Relationship between Organisation Commitment and Organisational Performance - Literature review Example

Topic: Relationship between Organisation Commitment and Organisational Performance Student’s name Course name Lecture’s name 20th September 2011 Introduction Organisational commitment can be defined as the attachment of an employee towards the organisation. The level of attachment of the employee results and determines the level of commitment an employee has towards the organisation. It is imperative to note that attachment towards an object is a psychological occurrence and therefore organisational commitment can be perceived as the psychological attachment an individual employee has towards the organisation (Abraham, 1999, p. 441-455). Peter F. Drucker once noted that “unless commitment is made, there are only promises and hopes; but no plans”. This means that organisational commitment is an important element of organisational success. Walton (1985) postulated a definition of organisational commitment by looking at three important aspects which include; internalisation, compliance and identification. According to Walton, internalisation refers to the effort by the employee to grasp and understand the processes that take place in the organization in order to change or renovate such processes for the sake of making the organization better off. Walton defined compliance as sticking to the set rules and regulations that define the organizational processes and identification was defined as the feeling of belonging to the organization. Walton held that unless the employee is committed to the organization through the three aspects mentioned above, then the employee works half-heartedly and the likelihood of the employee resigning or moving out from the organization is high (Walton, 1985, p. 23). The development of the aspect of organisational commitment has its roots in two schools of thoughts that relates to human resource management. The two schools of thought include the ‘hard school’ and the ‘soft school’. The hard school of thought is based on Taylorism. This was the popular human resource management approach in the 1980s where people were regarded as resources to be utilised for the success of the organization without the need to consider the satisfaction of the employees. In this regard, the management was largely concerned with the structure and the strategy of the organization and not the commitment of the employees towards the organization. The soft school of thought was popular in the 1990s and it focussed on people as important sources of talents that can be used to achieve the desired levels of success in the organization. Hence, the role of the management was devise ways of attracting and retaining people as source of talents required in the organization. During the 1990s thinking of managers shifted from control to commitment thus emphasizing the need for organisational commitment as an important aspect related to organizational performance. According to Kidron (1996) the commitment strategy was more rewarding because it gave the employees the autonomy to participate in organizational processes. In this regard, Kidron held that the commitment strategy eliminated the traditional approach where the management was largely involved in the control of the employees. The control of employees resulted into increased conflicts between the employees and the organizational managers because the employees lacked the platform from where to exercise their autonomy. As a result, the level of commitment to the organization was low. According to Meyer and Allen (1997) an employee who is strongly attached to the organisation can be said to be strongly committed to the organisation and this is depicted by the behaviour of the employee such as a decrease in withdrawal from the organisational functions and an increased commitment and loyalty of the employee towards the organisation functions and duties. Meyer and Allen noted that organizational managers need to devise ways of enhancing employee commitment rather than exerting their control on the employees because employees exert greater efforts to the organization when they are committed to the organization and not when the employees are tightly controlled (Lydka, 1994). The commitment of an employee towards the organisation can be grouped into three categories. They include normative, affective and continuance commitments. Meyer and Allen (1997) held that the degree to which an employee feels obligated to the functions, success and performance of the organisation comprises the normative commitment. This result from the employees desires to appreciate the investment done on him by the organisation in terms of training and development as well as promotions. In such a case, the employee feels obligated to remain loyal to the organisation and hence such an employee does not resign easily from the organisation. In other words, the employee enters into a psychological contact with the organisation. Additionally, Meyer and Allen (1997) noted that an individual’s attachment to the organisation emotionally comprises the affective commitment. This is the level where the employee perceives the organisation as part and parcel of his life and therefore identifies with the organizational goals and objectives. Such an employee is quick to speak about the positive side of the organization and hence paints a positive image of the organisation. The researchers observed that continuance commitment arises from the employee’s consideration of ways of reducing costs incurred by the organisation. Such an employee takes into consideration the amount the organisation is likely to lose if he/she resigns or leaves the organisation and therefore makes a strong decision to remain in the organisation. The employee also takes into consideration the amount of reward he/she is likely to get by remaining in the organisation. Huselid (1995) observed that the perception the employees have over the values of the organisation is the greatest indicator of the level of commitment the employees have towards the organization. In this regard, Huselid (1995, p.56) noted that when fairness is applied in the organisation’s policies and practices then it results into greater levels of commitment because all the employees feel and experience similar levels of recognition. This means that organisational commitment is a result of many other factors including workplace motivation, levels of recognition by the organizational management and the working conditions that prevail in the organisation. Different employees exhibit their level of commitment at different stages of organisational growth depending on the factors they upheld most in the organisation. Organisational commitment is therefore a continuous process comprising of different stages of development. In the first stage, the employee embraces the goals and values of the organization and takes as his/her responsibility to ensure that such goals and values are upheld for the betterment of the organization (Bowling, 2007, p. 167-185). In the second stage, the employee identifies with the organization and becomes part and parcel of the organization including the positive and the negative aspects of the organization. However, at this stage the employee strives to eliminate the weaknesses of the organization in order to enhance the positive aspects of the organization. In the third stage, the employee works hard and displays positive efforts in order to make the organisation succeed in the competitive environment. Feng, Terviosky and Samson (2008) held that the success of the organisation is entirely dependent upon the commitment of the people working in the organization and the greater level of commitment the greater chances of organisation success. Deviating from the issue of organisational commitment and its aspects, it is important to understand the meaning of organizational performance. In their definition, Coulter and Robbins (2005, p. 465) held that organizational performance is the end result and the accumulated benefits derived from the activities and processes undertaken in the organisation. Kidron (1978) argued that organizational performance is the overall reflection of the level of commitment that people in the organization have towards the organization. However, the authors noted that the effort of the management is to ensure that people in the organization are motivated and satisfied in order to yield better or positive organizational performance (Kidron, 1996, p.45). The different indicators of organisational performance postulated by Patchen (1970) include customer service, productivity of the organisation and the social responsibility of the organisation towards the immediate community. The different ways through which organisational performance can be measured include ranking in the industry and the effectiveness of the organisation in terms of customer satisfaction as well as the performance of the organisation financially. The balanced score approach is a recent devised method of measuring organisational performance which measures the internal processes, financial, customer and the level of growth of innovation in the organisation as the key indicators of organisational performance. It is noteworthy mentioning that financial performance of the organization is taken as the most preferred tool for measuring organisation performance. This shows that organisational performance is contributed largely by the financial performance of the organisation. The reason this is that business organizations are largely focussed on profit making. Without profits, business organizations would not operate or survive in the competitive business environment. The advent of methods such as the balanced scorecard was fuelled by the need to determine how best the organization would undertake its processes in order to achieve higher levels of performance. Although, the balanced score card approach is based on a number of issues, it is true that many contemporary organizations apply this approach to specifically determine how well they perform financially as compared to other competitors in the market. Hence, financial performance is regarded as the best measurement of organisational performance. Is there a relationship between organizational commitment and organizational performance? This is an important question because the two aspects that is, organizational commitment and organizational performance are used interchangeably in modern organizations even though they have different meanings. However, they are directly related to each other in a significant way. Meyer and Allen (1991) held that employees are instrumental in the success of the organization because they run with the vision and they execute the mission and goals of the organization. This is indirectly or directly influenced by the behaviour of the employees (Meyer & Allen, 1991, p.321). From the definition and the subsequent explanations offered in the sections above, it is right to mention that that the higher the level of organisational commitment, the higher the level of organisational performance. This is true to the extent that elements of organisational commitment such as supporting the development of the employees through training enhance the productivity of the employees. This in turn makes the employees more effective in their duties and hence the performance of the organisation financially also improves. Additionally, organization commitment towards the employees in terms of promotions from within and assuring job security to the employees increases the loyalty of the employees towards the organization which increases the level of commitment of the employees. This enhances hard work and employee retention levels which assures the organisation of continuity in its processes. Organisation performance in terms of productivity, customer service and financial performance is achieved through the continuity of organisational process and hence organisational commitment and organisational performance are inter-related in terms of input and the output derived by the organisation in its activities and processes. Furthermore, the increased attachment of the employee towards the organisation means that the employee perceives the organisation as part and parcel of his/her success. In this respect, the employee works hard to accomplish both the organisational and personal goals. The understanding of an employee who is strongly attached to a certain organisation is that the salary and wages, the rewards and a positive reputation the employee derives from the organisation is a stepping stone for both current and future success. In this regard, the employee attaches his/her success to the success of the organisation. In doing so, the employee strives to ensure the success of the organisation in terms of increased profitability and positive reputation of the organisation. In this regard, the organisational performance is enhanced through increased productivity, industry ranking and organisational effectiveness. Richard et al (2009) noted that a positive attitude held by employees regarding the organisational is one of the great elements of organisational commitment. The author held that a positive attitude is depicted by the willingness of the employees to work beyond their roles and the willingness of the employee to work under minimum supervision. This level of commitment was termed by Richard et al (2009) as an outright indication of a high level of commitment that drives the employees to undertake their duties with one thing in mind “success for the organization”. Such a view results into personalisation of organisational activities and processes which makes it possible for the employees to perform their roles beyond the stipulated time. As a result, the productivity of the organisation in terms of improved customer satisfaction and customer service, high levels of innovation, financial performance and enhanced levels of social responsibility to community. In this regard, organisational commitment is directly related to organisational performance because organisational commitment relates to the behaviour and the perception of the employees towards the organisation (Hackman & Oldham, 1976). It is imperative to note that the internal climate of the organisation determines the levels of organisational performance. The social climate held by the employees such as the beliefs, norms and values that employees hold when carrying out their tasks in the organisation is fundamental to organisational performance. A positive social climate depicts a high level of commitment and subsequently a high level of organisational performance. In conclusion, it is clear that a positive relationship exists between organisational commitment and organisational performance. Increased organisational commitment results into greater organisational performance through enhanced activities such as employee training and empowerment which increases the effectiveness of the employees in their duties and responsibilities towards the organisation. The positive attitude held by the employees which depicts the level of organisational commitment serves as the catalysts for enhanced performance in terms of organisational productivity, increase profitability, improved customer service and increased innovation among other factors. It is prudent to mention that managers have a major role to play in influencing organisational commitment through their own actions. Reference List Abraham, R. 1999, The impact of emotional dissonance on organizational commitment and intention to turnover. Journal of Psychology, 133, 441–455 Bowling, N. 2007, Is the Job Satisfaction-Job Performance Relationship Spurious: A Meta-Analytic Examination. Journal of Vocational Behavior, 71, 167-185 Coulter, M. & Robbins, S. 2005, Management, Prentice Hall, Upper Saddle River, N.J. Feng, M., Terviosky, M. & Samson, D. 2008, “Relationship of ISO 9001:2000 quality system certification with operational and business performance”, Journal of manufacturing technology, vol.19, no.1, pp. 22-37. Hackman, J. & Oldham, G. 1976, 'Motivation through the design of work: Test of a Theory”, Organizational Behavior and Human Performance, [Online], vol. 16, no. 2, pp. 250-279. 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