Aquarius Advertising Agency - Organizational Structure and the Role of Human Resources Management - Case Study Example

Running header: Case Study Report; Aquarius Advertising Agency Student’s Name: Name of Institution: Instructor’s Name: Course Code: Date of Submission: Executive summary Research has shown that organizational structures and Human Resource Management systems do have great influence on the development of Human Resource and general organizational climate. As such, how human resource management is carried out decided productivity and effectiveness in organization. It follows therefore that poor human resources management hurts these two components of management. For instance, research has shown that organizations that adopt personnel practices, such as internal career development opportunities, systems for formal training, performance appraisal based on results, employment security, room for employee participation and employee-advocacy, broad job descriptions and compensation in relation performance are in a better position to attain their organizational goals and objectives. Using the case of Aquarius Advertising Agency, this paper will not only show these factors in action, but also present a general solution to the Agency. Table of Contents Executive summary ii Table of Contents iii 1.0 Introduction 1 1.1 Issues/problems at AAA 1 2.0 Structure: Organizational Structure 2 2.1 Development Stages of Organizations 3 2.2 Types of Organizational Structure 4 2.2.1 Vertical Structure 4 2.2.2 Horizontal Structure 4 3.0 Solutions: The Role of HRM in Contemporary Organizations 5 3.1 Improving HRM Administrative Capacity 6 3.2 Solution: Adding more power to HRM 6 3.3 Solution: HRM Influencing Workforce 7 3.4 Solution: Three Paths to Competitive Advantage 7 4.0 Conclusion 8 5.0 Recommendations 8 Reference List 11 1.0 Introduction The case of Aquarius Adverting Agency (AAA) raises a number of issues related to Human Resource Management (HRM). Aquarius Adverting Agency (AAA) is faced by many problems that need to be addressed as they greatly affect its services delivery and operations. These include: how hierarchy and bureaucracy, depending on the HRM structure, can help or hurt company operations (Ellman & Christou-Pezanis 2010). In this particular case we see how communication lines can be broken; professionalism, which refers to being obedient to one’s line of specialty; the roles of organizational environment, internal and external; how the weight of multi-directional attention can affect strategic HRM. Here, we see how the company’s operations are affected under the magnitude of the many services that they provide (Ellman & Christou-Pezanis 2010). As a result, perhaps, there seems to be some sort-of confusion in communication. 1.1 Issues/problems at AAA Generally, this case raises questions on the place of traditional HRM structure in the modern world. In spite of the AAA being a company in the modern world, there are still some old HRM elements. As such, it seems ill-prepared to deal with contemporary issues. For instance, the account executives are the ones who are supposed to mediate between clients and the company specialists, there are occasional cases where this communication protocol is broken. There are many cases where clients bypass the account executives and communicate directly with the specialists or account manager. Perhaps it is overtaken by the need to bypass bureaucracy and save time. Add environmental changes to this list and one sees the need for reorganization. This would ensure not only first response to environmental changes, but also a more coordinated communication between the personnel in the company and the clients. These evident structural deficiencies fall under what Daft (2009) summarizes as: Poor decision-making Lack of innovative response to changing internal and external environments Interdepartmental conflicts, as a result of cross-purposes. As part of providing a solution to these problems, this report will: Determine how this structure is not appropriate for AAA’s present and future operations and plans for expansion Recommend a plan for AAA to change its structure Explain the importance of uncompromising job descriptions. Develop suitable policies and structures defining and facilitating volunteer and member participation. This will require the consideration of two important factors: Organizational Structure (OS) and Human Resource (HR) Management. 2.0 Structure: Organizational Structure The OS is almost the last thing on a Program Manager’s mind. However, at the company’s peril. An effective OS should facilitate management and clarify relationships, responsibilities and roles, and levels of authority, as well as supervisory and reporting lines. When a manager reviews the OS he/she is in a position to determine which financial, technical and human resources are readily available, which ones are lacking and need to be allocated (Ellman & Christou-Pezanis 2010). A Program Manager can use an orgnogram, which is a graphic representation of an organization, to: define tasks, decide the flow of information inside the organization, and ensure there is accountability in the organization’s goals and objectives. Equally, job descriptions, reflecting the OS should be assigned to every member of staff to let them know their job titles, specific tasks, subordinates and supervisors, department or unit and minimum qualification requirements for their jobs. However, notably, organizational needs and structures may be forced to change by changes in the internal and external environments. For such reasons, job descriptions may have to be periodically and systematically reviewed (Mark et al, 2009). 2.1 Development Stages of Organizations OS is not static. On the contrary, it is dynamic since it reflects a company’s level and stage of growth, which in-turn influences its business strategy. Every stage is always characterized with new business strategies. In addition, the business strategy of an organization influences its organizational structure/design, argues (Daft 2009). There are four main development stages of organizations: Emergent stage; these are the beginning stages when an organization faces fragile management, limited systems and resources. Growth or Launch stage. This is when an organization has stabilized its structures is aiming to expand. This is usually characterized by service mix; Consolidation stage when an organization has determined its strategic focus, increase its efficiency, and has progressed toward better sustainability and Mature stage. Here, an organization has attained self sufficiency characterized by effective management and adjustment of mission, structure, strategy and systems as response to changes in the challenges and trends in both the internal and external environments (Ellman & Christou-Pezanis 2010; David, 2007, p. 34). AAA is apparently at the Growth/Launch stage. Unfortunately, AAA appears to have stuck with a structure fit for the emergent stage. There seem to be lack of enough account executives as evidence in the frequency of direct client-specialists/account manager communication behind the back of account executives, and poor response to changes in the environment as evidenced in the quick turnover at changes in the tastes of consumers. The AAA seems to suffer from problems that should be experienced at emergent stages. For instance, many are seemingly not clear about their job descriptions, or simply don’t respect them. This may be attributable to the fact that they can get way with it. Moreover, although the OS seems strong, a number of fragilities are exposed in practice (Bruce 2001). Some other factors that seem to affect the OS is lack of a platform where employees can present their concerns and retain their support, and policies that set and govern participation. 2.2 Types of Organizational Structure There are two major types of organizational structures and they influence staff participation and involvement in different ways (Ikeda, Ito & Sakamoto 2010; Shantamani 1998). These two are further divided into minor structures. 2.2.1 Vertical Structure This is based on the belief that efficiency can only be achieved through command, control and domination (Ikeda, Ito & Sakamoto 2010). This is where decisions are made from the top, and those in the lower levels are only meant to follow and obey without question. 2.2.2 Horizontal Structure Ikeda, Ito and Sakamoto (2010) put the word ‘horizontal’ alongside ‘egalitarian’. The second word brings out the general notion of equality amongst employees as the main drive behind horizontal structure. Unlike in vertical structure, horizontal structure emphasizes that control should not come from without but within an individual; that a person should have a personal drive to do what is right towards achieving the organization’s goals and objectives (Ikeda, Ito and Sakamoto 2010; Shantamani 1998). At first glance at the organogram one may think that AAA has a vertical structure. But upon reading, the same person may decide that the company exercises horizontal structure, based on personal freedom to decision-making. Different specialists deal with different clients at the same time. This may be because there are only a few account executives to handle the magnitude of the AAA clients. And when they cannot get either access to or enough attention from the few account executives, clients opt to deal directly with the specialists, and vice-versa. The account executive crying for more influence and control is not exactly crying for that. He is indirectly crying for fewer tasks that he can handle sufficiently. His ignorance about what and where the problem is further reflects the confusion reigning in the company (Bruce 2001). The worst case scenario is where specialists in the client companies direct the company specialists on how to do their jobs. The direct communications and transactions taking place between the clients and AAA specialists is a reflection of work freedom in the company, a major characteristic of horizontal structure. Unfortunately, it seems to be running without government and order. This confusion has does not only have serious implications on the company’s Human Resource Management. 3.0 Solutions: The Role of HRM in Contemporary Organizations It has been argued that a firm’s HRM facilitates development, execution and achievement of its strategic business plan. Huselid (1995), argues that HRM can facilitate the creation of a sustained competitive merit over others, especially when formulated in accordance with a firm’s competitive plans and strategies. 3.1 Improving HRM Administrative Capacity Improving HRM administrative capacity, especially the factors regarding human capital can help improve organizational effectiveness (Beatty & Schneier 1997; David, 2007, p. 35). The question here therefore is: what is the AAA’s competitive strategy and how can its HRM enhance the effectiveness of this strategy? HRM has always performed many roles in the organization: advocating for employees, managing conscience, etc. However, the contemporary world has seen HRM adopt new roles, most notably, becoming a key business partner- what Beatty and Schneier (1997) refer to as ‘strategic player’. This ensures that only the moves that add actual value to the organization are adopted, through, for instance, downsizing and resizing through outsourcing (Haslinda 2009; Biswa 2006) are adopted in HRM. HRM is today judged depending on whether it enhances the organization’s competitive advantage in relation to customers (Tan & Nasurdin n.d.). Beatty and Schneier (1997) argue that the steps taken by HR department must add value to not only its internal clients, but the external clients: customers and investors, as well. 3.2 Solution: Adding more power to HRM AAA seems to have a problem with its HRM. Perhaps this is as a result of the fact that it still operates in the ‘traditional manner’. Thus, HRM is still no more than a mere spectator in the business. Part of the solution rests on adding more power to the HRM. In this respect, AAA’s HRM must upgrade according to the contemporary scope of HRM and perform that tasks that the contemporary scope demands of it: The ‘strategic player’ analogy implies that HRM does not wait for others to score. It also scores. It is clear in the case of AAA that HR is quite passive. It is merely a spectator in the company. To enhance its place, it must be given a more active role. It must also be in a position to score for the overall good of the organization (Beatty & Schneier 1997). 3.3 Solution: HRM Influencing Workforce HRM can add operational and financial value to AAA if given more room to influence the workforce. This involves ensuring that the workforce behaves appropriately in relation to work ethics. Respect for job description, a seemingly big problem for AAA, is one such a behavior worth influencing. This also involves dictating required results from the employees. In recent times, this has been done through performance contracts. Another way by which HR becomes a player is through caring and feeding the central competency workforce (Beatty & Schneier 1997). This refers to obtaining, creating and retaining vital talent that directly determines the firm’s competitive advantage. The third important role is the management of operational activities and processes. This involves HRM becoming administrative experts; improving service quality while removing costs from HR systems (Swanson, 2001) 3.4 Solution: Three Paths to Competitive Advantage How HRM relates to business strategy can be examined in relation to the three paths to competitive advantage proposed in Treacy and Wiseman (cited in Beatty & Schneier 1997, p. 33): excellence in operation, product leadership and intimacy with customers. The strategy aimed at operational excellence aims at building operational systems that perpetually reduce price/costs, even while offering products of high quality that add actual value to customers than their competitors. Treacy and Wiseman (cited in Beatty & Schneier 1997, pg 28) further argue that this thrives, in part, to flexible and trainable employees . On the other hand, a company that adopts a strategy aimed at product leadership seeks vital anti-bureaucratic and versatile workforce with an entrepreneurial psychology, long-term focus, high tolerance for ambiguities, love for new challenges and cross-functional collaborations, creative behavior and love for risk-taking (Treacy & Wiseman, cited in Beatty & Schneier 1997, pg 28). Customer intimacy strategies allow close working between the organization and the customers. This enables products and services, or both, to be customized at the lowest customer-interface level. Since unique customer strategies is the foundation for competitive advantage for these organizations, it must go along with seeking and developing active learners, advocating for customers and employees who show a willingness to enhance cross- departmental sharing and learning in the organization. This calls for continuous interaction between the employee network and customers in order to learn new customer tastes and facilitate improvement on customer tastes (Simone & Laura, 2012). 4.0 Conclusion In conclusion, AAA has faced a lot of issues in its operations and delivery of services. This has mainly been contributed by poor HRM department hence the need to improve and restructure its operations. AAA has obviously adopted a ‘customer-intimacy’ strategy. Its primary selling point is the provision of customized products and services. Notably, this strategy can easily infuse the traits of the others strategies, but the other strategies can hardly achieve its customer intimacy. However, there is another problem in the organization which is ‘clarity’. Seemingly, AAA is not so clear about and defensive of its policies governing job description, tasks, line of communication, and customer-oriented strategy, among others. This report provides some recommendations that can assist the company in solving out the issues facing it. 5.0 Recommendations By employing new hiring strategies like psychological contracts, the company HRM can easily acquire employees with the traits stressed in the two other strategies. With trainable and flexible employees, for instance, the company is prepared to take on new changes in the environment. As has already been mentioned, everyone seems to take whatever action they deem they deem fit, bypassing set protocols. Although direct client-staff communication is an important strategy, it must have its limits. Otherwise, the company may as well lose track of its own operations. As one Account Executive bemoans, many of the on-going transactions may not be known to the Account Executive. This may go on up the ladder. The question is not whether there is money coming in. The question is whether the company has a clear track of how, how much and when money is coming in, and who are responsible. It is only with this knowledge that accountability can be credible and valid, and the AAA can make accurate decisions. All this is attributable to the fact that the HRM here is a passive player. As we have seen, the changing world today needs transformational management skills. The HRM in AAA needs upgrading. It must become contemporary as the world that it wants to serve. While the direct communication between various staff members and clients is vital, it must be coordinated (David, 2007). As is already established, the Account Executives are the official liaisons for such communication. That must be clear. If they are few in number that they cannot manage the magnitude of work, then more of them need to be added. On the same note, the available Account Executives seem to be serving two different departments: Operations and Marketing. There is need to have Account Executives for every department. This will reduce work load for each Account Executive as well as shorten the power-distance. This step may seem expensive since it involves hiring. But the expenses involved are likely to be eventually recovered in saved time. Clarity is also needed in its main strategy. For instance, there need to be a clear boundary between the ‘place’ of the client and the company. There is a difference between customers expressing ‘what they want’ and ‘taking over the operation’. When the specialists from client companies come to rule over the creation of products and provision of services, then indeed the company has ceased to exist. The company must be clear about the meaning of ‘customized’. The danger of allowing such over-indulgence of customers in the company operations is that it implies that the company does not know its job that well. The company must show that it can do the job without one-on-one supervision. The company also seems to have adopted an integrative vertical-horizontal structure. This structure can still work if the HRM is given a more active role. Vertical structure facilitates higher control level and facilitates higher control level and improves cost reduction efficiency, and effectiveness. Horizontal structure is a differentiation strategy; ensuring less control, values uniqueness and promotes innovation (Daft 2009). Indeed, the OS influences the HRM. However, the latter is what makes OS effective, especially in the contemporary organization. AAA must balance the two for it to achieve its goals. 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