Far East Journal of Psychology and Business

Vol. 2 No 1, January 2011

ORANIZATIONAL EFFECTIVENESS: A CASE STUDY OF TELECOMMUNICATION AND BANKING SECTOR OF PAKISTAN Prof. Dr. Muhammad Ehsan Malik Director General, University of the Punjab Gujranwala Campus, Pakistan Muhammad Mudasar Ghafoor Research Scholar, School of Business University of Dundee, United Kingdom E-mail: M.M.Ghafoor@dundee.ac.uk Salman Naseer Lecturer, Department of Information Technology, University of the Punjab Gujranwala Campus, Pakistan

ABSTRACT Composition of people which formulate independent business identity for some specific purpose is commonly known as organization and getting desired outcome within defined resources is treated as effectiveness. This paper provides an impact of employees performance and employees motivation toward organizational effectiveness. We will examine to what extent the role of employee's performance, their motivation and the environment of organization influence organizational effectiveness particularly in telecommunication and banking sector. The study was conducted in four cities of Pakistan: Islamabad, Lahore, Gujranwala, and Faisalabad. Sample size consists upon 103 respondents, who filled the questionnaire. The purpose of the study was causal and researcher interference was minimal. Unit of analysis was individuals and dyads. Study setting was non-contrived and time horizon was cross-sectional. The validity of data was authenticated. After analyzing the data, findings showed that there is a significant relationship among all these factors i.e. employees performance and motivation toward organizational effectiveness. Results showed that increased employees performance accelerate organizational effectiveness. As employees get self motivation, the organizational effectiveness moves in a positive way. Moreover this study indicates that the effective organizational environment promotes the effectiveness of the organization. It will discuss the theoretical, managerial implications and dimensions of organizational effectiveness. Hence the topic is highly of research interest in current years. Thus the relationship among all variables is highly complex and should be subject to further research. Organizational effectiveness should be realistic and measurable. Happy employees are more productive rather than productive employees are happier. Keywords: Organizational effectiveness, performance, Motivation, Organizational environment, Managerial expertise, Creative synergy Paper Type: Research Paper

37

Far East Research Centre

Hong Kong

INTRODUCTION This research concerns with the various factors that may affect the organizational effectiveness. These are: performance, motivation, organizational environment, managerial expertise, creative synergy, multi ethnic and racial background. Performance may also depend on some factors such as: pay rises, performance appraisal system, flexible time system, personal satisfaction, job security and so on. As motivation relate to leadership styles, carrier opportunities, suggestions, opinions and advices from seniors etc. Organizational environment reflects from the culture composition, rules and regulations, freedom of work etc. Managerial expertise includes training, check and balance, opportunity of condensed work week etc. This research covers service sector particularly telecom sector and various banks. This study was conducted at four cities of Pakistan which include Islamabad, Lahore, Gujranwala, and Faisalabad. Three main hypotheses are developed: (1) Relationship of employees performance with organizational effectiveness; (2) Motivation level relates to effectiveness improvement; (3) Efficient organizational environment increases the effectiveness of the organization. The main objective is to describe the factors which influence on Organizational effectives. Organizational Effectiveness: Organizational effectiveness is the concept of how effective an organization is in achieving the outcomes the organization intends to produce. Organizational effectiveness is an abstract concept and is basically impossible to measure. Instead of measuring organizational effectiveness, the organization determines proxy measures which will be used to represent effectiveness. We may include such things as efficiency of management, performance of employees, core competencies, number of people served, types and sizes of population segments served and so on. So we focused on the performance of the employees that to what extend this proxy measure contributes in Organizational effectiveness. Employee Performance Employee Performance basically depend on many factors like performance appraisals, employee motivation, Employee satisfaction, compensation, Training and development, job security, Organizational structure and other, but our area of study is focused only on two basic factors: Employee Motivation and Organizational Structure, these two factors highly influence the performance of employees. Employee Motivation According to Kreitner (1995) that the psychological process that gives behavior purpose and direction. According to Buford, Bedeian, & Lindner, (1995) that a predisposition to behave in a purposive manner to achieve specific, unmet needs. According to Bedeian, (1993) that an internal drives to satisfy an unsatisfied need and the will to achieve.

38

Far East Journal of Psychology and Business

Vol. 2 No 1, January 2011

Motivation Theories Getting people to do their best work, even in trying circumstances, are one of managers most enduring and slippery challenges. Indeed, deciphering what motivates us as human beings is a centuries-old puzzle. Some of historys most influential thinkers about human behavioramong them Aristotle, Adam Smith, Sigmund Freud, and Abraham Maslowhave struggled to understand its nuances and have taught us a tremendous amount about why people do the things they do. Maslow hirarchy of need (1943) discussed five levels of employee needs, physiological, safety, social, ego, and self- actualizing. According to Masclow lower level needs had to be satisfied before the next higher level need would motivate employees. Herzberg (1959) categorized motivation into two factors: motivators and hygienic (Herzberg, Mausner, & Snyderman, 1959). Motivator or intrinsic factors, such as achievement and recognition, produce job satisfaction. Hygiene or extrinsic factors, such as pay and job security, produce job dissatisfaction. Vroom's theory is based on the belief that employee effort will lead to performance and performance will lead to rewards (Vroom, 1964). Rewards may be either positive or negative. The more positive the reward the more likely the employee will be highly motivated. Conversely, the more negative the reward the less likely the employee will be motivated. Adams' theory states that employees strive for equity between themselves and other workers. Equity is achieved when the ratio of employee outcomes over inputs is equal to other employee outcomes over inputs (Adams, 1965). Skinner's theory simply states those employees' behaviors that lead to positive outcomes will be repeated and behaviors that lead to negative outcomes will not be repeated (Skinner, 1953). Managers should positively reinforce employee behaviors that lead to positive outcomes. Managers should negatively reinforce employee behavior that leads to negative outcomes. Organizational Environment: Organizational environment refers to the forces that can make an impact. Forces made up opportunities and threats. An organization does not exist in isolation. It works with the overall environment. Scholars have divided these environmental factors into two main parts, 1) Internal Environment2) External Environment, it is further divided into specific and general environment (Robbins, S.P.2008). Organizational environment determines the manner and extent to which roles, power, and responsibilities are delegated, controlled, and coordinated, and how information flows between levels of management. This structure depends entirely on the organization's objectives and the strategy chosen to achieve them. According to Lusthaus, Anderson and Murphy: Environment is made up of the administrative, technological, political, economic, socio-cultural, and stakeholder factors. According to Nabli and Nugent that each organization is set in a particular environment to which it is inextricably linked. This environment provides multiple contexts that affect the organization and its performance, what it produces, and how it operates.

39

Far East Research Centre

Hong Kong

Theoretical Framework

Employees Performance

Organizational Effectiveness

Employee Motivation

Hypothesis Keeping in mind the above discussion this research or study is designed to test the following hypothesis: H1 H2 H3 Employees performance affects Organizational Effectiveness. Employees motivation leads to Organizational Effectiveness. Employees performance and employees motivation factors affect organizational effectiveness.

Method Area of selection Above mentioned literature mentioned that various studies show the influence of employee performance on organizational effectiveness. The current study is being furnished in different cities of Pakistan based on surveys. Islamabad, Lahore, Faisalabad, Gujranwala are the prime cities for studying the organizational effectiveness with regard to employees performance, employees motivation and organizational environment.

40

Far East Journal of Psychology and Business

Vol. 2 No 1, January 2011

Research Instrument Adopted questionnaire is used as a research instrument. The instrument uses 5-point likert scale from: 1-strongly disagree, 2-disagree, 3-neither agree nor disagree, 4-agree, 5-strongly agree. Questionnaires are administered to employees in various organizational settings in four cities of Pakistan. This questionnaire gives importance to all these factors relating to organizational effectiveness. These questionnaires show the opinions of employees in regard to each question. The questionnaire included 21 questions added by some personal questions. 3 questions relate to performance, 7 to motivation, 3 to managerial expertise, 1 to creative synergy, 2 to multi ethnic and racial differences. By combining all these questions the study enables to take an in depth sight of every organization and be familiar with its regulations. This research is done in non contrived settings because natural environment is preferred to analyze the organizational employees. Data is collected only once so the study is based on cross sectional analysis. Sample The study used the probability sampling and it is further categorized into simple random sampling as the study variables have the equal chance of being selected and the nature is generalized. Sample size of this study is 103. Sample is based on the total population and this sample size covers telecommunication and banking sector in Punjab province of Pakistan. Reliability of Measure Measurement scale in this study examined by the questionnaire adopted, 1988 by Donald Clark (created March 19, 1998 updated December 30, 2007). Another source which is pitched in and supportive for measurement is J.K White and R.R Ruh (1973) Effect of personal values on relationship between participation and job attitudes, Administration science quarterly, 18, 4, p. 509. All the measures used in this study are indicating an acceptable reliability. RESULTS AND DISCUSSION The data are firstly subjected to the principal components factor analysis to check the validity and reliability of the different factors involved in our study. The following tables show all the factors statistically.

41

Far East Research Centre

Hong Kong

Table 1 shows descriptive statistics of demographic variables, dependent and independent variables N Age Education Org. Effectiveness Emp. Performance Emp. Motivation Valid N (list wise) 103 103 103 103 103 103 Minimum 1 1 1.00 9.00 10.00 Maximum 4 4 5.00 35.00 29.00 Mean 2.13 3.06 3.8641 24.6602 22.0194 Std. Deviation .605 .725 1.27609 5.10777 3.88809 Variance .366 .526 1.628 26.089 15.117

Table 1 showed that as age factor is concerned, majority of the employees were in middle of their age. According to our sample size all the staffs possessed bachelor and master degree. It is also shown organizational effectiveness is higher in the staff of telecommunication and banking sector particular in our sample size. The total sample size was 103 and maximum were in the age of 20 to 30 years old. The maximum variance in 26.089 in employees performance and minimum was .366 in age. Table 2 Correlations Analysis Org. Effectiveness Org. Effectiveness Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) Pearson Correlation Sig. (2-tailed) .270(**) .006 .287(**) .003 .756(**) .000 Emp. Performance

Emp. Performance

Emp. Motivation

** Correlation is significant at the 0.01 level (2-tailed). It is explained by the table 2, there is positive correlation between employee performance and organizational effectiveness. On the other hand there is also positive correlation between employee motivation and organizational effectiveness. Its value normally remains in +1 and -1. Near +1 show strongly positively correlated and near -1 show strongly negatively correlated. In this table is just positively correlated not strongly positive correlated. In this table we used Pearson correlation and 2-tailed, reason was our hypothesis was nondirectional. If our hypothesis is directional then we use single tailed test.

42

Far East Journal of Psychology and Business

Vol. 2 No 1, January 2011

Table 3 Regression Model Summary Change Statistics Std. Error of F the Estimate R Square df1 df2 Change Change 1 .298(a) .089 .071 1.23019 .089 4.877 2 100 a) Predictors: (Constant), Emp. Performance and Emp. Motivation R R Square Adjusted R Square

Sig. F Change .010

Table 3 (a) ANOVA Sum of Model Squares df Mean Square 1 Regression 14.762 2 7.381 Residual 151.336 100 1.513 Total 166.097 102 a) Predictors: (Constant), Emp. Performance and Emp. Motivation b) Dependent Variable: Org. Effectiveness

F 4.877

Sig. .010(a)

Table 3 (b) Coefficients Mode l 1 Unstandardized Coefficients B Std. Error Standardized Coefficients Beta 2.407 .843 1.333

Sig.

(Constant) 1.704 .708 Emp. Performance .031 .036 Emp. Motivation .064 .048 a) Dependent Variable: Org. Effectiveness

.123 .194

.018 .401 .186

After looking the table 3, 3(a) and 3(b), we can analyze the regression model summary proved our theoretical framework and there is .071 adjusted R Square, although its value is less, which is good indicator of model authentication. After excluding employee performance variable in table 4.8, its results are significant at .003. We conclusion we most of the time rely on adjusted R square rather than simple R square. Normally Regression Model summary predicts authentication of overall model.

43

Far East Research Centre

Hong Kong

Table 4 Differences in Males and Females Sum of squares 1.922 2659.185 2661.107 df 1 101 102 Mean square 1.922 26.329 .383 15.263 F .073 Sig. .788

Emp. Performance Between Groups (Combined) * Gender Within Groups Total Emp. Motivation Between Groups (Combined) * Gender Within Groups Total

.383 1 1541.579 101 1541.961 102

.025

.875

ANOVA is commonly used to compare means of more than two groups. Results of the above mentioned table are insignificant, F value should be higher than its table value and on the other hand the value of sig. column should be lesser than .05. The last column showed the value of significant which is also known as p value in statistics. It should be lesser than .05 then we may say our hypothesis is accepted and null hypothesis is rejected. It was just related to male and female differences. There are no significant differences between male and female staff of both organizations. Table 5 Differences in Age Sum of df squares 37.096 3 2624.010 99 2661.107 102 57.472 1484.489 1541.961 3 99 102 Mean square 12.365 26.505 F .467 Sig. .706

Emp. Performance Between Groups (Combined) Age Within Groups Total Emp. Motivation Between Groups (Combined) Age Within Groups Total

19.157 14.995

1.278 .286

Table 5 explained that the results of age ANOVA table are insignificant, if we minutely analyze the values of employee motivation are comparatively better than employee performance. Employee motivation is significant at .286, it should significant at .05 and on the other hand employee performance is also not significant but if we compare both the values of employee motivation are comparatively better than employee performance.

44

Far East Journal of Psychology and Business

Vol. 2 No 1, January 2011

Table 6 Differences in Education Sum of df squares 166.659 3 2494.448 99 2661.107 102 122.600 1419.361 1541.961 3 99 102 Mean square 55.553 25.196 F Sig.

Emp. Performance Between Groups (Combined) Education Within Groups Total Emp. Motivation Between Groups (Combined) Education Within Groups Total

2.205 .092

40.867 14.337

2.850 .041

Employee motivation with respect to education is significant, its values are .041 which is lesser than .05, on the other hand employee performance with respect to education is significant at .092. Employee motivation is significant at .041, it is significant at .05 and on the other hand employee performance is not significant but if we compare both the values of employee motivation are comparatively better than employee performance. Education plays important role in employee motivation. Self motivation is much better than simple motivation in the employees of the organizations. Table 7 Differences in Marital Status Sum of squares 48.702 2612.405 2661.107 2.745 1539.216 1541.961 df 1 101 102 1 101 102 Mean square 48.702 25.865 F Sig.

Emp. Performance Between Groups (Combined) Marital Status Within Groups Total Emp. Motivation Between Groups (Combined) Marital Status Within Groups Total

1.883 .173

2.745 15.240

.180

.672

Marital status has no impact on organizational effectiveness. As employees performance and employee motivation are concerned, they are insignificant. There values are much higher than the value of level of significance which is .05. In the case of marital status the results of employee performance are better than employee motivation. Organizations should also consider the employees personal life and also focus on their personal matters, it will boost the outcome of the organizations.

45

Far East Research Centre

Hong Kong

Discussion The study has achieved its objective of providing insights into the relationship between organizational effectiveness influenced by the employees performance. These two are positively related as its clear by the findings of four cities of Punjab (Pakistan). The findings provide evidence that largely confirm the hypothesis as well as raising questions that invite further research. In the term of employees performance within a city, the findings clearly indicating that Men and Women are performing on a same scale beyond their gender difference, furthermore men are more contributed to the leadership activities when talking about a firms management. These results are expected reflection of employees contribution in any organization which tends to have no gender biasness. Furthermore the pie charts are indicating the clear result. 86 males and 17 females responded to the questionnaires. Their percentages of ages show that maximum of them are lying in 20-30 age groups. They are mostly having a graduation degree with a percentage of 65. Questionnaires clearly states that the career opportunities motivate employees. Seniors in good firms motivate employees and always welcome their ideas. This figure of welcoming ideas and opinions marked a percentage of 51 which are agreeing to this statement. Incentives are provided for motivation in some of the organizations but this has not a clear statement representation. In most of the organizations there is no flexible time availability since 26 were strongly disagreeing to this statement and 20 were disagreeing. Most of the employees are willing to stay overtime to finish a job as results agreeing marked a percentage of 39. Job security is not available to most of the employees working in private sectors. Whereas jobs in public sector are more secure. Environment of organization is composed of diverse cultured in most of the organizations as results in agreement of this statement marked a percentage of 41. Personal work freedom is experienced by senior personnel in most of the organizations as the results marked a percentage of 31 in agreement statements. In most of the organizations in these areas of interest showed that they are being trained before any new work assignments. Most of the people showed an agreement to working in groups rather than working individually. Gender and Racial discrimination is not faced in these organizations as results show that 41 marked strongly disagree. And 28 of them marked disagree with the statement. Overall questions show that in most of the organizations there was no gender or any kind of racial discrimination. And mostly the employees were willing to work in groups rather than working individually. Job security is safer in public sector organizations as compared to the employees who are working in the private sector. There is no flexible time system available in most of the firms. Employees are showing a straight attitude towards their jobs and most of them are loyal only if their senior personnel are co-operative and supportive. Seniors mostly have a proper check and balance system over the different jobs designations in the organization. Overall after looking into all the figures and percentages which are being mentioned by pie charts and tables it is clear that employee performance is directly influenced by their motivation they get by their senior personnel in the shape of incentives and other benefits. Employee motivation will ultimately increase the performance. When employee performance will be increased they then are willing to stay overtime to finish their jobs. They will also be more loyal to the organization management and business operations. And in the end all these factors will 46

Far East Journal of Psychology and Business

Vol. 2 No 1, January 2011

lead to make a positive affect over the organization. In this way organization effectiveness will be directly influenced by the employees performance. CONCULSION AND RECOMMANDATION This study focused on employee performance, employee motivation and organizational effectiveness. Employee performance has a positive relation with organizational effectiveness and employee motivation has also positive relation with organizational effectiveness. There is a relation among these variables but strong relationship does not exist. Organizations of banking and telecommunication sectors should give proper attention to their staff, regarding employee performance and employee motivation. Happy employees are more productive rather than productive employees are happier. Staff of these service sectors should be considered assets of their respective organizations. This study further suggested organizational effectiveness has key importance for the organizations success. Managerial Implications This research has provided a deep evaluation for employees performance affecting organization effectiveness. The findings show that the men and women are having equally opportunities without having any kind of gender biasness. But men are contributed towards leadership jobs. The level of employees contribution towards their jobs is same in all the cities of interest. I.e. Islamabad, Lahore, Gujranwala, Faisalabad. Knowing the level of similarity of job performance in different cities of Pakistan, Organizations are advised to formulate their organizational settings and goals accordingly particularly with regard to the no differences of the genders or racial discrimination. Moreover, this research has proved that both males and females are equally responsible for the organization performance. Their roles are of equal importance according to the designation of their job. Their job performance equally affects the organizational effectiveness. In all sectors of economy and in any type of organizational settings employees directly influence the performance of that organization. Therefore a good management hence in all the organizational behaviors should satisfy the customers needs. Firms must be supportive and dedicated towards employees difficulties and problems. Firms must listen to the suggestions and opinions of the employees employed. Organizations effectiveness is essential for any firm to be healthy and productive so all the firms are advised to adopt employees oriented policy which should satisfy them. Limitations and direction for future research The sample size is relatively small and this study may not generalizable on other sectors of the economy. This study covered the various organizations and it is better to focus on one industry. Sample size should increase and cover more organizations as study centers. There is need for study in depth on each independent variable.

47

Far East Research Centre

Hong Kong

REFERENCES Adams, J. S. (1965), Inequity in social exchange. In L. Berkowitz (ed.), Advances in experimental social psychology. New York: Academic Press. Bedeian, A. G. (1993), Management, 3rd Edition, New York, Dryden Press. Buford, J. A., Jr. (1990), Extension management in the information age. Journal of Extension, 28 (1) Definition of Organizational structure http://en.wikipedia.org/wiki/Organizational_structure, 5.01.2009, 21:15 Definition of Organizational structure: http://www.businessdictionary.com/definition/organizational-structure.html, 25.01.2009, 21: 15 Drath, W.H.(2001), The Deep Blue Sea: Rethinking the Source of Leadership. San Francisso.CA: Jossey-Bass. Nitin Nohria, Boris Groysberg, and Linda-Eling Lee Buford, J. A., Jr. (1990), Extension management in the information age. Journal of Extension, 28 (1) Herzberg, F., Mausner, B., & Snyderman, B. B. (1959), The motivation to work. New York: john Wiley & Sons. Kreitner, R. (1995). Management, 6th Edition, Boston, Houghton Mifflin Company. Maslow, A. H. (1943), A theory of human motivation. Psychological Review, July 1943. 370396. Robbins, S.P, (2008), Essential of Management, Pearson Education Canadian Inc. 8th Canadian Edition. Skinner, B. F. (1953), Science and Human Behavior. New York: Free Press. Tarabity , A., Solomon, G., Fernald jr., L.W. and Sashkin, M.(2005), The enterprieneurial leaders impact on the organizations performance in dynamic markets. Journal of private equity, 8 (4):20-29. Research and Extension Associate, (1999), The Ohio State University, Piketon Research and Extension Center, Piketon, Ohio Vroom, V. H. (1964), Work and motivation. New York: Wiley. Wiley, J.E. (1991), Customer Satisfaction: Asupportive work environment & its Financial Cost. Human Resource Planning, 14: 117-127. Yammarino, F.J., Spangler, W.D. and Bass, B.M. (1993), Transformational leadership & performance: A longitudinal investigation. The Leadership Quarterly, 4(1): 81102. Yukl, G. (1999), An evaluation essay on current conceptions of effective leadership. European Journal of Work & Organizational Psychology, 8(1): 81-102. Zhu, W., Chew, I.K.H. and Spangler, W.D. (2005), CEO transformational leadership & Organizational Outcomes: The mediating role of human-capital-enhancing Human Resource Management. The Leadership Quarterly, 16(1):39-52.

48