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1 PMPC
2013
Dr. Wolfgang Messner
14 September 2013
Leveraging Organizational Culture to
Transform Offshore IT Service Delivery Teams
2 PMPC
2013
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
Dr. Wolfgang Messner
Associate Professor of International Management
MYRA School of Business, Mysore
Director
GloBus Research – Messner Consulting & Training Pvt. Ltd.
Author of 6 books and a good number of journal publications
3 PMPC
2013
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
Agenda
Employee commitment and attrition in India’s ITES industry
Correlating employee commitment with organizational culture
A 2012 empirical study with 291 employees in Pune and Bangalore
Descriptive statistics of employee commitment
How organizational culture impacts employee commitment
Challenges in changing organizational culture
4 PMPC
2013
Demotivation of the employee base – even if
unintended – often leads to attrition
• Frequent complaints by clients of India’s ITES offshoring industry
– Not adequately skilled employees
– Difficulty to retain employees on project
• Reported attrition rate around 15% across ITES industry in India (2012)
• Client experiences a much higher project attrition rate, sometimes as
high as 90%
• Employees are the most important asset in the ITES industry
Employee commitment is a business issue – and not only one of
many HR problems.
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
5 PMPC
2013
Most providers have organizational HR measures
in place to combat attrition
Yet, there is surprisingly little research available in India’s ITES
industry linking organizational culture with employee commitment.
Compensation Career
development Motivation
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
6 PMPC
2013
Employee commitment is about an employee’s
loyalty to the organization
Committed employees provide a comparative advantage – as
postulated by the resource-based view (RBV) of a firm
Affective factor
Normative factor
Continuity factor
Employee
commitment
Emotional attachment
Identification & involvement
Moral obligation
Willingness to make sacrifices
Costs of leaving
Monetary, skills, relationships
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
7 PMPC
2013
Organizational culture is ‘the glue’ that guides
behavior and shapes decision making
Shaping the culture is an often cited priority in management circles.
Institutional
collectivism
Organizational
culture reflects the
society in which it
is embedded
(GLOBE study)
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
8 PMPC
2013
We examined the linkage between organizational
culture and employee commitment
• Empirical study conducted in 2012 using Team-ICCA™•
• 291 respondents from Capgemini/Pune and Infosys/Bangalore
• Professional work experience
Average: 7.4 years
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
44
124
14
47
62
..2 3..5 6..10 11..15 16..
• Gender distribution
Female: 25 %
Male: 75 %
• Time in current company
Median: 2 years
9 PMPC
2013
Descriptive statistics provide insight into
employee commitment in India’s ITES industry
As the sample is from across a typical offshore project hierarchy, the
statistics should provide a fairly reliable picture.
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
4 5
24 24
57 59
68
28
16
04
30
74 76
55
28
7
5258
2822
4 26
14
32
11
34
77
[1; 1.5[ [1.5; 2.0[ [2.0; 2.5[ [2.5; 3.0[ [3.0; 3.5[ [3.5; 4.0[ [4.0; 4.5[ [4.5; 5.0[ [5; 5.5[ [5.5; 6.0]
Affective factor
mean = 4.1
Normative factor
mean = 4.2
Continuance factor
mean = 3.3
low high
10 PMPC
2013
In our study we have …
• Correlated the factors of employee commitment with each other
• Hypothesized the segregation of continuance commitment into two
sub-factors using confirmatory factor analysis (LISREL 9.1)
• Analyzed the correlation of employee demographic variables with
employee commitment
• Related the 9 dimensions of organizational culture with the 3
factors of employee commitment using correlation analysis and
multiple regression analysis (LISREL 9.1)
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
The results reveal a number of implications for transforming the
management and leadership practice in India’s ITES industry.
11 PMPC
2013
What works in the U.S. or Europe, may not
necessarily work in India
• Correlation between the employee commitment factors is
considerably higher than in comparable North American studies
• With increasing work experience, age, management span, and time
spent in the organization, continuance commitment decreases
• There is no significant correlation with subfactor sacrifice
(continuance commitment) and management span resp. time in the
company; this is in contrast to older North American studies which show
positive path factors between age and employee commitment via job
satisfaction
Some of these findings can possibly be explained by national culture,
others by the dynamics of India’s ITES industry.
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
12 PMPC
2013
In-group collectivism and performance orienta-
tion are strongly related to employee commitment
Humane orientation, uncertainty avoidance, and institutional
collectivism also correlate positively with employee commitment.
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
Organizational culture
Performance orientation
In-group collectivism
Reciprocal feeling of pride
Active support structures
Emotional attachment
Encourage performance, excellence, and innovation
Monetary reward and group recognition of individual achievement
Employee commitment
Affective factor
Continuance factor
Normative factor
13 PMPC
2013
Power distance correlates negatively with
(affective and normative) commitment
• Bonding and sharing power throughout the organization seems to help
increase employee commitment (affective and normative factor)
• No significant correlation with continuance commitment could be
unveiled
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
Changing an organization’s culture for increased employee
commitment is one of the most difficult leadership challenges.
14 PMPC
2013
Single-fix changes are not likely to be successful
• Organizational culture is a system of
– Goals
– Values
• Interlocking takes over when single-fix changes applied
• In India’s ITES setup, employees shift between organizational
subcultures when they change projects
• Subcultures must not overwrite organizational culture
• Cultural dynamics are different in every organization and team
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
For changes to be successful, research has to be done on firm or
even team level; Team-ICCA™ provides a diagnosis framework.
– Processes
– Roles
– Practices
– Assumptions
15 PMPC
2013
Thank you for your attention!
Dr. Wolfgang Messner: Leveraging Organizational Culture to Transform
Offshore IT Service Delivery Teams
Dr. Wolfgang Messner
Associate Professor of International Management
& Director, GloBus Research
Phone: +91 99 8659 8650
E-Mail: [email protected]
Web: www.myra.ac.in/wolfgang-messner
www.globusresearch.com