Engineering Products - Essay Example

ENGINEERING PRODUCTS A Case Study Objective: To critically examine the impact of power and control operating at Engineering Products from the perspective of the managers and employees. Introduction Power has been variably defined as “the capacity of individuals to overcome resistance on the part of others, to exert their will and to produce results consistent with their interests and objectives.” (Huczynski and Buchanan, 2004 p. 187) Power can be exerted by individuals, groups, departments, organizations. Huczynski and Buchanan enumerated the bases of power as reward power, coercive power, referent power, legitimate power, and expert power. In the case of Engineering Products the issues of power and control emerged because the Company (Engineering Products) has adopted a strategy of standardization throughout its worldwide operations. Daniels et al (2004, p. 443-444) defined control as “the assurance that the company’s objectives are met.” According to them, among the factors that make control difficult are distance of communication, diversity of politico-socio-economical realities, and uncontrollables like government regulations, all present in the EP dilemma. Top management’s toughest challenge is to balance the company’s global needs with its need to adapt to country-level difference. Analysis Organization and control EP is straddled with a problem faced by many large businesses, that of reconciling the demands of the market with the constraints innate in an organization. The demand of the EP’s customers is for the standardization of the product. This pressure to meet a standard creates the need to impose uniform production processes. Control by a central authority becomes necessary if the product is to achieve not only similar but consistently uniform attributes. In EP, a manager was heard to comment, “It’s increasingly a strongly coordinated effort from the centre of the division which makes sure that all our operating companies are working together to the same standards making similar products often with the same level of prices.” This is evidence that work design in EP had, in some respects, tended towards the fordistic model of manufacturing (after Henry Ford, the inventor of the assembly line), with its emphasis on standardisation of products, its stress on performance related pay, its strongly vertical form of communication (since all orders are centralized with HQ), and the limited responsibility of its employees since much of the exercise of discretion has been eliminated in favour of centralized decision making. What to do, how much to do, and how to do the job, were all decided by a centralist authority. Barnard (1960, p. 64) observes that the imposition of rules defines the authority relation more clearly, and robs the subordinate of the authority provided by ambiguity. Replacing supervision with control by rules invariably narrows the subordinate’s freedom of action, with the effect of weakening his power in the organization. This is seen as personally threatening to the subordinate employees, since in impersonal “control by rules” there is no assurance that company goals, interests, or needs will be compatible with those of the subordinate, especially when the organization is so large that the decision-makers cannot identify with the individuals in the rank-and-file. The individual’s loss of control over his immediate working environment, to a set of rules implemented by a distant, detached central HQ, becomes a strong de-motivating factor. Organization culture, motivation and control It is expected that people with different backgrounds, values and personalities interact, there is bound to be disagreement and thus conflict. “Organizational change also contributes to conflict, because it realigns relationships among people,” according to Davis (1992, p. 180). “The result is that conflict is an inevitable part of organizational life.” EP is susceptible to conflict due to culture change in multinational operations. Schein (2004, p. 259) envisioned three levels of organization culture: surface manifestations, values, and basic assumptions. We shall now answer the questions: What are the surface manifestations of the organizational culture at the Engineering Products? What are its organization values? And what are its basic assumptions? Schein’s surface manifestations deal with the culture’s most visible aspect which can be observed by others. They include behaviour patterns which can “send a message” to an organization’s visitors, customers and employees. In EP, one strong surface manifestation is the promotion of managers and engineers who have developed “best practices” that are disseminated to employees. Hand-in-hand with this is the sanctioning of executives and managers who expressed dissent with HQ decisions. These behaviour patterns send the message that EP will reward compliance and punish non-compliance with HQ directives. Schein’s second level, organization values, are located below the surface manifestations and provide a common direction for all employees and guidelines for their behaviour. For EP, the moral/societal value apparently espoused is “customer obsession” coupled with employee obedience, or the law of strict adherence to the hierarchy. It must be noted that prior to standardisation, EP was geared more towards local initiative and versatility, thus one can say that the new strategy ushered in a new set of organisation values. Finally, Schein’s third level, basic assumptions are, in his view, the organization’s culture. Included here are the notions that individuals hold about the organization – aspects of human behaviour, the nature of reality, and how the organization relates to its environment. For EP, it appears to be a basic assumption of the employees that the company will reward obedience and punish disobedience. Under the old system, the exercise of local initiative and discretion was normal. Under the new system, the continued dissent of plant managers, no matter if it was well meaning, is met with sanctions. There are four types of culture, developed by Harrison (1972), Handy (1979) and Williams et al (1989) (Huczynski and Buchanan, 2004 p. 268). These are power-oriented culture, people-oriented culture, task-oriented culture, and person-oriented culture. To some extent EP exhibits aspects of each of these, but mostly it is the power-oriented culture that dominates. This culture is characterized by strong leadership from a central power source, and by competition and challenge. In EP it will be recalled that HQ has imposed internal competition for orders, and has centralised the assignment of orders with the headquarters (HQ). The assignment of orders is the single most important factor in determining the performance output of a plant, and control of this is control of all that is essential to the local plants. One of the most widely accepted theories in motivation is the Expectancy Model developed by Victor H. Vroom (1964, p. 73), later refined by Porter and Lawler (1968, p. 34). Vroom explains that motivation is the product of valence (the strength of a person’s desire for an outcome) and expectation (the chance that a certain action will produce the desired result. Formerly in EP, the managers were most likely self-motivated and used to taking the initiative. The sudden impositions of HQ was thus resented by these local executives. The centralization of control was a censure of how they conducted their localized style of management. Thus while the valence is intact, the expectancy that their actions will produce the desired result has radically diminished. This results in further de-motivation, and erosion of control by HQ over local plants’ performance. This theory is concurred in by Brunsson (2000, p. 6-7). Such action, according to him, must include cognitive aspect of expectation, such that the action entitles the doer to certain desired consequences. Absent the reward, then there will be no motivation to undertake the action. In EP, the reward sought is, in part, an increase in pay based on the pay plan. Lawler (2000, p. 394) specifies requisites for such pay plan to become a motivating force, the most important of which is that it must create a belief among employees that good performance will lead to higher pay. The problem in the case of EP, however, is that standardized performance is not rewarded with standard pay increases, since legalities and cultural differences vary from country to country. For EP, this essentially “de-links” the reward from the desired conduct, rendering the pay plan ineffective as a tool for motivation, and further compromises organizational control. One reward other than a pay increase is promotion given to its personnel. EP has adopted what Sutherland and Canwell (2004. p. 102) have defined as “geocentric staffing,” wherein the best individuals are placed in key roles in the organization, whatever their nationality. This is ideal for a multinational organisation. Power and Control The theory developed by French and Raven (1958, p. 453) distinguished five bases of social power. These are the reward power, the coercive power, the referent power, the legitimate power, and the expert power. EP’s power policy is the combination of three bases, namely reward, coercive, and legitimate power. The reward power is the leader’s influence on his followers exerted through the dispensation of valued rewards in return for compliance with instruction. When EP established the pay plan and the new criteria for promotions, opening upward mobility to compliant managers, it was wielding the proverbial “carrot” and trying to court obedience to central policy. Coercive power, on the other hand, is based on the administration of penalties or sanctions for non-compliance with instructions. In EP, HQ wielded the “stick” in the form of sanctions and dismissals for managers who insisted on not abiding by HQ’s standardization policies. HQ also introduced punishment in not allocating orders to plants perceived to be uncooperative with central authority. Finally, the exercise of legitimate (or position) power is based on the obligation of subordinates to accept instructions given by the leadership because of its position and title. HQ used its legitimate power by employing control mechanisms such as: centralizing the decision-making functions on itself; changing the company’s structure to favour standardization; affording rewards and imposing punishments; training of personnel; and imposition of policies and rules (Hellriegel, D. and Slocum, J., 1978, p. 365 ). In EP, however, the changes in the organizational structure may be viewed as a benevolent attempt to gradually inculcate standardization through collaboration. The manufacturing councils, the engineers’ International College, the internal consultants, and regular meetings of international HR specialists, were all meant to smooth out the transition from localized operations to a standardized system. Luthans (2005 p. 154) has a modified view of the bases or sources of power, as tabulated below. Contingency Theory and Postmodernism applied at EP. Among theories on organization and leadership, most pertinent to the EP problem are a combination of the contingency and postmodernist theories. The contingency theory states that there is no single ‘best way’ of leading. It posits that a leadership style that is effective in some situations may not be successful in others. "Contingency theory is guided by the general orienting hypothesis that organizations whose internal features best match the demands of their environments will achieve the best adaptation" (Scott p. 89). Probably the earliest such theory is that of Fiedler (2000, p. 690). Instead of specifying trait and behavioral leadership models, he explained that group performance is a result of interaction of two factors: leadership style and situational favorableness. In Fiedlers model, leadership effectiveness is as much the result of characteristics of the environment in which the leader works, as the style of the leader. Furthermore, Vroom and Yetton state that the decision quality and the manner of acceptance of the decision by the followers are likewise important determinants of the effectiveness of a decision. EP is a multinational corporation, where situational differences significantly defy total uniformity of operational policy and control. Since environments differ in each country, then by Scott’s theory the validity of the organizational features (i.e., operational practices and leadership styles) should also differ, so that the organization could become more responsive and effective. On the other hand, postmodernism embraces the concept that there is no such thing as a single reality, and that peoples’ concept of reality are defined by their experiences. Different experiences therefore produce different realities based on the context of peoples’ perceptions. Gergen (1992) wrote that postmodernism in organizational theory may be approached from the point of view of language. What managers say are themselves never rational nor irrational, but that their rationality, objectivity or wisdom will depend on how their subordinates or colleagues interpret these sayings. That is, rationality is a product of social collaboration. According to Clegg (1990, p. 2), “current empirical tendencies in some international contexts may be such that organization practice may well have transgressed the limits to understanding which are framed by this modernist theory.” In EP, a multinational organization, postmodernism gains special significance because of the “distance” of the communication (i.e., from HQ to locale) that comprises the exercise of control. Those directives issued by HQ are neither objectively reasonable nor unreasonable; this quality is vested in the manner the recipients – the managers and employees of the locales – interpret and perceive them in the context of their experience. It is entirely possible that HQ directives are perceived as irrelevant or disadvantageous by the local managers and employees, and thus are ineffective as instruments of control. Summary and Conclusion Engineering Products should exercise “selective standardization” instead of the totalitarian, centralized uniformity it is presently implementing. The best practices for a locale will be viewed as interference by employees and managers in other locales where such are imposed, especially if they are not responsive to conditions in the latter. EP should define what standards of quality should necessarily be complied with, particularly those that determine product characteristics and performance. In time, it is expected that the steps taken by Engineering Products would be accepted by employees and managers if such steps have favourable effects in production; and local opposition will eventually give way to full integration. Those operational matters which are not critical to quality control may thus be relegated to local management to determine. [Word count = 2,252] References Adler, N. (2002) International Dimensions of Organizational Behavior, 4th Ed. McGill University, Ohio. Barnard, C. (1960), The Functions of the Executive, Harvard, Cambridge, Mass. Black, B (1999) “National culture and high commitment management”, Employee Relations pp 389-404, as cited in Rollinson, D, Organisational Behaviour and Analysis: An Integrated Approach, 3rd Ed. Brunsson, N. (2000) “The Irrationality of Action and Actions Rationality: Decisions, Ideologies and Organizational Actions”, Classics in Management Thought Volume 1, Cooper C. (ed.), Edward Elgar Publishing, Cheltenham, UK Clegg, S. (1990) Modern Organizations: Organization Studies in the Postmodern World. SAGE. Daniels, John D., Radebaugh, Lee H., & Sullivan, Daniel P. (2004), International Business: Environments and Operations, Tenth Edition, Pearson Education, Inc., Upper Saddle River, New Jersey Fiedler, F.E. (2000) “Engineer the Job to Fit the Manager”, Classics in Management Thought Volume II, Cooper C.L. (ed.), Edward Elgar Publishing Ltd, Cheltenham, UK French, J. and Raven, B. (1958) “The bases of social power” in D. Cartwright (ed.), Studies in Social Power, Institute for Social Research, Ann Arbor, Mich. George, J. and Jones, G. (2005) Understanding and Managing Organizational Behavior, 4th Ed., Pearson Education, New Jersey Gergen. K.J. (2004) “Organization Science as Social Construction: Postmodern Potentials”, The Journal of Applied Behavioral Science, Vol. 40, No. 2, 228-249 Hellriegel, D. and Slocum, J. (1978), Management Contingency Approaches, Addison-Wesley, as cited in Huczynski, A. and Buchanan, D, Organizational Behavior 5th Ed., London Hofstede, G. (1980) Culture’s Consequences: International Differences in Work-related Values, Beverly Hills, CA Huczynski, A. and Buchanan, D. (2004), Organizational Behavior (5th Ed), Pearson, London Lawler, E. (2000) “Using Pay to Motivate Job Performance”, Classics in Management Thought Volume 1, Cooper C. (ed.), Edward Elgar Publishing, Cheltenham, UK Luthans, F. (2005) Organizational Behavior 10th Ed. McGraw-Hill Irwin, New York, NY. Porter L. and Lawler, E. (1968) Managerial Attitudes and Performance, Dorsey Press and Richard D. Irwin, Inc., Homewood, Ill. Sutherland, J and Canwell, D. (2004) Key Concepts in International Business, Palgrave Key Concepts, Palgrave Macmillan, Houndmills, Hampshire Vroom, V. (1964) Work and Motivation, John Wiley and Sons, New York Read More