Impact of Organizational Culture on Employee’s Performance

Industrial Engineering Letters ISSN 2224-6096 (Paper) ISSN 2225-0581 (online) Vol.5, No.9, 2015 www.iiste.org Impact of Organizational Culture on Employee’s Performance Nadia Nazir, Dr.Shazia Zamir National University of Modern Languages, Islamabad Abstract This present study was an effort to explore the impact of organization culture on employee’s performance. The objectives of study were to determine the relationship between organizational culture and employee’s performance, to find out the gender based differences regarding employee’s performance and to find out the gender based differences regarding organizational culture. Role based performance and organizational culture questionnaires were used. The 20 items questionnaire relating employee’s performance and 17 items concerning organizational culture were used to collect the data for study. Sample of 60 employees were taken from different organizations. Mean, standard deviation, t-test and Pearson correlation were used for statistical analysis. The findings indicates that there is positive relationship between employees performance and organizational culture and also indicates that there is no significant difference in responses between gender of employees regarding organizational culture and employee performance. Keywords: organizational culture, employee’s performance Introduction Organizational culture is the combination of expectations of organization, experiences, philosophy and values. Organizational culture is also called corporate culture. Organizational culture influences on performance and productivity of organization. It gives guidelines for quality of product, punctuality, safety and other factor affecting on environment. Organizational culture is unusual for every organization and it is very problematic to change it. An employee performance based upon the combination of good working skill and work environment. There is need of some sort of motivation to get the good performance from employees. Motivation can come from salaries and other incentives. Productive work can be created by effective motivation. Employees feel that an organization has made a commitment to them to perform better. Organizational commitment offers a good pay and allowances, offer for employee’s higher education costs, give a training that keeps employee updated and gives the chance of promotion. There are some environmental factors over which an employee has no control. For example; staff in organization has less cooperative, with the lack of resources, employee may leave the organization, because of overload of work the employee may be under stress or confused, through effective employee evaluation process the manager gives his input on the performance of employee and employee come to know what he learned during the job. Manager create a plan for employee that how can he develop and improve his performance. Literature Review The idea of culture has taken from learning process that based upon organized portion of possessions (Titiev, 1995). By Schein (1992) organization culture is the sample of basic assumptions that a given group has imaginary, exposed or developed in learning to manage with its problems of exterior variation and vital combination. First time organizational culture has been defined by Administrative Science Quarterly (Pettigrew, 1979). Organizational culture is defined as philosophies, a set of ideas, attitude, feelings, assumptions, hope, thoughts, norms and values. Performance of employee is calculated against the performance standard by the organization. Good performance means that how employee performed in the task that assigned to him. (Kenney et.al, 1992).Performance is a main multidimensional build aimed to get results and has a strong link to planned objectives of an organization (Mwita, 2000). The work of employee is made up by his achievement of mission of organization that shows the limits of performance (Cascio, 2006). The achievement of objectives of organization has been designed based on employee performance (Richardo, 2001). An employee’s achievement when he gains the goals of organization at workplace is called performance (Cascio, 2006).Different researches have identifies different thoughts, attitudes and beliefs of performance as it helps in measurement of input and output effectiveness measures that guide transactional relationship ( Stannack, 1996). There are different types of culture. Subculture is defined as in organization segments, different sets of norms, values and beliefs on basis of environmental areas, job necessities and goals (Schein, 1995). The employee’s obligation with organization is based on employee awareness that effects upon culture (Lok, Westwood and Crawford, 2005). The values, beliefs and attitude that hold the employee in culture must be strong (Deal and Kennedy, 1982). Strong organizational cultures give positive effect on the performance of employee (Martins & Martins, 2003). The rules must be vital for employee. The policies, actions and goals planned by high authority, they all depends on attitude of employee then organization must get benefits with it. 31 Industrial Engineering Letters ISSN 2224-6096 (Paper) ISSN 2225-0581 (online) Vol.5, No.9, 2015 www.iiste.org Weak culture is opposite to strong culture, an employee does not share their ideas, beliefs, values and norms (O’Reilly et al, 1991). Weak cultures give negative effect on employees because they are openly connected to enlarged earnings (Harrison, 1993). Culture is a set of customs, values, norms and beliefs that influence on an organization (Khorshidi, 2008.).There are different personalities in organization. Organization can be taken as humanity, warmth, wise, and modernism and have special characters like these. In organization these characters are used to predict the employee’s behavior (Khorshidi, 2009). Culture comes from a culture of organization but it is not the culture of society. In each organization beliefs, attitudes and pattern of culture are influenced (Khorshidi, 2009). Farjad (1989)believed that culture have two parts that are material culture which involve all facilities, buildings etc and spiritual and immaterial culture which includes values, laws, customs, arts and philosophies. In many studies it is shown that there is a significant relationship between employee performance and organizational culture, if employees have common perceptions then they will more cooperative with each other to achieve their goals (Eric, 2010). Culture is regards as fact that examine properties and characteristics so if we accept organizational culture then beliefs and perceptions shared between the persons and ideas, policies, rules, procedures of organization will see and feel ( Morgan, 1993 ). Every organization have organizational culture and sub cultures exist in every organization that needs absolute knowledge is sign of their cultural characteristics (Zahedi, M. 2004). There are seven features for organization those are creativity and risk, attention to detail, result-oriented, staff, transformation, transforming and stability (Robbins, 1991). Wallach (1983) used cultural indicators of organizational culture those are bureaucracy, innovative and supportive culture. Bureaucracy requires demand, rules and arrangement. Innovative culture gives independence to colleagues in thinking, giving, and opinions to work. Supportive culture communication plays vital role through friendship, cooperation and harmony. A study related to Pakistani’s organizational culture has been conducted by Mujeeb Ehtesham, Tahir Masood Muhammad & Shakil Ahmed Muhammad (2011) at Comsats University. The purpose of the research is to find out the relationship between the components of the organizational culture and performance management practices. The result of the study has indicated that involvement of the employees within the organization is highly interrelated with the uniformity and flexibility. The components of the organizational culture have also positive relationship with the performance management practices as, the more comfortable culture has been given to the employees the more satisfaction among the performance will occur. Fakhar Shahzad, Rana Adeel Luqman, Ayesha Rashid Khan & Lalarukh Shabbir (2012) have written an article on the describing and determining the organizational culture and their impact on the organizational performance. The research has indicated that if the employees have the same norms and values that organization have then they can shows the good impact on the performance of the organizational culture. Another focus of the research is also on the balance between the organizational culture and the performance as, this balance is helpful in maintaining a satisfactory level of the performance among the organizations. Further results are different with theory that confirmed organizational culture able to improve organizational efficiency. Relationship between the organizational culture and performance have been investigated by the (Alharbi Muhammad Awadh & Alhaya Muhammad Saad 2013) the results of the study has also indicated that the significant relationship between the norms of the employees and organization and focus of the organization should be on designing the strategies that can play role in increasing the level of the employee performance.v There is another indicator that shows that cooperate culture has also an impact on the performance of the employee commitment to the organization (Ezekiel Saasongu Nongo & Darius Ngutor Ikyanyon 2012). Another study was conducted to investigate the effects of the organizational culture on the job’s satisfaction level of the university faculty of the Public Sector of Pakistan. The findings of the study suggested that the culture of the Public sector of Pakistan needs to be enhanced so that the performance of the employees should be improved and reach the satisfaction level in the universities of Pakistan (Syed Munir Ahmed Shah and Mohammad Salih Memon 2012). It is commonly believe that organizational culture has a great impact on the performance of the organizations (Engr. Hafeez Ur Rehman 2012). There are other dimensions of the organizational culture that may play role in the performance of the employees within the organizations. Research has also indicated that if the employees have same norms and values that organization then this will increase the performance of the employees towards achieving overall goals of the organization. Literature has suggested that the organizational commitment and organizational effectiveness has great impact on different levels of the employees who are working within the organization as, low-level employees if provided with a bus service that it will leads towards the increase in the fulfillment of the organizational 32 Industrial Engineering Letters ISSN 2224-6096 (Paper) ISSN 2225-0581 (online) Vol.5, No.9, 2015 www.iiste.org commitment as this commitment refers to the adaptability, turnover etc. It does not refer to the absenteeism, or operating costs. Study proved that organizational commitment is equally related to the organizational effectiveness (Harold L. Angle and James L. Perry 1981). Another study was aimed to investigate the performance of employees across various professions was tested by using Investment Model (Farrell & Rusbult, 1981) that has been used with the organizational commitment and organizational citizenship behaviors. In this research the organizational commitment was responsible for measuring organizational citizenship behaviors whereas components of Investment Model like satisfaction, alternatives, and investments will be the predictor of both organizational commitment and organizational citizenship behaviors. The results have proved the hypotheses that Investment Model is responsible for providing the antecedents and outcomes related to the organizational commitment. (Lucy Bayer, 2009). The culture of the organization has been derived from two resources which are as follows • For developing the culture of the organizations norms, attitudes and values of the senior executives is involved. Whole culture of the organization revolves around the charismatic leadership. • The people who have been working previously in the organizations have helped to solve the problems that may face by the new employees. Norms have been made from such incidents that myths may transfer to the new employees within the organization. For the development of the organizational culture three things are required as: • Commitment (based on common philosophy and purpose) • Competence (indicate the development and reward in key areas) • Consistency (purpose is to spread the competence by attracting, developing, and retaining the right person for the right job) There are two main approaches of the models of culture as type models. These models are responsible for the classification of the organizational culture from one to the limited number of the groupings. In lieu of the models one model suggest that there are four type’s organizational culture and each represents the structure and its sets of system. These four types are: Power Task Role Person Profile Models: These types of models do not try to categorize the organizational culture, but they try to identify and explore its key characteristics. When such identification have been occurred than they have been compared to the culture that organization demands and needs to operate and any appropriate changes that are required to be taken must be made. The result of the research has shown that performance of the employee does not directly influence by the organizational culture. If it has mediated of job satisfaction along with it then organizational culture influence performance of the employees. The other variable that is related to organizational commitment shows direct influence on the employee performance and indirectly influence through job satisfaction (Jack Henry Syauta, Eka Afnan Troena, Margona Setiawan and Solium 2012) Human Capital Institute has conducted a research on the connecting organizational culture to the performance. The purpose of this research is to deeply study the thoughtful information for supporting and how structure a performance culture impacts on the business efficiency and economic performance (Meehan, P., Gadiesh, O. & Hori, S. (2006). The whole research has indicated that the accountability of the high level job performance is a continuous process rather than the one-time event. Organizations have been established on the purpose to measure all things that are related to the performance and the work that have been occurred within the organizations make them to take correct actions that are related to change or must be required to be taken in time. The term organizational culture has derived from the concept of the culture theory. The people who have contributed in this field are Alvesson (2002); Chhokar, Brodbeck, and House (2007); Denison, Haaland, and Goelzer (2004); Hatch (1993);Hofstede (1980); Hofstede et al. (1990); and House, Hanges, Javidan, Dorfman, and Gupta (2004). They did influential work on the theories of the organizational culture. Their focus is on the separate set of team or group leadership that have a high level of significance on the organizational culture. They define organizational culture as a separate entity from a societal culture. The approaches of the organizational culture have been classified into three forms as dimension approach, interrelated structure approaches and typology approaches. Dimension approaches focuses on the idea the organizational culture must be checked with all the related variables that are of interest. Whereas, interrelated structure approaches focuses on linking the concept of the organizational culture to other related paradigms and features. Typology approaches have worked on the already existed criteria on the basis of which they cluster and divide the organizations into different classifications by not defining any relationship of those characteristics. Hotch and Cunliffe (2006) have worked on the organizational culture and they have given the generic model and they have given four domains that are a) organizational culture and identity that focuses on the real 33 Industrial Engineering Letters ISSN 2224-6096 (Paper) ISSN 2225-0581 (online) Vol.5, No.9, 2015 www.iiste.org worth and appropriate existence of the organizations. b) Organizational strategy that focuses on the plans that have follow by the organization for achieving goals c) organizational structure, design and processes leads towards the overall analysis of the organization which work as a representation and shows the actual form of organization. d) Organizational performance and behavior leads towards the idea regarding the achievements and fulfillments of the goals of the organization. Role theory is among those theories that have been used in the various fields of psychology as social psychology, organizational behavior, sociology and human resource management since 1930’s(Theresa and Amir 1998).Researchers who have been contributed in these fields have illustrated that roles plays vital role in the social structure (Mead, 1934; Turner, 1978) and these roles have been recognized as a central understanding in order to know about the employee behavior in the organization (Katz & Kahn, 1978). Methodology The present study was descriptive in nature. Role based performance’s questionnaire by Welbourne, Johnson & Erez (1998) and organizational culture by (Zammuto & krakower 1991) were used for data collection. These questionnaires were used to probe the impact of organizational culture on employee’s performance. A random sample of 60 respondents was selected from different organizations. The respondents have to rate these statements on 5 point scale vary from strongly agree to strongly disagree. For data analysis mean, standard deviation, t-test and Pearson correlation were applied. Results Table No 1: Cronbach’s Alpha Reliability of the Scales Cronbach’s Alpha Employee performance N of items Assessment Scale 20 .87 Organizational culture Scale N of items Cronbach’s Alpha 17 .79 Table No.1 shows the Cronbach’s Alpha reliability of the employee’s performance assessment scale is .87 and organizational culture is .79. Table 2: Correlation between Employees’ Performance and Organizational Culture Variables Mean S.D N Organizational culture 4.20 4.110 P Sig (2-tailed) 60 .771** .000 Employee performance 4.01 3.186 60 **. Correlation is significant at the 0.01 level (2-tailed). Table No.2 shows that correlation value (.771** ) is highly significant at .01 level of significance, so the null hypothesis stating that there is no significant relationship between employees’ performance and organizational culture is accepted and it is concluded that there significant positive relationship found between employees’ performance and organizational culture. Table No. 3: Comparison between Male and Female Employees (t-test) Variable N Mean t value Df Sig Male 24 35.73 Organizational .589 58 .59 Female 36 34.86 culture *P<0.05 **P<0.01 Table No.3 shows mean scores and t-value of male and female employees. The calculated t value (.589) is not significant at 0.05 level of significance .This shows that there is no significant difference in responses between male and female employees regarding organizational culture. Table No. 4: Comparison between Male and Female Employees (t-test) Variable N Mean t value Df Sig Male 24 4.31 Employee .836 58 .41 Female 36 4.03 performance *P<0.05 **P<0.01 Table No.4 shows mean scores and t-value of male and female employees. The calculated t value (.836) is not significant at 0.05 level of significance .This shows that there is no significant difference in responses between male and female employees regarding employee performance. 34 Industrial Engineering Letters ISSN 2224-6096 (Paper) ISSN 2225-0581 (online) Vol.5, No.9, 2015 www.iiste.org Discussion The relationship between organizational culture and employee performance has been proved by many researches (Ogbonna & Harris, 2000, Rousseau 1990, Kotter & Heskett 1992, Marcoulides & Heck 1993). This present study focuses on impact of organizational culture on employee performance. This study found significant positive relationship between employees’ performance and organizational culture but the results of Raka (2003), Ghani (2006), support that there was no contact of organizational culture to employee performance where as the research results of Aluko (2003), Swanepoel (2009), Ebtesbam et al (2011), Ahmad (2012) affirmed that organizational culture gives the positive impact on employee performance. This research also found that there is no significant difference in responses between male and female employees regarding organizational culture and employee’s performance where as the research result of Khorshidi and Panji (2012), Schein (1980), March et al (1958), Dension (1990), Peters and Waterman (1982), Quinn and Kenned (1982) incoherent with this research. Recommendations The main objective of this research was to explore the impact of organizational culture on employee performance. Higher bodies should set realistic norms and standards so that employees can achieve these standards. The positive association between culture and performance helps in improving productivity of organization. Efficient and effective management of work force employees can be stronger by organization strong culture. Healthy organizational culture improves and runs competitive environment. The employee commitment helps in improving performance based organization sustainability. References Ahmad, Shalik M. 2012. Impact of Organizational culture on Performance Management Paractices in Pakistan, Businness Intelligence Journal, 5. Alharbi.M and Alyahya.M(2013). Impact of Organizational Culture on Employee Performance: International Review of management and Bussiness Research: Vol.2 Issue.1 Aluko, M.A, 2003. The Impact of Culture on Organizational Performance in Selected Textile Forms in Nigeria, Journal of African Studies 12 (2): 164-79 Alvesson M. (2002). 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