EFFECT OF ORGANIZATIONAL STRUCTURE ON CORPORATE PERFORMANCE
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EFFECT OF ORGANIZATIONAL STRUCTURE ON CORPORATE PERFORMANCE
ABSTRACT
The study looked at how Globacom Limited’s organisational structure affected its business performance. Organisational structure was defined as the formal system of authority, relationships, and duties that govern and coordinate employee activities and behaviour in order to achieve organisational goals.
Structures can be classified as centralization, formalisation, sales growth, integration, differentiation, autonomy, administrative component, delegation of authority, adaptiveness or adaption, production, efficiency, and job satisfaction.
The study used primary data. The data were analysed using descriptive statistics and regression analysis. The survey included 4, 575 Globacom employees in junior, senior, and management positions. Out of 368 questionnaires distributed, 327 copies were returned, showing an 88.2% response rate.
The findings revealed that employees universally agreed that their organisation performs satisfactorily in terms of profitability, sales growth, and market share. The respondents agreed that the organisation is centralised, formalised, and complex.
The following alternative hypotheses were accepted, assuming that the probability value of the computed coefficients of the independent variables is less than the standard 0.05.
Globacom Limited’s profitability position is significantly impacted by centralization; formalisation has a large impact on its market share; and complexity has a significant impact on its sales growth.
The study suggests that organisational structure influences company performance in terms of profitability, sales growth, and market share. The report recommended that Globacom Limited’s management adopt fewer layers in the organisational hierarchy, and that management refrain from enforcing overly strict standards.
Management is urged not just to use appropriate technology when developing structures, but also to constantly respond to technological advances. To obtain the benefits of both job assignment systems, management should blend parts of work routine and diversity when organising employees to complete tasks.
Chapter one
INTRODUCTION
1.1 Background for the Study
The literature on organisation structure-performance links is one of the most puzzling and unclear in management and organisational behaviour (Ogosi & Agbaeze, 2018). As a result, assessments and generalisations about the nature and direction of these interactions are uncertain.
This emphasises the relative lack of generalizability of studies in the field, as well as the need for thorough examination of the structure-performance literature (Dalton, 2013).
For decades, it has been maintained that an organization’s performance requires it to concurrently investigate and exploit possibilities that emphasise the appropriate structure (O’Reilly & Tushman, 2017).
Thus, the fundamental dilemma confronting organisations is to organise in a way that ensures their current viability while also devoting efforts to creating a structure that ensures future viability by improving performance (Blau, 2013).
According to Dalton (2013), organisational structure can be thought of as the organization’s anatomy, providing a framework for the organisation to function. Thus, organisational structure is thought to influence the behaviour of its members.
Every organisation has a structure. According to Lunenberg (2012), organisational structure serves two primary functions, each of which has the potential to influence individual behaviour and organisational performance.
First, organisational structures are intended to reduce or at least limit the impact of individual differences on the organisation, and the structure establishes the context in which authority is exercised, decisions are made, and the organization’s activities are carried out.
Van de Ven (2015) emphasised the significance of organisational structure at both the organisation and component levels for performance. In that light, Blau (2013) believes that structure not only aids in systematic comparisons of many organisations
but it also establishes relationships between organisational characteristics and specifies 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 organisation.
A superb organisational structure is the foundation of any successful company, division, or team. An organization’s structure is suited to the aims of its divisions or teams, and it helps employees understand their role in the larger picture.
Without the correct structure, an organisation may fail to function efficiently or even collapse (this has been one of the primary causes of most corporate failures).
Poor organisational design and structure creates a perplexing maze of contradictions: misunderstanding within positions, a lack of coordination among functions, a failure to communicate ideas, and sluggish decision-making cause managers unnecessary complexity, stress, and conflict (Ogosi & Agbaeze, 2018).
Centralization is the process by which an organization’s operations, particularly those related to planning and decision-making, are concentrated in a single leader or location (Lunenberg, 2012). In a centralised organisation, the head office retains decision-making authority, but all subordinate offices receive orders from other offices.
The executives and specialists who make crucial choices are headquartered in the headquarters. Similarly, in a centralised government system, decision-making authority is concentrated at the top, and all lower levels follow orders from the top of the organisational hierarchy.
According to Zachary (2015), a centralised management structure allows an organisation to easily focus on achieving its vision. There are clear lines of communication, and senior leaders can express the organization’s vision to employees.
In the absence of centralised management, there would be discrepancies in transmitting messages to staff because there are no clear lines of command. Directing the organization’s vision from the top enables the smooth implementation of its ambitions and strategies.
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