In management and organizational studies and leadership style and organizational culture are considered to be the most important concepts and key resources of strength for any firm that can derive, control and combine people, processes and organizational behavior and performance. The main reason of importance is the significant relationship between leadership style and organizational performance from one side and organizational culture and organizational performance from the other side.There many studies indicates the impact the organizational culture has on the organization outcomes such as financial performance, gaining competitive advantage, and enhancing firm effectiveness. The firms such as McDonalds, IBM and HP have focused on the managerial values and beliefs form in their organizational cultures. In the recent days, the growth in the mentioned firms has increased drastically lead researchers to take attention to their success, they then found a strong relationship between their culture and their leadership style.
They are still world lead firms in their respective area, for them leadership-culture fit has not happened by a chance. The key point is that culture will remain linked with management performance only the culture is able to adapt to the changes in environmental conditions. Equally, the relationship between leadership and organizational performance is an important topic. In a competitive business environment, organizations rely on upon their leaders to facilitate the changes and creativeness required to maintain competitive advantage.Leadership has been changed overtime by the change in employee’s requirements which resulted in a demand for change in the relationship between a leader and his subordinates.
Leaders have found to influence supporters in many different ways and methods, including coordinating, communicating, training, motivating and rewarding. Many leadership theories have been suggested in the previous 10 or more years which declares the influence of leadership on organizational effectiveness and therefore on overall organizational performance.The main purpose of this research is to explore in details and wide aspects the relationship between organizational culture and organizational performance and Leadership style and organizational performance and to find out the relationship between leadership and culture that could influence the organizational performance together. Culture – Performance Relationship Culture – Definition and Dimensions: Culture has been identified as a pattern of shared assumptions, beliefs and expectations that influence employee’s behavior within an organization.Shared nature of culture is the key element of this definition (Chatman et al, 2011). Culture is inherited by employees by means of socialization and training, communication network and symbols.
There are four basic functions for organizational culture: provide employees with a sense of identity, increase their commitments in an organization, reinforces organizational standards and values, and serves as a control mechanism for shaping employees behavior.Leaders has always played an important role in shaping and reinforcing culture by how they behave, how they allocate rewards and how they hire and fire employees (Lunenburg, 2011). Hofstede (1980) has identified four dimensions of culture that highlights the most important culture differences in a multinational company. The four dimensions are: individualism versus collectivism, power distance, uncertainty avoidance and masculinity and femininity.
These dimensions were first discovered from the comparison of values among managers and employees working in 53 national subsidiaries of IBM corporation.A fifth dimension, long-term versus short-term orientation was added based a study (Questioners) among students from 23 countries (Che Rose, 2008). Brinhaum focused on institutional types with his four-part topology of dominant cultures: collegial, bureaucratic, political and organized anarchy. There are many other famous dimensions also identified based on different studies such as Kluchohon and strodbeck (1961), Trompanaar (1993), Schwartz (1994), and others (Lunenburg, 2011).
Culture and Performance:The effects of organizational culture on employees behavior and performance are based on four key factors. First, knowing the culture of an organization allows employees to understand both organization’s history and current methods of operations. This insight provides guidance about the expected future behavior. Second, organizational culture can promote loyalty to the organization’s values and beliefs. This loyalty generates shared feelings of working toward common objectives, which means that organizations can achieve effectiveness only when employees share values.
Third, organizational culture serves as a way of control to channel employees’ behaviors toward preferred behaviors. This can be achieved through recruiting, selecting and retaining employees whose values best fit the values of an organization. Finally, certain types of organizational cultures may be associated directly to greater effectiveness and productivity than others (Lunenburg, 2011). A high degree of organization performance is related directly to an organization which has a strong culture with integrated and effective set of values, beliefs and behaviors.
Strong culture has almost considered as a driven force to improve the performance of the employees. It enhances self confidence and commitment of employees and reduce job stress and improves the ethical behavior of employees, as in this type of cultures, the employees goals are aligned with the goals of the organizational management which apparently increases the overall performance of an organization (Shahzad et al. , 2012). Due to the link of strong organizational culture and high level of performance, culture is considered to be a popular concept in the management literature for researchers.
Researchers such as Peter and Waterman have showed that the connection between culture and achievement or success have strengthened as times goes by. In another important study, Dension indicated that organizational culture impacts organizational performance directly. According to Cameron and Quinn, the right organizational culture is considered to be a requirement of high level of organizational performance. The later research or organizational culture develops into more macroscopically organizational perspective progressively.
Researchers have done much investigations and tried to establish the relation between organizational culture and organizational performance, specifically, the is a close connection between them (Zehir, 2011). One of studies conducted by Chatman and Jehn (1994), Denison and Mishra (1995) and Kotter and Heskett (1992), have contributed significantly to the field of culture and performance studies whereby culture is being treated as variable for a specific research purpose.For example Denison and Mishra (1995), utilizing a more precise methodology, discovered that cultural strength was significantly associated with short-term financial performance. Schneider (1990) also discovered that the organizations focuses clearly on the cultures are more successful.
It is because, focused culture can provide better financial returns, which includes higher return on Investment (ROI), higher return on assets (ROA) and higher return on equity (ROE).The firms which have a superior financial performance such as McDonalds, IBM, P&G and HP have focused on the managerial values and beliefs formed in these firms' organizational cultures. The finding of a study also has been reported that industry moderates the connection between culture and performance. These findings have advanced the understanding of the performance effects of organizational culture. However, they go away on the contrary to the applicability of existing results across national boundaries.There are some aspects of organizational culture may enhance performance in one national setting, but they may not be effective in another.
Thus, one of the main reasons for the common popularity and interest in the study of organizational culture is due to the argument or assumption that certain organizational cultures lead to superior organizational performance (Che Rose, 2008). One of the models of organizational culture that have the prospective to influence organizational efficiency is Peters and Waterman’s (2006) views of excellence, they found that organizational culture to be closely attached to the success of those firms.From their research, they identified the following attributes that characterize excellent companies: Productivity through People: The organization demonstrates a belief in their employees through shared decision making and encouragement of new ideas. This belief is reflected in the language used by the organization. The organization views the employees as extended family.
Hands-On, Value-Driven Effort: The organization gives precise attention to cultural values and gives over considerable effort in encouraging and clarifying core values to employees.Members of an organization with a strong culture will follow its values without questioning. (Lunenburg, 2011) Leadership Style – Performance Relationship Leadership – Definition and Types: In Literature, leadership has been identified as an important subject in the field of organizational behavior, it is defined as the individual behavior to guide a group to achieve the common target. Leadership is one with the most dynamic effects during individual and organizational interaction. In other words, ability of management to execute collaborated effort depends on leadership capacity (Timothy C et al., 2011).
The success of an organization is depending mainly on the leaders’ ability to optimize human resources. A good leader try best to understand the importance of employees in achieving the organization’s objectives, and that motivating employees is very crucial in achieving these goals (Prabhu and Pradeep, 2011). It has been widely understood that effective organizations require effective leaders and that organizational performance will suffer directly in case of neglecting this fact.Furthermore, it is generally understood that the effectiveness of any group of people is mainly dependent on the quality of its leadership – the behavior of effective leaders facilitate the accomplishment of the followers’ desires.
Leadership is perhaps the most investigated organizational variable that has a potential impact on employees’ performance. The researches have introduces three types of leadership styles: instrumental (transactional) as a mechanic-based leadership, supportive and participative leadership that are humanistic-based leadership style (Zehir, 2011).A transactional leader (known also as strategic leader) is the one who operates within an existing culture or system (opposite to try to change them) by trying to meet the need of the followers by focusing on contingent rewarding behavior and paying close attention to deviations, mistakes or irregularities and take action to correct such a behavior. Transactional leader also know as inactive leaders as they reward good performance and interfere only if there is any problem. Their focus mainly is on performance.
(Zehir, 2011)In the recent 30 years supportive leadership has received an widely attention in many different research studies. Supportive leader can be defined as one who can provide emotional, informational, and instrumental and appraisal support to followers. Researchers also have found that supportive leader expresses concern for followers’ needs and preferences when making decisions and they found that supportive leader is strongly correlated with satisfaction rather than performance.Participative leadership style is generally viewed as leaders who often work very closely with followers and involve their followers in any kind of decision they make. The idea is that Participative style of leadership is likely to improve subordinates performance. Humanistic-based leadership styles (Supportive and Participative) used in planning and administrating organizational operations may directly increase job satisfaction.
However, researchers found inconsistent outcomes in the matter of performance outputs (Zehir, 2011).Leadership and Performance: There are many reasons indicate the relationship between leadership style and organizational performance. The first is that today’s demanding and dynamic markets feature innovation based competition, price/performance opposition, decreasing returns and the creative destruction of existing competencies. Studies have indicated that effective leadership behaviors can facilitate the improvement of performance when organizations face these new challenges (Zehir, 2011).Team leader are believed to play a very essential role in shaping and allocating collective norms, helping team members to deal with their environment, and coordinating collective action. This leader-centered perspective has provided valuable view into the relationship between leadership and team performance.
Some studies went to an extend of exploring the strategic role of leadership to investigate how to utilize leadership style and use leadership behavior to improve organizational performance (Timothy C et al. , 2011).