CHANGING WORKPLACE CULTURES IN THE KNOWLEDGE-INTENSIVE SECTOR IN EUROPE

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REPORTS | ANU PUUSA, PASI TUOMINEN, KATARIINA YLÖNEN | CHANGING WORKPLACE CULTURES IN THE ... | No 17

ANU PUUSA PASI TUOMINEN KATARIINA YLÖNEN

CHANGING WORKPLACE CULTURES IN THE KNOWLEDGE-

INTENSIVE SECTOR IN EUROPE

NEW WORK, VALUES, METHODS AND MANAGEMENT

Reports and Studies in Social Sciences and Business Studies

PUBLICATIONS OF

THE UNIVERSITY OF EASTERN FINLAND

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CHANGING WORKPLACE CULTURES IN THE KNOWLEDGE-INTENSIVE SECTOR IN EUROPE

NEW WORK, VALUES, METHODS AND MANAGEMENT Final report of the WoCuE project

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Anu Puusa Pasi Tuominen Katariina Ylönen

CHANGING WORKPLACE CULTURES IN THE KNOWLEDGE-INTENSIVE SECTOR IN EUROPE

NEW WORK, VALUES, METHODS AND MANAGEMENT Final report of the WoCuE project

Publications of the University of Eastern Finland Reports and Studies in Social Sciences and Business Studies

No 17

University of Eastern Finland Joensuu

2022

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Punamusta Oy Joensuu, 2022

ISBN: 978-952-61-4579-2 (Print) ISBN: 978-952-61-4580-8 (PDF)

ISSNL: 1798-5765 ISSN: 1798-5765 ISSN: 1798-5773 (PDF)

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FOREWORD

The aim of the Changing Workplace Cultures in the Knowledge-Intensive Sector in Europe: New Work, Values, Methods and Management (WoCuE) project was to increase our understanding of the trends, practices and modes of thinking in current working life. Above all, the project focused on understanding the expectations that expert organisation members have about work, leadership and workplace communities, and about workplace behaviour in general.

The knowledge-intensive ICT expert organisations provided an interesting context in many respects, and the sector has also been found to predict broader trends in working life. In other words, examining these organisations, we may learn something that so far only manifests itself as a hint, aspiration or goal in more “traditional” organisations. It became clear already at the beginning of the project that we were about to gain relevant and new knowledge about working life. In many respects, the target companies had unique ways of operating, talking and structuring things compared with established mainstream ideas from management, marketing and organisational theories, as well as with many other organisations’ prevailing practices.

A major goal of the project was to engage with the actors involved to develop their organisational culture and identity, and workplace and interaction skills, as well as to make their significance visible concerning the functionality, efficiency, development and growth of companies. Based on the feedback collected from the project actors and participating companies, we achieved this in the project.

We also wanted to understand whether it is possible for companies to maintain a family-like culture characterised by openness, a low hierarchy, flexibility and freedom in a situation in which the company community seeks significant growth, globalisation and diversification. What happens to its culture, leadership, human resource management, knowledge management and processes in such a situation? How can the company maintain an open, constructively critical and multivoiced dialogue and nurture workplace skills that promote success and a good atmosphere? How can agile and innovation-oriented practices be maintained while ensuring adequate resources? In this extensive project report, we will provide answers and perspectives on these questions.

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The project offered an interesting window into the development of ICT companies and the above-mentioned questions through the target companies, as well as the international partners and the larger Finnish ICT company involved.

Our conclusion is that many of the observations we made do not pertain only to these specific companies but may instead be characteristics related more broadly to the sector and visible internationally as well. In other words, it appears that the management and organisation of expert work in knowledge-intensive ICT expert organisations and the workplace culture in these organisations are surprisingly similar in the different target countries. This leads us to the conservative estimate that the sector may have a more significant impact on the companies’

characteristics than national cultural differences.

The outbreak of the Covid-19 pandemic during the project period left a special mark on the project. We stood by the project companies and with pleasure and admiration followed their means and capacity to react agilely to the sudden changes. We were able to study their remote working practices, management and experiences and develop supportive practices with the companies.

The best feedback we received from the participating communities was their experience that we were able to help and support them in rebuilding a positive workplace culture and offer them new perspectives on how to develop the company and move forward. We achieved this together, and a key factor in our success was the interactive and inclusive approach applied in the project, which the organisations embraced collectively, openly and enthusiastically. Each respondent’s thoughts, responses and views have been invaluable to us, and we are deeply grateful for the open-minded attitude and trust you showed us during the project. It is no small matter to give one’s time and, above all, share one’s thoughts – on very deep issues – with the project actors, or to write them down to be analysed and addressed in joint, themed discussions. Another key element for the success of the project was that the target companies’ management gave their support and a face to the project while being aware that critical perspectives would also be raised, and that their own operations would also be critically examined. This is how modern leaders and expert organisations operate. It is our sincere wish that you will further strengthen your workplace culture by relying on your positive spirit, which we could perceive, experience and also contribute to a small extent.

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To ensure this, we encourage you to make use of the interactive operating model implemented during the project, which increases the interaction between the members of the workplace community and the management and employees and enables everyone to make their voices heard – in various, individually suitable ways. Increasing interaction promotes the personnel’s participation in and commitment to the common goals, improves well-being in the workplace community and enhances the company’s productivity.

The WoCue project began in 2018, and thus I have had the chance to work with some of the project companies for six years, and with others for three and a half years. The years have passed rapidly, and the project actors too have learned a lot during them. I would like to express my warmest and humblest thanks to the companies involved in the project and all the fine people who worked in them during the project, devoted their time to the project, and shared their valuable experiences and views. Thanks are also due to all the financiers. The project was funded by the Centre for Economic Development, Transport and the Environment (the authority that coordinates European Social Fund (ESF) funding), the project’s target organisations and the Business School of the University of Eastern Finland. I would like to thank financial expert Sirpa Raassina and payment expert Aslak Partanen for all their help, encouragement and seamless cooperation. I would also like to thank the project steering group and financial secretary Sanna Kontio.

This project was a development project, and the practical implementation was based on a sound scientific approach and expertise. I would like to express my warmest thanks to project researcher Katariina Ylönen and project manager Pasi Tuominen. It has been a pleasure to take the project forward with you. Our researcher triangulation has ensured that all the collected data in various formats has been analysed carefully and professionally, and all the data collection phases and company development events have been based on strong teamwork and the input of three experts.

We head for the summer and the light.

In Joensuu on 20 May 2022 Anu Puusa

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1 INTRODUCTION

Organisations are facing the challenges brought on by a changing workplace culture. Globalisation, structural change in work, emerging technologies, the unstable economy, demographic changes and the different expectations of a new generation of workers are all challenges that require organisations to develop new ways to improve their productivity and efficiency. Organisations must be able to secure the availability of labour and their ability to innovate and react proactively to changes in their operating environment. As a result of the structural changes in working life, service- and knowledge-intensive industries have become more common, and knowledge and expertise, as well as the ability to manage them, play an increasingly prominent role in terms of the productivity of an organisation. Thus, the future competitiveness of businesses will be more strongly based on their ability to create intangible value based on the building of an organisational culture that enables innovation and development.

The ICT industry continues to grow globally and is increasingly responsible for the competitiveness of countries. As the industry grows, it also needs to be continuously developed, while it is simultaneously faced with labour shortages that will not be eradicated in the near future. To remain competitive and retain a skilled workforce as the industry grows, ICT companies need to pay special attention to building a workplace culture that supports diversity and leadership so that employees will feel comfortable, stay in their jobs and be willing to contribute their skills to the organisation. The workplace culture is one of a company’s key competitive factors, because it cannot be copied and through it the company is able to influence the commitment, participation and development of its employees. This is why it is important for companies in the midst of constant change to develop an effective workplace culture within their organisation.

The starting point of the development project Changing Workplace Cultures in the Knowledge-intensive Sector in Europe. New work, values, methods and management (WoCuE) was the development of ICT companies’ workplace cultures. As a result of the changes in the operating environment, businesses

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need to find ways to improve their efficiency and be able to change rapidly.

In a project on changing workplace culture, which this project is based on, it was observed that many ICT companies face challenges related to community growth, globalisation and diversification. What will happen to culture, leadership and processes? How could dialogue, favourable work community skills and practices that support innovation, as well as a family- like workplace culture be maintained? Growing enterprises also need to find a balance between the freedom required by expert work and management structures. One of the project’s goals was to increase understanding of the impact of the workplace culture on the functionality and productivity of a company. The project aimed to advance a workplace culture that supports the development goals and assist ICT companies in Eastern Finland and North Savo, the target organisations, in the development of their ability to prepare for changes and improve their employees’ commitment by strengthening the self-awareness and work community skills of these companies. Another goal was to develop interaction between the employees and provide information about the advantages these organisations could obtain by engaging their employees in open dialogue. We also wanted to understand whether the features found to be characteristic of these companies were company- specific, somehow regionally characteristic or partly typical for the industry.

Another goal was to develop interaction between the employees and provide information about the advantages these organisations could obtain by engaging their employees in open dialogue. To this end, we found a partner in Belgium that also received funding for a project through the EU. Three ICT companies from Belgium joined the project, and the plan was to realise a similar development project also in Belgium.

The project consisted of information collected from the personnel and management, development events, an intermediate seminar and a final seminar, as well as the preparation of a final report. After careful research and initial discussions, the project began with the collection of data to study a theme or challenge that is topical for each organisation. Next, development events were arranged in the participating companies with the organisations’

best interests in mind. These events also allowed the management and employees to work together. During the meetings, the project actors

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introduced the main points of the data analysis at each phase, which were used as the basis for discussion and further work. Another data collection effort was implemented in between the meetings, and questions were selected based on the conclusions from the previous round or viewpoints voiced during the development events. We proceeded with the project in an inclusive manner by collecting both individual views (from the members of the organisation) and shared views (from the development events) about the organisation, its functionality and potential challenges. The key aspects revealed by the data analysis determined the types of development efforts and expertise needed by each of the target organisations, thereby directing the planning of the development events.

Information was collected confidentially and anonymously throughout the project period to allow the highlighting of strengths and challenges in the work community. The aim was that everybody would be able to offer honest feedback on the current status, successes and development areas. Raising difficult issues is easier when it is done by a neutral party from outside the organisation. Furthermore, transparency was facilitated by the fact that the participants were able to make their voices heard during the development events and anonymously through qualitative surveys. The project actors acted as facilitators during the development events. External experts were also used as trainers on the themes of strategy training, the SCRUM method, interaction, motivation, service design and promotion of the wellbeing of the work community.

The project actors were responsible for the planning, monitoring, observation and reporting of the work done during the development events.

During the development events, the project actors presented the main conclusions emerging from the collected data. The data was analysed by all three project actors and the findings were then discussed together. This is known as researcher triangulation, which increases the reliability of an analysis. Next, the conclusions were discussed in the company and could be worked on together. If a challenge had been identified based on the data collection and the analysis, a solution for it was sought using a variety of individual and group work methods. The aim of the joint discussion was to show the supervisors and employees how they can regularly discuss shared

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issues. It also encourages other forms of interaction in the planning of one’s own actions and the operations of the organisation. The aim was that the management would tell what the organisation should aspire towards, and the employees would have the chance to voice their opinions on how the goals should be pursued and on what terms and by what means the goals could be achieved from their point of view. This strengthened the involvement of the employees and their commitment to the common goals.

The final report begins with a presentation of the project’s basic details and the implementing parties, as well as the theoretical perspectives and research literature used as the starting points for the project. Perspectives used in the project work, i.e. the surveys and discussions during the development events, common to the involved companies, are described next. We also present the key findings from both the international data and one larger ICT company (Exove) that was used as a benchmark for the project companies.

The results and perspectives from a survey conducted for the project’s intermediate seminar and a peer discussion organised for managers of the project companies are also reviewed. Finally, at the end of the report, key conclusions that reflect the project’s factual goals are described. These meet the scientific objectives of the project.

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2 BASIC DETAILS AND IMPLEMENTING PARTIES OF THE PROJECT

The project Changing Workplace Cultures in the Knowledge-intensive Sector in Europe. New work, values, methods and management was realised between 1 October 2018 and 31 March 2022. The project was implemented by the Business School of the University of Eastern Finland. The project was headed by Anu Puusa, D.Sc. (Econ.), Professor of Intellectual Capital Management.

The project manager was Pasi Tuominen, D.Sc. (Econ.), lecturer and the project researcher was Katariina Ylönen, M.Sc. (Econ.), doctoral candidate.

The project was funded by the South Savo Centre for Economic Development, Transport and the Environment (ELY Centre) together with the target organisations and the University of Eastern Finland.

WoCuE involved seven small and medium-sized ICT companies operating in North Karelia and North Savo: Oy Arbonaut Ltd, Dikaios Oy, Fluent Progress RT Oy, Mastercom Oy (Kiho), Nolwenture Ltd, Process Genius Oy and Solenovo Oy. The industry and business of ICT companies are related to computer science (CS), information systems (IS), information technology (IT), software technology (SE) and e-business (Tong et al. 2014). The ICT sector covers both business related to developing hardware, such as systems and programming, and communication and interaction taking place through software. The expertise of an ICT professional involves processes taking place through electronic media, the delivery and presentation of data, and communication.

Products and services in the ICT industry or a related field are provided with the help of the above.

New and developing technologies call for up-to-date ICT knowledge from ICT experts, which means that organisations engaged in the industry must constantly monitor and anticipate trends in their operating environment (Tong et al. 2014). In fact, companies such as the target organisations have been found to be trailblazers in working life and to predict broader trends involving working life in general (Kunda 2006). The technology industry has generally been noticed to promote new trends in working life and influence the way in which work and working are perceived in other organisations

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and society at large. According to Rikama and Lehtonen (2015), companies utilising digital tools largely differ from traditional SMEs in that they are typically young businesses that can be considered trailblazers in their field.

By definition, digitally oriented companies make use of many digital tools, such as social media, cloud services, big data, online shopping, e-commerce and digital distribution channels.

The business of all the target companies is based on digitalisation, modern technology and information technology. Most of them can be considered young growth companies.

Established in 1994, Oy Arbonaut Ltd is a company based in Joensuu that develops the world’s leading geospatial data solutions for the mapping of forests, natural resources and terrain. The company’s strengths are data collection and analysis based on the laser scanning technology. Arbonaut assists its customers in optimising the cost-effective utilisation of forest resources. Technical expertise and new innovations form the basis for Arbonaut’s success. The company understands the importance of a customer- centred approach. The starting point for cooperation is understanding the customer’s needs, challenges and technical goals. The company has offices in Joensuu and Helsinki.

Established in 2010 in Kuopio, Dikaios Oy develops service technologies for managing and sharing learning-related information, providing innovative and customised services for the management of electronic content. The service enables organisations to manage and control information related to learning. Dikaios connects actors involved in the production of e-learning materials and brings together content and the people who use the content in a single channel using SSO technology. The service has been developed in cooperation with various content providers, education providers, teachers and software companies. The company’s goal is to operate in a customer- centred manner utilising technological change flexibility, so that the service technology it develops can be adapted and scaled according to the technological challenges and needs of each organisation. Dikaios’ service technology is used by Finland’s largest publishers and nearly half of Finnish municipalities and educational institutions. Dikaios Oy has been merged with Visma as the result of an acquisition.

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Established in 2015 and based in Joensuu, Fluent Progress RT Oy is a software company creating mobile production control systems for the construction and infrastructure industries. The company was established by separating its operations from the operations of FastROI Ltd, a Joensuu-based software company providing enterprise resource planning and customer information systems for the care sector. Customers of Fluent Progress are from both the public and private sector. The system provided by Fluent Progress promotes the work of construction companies by optimising and managing resources and saving the valuable time of the management and the employees. With the system, supervisors can effectively manage construction projects and monitor the safety, quality and progress of construction sites. The company has offices in Joensuu and Espoo.

Established in 2012 in Joensuu, Nolwenture Ltd is a small business focusing on software development and consulting. Nolwenture offers a wide range of consulting services related to the development and utilisation of software globally, such as product development consulting, software and user interface architecture design services and software procurement services.

The company provides digital services and products covering innovation, design and implementation with the best available technologies. Nolwenture employs highly skilled technical experts who understand ordinary customers and their needs. The customers are companies operating in the private sector.

Established in 2013 in Joensuu, Process Genius Oy offers simplified visual solutions based on next-generation virtual reality to improve the development of its customers’ business, productivity, efficiency and sales cycle acceleration.

Process Genius provides its customers with the latest information and aims to raise the customer’s product or solution to the next level that enables new type of business management. The company is proficient in user interface design, 3D modelling, system development, project management and gamification, and uses different technologies to meet the customers’ ever- changing business needs. The company has offices in Joensuu and Helsinki.

Established in 1996, Solenovo Oy is a software company that provides browser-based ERP and resource management solutions in Joensuu.

Customised solutions consisting of software and expert services provide tools for more efficient and clear profitability management, the planning

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of teaching and studies, and project management. The key customer organisations operate in the education sector and public administration.

Mastercom Oy was established in 2003. It is a limited liability company with its registered office in Kuopio, and its main business is applications and software. Kiho used to be Mastercom’s auxiliary business name, and the actual company Kiho Oy was established in 2020. Kiho is a limited liability company with its registered office in Kuopio, and its main business is IT consulting and IT services. Kiho strives to build the world’s best hardware and field work management platform that can be seamlessly combined with the most innovative solutions in the industry. The aim is to help businesses to improve the efficiency and optimisation of their hardware, manpower and time. Kiho has 51 employees and a total of 7 offices.

In addition to the above-mentioned companies involved in the project, the project partners included ICT companies from Belgium and Finnish design and software company Exove Ltd.

The latter allowed us to gather the data we wanted to use to examine whether the characteristics identified from the project companies were specific to small companies in the industry. Exove Ltd, the project’s benchmark company, assists its customers in looking towards the future and achieving growth through digital services. Exove develops digital services for a wide range of companies from listed companies to start-ups and from media houses to universities. It strives to find the best solutions in an agile manner, using service design, consulting and open source code solutions, looking far into the future. Established in 2006, Exove operates in four countries and has six offices and 90 employees.

Three companies from Belgium were involved. Calculus was established in 2017 and specialises in finding innovative digital solutions to a wide range of problems, such as customised solutions for process optimisation, cost reduction or workflow efficiency. At the time of data collection, the company employed 10 people.

Netropolix is a software company established in 1999 that employs 70 people. Netropolix supplies and installs optimal computing hardware and provides an optimal cloud environment tailored to its customers. The

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company aims to build an IT infrastructure that works smoothly behind the organisation’s business operations.

At the time of data collection, DeltaCare employed the entrepreneur and six other people. DeltaCare operates in the areas of data cabling, which forms the basis of data networks, communications solutions and intelligence building with the aim of creating intelligent buildings and yards that can react appropriately to the circumstances.

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3 EPISTEMOLOGICAL STARTING POINTS OF THE PROJECT

3.1 Dialogue-based development activities

Organisational management can be seen as an interactive process between the management and employees (Ilies et al. 2007; Omilion-Hodges & Ptacek, 2021). According to this management approach, a supervisor does not act alone but makes things happen together with their subordinates (Yukl 1999). Meanwhile, a dialogue-based management approach (Syvänen et al. 2012) emphasises communication and interaction between managers and employees where the parties of the management process negotiate on their shared reality. Especially in the case of changes, the parties typically negotiate to form a shared view of the fundamental intent, task and essence of the organisation, i.e. its identity (Puusa & Kekäle 2015). In this process, the most important task of the managers is to create meaning, because meaning plays an important role in the building of visions and goals, as well as in the motivation and commitment of people (Juuti 2001; Puusa 2007). A prerequisite for successful change is that the people being managed also play an active role in the creation of meaning and commit to the change.

An examination of the work community skills and organisational citizenship behaviour is important when one wants to understand the functioning, performance and development of organisations.

3.2 Organisational culture as the basis of identity

Organisational culture (also referred to as workplace culture or operating culture) can be defined as a common system of meaning created through social interaction in an organisation, and it guides the community’s activities (Paalumäki 2003). The emergence and development of the culture is based on long-term social interaction, where people discuss their shared

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experiences and develop a common language and common concepts. The culture consists of the company’s basic assumptions, values, symbols and artefacts (Schein 1988; 2001; Tong et al. 2014). Basic assumptions are the unconscious assumptions of an organisation about how and based on what motives people act in the community, what the community’s relationship with its surroundings is and what is the nature of the organisation’s activities, while values guide the perception of how things should be in the organisation.

They therefore have a significant, albeit often unconscious, guiding nature.

Basic assumptions and values are often described as hidden parts of an organisational culture. Artefacts, on the other hand, are a highly visible part of the culture: physical spaces, technology, logos, rituals, ceremonies and stories with a symbolic nature from the organisation’s point of view. Artefacts create continuity and build the common meaning among the members of the culture, because they communicate the history and story of the organisation to the members of the organisation. (Schein 1988; 2001).

In essence, the culture consists of the individual views of the members of the organisation. However, the members of the organisation must have some level of common understanding to be able to talk about the organisational culture. The culture creates continuity, commitment and motivation in the organisation, and acts as the basis for the organisation’s collective identity. Hence, it creates the setting in which people create and develop an understanding of what they are as an organisation (Puusa 2007).

Organisational culture can therefore be characterised as a cohesive factor in a work community (Prasad & Prasad 2009). The organisational culture either weakens or strengthens the organisation’s innovation attitudes, perceptions and ability to innovate (Salaman & Storey 2002), which is why an examination of organisational culture is important for coping with the heterogeneity and fragmentation caused by constant change and for the emergence of innovation.

A common understanding of a particular matter helps the members of a community to work as a group and to make mutually supportive choices, thereby eliminating uncertainty and generating predictability. When a company has a shared understanding of the culture, the members feel that they are part of a well-designed organisational structure, which makes

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them able to commit to its mission (Tong et al. 2014). The culture provides a basis for a shared identity and clarifies and reinforces behavioural norms.

In fact, culture can often be taken for granted, which can make it challenging for individuals to assess their own performance against the organisation’s objectives. It is therefore important for an organisation’s capacity for renewal to examine, from time to time, the organisation’s unconscious underlying assumptions and how well they are functioning in terms of the organisation’s objectives and desired direction. Otherwise, the culture may unconsciously become a force that resists renewal and change (Hannan and Freeman 1984).

3.3 Importance of organisational identity during change

Who are we as an organisation? This question, which is crucial to organisational identity, offers a foundation for investigating a variety of questions that are interesting from a scientific and practical perspective (Puusa 2007; 2009;

Puusa et al. 2013; Puusa et al. 2014, Mönkkönen & Puusa 2015; Puusa &

Kekäle 2015). The concept of organisational identity has established itself as a viewpoint in the study of organisations (Foreman & Whetten 2002), because the creation of meaning has been emphasised in the understanding of the functioning of organisations (Albert, Ashforth & Dutton 2000). This can be seen as particularly important in times of change and uncertainty.

Organisational identity is built through interaction between the members of the organisation and the management and employees, which means that it is a social phenomenon (Scott & Lane 2000). The identity can be understood by looking at the distinctive and permanent core features of the organisation, taking into account the past, present and future of the organisation (Albert and Whetten 1985). Especially during change, the members of an organisation will consider what the organisation is ultimately all about and where it is going, and many interpretations of the core features and their application in the changed situation may emerge. The members seek to understand the unclear situation by explaining events, actions and discussions within the organisation and expressing their meaning through their speech and actions

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(Corely & Gioia 2004). Views about the organisation’s core features influence how the members feel and act in the work community.

Other key questions related to organisational identity are “Who would we like to be?” or “Who should we be?” (Puusa 2007; 2009). In times of change, it is important to aspire towards goals together and ensure smooth cooperation, i.e. for the organisation to have a shared view of the desired direction (Hardy et al. 2005). As a concept, organisational identity is closely connected to practice. In fact, research has shown that organisational identity plays a role in the ability of a company to withstand changes (Whetten &

Godfrey 1998; Markkanen 1999; Beech & Johnson 2005; Hatch & Schultz 2004; Puusa 2007). Furthermore, the way in which the members of the organisation interpret matters related to change essentially influences their commitment and participation in a change process (Puusa 2009). Therefore, the organisational identity can act as a factor explaining the behaviour of the members of the organisation when the behaviour can no longer explained with other factors (Whetten & Godfrey 1998; Whetten 2006; Puusa 2007). The management’s way of handling, understanding and interpreting identity also either promotes or hinders change in the organisation (Stimpert et al. 1998;

Hip 2007; 2009) and the development of an innovation culture, which is the driving force behind change (Flash & Storey 2002). An organisation’s ability to manage its identity towards the direction it wants can also be a factor offering a competitive edge.

3.4 Leadership as a developer of organisational identity during change

Leadership plays an essential role in the creation of organisational culture and identity, because organisational identity is built through interaction between the members of the organisation and between the management and the employees (Scott & Lane 2000). In discussion about leadership, it is good to distinguish between the terms ‘leadership’ and ‘management’. In simple terms, management is about doing and using technology to achieve results, while leadership focuses more on personality, character and attitudes.

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Leaders have a significant impact on the assumptions and behaviour of the members of the organisation (Martin & Bush 2006). According to research, management style in senior management (Auh and Manguc 2005) and at lower organisational levels essentially affect the ability of the organisation’s members to innovate, create new things and adapt to change (Crossan and Apaydin 2010). The actions taken by the manager influence the prevailing patterns of thought in the organisation, and the members are socialised into these (Salaman and Storey 2002); meanwhile, the manager is also exposed to the influence of the prevailing culture. Managers are different and reflect their unique management styles owing to their personal characteristics.

However, it is possible to shape management styles by training managers to assume methods that are favourable for the work community (Avolio 1999).

It is therefore important to investigate and reflect on the impact of leadership on culture. Identifying, questioning and challenging the beliefs and practices that promote, prevent or limit change within the organisation is important.

In recent decades, leadership research has been extensive and multidimensional. It has largely focused on three leadership models:

transactional, transformational and transcendental leadership (e.g. Cardona 2000). Attention has also been paid to leadership trends that emphasise different perspectives but can still be seen as variations of the above three models. (Avolio et al. 1999). Leadership research has also dealt with the laissez-faire leadership model, but it is considered a very passive and inefficient approach (Bass 1997). This type of leadership is characterised by an avoidance of decision-making, responsibility and bearing risks, as well as an unwillingness or incompetence of the manager to lead. In contrast, researchers have also found out that any decrease in strong, active leadership may activate the employees in a positive way if they are capable of acting highly independently, though this is a more unlikely alternative. (Dubinsky et al. 1995b; Smith et al. 2012). In turn, remote management, which emphasises the significance of communication and interaction in management, has attracted attention recently (Contreras et al. 2020; Van Wart et al. 2019).

In transactional leadership, the leader typically focuses on short-term goals (Dubinsky et al. 1995b). The manager inspires the employees with rewards, which are the main source of motivation for the employees. Furthermore,

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the interest shown by the manager towards the employees is based on their performance. (Smith et al. 2012). The manager clearly specifies the requirements and tasks of the employees and the rewards available for achievements (Fuller 1999). In this case, the manager particularly supports the employees’ external motivators. The manager also monitors the completion of the tasks and any problems, offers feedback and implements corrective measures to achieve the goals (Dubinsky et al. 1995b; Avolio 1999). Transactional leadership typically takes the form of managing tasks.

An agreement is made between the manager and the employee on carrying out the agreed work and receiving the agreed reward for it. The manager allocates tasks and then rates the employee’s performance. In this type of leadership, employees are likely to only perform the agreed task, which means that a major part of their potential may be left untapped. (Avolio 1999;

Fuller 1999). According to research, transactional leadership does not seem to support innovation, but an organisation in a stable situation will benefit from this type of leadership (Dubinsky et al. 1995b).

In transformational leadership, the manager is committed to long-term goals (Dubinsky et al. 1995b). The manager seeks to bring the vision, mission and their personal views to the fore in a relatable manner and inspire employees through goals, challenges and responsibility (Bass 1997; Smith et al. 2012). The manager acts as an energising, ethical role model, assisting the employees in succeeding (Groves 2005). Through intellectual activation, the manager assigns challenges for the employees to resolve and encourages them to trust in and use their capabilities and utilise new approaches to problem- solving and the development of their work (Dubinsky et al. 1995b; Fuller et al. 1999). The manager seeks to understand the employees’ individual needs and assign tasks that match their personal competences and development opportunities, thereby motivating them and helping them perform in the tasks as well as possible. Such leadership supports the strengthening of the employees’ internal motivation and a feeling of the work being meaningful.

(Avolio et al. 1999; Eagly et al. 2001; Smith et al. 2012). Transformational leadership has been found to foster innovation and the sharing of knowledge in the organisation, which means that it is especially useful for addressing

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the leadership challenges of knowledge-intensive organisations and those undergoing a change (Bass 1997; Eagly et al. 2001).

This type of management often includes management by objectives.

Goals have been agreed between the supervisor and the employee, and the employee carries the responsibility for the achievement of these goals, which motivates them to use their capabilities and skills to achieve the goals (Fuller 1999). The employee is given freedom to work towards the goals and also bear responsibility for achieving them. When there are no more challenges left, the employee will start looking for new tasks and new goals. (Dubinsky et al. 1995a; Avolio 1999).

Transcendental leadership has been described as an exchange relationship between the manager and the employee (Cardona 2000). Unlike in transformational leadership, the focus in personal development is not on the person themselves but on other people. A transcendental leader is a leader who is able to lead and operate at several levels: self, others and the organisation (e.g. Crossan, Vera & Nanjad, 2008). A manager pursuing transcendental leadership exhibits a high level of internal control, which means that external incentives or stress cannot undermine their peace of mind (Sanders et al. 2003). Such a manager is capable of looking after the employees and seeks to support their personal development. Employees derive their motivation from the fact that they generate added value for others through their work and feel and perceive their work input as meaningful.

(Cardona 2000; Sanders et al. 2003).

In addition to transactional, transformational and transcendental leadership, studies have examined several other leadership trends. As examples of these, we provide here spirituality, servant leadership and shared leadership, as well as the leader-member exchange theory. The perspective of spirituality is closely connected to transcendental leadership. It involves an idea that a manager has the duty to elevate the spiritual atmosphere and level of awareness at the workplace. Spirituality can take the form of a sense of togetherness and awareness of a larger whole. It makes the work meaningful, helps the employees to focus on good things and introduces a deeper motivation into working life. (Sanders et al. 2003).

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Servant leadership also closely resembles transcendental leadership. It emphasises the human-centred nature of leadership, cooperation between the manager and the employee and development related to personal growth (Stone et al. 2004). This management style combines management and serving others, and the idea is that the manager has a desire to help others.

A manager who has adopted the servant leadership style understands that their growth and success are related to the success of other people through growth and development. The manager is geared towards promoting the wellbeing of the employees, customers and the entire community. The most important tasks of such a manager are to detect the needs of the community and seek to fulfil them. (Stone et al. 2004). A manager who has adopted the servant leadership style usually achieves a confidential relationship with the employees and is thus capable of influencing them (Farling et al. 1999). A servant leader is interested in the positive effects of leadership, and this is an ideal leadership model if the community is able and willing to work and develop. (Stone et al. 2004).

The leader-member exchange theory emphasises the role of interaction between the manager and the employee in the shaping of leadership (Omilion- Hodges & Ptacek, 2021). In the theory, the manager and the employee are considered equal and they mutually contribute to the relationship by introducing different values, preconditions and ideas during the interaction.

(Wang et al. 2005). The relationship between each supervisor and employee is thus unique. An effective interactive relationship is created when the manager and the employee are willing to support each other. An employee and a supervisor relying merely on their formal positions will not be able to form a functioning exchange relationship. The contribution of the LMX theory to research is a way of studying leadership as an interactive relationship or a mutual development process. (Wang et al. 2005; Ilies et al. 2007). It has been observed in leadership research that LMX leadership has a positive effect on the development of organisational citizenship behaviour and work community skills (Ilies et al. 2007).

Shared leadership offers a different viewpoint on the study of leadership.

A strong manager is replaced by a listening leader who also leaves room for others. According to this approach, leadership is not confined to

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manager-employee relationships. The approach is based on a relational perspective, and the starting point is the relationship that emerges from the process and community-level motivation that results from the interaction.

Such leadership focuses on the social production of visions and changes.

In shared leadership, leadership roles are divided into smaller parts and delegated to several people, but the responsibility for the whole remains with the formal manager or supervisor. A process of shared leadership can originate at any organisational level. (Nordbäck et al. 2018).

However, internal tensions and conflicts within the organisation may emerge more easily in an organisation with shared leadership, which places some challenges and constraints on the approach. The shared management approach requires good coordination to support the work of the team. The approach has been found to work well in a diverse organisation where the employees have different skills and typically work in multidisciplinary teams.

The team members can stand out and excel with their own expertise as they do their part in leading the team towards success together with the other team members. Through communal leadership, multidisciplinary skills can be used to create a cohesive organisation. This leadership model is essential especially for globally decentralised teams, where one leader cannot be present for every team member. (Nordbäck et al. 2018).

3.5 Work community skills in the development of organisational identity

Work community skills can be thought to have a central role in the building of a shared understanding and work community culture. This is because work community skills have been found to build the atmosphere within the work community and interaction within the organisation (Puusa et al. 2011), where an understanding of the organisation’s identity is created. Employees express this understanding in their work behaviour and activities (Corley & Gioia 2004, Puusa & Ala-Kortesmaa 2019), which in turn affect the perception of others of the organisation’s key features. The work community skills and related views within the organisation can thus be considered a key concept linked

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with the process of building the organisational identity and the workplace culture when considering how everybody can contribute to the operation of the organisation and the achievement of its goals through their personal efforts.

The concepts of work community skills, managerial skills and organisational citizenship behaviour are derived from the concept of an interactive supervisor-employee relationship, which involves the idea that management is not meaningful without employees (Arvassalo 2006; Hujala et al. 2009). If the employees do not have a consistent shared understanding of the organisation’s goals, the management alone will not be able to build operations that would support the organisation’s goals. If the employees are not engaged in effective interaction with the management, they cannot contribute to changes. This is why organisational citizenship behaviour, referring to the skills required of employees (literally translated, the Finnish term means ‘subordinate skills’), has been described as the counterpart of managerial skills ever since the early 2000s. The better the supervisor and the employee complement each other and meet each other’s expectations, the more natural and clearer their mutual interaction is (Puusa & Ala-Kortesmaa 2019). In fact, organisational citizenship behaviour and managerial skills are currently perceived as mutually supplementary work community skills (Keskinen 2005a, Rehnbäck & Keskinen 2005; Silvennoinen & Kauppinen 2007).

The concept of ‘subordinate’ has a negative connotation, however, which is why a better concept has been considered in its place. In the Finnish literature, managerial skills and organisational citizenship behaviour have been described as collaborative skills, so the concept has evolved into the common concept of work community skills (Aarnikoivu 2010; Mönkkönen &

Roos 2010). International discussion on organisational citizenship behaviour has largely focused on the distinctive skills of an employee in acting as a member of the work community, while the Finnish discussion has adopted a broader perspective on the phenomenon through the concept of work community skills. In the broader perspective, work community skills extend from the individual level to the community level and to the examination of social phenomena. According to Puusa, Mönkkönen and Kuittinen (2010),

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the concept of work community skills has attracted plenty of interest in contemporary working life amidst organisational changes, as workplace practices have been noted to play a crucial role in the success of a change.

Work community skills reflect the way supervisors, employees and teams communicate, collaborate and take things forward. The concept can thus be used to examine the realisation of relationships between an organisation’s members, their work behaviour, their cooperative skills and their personal characteristics that affect their actions as members of the work community.

Good managerial skills also include good interpersonal skills. A functional supervisor-employee relationship gives the employee the opportunity to develop their organisational citizenship behaviour and strengthens their sense of control over the work. ‘Control over the work’ refers to the available means and opportunities to influence one’s own work. A sense of control has been found to be related to an employee’s health, health behaviour and wellbeing at work (Rehnbäck and Keskinen 2005). A supervisor’s courage to utilise all the resources of the work community is also a part of good managerial skills (Mönkkönen & Roos 2010). To reduce work-related malaise, organisations should consider ways to strengthen the resources of work communities and employees, with a special focus on work community skills (Manka 2011). This is particularly important in the context of knowledge work, because research has indicated that knowledge workers face a particularly high risk of burnout (Donkin 2010). According to Keskinen (2005), being able to perceive and value employees with good organisational citizenship behaviour and reward them, for example by offering them development opportunities, is also a managerial skill. It has also been noted that an interactive approach to management will result in good work community skills and vice versa, i.e. a skilled supervisor understands that management is a relationship where the supervisor and the employee have their own roles and where both influence each other (Manka 2011). In management, the role of the supervisor is to ensure that the goals of the work have been understood, while the employees must make sure that their actions are in line with the goals.

Organisational citizenship behaviour can be defined as discretionary and voluntary behaviour of individuals that contributes to the social functioning of the organisation and goes beyond the formal requirements of the job,

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even if it is not explicitly rewarded under the employment contract (Organ 1988; 1997; Keskinen 2005a; Keskinen 2005b). The content of organisational citizenship behaviour is considered largely the same in both the Finnish and the international discussion. Loosely defined, organisational citizenship behaviour can be seen as responsible influencing with the support of the supervisor (Puusa et al. 2011). Podsakoff et al. (2000) have collected forms of organisational citizenship behaviour that have come up in international studies. On the basis of these, they have defined seven manifestations of organisational citizenship behaviour: 1) helpful behaviour, 2) sportsmanship and integrity, 3) organisational loyalty, 4) allegiance to the organisation’s rules, 5) initiative, 6) participation and interest in organisational matters, and 7) self- development. In general, an employee’s organisational citizenship behaviour can contribute to the organisation’s success in many different ways (Podsakoff et al. 2014). For example, an employee who has mastered their organisational citizenship behaviour has the means to influence both management and the performance of their basic duties (Rehnbäck & Keskinen 2005).

In day-to-day operations and at the practical level, good organisational citizenship behaviour refers to a constructive contribution to the work community. At the individual level, it manifests itself as, for example, commitment to work duties, a responsible approach and taking care of one’s own professional skills (Manka 2011; Rehnbäck & Keskinen 2005). At the team level, organisational citizenship behaviour is reflected as the promotion of cooperation: helping, encouraging and supporting one’s colleagues, sportsmanship and a desire to work for the common good (Podsakoff et al. 2000). An employee’s solidarity towards the organisation, interest in the organisation’s goals and the desire to be a member of the organisation can also be considered part of good organisational citizenship behaviour (Borman

& Motowidlo 1997).

Strong professional skills facilitate good organisational citizenship behaviour and good organisational citizenship behaviour reflects an employee’s willingness to provide these skills and their energy to the organisation. Commitment is manifested as motivation and a willingness to develop one’s own activities, work and working environment (Podsakoff et al.

2000). A motivated employee is aware of the goals of the job and strives for

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them by using their own resources appropriately (Bateman & Organ 1983). An employee demonstrating good organisational citizenship behaviour is also prepared to occasionally tolerate discomfort, perform at a level above the minimum requirements and accept extra tasks (Bolino & Turnley 2003). This means that a committed person takes responsibility for their own work input and performance in a way that it is relevant to the individual but also serves the organisation’s goals. When receiving the support of their supervisor, the subordinate participates in the management, so to speak, which also makes the supervisor’s job easier and promotes their wellbeing at work (Keskinen 2005a; Podsakoff et al. 2000). Thus, work community skills enable the commitment and coherent operation of the members of the organisation, or “moving in the same direction”.

A healthy and efficient work community is the primary and most visible consequence of good organisational citizenship behaviour. This is the result of employees who are committed to their work and the organisation, and who feel that their work and the work community are rewarding. By actively and responsibly participating in the operations of the work community, an employee can influence the atmosphere in the work community, which in turn can create a healthy culture of dialogue and interaction. In this manner, employees can also influence their own comfort and wellbeing at work, and create the prerequisites needed for work motivation. Work community skills can be learned by practicing how to address issues and how to offer feedback in a solution-oriented manner (Manka 2011), for example. Work community skills can also be developed observing others, by learning from one’s mistakes and, above all, by collaborating with others (Mönkkönen & Roos 2010). In this respect, the investigation and development of work community skills can be considered a useful tool for focusing on the role of specific employees and on the effects of their actions as members of the work community.

3.6 Renewal, growth and globalisation of an organisation One of the observations made in the MUTYK project was related to the thoughts of the participating ICT companies on what will happen to the culture

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and leadership when a small, family-like community grows, becomes global and diversifies. How can the sense of community, low hierarchy, openness, flexibility and a favourable attitude towards development typical of small companies be maintained when the organisation grows and more processes and shared operating methods are needed? What will happen to culture, leadership, management of human resources, knowledge management and processes? How can the company maintain an open and multivoiced dialogue that leads to constructive criticism and nurtures work community skills that promote success and a good atmosphere? How can agile practices that support innovation be maintained when resources are scarce and the goal is to grow and go global?

Such reflection is also justified in the light of research evidence. It has been found in leadership studies that the large size of an organisation, inflexible and stiff operating methods and a rigid organisational structure prevent innovation and the acceptance of new ideas (Subramanian 1996; Salaman

& Storey 200;2; Van de Ven & Engleman, 2004). Small companies typically react quickly to changes in the environment, because their practices are flexible and structures adaptable (Kim et al. 2011). The structures of large, old companies have become inflexible and stiff with time (Tang & Koveos 2004) and are characterised by extensive regulation and practices guiding the operations (Van de Ven & Engleman, 2004). Therefore, the challenges of a large company facing a change are often connected with inflexibility resulting from the organisational structure and culture.

3.6.1 Work community skills in modern communities

In the knowledge economy, the competitiveness of a company is based on the quality of work rather than the quantity of work: the most important capital and output of a modern knowledge worker is their knowledge, in other words, thinking is the employee’s job (Davenport 2005). Knowledge workers are people whose work involves the need for continuous innovation and creativity. The work is typically characterised by problem-solving, unconventional thinking and a lack of routines (Reinhardt et al. 2011).

Today, at least a little less than a half of the entire working population of

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all developed countries can be considered knowledge workers (Davenport 2005). Organisations engaged in knowledge work tend to be flexible, have a low hierarchy and empower their employees, which enables continuous innovation and adaptation of the employees’ roles according to the situation and the task at hand (Dekas et al. 2013). However, ideas about productivity and workplace stemming from the industrial era are still somewhat prevalent in Finnish working life, even though an important and constantly growing part of the economy in practically all developed countries is intangible (Puusa 2015; Lindroos 2015). It is also worth noting that international research on organisational citizenship behaviour has for the most part been conducted in industrial environments (Organ et al. 2006), and the Finnish discussion on work community skills largely relies on studies conducted in public sector organisations (Keskinen 2005a; Rehnbäck & Keskinen 2005; Silvennoinen

& Kauppinen 2006), even though public sector organisations rarely meet the characteristics of knowledge work organisations, i.e. low hierarchy and flexibility. The shift towards a knowledge economy and the different expectations and attitudes of the new generation about working life give rise to a need to rethink work community skills from a new perspective.

The manifestations of organisational citizenship behaviour presented in the chapter above can generally be regarded as virtuous working behaviour.

However, research has shown that these behaviours may contain something that may not be relevant for the organisation’s goals in future working life, and which will be replaced by new behaviours (Dekas et al. 2013). In the context of knowledge work, where the roles of employees and management are becoming more volatile and the external operating environment of companies is rapidly changing, it has been noticed that features that have traditionally been associated with good organisational citizenship behaviour and good behaviour at work can, in modern work communities, become obstacles to the very characteristics that are needed to maintain their competitiveness:

innovation, a dynamic approach and a culture of sharing knowledge. With the increasing emphasis on technology and the importance of building partnerships and collaborative relationships in knowledge work, the allegiance of employees, respect for authority, strictly determined working hours and working at one location do not necessarily guarantee good performance of

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modern organisations. Instead, relevant work community skills of the future may include the ability to maintain unofficial social relations and cherish one’s own physical and mental health and that of the other members of the community. These are skills that promote a knowledge worker’s ability to combine, analyse and use fragmented pieces of information to create new ideas (Dekas et al. 2013).

At the practical level, the new work community skills pose a challenge to the management: will supervisors be able to accept and reward coffee breaks that seem inefficient but where an informal exchange of ideas can lead to new innovations, or can the management accept employees spending some of their working hours doing sports, which in the long run can have a significant impact on their ability to cope with the hectic and challenging knowledge work? The need for an investigation into work community skills is justified by the comprehensive change in the goals of organisations. Nonaka stated already in 1991 that the goal of an industrial organisation is to maximise its efficiency, while the aim of a knowledge-based organisation is to maximise its innovativeness. This is of relevance to the types of work community skills that promote an organisation’s competitiveness. As the organisational culture and organisational identity are relatively subconscious and permanent phenomena, there is a risk that the understanding and basic assumptions linked to them regarding the behaviour of a good employee have not been updated in the requirements of an organisation engaged in knowledge work.

3.6.2 Work community skills in internationalising work communities

Globalisation is changing the world towards an era of a single market (Turnipseed & Murkison 2000), and most companies are facing the changes and challenges it has introduced. When a company goes global, the cultural diversity of its personnel will increase, and physical distances both externally between the company and its customers and other stakeholders and internally between the employees will increase. As a result, some of the internal structures, interaction and operating methods within the organisation have to be reconstructed and reshaped. A common understanding of the

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organisational culture, organisational identity and the roles and views prevailing in the organisation is more difficult to achieve when the personnel are culturally diverse and engaged in global business (Jiao et al. 2013).

Research has proven that work community skills are valuable capital within an organisation regardless of its culture, but the mutual importance of skills changes due to the pressure caused by globalisation, intensive competition and the dynamic operating environment (Turnipseed & Murkison 2000).

Workplace culture typically follows trends in the culture of the organisation’s home country (Turnipseed & Murkison 2000) and can be characterised as a micro culture within the national culture (Tong et al. 2014). The national culture is reflected in the organisation’s norms, values and practices. The national and organisational culture have been found to be an important determining factor in the manifestation and appreciation of work community skills (Turnipseed & Murkison 2000). It is therefore possible that the prevailing views about organisational identity and the appreciation of work community skills differ between organisations representing different cultures. Work community skills contain or emphasise different subskills in different cultures.

The national history and phases of economic development influence the manifestation of work community skills (Turnipseed & Murkison 2000).

Turnipseed and Murkison (2000) investigated the manifestation of work community skills in the United States and Romania, finding that these two countries differ especially in terms of social participation, loyalty and practical agency, and slightly less with respect to obedience in that in Romania these work community skills are much less common than in the United States.

The relatively low manifestation of work community skills may reflect a lack of satisfaction and positive conditions in the prevailing culture. The lack of loyalty, in turn, may appear in an inefficient economic system that has no goal-oriented rules, structures, opportunities or practices, indicating that the employees do not identify with the managers and the organisation. Loyalty typically appears in an organisation where employees are satisfied and thus want to contribute to the success of the organisation. In cultures that have undergone a communist or strongly hierarchical era, wages have typically been low, job satisfaction has been poor and innovation and possibilities for personal development have been limited. In cultures with such a history,

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the unselfishness and commitment to the organisation that are part of these work community skills can be poor among employees having lived during the communist era. However, the development of the economic system and new generations also shape the norms and practices of these cultures.

(Turnipseed & Murkison 2000).

Jiao et al. (2013) noticed in their study that Asians are more likely to consider work community skills part of their work than Western employees.

For example, in the American and Japanese culture, work community skills are expressed to a relatively similar extent, but their content differs: in the American work culture individualistic work community skills are valued, while Japanese organisations emphasise the characteristics of a collective culture (Turnipseed & Murkison 2000). Lam et al. (1999) observed in their study that in Hong Kong and Japan, employees were more likely to consider sportsmanship and courtesy parts of their job descriptions than their colleagues in the United States and Australia. Similarly, Blakely et al. (2005) noticed that compared to North American employees, Chinese employees were more likely to consider organisational citizenship behaviour part of their work. It thus seems that specific work community skills sustaining a sense of collectiveness are more important in Asian cultures than in Western ones.

3.6.3 Learning and innovation

The growth and internationalisation of a company and the globalisation of its operating environment tend to shape its structures, diversity and multidimensionality. The ability of an organisation to change and innovate play a key role in the ability of a company to succeed in a changing operating environment (Hult et al. 2004) and grow (Crossan & Apaydin 2010). When an organisation is faced with the need to change or is undergoing a change, its senior management play an important role as a force setting things in motion and making people committed (Auh & Manguc 2005). However, according to research, the entire organisation should commit to the new approach. The commitment of an organisation to a change or an operating method means that work must be done differently instead of merely reacting in a different way.

Day-to-day operations should not support traditional attitudes or operating

CHANGING WORKPLACE CULTURES IN THE KNOWLEDGE-INTENSIVE SECTOR IN EUROPE

ANU PUUSA PASI TUOMINEN KATARIINA YLÖNEN

CHANGING WORKPLACE CULTURES IN THE KNOWLEDGE-

INTENSIVE SECTOR IN EUROPE

Reports and Studies in Social Sciences and Business Studies

CHANGING WORKPLACE CULTURES IN THE KNOWLEDGE-INTENSIVE SECTOR IN EUROPE

CHANGING WORKPLACE CULTURES IN THE KNOWLEDGE-INTENSIVE SECTOR IN EUROPE

FOREWORD

TABLE OF CONTENTS

1 INTRODUCTION

2 BASIC DETAILS AND IMPLEMENTING PARTIES OF THE PROJECT

3 EPISTEMOLOGICAL STARTING POINTS OF THE PROJECT