Impact Of Organizational Culture On Employee Performance

This study defines and measures how performance is affected by organizational culture and our objective of this study is to examine and measure them. The study is expected to enable their effective role of organizational culture and help the managers to implement the culture and help to increase the efficiency of performance and productivity. After analysis of wide literature, we have come to know that both variables are positively correlated with each other and organizational culture and employee performance has strong relationship. Cultures that are agreed upon by the employees working in the same organizations showed that the level of performance increase and helps the business grow effectively. Their relationship can be further explored through more deep research.

Keywords: Employee Performance, Organizational Culture, Productivity

Introduction

Organizational development can be improved if we know that on which factors it depends upon. Organizations and managers of organization should know about the employees, their commitment and their needs, through this productivity can be increased. Managers should arrange meetings with new employees to tell them about their norms, values and mission of the organization which helps in understanding the organizational culture. This is the responsibility of managers to arrange meetings about organization’s culture with the new employees that will help their employees to know the organization’s system. Managers should develop and maintain environment in the organization through which employees can learn something. If employees know the organizational culture then they will perform well. Employee’s performance is back bone for the industry and it plays a vital role in the development of organization. Therefore organizations aim to get full attention of the employees to their work and they should be loyal. The growths of multi-national companies have also increased the responsibilities of managers. From how long a manager can handle the HR, equipment, and supplementary tools in an organization i.e. it was very difficult task to manage a huge number of employees which come from different culture. Manager has not only a duty to manage HR functions but also they have to take care of their cultural background which was an immense challenge in achieve their organization goals and targets.

How can we define Culture?

Forehand and von Gilmer (1964), defined culture as a distinguish attribution chest that articulates organization itself and from others as well. According to Hofstede (1980), it’s a massive mind thinking’s that brought difference among members of one group to another. Organization cultural concept was first come into sight in 1970s and 1980s (e.g., Hofstede, 1981; Ouchi & Price, 1993; Pettigrew,1979; Schwartz & Davis, 1981), and in a little while this concept became one of the most prominent but in management research and practice it also became most disreputable concept (Crane, 1995; Jarnagin& Slocum, 2007).According to Geertz (1973); culture is “and previously conveying pattern of meanings embodies in symbols, a system of innate commencement articulated in symbolic form through which men can correspond, achieve and build up their knowledge about and their approach towards life. Robins (2000) compared this with social glue that helps to grasp the organization jointly. According to Robins (2000), Organizational culture refers to a system of common meanings held by members that makes a distinction among different organizations. Strong organization cultures have an enormous control over behavior of its members. It is considered that national culture take priority over an organization’s culture because of its huge impact on employee performance.

Organization cultural types:

Normative Culture: Organizational norms are defined earlier in normative culture and employee should follow all the rules of the organization.

Pragmatic Culture: In a pragmatic culture, there is no rule and regulation; they should only satisfy their customer. This is their duty.

Academy Culture: In this type of culture, organizations hire the skilled employees and they don’t interfere in their work. They follow the rules which they made for themselves.

Baseball team Culture: A baseball team culture is a culture in which organizations think that their employee is very important asset for them and they never set rules for them. This type of culture is followed by numerous organizations such as, advertising agencies, event management companies, and financial institutions.

Club Culture: In this culture, organization hire specialists and they task them in which they are best. These organizations do appraisal regularly.

Fortress Culture: This culture is followed in the organizations in which they can fire any employee anytime. If organization is not performing well, they can fire their employees and an example for such cultures is Stock broking industries.

Tough Guy Culture: Timely performance is appraised in a tough guy culture and supervisors supervise them and give instructions on their work.

Literature review

Concept of organizational culture

Culture is stated as “the direction of life for a whole society”. The culture of a group defined by Schein (1990), An outline of communal necessary gatherings that the group learned as it solved its problem of outdoor variations and inside incorporation that has worked as much as necessary to be considered legitimate and consequently to educate fresh members in the correct way through which they were observed, assume and be aware of problems incorporated by such things.

In any institution, every employee wants to be favorable in an organization and wants an environment which will be suitable for him and then he will give his best to the organization and wants organizational development. This is the challenge for the juniors who want to impress his boss and want a culture which will helpful for him.

Any organization cannot be complete without Organizational culture which shows its importance. Johnson and Scholes (1999) defined organizational culture as “it is encompassed of essential ideology, notions as well as verdicts that are shared by members of an organization”. The features of a dominant Journal of Quality and Technology Management organizational culture includes a flexible learning of environment in which environmental changes can be absorbed and consisting of the workforce that is highly friendly, hardworking, powerful, responsible and well inspired (Barratt, 1992). “Indisputably organizational culture has been documented as an essential aspect in bringing the organizational success in getting most wanted business performance outcomes” (Irianto, 2005; Sigler and Pearson, 2000; Madu, 1997). Organizations in private sector are well-known by their competitive, performance based reward system, diverse and office conflict among employees and groups, and other responsibilities and discharging of employees.

Performance is something which is done by the employees. This concept tells us the difference of performance as of conclusion. Individual’s performance results as well as their influences are considered as outcomes which depicts that there are several more determinable factors of outcomes rather behaviors and actions of an employee.

Campbell states that performance cannot be directly observed. It consists of the work an employee done. However, performance is under the control of some individual.

Hypothesis

H1: Organizational Culture is positively related to Employee Performance.

H2: Organizational Performance is positively related to Employee Performance.

Theoretical framework

Employee Performance

Organizational Performance

Methodology

This section includes the discussion we made about methodology. Our discussion is determined through questionnaire and participants.

Questionnaire

Collection of Data was made through a questionnaire. A six point Likert Scale was adapted to gauge the variables. Total number of 150 questionnaires were distributed and out of which 110 were received.

b) Population and Sample

Population for present study includes employees of different organization. Sampling technique was suitable for us so we used it and distribution of questionnaires was done among employees of diverse organizations of Rawalpindi, Chakwal and Islamabad.

Results

The variables were analyzed by Bi-variate Correlation at first whereas the outcome of this statistical operation is quite feasible. The factor table shows the correlation coefficient of the three variables according to our Hypothesis i-e H1 & H2. These hypotheses were tested in order to find out the association of independent and dependents.

Correlation analysis

Correlations

Org. culture

Employee

performanceion:

ystem of inherited

Org. culture

Pearson Correlation

1

-.270**

Sig. (2-tailed)

.007

N

100

100

Employee performance

Pearson Correlation

-.270**

1

Sig. (2-tailed)

.007

N

100

100

**. Correlation is significant at the 0.01 level (2-tailed).

The above correlation shows that the dependent (employee performance) are significantly correlated to the independent variable but the other dependent variable (organizational culture) is relatively less correlated.

Reliability Statistics

Cronbach’s Alpha

N of Items

.831

27

Conclusion

Everyone who works in an organization has different norms and values. When he joins the organization he should know the culture of that organization and then follow them. Culture is made for organizational development. An organizational performance can be increased through improving employee performance which is due to strong impact of organizational culture. As per determined by Gallagher (2008), from 7600 small and medium businesses the relationship among cultural and organizational performance was checked which is given in More than 60 research studies between 1990 and 2007. Results of our study provide evidence that there is a positive relationship between strong culture and performance development.

Conclusion of our study shows that there is a positive relation among organizational culture and employee’s job performance. Our research demonstrates that everyone in the organization comes from diverse culture and they try to tune their norms and values with organization’s norms and values. When an employee accepts the culture of organization then he performs well. According to Gallagher (2008), positive employee performance can cause the profit of an organization.

Development of organization is very easy when there is a common way of living and everyone is following the same norms and rules. In our study, it is observed that successful organizational culture really helps fresh employees to accept and follow the same culture which organization has and thus they adjust easily in any organization and can achieve competitive advantage under any specific circumstances. Previous study tells thatif employee does his works with loyalty and performs well with group and it plays very significant role to implement the values and ideas of the organization and hence increasing the organizational performance.