Impact of Organizational Culture on Employee Performance

Impact of Organizational Culture on Employee Performance

Organizational culture comprises the unwritten customs, behaviours and beliefs which determine the ‘rules of the game’ for decision making, structure, and power. It includes a system of ideas and concepts, customs, traditions, procedures and habits for functioning in a specific macro culture. It is implicit, invisible, intrinsic, and informal awareness of the organization which directs behaviour of the employees and which results from their behaviour. It is based on the shared history and traditions of the organization combined with the current leadership values. In effect, culture dictates the way the organizational functions are performed. The organizational survival tactics which facilitate assimilation and personal success depends on the organizational culture.

There are many functions of the organizational culture. These are (i) it creates a clear distinction between one organization with another, (ii) it brings a sense of identity to the employees of the organization (iii) it facilitates the emergence of a commitment to something wider than employees’ individual self-interest, (iv) it is a social adhesive which helps unify the organization by providing the right standards to be performed by the employees, and (v) it is a mechanism of ‘meaning and control’ which guides and shapes the attitudes and behaviour of the employees.

Employees are seen as part of the organization. They are vital component of the organization. They are involved in the organizational day-to-day activities. They are the main thrust of the organization since they manage all those factors which keep the organization running. They ensure that the organization continue to survive or exist. The organization success depends on its employees’ performance. Hence, employees have to be pro-active, responsive, hard-working and diligent to ensure that they remain completely ahead of their rivals. Further, organization’s overall performance is highly dependent on the employees’ performance levels through the employee engagement. Hence, employees’ performance can be seen as an operation in which the employees can effectively accomplish the task delegated to them.

The employees’ performance is the degree of the achievement to which the employees fulfill the organizational mission at the workplace. The job of the employees is to build up by degree of achievement of a particular target or mission which defines boundaries of their performance. For keeping ahead of the competition, the organization is required to have employees with a consistent high performance. It is because employees are the key element of the structure of the organization and the success or failure of the organization depends highly on its employees’ performance. The employees’ performance affects positively or negatively the organizational performance at large.

The key to a successful organization is to have a culture based on a strongly held and widely shared set of beliefs which are supported by the structure of the organization and a well planned strategy. When the organization has a strong culture then three things happen. These three things are (i) employees know how the management wants them to respond to a situation, (ii) employees believe that their expected response to a situation is the proper one, and (iii) employees know that they are going to get recognition and appreciation for demonstrating the organizational values.

Organizational culture helps build shared values and unified efforts among employees and hence, it contributes to achieving the organizational objectives. Employees are to know the objectives of the organization and how to reach them, what are the tasks and responsibilities and how they are to be executed and the employees behave accordingly. Hence, the employees have higher performance and achieve the performance targets.

The organizational culture defines how the employees are to behave in the organization. The culture consists of shared beliefs and values established by the management and then communicated and reinforced through various methods, ultimately shaping the perceptions, behaviours and understanding of the employees. Organizational culture sets the context for everything the organization does.

Although there is not a universally accepted definition, organizational culture is defined as a concept which orients the employees, guides them in their behaviour and communication, and shows the character of the organization. The relationship between organizational culture and the employees’ performance (organizational performance is dependent on the employees’ performance) is an important issue of for the strategic management of the human resource in the organization.

Organizational culture creates good physical environment for the employees to work. A highly physical environment is attractive to the employees. This results into a clear mindset which leads to motivating the employees to boost their output and in the process they meet set goals and improve the organizational performance.

There are several studies which have linked culture in the organization with different organizational behaviours. It has been recognized in these studies that there is a correlation between culture of the organization and the employee job performance, decision making, and productivity.

Organizational culture in the organization is powerful and is available everywhere. It is either a catalyst for progress, or a definite obstacle to it. It is either the adhesive for the employees, which ties them to the organization, or it is the thing which pushes them away. In the present day environment, organizations are constantly forced to shift the culture of the organization in a manner which favour ways or method of accomplishing tasks.

Organizational culture plays an important part within the organization. It is a recognized measure which helps to understand the espoused stability of the organization and also the contentment, incentive, and encouragement of the employees with their work. Nonetheless, organization is to be well conscious that the employees are indeed to be provided with a solid, efficient, welcoming, supportive and career-oriented work environment so that productive and skilled employees can be created, handled, and preserved. All this can be achieved if a strong organizational culture is available in the organization which promotes such activities.

Organizational culture, employees’ performance and employees’ engagement are interrelated, and for the organization to fulfill its goal and objectives effectively, it is to pay serious attention to the organizational culture in order to achieve employees’ performance through job engagement levels. Hence, the organizational culture has the power to affect employees’ performance through employees’ engagement, as it empowers / dissuades employees to act genuinely at workplace.

Social exchange theory (SET), established by Homans in 1958 described and explained the phenomenon between the employees’ outcomes, organizational culture, and employees’ engagement. SET has economic as well as social impact. Employees are encouraged to do more work in the organization when they work under desirable organizational culture. Furthermore, fair exchange creates linkage between management and the employees which bring psychological attachment of the employees with the work. It brings connection between the employees and the organization on the basis of trust rather than legal obligations, flexibility rather than rigidness, and mutual cooperation. In this regards, it has been suggested that the organization is to implement effective and sound organizational culture which the employees can appreciate, with that different exchange relationships can be achieved by both the organization and the employees. When employees believe that the organization fulfils their requirements by providing sound organizational culture which guides their work then they feel important and are obliged to repay the organization with positive work behaviour like performance, loyalty, and commitment among others. Hence, employees’ performance is exchanged with how they feel of being respected, valued, and supported by the organization.

Hofstede model of the organizational culture sees culture as a programming of the mind which categorizes members of the organization in difference sections. Hofstede sectionalized couture into four difference levels which are symbols, heroes, ritual, and values. The carrying out of finding on these four sections of Hofstede model is very difficult for the managers in the organization as this is the life wire which connects the achievement of the organizational set target. Hofstede puts his model in diagram form which is known as the onion diagram of organizational culture. Fig 1 shows Hofstede model of organizational culture.

Fig 1 Hofstede model of organizational culture

Referring to the Hofstede model diagram, values stand as the life of culture in the organization. Values cannot exist without ethics and moral identity, ability of the employees to be creative on the task to be carried out, and are able to find out if it suits both the employees and the management. Values have a considerable impact on employees’ performance

Rituals are the organization of activities which makes the employees to come together for easy familiarization and socialization since this helps to enhance good relationship among the employees of the organization. Effective rituals in the organization have important and positive impact on employees’ performance since they reinforce desired behaviours of the employees. Rituals reduce tension within the employees and make them focused on the set target and performance.

Heroes are the set of employees in the organization who always do great things in the organization. They are role model for other employees. Heroes are top achievers who are always getting rewarded. The heroes motivate many other employees to perform greatly in the organization. Heroes have a great positive influence on the employees’ performance.

Symbols represent practices in the organization. The practices can be acts, words, gestures, and objectives which show different things but have meaning with the group of employees or individual employee. Symbols influence good morale, improve relationship among employees and create harmony which leads to the high performance of employees thus making them meet the organizational set targets. They are the life indicators of the organization which are visible, can be demonstrated physically, and can be experienced by human beings in the organizational environment. The organizational culture which influences the performance of the employees can be communicated through the symbols. Symbols have considerable and positive impact on the performance of the employees.

Schein model of organizational culture is one of the most cited culture models. It is the model which serves a high degree of abstraction and complexity reduction. It mainly consists of three domains namely (i) artefacts, (ii) espoused beliefs and values, and (iii) basic underlying assumptions. The model distinguishes between observable and unobservable elements of culture. Hence, there is a certain hierarchy between these domains. Visible behaviour influences and is influenced by unobservable assumptions through rules, and standards.

Artefacts are the surface level of an organizational culture, tangible, easily seen and felt manifestations of products, physical environment, language, technology, clothing, myths and stories, published values, rituals and ceremonies etc. Espoused beliefs and values are the next level of organisational culture, including strategies, goals, shared perceptions, shared assumptions, norms, beliefs and values instilled by the management. Basic underlying assumptions are the base level of organisational culture, and are the deeply-embedded, unconscious, taken for granted assumptions which are shared with others. Any challenge of these assumptions results in anxiety and defensiveness.

The most visible symbols are not to be the only aspects used to interpret culture, due to the ease with which they can be misinterpreted. Focus only on visible symbols results into a failure to grasp the underlying basic assumptions, which are fundamental to the understanding of the culture. Similarly, it is important to recognize that even espoused beliefs and values can only reflect the aspirations of a culture, and not the actuality. Fig 2 shows Schein model of organizational culture.

Fig 2 Schein model of organizational culture

Several studies have indicated that there exist relationship between organizational culture and its employees’ performance. Organizational culture is inherently connected to organizational practices which have influence on the employees’ performance. Organizational culture can enhance employees’ performance in a big way if the employees understand what sustains the organizational culture. The organizational culture allows the employees to be acquainted with both the organization’s history as well as the current methods of operation and this specific detection equips the employees with guidance about expected and acceptable future organizational behaviours and norms.

Each organization has its own specific way of doing things, has its specific management techniques for the management of the organization, has developed norms and procedures over time, and has its work environment which decides its organizational culture. Organizational culture which is developed over a period of time in the organization to cope up with the dynamic changes taking place as the organization moves forward with passing time is to meet the varying demand of employee expectations and satisfaction since it greatly influence the performance of its employees. It is a well acknowledge fact that in the present competitive environment the employees’ job performance is an essential necessity for the success of the organization.

Organizational culture is a multi-dimensional concept. It can be treated as a series of distinctive characteristics of the organization. Some present day definitions of organizational culture define it as dynamic, directed at creativity, innovations and entrepreneurship. Organizational culture includes a system of ideas and concepts, customs, traditions, procedures and habits for the functioning of the organization in a specific macro culture. It is a series of values, standards, and beliefs. It is implicit, invisible, intrinsic, and informal awareness of the organization which directs behaviour of individuals and which results from their behaviour.

In understanding organisational culture, it is very important to know all its elements. There are four important elements of the organizational culture. These are (i) organizational values, (ii) organizational climate, (iii) leadership styles, and (iv) work processes and system. These elements have strong links to employees’ knowledge, attitudes and behaviours which in turn affect the personal and professional lives of the employees. These issues have considerable influence on the performance of the employees in the organization.

In the organization having a strong organizational culture, employees do things efficiently since they believe that working efficiently is the right thing to do and feel they are going to be appreciated for their actions. However, if the leadership team lacks integrity or management capability to manage diverse nature of organizational employees, employees’ performance decline even with a strong organizational culture.

The culture of the organization refers normally to the behaviour patterns and standards which bind it together. It tells the employees what is right and wrong, what to believe, what not to believe, how to react, and how to feel. Its actions speak louder than its words. Normally, behaviour patterns are strongly influenced by the leaders of the organization. The words and actions of the quality control and production managers reflect the values and beliefs of the senior management of the organization.

The culture of the organization is to be such that it creates a work environment or setting in which the employees are enabled to perform to the best of their abilities. The organizational culture has a whole work system which begins when a job is defined as needed. It ends when an employee leaves the organization. The employee performance is the degree of an achievement to which the employees fulfil the organizational mission at workplace. The organizational culture demonstrates that the jobs of the employees are build up by the degree of achievement of a particular target or mission which defines boundaries of performance.

The organizational culture which supports (i) relationship, (ii) planning, development, and ownership, (iii) socio-moral and employee supportive environment, (iv) democratic behavioural orientation, (v) employee involvement and empowerment, (v) team working, (vi) flexible and multiple work places, and (vii) learning and innovation. These aspects of the organizational culture have a positive impact on the employees’ performance in the organization.

Relationship – A strong culture of relationship in the organization helps both the managers and the employees to measure the strengths and weaknesses which enable them to understand and to interpret the employees’ perceptions for work. This has a positive impact towards the employees’ work engagement. Employees when they are positively engaged in their work improve their work related performance which in turn is beneficial to the organization in its performance matrix such as profitability, growth, innovation, quality, and customer satisfaction.

Healthy relationship shifts the employees’ behaviour from participating to involving and involved employees are emotionally attached to their work. Involved employees show responsibility towards their work which helps in their job performance and growth.

The understanding of the relationship between employee’s job performance and culture of the organization is important. The organizational environment plays a major role in the employees’ job satisfaction as well as the job performance. This environment can be developed by the culture of the organization. Strong culture makes it easy to communicate openly and participate in most efficient and effective way in the decision making.

Planning, development, and ownership – The planning starts with the vision and mission of the organization which is to be strategized in such a way that it creates excitement and motivation for the employees. The vision is to believe in empowering employees since it gives positive impact on the employees’ performance and hence in the growth of the organization. The mission is to provide the employees the meaning and direction to the work. Further, the planning is required to meet the significant relationships of employees and the management. It is to fulfill the requirement of understanding and analyzing core values and vision points beyond the more traditional understanding engagement to a comprehensive understanding of organizational practices.

Also, the crucial factor which the organizational culture is required to have is the development and the ownership based strategy. The employees can also be made partners to share the knowledge and get thoughtful consequences through their participation. This has a greater impact on the employees’ performance and hence organizational success and growth. When the employees have respect over the vision and mission of the organization, they feel responsibility towards planned schedule and they nurture the workmanship in their work.

Well made plans enhance employee participation and involvement for desired employees’ performance within the stipulated time. Without an ambition and set goal either the employees or the organization can refrain from growth and development. Planning to choose the right path to know where the organization is going has both the employees and the organization without conflict and chaos. Absence of planning, development, and ownership makes both the employees and the organization tired of running in circles and in the course of time, they lose the concept what they are working for.

Socio-moral and employee supportive environment – The employees spend most of their time at the organization. Human resource management practices and the organizational culture are to ensure the employees’ involvement which is possible only when there is a socio-moral and employee supportive environment in the organization, which inspires the employees to have and sustain with positive approach. The organizational culture with a socio-moral and employee supportive environment creates, increases, and deepens the employees’ potential, work motivation, and job satisfaction which are the most important criteria for improving the employees’ job performance.

Further, various studies have shown that by increasing the employees’ material participation in decision making which improve their autonomy and control over their work lives, they become more motivated and more committed to their work responsibilities. The culture of the organization is required to deliver the ethics of the work by following organizational techniques. The morality lies in what management preach. The pride and enthusiasm of employees result in adoptability, involvement, and consistency at the workplace. Social environment enhances social responsibility amongst the employees and the management as well. This social responsibility creates a bond between management and the employees or between two employees. By understanding what social and moral responsibility is, the organizational culture is to create awareness among its employees for a better relationship. This also leads to find out solutions permanently, intentionally, and preferentially to solve opening and integration problems effectively.

Democratic behavioural orientation – Employees are human resource of the organization. Occupational commitment plays an important role to extract this resource. Job satisfaction is the most strongest and favourable correlations for employee relevant outcomes. Decision making is considered as a crucial existence for the employees’ work performance. It is indispensible that ultimate decisions are being made by the managements but proper discussions held in the appointed committees definitely help managements for proper decision making. When employees are made to involve in these things, the employees come out with democratic behaviour which remains within the boundaries of the organizational regulations and principles. The active participation of employees enables the management to pick out the employees with leadership qualities.

This organizational culture of engaging employees to behave democratically allows them to think rich and innovative and it helps in improving their work performance and growth. Organization with strong culture provides a healthy environment in the organization for employees’ work performance which in turn improves organizational performance. Since the organizational performance is ultimate, it has to be understood that the democratic thinking from the bottom level and to rationalize with the thinking at the top level is necessary for attaining appropriation in decision making.

Employee involvement and empowerment – The organization culture in which there is employees’ empowerment and involvement, the employees are encouraged to take work related decisions. The workplace is no more monotonous and becomes enjoyable to work. This makes the employees more responsible, disciplined, motivated, skilled, capable, and knowledgeable. The employees work with confidence, improve the work practices, and adopt analytical functioning. In this culture, the employees can utilize their strength to overcome the weaknesses. This results into comprehensive engagement of the employees at the workplace. The employees enrich themselves with innovative ideas. The employees are methodical and consistent at work. Their overall effectiveness at work improves. This not only helps in employees’ growth but also improves overall performance of the organization.

Team working – A common definition of team working includes a group of people working together toward achieving a desired goal.  Team working is the ability of the employees to work together toward a common vision, the ability to direct individual accomplishment toward the organizational objectives. It is the fuel which allows the employees to achieve exceptional results. Organization is more successful when its employees work together towards a common goal.

In the present day environment, management in several organizations is making more team assignments for the employees with the aim to reinforce their knowledge and enhance their professional skills. Working in teams enables employees to cooperate, improve individual skills, and provide practical feedback without making any conflict between any of the team members. Team working is definitely a very important strategy for the organizational culture, thus smoothing the operation of the organization as the team members upgrade their skills, knowledge, and abilities by working in teams, and this affects organizational performance and effectiveness.

The creation of an entire workplace to be a high performance team-based structure is extremely difficult and challenging. Very often, the organization becomes impatient before the process is completed. When the team approach does not show a dramatic improvement in the organizational performance, the management often decides that teams do not work. The reality is that the employees need to be guided from working solo to working in teams, and that the organizational culture is to be supportive of the team structure. The management is to realize that a high performance team-based culture is not attained overnight.

The implied characteristics of a high performance team-based culture include (i) the freedom to explore new technologies or approaches in order to solve complex problems, (ii) a strong and aligned vision throughout the organization, (iii) an environment which uses failures as foundations for successes , (iv) a strong executive team and leadership, (v) a reward and incentive system which kicks in when the team produces quality results, (vi) an open and honest communication practice where employees are encouraged to challenge and differ, (vii) an environment of trust, respect and support, where conflict is managed effectively, (vii) a patient and committed culture  since the high performance teams are not developed overnight and need hard work, (viii) a well-balanced (in terms of team roles) and diverse workforce in the organization, (ix) a learning organization orientation, where teams are regarded as a vehicle for learning to take place.

Flexible and multiple work places – Organizational culture which provides flexible and multiple work places results into the organization having employees who can work efficiently in different work places. Under such culture, organizational management invests in developing different skills in its employees. Such employees develop an interest in acquiring more knowledge and learn faster. Employees when they have multiple skills have better confidence, higher motivation, enhanced work involvement, and increased job satisfaction. Such employees enjoy their work and have a higher level of performance. They become an asset to the organization.

Workplace flexibility is a strategy of responding to changing circumstances and expectations. Employees who approach their job with a flexible mindset are typically more highly valued employees.​ Organizations having a culture in which flexible and multiple work places are cultivated have highly skilled and efficient employees.

Learning and innovation – Organization with a culture in which opportunities are available to the employees to learn and to innovate has highly qualified, motivated, and satisfied employees who have a high performance level. Organization having learning and innovation culture facilitates the employees to continually expand their capacity to create the results they truly desire. Such organizations actively create, capture, transfer, and mobilize knowledge to enable it to adapt to a changing environment and nurture new and expansive patterns of thinking in which collective aspiration is set free, and where the employees are continually learning.

Organization with learning and innovation culture discovers how to tap its employees’ commitment and capacity to learn at all levels. Such organization aims to bring new ideas, debate issues, introduce innovative methods and offer case studies to others. Normally all the employees have the capacity to learn, and hence the organizational culture is required to provide the structures and tools for learning and innovation.

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