THE EFFECT OF ORGANIZATIONAL STRUCTURE ON CORPORATE PERFORMANCE

THE EFFECT OF ORGANIZATIONAL STRUCTURE ON CORPORATE PERFORMANCE

Abstract

The study examined the effect of organizational structure on corporate performance of Globacom Limited. It was established that organizational structure is the formal system of authority, relationships and tasks that control and coordinate employee actions and behavior to achieve goals in an organization. There are different types of structures including centralization, formalization, sales growth, integration, differentiation, autonomy, administrative component, delegation of authority, adaptiveness or adaptation, production, efficiency and job satisfaction.

The study made use of primary data. Descriptive statistics and regression analysis were used to analyze the data. The population of the study comprised 4, 575 employees of Globacom at junior, senior and management cadres. Out of the 368 questionnaires administered, 327 copies were returned, indicating a response rate of 88.2 %.

The findings showed that employees unanimously agreed that their organization has satisfactory performance in the areas of profitability, sales growth and market share. The opinions of the respondents reached a consensus that the organization is centralized, formalized and complex.

On the premise that the probability value of the estimated coefficients of the independent variables is less than the standard 0.05, the following alternative hypotheses were accepted. Centralization has significant effect on profitability position of Globacom Limited; Formalization has significant effect on market share of Globacom Limited; Complexity has significant effect on sales growth of Globacom Limited.

The study concludes that organizational structure affects corporate performance with respect to profitability, sales growth and market share. The study recommended; Management of Globacom Limited are encouraged to adopt lesser layer in organizational hierarchy; Management are advised to reduce applying too rigid rules. Management are advised not only to adopt appropriate technology while designing structure but also always respond to changes in technology. Management should combine elements of both task routine and variety in organizing employees for carrying out task in order to reap the advantages of both systems of task assignment.

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