Recent reviews of the relationship of organisational culture to Strategic Human Resource Management (SHRM) suggest that culture plays a significant role in strategy implementation for sustaining competitive advantage and contributing to firm performance (Dyer & Ericksen, 2005; Roberts & Hirsch, 2005; Roehling et al. , 2005). A search of the literature reveals only two empirical studies examining organisational culture from an SHRM perspective.
The first study was a micro SHRM analysis examining the relationship between organisational culture and HR practices. An international study was conducted using Hofestede’s model to examine each participating country’s cultural characteristics at a national level. The findings from this study showed support for a stronger relationship between HR and internal communication practices and a weaker association with rewards (Papalexandris & Panayotopoulou, 2004).
A second study of companies in Asia used a contingency approach to examine the effect of culture and HR on firm performance. A content analysis of public documents was carried out to assess cultural values for each organisation. The findings suggested that organisations with “elite” or “leader” value profiles with a complementary HR system achieved higher financial performance (Chew & Basu, 2005).
Although both studies had a number of limitations, both also provided preliminary empirical support for examining organisational culture as an important factor in SHRM research. From the practical viewpoint, different organisations while implementing their strategic vision of organisational culture pursue different strategic HRM objectives: to create trusting environment highlighted by cooperation and openness, to gain new market share and reaches targets, to achieve operational efficiency, to look for new opportunities and welcomes new challenges, etc.
The most prevalent and cited quantitative approaches to strategic assessment and management of culture in organisations are Hofstede’s (1983) GLOBE dimensions model, Kets de Vrie’s five dysfunctional types model (DeVries & Miller, 1986) and Cameron and Quinn’s (2006) competing values framework (CVF). From both practical and critical perspective, managerial literature has relied heavily on the competing values framework, which as a result, has been empirically validated (Cameron & Quinn, 2006; Kwan & Walker, 2004).
CVF has also been tested in various ways in the HR literature using both quantitative (Prajogo & McDermott, 2005) and qualitative (Boggs, 2004) approaches, such as in studies showing that certain culture values are positively associated with HR outcomes including organisational commitment, job involvement and empowerment, and employee outcomes including job satisfaction (Goodman, Zammuto, & Gifford, 2001), operational practices (TQM) and productivity outcomes. Cameron and Quinn’s (2006) competing values framework offers the most compatible practical framework for organisations for several reasons.
First, CVF links to strategy implementation and resource-based view (RBV) through the integration of both values and dimensions in the model. The values framework allows for an assessment of organisations based on competing dimensions, which draw out the characteristics of organisational cultures. Second, it provides a level of assessment that tie to RBV’s social complexity of managerial style and leadership, along with its emphasis on organisational capital (i. e. , organisational administration and coordination).
Third, the framework has been empirically tested and shown to be valid (Cameron & Quinn, 2006; Igo & Skitmore, 2006; Kwan & Walker, 2004). Fourth, the framework is measured using the Organisational Cultural Assessment Instrument (OCAI), which assesses an organisation’s overall cultural profile through a self-reported survey method. The survey is easily transferable to a format that respondents can interpret and respond to. The competing values framework differentiates organisational cultures on the basis of four culture types.
Using the Organisational Cultural Assessment Instrument (OCAI), an organisation’s overall cultural profile and dominant characteristics can be assessed through a self-reported survey. The model considers two sets of competing values. The first set represents the contrast between the degree of control an organisation exercises on the one hand and the degree of flexibility it offers on the other. In other words, where one dimension shapes the values for organisations that provide a flexible environment with discretion, the other dimension shapes values around a controlled environment with stability.
The second set of competing values is represented by the contrast between the degrees to which an organisation has an internal versus an external focus. Organisations that value an internal focus are interested in the ways in which the organisation integrates and operates internally, whereas organisations with an external focus are more interested in examining and responding to the forces outside. These competing dimensions serve as the basis to develop characteristics that shape four organisational culture types, which are measured by the OCAI.
Each of these four main culture types has notable distinguishing characteristics. Studies using this approach to examine organisational culture have revealed that a company often has one dominant culture type but demonstrates varying degrees of each of the other types (Goodman et al. , 2001; Kwan & Walker, 2004; Prajogo & McDermott, 2005). The four organisational culture types are briefly described below. Clan: social environment in which employees work well together in teams. Leaders focus on mentoring employees and facilitating group problem-solving. A strong emphasis on ooperation and openness is evident, highlighted by a concern for people and customers. High levels of employee loyalty are often found in clan-dominant cultures.
Market: results-oriented approach emphasizing growing the market and customer base. Leaders are hard driving and competitive with a high demand for achievement. Emphasis is on being a market leader, which is pursued through goal orientation. Hierarchy: environment with a strong emphasis on rules and processes. Leaders in such environments are typically good coordinators and organisers. The focus of this culture ype is to develop a stable environment with job security and conformity to rules by employees. Dependability and efficiency are key to its success. Adhocracy: innovative, creative environment that encourages risk-taking. Leaders in this culture type are entrepreneurial and encourage others to take risks and innovate. Employees motivated by challenges and new opportunities to create products and services are drawn to adhocracy-dominant cultures. Organisations depending on their existing or potential organisational culture type can employ specific organisational methods to achieve their objectives.