Introduction
This paper discusses the organizational culture of China Resources Property Limited (CPRL) with the intention to analyze whether the organizational culture supports the goals of the organization and the organization in general. In investigating whether, the organizational culture of China Resources Property Limited supports its goals and objectives, different concepts, theories and models are discussed. In doing so, the author aims to create a clear picture of the current state of the company’s internal environment.
China Resources Company, the owner of CPRL is considered as a model of a Chinese organization where Chinese ideals exist. It is argued that even in today’s business environment, there are still Chinese organizations that are mechanistic, centralized and power culture-oriented. In this kind of organization, leadership and power seem to lie in the hands of few individuals. In this kind of organization, employees have little voice as to how the organization is run and how they do their jobs. Power culture-oriented organizations are also found to be restricted and information tend to be withheld from the employees.
All this conditions are argued to affect employee motivation and performance. It is the intention of this paper to analyze the organizational culture of the aforementioned company and to come up with suggestions that the author will find suitable for the organization.
Business Content
Industry
China Resources Property Limited is a Hong Kong-based organization. An organization according to Barnard (1938) is a consciously coordinated activity, composed of two or more persons, that performs to achieve a common goal or set of goals. China Resources Property Limited is a wholly subsidiary of China Resources (Holdings) Co. Ltd. China Resources (Holdings) Co. Ltd. Is a diversified company that is engaged in various businesses and operations. Among these are commodity manufacture and distribution, real estate and related business, infrastructure and public utilities, pharmaceutical production and distribution (China Resources, 2009). China Resources Property Limited is a subsidiary of China Resources Company that deals with real estate and related industries, particularly property management and development. Its business has diversified into several property-related industries no including leasing and exhibition organizing. With leasing as its core business, CR Property now manages over two million square feet of property in Hong Kong, ranging from A-listed offices and luxury residential apartments to high –end housing and shopping malls. Property management is also one of the top businesses of CR Property. The exhibition organizing side of CR Property includes operation and management of the Hong Kong Exhibition Centre (China Resources Property Limited, 2009).
Location
China Resources Property Limited is located in Rm. 4206-10, 42/F., China Resources Building at 26 Harbour Road, Wanchai Hong Kong.
Size
The company is a wholly owned subsidiary of China Resources (Holdings) Company. There are currently thirty-five employees working in the main office and over two hundred security guards and sanitation workers deployed in different locations. The head of China Resources Properly Limited was appointed by China Resources Company.
History
China Resources Property Limited (CRPL) was formerly known as Longdation Enterprise Limited in 1982. It was renamed as China Resources Property Management Limited in 1999. In 2002, the company was renamed again and is now known as China Resources Property Limited. The core business of CRPL has included property leasing, property management and property development of CRH’s properties in Hong Kong. In 2003, CRPL absorbed another unlisted company named China Resources Advertising and Exhibition Co., Ltd. The company included in its operations exhibitions and events management.
Hong Kong and China Staff
The head of each China Resources Company subsidiary is appointed by headquarters’ top management. Management positions are also filled in by CRC managers from the headquarters in China. The ration of Mainland Chinese to Hong Kong Chinese executives in CRPL is 7:2. Lower-rank staff are made up of Hong Kong employees since the operations of CRPL are based in Hong Kong.
Business Value (Organizational Goals)
China Resources Property Limited, as a wholly-owned subsidiary of China Resources Group is committed to the corporate motto of its parent company. The company values “integrity, pragmatism, professionalism, teamwork, initiation and innovation”. China Resources Group is committed to fostering a better future by observing the proactive and human-oriented ideal.
The information gathered by the author points to growth as the main goal of the company. The company is expanding its businesses and services in order to tap different markets and increasing its presence in both China and Hong Kong as well in other countries such as Thailand. Considering Ansoff’s (1965) Matrix, we can say that the company is keen on “Diversification”. Diversification according to Ansoff (1965) involves simultaneously introducing new products or services and entering new markets. The company engages in both related and unrelated diversification. Related diversification is one in which the new business has meaningful commonalities with the core business. Unrelated diversification on the other hand, means venturing new business that shares no commonalities with the core business (Proctor, 2000).
China Resources’ mission is to become one of the best-managed holding companies with leadership positions in all of the core business. In accordance to this mission, CPRL modified its organizational goal in order to become a reputable developer in Hong Kong.
Organizational Structure
Four common characteristics of all organizations are: coordination of effort, a common goal, division of labor, and a hierarchy of authority (Schein, 1980). These factors refer to as the organization’s structure by theorists. An organizational structure describes how the work tasks split up, conform and collaborate which is essential to estimate an employee viewpoint and conduct. There are six dimensions that an organization should be considered to formulate its structure: work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization (Draft, 2001).
Chain of Command
As can be observed from the organizational chart of the organization, the tasks, processes and operations of the company are divided into departments. Each department is lead by a department head who specializes in his or her own function. Looking at Mintzberg’s (1979) taxonomy of organizational structures, we can say that the organizational structure of CRPL is “Functional”. Considered as the most widely used organizational structure and also known as the basic hierarchical structure is functional organizational structure. The functional structure groups employees together based on the functions of their jobs (Bushman 2007). The structure is depicted by a standard pyramid, with senior management at the top, middle and lower managers spread out below, and workers at the bottom (Sims 2002). One of the advantages of this structure is that employees can be grouped based on their functions as well as their skills. Thus we can expect that the employees of a department share the same knowledge, skills and abilities that are required to complete the tasks in the department.
It can be observed that the organization has a simple and flat hierarchy as it is composed of only three vertical levels of from managing director grade to the lowest, then two higher levels to the chairman of CRH from him. Six department heads are under his direct supervision. Subordinates report to department head who granted certain degree of power to manage his department, then reported to the managing director who report to deputy general manager of CRH, after that to the chairman of CRH. Although the authority chain displayed in the organizational chart is bottom up, the managing director of CRPL can bypass the deputy general manager of CRH and report directly to the chairman. Although the heads of each department are more knowledgeable about the operations and processes of their respective departments, they cannot make decisions in most of the cases. Technically, decisions come from the chairman and department heads act on behalf of the chairman. The hierarchy of authority is considered as centralized. Centralization according to Hendrick (2002) has something to do with where formal decision-making occurs within the organization. In centralized work systems, formal decision-making is concentrated in a relatively few individuals, group, or level, usually high in the organization.
Organization Form
The organization is mechanistic. According to Burns and Stalker (1961), a mechanistic organization is one where power is centralized. Processes may be highly regulated through elaborate planning and control systems, specialization of tasks, and high degrees of standardization and formalization. Training and education and horizontal decentralization are very restricted, while the few liaison devices are highly formalized. As a result, the levels of participation and delegation are low. Only minor incremental changes are possible in such a highly formalized and centralized structure (Cohn & Turyn, 1984). A mechanistic system is essentially a bureaucracy. Bureaucracy is characterized by principles that include:
- Specialization
- Hierarchy
- Rules and Regulation
- Rational Decision-making
- Selection and promotion based on technical competence (Sims 2002).
Power and Influence
The leader in CPRL (like in many power culture-oriented organizations) is perceived as strong, proud and able to accept ever-increasing responsibility. Personal influence and status are utilized to charm others, so as to add to the powerful person’s list of contacts. To this end, considerable time and effort are invested in creating and maintaining access to useful people, and to valuable information. In so doing, dominant power holders are bale to predict and influence future events, thereby extending their dominance of situations. A dominant and successful leader in a power culture, is likely to be considered as a source of inspiration.
As majority of the employees are from China, Chinese ideologies and values persist especially in the top management. Majority of the employees as well as managers have adopted ideological education since kindergarten. Looking at the organization through a cultural perspective, it is evident that the employees are influenced by Chinese values such as sacrificing for the benefit of the family, group and country. Employees are also expected to follow the commands of their superiors without question or hesitation.
Organizational Culture: Power Culture
There are basically four types of organizational culture according to Handy (1985) these are power culture, role culture, task culture, and person culture. CPRL can be described as a power culture-oriented organization. Let us discuss what power culture is. A power culture depends on a central power source. A power culture operates largely on the basis of anticipating the wishes of those seen to hold power. Control is often exercised by the center through the selection of individuals and close control over resources. People higher up in the organization are often motivated by the drive for personal power and endeavor to build up close relationships with key figures. The lower ranks of the organization are often motivated by fear and dependency. Although such fear can be mitigated by the benevolent paternalism of the chairman.
In studying the organizational culture of CPRL Geert Hofstede’s (1984) Cultural Dimensions can be employed. Hofstede’s cultural model is made up of five dimensions, namely power distance, uncertainty avoidance, individualism vs. collectivism, masculinity – femininity, short-term vs. long-term orientation. According to Anthony (1994: 15), organizational culture is a vital component for us to understand an organization. It is also one of the variables inter-related with some other essential elements that lead to a success managing of an organization, for example, organizational structure, communication, leadership and motivation.
CPRL is essentially a Chinese organization so it is expected that the Chinese culture and values are embedded in the organization. In terms of power distance, the organization is highly centralized. China has a high level of inequality of power and wealth in the society. This is also the case in Chinese organizations. Top management executes policies and processes through direct orders, without sharing (Bate, 1994: 39) or consulting employees. Hong Kong Employees view the company’s culture as opaque and complex. Employees are prohibited to read of order Next Media Group’s publication in the office building because this media is known as a critic of the Chinese Government. Hong Kong employees may not understand this policies as most of them are exposed to Western Education and have been influenced by British culture. Compared to the Mainland Chinese, Hong Kong Chinese can be considered as more Westernized.
CPRL also values collectivism more than individualism. Meaning, the employees are expected to form strong and cohesive relationships with other employees especially if they belong in one department. Employees display loyalty to the group and to their superiors.
Uncertainty avoidance is also high, meaning employees are not expected to take risks and the tolerance of the organization for uncertainty and ambiguity is low. Deal and Kennedy (1982) offers a description of the Chinese culture as operative in organizations. According to them, Chinese employees generally avoid risks. If they encounter a problem, they just follow the routine procedure of ignore it without coming up with a solution. One factor for this is the “tasks” that the employees perform. Basing from the response of the employees to their tasks, it can be inferred that Chinese employees have low self esteem and identity. Despite the company’s commitment to values such as “initiative”, the training and educational programs existing in the organization are found lacking.
Generally, the main culture in the organization is that of a “Power Culture” (Handy, 1985). In a power culture certain persons are dominant and others subservient. According to Pheysey (1993) in the Power organization at its best, leadership is based on strength, justice and paternalistic benevolence. The leaders are expected to be all-knowing as well as all-powerful. Subordinates are expected to be compliant and willing.
Communication
Effective communication plays a significant role in the success of the organization. Communication must be integrated into the company’s strategy and recognized for its strategic importance. Unfortunately, communication in CPRL is not given strategic importance. The management fails to realize that effective communication can be instrumental in educating and motivating employees at all levels in the company’s strategies and goals. The company’s management only exercises a “one-way vertical communication” wherein employees have little opportunities to voice their concerns and thoughts. Communication is one-way and often comes as a command from top management, especially from the chairman of the company (Hall, 1989).
Informal Communication
Studying the daily operations of CPRL, the author was able to find out that verbal communication is the widely used form. An official announcement coming from the administration department are communicated to department secretary face-to-face. The secretary then delivers the message to team members orally. Relying on verbal communication may bring problems to the organization and employees as there are times when the secretary forgets to relay the message to employees. Therefore, it is more effective for the secretary to send a written notice like email to team members.
Formal Communication
As a power-culture oriented organization, employees in the middle and lower levels of the organization do not have complete access to organizational information. As a result, these employees use the grapevine as the main source of information. As observed by the author, there is an existing phenomenon in the organization wherein there is two informal “grapevine” (Davis, 1953) channels. One is termed “Cabinet” with Mainland Chinese employees and the other of “Local” with Hong Kong Chinese employees. The cabinet can get upper internal information fast and accurate, because of their cohesiveness. The information shared by Mainland Chinese employees are difficult to leak since there is a strong cohesiveness between them. The local employees do not have easy access to top information.
Leadership and Motivation
Leadership
Leadership in a power culture is highly centralized. Decisive, upfront and strong leadership is the hallmark of a power culture. A central power figure or a small group controls, directs and manipulates activity within the organization. In a power culture-oriented organization, the leader must display strength and dominance (Kakabadse, 1999). The leader is endowed with two advantages. First, he is strategically situated with regard to superior access to information, and he is followed because his office is respected or feared. The leader posses a range of assets and coercive force which can be used to reward compliance and penalize disobedience. Persons who perform well in power cultures are those who value dominance, money and status. The company is virtually male-dominated as over 95 percent of all leaders are male. Male leaders are considered to be more prescriptive and autocratic than women (Eagly, 1992: 76). Since CRPL leaders overlook the importance of role clarity, employees just perform what they have told, less query why they have to be done, even denied to take their responsibility on mistake (Lewin et al, 1939). Over a long period of time, their ability, creative thinking and initiative decline.
Motivation
As with Power organizations, managers in CPRM believe that employees can be motivated trough hope of reward, fear of punishment or personal loyalty towards a powerful individual (Handy, 1985). Motivation or employees in a Power organization is based on the view, which McGregor (1960) calls “Theory X”, that the average human being wants security above all, wants to be directed and dislikes responsibility. A power culture-oriented organization motivates on the assumption that most people must be coerced, controlled, directed and threatened with punishment is the organization is to achieve its objectives. Motivation occurs only at the physiological and security levels. The central principle of Theory X is direction and control through a centralized system or organization and exercise of authority. Motivation is a problematic topic in the organization. Employee performance seems to decline. There is no clear reward, training and development system for employees (Hersey & Blanchard, 1988). Furthermore, the organization seems to focus more on physiological and security needs of the employees (Maslow’s Hierarchy of Needs). The lower-order is basic external needs which included physiological and safety. An individual moves up steps by steps to the next higher-order level that satisfied internally like social, esteem and self-actualization.
Morale
The company focuses more on physiological and safety needs and do not pay attention to the employees’ social, esteem and self-actualization needs. This in return results in the drop of employee performance. As the higher level needs of the employees are not being met, they become less willing to accomplish their tasks and to fulfil their responsibilities. Motivation according to Herzberg and his colleagues (1959) arises from two sets of needs – motivator needs and hygiene needs. Motivator needs relate to the nature of the work that the employees do and hygiene needs are related to the environment where the employees perform their work. In the case of CPRL, both motivator needs and hygiene needs are not satisfied. The employees are complaining that their tasks are r standardized and boring. The employees also see their jobs as unchallenging. There is also little decision-making and autonomy on the side of the employees, not to mention the lack of career growth and development opportunities.
Organizational Change
A mechanistic organization like CRPL according to (Khandwalla, 1977) is not suited for organizational change. Because the organization is built of traditional management philosophy where the leader is the central power, change may take time to occur. Because the organization is highly centralize and is operating under strictly defined responsibilities and authority, the management may avoid change. Since communication is one-way, top management may not be aware of the needs of the employees and the changes that must be made to satisfy these needs. Changes in attitude, behavior and culture are almost impossible to happen in a mechanistic organization.
Supportive or Not
It can be inferred from the discussion above that the organizational culture existing in China Resources Property Limited is not supportive of the goals of the organization. The organization aims to be one of the best-managed holding companies with leadership positions in all of the core business. Aside from that the organization wants to support “integrity, pragmatism, professionalism, teamwork, initiation and innovation”. These values are not being acquired by the employees because of the existing organizational culture. The organizational structure limits employee participation in the decision-making. The employees cannot even decide how they will perform their tasks. The jobs are standardized and the employees are expected to go through a routine of activities everyday. The employees are expected to follow the commands of their superiors unquestioningly. Decision-making rests in the hands of few individuals and all the policies, strategies and goals trickle down from top management. The structure is highly centralized where the chairman of CRH as the holder of power. The organization is mechanistic in form. Being a mechanistic organization, work processes are regulated through elaborate planning and control systems, specialization of tasks and high degrees of standardization and formalization. There is limited training and development programs for employees and career growth opportunities are scarce.
Conclusion
Generally, the organizational culture can be described as Power Culture. This type of culture puts emphasis on the power of the leader. The leader is the dominant actor in this kind of culture and employees are expected to follow with unquestioning loyalty. As a subsidiary of a Chinese company, the dominant culture in the organization is that of the Mainland Chinese and not of the Hong Kong Chinese. There is a difference between the two cultures with Mainland Chinese having high power distance between the leader and the employee and more collective. The Hong Kong Chinese on the other hand are more Westernized when it comes to work. They are influenced by the British in education and they believe in Western management. They are also more individual, meaning they give importance to their individual achievements, thus making them more competitive and seeking challenging jobs. Hong Kong Chinese workers seek challenges and are more ready to take risks. However, the management wants to prevent risks.
In terms of communication, culture also come into play. Mainland Chinese workers are more cohesive and they tend to pass information among themselves. Since most of the company’s managers and leaders came from the headquarters, information can be accessed more openly by Mainland Chinese employees. Hong Kong Chinese employees on the other hand, find it difficult to get information about the company and its operations. Employees also find it hard and challenging that information are communicated verbally and there are no written notices and mails that are given to them.
Leadership also does not support the goals of the organization. The leader possess all the power and he directly manages and manipulates every part of the company. The leader display strength and dominance. The company is male-dominated. The leaders overlook the importance of role clarity, which confuses the employees since they just perform what they are told without question. The company is managed like how the Chinese government governs China, employees are given little choice and power. Employees are expected to follow commands and to not question or decide on their own. This characteristics make the organizational culture unsupportive of the goals of the organization. In order to achieve the goals of the organization, the importance and the contribution of its human resources must be acknowledged.
Recommendations
One of the recommendations for the company is to redesign its workflow. In redesigning the workflow, the management must also give more responsibility to the employees for performing their jobs. Tasks must be designed to be less standardized and routine must be removed in order to introduce challenging and exciting tasks for the employees. Moreover, the company must redesign its compensation and rewards programs as well as introduce career development, training and education programs in order to motivate employees. Teambuilding exercises must also be conducted to reduce the gap between Mainland workers and Hong Kong workers. Bias must also be decreased in order to ensure healthy relationships and effective communication. The organization can also introduce a 5-year auto-promote program in order to ensure that the employees do not feel ‘trapped’ and bored in their jobs. On-the-job training may also be introduced in order to update the knowledge, skills and abilities of the employees and make them competent. Standardized and strictly defined work must be eliminated.
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