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Evaluating The Effect Of Change Management On Organizational Structure In Builco

Introduction of the company:

Buildco plc is a construction company involved in the design and building of a variety of different types of building. This plc designs and builds the residential & commercial buildings. Imaginative designs and the construction of range of commercial type buildings have made the company famous in construction field. Therefore the company has grown from operating solely in the UK to securing contracts in South Africa, New Zealand and good prospects in a number of mainlands of Europe.

Buildco is headed by George Lampton, numbers of directors working in the company’s main function and all directors are reporting to the in charge, George. Each and everything has to be passed through the different heads of department before doing. So the company is structured typically bureaucratic lines.

Why Change is important?

Change is a process in which an organization shifts from being in one state to being in another state. Now a day, change is changing in a fast rate. With such change comes uncertainty and insecurity. All are increasingly challenged by change. In the organization, operational level, Organizational level and all the activities and structures are challenged by the change. As a result, organizations can either progress or perish. The organization who accepts the change could be progressed and who doesn’t accept could be perished from the existing position.

People are very excited to know that what will happen further. Different technology, information system, globalization are giving poses to the people to whom they have to adopt the changes. Currently without mobile phone and computer/ internet, people and business organization could not be run a second. These shows the change is necessary. People always want to be aware from the recent activities. They always expect the positive results from the current activities. Different knowledge age comprise people to make change.

Environmental turbulence is related to the amount of change and complexity in the environment of the organization. In every organization and business, they have the different phase. Organizational life cycle can be in the following phase:

1. Start up Phase

2. Growth phase

3. Decline phase

4. The Renewal/ Death phase

In the start up phase, entrepreneur thinking is in the business and they form the organization and finally start their business. In the growth phase, organization revenue is increasing upward due to the new services and product. But the organization has the bad and good years depending on the market situation. When business moves in to the boom, then this starts to declining phase. In this phase, corporate insanity is doing the same, the same way, but expecting in the different results. After declining phase, the organization has to develop new strategy and policies for its renewal if they did not launch the new policies, this would be gone in death and company identity would be lost. So every entrepreneur wants to maximize their profit from the optimum level of operation. For this purpose managing change is necessary.

Types of change:

There are number of ways in which change can be categorised most are related to the extent of change and whether it seen as organic or driven.

Development Change

This may be either emergent or planned. It is first order. This change focuses on the existing aspect of an organisation in term of improvement of personal skills and process

Transitional change

This is related to radical, second order, planned or episodic. It seeks to achieve a known desired state that is different from the existing level. This change is related to the work of Lewin who conceptualized change as a three-stage process

I. Unfreezing the existing organizational equilibrium which involves disconfirmation, creation of guilt and provision of psychological safety that converts anxiety in to motivation to change.

ii. Moving to a new position through identifying with a new role model and scanning the environment for new relevant information.

Iii. Refreezing in a new equilibrium occurs when the new point of view is integrated in to significant relationship and the total personality.

Transformational change:

This is the second order in nature which requires a shift in assumptions made by the organization including its members. Transformational can result differently in an organization in terms of structure, process, culture and strategy. This change refers to change in structure, culture and process that believe in transforming an organization through regular and continuous improvement.

Beside of these models, there is not one best method for change. So change could be in different modality and nature for example: planned and emergent change, episodic and continuous change.

Triggers for change:

Triggers factor consist of internal and external factors of change. Internal factors could be the condition or events within the organization which influences and control over it by the management or organization. External factors are those in which the organization could not control over them.

1. Process (decision making and communication)

2. Behavioural problems (turnover, absenteeism, low morale)

External Factors Internal Factors

1. political Factors and social factors

2. Economic

3. Technological Factors

External Triggers:

PEST Analysis gives us a broad view of external factors and organisation has no control over such factors

Technology

Changes in technology consist of innovation and development. Development of new technology replaces the existing technology due to the more sophisticated and feasible characteristics. The company (Buildco plc) has immense chances that it showcases through its innovative designs however the company plans to expand its operations into a new market with a newly featured product like Industrial construction, which needs to now the level of technology permissible and available with the competitors. The climate change is another issue. The strong climate change like global warming needs to be addressed.

Economic Factors:

This factor relates to Entry Requirement and procedure in a market, Purchasing power and purchasing habit and competitors. The capacity of the purchasing and spending on the building may affect on the company. In such a case Build co would need to overview the entry criteria and how easy to get in the new market. Consumer behaviour is necessary to understand before expanding the business in the different countries and it would need to identify its competitors and their market share.

Political and social Factors:

This is related to the EU legislation, Government policies, Culture and directives. The government policies may affect the build co for further expansion. The company’s plan to get industrial construction by expanding in EU countries would create the need to understand the respective government laws on construction industry. Culture and infrastructural development in those countries may play the vital role.

Internal Triggers

Internal factors are very volatile and flexible because the organization can control over them.

Process

Decision making process and communication process greatly affects the organization. For example, participative decision making process could be the good one in comparison of autocratic decision making process. If in the organization there is a hierarchy of organizational structure then it may be delayed to flow the information from upper level to lower level .The gap of communication may affect the organizational change.

Behavioural Problems

High employee turnover, absenteeism, low morale of employee toward their job results the negative impact to the organization. Higher turnover means the instability of the employee in the particular job place this may causes the lack shortage of experiences people and low morale employee’s couldn’t be performed theirs task effectively and efficiently.

Mergers

Now a day, business company are liquidated and merging between each other in order to extend the business volume. But merging action brings the difficulties in the management, organizational structure and policies.

In conclusion, internal issues (Soft factors) related to the employees, their impact on the progress and productivity of and organization. Lack of authority at various levels of Buildco Plc has created low level of employee morale and lack of ownership which eventually can affect the overall organizational productivity and efficiency. The Buildco plc’s bureaucratic organizational structure might give threat in the expansion process hence a organisational different structure which will avoid the bureaucratic structure on improve overall efficiency.

In the construction field, competitors of Buildco Plc may give the challenges. During the past 20 years, the company has grown from operating solely in the UK, South Africa and New Zealand. Company’s competitors might be doing hard for getting the buildco Plc’s construction side by defeating either in cost or in quality.

Currently, Global economy is suffered from the global crisis and the economy is not stable for doing betterment. People’s buying power is decreased. Many housing company are affected by the changing economic circumstances. Government laws and regulation including European Union Laws, directives and policies can affect the buildco activities. In many places, Terrorism, donation and pressures of social groups giving poses to the construction company. Monotonous absenteeism, high turnover rate and low level of moral affect the plc’s activities.

Change is a pervasive influence and an inescapable part of both social and organizational life. From the construction’s perspective, factors such as uncertain economic, government interventions and rapid development in new technology giving the direct challenges to the buildco. Plc. To avoid employee absenteeism and low employee morale toward work, for work specialization, for departmentalization, for chain of command, for span of control, for job redesign and for work process, method and equipment change management is necessary. In other word, the Buildco. Plc should accept the change to compete, to survive, to prosper, to be more effective and to improve the construction method.

Bureaucratic organization:

Bureaucracy is a combined organizational structure, policies and procedures to manage all the internal and external activities of the organization. In the bureaucratic organizational structure, there is division of power and work, clear hierarchy and standard procedure. There is also specialization of functions, adherence to fixed rules and hierarchy of authority.

The Buildco. Plc is headed by George Lampton. The numbers of director are reporting to the head and to control the marketing function, David Magnusson has appointed for promoting company’s activities outside the UK. These all shows the company is structured on typically bureaucratic models.

Strength and Weakness of Bureaucratic organizational structure:

Strength:

The strength of such organizational structure is flowed decision and policies are usually highlighted. This includes the increased in control and monitoring the upper level management. The success of the company depends on the decision made by the top level management. Success is completely depends upon the wise, visionary and strategic decision of the top management. Decisions are made solely by top management so there is no any delay in decision making process. There are the clear policies, procedures and division of work.

Weakness:

The bureaucratic organization’s main weakness is lack of innovation. Every tasks and process are fixed. Way of performing the task and the process are almost fixed that the development idea or innovation process is eliminated. Another weakness is that employees get negative motivation due to the lesser employee participation and involvement in decision making process. And another demerit is that Human Resources can’t be utilized in the fullest manner by optimizing creativity.

The Buildco plc is structured in typically bureaucratic line. So Plc can take decision in any matter easily as well as quickly. Quick decision helps the organization to do something in the faster way at a right time. Every employee is aware about their job role, process and performing procedure which avoid the delay in the activities.

The Buildco Plc cannot develop new idea, technology and work procedure from this organizational structure. In this competitive time innovation is important function of the company. Employee’s participation for decision making process, thinking and idea toward the work is not respected and that may cause the employee get de motivation which directly effect in the performance.In the bureaucratic organization, if the high level management is capable, experienced and visionary then the result can be favourable and if it is not then result an obviously disaster for the Buildco Plc.

Types of organizational Structure:

Organizational structure defines how job tasks are formally divided, grouped and coordinated. Organization is the patterns of relationships among position in the organization and among members of the organization. It allows the application of the process of management.

1. Functional organizational Structure:

Organizational work can be divided into different functional group. I.e. Marketing finance, administrative, human resources, R&D. Employee has to perform the specialized set of task. In this structure, specialization and coordination of tasks are centralized in a functional basis. The organization integrates its task vertical way.

Structure:

CEO/ Managing Director

General Management

Director Project

Director Purchasing

Director Marketing

Director HR

Director Finance

Director Operations

Head Project

Project Manager

Project Executive

Head Purchasing

Purchasing Manager

Purchasing Executive

Head Marketing

Marketing Manager

Marketing Executive

Head HR

HR Manager

HR Executive

Head Finance

Finance Manager

Finance Executive

Head Operations

Operations Manager

Operations Executive

Pros and cons of the Structure:

1. Very difficult to satisfy customer having different needs by using single set of function

2. Expansion problem using single product/ services

1. Division of labour and specialization in work

2. Easy communication (can easily share the information each other)

3. Quick decision and team workPros cons

2. Matrix organizational structure:

Matrix organizational structure includes the group of employee by both product and functions. This combines the functional and production departmentalization. In this organization, project manager shares the responsibility with the functional managers for directing the task and for making clear for the assignments of individuals assigned to the project. Basically in the construction organization there could be the various projects that were started from different in date. In such a case organization can divided its task as the functional as well as product base activities. I.e. Matrix organizational structure.

Pros and cons over the Bureaucratic organization.

1. Decision making is faster and decentralised based on participative management.

2. Better co ordination on shared technologies

3. Speed & flexibility in work and results more efficiency in resource utilization

4. Improved motivation level

5. Employees are more likely to experience higher level of motivation and commitment to the departmental objectives

6. Date and information is exchange vertically and horizontally to make decision

1. It shows only the formal relationships and does not describe the patters of human relationship which develop.

2. The structure doesn’t shows about the managerial style that the organization has adopted. I.e. Autocratic / democratic

3. Organizational structure very quickly becomes expire, especially in the large organization where is higher employee turnover.

4. Very costly and not suitable for small organization and worker dissatisfaction

5. Role ambiguity and conflict

Pros cons

3. Divisional Structure:

This involves the organizational activities are divided on the basis of function Geography and product. Every task is divided on the systematic way. Organizational activities are divided according to the product that the company has produced, according the operating the geographical location and according the task that the organization has to perform.

Buildco. Plc has involved in the design and building of a variety of different type of building. The plc has also involved building in new shopping centres, commercial type building, and home building and further would like to involve in industrial buildings. Furthermore the plc has worked in many places so we can reform the Buildco. Plc’s organizational structure is based on the department where work can be divided by the following way.

i. Function

ii. Product

iii. Geography

The Buildco Plc is working in several places and has many plans to involve in new places including Africa, Europe and New Zealand so work can be divided by the Geographical location.

Division al Structure :

CEO

DIRECTOR

UNITED KINGDOM

EUROPE

NEW ZELAND

SOUTH AFRICA

Zone 1

Zone 1

Zone 1

Zone 1

Zone 2

Zone 2

Zone 2

Zone 2

Zone 3

Zone 3

Zone 3

Zone 3

The Buildco. Plc is working in different geographical location so it’s better to organize the structure in the basis of territory .Suppose, In the UK, company is constructing the buildings then department of UK control the whole activities of the organization. And marketing finance, administrative and human resource department will report the UK Department and this will report to the Director. In the same way other territory’s construction side will report their own territory office and they will report to the director and director will report the overall activities of the organization to the Chief Executive officer (CEO). And authority, responsibility and accountability will be allocated as per the hierarchy and chain of command. In alternatively, organization can also restructure its structure in the basis of building construction.

Advantages and disadvantage for bureaucratic organization over Buildco. Plc.

Advantages:

Under this organization, organization structure is divided according to the type of product, services, geography and so on. This structure allows the flexibility in doing and quick response to environmental changes. Due to the job specification, there are the new innovation and differentiation strategies.

Employees are divided based on the product, customer and geographical location so every division are responsible for particular product and services. Therefore there is higher degree of accountability. It has the improved co ordination across functional department. And main benefits are easier growth or reduction in size by adding or deleting the organizational division.

Disadvantages:

The structure makes duplication of resources. Every department are separated from each other and each department has their own resources as well as equipments. So it doesn’t support the exchange of knowledge between people who are working in the same profession. And this may increase in cost. It may reduce economies of production (efficiency in terms of Buildco plc), desperate technical competence and expertise. This also creates unhealthy rivalries among operation units.

Suggested organizational structure for Buildco plc

After understanding the current organizational structure of the plc and the plan for the new development in to the new business area including market expansion in different markets, this gives an insight on how such changes will benefits the company the Buildco plc should restructure its structure into a Matrix Structure.

CEO/ Managing Director

Director HR

Director Strategy

Director Finance

Director Marketing

Senior Executive Industrial Contracts

Senior Executive Housing Contracts

Senior Executive Commercial Contracts

Senior Executive Business Development

Project I

Project I

Project I

UK

Project II

Project II

Project II

New Zealand

South Africa

East Europe

North Europe

Reasons for selecting this form:

i. Today’s business environment is quite uncertain and volatile. Matrix structure helps to change and cope well with uncertainty through a divisional form. The Buildco can react to the changes through the product development, expansion of market and customer satisfaction.

ii. While divisional section handles the changes the functional level of the organisation can concentrate on developing skills, technology and expertise to cope with planned changes.

iii. This matrix structure will help to use the scarce resources in a optimum way and employee will feel high motivated to provide contribution towards the business development strategy and plan of the Buildco.

iv. The Buildco plc is going to expansion of business in different geographical location and the organizational size is going to be complex and bigger so in such a situation this matrix organizational structure is appropriate to share its resources and works including authority and responsibility.

Conclusion

There are many influences on the way an organization might structure for successful performance and to cope with change. If buildco plc ignore the change, the plc will face the various obstacles and such deficient structure consequence the following:

Motivation and morale may be depressed

Decision making may be delayed and lack of quality

There may be conflict and lack of coordination

Organization may not respond innovatively to changing circumstances and cost may be increase

But the plc can face problem when accepts the change so it has to consider on some points before doing it. Organizational should not need to consider the internal as well as external forces in relation to need for change, whether, it was structured along strict bureaucratic, mechanistic lines or as one of the newer networks forms.

The Buildco. Plc should consider some influential factor. The plc should consider about the influences of size on structure, the influence of changing technology, the influence of external environment and socio cultural influences inside the organization. If the company consider this factor before accepting the change then it will easily manage the obstacle through the strategic decision making process.

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