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International Journal of Management, Accounting and Economics

Vol. 3, No. 2, February, 2016

ISSN 2383-2126 (Online)

160

Investigating the Relationship between

Organizational Structure Factors and Personnel

Performance

Hadi Shafiee1 MSc in Business Management, Faculty of Management and Economics,

Bahonar University of Kerman, Kerman, Iran

Ehsan Razminia MSc in Public Management, Payame Noor University, Bushehr, Iran

Narjes Khatun Zeymaran MSc in Industrial Management, Faculty of Management, University of

Tehran, Tehran, Iran

Abstract

Nowadays, for surviving in the dynamic and complicated environment, it is

required for organizations to have agility and flexibility in which the main factor

is organizational structure which is the principal force of change. It is a

framework for all organizational decisions and processes and influence the

performance improvement and productivity increase. The purpose of this

research is ranking the organizational structures factors which are effective on

Personnel performance. This is applied and survey research which its statistical

population consists of employees of Karafarin and Parsian insurance companies.

Convenience sampling method were used to collect research data. Analyzing,

the research data, the Pearson and Friedman Tests were applied. The results

showed that formality is the most effective factor and complexity is the least

effective factor on personnel performance.

Keywords: Organizational structure. Personnel performance, ranking, formality, complexity.

Cite this article: Shafiee, H., Razminia, E., & Zeymaran, N. K. (2016). Investigating the

Relationship between Organizational Structure Factors and Personnel Performance.

International Journal of Management, Accounting and Economics, 3(2), 160-165.

1 Corresponding author’s email: [email protected]

http://www.ijmae.com/

International Journal of Management, Accounting and Economics

Vol. 3, No. 2, February, 2016

ISSN 2383-2126 (Online)

161

Introduction

Any organization tries to have a proper and systematic structure in order to increase

efficiency and productivity. Such attempts can solely contribute to increase in sales and

net profit and ultimately result in success in business. In a flexible organizational

structure, personnel can do their duties by knowing the customers' needs and prompt

decision making. Such structure creates more liberties for employees and assists them to

make more proactive roles in the organization instead of being a mere viewer.

Appropriate organizational structure is very important in the achievement of

organizational goals and strategies in a way that organizational structure is a significant

source for obtaining competitive advantage through effective changeability and flexibility

and is considered as one of the essential provisions for successful adaptation with

changes. Good performance in organization requires a specific structure in it. The

organizational structure also involves system plans by which all units are harmonized and

consequently effective communication in organization is guaranteed. Organizational

structure is the mean of strategies implementation for achieving desired goals and also

the necessity of flexibility for compatibility with the changing world is unavoidable

(Englehardt and Simmons, 2002). The internal structure of organization can ignite of

prevent the performance in organization. Studies shows that existence of centralization in

decisions and their formality in processes and work relations prevent new ideas creation;

while distribution of power and flexibilities result in high performance in organization

leveling the ground for new ideas creation in organization. Thus, this research aims to

investigate the relationship between organizational structure factors and personnel

performance in two insurance companies of Karafarin and Parsian in Kerman, Iran.

Literature review

Organizational structure

Organizational structure is the way or methods by which organizational activities are

divided, organized and harmonized. Organizations produce structures to harmonize work

factors and control employees' duties. Organizational structure is the determinant of

formal relations and shows the levels available in administration hierarchy and specify

the span control of managers. Organizational structure is the dominant relations of works,

systems and operational processes, individuals and groups who try to achieve a common

goal (Barney & Griffin, 1992). Structure shows those who are responsible for supervision

and introduce managers to the employees to whom they have to obey. The other

application of structure for organizations is assistance to facilitation of information flow

(Arnold & Feldman, 1986). Therefore, organizational structure is the process of

determining relations, individuals' responsibility, accountability and power and specify

the way of doing works for effective use of human resources needed for organizational

goal achievement (Liao and et al, 2011; Willem and Buelensa, 2009). Knowing and

investigating the organizational structure factors is the start of using organizational

resources and benefits, empowerment of identifying opportunities, provision of new

combinations of available resources and ultimately leveling the ground for organizational

development.

http://www.ijmae.com/

International Journal of Management, Accounting and Economics

Vol. 3, No. 2, February, 2016

ISSN 2383-2126 (Online)

162

Complexity

Hage (1980) introduced the characteristics of organizational structure and said that the

degree of these characteristics are different in various organizations. This contributed to

a long pace on the route of investigation of organization format. Complexity means the

number of tasks or sub-systems in an organization.

Formality

Formality points to the standard level of organizational jobs. In a formal organization,

organizational relations are explained for employees in written and based on

organizational chart and, if necessary, the next changes are presented by manger formally;

but in an informal organization, organizational relations are illustrated verbally for

employees, and if necessary, are changed naturally.

Centralization

Hage (1980) defines centralization in line with the participation of individuals in

decision making. Researchers express that those public institutions looking for better

distribution of performance must pay attention to organizational structure and shift their

attention from centralized systems to non-centralized ones to facilitate the higher levels

of opinions and votes (Caruana et al., 2002). The centralization dimension is the

determinant of individuals having the right of decision making in organization (Fry &

Slocum, 1984).

According to the research literature review, the conceptual model of research is

defined as follows:

Figure 1 Conceptual model

Organizational

Structure

Complexity

Formality

Centralization

Performance

http://www.ijmae.com/

International Journal of Management, Accounting and Economics

Vol. 3, No. 2, February, 2016

ISSN 2383-2126 (Online)

163

H1: There is not a significant difference between organizational structure factors and

personnel performance.

Research methodology

The current research is an applied survey. The research tool is questionnaire. SPSS

software package was used to analyze data and test the research hypothesis. Friedman

test was applied to rank the organizational factors. Crobach alpha was also used to test

the reliability of the research tool.

Population and statistical sample

Current research applied convenience sampling method. The population size is 97

employees of two insurance companies, Karafarin and Parsian, in Kerman, Iran and the

sample size is 80 based on Morgan's table.

Demographic variables

Demographics of research population has been presented in table 1.

Table 1 Demographic variables

Variable Type No.

Gender Female 52

Male 28

Education

Post diploma 15

bachelor 56

Master and above 9

Reliability and validity of questionnaire

The validity of questionnaire was approved by expert and its reliability was calculated

by Cronbach alpha. According to table 2, its value was 0.81 which is more than the

acceptable threshold, 0.70.

Table 2 Reliability results

Index Cronbach alpha

Centralization 0.82

Formality 0.87

Complexity 0.76

Personnel performance 0.81

Results

Firstly, the research investigates the relationship between personnel performance and

organizational structure factors and then ranks these factors based on personnel

http://www.ijmae.com/

International Journal of Management, Accounting and Economics

Vol. 3, No. 2, February, 2016

ISSN 2383-2126 (Online)

164

performance. The summary of correlations among performance and organizational

structure factors is shown in table 3.

Table 3 Pearson's correlation matrix

Variable Organizational

structure Centralization Complexity Formality

Personnel

performance 0.680 0639 0.651 0.626

Test result Accepted Accepted Accepted Accepted

According to the results, there is significant relation between personnel performance

and organizational structure factors with confidence level of 0.95. Based on table 4 the

significance level is 0.000 which is less than 0.05 showing that research variables does

not have identical ranks and at least two variables are significantly different. The

Friedman test result also shows the ranks of research variables in table 5.

Table 4 Priority level test

K2 242.717

Degree of freedom 2

Significance 0.000

Table 5 Ranks of variables

Index Rank average

Formality 4.75

Centralization 4.19

Complexity 3.82

Conclusion

Nowadays in the current changing conditions, organizations are obliged to pay

attention to their human resources in order to achieve more efficiency and effectiveness

and ultimately their specified goals. Organizations are influenced by numerous factors

resulted from dynamic environments around them and since organizational structure is

stable and consistent, it is not always possible to estimate the need for efficiency and

productivity capability. Therefore, the purpose of this research was investigation and

ranking the relationships among organizational structure factors and personnel

performance. Results indicates that there is a positive relationship between organizational

structure factors and personnel performance. Formality has the highest rank and

complexity has the lowest one among organizational structure factors. Totally, from the

management perspective, organizational structure design emphasizes on omission of

repetitive tasks, grouping similar tasks and deploying economy of scales, codirecting of

strategies and organization abilities through which not only contributes to increase in

efficiency in organization but also influences the development of abilities in

organizational units.

http://www.ijmae.com/

International Journal of Management, Accounting and Economics

Vol. 3, No. 2, February, 2016

ISSN 2383-2126 (Online)

165

Recommendations for future research

Following recommendations are presented for scholars to conduct their future

researches:

 Applying multidimensional decision makings in order to rank the organizational structure factors;

 Investigation the effect of mechanic and organic structures on personnel performance; and

 Surveying the organizational agility models on personnel performance.

References

Arnold, H. J. and Feldman, D. C. (1986). Organization Behavior, New York:

McGraw- Hill.

Barney, Jay B. Griffin, Ricky W (1992). The Management of Organization, Boston:

Houghton Mifflin Company.

Caruana, A., Ewing, T. M. and Ramaseshan, B. (2002). “Effects of some

environmental challenges and centralization on the entrepreneurial orientation and

performance of public sector entities”, The Service Industries Journal, Vol. 22, No. 2, pp.

43-58.

Englehardt, C., Simmons, S. and Peter, R. (2002). Organizational flexibility for a changing

world, Leadership & Organization Development Journal, Volume 23 Number 5, pp113-121

Fry, L. Slocum, W.; and John, W. (1984), “Technology, structure and work group

effectiveness: A test of a contingency model”, Academy of management journal, Vol. 27,

No. 2, pp. 221-246.

Hage, J. (1980). Theories of Organizations. New York: John Willy and Son Inc.

Liao C., Chuang S.-H., To P.-L.(2011);"How knowledge management mediates the

relationship between environment and organizational structure"; Journal of Business

Research, 64(7),

Willem, A. and Buelensa M. (2009). "Knowledge sharing in inter-unit cooperative

episodes: The impact of organizational structure dimensions"; International Journal of

Information Management, 29(2).

http://www.ijmae.com/

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