THE EFFECTS OF ORGANIZATIONAL CULTURE ON EMPLOYEE PERFORMANCE AND PRODUCTIVITY
ABSTRACT
This study examines the effect of organizational culture on employee performance and organizational productivity. Five hypotheses were formulated and tested. The literature review examines the meaning of organizational culture, theoretical concepts in organizational culture, the functions of organizational culture, components of organizational culture, assessing the culture of an organization and the methods for changing the culture of an organization. Four banks were taken as the sample for this study. The method of data collection used in this study is mainly through the questionnaire method. Findings indicate (i) a high percentage of employees who comply to the culture of the organizations, (ii) that rigid operational procedures and policies can inhabit employee performance and productivity, (iii) lack of good communication is a factor that can prevent employee performance and productivity, (iv) a strong relationship between “entrepreneurial risk-taking initiative and organizational performance, and (v) a strong relationship between shared values among the employees of the banks and the performance of the banks. The study recommends that banks should have a clear vision and mission statements and communicate these to their employees; good leadership skills are essential to manage the organization’s culture; there must be shared values and trust; and opportunities for employees to progress and develop. Finally, it is recommended that organizations should encourage initiative, creativity and entrepreneurial culture by doing away with bureaucratic practices.
CHAPTER ONE
BACKGROUND TO THE STUDY
1.1 INTRODUCTION
Every organization is affected by its culture and every organization has a culture. It has been shown by several researchers such as Ogbor (2003), Schein (2004) and Alvesson (2003) that the performance of an organization should be explained against the backdrop of its culture. Someone walking into the lobby of Grand Hotel, Favorites Fast-Food Restaurant, Zenith Bank, all in Asaba will experience a certain atmosphere, feeling, and style that are unique. These companies, be it a bank, a hotel or a restaurant, have a personality, a charm, a feel that is unique to it. They have a cultural anchor that influence the way customers respond and the way employees interact with customers.
At Zenith Bank, for example, with its over two hundred and fifty (250) branches and business offices nationwide, a visitor experiences a kind of business focus in the ways tellers attend to the customer; there is an attitude among the tellers which exudes passion, energy and enthusiasm, and creativity in its environment. At Grand Hotel, the ambience is not only seductive but customers feel a sense of been in an oasis. The founders or the management of these successful organizations have instilled these cultural values in the companies and have been embedded in the ways business is conducted.
Whether the discussion focuses on a bank or a hotel that exudes a culture of passion or friendly customer service, culture is a part of organizational life that influences the behavior, attitudes, and overall effectiveness of employees. The culture of an organization deserves special consideration because, as Denison (1990) rightly points out, “decisions made without awareness of the operative cultural forces may have unanticipated and undesirable consequences.”
In this project, the aim is to explore how the organizational culture of four banks in Asaba affects their productivity. In this project, I will use the terms “organizational culture” and “corporate culture” interchangeably because the two concepts refer to the same phenomenon. According to Alvesson (1990), “Organizational culture” is a term that is mostly use in scholarly research and organizational discourses while “corporate culture” is practitioner-oriented.
Ogbor (2012) has argued that many organizations in Nigeria, especially in the public sector, are plagued with problems of productivity. According to the researcher, there are several reasons for this, including:
- Fuzzy vision: when the corporate vision and mission don’t inspire people; lack of strategic alignment; people don’t know where the organization is going and what it is trying to achieve in the future.
- Lack of leadership skills: when members of the organization are afraid of change. A problem culture in this regard may be characterised with the following features: fear of change, leaders lack entrepreneurial spirit, leadership style on the part of management is either too directive or too hands-off, managers do not lead, they just administrate and micromanage, and weak or absence of leadership development programme;
- Discouraging culture: when there is no shared values; lack of trust; blame culture; focus on problems, not opportunities; people don’t have fun at work; diversity is not celebrated; failures are not tolerated; people lose confidence in their leaders and systems.
- High bureaucracy: A bureaucratic culture is capable of killing creativity and growth in an organization. Bureaucratic organizational structures are characterised with these features: too many management layers; high boundaries between management layers; hierarchical coordination of decisions and actions; slow decision making process; too close monitoring of things and subordinates; rigid operating procedures and policies; and too many tools and documents discouraging creative thinking and innovative approach to strategic actions and marketing initiatives.
- Lack of initiative: when the culture of the organization does not promote entrepreneurial and risk-taking initiatives. In this kind of culture, employees are poorly motivated and dis-encouraged; employees do not feel their contributions make a difference; management fails to engage the organization effectively; people work defensively and not creatively, they do their job, and nothing more.
- Poor vertical communication: An evidence of a problem culture is when there is poor vertical communication and management insulate themselves from the rest of the employees in terms of accessibility. In such a culture,people have no clue of the big picture and do not feel that their contributions are important; too much uncertainty; people don’t know what top-managers are thinking and planning. The consequence of such an organization communication system is that management are out of touch with prevailing market conditions and customer expectations.
- Poor cross-functional collaboration: A sign of problem culture may be related to functional mindset; lack of cross-functional goals and cross-functional collaboration spirit; functional, no enterprise-wide business process management; no cross-functional management committees; lack of or powerless cross-functional teams.
- Poor teamwork: Another evidence of a problem culture is when there is no organizational commitment to team culture; lack of shared and worthwhile goals; weak team leaders; team members who don’t want to play as part of a team are tolerated; teams are too large; and lack of shared rewards.
- Poor Idea and Knowledge Management: Finally, a problem in the culture of the organization may manifest itself when cross-pollination of ideas is not facilitated; when there are no strategies for managing knowledge in the organization; when there is the predominance of management’s “know-it-all” attitude; and an attitude of “not invented here” syndrome.
As pointed out above, the purpose of this study is to examine the effect of organizational culture on the performance of selected banks in Asaba.
1.2 STATEMENT OF THE PROBLEM
Organizational culture affects the performance and productivity of organizations in a tremendous way. The Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi (2010) argued that poor corporate governance and poor corporate culture were responsible for the problems faced by Nigerian banks in the post-consolidation era. In several instances, it has been shown that most employees in the organizations (banks) do not have the knowledge of its vision, mission and strategic goals.
Studies have indicated that the leaders of most banks in Nigeria lack the necessary skills for their banks to compete effectively and employees do not share values expressed in the organization’s mission statement. Secondly, many of the banks have bureaucratic culture and do not promote entrepreneurial and risk-taking initiatives. Thirdly, there is no appropriate communication between management and employees Fourth, cross-functional collaboration and team work in the banks is poor.
1.3 OBJECTIVES OF THE STUDY
The general objective of this study is to achieve an understanding of how the culture of an organization affects the performance of the organization. This is done by examining the organizational culture of some selected banks in Asaba. Specifically, the study aims at achieving the following five objectives:
- To know if there is any relationship between an organization’s shared vision, mission and strategic goals and its performance and productivity.
- To know if there is any relationship between the culture of an organization, the skills of its leaders and its competitiveness and performance and productivity.
- To know what extent shared values among members of the
- To know if there is any relationship between entrepreneurial and risk-taking initiatives (entrepreneurial culture) and organizational performance and productivity.
- To know if there is any relationship between open communication, cross-functional collaboration and team-work and organizational performance and productivity.
1.4 RESEARCH QUESTIONS
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