The Relationship between Organizational Culture and Employee Performance by Using Denison Model (Case Study: Ma Insurance Company)

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1 The Relationship between Organizational Culture and Employee Performance by Using Denison Model (Case Study: Ma Insurance Company) Saeed Najafi 1, Ahmad Reza Kasrai 2 * ISSN Research Article 1 Department of Management, College of Humanities, Buinzahra Branch, Islamic Azad University, Buinzahra, Iran 2 Faculty Member of Central Tehran Branch, Islamic Azad University ABSTRACT The organizational culture is regarded as a joint pattern among the individuals of an organization. Knowledge of culture is of specific importance for organizations because any measure without awareness about cultural forces that are always available, may bring about unexpected and unwanted consequences for them. This research is going to study the relationship between the organizational culture and employee performance of MA insurance companies in Tehran. Meanwhile, it tries to test the manner of relation of the dimensions of the organizational culture (involvement, consistency, adaptability and mission) based on Denison Model relying on the employee performance. Finally, presenting appropriate approaches and suggestions, it shall promote the qualitative level of performance of the personnel of MA insurance companies according to their organizational culture. For assessment of the organizational culture, Denison Questionnaire was used. In order to assess the performance of the personnel, ACHIEVE Performance Questionnaire (Hersey-Blanchard) was used. The statistical population of this research consists of 164 employees of MA insurance companies in the city of Tehran. The said sample comprises 115 persons. This sample was obtained by using Kokran s sampling formula for limited communities. Furthermore, for assurance about the referral of the said number of questionnaires, 130 persons were selected through simple random method. Then, the said questionnaire was distributed among the members of the said sample. After completion of the said questionnaires, 128 questionnaires were completely delivered. Data analysis has been conducted from among the 128 questionnaires collected by using Kolmogorov Smirnov test (K S test or KS test), factor analysis and modeling the structural equations by the help of Lisrel s Software. The research findings have revealed that there is a significant relationship between the elements of the organizational culture and employee performance. The relationship between the elements of the organizational culture and performance of the personnel of MA insurance companies are namely adaptability, involvement, consistency and finally mission. It means that from among the elements of eth organizational culture, adaptability shows the utmost relation and that of mission shows the least relation with the performance of the personnel. Keywords Organizational Culture; Employee performance; Denison Model; MA Insurance Company. INTRODUCTION * Corresponding Author Ahmad Reza Kasrai As the societies and economies are based on knowledge and learning, the main causes of superiority are expertise, skill and knowledge of educated and expert human resource of the respective society that are discussed in form of development of human resource (Sohrabi et al, 1997). On the one hand, the increasingly growth of demand for achievement of different resources and limited accessible resources in social systems of any nation on the other hand have developed a fundamental challenge for these societies that must be taken into consideration (Fiouzat et al, 2001; Mohsen Pour et al, 2006). For this purpose, economic specialists and executive agents in different societies are seeking for benefiting from potentials and abilities relying on which they may achieve more efficiency by spending less costs and resources. Essentially, one of these potentials is human resource that may cause the economic cycles of a society be rotated thanks to their great abilities and talents and cause growth and development of the said societies (Maleki et al, 2004; Taeb et al, 2008). Contrary to the traditional attitude, human resource is a very complicated being with specific system of values and one cannot perceive and analyze his behaviors and function only by relaying on rational-logical approach. In fact, nowadays, it is imagined that the organizations are regarded as cultural phenomena of which human dimension is taken into consideration and their value and normal aspects are emphasized more rather than the said organizations are regarded as rational-logical means. Undoubtedly, it should be accepted that humans create culture and culture develops humans. Fundamental values, JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 23

2 beliefs and assumptions that exist in an organization, behavioral patterns rising from these joint values and the symbols that clarify the link between assumptions and values and behaviors of the organizational members are called Organizational Culture (Denison et al, 1997). Culture assists humans with learning stable and permanent thoughts and is organized in form of complicated groups that have separate and specific duties each. After fixed and permanent thoughts are internalized in mind, it is different to alter them. However, concerning the fact that nature of human s behavior is a reaction through which he is able to respond to the cultural elements that are offered to him, he is able to push back or alter the said thoughts if he wants. Considering that the organizational culture is a pattern of joint values and beliefs that give meaning to the organization of an organization and provides certain instructions and restrictions for their behaviors in organizations, one may understand the role and importance of human resource and development of a strong organizational culture that realize their material and nonmaterial needs. Studying the organizational culture acts as a means of data collection and managers are able to use the said means to compare the groups or working parts first and, second, to prioritize the issues and third, to identify the perceptions and expectations of the personnel through which they can improve the gap between existing and desirable condition. In order to promote the existing organizational culture, first, the governing culture must be studied and identified through which improvable parts of culture are identified and suitable grounds are established for the organizational culture accordingly. Now, assuming that one of the most important inefficient elements of the organizational performance and employee performance may be the organizational culture, studying the relationship between the said two elements are of great importance (Ghorbani, Asadi and Sharifi et al, 2009; Kabiri and Tehrani et al, 2006). On the other hand, insurance companies in Iran are of great importance in a social system that may bring about adverse consequences for them due to inefficient performance of human resources. This, adopting a qualitative approach and using Denison Model for studying the organizational culture and ACHIEVE model, this research is going to assess the performance of the personnel of one of insurance companies. In this research, it has been tried to identify the organizational culture in MA insurance companies and to study the existence or nonexistence of a relationship between the elements of eth organizational culture and employee performance. MATERIALS AND METHODS Research Conceptual Model The theoretical framework is a conceptual pattern that is based on theoretical relations among a number of the elements that have been identified as important with respect to the research issues. The said theoretical framework studies the research records in the area of the problem in such a manner that it finds a logical trend. Relying on definitions presented and designating the previous researches, the researchers of this research are seeking for adoption of a quantitative approach and use Denison Model to study the organizational culture and using ACHIEVE model for to assess the performance of the personnel of MA insurance company. Denison Model enjoys four fundamental dimensions namely involvement, consistency, adaptability and mission (Zomorrodian et al, 1994). Hersey and Gold Smith Model under the name of ACHIEVE Pattern (Hersey and Blanchard et al, 1996) including ability, clarity, help, incentive, evaluation, validity and environment and presented the following conceptual model for manner of effectiveness: Indepdent Variable Dependent Variable JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 24

3 In this research, the attention of the researches to the relationship between the organizational culture and its elements and performance of the personnel has been studied. The ideas and concepts that were put forth in management of the organizational behavior corresponding to the organizational culture and performance of the personnel have been used. Assessment of the two notions of the organizational culture and its elements and the performance of the personnel of the organization (MA insurance companies in the city of Tehran). Research Hypotheses; Considering the aforesaid pattern, the following hypotheses are put forth: - There is a significant relationship between the organizational culture and performance of the personnel of MA insurance companies in the city of Tehran. Sub-hypotheses; - There is a significant relationship between involvement of the personnel and their performance at MA insurance companies in the city of Tehran. - There is a significant relationship between consistency of personnel and their performance at MA insurance companies in the city of Tehran. - There is a significant relationship between the adaptability of personnel and their performance at MA insurance companies in the city of Tehran. - There is a significant relationship between the mission of personnel and their performance at MA insurance companies in the city of Tehran. Research Method Najafi et al., Int. J. Rev. Life. Sci., 5(4), 2015, Since the goal of this research is to determine the relationship between the variables of organizational culture and performance of the personnel, this research is of applied type considering its goal and regarding data collection means it is of descriptive-survey type. The main data collection means of this research is the questionnaire. Thus, for the variables subject of this research, two questionnaires have been made in general, consisting of two parts: A. It consists of the questions that are based on general and demographic data collected with respect to the repliers. In this part, four questions (gender, age, educational background and service record) have been put forth. B. It consists of the specialized questions including two questionnaires: The first questionnaire relates to the organizational culture. It consists of 36 questions that have been scaled based on Likert s Scale by using Liker Scale from completely agreed to completely disagreed respectively. In the said questionnaire, four dimensions of the organizational culture (involvement, consistency, adaptability and mission) have been assessed. The second questionnaire is related to the organizational performance of the personnel, consisting of 42 questions that have been scaled based on Likert s scale by using Liker Scale from completely agreed to completely disagreed respectively. In this questionnaire, seven organizational performance (ability, clarity, help, incentive, evaluation, validity and environment) have been assessed. For assessment of reliability of the questions, one primary sample consisting of 60 questions has been pretested. Then, using the data collected from the questionnaire, reliability coefficient has been by Chronbach s Alpha method, given in the following table. The following figures show that both questionnaires enjoy the required reliability. Table 1: The values of Chronbach s Alpha for research indices Questionnaire Index Number of questions The questionnaire of the organizational culture The questionnaire of organizational performance Chronbach s Alpha Involvement Consistency Adaptability Mission Organizational culture Ability Clarity Help Stimulant Evaluation Validity Environment Organizational performance For assessment of the validity of the questions of the questionnaire, factor validity has been used. Factor validity is a form of structural validity that is obtained through factor analysis. Factor analysis is a statistical technique which is mostly used in most of human sciences. In fact, it is necessary to use factor analysis in JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 25

4 Bartlet test Najafi et al., Int. J. Rev. Life. Sci., 5(4), 2015, the branches where the questionnaire and test are used and variables are of type (Klein et al, 2003). In order to promote the foundation of the research means, factor analysis has been used to assess the validity of structure. The indices of accuracy and appropriateness of confirmation factor analysis, KMO and Bartlet Test have been used. The test results are given as follows: Table 2: The KMO and Bartlet test of indices of the questionnaire Index for sampling efficiency (KMO) Value of test Level of significance Concerning the fact that in this study, the said value equals to 0.849, analysis of indices to factors is appropriate. Statistical Population The statistical population of this research consists of the personnel of MA insurance companies in Tehran in May-June According to the statistical obtained, the said population consists of 164 persons. In order to determine the size of the sample members, Kokran s Formula will be used. Kokran s Formula is one of the highly-used methods for calculation of the size of the statistical population. In order to determine the size of the required sample for the research, the following formula has been used: Considering the size of the statistical sample, for desirable return of the questionnaire, 130 persons were selected and the questionnaire was distributed among the said persons and received after completion. Relying on unsparing efforts and explaining the case to persons who were effective in the research results, 128 questionnaires were completed and returned. The sampling method was performed by using random method. Thus, the said number of questionnaires has been analyzed. Method of Analysis In this research, first, using descriptive statistics, the required knowledge about status and demographic characteristics of the repliers was obtained, and then, for analysis of data and observation and entrance of the data, statistical software- SPSS and Lisrel s software were used. The most important statistical tests used in this research are namely Kolmogorov Smirnov test (K S test or KS test) and Confirmation Factor Analysis and finally, the structural equations model have been used to study the research hypotheses. Descriptive Statistics In this research, at first stage, we have studied the percentage of the participants in term of their age. 75.8% of repliers was male and the rest of 24.2% was female. At the second stage, we studied the percentage of participants in term of age. 6.3% of repliers was at the age group of years old, 54.7% was at the age group of 26-30, 35.2% was at the age group of and 3.9% was at the age group above 35. At the third stage, we studied the level of education of repliers. The results revealed that 5.2% of repliers held high school diploma, 67.6% held associate s degree, 49.8% held bachelor s degree and the rest of 8.7% held master s degree. At the fourth stage, we studied the service records. The results revealed that service records of 46.1% of repliers was given as 5 years and less, that of 30.5% was between 6-10 years, that of 15.6% was between years and that of the rest of 7.8% was 15 years and more. Inferential Statistics First, for selection of statistical tests, Kolmogorov Smirnov test (K S test or KS test) has been sued. The test results of significance test for all indices is > that of error value of H0 is not rejected at the level of significance given as Consequently it may be stated that indices of variables enjoy normal distribution. Considering this test, we use parametric tests for all variables that we have studied. The structural equations models have been used to study the hypotheses and to assess the relationship between the two variables of organizational culture and performance of the personnel. Final model is given as follows. The said mode has been drawn up by using Lisrel s software output. JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 26

5 Figure 2: The measurement model at standard level Figure 1: The measuerment model at significance level (T-Value) Table 3: The fitness indices of structural model Based on calculations carried out: The following table shows that the structural pattern of the research hypotheses enjoy good condition in term of clarification and fitness. Fitness Index χ8/df GFI RMSEA RMR NFI IFI CFI Desirable Vlaue > 6/00 > 0/08 > 0/05 Result 8 /658 0 /90 0 /068 0 /069 0 /94 0 /91 0 /98 RESULTS AND DISSCUTION Hypothesis 1- There is a significant relationship between involvement of personnel and their performance at MA insurance companies in the city of Tehran. The test result reveals that the level of significance between involvement of personnel and their performance equals to 5.39 that is > 1.96, revealing that there is a significant relationship between the organizational culture of involvement and organizational employee performance at the level of significance given as 95%. The first hypothesis of this research is accepted. Moreover, considering the path coefficient between the said two variables (0.46), it is concluded that one unit of increase in the organizational culture of involvement shall result in increase of the organizational employee performance by Moreover, the organizational culture of involvement stands in the second place in tern of effectiveness on the variable of the organizational employee performance. The findings of this research confirm the results obtained from Markulids and Hack (2013), Yelmaz and Organ (2008), Ebrahim Kheradmand (2010) and Queen (1985). Hypothesis 2- There is a significant relationship between consistency of personnel and their performance at MA insurance companies in the city of Tehran. JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 27

6 The test result shows that the level of significance between the organizational culture of consistency and organizational employee performance equals to 5.11 that is > It reveals that the relationship between the organizational culture of consistency and the organizational employee performance is significance at the level of reliability given as 95%. Thus, H2 of this research is accepted. Moreover, considering path coefficient between these two variables (0.41), it is concluded that one unit of increase in the organizational culture of consistency results in increase of the organizational performance of the personnel by 0.41 units. Also, the organizational culture of consistency stands at the 3rd place in term of effectiveness on the variable of the organizational employee performance. The findings of this research confirm the results obtained from the researches of Yelmaz and Organ (2008) and Farhad Mehregan (2005). Hypothesis 3- There is a significant relationship between adaptability of personnel and their performance at MA insurance companies in the city of Tehran. The test result reveals that the level of significance between the organizational culture of adaptability and organizational performance of the personnel equals to 6.47 that is It reveals that there is a significant relationship between the organizational culture of adaptability and organizational employee performance at level of reliability given as 95%. Thus, H3 of this research is accepted. Moreover, considering the path coefficient between these two variables (0.53), it is concluded that one unit of increase in the organizational culture of adaptability results in increase of the organizational performance by 0.53 units. Also, the organizational culture of adaptability stands in the first position in term of effectiveness on the variable of the organizational performance of the personnel. The findings of this research confirm the results of the researches of Markulids and Hack (2013), Ebrahim Kheradmand (2010) and Queen (1985). Hypothesis 4- There is a significant relationship between mission of personnel and their performance at MA insurance companies in the city of Tehran. The test result reveals that the level of significance between the organizational culture of mission and organizational employee performance equals to 3.32 that is > This reveals that there is a significant relationship between the organizational culture and organizational performance at reliability level of 95%. Thus, H4 of this research is accepted. Moreover, according to the path coefficient between these two variables (0.38), it is concluded that one unit of increase in the organizational culture of mission results in increase of the organizational employee performance by Also, the organizational culture of mission stands at the 4th place in term of effectiveness on the variable of the organizational employee performance. The findings of this research confirm the results obtained from the researches of Ali Badizadeh (1999). Main Hypothesis - There is a significant relationship between the organizational culture and performance of the personnel of MA insurance companies in the city of Tehran. Relying on the results obtained through Lisrel, standard factor charge between the organizational culture and employee performance equaled to The value of t statistic equaled to It reveals that the observed correlation is significant. Thus, the organizational culture has a positive effect on the employee performance and eventually the main hypothesis of this research is confirmed. The findings of this research confirm the results obtained from the researches of Markulids and Hack (2013) and Mehdi Mohammad Pour (2004). Suggestions In the recent years, many changes and complications are observed among the organizations more than ever. In order to realize the main goals of organizations, those involved in this system should pay more attention to these changes. The findings of this research reveal that the organizational culture may be regarded as one of the effective factors in promoting the employee performance which is among the most fundamental goals of the organizations. Thus, responsible authorities of the company should update their information and knowledge about the importance of the organizational culture once every year considering the research findings and eventually like other developed countries, they will be successful in the realm of the organizational performance. In order to improve the elements of performance of the personnel of MA insurance companies, the following suggestions are presented: Promotion of Ability: Execution of specific training courses, official training course of trust and referral of duties and responsibilities assigned to individuals Improvement of Clarity: Clarifying the achievement of goals for the personnel Improvement of organizational support: Budge allocation, means and facilities that are required for fulfillment of duties, the required support by other organizational departments. Improvement of incentive: Allotment of proper bonus to encourage the personnel more Improvement of evaluation: Awareness about their performance through convention of performance evaluation every six months JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 28

7 Improvement of validity: Assurance of managers about appropriateness of decisions adopted about the personnel regarding their salary Improvement of environment: Promoting competition and other external elements affecting the employee performance Since there is a positive and confirmed relationship between the elements of the organizational culture and performance of the personnel, it is suggested that managers and responsible authorities of MA insurance Company should consider the following activities for promotion of existing culture: They should promote the encouragement system based on performance at the company because joining encouragement and bonus in an organization develops the incentive of the organizational personnel. They should develop management support in an organization through establishment of a constructive relation between managers and personnel. One of the elements that promote the performance of individuals is clarified organizational goals and the managers should pay more attention to this subject. They should develop and encourage the spirit of initiative and creativity in an organization and try utmost to provide suitable grounds for involvement of personnel. They should promote the identity and similarity in an organization through alignment of the individual and organizational interests and goals more than ever. The personnel should not be expected that all of their suggestions are logical and effective. In case the suggestions of the employees are simple, great importance should be attached to them and they should be encouraged. REFERENCES [1] Amir Kabiri, Alireza and Tehrani, Helia (2006). Study of the effect of the cultural elements (based on DOCS Model) on occupational satisfaction and employee performance: Case study: Social Security Organization- Tehran Province Indirect Treatment General Office- Management Studies- 5th Year- Issue [2] Sohrabi, Hamid (1997). Demand and Offer of Specialist Human Resource in Iran: Analysis of existing condition and future perspective, Tehran: Plan and Budget Organization [3] Zomordian, Asghar (1994). Evolution Management, Published by Industrial Management Institute, Tehran- 9th Printing [4] Rahim Nia, Fariborz and Alizadeh F. Masoud (2008). Study of the dimensions of organizational culture based on Denison Model from the viewpoint of faculty members of Ferdowsi University of Mashhad, Educational and Psychological Studies- Ferdowsi University- 10th course- 1st Issue [5] Fiozat, Yahya (2001). Fundamentals of Educational Planning. Tehran- Savalan Publications. [6] Ghorbani, Mohammad Hossein; Hassan and Sharifi, Moslem (2009). The relationship between the organizational culture and effectiveness in Physical Education Organization of Islamic Republic of Iran based on Denison Model. Kinetics and Sport Sciences Journal. 7th Year, 2nd Edition, Issue [7] Klein (8006). P Easy Guidance for Factor Analysis, translated by Sadrolsadat C.J. Minaee, A; SAMT Publication, 2001 [8] Hersey and Blanchard, Kent H (1996). Management of Organizational Behavior. Translated by Ghasem Kabiri, Published by the Iranian Academic Center of Education, Culture and Research (MAJED), 1996, 5th Printing- Page 117 [9] Mohsen Pour, Bahram (2006). Fundamentals of Educational Planning- Tehran- SAMT Publication [10] Maleki, Behnam (2004). The elite and development. Islamic Revolution Thought- issues [11] Denison, D, R. (1997). The Denison culture model, General business application, academy of management, Vol 4, No, 3, Page 34 [12] Denison, Daniel. R. cho, H. J., Young j. (2000). Diagnosing organizational culture: validating a model and method, working paper, IMD , International Institute for Management Development, Lausanne, pp.1-31 [13] Forbes, David. and Seena, Sara, (8007). The Value of a Mission Statement in an Association of not for profit Hospitals, International journal of health care quality assurance, Vol. 19. No. 5 [14] Hoy, W. K., Miskel, C. J. (2013). Educational administration: Theory, research, and Practice. New York: McGraw-Hil [15] Kolia, Martin. (2002). Relationship between organizational culture, organizational climate and organizational effectiveness. PhD Thesis in Organizational Behabiour, Available at JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 29