A Study of Organisational Culture and Its Effect On Employee Retention

Author:Chatterjee, Nandita

This paper tries to identify the key factors which affect employee performance and attempts to understand the effect of organisational culture on employee retention. In the modern organisation, employee retention is the key term which summarizes all HR efforts. Various methods are being employed in order to ensure high employee morale and also to asses employee expectation and match them in order ... (see full summary)


1. Introduction

Organisations these days are going through a situation where the number of employees is large but the quality is lacking. With a large number of B-school graduates hitting the market each year, it is even more difficult for organisations to deal with skill shortage. Moreover with the transition from traditional way of functioning to MNC culture, organisations are also finding it difficult to adapt to changing situations. Employee loyalties are shifting and hence, it becomes very important for companies to ensure that they find the right people for the organisations and these employees blend into the organisational culture, The challenge is even more critical in countries like India, because the society is aiso going through a struggling phase between the traditional and the modern outlook

High attrition not only has a deep impact upon current performance but also adds to the high cost of recruitment and training. Moreover, high employee turnover affects customer service adversely. The organisations also stand to lose ground with the current employees and it becomes less attractive for the potential candidates.

Since 1991, the Indian economy has changed in a big way. The impact of restructuring, economic transition to an open market, and increased competition through various sources have not just put pressure on all functions of organisations, but have also opened up various options for the employees. There has been a general need among the managerial cadre to develop a culture suitable to the employee requirements in order to ensure higher productivity. Some leading Indian organisations have also started to explore options of linking organisational strategy with the HR function.

2. Organisational Culture

Numerous authors in the organisational management field have tried to determine how an organisational culture can be identified in order to serve as an element of observation (Peters «Sc Waterman, 1982; Ouchi, 1981). An organisational culture is understood as a characteristic of the day-to-day environment as seen and felt by those who work there (Wallace et al, 1999; Choueke & Armstrong, 2000). The models of most referred organisational culture are those by Hofstede (1980) and Schein (1997), which describe culture as a distinct set of levels: core values, norms, beliefs and values, behaviours and artefacts.

Boyd and Begley (2002) state that as companies increasingly operate in a global arena, they require consistency and control across their far-flung operations. Yet highly structured design and overly directive leadership can constrain entrepreneurial thinking. Especially in the fast-paced environment of emerging technology, a bureaucratic mentality can stifle innovation and retard the quest for competitive advantage. Moreover, geographic dispersion not only limits management's ability to control employee behavior; increased emphasis on autonomous decision making...

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