Organizational Culture Effects on Employees and Customers

Abstract

Research on organizational culture supports the belief that corporate customs are vital for efficient operations and profitability of the business. Even though various studies have examined the correlation between corporate culture and performance, experimental results appear to be mixed and indecisive. Additionally, limited studies analyze the connection between organizational culture and customer retention. The majority of the existing studies discuss the link between corporate culture and employee performance in commercial institutions.

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Few studies have examined non-profit organizations. Most scholars agree that promotion of flexibility-oriented corporate culture boosts employee performance and guarantees customer retention. Such a culture facilitates career development, which is an essential factor that contributes to employee commitment. A motivated workforce works towards the realization of organizational goals. In the process, it fulfills consumer needs, resulting in customer loyalty. This study will examine the impacts of corporate culture on employee performance and customer retention using both qualitative and quantitative methods. The research will utilize qualitative data from secondary sources. It will also rely on primary data gathered through in-depth interviews. The interviews will target employees working in different departments at the UN Secretariat.

Understanding the correlation between corporate culture, employee performance, and customer satisfaction is paramount because it helps to boost a competitive edge of an enterprise. Businesses ought to establish corporate cultures that guarantee continuous development. According to Paschal and Nizam (2016), organizational culture is vital because it influences employee commitment and turnover. Businesses that embrace flexible cultures experience low employee turnover. Such cultures provide a working environment that empowers workers, enabling them to operate with minimal interference. In return, the workers exhibit a high degree of job fulfillment and are devoted to their duties. An efficient corporate culture promotes organizational performance, which translates to customer satisfaction.

Objective of the Study

The primary objective of this study is to determine the impacts of corporate culture on employee performance and customer retention. The study seeks to identify how the United Nations uses corporate culture to boost employee performance and retain member states.

Structure of the Proposal

The proposal will constitute four chapters. The first chapter will comprise the introduction. The second chapter will consist of preliminary review of existing literature. Chapter three will include the methodology of the proposed study. Chapter four will discuss the results of the study and outline the research timetable.

Background

The existing literature lacks a standard definition of organizational culture. Instead, scholars define the term from diverse perspectives. Belias and Koustelios (2014) confirmed that there was no single definition of culture or an agreement on how it should be studied and defined organizational culture as “a pattern of basic assumptions that a group has invented, discovered or developed in learning to cope with its problems of external adaptation and internal integration and has worked well enough to be considered valid” (p. 137). On the other hand, Guiso, Sapienza and Zingales (2015) defined organizational culture as a collection of universal norms and values of an enterprise’s employees. It comprises fundamental assumptions that business learns to address challenges attributed to external adaptation and adjust to the current environment.

Organizational culture impacts different corporate and employee-related outcomes. It influences employee behavior, creativity and innovation, learning and development, and knowledge management (Anitha, 2014). Numerous studies have analyzed the correlation between organizational culture and employee performance. Unfortunately, the findings of the studies appear inconclusive due to structural, design, and definition-related differences and challenges. Nizam and Paschal (2016) assert that some studies cite reconciling impacts of aspects like knowledge management, organizational innovativeness, and knowledge conversion between corporate culture and employee performance. Hyland, Lee, and Mills (2015) allege that one requires considering the interactive character of processes, culture, and business outcomes when analyzing the association between organizational traditions and employee performance. The authors hold that organizational culture impacts employee performance and customer retention via mediate factors.

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Employee performance reflects the degree of the realization of organizational goals. Companies use numerous objective and skewed measures to evaluate employee performance. Habib, Aslam, Hussain, Yasmeen, and Ibrahim (2014) contend that employee performance is widely featured in the majority of the organizational theory literature. Nevertheless, evaluation of employee performance remains a significant challenge to many researchers and corporate managers. Researchers that analyze the link between organizational culture and employee performance utilize various measurements. Evaluating the relationship between culture and employee performance, Rahimi and Gunlu (2016) found that most institutions use growth and economic profitability as the units of measure. Such standards are difficult to use in non-profit organizations. Hogan and Coote (2014) maintain that scholars use indicators such as the number of clients handled and cost per service to evaluate employee performance in non-profit institutions.

Customer retention depends on the degree of an organization’s ability to fulfill the needs of its target clients. An organizational culture that emphasizes customer-oriented knowledge sharing, behaviors, performance-based rewards, and cross-functional teams contributes to customer satisfaction and retention (Homburg, Jozic, & Kuehnl, 2017). Such a culture ensures that employees offer products and services that satisfy consumer needs. In return, clients develop a positive impression of the company, thus opting to establish a lasting relationship with the organization. Corporate culture has significant impacts on human resources. It determines the traditions, habits, and values that human resource exhibits. Pantouvakis and Bouranta (2013) argue that organizational culture is essential in “establishing a unified organization, thus influencing the direction of human resource development and performance” (p. 51). On the other hand, human resource development and performance enable an organization to meet customers’ expectations and preferences, therefore facilitating their retention.

Public organizations have complex organizational cultures due to the nature of their operations. Dependence on governments for financial resources, external political influence, and rigorous formal legal restrictions affect the smooth running of public institutions. The United Nation (UN) organization is one of such bodies that have complicated corporate culture. The UN runs multiple agencies with individual decision-making bodies that comprise many governments and associated constituencies. The governments have a significant influence on the operations of the agencies and budget approval. Consequently, the agencies encounter challenges in decision-making as they have to please their financiers. Clarke (n.d) holds, “The budgetary process determines the resource allocation to different programs” (p. 126). Therefore, member states manipulate the process to suit their interests. Small countries that do not influence the UN Secretariat and agencies establish alliances to ensure that they benefit from budgetary allocations.

The UN agencies operate under the rule of neutrality that requires all employees to reign over political manipulations. Unfortunately, mixed loyalties dominate the agencies where employees are torn between abiding by the UN system and serving the interests of their home countries. Clarke (n.d) avers that at the agency level, the UN employees experience immense pressure to serve the interests of paymasters. The UN system and Secretariat are under the constant influence of the member states and the Security Council. The two evaluate the UN organizational performance based on political measures. Lack of a well defined corporate culture hinders the efficiency of the UN.

Literature Review

The absence of concrete data on different cultures complicates the understanding of theories of corporate culture. Most employers prefer to recruit like-minded employees to ensure that they work together towards common goals. Liden, Wayne, Liao, and Meuser (2013) posit, “Theories on organizational culture typically have different overall corporate mind-sets, such as ethics, profits, or philanthropy” (p. 1438). The theories that explain corporate culture include consistency theory, theory X and theory Y, and the involvement theory among others.

Theory X and Theory Y

The suppositions of theory X and theory Y are based on Maslow’s hierarchy of needs conjecture, which argues that the degree of employee commitment is pegged on their needs. Theory X is premised on the lower-hierarchy needs, while theory Y is founded on high-order needs (Arslan & Staub, 2013). Organizational leadership can use either of the needs to enhance employee performance. Nonetheless, the most significant impact can be realized through the satisfaction of the higher-order needs. Theory X argues that employees cannot devote themselves to organizational goals without coercion and control by the management (Arslan & Staub, 2013). It holds that workers have inborn hate for responsibilities and tend to avoid them at all costs. Moreover, employees have to be threatened, directed, pressurized, and controlled to realize organizational objectives. The theory fails to appreciate that most workers have ambitions and commit themselves to corporate goals as long as they help them achieve their dreams.

Theory Y holds that Organizational leadership must facilitate employee development to boost commitment (Arslan & Staub, 2013). An organizational culture that promotes training and development helps to enhance employee performance because it motivates them to pursue their aspirations. The theory argues that employees exercise self-direction if allowed to make decisions on matters that affect their areas of specialization. Moreover, a culture that promotes performance-oriented rewards enhances employee commitment. Arslan and Staub (2013) aver “People are committed to objectives since they are a function of the rewards associated with their achievements” (p. 105). Intellectual creativity is critical to employee performance. However, it is imperative to acknowledge that it cannot be achieved through intimidation, coercion, or management programs. Instead, it is realized through the appropriate inculcation of cultural principles of individual responsibility and accountability. Traditional management practices and issuing directives cannot help to improve employee performance.

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Consistency Theory

The consistency theory argues that organizational effectiveness is pegged on culture. Organizations with reliable, consistent, integrated, and well-organized cultures are successful. A steady and well-coordinated culture instills a set of core values in employees, which guides their operations. According to Ruiz-Palomino, Martinez-Canas, and Fontrodona (2013), organizational culture has a significant influence on employee behavior as their conduct is ingrained in core values. It enables corporate leaders and employees to overcome their differences and compromise for the sake of business. The consistency attributed to organizational culture promotes stability and high level of conformity amid employees, which supports seamless operations and boosts their performance.

Involvement Theory

The involvement theory is founded on the notion that participation and contribution instill a sense of ownership and accountability in employees, thus boosting their commitment and performance. Successful companies establish their institutions around teams, empower employees, and build human resource capacity at all levels (Strom, Sears, & Kelly, 2013). A corporate culture that promotes employee development and empowerment allows an organization to assemble a dedicated workforce. Managers, executives, and regular workers devote their energy to organizational goals because they feel like they own part of the company (Karatepe, 2013). Employees at all levels ensure that they contribute to decision-making processes, thus guaranteeing flawless operations.

Customer Relations Management

Customer relations management refers to an organizational strategy that aims at creating value for the primary target clients and establishing a lasting gainful relationship with consumers. Cultural factors influence the success or failure of customer relations management (Battor & Battour, 2013). A corporate culture that encourages customer-oriented behaviors, supportive relationships, innovation, high-risk taking, and teamwork is likely to facilitate efficient customer management, thus guaranteeing their loyalty (Park, Lee, & Kim, 2014). The analysis of organizational learning framework reveals a strong correlation between corporate learning culture and customer retention (Lukas, Whitwell, & Heide, 2013). A culture that gathers quality customer data helps to align organizational strategies with consumer needs. In return, an organization wins the trust of the target customers, thus retaining them.

Staff Management

Employees are a reflection of an organization. A workforce that understands its responsibilities and consumer needs enables an organization not only to attract clients but also retain them (Rahimi, 2017b). Marketing theorists agree that organizations, which pay attention to consumer needs and act in customer-oriented manners, do better and enjoy a substantial client base (Namasivayam, Guchait, & Lei, 2014). According to Eman, Ayman and El-Nahas (2013), interaction amid consumers and employees augments customer satisfaction. Hence, employee behavior is paramount in promoting customer loyalty. On the other hand, organizational culture influences employee behavior. Thus, it is essential to improving customer retention. Corporate leaders appreciate the significance of offering tailored services to consumers. Most organizational cultures encourage employees to accord consumers personalized attention (Martelo, Barroso, & Cepeda, 2013). It goes a long way towards winning the trust of customers and encouraging them to continue relating to a business. Many companies persuade their workers to address consumer needs in an on-the-job context. Such a culture helps an organization not only to meet consumer needs but also gather customer feedback, which is vital in shaping the future operations of an organization.

Research Question

Limited studies have been conducted to establish the connection between organizational culture, employee performance, and customer retention. Moreover, the majority of the existing studies focus on commercial institutions (Rahimi, 2017a). Lack of studies that analyze non-profit institutions makes it difficult to ascertain the contribution of corporate culture to such organizations. In this study, the researcher will determine how non-profit organizations align their corporate culture with the capabilities of the workforce and consumer needs. Specifically, the researcher will evaluate how organizational culture helps to enhance employee performance in non-profit institutions. The study will assess the effectiveness of organizational culture in addressing the needs of the target population.

The UN is one of the non-profit organizations with intricate organizational culture. Clarke (n.d) posits, “The UN promotes the official organizational values of integrity, professionalism, and respect for diversity among its staff” (p. 128). The fact that the UN hires employees from diverse backgrounds and runs multiple agencies makes it difficult to comprehend its corporate culture. In this study, the researcher will evaluate how the UN promotes an organizational culture in a diverse workforce. Specifically, how do the different agencies embrace and ensure that they operate within the guidelines of the UN organizational culture? Moreover, the researcher will evaluate the impacts of the UN organizational culture on employee performance. The UN focuses on providing services to member countries. The developing states benefit most from the UN (Clarke, n.d). Therefore, the study will consider developing states as the primary clients for the UN. The researcher will evaluate how the UN organizational culture contributes to the satisfaction of the developing nations.

The study will analyze the nature of the UN organizational culture and how it is reflected in the various agencies. It will also investigate employee perception of the culture and how it assists them in their daily operations. An examination of the attitude of the developing nations towards the UN will confirm if the organizational culture helps to satisfy the needs of the target population. Currently, there is limited literature about the impacts of organizational culture on customer retention. Thus, this research will help to close the existing gap. The primary questions for the study are;

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  • What are the impacts of organizational culture on employee performance?
  • What are the effects of organizational culture on customer retention?

Methodology

Researchers have numerous modes of data collection and analysis at their disposal. The method of data collection selected depends on the availability of information, finance, and time. Some of the widely used methodologies include triangulation, surveys, and case studies. Currently, there is limited information about the link between organizational culture and customer retention. Additionally, the existing data elucidate limited information about the corporate culture of non-profit institutions. Thus, to come up with general findings, there is the need to rely on triangulation method. The researcher will use both qualitative and quantitative methodologies to determine the link between organizational culture, employee performance and customer retention in the UN.

One of the advantages of qualitative research is its ability to offer multifaceted contextual interpretations of how people understand a specific research issue. The method captures data regarding the “human” side of a research question. According to Bansal et al. (2017), qualitative methodology helps researchers to collect information about emotions, behaviors, opinions, relationships, and beliefs of people. It also assists to gather data about subtle factors like social norms, ethnicity, and socioeconomic status, which go a long way towards enabling the researcher to compile a comprehensive report. The primary limitation of qualitative methodology is that it cannot be used to gather universal information.

Quantitative methodology gathers numerical data, which help to guarantee the credibility of a study. Numerical data is not vulnerable to misinterpretation. Therefore, it enables researchers to come up with reliable findings. Moreover, it allows pollsters to use different statistical methods to analyze data, thus gaining an in-depth understanding of the research issue.

The researcher will require both descriptive and numerical data to understand the impacts of organizational culture on employee performance and customer retention in the UN. Thus, this study will rely on the in-depth interview as the primary mode of data collection. Bansal et al. (2017) define in-depth interview as a “qualitative research technique that involves conducting intense individual interviews with a small number of respondents to explore their perspectives on a particular idea, program, or situation” (p. 226). Gathering data from multiple UN agencies is difficult. Therefore, the study will focus mainly on the Secretariat since it is the principal agency.

The researcher will collect descriptive and numerical data regarding the number of clients that the agency serves, the current number of employees, and workers’ perception of the agency’s corporate culture. The researcher will also gather information regarding the number of new states (if any) that have joined the UN. Moreover, the study will inquire on the number of countries that have expressed their dissatisfaction with the Secretariat and their chief complaints. The primary objective of the study is to determine if the UN organizational culture helps to enhance employee performance. Thus, the researcher will decide if the UN corporate culture enables employees to discharge the mandates of the Secretariat without challenges. They will also examine the factors that hamper efficient operations in the agency. A total of 30 employees will be interviewed. The participants will be selected from different departments within the Secretariat.

The researcher will also rely on secondary data from existing literature. The secondary data will go a long way towards assisting the researcher in preparing the interview questions. According to Bansal et al. (2017), secondary data helps a researcher to identify existing gaps, thus knowing the right questions to ask during the interviews. Currently, there is limited data regarding the correlation between corporate culture and employee performance and customer retention. The researcher will use the existing data to understand the research issue. Moreover, the secondary data will form a basis for verifying the findings of the in-depth interviews.

Limitations and Ethical Issues

Time constraint is a major limitation for this study. The researcher will not have adequate time to conduct a detailed study. Additionally, inadequate literature about the effects of organizational culture on customer retention is a major constraint for the study. The researcher will require maintaining the privacy of the participants. This will be realized by not disclosing the names of the participants. Moreover, no unauthorized persons will have access to the findings of this study.

Research Outcome

The primary objective of this study is to determine the role of organizational culture on employee performance and customer retention. Thus, the expected outcome of the research is a description of the UN organizational culture. The study should also describe the role of the organizational culture on employee performance and customer retention.

Interview Questions
  1. What do you understand by the term organizational culture
  2. How can you describe the organizational culture of your company
  3. Does organizational culture benefit your company? How?
  4. How do you and other employees perceive the organizational culture of your company
  5. What do you understand by the term employee performance?
  6. Does organizational culture influence your performance? If yes, Describe how
  7. How does your company measure employee performance?
  8. Are you contented with the current methods of employee performance?
  9. Explain what you understand by the term customer retention
  10. What do customers say regarding the corporate culture of your company?
  11. Does organizational culture help in customer retention?
  12. Outline some cultural practices that help your organization to retain and attract customers

Contingencies

Numerous challenges may hamper the success of the study. For instance, some participants may fail to turn up for the interview due to changes in their working schedule. Additionally, some participants may fail to provide detailed information regarding the study questions, thus affecting the credibility of the results. To address these challenges, the researcher will contact the participants in advance to determine the time that they will be available for the interview. The researcher will also supply scorecards to all the participants to prepare them for the interview.

Research Timeline

Task Duration
Collection of secondary data From: 28thMarch 2018 to 4thApril 2018
Research Design From 5thApril 2018 to 7thApril 2018
Proposal Writing From 8thApril 2018 to 14 April 2018
Seeking Approval 15thApril 2018
Data Collection 16thApril 2018 to 22 April 2018
Data Analysis 23rdApril 2018 to 29thApril 2018
Report Compilation 1stMay 2018 to 6thMay 2018

References

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Arslan, A., & Staub, S. (2013). Theory X and theory Y type leadership behavior and its impacts on organizational performance: Small business owners in the Sishane Lighting and Chandelier District. Social and Behavioral Sciences, 75, 102-111.

Bansal, H., Eldridge, J., Haider, A., Knowles, R., Murray, M., Sehmer, L., & Turner, D. (2017). Shorter interviews, longer surveys. International Journal of Market Research, 59(2), 221-238.

Battor, M., & Battour, M. (2013). Can organizational learning foster customer relationships? Implications for performance. The Learning Organization, 20(5), 279-290.

Belias, D., & Koustelios, A. (2014). Organizational culture and job satisfaction: A Review. International Review of Management and Marketing, 4(2), 132-149.

Clarke, E. (n.d). Organizational culture, system evolution, and the United Nations of the 21st century. Insider’s View, 127-133. Web.

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Park, J., Lee, H., & Kim, C. (2014). Corporate social responsibility, consumer trust and corporate reputation: South Korean consumers’ perspective. Journal of Business Research, 67(3), 295-302.

Rahimi, R. (2017a). Customer relationship management (people, process and technology) and organizational culture in hotels: Which traits matter? International Journal of Contemporary Hospitality Management, 29(5), 1380-1402.

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Rahimi, R., & Gunlu, E. (2016). Implementing customer relationship management (CRM) in hotel industry from organizational culture perspective: Case of a chain hotel in the UK. International Journal of Contemporary Hospitality Management, 28(1), 89-112.

Ruiz-Palomino, P., Martinez-Canas, R., & Fontrodona, J. (2013). Ethical culture and employee outcomes: The mediating role of person-organization fit. Journal of Business Ethics, 116(1), 173-188.

Strom, D., Sears, K., & Kelly, K. (2013). Work engagement: The role of organizational justice and leadership style in predicting engagement among employees. Journal of Leadership & Organizational Studies, 21(1), 71-82.

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