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Organizational culture and its effects on organizational performance; evidence from the Edirisinghe Trust Investment (Pvt) Ltd

Culture of an organization can be identified as the embodiment of its joint systems, beliefs, norms, ideologies, myths and rituals. Furthermore, those factors can motivate employees to become valuable sources of efficiency and effectiveness (Sudarsanam, 2010). Generally, organizational leadership is directly associated with the organizational culture and due to same, it is very difficult to change it even under good leadership (Denison, 1990). According to Kotter and Heskett (1992), corporate culture is included with a significant positive impact on the organizational long-term economic performance while highlighting all the key managerial constituencies such as customers, stockholders, and employees and leadership.

Edirisinghe Trust Investment (Pvt) Ltd (ETI) was a leading and strong finance companies registered under the Monetary Board of the Central Bank of Sri Lanka under the Finance Companies Act No. 78 of 1988, providing services in the areas of Fixed Deposits, Pawning, Gold Sales, Leasing, Hire Purchase and Property Development. It was started by Dr Soma Edrisingehe an entrepreneur, film producer, a philanthropist and a social worker in Sri Lanka. At the time the financial the crisis hit the company, ETI has over 34 billion rupees in financial strength with a customer base of over 24,000 (Mudugamuva, 2019).

After the death of the chairperson of ETI, heavy cash withdrawals took place due to false media reports published on social media. In addition, the fall of the price of gold during the same period also affected the performance of ETI. As a result of the financial crisis that emerged ETI, could not maintain their Cooperate Social Responsibilities and the new culture that prevailed was unable to cope with the challenge. Therefore, customer and employee confidence and trust about ETI was highly tainted and also accelerated employee turnover as well as the withdrawal of deposits (Srilnakamirrio,2018). As per the above facts, the sudden change in the organizational culture was directly associated with the negative performance of ETI.

References

Denison, D.R. (1990), “Corporate culture and organizational effectiveness”. New York: John Wiley.

Kotter, J.P. & Heskett, J.L. (1992). “Corporate culture and performance”. New York: Macmillan

Madugamuva M,2019 ‘ETI crisis deepens’,The morning 13 March. Available from: <http://www.themorning.lk/eti-crisis-deepens/>.[30 May 2019].

Srilnakamirrio 2018, What happened to ETI Finance?.Available from:< https://srilankamirror.com/biz/6548-what-happened-to-eti-finance>.[30 May 2019].

Sudarsanam (2010), “Creating Value from Mergers and Acquisition”. Pearson Education Ltd. UK.

Comments

  1. Chaminda SamarakoonJune 9, 2019 at 6:24 AM

    Leadership plays a huge role in organizational culture. Inspiring leaders can create cultures and departure of such leaders can change the values of an organization. steve jobs departure from apple also prompted a value change.

    ReplyDelete
  2. RuwanJune 11, 2019 at 4:59 PM

    Leadership leads the organization to the success or failure. As you mentioned leadership clearly pay the way to organization's culture and its performances. What happens to the Eti was, depositors withdrawn their deposits. Finance companies are running on deposits and loans when deposits are going down they can't operate their operations. nice right up.

    ReplyDelete
  3. Nimmitha KumarasingheJune 11, 2019 at 5:37 PM

    Studying organizational culture of an organization is important because we can find the organization's weaknesses and differences between current and desirable situation from the viewpoint of that organization's employees.

    ReplyDelete

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