Organisational Structure and Operational Efficiency of Selected Money Deposit Banks in Lagos State, Nigeria

Abstract

Organisational structure is a critical antecedent to financial performance. In order to be capable of adequately responding to changes in dynamic environments, banks often decentralize decision-making authority, have minimal hierarchical levels or structural layers and adopt free-flow communication channels. However, most banks in Nigeria are characterized with improper organizational structure which had made most deposit money banks fail to function and operate efficiently or even collapse. Furthermore, most past studies on the influence of organisational structure on organisational performance have not critically investigated the effect of organisational structure dimensions in terms of centralization, bureaucratic structure, divisional structure, number of layers of hierarchy and formalization on performance of deposit money banks in Nigeria. Hence, this study examined the effect of organisational structure dimensions on performance of selected Deposit Money Banks in Lagos State, Nigeria.

The study adopted cross-sectional survey research design with a population of 26452 of 5 selected deposit money banks in Lagos State. The sample size estimated through the Cochran (1997) formula was 829 and selected through a stratified random sampling technique. A self-developed structured and validated questionnaire was used for data collection. Data were analyzed through Pearson Product Moment Correlation (r).

Findings revealed that organisational structure dimensions: Centralization (r= 0.712, p<0.05), bureaucratic structure (r=0.753, p<0.05), divisional structure (r=0.747, p<0.05), number of layers of hierarchy (r=0.775, p<0.05) and formalization (r= 0.740, p<0.05) had significant relationship with the operational efficiency of selected deposit money banks in Lagos State, Nigeria.

This study recommend that deposit money banks in Nigeria should leverage on the advantages of adopting the right organisational structure as it is suggested that adopting the appropriate organisational structure will enhance operational efficiency.