Organisational climate and project success

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Abstract

This paper establishes a clear association between project outcomes and the social and management climate in which those projects are implemented. Drawing on extensive field research involving project management professionals in major British organisations, project success is shown to decline as the level of personal and environmental threat perceived by project staff increases. Other organisational characteristics, such as free expression, questioning, participation in the definition of goals, innovation, and intrinsic satisfactions from the work itself, are all found to be positively associated with successful project outcomes, whilst organisational change and conflict are negatively associated with project success.

Introduction

Few managers would dispute that the climate or atmosphere of an organisation — loosely, what it feels like to work there — is likely to have some impact on its performance. There is less agreement about what is an ideal climate for optimum performance, and the influence managers can have in creating and maintaining it.

In his seminal book in the 1960s, described by Warren Bennis as having “changed an entire concept of organizational man and … elevated the human role in industrial society” Douglas McGregor [1] summed up two opposing attitudes managers may have towards their subordinates. One view is that people only work in the ways and to the extent that they are induced to do so by their managers. McGregor argued that this was the prevailing management attitude and “the principles of organization which comprise the bulk of the literature of management could only have been derived from assumptions such as [these]”. The opposing view is that work is a primary source of satisfaction and fulfilment for most people. Managers who hold these assumptions will naturally behave very differently in their interactions with employees, creating a climate of ‘integration,’ in which members of an organisation can “achieve their own goals best by directing their efforts toward the success of the enterprise”.

It is well-established that the attitudes of authority figures can influence performance. Perhaps the most convincing evidence for this is in the work of Rosenthal and colleagues [2] who randomly selected one in five school children and informed teachers that the selected children were ‘academic spurters’. The selected children were found after a year to have added 22 points to their IQs. This suggests that whichever of McGregor’s viewpoints managers incline towards, they are likely to find their views confirmed by the responses they receive. Managers who use the ‘carrot and stick’ approach will find their subordinates doing enough to earn the reward or avoid the punishment, whilst managers who empower and trust their subordinates should expect to find greater commitment and use of initiative. This simplistic view must, however, be qualified by the views of the subordinates themselves. Many people, including one in three of the informants in this study, would take the view that some degree of threat or penalty tends to enhance performance, and would not regard this as unfair or undesirable.

In order to establish definitively whether the organisational climate in which projects were undertaken had any detectable relationship with project outcomes, 44 project management professionals were interviewed during the summer of 1998. The informants came from 17 nationally-recognised UK organisations, covering seven industry sectors, and were involved in a variety of types of project work at various levels of seniority (including directors, project managers, and project team members). The interviews were semi-structured; that is, the researcher gave guidance on topics to be discussed, but informants were free to say or leave unsaid whatever they wished. The interviews were tape-recorded for subsequent analysis.

The concepts of Organisational Climate and Project Success both need to be clarified in the context of this research. Organisational climate may be summed-up very succinctly as “what it feels like to work here”. There are, of course, a number of elements which contribute to an individual’s perception of what an organisation ‘feels like’. For the purposes of this study a broadly-based coefficient was defined, taking account of the informants’ perceptions of:

  • The management style at the organisational level within which the project work was done, with particular attention to the levels of threat or insecurity.

  • The management style at the project level.

  • The extent to which a group of behaviour characteristics collectively labelled ‘voluntarism’ was apparent. The components of voluntarism are: free expression of ideas and concerns, innovation, questioning, intrinsic satisfactions, and participation in defining goals.

  • The level of purposive threat directed at the informant him/herself, or others. Purposive threat is defined here as any form of threat or coercion intended to cause someone to act in a certain way.

  • The level of environmental threat affecting the informant him/herself, or others. Environmental threat is defined here as threat arising from natural events, from societal forces which, for practical purposes are undirected by intelligence, or from macro-political causes or policies determined so remotely from the affected individuals that they may be regarded, again for practical purposes, as being undirected.

According to Pinto and Slevin [3] project success is a concept which “has remained ambiguously defined both in the project management literature and, indeed, often within the psyches of project managers”. Project objectives have traditionally been represented in the form of a triangle, showing time, cost; and quality targets This is a powerful illustrative and didactic device because it clearly shows how a change to any one of the factors must impact the other two. Some writers, however, e.g. [4], [5], have argued that the triangle is too simple a figure to represent the interacting objectives of most projects and that the personal objectives and feelings of the people involved must also be taken into account.

A measurement of success which compares specification with outturn is likely to be grossly simplistic. Both elements are variables and criteria such as budget, schedule or technical specification are often very subjectively-based. If a project fails to meet an impossibly tight budget, but is efficiently delivered without wastage, to what extent should it be said to have ‘failed’? Equally, a project which was completed ahead of schedule, but involved frequent delays and much rework may be represented as successful, but has in reality cost more than it should and tied-up precious resources which could have been diverted for use elsewhere.

Perceptions may in any case change over time. Avots [6] has found that purely ‘contractual’ aspects of performance, ie, those which are defined in the project documentation, tend to diminish in importance after completion, and success comes to be assessed by how well the project’s deliverables meet the needs of their users. Such an assessment may well include factors outside the project specification, since it is quite feasible that project deliverables which perfectly fulfil or even exceed the specification may not produce the desired effects when put into use.

Because of these complexities, project success is assessed for the purposes of this study as a broad overview, taking account of performance against budget, schedule and technical specification, and stakeholder opinion, all based solely on informants’ reports. Where there are clear indications that significant wastage of resources occurred, even though specifications were met, a modest opportunity cost element is factored-in to the assessment.

It is implicit in McGregor’s [1] orientation that the well-being and happiness of individual employees is important, and that there is no incompatibility between a concern for these considerations and a concern for efficiency and effectiveness in performance. Blake and Mouton [7] in their ‘Managerial Grid’ have designated this dual, balanced concern ‘Team Management’. Some of the factors which may affect individual well-being, or performance may usefully be identified here.

High levels of stress are known to be harmful to physical and psychological health [8], [9], [10] and are associated with increased accident rates [11] and with organisational effects such as high absenteeism, staff turnover, poor time-keeping [8], reduced creativity [12] and impaired task performance [13], [10]. It is often said that good performance requires some degree of stress, although arousal would be the more accurate term in this context. Yerkes and Dodson [14] showed long ago that this idea is basically correct, but found that different kinds of task required different levels of arousal for optimum performance. The more complex the task the lower the level of arousal which would facilitate optimum performance. Similarly, fear impairs performance by inhibiting both the acquisition and the retrieval of information [13], curtailing innovation [15] and by constraining questioning, the expression of ideas [16] and experimentation [17].

If the views of Baguley [18] that “Projects are people-centred” and of Kerzner [19] that “project management is more behavioural than quantitative” are correct, then project work is likely to be especially subject to Lawler’s [20] premise that “Those individual behaviors that are crucial in determining the effectiveness of organizations are, almost without exception, voluntary motivated behaviors.” The frequent use in management contexts of the word motivate as a transitive verb — something done by one person or group to another — is evidence of an assumption that the motivated parties need to be induced to perform some action or expend a degree of effort which they would not otherwise wish to do. As well as tending to confirm McGregor’s [1] opinions about the basic premises of management literature, this may represent a fundamental and serious error which will have far-reaching consequences.

According to Ruth Kanfer [21], most motivational theories are “not intended to predict performance but rather to predict decision processes and volitional behavior,” which implies that managers and organisational theorists will not find easy answers to their practical needs in motivation theory. And indeed, the development of motivation theory may be characterised broadly as a movement from the simplistic to the complex. Some specific ideas and findings, though, may be particularly useful and relevant here.

Goal theory [22], [23] contends that “persons assigned [and adopting] difficult and specific goals outperform persons provided ‘do your best’ [vague and non-specific] goal assignments.” This theory has had considerable empirical support [21], [24] but it must be emphasised that the key to the success of goal-setting approaches in stimulating performance improvements lies in the parentheses: “persons assigned [and adopting] difficult and specific goals” — “Difficult goals lead to higher performance only when an individual is committed to them” [25]. Intrinsic satisfaction in the work itself has been recognised as a significant factor in performance [26], [27], [28] and the relationships between such satisfactions and extrinsic rewards have attracted considerable attention. Deci [29] found that intrinsic motivation to perform a task was negatively correlated with extrinsic types of reinforcement [e.g. money] for performing that task. Verbal reinforcements, on the other hand, were positively correlated with intrinsic motivations. McGraw [30] found that “rewards facilitate performance of overlearned [algorithmic] tasks but impair performance of heuristic tasks, such as problem solving” and Kohn [31] cites a number of studies to conclude: “research suggests that, by and large, rewards succeed at securing one thing only: temporary compliance.” A perception of unfairness or inequality, in reward or other kinds of treatment, has however been found to have a negative impact on performance [32], [33].

What is regarded as fair is an aspect of the implicit, and often unconscious, sets of expectations that individuals and their employing organisations have of each other. These expectations can be summed up as the psychological contract between the two parties. Organisational culture — “the way we do things round here” — is a major influence on both expectations and behaviour. Using the vivid analogy “software of the mind”, Hofstede [34] describes culture as “the collective programming of the mind which distinguishes the members of one organization from another.” This perspective is helpful because it directs attention to culture both as a kind of recipe for behaviour; a collective predisposition to act in certain ways in response to certain circumstances and to establish the shared “philosophies, ideologies, values, assumptions, beliefs, expectations, attitudes, and norms that knit a community together” [35], and also to the distinctive nature of culture as distinguishing organisations one from another, and sub-groups from the parent organisation as well as from each other. Culture determines what behaviour is acceptable and expected from members.

The relationship between culture and climate is a complex one. In the present context it is helpful to think of climate as the sum of the effects of culture, as perceived by an individual.

Most informants based their perceptions of project outcomes on their ongoing contacts with users or recipients. Thirty-two informants received direct personal feedback after project completion, and a further three received indirect feedback via colleagues. Sixteen informants based their views at least partially on formal feedback procedures (12 of these also maintained some contact with the users or recipients of the project deliverables after completion). Four informants did not receive any feedback, formal or informal, after completion. Their perceptions of success are based on their own observations.

Of the 44 informants, 33 claimed initially that their project had been successful, 14 of these expressing some reservations or qualifications. Of those who initially claimed unequivocal success, 14 subsequently identified some aspect in which the project had failed to meet its performance criteria, for example, against schedule, costs, specification or stakeholder opinion. The mean assessments for both groups, where 1 indicates very low success and 5 very high success, were 2.70 for those initially claiming unequivocal success and 2.85 for those with some reservations. The mean assessment, based on informants’ own accounts, of thirty-three projects claimed to be successful in some degree was therefore somewhat below the midpoint on this numerical scale, where 3 represents moderate success.

In 13 cases the informant effectively had no pre-defined budgetary targets. In seven of these (i.e., 16% of all informants) the informant said that no budget was defined for the project at all, and in the other 6 cases the informant had no personal awareness of budget. In contrast, all informants had specification and timescale targets, although in some cases these were implied to be flexible.

A rudimentary culture index was compiled for each case, taking account of voluntarism, perceived threat, control and care for people, all at both the organisational level and the project team level. There were six cases where the informant was working effectively as a consultant project manager, outside his own organisation, which were excluded from consideration of this dimension. Most (82%) project teams appeared to have cultures which were very similar in all respects to the culture of the parent organisation, but tending towards slightly lower overall levels of threat, and slightly higher levels of care for people than the wider organisation. Most (but not all) informants felt that their project team had seemed distinctive in some way from the wider organisation. Those informants who did perceive a special ‘feel’ or atmosphere all viewed it as a positive factor. A modest positive correlation of +0.23 was detected between the strength of the distinctive identity, considering team cohesion and distinctiveness from the wider organisational culture, of a project team and the success of its project.

Personnel were almost exclusively selected for projects because they represented a part of the organisation which would be required to deliver some aspect of the project, and occasionally for their specialist skills. That is, it was the organisational unit or function which was selected, rather than the individual.

Levels of purposive or coercive threat assessed as higher than low or very low were experienced by 29 of the 44 informants. Three broad categories of purposive threat could be identified: career implications, financial consequences, and effects on reputation. A concern for self image, whilst not properly a form of purposive threat, was sufficiently closely associated with the concept to be included here. These factors are highly interlinked, so isolation of any one of them is to some extent artificial.

  • Threats to career were mentioned by 30 informants

  • Threats to reputation were mentioned by 16 informants

  • Financial threats were mentioned by 14 informants

  • Threats to self image were mentioned by 10 informants

Threats to career included the possibility of dismissal or loss of contract, removal from one role to another within the same organisation, and career stagnation. Threats to reputation ranged from public humiliation to mild but widespread negative comment. Financial consequences were mainly concerned with non-payment of benefits, such as bonuses or pay increments, rather than direct financial penalties. Implications for self image revolved around the pride informants took in doing a good job, and the personal chagrin resulting from failure to perform well.

Only 13 informants felt that purposive threat was unfair, against 16 who suggested that some level of purposive threat was not unfair. In these cases it appeared that an expectation of pressure to perform, with concomitant penalties for under-performance, formed part of their psychological contracts with their organisations. The remaining informants did not express an identifiable view on the issue. High levels of purposive threat were more likely to be perceived to be unfair: of the 12 cases assessed as having the highest levels of purposive threat, seven of the informants perceived this to be unfair, whilst only two believed it to be fair.

There were mixed opinions on whether a level of purposive threat was likely to be conducive to enhanced performance. Several informants were fairly clear that it was unhelpful, whilst others suggested, with varying emphasis, that some beneficial effect on performance might result from the application of coercive pressure, on themselves or others. Analysis of purposive threat levels and project success, however, shows a clear negative correlation, calculated as −0.4, between purposive threat and successful project outcomes.

A concern for project and personal performance was apparent in almost all informants’ evidence.

Voluntarism levels were assessed for each informant, based on an holistic judgement, avoiding undue emphasis on the presence or absence of any individual element. A complete absence of any factor was found to be rare and assessments were made on the basis of whether or not the factor was implied to have been influential in any way on the overall climate. The occurrence of identifiable component factors contributing to the voluntarism assessment was as follows:

  • 31 instances of free expression:

  • 25 instances of questioning:

  • 21 instances of participation in defining goals:

  • 12 instances of innovation:

  • 8 instances of intrinsic satisfactions:

A clear positive correlation was found between voluntarism and successful project outcomes. Based on voluntarism within project teams this correlation is calculated as +0.37, and based on voluntarism in the wider organisations the correlation becomes much more pronounced, at +0.64.

Contrary to expectations, no correlation was found between voluntarism in the project team environment and purposive threat levels experienced by informants.

A wide variety of sources of environmental threat were experienced by informants:

  • 17 instances of organisational change/disruptive organisational climate

  • 7 instances of scrutiny/interest by top management

  • 7 instances of scrutiny/interest by the public, external officials or VIPs

  • 6 instances of industrial relations issues

  • 5 instances of competition

  • 4 instances of resource conflicts

  • 4 instances of takeover/merger concerns

  • 3 instances of physical hazards

  • 2 instances of leading-edge technology risks

Concerns on organisational change/disruptive organisational climate were directly related to the possibilities of job loss in some cases, and in others to conflict and rivalry between senior figures which affected support for the project or impacted directly on the project personnel. Takeover and merger concerns were not clearly linked to any specific impact on project teams. Scrutiny and interest by top management in the informants’ own organisations, however uncomfortable, was seen as a positive factor, whilst public or official attention tended to evoke responses of greater care or attention to detail. There was mixed evidence concerning responses to competition, which included generalised comments on organisational style, as well as more specifically project-related concerns.

There were many instances of project managers experiencing difficulty in obtaining sufficient resources and conflicts from this source created some tensions for individuals, but there was little evidence to suggest that this kind of operational difficulty had a significant impact on project climates.

Where physical hazards were mentioned the effect on the project team tended towards risk management activity and seeking for increased knowledge. Similarly, such technology risks as were identified by informants were addressed operationally and did not appear to impact significantly on the project team culture or morale.

Comparison of assessments of overall environmental threat levels with assessments of project success shows a strong negative correlation, of −0.56, between these two factors.

The individual factors reported above contribute to the coefficient of organisational climate mentioned in the introduction to this paper. This coefficient is derived for each case from the assessments previously made of management style at the organisational level, management style at the project level, purposive threat, and environmental threat, moderated by the assessment of voluntarism. Comparison of organisational climate assessments (high ≶ low threat) with assessments of project success produced a very strong negative correlation of −0.74.

To illustrate this correlation the line graph in Fig. 1, has been prepared with the organisational climate series inverted:

Section snippets

Conclusions

This study has identified a variety of purposive and environmental threats perceived by project management professionals to affect them. A widely held view that threats of various kinds are justified on the grounds that they promote enhanced performance was reflected in the opinions of some of those who were themselves subject to such threats. This opinion was not supported by the evidence of project outcomes provided by the informants themselves. On the contrary, the fact that clear negative

Rod Gray is a consultant with particular interest in the use of project approaches in organizational development and change, and product development. He has a PhD in organizational behaviour and an MSc in human resources management, both from Anglia Polytechnic University, and the Professional Diploma in Management from the Open University Business School. He is a member of the Institute of Personnel and Development, the Institute of Management and the Association for Project Management, and is

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