IMPACT OF ORGANIZATIONAL CULTURE ON EMPLOYEES PERFORMANCE

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CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND TO THE STUDY

Organizational culture refers to a system of shared assumptions, values, and beliefs that show people what is appropriate and inappropriate behavior. These values have a strong influence on employee behavior as well as organizational performance. In fact, the term organizational culture was made popular in the 1980s when Peters and Waterman’s best-selling book In Search of Excellence made the argument that company success could be attributed to an organizational culture that was decisive, customer-oriented, empowering, and people-oriented. Since then, organizational culture has become the subject of numerous research studies, books, and articles. Organizational culture is still a relatively new concept (Daft, 2003). In contrast to a topic such as leadership, which has a history spanning several centuries, organizational culture is a young but fast-growing area within management.

Culture is largely invisible to individuals just as the sea is invisible to the fish swimming in it. Even though it affects all employee behaviors, thinking, and behavioral patterns, individuals tend to become more aware of their organization’s culture when they have the opportunity to compare it to other organizations (Amah, 2009). The organizing function involves creating and implementing organizational design decisions. The culture of the organization is closely linked to organizational design. For instance, a culture that empowers employees to make decisions could prove extremely resistant to a centralized organizational design, hampering the manager’s ability to enact such a design. However, a culture that supports the organizational structure (and vice versa) can be very powerful (Daft, 2003).

An organization’s culture may be one of its strongest assets or its biggest liability. In fact, it has been argued that organizations that have a rare and hard-to-imitate culture enjoy a competitive advantage. In a survey conducted by the management consulting firm Bain & Company in 2007, worldwide business leaders identified corporate culture to be as important as corporate strategy for business success. This comes as no surprise to leaders of successful businesses, who are quick to attribute their company’s success to their organization’s culture (Garvin, 1998).

Culture, or shared values within the organization, may be related to increased employee performance. Researchers found a relationship between organizational cultures and employee performance, with respect to success indicators such as revenues, sales volume, market share, and stock prices leading to realization of the organizations goal. At the same time, it is important to have a culture that fits with the demands of the company’s environment. To the extent that shared values are proper for the company in question, employee performance may benefit from culture. For example, if a company is in the high-tech industry, having a culture that encourages innovativeness and adaptability will support its performance (Amah, 2009). However, if a company in the same industry has a culture characterized by stability, a high respect for tradition, and a strong preference for upholding rules and procedures, the company may suffer because of its culture. In other words, just as having the right culture may be a competitive advantage for an organization, having the wrong culture may lead to performance difficulties, may be responsible for organizational failure, and may act as a barrier preventing the company from changing and taking risks (Caves and Porter, 1977).

In addition to having implications for employee performance, organizational culture is an effective control mechanism dictating employee behavior. Culture is a more powerful way of controlling and managing employee behaviors than organizational rules and regulations. For example, when a company is trying to improve the quality of its customer service, rules may not be helpful, particularly when the problems customers present are unique. Instead, creating a culture of customer service may achieve better results by encouraging employees to think like customers, knowing that the company priorities in this case are clear. Therefore, the ability to understand and influence organizational culture is an important item for managers to have in their tool kit when they are carrying out their controlling function as well as their organizing function to enhance employee performance and promote the realization of the organizational goals.

Several researches on how to optimize employee performance with a view to realize organizational goal have taken place in the past two decades. It has been argued that strategic group membership and associated collective behaviours are the primary sources of durable differences in firm profitability and effective employee performance (Caves and Porter, 1977). This implies that the collective behaviour of organization members which culture helps to control is important to its effectiveness. In relation to this argument, Glasister and Buckley (1998) identified organizational culture as one of the factors responsible for organizational effectiveness and employee performance. A strong organizational culture (that is, one in which everyone understands and believe in the firm’s goal, priorities and practices) that encourages the participation and improvement of all organization’ members has been identified to be one of its most important assets (Denison, 1985). However, the researcher seeks to analyze the impact of organizational culture on employee performance.

1.2   STATEMENT OF THE PROBLEM

It is widely acknowledged in current discussion of organizational performance that managers have to widen an understanding of their cultural settings if their organizations are to perform effectively (Hodgetts & Luthans, 2013; Agwu, 2014). Increased competition, globalization, and alliances have led to a greater need for a performance-based organizational culture. This has become necessary because organizations are saddled with a lot of management crises that stem from their organizational culture (Agwu, 2014). These problems tend to impede progress toward achieving high employees’ performance.

A lot of attention has been given to organizational culture and related studies (Ojo, 2010; Omoniyi, Salau,. & Fadugba, 2014). The extent of the relationship between organizational culture and employees’ performance has been the subject of several researches in many fields, including management, organizational behaviour and industrial organizations (Ojo, 2010, Agboola, 2013, Alharbi & Alyahya, 2013; Omoniyi et al, 2014). Theoretical arguments as well as empirical evidence lend credence to the view that organizational culture is related to employees’ performance (Cameron & Quinn, 2006; Zheng, Yang & McLean, 2010; Ogbonna & Haris, 2000; Agwu, 2014; Omoniyi et al, 2014). However, Ojo (2010) argues that there is no clear conclusion on the exact relationship between organizational culture and employees’ performance. Similarly, Ogbonna and Harris (2000) aver that despite many research works done in this area and contributions from various fields, there is no generally acceptable causal relationship between organizational culture and employees’ performance. Therefore, more research is needed in understanding and establishing relationship between organizational culture and employees’ performance.

Furthermore, there is indeed a expanding body of literature about questions of cultural influences on organizational behaviour (Bradley & Parker, 2001; Abu-Jarad, Yusof & Nikbin, 2010; Eccles, Ioannou & Serafeim, 2012). However, some of these papers consist of accounts and recommendations based on Western practice. Consequently, not much of extant literature on the impact of culture on employees’ performance dwells on developing countries. This study was intended to tackle this paucity by empirically examining the impact of organizational culture on employees’ performance in the Nigerian banking sector.

1.3   OBJECTIVES OF THE STUDY

The general objective of this study is to analyze the effect of organizational culture on employee performance and the following are the specific objectives:

1. To examine the effect of organizational culture on the employee performance.
2. To identify the type of organizational culture capable of enhancing employee performance in an organization.

• To identify factors hindering the employee performance in an organization.
  • RESEARCH QUESTIONS

1. What are the effects of organizational culture on the employee performance?
2. What are the types of organizational culture capable of enhancing employee performance in an organization?

• What are the factors hindering the employee performance in an organization?

1.5   RESEARCH HYPOTHESIS

The following proposed hypothesis will be considered for the study:

H_O: There is no significant relationship between the organizational culture and employee performance in an organization

H₁: There is significant relationship between the organizational culture and employee performance in an organization

1.6   SIGNIFICANCE OF THE STUDY

This study on the effect of organizational culture on employee performance towards the attainment of organizational goals is significant in the following ways:

It will enlighten managers and other stakeholders in Nigeria on the need for better organizational culture as the result from this study will guide them in selecting and adopting better organizational culture in the organization for better employee performance.

This research will be a contribution to the body of literature in the area of the effect of organizational culture on the performance of quantity surveying firms in Nigeria, thereby constituting the empirical literature for future research in the subject area.

1.7   SCOPE/LIMITATIONS OF THE STUDY

This study on the impact of organizational culture on effective employees performance towards the attainment of organizational goals will cover all the corporate organization in Nigeria by carefully examining their organizational culture and its effect on employee performance with a view to attain the organizational goal. The study will also cover an overview of factors militating against employee performance. The study will be limited to MTN Nigeria in Lagos-Island, Lagos.

LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8   DEFINITION OF TERMS

Culture: the arts and other manifestations of human intellectual achievement regarded collectively.

Performance: The accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed. In a contract, performance is deemed to be the fulfillment of an obligation, in a manner that releases the performer from all liabilities under the contract.

Organization: A social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a management structure that determines relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open systems–they affect and are affected by their environment.

Employee: Employee is a person employed for wages or salary, especially at non-executive level.

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