Organisational culture and financial performance in a South African investment bank

Abstract

Concern with the effectiveness, productivity, efficiency and excellence of organisations has served as a unifying theme of research on the management and design of organisations for more than a century. It has also motivated the writings of economists, organisation theorists, management philosophers, financial analysts, management scientists, consultants and practitioners. Empirical research has, however, not contributed to the development of a universal theory of organisational effectiveness. Another limitation has been that measures of effectiveness have often been based on a set of subjective measures (Lewin & Minton, 1986;Pounder, 2001).The entrance of new competitors into the financial services arena in South Africa during the past decade has had a profound effect on the banking industry. During the apartheid years when economic sanctions were imposed on the country, South African organisations were not overly concerned with internal effectiveness and price competitiveness, because the local environment was less competitive than at present as there were few multinational firms operating within the country (Marx, De Swart & Nortjé, 1999;Van der Post, De Coning & Smit, 1998). Since the first democratic elections new competitors have moved in and South African organisations have expanded their horizons internationally. This trend is also apparent in the investment banking sector. New models of management require managers in the banking industry to be more knowledgeable about their markets and also more competitive in how they approach them. In general, banks have not competed on the basis of cost and the margins of return on most banking products and services have been relatively small (ParadiseTornow, 1991). Whereas quality of service is a key differentiating factor for attracting and retaining customers, it appears that sound financial management is necessary to keep abreast of the competition (Marx et al, 1999).In order to achieve the desired level of financial performance, many organisations have restructured, merged, benchmarked, re-engineered, implemented total quality management programmes and introduced competitive staff benefits. Despite such attempts, many organisations have not achieved the anticipated results or have not experienced high performance (Jeuchter, Fisher & Alford, 1998). Analyses of sustained superior financial performance of certain American organisations have attributed their success to the specific cultures of the respective organisations (Deal & Kennedy, 1982;Flamholtz, 2001Lewis, 1994Ouchi, 1981;Peters & Waterman, 1982;Schlechter, 2001). Culture sets the boundaries by providing employees with a set of normative rules to regulate certain aspects of their behaviour which gives rise to attitudes, motivations and a sense of shared identity that contributes to organisations' effectiveness (Rollinson, 2005). No change will provide sustainable performance unless an organisation's culture and employees are fully prepared and aligned to support that change. Culture is what distinguishes tr...

The impact of organization culture on competitive advantage "An empirical study of hotels and tour operators in Egypt"

“…The benefits of the culture in organizations direct the organization towards goal attainment, organizational success, enhance organizational citizenship, loyalty, customer satisfaction, motivation and increase the consistency of employees' behaviour (Pressing and Loennies, 2011;Martins and Von der Ohe, 2006;Robbins, 2005;Struwig and Smith, 2002). Also, culture is able to create a unifying force that increases organizational performance and it is able to positively affect employee behavior, the financial performance of the organization and creates a competitive advantage (Ledimo, 2015;Manetje and Martins, 2009;Ivancevich et al, 2005;Werner, 2007;Mazur, 2010;Madu, 2012;Davidson, 2003 andBarney, 1991).…”

Effect of Organizational Ownership and Culture on Employee Performance Among Selected Banks in Kenya

“…Unfortunately, most often organizational cultural issues are overlooked, while attention is directed towards activities that may have little or no positive effect on performance (Davidson 2003). Organizational culture and employees' performance are clearly related though the exact nature of this relationship is mixed (Kopelman, Brief, &Gizmo, 1990).…”

“…Moreover, the quantitative studies that have been conducted on organizational culture have generally been performed in the developed countries and very little has been done in developing countries (Davidson, 2003) such as Kenya, especially in the banking industry. However, more relevant here is the common finding that the advantages of foreign banks often outweigh the disadvantages in developing nations in terms of bank performance.…”

“…The ability to identify the culture traits of an organization provides a platform for better understanding of the operations of the organization for a better performance. Unfortunately, most often organizational cultural issues are overlooked, while attention is directed towards activities that may have little or no positive effect on performance (Davidson 2003).…”

“…Unfortunately, most often organizational cultural issues are overlooked, while attention is directed towards activities that may have little or no positive effect on performance (Davidson 2003). Employee performance reveals that, there is not much statistical evidence supporting this relationship (Calori & Sarnin, 1991; Van der Post et al, 1998).…”