PERCEIVED IMPACT OF ORGANIZATION CULTURE ON EMPLOYEES PERFORMANCE (A CASE STUDY OF NIGERIAN SOCIAL INSURANCE TRUST FUND (NSITF) YOLA L.G.A, ADAMAWA STATE)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Employees are considered the most valuable assets among the critical resources that organizations acquire, and without their contribution to performance, organization’s goals and objectives would not have been achieved. The success of any organization largely depend on its employees’ performance and good employees’ performance direct the organization to its success path. This is due to the reason that individual performance is the backbone for realizing the outcome of organizational performance so that all organizations need employee’s job performance in order to achieve pre- stated objectives, and employees to accomplish their duties based on specific standard stated by their managers. If they are not properly managed, the attainment of organizational goals may be difficult. Managerial science deals with the management of human and resources (material) inputs in any organization. A manager is termed to be an effective or efficient manager depending on his ability to co-ordinate, organize, direct, and plan these inputs. The business organization is a system in which the manager, the human, and the raw materials are part of the system, working together for the smooth functioning of the system. Today, business organizations have changed from simple to complex business structures requiring practicing managers to be complex too. Most business are not only operating in national boundaries but have cut-across the off- shores of national boundaries extending to other countries or nations of the world as a result of increasing demand in the international trade. This recent trend has added more responsibilities on the part of managers in managing this type of global business complex structures. Thus, understanding the relationship between the organization and its employees’ performance is the key factor to improve the organization‘s ability to move through change effectively. There are different factors that determine the performance of employee so organizations are expected to understand the factors that most affect employees’ performance because such insight will help them to make better decisions that will instil improved performance of employees and to an extension the overall performance of the organization (Mwangi, 2012). One of the most determinant factors for achievement of employees’ performance is organizational culture and organizations should be aware of their culture in order to survive successfully in unstable business environment (Northouse, 2004). Organizational culture according to Robins (2010), refers to a system of shared meaning held by members that distinguishes the organization from other organizations. Strong organization cultures have a great influence on the behaviour of its members. It is worthy of note to mention at this point that national culture overrides an organization’s culture and has a great impact on employees than does their organizations culture. Adler, (1997) this means that as influential as organizational culture is in shaping employee behaviour, national culture is even more influential. Culture’s idea needs to be refined and become common in the organizations (Titiev, 1959). Organizational culture is based on the effective systems that help an employee how he/she thinks and makes effective decisions (Pettigrew, 1979). Organizational culture comprises of an organization’s expectations, experiences, thinking, and values that bind it composed, and are stated in its self-image, workings, connections with the global world, and future prospects. It is based on shared norms, beliefs, customs, and rules that have been developed with time and are considered valid. Organization’s cultural values and norms powerfully affect all the employees who work within the organization (Stewart, 2010). Organizational culture depends on the norms, values, beliefs of employees and processes of the organization. Organizational management defines employee’s norms, values and objectives which lead an organization towards productivity. The understanding and awareness of the organizational culture bring effectiveness in organizational goals achievement (Brooks, 2006). It is important that culture should be industrialized the way that it recovers the job performance of employees. “Organization culture is recognized as ‘normative glue’ means to hold the complete organization collected” (Tichy, 2014). Schein (2006) states that organizational culture is based on two influences of community group: (i) structural constancy of a group (ii) integration of single item in larger average. Organization’s norms and values must affect the concerned employees (Stewart, 2010). As per Hofstede (1980) model there are four dimensions of organizational culture: (1) Power distance, (2) Individualism versus collectivism, (3) Uncertainty avoidance, and (4) Masculinity versus femininity. Power distance is defined as the area in which the less influential employees of the organization feel that the power is dispersed unevenly. Individualism and collectivism are different cultural values in their relative accent on independence versus interdependence in one group (Markus & Kitayama, 2015). Uncertainty avoidance deals with civilization’s acceptance for vagueness. It indicates that to what extent employees feel comfortable or uncomfortable in unwanted situations. Masculinity refers to features of community with clearly mentioned and divided duties; and men are supposed to be strong and they work more and more effectively while the ladies are weak and they do not work as compared to men while the femininity is the opposite of masculinity. In femininity, social roles are overlapped and males and females are self-effacing and sensitive and work equally in life. Most of the authors relate performance to the transaction of effectiveness and efficiency towards administrative objectives (Barne, 1991; Stannack, 2012). The job related activities of a worker and how well those actions were performed is the job performance of an employee.

1.2 STATEMENT OF PROBLEM

The concept of organizational culture has gained wide acceptance in understanding the management of change in human relation practices. The review of numerous literatures proved that management of human resource in organization has become indispensable in attaining the mission and vision statement. Since employees are seen as the greatest and valuable assets that implement and complement other factors in an organization. Increased competition, globalization, alliances and major work force department have created a greater need for organizational culture. Thus, managing organizational culture is emerging as one of the key managerial challenges of the millennium. However, it is important to note that change is inevitable and constant in all aspects of its connotation, and contrary to this assertion, it is argued that just as people resist change, so also organizations be it in Nigeria or any part of the world would surely resist change. In some organizations, the manner in which things have always been done where some norms and values are not favorable to employees have been established over time, there is always an irresistible urge on the part of employees to behave in a peculiar way in order to stick to status quo. More often than not, employees are unconscious of their organization culture until it is becomes a problem, and until the occurrence of a new culture which can be made obvious and explicit. Essentially, this most times could constitute a hindrance to employees’ satisfaction. When the corporate culture of organization is the one that shows hostility, repression of employee view, contributions, turns a deaf ear to employee supplications, lack of unity of purpose and where only the downward flow of communication and information in the organization’s hierarchy is recognized indeed there could be problem. In the light of the complexity of organizational culture and how it impacts on employees’ performance, this study intends to shed light on the following questions in order to address the fears of managers in organization on the performance of their employees.

AIMS AND OBJECTIVES OF THE STUDY

The major aim of the study is to examine the perceived impact of organizational culture on employee performance.  Other specific objectives of the study include;

1. To examine the effect of training and development on employee performance.
2. To examine the factors of organizational culture that influence employee performance.
3. To examine how employee involvement as an element of organizational culture influences employee job performance.
4. To examine the impact of organizational culture on employee performance.
5. To examine the relationship between existing organization culture and employees’ performance.
6. To formulate recommendations regarding organizational culture, which will help tackle human resource related issues in the organization.

RESEARCH QUESTIONS

1. What is the effect of training and development on employee performance?
2. What are the factors of organizational culture that influence employee performance?
3. How will employee involvements as an element of organizational culture influence employee job performance in NSITF?
4. What is the impact of organizational culture on employee performance?
5. What is the relationship between existing organization culture and employees’ performance?
6. What are the recommendations regarding organizational culture, that will help tackle human resource related issues in the organization?

SIGNIFICANCE OF THE STUDY

The study will enable investors, both individual and institutional; to objectively and strategically apply the best organizational culture practices to ensure competitive advantage. The Nigerian Social Insurance Trust Fund management will be able to easily pinpoint the best cultural practices applicable for their organization. The study will stimulate interest in the area of organizational culture and its influence on competitive advantage and organizational performance and thus contribute to the existing literature and provide a basis for further research. Researchers will be able to provide accurate human resource management policy guidelines

1. SCOPE AND LIMITATION OF THE STUDY

The study is restricted to perceived impact effect of organization culture on employee performance, a case study of Nigerian Social Insurance Trust Fund (NSITF) Yola L.G.A, Adamawa State.

LIMITATION OF THE STUDY

Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview)

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

ORGANIZATION OF SERVICE

This study comprises five chapters. The first chapter provides background of the study, background of the organization, statement of the problem, objectives of the study, significance of the study, scope of the study, limitation of the study, and definition of key terms. Chapter two comprises a review of the related literature on the concept of organizational culture, different types of models of organizational culture and their dimension, concept of employee performance, theories of employee performance, the functions and characteristics of organizational cultures, Empirical Review and Conceptual framework. The third chapter presented research design, data sources, sampling technique, instruments of data collection, procedures of data collection and methods of data analysis. Chapter four described the finding of analysis and interpretation on the relationship of organizational culture and employee performance and the final chapter i.e. the fifth chapter gave highlights on the implications based on the results; it included summary of major findings, conclusions, recommendations and finally suggestion for further research.

PROFILE OF THE ORGANIZATION IN THE STUDY

The origin of the Nigeria Social Insurance Trust Fund (NSITF) can be traced to the Provident Fund Scheme which later became the Social Insurance Scheme. The NSITF is currently known as the Employees’ Compensation Scheme. The predecessor of NSITF, the National Provident Fund (NPF) was established by an Act of Parliament in 1961 to provide a poverty alleviation measure as required by convention No.102 of the International Labour Organization (ILO). At this time, the goal of the scheme was to protect private sector employees (whose employers were then mostly multinationals) from financial difficulties in the event of either old age, cessation of employment, invalidity or death. Most employers didn’t have any scheme like this in place at that time. The scheme was a sort of compulsory savings scheme in the form of a monthly contribution by members at the rate of 6% of basic salary subject to a maximum of N8.00 per month or a sum total of N96.00 per annum to be paid in equal proportion by the employer and the employee. In the event of emigration from the country, employment cessation, old age, invalidity or death, the cumulative amount contributed plus accrued interest (7% as at 2015) is calculated on a compound basis and paid to the contributor or his/her dependent as the case may be. The Act was later amended by another Act of Parliament in 1962 to cover only employees in the private sector who were not covered by the Pension Service Scheme. However, there was a unanimous by the different labour unions including the ILO that the organization had not satisfactorily performed its responsibilities. This led to the Federal Government setting up the Nigeria Social Insurance Trust Fund (NSITF) which was launched by the Honourable Minister of Employment, Labour and Productivity, officially launched the new scheme in July 2015. Based on this scheme, all Nigerian employers in the private sector were to contribute monthly and the organization was expected to remit this sum.

This scheme would enable the employer provide the following benefits:

• Retirement pension benefit
• Survivors benefit
• Retirement grant
• Death grant
• Invalidity benefit
• Invalidity grant and such other benefits as may be approved from time to time by the Board.

In 2002, a new rate of contribution was implemented after the scheme was reviewed. This new scheme meant that the pension and grants on offer available was more than the employees’ contributions. Between 5 to 25% of the pension contributions is allowed to be used to meet the administrative costs while the surplus was invested in a safe liquid and profitable investments which enabled the NSITF generate income for the payment of benefits. Generally, the cost of administration was usually higher at inception of the scheme but tends to become progressively lower as the scheme matures. The registered members were entitled to receive pension and grants that they benefit from once they attain the retirement age (55-60 years) or as a result of death or invalidity. In the case of death, the pension would be paid to the survivors while it is paid directly to the person in situation of invalidity. In 2004, there was a twist and the Pension Reform Act (PRA) was enacted leading to the NSITF ceding its pension’s business in compliance with the Section 42 of the PRA. As a result, the NSITF incorporated a subsidiary company in 2004 which was the Trust fund Pensions Plc. This company partnered with the likes of Main Street Bank, Denham Management Limited, Nigeria Employers Consultative Association, Nigeria Labour Congress and the Trade Union Congress that same year. However, NSITF owned majority shares of Trust fund Pensions Plc. The company was licensed by the National Pension Commission in December 2015 which led to its commencement of activities in January 2006. At that time, the company had assets in excess of N54 billion. Additionally, the PRA of 2004 redefined the mandate of the Fund to provide social security insurances services other than pension according to section 71(2).

In 2010, the Employees Compensation Act was passed into law by President Goodluck Jonathan which backed the mandate of the NSITF to provide social security insurance services specifically by operating the Employment Compensation Scheme (ECS).

Below is an overview of the Act:

The Employees’ Compensation ACT 2010 establishes the Employees Compensation Scheme (ECS) to replace the workmen’s Compensation scheme in line with global best practices and trends. The ECS provides adequate and timely compensation for employees who suffer injuries/diseases in the course of their employment. Additionally, the Act provides rehabilitation for injured employees in work places and replacement of loss of productivity to the employer. It is a no-fault claim scheme. The funds generated from the scheme are being invested in other basic social security services. Subsequently, in 2011, the strategy was to ensure that the ECS became a reality. The objectives of the scheme include:

• To provide for an open and fair system of guaranteed and adequate compensation for all employees or their dependents for any death, injury, disease or disability arising out of or in the course of employment
• To provide rehabilitation to employees with work disability as much as possible;
• To establish and maintain a solvent compensation fund managed in the interest of employees and employers;
• To provide for fair and adequate assessments for employers;
• To provide an appeal procedure that is simple, fair and accessible, with minimal delays; and
• To combine efforts and resources of relevant stakeholders for the prevention of workplace disabilities, including the enforcement of occupational safety and health standard.

Overall, the vision of the NSITF is to become the foremost Social Security institution in Africa, setting the agenda for change, social policy, economic empowerment and poverty alleviation in Nigeria.

The core values of the NSITF include

• Human Capital Development
• Professional Management and Good Corporate Governance
• Security of Investible Funds.
• Social Responsibility and Advocacy
• Transparency and Accountability

Also the NSITF is involved in the following:

• Endowing a chair on social security studies
• Health and safety education
• Affordable housing scheme
• Social assistance for the less privileged and aged
• Vocational rehabilitation.

DEFINITION OF OPERATIONAL TERMS

Organizational Culture: Is defined as the underlying beliefs, assumptions, values and ways of interacting that contribute to the unique social and psychological environment of an organization. Organizational culture includes an organization’s expectations, experiences, philosophy, as well as the values that guide member behaviour, and is expressed in member self-image, inner workings, interactions with the outside world, and future expectations. Culture is based on shared attitudes, beliefs, customs, and written and unwritten rules that have been developed over time and are considered valid.

Learning: Learning is the process of acquiring new, or modifying existing, knowledge, behaviours, skills, values, or preferences. The ability to learn is possessed by humans, animals, and some machines.

Employee Performance: An employee performance is work outcome in quality and quantity that achieved by someone in conducting his responsibility (Mangkunegara, 2015).