Contingency Factors - Jones Lang Lasalle - Case Study Example

Managing People and Organization Name Institution Managing People and Organization Table of Contents Managing People and Organization 2 Table of Contents 2 1.0 Introduction 3 2.0 Overview of the case study 4 3.0 Organizational design and JLL performance 5 4.0 Contingency factors needed in the organization design process to ensure it has the best 'vehicle' to deliver performance 7 4.1Strategy 7 4.2 Environment 8 4.3 Size of the organization 10 4.4 Organization age 11 5.5 Technology 11 5.0 Conclusion 12 6.0 References 13 1.0 Introduction It is self-evident that the level of change is intensifying in the real estate industry. The new emerges with new opportunities and challenge which increases profits or reduces it. Real estate industry is one industry which has been facing challenges in the recent past (Harley, 2014). Competition, economic downtown, organization designs, technology, marketing and decision making are some issues that are currently influencing the performance of real estate industry. A constant topic in the last five years has entailed how economic downtown and globalization influenced the market and compelled companies to rethink on their approaches and strategies and transform their mode of operations. According to Harley (2014) Jones Lang LaSalle performance has been affected by trends in global real estate industry since 2007. The firm’s global CEO thinks that its tall organization design has also thinks that the company’s tall organizational design has also contributed slow decision-making hence contributing to dismal performance. The CEO Colin Dyer is also aware that he and other senior manager have the responsibility to implement effective organizational design by considering effective contingency factors which positively influence organization towards positive performance (Harley, 2014). Therefore, this essay will discuss the key contingency factors senior managers of Jones Lang LaSalle need to consider in the organization design process to ensure it has the best 'vehicle' to deliver performance. 2.0 Overview of the case study Jones Lang LaSalle Incorporated abbreviated as JLL is an investment management and professional service firm focusing on the real estate. JLL (2015) claimed that the company was established in 1999 in Chicago after merger between LaSalle Partners and Jones Lang Wootton. The company has since expanded it branches in the US and beyond. The company has opened its branches in New York, India, United Kingdom, Australia and Singapore among others. Jones Lang LaSalle’s services consist of agency leasing, tenant representation, capital markets, property management, merchant and investment banking, facilities management, corporate finance, consulting, development and project management, hotel advisory, sustainability services, value recovery, valuation, investment management and receivership services (JLL, 2015). In the last few years, the company has been faced by fluctuating economic trends which have affected its performance across the globe. In a nutshell, global real estate industry has undergone volatile conditions partly resulted by politics and partly by economic issues. For instance, Harley (2014) contended that Australian real estate industry had to live with shambolic policies by the Labor government and dropping resource investment. In China, JLL posted the worst ever office leasing performance. Due to such challenges, JLL’s business transaction represents only 45% of its global profit. On the other hand, facilities and property management like the agreement with JPMorgan Chase’s international business account for 27% (Harley, 2014). JLL’s investment management at the global stage has had a slow rate to improve and only increased its revenue by just one percent. Despite the challenging economic past, the company CEO Mr Dyer is hopeful that the industry will improve. Harley, R. (2014) stated that this anticipated growth has been signified by sales volumes of investment which increased by 21 and 15% in 2013 and 2014 respectively. In addition, the company also expects an increase in leasing volume by 5 to 10% in 2015 (Harley, 2014). However, the CEO is wary of the tall global organizational design which lowers the rate of decision making and communication between the headquarters and branches across the globe. For that reason, Mr Dyer thinks of assessing key contingency factors in the organizational decision which can make sure the company has the best 'vehicle' to deliver performance. 3.0 Organizational design and JLL performance Organizational design is defined as the formal structure of management hierarchies and systems in the firm, creating forth the reporting and information flows and relationships (Daft, 2007). The organizational design of a company creates the foundation the operational policies are anchored. Design plays a critical in shaping up of the culture of an organizational, and firms could find it indispensable to transform organizational structure in order that it adjust to changes or remain competitive in the industry (Hernaus, 2008). Experts argue that however, how efficient the corporate strategy of the company is; 100 percent effectiveness and success could become unattainable if the organizational design is disorganized. In addition, Law, D., & Boyce, (2003, p.1) affirmed that success can become unattainable if the systems of management do not enable the flow of positive concepts into actual life. Whilst the strategy offers approaches the management ought to take in order to realize its objectives, effective organizational design reinforces roles, assigns authority and set communication channel at every organizational level (Levin, 2005, p.306). If the objective is to make sure there is growth in a business value and drivers of value creation, organizational design will assign individual managers for each driver. According to Lim, Griffiths and Sambrook (2010) an organization’s design can be regarded as efficient when responsibility, decision making, resources, processes are efficient and result to competitive advantage. However, JLL organizational design has been effective in past but not now. The competition has highly intensified in the real estate industry calling for quick decision, flow of information and processes. Outside, Chicago, Jones Lang LaSalle currently has branches in New York, India, India, United Kingdom, Australia and Singapore with function organizational design and runs operations in those countries (JLL, 2015). Controlling several branches and bringing them together is difficult because they have different factors affecting them. The major concern is how to connect the head office and several business units across countries. In some instance, business units try to outdo each other for personal reasons like employees’ promotion and rewards. The company also deals with different services as stated earlier therefore managers could have overlapping roles. Worley and Lawler (2010, p.196) argued that differences in organizational design particularly process, reporting relations and roles have led to mixed result in different services and in different countries. For instance, Harley (2014) stated that in Australia JLL reported dropping resource investment while poor office leasing results was posted. In addition, facilities and property management has not picked up in the global market as JLL management had expected. The CEO considers that the company must pursue for positive performance and growth. 4.0 Contingency factors needed in the organization design process to ensure it has the best 'vehicle' to deliver performance As JLL endeavors to attain competitive advantage, the CEO Mr Dyer has a responsibility to adopt contingency factor which will ensure companies performance better. Some of these factors include strategy, environmental, organization size, organization age and technology. 4.1Strategy Organizational strategy implies to the mode which the company positions itself within its location with reference to stakeholders, available resources, mission and capabilities (Chand, n.d). Sensibly design follows strategy since organizational designs are created to attain objectives by adopting the laid strategies. Changes strategies also call for change in organizational design. When strategy is formulated a new design has to be developed so as to support the strategies. Chand (n.d) argued that strategy usually tries to accomplish the vision, whilst the organizational design supports the effort. With competition in the real estate market between companies offering services, players like JLL must change strategies such as marketing, service delivery, organizational structure and process to surpass customer expectations. For instance, Jones Lang LaSalle can change marketing style by investing heavily on internet technologies to attract large customer base (JLL, 2015). The process also comes with creating an ICT and linking it to marketing departing for coordination. Furthermore, Jones Lang LaSalle has decided to target international market as a strategy, it needs to organize its geographical divisions in terms of lean organizational structure which match with the head office so as facilitate coordination and communication. The corporate level strategies are often formulated on the basis of the strategic goals, mission and objectives of the company (Strikwerda, 2012). 4.2 Environment Chand (n.d) posited that as contingency factor, the environment bears a big influence on the decision making; particularly, the complexity of the arriving at decisions in unpredictable or an uncertain environments. Equally, the predictability and stability of an environment hold a direct influence on the capability of an organization such as JLL to performance positively (Chand, n.d). The unstable environment which normally transforms quite fast and cannot be predicted has two conditions; first, an organization like JLL which operates worldwide must be capable of adapting to change where it requires being responsive and flexible. The changes which have increased in the real estate industry include marketing and customer service (JLL, 2015). The Customers are no longer persuaded by ineffective and traditional form of marketing. It has compelled companies to use enhanced digital adverts which attract the emotions of a consumer. To some extent this is where JLL has missed to adapt to the change so as to improve service especially facility and property management and office leasing. Secondly the company requires great interrelations among the departments. For instance, Sherman, Rowley and Armandi (2007, p.164) claimed that a great coordination is highly recommended between the IT and marketing department to create strong perception and expectation among consumers. Organizations are considered open systems which have receive various inputs from an environment and also sell numerous outputs to the same environment (Schuster & Kesler, 2012). Therefore, it is vital to understand external environment and the components are significant to the positive performance of the company. External environment factors like competition level, uncertainty and resources are significant in creating organizational design. Law and Boyce (2003) argued that competition calls for organization to improve its design and have qualified employees and executives who can instill new strategies in marketing most of the company services which are currently not doing well. The company can also do away with services which do not well and focus juts on those which present opportunities for Jones Lang LaSalle such as commercial houses. According to Harley (2014) the strategy is encouraged by the fact that commercial houses services economic environment was stronger in 2013 and showed potential in future. Apart from external environment such as economic, cultural-socio and legal-political, there are specific environment which consists of market, owners, competition, industry standards, suppliers, government agencies and distributors which the organization normally interact with in quest to improve performance (Amaral & Uzzim, 2007). The organization designs especially the process of service must adhere to industry standards not only attract customers but also to meet customer needs. Every country has real estate standards which are affected by the culture. Drucker (2007) stated that the organization design must accommodate a local who understand the market standards and factors which influences in order to guide the rest managers and employees to meet such requirements. Since the company offer consultation on real estate service knowing standards in the US, India, United Kingdom, Australia and Singapore are vital to offering effective services. 4.3 Size of the organization The employees’ number within an organization depicts its size. It is a reality that small organizations differ in terms of design with the larger ones based on regulations and rules, division of labour, budgeting and performance evaluation Chand, n.d). Size is considered a major contingency factor that impact numerous of the organization design. Size contingency in this perspective implies to the number of staff that needs to be arranged. JLL (2015) asserted that currently, Jones Lang LaSalle is a large organization with a tall division organization managing the head office and various division including Australia, Singapore, India and United Kingdom. Australia alone has a very tall organizational structure which covers even Asian region. The structure has two CEOs two-level middle level managers consisting of corporate solutions and business network (JLL, 2015). The organizational structure of Jones Lang LaSalle Australian division is tall hence creates inefficiency in operation. The operational size and scale of the company is critical and needs to be considered in when formulating the perfect organization design. McGrath (2010) opined that tall structures normally have slow decision making process since decision-making is centralized. Also, tall structures imply high administrative costs and wage bill emerging from the management layers (Jason, 2011). The situation leads to low cash flow and net profit for the company. The ideal design are shorter with few middle level managers to reduce the time decision making takes to reach into conclusion. In addition, shorter organizational structures encourage efficient communication. 4.4 Organization age Age makes organization to integrate procedures, standardized systems and regulations. Just like human beings, companies evolve as it passes through phase of a life cycle which includes birth stage, youth stage, midlife stage and maturity stage (Chand, n.d). However, it is the midlife which is the most critical stage for the company becomes the company has grown large and needs a lot of control. In relation to Jones Lang LaSalle, experts believe that the company has surpassed this stage and is actually at the maturity phase. Strikwerda (2012) contended that this stage is characterized by regulations and rules, budgeting procedures for different divisions, control system, specialized staff and division of labour. Chand (n.d) stated that as company which has many divisions across the globe, control of such divisions has become difficult because of the complex organization. Reducing many level and positions within the structure can ensure that control is implemented and roles are clearly defined with rules (Hamel & Breen, 2007). 5.5 Technology Technology has proved to be an important factor for an organization in the 21st century. Technology is used in the knowledge management, machinery, and in processes and procedure and to convert (Amaral & Uzzim, 2007). Jones Lang LaSalle technology is used to process real estate transactions between the company and clients and staff information for future references. Hernaus (2008) posited tha that technology influences organizational culture in that it enhances resource and communication flow. As a big company with several divisions which are interconnected, the head office management led by the CEO Dyer has to create a proper communication channel to enable flow of information. 5.0 Conclusion The essay has met its objective of finding contingency factors which senior managers of Jones Lang LaSalle must consider in the organization design process to ensure it has the best 'vehicle' to deliver performance. The factors discussed in entails include strategy, environment, and size of the firm, organization age and technology. The essay has also discovered that in the 21st century competition has gone up in the real estate industry and organization offering services ought to change from rigid and complex to permeable structures and processes and develop a new paradigms for the success of the organization. Clients are currently demanding for speed, innovation, integration and flexibility in service delivery. To meet these demands, the managers must consider and implement the stated factors in new organization design to improve process and efficiency. 6.0 References Amaral, L.A.N & Uzzim, B. (2007). Complex Systems—A New Paradigm for the Integrative Study of Management, Physical, and Technological Systems. Management Science, 53(7), 1033–1035. Daft, R. (2007). Organization theory and design (9th ed.). Willard, OH: Thomson South- Western Drucker, P. (2007). The effective executive. Butterworth-Heinemann: Oxford, UK Gerth, A., & Rothman, S. (2007). The future IS organization in a flat world. Information Systems Management, 24(2), 103-111 Harley, R. (2014).Jones Lang LaSalle finds multiple silver linings. Retrieved 13th June 2015 from http://www.afr.com/real-estate/commercial/jones-lang-lasalle-finds-multiple-silver-linings-20140213-ixt0x Hamel, G., & Breen, B. (2007). The future of management. Harvard Business School Press: Boston, MA. Hernaus, T. (2008). Process-based organization design model: theoretical review and model conceptualization. Third international workshop on organization design, Aahus, Denmark Jason, F.(2011). Why I Run a Flat Company. Inc. (magazine) Law, D., & Boyce, R.A. (2003). Beyond organisational design: moving from structure to service enhancement. Australian Health Review, 26, 1 Levin, AC. (2005). Changing the role of workplace design within the business organization: a model for linking workplace design solutions to business strategies. Journal of Facilities Management, 3(2), 303-321 Lim, M., Griffiths, G., & Sambrook, S. (2010). Organizational structure for the twenty-first century. Presented the annual meeting of The Institute for Operations Research and The Management Sciences, Austin JLL. (2015). What's new in Commercial Real Estate?​ Retrieved 13th June 2015 from http://www.jll.com.au/australia/en-au McGrath, L. (2010).Chain of command principle. Retrieved 13th June 2015 from http://american- business.org/136-chain-of-commandprinciple.html. Schuster, M., & Kesler, G. (2012). Aligning reward systems in organization design: how to activate the orphan star point. People and Strategy, 34(4), 43-57 Sherman, H., Rowley, D., & Armandi, B. (2007). Developing a strategic profile: The pre- planning phase of strategic management. Business Strategy Series, 8(3), 162-171. Strikwerda, J. (2012). Organization design in the 21st century: from structure follows strategy to process follows proposition. University of Amsterdam Worley, C., & Lawler, E. (2010). Agility and organization design. Organizational Dynamics 39(2), 194–204. Chand, S. (n.d). 5 Contingency Factors Affecting Organizational Design. Retrieved 13th June 2015 from http://www.yourarticlelibrary.com/organization/5-contingency-factors-affecting-organisational-design/22114/ Read More