The effect of Organizational Values on Employees

Objective

The purpose of this report is to critically analyse the role organizational values play in influencing the process of employee recruitment and retention and how organisational values influence organisations’ policies and practices. This data in this report however is secondary as researcher faces monetary and time limitation to conduct a proper research.

Scope

This report will first define values, organisation and organisational values, and go on to discuss the sources and origins of organisational values and the influence of organisational values towards organisational practices and policies. Advantages and disadvantages of organisational values will be discussed. Applicable theories will be drawn to discuss relevant human resources strategies involved in employee retention, future development and motivation in order to ensure long term benefits to organisation. Lastly this report will demonstrate the benefits and importance of human resources retention.

Organisational Values

Definition

An organisation is an artifact, social entity, has structured activities, nominal boundaries and it is goal directed (Rollinson, 2008). Values can be explained in few perspectives according to various sources. In ethics, value represents importance of physical and abstract objects which is ideal accepted by individual or group. It can be also defined as qualities that are considered worthwhile that represent an individual’s highest priorities and deeply held driving forces. P. Chelladurai pointed out that values are often admixture with knowledge, norms and beliefs (P.Chelladurai, 2006). Beliefs can be proven right or wrong by one but not values. Beliefs may vary by cohort, time, geographical differences but values are universal, true for anybody at any time, whenever an individual is. Organisational values are ethical codes that guide behaviour by putting assumptions into practice. It also serves as qualities that an organisation appreciates and would require members of the organisation to chase after. Organisational values are ideology of an organisation and practiced by organisation from the employee treatment, technology development, customer or any other external environment interaction. Ken Blanchard and Michael O’Connor used a story telling method to demonstrate that organizational values are influenced by personal values to a very much extent (Ken Blanchard and Michael O’Connor, 1993). It is part of the important element that forms organisation’s culture and it emanate deep from an organisation’s soul.

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Source and Origin of Organisational Values

Organisational values are closely associated with human values. It can be perceived as extension of human values, which can be categorized to two: instrumental and terminal value. Positive, honest, integrity, responsible, helping the needful are some examples of values. Assumption can be drawn by referring to Robert P. Marinelli, Arthur E. Dell Orto (1999) and Marieke K. de Mooij (2010) that terminate value relate to goals or desired stage, where as instrumental values relate to what needs to be applied to achieve a terminal value. Example: one’s terminal value being to provide good life to family members, and instrumental value being to be hardworking and responsible in everything aspects. Organisation values that contradict with human values will leave the members of the organisation uncertain and confused about their roles. Problems that plague the society will be mirrored in the organisation. Values do not come from conscious intentions but rather, from highest expression out of free will (Aubrey Malphurs, 2004). Some organisational values are not consciously created but are part of fabric of the organisation, as a result of founders’ views. Values might be discovered and practiced by founders during the early days. Values remain unchanged but evolved over the years unnoticeably until the organisation decided to encapsulate it in words and lay as fundamental part of the way the organisation thinks.

Some organisational values are created consciously by management team who decide to improve company’s performance systematically. Frameworks, methods might be introduced to capture the organizational values to reveal findings (Barton Cunningham 2001).

Values could be derived from organisation’s goals. It is a set of principles that guide an organisation to success and through difficult situations. It is not to be compromised for short term expediency or financial gain.

Organizational values are so special that it superseded corporate strategy, technological advantages or market presence to be the power that resides in shaping a successful organisation. Organizational values define the acceptable standards which govern the behaviour of individuals within the organization. Without such values, individuals will pursue behaviours that are in sync with their own individual value systems, which may lead to behaviours that the organization doesn’t wish to encourage.

Advantages of Organisational Values

Organisational values promote healthy growth of an organisation. According to Maslow’s hierarchy of needs, humans have a fundamental need to associate with something that they can feel proud. With the tight association all members have with an organisation, individual’s membership is defined and subsequently creates a committed workforce. Organisational values also let members of the organisation stay motivated. The external motivation by managers is less effective than in a routine-based society and work process. Therefore organisational values should be taken into consideration to promote intrinsic motivation of the organisation members.

The nature, role, and function of values are considered a central part of the organisational value foundation of a corporate brand. Organisations with good organisational values perceived as social responsible corporate and generally well accepted by public. Brand value increase and therefore drive good returns from public, in terms of sales, as well as brand image. Organisation identity is strong and helps differentiate the organisation from competitors. Organisational values are vital for continuity, consistency and credibility in a value-creating process. Organisational values ensure everyone in organisation is working towards the same goals in accordance with the same principles and adhering to the same standards. Organisational values foster organisation’s morale and protect organisation’s reputation. Values are cognitive, affective and provide directions. It drives organization groups towards the common target.

Disadvantages of Organisational Values

Values are important to study organizational behaviour because values are the foundation of how people behave (Stephen P. Robbins, 2004). Personal values might be contradicted with organisational values although values are typically good in nature. Example some organizations’ reward system is based on seniority. People that value performance higher than seniority will tend to need to deal with disappointment when they are bounded by reward system based on seniority. Both seniority and performance are good values but in this case people disappoint due to different value hierarchy. When there is contradiction, individual could either place personal values as top priority against organisational values, and vice versa. When individual prioritized personal values, organisations’ benefits are at risk to be sacrificed. Individuals might feel depressed as well when organisational values took over personal values.

Individuals might suffer imbalanced life from practicing organisational values, such as ‘hardworking’ as organisational value and member of the organisation might be required to practice it and slack in terms of personal life, which is not a good sign from society harmony point of view.

Organisational values somehow define organisations’ goals to certain extent. It might limit organisation’s pursuit of other achievable goals due to principles and standards generated by the defined organisational values.

Organisational values make an organisation harder to change their existing reputation if an organisation decided to change public’s perception that has long formed. It makes a reputable organisation’s journey to breakthrough existing image, a hard one.

How Organizational Values Influence Organizational Practices and Processes

Personal values shape individuals’ attitude and impact an individual’s behaviour. Similarly, organisational values also influence how an organisation ‘behaves’ because it will then determine the destiny of that organisation. Organisation Practices and Processes are then set up, to be followed, serve as guide books to ensure the organization is pursuing the right path towards common goals on a day to day execution perspective. These practices and processes served as written controls and guidelines for members of an organisation to perform their day to day job in order to achieve the common organisational goals. Business processes are set of living documents although there should not be frequent changes but to be reviewed from time to time. Some organizations spend huge amount of investment to review and redesign processes. The design teams tend to be ambitious to design processes that ‘work on paper’. Issues arise during the execution phase (Varun Grover, William J. Kettinger, 2002). Situations become more complicated if staffs are not governed by the organizational values. Policies and practices are as good as the human that man many subsystems and sub processes.

An organisation can have the best designed processes but still cannot be the world class organization if humans, as part of the key factor are not behaving how they should be. Other than processes, policies and practices also include organisational enablers. An enabler is a technical facility or resource that makes it possible to perform a task, activity or processes. Organisational values also influence the organizational enablers directly which consequently impact the organisation’s policies and practices.

Typical business processes involved in invoice and servicing customers include billing the customer, provide after sales service and responding to customer inquiries. If an organisation induce ‘trust and personal responsibility to every client’s success’ as an organizational value and this is being practiced across the organisation including the invoice department, it is almost certain that customers will receive superb customer services and that organisation can expect regular return customers without much of marketing effort. But if the invoice department does not practice the organizational value, it is most likely to be the pain point for customers to deal with, and the staffs do not feel their responsibility towards the organisation’s success.

If an organisation is sales-oriented and take customers as highest priority, the internal policies making would also aligned to support organisation’s values. This direction does not only apply to external customers, but will also determine inter-departmental interaction mode. One department becomes another department’s internal clients and staffs take cross departmental interaction seriously instead of having bureaucracy attitude.

World famous technology leader, Sony’s core values is to be leader, not follower. The organisational value has been driving the company to be notable as the ‘first’ to introduce cutting edge electronic devices, recording and storage technologies to market all time. Sony refuse to stay in the position of adopting standards of other manufacturers set. Sony spends million of dollars in the Research and Development Department every year to sustain as the leader in new product introduction. ‘Walkman’ is a Sony brand trademark originally used for portable cassette player. It was invented by Sony’s audio division engineer Nobushi Kihara in 1979 and other electronic companies then followed the idea, innovatively. Sony also was the first to launch other electronic products such Compact Disc players, gaming console, Play Station to name a few.

Organisational Values, Recruitment and Selection

Internal

External

Individual

Personal

Personal values and beliefs

Character

Personal actions and behaviours

Collective

Culture

Group values and beliefs

Social Structures

Group actions and behaviours

Modified Ken Wilber’s Four Quadrant Model- Richard Baratt (2006)

As the quadrant model above suggest, personal values extend to group or organisational values at collective level. It is important to select new employees that not just most suitable to the job, but also to find people that believe the organisational values. Large part of partnership did not work due to failure of both parties to clearly state and agree mutual expectation up front. Verplanken and Holland (2002) stated, values influence choice by determining the attractiveness of outcomes relevant to those values. Organisational values, organisation culture, ethics, characteristic of the organisation must be shared by recruiter as part of recruitment strategy in order to attract the right candidates. This information will then become criteria for potential employees during evaluation stage. According to a research done based on Attraction-Selection-Attrition (ASA) model (Schneider, 1995) tend to compare their own personalities and the attributes of an organisation. Attractiveness to the organisation becomes a function of people’s implicit judgments of the congruence between themselves and the organisation (Kristof, 1996). If an organisation recruits employees that do not appreciate organisational values, the employee will have difficulties adapting to the organisation’s culture, the new staff will not be able to perform at the most optimum level of the person’s ability. Eventually the employee lost interest, lost motivation and might eventually impact the social life. The organisation will also need to deal with various human resource issues which are non productive. Recruiting employees that are not aligned with organizations values will impact the return of investment and can be avoided by including organisational values as part of human resource recruitment strategy.

One of the key factors of organisation’s success is establishing a reciprocal, balanced level of expectations between the organisation and employees. The initiative to instill and further induce organisational values has to continue within an organisation to ensure employee retention. This should be included as part talent management. It is life long training and development activity to constantly reiterate the organisational values to employees which in return provide a pool of talents that are loyal to the organisation. Vancouver and Schmitt (1991) compared the impact of member-constituency congruence and supervisor-subordinate congruence and realised that member-constituency congruence has greater positive impact on job attitudes. Coaching and counseling that involve organisational values will retain employees because employees will be motivated and more willing to stay in the organisation that share the same missions. Incentives should be given to employees that appreciate and apply the organisational values in day to day job as sign of appreciation from management. Personal values determine how a person lives (Rokeach 1979), therefore it can be derived that organisational values determine how members in an organisation works, which then form the organisation culture. It is the way the members of organisation work. Conversely, values are equipments that help employees to continue the way an organisation works and it should become each member’s mantra and Raison d’etre- reason to live.

From management of an organisation’s perspective, that organisation needs to practice what has been pitched to employees. Organisational values should also play as part of employee welfare system. Examples if integrity is one of the organisational values, employees are expected to perform their tasks with integrity, vice versa, integrity has to be one of the element of employee welfare system that protect employees from exploitation. Welfare system is fair to the hiring party and the employees.

Benefits of Retention

Human resource management practices emerge constantly from strategic outsourcing non core functions, increase use of information technology, adopting flexibility in working environment to name a few examples. These practices cannot be realised without taking organisational values into consideration. Example of organisational values is to be dedicated to every client’s success. Staffs are expected to be responsive to clients’ requests and sometimes clients might need employees to attend critical meetings after working hours. To be fair, the employee should be provided flexibility such as allowed to work from client’s office instead of required to report in to office and a lot of time will be wasted on the road while travelling between own office and clients’ location.

Employee success and satisfaction is important indicator of company’s success. Retaining employees build a strong knowledge base to the organisation which helps to ensure day to day operation efficiency. Organisations are stable if employees stay for long period of time and this will increase productivity. The cost of unwanted and unavoidable turnover can be significant but management of an organisation would not normally understand the actual turnover cost (Jack J Phillips, Adele O. Connell). Emphasis on organisational values as the tool of retention help organizations to avoid turnover cost which is higher than retention cost. When an employee leaves the organisation, the effect is felt by other staffs. Turnover could be a spiral motion that triggers other employees to reconsider staying back at the same organisation. Remaining employees are required to handle the job left by terminated employees and this will further intensify the remaining employees. Customer services will be disrupted as well if the employee who owns good relationship with customers decided to leave the company. Low turnover rate translate to better employer image because public will perceive that the organisation takes care bout employees, which makes employees to stay back and work for that organisation. It will help build good corporate reputation that generally welcomed by public. A good corporate image is a priceless asset that every organisations want to acquire because it means strong brand value and free positive publicity.

Human resource retention strategies help organisations keep the talents to support organisations’ growth. People tend to leave the company and go to competitors and this is a threat to an organisation that the impact should not be under estimated. Competitors ‘growth increase the business risk for an organisation to sustain the current market position and eventually an organisation will have to play the ‘catching-up’ game which is not a position that an organisation wants to be in. Retention strategies not only support organizations growth but also slow down competitors’ growth rate. Worse scenario is an organizations training the troops that become competitors’ weapons to kill that organisation in return.