Managing the Internal Environment - Delap & Wellar Consulting Engineers - Case Study Example

 Table of contents 1. Introduction 1.1 Background 1 1.2 Purpose of the Report 1 2. Method of data collection 1 3. Internal analysis 2 3.1 Organizational structure 2 3.2 Corporate culture 2 3.3 Cultural Web 4 3.4 Framework for understanding organizational cultures 6 3.5 National cultures 7 4. Analysis of D&W 4.1 Organizational structure 7 4.2 Organizational culture 8 4.3 Cultural web 10 5. Conclusion and recommendations 5.1 Conclusion 12 5.2 Recommendations 13 References 15 1. Introduction 1.1 Background Delap & Wellar Consulting Engineers (D&W), a consulting and engineering firm has experienced growth over the years because of its unique corporate culture. While the firm has been in business since 1911, it evolved into a limited company in 1991. D&W has always believed in luring employees into the company when they are still young and neither the company nor the employees have regretted such a strategy. The nature of business being the installation and maintenance electrical and mechanical systems, the company is unable to attract people as there are better and more interesting alternatives available. In the current economic recession, D&W is unable to pay competitive salaries due to cost-cutting pressures. The most affected are the young engineers, whose salaries are the first to be trimmed. Due to the downturn the volume of business has also shrunk while margins have been reduced to the bare minimum due to cut-threat competition. This has affected the training that the company would ideally like to give to its employees. 1.2 Purpose of the Report While the company has grown gradually over the years, the current economic situation warrants a review of the investment in training and recruiting people. In an engineering firm such as D&W, quality staff is essential to procure repeat business from the clients. An analysis of the internal environment could reveal the strengths and weaknesses of the employees. This would help to ascertain whether a culture change could induce and motivate the existing employees to produce more, thereby reducing the need for additional staff. 2. Method of data collection Data on the company has been collected through personal interactions and contacts within the company, particularly from their Dublin branch, apart from internet search. Two academic books have been used for the theory on corporate strategy, organizational culture and how culture influences decision making within a firm. The corporate strategy that deals in this report is concerned with the dissemination of its culture and the impact on the internal work environment. 3. Internal analysis Internal analysis of a firm helps to disaggregate a firm’s activities and determine which are most critical to gain competitive advantage. In the fast changing business environment, it is not advisable for companies to rely on past experiences (Evans: 88). Moreover, if the managers are new to strategic management, subjective decisions cannot be relied upon. While there are different ways in which the internal strengths and weaknesses can be assessed – such as SWOT analysis, value chain analysis and resource-based view, the internal analysis of Delap and Waller would be conducted based on the cultural web described by Johnson & Scholes. 3.1 Organizational structure Organizational structure is the formalized arrangement of interaction between and responsibility for the tasks, people and resources in an organization (Evans: 262). Organizational structures could range from simple to functional to divisional organizational structures depending upon the requirement of the company. 3.2 Corporate culture D&W focuses on project management and in handling projects the manager has to identify the stakeholder expectations. In an engineering firm it becomes necessary to protect the interests of the different stakeholders. This gives rise to the concept of culture of an organization. According to Schein, organizational culture is the “basic assumptions and beliefs” that are shared by the members of an organization, that operate unconsciously and define in a basic taken-for-granted fashion an organization’s view of itself and its environment” (Johnson, Scholes and Whittington 2005: 196). Thus, every group even within an organization can have collective experience which is reflected in the organizational routines that accumulate over time. These collective behaviours become taken-for-granted assumptions that are handed down over within the group. Organizational cultures thus, can influence the present and future business strategies. Hofstede, Schneider and Barsoux found that attitudes to work, authority and equality can differ from one location to another (Johnson, Scholes, and Whittington 2005: 197). These are in reality shaped by the powerful forces of culture. This can be different even within the same region. This is highly likely where diversity of workforce exists. In Europe and especially in the UK, immigrant labour is high. When people from diverse national cultures work together, differences in attitude can be perceived. According to Hofstede four dimensions of national culture can be found at work places. These include power distance, uncertainty avoidance, individualism–collectivism, and masculinity–femininity. Power is unequally shared by the members of the society in high power cultures and in uncertainty avoidance cultures, the members feel threatened in uncertain situations. These factors impact their attitude towards work and authority. In high power cultures, the employees would prefer work to be defined and they act exactly as per instructions with no contribution or creativity coming from them. Hence, within an organization, the national and regional cultures could matter. Cultures within an organization consist of four layers – values, beliefs, behaviours and paradigms. Organizations project their values and mission in their annual reports but these can be misleading because often they are the aspirations of the stakeholders or perhaps a particular stakeholder such as the CEO. Values: easy to identify within an organization. They are usually written down as statements about the organization’s mission, vision and objectives. Very often they tend to be vague. Beliefs: include certain issues that the organization should not deal with another country or some such beliefs that are practiced and handed down. Behaviours: refer to the day-to-day way in which an organization operates and can be seen by people both inside and outside the organization. Structure, control, work routines fall under symbolic behaviours. Taken-for-granted assumptions: these form the core of an organization’s culture. These are known as organizational paradigm which are held in common and taken for granted within an organization. Every organization needs and has a generally accepted set of assumptions. These assumptions are the collective experiences and are necessary. Without these, people would have to reinvent their world for the different circumstances and the challenges they face. Some aspects of the culture pervade the entire organization but subcultures can also exist within the organization. These subcultures may be directly related to the structure of the organization. Different functional groups within an organization can have differences in the way they perceive and resort to decision making. Different divisions may be pursuing different types of strategy and these may require different cultures. Thus, D&W having several different departments and units is likely to have different cultural requirements at different levels. 3.3 Cultural Web Despite the values and beliefs being written down as corporate statements, the underlying assumptions reflect in the way people behave on a day-to-day basis. These behaviours not only reflect the paradigm but also reinforce the underlying assumptions within that paradigm. The cultural web is the representation of these taken-for-granted assumptions of an organization and the manifestation of the organization culture in the behaviour. The cultural web of an organization is typically represented as below: Routine behaviours represent the way things are done on a day-to-day basis. At times it may provide a basis for organizational competence but it may also result in taken-for-granted actions which ignores change. Rituals in an organization are particular activities which enables an organization to reinforce what is important for the organization. These include the training programmes, the performance appraisals, the sales conferences and the interview panels. Apart from the formal organizational procedures, rituals can also include activities like gossipying around the coffee vending machine. Stories these become important for an organization as the present is embedded in the organizational history and narrated to the new recruits, to the outsiders and even amongst each other. These are the success of failure stories or anecdotes that could be of consequence to the organization. Symbols such as logos, language, or titles become common short-hand representation of the nature of the organization. It could also be the way in which people address each other. Many elements of the cultural web can be symbolic because they convey messages beyond their specific purpose. Reward systems, for instance, are symbolic. Power structure these influence the key assumptions. There can be many sources of power within an organization. The most powerful groups are those associated with the core assumptions and beliefs. Control systems these emphasize what should be monitored within an organization. The control system reflects in the procedures of an organization. Reward system is also a control system which influences behaviour but it can also prove to be a barrier to the success of new strategies. Organizational structure most often reflects in the power and shows important roles and relationships. Organizational structure could be simple, functional or divisional depending upon the nature of work, the size of the organization and its requirements. Paradigm this reinforces the behaviours observed in other elements of the cultural web. 3.4 Framework for understanding organizational cultures Within an organization four different types of cultures exist which provide the framework to understand the organizational culture. These include role culture, power culture, task culture and people culture. Power culture – power radiates from the centre like a web and reaches the employees like the rays. The member of the project would take calculated risks and to enhance productivity, communication and information flow become important. (This sentence has not been provided by you and I think it is perfect because what it implies is that the members would not risk any decisions and would await instructions, which in turn means that communication and information flow from the top management should be perfect. So please leave it as it is). Role culture – these are bureaucratic cultures where regulations and paper work become important. In many organizations employees feel secured in such an environment because they operate based on job descriptions. Task culture – team is the basis on which the job is designed. These are very helpful in implementation of specific projects or when the organization seeks a strategic change. In such a culture, personal aspirations are not important and the organization works towards the achievement of the common goal or task. People culture – in this culture the individual feels superior to the organization but this is against the very nature and meaning of an organization. This is detrimental to the growth of an organization. 3.5 National cultures National culture, according to Hofstede can be classified under four types: Power distance – power is unequally shared by the members of the society in high power distance cultures. The US and the UK are examples of low power distance which implies that power is more equally shared. Uncertainty avoidance – in uncertain situations, the members feel threatened and prefer to take the safer route. Individualism-collectivism – In individualism people take care of themselves as it is a loosely knit social fabric. Masculinity-femininity – In the masculinity culture the social gender roles are distinct and in femininity culture the gender roles overlap. 4. Analysis of D&W 4.1 Organizational structure The organisation structure at D&W is based on the project type model (POMBK Guide, p30). Under the projectized organisation, there are approximately six-eight directors who operate in the Dublin office. Each of these directors operates as project managers as per the organisation structure illustrated in the PMBOK guide. The task, people and technologies have been divided into different project groups. Within each team, are a number of senior engineers who are responsible for a number of projects but the project manager’s authority is final. The teams also include a number of intermediate and junior engineers, and draughtsmen. In this structure, the director who is actually the project manager is employed full-time and has overall control of the budget. They have the independence and the authority at the project locations. These can also be termed as different departments within the organization and each of the team member reports directly to the project manager or the director. (I do not have the book and the scanned pages that you sent, does not carry any page number, hence cannot give you the reference). While projectized organizations define clear project authority, they have access to expertise, project focus and priority, at D&W, the organization suggests that overall the Managing Director is in command. The responsibility for the success of the project is defined clearly. However, such project organizational structures can create problems because the authority of the project manager can be a critical issue. At D&W, the final authority rests with the Managing Director and this could lead to conflicts. Even within the group conflicts could arise and besides such an administrative structure attracts massive overheads. This is because the focus of the members is on completion of the project and for this they may have to hire extra staff with expertise so that several projects can be implemented simultaneously. Administrative costs may also rise because not all the time the project teams are occupied. 4.2 Organizational culture Power culture D&W believes in recruiting people while they are still young. This demonstrates that they would like to mould and influence the employees with specific job descriptions. This reflects the power culture where employees have to follow what has been designed. The company has three different private limited companies with several branches but the same six directors appear on all the boards. This again bears testimony to the power culture that prevails in the organization. The Managing Director at D&W, Dublin is responsible for attracting about 60-80% of the clients. This suggests that autonomy has not been granted to the project teams. These types of companies are generally found in the building services industry as they are based around the founder. This form of culture is very effective in running small businesses or entrepreneurship ventures where decision making at a centralized point becomes necessary. One individual who generates business and builds up the company gains power. However, there is tendency for power holders to further their own interests and in this case, since most projects are procured by the Managing Director, the reins are in his hands. At times, it may happen that personal vested interests overrule business efficiency. D&W is no more a small family run organization but has spread geographically in different countries. Too much reliance at one centralized point can break the company if that individual is removed. Moreover, involving others can lead to newer and innovative ways of doing the same job. Role culture Role culture is also dominant at D&W. The directors report directly to the Managing Director but are themselves accountable for the project, processes and people under them. Their personal and professional relationships are governed by a shared culture. Therefore, organizational culture influences the interpersonal relationship that individuals or develop over time. However, since D&W has offices at different locations and may be employing people from different nationalities, as Hofstede finds, they could differ in their attitude towards work. The culture specific to the nation could influence the way a particular instruction is accepted or declined. This difference poses a challenge to the project manager who must be able to understand the nuances of the regional cultures. Role culture provides job security but such bureaucratic cultures cause waste of time and effort in formalities and paper work. The engineers can consult only with certain people and adhere to the instructions of the management. This can stifle innovation and creativity. Such a culture may befit government organizations where regulations have to be strictly adhered to but for an engineering organization, oppurtunity should be provided to the engineers to contribute and progress in their career. 4.3 Cultural web The nature of the company is project oriented and this is central to its paradigm. The organizational structure is projectized where the sole responsibility and power is concentrated in one hand. Employees are permanent and include engineers and draughtsmen. There are fixed employees associated with definite projects. This implies that job specifications have been defined and they just have to follow instructions. These indicate the underlying power structure that is present at D&W. However, whether the organization is equipped to handle the diversity at the workplace is not known. As an organization expands, such measures become critical to the sustained success. The staff turnover at D&W is low which suggests that employees are generally satisfied with the work environment. The employees are not just motivated; they are satisfied, committed and engaged with their jobs. Another possible reason for low staff turnover is that promotion is always encouraged. However, the company does not offer any other form of incentives to the employees to enhance performance or to do something beyond the routine requirements. The recruitment strategy and the training and development at D&W appear to be better than the competitors who are unable to offer the desired level of training to the staff. This has instilled a sense of loyalty among the staff at D&W and is responsible for their commitment to the organization. However, it needs to be noted that salaries are merely competitive. They do not offer something very attractive to the staff. D&W do support training/career advancement along with project-related training. For example, they sponsor engineers who undertake this particular engineering programme. They normally cover 50% of tuition fees but can even go up to 100 percent. In return for this financial support, the engineers are expected to continue working with the firm for a certain number of years. This arrangement is based on a hand-shake or gentleman’s agreement. They do not believe in drawing up contracts to formalise this agreement as is the case with many other firms - this is another indication of loyalty or trust between managers and their subordinates. D&W needs committed and highly skilled staff to procure repeat business and the employees has to give back to the company much more than their salaries. The company also fulfills its corporate social responsibility and the responsibility towards sustainable buildings. The employees have this culture embedded into their system. There is a high level of trust between the employees and the management. They do not have the clock-in system and the employees are allowed access to internet. These gestures instill a sense of confidence in the management and the employees automatically want to give their best. Clock-in system is a measure to regulate the timings but this discipline should come from within. It should be a part of the organizational culture, is what D&W is perhaps trying to communicate. Punctuality should not be enforced but should be a part of the system. These are the symbols that the company practices and communicates. Such symbols serve as incentive to the staff. The rituals followed at D&W are so designed that a new recruit feels at ease and comfortable. Thus D&W reinforces the feeling of trust and is able to gain the confidence of the employees in the management. Even the staff training is aimed at enhancing performance and not geared towards rewards. The performance appraisals are done annually where the strengths and weaknesses of the employees are evaluated and communicated. This helps them prepare for career progression. Rituals like Christmas bonus and cream buns on birthdays are the ways through which the organization reinforces its values. Car parking space is reserved at D&W and such restrictions are communicated through memos circulated among the employees. Such routines project power culture but then other routine activities like Friday evening drinks at a pub is an oppurtunity for all to open up and interact freely. Such occasions provide for enhancing interpersonal relationships within the organization. These are also the occasions when stories do their round among the employees. Stories about the history of events and anecdotes of the organization are very important as a part of the learning process. many decisions can be based on such past experiences because it enables one to know what to avoid and how to handle the situation. Symbols over time become the short-hand representation of the nature of the organization. At D&W, the design of the office space indicates who it is meant for. They have open spaces for general employees while the directors have cellular offices. Other symbols include the dress code at the work place. The engineers have to adhere to a formal dress code while the women and draughtsmen have informal dress code. Engineers interact with the clients and hence the symbols have to be in synchronization with the nature of the organization. Such symbols are essential because they convey the message beyond their specific purpose. While D&W practices power structures, as these are necessary to influence the key assumptions, they also have the control system in place. Control system guides the management on what should be monitored and towards attaining this end, the management implements the QMS ISO 9001. They also perform the customer satisfaction surveys. This is done by monitoring and evaluating KPIs (Key performance indicators) for individual projects. Customer satisfaction is vital because it implies a repeat customer. Retaining customers is more economical than attaining new ones. Besides, one satisfied customer can bring in many other customers through word-of-mouth publicity. Thus, KPIs help to measure how the customers perceive the organization and how D&W fairs against the competitors, according to the customers. Other factors that are measured include delivery schedules, quality performance, service, value for money and training provided to the employees. Evaluating and monitoring these helps D&W to view the existing system and make changes as and when necessary. 5. Conclusion and recommendations 5.1 Conclusion The study was undertaken to review the investment in training and recruitment of people at D&W. This has been considered vital because quality staff is essential to ensure repeat business. Convincing a customer the first time about the success of an engineering firm can be challenging and hence focus is on procuring repeat business. This justifies the investment in training and development of the employees. To determine the investment needs, an internal analysis of the firm was conducted. The study focused on the cultural aspect which has a very strong influence on the decision making in a firm. Data for the study was collected through personal contacts and through the internet. The data collected was interpreted with the theory on culture – both organizational culture and national culture. This helped to disseminate the corporate culture prevalent at D&W and how it impacts the internal work environment, thereby influencing the decisions about the investment in training and development. The organizational structure at D&W is typically project-oriented. The study revealed that power culture is the most dominant at D&W. This is because this company started as an entrepreneurial venture and continues to be so despite having international branches and diverse activities. While there is an atmosphere of trust and commitment among the employees, they prefer to receive and act upon instructions. This demonstrates uncertainty avoidance culture which maybe due to employees coming from different national cultures. As far as training and development is concerned, the company does provide training but only what is specific to the job requirement or the project at hand. The company uses rituals and symbols to convey messages to the employees. Informal gatherings help circulate the historical stories and events essential in any organization. However, the company does need a rethink of its organizational culture and its training and development. 5.2 Recommendations A projectized organizational structure enables autonomous units or divisions to have its own functional specialists responsible for their own divisions. In such a structure power and authority is not delegated; instructions are disseminated. To bring about culture change, D&W can do the following: Authority should be delegated authority for the strategic management of each unit. This could expedite decision making. Thus power structure and power culture has to give way to soft culture like task culture where every team member is equally valuable. Each division can also be given a profit responsibility and there would be increased focus on the divisional products and services. This would also enable the manager or director to have a closer view of the strategy development and implementation, thereby resulting in lesser deviation. The training process should include acculturation of the employees at all levels. This training is also required for the directors who have to deal with people from diverse cultural backgrounds. The directors should be able to understand the nuances of the different cultures. Salaries should not merely be competitive but they should be so attractive that employees would not bother to even ‘consider’ offers from competition. Task culture should be introduced replacing the role culture. When they already feel committed, they need not be instructed. The culture of uncertainty avoidance should be replaced and innovation encouraged. This can be done through informal gatherings over coffee when the team members are asked to openly discuss issues they consider important. The symbols at D&W should be used to convey message like the expectations and responsibilities. For instance, a director can just tell his subordinate that he would be away and in his absence a particular task would need to be completed. This indicates that the subordinate has to find his way to complete the job without receiving further job-specific instructions. This would bring out the creativity in an individual and make him feel valued and valuable. Reference: Evans, J. Management & Strategy. McGraw Hill Primis Online. 10th Edition. ISBN: 0-390-72289-B Johnson, G., Scholes, K., Whittington, R. (2005) 'Exploring Corporate Strategy' Seventh Edition, Prentice Hall, Financial Times. POBMK. Guide to the project Management Body of Knowledge, 4th edition. ISBN 978-1-933890-51-7. 30-31 Read More