The Change Story of Yellow Auto Company - Case Study Example

Case Study Report ‘The Change Story of Yellow Auto Company’ CONTENTS EXECUTIVE SUMMARY 3 1. INTRODUCTION 4 2. THE DECISION-MAKING SYSTEM AT YELLOW AUTO 4 2a. A Sociological Perspective .5 2b. The Phenomenon of Centralized Authority 6 3. THE DECISION-MAKING IN YELLOW AUTO AFTER 2001 6 3a. A Sociological Perspective 7 3b. The Phenomenon of Johari Window 8 4. CONCLUSION 8 5. RECOMMENDATIONS 9 REFERENCE LIST 10 Executive Summary This report uses the principles and models of sociological perspectives in decision-making to analyze the changes that have gone on within Yellow Auto. In the period prior to 2001, the company was a highly centralized one with limited formal rules and regulations. Sociologically, the owner was in control of everything and this stood in the way of employee interaction and connection. Employees were not able to communicate with each other and there were no organizational cultural systems and roles. Due to this, employees could not participate in affairs in the company and they ended up keeping to themselves. The plan of expanding to capture an extensive share of the market saw the need to get external consultants to support in decision-making. The external consultants put in place several measures and systems that reduced centralization and enhanced group cohesion. First of all, the consultants took information from the employees and issues that were hidden from the president were brought to bear. The top level management implemented the recommendation and significant changes were made. This included the improvement of physical work condition, use of scientific human resource management systems and the employment of qualified persons. The change also enabled the company to identify hidden issues and issues that came up and deal with them convincingly. This enabled Yellow Auto to exceed its objectives by 2008. It is recommended that the company should maintain the system of participation and formalization. This way, the interaction within the company will be enhanced and employees can contribute their expertise and observation to management. Also, we recommend that regular external consultancy must be invoked into the company to provide some degree of innovation and recommendation for future changes. 1. INTRODUCTION This report is an analysis of the different sociological perspectives involved in the transformation of Yellow Auto, a Turkish automobile sales company that started from a very modest beginning in the late 1980s. The family business was grown and expanded to a considerable level by the late 1990s. In 2001, the company sought to move to another milestone by capturing over half of the market share of the city that it operates in. In the quest to attain this, they hired an external consultant to examine important issues in the organizational systems and structures. The recommendations enabled Yellow Auto to meet and exceed its objectives by 2008. This paper examines the decision making processes used in attaining this paradigm shift. The research will examine two significant components of the company from a sociological point of view. The first is the problem with the previous decision-making system that stood in the way of reforms. The second is the examination of the new systems that were implemented to attain the objectives of the company. 2. THE DECISION MAKING SYSTEM AT YELLOW AUTO The first observation of the old decision making system is that it was a centralized system that was steeped in the owner who doubled as the president and the top manager of the company. Lussier identifies that centralization of authority means that the organization's group structure operates around a single unit of the entity and this has an influence on communication and interpersonal relationships in the organization (2011, p.174). In examining group dynamics, there is a distinction between formal and informal groups. A formal group is one where there is a consciously created set of roles and obligations that are well defined (Chevalier, 2007, p.105). An informal group is established through relationships. In the case of Yellow Auto (1988 – 2001), there were unwritten rules and employees lacked autonomy. Roles were not clearly defined and people were told what to do as they came up. This means that Yellow Auto in its advent was an informal organization. Also, people joined the organization because they were family members and a few were recruited only under the involvement of the owner. This was more of a reference group rather than a membership group. A reference group is one where people identify with groups rather than have clearly defined goals, as the case is in a membership group (Zastrow, 2009). Yellow Auto employees had a fringe status whereby they supported efforts of the owner as and when they were told to do things (Harrison, 1999, p.222). This was because there was a primary set of face-to-face relationships and contact was strong (Tischler, 2009, p.23). In effect, communication was deeply affected. People were told what to do as and when the need arose. Due to this, there was a system where employees' roles were not clearly defined. They worked as and when they were told to do so. 2a. A sociological perspective There was a problem with the structure and systems of the company. Basically, there was little room for group cohesion. This is because the members of the group had no communication linkages and communication lines. Aside the family connections that kept most of the employees together, there was no conscious attempt to create an organizational structure that allowed people to cooperate and work to attain certain objectives. Employees were also not allowed to participate in decision making. They just had to do what they were told to do. Due to this, decisions were devoid of the inputs of employees. In this sense, there was a lack of collectivism in the running of the company. People only did what was decided for them. This affected participation and the need to get the commitment and innovation of the employees. Also, the lack of laid down rules and structures meant that things were done on a fire-fighting basis. There were no precedence and things were done when one was expected to do them. In effect, there was no conscious or recognized organizational culture. The business had to thrive on the things that came up. Employees did what was required of them. Literally, the owner was Yellow Auto and Yellow Auto was the owner. 2b. The phenomenon of Centralized Authority The authority was vested in the owner and president. Due to this, there was no conscious effort to define the roles and job specification of members of Yellow Auto. People were required to work whenever they were told to do so. This means that there was the lack of delegation and structured management. Delegation means handing over the authority and responsibility with its corresponding accountability requirements to a subordinate (Lussier, 2011, p.44). In contrast, authority remained with the owner. The centralized authority culminated in the Abilene paradox (Harvey, 1988). This concept asserts that a mismanaged agent becomes a passive person. In other words, a person who is denied the right to take part in managerial matters becomes quiet and does not often take part in discussions and refuse to challenge the people at the top. Thus, the contribution of such a person is not forthcoming and the management remains with those who take decisions. This made it imperative for some changes to be made in 2001 to move the firm closer to its objectives. 3. THE DECISION MAKING IN YELLOW AUTO AFTER 2001 In order to meet the targets that Yellow Auto sought to attain, the management found the need to get professional help in doing this. The external consultants hired realized the problem of the lack of participation. Thus, they got information from employees to ascertain the current position of the company and come up with ways of moving forward to attain goals and objectives. The external consultants used various techniques and tools which can be explained from various theories to ascertain the root of the problem. Through this, they were able to identify that the issue was with the centralization, concentration of power and the need to make reforms. Once the reforms were made, important changes were made to group dynamics and this enabled them to get the support and cooperation of all the employees. Such a move helped Yellow Auto to meet its objectives by 2008. 3a. A sociological perspective Teale (2003) identifies that effective groups have some important components which include amongst other things: unity, confidence, rationalization, conformity and interaction. The changes made to Yellow Auto helped the company to attain these elements of group dynamics which enhances organizational growth. First of all, there were physical changes made to promote motivation and set the tone for group interaction, communication and unity. Secondly, there was the definition of rules and regulations for employees this included job descriptions and the creation of career plans for the family members. Thirdly, the recruitment system followed a scientific pattern which allowed the best people to be chosen and trained to take over affairs not only in car sales but other aspects of interpersonal skills. These promoted unity, confidence and conformity in a scientific environment. Another interesting element of this change is that, the changes were made at the time when the Turkish economy was going through terrible times. However, Teale (2003) argues that four main things cause groups to become more competent even if there are major risks. This is known as group risk shifts. First of all, a group with a good and trusted leadership can take more risks. Secondly, the synergistic effects of all members of the group helps them to work together to overcome the risks. Thirdly, the diffusion of responsibility promotes understanding and unity. Finally, risk is seen as value by a group and not an obstacle as the case may be for individuals. Due to this, the group was able to develop strong connections which enabled them to overcome all the risks that existed in a stumbling economy. 3b. The phenomenon of Johari Window In attaining the results, the consultants used elements of the Johari Window to diagnose the problem and come up with solutions. The Johari Window asserts that problems appear in various ways to management. They could be open, hidden, blind or unknown (West and Turner, 2010). Most of the problems in Yellow Auto were either unknown or hidden or the president was blind to them. However, through the consultation and enquiries the consultants made, they were able to come up with accurate diagnosis that helped in identifying the problems. The problems were made known to the management and they came up with solutions. As the solutions were implemented, issues that were hidden from the company, like the canteen and its potential to become a restaurant came up and it helped the company to move on and attain its goals. 4. CONCLUSION The report identifies that the main decision making issue with Yellow Auto before the 2001 reforms were mainly due to the centralization of authority and the dominant position of the president and owner. Due to this, there was a problem with communication and interaction between the members of the company. This is because the rules and regulations were informal and things were not clearly defined. Due to this, the employees refused to participate and their cooperation was not strong. However, after external consultants came in, they used the principles of the Johari Window to get employees to speak up and reveal problems that were unknown to the management. Management reacted by coming up with solutions and providing cooperation and group cohesion through proper communication, training, formal rules and regulations amongst others. This enabled Yellow Auto to discover previously unknown potentials like the restaurant which helped them to attain their overall objective of capturing half of the automobile market in the city they operated in. 5. RECOMMENDATIONS From the observations, it is recommended that Yellow Auto should continue with the formalization quest that it has been pursuing. This way, roles will be clearly defined and objectives can be stated in a clear manner. Also, employee participation in decision making should be enhanced and promoted. This will help in innovation and the identification of unknown possibilities. The study also indicates that there is the need to inject external perspectives from time to time. In line with this, I recommend that external consultants should be hired after several years to inject new ideas and concepts into the company's operations. REFERENCES LIST Chevalier, R. (2007). A Manager's Guide to Improving Workplace Performance New York: AMACOM Publishers. Clampitt, P. G. (2009). Communicating for Management Effectiveness London: SAGE Publications. Harrison, F. E. (1999). The Managerial Decision-Making Process South-western College Publication. Harvey, J. B. (1988). The Abilene Paradox and other Meditations in Management New York: Jossey Boss. Kast, F. E. & Rosenzweig, J. E. (1985). Organizational Decision Making New York: McGraw-Hill. Lussier, R. N. (2011). Management Fundamentals: Concepts, Application and Skills Development. Mason, OH: Cengage. Teale, M. (2003). Management Decision Making: Towards an Integrated Approach New York: Pearson Education. Tischler, H. L. (2010). Introduction to Sociology Mason, OH: Cengage. West, R. & Turner, L. H. (2010). Understanding Interpersonal Communication Mason, OH: Cengage. Zastrow, C. (2009). The Practice of Social Work: A Comprehensive Workout Mason, OH: Cengage. Read More