Organizational Structures at Can Corporation and U-Shape Unlimited - Case Study Example

Organizational Structure and Design Student Name: Student Number: Course Code: Instructor: 11th March, 2013 Introduction Organizational structure is the order in which authority is arranged from the management to the last employee from top to bottom. It is an order that determines the flow of information from the point of dissemination to the receivers. The passing of decisions also relies heavily on the structure of an organization. Therefore, a clear division of tasks emanates from such an arrangement so that everyone fulfils their assigned roles in any working set-up. Muthoni (2012) posits that the structure an organization adopts could be the key to their success in the goals that they set out to accomplish. To be specific, when an organization does not have a clearly defined chain of command, there may be problems in the flow of information and mostly importantly, order. The design of an organization has everything to do with how the structure is allowed to work in harmony so that a common goal is achieved. It is the core of a system of structures that integrates them to give a result that is pleasant and desirable. This integration should be made in such a way as to reduce friction among the member structures and therefore reduce, as much as possible, chances that any of the constituted parts may bring down the whole system. When the design is made as to reduce the flaws of each component of the whole system, the goals of an organization will always be met maximally. Organizational structure and design focuses on the aims of an organization to enable it reach the desired goal. The structures provide guidance to both the employees and the recipients of the products or services that the organization puts out. When a concern arises among the employees or the customers of the organization, it is easier for the concern to be addressed as there is a clear order that is defined by structures on how any issue is dealt with. This way, order and efficiency come to play. This reduces the period taken in addressing concerns in the organization. Organizational Structures at Can Corporation and U-Shape Unlimited Can Corporation, which is a medium-sized company, is a light metal container manufacturer. Its factories includes three plants: the first deals in production of soft drink cans, the second tin paint containers and the last aluminium foil for baking and covering food containers. It has a centralised head office with Finance, Human Resource Management and six support units and uses assembly line processes at each of the plant sites. On the assembly line, workers tend to be migrants and/or poorly educated. Each worker does one major task activity within the assembly line process. Overall, this work organisation seems inefficient but has relatively high employee turnover and has variable output quality due to worker inexperience. Both of these have come to be expected by the management. High volume of output offsets variable quality. U-shape Unlimited is a smaller light metal container manufacturer that uses a mix of computer-based design, semi-automated robotics, and six work teams to produce a range of customised metal containers for clients. Each team each works more as a project team, and is assigned its own human resources and finance personnel as well as designing, costing, and producing (and even arranging for delivery) client-requested "shaped" containers. While employee turnover is relatively low, projects at times fail to meet required deadlines and there appears to be inefficiencies in ordering and supply of raw materials. Similarly, management suspects that cost of labour for support specialists in accounting and human resources and logistics are larger than necessary – although in general all six teams produce acceptable profit levels. From the characteristics provided, we can conclude that Can Corporation and U-Shape Unlimited employ the functional structure or centralized management systems and what MLab (2013) calls matrix structure or multi-layered management systems respectively. A functional structure or centralized management system uses a less complicated design as most of the authority is concentrated at a single source. Hill & Jones (2007) insist that the management in this kind of structure is responsible for all of the organization’s operations. The location of all the departments is at the headquarters and no other group is assigned extra managerial duty. As we can see from the characteristics of Can Corporation, the central structure contains all the basic teams needed in the smooth running of all of its three plants. The core departments of finance and human resource management are based at the central office. At the assembly lines, it is only the workers who are assigned the duties to feed respective components to the assembly to end up with a complete product. On the other hand the multi-layered management system at the U-Shape Unlimited is authenticated by an assignment of a complete managerial team for each project team. Each team has its own finance, human resource management and other managerial positions such as the design, costing and production managerial positions. This is due to the fact that the organization does not deal in the production of a specific product, but a product that is specified by the customers. Customers place orders for containers with shapes of their choices. A team among the available is then assigned a particular order, whose requirement can only be met according to the specifications of the customer. It is prudent to point out that the multi-layered management system at U-Shaped Unlimited is designed with basic components of the centralized management system. As such, the mode of operation characterised in the centralized management system is only duplicated in each of the six work groups found at its manufacturing plant. The other difference it has with the former is that its employees are skilled while those of the Can Corporation are semi-skilled. The efficiency of the semi-skilled group in the case of Can Corporation results from the use of an assembly line. Benefits of Centralized and Multi-Layered Management Systems First off, the centralized management system minimizes costs associated with management. It is cheaper to deal with a centralized system as the duplication of roles does not occur anywhere in the system. With no duplication of roles, efficiency is achieved with a lot of ease as each and every structure is clearly assigned its role in the whole of the organization. In any organization that has a central management system; it is easier for the employees to climb up the structure through promotions. This is due to the fact that the management team and the employees at the lower levels more often than not share the same career line. However, in the case of Can Corporation, this may not be entirely true. As observed, the workers either meet low skill requirements, or are migrants. Effectively, this leads to a high turn-over of workers and in essence cannot be good for any form of career development. The multi-layered management system is the best to employ in an organization that deals in customer-specified orders. We can conclusively say that it has an excellent customer service due to the fact that it mainly produces what is specified by the customer. Consequently, there is greater accountability on the part of the respective project team that is assigned a specific job. This also makes that particular management team better poised to resolve problems that may arise during the course of manufacturing or even at a later stage. The workers at the U-Shape Unlimited are skilled as they deal with a complex process of production. Vink et al (1998) appreciate the high levels of management values and capabilities among them so much so that they may at times implement decisions on issues that may need immediate resolution. This is a big plus for the organization as it may help in making processes more efficient and faster. This implies that career placement in higher posts for an employee is likely, clearly ensuring development of employees’ careers. The Costs Associated with the Centralized and Multi-Layered Systems Organizations run from a central point experience a lot of difficulties in managing the amount of work from each of their different structures. As a result, a department may not be versed with the exact goings-on at the other. This is detrimental as it is requisite that the departments have sufficient information on each other’s operations. Secondly, decision-making may not be as fast due to the lack of information on each department’s operations. Consequently, a response to concerns may take a relatively longer period to solve as compared to many other types of management systems. The high turnover of employees experienced at the Can Corporation is as a result of various factors including lack of prospects for career development and a less perspective towards management for those in managerial positions. Hogg et al (2012) associate the disjoint in information flow at managerial level to bureaucracy associated with systems that are run from a central point. Cavaleri (2011) perceives education as a component that may not exactly be better than experience. This signals a need to view the failure of U-Shape Unlimited to meet its customer’s needs within a specified period. He laments that education only may not be enough to foresee the point at which machines used in production fail to function and produce a favourable result. This is a weakness of the multi-layered system of management practised at the U-Shape Unlimited. Automated processes may be influenced by human machinations, but this does not mean that the point when a machine may fail can be foreseen by the employees of an organization. The availability of smaller management groups for each project team may also present a bigger problem for the organization using the multi-layered system of management as illustrated by Corkindale (2011). This is due to a possibility of duplication of roles found in the overall management with the smaller management team working with each project. As a result, power struggle may not be alien. Challenges Posed by Centralized and Multi-Layered Management Systems The management system at Can Corporation largely identifies as a centralized management system. One prevalent character of the centralized system of management is that employees may have an easier career-defined path with such systems. At Can Corporations, however, the high employee turnover characterised by semi-skilled employees and migrants may not necessarily be true. In essence, the company may incur more costs in trying to recruit management teams from outside the company as it may not be practical to do job placements from within the pool of its own under-educated employees. The design limits Can Corporation’s ability to successfully interview its own employees for promotion to managerial positions. The design of the organization may also not enable it to reduce the inefficiency at work. This is due to the fact that the relatively inexperienced workers may not be able to make management-style decisions in time when needed to. Duplication of roles gives the main management team a big challenge in terms of dealing with employees who may be over-ambitious. This is characterised by power struggles mainly posed by duplication of roles as stated by Evans (1995). On the other hand, the cost of running a big team is also high. When the design of a company does not factor in such costs, it beats the basic company goals, which is to provide high quality products while meeting their goal of making profits. It is widely recognized that without making sufficient profits, it may be difficult to employ a management team for every project. Both Can Corporation and U-Shape unlimited are operating at an average as opposed to optimum production levels when we consider that they could do a better job while at it. This basically implies that there are a lot of factors that can be considered to make each one of them cut out the factors affecting operations so as to reach a much deserved optimal operation as intimated by DuBrin (2008). The Benefits Centralized and Multi-Layered Management Systems May Gain from Each Other. In as much as the approaches used by both Can Corporation and U-Shape Unlimited in management differ, there are concepts that may be borrowed from each to benefit the other. Employment of skilled labourers by Can Corporate is an excellent recommendation that could work towards stemming the high employee turnover. There is no known organization that prides in having a high turnover as the effects always leave a dent in both an organization’s capital and its production processes. The Can Corporation could also do with a more dispersed authority: the management may need to cede more powers to lower levels, which may come in handy in rendering a faster decision-making if need be. The ability of employees to address simple concerns from customers at the low level of employees could be pivotal in increasing production of quality goods, says Liamsheasb (2013). The multi-layered system of management has is fair share of problems: Gottlieb (2007) reckons tussles between the several hierarchies in management could lead to a slower production process due to slower implementation of decisions at the highest management levels. Gibson et al (2011) identify highly-automated systems as instruments of production that have several effects on the average employee. It may take longer for an employee to internalize the working mechanism employed by a system. The psychological effects in working with automated systems may manifest in employees’ personal lives, which may come back to haunt them at the work place. When an employee’s personal is affected, there is a high likelihood that the problem may affect his production capacity. Therefore, the employees at U-Shape Unlimited may be at risk of being affected by constant use of the machines at work. Assembly lines are a little simpler to deal with and may be only limited to feeding components of a product so that the assembly lines puts out a complete product. Conclusion Any organization that would like to have work delivered within given time frames always has to design its structures in such as to achieve harmony in the day-to-day operations. As a matter of fact, Marcic & Daft (2011) declare that the general approach with which a company tackles its production processes is the biggest decider as to how profits trickle in. there are several ways through which a company may organize its management systems. Two common ways of categorizing the systems are the centralized management and the multi-layered systems of management. As a type of management whose system is basically centrally placed, the central management system identifies with the functional structure of management. We find that the functional structure in management places most of the authority at one point where all the departments tasked with the normal running of an organization are responsible for all of the branches of an organization. Characteristics of this form of management include an inconsistency in the knowledge of goings-on in the different departments by those at management level. This is contributed by the fact that an overwhelming amount of data that is centrally placed may not be frequently available as desired in nay organization. Carvalho & Oliveira (2006, p. 512) claim that the multi-layered management system is a more detailed system of management which partly utilizes the characteristics of a functional structure, which is disseminated to the different managerial teams assigned to respective projects. In effect, there is a management that oversees the running of the whole organization as well as smaller management teams, each responsible for particular projects. It is a foregone conclusion that this system may be more responsible as better educated employees find it easier to deal with customer concerns. They are also more likely to benefit from promotions through the ranks in the same organization. The costs that arise from running a centralized management team come from a disjoint in the flow of information between the concerned departments. The Can Corporation experiences a high turnover of employees, which is not a good thing, going by the standards of any organization that expects consistency in its production processes. The bureaucracy experienced in such companies makes decision-making a painstakingly long process as all concerns have to be addressed from a central point. The multi-layered system of management employed at the U-Shape Unlimited has a fair share of costs. For instance, the interaction between employee and machines used for production may be limited due to the inability of employees to tell when a machine may break down. This is a sure way of creating uncertainty so that if it so happens that there is a breakdown, then production is stopped abruptly. We can also say that machines need more experience than education to be run effectively by any employee. The division of projects into specific tasks, each managed by a separate team is a sure way of incurring higher costs in the running of an organization. Challenges abound for both the Can Corporation and the U-Shape Unlimited considering that the systems employed are not exactly perfect. The high employee turnover at the Can Corporation may be linked to the employees’ need to progress, which may not be forthcoming with such a system of management. The inability of the Can Corporation to find suitable candidates for placement in managerial positions due to their semi-skilled nature creates a bigger cost in trying to source for the same from outside. On the other hand, U-Shape Unlimited is likely to experience duplication of roles among its management teams. The independence created by smaller management teams also threatens the general order of command as more employees may prefer the project management team to the main one. Griffin (2008) offers that he cost of running all the management teams are high. 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