Organizational Performance: the of Dell - Case Study Example

Organizational performance - the case of Dell The development of organizational performance has been one of the major targets for corporate managers around the world. However, this target is not always easy to be achieved. In fact the increase of firm’s profitability and the improvement of its financial performance have been proved to be challenging tasks for the company’s strategic department. Towards this direction it has been supported by Lawler et (2003, 24) that “the knowledge economy, with the proliferation of companies that rely on knowledge-based competitive strategies, offers an opportunity for HR departments to alter their role in the corporation fundamentally and become true value-adding strategic partners”. In other words, in order for a company to achieve a stable and significant level of growth, it has to proceed to an accurate and appropriate evaluation of its resources available in accordance with the required aims as they are stated in its mission statement. In the above context, the firm’s leader has a significant role in the improvement of firm’s performance in the long term. For this reason, he should have particular skills and competencies. Under these terms, the study of Ashforth (1995, 97) which referred especially to the role of leaders in the organizational context, led to the following conclusion “Leaders may persuade with logic, but they motivate through emotion; they must come to grips with the challenges of emotion, a key driver of productivity, quality and other factors that lead to business success; the words "motivation," "emotion" and "motion" all derive from the same Latin root meaning "to move;" when you want to motivate people to take action, engage their emotions”. In fact the above study presents all necessary elements of successful leadership within a particular organizational context. From this point of view, leader can be regarded as a significant factor to the achievement of organizational growth providing the necessary decisions and monitoring the application of strategies proposed regarding a particular organization. Current paper refers to the issue of organizational performance as it can be observed in the case of Dell which faced a severe crisis and for this reason a change in the leadership it was decided. The info related with the corporate performance and its reaction to the limitation of its growth are included in an article of Business Week which can be retrieved following the link provided in the references section. This article was published recently (in Feb 1, 2007) and refers to the appointment of Michael Dell (the company’s founder) as a CEO after the replacement of the firm’s (previous) Chief Executive Kevin Rollins. This differentiation in the firm’s governance was necessary after the significant reduction of the corporate performance, a reduction that has been made more obvious since mid-2005 when severe problems appeared regarding the firm’s customer service and the sales scheme used. As a result of the above problems, the firm’s financial performance has been decreased and for this reason the application of change has been considered as necessary. The replacement of the firm’s CEO was regarded as a priority for the corporate stakeholders. The issue that should be examined is whether this decision has been appropriate taking into account all aspects of organizational performance and the targets set both in the short and the long term. The relevant industrial organizational theory would be helpful in this context in order to evaluate the effectiveness of the particular change and the prospects for growth in the future. The use of the appropriate ‘model’ of organizational theory has to be based on the particular firm’s characteristics and its strengths. On the other hand, the existence of many aspects of organizational theory – as they can be observed in modern organizational activity – causes difficulties in the completion of the relevant task. In fact, it has been found by Kreiner (1992, 37) that “the many "schools" of organizational theory born during the postwar period immediately give the impression of great discontinuity; nevertheless, they contain a common element that may justify the use of a collective label such as "postmodern"--that is, the discord with the idea that organizations are "technically rational machines”. In other words, postmodernism should be regarded as a particular sector of the organizational theory which can have many different aspects. A first ‘category’ of the industrial – organizational theory is the one called ‘project school’ which supports that modern organizations tend to resolve all problems related with their operation by ‘transferring them to projects’. In a more analytical presentation of the project-scheme, Kreiner (1992, 37) states that “the stable, functionally divided "technically rational machine" is replaced or supplemented by temporarily established units which, disrespecting traditional structural barriers and institutionalized myths about rational technology, solve unique, isolated, unstructured, and limited tasks”. In accordance with the explanation of projects scheme presented above, the tasks that can be completed within a particular organization are limited and complex, an issue that creates more obstacles to the rapid growth of the firm’s performance. The specific organizational theory could be possibly observed in the case of Dell. The company faces a specific problem, reduction of its growth due to the limitation of the profits. Moreover, in order for this problem to be faced successful, a replacement in the firm’s hierarchy is decided. It is obvious in the particular case that current firm’s CEO has to complete a particular task: the increase of the firm’s performance towards its competitors. The tools and the methods used for the achievement of this target are going to be decided by the CEO who has to make primarily a detailed evaluation of resources available. In fact the application of project – scheme as explained above in Dell can be also justified by the view of Kreiner (1992) who supported that the particular scheme is appropriate for companies that face severe organizational turbulences and have therefore to proceed to the design and the application of specific projects in order to enhance their performance in the long term. From a totally different point of view, Parsons referred to his study “Suggestions for a Sociological Approach to the Theory of Organizations” to an organization which is characterized by the existence of strong sociological influences. This organization, in accordance with Parsons, has to focus on three specific targets: “a) the adaptation of an organization to the situation in which it must operate through the study of resource acquisition and the economics of exchange, topics today associated with open systems, resource dependence, and transaction-cost theory; b) the mechanisms of implementation operative goal attainment, i.e. the structures, processes, and decision making internal to the organization; and c) the analysis of mechanisms by which the organization is integrated with other organizations” (in Barley et al., 1996, 146). In accordance with the above theory, organization is regarded as an element or part of the greater society, with all the consequences that such a relationship can have to the organizational performance. This theory also can be regarded as applied in the case of Dell (as in all organizations internationally). Dell – like all corporations around the world – is part of the greater sociological context and it has therefore to show the appropriate respect to the ethics and principles developed in modern society. Current CEO will have to consider all possible theoretical and empirical solutions in order to achieve the improvement of the firm’s performance. The application of the following three types of control over the particular organization can be considered as a significant tool towards the achievement of the relevant task: “(1) direct and fully obtrusive, such as giving orders, surveillance, and rules; (2) bureaucratic and somewhat less obtrusive, such as division of labour and hierarchy; and (3) fully unobtrusive control of the cognitive premises underlying action, in which the employee voluntarily restricts the range of behaviours considered appropriate” (Beckman et al., 1998, 429). The above strategy regarding the control over the firm’s operation refers mostly to the company’s human resources which is though a significant element towards the improvement of the firm’s performance. In other words, apart from the organizational theories as presented above, the use of appropriate human resources plan could be proved to be really helpful for the improvement of the corporate performance. The fact that customer service has been a factor that faces problems supports the view that an appropriate HR policy would be necessary for the particular organization. Indeed, the study of Conner et al. (1996, 38) showed that in order “to improve its effectiveness and have greater impact, the human resource function must understand how to add value in the organization by helping line managers align HR strategies, processes, and practices with business needs”. In the specific organization the improvement of communication and cooperation in the internal environment could be proved to be crucial factors towards the achievement of any proposed strategic plan. References Ashforth B. E. (1995). Emotion in the workplace: A reappraisal. Human Relations 48(2): 97 Barley, S., Stern, R. (1996) Organizations and Social Systems: Organization Theorys Neglected Mandate. Administrative Science Quarterly, 41(1): 146-158 Beckman, C., Knopoff, K., Martin, J. (1998) An Alternative to Bureaucratic Impersonality and Emotional Labor: Bounded Emotionality at the Body Shop. Administrative Science Quarterly, 43(2): 429-437 Business Week, Feb.1, 2007 http://www.msnbc.msn.com/id/16921695/ Conner, J., Ulrich, D. (1996). Human Resource Roles: Creating Value, Not Rhetoric. Human Resource Planning, 19(3):38-46 Hage, J. (1999) Organizational Innovation and Organizational Change. Annual Review of Sociology, 597 Kreiner, K. (1992) The Postmodern Epoch of Organization Theory. International Studies of Management & Organization, 22(2): 37-45 Lawler, E.E., Mohrman, S.A. 2003. HR as a Strategic Partner: What Does It Take to Make It Happen? Human Resource Planning, 26(3): 15-31 Read More