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
CHAPTER ONE
INTRODUCTION
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.?
1.5 HYPOTHESES
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.
Summary
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.
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