CHAPTER ONEINTRODUCTION1.
1 Background to the Study Organisations exist to achieve various goals and objectives. Organisations are cultural units which have within them strong subcultures that are based on occupations and common histories (Schien, 2009). Every organisation has its own survival goals and objectives but what differentiates such organization from others is the means through which resources are effectively and efficiently utilised to achieve such goals and objectives. Organisation that wants to survive and grow must develop viable assumptions about what to do and how to do it. Moreover, for any organisation to survive and effectively adapt to the dynamic and competitive environment, as well as earning high returns on their investment and creating a defendable position against their competitor, such organisation needs to understand correctly the industry structure, the heterogonous resources and capabilities that are accumulated through time and are unique inimitable and non-transferable (Dakare & Ogbojafor, 2016). Organisational structure is meaningless except it is supported by appropriate system and a well-conceived culture (Nelson & Quick, 2011, cited by Maduenyi, Oke, Fadeyi & Ajagbe, 2015).
Moreover, it is important to understand that organisations exist and operate within broader cultural units that matter in the present global environment due to the fact that mergers, acquisitions, joint ventures and special projects are multicultural entities (Schien, 2009). Mergers, acquisitions and recapitalisation are part of consolidation programme introduced to strengthen, grow and position banks in Nigeria to play pivotal roles in driving development across the sectors of the economy (Afolabi, 2015). The culture and philosophy of an organization are key factors in shaping up such organisation which have a significant impact on the structure, the internal and external environment, technology and human resources, and most importantly, the efficiency and the strategy of the organization (Akbari1, Nazari1 & Mahmoudi, 2015). Creating an effective corporate culture in an organisation is very important to improve productivity. Corporate culture is concerned about the way things are done within an organisation. Corporate culture is the collective programming of the minds of members of an organisation which distinguishes them from other organisations (Hofstede, 1991). Corporate philosophy is the comprehensive policies and principles that guide an organisation’s actions toward employees, customers, and other stakeholders (Schein, 2004).
Corporate philosophy should be able distinguish an organisation from its competitors by recognising their basic principles (Mintzberg ; Quinn,1996 cited by Darbi, 2012). Organisations that managed their culture and philosophy effectively out-perform others who do not (Kotter ; Hesket, 1992, cited by Sabri 2013). However, in order to establish a strong corporate culture, firms must be able to develop strong leadership because with poor leadership, it is difficult to communicate the firm’s strategy to employees. Meanwhile, making the mission, vision, and objectives of a company transparent to employees is very essential in executing goals effectively and efficiently (Mahrokian, Chan, Mangkornkanok, Lee & Hee, 2010). Organisations that pay adequate attention to corporate culture and philosophy in their practices have in most cases achieved better employee relations, higher productivity, greater customer satisfaction, increased market share, and improved profitability. Companies use productivity in assessing the efficiency of internal functions and strategic business units (Vitamo, 2007).
In a globalized competitive world, companies need to differentiate themselves in more ways in order to allow them thrive and sustain a competitive advantage, especially during recessionary period where so much uncertainty is all over the economy (Mahrokian et al , 2010). Corporate philosophy and culture are part of major source of competitive advantage for any business organisation. Regardless of industry or size, of an organisation, a corporate culture should be in line with its strategy (De Witte & Muijen, 1999).Organisations are faced with highly uncertain and challenging environment caused by some challenges like capital problem, difficult union, foreign competition, rapid changes in products and processes, energy, government regulation, increasing importance of skill, quality productivity and other difficulties which call for the need of increasing adaptability and flexibility (Hall & Fukanim, 1979) cited by (Amah, 2012),. However, Organisation can be effective and efficient if adequate strategy is put in place. Each of the strategy has an impact on productivity. Hence, the quality of corporate culture and philosophy construction will affect organizational productivity directly or indirectly.
Corporate culture takes time to develop, it shapes a company’s strategy and sets the tone for the present as well as the future, it guides employees on how to conduct business on a daily basis and the way in which they do things (Mahrokian et al., 2010. Implementation of a business strategy is successful when leadership style, management systems, organizational structures and organizational culture change support the strategy (Kelepile, 2015).
Organisations are expected to be productive, profitable and increase their market share regardless the difficulty of coping within the challenging environment, hence, the need to achieve organisational goal has made managers to seek for cultural methods of motivating employees (Amah, 2012). Therefore, culture defines the way business is done and the organisational survival tactics that ease understanding of information and individual success (Hotterberth ; Urich,2011). Every organisation focuses on increasing its productivity which can be achieved by building a strong culture that support teamwork, innovation, commitment and loyalty in order to realise organisational goal (Ahiabor, 2014).
Corporate culture is an essential ingredient of organisational performance and a source of sustainable competitive advantage. Corporate culture is therefore an important element to unify various company cultures in a corporate group (Kenny, 2012).Corporate culture and philosophy represent predefined policies that guide and give employees a sense of direction within the organisation. Culture and philosophy of an organisation are assets and sources of competitive advantage to such organisation. Hence, It is the responsibility of the directors to determine the mission of the company and ensure that the company’s values, strategy and business model are aligned to it. Therefore, in order to improve productivity companies must adopt a culture and philosophy that promote sustainable competitive advantage in the area of resources and capabilities; this will help them to maintain a higher profit than the average level of the industry in the long run.
However, if an organisation lack adequate resources and capabilities the competitors will overtake such organisation. In effect, it is important to understand that resources and capabilities distinguish a company from its competitors and thereby enhance innovation, efficiency, quality of service delivery and customer satisfaction. For many years, corporate culture has been acknowledged as an important component of organisational success. Corporate culture is identified as one of the factors responsible for organisational effectiveness (Giassister & Buckley, 1998) Culture is an abstraction, yet the forces that are created in social and organisational situations that derive from culture are powerful (Schein, 2009). Corporate culture is very important as it can decide the strategic target and the operation pattern of a corporation (Schein, 2009).
Culture is much more about people than it is about rules. Detert, Schroeder and Mauriel (2000) opine that culture is a way of life which is indispensable for the success of every organization and also in promoting the value of human resources. According to Karathanos, (1998), managers should periodically analyse the relevance of corporate values within their organisations to examine how adaptive it is to environmental changes. Corporate culture is ‘a pattern of shared basic assumptions that is learned by a group as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think and feel in relation to those problems (Schein, 2004).
Therefore, managers should have a clear knowledge on how to promote a culture and philosophy that gives room for learning and change through teamwork, participation and empowerment of employees. Corporate culture has played important roles in adapting to external and internal changes; maximizing the value of employees through organizational learning, knowledge management and creativity (Horwath ; Morrison ,2000). Corporate culture and philosophy of organizations influence what an organization does, what it focuses on, and how it operates, based on employees, customers and shareholders expectation. In order word, corporate culture affects both the internal and the external environment of an organisation. Corporate culture is closely connected to productivity, and it is critical to the business success which is the process by which an organization develops its internal capacity to be effective in its mandate in the short, medium and long term (Kelepile, 2015). It is therefore the responsibility of the management to introduce the corporate culture to its employees that will assist the employees to get familiar with the system of organization (Shahzad, Luqman, Khan ; Shabbir, 2012). In a globalized competitive world, companies need to differentiate themselves in more ways in order to allow them thrive and sustain a competitive advantage, especially during recessionary period where so much uncertainty is all over the economy (Mahrokian et al , 2010).
Corporate philosophy and culture are part of major source of competitive advantage for any business organisation. Regardless of industry or size, of an organisation, a corporate culture should be in line with its strategy (De Witte ; Muijen, 1999).Organisations are faced with highly uncertain and challenging environment caused by challenges like capital problem, difficult union, foreign competition, rapid changes in products and processes, energy, government regulation, increasing importance of skill, quality productivity and other difficulties which call for the need of increasing adaptability and flexibility (Hall ; Fukanim, 1979) cited by (Amah, 2012),. However, Organisation can be effective and efficient if adequate strategy is put in place. Each of the strategy has an impact on productivity. Hence, the quality of corporate culture and philosophy construction will affect organizational productivity directly or indirectly. Corporate philosophy covers fundamental thoughts related to the company, and this includes vision, values and mission. According to Stevenson (1991), cited in Feteke and Csordas (2005), corporate philosophy is defined as the values and beliefs which a company holds and which drive its corporate activity.
Corporate philosophy is the core values which serve as the guiding principle that directs and regulates the purpose for the existence of organisations and this is often stated in a document which outlines a firm statement encompassing, and in most cases, the legal, cultural, environmental and religious facets of all human endeavours as it affects the shareholders, the customer and the employees of certain organizations (Akinbola, Oyewunmi ; Amaihian, 2013). These values, ethical standards and mission develop a personality which is the set of characteristics which make a company and distinguishes it from others (Stevenson, 1991 cited in Feteke ; Csordas, 2005). Therefore, mission statement is one of the determinants of corporate philosophy that provides direction to the organization. Companies in the recent times have reemphasized the need to market their corporate philosophy as this has been identified as one of the avenues to boost the acceptability and marketability of businesses and organizations (Akinbola et al, 2013). Competition is increasingly important and striving to surpass the opposition is essential for becoming ‘the best’, therefore profit-oriented organisations make use of superlative adjectives such as ‘best’, ‘highest’ and ‘most’ to give an impression of self-confidence in the organisation’s ability, position and conduct (The Jubilee Centre for Character and Virtues, 2014). A clearly defined corporate philosophy creates competitive advantages which can be measured in the employees’ productivity resulting in the company’s success. According to Wang (2011 cited by Daura and Pers, 2012), a corporate philosophy that is consistent and has legal backing may transform commitment into productive effort because it could provide direction for individuals, set constraints on employee behaviour, and enhance individual motivation.Productivity is concerned about how resources such as raw materials, labour, skills, capital, equipment, land, intellectual property and managerial capability are well combined to produce a desired output (Agarwal & Adjirackor, 2016).
Productivity is the efficiency of the underlying goals to achieve (Epstein, 1992), However, looking at productivity only from efficiency perspective has led to adverse effect on quality; therefore productivity should be viewed as measuring and addressing both efficiency and effectiveness (Alman, 2013). According to Drucker (1973), efficiency is concerned about doing things right while effectiveness is concerned about doing the right things. According Nash (1993) cited by Abu-Jarad, Yusof and Nikbin (2010), profitability is the best indicator that determines the efficiency of an organisation; hence profitability can be used as the primary measure of organizational success. Moreover, profit margin, return on assets return on equity, and return on sales are considered to be the common factors to measure profitability (Abu-Jarad et al, 2010). Maintaining effective organizational culture in the organization is important to improve performance and productivity (Eaton & Kilby, 2015). Corporate managers use an effective organizational culture to influence performance and productivity (Shahzad et al, 2012).
1.2 Statement of ProblemAccording to Financial Reporting Council (FRC) report observations (2016), a healthy corporate culture is a valuable asset, a source of competitive advantage and vital to the creation and protection of long-term value. Leaders and managers of organizations are creators, products, and victims of culture (Schien, 2009). Many business organisations find it difficult to survive in a dynamic competitive business environment as a result of challenges in the global price competition and satisfaction of various stakeholders’ demands (Bolboli ; Reiche, 2014). However, the top management should not wait for crisis before they focus on corporate culture and philosophy. Furthermore, business managers are confronted with many complex issues when making decisions about the best method to achieving organisational productivity in the dynamic and complex environment. In corporate organisations, managers have various challenges in creating effective culture and philosophy that are necessary for improving organisational productivity (Kenny, 2012). Many problems associated with organisational productivity especially during economic crisis can be traced to many managers (CEOs) who did not pay adequate attention to their corporate culture and philosophy as they did to their profit maximisation, quality of product/service delivery, customers’ satisfaction and market leadership.
Eaton and Kilby (2015) argue that lack of effective organizational culture by some company managers often lead to poor performance and loss of productivity within the corporate organisation.According to Hsu (2008) cited by Sabri (2013), the business world was filled with corporate scandals that shocked people’s beliefs about the culture of many corporations. A corporation such as Enron was overshadowed with dishonesty which permanently affected the organisation’s overall culture and ultimately led to the end of the company. According to Schein (1996), cited by Sabri (2013), the organizational culture adopted by Enron gave room for ethical misbehaviour among its employees, particularly the top executives.
Enron’s leaders influenced its corporate culture and philosophy which eventually led to crisis which resulted in the collapse of the company. In other words, the failure of Enron resulted from poor corporate culture and philosophy, poor asset and liability management, poor regulatory and supervision. Corporate world must therefore understand that no company (bank) is too big to fail.However, the Nigerian banking sector is also affected by the recent global economic crisis. Increase in recession in advanced countries has affected the Nigerian economy as a whole especially the financial sector (Sanusi, 2010). Sanusi (2010) further explained that credit mismanagement, was one of the main structural sources of the financial crisis and causative factors, such as unethical and unprofessional practices, poor management among others contributed to low level of bank performance and sometimes lead to failure of bank.
According to Uwuigbe (2011) cited by Afolabi (2015), the Nigerian banking sector experienced cases of accounting improprieties in 2009, as a result of lack of vigilant oversight functions by the board of directors, who left control to corporate managers who pursue their own self-interests and the board being remiss in its accountability to stakeholders. 1.3 Objectives of the StudyThe main objective of this work is to carry out an appraisal of corporate culture and philosophy on organisational productivity.
In addition to this, other specific objectives are to;1. examine the influence of core value on organisational productivity in banks..2.
measure the relationship between corporate mission and organisational productivity.3. evaluate whether employee involvement enhance organisational productivity.4.
analyse the effect of organisational adaptability on productivity in corporate organisations. 5. examine how organisational learning capability influence productivity in organisation.1.4 Research QuestionsThe following relevant questions would be addressed in this study: 1.
How does core value influence productivity in Nigerian banking industry?2. Is there any positive relationship between corporate mission and productivity in business corporations? 3. How does employee involvement enhance organisational productivity in banks? 4. What is the effect of organisational adaptability on organisational productivity? 5.
Does organisational learning capability influence organisational productivity? 1.5 Research HypothesesIn order to achieve the objectives of this research study, the following hypotheses would be tested in the course of this study.Hypothesis One: (Core Value and Organisational Productivity)Ho: Core value does not influence organisational productivity in Nigerian banking industry. Hypothesis Two: (Corporate Mission and Organisational Productivity)Ho: There is no positive relationship between Corporate mission and organisational productivityHypothesis Three: (Employee Involvement and Organisational Productivity)Ho: Employee involvement does not enhance organisational productivity in banks.Hypothesis Four: (Organisational Adaptability and Organisational Productivity)Ho: Organisational adaptability does not affect organisational productivityHypothesis Five: (Organisational Learning Capability and Organisational Productivity)Ho: Organisational learning capability does not influence organisational productivity 1.6 Significance of the Study Every corporate organisation has its own culture and philosophy which have influence on improving organisational productivity, and thereby promoting a healthy competition within the business environment. Hence, understanding corporate culture and philosophy is necessary for managers at all levels. Therefore, this study is of immense benefits and veritable source of information to various stakeholders in Nigeria.
This study is of great importance to both public and private organisations in Nigeria. The increase in the knowledge of corporate culture justifies the need for effective and efficient running of organisations. Managers of business organisation who are confronted with the challenges of improving productivity will find this study useful. Moreover, this study will help corporate organisations to give their employees direction by guiding them on how to relate with other colleagues, customers and management, and thereby eradicating unethical behaviour within the organisation.Moreover, this study is of benefit to employees because it gives them more knowledge about the elements that drive the organization and also understand the operational environment in which they strive to achieve the goal set by the company (Newstrom ; Davis, 1993). Well-designed organization can achieve new operating values, which have a positive effect on the behaviour of employees (Belbin, 1996). Also, the knowledge of corporate culture helps employees have clear vision about who represents the organization, and also he lp new employees understand what is happening within the organization (Newstrom ; Davis, 1993). In addition, this research study would also generate a great deal of interest to the government and policy formulators as it serves as a guide to ensuring proficiency, efficiency and effectiveness.
The study helps leaders to understand the importance of culture and philosophy which may help in tackling present and future crisis in the economy. Finally, this research study is of immense benefit to the educational sector. This will help in obtaining relevant information in the area of corporate culture and productivity considering the important role it plays in the corporate world today.
Thus, it will serve as a reference material for researchers, trainers and students who would wish to carry out related studies in future.1.7 Scope of the StudyThe research study focused on an appraisal of corporate culture and philosophy on organisational productivity using the banking sector as case study. The study explains corporate culture and philosophy on the dimension of core value, corporate mission, employee involvement, organisational adaptability and organisational learning capability. The scope of this research was cantered around five Nigerian banks; Access Bank Plc., Guaranty Trust Bank, First Bank Plc, Diamond Bank Plc, and UBA.
Structured questionnaire was used to elicit responses from the staff of the above mentioned banks. 1.8 Operational Definition of TernsCorporation: A large company or group of companies authorized and recognized by lawto act as a single entity Corporate culture: The basic values, assumptions and beliefs that are shared by members of an organisation. Corporate philosophy: The core values which organizations adopt as the guiding principle that directs and regulates the purpose of their existence. Productivity: A measure of efficiency and effectiveness of how resources (human, material, machine, money) are well combined in converting inputs into useful outputs Corporate mission: This defines what an organization is and why it exists (business goals and philosophies)Core values: These are the guiding principles that dictate behaviour and action.Employee involvement: The participation and contribution of staff to help an organization achieve its goals and objectives by applying their ideas and skills in making decisions.Adaptability: The degree to which an organization adjust its structure in accordance with the characteristics of a dynamic environment.Competitive advantage: A circumstance that puts a company in a favourable or superior business position over its competitors Ethical misconduct: Certain behaviour that violates professional standards
