Employee Commitment and Organizational Performance
Employee Commitment and Organizational Performance
In the present day environment which is not only competitive but also changing very fast due to the accelerated technological advance, the organizations are facing new challenges regarding sustained productivity and having employees who are committed to the organization. In today’s environment, no organization can perform at peak levels unless each employee is committed to the organizational objectives. Hence, it is important to understand the concept of the commitment and its feasible outcome. Although a large numbers of studies have been carried out to investigate the concept of the organizational commitment, yet in this competitive world, the commitment still remains the most challenging concept for the organizational management since it has a major impact on the organizational behaviour.
Committed employees are increasingly becoming a valued asset in the organization since the employee commitment plays the major part in the growth of the organization performance. In the present day environment, every organization wants to increase its performance for effectively facing the market forces. The employee commitment helps the organization in this objective. In fact, It is crucial and a key element in the organizational success. Several studies on the subject have proved that a positive relationship exists between employee commitment and productivity. However, for the management, getting the employees committed who are competent and ready to give in their best in the pursuit of the objectives of the organization has been not an easy task and the management often faces problems regarding this.
It is universally known that employees when they have high commitment then they contribute their maximum energy and time for achieving the organizational goals and objectives. This also provides the employees a sense of satisfaction and this sense of satisfaction further motivates them to give their best. Hence, the organization needs to develop the commitment of the employee by adopting the finest methods to see that the employees remain committed to the organization. For this, the organizational management is to adopt various techniques to ensure that the employees develop positive attitudes towards the organization. These techniques provide the employees with job satisfaction and job involvement. The motivated, involved and committed employees become an asset for the organization, since such employees lead to increase the productivity and hence the performance of the organization.
Employee commitment also results into the employees getting a sense for an attachment for their organization. Since the employees start treating organization as their own organization, their level of satisfaction and engagement improves. Employees become high performing employees. The organization gets benefitted by the employees’ productivity as well as the quality of the output given by the employees. Hence, the organizational management is to pursue all those practices which make employees committed.
Commitment is not only a human relation concept but involves generating human energy and activating the human mind. Without commitment, the implementation of new ideas and initiatives is compromised. The commitment is defined as the steadying strength which acts to retain the behavioural move toward in the fairness conditions and the psychological condition of the commitment are the bonds of individual towards organization. Commitment has also been defined as a psychological state which binds the individual to the organization. This binding force can be experienced in different ways which can be accompanied by different mindsets including (i) an affective attachment and involvement with the target, (ii) a felt obligation to the target, and (iii) an awareness of the costs associated with discontinuing involvement with the target.
Committed employees are one of the greatest assets any organization and can have and play a major role in overall organizational efficiency and profitability. The greater levels of employee commitment lead to organizational benefits such as a continuous flow of improvements, cost and efficiency improvements and active employee participation. Committed employees are believed to enhance the organization as they feel secure in their jobs, are well trained, feel part of a team and are proud thus enjoying doing their jobs.
Employee commitment results into benefits which include (i) increased job satisfaction, (ii) increased job performance, (iii) increased total return to shareholders, (iv) increased sales, (v) decreased employee turnover, (vi) decreased intention to leave, (vii) decreased intention to search for alternative, and (viii) decreased absenteeism. With this in mind, employee commitment is to be viewed as a organizational necessity. Organization which ignores employee commitment has difficulty in retaining and replacing the competent employees and thus finds it hard to optimize performance. There are not only the immediate expenses of the recruitment process, but other hidden costs such as management time and lost productivity as new employees take time to become effective in their roles.
Evidences derived from social science studies have shown that there is now a broad agreement amongst experts that high commitment work practices do improve performance, productivity, and the quality of service. However, some experts have argued that the many of the studies have looked at high commitment work practices from the management’s perspective, and the over dependence on such perspectives can sometimes be misleading and does not present the real impact of employee commitment which results in positive outcomes in organizational performance. However, when employees positively interpret high commitment work practices, it sequentially increases their commitment to the organization, thereby increasing their individual performances and hence organizational performance also increases.
Employee commitment refers to the individuals’ participation in the organizational activities. It is an effective reaction to the entire organization and the degree of employees’ loyalty towards the organization. It is basically employees’ attitude to organization. It is a psychological degree which describes the individuals’ relationships with the organization and has associations to continue as a member in the organization. It is the degree to which the individuals have strong attachment to the organization. Employee commitment is significant for every organization, since high levels of employee commitment benefits the organization in several ways. Although a commitment strategy can be tied to organizational human resource practices, recruitment, selection, performance, and evaluation, it can also be used to develop psychological connections.
Organization achieves its objectives when competent and committed employees are engaged. Employees are regarded as committed to the organization if they are willingly to continue their association with the organization and devote considerable efforts for achieving organizational goals. The high level of efforts exerted by employees with high level of the organizational commitment leads to higher levels of performance and effectiveness both at the individual and the organizational levels. Here, employee performance is defined as the attained outcome of actions with the skills of employees who perform in some situation.
Model of commitment
According to Meyer & Allen ‘commitment is a psychological state that characterizes the employees’ relationship with the organization and has implication for the decision to continue membership in the organization’. They suggested a three component model for the organizational commitment. The three component model is a dominant framework for the organizational commitment. It is based on a more comprehensive and a clear understanding of the organizational commitment.
The three component model (Fig 1) of the organizational commitment consists of (i) affective commitment dimension, (ii) continuance commitment dimension, and (iii) normative commitment dimension. Affective commitment is the degree that employee is emotionally attached to the organization. he continuance commitment is the degree that an employee is attached to organization because of self-investment. The normative commitment is the degree that an employee is attached to an organization because of social norms and ethical reasons.
Fig 1 Three component model of the organizational commitment
Affective commitment dimension – This represents the individual’s emotional attachment to the organization. According to Meyer and Allen, affective commitment is ‘the employee’s emotional attachment to, identification with, and involvement in the organization’. Organizational members, who are committed to an organization on an affective basis, continue working for the organization because they want to link closely with the same organization. Members who are committed on an affective level stay with the organization since they view their personal employment relationship as congruent to the goals and values of the organization.
The organizational commitment model of Meyer and Allen indicates that affective commitment is influenced by factors such as job challenge, role clarity, goal clarity and goal difficulty, receptiveness by management, peer cohesion, equity, personal importance, feedback, participation, and dependability. Affective commitment development involves identification and internalization.
Continuance commitment dimension – The second dimension of the tri-dimensional model of organizational commitment is continuance commitment. Meyer and Allen define continuance commitment as ‘awareness of the costs associated with leaving the organization. It is calculative in nature because of the individual’s perception or weighing of costs and risks associated with leaving the current organization. Meyer and Allen further state that ‘employees whose primary link to the organization is based on continuance commitment remain because they need to do so’. This indicates the difference between continuance and affective commitment. The latter entails that individual’s stay in the organization since they want to.
Continuance commitment can be regarded as an instrumental attachment to the organization, where the individual’s association with the organization is based on an assessment of economic benefits gained. Organizational employees develop commitment to an organization because of the positive extrinsic rewards obtained through the effort-bargain without identifying with the organization’s goals and values.
Normative commitment dimension – The third and the last dimension of the organizational commitment model is normative commitment. Meyer and Allen define normative commitment as ‘a feeling of obligation to continue employment’. Internalized normative beliefs of duty and obligation make individuals obliged to sustain membership in the organization. According to Meyer and Allen ‘employees with normative commitment feel that they ought to remain with the organization’. In terms of the normative dimension, the employees stay since they are to do so or it is the proper thing to do.
It has been found that employee commitment goes up when they feel affiliation with the organization and also when organization recognizes them as a part of organization. Recognition as a part of organizational success story increases the commitment level and also the individual and organizational productivity.
Stages of employee commitment
Several studies have indicated that development of the employee commitment for the organization has three stages. The reason why the employee is committed is different from one stage to another. The three stages are (i) compliance stage, (ii) identification stage, and (iii) internalization stage.
Compliance stage – Compliance or exchange stage is the stage when the employees act with the performance which complies with organization standards not because they believe in the organization standard and values, but because they gets reward and promotion from the organization, so the commitment of the individuals in this stage is based on the number of rewards they get from the organization.
Identification stage – Identification stage is defined in terms of belonging to the organization in which the employees in the organization has a strong relationship with the organization and they are proud because they are members of this organization. In several studies, it has been argued that the organization is the first and most important place in which the employees can identify themselves, and it has also been found a positive relationship between organization Identification stage and affective commitment exist. Hence, the employee commitment in the identification stage is different from compliance stage since the employees in this stage have a strong desire to remain in the organization because of the level of belonging they have toward their organization.
Internalization stage – This stage has been defined as the stage of matching between employees belief and value and with the organization. This stage is the final stage of commitment since the employees here want to stay in the organization because they share the same values with their organization.
Organizational performance relation with employee commitment
No organization in the present day competitive environment can perform at peak levels unless each employee is committed to the organizational objectives and works as an effective team member. It is no longer good enough to have employees who come to work faithfully every day and do their jobs independently. Employees now have to think like entrepreneurs while working in teams, and have to prove their worth. However, they also want to be part of a successful organization which provides a good income and the opportunity for development and secure employment.
Employee commitment benefits the organization in a number of ways such as it can improve performance and reduce absenteeism and turnover thereby resulting in sustained productivity. Employees with high level of organizational commitment provide a secure and stable workforce and thus they give competitive advantage to the organization.
Committed employees who are highly motivated to contribute their time and energy to the pursuit of organizational goals are increasingly acknowledged as the primary asset available to an organization. The committed employees provide the intellectual capital which has become the most critical asset for the organization. Furthermore, employees who share a commitment to the organization and their collective well-being are more suitable to generate the social capital which facilitates organizational learning. It is therefore important for the organizational management to know the aspects which play an important role or have big impact in boosting the commitment of the employees. Several factors had been identified as determinants of employee commitment.
An organization function at optimum level with committed employees. Hence, commitment is now considered a natural process for effective performance of the employees as well as for the organization. Every organization strives hard to induce commitment in the employees. The organizational management uses different means and methods to enhance employee’s commitment. It is not surprising that employee commitment is the fundamental activity for the success of an organization. Employees have a desire to reach their self-actualization motivational level. Hence, employees are to be given opportunities to improve their knowledge, skills and abilities. Employees’ development programs provide chances for promotion and career growth. Such like activities in an organization create commitment in employees, which is a basic requirement for effective functioning of organization.
The committed employee has been found to be more creative than those who are uncommitted. Sustained productivity improvement depends on the human capital of the organization (the skills, knowledge, competencies and attitudes reside in the individual employee of the organization), and its social capital (trust and confidence, communication, cooperative working dynamics and interaction, partnership, shared values, andteamwork etc.) among these individuals. A committed employee is perceived to be one who stays with the organization even in turbulent times, attends work regularly, protects organizational assets and shares the organizational objectives. Hence, it is evident that for sustained productivity, employee commitment is an important factor.
Studies made with respect to the relationship between organizational performance and the employees’ commitment. It has been found that a positive relationship exists between the two. Employees’ commitment to organization is positively related to such desirable outcomes as motivation and is negatively related to outcome as absenteeism and turnover. Highly committed employees have a weak intention to leave the organization. There is a negative relationship between turnover intentions and organizational commitment. On the other hand, there is a positive relationship between commitment and job performance. Employees who are committed to the organization are more likely not only to remain with the organization but are also likely to exert more efforts on behalf of the organization and work towards its success and therefore are also likely to show better performance than that the uncommitted employees show. Hence, the organization management needs to strengthen the employees’ commitment towards organization in order to enhance organizational performance.
Preparing and retaining of the committed employees is imperative for the organizational development, as committed employees work harder and perform their tasks with devotion and dedication. The objective of organizational development is to improve the capacity of the organization to increase its efficiency for achieving strategic objectives. Building the capacity of the organization is possible when every employee realizes his responsibility and accountability for outcomes related to his performance.
Types of employee commitments and their relationship to organizational performance
Several studies have been devoted on the importance of the employee commitment towards the organizational performances. Meyer and Allen believe that there exist a strong correlation between the employee commitment and the performance of employees and when the employees are performing, and then the performance of the organization improves automatically. There are several types of the employee commitments which affect organizational performance. These employee commitments can be characterized based on the commitment towards the job, people, own self, organization and stakeholder. These employee commitments affect positively the employee performance which in turn improves organizational performance as shown in Fig 2.
Fig 2 Types of the employee commitments and their relationship to the organizational performance
Commitment towards job – There is less study on normative commitment, and there are more theoretical developments than empirical. The normative commitment is the connection between the employees and the organizations. It is often believed that the premise of normative commitment is that the organization is willing to provide incentives to the employees. Employees are subject to regulatory pressure imposed by society before they enter an organization or join an organization. When employees believe that they can be rewarded by following social norms, employee is willing to make normative commitments. Earlier, the normative commitment was considered as an obligation to stay in the organization. Now it is believed that normative commitment implies that employees and organizations are mutually beneficial.
Employee satisfaction is the employees’ evaluation of work and has always been an important issue for the organization. It is defined it as employees’ feeling toward their job. However, only few organizations have made employees’ job satisfaction as a top priority. The organization management is to realize that employees are more inclined to choose a more productive and creative organization. So when employees think that the management can be satisfied with them, they get happiness from work and they are willing to make a commitment. The employees who are satisfied with their job are more productive and have a desire to stay more in the organization. The organization gets benefitted because of the experience gained by the employees during their longer stay.
Commitment towards people – When many aspects of employee interpersonal contact with the co-employees are positive, then it indicates that the employee personal and environmental factors are in a positive state, and he is willing to make a commitment to the organization. Such a commitment is a commitment towards people.
Some of the personal factors which affect the commitment level are the gender of the employee, their age and their education level. In a study to test if there is a difference between males and females commitment in the workplace, it has been found that there is no difference between the level of commitment based on the gender, while the result of another study has shown that the difference in commitment between males and females is based only on normative commitment, and the study has found that females have more normative commitment than males.
The age of the employees is also one of the main personal factors which affect the commitment. In a study to explore the relation between the age of the employees and the commitment, it has been found that the desire to stay in the organization for employees between the ages 31 years to 45 years and over 45 years are more than those under the age of 30 years.
While the effect of education level on organizational commitment has received different views, it has been argued that as the education level of employee increases, their commitment decrease. The degree of commitment for employees who have a low education level has been examined, and it has been found that those employees stay more in the organization.
Moreover, the environmental factors also have an impact on organizational commitment. The first environmental factor is communication. Excessive interpersonal communication makes the employee’s emotion change, causes excessive emotional expansion and loss, and eventually leads to the decrease of personal accomplishment and the decline of job burnout. Several studies show that environmental factors are the direct cause of job burnout. Contact with others, regardless of colleagues or customers, can lead to changes in mood. Excessive exposure is the main cause of problems, frustrations, and even conflicts, and this negative emotional change is the main factor in job burnout. In such negative mood changes, employees are reluctant to make a commitment to continuing work, and they even want to escape the working environment of negative emotional sources even more quickly.
On the contrary, perception and attitude are very important to the employees. The quality of communication can affect organizational commitment. It has been found that in organizations involved in total quality management, communication strengthens the organizational commitment with a difference of 59 %. Good communication enables employees to get job-related information and the task-related information which increase their level of engagement in the organization, which has a positive impact on affective, continuance and normative commitment. Also, good communication between employees and the line managers can improve the working environment, thereby reducing job burnout, and ultimately making employees commit to the organization. It has been seen that the line managers have a great impact to boost the commitment level of employees. The line managers with transformational leadership qualities influence the employees by giving them the opportunity to communicate and also they provide a space to the employees to think about their needs and give them a wider scope to be able to express their need, which leads to increase their level of commitment. Employees under line managers with transformational leadership qualities always have a great feeling and emotion toward their organization since they are sure how important they are to the organization.
Another environmental factor is the safety climate. Safety climate plays an important role in enhancing the commitment level of the employees. It has been found that as the organization provides the employees with a safe working environment and makes employees’ safety a priority, the level of the employees’ commitment increases.
Commitment towards own self – It has been seen that commitment establishes an exchange relationship between the organization and the individual, and the employees bundles themselves with the organization in return for return. When a change is made, the direction of the organization’s change affects the employee commitment. The employees are willing to accept the change and make a commitment to the organization at the same time. While the interests of the organization are contrary to the personal interests of the employees, the employees give up their commitment to the organization for their personal interests.
Employees come to the organization in order to find a job environment which meets the needs of their own ability and meets their work needs. When the organization can meet the specific needs of the individuals, skills and expectations, the commitment of employees is more and more. Such a commitment does not mean the exploitation of the employees, but the employees accept the values and goals of the organization, volunteer for the organization, and desire to be in the organization. Hence, when the organization can meet the needs of employees, employees commit themselves to their development. It has been argued that human resource management is responsible to meet the needs of employees, many practices of human resource management like developmental appraisal, promotion, compensation and training program play a vital role in employees’ commitment and motivation, when the employees feel that they work is appreciated, their willingness to stay in the organization increase, and vise versa.
Commitment towards the organization – Several people believe that employee commitment is because of the identity of the organization, and the high recognition of the organization which makes the employees commitment to their work. The identity of the organization can help employees understand their experience, organize their ideas, develop strategies, and ultimately achieve a sense of self-achievement. It has been seen that the organizational identification is related to intention to stay in the organization. Similarly, job satisfaction is also positively related to organizational commitment, while the work input and job motivation are also related to organizational identification.
In one of the study, it has been confirmed that human development is accompanied by efficient communication, which means that the organization embeds employees into the organization, and employees volunteer to work for the organization. When a team is working together, a person can recognize the pressure. This kind of pressure can increase the time for members to work together. Personal identification can attract the attention of individuals to a complex process, and eventually make individuals become more efficient for the organization. Hence, for the organization, employees are willing to commit to the organization because of their high recognition of the organization.
Commitment towards stakeholders – An important group of employee commitment is a stakeholder. Although a large amount of efforts have been made for the stakeholder theories, many important links are still missing, and these theories are related to organizational identification and commitment. Stakeholder theories show that the organization is to analyze the key components of the interests, which affect the behaviour of the stakeholders, that is, the commitment to the organization.
Different stakeholders have different importance for employees, so employee commitment to the organization gets affected to varying degrees. Different stakeholder groups can create a different impression of the organization which affects whether employees are willing to make a commitment to the organization to continue to work.
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