EFFECT OF ORGANAZATIONAL CULTURE ON EMPLOYEE

PERFORMANCE: THE CASE OF DEVELOPMENT BANK OF

ETHIOPIA WOLITA SODO DISTRICT

MBA THESIS

BY

AMELMAL HAIMANOT

August, 2018

ARBA MINCH, ETHIOPIA

EFFECT OF ORGANAZATIONAL CULTURE ON EMPLOYEE
PERFORMANCE

THE CASE OF DEVELOPMENT BANK OF ETHIOPIA

BY

AMELMAL HAIMANOT

A RESEARCH PROJECT SUBMITTED TO POST GRADUATE

STUDIES IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE DEGREE OF MASTERS OF
BUSINESS ADMINISTRATION (MBA)

ARBA MINCH UNIVERSITY

SCHOOL OF POST GRADUATE STUDIES

August, 2018

ARBA MINCH, ETHIOPIA

 DECLARATION

I hereby declare that the thesis entitled “Effect of Organizational Culture on Employee
Performance: The Case of Development Bank of Ethiopia” is my original work. I have
carried out the present study independently with the guidance and support of the research
advisor, Dr. Habtamu Endris. Any other contributors or sources used for the study have been
duly acknowledged. Moreover, this study has not been submitted for the award of any Degree or
Diploma Program in this or any other Institution.

Name: Amelmal Haimanot

Signature: ________________________________________

Date: __________________________________________
 ARBA MINCH UNIVERSITY
SCHOOL OF POST GRADUATE STUDIES
ADVISORS’ THESIS SUBMISSION APPROVAL SHEET
This is to certify that Mrs. Amelmal Haimanot has completed her Research Project entitled
“Effect of Organizational Culture on Employee Performance: The Case of Development
Bank of Ethiopia”. In my opinion, all the materials used for the paper has been duly
acknowledged and this paper is appropriate to be submitted as a partial fulfillment of the
requirement for the award of Degree in Masters of Business Administration.

Dr. Habtamu Endris ______________ ______________ ____________

Advisor Signature Date
 Arba Minch University
College of Business and economics
Department of management
MBA project
Approval of board of examiners

1. _________________ ________________ _________________

External examiner Signature Date
2. ________________ _________________ _________________
Internal Examiner Signature Date
3. ________________ _________________ ________________
Chairperson Signature Date
 ACKNOWLEDGMENT

First of all and foremost I would like to express my deepest gratitude to the Almighty God for
his blessing and for making every step of my life possible. Secondly, I am greatly
indebted to thank my advisor Habtamu Endris (PHD) for his unreserved attention to correct my
report and advising me for the better improvement of this thesis.

Thirdly, I am very grateful to thank my family for everything they have done for me up to this
moment. Moreover, I would like to acknowledge the participants and individuals who have
been contributing to the study for their willingness, participation and valuable information.
Finally, those individuals who have been contributing a lot for the entire work deserve to
be acknowledged.

THANK YOU ALL

Amelmal Haimanot
 ACRONOMY
DBE...................................................................Development Bank of Ethiopia

SPSS..................................................................Statistical Programming for Social Science

ANOVA.............................................................Analysis of Variance

II
 TABLE OF CONTENTS

ACKNOWLEDGMENT ........................................................................................................................... VI

ACRONOMY .............................................................................................................................................. II

TABLE OF CONTENTS .......................................................................................................................... III

LIST OF TABLES ..................................................................................................................................... VI

LIST OF FIGURES .................................................................................................................................. VII

LIST of APPENDICES............................................................................................................................ VIII

ABSTRACT ................................................................................................................................................ IX

CHAPTER ONE ......................................................................................................................................... 1

1. Introduction ............................................................................................................................................... 1

1.1. Background of the study ................................................................................................................ 1

1.2. Statement of the Problem ............................................................................................................... 3

1.3. General objective ........................................................................................................................... 5

1.4. Significance of the Study ............................................................................................................... 5

1.5. Scope of the Study ......................................................................................................................... 5

1.6. Limitation of the study ................................................................................................................... 6

1.7. Operational definition of key terms ............................................................................................... 6

1.8. Organization of the study ............................................................................................................... 6

Chapter Two ................................................................................................................................................ 7

2. REVIEW OF RELATED LITERATURE ............................................................................................ 7

2.1. Organizational Culture ................................................................................................................... 7

2.3. How organizational Culture developed.......................................................................................... 9

2.4. Types of organizational culture.................................................................................................... 10

2.5. Functions of Organizational Culture ............................................................................................ 13

2.6. Characteristics of organizational culture ...................................................................................... 14

2.7. Dimensions of Organizational Culture......................................................................................... 14

2.7.1. Hofstede's Cultural Dimensions Theory ........................................................................... 14

2.7.2. Daniel Denison’s Model ................................................................................................... 16

III
 2.7.2.1. Involvement Culture and Employee performance ............................................................. 20
2.7.2.2. Consistency Culture and Employee Performance .............................................................. 20
2.7.2.3. Adaptability Culture and employee performance .............................................................. 21
2.7.2.4. Mission Culture and Employee Performance .................................................................... 22
2.7.3. Edgar Schein Model .......................................................................................................... 23

2.7.4. O'Reilly, Chatman and Caldwell Model ........................................................................... 24

2.8. Employee Performance ................................................................................................................ 25

2.8.1. Measurement of employee performance ........................................................................... 26

2.9. Empirical Review......................................................................................................................... 26

2.10. Conceptual Framework .............................................................................................................. 27

CHAPTER THREE .................................................................................................................................... 29

3. RESEARCH METHODOLOGY ............................................................................................................ 29

3.1. Description of the study area ....................................................................................................... 29

3.2. Research design and approach ..................................................................................................... 29

3.3. Target population and Sample size .............................................................................................. 30

3.3. Data Collection Tools .................................................................................................................. 31

3.4. Method of Data Analysis ............................................................................................................. 31

3.5. Validity and Reliability ................................................................................................................ 32

3.6. Ethical Consideration ................................................................................................................... 33

CHAPTER FOUR..................................................................................................................................... 34

4. RESULTS AND DISCUSSION ............................................................................................................. 34

4.1. Descriptive Statistics .................................................................................................................... 34

4.1.1. Demographic Profile of Respondents ............................................................................... 34

4.1.2. Descriptive statistics on organizational culture................................................................. 35

4.1.3. Descriptive statistics on Employee Performance Measure ............................................... 38

4.2 Analysis of Inferential Statistics Results....................................................................................... 39

4.2.1. Correlation Analysis ......................................................................................................... 39

4.2.2 Regression Analysis ........................................................................................................... 41

CHAPTER FIVE ...................................................................................................................................... 47

IV
5. SUMMARY OF FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS ........................... 47

5.1 Summary of Findings .................................................................................................................... 47

5.2 Conclusions ................................................................................................................................... 48

5.3 Recommendations ......................................................................................................................... 50

5.4. Limitation and Suggestions for Future Studies ............................................................................ 51

Reference ................................................................................................................................................... 52

V
 LIST OF TABLES

List of Tables Page

Table 3.1 Target Population of Wolita Sodo District in 2018 ............................................... 30

Table 3.2: Reliability Test Result .......................................................................................... 32

Table 4.1.Demographic characteristics of the respondent ..................................................... 34

Table 4.2: Results of Descriptive Statistics of the Study Variables. ..................................... 36

Table 4.3:Results of Descriptive Statistics of the Study Variables........................................39

Table 4.4. Descriptive statistics on employees performance measures ................................ 38

Table 4.5 Correlation Among the study Variables……………………………………...…..43

Table 4.6: Model summary of Regression analysis on organizational cultures and

employee performance. ......................................................................................................... 43

Table 4.7.ANOVA of Regression Analysis on organizational culture and employee

performance ........................................................................................................................... 44

Table 4.8. Regression Coefficient on Organizational Culture and

Employee Performance.........................................................................................................48

VI
 LIST OF FIGURES
List of Figure Page

Figure. 1 Denison Culture Model.........................................................................................17

Figure 2 – Conceptual framework of the research ..............................................................29

Figure 3 Test of normality.....................................................................................................45

VII
 LIST of APPENDICES

List of Appendix Page

Appendices1: - A Survey on the Effect of Organizational Culture

on Employees’ performance....................................................................................................62

Appendices2: - Test Result of Linearity..................................................................................66

Appendices3: - Test of normality............................................................................................67

Appendices4: - Test for Homoscedasticity of the variables....................................................68

VIII
 ABSTRACT

This research paper discussed the effect of organizational culture on employees’ performance in
case of Development Bank of Ethiopia. The objective of this study was to investigate the effect
of four organizational culture traits namely, involvement, consistency, adaptability and
mission on employee performance in Development Bank of Ethiopia (DBE). The thesis adopts
explanatory research with quantitative research approach. Data for the study was collected
from 84 employees by census, using survey questionnaire. Both inferential and descriptive
analysis are used to see the relationship and effect of independent variables on dependent
variable. The results show that the four traits measuring organizational culture were all
positively related with employee’s performance. Moreover, involvement is the most contributing
organizational culture traits in the prediction of employee performance with beta value .654.
The other three organizational culture traits, in their descending order of standardized
coefficients are mission, consistency and adaptability. Furthermore, statistically significant
result for the three organizational culture traits: involvement, mission, and consistency,
indicate that there is significant relationship with employees’ performance. However,
adaptability doesn’t have significant effect on employee performance as per the result of
regression analysis.

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 CHAPTER ONE

1. Introduction
1.1. Background of the study
The issue of organizational culture has received increased attention in the late 1980’s and early
1990’s when US companies failed to compete with their Japan counterpart in terms of
organizational effectiveness (Ojo, 2010). Different definitions have been given for the term
organizational culture so far. This study follows the definition given by Dolan and Lingham
(2012) as culture is a set of values and commonly held beliefs that determine which behaviors
are acceptable and expected for a given group.

People are surrounded by culture, usually invisible that forms the background of their work lives
in organizations. Organizational culture provides a powerful mechanism for controlling behavior
by influencing how we view the world around us. Organizations do not exist in a vacuum but in
a specific culture or socio-cultural environment that influence the way their employees think,
feel, and behave. Work place culture is a very powerful force that influences an employee’s work
life. It is the very thread that holds the organization together. Hence, managers and employees do
not work in a value-free environment. They are governed, directed, and tempered by the
organization’s culture (Ritchie, 2000). Hence, organizational culture is the underlying values,
beliefs, principles, and practices that constitute its management system (Denison, 1990).

Different empirical studies indicate that organizational culture has impact on employee
performance (e.g., Schein, 2004; Fakhar, Rana, Ayesha & Luqman, 2012; Beverly Cutajar, 2012;
Mohammad, Rumana & Saad Md, 2013; Nadia Nazir, 2015). According to Cascio (2006)
performance is the degree of an achievement to which an employee’s fulfill the organizational
mission at workplace. Antonnette (2016) defines employee performance as the ability of any
employee to successfully and efficiently perform the duties and tasks assigned to him or her
within the organization. In addition, Antonnette argues that employee performance is not just a
matter of only what a group of employees (teams) or an individual employee achieves stated
goals but it also has to do with how the employee is willing and motivated to uphold and
promote the values of the organization.

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Daft (2000) in the other hand defines employee’s performance as a means to measure the ability
of employees to attain goals either personal or organizational by using resources efficiently and
effectively. According to Kandula (2006) the key to good performance is a strong culture. He
further maintains that due to difference in organizational culture, same strategies do not yield
same results for two organizations in the same industry and in the same location. A positive and
strong culture can make an average individual performance and achieve brilliantly whereas a
negative and weak culture may demotivate an outstanding employee to underperform and end up
with poor performance. Therefore, organizational culture has an active and direct role on
employee performance (Ahmed, 2012).

Magee (2002) explained that organizational culture is inherently connected to organizational

practices which in turn influence employees’ performance. Similarly, Ojo (2009), findings
indicate that organizational culture has influence on employee performance, and also a positive
relationship between organizational culture and employee performance. Furthermore, Anozie
and Ismail (2016) find out organizational culture has a huge and significant impact on
employee’s performance. Organizational culture has a deep impact on the performance of
employees that can cause to improve in the productivity and enhance the performance of the
organization (Fakhar, Rana, Ayesha and Luqman, 2012).

From numerous “culture surveys” it has been claimed that employee performance can be
improved by developing and creating certain kinds of organizational cultures (Sackman &
Bertelsman, 2006, & Denison, 1990).

This study therefore sets to assess the effect of organizational culture on employee performance,
using Development bank (DBE) as a case study.

2
1.2. Statement of the Problem

As depicted on the background of the study different authors and researchers asserted that there
is positive and significant relationship between overall organizational culture and employee
performance (e.g., Kandula, 2006; Ahmed, 2012; Magee, 2002; Ojo, 2009; Anozie & Ismail,
2016 & Schein, 2004). Furthermore, a study by Fakhar, Rana and Ayesha (2012) proved that if
employees are committed and having the same norms and value as per their organizations, they
can increase the performance toward achieving the overall organization goals. Organizational
culture has a significant impact on the performance of employees that can cause to improve in
the productivity and enhance the performance of organization.

Coming to the specific case company, Development bank of Ethiopia has organizational culture
which distinguishes it from other companies. This organizations culture encompasses shared
values, norms and attitudes which guide the way employees behave. According to the strategic
plan report of development bank of Ethiopia for the period covering 2015/16-2019/20, indicates
the gap of the organization culture and the entire environment of the bank which requires further
consideration for the next strategic period. some of them are; values of the organization were not
adequately shared by the entire staff of the bank and the practical level of team work and team
development throughout the Bank is not up to the desired level, systems of the bank operation
indicates compliance to rules and regulation and also the practical observations and survey
results indicate there is low level of employees’ engagement; lack of commitment, behavioral
changes of the staffs, low level of employees satisfaction and low employees performance
provision and performance evaluation. In general, the report indicates that all the above-
mentioned points require further consideration for the next strategic period.

Moreover, the existing literature on culture, organization culture and employee performance
mainly focused and carried out in developed countries and considering the determinants,
influences and composition of the culture it was not applied universally in different
environments like developing countries (Lydiah, 2014). However, some studies were conducted
on organizational culture and employee performance from other wider dimensions in developing
countries such as Nigeria, Kenya and Somalia. Such countries research finding on organizational
culture and performance has a good attempt to adapt to developing countries like Ethiopia.

3
In a study in a government parastatal in Kenya, Musioka (2015) found a positive effect of
organization culture on organizational performance. According to Agwu (2014) studies in
Nigerian banking industry indicated significant relationship between organizational culture and
employee’s performance. There is a strong evidence of a significant relationship between
organizational culture and increased employees’ productivity. This conclusion is supported by
Ojo (2009) studies that a positive relationship between corporate culture and employee job
performance. Also, the conclusion is supported by Daft (2010) studies which indicates a positive
organizational cultures positive impact on employees’ performance by motivating, shaping and
channeling their behaviors towards the attainment of corporate objectives.

However, organization culture has received relatively low levels of empirical investigation
among the possible antecedents of employee performance (Lok & Crawford, 2004). According to
Edgar (2013) culture researchers have devoted numerous articles to the nature and definitions of
culture, relatively fewer articles have been contributed towards culture and performance
research. In addition, Edgar mentioned the reason for this was the difficulty in operationalizing
the culture construct. Although empirical research has been carried out, there has been little
evidence to prove the effect of organization culture on employee performance.

Njugi and Nickson (2014) found in their study that organization culture has a great influence on
performance as it dictates how things are done, organization’s philosophy, work environment,
performance targets, and organizations stability. However, Lahiry (1994) argues a weak relation
between organization culture and performance. It is these diverse results that give room for more
research to be done on the relationship between organizational culture and employee
performances. According to Ojo (2008) despite the studies on organizational culture in the last
few decades, the empirical evidences emerging from various studies about the effect of
organizational culture on performance have so far yielded varied results that are inconclusive and
contradictory. He further states that there is no agreement on the precise nature of the
relationship between organizational culture and performance.

In view of the above research gaps this study is conducted to assess the effect of organizational
culture on employee performance in Development Bank of Ethiopia (DBE). The above research
problems lead to the following research questions:

4
Research Questions:

1. What is the effect of involvement on employee performance?

2. What is the effect of consistency on employee performance?
3. What is the effect of adaptability on employee performance?
4. What is the effect of mission on employee performance?

1.3. General objective

The general objective of this study is to assess the effect of organizational culture on employee
performance in development bank of Ethiopia Wolitasodo District.

Specific objectives

The specific objectives of the study are as follows:

1. To examine the effect of involvement on employee performance.

2. To identify the effect of consistency on employee performance.
3. To examine the effect of mission on employee performance.
4. To identify the effect of adaptability on employee performance.

1.4. Significance of the Study

The purpose of this study was to investigate the possible effect of organizational culture and
employee performance. Furthermore, the results of this study have the following importance:

 The company might use the study finding as an input to amend its policy and procedure
on organizational culture to improve employee’s performance.
 The findings of the current study could serve as a stepping stone for further researchers
who are interested to make further investigation on the topic.

1.5. Scope of the Study

The scope of the study is delimitation geographically, conceptually, methodologically as well as
time. Conceptually: this study only focuses on the cause and effect relationship between
organizational culture dimensions (Involvement, Consistency, Mission and Adaptability) and
Employee performance. Geographically: in the case organization of development bank of
Ethiopia, there are12 districts and 122 branch in Ethiopia. But this study delimits itself on some
selected branches which are under Wolita Sodo district only because of financial and time
constraints. Methodologically: the study was conducted by cross sectional /single point data

5
collection using quantitative research design was used to gather the response of employees.
Time: Due to the time constraint the study used cross sectional survey design conducted from
March-August 2018.

1.6. Limitation of the study

This study reported the result of the study in the effect of organizational culture on employee
performance in selected districts of development bank of Ethiopia. Therefore, due to this reason
the study cannot be considered as a representative of the whole development banks of Ethiopia.

1.7. Operational definition of key terms

Organizational Culture: - Organizational culture comprises the shared set of beliefs,
expectations, values, norms and work routines that influence how members of an organization
relate to one another and work together to achieve organizational goal (Jones & George, 2006).

Performance: -Performance is deemed to be the fulfillment of responsibility and an obligation,

in a manner that releases the performer from all liabilities under the contract.

1.8. Organization of the study

This study has five chapters. The first chapter provides background of the study, statement of the
problem, objectives of the study, significance of the study, scope of the study, and definition of
key terms. The second chapter deals with review of the related literature on the concept of
organizational culture, types of organizational culture, levels of organizational culture, theories
of organizational culture, concept of employee performance. The third chapter presents research
design, data sources, instruments and data collection, methods of data analysis, reliability and
validity and ethical considerations. The fourth chapter deals with the presentations, analysis, and
interpretation of data. Finally, chapter five summarizes the investigation, conclusions drawn, and
the recommendations made.

6
 Chapter Two

2. REVIEW OF RELATED LITERATURE

This chapter starts with the concepts and definitions of organizational culture and the theoretical
review of its importance, characteristics of organizational culture, models of organizational
culture, changing organizational culture, functions of organizational culture, the elements of
organizational culture, creating and maintaining organizational culture, communicating
organizational culture, and employee performance. The chapter continues with the empirical and
theoretical review of different researchers’ works regarding the relationship and effect of
organizational culture on employee performance and then followed by the conceptual
framework.

2.1. Organizational Culture

The concept and definition of organizational culture has been debated by many experts in the
field for over a decade. The term “culture” originally comes from social anthropology.
According to them, concept of culture was coined to represent, in a very broad and holistic sense,
the qualities of any specific group that are passed from one generation to the next (Kotter, 1992).

Organizational culture is the set of shared values, beliefs, and norms that influence the way
employees think, feel, and behave in the workplace Culture is transmitted to an organization's
members by means of socialization and training, rites and rituals, communication networks, and
symbols (Schein, 2011).organizational culture is as collection of traditions, values, beliefs,
policies and attitudes that constitute a pervasive context for everything one does and thinks in an
organization (Agwu, 2014). Schein (1992) defines organizational culture as: a pattern of
shared basic assumptions that the group learned as it solved its problems of external
adaptation and internal integration that has worked well enough to be considered valid and,
therefore, to be taught to new members as the correct way to perceive, think, and feel in
relation to those problems. Schein also states that these assumptions come to be taken for
granted because they solve the group’s problems repeatedly and reliably. Also notes that culture
can be analyzed at several different levels including artifacts, espoused values and basic
underlying assumptions. Artifacts are defined as “visible organizational structures and
processes” (Schein., 1992). Examples of artifacts include dress codes, architecture, newsletters,

7
signs, and banners. Another level of culture stated by Schein is Espoused Values. Espoused
Values are audible and spoken, and includes goals, sayings, philosophies, strategies and slogans.
The third level described by Schein is Basic Underlying Assumptions. Basic Underlying
Assumptions are “unconscious, taken-for granted beliefs, perceptions, thoughts, and feelings”.
This includes assumptions that are not directly observable, consequently hard to analyze and
change.

Similar to Schein, Denison (1990) defines organizational culture as “underlying beliefs, values,
and assumptions held by members of the organization, and the practices and behaviors that
exemplify and reinforce them.” Zhang (2010) also describes organizational culture as a model,
composed by some basic assumptions; and the assumptions are found and created gradually by a
certain group in the process of exploring the method of adapting to external environment and
solving internal interconnected system. Internal integration is the socialization of new members
in the organizations, creating the new boundaries of the organization and the feeling of identity
among personnel and commitment to the organization (Treblanche, 2003). External adaptation is
also said to be creation of competitive edge, making sense of environment in terms of acceptable
behavior and social system stability. The definitions by (Schein, 2004) and (Zhang, 2010.) Offer
both deeper basic assumption and faith that is shared by organizational members in explaining
the purpose; and the environment of organization itself. Also, the affirmations focus on internal
integration and external adaptation of organizations which are the organizational culture
attributes that define the performance of organizations. It is thus admittance that organizational
culture is paramount to organizational success (Gammack, 2006).

Ravasi (2006) wrote that organizational culture is a set of shared assumptions that guide what
happens in organizations by defining appropriate behavior for various situations. It is also the
pattern of such collective behaviors and assumptions that are taught to new organizational
members as a way of perceiving and, even, thinking and feeling.

According to (Needle, 2004), organizational culture represents the collective values, beliefs and
principles of organizational members and is a product of such factors as history, product, market,
technology, strategy, type of employees, management style, and national culture; culture
includes the organization's vision, values, norms, systems, symbols, language, assumptions,
beliefs, and habits.

8
As it can be seen from the above definitions, there are some commonalities between and it can be
assumed that organizational culture comprises of some sort of values, beliefs, and attitudes that
are held by individuals and the organization.

2.3. How organizational Culture developed

According to Dwirantwi (2012) postulates that as a concept, culture is inseparable from the
notion of human society. To try and change the prevailing culture within an organization, one
has to take cognizance of the relevant societal culture. On the other hand, argues that a
company’s organization culture does not pop out of thin air and, once it is established, it does not
fade away. 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.
This leads one to its ultimate source of an organization‘s culture: its founders. Robbins further
emphasizes that the founders of an organization have a major impact on that organization‘s early
culture. They have a vision of what the organization should be, and they are unconstrained by
previous customs and ideologies. The process of culture creation occurs in three ways:

First, founders only hire and keep employees who think and feel the way they do; second, they
indoctrinate and socialize these employees to their way of thinking and feeling; and finally, the
founder’s own behavior acts as a role model that encourages employees to identify with them
and thereby internalize their beliefs, values, and assumptions. When the organization succeeds,
the founder‘s vision becomes seen as a primary determinant of that success. At this point, the
founder‘s entire personalities become embedded in the culture of the organization.

In the other ways, Ojo (2012) indicated that the values and norms which are the basis of
organizational culture are formed through the following four ways. These are:

1. By Leaders in the organization, especially those who have shaped them in the past.
People identify with visionary leaders – how they behave and what they expect. They
note what such leaders pay attention to and treat them as role models,
2. Through Critical Incidents or Important events from which lessons are learned about
desirable or undesirable behavior.
3. Through effective working relationship among organizations members. This establishes
values and expectations.

9
 4. Through the Organization’s Environment: Culture is learned over a period of time.
Where a culture has developed over long periods of time and has become firmly
embedded, it may be difficult to change quickly.
According to Nadia (2015), the culture of the organization has been derived from two
resources which are as follows

 For developing the culture of the organizations norms, attitudes and values of the
senior executives is involved. Whole culture of the organization revolves around the
charismatic leadership.
 The people who have been working previously in the organizations have helped to
solve the problems that may face by the new employees. Norms have been made
from such incidents that myths may transfer to the new employees within the
organization.
For the development of the organizational culture three things are required as:

 Commitment (based on common philosophy and purpose)

 Competence (indicate the development and reward in key areas)
 Consistency (purpose is to spread the competence by attracting, developing, and
retaining the right person for the right job) (Impact of Organizational Culture on
Employee’s Performance)

2.4. Types of organizational culture

According to Nadia (2015) there are two main approaches of the models of culture as type
models. These models are responsible for the classification of the organizational culture from
one to the limited number of the groupings. In lieu of the models one model suggests that there
are four type’s organizational culture and each represents the structure and its sets of system.
These four types are: Power, Task, Role and Person. And the other culture model types Profile
Models: These types of models do not try to categorize the organizational culture, but they try to
identify and explore its key characteristics. When such identification have been occurred than
they have been compared to the culture that organization demands and needs to operate and any
appropriate changes that are required to be taken must be made.

10
In the other way, Kim (2011) categorized organizational culture into four: Clan culture,
hierarchy culture, adhocracy culture and market culture are each rooted in a model of
organizational theory research.

The Hierarchy/ Control Culture: characterized by stability and an internal focus, is made up
of a formal structured chain of command and control that emphasizes constancy, predictability,
and efficiency. A very formalized and structured place to work. Procedures govern what people
do. Organization with this kind of culture deals with doing things right which implies efficient
utilizations of resources and achieving the right outputs. The leaders pride themselves on being
good coordinators and organizers who are efficiency minded. Maintaining a smooth-running
organization is most critical.

Formal rules and policies hold the organization together. The long-term concern is stability and
performance with efficient and smooth operations. Success is defined in terms of dependable
delivery, smooth scheduling and low cost. The management of employees is concerned with
secure employment and predictability. Efficiency, punctuality, consistency and uniformity are
the value driven in organization with such kinds of culture. Error detection, measurement,
process control, systematic problem solving and quality tools are quality strategies in such kinds
of organizations.

The identification of organizational cultures into different categories and dimension is not
sufficient to attempt to understand and measure the culture of the organization. However, it is
also very important to measure the impact that the culture has on the everyday operations
and workings of the organization, that is, how the organization organizes itself, its
relations with customers (internal and external) and how the organization treats staff, those
should be key aspects when building a successful culture (Sun, 2012).

The Market Culture/ compete: characterized by stability and an external focus, produces a
competitive organization that emphasizes results and achieving goals. Organization with this
culture is result-oriented whose major concern is getting the job done. It is with the intensions of
doing things fast. In such organization people are competitive and goal-oriented. Quality
Strategies of organization is measuring customer preferences, improving productivity, creating
external partnerships, enhancing competitiveness, involving customers and suppliers.

11
The leaders are hard drivers, producers, and competitors. They are tough and demanding. The
glue that holds the organization together is an emphasis on winning. Reputation and success are
common concerns. The long-term focus is on competitive actions and achievement of
measurable goals and targets. Success is defined in terms of market share and penetration.

The Clan culture, characterized by a flexible and internal focus, is a collaborative culture with a
strong commitment to the people of the organization and their development, much like an
extended family. Is with the motto of” do things together”. Exists in an organization where there
is a very pleasant place to work in which people share a lot of personal information, much like an
extended family. The leaders or heads of the organization are seen as mentors and perhaps even
parent figures. The organization is held together by loyalty or tradition. In this case,
commitment is high. The organization emphasizes the long-term benefit of human resources
development and attaches great importance to cohesion and morale. Success is defined in terms
of sensitivity to customers and concern for people. The organization places a premium on
teamwork, participation, and consensus. In an organization with this type of organization
culture, leaders are facilitator, mentor and team builder. And the value drivers in such kind of
culture are commitment, communication and development. In organization with this king of
culture quality strategy is empowerment, team building, employee involvement, human resource
development, open communication.

The Adhocracy/create Culture: characterized by a flexible and internal focus, makes up a

creative culture that promotes entrepreneurship, innovation, and unique ways to meet challenges
and stay on the leading edge. is organizational culture where a work place is dynamic,
entrepreneurial, and creative i.e.do things first. In such organizational culture, leaders are
considered innovators and risk takers. The glue that holds the organization together is
commitment to experimentation and innovation. The organization’s long-term emphasis is on
growth and acquiring new resources. Success means gaining unique and new products or
services. Being a product or service leader is important. The organization encourages individual
initiative and freedom. The quality strategy is, creating new standards, anticipating needs,
continuous improvement, finding creative solutions.

12
2.5. Functions of Organizational Culture
Organizational culture has different functions in the life of any organizations. It plays several
important roles within an organization. As such it provides a sense of identity and generates
organizational commitment as well as commitment to the organization’s mission and clarifies
and reinforces standards of behavior (Greenberg, 2003). According to (Patel, 2014), the
functions of organizational culture can manifest itself through creating the feeling of identity
among personnel and commitment to the organization and competitive edge to enable the
members (especially new members) in the organization to well understand acceptable behavior
and social system stability.

Dwirantwi (2012) indicates that culture helps to account for variations among organizations and
managers, both nationally and internationally. Culture helps to explain why different groups of
people perceive things in their own way and perform things differently from other groups.
Culture can help reduce complexity and uncertainty. It provides a consistency in outlook and
values, and makes possible the process of decision-making, co-ordination and control. There is
nothing accidental about cultural strengths. There is a relationship between an organizations
culture and its performance. And he explains that culture performs the four main functions.

First and foremost, Culture supplements rational management creation of work. Culture is a
time- consuming process. He continues by saying that, organization culture cannot suddenly
change the behavior of people in an organization. Culture communicates to people through
symbols, values, physical settings, and language, and, thereby supplements the rational
management tools such as technology and structure.

The second function is it facilitates induction and socialization. Induction is a process through
which new entrants to an organization are socialized and indoctrinated in the expectations of the
organization; its cultural norms, and undefined conduct. The newcomer imbibes the culture of
the organization, which may involve changing his / her attitudes and beliefs to achieving an
internalized commitment to the organization.

Furthermore, culture promotes a code of conduct; a strong culture in an organization explicitly

communicates modes of behavior so that people are conscious that certain behaviors are
expected and others would never be visible. The presence of a strong culture, would be evident
where members share a set of beliefs, values, and assumptions which would influence their

13
behavior in an invisible way. Where culture has been fully assimilated by people, they
persistently indulge in a typical behavior in a spontaneous way. Promotion of the culture of
quality can helps achieve good business results.

Lastly; 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. Sub-cultures can affect the organization in many ways: (i) they
may perpetuate and strengthen the existing culture; (ii) they may promote something very
different from those existing; (iii) they may promote a totally opposite sub-culture (beliefs and
values) or counter culture when in a difficult situation.

2.6. Characteristics of organizational culture

According to Fakhar, Rana and Ayesha (2012) maximizing employee’s values are considered as
rational assets that required a culture to support their logical participation both for individual and
organizational learning, new knowledge formation and readiness to share with others. They tell
that organizational culture is very important today as compare with past. And define some of the
characteristics of the organizational culture:

1. Norms are measured by things like as amount of work done and also the level of
cooperation between management and employees of the organization.
2. Clearly rules are defined for employee’s behavior associated to the productivity,
intergroup cooperation and customer relationship.
3. Observed behavioral regularities, as illustrate common language and formal
procedures
4. Coordination and integration between the organizational units for the purpose of
improvement in efficiency to works, quality and speed of designing, manufacturing
the products and services.

2.7. Dimensions of Organizational Culture

2.7.1. Hofstede's Cultural Dimensions Theory
According to Kien (2014) used a framework of six dimensions to describing organizational
culture:

1) Process-oriented vs. results-oriented (Means-oriented vs. Goal-oriented)

14
This dimension is most closely associated with the effectiveness of the organization. A process-
oriented culture focus on how the work is done, it concerns more about technical and
bureaucratic routine while results-oriented culture concerns about the outcome, where employees
are asked about what to be done. The two sides of the dimensions are also different in level of
risk taking. As Process-oriented culture emphasize on the assurance during working process,
employees avoid risks and even make limited effort in the task. By contrast, employees in
results-oriented tend to take more risk in order to achieve specific internal goals.

2) Job-oriented vs. employee-oriented

This dimension relates to management philosophy. The job-oriented culture assumes

responsibility for the employees’ job performance only; it even heavily presses employees to
perform the task. In opposite, employee-oriented culture considers also the employees’
wellbeing; it cares about individual issues too.

3) Professional vs Parochial (local)

In professional culture, employees are identified with their profession or content of their job. In
the local culture, the identity of members is determined by the team or unit they work in.

4) Open system vs. closed system

This dimension reflects the level of the accessibility of an organization. It refers to the internal
and external communication style and how easily newcomers are welcome. In open system, a
member is open to both insiders and outsiders as they believe everyone can fit the organization.

5) Tight vs. lose control (Easy going work discipline vs. strict work discipline)

This dimension deals with the amount of internal control, structuring and discipline. It expresses
the formality and punctuality level of the organization. In a tight culture, members are expected
to be punctual, serious and cost-conscious while loose culture exposes less control and
discipline.

6) Pragmatic vs normative (External driven vs. internal driven)

This dimension is about customers’ satisfaction, or in general, it defines the principal way of
dealing with the environment. The pragmatic culture (external driven), mostly existing in units
such as selling or customer services, focus on fulfill the customers’ requirement. On the other

15
side, normative culture (internal driven) emphasis on business ethics and honesty issues, which
appears in units involving in laws and regulation. More recent, in his website, Hofstede (2014)
add two more dimensions: degree of acceptance of leadership style and degree of identification
with your organization. Degree of acceptance of leadership style implies how the leadership style
of employee’’ direct boss is alighted with their preferences. Degree of identification with your
organization tells us the degree to which one identifies with the organization, such as internal
goals, clients, direct boss, team, etc…

2.7.2. Daniel Denison’s Model

Denison and Neale (2011) identifies four cultural traits Involvement, Consistency, Adaptability
and Mission. These underlying traits are expressed in terms of a set of managerial practices and
measured using the twelve indices that make up the model. (Denison & Neale, 2011). The
below succeeding paragraphs briefly discuss each of the four organizational culture traits and
their respective indices.

Denison Culture Model

Figure. 1 Denison Culture Model

Source. (Denison, The Role of the Board of Directors in Shaping Corporate Culture: Reactive
Compliance or Visionary Leadership? June 2005)

16
Involvement
Involvement is the degree to which individuals at all levels of the organization are engaged in
pursuit of the mission and work in a collaborative manner to fulfill organizational objectives.
This trait consists of building human capability, ownership and responsibility.

Organizations empower their people, build their organizations around teams, and develop human
capability at all levels (Becker, 1964; Lawler, 1996; Likert, 1961). Executives, managers, and
employees are committed to their work and feel that they own a piece of the organization. People
at all levels feel that they have at least some input into decisions that will affect their work and
that their work is directly connected to the goals of the organization (Spreitzer, 1995).

When capability development is higher than empowerment, this can be an indication that the
organization does not entrust capable employees with important decision making that impact
their work. Capable employees may feel frustrated that their skills are not being fully utilized and
may leave the organization for better opportunities elsewhere if this is not dealt with.

On the other hand, when empowerment is higher than capability development, this is often an
indication that people in the organization are making decisions that they are not capable of
making. This can have disastrous consequences and often happens when managers confuse
empowerment with abdication. When team development is higher than empowerment or
capability development, it provides an indication that there cannot be much substance to the
team. The team is likely to go about their daily activities without a real sense of purpose or
without contributing to optimal organizational functioning.

Consistency
Consistency is the organization's core values and the internal systems that support problem
solving, efficiency, and effectiveness at every level and across organizational boundaries.
Organizations also tend to be effective because they have “strong” cultures that are highly
consistent, well-coordinated, and well-integrated (Saffold, 1988).

The fundamental concept is that implicit control systems, based upon internalized values, are a
more effective means of achieving coordination than external control systems which rely on
explicit rules and regulations (Pascale, 1985; Weick, 1987).

17
Behavior is rooted in a set of core values, and leaders and followers are skilled at reaching
agreement even when there are diverse points of view (Block, 1991). This type of consistency is
a powerful source of stability and internal integration that results from a common mindset and a
high degree of conformity (Senge, 1990).

When agreement is lower than core values and coordination, this tends to indicate that the
organization may have good intentions, but may become unglued when conflict or differing
opinions arise. During discussions, different people might be seen talking at once or ignoring the
input of others, and withdrawal behaviors might be observed. The result is that nothing tends to
get resolved and the same issues tend to arise time and time again.

Adaptability
Adaptability is the ability of the company to scan the external environment and respond to the
ever-changing needs of its customers and other stakeholders. Organizations hold a system of
norms and beliefs that support the organization’s capacity to receive, interpret and translate
signals from its environment into internal behavior changes that increase its chances for survival
and growth (Denison, 1990). Ironically, organizations that are well integrated are often the most
difficult ones to change (Kanter, 1983).

Adaptable organizations are driven by their customers, take risks and learn from their mistakes,
and have capability and experience at creating change (Nadler 1998, Senge 1990, Stalk 1988).
When customer focus is higher than creating change and organizational learning, this signifies
that the organization may be good at meeting customer demands currently, but is unlikely to be
planning for future customer requirements or leading customers to what they may want in the
future.

However, when organizational learning and creating change are higher than customer focus,
there is an indication that the organization is good at recognizing best practices and creating new
standards in the industry, but has difficulty in applying their learning to their own customers.
Mission

Mission is the degree to which the organization and its members know where they are going,
how they intend to get there, and how each individual can contribute to the organization's
success. Successful organizations have a clear sense of purpose and direction that defines

18
organizational goals and strategic objectives. They express the vision of how the organizations
will look in the future (Mintzberg, 1987; Hamel & Prahalad, 1994).

When an organization’s underlying mission changes, changes also occur in other aspects of the
organization’s culture. When strategic direction, intent and vision are higher than goals and
objectives, this indicates that the organization may have a difficult time executing or
operationalizing its mission. There may be brilliant visionaries who have a difficult time
translating dreams into reality. When goals and objectives are higher than strategic direction,
intent and vision, this often indicates that the organization is good at execution but lacks a real
sense of direction, purpose or long-range planning. The focus is usually a short term, bottom-line
focus with little forward planning.

Thus, the four traits of Denison‟s Model of Culture and Effectiveness have been expanded by
Denison & Neale (1996), Denison & Young (1999) as well as Fey & Denison (2003) to include
three sub-dimensions for each trait for a total of 12 dimensions. The following are the four main
cultural traits with their sub dimensions:

Involvement trait (Attributes: capability development, team orientation, and empowerment);

Consistency trait (Attributes: core values, agreement, and coordination and integration);
Adaptability trait (Attributes: creating change, customer focus, and organizational learning);
Mission trait (Attributes: vision, strategic direction and intent, and goals and objectives).

Two of the traits, involvement and adaptability, are indicators of flexibility, openness, and
responsiveness, and were strong predictors of growth. The other two traits, consistency and
mission, are indicators of integration, direction, and vision, and were better predictors of
profitability. Each of the four traits was also significant predictors of other effectiveness criteria
such as quality, employee satisfaction, and overall performance. Mission and consistency are
linked to financial performance, while involvement and adaptability can be linked to customer
satisfaction and innovation. The four traits were strong predictors of subjectively-rated
effectiveness criteria of the total sample of firms, but were strong predictors of objective criteria
such as return-on-assets and sales growth only for larger firms.

19
2.7.2.1. Involvement Culture and Employee performance
Involvement is the degree to which individuals at all levels of the organization are engaged in
pursuit of the mission and work in a collaborative manner to fulfill organizational objectives.
This trait consists of building human capability, ownership and responsibility.

Organizations empower their people, build their organizations around teams, and develop human
capability at all levels (Becker, 1964; Lawler, 1996; Likert, 1961). Executives, managers, and
employees are committed to their work and feel that they own a piece of the organization. People
at all levels feel that they have at least some input into decisions that will affect their work and
that their work is directly connected to the goals of the organization (Spreitzer, 1995).

When capability development is higher than empowerment, this can be an indication that the
organization does not entrust capable employees with important decision making that impact
their work. Capable employees may feel frustrated that their skills are not being fully utilized and
may leave the organization for better opportunities elsewhere if this is not dealt with this may
improve the Employee performance of the organization.

On the other hand, when empowerment is higher than capability development, this is often an
indication that people in the organization are making decisions that they are not capable of
making. This can have disastrous consequences and often happens when managers confuse
empowerment with abdication.

When team development is higher than empowerment or capability development, it provides an

indication that there cannot be much substance to the team. The team is likely to go about their
daily activities without a real sense of purpose or without contributing to optimal organizational
Employee performance (Lawler, 1996).

2.7.2.2. Consistency Culture and Employee Performance

Consistency is the organization's core values and the internal systems that support problem
solving, efficiency, and effectiveness at every level and across organizational boundaries.
Organizations also tend to be effective because they have “strong” cultures that are highly
consistent, well-coordinated, and well-integrated (Saffold, 1988). The fundamental concept is
that implicit control systems, based upon internalized values, are a more effective means of

20
achieving coordination than external control systems which rely on explicit rules and regulations
(Pascale, 1985, Weick, 1987).

Behavior is rooted in a set of core values, and leaders and followers are skilled at reaching
agreement even when there are diverse points of view (Block, 1991). This type of consistency is
a powerful source of stability and internal integration that results from a common mind-set and a
high degree of conformity (Senge, 1990). When agreement is lower than core values and
coordination, this tends to indicate that the organization may have good intentions, but may
become unglued when conflict or differing opinions arise. During discussions, different people
might be seen talking at once or ignoring the input of others, and withdrawal behaviors might be
observed. The result is that nothing tends to get resolved and the same issues tend to arise time
and time again.

Consistency trait is also considered critical for achieving internal integration based on its ability
to facilitate the coordination of activities. Unlike involvement, however, which emphasizes
flexibility, consistency emphasizes stability and involves three components labelled, core values,
agreement, and coordination and integration. These three components refer, respectively, to the
degree to which organizational members, share a set of values which create a sense of identity
and a clear set of expectations, are able to reach agreement on critical issues and reconcile
differences when they occur, and work together well to achieve common goals, this might
improve the Employee performance of a firm (Denison, 2000).

2.7.2.3. Adaptability Culture and employee performance

The ability to be responsive toward external environment, internal customers (employees) and
external customers by understanding the business demand environment into actions may give a
chance to be resilient, growing and expanding (Hartijasti, 2002). The ability to recognize and
react to external and internal environments should be in line with the ability to react to internal
and external customers. According to Clark (Ahmad, 2012), the organization is able to adjust its
program to the existing environment outside the organization as well as the adjustment of the
group against the rules or norms in the group or organization, as well as the adaptation of the
organization or company to environmental changes. Tjiptono et al. (Indayati and Rofiaty, 2011)
assert that a high level of adaptability is a necessity for any organizations as the environment is

21
really unconditioned. Thus, skills and competencies mastered by students are expected to be the
provision of their lives in the future with a great deal of demands and development.

There are some dimensions of variable of adaptability. The first is the ability to create change.
The organization should be able to change and adapt to environmental changes or adapt to
potential changes that may occur in the future. The second is the ability to focus on the customer.
In the context of education, the world is aimed at learners’ achievements, and this requires
constant sensitivity to the emerging demands of the customers and the measurement of the
factors that drive customer’s satisfaction. The last is the organization’s ability to learn.
Organizations must be responsive and adaptive to keep learning in every strategic decision to
anticipate the internal environment to face the competition.

Organizations are required to continue to develop and enhance their capabilities through
learning, so that the products and services provision will give satisfaction to the customers.

2.7.2.4. Mission Culture and Employee Performance

A clear mission should be in accordance with the culture and needs of the company and the
needs of the market. All this should foster employees’ commitment to their jobs and foster their
morale, sense of harmony in the working lives of employees and excellent working standards
(Doloksaribu, 2001). The appreciation to the mission gives two big influences on the functioning
of the company, namely, determining the benefits and meaning by defining social roles and
external goals for the institution as well as defining the role of individuals with regards to the
role of the institutions. Through this process, the behavior of intrinsic meaning or even spiritual
may exceed the functional role of the bureaucracy, providing clarity and direction or rules.
Awareness of the organization’s mission gives a clear direction and objectives that serve to
define a series of appropriate measures for the organization and its members.

22
There are some dimensions of variable of mission. The first is strategic directions and intentions.
A successful organization has a clear direction and goal that are clearly defined in the
organization’s goals and strategic objectives, and these are reflected in the organization’s vision
for the future. The second is goals and objectives. The mission provides direction to the
managers (top management) in making an appropriate strategy to achieve and communicate the
organization’s goals and objectives, creating a common feeling toward the jobs being done. The
last is vision. Vision is the expected aspiration of the state to be realized in the future. To achieve
these ideals goals, of course, should move all resources starting at the top to the bottom levels.

2.7.3. Edgar Schein Model

Schein (2004) believed that there are three levels in an organization culture and his model
focuses on artifacts, values, and assumptions.

Artifacts: The first level is the characteristics of the organization which can be easily viewed,
heard and felt by individuals collectively known as artifacts. The dress code of the employees,
office furniture, facilities, behavior of the employees, mission and vision of the organization all
come under artifacts and go a long way in deciding the culture of the workplace. And this aspect
of the organizational culture is the simplest perspective on culture which is provided by the
tangible artifacts that reveal specific cultural predispositions.

Values: The next level according to this model which constitutes the organization culture is the
values of the employees and rules of behavior. The values of the individuals working in the
organization play an important role in deciding the organization culture. The thought process and
attitude of employees have deep impact on the culture of any particular organization. The mind-
set of the individual associated with any particular organization influences the culture of the
workplace. Values pertain largely to the ethics embedded in an organization.

23
Assumed Values: The third level is the assumed values of the employees which can’t be
measured but do make a difference to the culture of the organization. There are certain beliefs
and facts which stay hidden but do affect the culture of the organization. The inner aspects of
human nature come under the third level of organization culture. The organizations follow
certain practices which are not discussed often but understood on their own and much more
difficult to deduce through observation alone. These are tacit assumptions that infect the way in
which communication occurs and individuals behave. They are often unconscious, yet hugely
important.

2.7.4. O'Reilly, Chatman and Caldwell Model

Edgar (2013) developed a model based on the belief that cultures can be distinguished by values
that are reinforced within organizations. Their Organizational Profile Model (OCP) is a self-
reporting tool which makes distinctions according seven categories – Innovation and risk taking,
Stability, Respect for People, Outcome Orientation, and Attention to Detail, Team Orientation,
and Aggressiveness. These seven dimensions are:

 Innovation and Risk taking: characterizes the degree to which employees are encouraged
to be innovative and take risks while performing their duties.
 Attention to detail: the degree to which employees are expected to exhibit precision,
analysis, and attention to detail or task. It means that paying attention to being precise/
careful.
 Outcome Orientation: the degree to which management focuses on results or outcomes
rather than on the techniques and processes used to achieve these outcomes.
 People Orientation: the degree to which management decisions take into consideration
the effect of outcomes on people within the organization. It is degree of value and
respect for people.
 Team Orientation: the degree to which work activities are organized around teams rather
than individuals based.
 Aggressiveness: the degree to which the people are aggressive and competitive regarding
their work rather than easy going.
 Stability: the degree to which organizational activities emphasize maintaining the status
quo in contrast to growth. Or the organizational openness to change.

24
2.8. Employee Performance
According to Mohammad, Rumana and Saad (2013) the word ‘performance’ can be used to
describe different aspects such as societal performance, organizational performance, employee
performance, and individual performance etc. Performance on the other hand refers to be the
ability (both physical & psychological) to execute a specific task in a specific manner that can be
measured as high, medium or low in scale.

Performance refers to the degree of achievement of the mission at work place that builds up an
employee job. Different researchers have different thoughts about performance. Mostly
researchers used the term performance to express the range of measurements of transactional
efficiency and input & output efficiency. Performance is a continuous process to controversial
issue between organizational researchers Fakhar, Rana and Ayesha (2012).

Employee’s performance means the ability of employees to attain goals either personal or
organizational by using resources efficiently and effectively. Sometime the term performance
mixed with productivity. Performance and productivity were two different things. Productivity
means the ratio represents the volume of work done within the due to the period while
performance is an indicator of productivity, consistency, and quality of work (Fakhar, Zahid &
Muhammad, 2013).

From Dedrick (1999) points, employee performance could be defined as the record of outcomes
achieved, for each job function, during a specified period of time. If viewed in this way,
performance is represented as a distribution of outcomes achieved, and performance could be
measured by using a variety of parameters which describe an employee’s paten of performance
over time.

Different studies related to employee performance variables were carried out in the past. A study
Murphy and Kroeker (1988) defines employee performance as a function of the individual’s
performances on the specific tasks that comprise standard job descriptions, and declares that it is
also affected by variables such as maintaining good interpersonal relations, absenteeism
and withdrawal behaviors, substance abuse and other behaviors that increase hazards at the
workplace (Murphy, 1989). A study Befort and Hattrup (2003) indicates that the essence of job
performance relies on the demands of job, the goals and the mission of the organization and the
beliefs of the organization about which behavior are mostly valued. To conclude, employee

25
performance could be simply understood as the related activities expected of a worker and how
well those activities were executed.

2.8.1. Measurement of employee performance

Performance of employee is calculated against the performance standard by the organization.
Good performance means that how employee performed in the task that assigned to him.
Performance is a main multidimensional build aimed to get results and has a strong link to
planned objectives of an organization. The work of employee is made up by his achievement of
mission of organization that shows the limits of performance. The achievement of objectives of
organization has been designed based on employee performance. An employee’s achievement
when he gains the goals of organization at workplace is called performance. Different researches
have identifies different thoughts, attitudes and beliefs of performance as it helps in measurement
of input and output effectiveness measures that guide transactional relationship (Nadia, 2015).

In this study the performance of employee should be measured by employee job performance.
Due to the reason a company undertakes the individual job performance measure to evaluate the
performance of employee it includes individual task performance evaluation and employee
behavioral competency performance evaluation. In order to measure the dependent variable
employee performance, individual work performance questionnaire (IWPQ) that was developed
by (Koopmans 2014) was used; the questionnaire consists of 18 questions and addresses aspects
of task performance, contextual performance and productive behavior of employee job
performance on a 5-Point Likert Scale.

2.9. Empirical Review

This section outlines the result of different researches on the topic ‘’ the effect of Organizational
Culture on Employee Performance’’ and it is tried to summarize below.

According to Mohammad, Rumana and Saad (2013) studied in the field of the impact of
organizational culture on employee performance and productivity by undertaking a case study of
telecommunication sector in Bangladesh. The result of this study also indicated the sound role of
organizational culture on employee performances and productivities. It also indicated that
organizational culture significantly influences employee performance and productivity in the
dynamic emerging context. The findings of this paper significantly demonstrate both positive
and negative mannerism of organizational culture which has significant consequences on

26
employees as well as organizational performance. It also asserted that organizational culture is an
open system approach and it has interdependent and interactive association with organizations
performance.

Agwu (2014) made a study on the ‘’Organizational Culture and Employee Performance in the
National Agency for Food and Drugs Administration and Control (NAFDAC) in Nigeria’’. It
assumes that a positive organizational culture will enhance employee’s performance. The three
major findings of the research were NAFDAC’s organizational culture of decentralization
provide employees with greater intrinsic rewards than other traditional means of governance,
there is a significant relationship between organizational culture and increased employees’
commitment in NAFDAC and the last research result was there is a significant relationship
between organizational culture and increased employees’ productivity in NAFDAC.

Ojo (2009) analyzed and assesses empirically the impact of corporate culture on employee job
performance as well as organizational productivity using Nigerian banking industry as the case
study. He tried to ascertain if organizational culture affects employee job performance, and to
formulate recommendations regarding corporate culture and employee job performance. He
came out with the result that majority of the respondents strongly agrees that corporate culture
has effect on employee job performance, and that majority of the employee’s respondents agree
that corporate culture has effect determines the productivity level of the organization.
Organizational culture is a major determinant of an employee’s efficiency and effectiveness in
carrying out their jobs. That is, organizational culture is one of the major key determinants of
how employees perform or behaves in their job (Ojo, 2012).

Additionally, Sun (2012) said organizational culture can have an influence on: employee
motivation; employee morale and ‘good will’; productivity and efficiency; the quality of work;
innovation and creativity and the attitude of employees in the workplace.

2.10. Conceptual Framework

There are different models and dimensions that can be used to measure organizational culture;
However, I preferred to take the Denison’s (2011) organizational culture model. The reasons for
adoption of this model as a conceptual framework are as follows: The basis of the model is
that it tests the behavior of group, it is applicable to all of the hierarchy levels from
viewpoint of the measuring indices and measurement of organizational culture dimensions, it is a

27
detailed model, the graphical diagram of this model indicates clearly the organizational culture
characteristics in two dimensions of internal and external centralization and the degree of
inflexibility as well as at 12 indicators level. This model has a direct impact on organizational
culture and provides a novel framework over the other organizational culture models and lastly
the Denison’s model has been extensively employed by various organizations in other countries
in order to diagnosis organizational culture. Denison’s model allows cultures to be described
broadly as externally or internally focused as well as flexible versus stable. The model has been
typically used to diagnose cultural problems in organizations. also, employee performance
measured based on the individual work performance questionnaire (IWPQ) such as Task
performance (TP) scale, Contextual performance (CP) scale, Productive behavior (PB), that was
developed by Koopmans 2014.The conceptual framework is designed, taking organizational
culture as independent variables and employee performance as dependent variable.

Involvement

Consistency Employee
Performance
Adaptability

Mission

Independent variable Dependent variable

Source: Suharno, Antonius and Evawati, (2017).

Figure 2 – Conceptual framework of the research

28
 CHAPTER THREE

3. RESEARCH METHODOLOGY
This chapter presents a detail discussion about the type of research design employed in the study.
Moreover, topics related to the target population and sample size, method of data collection, data
analysis and interpretation tools are included. Explanation about validity, and reliability and
research ethics of study are also part of this chapter.

3.1. Description of the study area

This study wants to assess the effect of organizational culture on employee performance in the
development bank of Ethiopia. Development Bank of Ethiopia (DBE) has 12 districts and 122
branches located in different parts of Ethiopia. From the above mentioned districts of the bank
the study is conducted on the selected one of Wolita sodo district. Wolitasodo district is one of
the districts of DBE engaged in providing short, medium and long-term loans to investors. The
district has 9 branches including Sodo branch, Arbaminch branch, Areka branch, Bodity branch,
Waka branch, Durame branch, Hadero branch, Sawla branch and Jinka branch. This study
employed the staffs of all above mentioned branches under the district.

3.2. Research design and approach

This study used the deductive research approaches, which owes more to positivism and it
possesses several important characteristics such as to explain causal relationships between
variables, operationalization of concepts to ensure clarity of definition, the application of
controls to ensure validity of data, to collect more quantitative data, highly structured approach
and in order to generalize conclusions (Mark, Philip & Adrian, 2009).

The main objective of this research is to examine the effect of organizational culture on
employee performance. Considering the purpose of the research and the nature of the
phenomenon the research design used in this study is explanatory research design. This
explanatory research provides explanations of observed phenomena, problems or behavior,
answers to why and how types of questions and also indicate the causal relationship between the
independent and dependent variable (Teklu,2015). The selected approach for this research is
quantitative, “Quantitative methods provide an opportunity to maximize the values of precision,
systematization, repeatability, comparability, convenience, unobtrusiveness and cost
effectiveness” (Tucker et al. 1990, p. 5). This study intended to use cross-sectional sample

29
survey study design. Cross sectional studies (sample survey) carried at once and represent a
snapshot at one point in time. Therefore, this study used both descriptive and inferential
statistics. The descriptive statistics summarizes the sample respondent’s information whereas,
inferential statistics used to make inferences to the wider population.

3.3. Target population and Sample size

The target population of this research include employees of DBE in Wolita Sodo districts such as
Sodo branch, Arba Minch branch, Areka branch, Bodity branch, Waka branch, Durame branch,
Hadero branch, Sawla branch and Jinka branch. The target population constitute 84 employees
working in Wolayta Sodo District.

The following table is generated from the Human Resources data base of DBE Sodo District.
The target population includes the whole employees of the branches which exclude guards and
janitors from the staff due to the reason of guards and janitors are not permanent employees of
Development Bank of Ethiopia. The staff size of each branch under the district is presented in
the following table.

Table 3.1.
Target Population of Wolita Sodo District in 2018

NO Name of Branch Number of employees

1 WolitaSodo District 21
2 Wolita Sodo Branch 21
3 Arba Minch Branch 6
4 Bodity Branch 5
5 Waka Branch 5
6 Areka Branch 6
7 Durame Branch 5
8 Sawla Branch 5
9 Jinka Branch 5
10 Hadaro Branch 5
Total 84

Source: Compiled from the district human resource

In this research, all the target populations are considered since the total number is 84 which is
manageable to collect the data.

30
3.3. Data Collection Tools
This study used primary sources of data and questionnaire was used as a primary data collection
tool. The questionnaires contained structured items which enabled the researcher to tabulate and
analyze data with ease. The primary data collected from the employees of development bank of
Ethiopia. The questionnaire consists three sections. The first section represents the demographic
information of the respondents. The second section represents the data on organizational culture
while section three represents the data on employee’s performance. Thus, organizational culture
was measured using 36 items adapted from the Denison organizational culture survey. The
measurement instrument has three sub scales, measuring the four Denison cultural traits such as:
involvement, consistency, adaptability and mission. Therefore, by using 5 -point Likert scale, on
which to express the respondent’s level of agreement. Employee performance measured using
items adopted from (Koopmans,2014), based on the individual work performance questionnaire
(IWPQ) such as Task performance (TP) scale, Contextual performance (CP) scale, Productive
behavior (PB). The instrument which contains 18 items and addresses the aspects of task
performance, contextual performance and productive behavior of employee job performance was
measured on a 5-Point Likert Scale.

3.4. Method of Data Analysis

The data analysis was made by using both descriptive and inferential statistics. Descriptive
statistics simply summarizes the sample respondent’s information which includes means and
standard deviations. The descriptive statistical results presented by tables, pie chart, frequency
distributions and percentages to provide a summary picture of the data. While inferential
statistical regression was used to generalize from a sample result, and also to examine the
significance contribution of each independent variable to the dependent variable. Correlation and
regression analysis was run to see the relationships between variables and test the effect of
independent variables on the dependent variable

Furthermore, the data analyzed using quantitative data analysis methods. Data from the
questionnaires coded and entered into the computer using Statistical Package for Social Science
version 20.0.

31
3.5. Validity and Reliability
Research should always be based on the acceptability of a measuring instrument should be tested
on the principles of adherence to the standards of perfect reliability, confirmed practicality and
verified validity.

Validity

This study tried to addresses validity through the review of literature and adapting instruments
used in previous research.

Reliability

Reliability is required of the research studies to make the study more transparent and clearer, so
that the readers can either undertake the same method themselves or produce the same result, at
least the method clear enough to steal confidence in the reader that the result not fudged in any
way. The reliability of instruments measures the consistency of instruments. The reliability of an
instrument can be certain when it conforms to certain prescribed norms. It is not the physical
form or shape but it is the accuracy of the prescribed standard content of the instrument that
leads to acceptability (Greener, 2008).

Furthermore, one of the most commonly used indicators of internal consistency is Cronbach’s
coefficient alpha and ideally this coefficient should be above .7 (Pallant, 2005). Thus, reliability
of the measures ensure that yield a consistent result. As indicated on below table the coefficient
for all independent and dependent variables were acceptable or >.7.

Table 3.2
Reliability Test Result
Variables Cronbach's Alpha N of Items
Involvement 0.894 9
Consistency 0.912 9
Adaptability 0.887 9
Mission 0.87 9
Employee performance 0.856 18

Source: Own Survey 2018

32
3.6. Ethical Consideration
All the research participants included in this study was appropriately informed about the purpose
of the research and consent was secured before the commencement of distributing questionnaire.
In addition, the researcher notified the participants to participate in the research willingly.
Moreover, the researcher notified the participants not to disclose their names; and also, assured
anonymity of data. This is done so that the respondents has at ease and more likely to give honest
responses to the questionnaire. There are also ethical measures that followed in the data analysis.
To ensure the integrity of data, the researcher checked the accuracy of encoding of the survey
responses. This carried out to ensure that the statistics generated from the study are truthful and
verifiable.

33
 CHAPTER FOUR

4. RESULTS AND DISCUSSION

This chapter discusses the results of the primary data which is gathered through structured
questionnaire. The first part presents the background of the respondents and descriptive statistics
of the respondents. Next the statistical method of analysis which was applied to answer the
research questions asked at the beginning of the study, such as correlation analysis and multiple
regression analysis discussed and presented.

4.1. Descriptive Statistics

4.1.1. Demographic Profile of Respondents
This section summarizes the demographic characteristics of the respondent, which includes age
of the respondent, gender, educational level, work experience, and marital status. The purpose of
the demographic analysis in this research is to describe the characteristics of the sample such as
the proportion of males and females in the sample, range of age, education level, and marital
status, so that the analysis could be more meaningful for readers.

Table 4.1.
Demographic characteristics of the respondent
Demographic characteristics Frequency Percent
Gender Male 31 36.9
Female 53 63.1
Total 84 100
Educational Diploma/Level IV 2 2.4
level
First Degree 61 72.6
Masters and Above 21 25
Total 84 100
Marital status Single 51 60.7
Married 29 34.5
Divorced 4 4.8
Total 84 100
20-29 43 51.2
Age 30-39 34 40.5
40-49 6 7.1
above 50 1 1.2
Total 84 100

Source: Own Survey 2018

34
Demographic information of the respondents participated in the study, above illustrates that the
gender distribution of the total respondents 36.9% are female and 63.1% are male respondents.
From the gender profile of the respondents it can be inferred that gender disparity was also
prevalent in Development bank of Ethiopia.

The educational level of sample population shows that the majority of the respondents are first
degree holders (72.6%), and (25.0%) of the respondents have masters and above and the
remaining 2.4% of the respondents are diploma/level IV. It can be said from the survey that,
most of respondents (72.6%) of development bank of Ethiopia employee are first degree and
above, therefore, they would have the ability to easily understand and inhabit with the culture of
the organization and a higher level of expertise which matches with their positions in DBE. The
majority of respondents (60.7%) are single. Those married are (34.5%) and the rest (4.8%) are
divorced. From the data one can conclude that the majority of the respondents are single.

From the figure depicted in the above majority of the respondents (51.2%) fall in the age range
of 20-29 years and 40.5% of the respondents are range between 30-39 years. from the result the
majority of the respondents are young which is important to the organization to easily adopt the
culture of the organization and high potential to do their work properly as well as to make good
performance. Whereas when we see work experience of the respondents 46.4% of the
respondents have experience of below 4 years, the second highest proportion was 36.9% of the
respondents have 11-15 years of experiences.

4.1.2. Descriptive statistics on organizational culture

In order to see the general organizational culture of DBE regarding the level of agreement of
employees’ response to the organizational culture dimensions. Employees rating to their level of
agreement in five points of Likert scale, the researcher has summarized the measures with the
respective means and standard deviations. Thus, the mean indicates to what extent the sample
group averagely agrees or does not agree with the different statements. According to Al-
Sayyad, Rabea and Samrah (2006) the mean score 1up to 1.8 is considered as very low, the mean
score from 1.8 up to 2.6 is considered as low, the mean score 2.6 up to 3.4 is considered as
moderate, the mean score 3.4 up to 4.2 considered as high and the mean score 4.2 up to 5.00
considered as very high. The lower the mean, the more the respondents disagree with the
statements. The higher the mean, the more the respondents agree with the statement. On the other

35
hand, standard deviation shows the variability of an observed response from a single sample
Marczyk, Dematteo and Festinger (2005).

Table 4.2
Results of Descriptive Statistics on organizational Culture
Items M SD
improved ways to do work are continually adapted 2.71 0.59
Different part of the organization cooperate to create change 2.74 0.58
DBE respond to competitors actions and other changes in the 2.75 0.58
business environment
customers comment leads to changes and influences decision 2.76 0.65
making
employees understand customers want and needs 2.82 0.66
customers inputs directly influences company decision 2.92 0.71
innovations are encouraged 2.94 0.73
learning is an important objective in day to day work of the 2.93 0.69
company
DBE view failures as an opportunity for learning and 2.93 0.69
improvement
Adaptability 2.83 0.36
there is a clear mission that gives meaning and direction 3.82 0.92
DBEs strategic direction is clear 3.88 0.88
there is a long-term purpose and direction of the company 4.11 0.88
leaders set goals that are ambitious, but realistic 3.71 0.93
DBE continuously track its progress against the stated goals 3.68 0.95
there is a wide spread agreement about the goals of the 3.68 0.93
company
employees have a shared vision of what the organization will 3.61 0.98
look like in the future
leaders have a long-term viewpoint 3.51 0.94
DBE vision creates excitement and motivation for employees 3.49 0.95
Mission 3.73 0.68
Source: Own Survey 2018

The above table indicates the result of mean and standard deviation for each item in each
variable, from which the mean score for mission (3.73) was relatively the highest in comparison
to the other organizational culture dimensions. This indicates that employees give more value
and agree with the measure of mission statements. Although, existence of a clear mission, clear
strategic direction and long-term purpose and direction are scores a higher mean, the other
items that measure mission also contributes significantly to the grand mean. This implies the
majority of the respondents agree that the company has clear mission and vision and it indicates
that the missions of the organization is integrated with the organizational culture. The other

36
higher level of mean score for Adaptability (2.83). This result indicates the majority of the
respondents moderately agree with the adaptability in the organization which means Adaptability
is the ability of the company to scan the external environment and respond to the ever-changing
needs of its customers and other stakeholders.

Table 4.3
Results of Descriptive Statistics on organizational Culture
Items M SD
Employee believes that they can have a positive impact 2.57 0.99
information is widely shared so that can have a positive impact 2.62 0.97
cooperation across different parts of the organization is encouraged 2.61 0.93
teamwork is used to get work done, rather than hierarchy 2.61 0.93
employees work like they are part of a team 2.64 0.86
there is a continuous investment to develop the skill of employees 2.60 0.85
the capability of employees are viewed as an important source of 2.71 0.84
competitive advantage
authority is delegated so that employees can act on their own 2.58 0.91
Involvement 2.59 0.8
managers 'practice what they preach' 2.45 0.68
there is a consistent set of values that govern the way development 2.54 0.61
bank of Ethiopia does business
there is an ethical code that guides employees behavior and tell 2.52 0.63
right from wrong
when disagreement occur, employee work hard to achieve a win 2.58 0.59
win solution
there is a clear agreement regarding the right way and the wrong 2.63 0.6
way to do things
it is easy to reach consensus, even on conflicting issues 2.71 0.63
employees from different part of the organization share a common 2.67 0.63
perspective
it is easy to coordinate projects across different part of the 2.64 0.63
organization
the approach to doing business is very consistent 2.67 0.59
Consistency 2.6 0.5
Source: Own Survey 2018

In the above table consistency (2.6) is exist in lower mean score level. Which indicates that the
majority of respondents have low level of agreement on the measures of consistency. The
response of employees indicates that agreement on the existence of ethical code that guides
employees behavior and consistent set of values that govern the way of the organization.
However, the employees are disagree with the statement of easy to coordinate projects across
different part of the organization, a consistent approach to doing business, easy to reach

37
consensus and employees from different part of the organization share a common perspective.
Lastly, from the above table relatively the lower level of mean score for involvement (2.58),
which indicates that the majority of the respondents low level of agreement with the practice of
involvement in the organization. Specially, capability of employees is viewed as source of
competitive advantage and team work statements result higher mean score (2.64-2.71) rather
than others. In the other way employees give their disagreement in the statement of decisions are
made in the right information, continuous skill development of employee and authority is
delegated to employees with the mean score (2.48-2.58).

4.1.3. Descriptive statistics on Employee Performance Measure

Eighteen items were included on the survey questionnaire to measure employees
performance. Employees then rated their level of agreement with five points of Likert scale and
it is presented as follows.

Table 4.4.
Descriptive statistics on employees performance measures
Items M SD
I managed to plan my work so that it was done on time 2.43 1.38
My planning was optimal 2.43 1.37
I kept in mind the results that I had to achieve in my work. 2.46 1.37
I was able to separate main issues from side issues at work. 2.50 1.39
I was able to perform my work well with minimal time and effort 2.48 1.37
I took extra responsibilities 2.49 1.36
I started new tasks myself, when my old ones were finished. 2.51 1.36
I took on challenging work tasks, when available 2.38 1.24
I worked at keeping my job knowledge up to date 2.50 1.28
I worked at keeping my job skills up to date 2.50 1.26
I came up with creative solution to new problem 2.56 1.25
I kept looking for new challenges in my job 2.57 1.28
I actively participated in work meeting 2.52 1.29
I don't complain about unimportant matters at work. 2.56 1.29
I don't made problems greater than they were at work 2.57 1.27
I focused on the positive aspect of a work situation, instead of on the negative aspects. 2.65 1.30
I spoke with colleagues about the positive aspects of my work 2.63 1.29
I spoke with people from outside the organization about the positive aspects of my 2.63 1.25
work
Employee performance 2.52 1.22

Source: Own Survey 2018

38
As depicted on the above table, mean score of 2.52 rated under low level agreement for
employee performance statement. The average agreement to this result range from the smallest
2.38(I took on challenging work tasks, when available) to the largest 2.65(I focused on the
positive aspects of a work situation, instead of on the negative aspects). This result indicates that
employees have low level of performance practice in DBE.

4.2 Analysis of Inferential Statistics Results

One of the major objectives of the study is to assess the relationship between
organizational cultures with employees performance. For this purpose, inferential statistics of
correlation and regression analysis have been used and the results are presented in the
below sections.

4.2.1. Correlation Analysis

Correlation determines whether and how strong pairs of variables are related. The correlation
analysis can lead to greater understanding of the data. To know whether there is a correlation
between the variables and what the level of the linear relationship between the variables, the
Pearson R correlation coefficient was examined. This coefficient indicates the direction and the
strength of a linear relationship between two variables. The Pearson’s correlation coefficient (r)
can vary from -1 to +1. The larger the value implies the stronger the relationship. A coefficient
of +1 indicates a perfect positive relationship and a coefficient of -1 indicates a perfect negative
relationship. 0 indicates that there is no linear relationship between the variables (Field, 2009).
The values for interpretation according to statistics are (Marczyk, Dematteo & Festinger, 2005)

.01 to .30, -.o1 to -.30 Low correlation

.30 to .70, -.30 to -.70 Moderate correlations

.70 to .90, -.70 to -.90 Strong correlations

.90 to 1.00, -.90 to -1.00 Very strong correlations

39
Table 4.5
Correlation Among the study Variables.

M SD 1 2 3 4
1.Mission 3.73 0.68
2.Involvment 2.58 0.91 .226*
3.Consistency 2.60 0.59 0.165 0.117
4.Adaptability 2.83 0.36 0.075 .388** 0.058
5.Employee performance 2.52 1.22 0.21 .597** 0.033 .368**

*. Correlation is significant at the 0.05 level (2-tailed).

**. Correlation is significant at the 0.01 level (2-tailed).
N = 84

Source: Own Survey 2018

Accordingly, the above Pearson correlation coefficients shows that the four factors measuring
organizational culture were all positively related with employees performance within the range
of .033* to .597**.

The involvement dimension show that positive correlation to employee performance with
r=.597**, followed by the adaptability dimension with r=.368**. In general involvement and
adaptability culture have moderate correlation with employee performance. These positive
relationships indicate that the employee performance has increased due to the adequate level
practice of organization culture at DBE. This result is consistent with the study of Emmy and
Charles,(2017) find out Involvement culture was positively correlated with employee
performance (r = 0.599, ρ<0.01). This implies that involvement culture is expected to influence
on employee performance. In the same way variable of adaptability moderately correlated
r=.368**with employee performance, while Suharno, Antonius and Evawati, (2017) studies find
out the variable of adaptability, is the most powerful dimension of performance of employees
because it has the coefficient = 0.312 (having “low” correlation).

Whereas, the mission and consistency dimension, shows that low level of positive correlation to
employee performance with r=.210 and r=.033 respectively. This result also confirmed in the
study of Suharno, Antonius and Evawati, (2017) the result depicts that mission and consistency
are low level of correlation with variable of employee performance.

40
In general, thus all the independent variables involvement, mission, consistency and adaptability
show a positive relation with the dependent variable. This finding is consistent with the findings
of other researchers.

According to Mujeeb,Tahir and Shakil (2011) the correlation analysis of organizational

culture traits a positive correlation to the performance. All the variables including involvement,
consistency, adaptability and mission has significantly positive impact on Performance of
employee. Similarly Funda Özer (2012) studies indicate that Pearson correlation test results
showed that there is a positive and significant relationship between cultural dimensions of
involvement, mission, consistency and adaptability with the firm performance.

In addition, in the study of Menaka and Chandrika (2015) the result indicates the Pearson’s
correlation between organizational culture and job performance is a moderate level positive
relationship between them. And in the result they concluded that there is a positive relationship
between organizational culture and job performance and as organizational culture gets
strong, job performance increases. In other words, a strong organizational culture has a positive
impact on employee job performance.

These findings were supported by the findings and arguments given by Shahzad et al. (2012),
Lee and Yu (2004), Kandula (cited in Ehtesham, Muhammad & Muhammad 2011), Awadh &
Saad (2013), Shahzad, Iqbal and Gulzar (2013), Ojo (2009), Rehman (2012), Zakari, Poku
and Owusu-Ansah (2013) with positive relationship between organizational culture and job
performance while culture was strong. But the findings of Ehtesham, Muhammad and
Muhammad (2011) prove that each of the four organizational cultural traits of involvement,
consistency adaptability and mission are positively correlated with employee performance.

4.2.2 Regression Analysis

In order to see the contribution of each organizational culture variables on employee
performance, standard multiple regression analysis was employed. To conduct a multiple linear
regression several assumptions, have to be met (Vocht, 2006):
Assumption 1 – Sample Size
According to (Julie, 2005) to test the overall model the recommended minimum sample size of N
> 50 + 8m (where m = number of independent variables). Considering four number of
independent variables in the present study; 50+8(4) =82 which is less than observed

41
respondents/sample size/. i.e. 50+ 8(4) = 82 <84. Which should be enough based on the criteria,
the sample size exceeds the minimum to run the standard multiple linear regression.
Assumption 2 – Multicollinearity test
According to Pallant (2005), tolerance is the indicator of how much of the variability of
independent variable is not explained by another independent variable. Thus, if the value is less
than 0.1 or VIF: the inverse of tolerance value is greater than 10, it implies possibility of
multicollinearity. As the multiple regression result on table 4.9 shows all tolerance values are
greater than 0.1 and VIF is less than 10, there is no possibility of multicollinearity among the
variables.
Assumption 3-Test of linearity
Standard multiple regression can only accurately estimate the relationship between dependent
and independent variables if the relationships are linear in nature. If the relationship between
independent variables (IV) and the dependent variable (DV) is not linear, the results of the
regression analysis will under -estimate the true relationship. This underestimation carries two
risks: increased chance of a Type II error for that IV, and in the case of multiple regression, an
increased risk of Type I errors (overestimation) for other IVs that share variance with that
IV(Carlos & Dason,2013). According to David Garson (2012) as a rule of thumb, an indicator of
non-linearity is when the standard deviation of the residuals exceeds the standard deviation of the
predicted value (dependent variable). So in this case standard deviation of the predicted value
exceeds the standard deviation of the residuals this indicated that this assumption is not violated.
The test result is presented in appendix 2.
Assumption 4-Normality test
Multiple regressions assume that variables have normal distributions. This means that the errors
between observed and predicted values (i.e., the residuals of the regression) should be normally
distributed. This assumption may be checked by looking at a histogram or a Q-Q-
Plot. Normality can also be checked with the decision is obtained by looking at the normal
probability plots, that is from the points where the data points form a linear pattern, so that it can
be considered as consistent with a normal distribution. The result of the tests is presented in the
figure below.

42
 Figure 3 Test of normality

Source: Own Survey 2018

Assumption 5-Homoscedasticity
Homoscedasticity means that the variance of errors is the same across all levels of the IV.
Homoscedasticity of the residuals, in the scatter plots of the residuals the variance of the
residuals about predicted dependent variable scores should be the same for all predicted scores.
This is the case as the residuals are randomly dispersed around the center line; the test is
presented in appendix 4.

Table 4.6:
Model summary of Regression analysis on organizational cultures and employee
performance.
Model Summary

Model R R Square Std. Error of the

Estimate
1 .727a .528 .86100

a. Predictors: (Constant), Adaptability, Consistency, Mission, Involvement

Source: Own Survey 2018

The regression Model Summary presents how much of the variance in employee performance is
explained by the selected organizational culture variables: involvement, consistency, adaptability
and mission. As shown on the table below Given the R Square of .528, the model summary

43
reveals that the proportion of the variation in employee job performance is explained by culture
of the organization is 52.8% (where by R square is .528) and the remaining 47.2% of the
variance is explained by other unexplored variables not included in this study. As it is observed
from the model summary the coefficient of multiple correlations R which is the degree of
association between organizational culture and employee performance is 0.727.

Table 4.7.
ANOVA of Regression Analysis on organizational culture and employee performance
ANOVA

Model Sum of Squares Df Mean Square F Sig.

1 Regression 65.620 4 16.405 22.129 .000b
Residual 58.565 79 .741
Total 124.185 83
a. Dependent Variable: EPP
b. Predictors: (Constant), ADP, CONS, MSS, INV

Source: Own Survey 2018

Furthermore, the ANOVA table shows the overall significance / acceptability of the model from
a statistical perspective. As the significance value of F statistics shows a value .000, which
is less than p<0.05, implies the model is significant and 0.0% of regression model representing
untrue information . Therefore, organizational culture is a strong predictor of employee
performance.

Table 4.8.
Regression Coefficient on Organizational Culture and Employee Performance
Coefficient

Model Unstandardized Standardized t Sig. Collinearity

Coefficients Coefficients Statistics
B Std. Error Beta Tolerance VIF
1 (Constant) 2.93 1.04 2.82 0.01
Mission 0.71 0.15 0.40 4.88 0.00 0.91 1.10
Involvement 1.00 0.13 0.65 7.48 0.00 0.78 1.28
Consistency 0.41 0.19 0.17 2.09 0.04 0.94 1.07
Adaptability 0.45 0.28 0.13 1.59 0.12 0.84 1.19

44
Source: Own Survey 2018

As it is stated earlier in first chapter, this study aims to identify the contribution each
organizational culture traits has on employee performance. Multiple regression model is applied
to determine how organizational culture in DBE has an effect on employee performance as the
study contains more than one predictor. the strength of each predictor (independent) variable
influence on the criterion (dependent) variable can be investigated with standardized Beta
coefficient.

Therefore, involvement is the most contributing organizational culture traits in the prediction of
employee performance with beta value 0.654. The other two organizational culture traits, in
their descending order of standardized coefficients, are mission (β = .395) and consistency (β =
.167) and that the variables are making significant to the prediction of employee
performance. While adaptability (β = .134, p = .12) which indicates insignificant contribution to
the prediction of employee performance. In general, among the four predictors, multiple linear
regressions (Beta coefficients) analysis revealed that, involvement is the first most
significant variable for employee performance then followed by mission. Further, consistency
of employees takes the third place.
In addition, the significance levels of involvement, mission, consistency as .000, .000 and
.040 respectively, which are less than 0.05. Which means that there is a significant
relationship between the three organizational culture traits and employee performance. The
finding is consistent with the study of Eddah, (2017) which indicate organizational culture traits
involvement, consistency and mission as a significant predictors of employee performance. In
the same way the result is in conformance with the study of James (2016) result indicates that the
significance level of mission (β = .186, p < .05) is a significant effect on employee performance.
Furthermore, the finding of this study is also consistent with the finding of Suharno, Antonius
and Evawati, (2017).
On the other hand, adaptability is unlike the other three organizational culture trait, it doesn't
have significant effect on employee performance as it is explained by significance level (β = .13,
p= .12). This indicates that, as much as the company tries to maintain a strong culture by being
highly adaptability, this doesn't significantly contribute to level of employee performance. This
finding also consistent with the finding of Suharno, Antonius and Evawati, (2017) studies

45
concluded that adaptability (β = -.004, p = .965) has no significant effect on the performance of
employees.

Totally, this finding indicates that there is statistically significant relationship between them
and the dependent variable (employee performance) and this result answer to the study
research question stated in the first chapter.

46
 CHAPTER FIVE

5. SUMMARY OF FINDINGS, CONCLUSIONS, AND

RECOMMENDATIONS
This chapter states the summary of the study findings and results. Based on the key findings and
results, conclusions are drawn and recommendations are made. The recommendations include
interventions to improve organizational culture and employee performance in Development Bank
of Ethiopia and give implication for further studies.

5.1 Summary of Findings

The main goal of this study is to investigate the effect of organizational culture on employee
performance based on the questionnaire which was distributed to 84 employees of Development
bank of Ethiopia.

 In the descriptive part of the analysis, the result indicated that majority of the total
respondents are male (63.1%), 51.2% of the respondents are in the age range of 20-29
years and 72.6% of the respondents are first degree holders. And the result of the mean
score for the measures of mission was relatively high (3.73) which indicates that the
majority of respondents have strong agreement on the measure of mission and the mean
score for adaptability (2.83) exist in the level of medium. On the other hand, the mean
score for consistency (2.60) and involvement (2.58) exist in the level of low, which
indicates that the majority of respondents have slight agreement on the measures of
consistency and involvement. Besides, currently in all dimensions of self-rated
performance of the employees are performing low which is expressed by the mean score
of 2.52 in performance variable.
 The result from Pearson coefficients implies that the four factors measuring
organizational culture were all positively related with employees performance within the
range of 0.597 to 0.033.
 Findings from the multiple regression analysis depict, 52.8% variation in employee
performance is explained by organizational culture (where by R square is 528 and
adjusted R square is .505%). Furthermore, the significance value of F statistics shows
a value .000, which is less than p<0.05, implies the model is significant.

47
  Involvement is the most contributing organizational culture traits in the effect of
employee performance with beta value .654. The other three organizational culture
traits, in their descending order of standardized coefficients, are mission (β = .395),
consistency(β = .167) and adaptability (β = .134).
 Statistically significant of the four organizational culture shows there is relationship
between them and the dependent variable (employee performance) in which p<0.05.
Accordingly, the research questions related to involvement, mission, and consistency
were a significant effect on employee performance. To the contrary, the research
questions which is related with adaptability, was significance level is (β = .13, p=
.12), it also implies that adaptability does not have significant effect on the level of
employee performance.

5.2 Conclusions
To realize the objectives of the study, four research questions were generated, and correlation,
and multiple regression method were employed to answer the research objective: from the result
the researcher concludes the following:

Based on the findings, employee job performance is a critical factor in every organization to be
successful. This research work can justify that employee performance has positive relationship
and impact of organizational culture which comprises of involvement, consistency, mission and
adaptability. As per the findings of this study on employee performance, all the ratings show that
employees have low level of ratings to their performance at Development bank of Ethiopia.

This study finding shows that involvement has moderate level of correlation with employee
performance, which means that employees are committed to their organizations when they are
involved in decision making and also sense of ownership result a greater commitment to the
organization. Furthermore, teamwork, investment to develop the skills of employees, room to
receive inputs from organizational members enhances both implementation process and
employee performance.

The organizational culture of involvement has a positive and significant effect on the
performance of employees. The higher the level of the involvement, the higher the level of the
performance and the lower the level of involvement the lower the level of the performance of
employee. The result shows that DBE has lower level of practicing the involvement

48
organizational culture and their mean scores fall the lower level 2.588. The result indicates
that when high level of involvement is practicing in the organization which create teamwork,
investment to develop the skills of employees, room to receive inputs from organizational
members enhances both implementation process and employee performance.

Mission, one of the other organizational culture traits, is found to be more practiced in the
organization. This is asserted by the highest mean score of mission, which indicate
employee agree with the measure of mission. The results of regression analysis indicated that
mission is the second highest predictor of employee performance and a positive and
significant impact on the performance of employees.

The organizational culture of consistency has a significant effect on the performance of

employees. In the measures of consistency majority of employees low level of agreement on that
Development bank has an ethical code that guides employees‟ behavior and tells right
from wrong. This is asserted by the mean score of consistency under low level. The regression
analysis depicts that there is a positive and significant effect on employee performance. When
there is a high level of consistency in an organization, higher level of performance which means
different functions and departments of the organization are able to work together well to
achieve common goals. Still with the responsibility of promoting this culture, it is the top
management who are expected to give individuals assignments that are consistent with
their strengths, interests and opportunities for continued learning and growth.

On the other hand, among the measure of the adaptability the majority of employees agree on
Development bank focus on the need and want of customer and the dimensions of change.
However, the result from multiple regression analysis indicates adaptability doesn't have
significant effect on employee performance. The dimension of change and focus on the
customer have not significant contribution to effect on employee performance.

In general as per the findings of the study, it can be concluded that organizational culture is
important in improving the level of employee performance which is asserted by the
positive contribution of involvement, mission and consistency practice to employee
performance. However, adaptability has improve the organization to do their business well,
properly handle their customers and focus on change. And the value of adaptability is p > 0.05
has no significant contribution to employee performance.

49
5.3 Recommendations
As shown in the part of result and discussion of this study, the result of the mean score infers
having relatively a low level of organizational culture and low employee performance is
practiced in the development bank of Ethiopia. depending on the findings of the study and
conclusions made, the researcher came up with some important recommendations which
would help the organization to focus on the organizational culture that can largely
contribute to the improvement on level of employee performance. The recommendations
given are the following:

 Although, organizational culture is important in improving the level of employee

performance, the organization need to give strong emphasis for organizational culture traits
involvement, mission and consistency, rather than adaptability of the organization as a
result of their insignificance effect with employee performance. As depicted in the result and
discussion section of those the three organizational culture traits are a significant effect on
employee performance, involvement is the most contributing organizational culture traits in
the prediction of employee performance and the other two organizational culture traits, in
their descending order of standardized coefficients, are mission and consistency that the
variables are making significant to the prediction of employee performance. So that,
their contribution to employee performance is high, as a result, the organization give strong
attention for the practice of those organizational culture traits based on their contribution
level on employee performance.

 Involvement in the organization make a continuous investment to develop the skills of

employees, the delegation of authority and decisions made at the right information, so that
the organization should give strong emphasis to develop the culture of involvement to
increase the performance of employee.

 the organization should continue to make improvement in communicating its mission and
vision to new employees and ensure employees understand and work toward the
attainment of the goals of the organization.

 Consistency in the organization guide employees behavior, tells right from wrong defining
values and which creates internal system of governance with a clear set. So that the

50
 organization should give strong emphasis to practice the consistency in the organization to
increase the performance of employee.

Finally, implementing the above listed recommendation, the organization would be able to
focus on selected organizational culture and also it would be possible to have
improvements in workplaces to help employees become highly performed to their jobs.

5.4. Limitation and Suggestions for Future Studies

The following are some of the recommendations for future studies:

 As it is mentioned in the first chapter of this study, the research on the effect of
organizational culture on employee performance are limited specially in our context and the
result of the study limited only to the selected branches of development bank;
recommendations are therefore made for further research including all branches of
development bank and other banks in order to broaden research in this industry.

 There are different models and framework that will help to study the effect of
organizational culture on employee performance like Hofstede’s cultural dimensions
theory, Edger Schein Model, O’Reilly, Chatman’s and Caldwell model and others. This
research study used Denison‘s Model, further research on the same organization can be done
using a different framework of organizational culture as suggested above to bring depth
understanding and outcome.

51
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APPENDICES

60
Appendices1: - A Survey on the Effect of Organizational Culture on Employees’ performance

Arbaminch University

School of Graduate Studies

MBA Program

Dear respondent,

The purpose of the questionnaire is to collect data for research on the effect of
organizational culture on employee performance. The research is designed to identify the
factors that affect employee performance. The research outcomes are important for the
case organization (DBE). Your genuine and honest response is very important for the
success of the research and the researcher would like to thank you for your cooperation in
advance. Please note that your responses are anonymous and will not be shared to others.

Note: for any clarification or question please don’t hesitate to contact the researcher
through:AmelmalHaimanot, Email: -hamelmalhaimanot@gmail.com, Mobile phone: -
0926463661.

General Instruction:

1. No need to write your name

2. Your response confidentiality is maintained
3. Instruction for each part of the questionnaire is given at the beginning of
the questions

Thank You for your Collaboration!

61
 Part I: General Background Information
Please put mark in the box that best describes you
1. Age: __________
2. Gender: 1. Female 2. Male
3. Highest educational level obtained:
1. Diploma / Level IV 2. First Degree 3. Masters and above
4. How long have you been in this organization? __________________
5. Marital Status: 1. Single 2. Married 3. Divorce 4. Widow
Part II: Organizational Culture

Listed below are a series of statements that represent organizational culture with respect to your own
feeling, please indicate the degree of your agreement or disagreement with each statement by putting
a tick mark (√) on one of the five alternatives. Responses are measured on 5- point scales with the
following verbal anchors: Strongly Disagree (1), Disagree (2), Moderately Agree (3), Agree (4) and
Strongly Agree (5).

Item Scale
1 2 3 4 5
1 Decisions are made at the levels where right information is available
2 Employees believes that they can have a positive impact
3 Information is widely shared so that employees can get the information
they need
4 Cooperation across different parts of the organization is encouraged
5 Teamwork is used to get work done, rather than hierarchy
6 Employees work like they are part of a team
7 There is a continuous investment to develop the skills of employees
8 The capabilities of employees are viewed as an important source of
competitive advantage
9 Authority is delegated so that employees can act on their own
10 Managers "practice what they preach"

62
11 There is a consistent set of values that govern the way development
bank of Ethiopia does business
12 There is an ethical code that guides employee’s behavior and tells right
from wrong
13 When disagreements occur, employee work hard to achieve a "win-
win" solutions
14 There is a clear agreement regarding the right way and the wrong way
to do things
15 It is easy to reach consensus, even on conflicting issues
16 Employees from different parts of the organization share a common
perspective
17 It is easy to coordinate projects across different parts of the
organization
18 The approach to doing business is very consistent
19 Improved ways to do work are continually adapted
20 Different parts of the organization cooperate to create change
21 DBE respond to competitor’s actions and other changes in the business
Environments
22 Customers comment leads to changes and influences decision making
23 Employees understand customers wants and needs
24 Customers inputs directly influences company’sDecisions
25 Innovations are encouraged
26 Learning is an important objective in a day-today work of the company
27 DBE view failures as an opportunity for learning and improvement
28 There is a clear mission that gives meaning and direction
29 DBEs strategic direction is clear
30 There is a long-term purpose and direction of the company
31 Leaders set goals that are ambitious, but realistic
32 DBE continuously track its progress against the stated goals
33 There is widespread agreement about the goals of the company
34 Employees have a shared vision of what the organization will look like
in the future
35 Leaders have a long-term viewpoint
36 DBE vision creates excitement and motivation for employees

63
 Part III: Employee Performance Measurement.
Listed below are a series of statements that representemployee performance with respect to your
own feeling, please indicate the degree of your agreement or disagreement with each statement
by putting a tick mark (√) on one of the five alternatives. Responses are measured on 5- point
scales with the following verbal anchors: Strongly Disagree (1), Disagree (2), Moderately Agree
(3), Agree (4) and Strongly Agree (5).
Item Scale
1 2 3 4 5
1 I managed to plan my work so that it was done on time.
2 My planning was optimal
3 I kept in mind the results that I had to achieve in my work.
4 I was able to separate main issues from side issues at work
5 I was able to perform my work well with minimal time and effort.
6 I took extra responsibilities
7 I started new tasks myself, when my old ones were finished.
8 I took on challenging work tasks, when available.

9 I worked at keeping my job knowledge up-to-date.

10 I worked at keeping my job skills up-to-date.
11 I came up with creative solutions to new problems.
12 I kept looking for new challenges in my job.
13 I actively participated in work meetings.
14 I don’t complain about unimportant matters at work.
15 I don’t made problems greater than they were at work.
16 I focused on the Positive aspects of a work situation, instead of on
The negative aspects.
17 I spoke with colleagues about the positive aspects of my work.
18 I spoke with people from outside the organization about the positive
Aspects of my work.

64
Appendices2: - Test Result of Linearity
Residuals Statisticsa for linearity test
a
Residuals Statistics

Minimum Maximum Mean Std. Deviation N

Predicted Value .7549 4.3523 2.5212 .88916 84

Residual -2.07843 1.94442 .00000 .84000 84

Std. Predicted Value -1.986 2.059 .000 1.000 84

Std. Residual -2.414 2.258 .000 .976 84

a. Dependent Variable: EPP

Appendices3: - Test of normality

65
66
Appendices4: - Test for Homoscedasticity of the variables

67