ORGANIZATIONAL CULTURE PROFILE OF CONSTRUCTION COMPANIES IN THAILAND

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1 ORGANIZATIONAL CULTURE PROFILE OF CONSTRUCTION COMPANIES IN THAILAND Maria Novana and Stephen O. Ogunlana School of Engineering and Technology, Asian Institute of Technology, Klong Luang, Thailand, ABSTRACT A construction organization should understand its culture as a means to improved performance and effectiveness. This study assesses the organizational culture profiles of construction companies in Thailand using questionnaire survey data. The analysis of organizational culture and effectiveness was classified into groups, based on job position and age of company. Overall, the strongest culture of contracting companies in Thailand is characterized by Hierarchy culture followed by Market, Clan, and Adhocracy culture respectively. Thai contracting companies do not focus on innovation, growth, and resource acquisition, but rather they are growing as hierarchical organizations. Keywords: Construction companies, Organizational culture, Thailand 1. INTRODUCTION Organizational culture is very important for organizational success (Newstrom and Davis, 1993) and it is a key ingredient that differentiates the successful firms from the others, because it is the major distinguishing feature, the most powerful factor, and the most important competitive advantage in gaining success (Cameron and Quinn, 1999). Schein (1985) also stated that organizational culture can determine the level of effectiveness of an organization through its strength and type. Therefore, it is important to clearly understand organizational culture; particularly in the construction industry. By understanding an organization s culture, organizational leaders can manage the culture in order to improve organizational performance (Maloney and Federle, 1993). Although recent economic growth has brought good opportunity for development of the construction industry in many countries, the industry faces many obstacles and uncertainties resulting from the changing environment. There is still poor performance and low effectiveness in construction quality and organizations face many problems when attempting to improve organizational performance (Liu and Zhang, 2003). One major cause of problem in improving organizations is the lack of means for assessing organizations (Maloney and Federle, 1993). Given that organizational culture plays an important role in performance and effectiveness of contractor firms, this study examines the organizational culture profile of representative contractors in Bangkok as a first step towards establishing a relationship between culture and organizational effectiveness. In order to meet this objective, two logical steps were taken. First, we have assessed and constructed 279

2 organizational culture profile by classifying construction firms into groups. Second, we make recommendations regarding organizational culture to assist construction organizations in identifying their culture in order to improve performance and effectiveness. 2. LITERATURE REVIEW According to Schein (1985), organizational culture is defined as A pattern of basic assumptions which is invented, discovered, or developed by a group since it learns to cope with its problems of external adaptation and internal integration that has worked well to be considered valid, and therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems (Brown, 1998). There are a large number of functions that have been attributed to organizational culture. The most significant functions of culture according to Brown (1998) are: conflict reduction; coordination and control; reduction of uncertainty; motivation; and competitive advantages. Therefore, a strong organizational culture can help an organization to be successful in the market place. Theorists have examined different aspects of organizational culture (Brown, 1998). Below are the well-known classifications of organization culture s elements as per Schein s model (1985): 1. Artefacts. According to Schein, this is not the organizational culture itself, but only the most visible, apparent, accessible aspects, and superficial manifestation which can be perceived by people (Buchanan and Huzynski, 2000). 2. Values, beliefs, and attitudes. Values are the social principles, goals, and standards held within a culture to have intrinsic worth. They define what the members of an organization care about (Hatch, 1997). Beliefs, on the other hand, concern what people think is and is not true. (Brown, 1998). Attitudes connect beliefs and values with feelings. An attitude is a positive or negative feeling or mental state of learned predisposition to respond in consistently favorable or unfavorable manner to a particular objects, people or idea. 3. Basic Assumptions. According to Schein, this level is the organizational culture. Basic assumptions represent what members believe to be reality and thus influence what they perceive and how they think and feel (Hatch, 1997). The Competing Values Framework A brief review of the framework is presented here to bring the reader up to speed. The purpose of using the Competing Values Framework is to diagnose and facilitate change in organizational culture (Cameron and Quinn, 1999). The model dichotomizes organizational types into a 2 x 2 matrix, in which the organizational types on the diagonals are competing and those adjacent are complementary (Maloney and Federle, 1993). Using Figure 1, which presents organizational culture framework, the competing values paradigm can be discerned. An organization in the upper-half of Figure 1 is oriented toward decentralization and differentiation, with an emphasis on spontaneity and flexibility. On the other hand, an organization in the bottom of the figure is oriented toward centralization and integration, with emphasis on predictability and 280

3 control. An organization on the left side emphasizes maintenance of the sociotechnical system, has an internal focus, and focuses on long-term horizon. An organization on the right side is oriented toward the competitive position of the overall system, has an external focus, and focuses on short-term horizons. The values of upper-half of the picture are competing with those of the bottom-half, as well as those of the left and right sides (Maloney and Federle, 1993). Therefore, the framework identifies four types of culture as in Figure 1. Order Spontaneity Predictability Flexibility Figure 1: Competing Values Framework: Culture Source: Adapted from: Quinn (1988) 3. RESEARCH METHODOLOGY The major hypothesis in the study is that there is a dominant culture of contractor companies in Thailand. The OCAI (Organizational Culture Assessment Instrument) developed by Quinn and Cameron (1999) for measuring organizational culture profile was used. The instrument has been tested for reliability and validity by many researchers and results have been published in journals and books such as Maloney and Federle (1993), Lamond (2003), and Cameron and Quinn (1999). The OCAI assesses six key elements of organizational culture. The questionnaire was pilot tested on five contractors. Organizational culture is divided into six elements, each element having four statements representing each culture type. The six key elements and the measures can be gleaned from Table 2. The questionnaire was presented with a series of statements using a 5-point Likert scale. Respondents were asked to give labels ranging from never true or completely true to each statement and each was given a numerical score to reflect the degree of attitudinal favorableness. 281

4 Data Collection and Analysis The target respondents of the research were one manager and two engineers for each contracting firm. Therefore, three sets of questionnaires were distributed to each company. Due to time and budget limitations, the target location was in Bangkok and its surroundings and samples were selected randomly from the Thai Construction Association Directory The questionnaire was translated into the Thai language to aid understanding by the respondents. The sampled companies were classified into groups based on job position and duration of company existence. To construct an organizational culture profile, the study followed the OCAI. The score of each culture was plotted on the diagonal line and the organizational culture profile was interpreted based on the picture. The culture with the highest average score is considered to be the strongest and dominant culture. Microsoft Excel and SPSS 10.0 were used for the analysis. The t-test and Mann- Whitney U test were used to determine the significance of mean differences between groups. Spearman Correlation Coefficient is the measure of significant rank correlation between two groups. 3. RESULTS One hundred and twenty three (123) respondents returned questionnaires from forty eight (48) companies; i.e. forty two (42) managers and eighty one (81) engineers. Thus, the desired (1:2) ratio between managers and engineers could not be maintained in a few of the companies. Organizational Culture Profile of Contractor Companies The research intended to measure the organizational culture of the companies, and to determine the dominant or the strongest culture in the companies. 1. General Case. Overall, Hierarchy culture is emphasized most in the contracting firms (Figure 2). It means that the firms most emphasize formalized and structured place to work and focus on internal maintenance with a need for stability and control. The result shown in Table 1 reveals that Hierarchy culture is stronger than the other types of culture with the average score of 3.74, followed closely by Market culture (3.64), Clan culture (3.57), and Adhocracy culture (3.33). Hierarchy culture is the strongest culture; it contrasts with Adhocracy which is the weakest culture. As shown in Table 1, the differences in average score of the four types of culture are not great. It can be said that although the culture in the bottom two quadrants are stronger than the upper two quadrants, the respondents perceive their organizational culture to be relatively balanced. It seems that the contracting firms require a balanced culture where similar emphasis is placed on each culture type. The six elements of organizational culture (presented in Table 1) are dominant characteristic, organizational leadership, management of employees, organizational glue, strategic emphasizes, and criteria of success. All respondents perceive that the dominant characteristic of the contracting firms is represented by the Clan culture. In 282

5 organizational leadership, most of the contracting firms are strongly Market oriented (3.85) wherein leaders focus on being hard drivers, producers, and competitors. Figure 2: Overall Organizational Culture Profile The management style used to manage employees is strongly Hierarchy oriented (3.55), followed by the Market culture (3.34). The organizational glue that holds companies together is Clan culture that respects loyalty and follows tradition. The company strategic emphasis is strongly Hierarchy oriented (3.80); followed by the Market culture (3.73). Companies define success based on the Hierarchy culture (3.97) that stresses efficiency, dependable delivery, smooth scheduling, and low-cost production. From the explanation above, it is evident that there is a presence of cultural incongruence in the contracting firms because the strategy, leadership style, reward system, approaches to manage employees, and dominant characteristic tend to emphasize different culture types. This may have resulted from a mixture in the Thai market place. Nowadays, the market demand is changing rapidly. Hence, the contractor companies desire to modernize their organization in a society or business environment that requires them to be hierarchical organizations. Table 1: Overall Organizational Culture Profile Average Score No. 6 Elements of OC Clan Adhocracy Market Hierarchy 1 Dominant Characteristic Organizational Leadership Management of Employee Organizational Glue Strategic Emphases Criteria of Success Overall OC Profile N= Classification by Job Position The perception of culture types in an organization may be affected by the job position of the employees. For instance, the leader may a have different perception from the sub-ordinates. Therefore, the respondents were classified into two groups based on their job position separating managers from engineers. Their responses are plotted and summarized in Figure 3 and Table

6 Table 2 shows that the rank correlation for each pair (r) is very strong and significant. Thus, managers and engineers alike perceive that the Hierarchy and Market cultures are stronger than the Clan and Adhocracy cultures. The classification by job position does not show differences in the rank ordering of the four culture types. As seen in Figure 3, the two lower quadrants are stronger than the upper two quadrants. Seventeen (17) of forty two (42) managers perceive Hierarchy culture as the dominant and the strongest culture in contracting firms, followed by Market culture, Clan culture, and Adhocracy culture respectively. Twenty nine (29) of eighty one (81) engineers also perceive Hierarchy culture as the dominant and strongest culture in the contracting firms, followed by the Market, Clan, and Adhocracy culture respectively (Table 2). The statistical result shows that there is a significant mean difference between managers and engineers in the four culture types. The managers average score is higher than engineers average score as shown in Table 2. Thus, the managers have stronger feelings regarding the organizational culture profiles in their companies than the engineers. It can be concluded that the hierarchy culture is the most dominant in the contracting firms. It means that contractor companies tend to improve their effectiveness by emphasizing on value stability, control, and continuity which are obtained through measurement, documentation, and information management. In addition, the six elements of organizational culture are presented in Table 2. In the first element, the forty two (42) managers perceive that Market culture is more dominant than the others. On the other hand, the eighty one (81) engineers perceive that their organization is dominated by Hierarchy culture. Nevertheless both groups perceive Clan culture as the weakest culture in terms of the dominant characteristic. In the second element, both managers and engineers perceive that the organizational leadership used in the contracting firms is strongly Market culture, whereas Adhocracy culture is the weakest. OC Profile by Managers OC Profile by Engineers Figure 3: Organizational Culture Profile Classified by Job Position 284

7 In the third element, both groups perceive that the management style in the companies is strongly characterized by Hierarchy culture which focuses on security of employment and predictability, whereas Adhocracy culture is the weakest. In the fourth element, both managers and engineers perceive Clan culture as the organizational glue holding contracting firms together and Adhocracy culture is the weakest culture that cannot be applied to hold organizations together. Thai people have a tradition of loyalty to the family group, it may have colored their opinion regarding organization glue element. In the fifth element, both managers and engineers alike perceive that companies emphasize permanence, stability, efficiency control and smooth operations (Hierarchy culture) as being important to their strategy. In the sixth element, both managers and engineers perceive that companies define success on the basis of efficiency, dependable delivery, and smooth scheduling. They still believe that Hierarchy culture makes their companies successful. Adhocracy culture still has the least effect as criteria of success. From the foregoing, it is evident that there is incongruence in culture based on job position. Each element of organizational culture tends to emphasize a different culture type. 2. Classification by Age of Company Responses were divided into two (2) groups based on the age of companies: companies that are younger than twenty (20) years and companies that are older than twenty (20) years. The objective of the classification is to determine whether or not culture changes occur as companies age. The analysis and discussion consider the views of managers and engineers separately. The result for managers shows no significant mean difference between the two classes of companies. However, companies younger than 20 years give less average values than those that are older than 20 years. There is weak but non significant rank correlation between the two groups. Therefore, the age of companies have affected the ranking of the four culture types - as per the views of managers. The dominant culture in older companies (personal place) is different from that in younger companies (production). Based on managers, nine (9) of eighteen (18) companies younger than 20 years, are dominated by Market culture. Whereas eight (8) of twenty four (24) contracting firms older than 20 years are characterized by Hierarchy culture as the dominant and strongest culture. By contrast, Adhocracy culture is perceived as the weakest culture for both classes of companies. The analysis for engineers shows that there is no significant mean difference in organizational culture between the two groups of companies. In addition, there is strong but non significant correlation between the two groups in ranking the organizational culture types (sig. value > 0.05). Engineers perceive that both classes of companies are strongly Hierarchy oriented and Adhocracy culture is the weakest culture opposite to Hierarchy culture. Engineers report that the contracting firms focus on formalized and structured procedure, 285

8 documentation, stability and control. This may have resulted from the fact that the engineers are made to always follow procedures and rules by their companies. In addition, some contracting firms have adopted international standards for products or services which must be followed by the employees. The result for the six elements of organizational culture shows that there is incongruence in culture because each element of organizational culture of contracting firms tends to emphasize a different culture type. For example, based on managers perception, contracting firms younger than 20 years are dominated by Market culture, but they define their criteria of success based on Hierarchy culture. 4. CONCLUSIONS AND RECOMMENDATIONS The most common culture types reported in the analysis are Hierarchy and Market culture, which emphasize formalized and structured place to work, and goal achievement respectively. Clan and Adhocracy cultures were less prominent in the construction companies. The dominant characteristic of the contracting firms is Clan culture emphasizing personal place, like an extended family, and comfort at work. However, in this element, there is not much difference among the four types of cultures. Hence, it can be said overall that there is no dominant culture characterizing the companies. The leadership style used in the contracting firms is Market culture, which is generally considered to exemplify aggressive, result-oriented focus, hard driver, producer and competitor. The management of employee in the companies is strongly Hierarchy oriented which is characterized by security of employment, conformity, predictability, and stability in relationships. The organizational glue that holds the companies together is characterized by Clan culture that stresses loyalty and mutual trust, and commitment to companies runs high. The strategic emphasis in the companies is represented by Hierarchy culture which emphasizes permanence and stability as well as efficiency, control and smooth operation. Companies define success on the basis of Hierarchy culture, which values efficiency, dependable delivery, smooth scheduling, and low-cost production. The presence of cultural incongruence in the construction companies may have resulted from a mixture in the Thai market place. The contracting firms tend to modernize their organizations in a society or business environment that at the same time requires companies to have strong Hierarchical organization. In addition, the characteristic and the culture of Thai people may influence company values, beliefs, and basic assumptions. There are no differences in perception, based on job position classification, in ranking the overall average scores for the strongest and weakest culture types. Managers and engineers agree that the strongest culture is the Hierarchy culture and the weakest culture is Adhocracy. However, there are differences in perception in some elements of organizational culture, such as dominant characteristics, management of employees, and organizational glue. 286

9 Table 2 Organizational Culture Profile Classified by Job Position Manager Engineer No. 6 Key Elements of OC Average Rank Average Rank 1 B.1.a Personal Place (CC) Dominant of Characteristic 3.76* * 4 B.1.b Dynamic and entrepreneurial (AC) 3.83* * 2 B.1.c Production oriented (MC) 3.86* * 2 B.1.d Formalizes and structures (HC) 3.81* * 1 r = sig.(2-tailed) = Organizational Leadership B.2.a Mentor, sage, or parent figure (CC) B.2.b Entrepreneur, innovator, or a risk-taker (AC) B.2.c Hard-driver, producer, or competitor (MC) 4.07* * 1 B.2.d Coordinator, organizer, or an efficiency expert (HC) r = 1.000** sig.(2-tailed) = Management of Employee B.3.a Teamwork, consensus, and participation (CC) B.3.b Innovation, freedom, and uniqueness (AC) B.3.c Production and achievement (MC) 3.62* * 3 B.3.d Security of employment and predictability (HC) 3.90* * 1 r = sig.(2-tailed) = Organizational Glue B.4.a Loyalty and tradition (CC) B.4.b Innovation and development (AC) B.4.c Production and goal accomplishment (MC) B.4.d Rules and Policies (HC) r = sig.(2-tailed) = Strategic Emphases B.5.a Participative and comfortable (CC) 3.69* * 3 B.5.b Dynamics and readiness (AC) B.5.c Competitive and confrontational (MC) 3.98* * 2 B.5.d Permanence and stability (HC) r = 1.000** sig.(2-tailed) = Criteria of Success B.6.a Sensitivity to customers, concern for people (CC) 3.88* * 2 B.6.b Product leader and innovator (AC) 3.40* * 4 B.6.c Market penetration and market share (MC) B.6.d Dependable delivery, smooth scheduling (HC) 4.19* * 1 r = 1.000** sig.(2-tailed) = Overall OC Profile a Clan Culture (CC) 3.75* * 3 b Adhocracy Culture (AC) 3.51* * 4 c Market Culture (MC) 3.88* * 2 d Hierarchy Culture (HC) 3.97* * 1 N= r = 1.000** sig.(2-tailed) = ** = correlation is significant at 0.01 level (2-tailed) * = difference is significant at 0.05 level (2-tailed) 287

10 Analysis based on job position and age of company did not reveal much. In most cases, the strongest culture is Hierarchy culture and the weakest culture is Adhocracy culture; except that managers in companies that are younger than 20 years perceive that their companies are strongly market oriented. Overall, irrespective of classification, Adhocracy culture seems to be the weakest or the lowest culture. This may have happened because adhocracy does not relate well with hierarchy culture which is the strongest culture. Support for this comes from Maloney and Federle s (1991) observation that typically, the culture that is opposite to the strongest culture is the organization s weakest. It does mean that contracting firms do not focus on innovation, growth, and resource acquisition, but rather the companies are growing as hierarchal organizations. By knowing the dominant culture applied in the companies and the demand of the business environment, companies can determine the feasibilities of changing in order to achieve effectiveness. For instance, managers wishing to encourage innovation may need to manage themselves from a strongly hierarchical culture towards adhocracy or incorporate the appropriate elements into their organizations. 5. REFERENCES Brown, Andrew (1998). Organizational Culture. 2 nd ed. Prentice Hall. Buchanan, David A. and Huczynski, Andrzej (2000). Organization Behavior: An Introductory Text. New York: Pearson Education. Cameron Kim S. and Quinn, Robert E. (1999). Diagnosing and Changing Organizational Culture. Reading, Mass: Addison Wesley Publishing Company, Inc. Hatch, Mary Jo (1997). Organization Theory: Modern, Symbolic, and Postmodern perpectives. Oxford University Press. Lamond, David (2003). The Value of Quinn s Competing Values Model in an Australian Context. Journal of Managerial Psychology, 18, 1, Liu, Anita M.M. and Zhang, S.B. (2003). Organizational Culture Profiles of the Chinese Contractor. CIB TG-23. Maloney, William F. and Federle, Mark O. (1991). Organizational Culture and Management. Journal of Management in Engineering, 7, 1, Maloney, William F. and Federle, Mark O. (1993). Practical Models for Organizational Assessment. Journal of Management in Engineering, 9, 1, Newstrom, J.W. and Davis, K. (1993). Organizational Behavior: Human Behavior at Work. 9 th ed. New York: McGraw-Hill Inc. Quinn, Robert E. (1988) Beyond Rational management. San Francisco: Jossey-Bass Schein, Edgar H. (1985). Organizational Culture and Leadership. San Francisco: Jossey-Bass. 288

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