THE EFFECT OF ORGANIZATIONAL STRUCTURE ON ORGANIZATIONAL EFFICIENCY (A COMPARATIVE STUDY OF PATERSON ZOCHONIS INDUSTRIES PLC AND NIGERIAN BREWERIES PLC)
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THE EFFECT OF ORGANIZATIONAL STRUCTURE ON ORGANIZATIONAL EFFICIENCY (A COMPARATIVE STUDY OF PATERSON ZOCHONIS INDUSTRIES PLC AND NIGERIAN BREWERIES PLC)
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 content of the problem 1
1.2 statement of the problem 5
1.3 purpose of the study 6
1.4 research questions 7
1.5 hypotheses 8
1.6 significance of the study 9
1.7 definition of terms 11
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction 14
2.1 definition of organizational structure 19
2.2 purpose of organizational structure 20
2.3 guilding principles of organization structure 21
2.4 elements of organization structure 23
2.5 factors influencing organizational structure 25
2.6 common organizational structure and modern
organizational structure. 56
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction 62
3.2 research design 62
3.3 sampling procedure/sampling size determination 63
3.4 questionnaire design 64
3.5 operational measures of variables 66
3.6 data collection method 66
3.7 data analysis techniques 67
1.1 CONTEXT OF THE PROBLEM
At the heart of all organizations is the need to accomplish predetermined goals/objectives. In order to make it possible for people to work effectively toward accomplishing goals, a structure of roles must be designed and maintained. It is in the sense of a structure of roles that a formal organization is conceived. It is within this connotation that organizing is seen as the intentional structure of a pattern of roles and relationship that contribute to the goal. Roles are assigned, authority and responsibility are determined and provision is made for coordination. One of the most challenging tasks of all organizations is organizing the people who performs its work and accomplish its objectives. Organizing typically involves the development of organizational chart, job descriptions and statement of workflow (Baridam, 2002).
Organizing concerns the development of the specific organizational structure; that is the determination of the degree of specialization, the relationship of line and staff officers and units, and the basis for which departmentalization will be developed. This requires that the various functions will be performed by someone and there will not be confusion or overlap in the exercise of responsibilities. The assignment of responsibilities is accomplished by the development of an organizational structure. Such a structure is a kind of skeletal framework that delineates the level of authority and responsibility, defines information channels and establishes primary control points within the organization (Hart, 1970:237).
As an organization becomes successful and grows, however, there is generally more work and more people needed to perform various tasks. Through this division of work, individuals can become specialists’ jobs. Because there are several people often in different locations working toward common objective, there must be a plan showing how the work will be organized. The plan for the systematic arrangement of work is the organization structure. Organization structure is comprised of functions, relationships, responsibilities, authorities and communications by individuals within each department. It stipulates the job to be done, job titles, number of workers for each job and the formal relationship existing among various units aim at achieving objectives or goals.
The structure of the organization is essentially the way the organization is “shaped’ and the major focus of this shaping is how the organization is divided up into submits (that is on what common basis units made, how big are the units, how are they controlled etc). Structure can be described somewhat in the same way as the human body. Consider the body (the head, torso, limbs etc). The organs, tissue, bone, muscles etc, each a broad concept that helps to define the structure of the body. It shows a way in which people in the organization are put together in groups to do certain things. It shows how those groups relate to one another and how each person complements one another for the attainment of organizational goals.
As Nwachukwu (2006) opined, a sound organization structure involves dividing activities into departments, divisions, units and subunits, defining relationship between the heads and other members that make up the units. Good organizational design promotes effective communication, productivity and innovation. It creates an environment where people can work effectively. A good organizational structure identifies the operating departments, isolates the service departments, places emphasis on balancing the structure and shows the roles of committees in the organization. Therefore, wrong structure may direct behaviour towards the wrong goals.
Organizational structure is a framework within which the activities of an enterprise take place. Organization structure is an indispensable means and the wrong structure will seriously impair business performance and may even destroy it.
As Drucker point out; ‘good organizational structure does not by itself produce good performance just as a good constitution does not guarantee great president or good laws a moral society but a poor organization structure makes good performance impossible, no matter how good the individual manager may be” The right organizational structure is the necessary foundation which without it the best performance in all other areas of management will be ineffective and frustrated. Organizational structures can be influenced by factors such as size, views of the owners or leadership style, business objectives, external factors and changes in technology. If it is not so designed as to accommodate these activities, it does not promote efficiency. The organizational structure must be consistent with objectives to be accomplished and the means of accomplishing them.
Therefore, efficient operations demands clear definition of these objectives as well as proper allocation of responsibilities to individuals within the organizational hierarchy. This is especially important as the enterprise expands employs more people and its activities get more complex. An organization structure must be efficient to accomplish organizational efficiency. Bartal et al (1991:20) sees efficiency as the ability to make the best use of available resources in the process of achieving goals. It incorporates making the best use of resources and combing them in the best way rather than simply the relationship between input of resources and output.
Organizational efficiency is a measure whereby an organization aimed to accomplish its objectives by making the best use of available resources in the process of achieving the goals. Organizational efficiency is a matter of having the right people, doing the right jobs and making optimal use of available resources. When we walk about organizational efficiency we are talking about the capacity of an organization to produce desired results with a minimum expenditure of energy, time, money, personnel, materials etc.
This can be achieved through an efficient organizational structure. An organization structure is efficient in the sense that it facilitates accomplishment of objectives by people with the minimum unsought consequence or costs. That is an efficient organization structure is likely to be one that operates without waste or carelessness and makes for work satisfaction, has clear cut lines of authority and proper exertion of responsibility, allows appropriate participation in problem solving, gives provision for security and status, and provides opportunity for personal development and promotes healthy competition and all put together promotes organizational efficiency.
We have so far elicited information on how organizational structure could be utilized for efficiency as opined by many researchers, but none of the researchers has compared such levels of efficiency in two firms. This would have enabled us to confirm if the efficiency as reported by researchers in more advanced countries could be confirmed in Nigerian firms.
1.2 STATEMENT OF THE PROBLEM
For many organizations to exist and meet their goals, both the human resources and other resources must be well managed. The achievement of these goals lies on the effectiveness of its organizational structure which will map out clearly the responsibilities, duties and authorities of every individual in the organization.
Organizational structure of any organization affects the management of the system Nwankwo et al (1985). If the organization structure is bad it affects the whole system because there will be no harmony in the organization, interpersonal conflict emergies, executive will fail because subordinates will no longer accept the authority of the executive. Drucker (19955) also said that poor structure makes a good performance impossible no matter how good the individual manager/administrator may be. The most appropriate organizational structure depends on organizational objectives, the technology employed, the size of the organization, the rate of change in the environment and other dynamic forces.
Since, there is no single right structure, organizational structure should be adaptive to process requirements, aiming to optimize the effort of employees to achieve higher output. To improve organizational structure will therefore improve efficiency. The study is to investigate the effect of organizational structure on organizational efficiency.
In the context of the effect of organizational structure on efficiency, we tried to X-ray the factors that enhance or militate against it, but since the success factor has not been tested in Nigerian organizations this study tries to have comparative views of the effect of organizational structure on efficiency in Paterson Zochonis industries Plc. and their Nigerian Breweries counterpart.
1.3 THE PURPOSE OF THE STUDY
The way a structure is designed over time affects the way people and groups behave within the organization. A good organizational structure is one with the optimal number of layers of leadership, which demonstrably add value to the work of one another. It provides space and challenge for individuals to achieve, continue to learn, grow and enjoy their work and be duly rewarded or their performance.
This study is aimed at achieving the following objectives:
i. To find out the relationship between organizational structure and organizational efficiency.
ii. To investigate how organizational structure can be of help to manufacturing firms in achieving organizational efficiency.
iii. To find out the effect of delegation of authority and responsibility on organizational efficiency.
iv. To find out how interpersonal relationship with superior affects organizational efficiency.
v. To investigate the effect of changes in technology on organization structure.
vi. To investigate if changes in the environment affects organization structure.
vii. To investigate how size of an organization can influence the effect of organization structure on efficiency.
1.4 RESEARCH QUESTIONS
i. Does organizational structure have any effect on organizational efficiency in both Paterson Zochonis Industries Plc and Nigerian Breweries Plc.?
ii. Does position description help in enhancing efficiency of workers in both Paterson Zochonis industries Plc and Nigerian Breweries Plc.?
iii. Does interpersonal relationship between employees with superior have any effect on organizational efficiency in both Paterson Zochonis Industries Plc. and Nigerian Breweries Plc?
iv. Does delegation of authority and responsibility affect organizational efficiency in both Paterson Zochonis Plc. and Nigerian Breweries?
v. Does the size of organization affect organizational structure in both Paterson Zochonis Industries Plc and Nigerian Breweries Plc.?
vi. Does a change in technology affect organizational structure in both Paterson Zochonis Industries Plc. and Nigerian Breweries Plc.?
vii. Does organizational strategy affect organizational structure in both Paterson Zochonis Industries Plc and Nigerian Breweries Plc?
viii. Does the rate of change in the environment affect organizational structure in both Paterson Zochonis Industries Plc and Nigerian Breweries Plc?
ix. Does organizational structure help in removing obstacle caused by confusion and uncertainty of assignment in both Paterson Zochonis industries Plc and Nigerian Breweries Plc.?
The hypotheses stated below are relevant in this study;
H01: There is no positive significant relationship between organizational structure and organizational efficiency.
H02: There is no significant relationship between the size of the organization and the organizational structure.
H03: There is no significant relationship between changes in technology and organizational structure.
H04: There is no significant relationship between the rate of change in the environment and organizational structure.
H05: There is no relationship between delegation of authority and responsibility and organizational efficiency.
1.6 SIGNIFICANCE OF THE STUDY
The study will enable firms to know how relevant and important pattern of organizational structure is and its contributions to efficiency both from employees and management team in manufacturing firms.
The workers will benefit from this study because through proper organization structure, they know their tasks, responsibilities and status assigned to them. Thus eliminating misunderstanding between an employees and boss.
The manages will benefits from this study because it will help them to know and develop an intentional structure of roles for effective performance, a network of decision communication centers from which to secure coordination of individual effort toward group goals.
This study will also serve a useful purpose of enlightening entrepreneurs on the various socio cultural factors such as a man’s orientation, which are apt to operate on their job behaviour.
The study will be beneficial to business minded people who wish to be highlighted and succeed in their business endeavor through the use of appropriate pattern of organizational structure to enhance their organizational efficiency and performance.
To students and researchers, this study would serve as a reservoir of knowledge. The study would therefore not only add to the existing literature in the field, it would in a way improve the paucity of data which has for long been hindrance to the development of culture of research in the developing countries especially Nigeria.
1.7 DEFINITION OF TERMS
i. Authority: the right inherent in a managerial position to give orders and expect them to be obeyed.
ii. Centralization of Authority: The tendency to restrict delegation of decision making in an organization structure. Usually by holding it at or near the top of the organization structure.
iii. Coordination: Achieving harmony of individual effort toward the accomplishment of group purpose and objectives.
iv. Delegation: The organizational process that permits the transfer of authority from a superior to a subordinate.
v. Decentralization of Authority: The tendency to disperse decision making authority in an organization structure.
vi. Division of Work: The specialization of cooperative labour in specific circumscribed tasks and roles, intended to increase productivity of labour.
vii. Effectiveness: Doing the right thing.
viii. Efficiency: Doing something well/right with no waste of time and resources.
ix. Formalization: The specification of behaviour using rules, policy, procedure and training.
x. Objective: The ends toward which activity is aimed. The end points of planning.
xi. Organization: The intentional structure of roles in a formally organized enterprise.
xii. Organizational Efficiency: The capacity of an organization to produce desired results with minimum expenditure of energy, time, money, personnel and materials.
xiii. Organization Structure: A framework, by which job tasks are divided, grouped and coordinated.
xiv. Span of Control: The number of subordinate that an executive can manage effectively.
xv. Unity of Command: The principle that a subordinate should have one and only one superior to whom he/she is directly responsible.
This chapter looked at organizational structure as the framework within which the activities of an enterprise take place. An organizational structure is said to be efficient if it facilitate accomplishment of objectives by people with the minimum resources and cost. In other words, organizational efficiency is as a result of efficient organizational structure. Problem that necessitated this study is organization structuring (organizing) problem. This study is conducted in order to improve and encourage proper organization structuring (organizing) and performance. There were some research questions asked and hypotheses relevant to this study were being formulated. Those that will benefit from this study are organizations managers, entrepreneurs, workers and students. Finally, important terms were defined.
ORGANIZATION OF THE STUDY
The study will be divided into five chapters structured as follows:
Chapter One contains the context of the problem, statement of the problem, the purpose of the study, research questions hypotheses, significance of the study, limitations and definition of terms.
Chapter Two (literature review) contains definitions of organizational structure, the purpose of structure, the guiding principles of organizational structure, elements of organizational/structure, factors influencing organizational structure, common organizational structure and modern structures, structure and efficiency, organizational structure and chain of command, structure and delegation and removing obstacle by clarification through structure to promote efficiency.
Chapter Three (Research Methodology) contains research design, sampling procedure/sample size determination, questionnaire design, data collection method and data analysis techniques.
Chapter Four will contain the presentation, analysis and interpretation of data.
Chapter Five will contain discussion of the findings, conclusion and recommendations.