ORGANIZATIONAL STRUCTURE AND EMPLOYEE PERFORMANCE IN GUARANTY TRUST BANK PLC, LAGOS STATE

Abstract

This study examined organizational structure and employee performance. The effectiveness and success of an organization relies on the mangers ability to provide a motivating and enabling environment for its employees. The challenge for managers today is to keep the staff motivated, which will enhance their commitment and overall performance in the workplace. The manager has to know the habits of each employee and what might motivate each one in person. By understanding the employees' needs, managers can understand what pattern of reward to use to motivate them.

The research objectives were to; assess the impact of work specialization on employee productivity in Guaranty Trust bank, Lagos State; determine the influence of chain of command on employee commitment in Guaranty Trust bank, Lagos State; and to investigate the impact of departmentalization on employee efficiency in Guaranty Trust bank, Lagos State. This research work made use of quantitative source of data, through which data were gathered using a self-structure questionnaire and administered to 274 employees of Guaranty Trust Bank, Lagos State.

The findings showed that, there is a significant impact of work specialization on employee productivity in Guaranty Trust Bank, Lagos State. It was further revaaled that, there is a significant influence of chain of command on employee commitment in Guaranty Trust Bank, Lagos State. Lastly, the study found that, there is a significant influence of departmentalization on employee efficiency in Guaranty Trust Bank, Lagos State.

The study recommends that, organization should encourage a flexible chain of command in order to allow for employee participation and communication. Organization should ensure that employees are employed in their area of competence or specialization in order to bring out the best in them. In addition, organization should encourage a free flow of communication between management and employees

CHAPTER ONE

1.1. Background to the Study

Globally, the success of any facet of the business can almost be traced to motivated employee’s performance. This is particularly true and important in today's turbulent and often chaotic environment where commercial success depends on employees using their full talents. The ability to attract, retain and develop talented employees is a key feature of a successful business. Humans are an organization's most valuable and significant asset and this is particularly true in high tech industry such as the Banking sector, but again, people as well represent the most difficult resource for an organization to manage. However, the effective management of employee in an organization will lead to job performance and overall performance of the organization.

The effectiveness and success of an organization relies on the mangers ability to provide a motivating and enabling environment for its employees. The challenge for managers today is to keep the staff motivated, which will enhance their commitment and overall performance in the workplace. The manager has to know the habits of each employee and what might motivate each one in person. By understanding the employees' needs, managers can understand what pattern of reward to use to motivate them, (Nwachukwu, 2015). The goal of most companies is to benefit from positive employee behavior in the workplace by promoting a win–win situation for both the company and employees. Every organization is concerned with what should be done to achieve sustained high levels of performance through its employees. This means giving close attention to how individuals can best be motivated in order to enhance the overall employee performance in the organization, (Armstrong, 2015).

In the UK, there is difficulty blending multiple personalities into a cohesive and unified team.This can be an enormous issue, regardless whether the team is part of the executive suite, special project team in an R&D lab, or an operating team in a production facility, (Robbins, 2012). People’s personalities vary widely, and the diversity of backgrounds, opinions, views, and experiences can cause challenges for teams. This creates a unique set of potential issues and opportunities. If an organization can get people to come into alignment to support common objectives, a diverse team of leaders can produce amazing results, take on the demands of customers, and meet the threat of competitors, (Young, 2013).

In China, with the level of competition in the business environment around the world, it is important that organizations ensure that their employees are able to give their best performances to help the organization gain an edge over their competitors, (Chen, 2013). In the banking sector, the performance of employees is even more vital due to the fact that it is a service industry. As such the level of employee performance is critical to organizational sustainability in Chain.

In Germany, a number of organizations have a lot of hardworking people who have good intentions. However, despite their experience in the banking industry, their technical talent and the subject-matter expertise that many leaders bring to the table, creating a high-performance organization is often still out of reach, (O’Sullivan, &Lazonick, 2011).Sometimes managements are aware of their behavioral shortcomings; in other cases, they are blind to their leadership deficits. People inside the organization are often afraid to candidly say what they think, and helping enormously successful leaders with their Achilles heels can be tricky, (Bell, 2012).

In Belgium, Burton (2012) stated that, many managers in the banking industry in Belgium have complained that employees are displaying poor work attitudes at an alarming rate and are not committed to helping organizations achieve their set goals and objectives. Leading and managing an organization is a complex task that requires a unique mix of skill leaders who have to utilize their natural strengths, they also have to search relentlessly for ways to close their own performance gaps and improve their behavior.Without continuous improvement, an organization’s capabilities will be severely limited. In short, if leaders don’t constantly raise their game, they will suck all the energy and employ engagement out of an organization, (Bunderson& Sutcliffe, 2016).

In South Africa, many organizations especially the banking sector are faced with lack of poor communication and feedback. There seem to be two extremes in this area: either people do everything in their power to avoid confronting others and holding them accountable or they relish any opportunity to chew people out, belittle them, and crush their spirits, (Bell, 2012). Many organizations especially in South Africa have countless leadership teams which the number-one problem was a lack of honest, constructive, and open dialogue about team members’ practices, styles, skills, or behaviors, (Bell, 2012). In Zambia, Shafighi (2013) noted that the performance of employees had become a huge challenge due to the presence and representation of many cultures in the modern working environment in Zambia. According to Kuvaas and Dysvik(2009), most working environments in Zambia are diverse and multicultural as a result many employees have a variety of personalities which make them unique. However, this as well implies that, they have differing needs that propels them to give their best performance at work each day. In Ghana, as technologies change practically at the speed of light, it’s vital for banks and other organizations to innovate or be left behind. However, many organizations such as banks started their careers and businesses before many of these technologies such as internet banking, mobile app, etc., even existed, (Bell, 2012). Organizations can be vital for integrating new technologies, in particular mobile app development, and cloud computing.Lack of direction is one of the most common organizational issues encountered in many organizations in Ghana.

According to Aluko (2012), building a solid organization in Nigeria takes hard work and a keen awareness of the environment that exists in a business. Most executives are very busy people; a lot of things vie for their attention. Market conditions can change fast in business world and demand huge portions of leader’s time. Unfortunately, while they’re busy focusing on the many necessary operational distractions, many leaders take their eye off the teamwork ball, (Adi, 2011). This means that communication suffers and leaders get preoccupied and fail to recognize people, celebrate progress, build the talent pipeline, or invest time reviewing processes, practices, and better ways of working across functions. People then become disengaged, create marginalized, and lose focus and commitment in the organization.

Oyewobi, Windapo, and Rotimi (2013) opined that, organization structure is the arrangement of task, interrelations of different departments and levels of authorities to achieve cooperation of efforts, delegation of authority and effective communication along the scalar chain of command. Organizational structure identifies each job, its function and where it reports to within the organization. This structure is developed to establish how an organization operates and assists an organization in obtaining its goals to allow for future growth, (Malik, 2014). It is the way in which an organization is organized, including the types of relationships that exist between the directors, managers and employees. The organizational structure, which may refer to the hierarchy of not just a business, but as well as any entity such as a charity, government department, agency or education establishment, is developed to establish how an entity operates and helps the organization in achieving its goals and objectives, (Galbraith, 2013).

1.2. Statement of the Problem

Quite a number of studies have been examined by various authors in different countries, (Bell, 2012; Kuvaas & Dysvik, 2009). However, despite the importance of organizational structure, studies are lacking to show the degree to which organizational structure influence employee performance in the banking industry, using Guaranty Trust Bank, Plc, Lagos State. As a result, there exists a gap in this area. The 21st century managers are saddled with the responsibility of both leading employees and responding to the needs of customers who are more ethnically and culturally diverse from each other. Organizational structure has been observed to have an effect on employees’ attitudes and behaviors. The problems associated with impact of organizational structure on employees’ performance are significant issues and this has generated diverse opinions. The following are some of the problems;

Work specialization is a vital component for the success of any organization. This is so because, it is important that every organization should employ employees in their area of expertise in order to bring out the best in them towards ensuring organizational performance. Employees employed in their area of competence in an organization have the tendency to enhance the job performance by utilizing the organizational capital efficiently and effectively. According to Dale (2012), many employees are found in various positions in different organizations that are not related to their discipline and this has negatively affected the performance of many organizations because the employees gives in return low job quality and low performance. In spite of the importance of work specialization to the performance of employees in an organization, however, little or no study has been carried out in this regard, therefore this pose as a gap which this objective will fill by examining the impact of work specialization on employee productivity in Guaranty Trust bank, Lagos State.

In Nigeria, the issue of chain of command is mostly seen in many organizations, especially in the Manufacturing and banking sectors. The chain of command here implies to an organization hierarchy through which information is passed or method of operation in an organization. The issue of chain of command especially in a strict organization where autocratic style is in use has been found to discourage employee job participation and demotivation of employees’ morale in the organization, (Hellriegel, Slocum, & Woodman, 2012). This is so because, it doesn’t encourage an open flow of communication and as a result, it does not encourage employee involvement. The end result of this shows a negative attitude to work by employees which greatly affect employees’ commitment and overall performance of the organizations. Chain of command is a crucial component in every organization, however, research revealed that most of the studies are carried out in a more advanced and robust economy with a different methodology, therefore, this is gap which this objective will fill by determining the influence of chain of command on employee commitment in Guaranty Trust bank, Lagos State, with the use of different methodology.   

Departmentalization in an organization is crucial for enhancing the efficiency of employees in an organization; it is quite unfortunate that a number of departments in many organizations still lack communication problems to their subordinates, (Anderson, 2011). Today, a lot of departments in many organizations are faced with several issues such as communication barrier between department head and subordinates, improper way of transmitting information, the use of vague words and many others. To proof this point, a study examined by Riccomini (2015) in a number of organizational study, reveals that the better departments heads communicate, the more satisfied the employees will be in all areas of their work life. This simply connotes that, building a positive communication with department employees is very paramount mainly because employees are the best ambassador that represent the organization to the outside world, (Robbins, 2012). Study revealed that, departmentalization is crucial for improving employees efficiency in the organization, however, research carried out in this regard are mostly conducted in developed countries, therefore this is gap to be filled by examining this objective in order to investigate the impact of departmentalization on employee efficiency in Guaranty Trust bank, Lagos State.

Based on the above, it is important that a study in this area is carried out in order to identify how organizational structure in Guaranty Trust Bank Plc has been able to influence the performance its employees.

 

1.3. Objective of the Study

The main objective of the study is to establish the impact of organizational structure on employee performance in Guaranty Trust Bank Plc, Lagos State. However, to achieve this main objective, the following specific objectives will be to;

  1. assess the effect of work specialization on employee productivity in Guaranty Trust bank, Lagos State;
  2. determine the influence of chain of command on employee commitment in Guaranty Trust bank, Lagos State;
  3.  investigate the impact of departmentalization on employee efficiency in Guaranty Trust bank, Lagos State.

1.4. Research Questions

The questions of interest in the study are:

  1. What is the effect of work specialization on employee productivity in Guaranty Trust Bank, Lagos State?
  2. To what extent is the effect of chain of command on employee commitment in Guaranty Trust bank, Lagos State?
  3. How does departmentalization affect employee efficiency in Guaranty Trust Bank, Lagos State?

1.5. Hypotheses

Based on the objectives, the following hypotheses were developed in order to make valid conclusions on the subject matter. The hypotheses are expressed in their null form:

Ho1: There is no significant effect of work specialization on employee productivity in Guaranty Trust Bank, Lagos State

Ho2: There is no significant effect of chain of command on employee commitment in Guaranty Trust Bank, Lagos State

Ho3: There is no significant effect of departmentalization on employee efficiency in Guaranty Trust Bank, Lagos State

1.6. Operationalization of Variables

The dependent variable is employees’ performance, represented by employee productivity (EP), employee commitment (EC), and employee efficiency (EE). On the other hand, organizational structure, being the independent variable, is proxied by work specialization (WS), chain of command (CC), and departmentalization (D).

Where Y= Dependent variable

             X= Independent variable

 

Y= f(X)

X= Organizational Structure

 

X = f(x1, x2, x3, x4)

x1= Work Specialization (WS)

x2= Chain of Command (CC)

x3= Departmentalization (D)

 

Y= Employees’ Performance

Y= f(y1, y2, y3, y4)

y1 = Employee Productivity (EP)

y2 = Employee Commitment (EC)

y3 = Employee Efficiency (EE)

 

The three specific objectives are operationally expressed as:

To assess the impact of work specialization on employee productivity in Guaranty Trust bank, Lagos State.

Y1 = f (x1)

Y1 = b0 + b1x1 + u

To determine the influence of chain of command on employee commitment in Guaranty Trust bank, Lagos State.

Y2 = f (x2)

Y2 = b0 + b1x2 + u

To investigate the impact of departmentalization on employee efficiency in Guaranty Trust bank, Lagos State.

Y3 = f (x3)

Y3 = b0 + b1x3 + u

1.7. Scope of the Study

The study is limited to organizational structure and employee performance in Guaranty Trust Bank, Lagos State. The study is streamlined to employees’ performance variables such as employee productivity, employee commitment, and employee efficiency, and organizational structure variables namely work specialization, chain of command, and departmentalization. The study is to be carried out in Guaranty Trust Bank Plc, Lagos State. The unit of analysis of the study is the employees of Guaranty Trust Bank Plc, Lagos State at Junior, Middle level, Senior and Management level positions. In addition, the population of the study comprised 274 employees of Guaranty Trust Bank Plc, Lagos State.

1.8. Significance of the Study

To the Management, the findings of this study will be beneficial to the organization management in order to gain a better understanding on employee’s perceptions when changes takes place in an organization and to cultivate their negative behaviors and perceptions, because the performance of employees is one of the main issues in every organization

To the Academics/Researchers, this study will be of significance to the academic world as it will enhance their knowledge and understanding on organizational structure and how it can be carried out successfully in an organization. This study will be useful to future researchers who may be focusing on understanding the concept of organizational structure in order to be able to use the findings in this study for future studies that will create a huge positive impact on the society.

To the Society, the findings of this study will help the society and public at large have necessary information on how employee performance can be improved which in turn leads to customer satisfaction and patronization causing greater profitability.

To the Government, this study will be beneficial to the government in order to provide better understanding of how changes occur in an organization

1.9. Historical Background of Guaranty Trust Bank.

Guaranty Trust Bank Plc (GTBank) is a foremost Nigeria’s financial institution incorporated as a limited liability company licensed to provide commercial and other banking services to the Nigerian public in September 1990. The bank commenced operations in February 1991, and became a publicly quoted company in 1996 (GTB, 20202). The bank won the Nigerian Stock Exchange President's Merit award that same year and subsequently in the years 2000, 2003, 2005, 2006, 2007, 2008, 2009, 2011, 2013, 2015, 2016, and 2018. Presently, the bank has over 2 trillion Naira asset base, with shareholder’s funds of over 200 billion Naira and employs over 5,000 people in Nigeria, Cote d'Ivoire, Gambia, Ghana, Liberia, Sierra Leone and the United Kingdom (GTB, 2020).

In 2007, the bank became the first Nigerian financial Institution to undertake a US$350 million regulation Eurobond issue and a US$750 million Global Depositary Receipts (GDR) Offer. The listing of the GDRs on the London Stock Exchange in July 2007 made the bank the first Nigerian Company and African bank to be listed on the main market of the London Stock Exchange. In December 2009, the bank also successfully completed the first tranche of its $200 million corporate bond targeted at increasing the depth of its operations in West Africa and Europe. Similarly, GTBank launched a US$500 million bond, the first non-sovereign benchmark bond offering from sub-Saharan Africa (outside South Africa), to the international community in May 2011, (GTB, 2020)

GTBank mission describes the company’s product, market, and technological focuses which reflect the values and priorities of the company’s strategic. The bank mission establishes major goals thereby providing the company’s a sense of direction and encourages higher levels of performance. In essence, mission statement is a broad declaration of a firm’s purpose which identifies the company’s products and customers; thus distinguishes the company from its competitors. GTBank mission and vision statement are stated below (GTB, 2020):

We are a high quality financial services provider with the urge to be the best at all times whilst adding value to all stakeholders.

We are a team driven to deliver the utmost in customer services. We are synonymous with innovation, building excellence and superior financial performance; and creating role models for society. The bank mission and vision statements highlight its purpose, i.e. what the company is now and what it would like to become.

Strength constitutes capabilities and resources which give the bank an advantage compared to its competitors in meeting the need of the customers. The bank strengths are highlighted below:

GTBank has stronger capital base. The bank strong capital base assists the bank to increase its share of business with core corporate customers; thus, provides total banking solution (GTB, 2020).

The bank has high corporate lending expertise and reputation founded upon the quality and professionalism of its staffers (GTB, 2020).

In 2006, GTBank was accredited with International Standards Organization (ISO) quality mark for service providers (GTB, 2020). The bank is the first Nigerian bank so accredited.

GTBank is the first Nigerian company and African bank listed on the London Stock Exchange. In 2007, the bank was listed on the main market of London Stock Exchange having raised $750 million through the issuance of a Global Depositary Receipt (GTB, 2020).

The bank is rated by international rating agencies (including, Fitch and Standard & Poor’s; and Augusto & Co) as the best Nigeria’s bank (GTB, 2020). The strong ratings have assisted the bank to attract more customers and enhance its reputation. The bank also has positive ethics; thus, facilitates improved customer relationship.

GTBank has invested heavily on telephone contact center to accelerate its retail banking and ensure real time responses to customers’ enquiries and problems (GTB, 2012). In addition, the bank is adjudged the most satisfied e-banking customers, and a leading internet banking provider in Nigeria as per the Intermac Consulting 2007 Nigeria e-Banking Survey. The bank also features in Interswitch’s top 3 in ATM and card usage.

The bank has positive and good corporate governance. This is obvious from the bank’s noticeable lack of contraventions in banking legislation, unqualified audit report, lack of nonperforming insider-related credits and IFRS compliance.

Weakness connotes limitations of a firm resources and capabilities resulting to ineffective meeting of the bank customer’s needs relative to its competitors. GTBank weaknesses are highlighted below:

The bank liquidity is a concern as a recent study reveals that it has a worst maturity mismatch and advances are long term in nature with deposits being demand deposits.

The bank has a concentrated customer base which makes her susceptible to deteriorating industry specific conditions.

The bank’s pillars consist of reputation, professionalism, innovation, service and ethics (GTB, 2020). These pillars are particularly valued by corporate clients. However, previous studies revealed that some pillars of GTBank (i.e., excitement, belonging, fun and ubiquity) lack attribute good consumer brands.

1.10. Definition of Operational Terms

Organizational Structure: is the anatomy of the organization, providing a foundation within which organizations function, (Hatch, 2012)

Performance: The accomplishment of a given task measured against preset known standard of accuracy, completeness, cost and speed, (Price, 2000).

Employee Productivity: is an assessment of the efficiency of a worker or group of workers, (Mathis & John, 2003).

Employee Efficiency: means 'doing the right things or occupying oneself with the right things, (Obikeze, 2011).

Chain of Command: the command hierarchy or structure in which one rank obeys the one above it, and so forth, (Phillips, 2011)

Departmentalization: the organization of something into departments according to function, geographic location, etc., (Anderson, 2011)