THE EFFECT OF ORGANIZATIONAL STRUCTURE ON CORPORATE PERFORMANCE

ABSTRACT

The study examined the effect of organizational structure on corporate performance of Globacom Limited. It was established that organizational structure is the formal system of authority, relationships and tasks that control and coordinate employee actions and behavior to achieve goals in an organization. There are different types of structures including centralization, formalization, sales growth, integration, differentiation, autonomy, administrative component, delegation of authority, adaptiveness or adaptation, production, efficiency and job satisfaction.

The study made use of primary data. Descriptive statistics and regression analysis were used to analyze the data. The population of the study comprised 4, 575 employees of Globacom at junior, senior and management cadres. Out of the 368 questionnaires administered, 327 copies were returned, indicating a response rate of 88.2 %.

The findings showed that employees unanimously agreed that their organization has satisfactory performance in the areas of profitability, sales growth and market share. The opinions of the respondents reached a consensus that the organization is centralized, formalized and complex.

On the premise that the probability value of the estimated coefficients of the independent variables is less than the standard 0.05, the following alternative hypotheses were accepted. Centralization has significant effect on profitability position of Globacom Limited; Formalization has significant effect on market share of Globacom Limited; Complexity has significant effect on sales growth of Globacom Limited.

The study concludes that organizational structure affects corporate performance with respect to profitability, sales growth and market share. The study recommended; Management of Globacom Limited are encouraged to adopt lesser layer in organizational hierarchy; Management are advised to reduce applying too rigid rules. Management are advised not only to adopt appropriate technology while designing structure but also always respond to changes in technology. Management should combine elements of both task routine and variety in organizing employees for carrying out task in order to reap the advantages of both systems of task assignment.

           CHAPTER ONE

         INTRODUCTION

1.1          Background to the Study

The literature on organization structure-performance relationships is among the most vexing and ambiguous in the field of management and organizational behavior (Ogosi & Agbaeze, 2018). Hence, evaluations and generalizations concerning the nature and directions of these relationships are tenuous. This underscores the relative lack of generalizability of research in the area and the need for sound study of the structure-performance literature (Dalton, 2013). For decades, it has been argued that an organization’s performance demands that it simultaneously explore and exploit options that highlight the proper structure (O’Reilly & Tushman, 2017). Thus, the fundamental problem confronting organizations is to organize in a way that will ensure its current viability and at the same time, devote energy to create a structure that will ensure future viability by enhancing performance (Blau, 2013). As submitted by Dalton (2013), organizational structure may be considered as the anatomy of the organization, providing a foundation within which the organization functions. Thus, organization structure is believed to affect the behavior of organization’s members.

All organizations have a structure. Lunenberg (2012) suggested that organization structure has two basic functions, each of which is likely to affect individual behavior and organizational performance. First, organizational structures are designed to minimize or at least regulate the influence of individual variations on the organization and the structure set the stage in which power is exercised, decisions are made and the organization’s activities carried out. Van de Ven (2015) highlighted the importance of organizational structure both at the organization and subunit levels for performance. In that light, Blau (2013) opined that not only does structure assist in systematic comparisons of many organizations, it also establish relationship between the characteristics of organizations and stipulate the conditions under which these relations hold, thereby providing the material that needs to be explained by theoretical principles and important guides for driving these principles of the organization.

Behind every great company, division or team is a great organizational structure. The structure of an organization is tailored to its divisions or team’s goals, and one that helps employees understand how they fit into the bigger picture. Without the proper structure in place, an organization may fail to function efficiently, or even collapse (this have been one of the major reasons for most corporate failure). Poor organizational design and structure results in a bewildering morass of contradictions: confusion within roles, a lack of coordination among functions, failure to share ideas, and slow decision-making, brings managers unnecessary complexity, stress and conflict (Ogosi & Agbaeze, 2018).