Journal of Management Development

Employee involvement and organizational effectiveness

Edwinah Amah Augustine Ahiauzu
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Edwinah Amah Augustine Ahiauzu, (2013),"Employee involvement and organizational effectiveness",
Journal of Management Development, Vol. 32 Iss 7 pp. 661 - 674
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Employee
Employee involvement and involvement
organizational effectiveness
Edwinah Amah
Department of Management Sciences, Rivers State College of Arts and Science,
Port Harcourt, Nigeria, and
661
Augustine Ahiauzu Received September 2010
Department of Management, Faculty of Management Sciences, Revised February 2011
May 2011
Rivers State University of Science and Technology, Port Harcourt, Nigeria
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Accepted June 2011

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 1 ¼ strongly disagree to 5 ¼ strongly agree)
and Spearman’s 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 (Rho ¼ 0.515, po0.05) shows a positive
significant relationship between employee involvement and profitability. The result (Rho ¼ 0.126,
po0.05) shows a positive relationship between employee involvement and productivity. The result
(Rho ¼ 0.256, 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 Journal of Management Development
Vol. 32 No. 7, 2013
supervision to carry out their jobs efficiently for the good of the organization. It has pp. 661-674
r Emerald Group Publishing Limited
also been argued that strategic group membership and associated collective 0262-1711
behaviours are the primary sources of durable differences in firm profitability and DOI 10.1108/JMD-09-2010-0064
 JMD organization effectiveness (Caves and Porter, 1977; Porter, 1979). Organizational cultures
32,7 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.
662 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
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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 organization’s
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 one’s
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
 requires sharing information and knowledge, because employees require more Employee
knowledge to make a meaningful contribution to the decision process (McShane and involvement
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. 663
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
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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
 JMD measurement (Blenkhorn and Gaber, 1995). However, performance measurement that is
32,7 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
664 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 organization’s 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
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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 organization’s 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 management’s 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
 expenditures) may jeopardize the viability of a business. In addition to deducting Employee
business expenses, opportunity costs are also deducted when computing economic involvement
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 study’s organizational
effectiveness measures, emphasizing the organization’s ability to generate income, are in
keeping with a definition of effectiveness that focuses on an organization’s capacity to 665
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.
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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 company’s 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
company’s sales revenue (from that market) divided by the total sales revenue available
in that market. It can also be expressed as a company’s 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
 JMD causes change in the share market value; the reason can be political ups and downs,
32,7 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
666 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
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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 Yamen’s 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
Cronbach’s a coefficients were obtained: employee involvement (0.73), profitability
(0.72), productivity (0.76) and market share (0.73). In accordance with Nunnally (1978)
 model, which recommends a bench mark of 0.70, the reliability levels of the study scale Employee
are acceptable. Spearman’s rank-correlation statistical tool was used to test the involvement
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 57.1 667
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,
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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 (x ¼ 4.35). 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 (x ¼ 4.40) 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 (x ¼ 4.24) 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 (x ¼ 3.9) 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 Spearman’s rank-correlation
coefficient statistical tool was used to test the hypothesis. The result (r ¼ 0.515
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 Table I.
Market share 320 3.9232 0.49134 0.212 0.136 Descriptive statistics
Source: SPSS output on the analysis of research data of study variables
 JMD Level of participation Degree to
32,7 by organization’s which a
members in decision business is
making profitable

Level of participation by
668 Spearman’s organization’s members
r 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
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Table II.
Significant (2-tailed) 0.000 0.000
Spearman’s rank
n 320 320
correlation between
employee involvement Note: **Correlation is significant at the 0.01 level (two-tailed)
and profitability Source: SPSS output on the analysis of research data

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 Spearman’s rank-correlation
coefficient statistical tool was used to test the hypothesis. The result (r ¼ 0.126 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 Spearman’s rank-correlation
coefficient statistical tool was used to test the hypothesis. The result (r ¼ 0.256 pp0.05)

Level of participation Total output

by organization’s over total
members in decision input at a
making given time

Level of participation by
organization’s members Correlation
Spearman’s r in decision making coefficient 1.000 0.126*
Significant (2-tailed) 0.000 0.024
n 320 320
Total output over total Correlation
input at a given time coefficient 0.126* 1.000
Table III. Significant (2-tailed) 0.024 0.000
Spearman’s rank n 320 320
correlation between
employee involvement Note: *Correlation is significant at the 0.05 level (two-tailed)
and productivity Source: SPSS output on the analysis of research data
 (see Table IV) shows that there is significant positive relationship between employee Employee
involvement and market share in the banks. This means that increase in employee involvement
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 bank’s profitability;
employee involvement is associated with the bank’s productivity; and employees 669
involvement is associated with increase in the bank’s market share.

Discussion and implications

The discussion of findings will be undertaken in relation to the hypotheses:
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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 organization’s 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
organization’s Company’s sales as
members in percentage of sales
decision making in its target market

Level of participation by
Spearman’s organization’s members in Correlation
r decision making coefficient 1.000 0.256**
Significant (2-tailed) 0.000 0.000
n 320 320
Company’s sales as
percentage of sales in its Correlation
target market coefficient 0.256** 1.000
Significant (2-tailed) 0.000 0.000 Table IV.
n 320 320 Spearman’s rank
correlation between
Note: **Correlation is significant at the 0.01 level (two-tailed) employee involvement
Source: SPSS output on the analysis of research data and market share
 JMD organization (Randolph, 2000; Vroom and Jago, 1988). Organizations where employees
32,7 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
670 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.
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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 one’s own job;
it includes the power to influence decisions in the work unit and organization.
 With increase in level of involvement, the more power people tend to have over the Employee
decision, process and outcomes. Employee involvement requires sharing information involvement
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 671
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
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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
 JMD performance of the organization. This tends to increase the commitment of the
32,7 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
672 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
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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 organization’s 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.
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Corresponding author
Edwinah Amah can be contacted at: edwina4christ@yahoo.com

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