The Current Set Up at Innovations Ltd - Case Study Example

 INNOVATIONS LTD The current set up at Innovations Ltd is such that James is the Managing Director who likes to have his finger on the pulse of the Company. He adopts a traditional management style, where decision making is in accordance with an established chain of command, with the department managers working under him and with each of those managers being posted with a group of staff members working in that particular department. However, there is also some level of networking between James and the managers, as well as among the employees of the organization. The Classical Theory of Management is based upon the principle that the functions or operational tasks of managers need to be clearly defined and assigned according to each specific organizational unit. This theory states that the parameters of each function must be clearly defined, as well as the conduct related to the performance of that function, with such specific performance standards being enforced by the managers/supervisors.(www.prm.nau.edu). This is also the case with Innovations Ltd, where each department is strictly demarcated and functions as a distinct unit. This may serve to explain some of the problems that have resulted, such as the loss of the customer due to failure to develop a product on time, since this could well be the result of low levels of interaction between the various departments. Therefore, under this system, organizations function through a system of bureaucracy that was developed by Max Weber. The justification provided by Weber for bureaucracy is the need to control the unpredictable and highly individualistic behavior of employees of large corporations. On this basis, bureaucracy establishes strictly delineated roles for employees with their functions and related processes clearly spelt out and enforced by their supervisors in order to eliminate any un-productivity in job performance and enforce conformity in performance. Scalar concept: One of the features of the Classical Management Theory is that of the scalar concept. According to this, there is a chain of command within the organization, wherein there is a definite subordinate-superior relationship between employees at every successive level, from the lowest to the highest authority in the organization. In the case of Innovations Ltd, the scalar concept does not appear to be operational to its fullest extent in its traditional sense. Although James is the ultimate head of the firm, his two friends Tim and Clive also have some clout in the organization and James interacts actively with all his managers. Furthermore, Innovations Ltd has functioned on the basis of employees interacting actively with each other. The problems that the employees are experiencing also appears to demonstrate that there is no definite subordinate-superior relationship. For instance, if there was such a system in place, then the design problem in the hardware department would have been communicated by James to Tim, the hardware Manager, who would then have communicated it to the engineer, rather than James directly bashing the engineer himself and allowing Tim to find out about it afterwards. Claire moaning about a project that has been axed from her department without her consent, also indicates that events in the organization are occurring without traveling down the appropriate subordinate-superior chain, in accordance with the scalar concept. The unity of command concept moots that an employee must receive orders from one superior only. Usually, this would be the immediate supervisor of the employee in question. However, in the case of Innovations Ltd, it does not appear that this classical management concept is being upheld. One of the notable examples is James bashing an engineer from the hardware department, without letting Tim know first. In a similar way, it appears that not all information is traveling up the chain of command to James, because as he complains, he does not know about several problems until it’s too late. This could only occur if the causal factors of problems and their existence are not being transferred up from the employees to the managers, or from the managers to James. This is also the case with the distribution department, since the chain of command is not transmitting the orders down about a special promotion. This information is not being intimated to the department, as a result of which they are unable to meet the required delivery deadlines and Barbara. The Manager complains about the fact that they are not given any warning. Innovation Ltd also appears to be facing confusion as far as the Span of Control of the Managers is concerned. According to Graicunas (1937:43), “one of the surest sources of delay and confusion [in an organization] is to allow any superior to be directly responsible for the control of too many subordinates” or if a supervisor has too wide a span of control. Luther Gulick and Lydnall Urwick (1937) have defined the span of control as the number of employees who are reporting to a single supervisor. (www.prm.nau.edu) The span of control may include three or four complex tasks, or alternatively, up to 15 standardized tasks. The factors that will impact upon the span of control includes the complexity of the job, the actual physical location of the employees and the extent to which the work tasks are standardized. In the case of Innovation Ltd, the span of control system appears to be indeterminate in some instances due to poor coordination between the various departments. For example, Steve, the Sales Manager has a problem with the Sales budget because he feels that Liz, the other Sales Manager, has been allotted more funds to work with despite having fewer employees within her span of control. In a similar way, Steve is also disgruntled because the department’s bonus system is geared towards the promotion of Product Y, however the Marketing department is pushing for the promotion of the new product Z. Liz, the other Sales Manager also has some problems in this area, she complains that the sales of Product X is to be slowed down, however the department is in the middle of a software upgrade. This reveals that matters that are within Liz’s span of control are being controlled by James or others in the hierarchy, thereby also indicating that the chain of command is being compromised and is not clearly established within the firm. Frederick Taylor (1911) is credited with being the father of the principle of organizational specialization. He put forth the concept that the greatest organization efficiency in performance of tasks could be achieved by splitting up one task into several component tasks and making people responsible for performing only one of those tasks, thereby allowing the individual in question to acquire a degree of specialization in the performance of that particular task. It also helps the tasks to be completed faster. Hence, under this system, responsibilities are divided and there is a highly structured management style with a precise chain of command. However, as already demonstrated through several incidents mentioned above, Innovation Ltd is suffering from a disturbance in the chain of command and information is not being strictly structured and passed up the levels as it should be, thereby indicating that the management style is not a highly structured one. Another incident that demonstrates this confusion in the command structures and the non specific delineation of tasks is the case of discordance between the Finance and the sales Department. While the Finance Department is trying to improve the financial position of the Company by implementing credit controls, the Sales Department is engaging in more and more sales that offer the option of buying now and paying later, thereby exacerbating the credit position of the Company. Another indication is the effort to improve customer service, however the employees are not being paid adequately for their services. In a similar way, Claire’s project that has been axed also provides an indication that the specific tasks pertaining to her department have been dispensed off without proper indication or recommendations from the Department. Therefore the division of tasks and the clarity of authority to engage in decision making remains unclear in Innovation Ltd. Therefore, it does not appear to be following the recommendation of Taylor to sub divide tasks and to make employees responsible for only one part of one task – rather there appears to be some confusion among employees about tasks and decision making. The scientific management style was also advocated by Frederick Taylor (1911) and it treats the management and process improvement as a scientific problem where improvements can be brought about by improving quality control. Taylor’s method was based upon the management of tasks in such a manner as to minimize waste by getting rid of that which does not add value. The focus of the scientific method is to find the best practice that will achieve maximum gains and the development of such techniques must be through identification of the problems in the system. However, the problems that have been identified above in the case of Innovation Ltd suggest that the organization is not being run in a scientific manner to achieve maximum benefits and employee satisfaction, rather there is confusion and discord among employees of various departments. Innovations Ltd does appear to be value driven, but it is not necessarily customer driven. The evidence suggested in this case study for a value driven approach include the fact that some projects are being axed and employees who are not pulling their weight are being fired. This indicates that the Company is trying to eliminate unnecessary expenditures and trying to extract a more efficient performance from its employees. James getting hold of an engineer in the hardware department and yelling at him shows that he is pulling up the employee for deficient levels in service. The fact that the Company is also trying to give some special promotions indicates that it is trying to draw more business to itself and thereby improve its position. The glaring example of the fact that Innovation Ltd is not customer driven is the case of the customer who was lost because the departments could not coordinate effectively to deliver to him the product that he wanted. Another example is the fact that Innovation Ltd is not paying its employees the standard rate being paid by other companies for those in customer services. This is unlikely to motivate employees to focus upon pleasing customers. Furthermore, the Company is trying to push certain products by offering bonuses to the sales Department, however the Marketing Department’s thrust to promote other products indicates that those may be the products that customers are interested in, rather than the ones for which bonuses are being offered to the sales people to push them. Innovation Ltd does not appear to be service driven, rather it appears that there is too much internal bickering and rivalry among departments and this is the reason why customer service and the level of efficiency in delivery of services is being compromised. Since there are rumors flying about people being sacked and cuts being made without intimation to managers, therefore the situation is uncertain and most employees are likely to be unprepared to take risks of any kind, or go out of their way to develop a customer friendly attitude. Moreover, since it also appears that those in customer service are not being paid fair rates, they are unlikely to pull their weight and contribute to enhancing the levels of service that are provided to customers. The cancellation of the order from one customer itself is a strong indication of the internal discord and rivalry among members of the organization and the compromising of the chain of command. The employees and managers in general appear to be unhappy about the way James is arbitrarily making decisions without consulting the managers in question. There is a lack of smoothness and coordination among the various departments, and there is rivalry existing between them, with each department proceeding arbitrarily on its own agenda without consultation with other departments. Therefore, this does not bode well for Innovation Ltd in acquiring a reputation as a customer oriented, service driven firm. Suggested improvements: It is recommended that there is a better level of interaction between James and the Managers of all the departments. Weekly Board meetings where James and the Managers are able to discuss important moves for the Company’s growth will be very helpful. This will also provide an opportunity for each department to know the progress or lack of it in other departments, so that problems can be identified and remedial measures introduced which all departments will be aware of. Therefore a common purpose and objective can be derived with the proper flow and exchange of information among the various departments. When there is such concordance of information, the Company is unlikely to suffer from the problems arising out of actions taken by one department which may not be feasible for another department to execute. Since the functions of the various departments of the organization are inter-related, there will be a greater unity of purpose achieved through better coordination and networking. It is also necessary for James to take into account some new management techniques and allow his managers to handle their own departments without undue interference, unless it is strictly necessary. Otherwise, there is a risk of the manager’s authority being compromised in his/her own department. There also appears to be a need for the Company to improve its wage payment system and to continue its policy of discharging those employees who are not pulling their weight and performing satisfactorily. However these are policy decisions that must be made by the Company as a team. It is also necessary that all finance, sales and marketing decisions are taken by the group as a team, so that there is a smoother flow between the various departments and they work together in unity and cooperation. References: * “Concepts of Management” [online] available at: http://www.prm.nau.edu/prm426/concepts_of_management_lesson_chap2.htm * Graicunas, V.A., 1937. "Relationship in Organization” IN “Papers on the Science of Administration”, edited by Luther Gulick and Lyndall F. Urwick, Columbia University's Institute of Public Administration, at pp 183-187. * Taylor, Frederick Winslow, 1911. “The Principles of Scientific Management.” Harper and Brothers. Read More