Gulf States Metals Inc. (GSM)

Gulf States Metals Inc. (GSM) is a large nickel refinery plant that has suffered poor financial performance and is under the threat of being shut down by its parent company International Metals Inc. This paper aims to, firstly, analyse the issues that are contributing to the low performance, secondly, to provide some options for moving forward and thirdly, to present a set of substantiated recommendations. The analysis will be tackled through a multi-frame approach, incorporating a structural frame, human resource frame, political frame and symbolic frame as proposed by Bolman and Deal (1997).

Structural Frame Analysis

The structural frame asserts that organisations exist to achieve goals and objectives, and that they must be designed to fit the circumstances according to goals, technology and the environment. Organisations are thought to increase efficiency and enhance performance through specialisation and division of labour. To ensure that the divisions work together, appropriate forms of coordination and control are essential to ensure that individuals and units work together in service of organisational goals. The structural frame also assumes that problems, and performance gaps, arise from structural defects and can be remedied through restructuring (Bolman and Deal, 1997; Burnes, 1996).

GSM's overall structure is hierarchical and based around functional groups. Directors are assigned to the main sections of the business according to function, these being operations, engineering and administration. Within these directorial areas there is a structure based around process and time. There are supervisors that oversee one of each the processes of material handling, copper extraction, cobalt extraction, ammonia sulphate extraction, and nickel extraction. There are also supervisors who manage production for swing, graveyard and weekend shifts.

In the case of GSM, there is an absence of integration to bridge the division between the operations and maintenance. The two areas are at odds and compete for access to machines. Production requires the machines to continue running and producing nickel, while Maintenance requires windows of time to perform maintenance of those machines. This systemic conflict between Maintenance and Operations is a classic example of allocation leading to sub-optimisation. Rather than focusing on goals of the business, each division is narrowly focussed on their own goals.

The structure within the Operations Division may also be contributing poor performance. The structure consists of two types of supervisors: those who supervise a part of the production process and those who supervise particular shifts. As a result, operators are essentially reporting to both an Operations Area Manager and a Shift Supervisor. There is a similar structure within the Engineering Division. This structure can be described as a matrix in that each production or maintenance employee reports to both an Area Supervisor and a Shift Supervisor. This design carries an inevitable risk of tension and conflict between the area manager and shift manager, causes confusion for subordinates and in a sense is built for conflict in that roles and responsibilities are not clear (Bolman and Deal, 1997).

In terms of coordination, GSM has a very loose vertical approach to communicating and organising work through authority. This involves authorities (directors, managers and supervisors) being charged with keeping activities aligned with organisational goals. These authorities control by making decisions, resolving conflicts, evaluating performance and distributing rewards and sanctions. There is ideally a chain of command where power shapes subordinate's behaviour. This approach is successful when authority is endorsed by subordinates and authorised by superiors, however GSM does not fit these conditions. At GSM, senior management does not authorise power for middle managers and supervisors and as a result, subordinates view their direct managers and supervisors as powerless and often information from directors is fed to the middle managers by their reports.

There is also a lack of lateral coordination at GSM to link the concerns of the divisions and the interests of area supervisors and shift supervisors. There is no evidence of any formal or informal meetings to keep people informed, nor are there any coordinating roles to augment groups and allow for integration of production and maintenance. There is also a lack of coordination to integrate different parts of the production process, and to integrate functions contained under the Administration Directorate such as safety and production. There is also no evidence of any coordination in the changeover between different shifts.

The two cornerstones of the structural approach are division and integration (Bolman and Deal, 1997; Burnes, 1996). GSM has ample division, but possibly not in the most beneficial manner. GSM has a loose vertical coordination approach that is largely unsuccessful and possesses no lateral coordination at all. The structure of GSM is impeding the success and needs rethinking.

Human Resources Frame

The Human Resource frame regards people's skills, attitudes, energy and commitment as vital resources that can potentially make or break a company (Bolman and Deal, 1997; Stone, 1998). The core assumptions are that people and organisations need each other, and that poor fit results in frustrated individuals and organisations missing out on the talent of individuals who have withdrawn, resisted or rebelled. If the fit is good, organisations receive the talent and energy to succeed and individuals have satisfying work.

One of the major issues for GSM from a human resources frame is that there is no human resources philosophy about how people will be treated. In the absence of a philosophy, there is nothing that strategies can be based on and at GSM the people management varies among managers, with encouragement from the General Manager to be tough and virtually to ignore the needs of people.

Another major issue for GSM from the human resource frame is that there is a low quality and quantity of interpersonal interaction. This is in turn impeding individual satisfaction and thus organisational effectiveness. The core assumption of the Model I (Argyris and Schon, 1996) is that organisations are competitive, dangerous places and that one must look after oneself or someone else will. This is theorised to lead to individuals assuming that problems are caused by others. There are examples of this people-blaming phenomenon and conflict throughout GSM.

Another issue that rises out of the human resources frame is that the ...

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Another issue that rises out of the human resources frame is that the company has gone through a restructure that involved a 30% reduction in the workforce. Often downsizing results in strained customer and supplier relationships and demoralised employees (Markels and Murray, 1996) and a sacrificing of knowledge, skills and loyalty (Reichheld, 1993; 1996). GSM appears to be suffering from the aftermath of the shredding that occurred three years ago. Employees seem to be demoralised on the basis of comments made by middle managers and supervisors. They claim they are made to follow orders that are given by senior managers (often via subordinates) and that they are downtrodden when they attempt to resolve problems or make improvements.

McGregor's Theory X and Theory Y (1960 in Bolman and Deal, 1997) applies to many managers at GSM. The managers believe that subordinates are passive, lazy, unambitious and prefer to be led. They take a hard version of the Theory X and emphasise coercion, tight control, threats and punishments. This approach is likely a result of the absence of any management training. As McGregor theorises, this has produced low productivity, antagonism, militant unions and sabotage at GSM. For example, there was a union walkout for nine months precipitated by the "get tough" policy and there are reports of production operators sabotaging machines and not reporting problems so as to cause production shutdown.

Another issue from the human resources frame is that the physical work environment is unpleasant, with machines that are old and corrdoed, chemical smells and a lack of protection from the weather. Significantly, safety appears not be a priority, as many staff do not wear goggles, even though they are required to do so.

The Political Frame

The political frame approaches organisations as political arenas hosting a web of group and individual interests. Organisations are seen as coalitions of interest groups containing enduring differences in values, beliefs, interests and perceptions. The most important decisions involve the allocation of scarce resources, making power very important and conflict inevitable. Those who are successful, use political tactics to gain influence and decisions are made through bargaining and negotiation (Bolman and Deal, 1997; Fulop and Linstead, 1999; Pfeffer, 1992).

GSM is currently in a state of constrained resources, leading to power being a key commodity. As organisational change brings the potential of destabilising power bases and erosion of resources, key coalitions and individuals are likely to move to retain, or enhance, their power.

From a political approach, there is a sense of urgency for change in the organisation to survive. From this point a guiding coalition needs to be formed. The most obvious inclusion would be the General Manager, however, the current incumbent requires leadership training prior to inclusion in a change management team. Although, it may be difficult to win the General Manager's support, the change manager could use politics to gain support and rely on the fact that there is an urgent need to turn the organisation around.

Through a mapping of the political terrain, it becomes clear that support could be sought from the Engineering Director, who believes in changing the current approaches, and adopting a more people-oriented management style. There would also be considerable support from middle managers and supervisors who believe that the organisation can be turned around and would like to see it do so. Their support could be consolidated if any change satisfies their interests by empowering them to make decisions, encouraging participation and promoting improvement. The downside of these potential allies is that they are all relatively powerless. For example, the senior mangers would like to eliminate the Engineering Director, and the Industrial Relations Manager seems to locked out of the senior management team and senior decision making altogether, and middle managers and supervisors have been de-powered, decision-making prevented and information withheld.

Another important potential ally is the Industrial Relations Manager who is supportive of an organisational development program that would give supervisors more authority to commensurate their position, improve working relationships and facilitate balance between operations and maintenance. The fact that the Industrial Relations Manager has a good relations with the union is another potential source of power that has been anecdotally proven to assist in implementing change to improve organisational performance (Schneider in Vines, 2001). The drawbacks of using this manager as part of the coalition is that they do not appear to have any significant clout with senior managers, particularly in light of where this position fits on the organisational chart.

Analysis of the organisation from the political frame also suggests that support for a change program could also be leveraged through creating a sense of urgency (Kotter, 1996) to turn the organisation around and thus save jobs. Where resistance is encountered, tactics such using remunerative power (Burnes, 1996; 2000) (in this case the threat of the plant shutting down) or bargaining and negotiation could be utilised to win people over (Pfeffer, 1992).

The Symbolic Frame

The symbolic frame asserts that organisational culture is firmly embedded in the symbolic frame of organisations. This frame recognises that people seek a purpose or meaning to ignite passion (Bolman and Deal, 1997; Burnes, 1996; Pihulyk, 2002).

The prevailing culture at GSM is rough and reactive. There is a lack of vision and shared values. There is a history of disappointments and a tough environment with little regard to human needs. Instead of a positive cohesive culture, there is a blaming, negative one.

GSM requires a system of values and a vision to promote social and organisational cohesion (Bowles, 1989). The symbolic frame seeks to interpret and illuminate basic issues. GSM needs an appropriate metaphor to inspire employees and compress complicated issues into understandable issues. Such a symbol would need to fit into the environment so that employees can relate to it, as well as emphasise integration and unification towards one shared vision.

Summary of Analysis and investigation of options

Assessment of the options and suggested recommendations

The challenge under the structural frame is to attune structure to tasks, technology and the environment. Although integration and lateral coordination would be an option to bridge some gaps between divisions with only minor structural change, I believe that the current structure is unsatisfactory and must be revolutionised in order for organisational survival. The options available therefore relate to what type of structure would be most appropriate and the approach to finding the relevant structure, rather than whether there should or should not be change in structure.

The first option would be to establish a task force charged with the task of determining the most appropriate structure to increase integration, become more adaptable and impact positively on performance. This type of participatory approach would potentially increase morale and productivity (Levine and Tyson, 1990), however research suggests that it is difficult to design effective participatory methods (Bolman, 1975). Such an approach would be even more difficult in an environment where employees have not been exposed to consultation before.

Another option is for the change consultant to suggest a particular structure and consult with key stakeholders on the best manner in which to implement it. This method again would allow for employees to participate, but would be subject to the same drawbacks.

An additional option would be to instigate an organisational turnaround. According to Stace and Dunphy (2000), this type of change is most appropriate when radical change is vital for survival and there is not time for extensive participation in decision-making. I believe that this will be the most appropriate approach in the circumstances.

International Metals Inc. (IMI) has given GSM two years to show a profit. On this basis, it is clear that drastic and rapid change is required. An organisational turnaround in terms of structure is required due to short period of time available. The suggested new structure would emphasise lateral communication and coordination. The basis for this argument is that the literature suggests that sustainable organisations emphasise flexible structures with enhancement of communication and empowerment of employees (Eisenberg, 1997; Stace and Dunphy, 2002).

The structure would also integrate the operations division and maintenance division into 15 self-managing teams (with a team leader and team members) consisting of both operators and maintenance staff. The teams would spend certain shifts working on improvement projects and other shifts on production (perhaps rotating to a different process each production shift to promote multi-skilling). The teams would report to one of four rotating production coordinators on a production shift, receiving relevant information such as to which part of the process teams are assigned. On project shifts, teams would report to one of four rotating project coordinators. The projects and their purpose would be decided as a team and would be aimed at business improvement and assist the company in becoming more adaptable to changes in the external environment.

The basis for my recommendation is that a self-managing teams structure has been shown to increase organisational performance and result in lowered absenteeism and less grievances- this is likely to be through human needs being met more adequately (Katzenbach and Smith, 1993). Particularly in their project role teams would initiate a continuous improvement culture and ideally result in innovative solutions to problems. The issue of ageing machines and the unpleasant work environment are also examples of problems that could be tackled. The teams would provide the organisation with the ability to deal with new challenges as they rise, resulting in adaptability- the key to sustainability (Hellriegel, Slocum, and Woodman, 1995; Dove 2002).

Quality control and safety would also be laterally integrated and be more effective through coordinators being part of a coordination team consisting also of the production and project coordinators.

The new structure would concentrate on the core area of the business, an essential feature for success (Sadler, 1995) and increase machine reliability as maintenance team members and operators collaborate to monitor and improve machines and potentially schedule in preventative maintenance during less busy periods. The project teamwork also allows for the organisation to be more adaptable and able to respond innovatively to change. In other words there will be the necessary balance between clarity and creativity (Bolman and Deal, 1997).

Although structural change is a high-risk tool, that can potentially create confusion and resistance, it is necessary in this case and the drawbacks will be countered through due consideration of the other three frames. The new suggested structure, in fact, complements the recommendations for the human resource frame and symbolic frame.

My recommendation on the basis of analysis through the human resource frame is to implement several of the available options and to deal with the potential damage that the structural change may bring about initially. It is vital that a human resource philosophy is developed and the other suggested options are introduced as part of a strategic implementation of that philosophy.

Some of the strategies would be to assist with the implementation of self-managed teams as recommended in the context of structure and to establish an employee representative and management "Joint Consultation Team" (JCT). The basis of this recommendation is that the employee-management relationship is potentially a great source for improved performance (Deeley, 1991 in Stone 1998) and research shows that competitive excellence can be achieved through collaborative employee-leader groups (Weisman 2000, Cohen, 2000) and a participative leadership style (Coyle-Shapiro, 1999).

The human resource recommendations are based on evidence that following a revolutionary restructure, employees are likely to be de-motivated and cynical (Stace and Dunphy, 2001; Burnes, 1996). To counter this, a range of strategies will need to be implemented to meet the human needs of people. Enhancement of communication and empowerment of employees through relatively flat structure and team approach will assist in stabilising the human resources following revolution (Eisenberg, 1997; Stace and Dunphy, 2002). Most importantly, there is evidence that bottom line results can be achieved through investing in people via training and education (Waterman, 1994; Hathcock, 1996; Tyson and Fell, 1995), another strategy that I recommend.

The insights provided through analysis of the political frame also provide recommendations for achieving organisational improvement for GSM. In order to implement the drastic structural change and human resource philosophy, I recommend that the change manager first use political tactics to win the support of the General Manager. The coalition must then be built on to establish a power base for implementation of the change program.

Analysis of the organisation from the political frame also suggests that support for a change program could be leveraged through creating a sense of urgency to turn the organisation around. This could create a united stance against the threat of potential shut down and encourage support for change. Where resistance is encountered, tactics such using remunerative power (Burnes, 1996; 2000) (in this case the threat of the plant shutting down and jobs being lost) or bargaining and negotiation could be utilised to win people over (Pfeffer, 1992).

Although the union is identified as a potential source of power that has been anecdotally proven to assist in implementing change to improve organisational performance (Schneider in Vines, 2001), in this case I recommend attempting a top down or middle to top and bottom approach, as there is a culture of distrust at GSM. Additionally, the new structure is being introduced with minimal consultation and I do not believe that enough power and support can be fostered to use a bottom-up approach. Based on those who are most likely to support the change program it will be best pushed from middle and possibly top management.

The concept of uniting against threat relates strongly to the recommendations deriving from the symbolic frame. On the basis of an analysis through the symbolic frame, I recommend that a visionary metaphor be developed and utilised to unify GSM. The basis of this recommendation is that research suggests that the existence of vision and shared values has a positive effect on organisational performance (Collins and Porras, (1994) in Warrick, 2002; Clarke, 1994).

My recommended analogy conceptualises GSM as a Formula 1 Team on race day. The team is aiming to win the Formula 1 Drivers Championship and Constructor's Championship (become a competitive advantage for IMI and show a profit). To do so the team requires drivers (machine operators) and mechanics (maintenance staff) to work together to innovate and come up with new solutions to problems and to optimise operation of the cars (machine). On race day coordination in the pits is provided through a "lolly pop" man (coordinator) who integrates the team processes and ensures that all the mechanics work together to refuel and replace parts and prevents collision with traffic in the pit lane. The analogy can be further extrapolated, but in its simplest form would provide GSM with an inspiring vision- to be innovative and work towards the same goals using the differing skills of people and achieve something greater than any one person could individually. It also appeals to the macho culture of the organisation

In conclusion, there are several key organisational problems present in the GSM case study. An analysis performed through the use of Bolman and Deal's mutli-frame analysis assists in determining key options and on the basis of the change management literature a set of recommendations can be made. I believe that the organisation needs to be re-engineered into an integrated core operations division of operations and maintenance staff with non-core business in a separate division. The core business should be organised into self-managing teams that divide their time between production and improvement projects. There are also key steps to be taken to satisfy human resource needs via implementation of a human resource philosophy and strategy. The political frame provides options to assist in levering the necessary power to implement change and the symbolic frame requires development of an inspiring and unifying metaphor to a cohesive set of shared values.

References

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Gulf States Metals Inc. (GSM)

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