The Effects of Organizational Culture on Employee Performance and Productivity



The Effects of Organizational Culture on Employee Performance and Productivity

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The Effects of Organizational Culture on Employee Performance and Productivity

It is a fact that all organizations have a culture and every culture affects organizations in different ways. Most of the scholars have argued that performance and productivity of each organization can be explained based on its culture. The nature of the culture, feeling, arrangement and service delivery in different organizations depend on the nature of the business venture in which the organization has specialized in. The culture of an organization is basically what determines the way customers respond to services and the way organizational employee interacts with the organization’s clientele (Noe et al, 2006). Each business organization irrespective of nature or rather line of its business venture has a unique personality, charm, and feeling that it subscribes to and this is what has been explained as a culture. A culture that is passionate, enthusiasm and creativity have been identified as some of the business culture elements that strives employees and customers to be eager to be at workplace day after the other hence improved productivity through improved performance. Despite the fact that technology and innovation are most employees, organizations still stick to the old-fashioned version of culture which affect the way employees responds to cultures that are created in organizations, perceive changing the way culture. Organizations are just like societies and as the social change the way it perceives culture, it is expected that all organizations should follow the trend.

The problem is that scholars are not ready to adapt to the new trends in organizational culture that has been changed because of technology and innovations in the organizations (Schein, 1985). This has resulted in lack or rather gaps in knowledge that organizations can rely on to create a culture that is up to date with current workplace expectations and enhance employee performance and productivity. Management has to identify a culture that it will embed in its business activities which will be reflected in the subsequent success of the organization. “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,” (Muogbo, 2013). Most of the organizations take into consideration their organizational culture when implementing decisions as it is very clear that any decision made without the input of organizational culture will be very futile. This research paper was conducted through the review of literature will explore different articles and resources that support the idea that organizational culture has a big influence on organizational performance and productivity. Statement of the problem

According to the study that was done by Muogbo (2013), “culture consists of the totality of assumption, beliefs, values, social systems institutions, physical artifacts and behavior of people, reflecting their desire to maintain continuity as well as to adapt to external demands,” (p77). However, this is changing with time as technology and innovation take control of organizational activities and operations. Despite the fact that technology and innovation are most employees, organizations still stick to the old-fashioned version of culture which affects the way employees responds to cultures that are created in organizations, perceive changing the way culture. Organizations are just like societies and as the social change the way it perceives culture, it is expected that all organizations should follow the trend.

The problem is that scholars are not ready to adapt to the new trends in organizational culture that has been changed because of technology and innovations in the organizations (Noe et al, 2006). This has resulted in lack or rather gaps in knowledge that organizations can rely on to create a culture that is up to date with current workplace expectations and enhance employee performance and productivity. The major question that results from this inadequacy of knowledge is how organizations can change to ensure that they instill a culture in their organizations so that they can enhance employee performance and productivity. This is the question that was in the mind of the researcher as the researcher embarked on this literature review.

The purpose of the research

The main purpose of this literature review research paper was to evaluate and asses different scholarly sources to determine how organizational culture affect the performance and productivity of employees. The study was done to understand how culture can influence employees to perform at their maximum and organizational management can utilize culture to maximize employee productivity. The study also looked at how employees view organizational performance. The study also looked at and identified some of the gaps in the literature that have been an obstacle to employee performance and productivity.

Research questions

The literature review was done to answer the following questions:

What is the relationship between organizational culture, productivity, and performance of employees?

How can organizations utilize their organizational culture to enhance employee performance and productivity?

What are the effects of employee performance and productivity on organizational success?

Literature Review

For a long time, organizational culture has always been perceived to be the way things are done in the organization. However, according to Sarmawa and others (2015), organizational culture has changed into different facets of management that have a robust range of literature that has helped it create a deeper understanding of the concept. Schein defined culture in early 1985 and according to the author; culture was defined as the “learned product of group experience which affects the behaviors of individuals,” (Schein, 1985). Different studies have been conducted to differentiate between organizational structure and organizational climate. Organization climate is more of overt while the structure has more relation to do with individuals in the organization.

The study of organizational culture has gained momentum in the 21st century because of the impact it has on employee performance and productivity. It has emerged to a very important thing to understand the dynamics of its own culture so that the management team can utilize the benefits generated by the culture to ensure that they can control their organizational operations. According to Muogbo (2013), the ever-increasing technology and innovation have created a dynamic environment that which has made most of the business organizations management to grapple with the possible ways to improve performance and productivity using lower costs. Most of the organizations have chosen the sociological route to ensure that they motivate their employees to perform highly and increase productivity hence profitability. However, organizational culture remains to be an intangible element and yet play a very important role when it comes to business success.

According to Harwiki (2013), there is no single recognized organizational culture definition. The author is of the views that there is no single definition for organizational culture because it has been studied in anthropology and sociology to the applied discipline that include that include behavior, in management perspective and commitment to the organization. Harwiki (2013) defines culture as a climate and practice that organizations establish to ensure that they can easily handle people in the organization or to describe the values that organizations value. This definition varies significantly from the definition that is offered by Adeoye et al (2014). According to Adeoye et al (2014), organizational culture “as the collection of tradition, values, beliefs, policies, and attitudes that constitute a pervasive context for everything one does and think of in an organization,” (Adeoye et al, 2014). The authors are of the views that organizational culture is complex and it includes knowledge, beliefs, art, morals, laws, customs, capabilities, and behaviors that are acquired by human beings. Based on the above definitions of culture and organizational culture, it is true to say that all the studies incorporate belief, values, and attitudes in their definition of what constitutes organizational culture. In this regard, it can be concluded for the study by Adeoye et al (2014), Harwiki (2013), and Muogbo (2013) that organizational culture is the values, beliefs, and attitudes that a particular organization chooses to guide its operations. These elements of culture that include values, beliefs, and attitudes are put in place to define how employees conduct themselves and interact with other people or rather stakeholders in the organization daily.

According to the study that was done by Achim et al, (2013) organizational culture is very important as it is an element that can be used to account for the variations that exist in organizations between managers and employees in international and local regards. The authors are of the views that it is an organizational culture that can be used to explain why certain organizations conduct their businesses the way they do as compared to others even in the same industry. On individual employee, Achim et al (2013) explain that it is a culture that defines why people have to behave the way they do differently from others. The authors argue that organizational culture can be used to break the uncertainties and complexities that that may hinder employee performance and reduce their productivity.

Similarly, Fu & Deshpande, (2014) support the arguments that were put forward by Achim et al (2013) and argue that organizational culture enhance performance and productivity among employees in the sense that it provides consistency in outlook and values that aid in the decision-making process, coordination and control which ensures that very thing is done rightly in the organization and enhance productivity through improved performance because of smooth coordination. Fu & Deshpande, (2014) additionally argue that organizational culture act in four ways in the organization that spur performance and productivity among employees. One, culture add rational management something that is central to the creation of work because it is a time-consuming process in nature. The authors argue that organizational culture cannot change the way people behave instantly in the organization since it relays its message through values, symbols, language and physical setting which is imperative in the rationing management decision-making process.

Emeka & Philemon (2012) are of the views that culture brings about facilitation and induction. It allows new company employees to become integrated with other people in the organization and quickly adapt to the organizational practices through induction. According to Emeka & Philemon (2012), culture imbibes new employees in the organizations by influencing their attitudes, beliefs and what they value something that changes and becomes committed to the organization’s mission and vision hence increasing their performance and productivity to meet organizational requirements. The authors are of the views that culture communicates the code of conduct which inform employees of what is acceptable and what is prohibited in the organization. This is imperative in establishing a particular working norm among employee in the organization. It also “sub-cultures contribute to organizational diversity: sub-cultures, and sub-systems of values and assumptions, which may be based on departmentalization, activity centers, or geographical locations, provide meaning to the interests of localized, specific groups of people within the macro organization,” (Emeka & Philemon, 2012).

Noe et al (2006) draw more significance of organizational culture to performance and productivity by asserting that essential quality of cultures is infused in the exceptions, coherence, and dominance of culture which have proven to be very important as far as employee performance and productivity is a concern. The authors are of the views that organizations with a strong culture that is directed to the marketplace require fewer rules, procedures, policies, charts, and manuals that are meant to aid employees do their work. Noe et al (2006) are of the views that organizations with strong culture are likely to be successful because all the employees know what is expected of them to work on as the values that direct their activities are clear. The authors are of the views that just like the concept of culture are inseparable to human generation; it has increasingly become inseparable to organizations that want to be successful in the long-run. It is because of this that the authors are of the ideas that one can only change the culture of the organization by taking cognizant of the society’s culture (Noe et al, 2006). The authors assert here that “an organization’s current customs, traditions, and general way of doing things are largely due to what it has done before and the degree of success it has had with these endeavors,” (Noe et al, 2006). The authors provide a number of ways through which culture can be transmitted to employees and it include through rituals, stories, language, and symbols.

Kelliher, (2005) is of the views that organizational culture plays a significant role in ensuring that performance among employees is enhanced. According to the author, organizational culture plays a big role in talent retention in organizations through employee retention concept. Several studies have been done and have proven that employee retention is enhanced by a strong organizational culture. Job retention and performance of employees are inseparable and they go hand-in-hand in most organizations. Kelliher, (2005) is of the views that there are different organizational cultures that are designed based on their outcomes. The author, for instance, is of the views that achievement culture in organizations requires that employees contribute to the productivities for rewards. A culture in aligned organizations is separate from other organizations as this type of organization aligns its employees on a mission and vision of the company.

Noe et al (2006) argue that organizational culture creates an environment that provides protection to the employees and stability to the organization. In this regard, employees spend less time concentrating on some of the issues that bedevil the organization and dedicate their efforts on the work at hand something that enhances productivity due to increased performance. Having enough time dedicated to working is the main goal of the management team and therefore this can be enhanced by organizational culture.

Sarmawa et al (2015), job satisfaction is one of the key attitudes rather behavior that directly impacts employee performance and productivity. In their study, the authors concentrated on beliefs, attitudes, and values in organizations which make up the culture that affect employee performance. Sarmawa et al are of the argument job satisfaction has both mental and physical health implications that affect organizational performance. It is because of this that the authors are of the views that studies that are conducted to the correlation between performance factor and value preference must consider the impacts of job satisfaction. Similarly, although Hogan & Coote (2014) included the factors that affect employee performance in organizations ad grouped them into financial and non-financial, the authors concentrated more on the relationship between culture and organizational performance in organizations. The authors are of the views that there are several models that are used to classify culture that organizations are embedded on and how different types of cultures affect employee performance in organizations. The authors found out that organizations with a strong culture with values and beliefs that are well accepted in the organization are likely to perform well as compared to those with weak rather unacceptable values and beliefs. Performance according to Hogan & Coote (2014) is determined by the attitudes of the employees. Organizations in which employees attitudes towards leadership and management is positive will definitely have positive regard to their work because of motivation hence increased productivity.

Summary and Conclusion

From the above literature review, it is very clear that much work has been published on the effects of organizational culture on employee performance and productivity of the organizations. Scholars have focused on different cultural values, beliefs, and attitudes that are described to subscribe to an organization based on the nature of business such organizations are involved in. Despite the much knowledge that is available on this subject matter ranging from culture and employee performance, factors that affect how employees are motivated by the culture of the organizations, the financial aspect of culture among others, there are some areas that are still lacking which have created knowledge gap. Most of the studies concentrate on the definition of the major terms in their literature. Some focus on the financial rewards that organizations have infused in their cultural values and beliefs to enhance employee performance among others. However, there is a huge gap in the technological and innovative aspect of culture in organizations.

Little research has been done to create an understanding how technology and innovation have influence organizational culture and how organizational leadership can use the two changes to enhance their employee performance and productivity by making them part of their culture. Technology and innovation are here with organizations to stay and as such, organizations need enough knowledge to understand how it is causing a revolution in an organizational culture so that they can utilize it in their operations. Lack of sufficient knowledge o this regard has not worked well in most organization leadership. Because of this, this study recommends that a study should be done to create knowledge on how technology and innovation are changing organizational culture and how they are likely to affect employee performance and productivity.


Achim, I. M., Dragolea, L., & Balan, G. (2013). The importance of employee motivation to increase organizational performance. Annales Universitatis apulensis: Series oeconomica15(2), 685.

Adeoye, A. O., Kolawole, I. O., Elegunde, A. F., & Jongbo, O. C. (2014). The Impact of Organizational Climate on Business Performance In Lagos Metropolis. European Scientific Journal, ESJ7(26).

Emeka, N., & Philemon, A. (2012). The Impact of Organizational Culture on Employee Performance a Study of Selected Manufacturing Industry in Enugu. Asian Journal of Business Management Studies3(2), 13-19.

Fu, W., & Deshpande, S. P. (2014). The impact of caring climate, job satisfaction, and organizational commitment on the job performance of employees in China’s insurance company. Journal of Business Ethics124(2), 339-349.

Harwiki, W. (2013). The influence of servant leadership on organization culture, organizational commitment, organizational citizenship behavior and employees’ performance (the study of outstanding cooperatives in East Java Province, Indonesia). Journal of Economics and Behavioral Studies5(12), 876-885.

Hogan, S. J., & Coote, L. V. (2014). Organizational culture, innovation, and performance: A test of Schein’s model. Journal of Business Research67(8), 1609-1621.

Kelliher, F. (2005). ̳Problem in Academic Motivation Research &Advantage & Disadvantage of their Solution‘ Contemporary Education Psychology, Vol. 21: 149-165

Muogbo, U. S. (2013). The impact of employee motivation on organizational performance (a study of some selected firms in Anambra state Nigeria). The international journal of engineering and science2(7), 70-80.

Noe, R., Hollenbeck, J., Gerhart, B., & Wright, P. (2006). Human Resources Management: Gaining a Competitive Advantage, Tenth Global Edition. McGraw-Hill Education.

Sarmawa, I. W. G., Suryani, N. K., & Riana, I. G. (2015). Commitment and Competency as an Organizational Citizenship Behaviour Predictor and its Effect on the Performance. International Journal of Economics, Commerce and Management United Kingdom3(1), 1.

Schein, E. H. (1985). Organizational culture and leadership, San Francisco, clif: Jossey Bass

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