Organisational culture at VWF Industries

2011

LONDON SCHOOL OF BUSINESS & FINANCE Organisational culture at VWF Industries

Student Name: Madhumalesh Prakash Student ID: A4036664 Submission Date: 2nd October, 2011 Intake: MBA Batch 8A Module Name: Organisational Behaviour Module Code: OB Assignment Title: Culture change Word Count: 3651

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Organisational culture at VWF Industries Table of Contents

1. 2. 3. 4. 4.1 4.2

2012

Executive Summary ......................................................................................................................... 3 Introduction .................................................................................................................................... 3 Case background ............................................................................................................................. 3 Key findings ..................................................................................................................................... 6 Cultural Web ............................................................................................................................... 6 Organisational iceberg ................................................................................................................ 8

4.2.1 External factors .............................................................................................................................. 8 4.2.2. Internal factors.............................................................................................................................. 9 5. 6. 7. Recommendations ........................................................................................................................ 11 Conclusion ..................................................................................................................................... 12 References .................................................................................................................................... 14

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1. Executive Summary
This report delineates the key issues related to the organisational culture, and relates it to culture of a manufacturing organisation, VWF industries in India. We will discuss about the key internal and external factors which affect the organisational culture of an organisation and compare culture of two different units under VWF. We shall also see how culture of an organisation can be changed and evaluate the role that organisational design, leadership and some other factors play in facilitating cultural change.

2. Introduction
Vijay Wires and Filaments private limited is a medium sized manufacturing company based in India. Since its inception in 1979, it has developed a reputation as world class manufacturer and supplier to the lighting industry. VWF offers high quality tungsten and molybdenum wires and wire products like tungsten to the lighting industry and diamond dies for the wire drawing industry. Products manufactured in VWF are exported to more than 16 countries including U.S, Europe and other Asian countries. Exports constitute more than 50% of the total production. Raw materials are imported from Japan-Nippon, Osram-Germany and ChinaXiamen. From raw materials to finished products VWF incorporates its own quality checking process in every stage. Employees in the lower level are not highly skilled and educated, as the process of production is not complex. Members in managerial level and maintenance department employees are well educated. VWF industries operated through six units including the main unit. They are (1) VWF main unit, (2) Vijay halocoils, (3) Vijay precision dies, (4)Vijay Literonics, (5) Unique wires, (6) Vijay Inspections (VWF Industries 2010) .

3. Case background
Vijay Wires and Filaments industry was started by B.R.Pai with a bunch of people around 6 or 7 in 1979, in a small garage type building. The excellent management philosophy of Mr Pai emphasizing respect to individuals,

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Organisational culture at VWF Industries

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contribution to customers and the community brought up the organisation from a bunch of employees and a small unit to around 600 employees and 6 units at present. B.R.Pai headed the company as managing director from 1979 to 1991. The organisational structure contained fewer levels, as the organisation and number of employees were small in the beginning. There was direct contact between the employees and the owner. Mr Pai adopted the Management by walk around (MBWA) policy from the beginning. MBWA is an approach to handson, direct participation to hands-on, direct participation by the managers in the work-related to their subordinates or spending significant amount of their time making informal visits to the shop floor and listening to the employees (Business dictionary 2011). He also practised management by objective (MBO). According to Odiorne MBO is, a process whereby the superior and subordinate managers of an organisation jointly identify its common goals, define each individuals major area of responsibility in terms of results expected, and use these measurements as guides for operating the unit and assessing the contribution of each of its members (Kondrasuk 1981). These types of practises made the employees to get the sense of owning the company. He demonstrated excellent leadership style as a mixture of autocratic and democratic leadership style in different situations. In autocratic leadership style manager alone exercises decision-making whereas in democratic style all the members including employees have a greater say in decision making (Mullins 2005). Decisions like increasing the capacity of shop floor, changing of shifts was done in a democratic way. This again makes the employees to feel the belonging and make them to work hard to achieve the targets set by them. Every year during a famous festival celebrated in the factory, best employees were awarded with gold and silver coins and were praised for their work done. This motivated the employees both extrinsically and intrinsically. According to Mullins (2005), another classification of motivation to work is Social relationships such as friendships, group works. This also was satisfied by celebrating all the festivals in the factory and by arranging trips early once for the employees where they could come along with their families. His way of management can be compared to the Hewlett and Packard way of management where they relied on terms like integrity, trust, respect to individuals and teamwork (Dong 2002) As time passed, organisation grew rapidly from one to two, two to four and four to six units. Organisational structure was no longer simpler like before. Three best employees in every unit were promoted as shift managers and shift managers were appointed as production head for every unit. As the technology improved specifications in machines and processes improved. So, maintenance engineers were hired to rectify the breakdown of machines.

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Organisational culture at VWF Industries

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Crisis started in the year 1991, when B.R.Pai took retirement from the companys processes. He was still the managing director of VWF industries, but for the decision making process of the organisation he appointed Mr Radhakrishna as the President of VWF industries. Mr Radhakrishna was serving as divisional manager in VWF industries. This change in authority disappointed a few employees for losing Mr Pai as their leader and few top management staff like Rajendra Pai- nephew of B.R.Pai. The new head Mr Radhakrishna was not able to hold the same type of bond between employee and management like Mr Pai. He led the organisation with autocratic leadership skills, which made the employees to lose confidence on him and the organisation. This created demotivation among the employees. As time passed employees felt that they were losing the type of organisation for which they worked before. From then till now company has grown with ups and downs. Radhakrishna took the company global by attracting a lot of foreign customers. One of the units, Litreronics was merged with a US company and manufactured bulbs and CFL lights. This unit was locked down in late 90s by the labour union for a demand to pay rise which was solved eventually. Mr Radhakrishna made the organisation to grow in his way, not in the way company ran from the beginning. He just looked after companys financial and marketing and knew very less about the employee problems. This was managed by the divisional manager for production Mr Poovanna, who had similar leadership behaviour like Radhakrishna. Poovanna was also the production manager for unit one. This type of management has created discomfort in employees, due to which the permanent employees are not giving their best for the production and quality. Whereas in the second unit, Vijay halocoils the production was looked after by Mr Jayram who was reporting to Mr Poovanna. Poovanna did not have so much involvement in the production of second unit, and everything was looked after by Jayaram. This unit had highest production of 92% than all other units. VWF industries were the only company manufacturing tungsten wire till 1991, when Wolfra-tech was incorporated. Being developed as a brand name as biggest supplier of tungsten wires in South India, having a single competitor was not a big deal at that time. But now due to the cultural conflict in VWf environment, it is losing its grounds to Wolfra-tech which is attracting the customers with better quality and contract employees with better pay and a better environment.

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Organisational culture at VWF Industries 4. Key findings

A popular way of defining culture is how things are done over here. But organisational culture is seen in various aspects by different authors:

2016

Atkinson explains organisational culture as reflecting and underlying assumptions about the way work is performed; what is acceptable and not acceptable and what behaviour actions are encourage and not encouraged (mullins 2005) Deal and Kennedy (1982) argue that culture is the most important factor which accounts for the success or failure in organisation and Peter and Waterman (1982) suggests that culture can be looked upon as a reward of work: we sacrifice much to the organisation and culture is a form of return (Fincham and Rhodes 2005). In order to understand the culture of an organisation, many theories have been proposed like: Johnson presents a cultural web, which brings together different aspects (Mullins 2005); and Hellriegal et al (1988), had recognised why people behave as they do at work by viewing an organisation as an iceberg. Let us see the keys issues which caused change in culture of VWF industries by analysing these two theories.

4.1

Cultural Web

Rituals and Routines: Rituals include informal and formal processes in the organisation and a routine is the way members in the organisation behave towards each other. In VWF, at present situation there is no such bonding between the management staff and employees like how it was in Mr Pai regime and also to bring pressure on permanent employees canteen facilities were stopped, chairs in the shop floor was removed and festival

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celebration was stopped. Al these things brought a change in the culture of VWF. Stories: These are things told by the members of the organisation about the past of the company. One senior employee remembers his earlier days and says It was very nice to work before in the organisation, we were actually feeling home and all the employees had a feeling of we are part of VIJAYA family. But things changed and we are afraid we will not be getting that environment again. Symbols: VWF industries do not market its product directly to the people so it has very less to do with logos, offices, titles etc. Here, type of language or terminology used can be seen as symbol of the organisation. Power structures: This is most powerful individual or group in the organisation. In this case Mr Radhakrishna and Poovanna can be considered as power structures of VWF industries. As we saw both of them follows autocratic leadership style which may render any aspirations of involvement impossible, and this style can be considered as negative and even a source of bullying and harassment. Bullying is referred as the negative behaviour by the perpetrator on the employees, causing humiliation, offense and distress and which may affect the job performance or create an unpleasant working environment (Hoel et al 2010). Organisational structure: This reflects power structures discussed above and outlines important activities and relationships in the organisation. A poor organisational structure reduces the efficiency of an organisation. For instance, in VWF Poovanna is divisional manager for production, he is responsible for all the production activities in all six units but also, he acts as production manager for unit one. This means he has to concentrate a lot on unit one which reduces his efficiency in tracking production of all other units.

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Organisational culture at VWF Industries 4.2 Organisational iceberg

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Fig: Organisational Iceberg. According to Hellriegel, Slocum and Woodman (1988), One way to recognise why people behave as they do at work is to view an organisation as an iceberg. What sinks a ship isnt always what sailors can see, but what they cant see. In VWF industries also internal factors are more responsible for change in the environment and in-turn sinking of the company. Let us identify and discuss some external and internal factors responsible for change in the culture.

4.2.1 External factors

Competition: Competition is increasing with Wolfra-tech and small similar industries providing similar products with better quality and cheaper price. Due to this there was huge decline in profit margins and created worries among the management, which pressurised them to put pressure on employees. Resources: The raw materials were imported mainly from Japan- Nippon and China- Xiamen. Xiamen quality was comparatively low than Nippon, and due to the earthquakes and tsunami in Japan in 2011, flow of input was hugely affected.

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Organisational culture at VWF Industries

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Customers: VWF was losing its customers to its competitors, due to which companys turnover was decreased and employee turnover was increased. This caused employee lay offs and cancellation of pay rises, which created conflicts between the employees and management. Rules and regulations: This can be seen as rituals and routines which were discussed in previous topic. Strict rules were imposed on the employees to create pressure. Organisational design: VWFs organisational design can be seen as purely Mechanistic model except the fact that labour is not highly specialized. Mechanistic model emphasizes importance of achieving high levels of production and efficiency through: Extensive use or rules and procedures, Centralised authority. The characteristics of mechanistic management system are similar to those of bureaucracy (Mullins 2005).

4.2.2. Internal factors

Attitudes: This can be seen as the way management behaves with their employees as well as, employees behaviour towards management. This affects adversely on the culture of an organisation. Attitude towards the employees has been changed since Radhakrishna has taken the authority. He and Poovanna also follow MBWA but not with a friendly attitude like Mr Pai, they go to shop floors and behave negatively with the employees and put pressure. An attempt to change the attitudes of the employees can sometimes result in a change that is opposite to what is expected. According to Heller (1973), nobody likes to feel easily manipulated, and if a great deal of visual pressure is put on us to change our attitudes we are likely to exert pressure in return, perhaps by doing opposite. This is often referred to Boomerang effect (Rollinson 2008). The Boomerang effect was seen in VWF industries, more the pressure put by management on employees to increase production they were decreasing production and quality. This was happening in unit one, whereas in second unit Jayaram did not threaten or forced employees to change their attitude. He showed positive attitude by explaining the outcomes of the tasks and motivated the employees to work over-time and reach the target. Communication patterns: According to Varey, culture and communication cannot be separated. For us to communicate and cooperate, we must share some common assumptions about the world we live in and some common standards by which to judge our own and each others actions (Mullins 2005). There are different types of communication network like wheel, circle, allchannel and chain network which is suitable for different type of businesses. In VWF, communication pattern is of chain network type where lower level

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employees do not interact with the high level management directly and the flow of information flows in a predetermined channel. Conflicts: Conflicts occur when perceptions of two individual vary. Few employees in the organisation were in favour to Mr Poovanna and were loyal to him, mainly due to some personal benefits and were reporting him all the informal processes on the shop floor. This created conflicts between the employees. Conflict also occurs when two individual or groups interest are different and when one interferes in others activities wilfully. There were divisional managers for all departments like: Divisional manager for quality- Mr Rajendra Pai, Divisional manager for production- Mr Poovanna, Divisional manager for materials- Mr Vasanth Kumar. Mr Poovanna pressurised employees for production, whereas Mr Rajendra Pai was emphasizing on quality and advised employees to see quality instead of production. These sometime created conflicts between the managers for quality issues and improper supply of materials. Political behaviour: Organisational culture and political behaviour are interrelated. Culture is one of the factors which give rise to political behaviour. When a culture encourages people to view situation in win-lose terms, any behaviour that facilitates winning can be justifiable. This prompts the employees to engage in politicking (Rollinson 2008). This can give rise to conflicts. Let us consider a situation in VWF to explain this: In monthly meeting MR Radhakrishna was comparing production levels of unit one and two. Production of unit one being around 80% and unit two of 92%, he was always criticising Poovanna as loser in front of Jayaram. This gave rise to political behaviour in Poovanna and being divisional manager he was restricting the flow of raw materials to unit two, which created conflicts between him and Jayaram. Personality: Personality is defined by Gordon Allport nearly 70 years ago as, the dynamic organisation within the individual of those psychological systems that determines his unique adjustments to his environment (Robbins et al 2009). This affects the culture majorly because; personality is the one which alters the behaviour of an individual in a business environment. From all the key findings we can see that culture in VWF industries has been changed from 1991 and it has to be changed again to increase the profit margins, to hold on the customers, to create a better environment for the employees.

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Organisational culture at VWF Industries 5. Recommendations

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When an organisation is facing problems, declines in market share, losing its customers and employees then it is understood there is some problem in the culture of that organisation. The first step in cultural change is to determine the future and have clear vision of how the organisation is to look like, feel like and sound like. The next step is to find key findings in the present organisational culture and climate. Organisational climate, describes the atmosphere within the organisation and extent to which members work together. Then a plan is made for specific culture changes needed in particular areas (Dwane 2004). This can be compare to Lewins force field theory of change can be used in this case. As we discussed problems is all with the management and forces needed to the organisational change is employees emotions. Resisting force is the management itself, behaviour and attitudes of manager. Firstly, proper leadership qualities should be adopted by the management. Management and leadership are closely related. They both overlap and organisation needs both qualities to get things done through people and create an enjoyable environment. According to Drucker(1984), leadership is the most important factor which determines whether a group or organisation will be successful (Rollinson 2008). Lord Sieff describes it as, leadership is vitally important at all levels within the company, from main board to the shopfloor. Leadership is the moral and intellectual ability to visualise and work for what is best for the company and its employees... The most vital thing the leader does is to create team spirit around him and near him, not in a schoolboy sense, but in realistic terms of mature adults... To be effective leadership has to be seen, and it is best seen in action (Sieff 1991). Due to variable nature there are many alternative ways of analysing leadership. Factors like: risk factors, type of business, nature of the tasks can be considered to decide which leadership style suits the organisation. In VWF there is a need of transactional leadership for a period of time and needs to change to transformational leadership. Transactional leadership emphasizes on clarification of goals and objectives, work tasks and outcomes and is based on mutual dependence and an exchange process: I will give you this, if you do that. Whereas, Transformational is a process of engendering higher levels of motivation and commitment among the followers. Many leaders see transformational leadership as charismatic or inspirational leadership (Mullins 2005). Mr Radhakrishna with his autocratic leadership skills he should also adopt democratic leadership skills in few situations to motivate the employees.

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In VWF, production percentage is around 80% and rejection is of 35%. Transactional leadership can be applied by a mutual agreement with the employees, If production is increased and rate to rejection is reduced then pay rise can be seen proportionate to the percentage in production increase. Bass proposed a theory arguing, leader transforms and motivated people by explaining importance of the task outcomes, inducing them to outdo their own self interests for the sake of organisation and by satisfying their high level needs (Mullins 2005). Motivation can be defined as process that account for an individuals intensity, direction and persistence of effort towards attaining a goal. There are many theories which attempt to explain how and by which people get motivated. Most well known theory is Abraham Maslows hierarchy of needs theory which hypothesises that in every human being there exists a hierarchy of five needs: Physiological, Safety, Social, Esteem and Self-actualisation. As discussed before role of the transformational leader is to motivate employees by satisfying lower needs and activating high level needs (Robbins et al 2009). An efficient leadership in the management can control all the behavioural aspects like attitudes of the employees, communication patterns, employee and interdepartmental conflicts, and political behaviour. Having proper management and leadership, an organisation then can think about formulating different strategies to bring cultural change in it. Organisational design can also be considered to create a neat environment of working. As we saw before in VWF it is mechanistic model which is similar to bureaucracy. I recommend it to adopt a hybrid design which is mixture of mechanistic and organic model. Organic model is a more fluid structure appropriate for changing conditions. This type of model is required when unforeseen circumstances arise constantly and requires action beyond the defined roles (Mullins 2005).

6. Conclusion
Organisational culture is a key issue for the success or failure of any type of organisation. There are many factors which influence the culture in an organisation. To maintain a proper culture, a manager needs to concentrate on the behavioural aspects of an organisation which is not seen to the external world than the external factors. To do so he needs to see the organisation as an iceberg. Leadership and management play an important role in structuring the culture of an organisation. A manager of an organisation needs to posses excellent and different styles of leadership in different situations. He should be able to communicate properly with his subordinates and give them a clear vision of

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companys goals and objectives, manage conflicts, motivate and influence members of the organisation to outdo works beyond their role whenever needed to reach the goal. A manager should understand the motivating needs of the employees and should satisfy them from lower level and keep on motivating them by activating the higher level needs. Organisational structure and design also play a key role in the formation of successful culture in an organisation. Decisions always should not be taken by a single person. There should be a mixed organisational system of mechanistic and organic models.

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7. References Books:

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Fincham, R., Rhodes, P. (2005). Organisational culture: Principles of organisational behaviour, 4th edition. Oxford University Press: New York. Hellriegel, D., Slocum, J. W. & Woodman, R. W. (1998). Organisational Behaviour, 8th edition. South-western: Cincinnati. Mullins, L.J. (2005). Organisational development: Management and organisational behaviour, 7th edition. Rollinson, D. (2008). Attitudes and emotions: Organisational behaviour and analysis-An Integrated approach, 4th edition. Pearson education: United Kingdom. Robbins, S.P., Judge, T.A., Odendaal, A., Roodt, G. (2009). Personality and values: Organisational behaviour- global and South African perspectives, 2nd edition. Prentice Hall: South Africa Journals: Dwane, S. (2004). Changing organisational culture: NZ Business, Vol. 18 Issue 5, p-36. Hoel, H., Glaso, L., Hetland, J., Cooper, C.L. And Einarsen, S. (2010). Leadership Styles as Predictors of Self-reported and Observed Workplace Bullying: British Journal of Management, Vol. 21 Issue 2, p453-468. Kondrasuk, J.N. (1981). Studies in MBO effectiveness: Academy of Management Review, Vol. 6 Issue 3, p419-430. Internet: Business dictionary (2011). Management by walk around: Definition, [Online]. Available at: http://www.businessdictionary.com/definition/management-by-walkingaround-MBWA.html (Accessed on 28th Sep 2011) Dong, J. (2002). The rise and fall of the HP way: Paola Alto Online, [online]. Available at: http://www.paloaltoonline.com/weekly/morgue/2002/2002_04_10.hpway 10.html (Accessed on 28th Sep 2011)

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VWF Industries (2010). Available at: http://www.vwfindustries.com (Accessed on 28th Sep 2011)

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