THE EFFECT ORGANIZATIONAL RESTRUCTURE ON EMPLOYEE PERFORMANCE

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Introduction

1.1 Background to the Study

The success of any organization largely lies on internal and external factors. Workforce is the most fundamental and necessary for organizations competitiveness. Human resource is the real asset of an organization and plays a major part towards progress of the organizations. It is vital for organisations to fully optimise their resources as well as their workforce effectively. As with many private organizations in the world today, operations within the federal government are currently undergoing significant changes due to budget cutbacks and technological innovations. These changes need to be managed effectively in order for staff and management to adapt and find new ways to operate effectively within the changing environment.

As Katherine Mezei (Personal Communication, November 1, 1995), a consultant in the Professional Development Department of Humber College, states, “Organizations are great at change, but they are lousy at transition.” In the process of implementing organizational change, people can ‘drop off’ because their losses and grieving due to the change are not acknowledged. Changes taking the form of mergers, reforms, restructurings and downsizings are often planned and implemented before those who will be affected by them have even been informed. As with any organization, this is causing strong feelings of mistrust and apprehension among staff. A study conducted at Sir Sanford Fleming College in June 1994 to determine full-time support staff perceptions during a period of organizational transition, confirms these negative reactions (Milroy, 1995).

Both the speed of technological change and the need to implement cost-effective programs have caused an increase in the use of computer-based services. These shifts in direction call for new demands to be placed on government employees. Some skill sets will become obsolete while other new skill sets will emerge. If change is not effectively managed, the goals it was intended to produce are threatened. People build up resistance to it, productivity goes down, costs increase and the change itself may be abandoned (Bridges, 1988). The impact of taking on more responsibilities and seeing fewer employees to do the same or more amount of work is compounded by “survivor’s syndrome”. Feelings of guilt can add to strong feelings of change induced anxiety. Administrators and managers are often unprepared for these reactions. While they may have attained the services of an outplacement company to deal with the trauma of displaced workers, they generally fail to consider the emotional needs of the remaining staff. This can result in significantly reduced morale and productivity leaving the organization worse off than before (Noer, 1994).

Recently, due to the intense competitive environment rapid changes occur in the organizations which increased the competition for gaining revenues and growth. Concept of organizational change concerns mainly with the organizational wide transformation that mainly includes the changes in term of mission of the organization, operations of the organization, mergers, major partnerships and others. There are researchers who say that organizational change means organization transformation. In order to practice quality standard, value is the most important which sets the real beliefs in order to attain the performance in teams and to deliver the superior customer service to the clients. When change starts to appear then leaders have the chances to lead their workforce in better perspectives. Though employees obligation is necessary in order to move the organization towards growth and progress.

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1.2 Statement of the Problem

Organizational restructure generally refers to the reorganization of the corporate operations to achieve higher levels of the operating efficiency. Downsizing is a norm in organizations today, yet studies have implicated that these initiatives, although intended to produce positive results, do more harm than good to the organization and its workforce (Cascio 1993). This harm done by the organizational restructure does not only employees performance and organisational profitability, but also extends to its learning process. Employee performance involves the overall output of employees while at work. The morale of the employees directly affects productivity. Dissatisfied and negative employees portray negative and low morale about their work environment while positive or highly confident employees are happy and positive at work.

Redeploying workers because of poor performance, automation of systems and redundancies produce a work environment where employees are characterized with high anxiety and uncertainty of their future in the organization. Insufficient preparation as well as unrevealing process during restructuring, does impact negatively on the performance of employees at work. The implication of the restructuring strategy in any organisation is that employees suffer low morale as they survive lay-offs, feel fear and resentment (Decenzo et al, 2010). It is not the question of why companies have to downsize or cut jobs, it is how they should do it strategically to reach the expected goal of benefit and continue to retain the morale of the surviving workers. This study shall therefore investigate the effect organizational restructure on employee performance by using Continental Reinsurance Plc. Lagos State, Nigeria as a case study.

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1.3 Research Objectives

The study has both general objective and specific objectives. The general objective or main objective of this study is to investigate the effect organizational restructure on employee performance by using Continental Reinsurance Plc. Lagos State, Nigeria as a case study.

The specific objectives are:

1. To examine the effect of organizational restructuring on employee performance
2. To determine the reasons for organizational restructuring
3. To investigate the attitudes of employees of Continental Reinsurance Plc towards organizational restructuring

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1.4 Research Questions

The following are some of the questions which this study intends to answer:

1. What are the effects of organizational restructuring on employee performance?
2. What are the reasons for organizational restructuring?
3. What are the attitudes of employees of Continental Reinsurance Plc towards organizational restructuring?

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1.5 Research Hypotheses

The following shall be the research hypotheses to be tested in this study:

1. There is no significance correlation between organizational restructuring and employee performance
2. There is a significance influence of organizational restructuring on employee morale

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1.6 Significance of the Study

The study is useful to policy formulation as it will act as a foundation for organizational restructuring procedures. It establishes attitudes and performance of the unaffected employees during downsizing and how to ensure motivation and uplift of their morale. It also contributes to understanding the challenges faced with downsizing and the relevant processes of organizational restructuring that takes into consideration employees’ welfare. The study also contributes to theory by providing information on various theories on strategy in the banking industry as well as the business sector as a whole which adds more value. The information contained in this report will also be of use in providing empirical evidence on the impact of restructuring as a strategy and how it affects the morale of employees in various institutions. It will be of use to other studies within the field of strategy. This study contributes to the importance of further research, superior performance, and growth of the industry by offering a modern restructuring model that can be used in different institutions that may not compromise on the morale of employees. The results of this study may also be applied to other organization in the service industry since restructuring is common in many organizations.

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1.7 Scope of the Study

This research focused mainly on the effect organizational restructure on employee performance by using Continental Reinsurance Plc. Lagos State, Nigeria as a case study. This study will be therefore carried out at Continental Reinsurance Plc. Lagos State Nigeria.

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1.8 Limitation of the Study

Due to limited time and financial constraints, this research will consider only Continental Reinsurance Plc. At their head office in Lagos Island, Lagos State where research gap was identified. It will be also impossible to obtain data from all the employees of the above chosen organizations; thus, the study will only take sample of few employees who will be able to give required information from each of those organizations which will be best represent the entire population of the study. The researcher will also be faced with the problem in obtaining reliable data, in some case there will be no access to secondary data as will be treated as a confidential, in search of data researcher will have to use also online resources such as organisations’ websites and google search engine.

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1.9 Definition of Terms

The following terms were used in the course of this study:

Employee morale:

The job satisfaction, outlook, and feelings of well-being an employee has within a workplace setting. Proven to have a direct effect on productivity, it is one of the cornerstones of business.

Employee Performance:

Job related activities expected of a worker and how well those activities were executed. Many business personnel directors assess the employee performance of each staff member on an annual or quarterly basis in order to help them identify suggested areas for improvement.

Organizational restructuring:

Is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs.