The Organisation & Key Aspects of its Management Structure - Essay Example

Introduction & Background: the Organisation & Key Aspects of its Management Structure 1 Introduction & Background Organizational structure and culture are one of the most widely discussed aspects of today’s corporate world. As the corporate world is changing at a rapid pace, organizations have to change in order to adapt with the changing employee demographics, employee attitudes, geographical reach and innovation in the corporate world. This paper attempts discuss the organizational structure and culture of one particular company, known as Sophie’s. After analyzing the organizational structure and culture, the next part would be to understand the effectiveness of this structure and culture with respect to the operations of the organization. Based on this understanding, recommendations would be presented in the last section of this paper. Sophie’s is a clothing and accessory retailer that is based in California, USA. Sophie’s was created by an aspiring fashion designer, Jin Lee who found the capital to invest from her own family. Sophie’s began in 1999 as a small retailer but soon developed its image as a leading fashion retailer that catered to the changing demands of fashion conscious consumers. It is important that Sophie’s quickly adapt to the changing demands in fashion in order to remain profitable in such a strong market that has reached its maturity. The company buys manufactured cloth and other accessories and uses it to produce fashion clothing and items for its high end consumers. Clothes are imported in the country from developing countries that produce cotton including China, Bangladesh and Mexico and bought from select importers who deal with these countries. The cloth is bought in bulk and stored in warehouses. Later the cloth is designed according to the specifications of the designers. The designed piece is then displayed on the shop from where it is bought by the customers. 1.2 Company Structure The company structure within Sophie’s is vertical with Jin Lee as the managing director of the company. Vertical organizational structure is where power and decision making is centred at the top and authority moves from the top to bottom. Since Jin Lee is also the founder of the company and is very passionate about the organization, she maintains a rigid control over the organization. Other than Jin Lee, there are 20 people currently working within the organization. Directly working Jin Lee are the managers of the company which include Store Manager, Design Manager, Supply Chain Manager and Marketing Manager. The store manager has four people working under him who are directly interacting with the customers and providing them guidance on their shopping needs. These employees are mostly part-time workers who belong to diverse racial background which includes a Philippine, a Latino, an Indian and only one White American. All of them are between the ages of 25-35 and equally divided among the two genders. The employees within the store are directly responsible to the store manager who in turn report to the managing director. The Design Manager has six people working under them. Their responsibilities are diverse including research on latest fashion and dying and stitching of the material. Each person is assigned a specific task and they work by collaborating amongst themselves. The Design manager ensures that each person is allowed to express his own opinion and contribute fully towards the design process. The Supply Chain Manager is only responsible for two people. Sophie’s has limited its suppliers to only two companies. Each employee deals with one supplier at a time and reports directly to the supply chain manager. The coordination between the two people working under the supply chain manager is minimal. The last manager is the marketing manager who oversees four people under him. The marketing manager has not designated a role to his team members but rather switches roles in order to ensure innovation and creativity within his department. 2. Cultural Context 2.1 Organisational culture The Organization culture that is found at Sophie’s is role culture. Role culture is the type of organizational culture where ‘people have clearly delegated authorities with a highly defined structure’ (Hollank and Walter, 2009). Just like in a role culture, the staffs under the different managers have clearly delegated responsibilities except probably in the case of the Design Manager and the Marketing Manager. The power is concentrated at the top and the managing director holds the greatest power, thus forming hierarchical bureaucracy within the organization. The title of the person is indicative of the power of that person within the organization, for example director holds more power than the managers (Schien, 2010). The culture is preferred because it allows the division of role according to the knowledge and specialization of the person to whom a specific title is assigned. Rules, systems and procedures guide the people within the organization so that the organization does not fail due to lack of planning and control mechanisms (Handy, 1976). Coordination within the different departments of the organization is uncommon. The staffs under the different managers are only required to fulfil their roles. The staffs are not expected to initiate something on their own or to over perform above these specified roles. Thus, it is not preferable that any member of the staff from one department coordinate with the other on their own (Lewis, 2001). For example, the employees working under the design department would not provide information to the marketing department directly to improve the sales of the store as a whole. According to Handy, this kind of a culture is suitable for organizations where change is not constant. In organizations where the internal and external environment of the business remains constant, the role culture is most suitable. Role culture is most common in public and government organization where each person performs his own role and information is circulated in the organization through formal networks and channels (Grint, 2005). 2.2 Wider Cultural context Sophie’s is a US company situated in California. Being a US company, the American culture should be more focused on. However, Jin Lee, the owner of the company is a Chinese woman who believes strongly in Chinese work ethics. The Chinese work ethics often conflict with American work ethics. The Chinese believe in subtly, collectivism and power distance whereas the Americans are more direct, individualist and do not prefer power distances (Gouveia, and Ros, 2000). However, the managers employed by Jin Lee belong to her extended family and thus they are not American but rather Chinese. Additionally, Jin Lee favours the concept of Guanxi where relations are preferred over strangers (Mobley, 2009). This concept however does not suit well among the American employees in the organization that occupy lower level positions. 3. Theoretical background In order to understand cultural values present in an organization, different theorists have provided their own models including Hofstede. Cultural values of an organization widely differ on the basis of the organization and the people working within it. The culture of a Chinese organization will differ from the culture of a British organization in the same way that American culture differs from that of Indian culture. Hofstede, after understanding the differences proposed his five dimensions of culture on the basis of which organizational culture differed from one country to another and sometimes even within the same countries (McSweeney, 2002). Understanding the different cultural models such as the Hofstede cultural model in this paper will help to develop a cultural sensitivity towards the people within the organization. Since the managing director of Sophie’s is a Chinese but she has different people working under her, she needs to understand the cultural work background of these people so that she would be able to work out the differences within the organization and to help develop a better culture in the organization. The first dimension is power distance which refers to the distance of communication between the upper and lower management of an organization, based on power. Organizations with high power distance scores indicate that the people within the organization understand the play of power within the organization and have accepted their positions in the hierarchy. The second dimension is the individualism score which refers to the degree of communication between the different people within the organization. Organizations with high individualism score indicate respect for individualism of the people in the organization (Gouveia and Ros, 2000). The third dimension is masculinity which refers to accepted difference between males and females in an organization. Organizations with high masculinity score have clear distinction between the role of males and females. The fourth dimension is the uncertainty index that refers to the acceptance of diversity and change within an organization. Organizations with high uncertainty index avoid risk as best as they can and do not have a welcoming attitude towards change. The fifth and the last dimension is long term orientation that refers to the belief of the people towards traditions and values. Organizations with high long term orientation have strong connection with families and they value strong work ethic (Hofstede, 1993) (Hofstede, 2003). In the case of Sophie’s different cultures exist, therefore a balance should be reached in the case of all different factors so that all employees feel valued. Trompenaars, on the other hand, present a seven dimensional model of cultural values. The first five factors of the model deal with people oriented relationship and these factors are universalism versus particularism, individualism versus collectivism, neutral versus emotional, specific versus diffuse, and achievement versus ascription. The two factors deal with environment and the reaction to the environment. These include Sequential versus synchronic and external versus internal control (Hofstede, 1996).   Universalism versus Particularsim compares the culture of rules and regulations as opposed to Paritcularism that focuses on molding the procedure according to the conditions and the people. Individualism versus collectivism compares the culture that focuses on individuals as opposed to focus on the group. Neutral versus emotional culture compares the different attitudes of the people in their relationship with the others in the organization. In emotional cultures, people show their relation whereas in neutral cultures, people have controlled attitudes towards others. Specific versus diffuse culture refers to the extent where people separate their private and public life. Achievement versus ascription cultures compares the difference in how people achieve their titles as oppose to use their titles to uphold their power in the organization (Shaules, 2007).   Organization culture has also been categorized in different categories by different writers. One example is the types of organizational culture proposed by Handy. According to Handy, there are four different types of organizational culture. Power culture is a culture where power is concentrated within the upper echelons of the management who enforce rigid rules and policies to maintain control over the organization. In role culture, the same rigidity is observed as seen in power culture and the employees within this culture have clearly defined roles. Task culture focused on the people with no single leader but rather the group works as a whole. The last culture is the person culture where the purpose of the organization is to facilitate its employees (Thompson and Thompson, 2010). In the case of Sophie’s, a culture should be adopted that would be flexible to adapt the changing demands of the fashion industries. Rigidity and strict rules are not cultures that would be suitable for Sophie’s Deal and Kennedy also define four types of organizational cultures. The tough-guy macho cultures are those that focus specifically on work and deriving results from the work. Failure is taken very hardly in such cultures and coordination within such culture is low. These cultures work best for high risk organizations. The work hard/play hard culture is another type of culture whereby the work is fast and the risk low. This culture is sales oriented and focus on building a team rather than individuals. The third type of culture that Deal and Kennedy defined is the Bet-your-company culture, where feedback within the organization is slow due to the large projects initiated within the culture of these organizations. A hierarchical system is seen within the culture in terms of decision making since risks associated with these decisions are very high and may even lead the company to bankruptcy. The fourth type of culture is the process culture. These are slow feedback and low risk organizations. Decision making in this culture is methodical and even slow to avoid risk in the future (Senior and Flemming, 2009) (Mordon, 2004). Here again, the culture that would be suitable for Sophie’s would be one where work is fast so as to accommodate the changing fashion industry and feedback is fast. According to Stewart, 1997, there is no ideal form of an organization. The structure of an organization should be adapted to the needs to the organization. Certain organizations need to bring changes quickly with the changing demands and for such organizations; organic structures would be best suitable. On the other hand, in government organizations, change is not constant and thus hierarchical chain of command best suit these types of organizations. Stewart also pointed out that organizations in the 21st century are required to be more flexible as compared with organizations in the 20th century due to the changing demographics and generations entering into the workforce. The best structure of an organization is one that allows the organization to achieve its objectives. Thus Stewart brought forward the idea of fitness of purpose where the best organization structure adopted by the management would be one that fits the purpose of the organization (Stewart, 1997). On the whole, Sophie’s should adapt an organizational culture that fits the purpose of the organization and the people within it. The nature of the fashion industry should be understood before changes are made in the organization.   4. Fitness for Purpose Fitness of Purpose as introduced by Stewart requires that the organization adopt a structure and a culture that suits the purpose of the organization. In the case of Sophie’s the objective is to sell fashion clothes to the consumers. Sophie’s is a fast fashion organization where trends in fashion change quickly with time. Thus the organization needs to be adaptable with change and need to be quick in making decisions. This requires an organization that is organic in nature. In organic organizations, rapid change is quickly understood by the employees and they make decisions on a quick and timely basis. ‘Organic structures are more effective in unstable, changing environments’ (Jones and Mathews, 2008). Thus organic structure would be more suitable for Sophie’s due to its changing demands of the consumers. However, the organizational structure at Sophie’s leaves a lot to be desired. In the case of Sophie’s which is a fashion retailer, the organizational decision needs to be quick so that the final product matches the most recent trends. For this reason, the organization should be quick in its decision making policies (Mullins, 2005). However, Sophie’s follows a vertical chain of command where it takes time to make decisions and these decisions are exclusively made by the managing director, Jin Lee. The employees though may be more connected to the needs of the consumers are unable to offer their suggestions and even if they do, they most usually do not reach the level where the decisions are made. 5. Critical Reflection Sophie’s is a fashion retailer that has to adapt to changes in the external market. At this time, the management structure of Sophie’s is vertical with most of the power in the hands of the owner and the managing director, Jin Lee. Since Jin Lee is Chinese, the organizational culture is more relatable to Chinese culture. It works for the organizational managers who belong to the extended family of Jin Lee and are therefore Chinese. The Chinese managers understand the power distance between the manager and the director and subsequently the employees and the managers. However, the staff working under the managers is not Chinese and they do not understand the power distance that is observable in the organization. Team work within the departments is favoured by the managers, which works for the different departments but communication between the different departments is limited. The organizational culture for Sophie’s should be one where the different employees within the organization are able to make decisions on their own without having to gain approval. In fast fashion organizations, decision making process has to be quick. Fashion retailers such as Gap and Zara’s understand the impact of organizational culture on achieving of the objectives of the organization. Taking the example of the fashion retailer Gap, the organization allows its employees to develop their own dress code and to make suggestions on improving the recent line of fashion. The input of the employees is valued since Gap understand that in the case of fast fashion, decisions need to be quick therefore employees are allowed the power to make decisions in order to meet with the changing customer needs and demands (Granger and Sterling, 2003). The role culture within Sophie’s allows the organization to distribute roles and responsibilities according to the skill of the person. In this way, each manager and his staff deal with aspects of the business that they are more suitable to handle. This is beneficial for the organization to a certain extent since the marketing department does not interfere in the functioning of the design department. With roles divided clearly, conflict within the organization is greatly reduced. However, since the organization is small scaled, conflict is already limited within the organization. The power distance in the organization further prevents conflict from arising. 6. Recommendations Changing organizational culture and structure may be the most difficult task for an organization but Sophie’s need to make the change in order to expand to different states and even globally. For this, the owner would have to invest in making change which would be gradual and for which the managers and staff within the organization need to be motivated. The owner of the organization is responsible for shaping the culture and structure of the organization and it is the ideologies of the owner that reflect on the organizational culture and structure (Lin and Germain, 2003). The first recommendation would be to allow decision making in the hands of the managers and their staff. Since the company is involved in fast fashion where trends change in a short period of time, the company cannot afford to waste time on slow decisions. Even though the managers and staff are allowed to take minor decisions, they need the approval of the director if they want to add a new line of fashion or order a new material. Another change that the organization needs to make is to improve cross functional collaboration. At this time, communication within the different department is limited to just the managers who only reveal information in general meetings. This happens in role cultures where the managers and the staff are possessive about their own department. Cross functional collaboration would allow each department to benefit since the operations are interlinked. The staff within the design department should be able to directly communicate with the supply chain department in order to make minor changes in the inventory, that are done to better serve the changing trends and designs. Furthermore, the sale staff should help out the design department to better understand the needs and psyche of the customers. Even though the company is successful at this time period, it needs to make changes for the future in order to expand. Jin Lee may be making profit at this time but if she wants to expand further, she cannot hope to keep the vertical organizational structure. With stores in different states, a vertical chain of command would prevent Sophie’s from adapting to the changing demand s in lieu with the changes in the market in the different states. References Handy, C. B. (1976) Understanding organizations, UK: Oxford University Press Hofstede, G. H. 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