This paper aims to explore the effects of organizational size on organization effectivity. Organization or workforce size in this paper is defined as the number of employees in a geographical location, as defined by Michael Beer, or the number of persons employed in the organization. Also defined in this paper is organizational effectivity or effectiveness, which refers more to goal attainment. Topics also discussed in this paper are the effect of organization size on employee participation, which is also discussed at length here and can be direct and indirect. The two forms of direct participation are also included in this paper, as well as the determinants of employee participation. Three of them have been used in this paper: competition, indirect participation, and organization size. Other topics included in this paper is the effect of organization size on employee performance, training and development, which is described as crucial for an organization’s growth and survival. The effect of organizational size on employee performance is also discussed in this paper, where some researchers found that there is a positive and a negative relationship. Mentioned briefly are the methods in which employees from the private and public sector are evaluated where their performance is concerned. Three more topics have also been integrated in this paper: the effect of organization size on employee interaction and engagement, and organization culture, along with the advantages and disadvantages of large organizations and small organizations. The discussion on the effect of organization size on employee engagement and interaction are separated into two separate topics, as engagement and interaction are not synonymous with each other where this paper is concerned. Employee engagement, in this paper, would mean the commitment of the employees to work and attain organization goals. Included in the discussion about the effect on employee engagement are the key factors of employee engagement.
Keywords: organization effectiveness, workforce size, employee performance, employee engagement, employee participation, organization culture
Organizational or workforce size is the structural property of the organization and can be defined in terms of space volume, sales volume, net assets, customers, or the number of persons employed in the organization. (Theodore, 2009)
For this paper, organizational size would mean the number of people working in an organization.
The focus of this paper is the effect of organization size on its effectivity, also exploring deeper on the effects on what makes the organization effective—employee participation, which includes determinants such as organization size, indirect participation, and competition. The discussion also covers the effect of the organization size on employee performance, training and development, employee interaction and engagement, and organization culture, as well as a brief discussion on the advantages and disadvantages of small and large organizations.
Past studies on the effect of organization size on organizational effectiveness have been undertaken by Amah, E. and Nwuche, C.A., (2013), Zeong, and Luo (2013), and Georgopoulos and Tannenbaum (1957). Amah’s study, however, concentrated on the organizational structure, and its relevance in organizations; Zeong and Luo concentrated on organizational culture, which is also explored here in this paper; and Georgopoulos and Tannenbaum focused on productivity.
This paper’s objective is to determine what the effects of the organization or workforce size are on its effectivity, which also encompasses employee participation, employee performance, training and development, and organizational culture. It also seeks to explore the advantages and disadvantages of large organizations versus small organizations. It has, however, its limitations, where employee engagement and training and development are concerned, as it requires further studies on the topic.
Review of Related Literature
Introduction and Methodology
In this publication, (Theodore, 2009) provides the definition of organizational or workforce size, which is “the structural property of the organization and can be defined in terms of space volume.” Theodore’s study evaluates the effect of organization size in the development of private companies or enterprises in less developed countries, Ecuador, in particular. It, however, focuses more on organizational structure and levels, and its effect on economic development in Ecuador.
(Barling and Dekker, 2010) examined the relationship between workforce size and work-related role stress. It was found that workforce size was positively associated with role conflict, quantitative and qualitative role overload.
Findings and Discussion
Definition of Workforce size and definition of Organizational Effectivity
Organization or workforce size, as defined by (Beer, 1964), is “the number of employees at any given location.” Also covered in his definition is the total corporate organization if it is in one geographical location.
Beer’s work also discussed the effect of organization on job satisfaction, noting that there is a considerable confusion existing between the terms ‘morale’ and ‘job satisfaction’. Beer points out in his work that ‘morale’ is a group phenomenon rather than individual.
The work of (Georgopoulos and Tannenbaum, 1957) emphasized the complexity of organizational effectiveness, and how many difficulties have arisen in previous attempts to define the concept of effectiveness. It has always been viewed that where organizational effectiveness is concerned, effectiveness has always been associated with productivity.
Also discussed by Georgopoulos and Tannenbaum are the criteria for organizational effectivity—organizational productivity and net profit, but it is only to the extent to which the organization accomplishes its various contexts as criteria of effectiveness.
(Tain, 2012) recognizes how vital organization or workforce size is for its better functioning. Tain cites Blau and Schoenherr’s example, a large organizational or workforce size tends to create an organization that has greater formalization, specialization, and centralization. A limitation of Tain’s work is the use of perceptual indicators of organizational effectiveness. He recommends that future studies the work can be include real financial indicators such as market capitalization, and so forth.
How Organization or Workforce Size Can Affect Employee Participation
(Cabrera, 2003) in their work propoosed a number of hypothesis regarding determinants of employee participation, which included sector, competition, organization size—which were covered in this term paper. Also discussed was the two models of participation: affective and cognitive models.
Also discussed in this publication was the importance of employee participation. Cabrera et al. provided a short background which mentioned Elton Mayo’s contribution to industrial relations. The human relations approach to management highlighted the need for communication between employees and their superiors. Cabrera and colleagues warn, however, that the data in their study was obtained using a cross sectional research design, meaning, the investigator measures the outcome and the exposures at the same time (Dermatol, 2016), and they feel that it is unlikely that factors such as sector, strategy, or competition are caused by participation.
(Lawler, 1995), in his book Creating High Performance Organizations provided an important insight about how companies are more competitive and productive when employees are involved in decisions about their jobs and work environment.
Through meta-analytic techniques (Doucouliagos, 1995), finds that there is a positive relation between worker participation and productivity, and co-determination laws are negatively associated with productivity.
How Organization or Workforce Size Can Affect Employee Performance
(Amah, et al., 2013) concludes that the success of organizations depends largely on their ability to right-size and to combine the benefits of small and big companies. It is, however, recommended that companies have a big company/small company hybrid that combines a large corporation’s resources with a small company’s flexibility and simplicity. This has been reiterated in (Amah and Nwuche, 2013). Both publications, however, focus on corporate effectiveness, and not on the individual employee’s performance.
The Strategic Performance Management System which was implemented by the (Civil Service Commission, 2012), focuses on linking individual performance vis-à-vis the agency’s vision, mission, and strategic goals. It is a mechanism that ensures that the employee achieves the objectives by the organization, and the organization, in turn, achieves the objectives set forth in its strategic plan.
How Organization or Workforce Size Can Affect Training and Development
Training and development, as emphasized by (Butali and Njoroge, 2017) is crucial for the survival of any organization in the competitive world. The purpose of their study was to find out the impact of training and development on organizational performance. The findings of their study showed that training had a significant effect on organizational performance.
How Organization or Workforce Size Can Affect Employee Interaction and Engagement
(Talacchi, 1960) investigated the impact of certain structural characteristics of organization upon employee attitudes and behavior. Talacchi formulated his study for two reasons: first, a recently suggested need by administrative theories to evaluate organization structure as a determinant of organization behavior, and second, there was also a need to provide suggestions to administrators of growing enterprises.
Talacchi’s work has been valuable to this paper as it provided a correlation between organizational size, interpersonal relations, and relations between individual and management.
On the other hand, (Myilswamy, 2014) emphasizes the need for the recognition of employee engagement as a critical issue for every organization. Their study has found that organizations know that having high performing workforce is necessary for growth and survival. And for a high performing workforce, an engaged and willing workforce is needed.
How Organization or Workforce Size Can Affect Organization Culture
Organizational culture has come to be seen by many scholars as a key to understanding organizations, according to (Nazarian, et al., 2015). Their study investigated the relationship between organizational effectiveness in small and medium sized organizations in Iran, designing a model which helped show the impact of size on organizational culture. Using the Competing Values Framework, their study investigated to an extent the influence of organizational culture on organizational effectiveness on a given national culture, is impacted by size as well.
(Nazarian, et al., 2015) found that there is indeed a relationship between organizational culture and organizational effectiveness. They have also found that size, despite the fact that the results of their investigations are mixed, had a major impact on the nature on organizational culture, indirectly or directly through the organization’s structure or values.
(Amah and Nwuche, 2013), in their study on the effect of organization size on organizational culture in Nigerian banks. Through their study, the following results have been found: first, that size is significantly related to corporate culture and organizational findings. Second, it has been found that Nigerian banks do not focus properly on people management issues in the same way they address rules, systems, and procedures.
As Amah and Nwuche’s study is of the banking industry, it is limited to the extent that generalizations of any outcome of their study can be applied to all other sectors and industries in the Nigerian economy. Also, it is acknowledged that there is a lack of relevant literature on the subject matter.
(Zeong, 2013)’s study examined the impact of ownership type and firm size on organizational culture. Also discussed in their study was the moderating effect of contextual variables on the linkage between organizational culture and firm effectiveness.
Zeong and Luo’s study used (Denison and Mishra, 1995)’s model because not only it is one of the most popular organizational culture models but also because it also captures four contrasting culture traits. Their study is significant is can convey newer, or novel messages to managers about how firm size and ownership type may affect organizational culture.
(Denison, et al.,2003) examines the link between organization culture and effectiveness. They have conducted two separate studies, with the first study linking data from North America, Europe, or Asia. The second study focused on samples from Canada, also even as far as Brazil, Jamaica, Japan, and Australia and South Africa. Denison and his colleagues began their study by describing a model of organization culture whose research was conducted primarily in the USA. The four cultural traits are the following: involvement, consistency, adaptability, and mission. The authors also accept that attempting to create a common set of organizational traits are expressed in different ways, and in different national contexts.
On the other hand (Fey and Denison, 2003), in their study, presented a multi-method analysis of culture and effectiveness in a transition economy. Also, Fey and Denison present their argument that in Russia, effectiveness relies more on adaptability and flexibility, compared to the USA. Their study on organizational culture was significant to this term paper as the mission trait can help an organization to achieve its goals and to clearly inform its employees about its future direction.
Advantages and Disadvantages of Small vs. Large Organizations
The article by (Employment Crossing, 2013) about the advantages and disadvantages of large vs. small organizations. Larger organizations offer a greater degree of security, compared to smaller organizations, as well as growth and income. Smaller companies however, according to Employment Crossing, offer flexibility, and employees might be given a chance to create a solution to a new problem. They emphasized that at the end of the day, job searchers should still keep in mind about what they want in the job they intend to apply for.
(Quain, 2018) also lists compensation as one of the advantages of working in a large organization, ensuring that management will be able to draw for from a bigger, more talented pool of candidates, and that they will get to choose the most qualified for open positions. Smaller organizations, or businesses, adds Quain, do not quite have the same advantage, as they tend to have more limited resources.
The limitation in both these articles is that they are not able to provide more data as to how these advantages or disadvantages would make them more or less effective.
A survey was conducted online with thirty respondents. Organizations included government offices, financial institutions, food services (restaurants), business processing outsourcing companies, fuel and energy, research and development. The majority of the respondents (80%) are from the private sector; the remaining 20% belonged to the public sector. Some of the services they offer are legal services, technical support, financing, and accounting, construction, among others.
Organizational size was determined by the number of employees (Barling, and Dekker, 2010). 63% of the respondents worked in large corporations. Large corporations are organizations that have 250 or more employees (Industrial Development Agency, 2020). Respondents who work in medium-sized organizations make 13%.
The survey questionnaire, which is a combination of objective and multiple-choice questions had a total of twenty-six questions. Ten of these questions were objective type questions and measured organizational support. These questions covered the type of services the organization offered, opportunities for growth, and employee participation.
Sampling was stratified, and respondents were divided into subgroups—those who worked in the private or public sector, those who worked in small or large organizations. Respondents were also grouped according to their decision making power—that is, whether they are part of top or middle management, among others.
The full list of objective questions are as follows:
- What is the occupation of the respondent?
- What product or service does the company or organization offer?
- Are there opportunities where the rank and file employees are able to voice their sentiments regarding office policies or rules, or just to communicate with top management in general?
- Who provides funding for the training and development of the employees?
- If there are no training opportunities, what are the reasons why employees are not able to develop their skills or learn more?
- How does top/middle management ensure that the employees are able to perform their tasks well and on time?
- What does the management do to ensure that employees know one another?
- How many times are the employees able to gather in a year? What activities are they?
- Do you believe it is important that the employees know one another? Why or why not?
- What are the advantages and disadvantages of having a large or small workforce?
FINDINGS AND DISCUSSION
Definition of Workforce or Organizational Size
This discussion begins with the definition of workforce or organization size. Michael Beer defines workforce or organization size as “the number of employees at any geographical location.” (Beer, 1964) In his study, Beer includes the total corporate organization “if it is in one geographical location or a division of a decentralized corporation”. Small work groups were also cited as the dynamics of the smaller groups appear similar to those of larger organizations. (Beer, 1964)
Another definition of organizational or workforce size comes from (Theodore, 2009) whose study focuses on the development of private enterprises in less developed countries, mainly focusing on Ecuador. Theodore defines organizational size as “the structural property of the organization and can be defined in terms of space volume, sales volume, net assets, or the number of persons employed in the organization.” According to Theodore, “organizational size denotes the number of employees and managers employed in organizations”. Theodore also emphasizes that “large organizations tend to possess more specialization, departmentalization, centralization, and rules and regulations than small organizations.”
Definition of Organizational Effectivity or Productivity, and its criteria
It is acknowledged by Basil Georgopoulos and Arnold Tannenbaum that organizational effectiveness is one of the most complex and least tackled problems in the study of social organizations (Georgopoulos and Tannenbaum, 1957). Both of them also admit that there are many difficulties in attempting to adequately define the concept of effectiveness. The reasons for the difficulty are enumerated: some difficulties stem from the closeness with which the concept becomes associated with the question of values. (Georgopoulos and Tannenbaum, 1957).
However, both Georgopoulos and Tannenbaum were able to come up with their concept of organizational effectiveness (also sometimes called organizational success or organizational worth) is ordinarily used to refer to goal attainment. It is more a functional than a structural concept. (Georgopoulos and Tannenbaum, 1957)
Both Georgopoulos and Tannenbaum point out that traditionally, in the study of industrial relations, effectiveness has been viewed and operationalized mainly in terms of productivity. Citing RL Thorndike, who has noted a general tendency on the part of personnel and industrial psychologists to accept as an ultimate criteria of organizational success, Georgopoulos and Tannenbaum enumerates the following criteria: organizational productivity, net profit, the extent to which the organization accomplishes its various contexts as criteria of effectiveness, and the success of the organization in maintaining or expanding itself. (Georgopoulos and Tannenbaum, 1957)
What should be the size of a firm for its better functioning has always been a critical issue. (Tain, 2012) Tain, in his study of the significance of the difference in the dimensions of organizational performance also emphasizes the importance of organization size in organizational dimensions. Citing Blau and Schoenher’s example, Tain points out that a large organization size tends to create an organization that has greater formalization, specialization, and centralization.
How Organization Size Can Affect Employee Participation
Employee participation and its importance in business strategy was first stressed in the late 1920s and the early 1930s (Cabrera, 2003). Cabrera, with her co-authors referred to Elton Mayo’s Hawthorne studies, which gave rise to an increasing interest in the human determinants of productivity. The human relations approach to management, Cabrera further discusses, emphasizing the importance of communication between employees and superiors.
Employee participation can take the form of a variety of management practices such as participative management, employee involvement programs, empowerment, or workplace democracy. Each of these practices attempt in some way to involve employees in the sharing of information and/or making decisions. Such participation may be direct or indirect. Direct participation involves the employees themselves. Indirect participation, on the other hand, takes place through an intermediary of employee representative bodies, such as trade unions or work councils. (Cabrera, 2003, citing EPOC, 1997)
There are two main forms of direct participation; they include consultative participation and delegative participation (Cabrera, 2003). Consultative participation refers to practices where management encourages employees to share their opinions regarding work-related concerns, yet management retains the right to make all final decisions. Examples of consultative participation include regular meetings with supervisors, attitude surveys, and employee suggestion plans. Delegative participation, on the other hand, gives employees increased responsibility and autonomy to organize and perform their jobs as they see fit. Participation in the scheduling of work, improving work processes and attendance and absence control are examples of delegative participation where employees participate directly in work decisions. (Cabrera, 2003)
Determinants of Employee Participation
There is already a considerable amount of research regarding employee participation. Many of the studies focused on the outcomes of participative management. (Cabrera, 2003)
In order to identify the determinants, Cabrera and her colleagues have divided the determinants into two groups in their study, which was to explore the factors that influence employee participation in Europe: those who are expected to affect levels of employee participation in general and those expected to differentially affect the use of two types of employee participation. They have also hypothesized the amount of competition, sector, the pursuit of differentiation strategy based on either quality or service, and the amount of indirect participation that influenced general levels of employee involvement. (Cabrera, 2003)
For this paper, a detailed relationship will be described in detail for indirect participation, and organization size, which is the focal topic.
Individual countries have their own particular form of industrial relations as a result of their unique political and social history (Cabrera, 2003). Reflecting on participation in Europe, trade unionism, according to (Knudsen, 1995), is clearly a common dynamic that influences employee participation in Europe. Knudsen, however, concludes that on a more concrete level of analysis, there are more differences between national systems of employee participation than there are similarities. In other countries, participation is based on statutory regulation, in others, there is no regulation regarding employee participation, while in certain countries there is a mix of legal and voluntary regulation. There are some countries where work council members are elected by trade union members while in other countries, all employees, regardless of their trade union membership, elect work councils members. (Cabrera, et al., 1995, citing Knudsen, 1995)
There can be a major difference among national system of labor relations are the powers granted to trade unions and works councils. Some may have the power to call strikes and others may not, some can take legal action, others cannot, some can participate in decisions regarding training and compensation, others cannot. (Cabrera, 2003)
In the Philippines, where labor relations and employee participation are concerned, we have the Labor Code, and the Philippine Constitution, which provides the Filipino laborer the right to organize, to conduct collective bargaining or negotiation with management, to engage in peaceful concerted activities, to enjoy security of tenure, and to participate in policy and decision-making processes affecting their rights and benefits (Constitution, 1987).
Issues about employment tenure and termination fall in the area of labor relations (Azucena, 2016). Labor relations law, on the other hand, “defines the status, rights, and duties and the institutional mechanisms that govern the individual and collective interactions of employers, employees, or their representatives” (Azucena, 2016).
In the survey conducted for this paper, it would be very interesting to note that 83.3% of the respondents have shared that employees are involved or informed of the changes that the management makes in the organization. These are the same respondents who belong to large organizations, which make up 63.3% of the respondents
As to the extent of their involvement, there were plenty of avenues: through focus group discussions, consultations, town hall meetings. surveys, and feedback links. Of all these avenues enumerated, consultation was the most common form of employee participation and involvement. With respect to opportunities given to rank and file employees to air their sentiments regarding office rules and policies, respondents answered that they were also able to air their sentiments through focus group discussions, town hall meetings, surveys, and consultation meetings.
Large organizations may have motivational problems that consultative participation may help solve. Affective models of participation would suggest that consultation be used to increase employee satisfaction (Cabrera, 2003).
Survey feedback, according to (Lawler, 1995) was a practice used significantly more in large organizations. It was also used to assess attitudes and climate. However, it is argued that it may be more difficult to manage delegative participation in a large organization. (Cabrera, 2003 citing Heller et al., 1995)
Information sharing, on the other hand, requires efficient communication and higher levels of trust (Cabrera, 2003). Smaller organizations, Cabrera and her colleagues add, tend to have more committed employees and open communications. Also, according to Cabrera and her colleagues, increased bureaucracy and impersonalization of larger organizations may make the actual delegation of decision-making less likely.
Effect of Organization or Workforce Size on Employee Performance
The ability of organizations to cope, survive, and make progress determines how effective they are. Skyrocketing healthcare costs, increasing workforce diversity, and economic recessions have forced organizations to “right-size” While structure is important in definining individual responsibilities within the workflow process, a congruent size ensures that individuals carry out these responsibilities with minimum resistance. (Amah, 2013).
Some researchers claim that size inflences organizational effectiveness and efficiency and some claim that it does not. Of the various structural variables, size is perhaps the most likely to be associated with other organizational characteristics. (Amah, 2013)
In addressing the size-effectiveness relationship, some researchers find it a negative one, and others, a positive one. Despite their contrasting findings, each study holds that size may influence organizational effectiveness. (Amah, 2013)
Only 5% of respondents who work in large organizations have employees who do not know their major responsibilities or work in their organization. Those who work in smaller and medium-sized organizations know their major responsibilities or roles.
With respect to evaluation, private organizations have different ways of evaluating their employees. Some private organizations use strict supervision to ensure their employees perform their tasks or jobs well and on time. Some organizations use regular coaching, weekly team scrums, huddles, and regular check-ins.
For the public sector, the Civil Service Commission uses the Strategic Performance Management System. This System is a mechanism that links employee performance with organizational performance to enhance the performance orientation of the compensation system. It also ensures that the employee achieves the objectives set by the organization, and the organization, on the other hand, achieves the objectives it has set as its strategic plan. (Civil Service Commission, 2012)
Effect of Organization or Workforce Size on Training and Development
Training and development is crucial for the survival of any organization in the competitive world. Employees give an organization a competitive advantage. Organizations must therefore invest in the training and development of its employees if they are to remain relevant and productive. (Butali, 2017)
Butali and Njoroge’s study explored and examined the impact of training and development of employment in listed corporations in the Nairobi stock exchange. The study population was all 5,866 employees in three companies. Findings of their study showed that training and development had a significant effect on organizational performance. Both Butali and Njoroge emphasized on the long-term and short term benefits in investing in human capital. Training and development, they add, is important for effective performance of employees, improvement of their ability to adapt to the changing and challenging business environment and technology and increase employees’ knowledge to develop creative and problem solving skills.
The survey conducted for this paper yielded interesting results. Size was not a deterrent for organizations to offer opportunities for training and development. 83.3% of the respondents in the survey reported that there are plenty of training and development opportunities in the office. These respondents belong to the larger organizations.
Regarding funding, majority of the respondents have disclosed that it is the company that provides funding for training and development, including funding for training into their budget.
Some organizations, through their linkages to international organizations, offer funding for training courses such as fellowship grants, and scholarships, as well as in-house training courses, which they also offer to individuals or groups outside the office or organizations. (Philippine Nuclear Research Institute, 2019, p. 59)
On the other hand, there are those who do not have the same opportunities as those with other large organizations. Ten percent of the survey respondents have answered that there are very little opportunities for training and development; means for funding are equally as scarce, and it would mean that they would have to fund their own training and development.
Effect of Organization or Workforce Size on Employee Interaction and Engagement
Effect of Organization Size on Employee Interaction
The relationship between size of organization and quality of human relationships has been studied largely from a theoretical point of view. While some relationship has commonly been assumed, it has not been sufficiently demonstrated (Talacchi, 1960).
Talacchi, in his study of the impact of structural characteristics also discussed that only a few pilot investigations on the relationship between organization size and quality of human relations have been attempted to deal with the problem. It also attempts to interpret the meaning of employee behavior and vice versa, with the aim of further clarifying the meaning of the size effect of the organization. Other studies have dealt with the variable of size only peripherally because relevant data were collected and analyzed incident to some other objective, such as the study of the relationship between morale and behavior of employees. (Talacchi, 1960)
Talacchi also notes that in general, these empirical investigations suggest that there is some relationship between size of organization and the quality of employee relations. His research hypotheses aims to answer these two questions: what is the meditating mechanism by which organization size affects satisfaction and behavior, and in which direction does organization size affect attitude and behavior? Tentative solutions to the to the questions are offered in his study. (Talacchi, 1960)
Based on theory, increased size also increases division of labor and status differentiation, both leading to a lower level of employee satisfaction. The difficulties that stem from increasing size and specialization—that is, division of labor, are familiar ones. It is suggested that the size of organization directly affects the individual through changing both the nature of the job and the nature of interpersonal relations on the job. Increased division of labor also narrows both the work content and the functional responsibility of the job, depriving it of such non-material rewards as pride in workmanship, recognition of achievement, responsibility, and so forth. The result is apt to be a deterioration of both morale and efficiency. (Talacchi, 1960)
With respect to inter-personal relations, greater division of labor means, by definition, more persons and more departments involved in executing any single task—that is, more vertical subdivision within each horizontal level of the organization. Increased complexity of this kind, coupled with concomitant development of conflicting technical interests among departments and reduction in their informal interaction and communication increases the potential for personal and group conflict, which leads to lower levels of satisfaction. (Talacchi, 1960)
Organizational Size and Morale in Specific Work Areas
Increased size, as mediated by increased division of labor and formal status differentiation, has a differential impact upon level of employee satisfaction, depending upon the area of work considered. Specifically, the work areas considered relevant to measuring the effects of organization size upon employee satisfaction are: satisfactions associated with actually doing the job, which includes psychological and material rewards, and satisfactions associated with interpersonal relations at work, including relations between the individual and his immediate supervisor, also between the individual and fellow employees, and finally, between the individual and management. (Talacchi, 1960)
Increased size and division of labor directly affect the job itself. As the organization size increases, there is reason to believe that non-material rewards connected directly with the job may decrease more sharply than the rewards associated with inter-personal relations. At the same time, it is suggested that increased size may reduce the non-material rewards; it is, however, not related to material rewards on the job, such as salary and fringe benefits. (Talacchi, 1960)
Opportunities to Gather Together, Getting to Know Each Other and Their Importance
For some large organizations, opportunities to gather together are minimal, with the exception of office Christmas parties. In the survey prepared for this paper, questions with respect to employee interaction have also been included. Only 2% have no other means to gather together, except for the annual Christmas party. 93%, however have opportunities to gather together, and they do gather on a regular basis. They have listed team building activities, flag ceremonies, year-end parties, Gender Awareness Seminars, office or organization anniversary parties as specific opportunities for the employees to gather together.
80% of the survey respondents also believe that it is important for the employees to at least know each other. They believe that it creates a welcome environment, and that it builds a good relationship for effective communication. Furthermore, if employees know each other, it is easy to work together, collaborations and teamwork would be more possible. The respondents also believe that knowing each other creates a sense of family feeling in the organization.
It is also believed that if employees know each other, there is a better chance of understanding each other’s strengths and weaknesses. Through teamwork, they will easily attain or accomplish the organization’s goals.
Effect of Organizational Size on Employee Engagement
Employee engagement is now recognized as a critical issue for every organization. (Myilswamy, 2014)
(Myilswamy, 2014) also pointed out that although many organizations acknowledge that fact, they have very little knowledge about the importance required for their employees. An organization’s long-term strength is its workforce. Key factors that impact employee engagement are relationship with immediate supervisors, belief in senior leadership, and pride in working for the organization. Various research studies have revealed that engagement is more complex and can be directed by employees in many ways.
Both Myilswamy and Gayatri emphasized on the challenge for organizations—not just to retain talented personnel, but also to engage and capture their minds and hearts at their work. The employee engagement, they add, is defined to a certain extent to which employees commit to their organization: how hard they work, how long they stay as a result of commitment. Employees with the highest level of commitment are less likely to leave the organization. This indicates that the engagement is linked to organizational effectiveness.
Also discussed in Myilswamy and Gayatri’s study are the significance of engagement and recent trends on employee engagement. Employee engagement is a work related state of mind. This can be characterized by vigor, dedication, and absorption. Engagement is also strongly influenced by organizational characteristics such as integrity, communication and culture of innovation. The employee emotional commitment to the job is the key factor for engagement. (Myilswamy, 2014)
Myilswamy and Gayatri adds engagement is going to the heart of workplace between employer and employee. Engagement can be a key to unlocking productivity. Engaged employees, they emphasized, have a sense of personal attachment to their work and organization. They are motivated and able to give their best to the organization. The improved productivity and performance of an organization is at the heart of the engagement. This cannot be achieved by a mechanistic approach, but by employee commitment and emotions.
For the recent trends, Myilswamy and Gayatri acknowledges that today, the society and the industry are witnessing an unprecedented change in the global marketplace. Many companies, they also report, are competing for talent work force. In the competitive world, the ability of organizations to attract, engage, develop and retain a talent has fast become a high-task activity.
Also, there is an increased demand for work-life balance of employees and positive relationship between employer and employee, and it became a necessity for organizations to understand the needs of employees and to find ways and means to meet those needs. (Myilswamy, 2014)
Effect of Organization or Workforce Size on Organizational Culture
Organizational culture has come to be seen by many scholars and practitioners as a key to understanding organizations and problems associated with effectiveness. The view of culture has been confirmed by research which has demonstrated that participatory decision-making improves the performance of the organization. (Nazarian, 2015)
The ability of organizations to cope, survive, and make progress determines how effective they are. Skyrocketing health costs, increasing workforce diversity, and economic recession, for example, have forced organizations to “right size”. (Amah, E. and Nwuche, C.A., 2013)
(Amah, E. and Nwuche, C.A., 2013) also add that several researches have been undertaken to improve organizational effectiveness in the past two decades. The difference in performance is usually associated with the strategy adopted by a corporation to realize its objectives. It has also been argued that strategic group membership and associated collective behaviors are the first sources of durable differences in organizational profitability and effectiveness. Their study on the effect of organization size on organization culture in Nigerian banks reveal that managers in Nigerian banks do not focus properly on people management issues as they manage through the rules, systems, and procedures. Consequently, unrealistic targets are set and the effect on staff feelings and moral climate is often ignored. As a result, there were increased resignations, an increase in poor customer services, unethical practices that led to poor assets quality and loan losses, faulty recruitment placement process.
Both Amah and Nwuche note that a great deal has been written over the past decade about size and the role it plays influencing the relationship between corporate culture and successful performance of organizations. However, they also acknowledge that only little empirical evidence exists in developing countries.
In examining the impact of firm size on organizations, (Zeong, 2013) used Denison’s model (Denison D. a., 1995), as it was one of the most popular organization culture models and it provided a validated method of measurement of both organizational culture and effectiveness. Denison’s model captures four contrasting culture traits which are represented by two axes. The first axis shows the contrast between internal and external adaptation orientations, and the second axis shows the contrast between flexibility and stability operations. (Zeong, 2013)
(Denison D. a., 1995) proposed that the involvement and consistency traits focus on internal integration orientation, while the adaptability and mission traits focus on external adaptation orientation. They also proposed that the involvement and adaptability traits reflect a reflexibility orientation, while the consistency and mission traits reflect a stability orientation.
Denison and his colleagues characterized involvement traits: (1) empowerment, (2) employee development, and (3) team orientation. They also noted that involvement which focuses on internal integration can help an organization to increase employees’ commitment and their sense of ownership. Similarly, the consistency trait is also a powerful source of internal integration, but it emphasizes stability (Zeong, 2013). Consistency is characterized by creating rules and procedures for coordination and integration, common principles, and common behavior norms. (Denison D. a., 1995) proposed that consistency can help an organization to promote conmon behavior norms and real alignment of leaders and followers.
The adaptability trait emphasizes on flexibility and external adaptation. It is characterized by creating changes to respond to external environments, customer orientation, and willingness to take risks and learn from mistakes (Zeong, 2013). Adaptability, according to (Denison D. H., 2003) can help an organization to achieve its goals and to become customer-oriented and innovative. (Fey, 2003) report that the mission trait reflects stability and external adaptation orientations, and is reflected by explicit long term vision, clear goals, and clear strategies. The mission trait, Fey and Denison adds, can help an organization to achieve its goals and to clearly inform its employees about its future direction.
(Zeong, 2013) also found in their study that larger firms place more emphasis on consistency and mission. A high level of adaptability was seen in large firms. Smaller firms, on the other hand, fail to put emphasis on involvement and adaptability. Both Zeong and Luo provided two reasons for their findings: The first reason is that larger firms tend to have more resources to create internal changes in response to external environment changes. The second reason is that although small firms may be willing to take risks, it is the large firms that tend to have more expertise to select appropriate strategies to react to the external uncertainty.
Advantages and Disadvantages of Small vs. Large Organizations
Advantages and Disadvantages of Large Organizations
There are advantages of working in large organizations. Large companies have a greater degree of security compared to smaller companies. Size gives an employee a chance to move within the company. Giant organizations or companies offer career growth and income that cannot be matched in small companies. Not a lot of small companies or organizations can give their executives a huge amount of compensation (Employment Crossing, 2013). Larger companies have more employees. Over time, as people move to other companies, it is quicker for them to widen their technical contacts within their geographic area. (Bloom, 2013)
Large organizations have diversified ways to generate revenue (Quain, 2018). Quain, in his article, also adds that large organizations are able to establish multiple revenue streams to help offset economic downturns. There also more attractive compensation packages—higher salaries, more attractive bonuses, greater allowances, benefits, and other perks.
Survey respondents also provided their insights on the advantages and disadvantages of large workforce or organization size. Large organizations can be more agile, and more productive. With respect to human resources, large organizations would have a bigger pool of talents and skills.
A large workforce or organization size also has its drawbacks. Big companies tend to be very slow to act (Employment Crossing, 2013). It would also mean that it can take years before new ideas get accepted, and can be too layered with management, and too structured. Many company have policy manuals that cover everything from hiring employees to the most menial tasks, which would mean people would become too obsessed with doing everything by the book. (Employment Crossing, 2013)
Advantages and Disadvantages of Small Organizations
Respondents from the survey gave many advantages of small organization or workforce size. Small organization, the respondents declared, are easier to manage, and tasks are easily delegated. Multi-tasking is possible and redundant positions can also be avoided. With respect to employee interaction, it is easy for employees to get to know everyone, which would branch into a more harmonious relationship.
Also, in smaller organizations, employees are able to gain more exposure more quickly to different functional areas of the business (Nationwide, 2020). Moreover, in a small business or organization, workers have high visibility from their first day and their ideas and hard work will be seen by the people at the top. Some corporate environments also offer substantial flexibility in working and scheduling. These are benefits that are very highly valued, especially by working parents. (Nationwide, 2020)
In a number of ways, small businesses are at a disadvantage compared to larger organizations Small businesses can not sell bonds or issue new stock to raise capital—they tend to rely on loans. (Investopedia, 2018). There is also lack of support, and it is a common complaint with small organizations. Resources cost money, and small companies need to make every penny count (Employment Crossing, 2013).
It has been found in this study that with respect to employee participation, large organizations make use of consultative direct participation, which refers to practices where management encourages employees to share their opinions regarding work-related concerns, but management retains the right to make all financial decisions. Examples include regular meetings, surveys, and employee suggestion plans. On the other hand, it is argued that delegative participation, which gives employees increased responsibility and autonomy to organize and perform their jobs as they see fit, is harder to manage in large organizations.
For indirect participation, individual countries have their own particular form of industrial relations, which is due to their unique political and social history. In some countries, employee participation is based on the law or statutory regulation. Also, not all have the power to call strikes and take legal action; some do not have that power.
In the Philippines, at least, workers have the Labor Code and the Constitution. Both provide the Filipino worker the right to organize, to conduct collective bargaining, to engage in peaceful concerted activities, to enjoy security of tenure, and participate in policy and decision-making processes affecting their rights and benefits.
For employee performance, there are many studies that claim that organizational size influences its effectivity. Some, however, claim that there is no link between organization size and organization effectivity. Despite contrasting findings, each study holds that organization or workforce size may influence organizational effectiveness.
Training and development is crucial for the survival of any organization. To remain relevant and productive, organizations must invest in the training and development of their employees. It has been found that training and development had a significant impact on organizational performance. To add, training and development is important for the effective performance of the employees.
The result of the survey showed that many companies offer training and development opportunities and are able to provide funding for its employees either locally or internationally, in some cases. Some organizations, however, do not provide opportunities nor funding for training and development. For the employees who work in these companies, they are often left to dig deep into their own pockets should they wish to further their skills.
With respect to the link between size and training and development, there is a limited number of relevant literature regarding this research question.
For employee interaction and engagement, it is found that increased size has an impact on employee engagement and interaction. Increased organization size also increases division of labor and status differentiation. It is also suggested that increased size and division of labor also affects the job itself, as well as job satisfactions associated with actually doing the job, which includes psychological and material rewards. This also includes relations between the individual and his direct supervisor, the individual and his fellow employees, and finally, the individual and management.
Scholars and practitioners have began to see organizational culture as the key to understanding organizations and its problems regarding effectiveness. In some countries, such as Nigeria, some organizations do not focus properly on people management issues as they manage through rules, systems and procedures. As a consequence, unrealistic targets have been set, and its effects on staff feelings and moral climate are often ignored, which in turn resulted to increased resignations, increased instances of poor customer relations, faulty recruitment placement and ethical practices and poor assets quality where the Nigerian banking industry was concerned, as well as loan losses.
It has also been found that larger firms place more emphasis on consistency and mission. Smaller firms have a higher level of adaptability. It is because larger firms have more resources to create internal changes in response to external environment changes. Also, while smaller firms are willing to take risks, larger organizations tend to have more expertise to select appropriate strategies to react to external uncertainty.
There are many advantages of large organizations. Compared to smaller companies, larger organizations have a greater degree of security, as well as a greater chance for the employee to move within the company. As well, larger organizations offer bigger companites that its smaller counterparts usually cannot offer. However, lage companies also have their limitations, as large organizations tend to act slowly, and in some organizations, it would take years before new ideas get accepted. Large organizations also tend to be too structured. Smaller organizations, on the other hand, are easier to manage, and tasks, easily delegated. Also, in smaller organizations, some corporate environments offer a degree of flexibility in working and scheduling.
Small businesses or organizations are at a disadvantage compared to larger organizations. They cannot sell stocks, and they tend to rely on loans. Resources cost a good deal of money, and because of that, small organizations need to make every penny count.
Regardless of whether they are from small or large organizations, managers should incorporate into their annual company budget funding for training and development. When funding is available, there should also be enough avenues for training and development, whether in-house or in a different venue.
With respect to employee engagement and interaction, managers and supervisors should initiate or offer opportunities for coaching or consultation on how rank and file employees can improve their work or how the company can help them.
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