Analysis of Business Functions in Two Different Organizations - Essay Example

Sourabh Kishore Academia Research Order No. 238732 29 August 2008 Analysis of Business Functions in two different Organizations Introduction: Organization Structures in today's Business environments are dynamic and focused towards requirements of Customers. Customers are getting deeper into the way the outputs are delivered in addition to finished products. In this paper, a detailed analysis of organization structure of key business functions and their operating procedures is presented from two different companies. Special emphasis has been given to the business dynamics and the way the organization adjusts the structure and achieves enhancements in people, processes and technology to meet customer demands. The companies that we have selected are: (a) A large Technology Services Company focused in the Global Financial Markets - headquartered in Fairfax, VA and global delivery centers in various cities of North America (on-site services), UK (on-site services), Japan (on-site services), China (offshore services), Philippines (offshore services), and India (offshore services). The company was founded in 1981; have about 3000 employees worldwide delivering exclusive technology solutions in their niche market. They own a number of patents. Their patented technology models are used even by Microsoft and IBM. The name of the company has been kept confidential on their request. In this report, we will identify this company as Company A. (b) Asia Pacific regional office of one of the largest Security Services Group of the world headquartered in London. They employ the largest no. of people in India (more than 200000 people) among all privately owned organizations. They provide physical security services to MNCs, Banks, Govt. Of India and Foreign Embassies pertaining to Physical Guarding, Facilities Management, Cash Transfer, and Body-Guard services. The name has been kept confidential on their request. In this report, we will identify this company as Company B. Organization Structure of the chosen companies: Following diagrams present the organization structure of the two companies: Organization Chart of Company A: Figure 1 Organization Chart of Company B: Figure 2 Figure 1 Figure 2 In both companies, some departments are flat while others have deep hierarchies. The functional depth and scope of work of departments also varies considerably. Company A possesses a Global Organization Structure while Company B possesses a region specific organization structure. I hereby present a transformation model analysis (Lawrence & Lorsch, 1967, Learning Space - OpenLearn - The Open University; Lawrence 2007) of both the organizations: Transformation Model of Company A: Figure 3 Transformation Model of Company B: Figure 4 Figure 3 Figure 4 The transformation models of the two companies justify the rationale of the organization structure deployed in the two organizations. A closer look reveals the following differences: (a) The input parameters in company A appears to be more relevant to knowledge workers while the same in company B appears to be relevant to physical workers/muscle-men. (b) Company A is processing transformations of a global spread of people knowledge, software tools, networked computers and associated processes into software and associated knowledge products for customers while company B is processing manpower and associated physical resources into physical protection machinery deployed for a customer for physical security. (c) The output delivered by company A is software product and associated knowledge documents while the outputs delivered by company B are physical premises security and secured cash transfer. (d) In case of Company A, the customer is engaged with knowledge workers at a bit & byte level thus widening the span of feedbacks whereby lot of enhancements need to be processed. Every support function along with the Customer Engagement team gets involved. On the other hand, in Company B, the feedback from customers would be more of escalations and service improvement requirements. Let us compare the departments of the two companies in line with transformation models (Mathew, Prem, 2006): Senior Management: Every country and function in company A has a Senior Management representation at a global level. In company B, Senior Management members are functional leaders within the same region. HR: HR in Company A has complex organization structure processing strategic exercises in line with Customer demands. It is divided into: HRMS (Payroll, EIS, etc), Recruitment, Resource Management (project resource management) and People Development (trainings and certifications). In Company B, HR is a simple but highly transactional support function processing employee benefits & managing Employee Information System (EIS). Company A deals with high quality technological deliveries globally and employs highly skilled knowledge workers. Company B deals with about 1000 knowledge workers and more than 200000 physical security workers deployed at customer locations. Finance: Finance in company A is full of global domain skills and certifications while the same in company B is restricted to region specific skills and certifications. The organization structure in Company A is globally distributed while the same in company B is specific to the region. Legal, Risk and Compliance: Company A has a dedicated organization for Legal, Risk and Compliance, again due to a global framework of operation. Company B has Legal merged with Finance and doesn't have any function called Risk & Compliance. Sales and Marketing: Company A have a function called Customer Engagement, which manages engagements with existing customers and builds new customer engagements. They don't need a Sales & Marketing function as Customers contact them on their own and retain them for decades. In many products, they do not have a competition due to patent ownerships. Company B has a strong Sales & marketing function to carry out aggressive campaigns to get new customers. Their services are not unique and hence they face stringent competition in the market. IT Services: Both companies have powerful IT Infrastructure & Applications managed by knowledgeable IT personnel. However, IT Services in Company A manages customer engagement tasks and maintains multiple process frameworks to fulfill compliance needs for multiple customers. IT in Company B seldom engages with customers and maintains a single regional process. IT in company A owns more transactions compared to company B and hence has more manpower. As per the data provided, IT team in company A employs more than 200 people while IT of Company B employs about 50 people. To support customer engagements, IT in company A operates in 24 X 7 mode - i.e., staff operating in three shifts on working days and during weekends. IT in company B operates in a 12 X 6 mode - i.e., staff operating in two shifts from Monday to Saturday. The organization structure in both cases is quite hierarchical. Operating Function: The operating function in company A is the "Delivery function" and in company B is the "Security Services function". From a business perspective, both functions operate in a similar fashion. The difference is that Customer A employs about 2000 knowledge workers in this function and Customer B employs more than 200000 physical workers in this function. The following section presents further analysis on these differences. Differences in Functional Management of the two Organizations: A detailed comparison revealed that such differences are carefully planned due to the nature of Business and Customer preferences. Following conclusions were drawn after analyzing outcome of interviews with the departmental heads: (a) The organization structure is flat if there is limited Customer interaction or the Customers want to have functional engagement with subject matter experts. In case of Company A, Customer engagement function is very closely engaged with Customers as domain & subject matter specialists and hence the organization structure is flat. In case of Company B, HR has the most flat structure because it has nothing to do with a Customer. It is more of a processing department for employee payroll & benefits. (b) The organization structure is hierarchical if the Customer prefers a deep escalation chart. The customer gets a sense of satisfaction if they know that they have access to people right from the ground to top management. Company A has the delivery functions and IT services quite hierarchical because they own time bound deliveries and hence probability of escalations is high. In case of company B, sales & marketing and Security services are quite hierarchical because they are expected to take maximum escalations. IT is hierarchical because of the ERP implementation. The customer facing functions are dependent upon ERP for their deliveries and hence IT also ends up taking a lot of escalations. (c) The organization structure is global if the customers allow their work to be delivered from multiple countries but still expect compliances applicable in their country to be followed. For example, in case of Customer A, work allocation happens primarily from US, UK, Rest of Europe & Japan but delivered from Philippines, China and India. The Customers are primarily from Financial Services Industry and hence demand compliances. Customers in US expect Sarbanes-Oxley & SAS70 compliance, Customers in UK expect BS7799-2:2005& BS15000-2:2005 compliance and Customers in Europe & Japan expect ISO 9001:2000, ISO27001:2005 & ISO20000:2005 compliance. In this scenario, the organization needs to hire certified experts globally but still manage under a single large integrated framework. There is a dedicated Managing Director for Legal, Risk & Compliance having permanent employees only. In case of company B, there is no such function because primary business is Security such that Risk & Compliance management is culturally imbibed in day to day operations. (d) The People Management aspects differ a lot in both organizations driven by nature of business. In organization A, HR has a complex organization structure that maintains very complex charts; like the Role Based Skills Matrix, Productivity Measurement metrics, People to Requirement mapping sheets, etc. These data analysis on these sheets are presented to internal management and customers. In some cases, the billing criterion is to have a high productivity metric (calculated from activity based time sheets filled by every employee). IT services and Delivery teams employ contract staff who are treated as permanent employees and included in these analytics. In organization B, HR department is very transactional and normally focuses on the knowledge workers which are less than 1000. The remaining workers (in access of 200000) are managed by trade unions that are not managed by HR. Most of them are educated below high school and are contractual. There is a dedicated Managing Director for Labor management who interfaces with all the trade union leaders. (e) Stake Holders in both companies primarily expect Customer retention, timely full payments, fewer or no escalations, no litigations and a sustained growth in business. Rest everything is secondary. Hence, the entire organization in both companies is focused on running a business with high customer satisfaction, minimal or nil penalties, nil legal and compliance issues. (f) Finally, I present a comparison between both organizations as per Lawrence & Lorsch Contingency Theory (Lawrence, Lorsch, 1967): Structure: In Company A, HR structure is most complex while Customer engagement structure is least complex. This is because the organization deals with complex technology solutions and hence need to apply enormous efforts in development of the Knowledge Workers. However, Customer engagement is on-site placement of subject matter experts as coordinators. In Company B, the most complex structure is of the Security Services function because Security they are the main delivery function managing the entire workforce of more than 200000 workers. The HR function has the least complex structure being only a transaction processing department. Interpersonal Orientation: This parameter in Company A is effective. The nature of business requires high flexibility and hence inter-departmental interactions are very high. Everyone including the senior management team operates from open cubicles and engages with customers. In Company B, this parameter is not effective. Departments are located in closed, access-controlled areas. Inter-department co-ordination is workflow based (electronic). Thus, People seldom meet. Senior management members work in closed cabins accessible via their secretaries. Time Orientation: In Company A, Customers get involved on a daily basis to practice micro-management. This keeps everyone in the organization on their toes. In company B, everyone works in a relaxed mode and high-speed action is evident only in case of Customer escalations, external surveillance audits, or management inspections. This is because Customers contact only for an escalation or service improvement planning. Goal Orientation: Goal orientation appears to be similar in both organizations. The primary business objective is to keep customer happy and hence goals are critical in both organization. Benefits and Disadvantages of Organizational Arrangements in both companies: Both organizations appear to have enough rationale for the structure that exists. For Company A, customers from multiple countries assign work to on-site engagement managers. The on-site engagement managers then process the Master Service Agreement (MSA) based on existing understanding of the capabilities of the organization and some assumptions. The backend delivery heads are not always equipped with existing capabilities and availability of resources. Information Technology companies face serious attritions at times and may not have the bench (resources waiting for an assignment) available always. To add to this, what if the key resources have left at a time when a major project is in pipeline Hence, in practical scenarios, the delivery heads and the on-site engagement managers do take calculated risks without clear path to mitigations. Delivery heads however provide heads-up to the HR department proactively such that they start preparing for the ground work. Once the Master Service Agreement is signed, the engagement managers start preparing the Business and Software Requirement Specifications. This is the advantage of having on-site subject matter experts operating from the Customer premises. They can get into a "structured" process of documentation thus setting trap for the customer in terms of inputs needed from them, debates and documentation. A number of debates are triggered by the engagement managers in which the Customer gets trapped discussing various alternatives, studies from the Industry, study of global best practices, and so on. In this way, the engagement managers actually buy time for the backend preparations. The HR team in the mean time activates their machinery. Their various divisions get into a number of actions - recruitment campaigns, on-boarding campaigns, training campaigns, sourcing of consultants/contractors, global resource allocation plans (at the different delivery centers), etc. The reliance on HR department to prepare for the offshore project is very high - and that too with a number of assumptions. This does justify such a large and complex yet flexible and collaborative HR department. The people in this department need an attitude of say-yes-not-no and simply strive to deliver whatever is expected from them. No excuses allowed - time is less, skills difficult to find, calendars of trainers fully occupied - none of these would be accepted. This justifies a high value for all the four attributes of Lawrence & Lorsch contingency theory. While I support these positives about the organization structure designed, there are certain negatives which cannot be negated. First of all, an unreasonable pressure is built on the HR organization. They tend to be successful always and hence are taken as granted. The senior management tends to ignore all the mistakes that they commit with an excuse stating - leave it to HR, they will handle this - after all they are all paid to do this job!! Well, the head of HR department definitely gets paid much higher than the industry but not all in his/her department gets this level of salary. The HR head becomes an expert in exploiting his own people to commit and deliver the unreasonable demands. The real threat will appear when a major project is in pipeline and some of the key HR team members succumb to the pressures and quit!!! Now how will the HR head justify his/her salary A series of blame game will start and nobody will benefit out of it. Fundamentally, the management tends to commit major mistakes (sometimes blunders!!) due to such high performance by HR. Investments on bench staff, IT enhancements, salary increments, etc put on hold, some burning employee issues ignored, little to NIL attempt to retain key technology personnel, etc are some of the very common mistakes that the senior management are found to be committing. In my view, this is a major disadvantage of this kind of organization structure. Now let us compare a similar HR team in company B. Here are their attributes - very cool, not ready to take pressures, will move only if the workflows have been followed (due diligently!!). Are they negative attributes In my view, they are more structured and disciplined. They expect the requesters to be structured, proactive and process oriented. They expect the senior management to take right actions at the right time. Now it is time for disclosing some secrets. None of the IT and HR staff (except heads) in company A had completed two years in the system. In company B, no staff in IT and HR was in the system for less than five years. The Vice president - IT was on the verge of completing nine years in the system and the General Manager - IT was in the system since inception of the company in India. He was the first employee in the IT department. The IT team in company A had a wider span of knowledge with a number of workarounds. The IT team in company B had narrower span of knowledge but were very deep into their respective systems. They were at one third of the salary packages in company A but were very happy and satisfied. Are these facts just co-incidences In my view, company B is more disciplined, structured and process oriented than company A and hence has been successful to achieve high levels of employee satisfaction. If company A follows the style of functional management of company B, then: (a) They will retain their key resources and hence the knowledge (b) They will always be very comfortable to receive projects (c) With high levels of retention, they will have wider bandwidth to take projects - means more revenues!! (d) They will be able to get the best out of their patented technologies - in spite of customers directly approaching them (and they not requiring any sales and marketing efforts), their delivery effectiveness and efficiency will always be a question mark I the current mode. The senior management team will never sound confident. They apparently will always be in a state of urgency. Well this is enough of praises for company B. But are they doing everything perfectly. I don't think so!! The first aspect that I didn't like about company B is that their departments are extremely non-collaborative. As a result, knowledge management, team building exercises, total quality management (TQM), Six Sigma, etc. will all sound like ancient cryptography to them. The individual capabilities available in the organization will remain intact within the individual and the organization will never benefit out of them. Some of the best experts will join the organization and will leave one day but the organization will never even notice them. All these disadvantages are due to lack of collaborative approach of management. The workflows are so well defined, stringent and well implemented that innovations find no place in the organization. Such organizations will stick to the service catalogues for ages that they have been offering to their clients but will find it very painful to add a new service to it. I talked about the IT team being very deep into their respective knowledge areas. But one thing worth noticing is that they will learn to live with obsolete technologies. If the industry starts demanding completely different services or else drastically change the specifications of the services being offered, an organization like company B is expected to face failures due to lack of innovating capabilities. Now I will talk about Global Compliance Structures. The compliance levels required in case of company A is multi-faced - means they need to demonstrate their compliance to all global standards, best practices or governances coming on their way due to customer demands. The question to be asked is - are they really compliant Do they have time to carry out self assessment of their compliance They are always in crisis - pressed under hefty customer demands or demands raised by the on-site engagement managers. This is one of the reasons that a separate department is present to "manage" global risk and compliance. So, what is their work-stack They just create adequate documents and logsheets to the extent that an external surveillance auditor or the customer can certify them. Is it a best practice Do we really need a separate department to manage compliances if the same is expected to be imbibed in the culture of the organization Well the answer that we may receive is that no-body in the organization has adequate time to look into these "extra responsibilities" and hence a separate organization is needed. In my view this is completely an issue of short sightedness and poor calculation of return on investments. The organization must be spending huge money in managing this department and might have spent huge capital expenses on consultants, auditors and certification bodies to achieve the required accreditations on paper. Now if the organization starts following the same due diligently in all the functional areas, the advantages will be enormous. The organization will become well structured and disciplined in their approach. There are a number of advantages that these standards bring to the table which are not availed by the entire organization effectively in this scenario. Example, Lot of production hours will be saved which otherwise gets lost due to unnecessary discussions on a solution with poor process approach and documentation. Under time pressures, it is natural that a number of critical logsheets are not populated on time that later get populated by the compliance management function. If the rest of the organization becomes as structured as the compliance management team then the compliance team in turn can focus on better things that will benefit the organization more than what they are currently able to deliver. Conclusions: Organization structure drives the way functions are defined, implemented and utilized. Markets and Customers do impact the way an organization builds their organization structure. The transformation model applied to the organization gives clear indications on how the organization structure would be flexed or tailored as per business demands. A flexible organization structure does adapts to changes very fast but lacks implementation of best practices due to incomplete & ineffective implementation of global best practices. Team collaboration, knowledge management and continuous improvement are some of the best advantages of a flexible organization structure. Hierarchical structure indicates customer preference of longer escalation charts. Global organization structure tends to make operations more complex yet focused towards customer demands. Inflexible organization structure tends to adopt best practices quite effectively but unable to manage obsolescence. If change is inevitable, risk of losing customers and business is quite high. Depth of knowledge is quite good but unlearning from current practices to learn new practices is difficult. However, properly defined workflows make the organization quite efficient and disciplined. Overall, I would like to conclude stating that both organization types have their own benefits and limitations. After all, organizations are groups of collaborating human beings who can never be perfect. The arguments presented herewith are totally my views which I am sure can be challenged by a person having different viewpoints and, off course, supported by sound arguments. Thank You!!! References: Harvard - A Guide to referencing, Victoria University 2002, A new school of thought, Australia Understanding Operations Management - transformation processes, Learning Space - OpenLearn - The Open University, viewed 29 August 2008, Lawrence, P., and Lorsch, J., Differentiation and Integration in Complex Organizations, Lowrence and Lorsch - Contingency theory, viewed 29 August 2008, Formatting Organization Charts, Microsoft Office Online, viewed 28 August 2008, Lawrence, Chris, A Model for Process and Transformation, Slideshare 2007, viewed 28 August 2008, Mathew, George.E, Prem, Hema, Defining Business Transformation, Cutting Edge - A thought communiqu from Infosys, 2006, India Total Quality Management, iSIX Sigma, viewed 29 August 2008, Six Sigma - What is Six Sigma, iSIX Sigma, viewed 29 August 2008, ISMS Standards, International registrar of ISMS certificates, viewed 29 August 2008, ISO 20000 central, News and Information for ISO 20000, viewed 29 August 2008, Services - ISO 9000 series- ISO 9001:2000, DNV Certification, viewed 29 August 2008, < http://www.dnvcert.com/DNV/Certification1/Services/ISO9000Series1/ISO90011/> SAS70 Overview, About SAS70, viewed 29 August 2008, < http://www.sas70.com/about.htm> BS 7799 and BS 15000 have been incorporated by ISO as ISO 27001 and ISO 20000 respectively. Hence, these standards have not been cited separately. In addition to the cited references, I would like to extend my special thanks to all those who extended to me knowledge and information that helped me to put together this paper. On their request, their names have not been published herewith. Appendix: Ground rules followed: Ground Rule 1: Special emphasis has been given to protect Information Security of the organizations which have been analyzed in this paper. Ground Rule 2: Analysis is based on the explanations given by people consulted and data disclosed at their discretion not impacting the organization's security policy. Social engineering practices have been strictly avoided to fetch information. Ground Rule 3: As per Information classification policies of the organizations, special care has been taken to ensure that the analysis presented here can be treated as "Publicly Available Information". Ground Rule 4: Special emphasis has been given to ensure that a racial, communal, regional or gender bias is not getting implied in the analysis presented. End of Document Read More