CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.0 Introduction
This chapter reviews the relevance of this study. The major focus of this research is
to investigate the impact of organizational structure on staff trust and job
performance at First Bank PLC in Sokoto. In light of the above relevant literature
were closely examined. This chapter would be presented under the following
subheadings: Conceptual review, Theoretical review, Empirical review, Summary of
gaps in literature.
2.1 Conceptual Review
2.2 Concept of organization structure
According to Business Dictionary (2018) “an organization is a social unit of people
that is structured and managed to meet a need or to pursue collective goals.
McNamera (2018) further defines an organization in its simplest form as “a person, a
group or people intentionally organized to accomplish an overall, common goal or
set of goals”. According to Robbins (2014) “an organizational structure is defined
as a system that determines how job tasks are formally divided, grouped and
coordinated within an organization”. It could also be defined as the framework
within which management operates.
Also, an organization structure refers to the arrangements of task, interrelations of
various departments and levels of authorities to achieve co-operation of effort,
delegation of authority, and effective communication along the scalar chain (ISMN
Study Pack, 2012). However, the definition of an organization which was given by
McNamera (2018) in line with the organizational structure definition that was given
by Robbins et al. (2014) provided the core definition of an organizational structure in
terms of this study. This study therefore, defined the organizational structure as “a
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system that determines how tasks are formally structured and coordinated within a
group that is intentionally organized to accomplish a common goal” (Robbins 2014;
McNamera, 2018).
2.3 Importance of organizational structure
The organizational structure of first bank Sokoto branch is crucial for several reasons:
i. Efficiency: A well-designed organizational structure helps in streamlining
operations, reducing duplication of efforts, and improving overall efficiency
within the bank.
ii. Clear Reporting Lines: It establishes clear reporting lines, ensuring that
employees understand their roles and responsibilities, and know who to report to.
This helps in decision-making and accountability.
iii. Risk Management: A good organizational structure helps in managing risks
effectively by delineating responsibilities and ensuring proper oversight of
different functions within the bank.
iv. Customer Service: It can impact customer service by ensuring that there are clear
channels for addressing customer needs and concerns, leading to better service
delivery.
v. Compliance and Governance: An effective organizational structure supports
compliance with regulatory requirements and good governance practices, which
are essential in the banking industry.
vi. Adaptability: It can also impact the bank's ability to adapt to changes in the
market, technology, and regulatory environment.
Overall, a well-designed organizational structure is essential for the smooth functioning
and long-term success of a bank like First Bank PLC.
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2.4 Factors affecting staff trust
1. Communication: The way information flows within the organization can affect staff
trust and job performance. A hierarchical structure with limited communication
channels may lead to mistrust and decreased performance, while a more open and
transparent structure can foster trust and improve performance. (Robert and Olive,
2013).
2. Decision-making authority: The distribution of decision-making authority within the
organizational structure can impact staff trust and job performance. Empowering
employees to make decisions within their areas of expertise can increase trust and
motivation, leading to improved job performance.
3. Role clarity: A clear organizational structure helps employees understand their roles
and responsibilities, which can contribute to higher job performance and trust in the
organization.
4. Support and resources: The structure of the organization can determine how resources
and support are allocated to employees. A supportive structure that provides necessary
resources and assistance can enhance staff trust and job performance.
5. Flexibility and adaptability: An organizational structure that allows for flexibility and
adaptation to change can positively impact staff trust and job performance. Employees
are more likely to trust an organization that can respond effectively to challenges and
changes in the business environment.
2.5 Challenges within an Organizational Structure
Investigating the challenges within an organizational structure is critical for one to
recommend an alternative for an already existing organizational structure. The role
of organizational structure is essential in the success of the organization. As cited by
Ahmed (2012), an organizational structure must be clear to everyone so as to avoid
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confusion about the reporting protocol and the actual approach to the functioning of
the organization. Some of the challenges faced by organizational structures as
indicated in an article by Root (2017) are “departmental loyalty, new management,
confusion, and company goals”. Organizational structures are set up to define the
duties of each department and to determine each department’s objectives and
contribute to the overall organization’s performance and objectives. According to
Root (2017) one of the dangers of creating departments is the appearance of different
groups‟ mentality between the departments whereby each group sees themselves as
independent of the other instead of working together for the better good of the
organisation. Root (2017) also stresses that new management can also pose
challenges to an organisational structure. Root (2017) further states that “if there
have not been changes of management for many years, the organisation may start to
settle into doing things following a particular approach”. However, changes in
management can result in challenges on the organisational structure if the new
management does not adopt the previous management‟s management style. Within
the PAS department, management changes have been a norm in the last few years.
This, therefore, results in the organisational structure having to be changed every
time new management changes the focus of the department. Within an organisation,
effective communication is identified by Root (2017) as one of the critical aspects of
any business environment. Root (2017) stated that “without communication, new
ideas and processes can get confused”. This can result in the misalignment of the
organization’s objectives. Therefore, if departments are not communicating
effectively, then confusion may affect the effectiveness of the organizational
structure. Lastly, Root (2017) indicated that “an organizational structure is only as
effective when the entire organization utilizes it properly”.
2.6 Concept of Employee Performance
A good performance by employee is necessary for the organization, since an
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organization’s success is dependent upon the employee’s creativity, innovation and
commitment (Ramlall, 2008). Even though employee productivity and employee job
performance seem to be related, performance is in some cases measured as the number
and value of goods produced. However, in general, productivity tends to be associated
with production-oriented terms (e.g., profit and turnover) while employee performance
is linked to efficiency or perception-oriented terms (e.g. supervisory ratings and goal
accomplishments. Organizations need good employees and appropriate structure that
will enhance their performance. According to Olagunju (2010) most organizations
performance is measured by supervisory ratings, supervisory ratings quality, and
quantity, dependability and job knowledge and goal accomplishments even though they
are highly subjective. This study however will however adopt the variables of
employee‟s performance to include; supervisor’s ratings, quality, quantity,
effectiveness, efficiency, dependability, job knowledge and goal accomplishments.
Employee performance in First Bank PLC, Sokoto Branch, Nigeria, is likely to be
evaluated based on various criteria such as job knowledge, quality of work, productivity,
teamwork, communication skills, adherence to company policies and procedures,
customer service, and overall contribution to the bank's goals and objectives. The bank
may use performance appraisals, key performance indicators (KPIs), and other
assessment tools to measure and manage employee performance. Additionally, factors
such as attendance, punctuality, and adherence to ethical standards may also be
considered. It's important for employees to understand the specific performance
expectations and metrics set by the bank and to actively work towards meeting or
exceeding those standards.
2.7 Relationship between Organizational Structure and Performance
The organizational structure is developed such that it would positively contribute to
the organization‟s overall performance. Robbins and Coulter (2001) as cited in
Avdelidou-Fischer (2015) stressed the importance of measuring organizational
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performance and emphasized how vital an organizational structure is since it is “the
vehicle through which managers can coordinate the activities of the various functions
or divisions to exploit fully their expertise and capabilities”. Avdelidou-Fischer
(2015) further indicated that an organizational structure is simply the process by
which organizations formally divide, group, and coordinate job tasks. For any
organization to be effective and efficient, its organizational structure needs to be in
line with the organization‟s objectives. A study conducted by Khaleghi (2013)
indicated that “an organizational structure plays a crucial role in the success of an
organization”. Khaleghi (2013) further stated that a “successful organization
normally uses a horizontal and less complicated structure”. The study intended to
identify the relationship between the organization‟s formality, complexity and
concentration to its performance. The results of that study by Khaleghi (2013)
indicated that “Although there were some positive impacts from the formality and
concentration on the organizational performance, there was no indication of any
possible effect from the complexity of the structure on the organizational
performance”. In this research study, the departmental performance relied fairly on
the organizational structure. A horizontal structure is more effective when it comes
to performance measurement as opposed to a vertical or hierarchical organizational
structure.
2.8 Streamlining Organizational Performance through Departments
Streamlining can be said to be the improvement of the efficiency of a particular process
within an organization, departments is one of the ways by which organizational
performance can be streamlined. Each department focuses on its own objectives and
performance which contributes to the overall organization‟s performance. Sometimes
there can be departments within the larger department which are sub-departments of the
larger department. A study by Ahmed (2017) on, “The Importance of The
Organizational Structuring and Departmentalization in the Workplace” defined
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departmentalization of an enterprise as a process whereby a number of departments are
created based on the nature of their functions. According to Ahmed (2017)
“departmentalization helps to develop new managers by providing them with the
opportunity to take independent decisions and initiatives and this consequently creates
an environment whereby highly skilled subordinates can get an opportunity of being
promoted to higher levels of management”. In the same study, Ahmed (2017) stated that
if the departmental functions expand, the organisation can further sub-divide that
department so as to share the workload more efficiently. The attestation by Ahmed
(2017) in the study conducted shows that departmentalization results in a single point of
authority within a department. In this case, accountability can be appropriately directed
to an individual. When performance as one of the key performance indicators is
evaluated, the single source of accountability is responsible for ensuring that the
department’s performance is up to the acceptable standard. It has also shown that
departmentalization can be used to streamline organizational performance.
Streaming organizational performance through departments in banks involves
monitoring and analyzing various key performance indicators (KPIs) to assess the
overall effectiveness and efficiency of each department. Here are some steps to
consider:
i. Identify Key Metrics: Determine the specific KPIs that are most relevant to each
department's performance. This may include metrics such as customer
satisfaction, transaction processing times, error rates, employee productivity, and
financial performance.
ii. Data Collection and Analysis: Implement systems to collect real-time data on
these KPIs and use analytics tools to monitor and analyze the performance of each
department. This could involve using business intelligence software or custom-
built dashboards.
iii. Regular Reporting: Establish a reporting structure that allows for regular updates
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on departmental performance. This could involve weekly or monthly reports that
highlight trends, areas for improvement, and successes.
iv. Cross-Departmental Comparison: Compare the performance of different
departments to identify best practices and areas for improvement. This can help in
sharing successful strategies across the organization.
v. Continuous Improvement: Use the data and insights gathered to drive continuous
improvement initiatives within each department. Encourage a culture of
accountability and innovation to drive performance improvements.
vi. Leadership Involvement: Ensure that leadership is actively involved in reviewing
and discussing departmental performance. This can help in setting priorities,
allocating resources, and driving a culture of performance excellence.
By implementing these steps, a bank can effectively stream and monitor organizational
performance through its various departments, leading to improved overall performance
and customer satisfaction.
2.9 Theoretical review
Weber's Bureaucratic Model is a classic model of organizational design that is still in
use today. It involves structuring an organization hierarchically with formal rules and
procedures that govern the organization and its members. The basis for job design
theory is organization theory, which can be classified broadly into three strains of
thought: the classical, the behavioral, and the situational.
2.9.1 Classical theory was expounded in early writings of Max Weber and Henri
Fayol. For the classicist, any organization achieves efficiency through its division of
labor. Managers identify the overall purpose of the organization. They then divide
this overall purpose into jobs, each rationally related to the whole. Jobs are, in turn,
grouped to create work groups, divisions, and departments. Finally, each group is
assigned a supervisor, who is responsible for overseeing the work of subordinates
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and reporting the results to his or her own superior.
2.9.2 Behavioral theory is quite different. Unlike the classicist, the behaviorist is
much less interested in allocating specific tasks to specific jobs, making sure that the
authority matches the position, and then trying to attain higher efficiency through
specialization of labor. Behavior lists prefer simple organizational structure,
decentralized decision-making and informal departmentalization. In an organic
structure, subordinates feel free to discuss their performance problems with superiors
and have a positive view of the organization. They participate in decision-making
and communicate with those whose views are needed to solve immediate problems.
These characteristics are in stark contrast to conditions in a traditional organization,
where subordinates are guarded and negative about the organization, do not feel
sufficient trust to communicate openly with those of higher status, and are not
permitted to participate in decision- making.
2.9.3 Situational theory differs from both classical and behavioral theories.
Advocates stress the influence of the external environment on the allocation of
responsibilities and tasks within the organization, work groups, and jobs, allocating
responsibilities and tasks means creating a structure. Appropriate structures differ
according to technology, markets, production, research, and information. One of the
most common and relevant research topics in the field of contingency or situational
theory involves analyzing the effect of a set of mainly external factors on the
design of an organization in order to verify the most efficient organizational
structures (Powell, 1992; Baligh et al., 1996; Forte et al., 2000; Pettigrew et al.,
2000; Meilich, 2006).
2.10 Empirical review
Base on the research carried out by Malik Shahzad Shabbir (2016), titled
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“Organizational Structure and Employee’s Performance” the study sought to assess
the impacts of organizational structure on staff trust and job performance in brewing
firms in Nigeria. The purpose of the study is to determine whether there is appropriate
structure in Nigeria brewing firms and the extent it has contributed to their employees‟
performances. The population of the study is 68 being the total staff strength of the five
brewing firms in Nigeria Stock Exchange while the sample size was extracted from the
population using Taro Yamane method. This study used descriptive type of survey
design and structured questionnaire was used to generate data. Descriptive statistics,
correlation and t-statistics, was adopted for analysis of data and hypotheses testing. The
result of the study revealed that nature of hierarchical layers has significant positive
effect on the employee‟s performance of brewing firms; that technology has significant
positive effect on the employee‟s performance of brewing firms; that internal and
external boundaries has significant positive effect on the employee‟s performance of
brewing firms; and that formalization significantly affect employee‟s performance
positively. In view of the above findings, the study concludes that adopting appropriate
structure is the fulcrum on which employees‟ performance of brewing firms revolve
Rachmayanthy, (2017) there is a positive and significant effect between organizational
structure and employee performance. And the indirect effect between organizational
structures on performance through job satisfaction. Based on these findings, it can be
concluded that any changes or variations that occur in performance are directly affected
by job satisfaction, and indirectly have a significant effect on organizational structure.
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