Decentralized organizations have fewer levels of management with wide spans of control giving employees more freedom of action. The senior consultants of ABC product-unit have a span of control of eighteen people. The supervisors of strategic groups have a limited span of control on average of 4 people.
The ‘Chain of command is the line of reporting relationships that extends throughout the organization and clarifies who reports to whom’ (Robins & Judge 2006, p. 541). This indirectly defines the formal decision-making structure of the organisation. Supervisors in the strategic groups, (Marketing, HRM and Finance) give direct orders, evaluate performance, and reward employees who work for them. The supervisors are responsible to the managing director.
Unity of command means that the employee in an organization takes orders from and reports to only one person.
In the product units, the staff have no unity of command since they report to the head of the project team and to the senior consultant.
‘Formalization is the degree to which tasks are standardized’ (Robbins & Judge 2006, p. 545) and the rules and regulations that govern the behaviour of the employee. It influences the amount of discretion an employee has over his or her job. The formalization in the production unit is low and employees have a great deal of freedom in deciding how they conduct their work. Employees are not guided by formal rules and regulations but the strong organisational culture affects their behaviour. (see next chapter). Within the same organization, different departments may have different degrees of formalization. The formalisation in the strategic groups is much stronger and is related to different types of work, working methods and type of supervision.
2.2 The organisational culture
Organization Culture is a set of shared values often taken for granted and communicated through stories or other means to help people understand what is acceptable and what is not (Griffin & Morehead 2006). Often the culture reflects the founder’s philosophy as with Microsoft where Bill Gates had a vision and set the expectations to tailor the company (Griffin & Morehead 2006). Robbins (2005) refers to culture as a system of shared meaning held by members that distinguishes the organization from other organizations. Those meanings are key characteristics which the enterprise values. As stated by research there are seven primary characteristics which describe the culture of a company: (Robbins 2005). Applying those characteristics to ABC (see numbers in brackets) gives an high average score of 3.3 when looking at the company’s culture.
- Innovation and risk taking (5)
- Attention to detail (degree employees are expected to be precise) (2)
- Outcome orientated (focus on outcome rather then techniques and processes used) (3)
- People orientated (degree management decision takes into consideration the effect on people) (5)
- Team orientated (work organized around teams rather than individual) (5)
- Aggressiveness (degree people are aggressive and competitive instead of easygoing) (3)
- Stability (maintain the status quo instead of growing) (3)
:
Each of those characteristics exists on a scale from low to high. As a result of the appraisal ABC can be described with the following characteristics:
- Management rewards and encourages risk taking and change
- Decisions on intuition are valued as much as rational ones
- Management believes in autonomy, empowerment and trust their employees
- Manager or employees who have good ideas are encouraged to “run with it”
- Failures are treated as “learning experiences”
- Shared core values
- Individuals and teams have goals, bonuses are based on achievements and outcome.
The strong culture with core values is shown in the work commitment among our members, the loyalty, cohesiveness and a low employee turn over. The stronger an organizational culture the less formal rules need to be developed by management. Nearly 30% of our employees come from outside Australia, therefore an international flair and diversity in thinking and different backgrounds are great advantages when consulting our customers here on the Sunshine Coast. However the national culture will always have a greater impact on employees than the company culture (Robbins 2006). Many arguments about the terminology of culture and climate are discussed and argued (Gray 2007). Climate studies are based on an individual-focused psychological orientation, whereas the anthropological character of culture studies is criticized, because observations from small groups were extrapolated automatically to large organizations. Additionally anthropology is observing and describing but not concerned with effectiveness of culture or compares one culture to another one (Gray 2007). Burke and Litwin (1992) points out that climate is more the foreground of organizational people’s perception, whereas culture is more background defined by values and beliefs and very hard to change.
The process to create organization culture as by Moorhead (2007) is as follows:
Step 1: Formulate Strategic Values
Step2: Develop Cultural Values (work behaviour which support the strategic values)
Step3: Create Vision
Step4: Initiate Implementation Strategies
Step5: Reinforce Cultural Behaviours
To create a successful organizational culture the strategic values have to be in line with the cultural values. Similarly Michael & Fred (1993) found out after finishing a study of over 40 companies that the market leader concentrated just on ONE of the three value disciplines:
- Operational excellence
- Customer intimacy
- Product leadership
The value which fits our company with their capabilities and culture lies in Customer Intimacy.
Therefore …“it is not about the profit or loss on a single transaction it is about the lifetime of their relationship with a single customer” (Michael & Fred 1993).
The most impact on how the culture of the company will be, comes from the founder. The strongest impact has the vision - how it should look like. Additional ways to shape or change the culture are 1) hiring the right people, with the same thinking. 2) indoctrinate and socializing the people already working there and 3) the founder acting like a role model encouraging employees to identify with him (Robbins 2006).
Once the culture is in place it has to be maintained, this can be done through rewarding the one who supports it and penalizing the one who challenges it (Robbins 2006). The main three important forces to sustain a culture are the selection of employees, the action (role model) of top management and socializing (moulding) methods.
The way ABC passes its culture to new employees is through telling them stories, taking them to the customer to have the practical experience and through rituals.
The company has high standards when it comes to the relationship with customers, therefore an ethical, responsive, spiritual culture is what ABC wants to achieve and live day by day. To fulfil those standards, the question of how to achieve goals and, what goals are essential has to be transparent for the whole enterprise.
Newman talks in his book “Emotional Capitalist” about the passion of people, that potential which is of such great importance in our changing times, needs which have to be developed in order to reach a different level of doing business (spiritual business). What enterprises need to achieve is an environment where customers and employees get the value and recognition they expect. Working with people’s emotions adds value and brings out the best of people. Therefore the integration of the spiritual culture is of great importance to ABC. The integration of the whole person, in the organization, respect, honesty and openness, dignity and mutual trust is getting more and more important. To recognize the value of people and tap into that potential is one of the biggest challenges lying in front of us.
3 Behavioural dimensions
3.1 Teams in organisations
Although the words group and teams are often used interchangeably they are different. When talking about group usually it refers to an assemblage of people or objectives which interact whereas teams are people organized to work together (Robbins 2005).
Positive synergy is the buzz word in teams, 1+2 =4 the level of performance is greater than the sum of the individual input (Robbins 2005, Moorhead & Griffin 2007). As stated by Robbins (2005) teamwork takes more time and resources than individual work. They have a higher communication demand, more conflicts to be managed, and meetings to be run. Therefore in the end the benefit has to exceed the costs.
ABC Consultancy is based on team work. Teams work together in small numbers with complementary skills which have the same goal and purpose and hold themselves mutually accountable. Depending on the customer we have to consult, the team will be created to complement the skills needed for the project. There have to be benefits when creating teams for the organization if not they shouldn’t be implemented (Robbins 2005). The type of benefits achieved at ABC consultancy through team work lies in enhanced performance, benefits for the employees, lower costs and enhancement for the whole organisation (see Appendix 1).
Besides the benefits there is also the cost side to be mentioned, when companies fail to change to a team-based organization. Especially when managers are coming from the hierarchical tradition they often are frustrated in their new role as facilitator or coach. They feel as if they have less power than in their old role where a stiff hierarchy gave them a certain status (Robbins 2005). Employees also fear sometimes for their jobs, especially when their job is now part of or integrated in the team. However the highest losses are the cases when top management stops the process of changing into a team-based organization (Moorhead & Griffin 2006). Such a process can be very time consuming and therefore top management can get impatient (Moorhead & Griffin 2006, Gray 2007). In such a case besides costs, the confidence in management and decision makers is damaged (Robbins 2005). A change of such a dimension needs therefore good consultations from the management side, so that also if delays occur, or additional costs are incurred, the change will not be jeopardized.
It takes hard work, time, training and patience to change from a traditional organization structure to a team-based structure. ABC had the advantage compared to a hierarchal structured company, to start as a small enterprise where working in teams proved to be the most efficient way as a management consultancy. With a growing number of employees and the ability to react quickly to the changing environment, ABC management has to support their teams especially in phases of team implementation to grow, sort out the difficulties to develop to a self-managed team which outperforms their goals.
One of the main problems teams face when they start to work together is that their performance often declines drastically before it rises. High expectations and time pressure often puts too much pressure on teams and does not allow them to develop to their real potential (Moorhead & Griffin 2006). In Phase 1 the start of a team, performance is at a normal level, sometimes a little enthusiastic. In phase 2 reality hits the team, problems occur, confusion, lack of direction of training and support to a stage where performance declines. After struggling in phase 2 a refocus in phase 3 occurs. Internally they establish an internal leader (which could also be a rotation in leadership of the team members) they are more comfortable with the team idea, refocus on the work and now performance will come back and exceeds the formal level. (Moorhead & Griffin 2006). In phase 4 teams are experiencing their own potential. This is the phase where the most increase in performance can be achieved, because teams have managed to work out their difficulties, use their knowledge and start to enjoy their independence and the freedom to make their own choices; at this stage members know each other and are committed to the team and the outcome of the project. The next phase (5) culminates in self managing teams, experienced, mature, flexible exceeding their performance (Moorhead & Griffin).
Reprinted by permission of Harvard Business School Publishing 1993, in Moorhead & Griffin 2006, Performance and Implementation of Teams, p. 243
In regard to ABC team implementation, it has not yet achieved the final stage of self management. The teams learned to perform well with each other under limited supervision and therefore reached phase 4 of implementation.
To reach their full potential of a self managed team the top management has to support the entire developing process.
3.2 Responsibility and Delegation
An issue that arises due to the current organisational structure, is that the roles and responsibilities in the organisations are not sufficiently adapted to the phase of growth that the organisation faces. This is evident in the role of the Senior Consultants. The senior managers have a double workload which reduces their effectiveness even more. They participate in the project teams and have final managerial responsibility for 18 persons in their unit.
‘Decentralized organizations have fewer levels of management with wider spans of control. A wide span of control can be more efficient because it requires fewer managers but it is important to recognize that, at some point, effectiveness will decline’ (Allen 2006). The combined role of the senior manager existed by the fact that the growth of ABC was developed in stage two. According to Osland (et al 2006, p.506), the phase two of growth is characterized by an organization in which a managing director assumes responsibility for instituting direction and supervisors are treated more as functional specialists rather than autonomous decision-making managers. The solution adopted by most companies is to move to more delegation, which would evolve the organisation in phase three.
‘It is impractical for the supervisor to handle all of the work of the department directly. In order to meet the organization's goals, focus on objectives, and ensure that all work is accomplished, supervisors must delegate authority’ (Allen 2006).
According to Eltom (2007), is an assignment of duties and authority from superiors to subordinates. Delegation provides better managers and a higher degree of efficiency. In addition, it provides employees the opportunity to develop skills, experience, and the resulting confidence to develop themselves for higher positions.
The employee is empowered to act for the supervisor, while the supervisor remains accountable for the outcome. Delegation of authority is based on a relationship between the supervisor and the employee requiring trust and commitment.
The senior consultant should reconsider his tasks. The current pitfall is the combination of hands-on consultancy tasks coupled with managerial tasks. The manager should focus on management issues and decide to authorize the project teams to make more decisions. This implies that the senior consultant has to allow subordinates the freedom to make mistakes and learn from them. By employees who perform delegated jobs with the authority to manage those jobs, supervisors free themselves to manage more effectively.
‘Management is the key which allows quality improvement to occur in organizations. This reality is embodied in the holistic tenets of total quality management’ (Sashkin & Kiser 1992).
The current roles and responsibilities should not only be reconsidered for the Senior Consultant but for all supervisors throughout the organisation. From an organisational perspective, the firm has grown to phase three. The roles need to be redefined and management roles should focus on strategic and organisational issues. Hands-on work can be done by the staff in the division. A review of all job-descriptions and practical application of these roles should assist the management to specialize their function.
It will have implications for the managers and this process needs to be carefully planned. Car and Hancock (2006, p. 553) find that ‘participants can more readily accept changes communicated through metaphor, as it simultaneously mediates continuity and change’.
If a current manager prefers to continue hands-on tasks, a performance review might contribute to enable this person to find the most suitable position in the organisation available at that time.
4. Recommendations
To create self-managing team’s top management must support the change effort during difficult periods. Especially in periods where teams are still developing into phase five management should support them. The role model for a good management is to communicate, find out how and where they can help, provide training and improve members’ technical and interpersonal skills (Robbins 2005). Additionally team-building workshops can contribute to a better understanding and group performance. The process of developing into self managing teams will coincide with the decline in management responsibilities.
In regard to the organisational roles and responsibilities, it is advised to use the project approach to reconsider all management positions and to set the direction for the future. In order to achieve this, a project approach is most suitable and will enhance ownership and commitment since it involves the stakeholders at all stages. To apply the afore mentioned project approach ABC should consider the following five stages:
Preparing includes
- Reviewing the current job descriptions
- Prioritizing the main responsibility for the supervisor of the product unit and determine the span of control
- Specifying the job description, and deciding who is responsible for the following steps in the process.
Planning includes
- Individual meetings with all people involved
- Discuss the requirements of the designed position and the span of control with the manager
- Compare this with this person’s preference, skills and capabilities.
Action includes:
- Putting new tasks into practice
- Addressing any potential obstacles during this time to find the suitable balance between delegation and control
- Feedback of all involved, further clarification and guidelines, and other resources available will be used to further develop the best balance.
Auditing includes:
- Regular monitoring of the process
- Monitoring of job performance and making adjustments in response to unforeseen problems.
Appreciating includes:
- Accepting the completed task
- Acknowledging the managers’ and subordinates’ efforts.
“What lies before us and what lies behind us are small matters compared to what lies within us. And when we bring what is within out into the world, miracles happen”
(Henry David Thoreau)
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Appendix 1: Benefits of teams in organizations
Adapted from Moorhead & Griffin, Benefits of Teams in Organizations, 2006
