How Yunus has Influenced the Organizational Culture

Featured

How Yunus has Influenced the Organizational Culture

Introduction The Grameen bank is a microfinance firm and community development bank in Bangladesh. The bank makes small loans called Grameen credit for the poor. The bank does not require collateral (Wahid, 1993).The main objective of the bank is to offer financial support to the poor. Most of the banks in different countries in the world do not target the poor and this has made it hard for the banks to meet the needs of the poor communities. However, Grameen bank has opted to target the disadvantaged in the society (Wahid, 1993). Leaders in the bank believe that disadvantaged people in the society have skills that are not utilized at all. The bank has used a group based credit approach to offer services to the clients. The approach uses the peer pressure within the group to ensure the borrowers act well carrying out their financial activities. In addition, the approach ensures the borrowers repay their loans and develop good credit record. Apart from offering credits, the bank offers other services like accepting deposits and running various development businesses like telephone companies, energy companies etc. The Grameen bank is different from other banks as most of its customers are women. Women account for 98% of all customers served by the bank credit program. The bank has performed well for the last few years. Many people have attributed the success of the bank with the organizational culture. The bank has a strong organizational culture. The founder, Muhammad Yunus has influenced the organizational culture in different ways. For example he has influenced the bank mission, vision and operations. The bank has continued to offer financial help to the poor in the society. The leaders and other stakeholders in the bank believe that poverty can be eliminated by exploiting the talents poor people have. The bank has provided training and financial support to its members to make them responsible and independent. Yunus has influenced the lending policy, organizational structure, the hiring of employees and provision of services to customers. This paper examines how Yunus has influenced the banks culture using Johnson and Scholes culture web model and Edgar Schein culture model (Khandker, 1995).

Discussion History of the bank Grameen bank was established in 1976 by professor Muhammad Yunus. The professor carried out a study to determine the possibility of establishing a credit delivery system that offers banking services to poor people in the rural areas (Hossain, 1988).The Grameen bank project was transformed to an independent bank by the government through a law. The professor was inspired by the Bangladesh famine of 1974 to establish the credit program. The professor offered $27.00 to families affected by the famine to help them develop small items for sale without imposing unfair loan terms on the families (McBrewster, Vandome &Miller, 2010). Yunus believed that providing the loans to the families would help change the socioeconomic status of

people living in rural areas of Bangladesh. The bank first served the residents of Jerba village and other residents near the University of Chittagong. The bank project was successful and it expanded to other areas including Tangail district and other districts in Bangladesh. In 2005, the bank loaned $4.7 billion to poor people in the region. The loan offered to the poor increased greatly between 2005 and 2008 as the bank loaned $7.6 billion to the poor in 2008. The bank has expanded greatly and has continued to provide small loans to poor people living in the rural areas (Hossain, 1984).

How Mr. Muhammed Yunus has influenced the culture of Grameen Bank Culture refers to a set of values, beliefs and norms shared by people in the society and organization. The norms, values and beliefs determine how people in an organization interact with each other in the organization and how they interact with stakeholders who are outside the organization. Organizational culture also refers to a collection of shared mental assumptions that guide the actions of people in the organization and also their interpretations. The culture in an organization can be weak or strong. A strong organizational culture occurs where most of the people hold the same beliefs and values that are applied to the organization. Employees in organizations that have strong cultures follow the rules and ethical procedures that are important to the organization and this contributes a lot to the overall performance of the organizations. On the other hand, organizations that have weak cultures perform poorly as the employees do not follow beliefs and values in the organization (Schein, 2009).

There are various theories that can be used to study the organizational culture. Examples include Edgar Schein cultural framework and Johnson & Scholes cultural web model. The Schein model is the most common model used to study organizational culture. Schein has embraced the functionalist view and defined culture differently from other theorists (Schein, 2009). Schein defines culture as patterns of essential assumptions that are invented, discovered and developed by a certain group as it learns how to cope with its issues of external adaptation and internal integration. Scheins definition of culture has been considered valid and has been applied in many studies involving organizational culture (Schein, 2009). According to Schein model culture is made of three levels. That is artifacts, values and underlying assumptions. The first level is the artifacts. Artifacts consist of physical elements of an organization that convey the cultural meaning of the organization. There are different things in an organization that can be seen like offices and awards. Other things include recognition and how employees in the organization interact with people outside the organization and other employees. In addition, the company motto and mission are considered artifacts as they can be seen. Daniel Dension defines artifacts as touchable elements of culture that are shared by employees in the organization. Rituals and values are important elements of an organizational culture. In this case rituals refer to interpersonal behavior in the organization (Schein, 2010).

The second level is the values. Organizations have shared values. In this case shared values are individual preferences regarding certain elements of a culture in the organization. For instance, some people might be interested with the customer services offered by the organization and others loyalty. Local and personal values are expressed in an organization and this influence the culture in the organization. Basic assumptions and beliefs like supportiveness of a firm are

integrated into the organizational culture and influence its activities. The third level is the underlying assumptions. This level focus on the behaviors that are not explained when people in an organization are asked about the values of the organizational culture. In this case, data is gathered by observing behaviors (Schein, 2010).

Apart from Schein model, Johnson and Scholes culture web model has been used to examine culture in an organization. The culture web model is made up of 6 elements that are interrelated. The first element is rituals and routines. Rituals and routines refer to daily behaviors of employees and other people in the organization. For example, how customers are handled in the organization. Rituals like training programs and procedures are important in helping new employees understand the organization (Faulkner, Child &Tallman, 2005). The training programs and procedures help employees learn how things are done in the organization. In addition, they help employees learn the behaviors that are valued by the leaders. The second element is stories. Stories are important as they help people communicate the organizational culture. Stories can be told to people inside the organization and also outside. The third element is symbols. There are various symbols in the organization that can provide a reflection of the organizational culture. Examples include refer logos and language (Alvesson &Sveningsson, nd). The fourth element is power structures. People having the most powers in the organization have the most influence. For instance, managers and directors have the greatest influence in the organization as they influence organizational activities and behaviors. Another element is organizational structure. The kind of structures available in the organization determines the organizational culture. Formal structures and informal structures reflect power structures and influence the core values of a firm. Lastly, control systems are important in understanding the organizational culture. The control systems refer to reward systems and measurement systems used in the organization (Cholle, 2011).

The theories above are important in understanding how Muhammed Yunus has influenced the culture of Grameen bank. Muhammed Yunus has influenced the culture of Grameen bank in different ways (Bank &Watanabe, 1993). Yunus influence on Grameen culture is evidenced by e organization like mission, vision and logo. Grameen has influenced the mission and objectives of the bank. Unlike other banks in the country, Grameen bank targets the poor in the society who are seen as not credit worthy by other banks. Grameen bank believes that all human beings regardless of their social status have endless potential that can be exploited. Hence, the poor in the society have that potential, but it has not been exploited. Yunus established the Grameen bank project to help poor people in rural areas access financial services and hence eliminate poverty. The bank has continued to offer financial support to the poor in the country. Grameen bank and its employees believe that charity does not help end poverty, but it leads to dependency and increases the poverty rate (Yunus, 2010).The vision of a society free from poverty evidenced by the leadership in the bank has been forested among the stakeholders in the bank. For example, it has been forested among the employees, customers and managers. The customers, employees and managers share the same values, beliefs and even vision. The vision has affected the functioning of the organization. This is because the stakeholders believe tha5t poverty is man made and it can be eliminated by providing support to the poor and helping them exploits their potential (Todd, 1996). Yunus has influenced the management culture in the organization. The management culture is based on openness, transparency and honesty. It also encourages innovation and learning. All transactions in the bank are carried out openly including

getting loans. Customers also provided with regular training to make them learn how the organization functions.

Moreover, Yunus has influenced banks culture as it is evidenced by the organizational structure in the bank. Unlike other banking institutions, the bank does not have a formal structure. The organizational structure has changed greatly for the last few years and also the practices in response to the needs of the customers (Carnadian broadcasting corporation, 1991). The bank has a delivery system and a receiving system. At the receiving end, there are groups and centers. The delivery system in the bank is made up of branch offices, main office and the area offices. The bank has used groups to provide loans to its customers. Customers are required to form groups of 5. The groups should have either male members or female members, but not males and females. The group members are supposed to appoint a chairperson and secretary to lead the group. The positions rotate among the parties on yearly basis (United Centre for human settlement, 2000). This to ensure the members lean how to be responsible. The chairperson is supposed to monitor how the members use the loans granted by the bank and also ensure the members are disciplined. The employees in the bank are required to work with the group members. The group members and the employees should hold weekly meetings. Bank businesses are conducted openly during the meetings. At the bottom of the organizational structure is the branch office. The branch office is the major operational unit of the bank. The branch office serves more than 120 centers and consists of a manager, 6 employees and 2 trainee employers and an accountant. The next office is area office which monitors operations of the branch offices. The zonal offices are found at the district level and are found at the top of the organizational chart (Khandker, Khalily &Khan, 1993). The zonal manager monitors the operations of the area office. The main office is responsible for supervision and development. Managing director is supposed to implement policies in the bank and maintain close contact with leaders in other offices. Like other employees in the organization, the managing director visits customers at the village level. The organizational structure has influenced the success of the bank as most people have associated the banks success with the method it uses to serve its clients. That is the groups (Holcombe, 1995). Johnson and Scholes argue that the organizational structures reflect power and influence the culture in the bank in their model and the organizational structure in the bank has influenced its culture. The organizational structures developed by Yunus have influenced the organizations culture as top leaders in the bank and employees and customers work together. The leaders and employees adhere to the organizational structure in the organization and chain of command. The top leaders guide other employees and customers in attaining organizational goals (Ahmed, 1986).

Yunus has helped develop a culture of mutual responsibility and empowerment among the employees and customers in the bank as evidenced by the artifacts in the bank (Olofsson,1993). The culture is shown by how employees in the bank interact with customers and how customers behave. Customers are supposed to agree to16 decisions that are related to discipline and self empowerment and the banks philosophy (Luthus, 2002). The banks philosophy is discipline, unity, courage and hard work in all walks of our lives. The decisions and philosophy are repeated in every meeting to make members aware and ensure members comply with the decisions and credo. Further, employees in the organization have been trained to engage with customers. The employees have been trained to help customers solve their own problems instead of the employees solving the problems. This is to help customers acquire the necessary skills to solve problems they face on daily basis like poverty and unemployment. This is evidenced by

various stories told by employees and customers. The stories give a reflection of the organizations culture. One of the employees in the bank described the attitude of employees and customers in the organization as shown below (Miller,Vandome &McBrewster, 2010).

Instead of trying to solve other peoples problems, first find out whether they have an idea how to solve their own problemsEmployees in the bank are required to visit the customers in their villages every week to build strong relationships with them and also uphold the principle of hard work and discipline as stated in the banks credo above. Employees are required to undergo training for 6 months at the branch offices so as to learn how the bank operates (Saker, 2001).

Additionally, Yunus has influenced the banks culture by influencing operation of the bank. As its founder Yunus designed a delivery system that meets the different needs of poor people in rural areas. Unlike other bureaucratic organizations were customers come for services, Yunus has encouraged employees to go for customers (Mizuno, 1998). Customers are not supposed to come for services from the bank. Customers are supposed to form groups as stated earlier. The groups formed are monitored for about a month by a bank employee to see whether the group members comply with the rules and norms established by the bank. In addition, the group members are supposed to attend training sessions for seven days. The training sessions are offered by the bank employees (Pohl, 2010). During the training period, the employees are informed of the regulations and rules in the bank. They are also informed of the chairperson duties and other things. When the employee is convinced that the members have understood how the banks operate then the group is registered. Yunus has influenced how the bank hires its employees and select customers to offer loans. The bank only selects employees who are wiling to uphold the organizational culture (Sachdeva, 2010). The bank employs employees who are wiling to work with customers at the village level by taking services to them instead of coming for services. This has contributed a lot to the success of the organization as it has been able to meet the needs of poor people in the society who are not able to get financial services from other banks. Moreover, the selection of customers to offer loans is inline with the organizations culture and mission. The bank only offers bank loans to poor people in the society and customers are required to be minority groups like women, unemployed and illiterate. In addition, customers should belong to a group (Pohl, 2010).

Further, Yunus has influenced the bank culture by influencing strategies in the bank. As a founder, Yunus has influenced the lending policy and how activities in the organization are carried out. Bank employees are supposed to discuss loan proposals openly with the customers at the village level. In addition, they are required to discuss the payment to be made and the deposits to be made openly ( Schieffer &Lessem,2010).This is in contrast to other banks that have promoted confidentially. Most of the banks discuss the loan proposals with their customers and also deposits. The lending policy at Grameen is different from lending policies used by other banks. A customer dies not require a collateral to get a loan from Grameen bank. Customers are required to comply with the rules and relegations developed by the bank so as to get a loan. Customers are supposed to repay the loan in 50 weekly installments (Stanford, 2011). Customers are not given more loans if they have not cleared their current loans. Each member in a group is supposed to save one taka each week on top of 5% of the loan amount. The savings are

accumulated in the funds borrowed by the group. The total amount accumulated should be deposited with the bank at an interest rate of 8.5% a year. The lending policy used by the bank has enabled customer from poor areas in the country aces bank loans and hence improve their lives (Labie &Armendariz, 2011).

Conclusion In conclusion, Grameen has a strong organizational culture. Grameen bank was established by Yunus to provide financial support to the poor in the society. Most of the banks do not target the poor in the society as they are considered not credit worthy. This has affected their lives negatively as they are not able to get financial support from other banks. However, Grameen bank has targeted this population (Kolbmuller, 2009). Grameen founder, Yunus believes that the poor have potentials that are not exploited and this has made it hard for them to improve their lives. Yunus has influenced Grameen culture in different ways. Yunus has influenced the mission, vision and activities in the bank. The bank has continued to eradicate poverty in the society by providing financial support. Leaders, customers and employees in the bank share the same values and beliefs as they believe poverty can be eliminated through support and exploitation of potentials. Yunus has also influenced the organizational structure and strategies. The bank has a decentralized organizational structure where employees play different roles. Employees work with customers at the village level. The lending policy in the bank only targets the poor. Thus, Yunus has had a profound impact on the bank as a founder (Yeh, 2004).

Reference Ahmed,A.(1986).Grameen Bank.the innovatory rural development bank in Bangladesh. University of Wales,p1-202 Alvesson,M.,&Sveningsson,S.(nd).Changing organizational culture. Cultural change work in progress. Routledge, p90 Bank,G.,&Watanabe,T(1993).The ponds and the poor: the story of Grameen Bank's initiative. The Bank,p1-97 Carnadian broadcasting corporation.(1991).The Grameen Bank. p1-11 Cholle,F.(2011).The Intuitive Compass: Why the Best Decisions Balance Reason and Instinct. John Wiley & Sons,p1-256 Christabell,P.J.(2009).Women empowerment through capacity building: the role of microfinance. Concept Publishing Company,p1-263 Faulkner,D.,Child,J.,&Tallman,S.B.(2005).Cooperative strategy. Oxford University Press,p105 Gup,B.E.(2003).The future of banking. Greenwood Publishing Group,p1-366 Holcombe,S.(1995).Managing to empower. the Grameen Bank's experience of poverty alleviation. Zed Books,p23

Hossain,M.(1984). Grameen bank. a hope for the poor in Bangladesh. Chr. Michelsen Institute, Development Research and Action Programme, p12-90 Hossain,M.(1988).Credit for alleviation of rural poverty: the Grameen Bank in Bangladesh. Intl Food Policy Res Inst,p19-67 Hughes,S.,&Wilknson,R.(2002).Global governance. critical perspectives. Routledge,p1-240 Khandker,S.R.(1995).Grameen Bank.performance and sustainability, Parts 63-306.World Bank Publications,p45 Khandker,S.R.,Khalily,B.,&Khan,Z.(1993).Grameen Bank: what do we know,p79 Kolbmuller,B.(2009).Microcredits. Roots, Prospects and Status Quo in Western Europe. GRIN Verlag,p1-104 Labie,M.,&Armendariz,B.(2011).The Handbook of Microfinance. World Scientific,p1-600 Looney,J.W.,&Anderson,C.L.(2002).Making progress. essays in progress and public policy. Lexington Books,p90 Luthus,C.(2002).Organizational assessment. a framework for improving performance. IDRC, p1202 McBrewster,J.,Vandome,A.F.,&Miller,F.P.(2010).Grameen Bank. VDM Publishing House Ltd.,p23 Miller,P.F.,Vandome,A.F.,&McBrewster,J.(2010).Grameen Bank. VDM Publishing House Ltd,p1 Mizuno,N.(1998).Women's participation in the Grameen bank and fertility in rural Bangladesh. Cornell University,p123 Olofsson,B.(1993).Grameen Bank.a bank for the poor. Univ., Dept. of Economics,p45 Perkins,J.,&Cannon,.M.E.(2009).Social Justice Handbook.Small Steps for a Better World. InterVarsity Press,p1-302 Pohl,F.(2010).Modern Muslim Societies. Marshall Cavendish, p1-416 Rahman,A.(1999).Women and microcredit in rural Bangladesh.anthropological study of the rhetoric and realities of Grameen Bank lending. Westview Press,p1-23 Sachdeva,A.(2010).The Grameen Bank. GRIN Verlag, p1-36 Sachdeva,A.(2010).The Grameen Bank. GRIN Verlag, p90 Saker,A.E.(2001).The secret of success. The Grameen bank experience in Bangladesh. Retrieved from http://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan002581.pdf on 4/11/2011 Schein,E.H.(.(2009).The Corporate Culture Survival Guide. John Wiley and Sons, p1-240 Schein,E.H.(2010).Organizational Culture and Leadership. John Wiley and Sons,p1-464 Schieffer,A.,&Lessem,R.(2010).Integral Economics. Releasing the Economic Genius of Your Society. Gower Publishing, Ltd.,p1-381

Schindler,S.,Kohler,J.S.,&Fleishman,J.L.(2007).Casebook for the Foundation. A Great American Secret. PublicAffairs,p42 Shah,S.,Ravallion,M..&.World Bank(1999).Bangladesh: from counting the poor to making the poor count. World Bank Publications,p1-66 Stanford,N.(2011).Corporate Culture. Getting It Right. John Wiley & Sons,p273 Teufel,F.(2008).Social Entrepreneurship: Understanding a Phenomenon and Its Nexus with Current Changes in Philanthropy. GRIN Verlag,p1-80 Todd,H.(1996).Cloning Grameen Bank.replicating a poverty reduction model in India, Nepal and Vietnam. IT Publications,p1-126 United Centre for human settlement.(2000).Strategies to combat homelessness. UN-HABITAT,p1202 Wahid,AN.(1993).The Grameen Bank. poverty relief in Bangladesh. Westview Press,p78 Yeh,S.H.(2004).The art of business: in the footsteps of giants. Zero Time Publishing,p1-279 Yunus,M.(2010).Banker to the Poor: Micro-Lending and the Battle Against World Poverty. PublisherReadHowYouWant.com, Limited,p1-414