Employee involvement and organizational effectiveness

Employee involvement and organizational effectiveness

Edwinah Amah Department of Management Sciences, Rivers State College of Arts and Science,

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Port Harcourt, Nigeria, and

Augustine Ahiauzu Department of Management, Faculty of Management Sciences,

Rivers State University of Science and Technology, Port Harcourt, Nigeria

Abstract

Purpose The purpose of this paper is to examine the extent to which employee involvement influences organizational effectiveness and to examine the extent to which employee involvement influences profitability, productivity, and market share. Design/methodology/approach The correlational study was conducted as a cross-sectional survey. Research questionnaires were administered and interviews were held with managers in the organizations studied. A total of 388 managers were randomly drawn from a population of 13,339 managers of all the 24 banks in Nigeria. The independent variable, employee involvement was measured by empowerment, team orientation, and capacity development. The dependent variable, organizational effectiveness was measured by profitability, productivity, and market share. The measures all used a five-point Likert scale (ranging from 1strongly disagree to 5strongly agree) and Spearmans rank correlation statistical tool was used to test the hypotheses. Findings The descriptive statistics of the study variables indicate that employee involvement positively influences organizational effectiveness. The result (Rho0.515, po0.05) shows a positive significant relationship between employee involvement and profitability. The result (Rho0.126, po0.05) shows a positive relationship between employee involvement and productivity. The result (Rho0.256, po0.05) shows a positive relationship between employee involvement and market share. Research limitations/implications The result cannot be generalized because the study was carried out only in the banking industry. Not all the questionnaires given out were retrieved. Some respondents were reluctant to give out information about their organizations because of fear that such information will get to their competitors. Relevant literature on the topic of African origin were scarce, thus most of the literature reviewed was from Europe and America. Practical implications The results imply that increase in the level of employee involvement in organizations will enhance profitability, productivity, and market share. This means that employee involvement is associated with organizational effectiveness. Originality/value The study provides increased understanding, prediction, and appreciation of human behaviour. It enables us analyze the relationship that exist between employee involvement and organizational effectiveness. The study significantly enhances the body of knowledge in this area of management, as it provides reliable empirical results that can be used by scholars and practitioners. It will also help to alert managers to the implications of cultivating a culture of employee involvement that can serve as a competitive advantage. The study will be a challenge to further research because of its findings.

Keywords Nigeria, Banks, Managers, Employees involvement, Organizational effectiveness, Productivity, Profitability, Market share

Paper type Research paper

Introduction There is an increasing demand for committed employees who need little or no supervision to carry out their jobs efficiently for the good of the organization. It has also been argued that strategic group membership and associated collective behaviours are the primary sources of durable differences in firm profitability and

The current issue and full text archive of this journal is available at www.emeraldinsight.com/0262-1711.htm

Received September 2010 Revised February 2011

May 2011 Accepted June 2011

Journal of Management Development Vol. 32 No. 7, 2013

pp. 661-674 r Emerald Group Publishing Limited

0262-1711 DOI 10.1108/JMD-09-2010-0064

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organization effectiveness (Caves and Porter, 1977; Porter, 1979). Organizational cultures characterized as highly involved tend to strongly encourage employee participation and create a sense of ownership and responsibility. Consequently, out of this sense of ownership grows a greater commitment to the organization and an increased capacity for autonomy. Denison (1990) stated that receiving input from organization members increases the quality of the decisions and improves their implementation.

Involvement entails building human capacity, ownership and responsibility. It is very necessary as it leads to united vision, values and purpose. Employees reduce cost through recommendations to senior executives (Rossler and Koelling, 1993; Gowen, 1990; Lesieur, 1958). Based on the foregoing, employee involvement means employee participation in decision making and implementation in the organizations. It is measured by how well employees have sense of ownership and responsibility towards the organization. It reflects on the level of employee commitment.

The problem of modern organizations stem from the way their employees are managed (Luthans, 1985). Managers tend to focus more on the technical, to the neglect of the conceptual and human dimensions, of management for several reasons. The situation only changed with the emergence of organizational behaviour that focuses on human behaviour in organizations. Managers in Nigerian banks do not focus properly on people management issues as they manage through rules, systems and procedures. Consequently, unrealistic targets are set and the effect on the staff feelings and moral climate is often ignored. This results in increased resignations, poor customer services, unethical practices that lead to poor assets quality and loan losses, faulty recruitment and placement processes.

Involvement has been identified as an important dimension of corporate culture that influences its effectiveness (Denison, 1990; Denison and Mishra, 1995). Over the past decade, a great deal has been written about employee involvement and the important role it plays in successful performance of organizations (Likert, 1961; Kanugo, 1988; Stewart, 1989; Denison, 1990; Shipper and Manz, 1992; Bowen and Lawler, 1995; McCafferey et al., 1995; Denison and Mishra, 1995; Daft, 1998; McShane and Von Glinow, 2003; Amah, 2006). Despite this growth of scholarly publications on employee involvement and organizational effectiveness, little empirical evidence exists in developing countries, especially Nigeria. To bridge this gap in literature, this study examines the relationship between employee involvement and organizational effectiveness in the Nigerian banking industry. In this paper we shall examine the relationship between employee involvement and organizational effectiveness.

Literature review Involvement refers to the level of participation by members in an organizations decision-making process. It also refers to the sense of responsibility and commitment thereby engendered (Denison, 2007). Involvement entails building human capacity, ownership and responsibility. It is very necessary as it leads to united vision, values and purpose. Employee involvement is also called participative management and it refers to the degree to which employees share information, knowledge, rewards and power throughout the organization (Randolph, 2000; Vroom and Jago, 1988). McShane and Von Glinow (2003) argue that when there is involvement, employees have some level of authority in making decisions that were not previously within their mandate. They stated that employee involvement extends beyond controlling resources for ones own job; it includes the power to influence decisions in the work unit and organization.

The higher the level of involvement, the more power people tend to have over the decision, process and outcomes. Along with sharing power, employee involvement

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requires sharing information and knowledge, because employees require more knowledge to make a meaningful contribution to the decision process (McShane and Von Glinow, 2003). Employee participation has become an important part of corporate decision making because it is an integral component of knowledge management (McShane and Von Glinow, 2003). This implies that corporate leaders are realizing that employee knowledge is a critical resource for competitive advantage and as such, they are encouraging employees to share this knowledge.

Different forms of employee involvement exist in organizations. Formal participation occurs in organizations that have established structures and formal expectations that support this form of participation. Informal participation occurs where casual or undocumented activities take place at management discretion. Employee involvement can also be voluntary or statutory. It is voluntary when employees participate without any force or law. It is statutory when government legislate its activities (e.g. codetermination which varies from country to country) (Strauss, 1998).

Employee participation can also be direct or indirect. Direct participation occurs when employees personally influence the decision process. Representative participation occurs when employees are represented by peers (e.g. work council in the European codetermination system) (McShane and Von Glinow, 2003).

Different levels of employee involvement exist. Levels of employee involvement reflect both the degree of power over the decision and the number of decision steps over which employees can apply that power (Liden and Arad, 1996; Ford and Fottler, 1995; Coye and Belohlav, 1995; Vroom and Jago, 1988). The lowest level of involvement is selective consultation, in which employees are individually asked for specific information or opinions about one or two aspects of the decision. They do not necessarily recommend solutions and might not even know details of the problem for which the information will be used (McShane and Von Glinow, 2003).

A moderate level of employee involvement entails when employees are more fully consulted either individually or in-group. They are told about the problem and offer their diagnosis and recommendations, but the final decision is still beyond their control. Employees reduce cost through recommendations to senior executives (Rossler and Koelling, 1993; Gowen, 1990; Lesieur, 1958). The highest level of involvement occurs when employees have complete power over the decision process. They discover and define problems, identify solutions, choose best option and monitor the result of their decision (McShane and Von Glinow, 2003).

Organizational cultures that are characterized as highly involved rely on informal, voluntary and implied control systems, rather than formal, explicit, bureaucratic control systems. Denison (2007) identified three indices of the involvement trait as empowerment, team orientation and capacity development. From the foregoing, the working definition of employee involvement in this paper is the extent of employee participation in decision making and implementation in the banks studied. It refers to the employees level of sense of ownership and responsibility to the banks they work in. It includes the level of empowerment, team orientation and capacity building found in the banks studied.

Effectiveness is a broad concept and is difficult to measure in organizations (Daft, 1998). It takes into consideration a range of variables at both the organizational and departmental levels. It evaluates the extent to which the multiple goals of the organization are attained. Organizations are large, diverse and fragmented and tend to perform many activities simultaneously with various outcomes (Weick and Daft, 1982). It is difficult for many managers to evaluate performance that are not precise or easy for quantitative

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measurement (Blenkhorn and Gaber, 1995). However, performance measurement that is tied to strategy execution can help organizations reach their goals (Rose, 1991).

Daft (1998) has identified two major approaches to measurement of organizational effectiveness the traditional and contemporary approaches. The traditional approaches include the goal approach, the system resource approach and the internal process approach. The goal approach to organizational effectiveness is concerned with the output, whether the organization achieves its goals in terms of its desired level of outputs (Strasser et al., 1981). This means that this approach identifies the organizations output goals and assesses how well they have been attained. The approach tends to measure progress towards attainment of goals. It is based on the fact that organizations have goals they are expected to achieve. Hall and Clark (1980) argue that the important goals to consider are the operative goals and not the official goals. The official goals tend to be abstract and difficult to measure while the operative goals reflect the activities the organization is actually performing. The goal approach is used in business organizations because output goals can be readily measured (Daft, 1998). Top managers can report on actual goals of the organization since such goals reflect their values (Pennings and Goodman, 1979). Once goals are identified, subjective perceptions of goal achievement can be obtained if quantitative indicators are not available.

Profit has been defined as the money a business earns above and beyond what it spends for salaries expenses, and other costs (Nickels et al., 1997). Profit is one of the major reasons for venturing into business. Profitability therefore, means a state of producing a profit or the degree to which a business is profitable. Profitability is the primary goal of all for-profit business ventures (Amah, 2006). Without profitability the business will not survive in the long run. Conversely a business that is highly profitable has the ability to reward its owners with a large return on their investment. According to Thompson and Strickland (2001, pp. 9, 42):

Achieving acceptable financial result is crucial [y] Achieving acceptable financial performance is a must, otherwise the organizations financial standing can alarm creditors and shareholders, impair its ability to fund needed initiatives and perhaps even put its very survival at risk.

This makes measuring current and past profitability and projecting future profitability a very important issue. Profitability has been identified among the criteria for organizational effectiveness by many authors (Friedlander and Pickle, 1968; Child, 1974, 1975; Maheshwari, 1980).

Profitability reflects the overall performance of for-profit organizations (Daft, 1998). It is therefore an important parameter for business managers as it can show how well they are performing. Managers tend to look for ways to change their business to improve profitability. Profitability seems to be one of the most important tasks of business managers (Amah, 2006). Companies are evaluated by their level of profitability. It is measured with income and expenses. It may be expressed in terms of net income and earnings per share or return on investment (ROI) (Daft, 1998). A variety of profitability ratios can be used to assess the financial health of a business. These ratios, created from the income statement can be compared with industry benchmarks. Also income statement trends can be tracked over a period of years to identify emerging problems. Profitability ratio indicates managements ability to generate a financial return on sales or investment (Bateman and Snell, 1999).

Profitability can be defined as either accounting profits or economic profits (Hofstrand, 2007). Accounting profits provide an immediate view of the viability of the business. Consecutive years of losses (or net income insufficient to cover living

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expenditures) may jeopardize the viability of a business. In addition to deducting business expenses, opportunity costs are also deducted when computing economic profit. Economic profit provides long-term perspective of business. It enables business owners to know if they can consistently generate a higher level of income by using their money and labour in the business than elsewhere. This studys organizational effectiveness measures, emphasizing the organizations ability to generate income, are in keeping with a definition of effectiveness that focuses on an organizations capacity to acquire resources from its environment. This measure of success generally reflects the interest of all stakeholders, even though the strategies for acquiring resources often involve clear trade-offs among stakeholders. It takes a productive firm to be profitable; this brings us to our next measure of organizational effectiveness, which is productivity.

Productivity is basic to organizational effectiveness. Productivity can be defined in two basic ways. The most familiar is labour productivity, which is simply output divided by the number of workers, or more often by the number of hours worked (Nasar, 2002). Productivity is defined by Amah (2006, p. 221) as the measure of how efficiently and effectively resources (inputs) are brought together and utilized for the production of goods and services (out puts) of the quality needed by society in the long term. This implies that productivity is combination of performance and economic use of resources. High productivity indicates that resources are efficiently and effectively utilized and waste is minimized in the organization. Productivity balances the efforts between different economic, social, technical and environmental objectives (Amah, 2006). High productivity provides more profit for investors and promotes the development of the enterprise. Productivity measurement indicates areas for possible improvements and shows how well improvement efforts are fairing. It helps in the analysis of efficiency and effectiveness. It can stimulate improvement and motivate employees (Prokopenko, 1987).

Productivity is the amount of output produced relative to the amount of resources (time and money) that go into the production. Productivity is expressed in terms of cost for a unit of production; units produced per employee or resource cost per employee (Daft, 1998). Productivity improves, when the quantity of output increased relative to the quantity of input. It includes measures such as time minimization, cost minimization and waste minimization. Speed and time are important resources. Organizations seek to maximize speed and minimize time; how they achieve these indicates how productive they are. To be effective organizations need to maintain and improve their market share.

Market share refers to the companys sales as a percentage of the sales in its target market (Czinkota et al., 1997). This means that in strategic management and marketing, market share is the percentage or proportion of the total available market or market segment that is being serviced by a company. It can be expressed as a companys sales revenue (from that market) divided by the total sales revenue available in that market. It can also be expressed as a companys unit sales volume (in a market) divided by the volume of units sold in that market. Market share (or brand share) is the share of overall market sales for each brand. Market share can be quoted in terms of volume (e.g. the brand has a 10 per cent share of the total number of units sold) or in terms of value (Czinkota et al., 1997). According to Czinkota et al. (1997), the measure of share and concept of prospects are important because they describe the extra business that a producer can reasonably look for, and when to obtain it. Increasing market share is one of the most important objectives used in business. The main advantage of using market share is that it abstracts from industry-wide macro environmental variables such as the state of the economy or changes in tax policy. According to the national environment, the respective share of different companies changes and hence this

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causes change in the share market value; the reason can be political ups and downs, and disaster, any happenings or mis-happening.

Market share has the potential to increase profits. Small market share increases, mean very large sales increases. Studies have shown that, on average, profitability rises with increasing market share (Kotler and Armstrong, 2001). Because of these findings, many companies have sought to expand market share to improve profitability. Kotler and Armstrong (2001) argue that higher market shares tend to produce higher profits only when unit costs fall with increased market share, or when the company offers a superior quality product and charges a premium price that more than covers the cost of offering higher quality. Market share is important because it enables one to know the strength of the organization whether they are leaders or minor players and also if the organization is still holding, gaining or losing share of its target market (Kotler, 1999). According to Kotler and Armstrong (2001), organizations need to protect their current business against market attacks while trying to expand by first, fixing weaknesses that can provide opportunities for their competitors, second, keeping costs down and its prices in line with the value the customers see in the brand, third, by continuous innovation and finally by increasing its competitive effectiveness and value to customers. A strong and adaptive culture is necessary for organizations to maintain and expand their market share (McShane and Von Glinow, 2003). From the foregoing the following hypotheses were derived:

H01. There is no significant relationship between employee involvement and profitability.

H02. There is no significant relationship between employee involvement and productivity.

H03. There is no significant relationship between employee involvement and market share.

Research methodology This correlational study was conducted as a cross-sectional survey. The study units for data generation were managers in the banks and the micro-level of analysis was adopted. The population of the study was 13,339 managers of all the 24 banks in Nigeria and the sample size of 388 managers was determined using the Yaro Yamens formula (Baridam, 2001, p. 93). After cleaning, 320 copies of the instrument were used for the analysis. In selecting the respondents the simple random sampling technique was adopted.

The independent variable, employee involvement has the following dimensions, empowerment, team orientation and capacity development (Denison, 2007). Employee involvement was measured by a seven-item involvement scale based on the Survey of Organizations questionnaire used by Denison (1990). The dependent variable, organizational effectiveness was measured by profitability, productivity and market share. A five-item profitability scale was developed for this study. A two-item productivity scale and a seven-item market share scales were also developed for the study. The measures all used a five-point Likert scale (ranging from 1, strongly disagree to 5, strongly agree). For test of reliability of the scale, the following Cronbachs a coefficients were obtained: employee involvement (0.73), profitability (0.72), productivity (0.76) and market share (0.73). In accordance with Nunnally (1978)

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model, which recommends a bench mark of 0.70, the reliability levels of the study scale are acceptable. Spearmans rank-correlation statistical tool was used to test the hypothesis. The results as presented were obtained.

Research results and findings Frequencies and descriptives were used in our primary analysis which focused on the study demographics and univariate analysis, respectively. The results show that 57.1 per cent of the respondents were males while 42.9 per cent were females. In total, 23.8 per cent of the respondents have spent 0-9 years on their jobs while 30.6 per cent have spent between 10 and 20 years. In total, 46.6 per cent of the respondents have spent over 20 years on their present employments. On educational qualification, we had the following distribution: 60.3 per cent HND/BSc, 39.7 per cent Masters. In total, 23.1 per cent were single while 76.9 per cent were married.

The result of the univariate analysis is shown in Table I. The mean scores (x) obtained for employee involvement in Nigerian banks is weighty (x4.35). This means that employees in the banks have a good level of participation, sense of ownership and responsibility. They are therefore committed to their banks.

The mean score of profitability (x4.40) also shows that the high level of participation of employees in the banks have led to a high level of profitability. In other words, the high level of the sense belonging and responsibility on the part of the employees have led to a high level of profitability in the banks in Nigeria. The mean score of productivity (x4.24) also shows that the high level of employee involvement in the banks have positively impacted on the banks level of productivity. Similarly, the banks market share is high (x3.9) as a result of employees level of involvement which may have enhanced customer satisfaction. Satisfied customers help to advertise their respective banks leading to increase in market share:

H1. Relationship between employee involvement and profitability.

The first hypothesis states, There is no significant relationship between employee involvement and profitability. This hypothesis sought to examine the relationship between employee involvement and profitability. The Spearmans rank-correlation coefficient statistical tool was used to test the hypothesis. The result (r0.515 po0.05) (see Table II) shows that there is positive significant relationship between employee involvement and profitability in banks. In other words, increase in employee involvement is associated with increase in profitability in the Nigerian banks:

H2. Relationship between employee involvement and productivity.

Statistics n Mean SD Skewness SE

Employee involvement 320 4.3491 0.30931 0.150 0.136 Profitability 320 4.4012 0.45070 0.352 0.136 Productivity 320 4.2438 0.44039 0.291 0.136 Market share 320 3.9232 0.49134 0.212 0.136

Source: SPSS output on the analysis of research data

Table I. Descriptive statistics

of study variables

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This hypothesis states, There is no significant relationship between employee involvement and productivity. The hypothesis sought to examine the relationship between employee involvement and productivity. The Spearmans rank-correlation coefficient statistical tool was used to test the hypothesis. The result (r0.126 po0.05) (see Table III) shows that there is a positive relationship between employee involvement and productivity in the banks. In other words, increase in employee involvement is associated with increase in productivity in the Nigerian banks studied:

H3. Relationship between employee involvement and market share.

The third hypothesis states, There is no significant relationship between employee involvement and market share. The hypothesis sought to examine the relationship between employee involvement and market share. The Spearmans rank-correlation coefficient statistical tool was used to test the hypothesis. The result (r0.256 pp0.05)

Level of participation by organizations

members in decision making

Degree to which a

business is profitable

Spearmans r

Level of participation by organizations members in decision making Correlation coefficient 1.000 0.515**

Significant (2-tailed) 0.000 0.000 n 320 320

Degree to which a business is profitable Correlation coefficient 0.515** 1.000

Significant (2-tailed) 0.000 0.000 n 320 320

Note: **Correlation is significant at the 0.01 level (two-tailed) Source: SPSS output on the analysis of research data

Table II. Spearmans rank correlation between employee involvement and profitability

Level of participation by organizations

members in decision making

Total output over total input at a given time

Spearmans r

Level of participation by organizations members in decision making

Correlation coefficient 1.000 0.126* Significant (2-tailed) 0.000 0.024 n 320 320

Total output over total input at a given time

Correlation coefficient 0.126* 1.000 Significant (2-tailed) 0.024 0.000 n 320 320

Note: *Correlation is significant at the 0.05 level (two-tailed) Source: SPSS output on the analysis of research data

Table III. Spearmans rank correlation between employee involvement and productivity

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(see Table IV) shows that there is significant positive relationship between employee involvement and market share in the banks. This means that increase in employee involvement is associated with increase in market share in the Nigerian banks studied.

From the foregoing results, the findings are: employees in Nigerian banks have a good level of involvement (i.e. participation, good sense of ownership and responsibility); employee involvement is associated with the banks profitability; employee involvement is associated with the banks productivity; and employees involvement is associated with increase in the banks market share.

Discussion and implications The discussion of findings will be undertaken in relation to the hypotheses:

H1. Relationship between employee involvement and profitability.

We found that employee involvement is significantly related to profitability in the Nigerian banks. In other words there is significant positive relationship between involvement and profitability in the banks. This implies that increase in employee involvement is associated with increase in profitability in organizations. This finding supports an earlier report by Denison and Mishra (1995) that involvement is significantly correlated with return on assets. Involvement refers to the level of participation by an organizations members in decision making. It refers to the sense of responsibility and commitment resulting from the participation in decision making. Involvement entails building human capacity, ownership and responsibility (Denison, 2007). Out of this ownership grows a greater commitment to an organization and a lesser need for an overt control system. Voluntary and implicit normative systems ensure the coordination of behaviour, rather than explicit bureaucratic control systems (Denison, 2007). Employee involvement in banks is necessary and leads to united vision, values and purpose. Employees working with a united vision, values and purpose tend to be more effective. Employee involvement refers to the degree to which employees share information, knowledge, rewards and power throughout the

Level of participation by organizations members in

decision making

Companys sales as percentage of sales in its target market

Spearmans r

Level of participation by organizations members in decision making

Correlation coefficient 1.000 0.256** Significant (2-tailed) 0.000 0.000 n 320 320

Companys sales as percentage of sales in its target market

Correlation coefficient 0.256** 1.000 Significant (2-tailed) 0.000 0.000 n 320 320

Note: **Correlation is significant at the 0.01 level (two-tailed) Source: SPSS output on the analysis of research data

Table IV. Spearmans rank

correlation between employee involvement

and market share

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organization (Randolph, 2000; Vroom and Jago, 1988). Organizations where employees share information, rewards and power tend to increase in profits than those that do not (Denison and Mishra, 1995). The banks where information, rewards and power are shared more, tend to profit more than others.

Banks that have participative corporate cultures and well-organized work places have better performance records than those that do not have. This is in line with the report of (Denison, 1984). His results, presented in terms of ROI and other financial indicators, indicated that companies with a participative culture reap a ROI that averages nearly twice as high as those in firms with less efficient cultures. This earlier study supports our present finding that employee involvement in banks is positively and significantly related to profitability.

Corporate leaders are realizing that employee knowledge is a critical resource for competitive advantage and as such are encouraging employees to share this knowledge. Employees reduce cost through recommendations to senior executives (Rossler and Koelling, 1993; Gowen, 1990; Lesieur, 1958). This of course leads to profitability. Thus employee involvement can lead to profitability as found by the study. However, only employees with the relevant skills can make recommendations that can reduce cost. In Nigeria there is the additional problem of having the required number of people with managerial and other relevant skills (Nwachukwu, 2002). This makes the continuous training of employees in Nigerian banks a necessity.

There are several reasons why employee involvement is related to profitability. Receiving input from organization members tend to increase the quality of decision and improve their implementation (Denison, 2007). Profitability goals set by banks are easily achieved when employees are involved in decision making. Involvement empowers, and empowerment increases motivation. Superior performance capabilities are created by employee empowerment. We therefore reject the hypothesis that says that there is no significant relationship between employee involvement and profitability. Banks in which employees are involved in decision making tend to achieve their goals better than those that do not involve employees in decision making. Our finding implies that there is a positive relationship between employee involvement and organizational productivity:

H2. Relationship between employee involvement and productivity.

This hypothesis states thus: there is no significant relationship between employee involvement and productivity. In other words employee involvement is not associated with productivity. We, however, found that there is significant relationship between employee involvement and productivity in the banks studied.

Productivity is the measure of how efficiently and effectively resources (inputs) are brought together and utilized for the production of goods and services (outputs) of the quality needed by society in the long term (Amah, 2006). Productivity improves, when the quantity of output increase relative to the quantity of input. Banks like every other organization, seek to minimize expenses as much as possible in order to maximize profit. Employee involvement tends to minimize cost in the banks in Nigeria receiving input from organization members increase the quality of the decisions and their implementation (Denison, 2007). When employees are involved they tend to develop and implement better ways of achieving organizational goals. They suggest better ways of doing the job.

Employee involvement extends beyond controlling resources for ones own job; it includes the power to influence decisions in the work unit and organization.

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With increase in level of involvement, the more power people tend to have over the decision, process and outcomes. Employee involvement requires sharing information and knowledge, because employees require more knowledge to make a meaningful contribution to the decision process (McShane and Von Glinow, 2003). Employee knowledge is a critical resource for competitive advantage.

Unused human knowledge and skill within an organization is a clear competitive disadvantage. Banks in Nigeria need to capture as much involvement as possible from organizational members and use it to improve both the organizational processes and the individuals themselves. Effective organizations require a high level of involvement and these strategies should be a part of the methods used by a manager to shape the culture.

Banks involve their employees to create a unique organization that becomes the basis of sustainable competitive advantage. Our finding that employee involvement is positively related to productivity is supported by Kelleher of southwest who stated that the strength of southwest comes not from products or services but from a unique culture and management philosophy that emphasizes employee involvement (McShane and Von Glinow, 2003).

There are several possible explanations for this significant relationship. Employees reduce cost through recommendations to senior executives and this

result in higher productivity. Involvement creates a sense of ownership and responsibility amongst employees and this motivates them to be more productive. Involvement increases employees commitment to the organization. Committed employees tend to be more productive than uncommitted employees. We therefore reject the hypothesis that says, There is no significant relationship between employee involvement and productivity. The finding suggests that bank in which employees are more involved will be more productive than those in which they are not involved:

H3. Relationship between employee involvement and market share.

The third hypothesis states that there is no significant relationship between employee involvement and market share. We found that there is significant positive relationship between employee involvement and market share in the banks studied. This finding supports and earlier report by Denison and Mishra (1995) that involvement is significantly correlated with sales growth. Supporting this finding Likert (1961) states an organization will function best when its employees performs as members of a cohesive and effective work group. Organization culture that supports the use of teams gains competitive advantage (Amah, 2006). This implies that team-oriented organizations tend to performance better. Most banks in Nigeria work as teams to enhance their performance. Employees are more likely to be committed to a decision or course of action when they are closely involved in the decision making process (McCaffrey et al., 1995). This implies that involving employees in tasks concerning increase in market share will make them to be committed to the achievement of such goals.

Employee tends to be interested in taking part in decision making, deriving solution to urgent problems and receiving assignments that are challenging and involving. Banks, where employees are given rewards and incentives for effort towards increase in market share tend to have more customers as the employees are committed to the goals because of what they stand to gain. In Nigeria money motivates a lot, and employees in the banks are not an exception. Thus increase in employee involvement is associated with increase in market share. A respondent also revealed that their bank consults with employees on matters affecting their well-being. That formal and informal channel is employed in keeping staff abreast of various factors affecting the

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performance of the organization. This tends to increase the commitment of the employees to the organization. The result implies that there is a positive relationship between employee involvement and increase in market share in the banks studied.

Conclusion and recommendations The study on employee involvement and organizational effectiveness in the Nigerian banking industry reveal that first, employee involvement is an important tool a manager needs to obtain commitment from employees as it creates a sense of ownership and responsibility towards the organization. Second, involved and committed employees work hard to ensure the achievement of organizational goals (i.e. increased profitability, productivity and market share). Third, the positive association between employee involvement and profitability as established by the study is applicable to work organizations the world over including African-based organizations like the ones that make up our study population. Fourth, the results also reveal that employee involvement impacts on organizational productivity and market share as employees are more committed to a decision or course when they are involved in the decision-making process. Fifth, the study reveals that employee involvement positively impacts such work behaviours as job satisfaction and organizational commitment. The more employees are involved the more they gain pleasure working in such an organization and the more they are willing to stay with the organization.

Organizations with committed employees ease the work of the manager, as they do their jobs with little or no supervision knowing the effect of their jobs in the achievement of the organizations goals. Employees tend to be more productive when they are trained and involved in decision making.

The study therefore recommends that banks should endeavour to maintain culture that involves employees to enable them contribute positively to the achievement of the organizational goals such as increase in profitability, productivity and market share. Employees should be involved in decision making, as it will make them to be committed to the achievement of the decisions taken. Banks should also place emphasis on capacity development as this tends to enhance the contribution of the employees towards the achievement of the organizational objectives. Organizations should encourage employee empowerment and team orientation as it is likely to create greater sense of ownership and commitment among employees. Management of the banks need to appreciate and reward employees for making meaningful contribution as this will enhance job satisfaction and employees commitment.

It is suggested that further research on shared values and organizational effectiveness should be carried out in other sectors of the Nigerian economy to compare with what has been revealed in the banking sector. The study could also be carried out in the banking sector of European countries whether some cross-cultural comparisons may reveal some better processes and practices of values-led organizations in the banking sector.

Limitations of the study The fact that this is a study of the banking industry, limits the extent to which generalizations of any outcome of this study can be applied to all other sectors and industries in the Nigerian economy.

References

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Further reading

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Corresponding author Edwinah Amah can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints

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