Literature review

Effect of organizational culture on organizational performance

Engr.Hafeez Ur Rehman
BS Electronics Engg. UCET IUB
MS Electrical Engg. UET Lahore
MBA Exec. VU Pakistan

Abstract:

The objective of this review article is to demonstrate the relation between two variables i.e.
organizations culture & its performance. After study and analysis of wide literature, it is
reasoned out that organizational culture has deep impact on the variety of organizational process,
employees and its performance. This also describes the different dimensions of the culture which
have impact on organizational performance. Research shows that if employee are committed and
having the same norms and value as per organizations have, can increase the performance toward
achieving the overall organization goals.

What is an Organizational Culture?

Organizational culture is the set of shared values, beliefs, and norms that influence the way
employees think, feel, and behave in the workplace (Schein, 2011). Organizational culture has
four functions: gives members a sense of identity, increases their commitment, reinforces
organizational values, and serves as a control mechanism for shaping behavior (Nelson & Quick,
2011).
Organizational culture facilitates the acceptable solution to know the problems, which members
learn, feel and set the principles, expectations, behavior, patterns, and norms that promote high
level of achievements (Marcoulides & Heck, 1993; Schein, 1992).

What is an Organizational Performance?

Performance is a broader indicator that can include productivity, quality, consistency, and so
forth. On the other hand, performance measures can include results, behaviors (criterion-based)
and relative (normative) measures, education and training concepts and instruments, including
management development and leadership training for building necessary skills and attitudes of
performance management (Richard, 2002).
Undoubtedly the organizations performance is a function of the potential return to the
inculcation of strong culture into the organizations systems enabling it to execute its routines.

Effect of Organizational Culture on Organizational Performance

Organizational culture has the potential to enhance organizational performance, employee job
satisfaction, and the sense of certainty about problem solving (Kotter, 2012). If an organizational
culture becomes incongruent with the changing expectations of internal and/or external
stakeholders, the organizations effectiveness can decline as has occurred with some
organizations (Ernst, 2001). Organizational culture and performance clearly are related
(Kopelman, Brief, & Guzzo, 1990), although the evidence regarding the exact nature of this
relationship is mixed. Studies show that the relationship between many cultural attributes and
high performance has not been consistent over time (Denison, 1990; Sorenson, 2002).
We can summarize the effects of organizational culture on employee behavior and performance
based on four key ideas (Bulach, Lunenburg, & Potter, 2012; Hellriegel & Slocum, 2011). First,
knowing the culture of an organization allows employees to understand both the organizations
history and current methods of operation. This insight provides guidance about expected future
behaviors. Second, organizational culture can foster commitment to the organizations
philosophy and values. This commitment generates shared feelings of working toward common
goals. That is, organizations can achieve effectiveness only when employees share values. Third,
organizational culture, through its norms, serves as a control mechanism to channel behaviors
toward desired behaviors and away from undesired behaviors. This can also be accomplished by
recruiting, selecting, and retaining employees whose values best fit the values of the
organization. Finally, certain types of organizational cultures may be related directly to greater
effectiveness and productivity than others.

Conclusions:

Indeed the study of organizational culture and performance is advantageous since the cultural
values are observable and measurable.
Thus in studying of cultural effect on performance, it is vital that both financial and non financial
(i.e. cultural values, norms) measures are used to get more comprehensive results.
The literature on organizational culture and performance revealed that companies that know how
to develop their cultures in an effective way most probably have the benefit of advancement in
productivity and the quality of work life among the employees.
Indeed, employees must absorb the organizational culture at the maximum strength and the top
management should provide a precise guideline and direction to motivate the employees in
achieving the companys objectives

References:
Bulach, C., Lunenburg, F. C., & Potter, L. (2012). Creating a culture for high-performing
schools: A comprehensive approach to school reform (2nd ed.). Lanham, MD: Rowman &
Littlefield

Nelson, D. L., & Quick, J . C. (2011). Understanding Organizational behavior. Belmont, CA:
Cengage South-Western.

Kotter, J . (2012). Corporate culture and performance. New York, NY: Free Press.

Marcoulides, G. and Heck, R.H. (1993). Organizational Culture and Performance:
Proposing and Testing a Model, Organizational Science, 4(2) : 209-223.

Schien, E.H. (1992). Organizational Culture and Leadership, 2nd Edition, San Francisco;
J ossey-Bass.

Richard, C. (2002). Experiments with New Teaching Models and Methods.
International Public Management Review.

Ernst, H. (2001). Corporate culture and innovative performance of a firm. Management of
Engineering & Technology, 2, 532-535
Kopelman, R. E., Brief, A. P., & Guzzo, R. A. (1990). The role of climate and culture in
productivity. In B. Schneider (Ed.), Organizational climate and culture (pp. 282-318). San
Francisco, CA: J ossey-Bass.

Denison, D. R. (1990). Corporate culture and organizational effectiveness. New York,
NY: Wiley.

Bulach, C., Lunenburg, F. C., & Potter, L. (2012). Creating a culture for high-performing
schools: A comprehensive approach to school reform (2nd ed.). Lanham, MD: Rowman
& Littlefield.

Siehl, C. & Martin, J . (1998), Measuring Organizational Culture: Mixing Qualitative and
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