Airstar: Organisational Design the Company - Case Study Example

Organisational Design Table of contents Executive summary 3 1.0 Introduction 4 1.1 Company background information 4 1.2 The scope of the report 5 2.0 Contextual problem 5 2.1 Unclear risks 6 2.2 Lack of communication 7 2.3 Unclear organisational goals and objectives 9 3.0 Current structure and strategy 10 4.0 Recommendation 12 5.0 Conclusion 13 References 14 Executive summary The purpose of this study was to take a critical analysis of the situation at Airstar Company which has resulted into decline in performance and efficiency and thereafter write a report including the recommendations that can be used to offer solution to the problem. This analysis has found out that organisational design is the source of declining performance and efficiency. This is because it has forced the company to operate in disintegrated organisational structure and strategy where goals, duties and responsibilities are not clear. Some of the management issues that have been identified and that related to a poor organization design include lack of appropriate communication channels, lack of clear tasks and unclear company goals and objectives. In general, this report has found out that the success of any organization greatly depends on the effectiveness of its organisational design. This is because the organisational design must be holistic and must take into account the various components such as people, company structures, organization processes and processes and how all of them can interact effectively to realize the predetermined organizational goals and objectives. Finally, three main recommendations have been framed to help solve the problem at Airstar and they include: agreeing on organization design criteria, identifying appropriate operating model and focus on good governance. 1.0 Introduction Despite the efforts being made by many organizations to come up with a clear shape of the company, it is emerging that factoring in different processes, activities and people, is becoming a big challenge. Organizational design is what defines the business and its operations. Because of the various factors that are involved in making up an organization, the design is expected to facilitate coordination and close relationships within an organization. In simple terms, a organizational design is defined the process of put aligning factors such as processes, people, coordination activities, control mechanisms and lateral connection of an organization to its structure in order to suit in the operating environment (Romme 2003). An organizational design is important in ensuring that an appropriate organizational structure has been developed and that accommodate all other factors and that which allows for strategizing to realize the company objectives. With this regard therefore, organizational design identifies all the processes, activities, functions, processes and activity control measures are integrated and allowed to flow in a logical way. However, without proper organizational design, the organizational structure and strategy are likely to be on disarray and even there will be no single acceptable flow of activities (Frans et al 2000). It is with this regard that this analysis has embarked on a mission to establish how poor organizational design can lead to decline in performance. This analysis will refer to Airstar Inc. 1.1 Company background information Airstar Company as organization operates in the aviation industry. The company business is manufacturing, repairing and replacing pistons and engines of small aircrafts. In the industry, the company for over years has enjoyed a lot of support the market because of its brand recognition which enabled the company to have positive reputation. However, this was all because of the company’s strategy of establishing a solid market niche. While serving the company market niche, top of priority was quality services and this was demonstrated from the company’s ability to superior quality, safety and customer service. This strategy did a lot of good for the company in terms of market growth and revenue generation. However, with the change in leadership after the death of the company founder five years ago, the company has experienced some difficulties more especially in performance and efficiency. The company problems have also been made worse with the stiff competition from General Electric and Pratt & Whitney. Reduction in the orders by the customers is a clear demonstration how the company was performing under the leadership of Roy Morgan as its president. 1.2 The scope of the report Most important, this report will address the concept of organizational design and how it can affect the organizational structure and strategy and this is in relation to Airstar Inc. Despite using the case of one company and from the aviation industry, the concept applies across all sectors. Further, this report will address the likely problems that signify a failed organizational design in reference to Airstar Company. After the analysis of the problem at the company, the recommendations will be posed as part of the solution to the problem and that can be applied by the company regain in terms of performance and efficiency. 2.0 Contextual problem The organization design being used by the company can be said that which allows for individuals and the company management team to work based on their own understanding and experience. The design does not demonstrate at all if there are any processes, specific activities, objectives, teamwork and transparency and accountability in the company. After an analysis of the situation at Airstar, the following problems have been identified and can all be attributed to failure organizational design. 2.1 Unclear tasks From the company analysis it is clear that the majority of the managers do not have clear responsibilities to work as this can be traced in any documented report on job description. This can be noted when the managers seemed to have conflicts among themselves. For example, the conflict between the vice president for marketing and the company controller about the company strategies related to acquisition and merger as well as export and import opportunities is clear demonstration the company design has failed to address the issue of job descriptions and stating who should do what, when and how (Williams & Rains 2007). The aspect work of assigning jobs to the managers ideally is expected to be based on their capabilities to deliver on their expectations. However, this is the responsibility of the Human Resource Management (HRM). HRM in the contemporary society of management is expected to be charged with the responsibility of playing a professional role in ensuring that at all times the organization has competent and enough staff to delivering on its objectives. However, it is still not possible for the HRM to deliver on its strategies given lack of support by the organizational design. The HRM is a team of professional that should list in detail the job descriptions of each and every employee in the company (Laurie & Lynch 2007). Now, once the managers seem to have conflict as a result of roles, the two theories can be explained for the situation. First, it may be possible that there is no clear description of jobs for each manager and two, the likelihood that roles are duplicated among the individuals. What this kind of situation likely to do the business, is the slowed process of making important decisions as sabotage will prevail while other managers will be struggling to have control over others. The end result of this problem is lack of concentration and poor delivery in terms of services as much time will be used in solving conflicts among individuals. This is what has happened at the company as it is not easy to agree one strategy either to acquire, merge, export or import some of the services and products in order to boost the performance of the business (Schweizer 2005). 2.2 Lack of communication At workplace, communication is used to explain roles, give instructions and above all help establish interpersonal and stable relationships at work. Further, communication is also given a lot of attention as it’s very instrumental in communicating the company objectives and thereby providing direction for the business and in aiding the process of making decisions. No single business can operate without having communication (Romme 2003). Communication in an organization can take place in various forms including verbal, writing and electronic. Irrespective of the form, the bottom-line is that communication must be there and it must allow for flow of information from function to the other and from the management to the staff. Communication will only make a meaning if the intended the recipient gets the message on time. Transparency and accountability is also possible where communication is given priority. This is because at all times information about the business will be available and each employee will be answerable based on the information that is available (Williams & Rains 2007). The communication process involves a number of elements as shown in the diagram below. Diagram 1: Elements of communication process In summary, communication is important in an organization in realizing the following objectives: Communicating roles and responsibilities to individuals Employee training by managers Communicating any changes in the organization to the staff Creating awareness about the competitors’ activities and how they are likely to affect the business. Despite the benefits that can be realized from good communication structure, it is important to note that communication at Airstar Inc. is in a total mess. This can be illustrated by two main examples from the company operations. First, when the vice president of marketing was given responsibility to be charge of acquisitions and mergers, nobody new and that this had happened until Jim Robinson the president of manufacturing questioned on who was in charge of these strategies. What this implies is that many of the issues related to leadership and more especially on organizational strategy were not communicated and one with the seriousness they deserved. This is sign of lack of transparency and accountability. Second scenario demonstrating lack of communication at Airstar, is the failure to submit the copy of the financial report to the company president. Further, on the same line communication on performance appraisals and promotions processes are as not involving as they should have been. This can noted from the president’s complaints for being kept on the dark from such important issues. 2.3 Lack of clear goals and objectives Currently a lot of literature exist which shows how organization design can help the business realize its objectives. This however, depends on the effectiveness of the design. Different organizational design frameworks do exist and the most recent being the Galbraith’s star model. This model bases organizational design on various issues one of them the organizational goals and objectives which actually take care of the stakeholder interests. Every successful organizational design must always be holistic and must take into account the various components such as people, company structures, organization processes and how all of them can interact effectively to realize the predetermined organizational goals and objectives. All company processes, programs and policies should not operate in isolation of the company goals and objectives. In other words they must always interact with the objectives which are always put in place to explain which direction the business should go. In an ideal situation, company goals and objectives are used to help design itself in a given environment in order to success for the company (Mohrman 2007). Now, looking how Airstar Company is operating, it can be argued that some of its problems current are founded on lack of clear goals and objectives which must always be used to guide the company in its operations. This can be associated with the organizational design which does not show the direction of the business and that is not based on ideas, goals, objectives and strategies. For example, the company does not have any business plan even for a short-term. This can be demonstrated from the company’s process of gambling on strategies. For instance, the company is not sure if to go for mergers, acquisitions or exports to boost its performance. Failure to decide on a strategy is as a result of unclear goals and objectives and where the strategy will lead the company to. Further, the process of assigning roles to managers itself is absurd. This can be demonstrated from the way the vice president of market is allowed to manage various business strategies such as mergers and acquisitions. This demonstrates lack of seriousness and direction for the business. 3.0 Current structure and strategy An organizational structure is defined as a pattern of relationships of different roles in the organization and their specific parts in the organization. The organizational structure is seen as an organizational strategy to ensuring that all tasks in the organization are identified and adequately allocated in order to help the company realize its objectives. Further, the organizational structure is also considered as a key tool for the managers to use in planning, directing, organizing and controlling various activities within the organization. The organizational structure plays a very significant role for the organization. For instance, for the organization to realize maximum performance, then its structure must always be aligned in such away for easier configuration so as to change accordingly with the business environment (Yaeger & Sorensen 2006). Organizational design is considered as an invisible hand to influencing the business’s performance by bringing life into organizations and organizations to life and with this regard, an organizational structure is a complementary to an organizational design. In many occasions, organizational structures and its principles need to be aligned with its core purpose for the organization to be successful (Sparrow 1998). Referring to Airstar case, the core purpose is missing and also does clear organizational structure. As mentioned earlier, an organizational structure is used as a company strategy to realize the company goals and objectives. This is because it aids planning, directing, organizing and controlling. With lack of a clear organizational structure, these important leadership activities have failed to work within the company. Planning is all identifying where the company should be in the future and the various strategies that will be used to help the business reach its objective (Yaeger & Sorensen 2006). With planning the current problems at Airstar could be minimized. The objective of an organizational structure as identified earlier is to help bring cohesiveness in the organization by ensuring that different functions within the business are working as a team and a common purpose and they all lead from the same company policies and procedures. However, with the case of Aistrar Inc. the structure is broken both vertically and horizontally. This is to mean that no link between the top management, middle level management and the staff and between different units and managers as well. This has failed the chain of command and authority as well bureaucracies within the business. For example this can be illustrated by the situation where the business conflicts exist between the controller and the vice president of marketing. Working in such a kind of structure where every business unit and mangers are allowed to operate their own ways is what has resulted to the business situation being witnessed at Airstar. This is because there is combining of effort towards common company objective which is to increase performance and efficiency in all operations so as to create value for stakeholders’ interests (Piotrowski & Armstrong T2004). 4.0 Recommendation Based on this analysis about the situation at Airstar and relevant theories, it has emerged the current problems have been as a result of the company organizational design which have contributed to poor organizational structure and strategies. In reference to that therefore, the following recommendations have been developed as part of the solution framework to help the business regain in its performance and efficiency: Agreeing on organizational design criteria: The new organisational design must always be evaluated and agreed upon by all stakeholders. This is to mean any organisational design to be used must be able to assist the company realize its objectives. Designing a guide on how to evaluate various organisational designs, will always help the business develop a flexible and most appropriate design that can change with the pace in the business environment. Identifying appropriate operating model: The operating model is an overview of how the business should operate and it must show all the possible interconnections within the business and their core functions and their contribution to value creation. The operating model in particular should be applied where governance and control measures are and in other management and operations processes. This is important in finding out the organization that could be agreed upon by all stakeholders. Focus on good governance: Good governance is all about who owns the operating model and it is applied in ensuring good control in performance and effectiveness. Research has shown that success is very rare where units in an organization are operating under poorly deigned and implemented governance. Therefore having a sound organizational design is instrumental in ensuring successful and robust business. 5.0 Conclusion The aim of this analysis was to study the situation at Airstar Inc. and identify the underlying problems that have prompted to its decline in performance and efficiency and thereafter develop a solution framework in terms of recommendations. This is to help the business come up with a new organisational strategy to regain in its performance. This analysis has established that the current situation at Airstar is as a result of poor organisational designed which has resulted into setting of unclear tasks and responsibilities, failed communication structure and lack of clear company goals and objectives. Because of the current organisational design, the organisational structure and strategy have also failed as a result of disconnect between the managers and various units within the business. With this in mind therefore, there recommendations which have been posed include: agreeing on organization design criteria, identifying appropriate operating model and focus on good governance have been proposed. References Frans AJ, Ruffini HB, Maarten J and Riemsdijk, V 2000, "Organisation design in operations management", International Journal of Operations & Production Management, Vol. 20 Iss: 7, pp.860 – 879 Laurie DL & Lynch R 2007, Aligning HR to the CEO Growth Agenda. Human Resource Planning. 30(4): 25-33. Mohrman SA 2007, Designing Organisations for Growth: The Human Resource Contribution. Human Resource Planning. 30 (4): 43. Piotrowski C & Armstrong TR 2004, The Research Literature in Organisation Development: Recent Trends and Current Directions. Journal of Organisation Development. 22(2): 48- 54. Romme AG 2003, Making a difference: Organization as design. Organization Science, vol. 14: 558-573. Schweizer L 2005, Concept and evolution of business models. 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