CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Organizational culture refers to a system of shared assumptions, values, and beliefs that show people what is appropriate and inappropriate behavior. These values have a strong influence on employee behavior as well as organizational performance. In fact, the term organizational culture was made popular in the 1980s when Peters and Waterman’s best-selling book In Search of Excellence made the argument that company success could be attributed to an organizational culture that was decisive, customer-oriented, empowering, and people-oriented. Since then, organizational culture has become the subject of numerous research studies, books, and articles. Organizational culture is still a relatively new concept (Daft, 2003). In contrast to a topic such as leadership, which has a history spanning several centuries, organizational culture is a young but fast-growing area within management.
Culture is largely invisible to individuals just as the sea is invisible to the fish swimming in it. Even though it affects all employee behaviors, thinking, and behavioral patterns, individuals tend to become more aware of their organization’s culture when they have the opportunity to compare it to other organizations (Amah, 2009). The organizing function involves creating and implementing organizational design decisions. The culture of the organization is closely linked to organizational design. For instance, a culture that empowers employees to make decisions could prove extremely resistant to a centralized organizational design, hampering the manager’s ability to enact such a design. However, a culture that supports the organizational structure (and vice versa) can be very powerful (Daft, 2003).
An organization’s culture may be one of its strongest assets or its biggest liability. In fact, it has been argued that organizations that have a rare and hard-to-imitate culture enjoy a competitive advantage. In a survey conducted by the management consulting firm Bain & Company in 2007, worldwide business leaders identified corporate culture to be as important as corporate strategy for business success. This comes as no surprise to leaders of successful businesses, who are quick to attribute their company’s success to their organization’s culture (Garvin, 1998).
Culture, or shared values within the organization, may be related to increased employee performance. Researchers found a relationship between organizational cultures and employee performance, with respect to success indicators such as revenues, sales volume, market share, and stock prices leading to realization of the organizations goal. At the same time, it is important to have a culture that fits with the demands of the company’s environment. To the extent that shared values are proper for the company in question, employee performance may benefit from culture. For example, if a company is in the high-tech industry, having a culture that encourages innovativeness and adaptability will support its performance (Amah, 2009). However, if a company in the same industry has a culture characterized by stability, a high respect for tradition, and a strong preference for upholding rules and procedures, the company may suffer because of its culture. In other words, just as having the right culture may be a competitive advantage for an organization, having the wrong culture may lead to performance difficulties, may be responsible for organizational failure, and may act as a barrier preventing the company from changing and taking risks (Caves and Porter, 1977).
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