Impact of Corporate Strategies on Employee’s Commitment to an Organization
Objective of the study
The primary objective of this research is to examine the impact of corporate strategies on employee commitment within organizations. To achieve this overarching goal, the study will pursue the following specific objectives:
- To analyze the relationship between different corporate strategies (growth, cost leadership, differentiation, and diversification) and levels of employee commitment.
- To investigate the mediating role of organizational culture in shaping the link between corporate strategies and employee commitment.
- To explore how leadership styles influence the relationship between corporate strategies and employee commitment.
REVIEWED OF RELATED LITERATURE
Several authors has discussed different hazards towards organizational change to be common, however, level of commitment have in numerous cases viewed to decrease the presence of upcoming barriers regarding the field (Caldwell, 2012; Choi, 2011; Bell and Omachanu, 2011; Jaros, 2010; Kogetsidis, 2012; Lines, 2004; Raukko, 2009; Smith and Lewis, 2011; Ye et al., 2007). According to McGee and Ford (1987) commitment increases personal interest for the organization, and is in turn linked to higher willingness of understanding and embracing changes. The most common definition of commitment is associated with the level of strength between individuals linkage towards the organization (Choi, 2011). Others claim commitment to be related to individual objectives matching the organization’s (Alhazemi et al., 2013; Caldwell, 2011; Choi, 2011; Jaros, 2009). Additionally, Dweyer et al. (2003) and Jaros (2009) stresses that strategic changes are determined by upper-echelons or top management teams, but transferred by middle-management; and thereby, impacts several dimensions making commitment crucial to achieve beneficial organizational changes. Different researches have defined three types of organizational commitment towards strategic change: affective, normative and continuance (Choi et al., 2011; McGee and Ford, 1987). Affective commitment is associated to employees supporting a change due to belief in entailing essential benefits, while normative commitment represents supporting changes depending on obligation. Lastly, continuance commitment is referred to as employees are committed to changes due to awareness of financial loss related to failing. The types of commitment were found to support strategic changes at different levels; affective and normative had a higher support level compared to continuance (Herscovitch and Meyer, 2002). Considering type of supporting level among employees might simplify the process of maximizing organizational commitment (Choi et al., 2011; Hersovitch and Meyer, 2002). Finally, commitment has found being linked to participation; according to Chatman et al. (1998) and Ford et al. (2008) participation adds purpose and autonomy, and thereby, creates stronger commitment. Others states participation being an underlying factor to information and understanding (Choi, 2011; Lines, 2004; Raukko, 2009; Sagie and Kolowski, 1994) decreasing mismatching objectives by widening perceptions and see related change benefits from several angels, thus increasing both employee commitment and flexibility (Ambrosini, 2012; Choi, 2011; Kogetsidis, 2012; Raman, 2009). According to Alhazemi et al. (2013) strategic changes often contains rescheduling, requiring employee flexibility to reach optimal change benefits; which increases by higher understanding (Alhazemi et al., 2013; Choi et al., 2013). Thus, next section will present flexibility as an area given strategic changes higher potential, but at the same hard to comply as individuals tend to work against uncontrollable factors.
Corporate strategies are overarching plans and approaches that organizations develop to achieve their long-term goals, maintain competitive advantage, and maximize overall performance. These strategies guide an organization’s actions, resource allocation, and decision-making processes. Here are some key types of corporate strategies:
- Growth Strategies: Growth strategies involve expanding an organization’s operations, market share, or product offerings. These strategies aim to increase revenue and market presence. Examples include market penetration (selling more of existing products to existing customers), market development (entering new markets with existing products), product development (offering new products to existing markets), and diversification (expanding into new markets with new products). Growth strategies can enhance employee commitment by providing opportunities for career advancement and personal development (Huselid, 1995).
- Cost Leadership Strategies: Cost leadership strategies focus on becoming the low-cost producer in an industry. Organizations that follow this strategy aim to offer products or services at a lower cost than their competitors. This can attract price-sensitive customers and lead to higher sales volume. However, cost-cutting measures might impact employee morale and commitment if they result in reduced resources for employee recognition and rewards (Bowen & Ostroff, 2004).
- Differentiation Strategies: Differentiation strategies emphasize offering unique and high-quality products or services that stand out from competitors. Organizations following this strategy aim to create a perception of superior value among customers. Differentiation strategies can enhance employee commitment by instilling a sense of pride in producing exceptional goods or services (Porter, 1985).
- Diversification Strategies: Diversification strategies involve expanding into new markets or industries that are not directly related to the organization’s current operations. While diversification can create growth opportunities, it may lead to uncertainty among employees if the rationale and implications of the diversification are not effectively communicated (Guest et al., 2003).
- Stability Strategies: Stability strategies involve maintaining the organization’s current operations and avoiding major changes. This approach is suitable for organizations in mature industries with stable markets. Stability strategies can provide employees with a sense of stability and consistency in their roles.
- Retrenchment Strategies: Retrenchment strategies involve scaling back or restructuring an organization’s operations to improve efficiency or cut costs. While these strategies can lead to short-term challenges, they may be necessary to ensure the organization’s long-term viability.
It’s important to note that the effectiveness of these strategies on employee commitment can vary based on factors such as organizational culture, leadership style, and communication practices. Organizations need to carefully consider the potential impact of their chosen strategy on their workforce and take measures to address any negative consequences.
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine Impact of corporate strategies on employees commitment in an organization. Banking industry forms the population of the study.
DATA PRESENTATION AND ANALYSIS
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
Table 4.2: Demographic profile of the respondents
SUMMARY, CONCLUSION AND RECOMMENDATION
It is important to ascertain that the objective of this study was to ascertain Impact of corporate strategies on employees commitment in an organization. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing Impact of corporate strategies on employees commitment in an organization
This study was on Impact of corporate strategies on employees commitment in an organization. Three objectives were raised which included; To analyze the relationship between different corporate strategies (growth, cost leadership, differentiation, and diversification) and levels of employee commitment, to investigate the mediating role of organizational culture in shaping the link between corporate strategies and employee commitment and to explore how leadership styles influence the relationship between corporate strategies and employee commitment. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from banking industry in Lagos. Hypothesis was tested using Chi-Square statistical tool (SPSS).
In conclusion, this study has explored the intricate relationship between corporate strategies and employee commitment within organizations. The findings reveal that corporate strategies play a significant role in shaping the level of employee commitment, with nuanced impacts varying across different strategies and organizational contexts.
The study found that growth strategies, such as market penetration and product development, can positively influence employee commitment by providing avenues for career progression and skill enhancement (Huselid, 1995). However, cost leadership strategies, while effective in driving cost efficiencies, may inadvertently hinder commitment if they lead to resource constraints for employee recognition and rewards (Bowen & Ostroff, 2004).
Differentiation strategies emerged as a driver of heightened employee commitment, as employees take pride in contributing to the creation of unique and high-quality products or services (Porter, 1985). Diversification strategies, on the other hand, demonstrated a potential to create uncertainty among employees, underscoring the need for transparent communication to mitigate any negative impact (Guest et al., 2003).
The study also underscores the mediating role of organizational culture, leadership styles, and communication practices. A positive organizational culture that aligns with the chosen strategy can enhance employee commitment by fostering shared values and a sense of purpose (Denison, 1990). Transformational leadership styles, characterized by inspirational vision and employee empowerment, were found to positively impact commitment (Bass, 1985).
Effective communication emerged as a crucial factor, influencing how employees perceive and react to strategic changes. Transparent communication practices that clarify the rationale behind strategic decisions can alleviate uncertainty and enhance employee commitment (Rynes et al., 2001).
However, it is important to acknowledge the study’s limitations, including its cross-sectional design, sample characteristics, and potential biases in data collection. These limitations underscore the need for further research to explore the dynamic and contextual nature of the relationship between corporate strategies and employee commitment.
Based on the findings and insights generated from this study, the following recommendations are proposed to organizations aiming to enhance employee commitment while implementing corporate strategies:
- Tailored Communication Strategies: Implement clear and transparent communication strategies when introducing strategic changes. Ensure that employees understand the rationale behind these changes, their implications, and the organization’s long-term vision. Regular communication can help mitigate uncertainty and anxiety, thereby fostering commitment
- Balanced Resource Allocation: For organizations pursuing cost leadership strategies, strike a balance between cost reduction measures and maintaining resources for employee recognition and rewards. Ensure that cost-cutting measures do not negatively impact employee morale, engagement, or commitment
- Cultivation of Differentiation Strategy: Leverage differentiation strategies to enhance employee commitment by emphasizing the unique value proposition of your products or services. Foster a sense of pride among employees for contributing to high-quality, distinctive offerings that stand out in the market
- Nurturing Positive Organizational Culture: Develop and maintain a positive organizational culture that aligns with the chosen corporate strategy. A supportive culture fosters a sense of belonging, purpose, and commitment among employees.
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