Organizational Structure, in the Context of Change Management and Performance of Companies Listed in Nairobi Securities Exchange in Kenya

Abstract

Companies listed in Nairobi Securities Exchange are faced with difficulties in adopting flexible and effective organizational structures that are capable of realigning the business processes/operations in change management processes for a more efficient, effective response to the turbulent and changing business environment. This study sought to determine the extent to which organizational structure in the context of change management affects performance of companies listed in NSE in Kenya. This study anchored on pragmatism philosophy, adopted a cross sectional survey and correlational research designs. A quantitative research approach to collecting and analyzing data was used. The target population was 64 companies listed in NSE and met the condition of having traded for five years from 2013 to June 2017.The study used Mugenda and Mugenda (2003) sample determination proposition that a sample size of 10% to 30% was a good representation of the target population. Multistage sampling techniques was used, at the first stage stratified random sampling technique was used since the population was subdivided into groups, six were in agricultural sector, two were in automobiles and accessories, ten were in banking sector, thirteen were in commercial and services, five were in construction and allied, five were in energy and petroleum, six were in insurance, three were in investment, one was in investment services, nine were in manufacturing and allied, one was in telecommunications and technology and lastly, one was in real estate investment trust (NSE Handbook, 2015).At the second stage, purposive sampling was used and was confined to specific types of people who can provide the desired information namely; chief executive officers, heads of human resources, finance and marketing since they deal much with policy formulations. The number of companies sampled was 38 4 senior managers = 152 senior managers. The study used semi-structured questionnaire to collect data. The split-half reliability test showed a Cronbach's Alpha of r=0.704, this was above 0.7, hence the tool was reliable. Data analysis was done through descriptive and inferential statistics such as correlation, hypothesis testing, and linear regression model. The findings showed that all the elements were effective in contributing to adaptive organizational structures with the most effective to the least effective in this order: centralization of decision making, formalization of change process, Specialization of managers and configuration of change Process. The study revealed that there was a significant strong positive correlation between organizational structure and performance of companies listed in NSE, r= 0.723**,p<0.001,CL=95%. The ANOVA F-statistic p-value being < 0.001 which is less than 0.05 hence, the study rejected the null hypothesis that organizational structure does not significantly affect performance of companies listed in Nairobi Securities Exchange. It was recommended that companies listed in NSE should seek to strengthen specialization of managers and configuration of change process which are the elements of organizational structure that contributed the least to more flexible and effective organizational structures, this will ensure better performance outcomes. The study showed that organizational structure positively affects performance of firms listed in NSE, therefore managers of these firms should adopt an organizational structure that is efficient, flexible and innovative in order to be able to achieve better performance.