the effects of corporate culture on organisational effectiveness at general department of vietnam customs

Corporate culture is a process where norms, values, and coordination and integration characteristics are at play.. This study examines the characteristics of corporate culture: norms, va

Hanoi – 2013

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THE EFFECTS OF COPORATE CULTURE ON ORGANISATIONAL EFFECTIVENESS AT

GENERAL DEPARTMENT OF VIETNAM CUSTOMS

SUMBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS FOR THE DEGREE OF BACHELOR OF ARTS IN

ENGLISH FOR FINANCE AND ACCOUNTING

Class : CQ47/51.03 Supervisor : M.A Trương Thị Minh Hạnh

Hanoi - 2013

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DECLARATION

I hereby declare that this thesis is based on my own work except for quotations and citations which have been acknowledged I also declare that it has not been submitted for any other course/degree at Academy of Finance or other institutions

Hanoi, May 3th 2013

Student‘s name

Võ Thùy Linh

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ABSTRACT

Corporate culture contributes to enhance organisational effectiveness at an organisation Corporate culture is a process where norms, values, and coordination and integration characteristics are at play Companies or organisations need to build positive corporate culture not only for running a company but also for enhancing the effectiveness of it It is also significant for a company or an organisation to know who its employees are, how they interract with each other and how they achieve common goals This study examines the characteristics of corporate culture: norms, values, and coordination and integration at the GDVC A questionnaire and interviews are used to collect data about corporate culture and its impacts on the organisational effectiveness at the GDVC The preliminary results of the research show that initially the GDVC with a healthy corporate culture is more confident and motivated The conclusion research results, some recommendations for improving the corporate culture will also can also be drawn a healthy corporate culture positively impacts on the organisational performance Following an in-depth multi-dimentional analysis of preliminary

be presented

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ACKNOWLEDGEMENTS

This graduation thesis would not have been possible without the guidance and the help of several individuals who in one way or another contributed and extended their valuable assistance in the preparation and completion of this study

First and foremost, I would like to express my gratitude to my thesis supervisor M.A Trương Thị Minh Hạnh for her inspiring guidance, suggestions and critical evaluation of the work for the successful completion

Last but not least, I would like to thank my family members and friends for their essential encouragement during the process of completing this thesis

Hanoi, May 2 nd , 2013

Võ Thùy Linh

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LIST OF TABLES

Figure 2.1 Organisational structure of General Department of Vietnam Customs ……… 22

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LIST OF ABBREVIATIONS ASA

Master of Arts

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TABLE OF CONTENTS

DECLARATION i

ABSTRACT ii

ACKNOWLEDGEMENTS iii

LIST OF TABLES iv

LIST OF ABBREVIATIONS v

TABLE OF CONTENTS……… vi

INTRODUCTION 1

1 Rationale 1

2 Aims of the study 2

3 Scope of the study 2

4 Methodology 2

5 Organisation of the study 2

CHAPTER 1 4

LITERATURE REVIEW 4

1.1 Corporate culture 4

1.1.1 Definition 4

1.1.2 Characteristics of corporate culture 6

1.1.2.1 Norms (Behaviors) 6

1.1.2.2 Values 8

1.1.2.3 Coordination and Integration 10

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1.2 The relationship between corporate culture and organisational

effectiveness 12

1.2.1 Organisational effectiveness 12

1.2.2 The impacts of corporate culture on organisational effectiveness 13 1.2.2.1 Positive impacts 13

1.2.2.2 Negative impacts 14

1.2.3 Healthy and Unhealthy corporate culture 15

1.2.3.1 Healthy corporate culture 16

1.2.3.2 Unhealthy corporate culture 16

1.2.3.3 Building and maintaining a positive corporate culture 17

CHAPTER 2 20

THE STUDY 20

2.1 Introduction about the General Department of Vietnam Customs 20

2.1.1 Development history 20

2.1.2.Organisational structure……….21

2.2 Corporate culture at the GDVC 26

2.2.1 Analyzing Norms at the GDVC 26

2.2.2 Analyzing Values at the GDVC 29

2.2.3 Analyzing Coordination and Integration at the GDVC 31

2.2.4 The influences of corporate culture on organisational effectiveness at the GDVC 34

2.3 Mini conclusion 35

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CHAPTER 3 36

RECOMMENDATIONS 36

3.1 Summary of the findings 36

3.2 Suggestions for improving the corporate culture at the GDVC 37

CONCLUSION 42

REFERENCES 43

APPENDIX 45

is very important to study corporate culture and its effects on the organisational effectiveness in Vietnam

Culture can affect business performances in a number of ways, both positive and negative Corporate culture has a vital and measurable impact on the organisation‘s ability to deliver on its strategy It is imperative that enterprises and organisations do not ignore or underestimate the effects of corporate culture on the organisational performance A healthy corporate culture values each employee in the organisation regardless of his job duties, which results

in employees working as a team to meet the company‘s and their own personal needs On the contrary, in a business with an unhealthy corporate culture, employees act as individuals, performing their duties to meet their own needs

Realising the important role corporate culture has in organisational success, I chose topic ‗corporate culture‘for my research paper This paper focuses on

“The effects of corporate culture on organisational effectiveness at

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General Department of Vietnam Customs” with the expectation of

enhancing the effectiveness at General Department of Vietnam Customs

2 Aims of the study

The aim of this study is to define and measure the corporate culture and its impacts on the organizational performance It also aims to analyse the existing corporate culture of General Department of Vietnam Customs and its effects

on the organizational performance

3 Scope of the study

Because of the limited time and the scale of the research, and for the thoroughness of what is done, this research paper only deals with the following questions:

 What are the aspects of corporate culture at General Department of

Vietnam Customs?

 What are the impacts of corporate culture on the organisational

effectiveness at General Department of Vietnam Customs?

4 Methodology

A questionnaire and interviews are used to collect the reliable data at General

Department of Vietnam Customs

5 Organisation of the study

Apart from the INTRODUCTION, CONCLUSION, REFERENCES and APPENDIXES, the main content is divided into three chapters as follows:

Chapter 1 - LITERATURE REVIEW gives a general overview on corporate

culture, and its impacts on the organisational effectiveness

Chapter 2 - THE STUDY analyses the current situation of corporate culture

at General Department of Vietnam Customs

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Chapter 3 – RECOMMENDATIONS summarizes the findings of the study

and suggestions for the company to create a positive corporate culture

Corporate (organisational) culture can be difficult to define and even harder to change It is essentially the sum total of the attitudes, behaviors, beliefs, and traditions of an organisation It encompasses the collective goals of organsational and the standards of expected behavior in achieving those goals And it describes the environment and manner in which employees interact with each other and the market

There are many ways to define the corporate culture, which paints the clear painting about the corporate culture Pettigrew (1979) argues that cultures of organsation based on cognitive systems which help to explain how employees think and make decisions He also notes the different level of culture based on the multifaceted set of beliefs, values and assumptions that determine ways for organisations to conduct its business

According to Gareth Morgan (1997)‘s culture is as ―the set of beliefs, values, and norms, together with symbols like dramatized events and personalities, which represents the unique character of an organisation, and provides the context for action in it and by it‖ He refers to characteristics of corporate culture, such as norms, values, beliefs, which distinguishes an organisation

of an organisation‘s history, and which tend to be manifested in its material

arrangements and in the behaviors of its members‖ (Brown, 1990, p9) Hemaintains if an organisation builds corporate culture during the course of its history, it will be shown through the performance of organisation good or bad

According to Edgar Schein (2004), a professor of organisation research in America, corporate culture is considered as ―the system of shared beliefs, values and standards of solving problems, which is created in the forming and developing process of a corporation and demonstrated through physical and nonphysical forms and behaviors of its members‖ This is the most popular definition which is used to define the corporate culture He notes that corporate culture has a key role in success and effectiveness of an organisation

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1.1.2 Characteristics of corporate culture

1.1.2.1 Norms (Behaviors)

According to the Oxford advanced Learner‘s dictionary, norms are standards

of behavior that are typical of or accepted within a particular group or society And Hodgetts and Luthans (2003) believe that norms are measured by things like amount of work done and also the level of corporation between management and employees of the organisation Norms refer to specified

modes of prescribed or socially sanctioned behaviors (Effective management

control by Enc Flamholtz)

The origin of Wealthy by E.D Beinhocker undermines the position that

cultural norms are in short the rules of thumb for behaving in a social environment Norms are ―should‖ or ―ought‖ statement about what is considered the right, appropriate, or the expected thing to do, by the society or organisation in a given situation Every person has an individual set of rules

of behaviors that he or she follows For example, people at Matsushita might all share human norms, Japanese norms, and various Matsushita organisational norms, but they are still individuals and will differ in their behaviors There are many kinds of norms, such as idiosyncratic norms, organisational, societal, or human norms The way we can distinguish between them is to ask how widely shared the norms are

In other sense, norm is obviously a cultural affects that organisational performance If all (or even most) of the employees in a company behave in particular way, that behavior will affect the company overall performance The more interesting question is which behaviors are desirable, and which ones are not Naturally, norms that contribute to company success are likely to

Russell, in a study of small to medium size businesses, finds that a set of norms are significantly related both to the absolute number of innovations successfully implemented in the organisations and to the frequency and importance of innovation as an element of organisational strategy Seven norm dimensions are identified that are associated with reinforcing behaviors which are associated with innovation These norms dimensions are: (1) support of individual creative activities, (2) recognition of innovation as an appropriate solution to organisational problems, (3) free and open exchange if information both inside the organisation and with external agents, (4) open-minded consideration of new ideas, (5) commitment to the development of new ideas by providing psychological and resource support, (6) support of moderate risk-taking in new ventures, and, (7) support for the effective implementation of change

So, norm helps employees distinguish between what has been tried and succeeded and those things that were attempted but failed; it allows staff to move beyond past failures through to innovation and achievement, which assesses the effectiveness of organisation now and in the future

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1.1.2.2 Values

A culture‘s values are its ideas about what is the good, right, fair and just (Oxford advanced Learner‘s dictionary) An organisaional value is ―a belief that a specific mode of conduct is preferable to an opposite or contrary mode

of conduct‖ according to Rokeach (1973, The Nature of Human Values) Some organisations think or their values as their ―guiding beacon‖ directing the process of organisational development and growth Others describe them

as the components of their philosophy They do relate to how organisational deal with their beliefs about people and work More and more studies show that successful companies place a great deal of emphasis on their values Hofstede (1980)‘s study indicates that cultural values reliably distinguish national subsidiaries of a multinational corporation Values belong to people more than to organsations and, organisations import values more than they create them Analysing of values, therefore, may be of particular significance

to the recruitment and selection sub-system within organisations

Values are important building blocks of culture and are deep-seated and enduring They motivate behavior and emotional responses; they underpin the way people approach their work, make choices and decisions, and deal with each other The leadership of an organisational is responsible for the creation and management of its culture and should aim to achieve the link between manager‘ and employees‘ individual values and the organisational values

At work, values assist organisation and its employees by providing a framework for how staff treat one another and customer; helping staff make sense of working life; providing a framework for achieving the vision and increasing the effectiveness of the organisation; creating an environment

we value here‖

Values are the essence of corporate culture because they set out the ―do‘s‖ and ―don‘ts‖ around here! Living them is what really counts They are not made to be put up on the wall and forgotten about! Values vary from one organisation to another However there should be a few core values only, they should be symbolised by one word, then have a brief definition of what that means in reasonably global terms, followed by defined behaviors They support vision, shape culture and reflect what an organisation values

Therefore, ultimately, whether we are talking about high performance, brand differentiation, or retaining talented individuals, the success of organisation is directly related to the degree of alignment that exists between the underlying values of the leaders and the desired values of employees

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1.1.2.3 Coordination and Integration

Coordination and integration in corporate culture are for the purpose of

improvement in efficiency to works, quality and speed of designing, manufacturing the products and services They impact the effectiveness of an organisation

Firstly, coordination is the unification, synchronization of the efforts of group members so as to provide unity of action in the pursuit of common goals It is

a hidden force which binds all the other functions of management According

to Charles Worth (1895) says, ―Coordination is the integration of several parts into an orderly hole to achieve the purpose of understanding‖ He notes that

an organisation wants to achieve its goals, all staff need to promote the unity

of thinking and actions

Management seeks to achieve coordination through its basic functions of planning, organizing, staffing, directing and controlling That is why co-ordination is not a separate function of management because achieving of harmony between individuals efforts towards achievement of group goals is a key to success of management Coordination is the essence of management and is implicit and inherent in all functions of management

Coordination is an integral element or ingredient of all the managerial functions as discussed below:

Coordination through Planning - Planning facilitates coordination by

integrating the various plans through mutual discussion, exchange of ideas e.g - coordination between finance budget and purchases budget

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Coordination through Organizing – Mooney (1939) considers coordination as

the very essence of organizing In fact when a manager groups and assigns various activities to subordinates, and when he creates department‘s coordination uppermost in his mind

Coordination through Staffing - A manager should bear in mind that the right

number of personnel in various positions with right type of education and skills are taken which will ensure right men on the right job

Coordination through Directing - The purpose of giving orders, instructions

& guidance to the subordinates is served only when there is a harmony between superiors & subordinates

Coordination through Controlling - Manager ensures that there should be

coordination between actual performance & standard performance to achieve organizational goals

On the other hand, Integration is the act or process of mixing people who

have previously been separated so that they work together (Oxford advanced Learner‘s Dictionary) Creating a more integrated organisation is a way to meet increased demands with decreased resources, and maintain stability and sustainability across categorical programs

A successful integration can begin with the planning for integration revolving around vision and communications Vision refers to the ultimate look and makeup of the company after integration takes place It involves identifying the best features that will help to make up the culture It also means ensuring that these features remain intact and in focus throughout the integration process Part of this process entails setting overall goals and objectives for the integration, which will be handed to managers to refine and carry out ―We prefer ‗advance‘ to ‗retreat‘ for obvious reasons,‖ said Brenner (1927)

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Communication refers to the messages that are shared with all of the stakeholders in the integration process These stakeholders include stakeholders like the top management team, the broad, and associates External stakeholders include the organisations‘ shareholders and customers, too

1.2 The relationship between corporate culture and organisational effectiveness

1.2.1 Organisational effectiveness

Organisational effectiveness entails achieving organisational objectives Etxioni (1990 p.8) states that ―the actual effectiveness of a specific organisation is determined by the extent to which it realises its goals‖ There are several dimensions to defining and measuring corporate effectiveness though it is generally agreed that all the variables need to be operationalised

in any given study (Campbell, 1979; Gibson, Ivancevich & Donnelly, 1991; Evans, 1976; Masheshwari, 1980; Mullins, 2007) Corporate effectiveness measures are operationalised for this study as profitability, productivity and employee motivation Profitability is the degree to which a business is profitable Productivity indicates the efficiency of utilization of organisational resources and balances the efforts among economic, social, technical and environmental objectives Employee motivation is the inner force that induces

or encourages employees to put in their best efforts towards the attainment of goals of organisations

Organisational effectiveness relates to the organisational performance Performance refers to the degree of achievement of the mission at workplace that builds up an employee job Mostly researcher‘s used the term performance to express the range of measurements of transactional efficiency

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and input & output efficiency (Stannack, 1996) Daft (2000), said that organisational performance is the organisation‘s capacity to accomplish its goals effectively and efficiently using resources As similar to Daft (2000), Richardo (2001) said that achieving organisational goals and objectives is known as organisational performance Organisational success shows high return on equity and this become possible due to establishment of good employees performance management system

1.2.2 The impacts of corporate culture on organisational effectiveness

Kilman et al (1985) argues that culture which is widely shared and exerts strong influence over behaviour is positive if it "points behavior in the right direction" and negative if it points behaviour contrary to organisational goals‖

1.2.2.1 Positive impacts

Corporate culture consists of the shared values and beliefs that give members

of an organisation meaning and provide them with rules for behaviors Corporate culture has three impacts on the human resource effectiveness, including creating and strengthening the organisational brand; setting competitive advantages on employee attraction and retention; and promoting employee‘s performance and innovation at work

At first, the positive corporate culture may create and strengthen the company‘s trademark which makes organisation be different with the others For employees, the company trademark also contributes a part of their own brands Trademark always reminds employees about the organisational vision, common goals as well as their missions to achieve those goals And it is trademark that set aside their individuals (differences) to build a team (the common brand) where everyone strikes for the company benefits

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Secondly, corporate culture may impact the attraction and retention of competent employees The employees can be loyal and stay long with the company when they feel satisfactory, interesting, and respective in the working environment and opportunities of promotion are open to them which can only be achieved in a positive corporate culture In a good working environment, all employees understand their roles in the organisation, and work towards common goals

Last but not least, a positive culture may add invisible values to promote employee‘s performance and innovation When organisation members identify with the culture, the work environment tends to be more enjoyable, which enhances morale This leads to increased levels of teamwork, sharing information, and openness to new ideas

To sum up, positive corporate culture has lots of impacts on both the human resource effectiveness and organisational effectiveness So, it is important to build and maintain a positive corporate culture

1.2.2.2 Negative impacts

A positive culture can make a significant contribution to organisational success while a negative one can lead to failure Amanda Webster, eHow Contributor stated that: ―An organization's culture may be demotivational‖ (ehow.com) Culture can impact productivity and other aspects of work in negative ways

Organisational culture can result in group think The culture may become so dominant that employees and employers alike may dismiss good ideas that seen counter to the organisational culture Organisations that do not have an open and flexible culture can find themselves losing a competitive egde because they do not adapt to the changes of the market

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Organizational culture can make it hard for employees of one organization to

do business with other organizations This fact can impact employees even after leaving a company The employee may try to impose the old culture onto the new environment and as a result take on the image of an outsider unwilling to adapt

Sadly, some people who become part of an organizational culture for a long time can begin to lose their own identities The employee can only speak about work and the life becomes work-centric As time passed by the employee may not even realize he/she has lost so much of his personality outside work

In short, when a culture created improperly, it would have some impacts on the company effectiveness in general and the human resource in particular Therefore, the management has to identify and deal with these influences in a suitable manner

1.2.3 Healthy and Unhealthy corporate culture

Cultures range from healthy and robust to unhealthy and downright toxic So the ongoing challenge that managers, employees and human resource professionals face is how to minimize the negatives and maximize the positives in their particular culture To understand this, and also to appreciate the vital role of culture in an organisational effectiveness, a comparison of cultures in healthy and unhealthy organisations is instructive

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1.2.3.1 Healthy corporate culture

The biggest difference between unhealthy and healthy cultures is their values Healthy organisations value respect, responsibility, honesty, fairness, and integrity The power of these values lies in how they influence day-to-day interactions among co-workers; between managers and employees; between employees and their customers or clients, suppliers and business partners; and between the organisation and the larger community The result is positive upward spiral of improved quality of work life and performance People need

to trust each other in order to create a healthy and productive work environment Trusting someone means being comfortable taking risk in the relationship

As philosopher Robert Solomon and business consultant Fernado Flores

comment in their book, Building Trust in Business, Policies, Relationship and Life saying: ―Without trust, the corporate community is reduced to a group of

resentful wage slaves and defensive, if not ambitious mangers People will do their jobs, but they will not offer their ideas, or their enthusiasm, or their souls‖ The picture presented is poles apart from a healthy organisation

1.2.3.2 Unhealthy corporate culture

Robert I Sutton (1954) describes the ―culture of fear‖ that engulfs workplaces when managers and employees get away with bad behaviors, demeaning others, and generally acting like jerks The repercussions can immobilize an organisation

In unhealthy culture, work pressures and job dedication result in relatively low absenteeism but very high presenteeism, as workers feel they cannot afford to take time off even when sick Feeling demoralised, employees have little trust that management will take them into account An unhealthy culture

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triggers a downward negative spiral While this may not spell the end of an organisation, it likely results in chronic underperfomance, avoidable employee costs, and reduced quality of work life for employees

An unhealthy culture causes a lot of problems, and it‘s not enjoyable for anyone involved So, curing an unhealthy company culture is not easy, but there are four action steps that are crucial to starting the process They define the culture you need for success; define your current culture — thoroughly diagnose it; engage your workforce; form a plan of action and follow it

To sum up, many companies should not deal with issues that seem harder to

quantify, but they can have huge impacts on results The process – the more negativity you have seen, the better you are ready to improve business – can

be ordered by the doctor

1.2.3.3 Building and maintaining a positive corporate culture

Every human environment is so steeped in a culture (or cultures) that the particular influences they exert are often overlooked, and their local, characteristic features can be mistaken for norms In fact, the company must create a clear picture of its mission, vision, and values

Culture influences the way we think, what we do, how we work, and what is acceptable in the organisational environment That said, what are some of the many factors involved in building, and maintaining corporate culture? Three groups attributes of a corporate culture stand out:

Beliefs, stories, and experiences: When a new hire begins, what are the stories

he/she is told about the organization? About the people? About past events? Who are the company heroes and what have they accomplished that garnered them such a positive reputation that it deserves to be respected? More importantly, can these behaviors be emulated by others?

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Goals, norms, and history: "If you don't know where you are going, you will

probably end up somewhere else!" Anecdotal surveys show that the overwhelming majority of employees are clueless about their overall company goals While it's true that most know they should do a good job, many are unclear about the specifics and the nuances Sure, the goal of the Ford Motor Company is to make cars, the local mattress factory to produce bedding, and the accounting company to prepare your tax returns But to what degree of quality? And what about customer service? Where in the company environmental equation does that fit?

Surprisingly, these questions occasionally go unanswered To help the employee better understand the culture, the entrepreneur and the employees all need to understand specifically where the organization is going, how it will get there, by when, and with what degree of quality and success

Norms define and describe what is acceptable: "the way things are done around here" from the simple to the complex The former may basically include how early you have your staff come to work in the morning or how late they remain past 5 pm The complex may involve whether to work as a highly productive individual or to work together as an accomplished team (collaboratively or competitively?) Not knowing the difference can easily create problems for the individual and the work unit

History, like experience, provides a basis for behavior It helps employees distinguish between what has been tried and succeeded and those things that were attempted but failed; it allows workers to move beyond past failures through to innovation and achievement History can serve as a foundation or jumping off point to launch into new ventures or new procedures and policies

It helps the innovator deal with complainers who say, "We already tried

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that ‖ Supported by history, the employee can point out how this newest attempt will differ from and alter the past

Symbols, values: Symbols are crucial icons or signs that tell the observer,

visitor, and even the employees something about the organization These symbols can be as concrete as a name and as abstract as cleanliness, high tech, modernity, or quality They take all strong measures of the company These are values which make people choose to work in an organisation: honesty, pride, and concern for others, independence, positive reinforcement for a job well done or well begun These values may be unwritten nevertheless, are still potent qualities that exist to inform employees about the company, especially when a clash of values occurs