Impact of organizational culture on employee performance

College Name

Program Name

Course Name

Course Code

Impact of organizational culture on employee performance

Academic Year – Semester


Group Names and IDs with Students’ Signature

Table of Contents

Executive Summary. 3

Introduction. 4

Organizational Culture. 4

Organizational Culture and Employee Performance. 4

Internal and External Cultures. 7

Motivation. 8

Motivational Theories. 8

Conclusion. 9

Works Cited. 10

Appendices. 12


Executive Summary

Organizational culture includes the principles and technologies embraced by different organizations. These are dynamic and vary from one organization to another. Organizational culture is directly related to employee performance as it sets the environment in which the employees work. Different elements in the organizational culture determine the performance of employees. These are the management style, right state of mind of employees, degree of motivation of the employees, organizational change such as downsizing, workload of employees, employee reward packages, and internal and external cultures of the organization. Depending on the nature of these elements, employees will be motivated to perform to their best level, or may be demotivated and perform poorly in their work. The company management ought to ensure that all these elements of organizational culture are favourable to the employees, and are a source of motivation for them to perform maximally and get satisfaction in their work. Good organizational culture boosts employee performance, while poor organizational culture lowers employee performance.


Since culture is a word associated with human behaviour, organizational culture can be referred to as the collective behaviour of the employees of an organization. Culture of one country may not be the same as of other countries, because of the huge differences in social, economic, political and environmental or geographical differences between different countries. For example, America is an extremely wealthy country in which democratic administration prevails and majority of Americans are believers in Christianity. On the other hand, China is a communist country in which religion has no significant roles. Therefore, organizations working in these two countries are entirely different as far as culture and working environment are concerned.

Organizational Culture

Organizational culture is not a static phenomenon. It is a dynamic phenomenon, which undergoes periodic changes because of the advancements in science and technologies and subsequent changes in organizational principles. For example, the introduction of computers, internet and globalization have brought tremendous changes in the functioning of organizations. Majority of the corporate companies are currently operating internationally because of globalization. Outsourcing and offshoring are some of the new business terms brought in to this world by globalization. Instant and enhanced communication was introduced in the organizational world with the help of computers and internet. All these developments caused huge changes in organizational culture.

Organizational Culture and Employee Performance

Employee performance is directly connected with organizational culture. All organizations like to derive maximum output from an employee; however, few organizations provide the necessary organizational culture for the employees to perform well. Management styles in different countries and different organizations are entirely different and hence employees in different organizations may perform differently. “American management had been preoccupied by rational and systematic aspects of management like organizational structures and strategies whereas Japanese companies had a more holistic approach which included attention to people’s skills and management styles” (Grey 65). In short, management styles and organizational culture have definite impact upon the performances of the employees. This paper analyses the impact of organizational culture upon employee performances.

Right frame of mind is necessary for an employee to maximize his performance. Organizational culture is responsible for cultivating the right frame of mind among employees. An organization, which cares more for productivity of employees and cares less on dispersing necessary remuneration and benefits to the employees, may not cultivate the right frame of mind among the employees. On the other hand, an organization, which respects and recognize employee performance may cultivate positive frame of mind among employees.

No employee would like to work under autocratic managers. On the other hand, all employees like to work under democratic managers. This is because of the fact that only democratic managers are capable of delivering the needs of the employees whereas autocratic managers will always be interested in safeguarding the interests of the organization. For the better functioning of an organization, the organization’s needs as well as the employee’s needs should be considered. Only an autocratic manager would be able to do this.

Musacco has pointed out that “harassment, mobbing, bullying, and emotional abuses are common at the workplaces which resulted in increased fear and minimal trust between workers” (2). Organizational environment plays a vital role in controlling employee performances. It should be noted that current organizations are forced to keep a diverse workforce because of globalization and internationalization of business. Majority of the modern organization are operating cross culturally and their workforce is extremely diverse. For example, Coca Cola and Pepsi like most American companies are operating in most parts of the world. It is impossible for these companies to employ only Americans in their overseas operations. Same way, Middle East is a place in which one can see people from all parts of the world. An organization in Middle East may consist of employees of different nationalities. All these employees have their own cultures, traits, and behaviour patterns. Because of that, harassment, mobbing, bullying, and emotional abuses may often occur among the diverse employees working in these organizations. If the organizations with diverse workforce cater the needs of only one employee community and neglect the needs of other community, employee performances will be affected.

Sundays are sacred days for Christians whereas Fridays are sacred days for Muslims. An organization, which sticks with weekly off on Sundays or Fridays, may safeguard the interests of a particular community while neglecting the needs of other community. Such organizational culture may often create dissatisfaction among the employees who were neglected.

“Stress, anger and turmoil at workplace have the effect of creating more toxic work environments” (Musacco 51). Current organizational or business world is heavily competitive. It is difficult for modern organizations to allow employees to work on a regular schedule. Based on the workload increases, organizations often ask the employees to stay back for overtime work. Consistent overtime works may affect the employees in a negative manner. They fail to attain a work life balance. All employees like to achieve work life balancing. When the employees fail to attain this, stress may develop in the minds of employees. In fact spending leisure times with friends and relatives is necessary for an employee to relieve his stress. Family, society and workplace are the three major places in which an employee commonly interacts. The commitments towards these three entities are growing day by day and along with that, the stress levels of the employees also increasing. When he forced to work on a regular overtime schedule, he may not be able fulfil his commitments towards family or society. Such scenarios increase his stress further and further. In short, overtime works often affect the physical and mental health of the employees. Proper physical and mental health is necessary for an employee to deliver the goods.        Macky mentioned  that in situationswhere pressures to work longer hours are higher, employeesfeel overloaded and likely to experience greater dissatisfactionwith their jobs which may result in higher stress and fatigue, and greater work—lifeimbalance (17).

In an environment undergoing change, such as during the privatization of state-owned enterprises, employees’ commitment to the organization is easily disrupted because privatization is often linked to downsizing. Downsizing has been found to have a negative influence on surviving workers’ loyalty, which is an important element of organizational commitment (Chen & Chen).

Current organizations are particular in employability rather than employment security. They often threaten the employees and cut down their benefits in the name of recession or other economic factors. Downsizing is common in modern organizations. Majority of the employees working in private sector are under the threat of downsizing or loss of job. Employees working under such environment may not be able to concentrate more on their work. They always try something to impress the management. However, they may fail to do so as the demands of the management increases as time goes on. Campbell et al, mentioned that even the “survivors from the humiliating experience of downsizing may have worries about their own job security and concerns about the creation of heavier workloads due to the reduction of manpower” (8). In short, downsizing may develop counterproductive behaviour among employees, which is not good either for the organization or for the employees. It is difficult for the employees to work in an organization in which the management dictates. On the other hand, it is easy for the employees to deliver the goods in democratic organizations.

Internal and External Cultures

Morgan pointed out that everything exists in the context of wider environment as far as an organization is concerned (72). Internal culture as well as the external culture is important for an organization to derive the maximum out of the employees. Some organizations have the habit of treating the employees well, and the communities badly. It is the duty of every organization to deliver something to the communities to show their corporate social responsibility. It should be noted that the community provides the necessary canvass for the organization to draw its picture. If that is true, it is the duty of the organizations to keep the canvass in good shape. Corporate social responsibility enhances the reputation and images of a company. Employees like to work in socially committed companies. Majority of employees dislike their organization if it shows less commitments or respect towards sustainable business practices.

According to Mullins, “group exists in all organizations and are essential for the efficient working and performances in the current organizations. He also argued that everyone in an organization will be a member of one or more groups” (6). Organizations in the past were concentrated more work that is individual. They encouraged individual work more than teamwork. However, modern organizations are encouraging teamwork over individual work. It should be noted that while working as part of a team, an employee gets immense support from the team members. Such supports will reduce the stress levels of the employees immensely and they will deliver the goods. It should not be forgotten that the responsibilities of an employee in a team could be much lesser than responsibilities of an employee working individually. When a team performs badly because of the failure of a team member, the blame goes to the team rather than to the individual. In short, teamwork provides great flexibility and freedom to the employees. An employee may get more chances to correct his mistakes while working as part of a team. An organization, which encourages teamwork, may assess only the outcomes of the teamwork rather than the individual performances.  Thus, individuals in teams get more freedom and flexibility in their works.

According to McLean’s, Organizational culture is similar to growing children (4). In other words, at the beginning of an organization, its culture may not be matured enough. Only after few years, it will be developed properly. Employees working in new organizations may face lot of difficulties because of the underdeveloped culture. Such organizations may behave just like children and the employees may face lot of problems. Every experience provides a learning curve to the organization, which will help the organization to shape its culture properly.


Motivation is the much-required entity in enhancing the employee performance. Organizational culture plays an important role in motivating the employees positively or negatively. “According to Herzberg’s two-factor motivation theory, people are influenced by two factors; motivational and hygienic. Hygiene factors are related to working condition, quality of supervision, salary, status, security, company, job, whereas the motivational factors are related to achievement, recognition or, interest in the job” (“Two factor theory – Herzberg, Frederick”). Many of the modern organizations have the illusion that good salaries alone may motivate the employees properly. In fact, modern employees value the working climate, environment, and the attitudes of the employer or management more than what they getting as salaries do. Hygienic factors are related to physical gains whereas the motivational factors are related to the psychological factors. In other words, both physical gains and mental gains are equally important in motivating an employee properly.

Motivational Theories

Theory X and Theory Y are motivational theories, which deal with the human attitude towards work. Theory X believes that “most people must be coerced or threatened so as to induce them to make them meet their goals and get their work done,” whereas  theory Y argues that “external control and the threat of sanctions are not the only means by which to get employees to work toward organizational goals”(Furst 24). In other words, there are two types of employees, one who likes their work and the other who dislikes their work. Rewards are enough to motivate employees who like their work whereas punishment is necessary to motivate employees who dislike their work. An organization should account for such differences in employee attitude while formulating its management style and culture.

Organizational change

Organizational change is another important term in organizational world, which can make or break the performances of the employees. Organizational changes can affect the organizational culture immensely.  Before implementing structural changes or functional changes, an organization should make sure that these changes may not affect the employee performances negatively.

“Do not ‘sell’ change to people as a way of accelerating ‘agreement’ and implementation. ‘ Selling’ change to people is not a sustainable strategy for success, unless your aim is to be bitten on the bum at some time in the future when you least expect it. When people listen to a management high-up ‘selling’ them a change, decent diligent folk will generally smile and appear to accede, but quietly to themselves, they’re thinking, “No bloody chance mate, if you think I’m standing for that load of old bollocks you’ve another think coming…” (That is just the amenable types – the other more recalcitrant types will be well on the way to making their own particular transition from gamekeepers to poachers.) Instead, change needs to be understood and managed in a way that people can cope effectively with it. Change can be unsettling, so the manager logically needs to be a settling influence (“Change Management”).

There is no point in implementing change just for the sake of change. The effects of change should create a positive energy bin the minds of the employees. Employees should feel that the proposed changes might help them in many ways. When employees have concerns about the change, they will try to resist it at any cost. Therefore, before the implementation of any changes in the organizational culture and environment, the managers should convince the employees about the necessity of change. For example, if the working hours have to be rescheduled, the managers should convince the employees about the necessity of such changes.


Organizational culture plays an important role in employee performances. Better organizational culture helps the employees to perform well whereas poor organizational culture retards employee performances. Organizations should make sure that a positive energy created in the minds of the employees because of the existing work culture. Moreover, organizations should make sure to implement periodic changes in its culture based on the changes happening in science and technology and the subsequent changes in the life and living standards of the employees.


Works Cited

“Change Management” (1995). Web. 28 October 2012.


“Two Factor Theory – Herzberg, Frederick” Web. 28 October 2012.


Campbell, Fiona, Worrall Les, & Cooper Cary. “The Psychological Effects of “Downsizing

and Privatization.”2000. Web. 28 October 2012. <>

Chen, Huei-Fang and Chen, Yi-Ching. “The Impact of Work Redesign And

Psychological Empowerment On Organizational Commitment In A Changing Environment: An Example from Taiwan’s State-Owned Enterprises” 2008. Web. October 2012.  <>

 Furst, Peter. “Supervisor’s role in employee performances”. 2009. Web. 28,

October 2012. < management.aspx>

Grey, Christopher.  “A Short Fairly Interesting and Reasonably Cheap Book About

Studying Organizations”. 2008.  Sage Publication Limited. London. Print

Macky, Keith. “High-Involvement Work Processes, Work Intensification and Employee

Well-being: A study of New Zealand Worker Experiences”. 2008. Web. 28 October 2012. <>

McLean, Gary. “Organization Development: Principles, Processes, Performance.”  2005.

Berrett-Koehler Publishers: London. Print.

Morgan, Gareth. “Creative Organization Theory: A Resource book.” 1989. Sage Publications

Inc: New York. Print.

Mullins, Laurie J.  “Management & Organizational Behaviour.” 2007.  Financial Times

Management. Print

Musacco, Stephen.  “Beyond Going Postal: Shifting From Workplace Tragedies

and Toxic Work Environments to a Safe and Healthy Organization.” 2009. BookSurge Publishing: London. Print.




Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.