Abstract

This study assessed The effects of customer feedback on organizational performance. Data used for the study were collected through questionnaires from 50 employees in credit unions of Buea. This study exploits how customers satisfaction ratings, customer suggestions and customer complaints contribute to effective and efficiency of organizational performance. Findings reveal that while customer feedback significantly enhances organizational performance, its impact depends largely on how promptly and strategically it is acted upon. Recommendations include the establishment of structured feedback systems, regular staff training, and integration of feedback into performance evaluation mechanisms. This research contributes to the understanding of how member-driven institutions like credit unions can leverage customer insights to drive sustainable growth and member satisfaction on organizational performance and customer feedback.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Organizational performance has been a focal point of human enterprise for centuries, as businesses and institutions have sought to maximize their outputs while minimizing inefficiencies. Historically, organizational performance was primarily measured in terms of profitability and productivity, particularly during the industrial revolution when businesses focused on mass production and efficient resource utilization. During this period, organizations depended on rigid hierarchical structures and manual labor to achieve performance goals, often neglecting the human and customer-centric elements that are pivotal today. By the early 20th century, the emergence of scientific management, spearheaded by Frederick Taylor, introduced methods to optimize individual and organizational efficiency through standardization and task specialization.

This approach significantly improved productivity but did little to account for employee and customer satisfaction, elements now recognized as critical to organizational success.

In the global context, performance enhancement has emerged as a critical focus area for businesses across industries and sectors. Multinational corporations like Amazon, Google, and Microsoft have revolutionized performance management through innovative approaches to process optimization and communication strategies. For instance, Amazon’s sophisticated performance management system incorporates real-time performance dashboards, predictive analytics, and artificial intelligence to monitor and enhance employee contributions. These tools provide immediate feedback on productivity metrics, quality indicators, and customer satisfaction scores, ensuring precise alignment with organizational objectives. Similarly, Google’s data-driven approach to performance management includes regular performance calibration meetings, objective key results (OKRs) tracking, and sophisticated analytics tools that measure both individual and team contributions to organizational success. In the technology sector, companies like Microsoft have implemented comprehensive performance management systems that integrate multiple data points, including peer reviews, customer feedback, and productivity metrics. These systems enable organizations to identify performance trends, address challenges proactively, and implement targeted interventions to enhance organizational effectiveness. The success of these approaches is evident in the sustained market leadership and innovation capabilities of these organizations.

In developing economies, organizations face substantial challenges in maintaining and improving performance due to various structural and operational constraints. These challenges are deeply rooted in the historical, economic, and institutional complexities that define developing markets. Unlike developed economies where technological infrastructure, skilled human resources, and capital flow are readily available, developing economies often struggle with outdated infrastructure, limited financial resources, and weak institutional frameworks. These structural deficiencies create an environment where organizations are forced to operate with limited resources, making it difficult to adopt modern management practices and performance enhancement strategies.

The absence of a strong regulatory framework further exacerbates the problem, as businesses face inconsistent enforcement of labor laws, tax regulations, and market competition guidelines. This creates an uneven playing field where businesses with greater financial backing or political connections enjoy disproportionate advantages, while smaller organizations and startups face an uphill battle. Moreover, inadequate technological

infrastructure prevents businesses from accessing real-time data, automating processes, and integrating customer insights into their operations, all of which are critical for sustaining competitiveness in a rapidly changing global market. Even where technological infrastructure is present, unreliable electricity supply, high internet costs, and poor mobile network coverage often disrupt business operations, leading to inconsistent service delivery and reduced customer satisfaction.

In countries like Ghana, Nigeria, and Kenya, small and medium-sized enterprises (SMEs) frequently struggle to maintain competitive positions due to a combination of ineffective communication channels, inadequate performance monitoring systems, and limited access to performance enhancement tools. Research conducted by Mensah and Asamoah (2021) in Ghana revealed that over 60% of SMEs lack structured performance management systems, resulting in reduced operational efficiency and limited growth potential. The absence of performance management frameworks often leads to inconsistent employee evaluations, poorly defined job roles, and weak accountability mechanisms. Without structured feedback and evaluation systems, employees lack clarity about their performance expectations, which undermines motivation and reduces productivity.

In Nigeria, SMEs face similar challenges, with limited access to capital and weak institutional support further compounding the problem. Government policies aimed at supporting small businesses are often poorly implemented or inadequately funded, leaving many SMEs without the necessary resources to invest in performance improvement strategies. Additionally, the absence of formal business education and training opportunities means that business owners and managers are often ill-equipped to design and implement effective performance evaluation systems. In Kenya, Koech (2022) highlights how inadequate feedback mechanisms contribute to high employee turnover, poor morale, and low productivity. Employees often feel disconnected from organizational goals due to the lack of regular and constructive feedback, leading to disengagement and increased absenteeism.

The situation in Cameroon reflects many of these challenges, with organizations across sectors working to optimize their operations amid significant economic and infrastructural constraints. The financial sector, in particular, faces unique challenges in implementing effective performance management systems. While banks and credit unions have made efforts to adopt various performance measurement tools, several factors continue to impede their efficiency, including limited employee training opportunities, inadequate technological infrastructure, and insufficient feedback mechanisms (Tambe, 2019). Credit unions in Cameroon operate within a complex financial ecosystem characterized by limited market penetration, regulatory uncertainty, and increasing competition from foreign-owned financial institutions and fintech companies.

Despite the establishment of the Cameroon Cooperative Credit Union League (CamCCUL) in 1968, which aimed to strengthen the performance of credit unions and promote financial inclusion, many credit unions still struggle to maintain operational efficiency and member satisfaction. Inadequate employee training programs have resulted in a workforce that lacks the technical and interpersonal skills necessary for effective customer service and operational management.

Additionally, the technological infrastructure available to most credit unions remains outdated, with limited integration of digital banking platforms and real-time transaction monitoring systems. This prevents credit unions from providing seamless customer experiences and hinders their ability to respond promptly to customer feedback and market changes. Furthermore, the absence of structured feedback mechanisms exacerbates these challenges, as employees and customers have limited avenues for expressing concerns and providing suggestions for service improvement. Without a consistent feedback loop, managers are unable to identify performance gaps, implement corrective measures, and align employee efforts with organizational objectives. This results in a cycle of poor service delivery, declining customer satisfaction, and reduced profitability, which threatens the long-term sustainability of credit unions in Cameroon’s financial sector.

In Buea, credit unions play a vital role in the local economic ecosystem, providing essential financial services to individuals and businesses. These institutions serve as critical enablers of economic activity, facilitating savings, loans, and other financial transactions that support local development. Despite their importance, many of these credit unions face significant operational challenges, including declining member satisfaction rates, reduced operational efficiency, and increasing competition from traditional banks and fintech companies. For instance, delays in loan processing, poor communication with members, and inconsistent service quality have been cited as major concerns by credit union members. Members frequently report frustration over the lack of transparency in loan approval processes, with some applications taking weeks to process without clear explanations for delays.

Poor communication channels further compound these issues, as members struggle to access timely information about their accounts, loan statuses, and service updates.

Additionally, many credit unions operate without standardized customer service protocols, resulting in inconsistent treatment of members and increased dissatisfaction. The absence of structured feedback systems means that complaints and suggestions are often ignored or inadequately addressed, leading to growing frustration among members. The competitive pressure from commercial banks and mobile banking platforms further exacerbates these challenges, as customers increasingly seek faster and more reliable financial services. For example, the rise of mobile payment platforms such as MTN Mobile Money and Orange Money has introduced a level of convenience and transparency that many credit unions struggle to match. This shift in customer preferences underscores the need for credit unions in Buea to adopt more structured feedback mechanisms, enhance service quality, and modernize their operational frameworks to remain competitive in the evolving financial landscape.

Feedback is a critical organizational tool that provides employees with performance-related information, helping them align their actions with organizational objectives (Cascio, 2021). Globally, organizations have recognized the importance of structured feedback systems in improving performance. For instance, Google uses employee surveys and 360-degree feedback reviews to create a transparent and inclusive performance culture. This feedback-rich environment fosters collaboration and innovation, directly contributing to Google’s sustained success. Similarly, Starbucks emphasizes continuous feedback between managers and employees to enhance service delivery and customer satisfaction.

In developing economies, feedback systems are often underdeveloped due to a lack of technological infrastructure, limited managerial expertise, and cultural factors that discourage open communication. In Kenya, for example, studies reveal that organizations with unstructured feedback processes experience high employee turnover and reduced productivity (Koech, 2022). In Nigeria, inadequate feedback mechanisms in the public sector have been linked to low morale and poor service delivery (Okoro& Adebayo, 2020).

In Cameroon, feedback practices remain largely informal and inconsistent, particularly in the financial sector. While some organizations are beginning to adopt performance appraisals, the absence of timely and constructive feedback often leads to misunderstandings and dissatisfaction among employees (Tambe, 2019). Credit unions in Buea exemplify this challenge, as many rely on irregular and subjective feedback methods that fail to address employee concerns or align individual efforts with organizational goals. This gap highlights the need for structured feedback mechanisms to enhance performance in these institutions.

The relationship between feedback and organizational performance has been widely studied. Armstrong (2014) emphasizes that feedback is essential for improving employee efficiency, fostering innovation, and aligning individual efforts with organizational objectives. He notes that organizations with robust feedback systems outperform their peers in profitability, employee engagement, and customer satisfaction.

The role of customer feedback in driving organizational performance has been gaining attention, albeit at a slower pace compared to developed nations. The advent of mobile technology has provided a platform for collecting real-time feedback, particularly in countries like Kenya and Nigeria. Kenyan credit unions, for example, utilize mobile banking platforms such as M-Pesa to gather member insights and address complaints promptly, thereby improving service delivery and financial inclusion. In South Africa, the use of member satisfaction surveys has helped financial cooperatives identify areas for improvement, enhancing their competitiveness in the financial sector. Despite these advancements, many African credit unions struggle with resource limitations and inadequate feedback systems, which hinder their ability to fully leverage customer insights.

In Cameroon, credit unions have historically been instrumental in promoting financial inclusion and empowering communities. Since the establishment of the Cameroon Cooperative Credit Union League (CamCCUL) in 1968, credit unions have expanded their reach, offering savings and loan services to underserved populations. However, the performance of these institutions has been mixed, with many grappling with issues such as poor service delivery and low customer satisfaction. Although feedback mechanisms are gradually being introduced, their implementation remains inconsistent, with complaints often unresolved and suggestions overlooked. Studies have highlighted the negative impact of these inefficiencies on the financial and operational performance of Cameroonian credit unions, underscoring the need for more effective feedback systems.

In Buea, a town with a vibrant financial sector, credit unions play a pivotal role in providing financial services to residents. Despite their importance, these institutions face significant challenges in integrating customer feedback into their operations. Many members report dissatisfaction with service delivery, citing delayed responses to complaints, ignored suggestions, and inadequate attention to satisfaction ratings. These issues not only undermine member trust but also hinder the overall performance of credit unions. For instance, unresolved complaints about loan processing and poor communication have contributed to declining membership and profitability in several local credit unions. These challenges highlight the critical need for this study to examine the role of customer feedback in improving the organizational performance of credit unions in Buea.

1.2 Problem Statement

Organizational performance is a critical determinant of long-term business sustainability and competitiveness in today’s dynamic global economy. It encompasses a range of outcomes such as financial viability, operational efficiency, customer satisfaction, and institutional growth. In the context of credit unions, organizational performance is particularly important as these institutions aim to serve their members effectively while maintaining financial health and stability. While credit unions in Buea contribute significantly to local financial inclusion and economic empowerment, many are plagued by inefficiencies, poor service delivery, and low customer satisfaction.

These shortcomings manifest in delayed loan processing, weak communication structures, inconsistent member engagement, and overall underperformance. Despite operating in a competitive and fast-evolving financial landscape, several credit unions struggle to meet strategic and operational goals, thereby raising concerns about the underlying causes of their stagnating or declining performance levels.

Customer feedback has emerged globally as an essential component in organizational development, strategic decision-making, and performance enhancement. It is widely acknowledged as a means through which businesses can understand the needs, expectations, and experiences of their customers. Customer feedback includes satisfaction ratings, complaints, and suggestions—all of which can serve as early warning signs or opportunities for growth. Organizations that engage customers through structured feedback systems tend to exhibit stronger innovation, improved customer loyalty, and greater alignment between service offerings and market demands (Zeithaml et al., 2017). However, in many developing contexts, including Buea, the feedback loop between customers and organizations remains weak or underutilized. Credit unions in particular often lack the mechanisms to systematically collect, analyze, and implement feedback into their service design and delivery, which impedes their ability to respond effectively to customer needs and thus limits their potential for organizational growth and sustainability.

The link between customer feedback and organizational performance is well documented in management literature. Feedback plays a central role in identifying performance gaps, informing service improvements, and shaping customer-oriented policies. In theory, organizations that actively solicit and act upon feedback should witness measurable improvements in operational efficiency, customer retention, and overall performance. However, this relationship appears to be under-explored or inconsistently applied in many credit unions within Buea. While some collect feedback through suggestion boxes or verbal reports, these inputs are often not acted upon due to weak follow-up mechanisms, lack of accountability, or limited technological infrastructure.

Consequently, valuable insights are lost, and the same service challenges persist leading to declining trust, member dissatisfaction, and weakened organizational outcomes. The failure to effectively integrate customer feedback into organizational planning and review mechanisms raises serious concerns about the strategic capacities of credit unions in Buea to improve and sustain performance over time.

In developed economies, the integration of customer feedback into performance management has proven to be an effective strategy for continuous improvement. Organizations such as Google, Amazon, and Apple have institutionalized mechanisms that enable them to collect real- time feedback, analyze patterns, and implement corrective actions at various levels of operation. For example, Amazon’s performance dashboards and customer review systems are directly tied to service innovations and operational revisions. In the financial sector, banks and credit unions in the United States and Europe routinely use feedback tools such as Net Promoter Scores (NPS), satisfaction indices, and customer experience analytics to align their services with evolving consumer expectations.

These structured approaches not only enhance performance but also foster strong customer relationships and market competitiveness (Cascio, 2021). Yet, even in these environments, challenges persist in translating feedback into action especially in large, complex organizations where bureaucratic inertia and conflicting priorities may hinder responsiveness. Nonetheless, the overall trajectory in developed contexts points to the instrumental role of feedback in shaping high-performance cultures.

In contrast, developing countries often face structural and resource constraints that limit the effective use of customer feedback. Technological gaps, limited staff training, and cultural reluctance to critique authority figures impede the establishment of open and responsive feedback systems. In countries like Nigeria and Kenya, research has shown that many financial institutions either do not collect customer feedback systematically or fail to act on it (Mensah &Asamoah, 2021; Koech, 2022). When feedback systems do exist, they are often informal, unmonitored, or disconnected from strategic decision-making processes. These weaknesses contribute to persistently low service quality, customer dissatisfaction, and declining institutional credibility. Moreover, the lack of a feedback culture hampers innovation and delays service delivery improvements that are essential for long-term performance.

In Cameroon, and Buea specifically, the scenario reflects many of the challenges observed in other developing settings. While credit unions such as those under the Cameroon Cooperative Credit Union League (CamCCUL) have made efforts to collect feedback, implementation remains inconsistent and unstructured. According to Tambe (2019), feedback mechanisms in Cameroonian credit unions are often informal, with minimal integration into institutional planning or evaluation frameworks. Members frequently report that complaints and suggestions are either ignored or resolved inefficiently, leading to diminished trust and loyalty. Additionally, many credit unions lack the technology and expertise to analyze feedback effectively, further weakening their performance enhancement strategies. This disconnect between customer voice and institutional response contributes to the declining organizational performance observed in many credit unions across Buea. Thus, there is a compelling need to investigate how customer feedback is being utilized and the extent to which it influences the performance outcomes of credit unions in the region.

1.3 Research Questions

1.3.1 Main Research Question

What is the effect of customer feedback on organizational performance in Buea Credit Unions?

1.3.2 Specific Research Questions

1. How does a specific customer satisfaction rating impact the organizational performance of Credit Unions in Buea?
2. How does a customer suggestion contribute to organizational performance of Credit Unions in Buea?
3. What effect do customer complaints have on the operational review and customer retention of Credit Unions in Buea?

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