The Organizational Culture Effect on Employee Performance

Introduction

Understanding the correlation between corporate culture, employee performance, and customer satisfaction is paramount because it helps to boost the 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. A motivated workforce pays attention to consumer needs. Moreover, it strives to meet all consumer needs, thus winning customer loyalty. According to Buschgens, Bausch, and Balkin (2013), corporate culture plays a critical role in the creation of customer value. A culture that promotes employee development goes a long way towards ensuring that workers provide quality services to consumers. In return, an organization retains its customer base due to limited competition. This paper comprises a literature review of the impacts of corporate culture on employee performance and customer retention.

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Organizational culture refers to a collection of essential norms, understandings, assumptions, and values, which employees share. Recruits are trained in corporate culture to enable them to assimilate into a company. Corporate culture is attributed to organizational effectiveness, leadership behavior, employee retention, and job satisfaction. Consequently, it permeates all spheres of an organization. Employee performance is evaluated based on the capacity of workers to execute duties efficiently. The majority of organizations conduct performance appraisal on a quarterly or annual basis to determine weaknesses and devise ways to improve them. Customer retention refers to the ability of an organization to minimize client defections and maintain a consumer base. The primary objective of customer retention is to enable an enterprise to grow and boost profitability. Karatepe (2013) insists that customer retention starts with the first impression that a client develops upon coming into contact with an organization. An effective organizational culture ensures that customers develop positive impressions during their first encounter.

United Nations: Context

The United Nations (UN) comprises 191 member countries and runs six essential bodies. They are the General Assembly, the Security Council, the Trusteeship Council, the UN Secretariat, the International Court of Justice, and the Economic and Social Council. Rasche, Waddock, and McIntosh (2012) posit, “The UN has 14 specialized agencies and 12 funds and programs” (p. 12). The different organizations within the UN use a shared system of remuneration and employment benefits. The UN has operations in over 170 countries and uses six primary formal languages.

The UN Organizational Culture

The UN is prone to political influence. International governments and associated constituencies play a critical role in programs and budget endorsement. As such, decision-making is an intricate task in most UN agencies. Rasche et al. (2012) allege that political interference obscures the clarity of the goals of the UN agencies and hinders efficiency. Interruptions are prevalent, especially in the UN Secretariat, which is responsible for global “political” dossiers. Member states assert their influence in resource allocation. Additionally, developing countries that depend on the UN for financial support establish alliances within the UN agencies and diplomatic communities to boost their impact. Indeed, it is hard for the UN staff to reign over political manipulations. The major financiers of the UN pressure the agencies to meet their interests. There also exist internal conflicts amid the different agencies as they compete for specific responsibilities. Moreover, numerous agencies run competing and overlapping mandates, which hinders cohesion.

Methodology Review

The research studies selected for this literature review focused on two primary areas. The first set of studies focused on the correlation between organizational culture and employee performance. They discussed the effectiveness and the role of organizational culture in promoting employee commitment and job satisfaction. The second set focused on the link between organizational culture and customer retention. They analyzed the role of corporate culture in guaranteeing quality products and services delivery, which facilitates customer satisfaction and retention. The researcher relied on many databases as the primary sources of information. They included EBSCOHost and ProQuest Direct. They also used Google Scholar as a crucial source of information. Peer-reviewed journals that were less than five years old qualified for the study. Therefore, the dates of the journals used for this study ranged between 2013 and 2018. The majority of the journals were from 2013 and 2014.

The researcher used various keywords to get relevant information. They included corporate culture, organizational culture, employee performance, employee commitment, customer retention, and customer satisfaction among others. The search led to the selection of eleven journals.

Overview of Research Studies

Methodologies and Educational Backgrounds

The articles selected for this literature review comprised eleven peer-reviewed journals. Eight journals relied on quantitative and qualitative data (Paschal & Nizam, 2016; Martelo, Barroso, & Cepeda, 2013; Park, Lee, & Kim, 2014; Namasivayam, Guchait, & Lei, 2014; Martinez & Del Bosque, 2013; Pantouvakis & Bouranta, 2013; Habib, Aslam, Hussain, Yasmeen, & Ibrahim, 2014; Azanza, Moriano, & Molero, 2013). The data was gathered via questionnaires and interviews. On the other hand, three studies relied on qualitative data, which was collected through surveys sent to participants via mail (Buschgens et al., 2013; Liden, Wayne, Liao, & Meuser, 2013; Yesil & Kaya, 2013). All the sources were scholarly journals. The studies did not disclose any public or private institutional affiliation.

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Purposes and Participants in Research Studies

Six studies focused on the correlation between organizational culture and employee performance (Paschal & Nizam, 2016; Habib et al., 2014; Azanza et al., 2013; Buschgens et al., 2013; Liden et al., 2013; Yesil & Kaya, 2013). The studies gathered data from employees who worked on different levels at diverse organizations. They included managers, internal auditors, and regular staff. On the other hand, five studies focused on the relationship between organizational culture and customer satisfaction and retention (Martelo et al., 2013; Park et al., 2014; Namasivayam et al., 2014; Martinez & Del Bosque, 2013; Pantouvakis & Bouranta, 2013). The data was gathered from different institutions. They included financial organizations, hotels, automobile repair companies, supermarkets, port, and telecommunication.

Findings of the Review

Organizational culture is viewed as the conduct or correlation between humans in an organization. Most studies argue that there is a link between culture and organizational behavior (Liden et al., 2013). Moreover, they posit that organizational culture influences employee performance and job fulfillment. It also plays a critical role in business productivity and decision-making, which impact customer satisfaction. Paschal and Nizam (2016) and Habib et al. (2014) used the Hofstede model to analyze organizational culture. The authors claimed that corporate culture is inculcated in employees’ minds and guides their operations. It can be classified into different groups. They include heroes, symbols, values, and rituals. Paschal and Nizam (2016) maintained that value promotes the success of the organizational culture. It dictates the ethics and moral identity, which enables employees to be creative when executing duties. Ritual refers to a collection of activities that bring workers together to promote socialization and familiarization. Heroes constitute a group of workers in an organization who are go-getters. They motivate their colleagues, thus encouraging them to improve performance. Symbols refer to physical objects, gestures, words, and acts, which have essential meaning to an institution. They guide employees in their daily operations.

Theory X and Theory Y

Wambugu (2014) explains the contribution of corporate culture to employee performance through two opposing theories. Theory X holds that employees cannot perform without coercion and control by the management. The theory argues that workers have an inborn abhor for labor and will evade it when possible. Thus, for employees to perform, they must be coerced, threatened with retribution, directed, and controlled. Theory Y holds that organizational leadership must promote employee development and assist workers to realize their potential. The theory argues that an empowered workforce exercises self-direction and works towards the realization of organizational goals. The theory contends that employees learn to embrace and pursue creativity, imagination, and ingenuity that help to solve organizational problems. Based on the opposing theories, a corporate culture that nurtures accountability and personal responsibility promotes intellectual creativity that boosts employee performance.

Organizational Consistency

Consistency is paramount to guaranteeing customer retention. Customers prefer companies that offer regular services (Park et al., 2014). Corporate culture plays a significant role in promoting consistency. It establishes a set of rules that employees follow in product and service delivery. A company monitors operations to identify and correct deviations from the established policies. According to Pantouvakis and Bouranta (2013), organizational culture imparts core values in employees, which results in workers exhibiting a comparable outlook towards consumer satisfaction. It also promotes teamwork as employees work towards the realization of common goals. Some companies go to the extent of offering incentives to workers who are unable to adapt to corporate culture to facilitate their exit (Azanza et al., 2013). For instance, Zappos Insight and Netflix are renowned for offering financial assistance to employees who no longer add value to the organizations to enable them to seek employment elsewhere.

Customer Focus

Companies that pay limited attention to consumer needs are unlikely to be productive. Organizations require offering products and services that satisfy the needs of target consumers to guarantee loyalty. Teamwork, involvement, and customer focus are critical cultural issues that impact consumer relations outcomes (Martinez & Del Bosque, 2013). Organizations that empower employees and encourage them to focus on consumer needs enjoy a considerable customer base. According to Martelo et al. (2013), the analysis of market orientation reveals a strong correlation between customer retention and inventive and consumerist culture. An organizational culture that focuses on customer-oriented behaviors, performance-based rewards, cross-functional teams, and a high level of risk taking is likely to facilitate customer retention (Namasivayam et al., 2014). Such a culture does guarantee not only the provision of quality goods and services but also the fulfillment of customer needs, thus promoting consumer loyalty.

References

Azanza, G., Moriano, J., & Molero, F. (2013). Authentic leadership and organizational culture as drivers of employees’ job satisfaction. Journal of Work and Organizational Psychology, 29, 45-50.

Buschgens, T., Bausch, A., & Balkin, D. (2013). Organizational culture and innovation: A meta-analytic review. The Journal of Product Innovation Management, 30(4), 763-781.

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Habib, S., Aslam, S., Hussain, A., Yasmeen, S., & Ibrahim, M. (2014). The impact of organizational culture on job satisfaction, employee commitment and turnover intention. Advances in Economics and Business, 2(6), 215-222.

Karatepe, O. (2013). High-performance work practices, work social support and their effects on job embeddedness and turnover intentions. International Journal of Contemporary Hospitality Management, 25(6), 903-921.

Liden, R., Wayne, S., Liao, C., & Meuser, J. (2013). Servant leadership and serving culture: Influence on individual and unit performance. Academy of Management Journal, 57(5), 1434-1452.

Martelo, S., Barroso, C., & Cepeda, G. (2013). The use of organizational capabilities to increase customer value. Journal of Business Research, 66(10), 2042-2050.

Martinez, P., & Del Bosque, I. (2013). CSR and customer loyalty: The roles of trust, customer identification with the company and satisfaction. International Journal of Hospitality Management, 35, 89-99.

Namasivayam, K., Guchait, P., & Lei, P. (2014). The influence of leader empowering behaviors and employee psychological empowerment on customer satisfaction. International Journal of Contemporary Hospitality Management, 26(1), 69-84.

Pantouvakis, A., & Bouranta, N. (2013). The link between organizational learning culture and customer satisfaction: Confirming relationship and exploring moderating effect. The Learning Organization, 20(1), 48-64.

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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.

Paschal, A., & Nizam, I. (2016). Effects of organizational culture on employee performance: Case of Singapore telecommunication. International Journal of Accounting & Business Management, 4(1), 19-25.

Rasche, A., Waddock, S., & McIntosh, M. (2012). The United Nations global compact: Retrospect and prospect. Business & Society, 52(1), 6-30.

Wambugu, L. (2014). Effects of organizational culture on employee performance (Case study of Wartsila-Kipevu li Power Plant). European Journal of Business Management, 6(32), 80-93.

Yesil, S., & Kaya, A. (2013). The effect of organizational culture on firm financial performance: Evidence from a developing country. Procedia – Social and Behavioral Sciences, 81, 428-437.

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