Tatyana Yavorskaya

ABSTRACT

of the Masters Qualification Work

"Improvement of evaluation methods of organizational culture at enterprise"

INTRODUCTION

Object of this research is corporate culture of industrial enterprise.

Subject of the research is evaluation methods of corporate culture at industrial enterprise.

Objective of the research is development of methodology approaches to define of level (evaluation) of corporate culture for its further improvement, that will favor successful realization of strategic aims of enterprise.
Tasks of this report are considered to be following issues:

• Learning and analyzing of theoretical aspects of formation and development of corporate and organizational cultures;
• Improvement of categorical instrument of corporate culture;
• Analyzing of current evaluation methods of corporate culture level, marking of advantages and revealing its disadvantages;
• Defining modern problems of evaluation of corporate culture;
• Monitoring and characterizing current state of metallurgical enterprises in Donetsk Oblast in context of corporate culture development;
• Analyzing of methodological tools of evaluating level of corporate culture at metallurgical enterprises of the region,
• Developing of effective model of evaluating corporate culture at enterprise;
• Developing recommendations for improvement of corporate culture at enterprise.

Research methods: formalization, analysis and synthesis, classification, generalization, economic and mathematical modeling, measurement, interpretation, expert evaluation, statistical methods (standard, random evaluation, classification and comparison).

Urgency of the research. Viewing modern changes in society there can be observed growth of scientific and practical interest to the corporate culture. First of all, this is due to the fact that advanced and flexible corporate culture makes it possible to solve several problems at enterprises and affects the efficiency of their operation. These problems are associated with the peculiarities of the operation in Ukraine in the post crisis period, namely: the low competitiveness of basic industry sectors, the business climate deterioration in the country. These factors provoke significant complication in the organizations functioning, loss of their material and financial resources, staff reductions. To restore the stable operation of the enterprises it is necessary to introduce new management practices aimed at increasing goodwill and investment attractiveness of the company. Significant success can be achieved by ensuring cooperation of all employees, united by common tasks that reflect the main specificity of the enterprise and understandable to each worker. The human factor, that is a well-developed corporate culture and corporate spirit, is the valuable medium to access competitiveness, economic growth and efficiency. Competition growth among business entities actualizes the problem of finding stable competitive advantages, among which corporate culture of the enterprise is gaining its value.
The role of corporate culture is extremely important and multiple-aspect. It affects all the vital processes of the company: economic, political, technological, social and innovation processes, etc. Corporate culture not only forms the external perception of the company, creates its image, but also plays an important role in solving problems related to social control, determines the dynamism of industrial processes, adaptability to innovation and supports the implementation of business strategy. Determination of its level provides answers to questions about the possibility and efficiency of combining together different areas of business, and, above all, the prospects for customer relationship, internal business prospects, innovative perspectives, the financial prospects. Diagnosis of corporate culture allows us to classify the level of industrial relationships prevailing in different departments, to evaluate the staff incentives for creative activity and their focus on enterprise strategy, the degree of perception and support for innovative management solutions. In this context,   issues of evaluation and improvement of the company's corporate culture become urgent.

Connection of the paper to academic programs, plans and themes. Master's paper was  written during 2010-2011 according to the scientific direction of the Department of Personnel Management and Labour Economics, Donetsk National Technical University.

Estimated scientific novelty of the results. The most significant results obtained by the author, are as follows:
1. The content of the category of corporate culture is clarified;
2. The practicality of formation and development of organizational culture is revealed,  the place and role in this process of evaluation methodology for corporate culture is grounded;
3. A new approach based on the method of element (internal) evaluation of organizational culture that allows to determine the level of organizational culture with use of numerical score.
4. A three-level model for evaluation of corporate culture based on a systematic approach of consistent system creation in three interrelated aspects: elemental, integral and complex.

The practical significance of the results. The presented paper has certain theoretical value, and proposed practical recommendations for improvement of the evaluation methods of the corporate culture are of some interest for organizations of all business areas and allows to promote further research in this direction. The proposed three-level model of evaluation of corporate culture and methods of its application can be used to improve the corporate culture of an organization.

OVERVIEW OF RESEARCHES AND STUDIES ON THE TOPIC:

GLOBAL (WORLD)

There is a significant part of the fundamental works of foreign authors devoted to  corporate culture issues: E. Shein, Cameron Quinn, A. Fayolle, E. Clarke, D. Champion, J. Norton, G. Hofstede, J. Moutona, K. Sholts, S. Kosena, etc. Also, Russian scientists and sociologists: P. Spivak, O. Vikhansky, O. Tikhomirova, T. Galkina, T. Bazarov, T. Solomanidina, O. Naumova, E. Vlasova, N. Mogutnova, S. Shcherbina, O. Steklov, T. Lapina and others.
Before proceeding to the evaluation of organizational culture, it is necessary to diagnose it. Diagnosis is an important preliminary activity, the results of that are an essential source of information, in other words, they form "the base" of determination of the corporate culture level.
Aim of corporate culture diagnosis is systematic interpretation of the current cultural symptoms with the help of certain tools, and the result of that is visualization of the current corporate culture [4]. T.A. Lapina identifies the following three stages of diagnosis:

1. Preliminary discussion of the project, the development of research programs
2. Information gathering
3. Visualization of the current corporate culture.

The main diagnostic tools of the corporate culture include: document analysis, round at the company and a staff survey questionnaire.

Document analysis

In the analysis of documents a special attention should be paid to the following areas [20]:

1. The history of the organization development

• brochures containing information about the company history (e.g. released on the occasion of a company anniversary);
• key figures that are important marks in the development of the company (staff growth, income volumes, market shares, investments).
• In case of the absence of advertisement projects or any other documentary confirmation of the organization development, the official site can be used, where can be found this kind of information.

2. Company's strategy documents

• company policy, strategy, personnel policies (e.g. collective agreement);
• labor reports;
• minutes of meetings of the top-management.

3. Organizational Structure

• organizational charts;
  
• examples of duty regulations.
  

4. HR Management

• Personnel Policy;
• Documents on the adaptation of personnel;
• staff training programs;
• Selected indicators of staff (average record of work at the enterprise, the average age of employees, employee turnover rate);
• general conditions of employment at the company.

5. Planning and control systems

• planning tools;
  
• annual plans and budgets;
  
• reports (e.g. quarterly).

6. Internal and external communication systems

• domestic media, corporate publications;
• promotional materials;
• Examples of vacancy announcements;
• Results of internal studies (e.g. study of socio-psychological climate);
• examples of employees' speeches (e.g. President's congratulation on new year).

Round the firm

Significant help in the diagnosis of corporate culture may be brought from a spontaneous round of the company. Particular attention should be paid to the following issues [20]:

1. "Appearance" of the company:
 1.1. Building:
   • style and shape: height, architectural style, etc.;
   • exterior: facade, size and condition of signs, the presence of all letters in it, etc.;
   • Location: centre of town, suburban, etc.
1.2. Surroundings:
   • remoteness from major highways, the presence of signs surrounding the organization;
   • cleanliness, order around the building, etc.;
   • Parking: who? where? whom next to? etc.
2. "Checkpoint":
2.1. Room for visitors:
   • environment: flowers, marble, paintings, photographs, advertising, etc.;
   • atmosphere of expectation.
2.2. Ritual reception at the company:
   • The first person whom you address: who? What type of clothes? why was this person first? etc.;
   • An amount of time you spent in the room (who took you out there?)
   • tone, tact of staff when they respond calls in front of us;
   • willingness of  staff, who meets you, to help you, etc.
3. Round the company:
 3.1. Maintenance:
   • behavior of an employee accompanying you: telling about traditions of the company, proud for the organization, facial expressions, the depth in the explanations of specific problems of organization, corporate jargon, the representation of departments, etc.;
   • representation of employees: names, greetings, negotiating on the move, jokes, etc.;
   • relationship to you: fear, respect, kindness, etc.
3.2. The order of excursions:
   • the objects showed to you, the order of their presentation, the emphasis on individual objects, etc.
3.3. Observations during the round:
   • Logic of offices locations;
   • atmosphere in the enterprise: humor, social and psychological climate, stress etc.;
   • behavior of employees: talking, behavior during breaks, etc.;
   • place equipment: hardware, colors, music, etc.;
   • means of communication;
   • other.

Employee Questionnaire

 An important diagnostic tool of the corporate culture supports polling staff. The main themes in this case are [20]:
• the main orientation of the firm,
• firm strategy,
• strengths and weaknesses of the organization,
• teamwork,
• Information / communication
• features of typical employees
• career  procedure
• socio-psychological climate,
• management presentation, etc.

Thus, on the basis of the corporate culture diagnosis results at the organization culture level is determined. Comprehensive evaluation of corporate culture is offered by O.G.Tikhomirova  [3]. This technique presents evaluation of three interrelated aspects (functional, resource and organizational), each of which is defined as a combination of qualitative and quantitative indicators. This method allows to determine the fraction of actually solved problems and functions in the total number of planned tasks (in terms of index rate of functional construction level), company's resources availability, that is involved in the formation and development of corporate culture (through the calculation of coefficients of staffing, legal support, information support , financial support, technical support), to evaluate the organization level of management structure of culture formation and development (level of its modernity and progressiveness).
A positive aspect of this approach is the easy determination of the coefficients of resource provision, they are all calculated as a ratio, or actually available resources to resources planned or existing in the enterprise that are needed for activities related to the implementation of functions, tasks of the corporate culture.

However, it should be noted, that this technique has several disadvantages. Thus, conducting a comprehensive evaluation requires a significant number of stages, which are labor-intensive, the calculation of a large number of indicators, conducting the analysis of the expertise needed to implement the functions of the organizational culture, etc. In addition, some estimates of the parameters, in our opinion, are unnecessary (e.g. matching funds for the payment of salaries, bonuses and monetary rewards to staff, etc.). O.G. Tikhomirov does not take into account the evaluation of external and internal subjective attributes of the corporate culture of the company. And also, following this model level of corporate culture is estimated from the position of labor at the organization.

NATIONAL

Among local scientists and sociologists who have investigated the phenomenon of corporate culture are: A. Kolot, A. Pankova, O. Grishneva, N. Tsarenko, A. Bala, V. Evtushevsky, V. Shpilevaya, L. Panchenko, A.G. Nazarov, Yu. Zaloznovaya, M. Semikina, I. Mazhura, V. Anishchenko, G. Zaharchin, F. Zinoviev, I. Khimich and others. Themes of these studies is quite various: including disclosure of the concept of "corporate culture" and review of the methods and approaches to its evaluation.
Problems of evaluation of the corporate culture level are discussed by Ya.Ya. Slabo, according to its method the elements of corporate culture are appropriate to connect with labor discipline, interpersonal relationships of employees, the level of perception by HR modern innovations, incorporating them into the estimated figures. Generalization of theoretical researches gives reason to make certain that the characteristics of human resources, of human capital of the company primarily affect the formation and development of corporate and organizational culture and constitute its structural elements. So, Ya.Ya. Slabo. offering to determine the level of the organizational culture to count integral indicator by the geometric average (, where Коk  is an integrated indicator of the organizational culture level, and n is number of parameters to estimate the organizational culture level), identifies eight components of the general evaluation, among which are following components: the indicator of educational level of employees, the stability rate of company personnel, the rate of labor discipline, the index of interpersonal relationships, record-level of personnel health, record date of fixed assets, the rate of production regularity, the share of innovative products in total output [2].
However, it should be noted that the proposed approach to determine the integral index is imperfect: not all its components (evaluation parameters) can be calculated or it is not possible to do it reliably. Complex evaluation is not provided due to the limitations of quantitative and qualitative parameters included in the integral index. Lack of common approaches to defining the parameters, according to which corporate culture must be estimated, what makes it impossible to obtain a qualitative evaluation.

LOCAL

At DonNTU these issues are discussed by an assistant at department personnel management and labor economics Sergey O. Potorochin.  His major publications are:

• Поторочин С.О. Аналіз і вплив на безпечну трудову діяльність внутрішніх чинників розвитку організаційної культури на промисловому підприємстві // Економіка та право: науковий журнал. - 2010. - №1 (26). - С. 110-114.
• Поторочин С.О. Діагностика організаційної культури на промислових підприємствах як основа оцінки ефективності системи управління охороною праці // Наукові праці Донецького національного технічного університету. Серія Економічна. Випуск 38-3. - 2010. - С. 149-160.
• Поторочин С.О. Вплив національного господарювання на формування організаційної культури в умовах гірничодобувних підприємств // Корпоративна культура організацій ХХІ століття: збірник наук. праць / За заг. ред. С.В. Ковалевського. - Краматорськ: ДДМА, 2009. - С. 48-57.
• Швець І.Б., Поторочин С.О. Формування організаційної культури в умовах гірничодобувних підприємств // Наукові праці Донецького національного технічного університету. Серія: економічна. Випуск 35 (149). - Донецьк, ДонНТУ, 2008. - С. 196-204.

Also, during recent years such subjects were discussed by undergraduates:

1. Royenko-Letov V.O. (Supervisor: Ph.D., Assoc. Chumachenko E.V.)
Master's thesis topic: "Improving the efficiency of personnel management by improving the corporate culture of organization".
In this paper, the characteristics of corporate culture are given and ways to make  personnel management more effective by improving the corporate culture of the enterprise are described.
2. Savchenko, O.A. (Supervisor: Vasilenko V.M.)
Master's thesis topic: "Evaluation of the effectiveness of the corporate culture at organization".
This work is devoted to defining the interdependence between cultural and economic indicators, estimation of the corporate culture of an industrial enterprise.

STATEMENT OF RESULTS OF THIS RESEARCH

Problems of corporate culture estimation derive primarily from the uncertainty of the concept essence and its components. Feature of corporate culture is that it comes in the interaction of spiritual and material cultures. Enterprise (organization) unites its employees, who simultaneously produce material (artifacts, own products for realization) and spiritual values (team spirit, moral principles,  faithfulness, devotion to the corporation, loyalty, brands, ceremonies, etc.). Development of corporate culture is carried out with help of the interaction of people united by a social community to fulfill its mission, achieve its objectives, the implementation of substantive activities. Employees are in continuous communication, which is governed by values, norms, rules, language, traditions, customs, etc. Taking into account the above considerations the most successful definition of corporate culture was given by Vlasova E.F., identifying it with the organization: a complex and comprehensive system that operates in the industrial space, and includes elements of culture as  common (values, norms, rules, traditions, customs, language, artifacts), so as its peculiar components (mission, organization activities, appropriate human resources and communications) [1].However, this interpretation of the concept requires clarification and amendments with respect to the components that form the corporate culture, influencing its development and giving an opportunity to estimate its level.
It is possible to eliminate these shortcomings in the above methods by introducing a new approach based on the method of elemental (internal) evaluation of organizational culture, which gives an opportunity to determine the level of company culture with the help of numerical score. As accurate measurement of socio-psychological quality parameters is impossible, so system of tests can be proposed (according to the hierarchical structure), which allows on the basis of survey data of staff and management companies to estimate the subjective attributes of corporate culture. Fig. 2 shows a visualization of the development of corporate culture. The principle of this method is to identify the properties - the most important components of corporate culture and the weight of each of them. The weight of selected properties is determined based on survey of focus group consisting of management staff, technicians and workers. Survey allows to evaluate the corporate culture of the organization with the help of five-level scale in two directions:

• evaluation of the external subjective attributes of corporate culture (logo, slogan, appearance of staff, the interior of heroes, legends and holidays);
• evaluation of the internal subjective attributes (mission, goals, corporate values, rules and regulations).



Picture 2 - Process of evolution of organisational culture at enterprise
(Animation: volume - 75 КБ; size - 300х278; number of shots - 4; delay between shots - 100 ms; delay between the last and the first shots - 500 ms; number of repetition cycles - 7.)

The main task is the establishment of appropriate balance between values and interests of the parties of focus groups. As a result of focus group based on the ranking there  the weight (Wi) of external and internal elements of organizational culture and their grade point average (Bi) are determined. With the weight and the average score of each of the elements of the corporate culture their total score is calculated by the formula:

The next step is calculation of the average general evaluation of external and internal elements of corporate culture with the use of certain general ratings of each of the external and internal elements of corporate culture:

The proposed approach is effective when combined with two ones described above. This will allow to have more efficient three-level evaluation of corporate culture, what from the standpoint of system approach involves the consistent creation of a system upon three interrelated aspects:

element - point scoring of subjective attributes of corporate (organizational) culture on the basis of tests and interviews with staff;

integral - integral index calculation method of the geometric mean by defining the required number of parameters of corporate (organizational) culture;

complex – evaluation of set of qualitative and quantitative indicators from the perspective of functional, resource and institutional structure of company culture.

CONCLUSION

In this paper, we studied and analyzed the theoretical aspects of formation and development of corporate culture, resulting in the most successful definition of corporate culture, which was given by Vlasova E.F., identifying it with the organization: a complex and comprehensive system that operates in the industrial space, and includes elements of culture as  common (values, norms, rules, traditions, customs, language, artifacts), so as its peculiar components (mission, organization activities, appropriate human resources and communications) [1].

An analysis of existing methods of estimation of the corporate culture level revealed several shortcomings. Approach proposed by Slabko Ya.Ya. to determine the integral index is imperfect, since not all its components (evaluation parameters) can be calculated or it is not possible to do it reliably. Complex evaluation is not provided due to the limitations of quantitative and qualitative parameters included in the integral index. Conducting a complex evaluation of Tikhomirova O.G. requires a significant number of stages, which are labor-intensive, the calculation of a large number of indicators, analysis of the expertise needed to implement the functions of the organizational culture, etc. In addition, in the discussed methods there estimates of external and internal subjective attributes of the corporate culture at the organization  are not considered.

To eliminate these shortcomings a new approach has been introduced that based on the method of element (internal) evaluation of organizational culture, which gives you a numerical score to determine the level of company culture.

On the basis of the above methods, the model of a three-level evaluation of corporate culture based on a systematic approach for constructing a consistent system upon three interrelated aspects: the elemental, the integral and complex. The evaluation of the corporate culture of the company was made and upon its results there recommendations for its improvement were offered.

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NOTE

At the moment of writing this abstract master paper is not completed yet. Final completion is scheduled for December 2011.Full text of the work and materials on the subject of the research can be obtained from the author or his / her supervisor after this date.