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Buildco plc is Construction Company involved in the design and building of different types of building. Company has also won the contracts to build new shopping centre in one of the world's leading city. It has also taken over the small building company which is specialized in home building. Buildco plc now wants to secure its contracts in other mainland of Europe after successful in UK to South Africa and New Zealand. It also would like to develop further into the area of industrial buildings. So Buildco plc needs to conduct through analysis of its existing bureaucratic organization structure.
2.0 Types of Change
The change is a fundamental tenet of any organization in this world. It is necessary to change at the cultural, technological, and organizational levels for an organization to remain competitive and efficient in its operation and services. Change is constant so it is too pervasive to ignore.
There are different types of change which may affect organization are given below:
Organisation wide vs. Subsystem
Due to change in culture, resizing, evolution to different life cycles, collaboration is the types of organization wide change. In the same way change because of lunch of need product or removal and also restructuring of particular department etc are the type of subsystem change.
Planned vs. Unplanned
As name say, changes occur according to the organizations plans like any improvement, expansion or development of new project etc is planned change. On the hand, change occurs suddenly with changing economic circumstance like unpredictable situation which may affect the performance level of employees that will affect in the quality of product and which need to be rectified.
Transformational vs. Incremental
Transformational change may occur due to organizational structure which organization needs to change from existing one like Bureaucratic to divisional or more self directed form. Coming to Incremental change occurs when any company wants to change its processes through continual improvement like setting the high level of quality.
Remedial vs. Developmental
Well remedial changes occurs in order to improve the existing situation like improving the product's quality, also performances of employees and on the hand developmental change occurs in order to make the best existing situation e.g. increase in production may leads to increase in revenue and efficiency.
3.0 Triggers for Change
As we know, change is induced either by the internal and external factors. Following are the internal and external forces that Buildco plc has to consider:
Changes which can be handled by the organization within the organization are known as internal factors. It could be process issues like lace of effective communication, proper decision making, delegation, area of expertise. Behavioural issues like conflicts, low morale, motivation level, absenteeism, and employee turnover also may force company to seek for change.
Increasing diverse workforce also could be triggers to change. With increase numbers of workers/ employee from different ethnic group and to comply with equal opportunities legislation firms have found it necessary to change. With change in top management can often result in structural change or change in responsibility in the firm. Buildco plc is headed by George Lampton which could results change within the firm.
Coming to external factors, Buildco plc has to consider the following issues in order to implement the change.
Political- UK government policy and EU directives is the major concern for the Build co plc. So the company has to consider it for any planning and environmental issues including sustainability which affect on Buildco plc so the whole construction industry.
Coming to economic factor, the demand for any commercial and residential property gets affected with the health of economy and its interest rates. So the Buildco plc will get affected with the UK government taxation policies. So it has understand the capital cost and operating cost of the buildings and try to understand how to better design can improve all these costs.
Next is social factor- as we know the demand for housing also get affected due to changes in the birth and divorce rate and the average numbers of people living in a household. Other social dimension like increasing crimes and even ageing population and peoples well being may affect the construction company so as the Buildco plc.
With advancement of construction technology also affect the working practices in the Buildco plc. It has to consider the introduction and installation of new construction component systems in factories rather than just on the construction area.
Customer requirements/tastes- couldn't be met by existing products. There was a need for more ideas and better techniques. As Buildco plc is planning to carry out its business to other mainland of Europe so the customer needs and demand obviously varies. Everybody is looking affordable house/ building due to recession so the Buildco plc manager has to keep this these issues seriously. Build co plc has been already operating many of these markets and meeting many of these requirements. With the government support and ongoing change may offered Buildco plc many business opportunities. Changing economic circumstances i.e. recession has affected the most of the organization throughout the whole world so the Buildco plc.
Looking at the above analysis, Buildco Plc:
has to consider the different government policies from time to time that are applicable in European market and other market as well.
needs study the target customer i.e. theirs culture and level of development in those nations, like style of housing construction.
also needs to consider the economics of those nations and buying power of customer and its market in construction industry. .
Buildco plc also needs to consider its competitors spend on R&D and their use of technology in the construction industry.
4.0 Bureaucratic Form of organization Structure and Buildco Plc
Bureaucracy is a structure of highly operating routine task achieved through specialization, very formalized rules and regulation, task that are grouped into functional department, centralized authority, narrow spans of control and decision making that follows the chain of command.
Basically an Organisation tends to become bureaucratic where there is rigid form of rules and regulation and needs to be maintained high standard. So the Buildco Plc seems to be in a similar situation.
Let's discuss the strengths and weakness of the bureaucratic structure of the company.
Bureaucratic organization has always been its purely technical superiority over any form of organization.
More control over the employees with clear rules and regulation and there is no point of confusion as reporting relation is quite clear i.e. everyone is aware of their boss.
Its rules and policies are clearly specified and employees are always ware of their job roles and profiles. So we can see in the Buildco plc high level of expertise.
We can see efficiency of work due to well defined roles and task within the organization which see in the case of Buildco plc by gaining more markets in Europe.
We can also see effective decision with proper top -down communication that leads to immediate action. The main things in this form organization we find controlled work environment i.e. everyone is treated identically which ensure fairness.
In Bureaucratic form of organization, customer and employees are treated like numbers, procedures become rigid and fixed and customer also do not feel well served. So it may damage the effectiveness of Buildco plc.
It will reduce commitment and morale of employees. It leads division of the employees within the organization against each other which may results conflicts and fights instead of mission achievement of company.
In this form, any standard procedures and policies or practices that seem designed solely for the benefits of the organization and which disadvantage of customers.
The employees of bureaucratic organization suffers the most the more bureaucratic the organization is, the more stress, anxiety, and the angers the employee have.
There is politics in-fighting, with executives striving for personal advantage and power. Each department has its own agenda which may leads to conflicts among the department or subunits.
Thus bureaucratic structure could affect negatively to Buildco Construction Company. So the organizational health and success in the future may depend more on organizational structure that is how they design and practices organization structure.
5.0 Types of Organisational Structure
As we know organizational structure is the formal system of task and reporting relations that controls, coordinates, and motivates employees so that they cooperate to achieve an organization's goals. The structure of an organization may depend upon its size, strategy, mission, environment and culture. According to Burns and Stalker (1961), the structure of an Organisation should fit with the changes taking place in its environment in order to gain maximum output.
As business expands chain of command increases and widens the span of control. Therefore, every company needs to keep alter its structure with changing time.
Let's discuss the different organizational structures.
5.1 Functional Organizational Structure
It is one on which the tasks, people and technologies which are necessary to do work of the business are divided into separate 'functional' groups i.e. marketing, operations and finance for coordinating and integrating their activities to provide the best to the customer/clients. (refer appendix 5.0.)
Lead to operational efficiencies within that group.
More efficiency within the organization will leads to more product sale and also quick distribution will be carried at low cost.
Employees are motivated as they are aware of their career development within the Organisation.
Due to proper communication between the functional group within the organization, leads to the organization slow and inflexible.
There could be conflicts between different functions or units.
Monotony due to restriction of movement within functions
Table 5.0. Advantages and Disadvantages of Functional Structure
5.2 Divisional Organizational Structure
It is one in which a set of relatively autonomous units, or divisions, and each units will have all necessary resources and can function within it. Under different point of view each division can be categorized such as on geographical basis i.e. EU / US division or could be on product/service basis i.e. different product for different customer. (refer appendix 5.1.)
It allows for flexibility and quick response to the environment because this structure is decentralized.
Employees feel motivated with their involvement in decision making within a division.
Efficient decision making improves customer relation.
It also enhances innovation and differentiation strategy.
Operations cost could be high due to repetition of tasks within different geographical regions
Employees might focus more on divisional goals than Organisational goals.
There could be conflicts over the use of resources between divisions.
Table 5.1. Advantages and Disadvantages of Divisional Structure
5.3 Matrix Organizational Structure
It is one in which functional and staff are appointed to both a basic functional area and to a project or product manager. Here we can see frequent use of groups or team of employees in order accomplish the work and this will help to take advantage of strengths and cover up the weaknesses, of functional and decentralized in nature. It is intended to make the best use of talented people within the firm. (refer appendix .2.)
Benefit of handling the functional objectives along with various Projects at the same time.
Quick reaction time to any environmental change affecting the Organisation.
Horizontal co-ordination and communication is possible due to Project teams.
A matrix structure by its nature creates conflicts and confusion in organizations which actually results in inefficiency.
High level of work stress can create conflict and ambiguity which will increase feelings of stress among the employees.
Table 5.2. Advantages and Disadvantages of Matrix Structure
6.0 Recommended Organisation Structure for Buildco Plc
Buildco plc has been adopting typical bureaucratic structure which it needs to alter this structure in order to implement the change effectively. In this form, communication flows top to bottom where junior level executive or manager are ignored or neglected in decision making. Due involvement of different projects over a decade Buildco plc has strong pool of experts. Therefore it should able to see the changing environment and changes in the organizational structure which needs to focus on more organic rather than existing bureaucratic structure which is mechanistic. Transformational change type of change may help Buildco plc to follow up its expansion plan as it has started and able to secure its contracts outside the UK i.e. South Africa and New Zealand. Coming to internal issues Builco plc needs to consider behavioural issues.
According above analysis of different forms of organization, it would be beneficial for Buildco plc to transform its structure into an organic form which allows more flexibility in terms of decision making, communication and work environment. I would like to recommend Matrix Structure as organizational structure which will benefit Buildco plc in following ways.
A Matrix Structure helps to cope well with uncertainty through a divisional form, in which, as and when Buildco can react to the changes occurring in either at product, market or client level.
This structure will help utilise the maximum use of resources available and employees will feel motivated to contribute towards the business development plans of Buildco.
When Buildco plc needs to share its resources across functions or Projects or divisions and needs to be flexible in decision making.
When it has to respond to changes in its external environment by delivering better services or products.
Buildco plc is best known for its innovative designs and creativity that has made it gain a lot of Projects hence in order to expand its business across geographical boundaries and into different fields of buildings, it needs to consider the Matrix form of Organisation.
I would like to suggest following graphical representation of Matrix Structure for Builco plc.
CEO/ Managing Director
Senior Executive Industrial Contracts
Senior Executive Housing Contracts
Senior Executive Commercial Contracts
Senior Executive Business Development
Matrix Structure for Buildco Plc
As we know that we are living in a time of great changes, a time where we can unavoidably recognize the large changes in the process and management requirements especially for construction organizations like Buildco plc.
After careful analysis of various types of changes the transformation change process wouldn't be an easy task. It is suggested that Buildco Plc should adopt the Matrix Structure of Organisation. Its plan to expand geographically and product wise prompts a structure that can handle regional requirements along with functional.
In short, the structural change would assist Buildco Plc to carry out its expansion plan to develop its operations into main land of European countries and may be in other country in future.
It is the conviction of this report that the new structure is the best for use among Buildco plc in their plan to introduce change management.
Appendix 5.0 . Function Structure
Adapted from http://www.colourtex.com/organisation.htm
Appendix 5.1 . Divisional Structure
Country Head Scotland
Country Head Europe
Country Head Ireland
Country Head England
Appendix 5.2. Matrix Structure
VP (Project X)
VP (Project Y)
VP (Project Z)
VP Marketing Manager
Adapted from 'Matrix' ing your operations - A lesson in organisational structure, http://www.prophix.com/pdfs/The_Matrix_Model.pdf