Watsons Engine Components and H&M Consulting - Case Study Example

 Introduction to Organizations and Management Introduction In an increasing competitive environment organizations are facing challenges in managing their businesses effectively. The need to grow in such an environment is very important in order to sustain profitability but at the same time these challenges are pulling companies back. These challenges include human resource problems, innovation and organizational structure. This report will include a comparative analysis between two companies. By comparing the two companies we will try to learn how these challenges can be solved. The difference in the management style of both the companies will also be discussed under the light of relevant theories of management and business. Watsons Engine Components and H&M Consulting are the two companies that will be discussed in the report. Watsons Engine Components is a manufacturing company of parts for car engines. It is a family owned business and is in a lot of trouble because of the increased competition in the industry. The human resource management issues are also staring the company right in the face. On the other hand H & M Consulting is a consultancy company and has made massive inroads in many engineering and management sectors all over the world. Since its inception in 1989 it has grown into a large organization with a global presence. The company is doing very well and has a friendly culture which in turns yields good profits for the company. The differences between these two companies will be highlighted in the report. Organizational Design and Structure The first area of difference between the two organizations is the organizational structure. Structure in companies is very important because all communication is done within the organization according to its structure. The lower levels of employees communicate their demands and insights on the business through the structure. This is why the importance of organizational design in great. A major chunk of the problem of Watsons Engine Components lies in its organizational structure. The structure of the company is hierarchal and old fashioned. In a hierarchal structure the flow of information is very slow. The communication gap in the company is very evident from the highly unionized employee base. When the voices of employees are not heard they feel compelled to make such forums where voices are raised. It is actually an individual need, to raise his or her voice about the work he or she is doing and in absence of proper communication channels unions are formed. Cross functional integration is very important in environments where demand is unpredictable (Germain, Claycomb, & Droge, 2007). This integration is also lacking in Watsons Engine Components. The company is not interested in training employees so that they can work in different areas. The employees are not even motivated themselves to work hard because of the structural issues with the company. Employees working at the lowest level have great ideas about improvement of product but these ideas are not heard because of the vertical structure of the organization. Workers find it difficult to communicate their ideas to the top management. The business activity of Watsons Engine Components requires a structure that is flexible. The company produces complex products that are engine parts. Innovation is actually required when manufacturing complex products and design structure is very important when developing complex products (Danilovic & Browning, 2007). This is because innovation will only take place when ideas from employees are listened to and implemented. In a business of manufacturing the company should have a decentralized structure and a small company like Watsons Engine Components should have an open door policy. H & M Consulting on the other hand has a much decentralized structure and this is the reason of their success. The nature of business of H & M Consulting forces it to have a decentralized structure. The company has a global presence and teams are working in different locations on different projects at the same time so decentralized structure is important for them so that employees can quickly take decisions. The managers at H & M Consulting take only the jobs of coaches and they do not dictate their decisions. Such a structure causes employees to take initiatives. Employees are also motivated by this kind of structure and they display hard work. Also in consulting business free flow of information is required and that is why decentralized structure suits the business. Watsons Engine Components should also have a similar structure because there business is of making engine parts which are complex products. Also floor flexibility is lacking because employees are not motivated enough to work hard. If the company will ask for their advice and will implement some of their proposed changes only then they will feel motivated to work harder. This will happen because employees will feel a sense of independence. The main difference between the two companies is in their approaches towards organizational structure. H & M Consulting has realized that decentralized system will help their business while Watsons Engine Components is still not thinking about changing their practices. It is important for decision making to work for any business and decision making is dependent on structure of the organization (Rivkin & Siggelkow, 2003). Organizational structure at H & M consulting is perfect for their business and the same should be applied by Watsons Engine Components. Teams and Team Working Team work is very important in every organization. No company can work without effective team work between its employees. The extent to which an organization is dependent on teams may be different but this does not undermine the importance of team working. Groups are formed in all types of organizations and their performance directly affects the performance of the company. When it comes to Watsons Engine Components team work is something which is nowhere to be seen. Employees are not working together as a coherent unit but have made unions in order to protect themselves from layoffs. This shows how bad the situation is in the company. Teams are working together but they are not adding value to the organization and this is the problem. The business of Watsons Engine Components is to produce engine parts and for that they need multi skilled teams because the specifications of each order are different. The teams working on the production floor are only performing one job and there is no movement from one job to another. This causes a lot of problem because of the fact that employees are not able to perform at their full potential and many precious labor hours are lost. Team working is very important in organizational context of Watsons Engine Components because value creation is their main aim. They have to make parts of diverse specifications for their customers and this has to be done in the shortest possible time. And in order to achieve this aim it is essential that all level of employees should work as hard as possible. There is no roam for any wastage of time on the production floor of the company. Expertise is considered to be very important when it comes to effective decision making in teams (Hollenbecker, et al. 1995). There is some expertise in the employees of the company because they have ideas about how to improve the process of production. They lack skill and this is a problem which needs to be resolved. The relationship between managers and employees is also not very good in Watsons Engine Components. Team effectiveness is dependent on manager behavior and employee involvement (Cohen, Ledford, & Spreitzer, 1996). Both of these things are lacking in the company. Employees have formed unions because their demands are not met by the managers. In such a situation the organizational performance cannot be enhanced and it will deteriorate in future. The link between departments is also not very good because marketing department is rarely in contact with manufacturing department and this is also causing problems for the company. On the other hand H & M Consulting is a model of team work. Different teams are designed and managers only act as advisors to the team. Teams are also given power so that they can make decisions on their own and because of this employee themselves take many initiatives for the company. The growth of the company is also very good because of the effectiveness of its teams. Diversity is another major factor in the teams of H & M Consulting because of the global presence of the company. Diversity can itself add to the effectiveness of the team (Pelled, L. 1996). H & M Consulting is in a business where it deals with many kinds of different projects and for that team working is most effective. The decision making process has to be quick and therefore teams can add value to the company. Watsons Engine Components is also in an innovative business and teams can also be very beneficial for them. The orders which they get are changing everyday and are sophisticated so small teams can be made of members that specialize in many fields so that orders can be completed and quality can be maintained. But the difference between the two companies is that H & M Consulting is highly organized and have a diverse teams that are independent and motivated to work hard. On the other hand teams at Watsons Engine Components are not skilled and they are not independent. They are also not interested in working hard because they do not feel independent. Approaches to Leadership and Management Leadership is very important in any business environment because it is a non financial tool of motivating people. Management style of a company can also motivate people and can make sure that the flow of communication between all levels of employees is smooth. The management and leadership approach of a company should be suited to its business and operations, and no one style or approach can be considered as right. Watsons Engine Components management’s approach towards its employees is very bureaucratic in nature. The company follows a bureaucratic style of management where all employees have their own role and there is no interaction of tasks. Jobs are assigned by managers to employees and there is no interference in the work of managers. The problem of the company also lies in its management approach because its employees are not accepting such management style. In bureaucratic style of management employee empowerment is zero and formal authority is followed in the organization. This is the case with Watsons Engine Components. It is very important in technology business to focus on the flow of information within the organization and that is dependent on the management style of the organization (Goldhar, Bragaw, & Schwartz, 1976). Watsons Engine Components is in the technology business and management approach of the company should facilitate the flow of information. Only then the company can perform in an efficient manner. H & M Consulting is using a recent management style called learning organization. This trend is becoming very famous in businesses today where the entire focus is on team work. The main three elements of a learning organization include team based structure, empowered employees and open information (Daft, R. 2003). All these three characteristics are present in H&M Consulting and this is also one major reason of their success. Employees at H&M Consulting are empowered and their decisions are supported by the management. Decision making is actually delegated to teams and this creates a sense of independence in employees of the company. Information in the company is also open to everyone with all of the employees aware of the company policy and values. All of these characteristics are nowhere to be seen in Watsons Engine Components. The company has teams but the focus is not on team based performance. A set of values are also not designed and the management style is not in line with the business of the company. Employees feel that they are not given enough power and this is evident in bad relations between employees and management. Also turnover rate is very high in the organization and this causes concerns for the company. The management styles of both the companies are very different from each other. Watsons Engine Components also has a leadership crisis. There is a gap between the managing director and the employees. He rarely visits the production floor and his operations manager is responsible for everything on the production. He can be regarded as an absentee leadership and because of this there is a serious lack of leadership in the company. The human resource manager also shows that he is not interested in leading his department so all in all there is a leadership crisis in the organization. On the other hand H&M Consulting has a very influential leader. He has given his employees clear missions and has defined the values of the company. Employees at H&M Consulting are aware of their responsibilities and they know what their job is. The style of leadership followed in the organization can be regarded as participative style of leadership where team work flourishes. The participation of the managers at H&M Consulting is evident in the performance and all employees are empowered to take their own decisions. The leadership styles of both the companies are very different because one follows an absentee style of leadership and other uses participative style of leadership. Watsons Engine Components should learn from the success of H&M Consulting and its leader should follow in the footsteps of H&M Consulting. Organizational Culture Organizational culture plays a key role in the performance of the company. A culture of the organization includes all the features and characteristics of its environment. The life of the employees in the organization is defined by the culture of the organization. There are different types of culture prevalent in organizations and each complements the business operations of the company. Watsons Engine Components has a hierarchical culture and formal positions of authority are given to people. The culture has many problems because employees have many issues regarding the management and they are not able to raise their voices. Also the employees have very innovative ideas about the production process of the company but still there ideas are not heard by the management. Innovation is also lacking in the organization because the company has capital to improve its machinery technology but still the idea of management is to be cost effective. What the company does not understand is the fact that their methods of cost effectiveness are actually decreasing the performance of the company and in turn profits are decreasing. It is important for Watsons Engine Components to understand that their culture is not enhancing the performance of the company but it is actually decreasing it. It is because of this that employees are leaving their jobs and company is experiencing a high turnover rate. Innovative ideas are not entertained by the company even though employees are coming up with new ideas. The hierarchical culture of the company is impeding the performance of the employees of Watsons Engine Components. Organizational culture can be a source of competitive advantage for a company (Barney, J. 1986). H&M Consulting is following this to the best of their abilities. The company’s culture can be termed as clan culture. All employees work together as a clan and they complement each other’s skill. It is very important to do so because H & M Consulting is a firm whose business is dependent on work of employees. They have a global presence and teams work on different projects. Informed decisions are to be made by the group and for that a culture like this is necessary. The management is also friendly towards employees and their needs are kept in mind. Employees feel that company takes care of them and that is why they work hard for the company. This friendliness is a part of the culture of H&M Consulting. It is suggested that when business environment of a company is in turbulence and is uncertain then clan culture maximizes the performance in the service industry specially (Chan. A. 1997). This is another reason why clan culture is doing wonders for H&M Consulting. Clan culture also improves the thinking process of the individual and helps them achieve their potential. Innovation is bolstered in such organizations where clam culture is in placed because innovation happens at all levels of employees and if the communication between the employees is good only then newer and better strategies and ideas can be generated and implemented in the organization. The difference between the two organizations is that Watson Engine Components is failing to understand how important innovation is. The motto of its leader is also not helping the company. A set of values and missions should be designed so that employees have an idea about their responsibilities. There is uncertainty in the company and that is affecting the performance of the employees. On the other hand H&M Consulting is giving excellent services to its clients because of the fact that values and objectives of the organization are clear to employees and they are empowered to take their own decisions. Employees take initiatives in the company but in Watson Engine Components employees are reluctant to take decisions due to uncertainty of their roles on the company. Culture of the company is also very unfriendly in nature with traditional hierarchies defining authority of managers. Conclusion There are many differences between H&M Consulting and Watson Engine Components. The two companies have a very different organizational structure with H&M Consulting following a decentralized structure while Watson Engine Components have a traditional hierarchical structure. Team work is also better in H&M Consulting. Watson Engine Components uses bureaucratic management style while H&M Consulting uses learning organization approach. Leadership style is also different with Watson Engine Components having an absentee leadership while H&M Consulting having a participative leadership. Clan culture is the culture of H&M Consulting while Watson Engine Components uses a hierarchical culture. Because of all these differences H&M Consulting is doing much better than Watson Engine Components. The management approach, culture and leadership of H&M Consulting is proving to be in line with their business operations. Bibliography Barney, J. 1986. Organizational Culture: Can it be a Source of Sustained Competitive Advantage? The Academy of Management Review, Vol. 11 Iss: 3, pp. 656 Chan, Andrew. 1997. Corporate Culture of a Clan Organization, Management Decision, Vol. 35 Iss: 2, pp.94 - 99 Cohen, Ledford, & Spreitzer. 1996. A Predictive Model of Self-Managing Work Team Effectiveness, Human Relations, Vol. 49 Iss: 5, pp. 643- 676 Daft, R. 2003. Management 6th Edition. New York: Thomson Learning. Danilovic & Browning. 2007. Managing complex product development projects with design structure matrices and domain mapping matrices, International Journal of Project Management, Vol. 25 Iss: 3, pp. 300-314 Germain, Claycomb, & Droge. 2007. Supply chain variability, organizational structure, and performance: The moderating effect of demand unpredictability, Journal of Operations Management, Vol. 26 Iss: 5, pp. 557-570 Goldhar, Bragaw, & Schwartz. 1976. Information flows, management styles, and technological innovation, IEEE Transactions on Engineering Management, Vol. 23, pp. 51-62 Hollecnbecker, et al. 1995. Multilevel theory of team decision making: decision performance in teams incorporating distributed expertise, Journal of Applied Psychology, Vol.80 Iss: 2, pp. 292-316 Pelled, L. 1996. Demographic Diversity, Conflict and Work Group Outcomes: an Intervening Process Theory, Organization Science, Vol. 7 Iss: 6, pp. 615 Rivkin & Sigglekow. 2003. Balancing Search and Stability: Interdependence among elements of organizational design, Management Science, Vol. 49 Iss: 3, pp. 290-311 Read More