.

Organizations should initiate proper human resource intervention

techniques to develop a performance oriented work culture. Specific OD

initiatives should be developed for manufacturing and service organizations.

Service organizations should take more initiative in developing better work

culture to maximize the customer satisfaction and also to attract and retain

the best customers. Training programmes and action research should be

undertaken by sector specific different organizations to develop employees

on these attributes and also organizations in creating a healthy work culture,

which would be more vibrant, competitive, performance oriented and

environment sensitive.

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With regard to further avenues for research, one can study why culture

plays an important part when people join a company for the first time and

what are the reasons they stay in the company. Also, one can find methods

to increase openness, trust, authenticity, autonomy, proaction,

experimentation and collaboration and decrease confrontation in employees.

Such a study will enable one to improve the climate and culture in an

organization which will in turn increase the job satisfaction level of

employees.

Thus to conclude “it is not the organization, which makes the

difference; it is the people in the organizations who really make the

difference”.

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BIBLIOGRAPHY

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BOOKS:

DeCenzo, David E. & Robbins, Stephen P. – Personnel / Human

Resources Management, 3rd Edition, Prentice Hall India Private

Limited, 1997.

Aswathappa, K. - Human Resource and Personnel Management, 3rd

Edition, Tata McGraw-Hill Publishing Company Limited, 2002.

Cooper, Donald & Schindler, Pamela - Business Research Methods,

8th Edition, Tata McGraw-Hill Publishing Company Limited, 2003.

Pareek, U. (1997). Organizational ethos: OCTAPACE Profile. Training

Instruments for Human Resource Development. New Delhi: Tata

McGraw- Hill.

WEBSITES:

http://www.spss.com

http://www.indiana.edu/statmath/stat/spss/win

www.hrzone.com/articles/climate.html

www.sba.muohio.edu

www.aims.org.in

www.dhan.org/

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ANNEXURE

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QUESTIONNAIRE

ORGANIZATIONAL CLIMATE AND ITS IMPACT ON JOB SATISFACTION

Kindly fill in the details below:

1. Gender: --- Male --- Female

2. Age:

3. Designation / Job Title:

4. Qualification:

5. Years of Experience:

This questionnaire will help you to look at some values and beliefs of your

organization. Below are given statements indicating some values of the top

management, and hence generally shared in the organization. Read each statement

and indicate in the space on the left hand side of the statement, how much the spirit

contained in the statement is valued in your organization. Please be frank.

Use the following key for your responses:

Write 4 if it is highly valued 2 if it is given a rather low value

3 if it is given a fairly high value 1 if it is given a very low value.

____ 1. Free interaction amongst employees, each respecting others’

feelings, competence and sense of judgment

____ 2. Facing and not shying away from problems

____ 3. Offering moral support and help to employees and colleagues in

crises.

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____ 4. Congruity between feelings and expressed behavior

____ 5. Preventive action on most matters

____ 6. Employees taking independent action relating to their jobs

____ 7. Teamwork and team spirit

____ 8. Employees trying out innovative ways of solving problems

____ 9. Genuine sharing of information, feelings, and thoughts in meetings

____10. Going deeper rather than doing surface-level analysis of

interpersonal problems

____ 11. Interpersonal contact and support amongst employees

____ 12. Tactfulness, smartness and even a little manipulation to get things

done

____13. Seniors encouraging their subordinates to think about their

development and take action in that direction.

____ 14. Close supervision of and directing employees in action

____ 15. Accepting and appreciating help offered by others

____ 16. Encouraging employees to take a fresh look at how things are

done

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____ 17. Free discussion and communication between seniors and

subordinates

____ 18. Facing challenges inherent in the work situation

____ 19. Confiding in seniors without fear of their misusing trust

____ 20. Owning up mistakes made

____ 21. Considering both positive and negative aspects before taking

action

____ 22. Obeying and checking with seniors rather than acting on one’s own

____ 23. Performing immediate tasks rather than being concerned about

large organizational goals

____ 24. Making genuine attempts to change behavior on the basis of

feedback received

For statements 25 to 40, write 4 if it is a very widely shared belief ; 3 if it is a

fairly widely shared belief ; 2 if only some persons in the organization share

this belief ; 1 if only a few persons or none have this belief.

____ 25. Effective managers put a lid on their feelings

____ 26. Pass the buck tactfully when there is a problem

____ 27. Trust begets trust

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____ 28. Telling a polite lie is preferable to telling the unpleasant truth

____ 29. Prevention is better than cure

____ 30. Freedom to employees breeds indiscipline

____ 31. Usually emphasis on teamwork dilutes individual accountability

____ 32. Thinking out and doing new things tones up organizational vitality

____ 33. Free and frank communication between various levels helps in

solving problems

____ 34. Surfacing problems is not enough; we should find the solutions

____ 35. When the chips are sown you have to find them for yourself

____ 36. People are what they seem to be

____ 37. A stitch in time saves nine

____ 38. A good way to motivate employees is to give them autonomy to

plan their work

____ 39. Employees’ involvement in developing organizational mission and

goals contributes to productivity

____ 40. In today’s competitive situation consolidation and stability are more

important than experimentation.

JOB SATISFACTION

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ANSWER KEY:

VD – Very Dissatisfied D – Dissatisfied N – Neutral S – Satisfied VS- Very Satisfied Sl. No.

How satisfied are you: VD D N S VS

1. with your job?  

2.that the leaders in your work environment are positive role models?  

3. with your direct supervisor?  

4.that your supervisor keeps you well informed about what's going on in the company?  

5. that your views and participation are valued?  

6.that your supervisor cares about and is responding to the issues of most importance to you?  

7.with the professionalism of the people with whom you work?  

8. with the team spirit in your work environment?  

9. with the morale of the people with whom you work?  

10. with your own morale?  

11.that your work gives you a feeling of personal accomplishment?  

12.that you receive appropriate recognition for your contributions?  

13.with the empowerment you have to influence the quality of your work?  

14. with the reasonableness of your work responsibilities?  

15.with your ability to maintain a reasonable balance between your family life and your work life?  

16. that your compensation matches your responsibilities?  

17. with your overall job security?  

18.with the amount and frequency of informal praise and appreciation you receive from your supervisor?  

19. with the company as a place to work?  

Thank you for taking the time to complete this questionnaire.

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