Does organizational culture influence employee productivity at the local level? A test of Denison’s culture model in Ghana’s local government sector – Future Business Journal

In this section, the literature is examined focusing on the theoretical, conceptual and empirical investigations. In addition, the notions of organizational culture and employee productivity are examined first together with McGregor’s theories X and Y and Denison’s organizational cultural model. Empirical studies of factors influencing employee productivity as well as the impact of organizational culture on employee productivity are also discussed (see Tables 1 and 2). These two theories are key to this study because employee productivity is explained by McGregor’s X and Y through the content hypothesis which helps to explain the unique aspects that inspire and motivate a person’s productivity-enhancing activity. Similarly, Denison’s organizational model aids in the comprehension of organizational culture.

McGregor’s theory X and Y

Douglas McGregor makes two contradictory insights about human work behavior [28, 31]. According to McGregor, firms utilize one of two techniques to regulate employee behavior: theory X or theory Y. According to theory X, it is the responsibility of management to ensure that the use of money, materials and employees is organized in a way that meets the organizational purpose or goal. Also, employees have an inherent attitude not to perform at optimum if work environment and management weaknesses make it so [43]. Therefore, there is a need for management to direct and take steps to discourage the attitude of employees in avoiding work. Hence, high productivity can be achieved by controlling the actions and behavior of employees [38, 39]. In support of theory X, [28] found an inherent lazy attitude of workers which affected employee performance when no direction was given, arguing that such types of employees need to be rewarded, persuaded, coerced and directed before the organizational goal can be achieved.

McGregor’s theory Y focuses on how resources such as money, materials and employees are organized effectively to aid the achievement of corporate goals. In theory Y, employees are believed to be committed to organizational goals and objectives and are so willing to achieve them. In this light, the theory states that management must take advantage of this situation and provide employees with the right working conditions and resources needed to achieve the corporate goal (see Table 1). Thus, Theory Y assumes that management will support employees by giving them the right organizational values that help them develop their potential. According to Mullins [32], providing a stable and positive organizational culture is a requirement in ensuring increased productivity of employees.

Denison’s organizational cultural model

According to Denison, Haaland and Goelzer [18], the four main principles that underpin organizational cultural theory are consistency, engagement, flexibility and mission. The model defines involvement or participation as the cultural attribute that aims to empower individuals, organize the company around groups or teams and improve human talents on all levels. For the participation indicator to be legitimate, managers, supervisors and employees must be committed to the business and its mission.

Denison and Mishra [19] note that organizations interact with the environment in a sociocultural framework, which has an impact on the lives of employees. And since people are bound together by their culture, organizational culture can be a potent tool for influencing employee worldviews, which has a direct impact on the organization where they work.

Furthermore, Denison [17] argues that the institution’s culture must be consistent because of the underlying ideals, beliefs, principles and values. The stability of a company’s culture either attracts or repels employees. People’s conduct is rooted in a set of underlying beliefs, and managers and employees are adept at finding consensus even when opposing viewpoints exist [15]. As historical accounts show, civilizations with consistent cultures and well-coordinated and integrated systems tend to be more successful and efficient [49]. Consistency has been used to explain the foundations of a productive corporate culture by many [15, 17, 49]. In addition, organizations need to align their values and belief systems with performance goals to increase productivity. To a large extent, goal attainment is influenced by organizational culture alignment with individual and organizational goals as well as the integration of systems and people to create synergy to execute operational and tactical activities [49]. In this way, the synergy created through cascading organizational culture will impact employee commitment and control of task performance leading to an increase in productivity.

There are, however, some limitations to Denison’s culture model. For instance, in terms of an organization’s ability to allow people to adapt to its culture, the model does not indicate how this process is achieved. This is because people can be productive if their culture is strong and adaptive, and at the same time, they can also be counterproductive if their culture is negative and their adaptation is low [18]. Similarly, adaptive firms may be willing to take risks and learn from their failures, as well as have the skills and experience to implement change which explains their speedy adaptive nature [2]. Adaptable organizations update their systems regularly to increase their collective responsibility to achieve corporate goals.

The third cultural feature, according to Denison, Nieminen and Kotraba [16], is organizational mission. The mission attribute is concerned with how a feeling of purpose, vision and mission can help a community or organization thrive by directing how people should behave. Because organizations act as societies, the mission trait further describes the requirement for firms to have a mission in which strategic and policy orientations are used to accomplish the goals. As a result, successful businesses must have a clear sense of purpose and direction that outlines the company’s strategic goals and objectives [18].

These two theories are the foundation of this study. Consequently, involvement, consistency, adaptability and mission are the core variables that are used to measure organizational culture in this study (see Table 2).

Employee productivity

There are many different explanations for employee productivity and employee performance is commonly used interchangeably with the term. According to [25], employee productivity is the employee production in a corporation with the help of resources. This indicates that an individual capacity to be productive can be said to be the ratio of the available resources that the institution provides to the effort exacted to produce a given unit of goods and services (see Table 1). The resource can be monetary, training or other things required to complete an activity. In the view of [25], employee productivity measures employee’s efficiency when provided the required resources. As a subsequent outcome, the term emphasizes an employee’s efficiency. The time it takes to complete a task has an impact on an employee’s efficiency [13]. And according to [22], employee productivity is the production of products and services that an employee creates within a specified timeframe. This shows that employee productivity can also be quantified in terms of hours of work time [44]. According to Sauermann [44], definitions of employee productivity can also depend on the industry. For example, employee productivity can be easily quantified in connection to the number of goods produced and the resources or inputs used in the manufacturing industry. In the service sector, this can be measured in terms of service quality [47].

Each organization in any sector, however, is at liberty to apply either quantity or quality measures, or both.

In addition, according to Leblebici [29], technological improvement can influence staff productivity through innovation, skill enhancement and efficiency, all of which are important contributory aspects to profitability and outcomes. As a result, some input characteristics, as well as the efficiency with which production resources are used, have an impact on staff productivity. In this scenario, two employees may have similar productive technology, but one will be more productive than the other because he or she has more money. When compared to the marginal product of labor, an employee’s output or outcome agrees with the average product of labor.

In light of prior definitions of employee productivity, this study defines it as an employee’s capacity to fulfill goals set in the job description and employment agreement in a given period. Workers’ productivity can be viewed by comparing the man hours by an employee in a week to the total hours of task performance, as well as the efficiency with which they met weekly targets or goals. This kind of measuring can be used to see whether an employee’s production is on track. Furthermore, the efficiency metric aids in determining an employee’s ability to complete a task given the resources required or available [30]. These productivity measurements help management improve operations by allowing them to assess and quantify employees’ working abilities in terms of the time it takes to accomplish a task or achieve a goal. These metrics are intended to give a clear and precise foundation for contrasting real and projected outcomes.

Organizational culture

Schein [45] relates that organizational culture comprises three interconnected levels. First, at the bottom are assumptions that reflect the beliefs of nature and reality. The second is values, which are common principles and ideals. Lastly, at the top is visible and concrete characteristics of institutional culture. The term culture is used to describe how individuals feel, think and act in a particular way. A collection of people develops and interprets the same ways of doing things [41]. As a result, the term “culture” is now used in companies to refer to the traits, way of life, knowledge, language and social habits of people who work in the same organization.

Different schools of thought have also used culture, in general, to describe an organizational culture in different ways [1]. Organizational culture, for example, is viewed as a common symbolic system that incorporates cumulative mental products and unconscious mental processes that underpin cultural expressions by the structuralist school [9, 12, 37]. Similarly, the cognitive school of thought considers organizational culture to be a set of taught principles for perceiving, believing, evaluating and behaving [9]. This implies that an organization’s culture is made up of what people know or think and that this knowledge or belief impacts conduct in a way that is acceptable to all employees [26]. The functionalist school, on the other hand, claims that organizations are systems with objectives, purposes and needs that are always in contact with their surroundings. In the view of [19], an organization with a distinct cultural framework from the rest of society is what constitutes organizational culture. Also, most organizations have cultures that tend to bind individuals together as a unit and they act in like manner because the success or failure of the organization is dependent on it [6, 8]. It is also seen as the cooperative values, beliefs and principles of institutional members. As a result, it is influenced by history, product, market, technology, strategy, management style and country culture [4, 50].

Organizations with strong cultures, according to [44], are difficult to copy and have a competitive edge over institutions with weaker cultures. Nongo and Ikyanyonl [45] discovered that corporate culture is an important corporate strategy for the growth of businesses around the world. Daft [15] rightly puts it that the right culture results in a competitive advantage for an institution. Therefore, weak culture results in lower productivity, leading to institutional failure [12, 38, 39]. Hence, culture is an influential tool for regulating employee behaviors rather than rules and regulations. For instance, rules and regulations may not help in solving client–organization problems when there is the need to improve upon the quality of customer service or when to solve customer challenges. Rather, institutions must create a favorable culture to aid employees to think and produce solutions toward improving customer–institution relations.

According to Wambugu [53], a basic assumption shared by employees and managers may benefit the institution. This assumption must be transformed into values such as classlessness and good relationships. The visible and concrete characteristics of such values are the “open door” policy and an office arrangement that includes open spaces. As a result, Torres [48] suggests that studying an organization’s physical environment, employee relations, business regulations, reward systems and other observable elements might help one comprehend its culture. However, most often, a critical look at these observable elements may not give the true representation of the organization, because the composition of the institutional culture exists under a person’s level of awareness.

Empirical review

A study on organizational culture and employee productivity of six (6) zonal and 36 state units in Nigeria found that there is a strong relationship between organizational culture and employee productivity [3]. The total variance explained showed the analysis of variance (ANOVA) test was statistically significant and a strong positive connection between employee dedication and organizational culture, as well as a decent organizational culture.

Ahmed’s [3] study of the telecom industry in Pakistan revealed that there is a statistically significant association between organizational culture and employee productivity. The research used some Telecom franchisees in Bahawalpur and measured an organizations’ productivity using the balanced scorecard. The findings showed that all aspects of organizational culture had a significant impact on several aspects of organizational productivity. Similarly, Ng’ang’a and Wesonga [36] discovered that organizational culture had a substantial impact on educational institution performance in Kenya. Return on equity, asset and profitability was used to evaluate the performance. The study discovered that culture is a crucial component of good organizational performance and that there is a strong link between culture and performance.

In Pakistani universities, Mujeeb, Masood and Ahmad, [33] discovered a link between organizational culture and performance management techniques. The exploratory research approach was used to obtain data from 140 employees via primary means such as questionnaires. Inferential statistical procedures such as regression and correlation were utilized to analyze the data, which included both male and female faculty members. Involvement as a component of corporate culture was found to be substantially connected with consistency and adaptability.

Similar research of organizational culture and performance management procedures in information technology organizations was undertaken in Romania [42]. The Chi-square test and bivariate analysis of primary data from 82 workers in the information technology business in Bucharest, Romania, revealed that organizational culture characteristics had a moderate effect on performance management. Also, involvement, consistency, adaptability and mission were significant and positive on performance management, Consistency also has the greatest influence on performance management approaches.

In Ghana, the effect of organizational culture on performance provides substantial evidence [14]. The study used questionnaires and convenience and purposive sampling techniques to sample 185 nonrandom respondents from Ghana’s capital. According to a Pearson correlation analysis, there is a strong positive association between corporate strategy and organizational culture and performance. Similarly, [34] used 60 employees from several firms to investigate the impact of company culture on employee performance. Employee performance and organizational culture were found to have a favorable and strong significant association, according to the t-tests and Pearson correlation matrices. The study also discovered that there was no statistically significant difference in employee responses to organizational culture and performance based on gender.

In addition, [1] investigated how organizational culture affects employee productivity in Nigeria using a descriptive mixed-methods research design, the ordinary least square (OLS) simple regression method showed that consistency was a significant determinant of an employees’ effectiveness. The mission of an institution also had a significant effect on job efficiency. The research also discovered a link between company culture and employee productivity.

Findings from the theoretical, conceptual and empirical reviews of the two variables are in tune with recent findings from empirical studies such as [5, 24, 52] which reveal that organizational cultural dimensions as put forward by Dennison’s 1984 have an impact on employee productivity. From the review of the variables, the following hypothesis and the research framework in Fig. 1 guided the study in the empirical data collection:

H₁

There is a positive relationship between involvement and employee productivity

H₂

The culture of consistency has a strong effect on employee productivity

H₃

Increase culture of adaptability is positively related to employee productivity

H₄

The mission of an organization has a positive influence on employees’ productivity

H₅

There is a statistically significant relationship between organizational culture and employee productivity.