EFFECTS OF ORGANIZATIONAL STRUCTURES ON EMPLOYEES' PERFORMANCE

Introduction

1.1 Background of the Study

Organizational structure as how job task is formally divided, grouped and coordinated (Sablynski, 2003). Organizational structure is used by various firms as a control mechanism to effect work outcomes, to ensure that the required tasks are performed effectively and efficiently, and to assist the attainment of organizational goals and objectives. Organizational structure describes the internal characteristics of an organization. These internal characteristics receive attention since they are critical to organizational failure and success, and one of these is organizational commitment.

High performance organization is called organic organization that is designed to bring out the best in people and create an exceptional capacity to deliver high results (Dalton, 2000). Organic organization refers to a dynamic, loosely controlled, organization capable of modulating size and activities based on changing external and internal demands (Ledbetter, 2003). Organizational structure can be viewed as the way responsibility and power are allocated inside the organization and work procedures are carried out by organizational members.

Ledbetter (2003) investigated the effect of organizational structure on Organizational effectiveness in Texas Grand Prairie Fire Department. The results have shown that environment, technology, size, strategy, goals, culture and philosophy impact on organizational structure and a definite connection is between organizational effectiveness and organizational structure. Hao and colleagues (2007) studied about the relationship between organizational structure and performance, especially through organizational learning and innovation, based on evidence from Austria and China. The findings have shown that in a hi-technology or knowledge intensive industry, organizational structures affect employee performance mainly through innovation and organizational learning. But in traditional industry, such as labor- or capital-intensive industry, organizational structure impacts employee performance mainly through innovation.

In 2009, Seykora showed that the edge organization operating in a high trust environment produces the most accurate results in the least amount of time. Additionally accuracy performance in the rigid hierarchy was more resilient than the flexible edge structure to change in trust level. Kasrai and Alirahimi (2009), in an investigation which conducted in retirement organization in Iran, showed that there is a significant and negative relationship between complexity and effectiveness of communication.

Aghajani and others (2013) found the significant relationship between organizational structure and employee creativity in Saveh Pars Company. Also the results have shown the significant relationship between the level of formalization, complexity, centralization and creativity of employee. Shaemi Barzoki and colleagues (2013) determined organization’s structure dimensions effect on organizational trust. They found that formalization, standardization, hierarchy of authority, centralization and professionalism dimensions had affected organizational trust and complexity, specialization, employee ratio and management ratio dimensions didn’t affect organizational trust in thiscompany.

Organizational commitment will enhance the success of an organization by making employees dedicated to the achievement of its goals. The success of any organization can be predicted by its success in raising and maintaining employees’ commitment. High levels of commitment contribute to positive attitudes and behaviors in organizations (Chughtai and Zafar, 2006).

Employees in all organizations want to work in an environment of trust and respect where they feel they are making a real contribution to organizational goals and objectives. They want to be able to have the opportunity to show management that they can accomplish a task with the creativity obtained from working in teams. There is a consensus in the literature reviewed that trust and job satisfaction are essential elements to an organizations success. Trust between individuals and groups within organizations are a highly important ingredient in the long-term stability of the organization and the well-being of its members (Srivastava, 2013).

Many organizations still operate within “traditional” hierarchical structures which can have a detrimental effect on productivity and the flow of information because each employee is only accountable to one person. It also can result in what is called the “silo mentality.” In a traditional “one person, one boss” organizational structure, information is restricted, and co‐operation between employees and other departments is stifled (Dancer, and Raine, 2010). This traditional hierarchical structure becomes progressively more problematic as organizations become more specialized and require employees with specific areas of expertise. To capitalize fully on their increasingly complicated nature, many organizations are currently using more complex structures.

An organizational climate of trust enables employees to surface their ideas and feelings, use each other as resources, and learn together. Without trust people have a tendency to keep to themselves, rather than share their thoughts, which inhibits creativity (Jordan, 1999). Individuals want to work in an environment of trust and respect where they have the ability to make contributions to the organizational goals and objectives.

Past studies indicate many causes of project failure, such as a poor definition of the objectives, an inadequate project schedule, too much uncontrolled change, insufficient control, a lack of resources, ineffective communication, an unclear role of the participants, a lack of top management support, too many teams focusing on technical solutions and neglecting the people (customer, user), etc. (The Standish Group in Young & Jordan,2008).
A matrix organisation is particularly important, where responsibility for the project is shared between the project managers and line managers. The advantages of a matrix organisation include the more direct contact among different disciplines, the fact that people can work on a variety of problems, a strong technical base can be developed, and much more time can be devoted to complex problem-solving, and shared authority and responsibility. Yet, it has also some weaknesses: a two-boss syndrome and dual reporting, management co-operation is required, the balance of power between the functional and project organisation, and a conflict of priorities amongst different projects (Forsberg et al.,2005).

The project manager has total responsibility and accountability for the project’s success. The functional departments, on the other hand, have the functional responsibility to maintain technical excellence in the project. Each functional unit is headed by a line manager whose prime responsibility is to ensure that a unified technical base is maintained and that all available information can be exchanged for each project. Line managers must also keep their people aware of the latest technical developments in the organization.

They want to be able to have the opportunity to show management that they can accomplish a task with the creativity obtained from working in teams. High performance organizations offer individuals the opportunity to obtain the level of success they desire (According to the U.S. Department of Labor Office of the American Workplace, 1994). Hence, it is necessary to determine the effects of organizational structures on employee motivation and this study seeks to shed light on the extent to which project structures effects on an employee performance.

1.2 Statement of the Problem

Organizational structure describes the formal arrangement of jobs and tasks in organizations (Robbins and Coulter, 2007); it describes the allocation of authority and responsibility, and how rules and regulation are executed by workers in firms (Nahm et al., 2003). Organizational structures, behavior of employees based on acceptance, interpretation of common organizational values has relatively low importance, so strong, and developed organizational culture is not very important (zadar,2013).

Notably, every modification of the formal organizational set-up has an effect on the behaviour of the organization’s participants. As pointed out by Drucker, there is no single, perfect type of organizational design. Each structure has its strengths, limitations and specific applications (Drucker, 1999). In First bank plc, many changes have been adopted over time. These changes have necessitated a review in organizational structures that influence the employee performance. There has been no research study of organizational structures at First Bank Plc over time. For an organization to remain relevant it should regularly assess its organization structures. While organizational structures, policies and culture are intertwine with employee performance, its relationship with employee performance has received a lot of research interest (see for instance, Ogbonna & Harris, 2000; Rousseau, 1990; Kotter & Heskett, 1992; and Marcoulides & Heck, 1993).

This study sought to determine the relationship between components of organizational structures and employee performance. The study employed Mintzberg’s Classical Theory of Organizational Configurations and Dual-Factor Theory – Frederick Herzberg that implicitly explains the organizational structures and employee performance. Therefore, this study not only seeks to fill the existing gap in literature, but to provide relevant finding on effects of organization structure on employee performance to First Bank Plc management.

1.3 Objectives of the Research

The purpose of this study was to determine the effects of organizational structure on organization’s performance: case of First Bank Plc, Lagos state in order to shed light on how organizations’ structures effects on an organization’s performance.

This research was guided by four specific objectives as outlined below:

1. To establish the extent to which communication affect organization structures on employee performance in First Bank Plc.
2. To determine how supervision affects organization structures on employee performance in First Bank Plc.
3. To find out how leadership affects organization structures on employee performance in First Bank Plc.
4. To establish whether motivation affects organizational structures on employee performance in First Bank Plc

1.4 Research Questions

1. This research sought to answer the following questions:
2. To what extent does communication affect organization structures on employee performance in First Bank Plc?
3. To determine how supervision affects organization structures on employee performance in First Bank Plc?
4. To find out how leadership affects organization structures on employee performance in First Bank Plc.
5. To establish whether motivation affects organizational structures on employee performance in First Bank Plc?

1.5 Significance of the Study

The study was of great significance to management in assisting to better understand the type of organizational structure that gives employees adequate motivation which in turn effects on organizational productivity.

The study on the effects of project organization structures on employee performance brings in new knowledge to the field of research and other related disciplines. Secondly, departments that exercise project management and especially on organization structure on employee performance was aided by this study in making informed decisions that relate to adoption of appropriate project management practices to ensure successful completion of projects. Thirdly, other public institutions acquire an informed research study in order to achieve organization projects goals that meet global standards while maintaining the core objective of the organization thus building a good reputation through the appropriate project management practices.

Fourthly, project organization structures are aided by the study in understanding and employing the various proactive methods in projects success and saving on costs as they participate in employee performance by putting the relevant project management practices in place. Finally, Organization entities find it not only essential to conform to projects policies but also ways on how to come up with better practices for the realization of success of various projects on a universal scale.

1.6 Scope of the Study

The study was carried out in First Bank Plc, Lagos state for three months. The study focused on the effects of organizational structure on organization’s performance. The employees from the departments of administration, procurement, sales and marketing and finance within the bank were the respondent. The study focused on the effects of organizational structures on employee performance. The research design used was a case study of First Bank Plc. The focus was on four independent variables namely communication, leadership, supervision and motivation on the project organization structures that affects employee performance.

1.7 Limitations

The limitations to this study included some respondents who were shy about giving information about their organization thinking it was for commercial use and they can be therefore be victimized but they were assured of confidentiality and that the given information were purely for academic purposes.

1.8 Delimitation of the Study

Except for the purpose of comparison, the study delimits the organizational structure to First Bank Plc in Lagos state. The study used a small sample and cannot therefore, be generalized. The findings however were replicated to other organizations with similar characteristics.

1.9 Organization of the Study

This chapter discusses the background of the study, problem statement, research questions and objectives of the study. Others are the scope, relevance, delimitation and limitation of the study.

The remaining parts of the study have been arranged into two chapters. Chapter two presents the previous literature on the research topic and the model adopted by the study.

The third chapter covers the profile of the study area and the methodological issues. Under methodology, the research design, sample and sampling procedures used sources of data, the methods adopted for the collection and analysis of the data will be specified and described.

The fourth chapter (data analysis, presentation and interpretation) contains; introduction, questionnaire return rate, effects of organizational structures on communication, leadership, supervision and customer service.

The fifth and the last chapter is (summary, conclusion and recommendation) contains introduction, summary of the study, conclusion, recommendation and suggestions for further studies.