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Organizational Climate (OCTAPACE)An Insight into its effect on Job Satisfaction in the IT (Information Technology) Sector
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OCTAPACE
Organizational Climate (OCTAPACE)
An Insight into its effect on Job Satisfaction
in the IT (Information Technology) Sector
A Dissertation Report submitted in partial fulfillment of the requirement for the
MBA degree course of Bangalore University
By,
Shweta M.L.
Reg. No.: 03VWCM6097 (2003-2005)
Under the guidance and support of:
Prof. Uma Sreedhar
Faculty-Management
Alliance Business Academy
Alliance Business Academy
Bangalore – 560 076
2003-2005
1
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TABLE OF CONTENTS
LIST OF TABLES
2
Serial No. Contents Page No.
1. Executive Summary 1 - 2
2.Chapter 1: Theoretical Background and Literature Review 3 - 9
3.
Chapter 2: Design of the study
a. Objectives of researchb. Problem Statementc. Scope of the studyd. Research Methodologye. Research Instrumentsf. Methodologyg. Plan of Analysish. Limitationsi. Operational Definitionsj. Overview of Chapter Scheme
10
10101111131414141517
4.Chapter 3: Industry Profile 19 - 29
5.
Chapter 4: Analysis and Interpretation
a. Descriptive Statisticsb. Correlation Analysisc. 1 - way ANOVAd. t - test
30
31353637
6.Chapter 5: Summary of Findings and Conclusion 39 - 42
7. Bibliography 43
8.. Annexure 44 - 48
OCTAPACE
Serial No. Contents Page No.
1. Table 1: Hygiene Issues and Motivators 6
2. Table 2: Sample Distribution 12
3. Table 3 : Indian Software Exports 21
4.Table 4: Top 20 it software & service exporters from India
23
5.Table 5: Constraints Encountered by Indian Software Industries
24
6. Table 6: Gender Distribution 31
7. Table 7: Distribution based on Designation 32
8. Table 8: Qualification 33
9.Table 9: Descriptive Statistics-Age and Experience
34
10. Table 10: Group Statistics 34
11.Table 11: Correlation - Job Satisfaction and Organizational Climate
35
12. Table 12: ANOVA 36
13. Table 13: Results of t-test 37
LIST OF FIGURES AND CHARTS
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Serial No. Contents Page No.
1. Figure 1.1: Organizational Climate Index 7
2. Chart 1: Indian Software Industry 22
3. Chart 2: Growth of Knowledge Professionals 26
4. Chart 3 : Gender Distribution 31
5. Chart 4: Designation / Job Title 32
6. Chart 5: Qualification 33
7. Chart 6: Correlation 36
DECLARATION
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I, Shweta M.L., studying in Alliance Business Academy hereby state that this
report which is submitted in partial fulfillment of the requirement for the MBA
programme to Bangalore University is an original research work carried out
by me under the guidance and supervision of Prof. Uma Sreedhar, Faculty
Guide and that the project or any part thereof has not been previously
submitted for a degree/diploma to any university elsewhere.
Date:
Place: Bangalore
SHWETA M.L.
(Reg. No: 03VWCM6097)
5
OCTAPACE
GUIDE CERTIFICATION
This is to certify that Ms. Shweta M.L., student of MBA 4 th Semester of
our institute has completed the DISSERTATION project titled
“Organizational Climate (OCTAPACE) - An Insight into its effect on Job
Satisfaction in the IT (Information Technology) Sector”.
This work is based on an original project study conducted by her under my
guidance and no part of this report has been submitted for the award of any other
Degree or Diploma to any other Board or University by any one else.
Date:
Place: Bangalore
UMA SREEDHAR
FACULTY
ACKNOWLEDGEMENT
6
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The materialization of this project has witnessed innumerous
contributions from numerous people in the form of selfless criticism, valuable
suggestions and above all, power packed words of motivation. I am deeply
indebted to all of them and take this opportunity to express my feelings of
gratitude to all of them.
First of all, I place my heartfelt gratitude to Mr. Sudhir Angur, President
and Prof. B.V. Krishnamurthy, Director and Executive Vice President of
Alliance Business Academy for giving me the privilege to carry on this
dissertation project.
I express a profound sense of gratitude to my project guide Prof. Uma
Sreedhar, for her invaluable guidance and support during the ups and downs
of this project. A special thanks to Prof. Vivekanand for his help in analyzing
the results. Also thanks to all the faculty members and the lab-in-charges for
all the help rendered.
Lastly, I would like to thank my family and all my friends who have
been a constant reckoning for this endeavor, helping me by giving useful
comments.
Gratefully,
Shweta M.L.
7
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8
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EXECUTIVE SUMMARY
The Dissertation provided the Researcher with an opportunity to study
and analyze the impact of Organizational Culture and Climate on Job
Satisfaction. This study aims to find how the eight components of the
OCTAPACE (Openness, Confrontation, Trust, Authenticity, Proactive,
Autonomy, Collaboration and Experimentation) culture impact the level of job
satisfaction of employees in the IT (Information Technology) sector.
The following chapters are included during the course of the research:
INTRODUCTION: In this chapter the researcher has given an overview of the
theoretical concept of organization culture and job satisfaction. It explains the
8 different facets of Organizational Climate i.e. openness, confrontation, trust,
authenticity, proactive, autonomy, collaboration & experimentation
(OCTAPACE). It includes an insight into what job satisfaction comprises of
and how it can be increased. It also gives a brief insight into the various other
past studies done on this subject.
DESIGN OF STUDY: In this chapter the researcher has included the
following: Statement of problem, objectives of study, scope of study, research
methodology, data collection, sampling plan, limitations of the study and the
research process. The data is collected from various respondents in a
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leading software company in Bangalore. The data so obtained was
downloaded in SPSS (Statistical Package for Social Sciences) software
package for all the calculations and analysis.
INDUSTRY PROFILE: In this chapter the researcher had included a brief
overview of the software industry in India, which is growing by leaps and
bounds every day. It gives information about how culture can impact job
satisfaction in the software industry.
ANALYSIS AND INTERPRETATION: The study was carried out at a leading
Bangalore based software company. A sample of 40 employees was taken
and the data were thus analyzed. The data that was collected is analyzed
using SPSS (Statistical Package for Social Sciences) and interpreted
accordingly. The various measures and tools that were used to analyze the
data are Descriptive Statistics, Correlation coefficients, Means, Standard
Deviation, ANOVA and t-Tests.
SUMMARY OF FINDINGS AND CONCLUSION: The last chapter consists of
the summary of the analysis and concludes by providing certain
recommendations that an organization can do to improve its culture and
increase job satisfaction.
10
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11
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CHAPTER 1:
THEORETICAL BACKGROUND
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AND
LITERATURE REVIEW
Culture is composed of many elements, such a symbols, heroes,
rituals and values. Organization culture starts up with a common life style
adopted by its members in form of shared learning, behaviors, values &
interests & provides the employees with a clear understanding of the way
things are done around them in their organization thus guides their further
actions. It is considered to be a common perception held by the employees
regarding their organization.
Culture in an organization plays at different levels, dominant culture
which is shared & accepted by the majority of the organizations members,
the next level to come are the subcultures that exist at the micro level that
reflect the common problems & situations faced by every member in the
organization within his own group or department.
How does an organizational culture comes into existence?
All this starts with the philosophy of the father figure & the founders of
the organization, who then try to recruit & select the manpower of their
desires who match their frequency when it comes to the thoughts,
philosophies, values & beliefs, thus having a group of people standing
in hierarchy with a common state of mind and this is the stage which is
described as the socialization stage. (Adapting a culture among members of
the organization).
How does organizational culture benefit an organization?
It has direct links to the performance of an individual, although if one imposes
a culture on the employees the results will never cross the confined
boundaries of minimum specifications as enforcement kills creativity and 13
OCTAPACE
makes the job monotonous. On the other hand if the employees are left to
derive their own culture, it makes them feel at ease & adapt more quickly.
Performance increases due to the freedom enjoyed by the employees which
is the most dominating factor for the improvement of their creativity, sense of
belonging to the job and the organization.
A healthy organizational culture is not individual in nature rather a
grouped effort which brings common benefits to all; a slightest mistake might
lose the man and his sense of belonging for ever so when magic words of
organizational culture start they start with openness.
A healthy organizational culture rests on eight strong pillars of
"OCTAPACE" referring to Openness, Confrontation, Trust, Authenticity,
Proactive, Autonomy, Collaboration and Experimentation.
Thus, a healthy organizational culture with an open environment, filled
with the feeling of mutual trust & confidence, with added flavor of authenticity,
sense of collaboration, freedom & autonomy added to the responsibilities,
proactive measures, loyalty, surrendered personal interests before
organizational interests and above all a treatment with respect and
humanitarian consideration for each employee is important.
OCTAPACE values give a sense of direction to the HRD function.
HRD outcomes include: competent people, well developed roles, high
commitment, high job involvement, high job satisfaction, team work and
synergy, problem solving, and good organizational health. The HRD function
should contribute towards organizational effectiveness indicated in the
effectiveness variables such as high productivity, growth and diversification,
cost reduction, profits, and a better image of the organization.
Job Satisfaction is the pleasure and feeling of accomplishment
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employees derive from performing their jobs well. Job satisfaction can be
influenced by a variety of factors, e.g., the quality of one's relationship with
their supervisor, the quality of the physical environment in which they work,
degree of fulfillment in their work, etc.
Increasing job satisfaction is important for its humanitarian value and
for its financial benefit (due to its effect on employee behavior.) As early as
1918, Edward Thorndike explored the relationship between work and
satisfaction in the Journal of Applied Psychology. Bavendam Research has
included measures of job satisfaction in all employee surveys. The results
were as follows:
Employees with higher job satisfaction:
1. Believe that the organization will be satisfying in the long run
2. Care about the quality of their work
3. Are more committed to the organization
4. Have higher retention rates, and
5. Are more productive.
Job satisfaction has been one of the most widely studied concepts in
management literature, accounting for more than 5,000 published works
(Wilson, 1996). Information generated by research into this area had practical
implications for individuals and organizations alike. According to Wilson
(1996), employees want to have the best quality of life possible for
themselves and their families, and managers are confronted with increasing
challenges of managing effective and efficient organizations by utilizing
human, financial, and technological resources available to them.
Understanding job satisfaction and what it means is not only desirable but
also a critical aspect of life for both individuals and organizations.
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Previous studies have shown that organizational climate types are
related to facets of job satisfaction. In his study of non-profit employees,
Deshpade (1996) found that a “caring” organizational climate is associated
with high level of satisfaction with supervisors, and that instrumental and
authoritarian and task oriented climate types have negative influence on
overall job satisfaction as well as satisfaction with promotion, coworkers and
supervisors. Based on these findings one may be able to conclude that
organizational climate types are associated with facets of job satisfaction and
overall job satisfaction.
In a study done by Frederick Herzberg, he theorized that employee
satisfaction depends on two sets of issues: "hygiene" issues and motivators.
Once the hygiene issues have been addressed, the motivators create
satisfaction among employees.
Table 1: Hygiene Issues and Motivators
Hygiene issues (dissatisfiers) Motivators (satisfiers)
Company and administrative policies Work itself
Supervision Achievement
Salary Recognition
Interpersonal relations Responsibility
Working conditions Advancement
Source: Organizational Behavior, 5th Edition, Aswathappa, Pg 206-207
KEY POINTS:
Employee satisfaction affects every aspect of an organization, from
customer satisfaction to overall productivity.
Frederick Herzberg theorized that employee satisfaction has two
dimensions: "hygiene" and motivation.
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Hygiene issues, such as salary and supervision, decrease employees'
dissatisfaction with the work environment.
Motivators, such as recognition and achievement, make workers more
productive, creative and committed.
OTHER STUDIES ON ORGANIZATIONAL CLIMATE
1. Organizational Climate Index
(OCI):
Figure 1.1: Organizational Climate Index
The Organizational Climate Index (OCI) is an easy-to-use tool for quickly
measuring and improving the organizational climate.
Organizational Climate Index:
identifies the readiness for, commitment for, and skills for change.
identifies the values, emotional competencies, and behaviors needed
for success.
alerts managers to needs and opportunities for training,
communication, and development.
helps build strategies for sustainable growth.
is scalable, measurable, and practical.
17
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The statistically reliable, normed assessment addresses five climate
factors, plus an overlay dimension of Trust:
Accountability and Responsibility
Collaboration and Problem Solving
Perception of Leadership
Alignment to the Mission
Adaptability for Change
The OCI predicts:
47% of Customer Service
27.8% of Productivity
43.4% of Retention
2. A study on Organizational Ethos:
Dr. Phalgu Niranjana and Prof. Biswajeet Pattanayak conducted this
study that made an attempt to ascertain the relative importance of
organizational ethos and its eight dimensions in determining organizational
citizenship behavior. The sample size taken was 600 that were divided into
eight groups. Each group comprised of 75 participants. The statistics used
were descriptive analysis, ANOVA, correlation and step wise multiple
regression analysis to analyze the data and interpret the results.
The study had thrown many interesting results. The major findings
were: there is a significant difference between manufacturing and service
sector on organizational citizenship behavior and organizational ethos.
Manufacturing sector has better organizational culture in terms of openness,
autonomy, collaboration and experimentation whereas service sector has
high organizational citizenship behavior and learned optimism. Based on the
18
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findings, organizational development and behavioral development
interventions were suggested to increase the performance in the
organization.
TOOLS:
Two tools namely, Citizenship Behavior scale and Organizational Ethos scale
had been used to measure the dependent variables. They were
1. Organizational Citizenship Behavior Scale (Linn Van Dyne, Jill W.
Graham & Richard M. Dienesch in 1994)
2. Organizational Ethos: OCTAPACE Profile (Udai Pareek in 1997)
The results show that organizational citizenship behavior has positive
relationship with organizational ethos. It shows that a positive work culture
and learned optimism will influence organizational citizenship behavior
thereby developing loyalty, obedience and participation in the organization.
Hence, the cultural factors like confrontation and pro-action have
positive impact on organizational citizenship behavior. Organizations do need
to create ethos like confrontation and pro-action and also need to take
initiative to make the employees learn optimism in order to develop
organizational citizenship behavior.
19
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CHAPTER 2: DESIGN OF THE STUDY
The researcher had read various articles regarding organization 20
OCTAPACE
climate and wondered as to how it affects an employee. The researcher
wanted to know why climate is important in an organization. Also the
research wanted to ascertain if organizational climate impacts job
satisfaction. Hence to determine whether organization climate is one of the
factors why employees join a certain organization and continue to work in
that organization, this research study was undertaken. Also various previous
studies have been done on similar topics, more specific to other industries
such as manufacturing, banking, hotels etc. But not many such studies have
been conducted in the IT sector. Thus this study has been conducted specific
to the IT industry in Bangalore.
a. Objectives of the research:
1. To ascertain the impact of organizational culture on job satisfaction in the
IT industry.
2. To understand the correlation between the different variables of
organizational climate and job satisfaction.
b. Problem Statement:
Null Hypothesis: Organizational climate and culture does not impact the
various facets (pay, promotion, work, supervisor and coworkers) of Job
Satisfaction of IT (Information Technology) professionals.
Alternative Hypothesis: Organizational climate and culture impacts the
various facets (pay, promotion, work, supervisor and coworkers) of Job
Satisfaction of IT (Information Technology) professionals.
c. Scope of Research:
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This research is limited only to a certain company in the software industry in
Bangalore due to certain constraints. The findings can be applicable in IT and
related companies in Bangalore. The time that was required to carry out this
research was 1.5 months.
d. Research Methodology:
i. Type of Research:
Causal Research – Here the research aims to understand how
organizational climate and culture impacts job satisfaction in an
organization. Hence, this kind of research is used to determine how
one independent variable affects the other variable that is dependent
on it. Organizational climate is taken as the independent variable and
job satisfaction as the dependent variable.
ii. Sources of data:
Primary Data: This has been collected through standard
questionnaires. Samples were taken from employees at a leading
software organization in Bangalore.
Secondary Data: From previous studies done on similar topics.
iii. Sampling Plan:
The sample used for this study consists of information technology (IT)
professionals in a selected business organization.
Sample Size:
A sample of 50 IT professionals was drawn. The size was
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restricted to 50 due to time and cost constraints.
Sample Distribution:
Table 2: Sample Distribution
Designatio
nAge 22-26 27-31 31-35
Gender M F M F M F
Software Engineer
8 4 3 2 - -
Programmer 5 2 5 1 1 -
Coder 2 1 - - 1 -
Testing - 1 - - - 1
Business Analyst
- 1 1 - - -
Software Associate
- - 1 - - -
TOTAL 15 9 10 3 2 1 40
Source: Primary data
Sampling Method:
The sample was drawn using a simple random sampling
technique. This technique was used since it is an unbiased method
of selection in which each population element has a known and
equal chance of selection.
e. Research Instruments:
Two instruments were used to gather data for this study: The
OCTAPACE Profile (OP) and the Job Satisfaction Questionnaire (JSQ).
23
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1. OCTAPACE Profile: This was developed by Udai Pareek. It consists of
40 items in which some are negatively worded. It measures organizational
ethos in terms of eight different values- openness, confrontation, trust,
authenticity, proactive, autonomy, collaboration & experimentation. Each
dimension is measured by five items each. Each dimension has a
combination of positive and negative items. Response is collected on four
choices (4-Highly value, 3- Fairly high value, 2-Low value and 1-Very low
value)
Reliability of instrument:
Split- half reliability was found to be 0.84 on the 40 respondents.
Alpha was found to be 0.85.
Respondents were asked to respond to these questions in terms of
how the climates of their organization actually are and not how they would
want the climate to be. The interpretation of this profile is as follows: higher
score on any dimensions indicate the higher perceived value of the
organization. Low scores indicate areas of concern.
2. Job Satisfaction Questionnaire measures job satisfaction and the
instrument contains a total of 19 items; each to be ranked on a scale of 1 to 5
(1-Very Dissatisfied, D-Dissatisfied, 3-Neutral, 4-Satisfied, 5-very satisfied)
Reliability of instrument:
Alpha was found to be 0.92 on the 19 items in the questionnaire.
h. Methodology:
The instruments used to gather data were hand delivered to the
24
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professionals identified for this study. Of the 50 questionnaires distributed 40
usable questionnaires were returned (i.e. 80%).
g. Plan of Analysis:
The data collected were analyzed using SPSS (Statistical Package for the
Social Sciences), which is a comprehensive and flexible statistical analysis
and data management system. The various tests that were conducted on the
data are: Descriptive Statistics, Means, Correlation, Standard Deviation,
ANOVA and t-Test.
h. Limitations:
1. The time given for the project was not sufficient to carry out an in-
depth study.
2. The sample size had to be restricted to 50 due to time and cost
constraints.
3. The geographical are covered is small.
4. The responses given by the employees may not be true and could be
biased.
i. Operational Definitions of Concepts:
Corporate culture describes a set of values, feelings, attitudes and
expectations that provide meaning, order and stability to members’ lives and
influence their behavior.
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Openness: Spontaneous expression of feelings and thoughts, and sharing of
these without defensiveness.
Confrontation: Facing and not shying away from problems; deeper analysis
of interpersonal problems; taking up challenges.
Trust: Maintaining confidentiality of information shared by the other person
and not misusing it; a sense of assurance that others will help when needed
and will honor mutual obligations and commitments.
Authenticity: Congruence between what one feels, says and does; owning
ones actions and mistakes, unreserved sharing of feelings.
Proactive: Initiative; pre-palling and preventive action; calculation pay-offs
before taking action.
Autonomy: using and giving freedom to plan and act in one’s own sphere;
respecting and encouraging individual and role autonomy.
Collaboration: Giving help to and asking from, others; team spirit, working
together (individual and group) to solve problems.
Experimentation: Using and encouraging innovative approaches to solve
problems; using feedback for improving; taking a fresh look at things
encouraging creativity.
Job Satisfaction is the pleasure and feeling of accomplishment employees
derive from performing their jobs well. Job satisfaction is in regard to one's
feelings or state-of-mind regarding the nature of their work. Job satisfaction
can be influenced by a variety of factors, e.g., the quality of one's relationship
with their supervisor, the quality of the physical environment in which they
26
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work, degree of fulfillment in their work, etc.
Causal research: When the objective is to determine which variable might
be causing a certain behavior, i.e. whether there is a cause and effect
relationship between variables, causal research is undertaken. In order to
determine causality, it is important to hold the variable that is assumed to
cause the change in the other variable(s) constant and then measure the
changes in the other variable(s).
Correlation the degree to which one phenomenon or random variable is
associated with or can be predicted from another. In statistics, correlation
usually refers to the degree to which a linear predictive relationship exists
between random variables, as measured by a correlation coefficient.
Correlation may be positive (but never larger than 1), i.e., both variables
increase and decrease together; negative or inverse (but never smaller than -
1), i.e., one variable increases when the other decreases; or zero, i.e., a
change in one variable does not affect the other.
ANOVA stands for Analysis of Variance, a method by which the source of
variability is identified. This method is widely used in industry to help identify
the source of potential problems in the production process, and identify
whether variation in measured output values is due to variability between
various manufacturing processes, or within them. By varying the factors in a
predetermined pattern and analyzing the output, one can use statistical
techniques to make an accurate assessment as to the cause of variation in
any process.
The t - test is a statistical test which computes the probability that two groups
of a single parameter are members of the same population. The population
must follow a distribution.
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Simple Random Sampling is a process whereby a sample is chosen from a
population randomly, in which each member of the population has the same
probability of being chosen. In small populations such sampling is typically
done "without replacement", i.e., one deliberately avoids choosing any
member of the population more than once
j. Overview of Chapter Scheme:
Chapter 1 contains a theoretical background to the subject under study. It
describes what Organizational Culture and Climate mean and provides
information on the various aspects that determine culture in an organization.
Then it explains about job satisfaction and what are the various factors that
increase or decrease job satisfaction. It also gives a brief description of some
past studies that have been done on the same subject.
Chapter 2 contains the design of the study with regard to the type of research
done, its objectives, the sampling plan used, the methodology of data
analysis and the limitations of this study. It also the various operational
definitions that have been used in this study.
Chapter 3 gives an overview of the IT (Information Technology) industry in
India. It provides some highlights about the top companies in this industry
and the trends in this industry. It also provides a prediction on the future of
this industry.
Chapter 4 analyzes the data collected. All the tables and graphs are depicted
in this chapter. The inferences obtained from the various tests are mentioned
in this chapter. Various analyses like correlation, ANOVA etc have been
conducted on the data to arrive at conclusions and prove the hypothesis.
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Chapter 5 is the final chapter that gives a summary of all the findings of this
research and suggests certain recommendations. It also provides information
on scope for further research.
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CHAPTER 3: INDUSTRY PROFILE
IT (INFORMATION TECHNOLOGY) INDUSTRY IN INDIA 30
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DEFINITION:
The term ‘IT industry’ generally covers development, production and
services related to IT products. Hence it contains three basic sectors:
software, hardware and services. So, the IT software industry has two
components: IT software and service. According to the definitions given in
Information Technology Action Plan-I (under Recommendation No. 19), IT
Software means any representation of instructions, data, sound or image,
including source code and object code, recorded in a machine readable form,
and capable of being manipulated or providing interactivity to a user, by
means of an automatic data processing machine falling under heading ‘IT
products’, but does not include ‘non-IT products’. IT service is defined as any
service which results from the use of any IT software over a system of IT
products for realizing value addition.
OVERVIEW:
The software industry began in the late 1950s when the use of
computers for business applications expanded rapidly creating a huge
demand for people with programming experience. A number of people who
had learned their programming skills working for computer manufacturers or
for the large companies and government agencies that were the first
computer users saw this as an opportunity to start their own companies and
sell their services under contract.
The number of computers in use and their size and speed expanded
rapidly in the 1960s escalating the demand for software to support the
numerous tasks for which computers were now being used. This provided
enormous opportunities for entrepreneurs to create new companies to serve
this expanding market.
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The 1970s saw the contract programming industry continue to grow at
a rapid pace. These companies came to be known as "professional
services" firms reflecting the fact that they often provided a broad range of
consulting, analysis and design services in addition to programming.
As global organizations strive to improve the quality of their processes
while managing their bottom lines, Business Process Outsourcing ("BPO" or
"Outsourcing" or "Off shoring") has become the new imperative in the
1990’s and 2000’s. In the recent past, India has emerged as one of the most
preferred BPO destinations of the world. Currently, the BPO industry in India
is at the second stage of its operations. The initial stage, in the late 1980's
and 1990's was marked by the setting up of captive operations in India by
giant multinational corporations ("MNC") like American Express and GE. Now
in the second stage, independent third-party operations are emerging out of
the shadow of the more visible, captive MNC units. The USD 2.3 Billion BPO
segment is growing impressively in India. The most cogent reason for
Outsourcing is to reduce or control operating costs.
The total number of IT Software and Service companies in India is
estimated to be 5000. Of this, 60% of the companies are domestic players,
while 40% are MNCs.
With lack of significant domestic demand, growth in Indian software
industries has been spurred mainly by the growth in export market demand.
The export market is mostly concentrated in the United States and Europe.
Almost two thirds of the software revenue for the Indian companies comes
from servicing the United States market.
The structure of the Indian software exports industry in 2003-04 is as follows:
Table 2 : Indian Software Exports
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Annual turnover No. of companies
Above Rs. 1,000 crore 5
Rs. 500 crore-Rs.1,000 crore 5
Rs.250 crore-Rs.500 crore 15
Rs.100 crore-Rs.250 crore 25
Rs.50 crore-Rs.100 crore 55
Rs.10 crore-Rs.50 crore 220 220
Below Rs. 10 crore 2,483
Source: Nasscom Reports
Much of India’s export of software services is actually carried out at
the client’s site overseas, commonly referred to as ‘onsite services’, rather
than offshore more popularly known as ‘turnkey projects’. Approximately 70%
of export services are onsite work, while only about 30% are offshore type,
although, this is now showing reverse trends.
2003-04 has witnessed increased outsourcing of software
development work by global corporations resulting in a shift in the Onsite:
Offshore ratio. Offshore revenues are higher than onsite revenues. The
important factors taken into consideration by clients for decision on off
shoring of projects are managerial skills, quality control and access to
technology. Today, India is increasingly being seen as a destination where
these parameters are fulfilled as per international standards and
requirements.
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Chart 1: Indian Software Industry
IT MARKET:
The growth in the Indian IT industry was largely driven by exports. The
software and services exports registered a growth of 18.4%, recording
revenues of Rs. 34,800 crores (US$ 7.2 billion) in 2002-03. NASSCOM, the
chamber of commerce of the IT software services and ITES-BPO industry in
India, announced the rankings of Top 20 IT Software and Service exporters
in India (excluding ITES-BPO revenues). According to the survey, Tata
Consultancy Services has emerged as the leader, clocking IT Software and
Services (excluding ITES-BPO) revenues of Rs. 5,503 crores followed by
Infosys at Rs. 4,709 crores and Wipro with Rs. 3,920 crores respectively. The
combined revenue of the top 20 software and service exporters in the area of
IT Services, Products & Technology services is Rs. 26,464 crores (US$ 5.77
billion) in 2003-04 and have witnessed a year-on-year growth of 31.6 per
cent (in dollar terms) compared to the total combined revenue of Rs. 20,668
crores in 2002-03. The software and services exports industry (excluding the
ITES-BPO sector), recorded revenues of US$ 8.9 billion in 2003-04,
registering a growth of 25 per cent over the revenue of US$ 7.1 billion in
2002-03.
34
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While the top 20 IT software and service exports accounting for nearly
65 per cent of the total IT software and services exports, continue to drive the
overall growth of the Indian IT industry, Small and Medium Enterprises have
also performed well during 2003-04.
Table 3: Top 20 it software & service exporters from India (2003-04)
(Excluding ITES-BPO)
Rank Company
Exports (Rs crore)
Exports (US$ million
)
1 Tata Consultancy Services 5503 1198.9
2 Infosys Technologies Ltd 4709 1026.0
3 Wipro Technologies 3920 854.1
4 Satyam Computer Services Ltd 2472 538.6
5 HCL Technologies Ltd 1895 412.9
6 Patni Computer Systems Ltd 1223 266.4
7 iFlex Solutions 773 168.4
8 Mahindra British Telecom Ltd 727 158.5
9 Polaris Software 579 126.1
10 Perot Systems TSI (HCL Perot Systems Ltd) 544 118.6
11 Digital Globalsoft Ltd 541 117.9
12 NIIT Ltd 538 117.2
13iGATE Global Solutions Limited (Mascot Systems Ltd) 488 106.4
14 Birlasoft Ltd 427 93.1
15 Mphasis BFL Ltd 393 85.5
16 Mastek Ltd 379 82.5
17 Hexaware Technologies Ltd 378 82.4
18 Larsen & Toubro Infotech Ltd 352 76.6
19 Tata Infotech Ltd 345 75.1
20 Hughes Software Systems 321 70.0
Source: Nasscom reports
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MARKET CONSTRAINTS:
With a constant flow of new entrants in the global software industry,
profits from the sale of traditional services, for the Indian software industry,
are likely to fall in the future; revenue growth would depend only on growth in
number of software workers. In order to survive the increased level of
competition in the world market, Indian companies, therefore, would have to
develop new products that are at the high end of the value chain.
Table 4: Constraints Encountered by Indian Software Industries
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Source: Nasscom Reports
Despite challenges such as the volatility of the rupee, Indian IT
companies have witnessed significant growth in their revenues. This has
been possible as Indian companies are increasingly moving beyond
traditional service lines being able to draw more strategic business as well as
bag larger contracts from their customers and tap new geographies.
Indian IT companies, apart from consolidating their presence in
traditional verticals such as BFSI, also diversified into new verticals such as
Telecom, Retail, Utilities and Healthcare. Some leading players also moved
into new services lines in the IT services arena such as IT consulting,
packaged software implementation and systems integration. Apart from the
Indian companies, MNCs are doing an increasing amount of their software
development and design work at their captive centers in India. In the coming
years, IT software and service project execution will take place through a
global delivery model, with most companies offering three-tier delivery and a
network of global centers.
GROWTH AND PROFITABILITY:
In terms of size, Indian IT companies are much smaller although the
top three - TCS, Infosys and Wipro - have just crossed a billion dollar in
revenue. In comparison IBM’s service revenue is $43 billion, EDS’ $22 billion
and Accenture’s is $13 billion. Being relatively younger and operating on a
smaller base, Indian companies are growing faster. In 2003, for example,
TCS’ revenue registered 32 per cent growth over the previous year, Infosys
grew 44 per cent and Wipro’s revenue growth was 26 per cent.
The only global player that came close to these is Computer Sciences
Corporation whose revenue jumped up by 22 per cent last year. All other
37
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companies, including IBM, EDS, Accenture etc, grew at a much slower rate.
In terms of profitability too Indian companies are far ahead. A research report
prepared by JP Morgan shows that EBITDA (earnings before interest, tax,
depreciation and amortization) margins of Indian companies were 27 per cent
for TCS, 32 per cent for Infosys and 23 per cent for Wipro. In comparison, the
EBITDA margins of global IT majors varied between 13 and 18 per cent.
Moreover, with off shoring going main stream, the volume of business
shifting offshore is large enough to drive growth for Indian vendors for quite a
few years. Naturally, large Indian players like TCS, Infosys, Wipro, etc, who
have developed leaner cost structures and established credentials of
offshore project delivery, are unlikely to be threatened by the global giants or
their Indian operations.
EMPLOYEE PROFILE:
Chart 2: Growth of Knowledge Professionals
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Profile of Employees engaged in the Indian IT Sector
The number of employed IT software and services professionals
increased to 522,000 by the end of 2001-02 compared to 280,000
employed in the year 1998-99. This figure includes professionals, who
are engaged in software, IT services and IT-enabled services
including professionals engaged in software development units in user
organizations.
The hiring of new IT professionals was highest in South India at 41
percent and lowest in the Eastern region at 6 percent.
The overall median age of software professionals was about 25.6
years.
79 percent of software professionals in software companies were men,
whereas 21 percent were women. However, this ratio is likely to be
65:35 (male: female) by the year 2005.
44 percent of the software professionals or knowledge workers
possessed over 3 years of working experience.
There was an average of 6 percent rise in basic salary during 2001.
(This was the lowest rise ever recorded since 1990). Most companies
are increasingly adopting the variable pay concept in order to link pay
to revenues, and control costs.
The skills in demand were in the areas of : Software
engineering/programmers/analysts, Internet and e-commerce
applications, Database administrators, Network specialists and
communication engineers, Digital media, Business applications of
software development, Web based applications, Networking
applications, Java, Data warehousing, Client-networking, Project
management, Quality assurance & technical writing, Legacy systems,
etc.
According to a Forrester study conducted in November 2001, India's
IT strengths are:39
OCTAPACE
1. The country's decade-old experience in this area
2. Fluency in English
3. Supportive government policy infrastructure, and
4. High-quality offerings
5. The attractive wage structure in India is of course a very
important point. The average salary for an Indian software
professional is somewhere around 20 to 25 per cent of the
corresponding wages in the US.
This is amplified by a 1999 World Bank study, which says that
India is the only country that figures in the high-quality-low-cost
segment of the quality-cost matrix.
India also has a talent base with enormous potential. It has the
world's second largest pool of English-speaking scientific manpower.
The past year has sliced the software industry into three. There are
the giants, who now have enough scale, marketing and execution prowess to
continue growing at rates in excess of the industry average. Then, there are
the small companies, who specialize and survive. And in between are the
middle-tier companies, who are caught between the need to specialize and
the desire to grow big rapidly. The middle-tier companies run the risk of
becoming the "living dead" unless they achieve rapid growth. Software is one
industry in which consolidation is likely to happen less through mergers and
acquisitions but more through the departure of clients and employees in the
middle-tier companies.
All in all, India's software industry is growing up - fast. The
opportunities are there but so are the challenges. As the euphoria of
skyrocketing stock prices has faded away, there is a growing realization that
while the market opportunity is there, a lot more needs to be done to grab it.
40
OCTAPACE
FUTURE OF THE SOFTWARE INDUSTRY:
The NASSCOM - McKinsey report on India's IT industry is as follows:
1. Software & Services will contribute over 7.5 % of the overall GDP
growth of India
2. IT Exports will account for 35% of the total exports from India
3. Potential for 2.2 million jobs in IT by 2008
4. IT industry will attract Foreign Direct Investment (FDI) of U.S. $ 4-5
billion
5. Market capitalization of IT shares will be around U.S. $ 225 billion
Hence, the value proposition of the Indian software industry can be
summed up as "faster, better, and cheaper."
41
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CHAPTER 4: DATA ANALYSIS42
OCTAPACE
The data has been analyzed using the software SPSS. SPSS
(Statistical Package for the Social Sciences) is a comprehensive and
flexible statistical analysis and data management system. SPSS can take
data from almost any type of file and use them to generate tabulated reports,
charts, and plots of distributions and trends, descriptive statistics, and
conduct complex statistical analyses. It can perform a variety of data analysis
and presentation functions, including statistical analyses and graphical
presentation of data. Among its features are modules for statistical data
analysis, including descriptive statistics such as plots, frequencies, charts,
and lists, as well as sophisticated inferential and multivariate statistical
procedures like analysis of variance (ANOVA), factor analysis, cluster
analysis, and categorical data analysis.
The data was first coded for the descriptive variables and then entered
into the SPSS package to perform the analysis.
a. Descriptive Statistics:43
OCTAPACE
1. Gender Wise Distribution of Data:
Table 5: Gender Distribution
Gender Frequency Percent
Male 28 70
Female 12 30
Total 40 100
Source: Primary Data
70%
30%
Chart 3 : Gender Distribution
Male
Female
2. Distribution based on Designation / Job Title:
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OCTAPACE
Table 6: Distribution based on Designation
Designation / Job Title Frequency Percent
Software Engineer 17 42.5
Programmer 14 35
Coder 4 10
Testing 2 5
Business Analyst 2 5
Software Associate 1 2.5
Total 40 100
Source: Primary Data
43%
35%
10%
5%5% 3%
Chart 4: Designation / Job Title
Software Engineer
Programmer
Coder
Testing
Business Analyst
Software Analyst
3. Distribution based on Qualification:
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Table 7: Qualification
Qualification Frequency Percent
BE 24 60
B Tech 7 17.5
MCA 4 10
B Sc 2 5
M Tech 1 2.5
B.Sc 1 2.5
BCA 1 2.5
Total 40 100
Source: Primary Data
30%
9%
5%3%1%1%1%
50%
Chart 5: Qualification
BE
B Tech
MCA
B Sc
M Tech
B.Sc
BCA
Total
4. Descriptive Statistics with regard to Age and Experience:
Table 8: Descriptive Statistics-Age and Experience
Variable N Minimum Maximum Mean Std.
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OCTAPACE
Deviation
Age 40 22 35 24.33 2.25
Experience(in months)
40 7 72 18.93 12.68
Experience(in years)
40 .58 6 1.58 1.06
Source: Primary Data
5. Group Statistics: (Mean and Standard Deviation)
Table 9: Group Statistics
Variable Gender N Mean Std. Deviation
OpennessMale
Female
28
12
2.81
2.68
.47
.49
ConfrontationMale
Female
28
12
2.83
2.46
.45
.34
TrustMale
Female
28
12
2.54
2.37
.41
.32
AuthenticityMale
Female
28
12
2.51
2.36
.52
.29
ProactionMale
Female
28
12
3.01
2.93
.44
.55
AutonomyMale
Female
28
12
2.50
2.45
.32
.19
CollaborationMale
Female
28
12
2.80
2.72
.46
.32
ExperimentationMale
Female
28
12
2.73
2.58
.41
.39
Job SatisfactionMale
Female
28
12
3.50
3.56
.54
.61
Organizational
Climate
Male
Female
28
12
2.72
2.57
.30
.26
Source: Primary Data
b. Correlation Analysis:
1. Correlation between Organizational Climate and Job Satisfaction:
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The value of correlation between organizational climate and job
satisfaction is 0.63. This is a two-tailed test conducted at 1% level of
significance.
Inference:
At 1% level of significance, there is a positive correlation between
organizational climate and job satisfaction. The reason for this is that there is
high openness in this organization and also there is a significant level of
collaboration between the employees. This means that better the climate in
an organization, higher is the level of job satisfaction in the employees.
2. Correlation between Job Satisfaction and the 8 variables of
Organizational Climate:
Table 10: Correlation - Job Satisfaction and
Organizational Climate
Source: Primary Data
48
OCTAPACE Variables Job Satisfaction
Openness 0.581
Confrontation 0.521
Trust 0.464
Authenticity 0.123
Proaction 0.572
Autonomy 0.126
Collaboration 0.580
Experimentation 0.422
OCTAPACE
Jo
b S
ati
sfa
cti
on
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
0.5810.521
0.4640.123
0.5720.126
0.580.422
Chart 6: Correlation
Experimentation
Collaboration
Autonomy
Proaction
Authenticity
Trust
Confrontation
Openness
Inference:
At 1% level of significance, it has been observed that there is a
maximum positive correlation between openness and job satisfaction and
minimum positive correlation between authenticity and job satisfaction. The
reason for autonomy and authenticity to have a low correlation with job
satisfaction is that there is no empowerment given to the employees. The
decision making is done mostly by the top management and hence the
degree of autonomy that the employees perceived was low.
c. 1- way ANOVA (Analysis of Variance):
Table 11: ANOVA
Degrees of Freedom F39 19.402
Inference:
The F value obtained is significant at 1% level of significance, which
means that the null hypothesis is rejected. Hence it can be inferred that there
is an impact of organizational climate on job satisfaction.49
OCTAPACE
d. t-test:
At 5% level of significance, the various ‘t’ values for the different
variables are obtained:
Table 12: Results of t-test
Variables Calculated t valueSignificance (Two-tailed)
Openness 0.798 0.430
Confrontation 2.547 0.015
Trust 1.282 0.208
Authenticity 0.910 0.368
Proaction 0.447 0.657
Autonomy 0.496 0.623
Collaboration 0.573 0.570
Experimentation 1.041 0.304
Organizational Climate 1.465 0.151
Source: Primary Data
Inference:
All variables in the above table except Proaction and Autonomy have
the calculated ‘t’ value greater than the significant value. Hence, this implies
that the result obtained is significant. Therefore the inference is that the null
hypothesis is rejected and we can conclude that organizational climate does
impact the level of job satisfaction in an organization.
Also it can be noted that if the total of the eight variables that comprise
Organizational climate are taken together, even then the calculated ‘t’ value
is higher than the significant value i. e. 1.465 > 0.151. Hence it can be
50
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concluded that the results obtained are significant and hence the null
hypothesis can be rejected. Therefore job satisfaction is affected by the
culture and climate of an organization.
51
OCTAPACE
CHAPTER 5
52
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a. Summary of findings:
1. There is a positive correlation between organizational climate and
job satisfaction. Better the climate, higher the job satisfaction in
employees.
2. Among all the eight variables of organizational climate, there is a
maximum positive correlation between openness and job
satisfaction and minimum positive correlation between authenticity
and job satisfaction.
3. Using ANOVA, it was ascertained that the value obtained was
significant and hence the null hypothesis was rejected which
implies that organizational climate and culture impact job
satisfaction.
4. Using the t – test, the various ‘t’ values were obtained for the
individual variables of OCTAPACE. Of these, all the results were
significant except for two (proaction and autonomy). But the final
conclusion is that since all the eight variables of OCTAPACE
together were significant, the null hypothesis has been rejected
and hence the alternative has been accepted which states that
Organizational climate and culture impact the various facets of job
satisfaction.
b. Recommendations:
1. The authenticity variable in the climate of an organization can be
53
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improved to increase job satisfaction.
2. Factors like trust can be given higher priority in an organization.
3. More empowerment can be given to people in the organization to
increase job satisfaction.
4. Employees must be given opportunities where their leadership
styles can be displayed. Also they must be given the chance to
bring new ideas without the fear of rejection.
5. Since the IT industry mainly comprises of knowledge workers, such
employees cannot be enslaved but only led. Hence they must be
given the direction and authority to do their job.
6. The employees must be given a feeling that they belong to the
organization. They should work towards a shared vision of the
organization.
7. The employees must have a psychological contract with the
organization. This is because, more the employees feel that he/she
is valued in the organization, greater will be his/her job satisfaction.
c. Conclusion:
In the last one decade, after the liberalization and globalization
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OCTAPACE
process of the Indian economy, organizational competition has become very
high, throwing thereby a challenge for survival. Most of the organizations are
finding it difficult to sustain their positions, which have been reflected in the
ups and downs trend of Fortune 500 companies in India and abroad.
This is high time that the Indian organizations should understand the
culture specific organizational dynamics that determine the failure and
success of the organizations. Pareek (1994) has rightly pointed out that
culture provides a strong rim for a fast moving wheel, which keeps several
factors integrated and acts as a binding force to move in a difficult terrain.
Sinha (1994) pointed out that the move to get out of the western mould,
through indigenous organizational behavior research in India, has taken
three roots. The first is a religious-philosophical model of human beings who
strive to relate by seeking purity and peace of mind, cultivating a sense of
detachment and accenting work as a duty. The second one emphasizes on
the strategic role of the organization in nation building. The third root yields to
socio-economic and political compulsions and explores how people work in
the organization. This three approaches often overlap and taken together
present a contrast to a western view of culture.
Organizations should initiate proper human resource intervention
techniques to develop a performance oriented work culture. Specific OD
initiatives should be developed for manufacturing and service organizations.
Service organizations should take more initiative in developing better work
culture to maximize the customer satisfaction and also to attract and retain
the best customers. Training programmes and action research should be
undertaken by sector specific different organizations to develop employees
on these attributes and also organizations in creating a healthy work culture,
which would be more vibrant, competitive, performance oriented and
environment sensitive.
55
OCTAPACE
With regard to further avenues for research, one can study why culture
plays an important part when people join a company for the first time and
what are the reasons they stay in the company. Also, one can find methods
to increase openness, trust, authenticity, autonomy, proaction,
experimentation and collaboration and decrease confrontation in employees.
Such a study will enable one to improve the climate and culture in an
organization which will in turn increase the job satisfaction level of
employees.
Thus to conclude “it is not the organization, which makes the
difference; it is the people in the organizations who really make the
difference”.
56
OCTAPACE
BIBLIOGRAPHY
57
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BOOKS:
DeCenzo, David E. & Robbins, Stephen P. – Personnel / Human
Resources Management, 3rd Edition, Prentice Hall India Private
Limited, 1997.
Aswathappa, K. - Human Resource and Personnel Management, 3rd
Edition, Tata McGraw-Hill Publishing Company Limited, 2002.
Cooper, Donald & Schindler, Pamela - Business Research Methods,
8th Edition, Tata McGraw-Hill Publishing Company Limited, 2003.
Pareek, U. (1997). Organizational ethos: OCTAPACE Profile. Training
Instruments for Human Resource Development. New Delhi: Tata
McGraw- Hill.
WEBSITES:
http://www.spss.com
http://www.indiana.edu/statmath/stat/spss/win
www.hrzone.com/articles/climate.html
www.sba.muohio.edu
www.aims.org.in
www.dhan.org/
58
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ANNEXURE
59
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QUESTIONNAIRE
ORGANIZATIONAL CLIMATE AND ITS IMPACT ON JOB SATISFACTION
Kindly fill in the details below:
1. Gender: --- Male --- Female
2. Age:
3. Designation / Job Title:
4. Qualification:
5. Years of Experience:
This questionnaire will help you to look at some values and beliefs of your
organization. Below are given statements indicating some values of the top
management, and hence generally shared in the organization. Read each statement
and indicate in the space on the left hand side of the statement, how much the spirit
contained in the statement is valued in your organization. Please be frank.
Use the following key for your responses:
Write 4 if it is highly valued 2 if it is given a rather low value
3 if it is given a fairly high value 1 if it is given a very low value.
____ 1. Free interaction amongst employees, each respecting others’
feelings, competence and sense of judgment
____ 2. Facing and not shying away from problems
____ 3. Offering moral support and help to employees and colleagues in
crises.
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____ 4. Congruity between feelings and expressed behavior
____ 5. Preventive action on most matters
____ 6. Employees taking independent action relating to their jobs
____ 7. Teamwork and team spirit
____ 8. Employees trying out innovative ways of solving problems
____ 9. Genuine sharing of information, feelings, and thoughts in meetings
____10. Going deeper rather than doing surface-level analysis of
interpersonal problems
____ 11. Interpersonal contact and support amongst employees
____ 12. Tactfulness, smartness and even a little manipulation to get things
done
____13. Seniors encouraging their subordinates to think about their
development and take action in that direction.
____ 14. Close supervision of and directing employees in action
____ 15. Accepting and appreciating help offered by others
____ 16. Encouraging employees to take a fresh look at how things are
done
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____ 17. Free discussion and communication between seniors and
subordinates
____ 18. Facing challenges inherent in the work situation
____ 19. Confiding in seniors without fear of their misusing trust
____ 20. Owning up mistakes made
____ 21. Considering both positive and negative aspects before taking
action
____ 22. Obeying and checking with seniors rather than acting on one’s own
____ 23. Performing immediate tasks rather than being concerned about
large organizational goals
____ 24. Making genuine attempts to change behavior on the basis of
feedback received
For statements 25 to 40, write 4 if it is a very widely shared belief ; 3 if it is a
fairly widely shared belief ; 2 if only some persons in the organization share
this belief ; 1 if only a few persons or none have this belief.
____ 25. Effective managers put a lid on their feelings
____ 26. Pass the buck tactfully when there is a problem
____ 27. Trust begets trust
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____ 28. Telling a polite lie is preferable to telling the unpleasant truth
____ 29. Prevention is better than cure
____ 30. Freedom to employees breeds indiscipline
____ 31. Usually emphasis on teamwork dilutes individual accountability
____ 32. Thinking out and doing new things tones up organizational vitality
____ 33. Free and frank communication between various levels helps in
solving problems
____ 34. Surfacing problems is not enough; we should find the solutions
____ 35. When the chips are sown you have to find them for yourself
____ 36. People are what they seem to be
____ 37. A stitch in time saves nine
____ 38. A good way to motivate employees is to give them autonomy to
plan their work
____ 39. Employees’ involvement in developing organizational mission and
goals contributes to productivity
____ 40. In today’s competitive situation consolidation and stability are more
important than experimentation.
JOB SATISFACTION
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ANSWER KEY:
VD – Very Dissatisfied D – Dissatisfied N – Neutral S – Satisfied VS- Very Satisfied Sl. No.
How satisfied are you: VD D N S VS
1. with your job?
2.that the leaders in your work environment are positive role models?
3. with your direct supervisor?
4.that your supervisor keeps you well informed about what's going on in the company?
5. that your views and participation are valued?
6.that your supervisor cares about and is responding to the issues of most importance to you?
7.with the professionalism of the people with whom you work?
8. with the team spirit in your work environment?
9. with the morale of the people with whom you work?
10. with your own morale?
11.that your work gives you a feeling of personal accomplishment?
12.that you receive appropriate recognition for your contributions?
13.with the empowerment you have to influence the quality of your work?
14. with the reasonableness of your work responsibilities?
15.with your ability to maintain a reasonable balance between your family life and your work life?
16. that your compensation matches your responsibilities?
17. with your overall job security?
18.with the amount and frequency of informal praise and appreciation you receive from your supervisor?
19. with the company as a place to work?
Thank you for taking the time to complete this questionnaire.
64