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CHAPTER ONE

INTRODUCTION

1.1   Background of the Study

The organizational structure of, for example, a company is a system used to define its hierarchy. Each employee’s position is identified, including their function and who they report to within the firm. It is the way in which a company or 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 also 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. The organizational structure outlines how activities including task allocation, supervision and coordination are directed towards its individual aims. It is also a „viewing glass‟ or perspective through which employees may see their organization and its environment (Bock, 2013)

Nelson and Quick (2011) further posit that the organizations structure is meaningless unless supported by appropriate systems and a well-conceived culture. Martinelli, (2011) argues that the type of organization structure adopted by a firm will depend on the nature of the particular organization in question; in addition, the form which the organizational structure takes may be represented periodically by an organizational chart.  Ajagbe, (2011) sees organizational structure as “how jobs tasks are formally divided, grouped, and coordinated” the nature of formalization is the degree to which the workers are provided with rules and procedures that deprive versus encourage creative, autonomous work and learning. In organizations with high formalization, there are explicit rules which are likely to obstruct the impulsiveness and the flexibility needed for growth. Centralization or rigid authority structure also creates a non-participatory environment that reduces communication, commitment and involvement with tasks among participants. It refers to hierarchical level that has authority to make decision. If decisions are delegated to the lower levels, the organization is decentralized, and if decision making power authority is set aside at the top level, it is centralized. Germain, (2008) considers the outcome of structure on the performance mediating supply chain management and found that formal structure has a positive effect on performance in stable environment and a negative effect is achieved in dynamic atmosphere. Organizational performance relates to how successfully an organised group of people with a particular purpose perform a function.  Essentially, this is what we are speaking about when we refer to organisational performance and achievement of successful outcomes.

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