the importance of organisational culture in it …

Annals of the „Constantin Brâncuşi” University of Târgu Jiu, Economy Series, Issue 6/2019

„ACADEMICA BRÂNCUŞI” PUBLISHER, ISSN 2344 – 3685/ISSN-L 1844 - 7007

THE IMPORTANCE OF ORGANISATIONAL CULTURE IN IT COMPANIES

MARIA MAGDALENA CRIVEANU,

ASSISTANT, PHD, UNIVERSITY OF CRAIOVA, ROMANIA

e-mail: [email protected]

CONSTANTIN RENATO IVANESCU,

PHD STUDENT, UNIVERSITY OF CRAIOVA, ROMANIA

e-mail: [email protected]

Abstract:

Ten years after the economic crisis that affected almost all economic sectors in our country, Romania is facing a

new crisis, i.e. the labour crisis, especially seen in the private environment, where more and more companies choose to

shut down for these reasons. According to official data, Romania is the second country in the world in terms of migration,

after Syria. Such a negative factor impacts the economy, as the latter can only develop with the help of labour, which, in

this case, has become a very scarce and expensive resource. In this context, employers are affected by the fact that

employees easily leave their jobs and cannot be replaced. This is why they are constantly searching for new ways to

prevent such issues and try to find solutions to retain labour force. One of the most important issues to be considered refers

to the notion of organisational culture, as this might be a key component differentiating between companies.

Keywords: organisational culture, labour, crisis, private sector.

Introduction

Romanian private companies are facing a decrease in labour, which has destabilized the

economic environment and has resulted in an exponential growth of deficit. The private environment is

a central factor in the economy of any country, as it frequently finances a range of activities. However,

tax changes resulted in chaos in the private environment, as well as a range of imbalances also seen on

the macroeconomic level. At the same time, the migration phenomenon enhanced this crisis, as trained

labour prefers a less hostile and fragile environment. Private companies are starting a genuine war of

labour, as the lack of available labour force or the employees’ low training generates conflicts

especially between companies in the same sector, where a true hunt for labour is witnessed. Such wars

will not only affect the companies, which will face difficulties in performing their activities, but also

the consumers, who will no longer benefit from the same quality of products and services. Thus, many

managers are less focused on attracting customers, on increasing product competitiveness, on

improving their products or on favourable pricing policies; their major concern is to attract employees.

The difficulties experienced on an organisational level will be projected upon the customer, who will

have to bear the inconveniences: higher prices, also confirmed by national statistics through the

inflation level, as wage increases are seen in the price level; possible delays or mismatches in the

delivery of products and services; customers communicate with different staff members within the

same company, so that the customers’ needs are no longer well known, though the customers are loyal.

All these issues cause a rupture between the company and the customer and results in the customers’

dissatisfaction.

Thus, companies must overcome the labour bottleneck, prevent any obstacles due to labour

migration and apply a management style that motivates employees. Employees must remain connected

to the company irrespective of the offers they may receive from competing companies. The

employee’s main motivation is the wage; however, this war is not favourable for companies, as it

generates high cost fluctuation, instability, the impossibility of making forecasts. Such measures are

primarily harmful for profits and, hence, affect the profitability of activities. At the same time, wages

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tend to become aligned for each type of activity, so that, in short time, wages will become more or less

equal in all companies for each individual activity. Thus, starting from a unitary wage in all private

organisations, the companies will need to find another criterion to stand out, one that is no longer

based on extrinsic motivation, but on intrinsic drivers. The managers need to prove their leadership

abilities, to impose a favourable management style and to maintain a cohesive and stable team in the

organisation. For this purpose, a manager must hold up-to-date management knowledge, especially in

the field of organisational culture management. A strong culture within a company tends to shape a

well consolidated and cohesive team, so that the employees will find it harder to leave the company.

Literature review

This paper aims at analysing the importance of approaching organisational culture at the level

of IT companies, where labour migration has generated genuine obstacles. Based on ANIS, the

expected turnover for 2019 in the IT industry is 6% of the GDP, which sends an important message on

the expansion of the IT market. However, such an expansion has generated a genuine war on the

labour market, which is unable to meet the demand.

One of the issues refers to the incapacity of the education system to train the human resource

according to market requirements. IT industry develops at an alert pace, so that the most significant

problem is that today’s society is not ready to support this growth. Based on current data, the entire

society is moving on to a new era where the homo sapiens disappears in front of the new Homo

Technium. The demand for IT specialists is almost double compared to the number of IT faculty

graduates, and the much lower salaries in education generate a mismatch between the demand for

teachers and the demand for specialists, so that the Romanian state cannot provide enough teaching

staff. Another problem is, as previously stated, the brain drain, not only for young people who want a

radical change, but also for more experienced employees of organisations, who choose to radically

change their options and go abroad, due to social and political disturbances. At the same time, fiscal

instability has resulted in confusion and dissatisfaction, which practically cancelled the advantage of

the 0 tax in the IT field.

In order to attract more and more specialized labour, the employers inevitably choose to

increase salaries so that attracting employees has turned into a continuous auction aimed at stabilizing

IT labour force. However, such wage increases are not beneficial as long as employees constantly

migrate between organisations; this new capitalization of employees does not imply the addition of

new skills or abilities. In this context, we may speak of an artificial salary growth, which will result

into even more instability and volatility on the labour market. Such an artificial growth, stemming

from the need for employees, not based on higher training, will soon result in a restructuring of IT

companies, so that employers will look for cheaper labour, such as Moldova or Bulgaria, just like

developed countries in Europe, whose higher wages resulted in the use of Romanian workforce. This

hypothesis is supported by numbers showing that most of the turnover, i.e. 75% of the turnover is

generated by the export of software and IT services, as Romania is the first outsourcing country in

Central and Eastern Europe.

Employers are affected by this exponential wage increase, as the data show that the Romanian

IT industry has experienced constant growth, and this pattern follows the same trend. The forecast for

2020 shows an increase in turnover, an increase in productivity and, hence, an increase in the number

of employees. Thus, data provided by ANIS reflect the constant expansion of IT industry.

Table no.1 IT industry expansion

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2000

−

2010

−

2017

−

2020

−

13.000

employees

56.000

employees

100.000

employees

115.000

employees

$ 253 million

turnover

$ 2,4 billion

turnover

> € 4 billion

turnover

~ € 6,3 billion

turnover

$ 19.000 / employee

productivity

$ 42.000 / employee

productivity

€ 45.000 / employee

productivity

€ 55.000 / employee

productivity

Source: ANIS - the Association of the Software and Services Industry

In this context, assuming that employers will again raise salaries in order to win the

competition for employees does not seem reasonable, since, as already mentioned, wage growth will

result into additional costs, and the Romanian market will no longer be competitive and profitable.

Thus, employers must identify new ways to retain employees, and the state must provide the

possibility to train as many potential employees in education institutions as possible. One of the

negative aspects outlined by employees refers to the Romanian managers’ obsolete management style,

which is not favourable for an organisational climate likely to support the development of human

resource in IT. At the same time, the educational system promotes an individualistic culture, to the

detriment of a team-based culture, characteristic for modern organisations. Thus, large companies

promote a participatory, modern, attractive management style, of which organisational culture is the

key element; it often operates as a solid organizational binding agent, tending to dissolve the meaning

of material earnings, to the benefit of intrinsic earnings.

A Deloitte report shows that employees refer to culture as a challenge, often connected to

financial indicators such as: turnover, productivity.

IT employees experience a high level of organisational culture, having a strong impact on the

improvement of the labour crisis and also resulting in an increase of productivity and performance.

The differences between organisational cultures result in new challenges in the companies fighting to

retain and motivate a more and more diverse workforce. The most important topic in this process is

represented by the job satisfaction which is differently implemented by companies such as those

mentioned above. According to (Dawis and Lofquits, 1984), “satisfaction is the assessment of the

individual appreciation on how the working environment meets an individual’s needs”. Satisfied

employees will influence the progress of an organisation and will make its culture healthier (Lock,

1969). They are the largest resource and play the most important part. In order to stay, they need to be

encouraged for innovation and risks. A culture focused on innovation and engagement will always

encourage employees for work and progress bringing success and profit. In turn, success has an impact

on the employees’ satisfaction.

Large IT companies understand the employees’ need to benefit from a favourable

organisational climate, so that they are looking for a range of methods to create a solid, attractive

organisational culture, focused on the employees’ needs.

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Google, for instance, provides benefits to employees such as: trips and parties for employees,

gyms, dog-friendly areas. Though investments may seem significant, the advantages triggered by such

an approach are not negligible. On the one hand, such activities promote creative spirit; on the other

hand, the activities connect employees to a solid and cohesive team, as they perform joint activities.

Square Space, another site developer, places a major focus on corporate culture, providing

employees with the feeling that their organisation is interested in their safety, providing health

premiums, relaxation areas, flexible holidays, meals or relaxation areas. Such an open, employee-

oriented culture will make them more involved and, hence, more productive.

Twitter tried to set up a friendly culture, focused on the team, not on the employee. Managers

are highly interested in the employees’ activity, so that the latter develop an outstanding commitment

to the organisational objectives envisaged by the team’s efforts.

Facebook provides a range of advantages to its employees, along with a culture based on

personal development and employee interaction. Thus, they created open work spaces to favour social

relations, as well as other recreation areas where employees may exchange cultural values.

Adobe is another company whose strategy is mostly based on developing a strong culture,

based on trust between employees. They exclude micromanagement, which is seen as an anomaly of

the management, starting from the erroneous perception that careful staff supervision will ensure the

achievement of goals. Thus, employees are assigned complicated projects, developing a culture based

on taking risks and challenges. Employers trust employees, and employees become confident in their

own forces.

Continental, a company with a major influence in the automotive sector, is aware of the

importance of an inspired and open organisational culture, which provides satisfactions. The company

aims at creating a balance between work and the private life of each employee. At the same time, it

focuses on flexible work, irrespective of location or hierarchy in the company. The possibility to take a

sabbatical year reinforces one of the company’s policies based on increasing resistance, raising

awareness of the employees’ health, responsibility and autonomy.

Each organisation adopts its own attributes, but some are essential. One of them is to clearly

define the purpose and direction of the organisation, which results in a better alignment of employees

to the company’s mission and, hence, much more productive and more dedicated staff. Flexibility and

an energetic and enthusiastic work environment, as well as open and simple communication, represent

efficient retention strategies. The positive effects of organisational culture are also closely related to

decisions made within companies, which must be beneficial for both the company and its employees.

Another major aspect is the stability of culture. Any changes have to take place to an extent that is as

low as possible, in order to have an impact on employees. Both team-oriented and individual oriented

work is important. Thus, organisational objectives are reached more quickly, since members are

cooperative, not competitive.

Thus, any organisation, irrespective of its field of activity, must build its own model, a matrix

showing the link between culture and performance. Each type of organisational behaviour finds its

echo in the cultural component, so that a leader must observe the employee’s conduct and then analyse

how can organisational culture mitigate certain behaviours classified as inefficient or, on the other

hand, observe how the type of culture may support positive conduct. Thus, the achievement of

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individual or group goals is mostly based on how organisational goals are outlined and presented. At

the same time, the reward system may increase the employees’ enthusiasm to fulfil their tasks. Another

topic relates to extrinsic motivation factors, such as work conditions. An adapted, modern, open work

space, favouring team work and discarding differences between employees, such as different

hierarchical positions, provides the premises for the employees’ involvement. The location of desks

has proved to be a major factor in developing homogeneous team work, as well as the employees’

involvement in creative, pleasant activities, usually undertaken outside working hours. The recognition

of merits is an intrinsic motivation factor, increasing the employees’ self-esteem, respect and moral

position within the organisation. At the same time, participatory management, taking risks and

assigning major projects to mixed employee teams generate confidence in one’s own forces, as well as

commitment to the organisation. It has been noticed that, at least in IT organisations, micro-

management, i.e. excessive control, overcomes creativity and imagination and alienates employees

who prefer a less hostile working environment.

Conclusions

Organisational culture is a major element, significantly influencing the labour crisis. Based on

the findings of this research, we may ascertain a significant positive correlation for the impact of

organisational culture on the commitment of a company’s members. Employees may very easily adapt

in a company based on a strong culture. At the same time, a performance-focused environment is

created. A negative culture will increase the number of employees who will leave the company. In

many cases, it is key employees who leave the organisation, which entails significant costs: expenses

to employ new members, less experience, lower productivity. Managers must support employees in

finding job satisfaction, since satisfaction is important in their decision to leave or to stay.

The type of organisational culture promoted by the leaders of a company is the catalyst in

creating a bond between the employee and the company. In most cases, a friendly culture manages to

reduce the importance of material earnings, so that the working environment provides more

satisfaction than revenues. Managers must be aware that a strong culture will determine sustainable

relations between employees and the organisation. The members of the organisation will become

engaged with the environment created by the employer and, in time, will identify themselves with both

the organisation and its objectives.

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https://www.anis.ro

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