The Reasons of Financial Problems of GD Inc - Research Paper Example

Executive summary Various financial problems bedevilling GD Inc are caused by problems such as overstaffing. The size of the organisation is also very big given that there are currently eight operational departments of which some of them are redundant hence straining the company. As such, reorganisation of the structure of this organisation is seen as a viable option with regards to turning around its fortunes. As such, this report has been designed to evaluate the measures that can be implemented using the project management strategy. If the fundamentals of project management such as planning, scheduling, tracking as well as controlling are properly implemented, the organisation is likely to improve its efficiency and operational costs are likely to be reduced. If the number of employees is reduced, this entails that there will also be a reduction in labour costs. However, implementing this turnaround initiative is not an easy feat hence a holistic approach has to be taken. It has been recommended that the project should be clearly defined and there is need for the responsible authorities to put measures that are meant to deal with risks likely to be encountered. It has also been recommended that viable control measures should be put in place in order to achieve the desired outcome. Table of contents 1.0 Introduction 3 1.1 Situational analysis 3 2.0 Key aspects related to project management 5 2.1.1 Agreement 5 2.1.2 Support 6 2.1.3 Communication 6 2.2 Factors for success 6 2.2.1 Planning 7 2.2.2 Scheduling 7 2.2.3 Tracking 7 2.2.4 Controlling 8 2.3 Prince2 method 8 3.0 Assessment of the benefits of the initiative 8 3.1 problems likely to be encountered 9 4.0 Cost/efficient savings through project management 11 5.0 Good practice recommendations 12 6.0 References 15 1.0 Introduction GD Inc, is facing severe financial restrictions and it has been decided by the Board that it will have to re-organise and reduce the number of back office staff from 400 to 150 in order to turn around its fortunes. Against this background, this report is specially designed to outline and assess the extent to which managing this reorganisation initiative using formal programme and project management processes would deliver positive changes required and provide cost and efficient savings. The main objectives of the report include the following: to identify key explanatory aspects relating to project management, to assess the benefits and problems as applicable in terms of workplace implementation, to assess the extent to which formal programme and project management processes will provide cost and efficient savings as well as to provide a set of good practice or guidance recommendations with regards to the implementation of this reorganisation initiative. The report starts by outlining the situational analysis of GD Inc and this will be followed by an assessment of key aspects related to project management and discussion of the objectives mentioned above. 1.1 Situational analysis of GD Inc The operations of GD Inc have been severely affected by financial restrictions and this can be attributed to a number of factors such as overstaffing. Another factor is that the organisational structure and the human resources management structures have to be standardised in order to meet the demands of the organisation. As such, the operational costs are higher than the revenue generated by the organisation hence a holistic approach has to be taken in order to address this impending problem which is a threat to the operations of the company. Currently, it can be observed that the organisation has eight operational departments each with its own HR department, finance department, IT department and administration pool. The back office staff stands at 400 people at the moment. A critical analysis of the current structure of the organisations seems as if there are eight companies operating under one name. Given such a scenario, it can be observed that it is quite difficult to effectively manage the affairs of the organisation. There is need to reorganise the structure of the organisation so that its operations are centralised as one entity in order to easily manage the affairs of the company. The reorganisation should include the following points suggested in this section of the report. The number of the operational departments has to be reduced from eight to four in order to improve its performance. Four of the redundant sites have to be sold and the employees willing to be relocated have to be moved to the other sites. New employees have to be recruited in order to fill the gap that may exist in the number of operational staff. The IT, Finance, administration pool, and HR departments have to be centralised in order to effectively manage the operations of the organisation as a whole. These departments are very crucial in the day to day operations of the organisation. The responsible authorities in these departments have to ensure that all the activities of the organisation are moving towards the same direction. As it stands, each operational department at the moment seems to be independent from the others and this is not healthy for the company. Recruitment of the best staff in the new central departments is a virtue as these are likely to steer the operations of the department towards the desired direction. There is also need to determine the most efficient and effective number of the staff required in these centralised department in order to cut costs in terms of wages. An exit strategy for the employees who are not selected or are not willing to relocate has to be put in place in order to minimise the chances of disgruntlement or unfair treatment to the staff. The day to day responsibility of the HR department has to be delegated to line managers as this is likely to result in improved performance of the employees as well as the organisation as a whole. Line managers are closer to the employees hence they are likely to monitor their operations while at the same time motivating them to put optimum effort in their performance. 2.0 Key aspects related to project management In order to effectively implement this initiative meant to result in the reorganisation of the company, project management principles have to be applied given that this is a one time off effort which is about change and there is a desired outcome from the initiative. Basically, project management is a combination of steps and techniques for keeping the goals and objectives, budget and schedule in order so as to achieve the desired outcome (Fox, 2008). There are various tools for project management that can be used in order to attain the goals set as well as to manage the project effectively. The effectiveness of the project depends on the project manager’s ability to manage and control the different phases of the project so as to be better positioned to ensure that all the activities are directed towards the desired goals. In order to achieve the goal of reorganising the structure of GD Inc using the principles of project management the following factors are essential: agreement, support and communication. 2.1.1 Agreement Agreement among the project team and stakeholders on the goals and objectives of the project is a virtue. Without a clear goal and objectives, and agreement among the stakeholders, the results can be shattering (Fox, 2008). No project can be a success unless everybody agrees that they want the same thing produced. In case of GD Inc, there is need for agreement among all the stakeholders involved so that they can share the same vision as well as goals for this initiative to restructure the organisation. The aim is to turn around the fortunes of the company hence there should be mutual understanding among all the people involved so that they can share the same vision. 2.1.2 Support In order to remove the organisational obstacles, support from the management as well as stakeholder management is very important. The theme of stakeholder management is very important in as far as the implementation of the project is concerned. Orr (2004) posits to the effect that the success of any project is largely determined by the stakeholders involved in that particular programme. The success of the project largely depends on the coordination of the efforts of the stakeholders towards the attainment of the set goals and objectives. Without support, project managers rarely have the authority of their own to implement the policies and decisions necessary to complete the project successfully. 2.1.3 Communication In as far as project implementation is concerned, it can be seen that that no project can function properly without a good system of communication (Kritzinger, Bowler & Goliath, 2003). Communication that is effective, appropriately delivered and ongoing through the project is essential. Almost every technique of project management involves some form of communication because without clear and concise communication, the members of the project team will not be able to agree on goals and objectives and then meet them. Communication is used to solve problems give instructions, resolve conflicts motivate employees among others. 2.2 Factors for success Project management methods are useful when they are placed in the context of the current trends within the organisation. In this case, it is anticipated that reorganisation of this company is likely to result in positive results. As such, the fundamentals of project management include planning, scheduling, tracking and controlling all the activities (Fox, 2008). In practice, these four elements have to be implemented in order for GD Inc to achieve its intended goals. 2.2.1 Planning In this particular case, proper plans have to be put in place in order for this organisation to set a clear direction that can be followed in the implementation of the reorganisation initiative. As Rossouw (2003) aptly puts it, failing to plan is planning to fail. Without proper plans, managing a project may be very difficult since there are no clear cut goals that need to be achieved. The tasks to be performed during the reorganisation process have to be outlined and the people to perform them have to be identified as well. With proper plans in place, this initiative is likely to be a success. 2.2.2 Scheduling This entails that the period anticipated for the implementation of this exercise is specified. The action plan for this initiative has to be carried out within the stipulated time so that it becomes easier to check if all plans are going according to schedule. Failure to do so may result in missing the deadlines which can jeopardise the project. 2.2.3 Tracking Once the implementation of this exercise that is specifically meant to reorganise the structure of GD Inc has begun, it is important for the project manager in particular to track all the processes taking place. This method is effective in that proper changes can be made should the need arise and it also enables the managers to keep pace with all the developments taking place throughout the course of the project. 2.2.4 Controlling Given the uniqueness of a project such as its short period of implementation, it is imperative to implement control measures during the course of the project. To implement control in a project entails the tracking of the strategy as it is being implemented and making adjustments as deviations occur (Rossouw, 2003). Controlling is aimed at achieving two sets of responses and these include the following: to check if the organization is moving in the correct direction and to establish how the organisation is performing. It is therefore, important for GD Inc to put control measures that are aimed at ensuring that all set objectives are achieved within the reasonable period anticipated. 2.3 Prince2 method According to Prince2 official website (2011), prince2 is a process based method for effective project management in controlled environments. This method focuses on a defined organisation structure for the project team and it is ideal for GD Inc which seeks to reorganise its structure given that it is goal oriented. The internal processes of the organization are carefully outlined and the tasks to meet each process are defined. Another advantage of this method in managing a project is that it divides the project into manageable and controllable stages. This is very important in that it becomes easier to manage all stages of the project which can make it possible to attain the set goals for the project. 3.0 Assessment of benefits and strengths of the initiative The turnaround initiative for GD Inc is likely to bring immense benefits to the organisation if crucial steps of project management highlighted above are carefully implemented. There is need for concerted efforts by all the stakeholders involved given that they are the ones who are responsible for the operations of the organisation as a whole. If all the stakeholders are involved in this programme, they will share the same vision with the board given that the results will benefit the organisation as a whole. In the workplace, there is need to involve all the stakeholders so that objectives are clearly spelt for the benefit of everyone. As noted by Fox (2008), the benefit of carefully taking into consideration all the steps involved in a project is that mutual understanding among all the employees is promoted. Involvement of the stakeholders in such a project is beneficial in that they will develop a sense of belonging to the organisation such that they can put optimum efforts towards the attainment of the set goals. In order to solve the risks that are likely to affect the full implementation of the project, it is important to implement the project risk management strategy. Burke (2007) defines project risk management as the processes concerned with identifying, analysing and responding to uncertainty throughout the project life cycle. In this particular case of GD Inc, the probability of positive events will be maximised for the benefit of the organization while the probability of adverse events to the project will be minimised. In order to deal with resistance to change, various measures can be implemented. There is need for effective communication where the objectives of the project are clearly explained to all the members of the organisation. There is also need for inclusivity in the implementation of the project where the members are given the opportunity to contribute their ideas towards the decisions that are likely to affect their operations. The advantage of this strategy is to speed up the project implementation process. 3.1 Problems likely to be encountered Implementing this initiative to reorganise the structure of GD Inc is not an easy feat hence a holistic approach has to be taken. There are risks that are likely to be encountered during the implementation process of this particular project. According to Jones (2007), a risk is defined as factors that may cause failure to meet the project’s objectives. In this particular case, there are two types of risks namely certain and uncertain risks. Certain risks will definitely occur at some point while uncertain risks are those which can occur at some point. In this particular case, the probable risk that is likely to be encountered is related to resistance to change by the employees. Change cannot be achieved overnight hence requires proper planning and implementation (Amos et al 2008). In most cases, change initiative such as the case in GD Inc is not readily accepted by the employees hence the need for the leaders to influence the employees to accept the idea since they are the foundation of the organisation. This initiative will certainly result in many people losing their jobs and there are changes that are going to be implemented in the operations of the organisation. The usual tasks performed by different people are going to vary considerably hence it is anticipated that this programme is likely to be resisted by many people who are going to be affected in their day to day operations. People do not want to change their usual day to day operations hence this is the reason why they resist change (Robbins, 1993). The other problem likely to be encountered in this initiative is related to communication issues. Since this project is meant to reorganize the structure of the whole organization, it can be seen that there are likely chances that there will be limited understanding as most people may not share the same views with the proponents of this programme. The other measure that can be put in place is to assess the risk on a weekly basis. Discussion of probable risks as well as the ones identified already should be part of the weekly meetings such that contingency measures are put in place in order to deal with such kind of uncertainties. The aspect of risk is a threat to the survival of the project given that it can collapse if there are no structures that are meant to deal with it (Fox, 2008). Anticipated problems such as reluctance to participate in the project can be dealt with at individual as well as group level where the project manager attempts to influence the behaviour of the followers to share the same vision and objectives of the project. There are likely chances that mutual understanding will be created if people are pulling their efforts towards the same direction. 4.0 Cost/efficient savings through project management There are likely chances that the costs are saved if proper stages of project management are fully implemented. This is a formal programme which deals with internal processes hence there is only need to coordinate the efforts of the employees towards the desired goals. Since this is an internal arrangement, it can be observed that there is no need to hire external consultants to carry out the exercise to reorganise the structure of the organisation. As such there is no money spent or wasted since the project will be undertaken by the members of the organisation. This is regarded as part of the operations of the organisation hence there will be no need to set an extra budget since all the activities can be done from within the organisation. Careful implementation of the reorganisation strategy of GD Inc is likely to result in the company saving a lot of money through getting rid of underperforming departments. As noted eight operational departments acting as independent within a single company can strain its financial position given that the revenue generated will be lower than the operational costs encountered on a daily basis. Downsizing is also advantageous in that money will be saved through the reduction of labour costs. At the present moment, it can be seen that this company is overstaffed and this is straining its financial position given that a huge chunk of the revenue generated is used towards paying the employees. If the number of workers is reduced, then the costs are also reduced which is beneficial to the organisation as a whole. Efficiency within the organisation is likely to be improved given that if all activities are centralised, it becomes easier to carefully manage the operations of all the departments. The efforts of all the departments will be directed towards the attainment of the organisations goals which can improve its productivity. It also becomes easier to implement all the policies of the organisation given that there will be a clear channel of communication and the employees will be aware of the tasks they are supposed to perform within the company. Given such a clear structure of the company, it can be seen that its effectiveness is improved through increased efficiency of the departments responsible for various activities. 5.0 Good practice recommendations The success of any project hinges on the strategy used in the implementation process of this particular project. There are various steps that can be taken in order to ensure the success of the project hence the following recommendations are ideal for this kind of project. Project definition It is recommended that the project should be clearly defined before implementing it. The advantage of clear project definition is that all the stakeholders involved in this initiative will share the same vision with the board of the company. Mutual understanding is likely to be promoted which also helps the employees to pull their efforts towards the same direction of achieving the desired goals as suggested by Burke (2007). In this case, the desired goal is to reorganise the structure of the company in order to improve its effectiveness as well as efficiency in order for it to overcome the financial difficulties it is currently facing. Put measures to deal with risks Risk in a project is inevitable hence it is recommendable for the responsible authorities to put measures in place that are meant to deal with problems related to it. Risk is inevitable in a project but it can be dealt with if there are measures in place to address the problems likely to be encountered (Fox, 2008). It is recommended that the management should anticipate various risks that are likely to be encountered during the course of implementing this project. Contingency measures should also be drawn so that it becomes easier to deal with the risk likely to be encountered. Viable control measures should be put in place More often than not, the success of any given project depends on the control measure put in place by the responsible authorities. It is therefore recommended that measures should be put in place in order to ensure that critical things that will ensure successful implementation of the project are being taken. Thus continuous assessment allows the organization to respond more proactively to changes and developments in the areas that are critical for its success (Pearce & Robinson, 2000, p. 443 as cited in Rossouw 2003). The actual results of the project are compared with the previous figures to establish if the project is moving in the right direction towards the attainment of the set goals. It is also recommended that the project manager must monitor and control performance of the members in order to establish if the project is meeting its deadlines. Progress can be tracked if this strategy is used. The balanced scorecard strategy can also be used in order to monitor the performance of the individuals as well as organization as a whole. This is a process which translates the vision and strategies into action (Rossow, 2003). Over and above, it can be noted that the financial problems bedevilling GD Inc can be attributed to aspects related to overstaffing as well as the large size of the company given that it has eight operational departments. In order to turn around the operations of this company, it has been observed that there is need to reorganise its structure. This can be done through implementing a formal programme or project management technique. There are various advantages of this technique given that the company stands better chances of cutting operational costs which can save the revenue generated from its operations. References Amos, TL et al 2008, Human Resources Management, 3rd Edition. JUTA, CT. Burke, R 2007, Introduction to project management: one small step for the project manager, Burke Publishing, London. Fox, W 2008, A Guide to Project Management, JUTA, CT. Introduction to the prince2 method, Viewed 10 November, 2011, . Jones, R 2007, Project Management survival: A practical guide to leading, managing and delivering challenging projects, Kogan Page, London. Kritzinger E., Bowler A. and Goliath D (2003), Effective Communication: Getting the message across in business, Afritech: CT. Orr, I 2004, Advanced project management: A complete guide to the key processes, models and techniques, Kogan Page London. Robbins, SP 1993, Rossouw, D 2003, Strategic Management, NAE, CT. The Official prince2 website, 10 November, 2011, Viewed 10 November 2001, . What is prince2? Viewed 10 November, 2011, . Read More