H&M Consulting Organization Structure and Design - Essay Example

? Topic: Lecturer: Presentation: Introduction Modern organizations are constantly changing the way they are organized and managed as a result of globalization which shrinks the world into a global village thereby prompting a lot of competition and opportunities for establishing firms in any part of the world. To achieve competitive advantage organizations need to keep pace with the changing environment and technological advancements by ensuring customer satisfaction and ensuring the needs of the employees are taken care of. Continuous innovations are inevitable for a firm to survive. The organization structure and design is essential in an organization as it enables managers to allocate duties and ensure proper utilization of resources. Activities in the organization can be allocated according to function, output, customers, territory, process or cross-functional teams (CliffsNotes, 2011). In a dynamic environment, an organic organization design is preferred as it allows for adjustments as opposed to a mechanistic design which is rigid and ill-equipped to respond to rapid environmental changes. Recent literature has emphasized the use of teamwork in organizations so as to remain competitive and cope with rapid changes. Modern organizations are encountered with new management trends such as; crisis management, use of outside directors, increased use of information technology and need for global management skills (Gitman & McDaniel, 2008). Watson engine components represent traditional organizations which were family owned and bureaucratic in nature. The organization thus faces frequent problems of staff turnover and absenteeism due to boredom, lack of morale, non involvement in decision making and lack of a chance for career development. The jobs are highly specialized and employees are not allowed to move from their work stations. Team work is not encouraged and poor communication between staff and the management and between various departments makes it hard for the company to accomplish its goals. H & M consulting on the other hand represents modern organizations which have taken advantage of globalization to establish branches all over the world hence complexity in organization and management. It has also taken advantage of teamwork to ensure success. A learning culture is encouraged to ensure team members personal development as well as organizational development. The organization through its mission and values has established an organization culture where customers and employees are given priority for organization success. Contrary to common belief that large organizations tend to have a bureaucratic organization design, H & M consulting has an organic design that enables it to cope with the rapid environment in which it operates. The differences between the two organizations in terms of how they are operated and managed will be discussed in detail in the report. Organization Structure and Design The organization structure shows the organization is configured and relationship between positions and departments while organization design is concerned with changes to the organization structure (Hill & Jones, 2008). Organization structure reflects the degree of complexity, formalization and centralization. Organization design is determined by the size of organization, lifecycle, environment and technology. Smaller firms tend to have organic structure but as the firm grows, it establishes formal structures and more rules and regulations hence become mechanistic. Due to rapid environmental changes, organizations apply both organic and mechanistic structures so as to be flexible enough to adjust to the changes (Gitman & McDaniel, 2008). Watson is a small company and has no room for growth due to unavailability of capital but applies mechanistic structure while H & M consulting is a multinational corporation formed through mergers and acquisitions hence operates in a rapid environment thus uses organic structure. Mechanistic structures are suited for a stable environment and have clear cut division of labour, strict hierarchy of authority, formal rules and procedures and promotion is based on competency. Organic structures operate in unstable environment and cooperation is emphasized as opposed to formal authority (CliffsNotes, 2011). There are two approaches to the organization structure and design; the traditional or classical view and the modern or contemporary view. Watson engine components reflect more of the classical view while H & M consulting is of contemporary view. The classical view beliefs in unity of command hence the organization is bureaucratic and hierarchical in nature (Hayes, 2002). For example, Watsons has a director Mr.Gordon Watson. Under him is the operations director Mr. Smith followed by the production manager Mr. Ahmed Khan. Liaison between departments can only occur through the directors and the managers are the sole decision makers. The production manager takes orders from the operations director who in turn gets orders from the director. This makes it difficult for the organization to keep pace with the changing environment and decisions take slow to make. For example, Mr.Khan proposed brilliant ideas of team working and customer oriented production but they could not pass through due to poor communication between departments and bureaucracy. Contemporary view advocates for flexibility in structure and power and authority depends on the willingness of the employees to accept. In H & M, authority and responsibility are delegated to the teams; the organization is employee-owned. The role of the manager is to coach and give advice. Communication takes place in all directions making it possible for the organization to embrace changes and adjust to the rapidly changing environment. The chief executive officer Mr. Theo Wolf delegates authority and responsibility to project teams. The span of control also influences the organization structure and design. Classical view advocates for close control hence a small span while span of control is determined by contingency factors according to the contemporary view. (Hayes, 2002).Watson has a small span of 200 employees while H & M has a very wide span; operating in 120 countries and more than 13000 staff. Technology also affects the kind of structure; if the technology involves routine then the structure is standardized. For example, Watson has routine technology (mass production of machine parts) hence its more standardized than H & M which is involved in various projects in both public and private sector. Traditional organizations were characterized by division of labour and departmentalization. Activities can be grouped according to functions, product line, customers, teams and process or according to geographic location (CliffsNotes, 2011). Watson activities are organized according to the production process and are highly specialized. Some staff works on pressing machines, finishing machines and others on assembly machines. There is no movement of worker between the three stages of production even though demand depends on each stage of the process. This limits their skills and lowers the productivity of workers due to boredom. It also results in high labour turnover and absenteeism. Modern organizations use all categories of groupings but emphasize on customer department as well as teamwork. H & M activities are performed by project teams which are customer oriented allowing for flexibility and skill development. This has resulted in high staff motivation and job satisfaction, customer satisfaction (rating of 8.2 out of 10 for responding to customer needs in 2006) and organization success. It is regarded as one of the top consulting company and one of UK’s top 20 best big companies to work for in 2008 and 2009. Team and Team Working Due to the ever changing environment, teamwork has been recognized as the basis for organizational success. According to Hayes (2002), a team is a group of people with complementary skills committed to a common purpose and a set of specific performance goals. For a group to function properly, it needs enough power and authority to make its own decisions on how to perform the given tasks. A team may be formed to operate permanently on given functions or temporary to accomplish a given task or project. For example, H & M project teams are formed to work on a project and once it is completed the team is disbanded to perform new teams hence the teams are temporary. Parker (2008) argues that team members should feel a sense of belonging to a team and identify with it for success. The team should also be flexible, persistent and involve many people inside and outside the group as involving more people leads to acceptability of the team ideas. Trust between members is vital (Jones & George, 1998). There are many types of teams in an organization. Functional teams are formed to perform specific organization function and are permanent in nature. Its members are recruited from vertical hierarchy levels for example, production department. Cross-functional teams are formed to perform various tasks. Members come from various departments and are experts in various functional areas. Their skills are combined to perform a particular task and after its completion the team is disbanded (Hayes, 2002). H & M consulting uses cross-functional teams in its operations. Every project requires different set of skills from consulting experts. Information technology is used to coordinate the teams and ensure they have enough resources and skills. The team makes the decisions; the managers act as coaches and advisors to the project team. Once the project is finished, the team is disbanded and new teams formed to undertake other projects. Self-directed teams are responsible for complete work processes and have no managers. Responsibility is shared by team members (Parker, 2008). Since activities in Watson engine components are divided according to process in the production section, the production manager had suggested the formation of self-directed teams to oversee completion of the whole process instead of overburdening some employees. However, the organization does not embrace team work hence his idea was not taken seriously. For teamwork to be successful, there are certain essential principles that should be adhered to. Heathfield (2011) recognizes twelve principles. The team expectations should be clear. The management should thus explain what is expected of the team or the outcome and provide enough resources for task completion. H & M uses information technology to ensure allocation of resources. The team should also understand why they are participating and where its work fits in the organization. The company has a set mission and teams are geared towards attainment of the company mission and objectives. Commitment of members is also vital. The culture of the organization promotes innovation and skill development hence gaining commitment. The team should be comprised of appropriate people hence the combination of skills from functional departments. The team should be able to design its own mission and objectives thus given authority and responsibility. Collaboration and communication is important for a team to be successful (Parker, 2008). Poor communication can lead to business failure just as is being experienced at Watson. Group should be well coordinated, allow risk taking culture for innovation to take place and ensure an enabling organization culture of the future. For example, Watson should change its climate and support team work if it has to remain in the industry and compete effectively with the newly established organizations in Eastern Europe. Team working if encouraged in the organization has various benefits. It leads to increased productivity, job enrichment and improves staff morale thus reducing staff turnover (Hayes, 2002). Lack of teamwork has resulted in lack of morale hence absenteeism and high labour turnover in Watson while H & M has experienced continuous growth over the years due to high staff morale, career development due to diversity skills in the teams. Some organizations lack belief in team work while others feel that the team is threat to the management hence discourages it. Some form teams but control them instead of giving them autonomy to function thus hindering their success. Teamwork is thus affected by the organization structure and culture. It is hard to form teams in a bureaucratic organization as tasks are highly defined and specialized. Even if the production manager had established teams, it would have been hindered by lack of liaison between departments and lack of necessary skills. Leadership and Management Different organizations use different approaches to leadership and management depending on the size of the organization and organization structure. Bureaucratic organizations tend to use autocratic leadership while organic organizations use democratic rule. However, both types of organizations may apply laissez-faire. The style also depends on the situation, manager’s beliefs, values and assumptions (Hill & Jones, 2008). Leadership is concerned with establishing direction and influencing others to follow while management is more complex as it involves planning, organizing, staffing and controlling. It is strategic in nature. According to Gitman & McDaniel (2008), an effective leader should possess the following traits; ambitious, innovative, motivated, have self-confidence, cognitive ability, and have business knowledge. The director of Watson is not ambitious and not willing to take initiative. The business is faced with a lot of challenges but the leader remains resistant to change and does not have the willingness to take charge; he leaves most of the shop floor duties to the operations director. He also does not take risks and has no vision; he has capital available for replacing machinery and technological systems but sticks to his motto ‘if it ain’t broke, don’t fix it’. He also rejected the idea of computerized production technology to cope with competition by his highly qualified and experienced production manager but did not take the idea seriously. The Human Resource manager lacks the ability to deal with employees. He cannot handle a discipline problem from a female worker but chooses to ignore it. He does engage in staff motivation blaming the supervisors for lack of staff morale and the union for not allowing him to sack staff for non-performance instead of establishing where the problem is and rectifying it. H & M director on the other hand, is very inspirational and highly motivated. He is innovative and frequently takes risks; he undertakes major projects in various countries in public and private sector without fear of failure. He has a mission which is embedded in the corporate culture of the organization. He is therefore a strategic thinker. The autocratic leader makes all the decisions in the organization (Hill & Jones, 2008). Such is the case with Watsons; all decisions are made by the managing director Mr. Watson. Employees do not play a part in the decision making process but take orders from superiors. Communication is from the top to bottom and no communication or coordination between departments. This is disadvantageous as the employees have great ideas which would propel the organization forward but they can’t offer them. The marketing department deals with customers but does not liase with production department making it difficult to establish customer requirements and fulfil them. The director does not deliver his expectations to the staff hence they work with no direction thus reducing their performance levels and lowering their commitment to the organization. Participative form of leadership involves leadership through consultation. The leader motivates the employees by empowering them to direct themselves. H &M chief executive has empowered the teams to direct themselves and involves employees in decision making. Communication in the organization is in all directions and use of video and telephone conferencing to ensure all stakeholders are involved. He has communicated his expectations to the staff hence they have a sense of purpose and know the direction they are heading resulting in a highly motivated and committed workforce. Empowering employees ensures they are not resistant to change since they are involved in the change process (Hayes, 2002). They also contribute innovative ideas which enable the business to be a leader in the market. Employees are in constant touch with the customers and hence are best suited to know their needs, involving them in running of the business thus ensures customers needs are taken care of. Organization Culture Organization culture refers to the values, norms and behaviours of the members of the organization. There are various types of cultures; in an academy culture, employees are highly skilled and work their way up the organization ranks and also stay longer in the organization. For example, the operations manager of Watson has been with the company for a long time and managed to work his way up the ranks; he is to be the next managing director when Watson retires. Baseball culture employees have highly prized skills. In a club culture, people fit into a group within the organization and in a fortless culture, there is massive reorganization. Those with specialized skills have the advantage of remaining in the organization or opportunities for acquiring jobs elsewhere (About.com, 2011). The organization culture enables the employees to relate with the organization and know what is expected of them (Alvesson, 2002). The culture thus plays an important role in attracting and retaining employees as well as customers as it portrays the values of the organization. Watson has established a culture of poor relations. It has poor relations with the union leading to industrial actions due to lack of trust between management and workers. It also takes orders from customers which it cannot be able to fulfil leading to delays and poor relation with customers. The employees are not valued as their work is not recognized and they are not involved in decision making, and their skills are not enhancing through training and teamwork. H & M consulting organization culture is embedded in its mission and value statements. It has established a culture of customer satisfaction, professional excellence, commercial success and employee fulfilment. This is reflected in its values; PRIDE. It is involved in corporate social responsibility, embraces diversity, promotes ethical behaviour, ensures customer satisfaction, and engages in continuous innovations. As a result, the organization is globally respected and has won various awards for its achievements. It is also recognized as among the top companies to work for due to its culture of valuing employees. Conclusion Traditional organizations are gradually transforming into modern global organizations which are capable of keeping pace with the rapidly changing business environment and technological advancements. The ways the organizations are operated and managed differ depending on the size of the organization, organization structure and design as well as organization culture. Bureaucratic organizations such as Watson are gradually disintegrating to more accommodative organic and virtual organizations like H & M consulting. Bureaucracy hinders innovations and makes it impossible for the organization to cope with changing market trends. Organic organizations on the other hand, are well suited to deal with challenges. The leadership style determines how organizations are managed. Autocratic leaders make all decisions while democratic leaders engage employees in decision making leading to effectiveness. The role of team work is increasingly gaining popularity as it leads to organization effectiveness and employee development. References About.com (2011). ‘Organizational Culture: Corporate Culture in Organizations’. Available at http://humanresources.about.com/od/organizationalculture/organizational-culture-corporate-culture-in-organizations.htm. Accessed 20 Apr 2011. Alvesson, M (2002). Understanding Organizational Culture. London: Sage. CliffsNotes (2011). ‘Principles of Management: Five Approaches to Organization Design’. http://www.cliffsnotes.com/study-guide/five-Approaches-To-Organization-Design’. Accessed 21 Apr 2011. Gitman, L., McDaniel, C (2008). The Future of Business: The Essentials. USA: Cengage Hayes, N (2002) Managing Teams: A strategy for Success. UK: Thomson Learning. Heathfield, S (2011). ‘Twelve Tips for Team Building: How to Build Successful Work Teams’. http://humanresources.about.com/od/involvementteams/a/twelve-tip-team.htm. Accessed 21 Apr 2011. Hill, C., Jones, G (2008). Strategic Management: An Integrated Approach. USA: Cengage. Jones, G & George, J (1998). ‘The Experience and Evolution of Trust: Implications for Cooperation and Teamwork’. Academy of Management Review, Vol 23 (3): 531-566. Parker, G (2008). Team Players and Teamwork: New Strategies for Developing Successful Collaboration. San Francisco: Jossey-Bass. Read More