International Journal of Industrial Engineering & Production Research December 2021 Vol. 32, No.

4: 1-14
DOI: 10.22068/ijiepr.32.4.1

RESEARCH PAPER

Effect of Work Environment on Organizational Performance: A

Comparative Study on Arjo Dedessa and Finchaa Sugar Factory
Shimelis Mihretu1 & Mahesh Gopal2*

Received 10 May 2021; Revised 17 October 2021; Accepted 13 November 2021;

© Iran University of Science and Technology 2021

ABSTRACT
This study examines the impact of the working environment on the organizational performance of the
the Arjo Dedessa Sugar Factory (ADSF) and Finchaa Sugar Factory (FSF) in Ethiopia, the physical
working environment, work-related risks and injuries, and the psychological working environment and
social work environment. The total number of employees in the two sectors is 867 and 2824,
respectively. Selected samples of 266 and 338 employees were used as stratified random samples to
investigate work-related environmental conditions. A response rate of 60% was achieved. The
statistical software SPSS V 23.0 was used to analyze and to determine the relationship between the
dependent and independent variables using Pearson's correlation and linear regression analysis. The
results show that ADSF employees have a more modest social work environment than FSF employees,
but the physical work environment of both organizations contributes the least. Both the ADSF and FSF
physical working environments had a statistically significant impact on performance. Improvements in
the social environment have been proposed to improve the psychological health of employees. The
result is ADSF organization performance = 0.173 + 0.250 physical work environment + 0.304
administrative work environment. FSF Organization Performance = 0.157 + 0.355 Social working
Environment.

KEYWORDS: Organizational performance; Physical work environment; Work-related risk and injuries;
Psychological work environment; Social work environment.

1. Introduction1 suggested that machine noise, workload, task

Employees who concentrate on their work will be distribution, complexity, culture, history,
more valuable in the workplace. The physical, industrial environment, and employee
psychosocial and psychological aspects of the relationships also affect the organization. The
work environment influence the success of an environment refers to all the factors that affect a
organization. This is also the most important person's existence throughout life. Today's
aspect that also affects industrial enterprise. By employees have a wide range of career
making products as effective as possible, opportunities. Employee satisfaction, future
organizations strive to make successful product / performance, and organizational efficiency are all
reward transactions with the world. Industrial determined by the consistency of your work
environment such as workplace lighting, environment. The purpose of the work
temperature, ventilation, air supply rate, environment is to create a comfortable
humidification, and resident discomfort Veitch environment in which employees can work
and New sham (2000) [1]. Milton et al (2000) [2] comfortably. Ergonomic concepts allow
employees to reconcile their tasks and
requirements. This improves operator
*
Corresponding author: Mahesh Gopal productivity, employee physical, physiological,
doctorgmahesh@wollegauniversity.edu.et social, mental health and safety, and work
satisfaction and performance. The physical reality
1. Department of Mechanical Engineering, College of as part of the workplace has a profound impact
Engineering and Technology,Wollega University, Post Box
No: 395, Nekemte, Ethiopia. on the human experience, which leads to gradual
2. Department of Mechanical Engineering, College of improvement of internal communication to
Engineering and Technology,Wollega University, Post Box
No: 395, Nekemte, Ethiopia.
increase production efficiency. Becker (2002) [3]
2 Effect of Work Environment on Organizational Performance: A Comparative Study on Arjo
Dedessa and Finchaa Sugar Factory
considered workplace strategies for both Like the relationship between the factory and the
individual small start-up projects and projects workplace, the workplace becomes an integral
initiated by large corporations. Based on the part of the work. Management that controls
results, the worker determine common workplace maximizing employee productivity focuses on
preparation and architectural factors that reduce two main areas: personal motivation and work
costs and increase productivity while maintaining environment infrastructure Chandrasekar (2011)
or improving the effectiveness of the [8]. Work and personal resources predict work
organization. One of the most important human engagement, which helps improve work
needs is a working environment that helps people efficiency. Therefore, work engagement is an
work in the most comfortable environment they important indicator of employee and company
can imagine. . Buildings and air conditioning well-being. The HR manager can take several
systems are carefully crafted. The purpose of this steps to get employees involved in the work
article is to focus on thermal conditions and Backer (2011) [9]. The purpose of this survey is
measure this relationship in order to make to investigate the relationship between job
strategic decisions about the working satisfaction and the organizational environment
environment of the facility management process of public, private and international bankers. The
by Roelofsen (2002) [4]. This article reviews the results show that three subfactors of
latest management literature to increase organizational culture, such as organizational
employee participation in environmental structure, identity, and relationships, are
improvement initiatives. According to literature positively related to work satisfaction Bhutto et
reviews, four key factors that motivate employees al (2012) [10]. The purpose of this study is to
to improve environmental performance are investigate the working environment and
management involvement, employee prospects of women in terms of work-life balance
empowerment, incentives, and inputs and ratings and job satisfaction in the banking and education
Govindarajulu and Daily (2004) [5]. The main sectors. Another important goal is to look at the
purpose of this quasi-fieldwork was to find ways relationship between work-life balance's impact
of ergonomic training programs in the office to on work satisfaction, organizational initiatives to
relieve psychological tensions and improve achieve effective work-life balance, and work
control of the environment, employee satisfaction satisfaction Yadav and Dabhade (2014) [11]. The
and connectivity. A computational model was main purpose of this study was to assess the
created and used to evaluate these relationships. ergonomic aspects of the desert environment.
A total of 89 information workers were Heavy physical labor, back pain, discomfort, hot
interviewed before and after the intervention. The environments, long shifts, and different working
results show the value of integrating ergonomic hours have been identified as important
programming into the office environment to ergonomic issues. 94% of employees thought the
improve the efficient use, autonomy, and working days were very long, 79% were
surrounding comfort of the work environment dissatisfied with the work schedule, and 61%
Huang et al (2004) [6]. The purpose of this study thought the summer work environment was very
was to test an interior design approach that helps hot. At the end of the day, the employees were
employees reduce stress and increase exhausted and thought their workload was
productivity by using eco-friendly fabrics and beyond their capacity Shikdar (2015) [12]. This
furniture. The design approach combines features study adopted a quantitative approach. The data
that facilitate collaboration and coordination was collected using a self-administered
between employees with flexible ergonomic questionnaire. This study is based on a previously
furniture to increase efficiency. Environmentally validated study. The target audience consists of
friendly materials and furnishings were selected people working in the city's educational
to protect the well-being of all workers and the institutions, banking sector, and the
global environment Gutnick (2007) [7]. telecommunications industry. This dissertation
In most industries, the working environment is has the ability to support society by encouraging
dangerous and dangerous. Factors include poorly people to continue working while supporting
designed workplaces, improper furniture, lack of their own growth. Therefore, organizational staff
ventilation, poor lighting, excessive noise, poor must be motivated to work hard to achieve the
fire protection, and lack of personal protective organizational goal Raziq and Maulabakhsh
equipment. Creating a productive work (2015) [13]. The survey found that the top 10 key
environment for your organization, enterprise, or factors (teamwork, contract work, exemplary
small business is important to increasing revenue. oversight based on leadership, and equipment

International Journal of Industrial Engineering & Production Research, December 2021, Vol. 32, No. 4
 Effect of Work Environment on Organizational Performance: A Comparative Study on Arjo
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Dedessa and Finchaa Sugar Factory
provision) have a significant impact on are also important aspects to consider in the
motivation and productivity. They can carry out workplace. To assess the level of innovation in
their responsibilities with a sense of duty, the company, the author Kuzmin et al (2020) [22]
humility, and reliability because they are highly improved the method based on the use of a three-
motivated Joseph (2015) [14]. Independent dimensional spatial model of the innovative
leadership and work environment variables can capacity dependency on the level of the load
represent teacher performance. However, vector of the company's technology, increase
independent variables such as membership innovative technology and resources. The AHP
incentives did not have a sufficiently substantial model is developed to form an integrated method
effect. The data was evaluated using the latest for assessing our ability to innovate. Cera and
technology namely Structural Equation Modeling Kusaku (2020) [23] surveyed the corporate
(SEM) based on Partial Least Squares (PLS) culture; work environment, training and
methods. As a result, principal leadership and a development, and management are variables that
positive work environment help teachers perform affect an organization's performance. The survey
better Hartinah et al (2020) [15]. According to includes a sample of 162 government employees.
Pech and Slade (2006) [16], the focus is not on Results were obtained using static tests such as
the actual cause of withdrawal, but on withdrawal Cronbch Alpha, KMO, Bartlett, factor analysis,
symptoms such as distraction, indifference, and correlation, and regression. The study shows that
high absenteeism. In recent years, employee variables such as work environment, training
comfort in the workplace, which is determined by development, and management are important
workplace conditions and environment, has been determinants of a company's performance. The
recognized as an important factor in determining COVID19 pandemic puts organizations around
productivity. Hameed and Amjad (2009) [17] the world in a difficult position. The selection
considered workplace design to improve process, employee involvement, training, and
employee satisfaction and productivity. further educational activities are current
According to the author, 89% of respondents challenges in human resource management. The
positively rated the design of the organization. author Ahmed et al (2020) [24] tested the
Almost 90% of executives believe that good conceptual framework and proposed Structured
workplace design is critical to improving Equation Modeling (SEM) for transforming a
employee productivity. Employee participation physical workplace into a virtual workplace.
has a significant impact on a company's Managers plan to engage employees efficiently.
competitiveness. To be more productive, Human resource development is an outstanding
companies must have the freedom to design their and important success in achieving high
workplaces and avoid repetitive workflows, in employee performance. Researcher Yogan et al
addition to providing workers with superior (2020) [25] analyzed the impact of the working
equipment and other equipment Patro and environment. Structural equation modeling
Chandra Sekhar (2013) [18]. After examining (SEM), applied to the study using saturated
different departments and office furniture, issues samples from seven work areas, is positive and
such as dissatisfaction, workplace, and built important for analyzing the relationship between
atmosphere play an important role in reducing work environment and organizational culture, and
employee efficiency Croome (1997) [19]. employee performance. Meybodi (2021) [26]
According to Nitisemito (1992) [20], the work proposed a fuzzy inference system method for
environment impacts employee morale both identifying risks in the manufacturing process of
externally and internally, allowing tasks to be a product. The authors conclude that the final
performed quickly. The physical characteristics result is the proposed methodology of this study
of the work environment can have a significant for prioritizing product improvement projects
impact on the efficiency, health and safety, according to the identified risk classification and
comfort, concentration, job satisfaction, and self- prioritization, and the risk ranking of the
confidence of the people working in the production process. The objectives of this study
organization. According to Sedarmayanti (2003) are: the impact of organizational involvement on
[21], a good working environment is one in work satisfaction, the impact of the work
which people can work in an ideal, safe, healthy environment on work satisfaction, the impact of
and comfortable way. Building construction and organizational involvement on teacher
age, workplace composition, workplace setup, performance, the impact of the work environment
decoration, device design, efficiency, space, heat, on teacher performance, It was to analyze the
airflow, lighting, sound, vibration and radiation impact of work, satisfaction with teacher

International Journal of Industrial Engineering & Production Research, December 2021, Vol. 32, No. 4
4 Effect of Work Environment on Organizational Performance: A Comparative Study on Arjo
Dedessa and Finchaa Sugar Factory
performance. The author Haerofiatna et al (2021) organization. Employee performance is heavily
[27] concluded that the work environment has a influenced by factors such as plant layout design,
significant impact on teacher performance. Work system planning, office design, furniture, noise
satisfaction does not significantly affect teacher levels, and temperature. Employee tension and
performance. The purpose of this study is to malaise are likely to escalate from improperly
investigate the factors that affect occupational placed standard furniture and noisy
safety by implementing the steps of the CRISP environments, straining the back, neck and eyes.
approach. The results show clear evidence of a As a result of these negative consequences, there
very young age, often diploma-educated and with is a high rate of incompetence, absenteeism,
low experience of serious accidents such as demoralization and indifference to work.
bruising, injury or twisting Khosrowabadi et al According to Anzi (2009) [29], employee
(2019) [28]. involvement in an organization is significant in
error rates, degree of innovation, collaboration
2. Conceptual Framework with co-workers, absenteeism, and the number of
The conceptual Framework identifies hours they spend, especially in their immediate
independent variables such as physical, environment, affect the work of the company.
psychological, work-related risks and injuries, The model was built on the researcher's
social and administrative work environments as perception of the ADSF and FSF issues and the
factors that affect employee performance and results of reading the literature.

Fig. 1. Conceptual framework

3. Data Analysis and Findings formula for finite population correction is used.
3.1. Sample size determination
2
To calculate the sample size, Daniel (1999) [30] n'ˈ= (2)
2 2
2
nˈ= 2 (1)
Where,
n' - Sample size with finite population correction,
Where, N - Population size,
n - Sample size, Z - Z statistic for a level of confidence,
Z - Z statistic for a level of confidence, P - Expected proportion (in proportion of one),
P - Expected prevalence or proportion (in and
proportion of one; if 20%, P = 0.2), and d - Precision (in proportion of one).
d - Precision (in proportion of one; if 5%, d
=0.05).
4. Research Methodology
4.1. Research design
3.2. Finite population correction
This study by Arjo Didessa and Finchaa Sugar
If the estimated sample size is less than or equal
Factory used a descriptive study design to
to 5% of the population size (n/N ≤ 0.05), the
investigate the impact of the work environment
above sample size formula is true (Daniel, 1999)
on organizational success. Descriptive research
[30], Naing et al, (2006) [31]. If the proportion is
design methods helpful to find out how your
greater than 5% (n/N >0.05), the following

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 Effect of Work Environment on Organizational Performance: A Comparative Study on Arjo
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Dedessa and Finchaa Sugar Factory
work environment affects industry performance. sampling range of 867 and a sample size of 266
This is a convenient way to collect information selected, Fincaa has a sampling range of 2824
about the characteristics of the sample and a sample size of 338 selected. Tables 1 and 2
population, current practices, working show a sample that includes senior management,
conditions, and work requirements. mid-career management, managers,
administrators, and lower-level employees.
4.2. Target population
The term "population analysis" refers to all the 4.3. Data source and types
items from which all conclusions are drawn by Throughout the review of this report, researchers
Igella (2014) [32]. For this analysis, data was used both primary and secondary data. The data
collected at Arjo Dedessa and Fincha Sugar was collected using questionnaires created by
Factory. Sampling details are provided by the other
human resource department. Arjo Dedessa has a

Tab. 1. Arjo distribution of population and sample size

Sl. Department Population Sample size Remarks
No Employees TM Total Percentage

1 Agricultural Operation 212 64 1 65 24% (212/867)*266=65

2 Supply and Facility 220 66 1 67 25% (220/867)*266=67
Management
3 Factory Operation 386 117 1 118 44% (386/867)*266=118
4 Human Resource 31 9 1 10 4% (31/867)*266=10
Management
5 Finance 18 5 1 6 2% (18/867)*266=6
Total 867 261 5 266 100%

Tab. 2. Finchaa distribution of population and sample size

Sl. Department Population Sample size Remarks
No Employees TM Total Percentage

1 Agricultural Operation 1052 125 1 126 37% (1052/2824)*338=126

2 Supply and Facility 688 81 1 82 24% (688/2824)*338=82
Management
3 Factory Operation 880 104 1 105 31% (880/2824)*338=105
4 Human Resource 154 18 1 19 6% (154/2824)*338=19
Management
5 Finance 50 5 1 6 2% (50/2824)*338=6
Total 2824 333 5 338 100%

researchers. The data was collected through Where,

questionnaires and surveys of respondents from
ArjoDedessa and Finchaa sugar mills. Journal ∑ni 1 Xi
articles, printed notes, internet websites, and (4)
n
document reports are used to create surveys, ∑
Getamesay (2016) [33]. (5)

4.4. Method of data analysis Xi - The response of respondents for items in the
The data collected is statistically compiled and independent variables.
analyzed using SPSS version 23 software. A Yi - The response of respondents for items the
statistical tool called correlation analysis was independent variables.
used to determine goals and test the relationships X - Average/Mean/ of the overall responses for
between variables. the items in independent variable.
Ȳ- Average /Mean/ of the overall responses for
∑ the items in dependent variable.
(3) n - Sample size
∑ ∑

International Journal of Industrial Engineering & Production Research, December 2021, Vol. 32, No. 4
 6 Effect of Work Environment on Organizational Performance: A Comparative Study on Arjo
Dedessa and Finchaa Sugar Factory
Tab. 3. Reliability test
Items Number of Cronbach’s Alpha
Items ADSF FSF
Organizational Performance 10 0.901 0.906
Physical work environment 20 0.885 0.900
Work related risk and injuries 15 0.916 0.937
Psychological work environment 5 0.711 0.898
Social work environment 10 0.821 0.874
Administrative work environment 9 0.862 0.754

Y β β X β X β X β X Ԑ (6) questionnaires distributed, and the report

considered the physical working environment as
When one of the factors influencing the performance of
Y=dependent variable employees and the company. Table 4 shows that
β1, β2, β3…are coefficients the average physical working environment for
Х1, Х2, Х3… Independent variables ADSF is 3.77. This is a moderate mean score.
The effect of the independent variable on the This is also explained by the fact that on average
dependent variable (work environment effect) 67.6% of employees disagree (negatively) with
was determined by regression analysis their current physical work environment.
(organizational performance). The results Employees report that the current physical work
evaluated the frequency of interactions between environment makes it difficult to work safely and
variables and the effect of independence on the participate at a higher level. Although 3.1% of
dependent variable. employees disagree (positively) with the current
The Cronbach's alpha is an internal consistency, a physical work environment. Employees said that
measure of how closely a collection of items is the current physical work environment is good
linked as a group, and is used to assess reliability. for them, and the remaining 29.4% people rate
This alpha method by Cronbach was accurate to the physical work environment as undecided for
60 items to measure employee views on the efficiency (neutral). From these answers, ADSF
impact of the work environment, and these 10 employees are vulnerable to physical workplace
items were used to measure performance architecture, office equipment, work tools,
components, as shown in Table 3 is shown. equipment, lack of ventilation, inadequate
Next, need to analyze the data using these lighting, excessive heat, long working hours, and
summed scales or subscales, rather than heavy organizational workloads. They may also
individual objects. If one don't do this, your be dissatisfied with supervisory support and
product will be unreliable at best and, in the coaching. The FSF's average physical working
worst case, unsafe. George and Mallery (2003) environment average is 3.83, which is a high
[34] does not provide accurate estimates for mean score. This is also supported by the fact that
individual objects. Include the following 70.9% of employees disagree (negatively) with
guidelines: “=>0.9 – Excellent, = >0.8 – Good, = the current physical working climate. Employees
>7 – Acceptable. 6 – Questionable, = > .5 – Poor, reported that in the current physical working
and = < .5 – Unacceptable” environment, it is difficult to work safely and
participate at a higher level. However, 4.4% of
5. Results and Discussions workers (positively) agree with the current
5.1. Physical work environment of ADSF physical working environment. Employees said
that the current physical work environment is
and FSF
really good, and the remaining 24.6
Employees at both sugar factory responded to the

Tab. 4. Employees response to physical working environment

Organiza Strongly Agree Agree Not Sure Disagree Strongly Mean St.
Item tion disagree Dev.
Freq. % Freq. % Freq. % Freq. % Freq. %
Average ADSF 22 13.8 86 53.8 47 29.4 4 2.5 1 .6 3.77 .73
FSF 36 17.7 108 53.2 50 24.6 8 3.9 1 .5 3.83 .77
ADSF Overall Average Mean= 3.77, Disagree= 3.1%, Agree= 67.6%, Undecided=29.4%
FSF Overall Average Mean= 3.83, Disagree= 4.4%, Agree= 70.9%, Undecided=24.6 %

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 Effect of Work Environment on Organizational Performance: A Comparative Study on Arjo
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Dedessa and Finchaa Sugar Factory
Tab. 5. Employees response to work-related risk and injuries
Organi Strongly Agree Agree Not Sure Disagree Strongly disagree Mean St.
Item zation Freq. Freq. % Freq. % Freq. % Freq. % Dev.
%
Average ADSF 22 13.8 99 61.9 25 15.6 13 8.1 1 .6 3.80 .79
FSF 43 21.2 97 47.8 36 17.7 25 12.3 2 1.0 3.75
ADSF Overall Average Mean= 3.80, Disagree=8.7%, Agree=75.7%, Undecided=15.6%
FSF Overall Average Mean= 3.75, Disagree= 13.3%, Agree= 69%, Undecided=17.7%

% rate the physical work environment as higher level. However, 8.7% of employees
undecided for efficiency (neutral). We may infer (positively) agree with the current work-related
from these responses that FSF employees are risks and injury environment. Employees said
dissatisfied with their organization's physical that the current physical work environment is
workplace architecture, office layout, working good for them, and the remaining 15.6 % the
tools, furniture, ventilation, light, temperature, work environment with work-related hazards and
and working hours and that FSF's physical work injuries as undecided for efficiency (neutral).
environment requires improvement in order to From these answers, we can conclude that ADSF
improve organizational efficiency. employees are dissatisfied with work-related
risks and the environment of injury. Employees
5.2. Work-related risk and injuries of are facing an injury or related to the workplace,
ADSF and FSF mechanical injury, burns, fall down, excessive
The responses in Table 5 show the relationship vibration, excessive pressure, toxic gas, dust,
between work-related risks and injuries and chemicals, inadequate work design, physical
organizational and employee efficiency. Table 5 tension Risk, repetitive movements, lack of
shows that the average work environment for proper toilets. The FSF's workplace risk and
ADSF work-related risks and accidents is 3.80, injury work environment averages 3.75, which is
which is a high mean score. This is also a modest mean score. The average percentile also
explained by the fact that 75.7% of employees explains this. 69% of employees (negatively)
(negatively) agree with existing work-related agree with new work-related risks and injury
risks and injury situations. Employees said that in situations. Employees said current work-related
today's dangerous work environment, it is very risks and injury conditions make it difficult to
dangerous to work safely and participate at a work safely

Tab. 6. Employees response to psychological work environment

Organiza Strongly Agree Agree Not Sure Disagree Strongly Mean St.
Item tion disagree Dev.
Freq. Freq. % Freq. % Freq. % Freq. %
%
Average ADSF 14 8.8 71 44.4 58 36.3 15 9.4 2 1.3 3.50 .83
FSF 35 17.2 64 31.5 40 19.7 52 25.6 12 5.9 3.28
ADSF Overall Average Mean= 3.50, Disagree= 10.7%, Agree=53.2%, Undecided=36.3%
FSF Overall Average Mean= 3.28, Disagree= 31.5%, Agree= 48.7%, Undecided=19.7%

and participate at a higher level. However, 13.3% shows that the working environment ADSF
of employees do not (positively) agree with Psychological has an average value of 3.50,
existing work-related risks and injury situations. which can be considered as a moderate mean
Employees stated that the current physical work score. This is because the average percentile of
environment is very comfortable, and 17.7% 53.2% agrees that the current psychological work
explained that work-related hazards and injured environment contributes to higher work
work environments are not definitive in terms of performance, 10.7% of the respondents disagree
efficiency (neutral). with the psychological work environment, and
the remaining 36.3% are undecided (neutral).
5.3. Psychological work environment of From these responses, we can conclude that
ADSF and FSF ADSF's psychological working environment has
Table 6 shows the relationship between the a moderate relationship with employee and
psychological work environment and the success organizational performance. 68 (42.5) % of
of the organization and employees. Table 6 employees agree that workplace noise pollution

International Journal of Industrial Engineering & Production Research, December 2021, Vol. 32, No. 4
 8 Effect of Work Environment on Organizational Performance: A Comparative Study on Arjo
Dedessa and Finchaa Sugar Factory
affects their performance. The remaining 33 performance. 69 (34%) of workers agree that
(20.6%) employees are uncertain whether workplace noise distractions adversely affect
workplace noise will distract them. Workplace their performance. The remaining 30 (14.8%)
noise distractions affect employee performance employees are uncertain whether workplace noise
and affect the overall performance of the will distract them. Workplace noise distractions
organization because employees feel affect employee performance and affect the
uncomfortable and lose focus when performing overall performance of the organization because
tasks. For the FSF, the FSF-Psychological Work employees feel uncomfortable and lose focus
Environment has an average value of 3.28, which when performing tasks.
can be considered a low mean score. This is
because the average percentile of 48.7% agrees 5.4. Social work environment of ADSF
that the current psychological work environment and FSF
contributes to higher work performance, 31.5% For both sugar factories, the responses in Table 7
of the respondents disagree with the show the relationship between the social work
psychological work environment, and the environment and organizational and employee
remaining 19.7% are undecided (neutral). From performance. Table 7 shows that the social work
these responses, we can conclude that the FSF's environment that encourages company to build a
psychological work environment is reasonably conducive social work environment. ADSF
related to employee and organizational

Tab. 7. Employee’s response to social work environment

Organ Strongly Agree Agree Not Sure Disagree Strongly Mean St.
Item ization disagree Dev.
Freq. Freq. % Freq. % Freq. % Freq. %
%
Average ADSF 26 16.3 64 40.0 59 36.9 10 6.3 1 .6 3.65 .84
FSF 35 17.2 108 53.2 48 23.6 11 5.4 1 .5 3.81 .59
ADSF Overall Average Mean= 3.65, Disagree= 6.9%, Agree= 56.3%, Undecided=23.6%
FSF Overall Average Mean= 3.81, Disagree= 5.9%, Agree= 70.4%, Undecided=23.6%

Tab. 8. Employees response to Administrative work environment

Organizati Excellent Very good Good Fair Poor Mean St.
Item on Freq. % Freq. % Freq. % Freq. % Freq. % Dev.
Average ADSF 14 8.8 67 41.9 54 33.8 20 12.5 5 3.1 3.40 .92
FSF 38 18.7 137 67.5 26 12.8 2 1.0 - - 4.03 .59
ADSF Overall Average Mean= 3.40, Disagree= 15.6%, Agree= 50.7%, Undecided=33.8%
FSF Overall Average Mean= 4.03, Disagree= 1%, Agree= 86.2%, Undecided=0%

respondents claim that their employees have 5.5. Administrative work environment of
good relationships with them and are polite. This ADSF and FSF
was supported by a medium mean of 3.65 and a The responses in Table 8 show the relationship
standard deviation of 0.84 in the social work between the management work environment and
climate group. However, they argued that these organizational and employee performance in
factory workers were not involved in decision- both sugar factories. Respondents felt that
making, which had a negative impact on their ADSF's management work environment was
social working environment. FSF respondents favorable because all employees of the company
feel that the most important sub-environment had all the skills they needed to perform their
(work environment element) that helps a tasks and there was room for further
company build a comfortable working development. This was assured by a moderate
environment is that employees have a medium mean of 3.40 and a corresponding
comfortable relationship with them and are standard deviation of 0.92687. Nonetheless, they
polite. This was supported by a high mean of said nothing about the size of their salaries,
3.81 and a standard deviation of 0.84 in the claiming that this made the administration's
social work climate group. However, they argued working environment hostile. This was
that these factory workers were not involved in represented by a standard deviation of 1.31 and a
decision-making, which had a negative impact least mean of 3.21. In addition, these workers are
on their social working environment. dissatisfied with the lack of authority they have

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 Effect of Work Environment on Organizational Performance: A Comparative Study on Arjo
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Dedessa and Finchaa Sugar Factory
for their work. In the case of the FSF, perform their tasks and have the opportunity to
respondents rate the administrative work be promoted. This was assured by a moderate
environment favorable because all employees of mean of 4.03 and a corresponding standard
the company have all the skills they need to deviation of 0.59.

Tab. 9. Employees response to Organizational Performance

Organizati Excellent Very good Good Fair Poor Mean St.
Item on Freq. % Freq. % Freq. % Freq. % Freq. % Dev.
Average ADSF 16 10.0 64 40.0 61 38.1 15 9.4 4 2.5 3.45 .88
FSF 26 12.8 91 44.8 67 33.0 15 7.4 4 2.0 3.59
ADSF Overall Average Mean= 3.45, Excellent= 10%, Very good= 40%,
Good=38.1%, Fair = 9.4%, Poor = 2.5%
FSF Overall Average Mean= 3.59, Excellent = 12.8%, Very good= 44.8%,
Good = 33%, Fair =7.4%, Poor = 2%

5.6. Organizational performance of ADSF performance.

and FSF
For both sugar factories, the responds in Table 9 5.7. Correlation analysis
show the relationship between organization and The main purpose of Pearson correlation analysis
employee efficiency. Table 9 shows that the is the interaction between selected internal
average ADSF working environment for factors (physical work environment, work-
organizational success is 3.45. This is a modest related risks and injuries, psychological work
mean score. The average percentile also explains environment, social work environment,
this. 10% of respondents strongly agree with the management work environment) and
current company's performance in terms of organizational efficiency. Is to determine the
contributing to higher performance (excellent), degree of. The answers are related to Tables 10
and 40% agree with the current company's and 11.
performance in the work environment (very
good), 38.1% answered well. In contrast, 5.8. Multiple regression analysis
employees responded to 9.4% of the time when The results are shown in Tables 12 and 13. The
the organization's performance was fair and physical work environment, work-related risks
2.5% of the time when the organization's and injuries work environment, psychological
performance was poor. From these answers, it work environment, social work environment, and
can be inferred that the ADSF organizational management work environment all make up
performance work environment has a moderate 40.0% (R2 = 0.400) of the dependent variable of
relationship to employee and organizational ADSF and the FSF (Organizational
performance. Performance) is 39.1% (R2 = 0.391). This means
For the FSF, Table 9 shows that the average that the independent variables determine 40.0%
successful work environment for an organization and 39.1% of the organizational performance of
is 3.59. This is a modest mean score. This is also the ADSF and FSF, while other factors not
explained by the average percentile. This is considered to determine the remaining 60.0%
because 12.8% of respondents strongly agree and 60.9% of this study. Based on the results, for
(excellent) with the current organization's F = 20.522 and 25.337, which are greater than 1
performance to contribute to higher work and P<0.01, respectively, the determinant
performance, and 44.8% agree (very good)with combinations shown in Tables 14 and 15 are
the current organization's performance, 33% statistically significant and optimistic at 95%.
responds well. Employees, meanwhile, said that We can conclude that it has a positive impact on
7.4% of their organization's performance was a company's performance.
fair, and 2% concluded that their organization's We can conclude that the combination of
performance was poor. From these answers, we determinant factors has a positive impact on
can infer that the FSF's organizational organizational performance that is statistically
performance work environment has a moderate
relationship to employee and organizational

International Journal of Industrial Engineering & Production Research, December 2021, Vol. 32, No. 4
 10 Effect of Work Environment on Organizational Performance: A Comparative Study on Arjo
Dedessa and Finchaa Sugar Factory
Tab. 10. ADSF Correlation Analysis between Independent variables and Dependent
Variable
PH WR PS SO AD OP
Physical Work Pearson Correlation 1
Environment Sig. (2-tailed)
Work Related Risk Pearson Correlation .287** 1
Sig. (2-tailed) .000
Psychological Work Pearson Correlation .278** .492** 1
Environment Sig. (2-tailed) .000 .000
Social Work Pearson Correlation .115 .425** .508** 1
Environment Sig. (2-tailed) .148 .000 .000
Administrative work Pearson Correlation .301** .263** .714** .358** 1
Environment Sig. (2-tailed) .000 .001 .000 .000
Organizational Pearson Correlation .389** .368** .532** .313** .544** 1
Performance Sig. (2-tailed) .000 .000 .000 .000 .000
**. Correlation is significant at the 0.01 level (2-tailed).

Tab. 11. FSF Correlation Analysis between Independent variables and Dependent Variable
PH WR PS SO AD OP
Physical Work Pearson Correlation 1
Environment Sig. (2-tailed)
Work Related Risk Pearson Correlation .480** 1
Sig. (2-tailed) .000
Psychological Work Pearson Correlation .430** .420** 1
Environment Sig. (2-tailed) .000 .000
Social Work Pearson Correlation .446** .439** .555** 1
Environment Sig. (2-tailed) .000 .000 .000
Administrative work Pearson Correlation .025 .130 .103 .151* 1
Environment Sig. (2-tailed) .727 .065 .146 .032
Organizational Pearson Correlation .441** .454** .415** .555** .164* 1
Performance Sig. (2-tailed) .000 .000 .000 .000 .020
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).

Tab. 12. ADSF, Multiple Linear Regression Analysis Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate
a
1 .632 .400 .380 .69987

Tab. 13. FSF, Multiple Linear Regression Analysis Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate
1 .626a .391 .376 .69214
a
Predictors: (Constant), physical work environment, work-related risk environment, psychological work
environment, administrative work environment.

Tab. 14. ADSF ANOVAa

Model Sum of Squares df Mean Square F Sig.
1 Regression 50.261 5 10.052 20.522 .000b
Residual 75.433 154 .490
Total 125.694 159

Tab. 15. FSF ANOVAa

Model Sum of Squares df Mean Square F Sig.
1 Regression 60.689 5 12.138 25.337 .000b
Residual 94.375 197 .479
Total 155.064 202

relevant and optimistic at 95 % based on the results F= 20.522 and 25.337, respectively,

International Journal of Industrial Engineering & Production Research, December 2021, Vol. 32, No. 4
 Effect of Work Environment on Organizational Performance: A Comparative Study on Arjo
11
Dedessa and Finchaa Sugar Factory
which are greater than 1 and P < 0.01. We can environment will have a 7.6% impact on
easily compare the relative contributions of the organizational results. Similarly, a 1%
various variables by examining the beta values improvement in the psychological work
under the coefficients in Tables 16 and 17. The environment has a 6.3% impact on
larger the beta, the greater the contribution. organizational efficiency.
Standard coefficients 0.317 (administrative work In this analysis, the multiple regression equation
environment), 0.207 (physical work is based on two sets of variables: the dependent
environment), 0.166 (psychological work variable (organizational performance) and the
environment), 0.128 (work-related risks and independent variable (administrative, physical,
injuries work environment), 0.037 (social work psychological, risk and injuries and social
environment), ADSF, management, physical, working environment). The main goal of using
psychological , Work-related risks and injuries, regression equations in this study is to improve
and the social work environment all have a the ability of researchers to describe, understand,
positive impact on the performance of the predict, and monitor described variables.
organization (social work environment). Organizational performance
As a result, a 1% increase in the management
work environment has a 31.7% impact on = f PH, WR, PS, SO and AD (7)
organizational efficiency, and a 1% increase in 1
the physical work environment has a 20.7% (8)
impact on performance. A 1% improvement in
psychological work environment has a 16.6% Where,
impact on organizational results. A 1% increase OP - Organizational Performance,
in work-related injuries and a 12.8% increase in PH - Physical Work Environment,
the risk environment will affect the company's WR - Work-Related Risk and Injuries,
performance. PS - Psychological Work Environment,
Similarly, a 1% improvement in the social work SO - Social Work Environment,
environment impacts 3.7% on organizational AD - Administrative Work Environment.
performance. FSF's social, labor-related risks Mathematically,
and injuries, physical, administrative and
Yi β β X β X β X
psychological working environments all have a
positive impact on organizational performance, β X β X β X (9)
with standard coefficients of 0.355 (social work
environment) and 0.183 (labor-related risk and Where Y is the dependent variable-
injuries work environment), 0.166 (physical organizational performance X2, X3, X4, X5, X6
work environment), 0.076 (administrative work and X7 are the Independent β 1 is the intercept
environment), or 0.063 (psychological work term- it gives the mean or average effect on Y of
environment). As a result, a 1% increase in the all the variables excluded from the equation,
social work environment has a 35.5% impact on although its mechanical interpretation is the
the organizational performance, and a 1% average value of Y when the stated independent
increase in the work-related risk and injury variables are set equal to zero. β2, β3, β4, β5, β6
environment has a 18.3% impact on the and β 7 refer to the coefficient of their respective
organizational performance. A 1% improvement independent variable which measures the change
in the physical working environment has a in the mean value of Y, per unit change in their
16.6% impact on organizational efficiency. A respective independent variables.
1% improvement in the management work

Tab. 16. FSF Multiple Regression Coefficientsa

Model Un standardized Standardized
Coefficients Coefficients
B Std. Error Beta t Sig.
(Constant) .173 .378 .459 .647
Physical work environment .250 .082 .207 3.062 .003
Work related risk and injuries work environment .142 .085 .128 1.675 .096
Psychological work environment .178 .111 .166 1.607 .110
Social work environment .039 .078 .037 .497 .620
Administrative work environment .304 .088 .317 3.451 .001
Dependent Variable: Organizational Performance

International Journal of Industrial Engineering & Production Research, December 2021, Vol. 32, No. 4
 12 Effect of Work Environment on Organizational Performance: A Comparative Study on Arjo
Dedessa and Finchaa Sugar Factory
Tab. 17. FSF Multiple Regression Coefficientsa
Model Un standardized Standardized
Coefficients Coefficients
B Std. Error Beta t Sig.
(Constant) .157 .420 .374 .709
Physical work environment .187 .076 .166 2.453 .015
Work related risk and injuries work environment .167 .062 .183 2.713 .007
Psychological work environment .046 .051 .063 .896 .371
Social work environment .389 .078 .355 4.977 .000
Administrative work environment .112 .083 .076 1.347 .180

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