Structure and Culture in Human Resource Management at UPS - Case Study Example

Organisation structure is the formal pattern of interactions and coordination designed by management to link the tasks of individuals and groups in achieving the organisational goals. There are two main types of organisation structures - mechanistic and organic structures. The mechanistic organisation structure functions like a bureaucracy where proper channels are used and efficiency is emphasised. The organic structure is free flowing, has numerous communication channels, and emphasises quick response and innovation (Bartol and Martin, 1998, p. 251 - 278). Culture is a set of basic shared assumptions that the group learns and taught to new members as the responses to problems (Schein, 2006). Cultures differ with structures. According to Bartol and Martin (1998, p. 251 - 278), the mechanistic structure is characterised by: (1) a tall structure with more levels of hierarchy; (2) high managerial control; (3) formalisation, that is, rules and procedures such as manuals and formal job descriptions; (4) much written communication; (5) low worker autonomy; (6) hierarchy of authority is well defined; (7) unity of command, whereby the subordinates report to only one boss; (8) high individual accountability; and (9) individual specialisation, whereby employees work separately and do only one task. The culture in an organisation structure with a mechanistic structure tends to be characterised by: (1) centralisation, whereby power and decision making authority are retained at the top; (2) individuals who are bureaucratic; (3) individuals who are risk-averse; (4) individuals who are autocratic; (5) individuals who are cautious; and (6) respect for established traditions by staying within one's role. On the other side of the continuum, the organic structure is characterised by: (1) a flat structure with fewer levels of hierarchy; (2) low managerial control; (3) mutual adjustment, whereby face-to-face contact is used for coordination as work process is unpredictable; (4) much verbal communication; (5) higher worker autonomy; (6) horizontal coordination is used to coordinate tasks, such as direct contact between managers, the assumption of liaison roles by individuals, task forces and teams, and integrators; (7) multiple lines of command; (8) high group accountability; and (9) joint specialisation ,whereby employees work together to coordinate tasks. The culture in an organisation structure with an organic structure tends to be characterised by: (1) decentralisation, whereby decision making authority and resources are delegated to subordinates; (2) individuals who are entrepreneurial; (3) individuals who are risk-takers; (4) individuals who are democratic; (5) individuals who are creative; and (6) individuals who challenge the established tradition. To achieve the maximum HR performance, ogranisation structure should be chosen based on the environment in which the organisation operates (Bartol and Martin, 1998, p. 251 - 278), its strategy (Bartol and Martin, 1998, p. 251 - 278), the size of the organisation (Bartol and Martin, 1998, p. 251 - 278), technology (Woodward, 1965, p. 76 - 77), and the type of exceptions that occur during production (Perrow, 1967, p. 194 - 208). If the environment in which the organisation operates is uncertain, it should adopt an organic structure for quicker response. Also, structure must match strategy to achieve HR performance. For example, a functional structure should be adopted if the organisation sells a large volume of a single product in the same region; a product structure should be adopted if the organisation sells several dissimilar products; and a customer structure should be adopted if the organisation deals with different sets of customers each of whom is very large and important. Moreover, as the size of an organisation increases, there are more departments, more levels of hierarchy, and more staff positions. After a point, formalisation and decentralisation come in. Furthermore, organisation structure should match production technology. The three types of production technologies are unit and small batch production, large batch and mass production, and continuous process production. Unit and small batch production technology is expensive to operate, involves an unpredictable work process, and adopts low if any automation. An organic structure with a flat hierarchy, low span of control, and small number of managers is likely to be adopted. Latch batch and mass production is relatively cheap to operate and adopts automation. A mechanic structure with a tall hierarchy and a large number of managers is likely to be adopted. Continuous process production, whereby the machine performs all the tasks, applies to the production of liquids and powders. A tall and thin structure or an inverted pyramid structure is likely to be adopted. Lastly, structure contributes to human resource performance in the way employees handle exceptions. Exceptions may be classified along the two continuums of frequency and type. A mechanic structure with a high degree of centralisation and formalisation is best suited for organisations with formed and few exceptions. An organic structure with a high degree of decentralisation and informal means of coordination is best suited for organisations with unformed and many exceptions. The two theories of (1) the strategy of the ogranisation (Bartol and Martin, 1998, p. 251 - 278) and (2) the environment in which the organisation operates (Bartol and Martin, 1998, p. 251 - 278) will be used to explain how the structure and culture of UPS Supply Chain Solutions impact on the management of human resources. In order to gain an insight into the structure, culture, environment, strategy, and human resource management of UPS Supply Chain Solutions, an interview was conducted with Mr. Caplan, the managing director of UPS Supply Chain Solutions in United Kingdoms. The main products and services of UPS Supply Chain Solutions are logistics and distributions, service parts logistics, transportation and freight, and global services (UPS Supply Chain Solutions UK, 2006). It operates in around 200 territories worldwide (United Parcel Service of America, 2006). Its customers include a few large and important customers such as Hitachi Global Storage Technologies that comprise 60% of its revenue and other small accounts that altogether comprise 40% of its revenue. Hence, UPS Supply Chain Solutions is firstly organised by location. Staff are either regional staff or country staff and each group has their own line of report. Next, UPS Supply Chain Solutions has 9 functional departments including the operations department (in turn divided into air freight and ocean freight), the service parts logistics department, the transportation department, the customer solutions department, the project department, the sales department, the finance department, the human resources department, and the warehouse department. Within each department, there may be country staff or regional staff. For example, a financial analyst in the finance function is a regional staff performing financial analysis for the whole region, but a billing specialist in the finance function is a country staff doing billing for revenue generated by UPS Supply Chain Solutions United Kingdom. For the large and important customers, a project manager is assigned to each customer. Also, within each function, there may be designated staff to take care of the customer. For example, within the air freight department, there may be a specialist to handle all shipments of Hitachi Global Storage Technologies, a whole warehouse and the entire staff of the warehouse is dedicated to Hitachi Global Storage Technologies. When problems such as delivery to the wrong destination or consignments are damaged in the process of transportation, the project manager makes the decision such as whether to incur cost to engage a third party to independently assess whether the fault is caused by the airline or present before the shipment. The air freight specialist will take the instruction of the project manager, perhaps with the knowledge of the operations manager to whom he or she reports. The legal environment in which UPS Supply Chain Solutions operates is quite stable, being regulated by customs rules and regulations. Therefore, the job of the operations department is specialised and divided into air and ocean freight specialists and supervisors. Formalisation also exists in the department such as customs rules and procedures. The requirements and needs of air and sea freight customers are also stable and routine. On the other hand, customers such as drilling companies that require ad-hoc shipments of mammoth drilling equipment require innovative solutions. The project department is tasked to handle the requirements of such customers. Hence, the project department only has a staff of 4 as compared to dozens of staff in the air and ocean freight department. Suppliers such as airlines and shipping lines change rates frequently and strikes occur in some countries driving rates up tremendously. To handle this instability, the financial analyst is responsible for scanning the external environment to set the rates and disseminating the rates to all parties concerned. Hence, as expected, the structure is flat. The regional financial analyst reports to the regional financial controller and has no subordinates under him. The structure and the culture of UPS Supply Chain Solutions have an impact on HR management. For staffing, internal recruitment is used for positions that require knowledge of the procedures already in place, such as warehouse supervisor, while external recruitment is used for other positions that do not require such knowledge, such as accountants. For performance appraisal, management staff and non-management staff have different types of appraisals, but within each group, there are uniform appraisal procedures. For the non-management staff, the appraisal is conducted solely by the immediate supervisor. For the management staff, a 360 degrees appraisal is conducted. This is in response to the company's structure of a mechanic structure for the lower level staff and an organic structure for the management staff. Also, to cater for this middle-of-the-road structure, the training policy is that staff will select a course from a list of both internal and external courses that they wish to attend. The departmental manager then approves it. This ensures that staff whose positions require them to be creative and innovative are exposed to new ideas. References Bartol, KM and Martin, DC 1998, 'Chapter 8', in Management, 3rd edn, Mc-Graw Hill, New York, pp. 251-278. Perrow, C1967, 'A Framework for the Comparative Analysis of Organizations', American Sociological Review, vol. 32, no. 2, pp. 194 - 208. Schein, EH 2006, Organisational Culture and Leadership, viewed 6 June, 2006, < http://72.14.203.104/searchq=cache:k1voy4W-cbUJ:www.tnellen.com/ted/tc/schein.html+definition+organisation+culture&hl=en&ct=clnk&cd=1>. United Parcel Service of America 2006, America, viewed 8 June, 2006, UPS Supply Chain Solutions UK 2006, UPS Supply Chain Solutions, United Kingdom, viewed 8 June, 2006, . Woodward, J 1965, Industrial Organisation: Theory and Practice, Oxford University Press, Oxford. Read More