Organizational structure and culture of NST Logistics and Caring Pharmacy

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1.     Company I - NST Logistics

NST Logistics is a company dealing with logistic services in UK. The company approximately has 500 employees and is providing logistics and forwarding services in the international arena. Strict rules and efficient culture present in the company. As the company is relatively larger as compared to the many other small and medium enterprises, the management is exerting tight control over the workforce. Procedures, best practices, and red tapes are common themes in the company.


2.     Company II - Caring Pharmacy

Caring Pharmacy is a small entrepreneurial venture consists of only 6 employees. The company is dealing with distribution of limited pharmaceutical related products to the clients. The company is relatively young; it is established three years ago. Up to date, the company is growing fast and the financial performance of the company is encouraging. The company is planning to enlarge the market shares and to hire more workforces to serve large client base in the near future aggressively.



1.     Theories on Organizational Structure

The word 'structure' is an important subject of discussion in business studies. It is often the issues of discussion in company's meeting and it is an important concept for management of organizational behavior. The concept of organizational culture is important because it describe the hierarchy of authority and accountability in an organization. These formal working and reporting relationships are often detailed in the organizational charts.

            Depending on the involvement of an employee in the organization, he/ she can often be classified as either the line employees or the staff employees. Specifically, employees that directly involved in producing or marketing the firm's products or services are categorized as the line employees. In contrast, those employees that support the line employees are categorized as the staff employees.

            Usually, an organization employs a mixture of organizational structures for attainment of the organizational mission and vision. There are various perspectives in which line and staff employees can be organized. These perspectives are: (a) functional, (b) product, (c) customer, (d) geographic, (e) divisional, (f) matrix, and (g) amorphous.

            The choice of structure chosen by an organization is critical, as different structure will affect the operations of a company differently. It is widely acknowledged that it is best to have a fit between the business activities as well as the corporate resources available to produce or deliver value to marketplace. Specifically, the structure for an organization should be formed in consistent to the organization's goals and strategy. An effective structure should be able to enable individuals to interact, work and complete the task assigned in the process of realization of the company missions.

            It is also important to acknowledge that as the reporting and working relationships in workplace can be formal or informal, the organization structure can be explicit or implicit in nature as well. Both formal and informal relationships are important in executing a successful action plan.

            Not only that, another widely discussed issue about organizational structure recently is about the subject of span of control. In the new knowledge economy, management gurus are advocating that organizational should be more responsive to the marketplace and having a lean structure can improve company performance, while at the similar time reduce wastage. Thus, managers are given a larger span of control, while those middle-managers are being dismissed. Such a structure is often perceived as the adaptive, lean, effective and the optimized organizational structure.


2.     Theories on organizational Culture

Generally, organizational culture consists of the shared values and assumptions within a firm. To be specific, the shared values mentioned can be defined as the stable beliefs that guide people's preferences and attitudes in a variety of situations. Shared assumptions however, can be defined as the unconscious perceptions or beliefs that are not explicitly stated, but are often assumed as the correct way to think or to act in handling daily problems and challenges.

            There are various types of cultures embraced by many of the companies today. In fact, the cultural issues in an organization can further be divided into the dominant culture and the sub-culture in a firm. Although the dominant culture is widely embraced by people in a group, the impacts and potentials of sub-cultures should never be taken for granted. Often, subcultures maintain the organization's standards performance and ethical behavior. They can be the source of emerging values and assumptions to replace outdated or irrelevant core values.


3.     Relationship between Organizational Structure and Culture to Business Performance

There are some researches on the subject of organizational structure and culture to the firm performance. However, the relationships between these variables are mixed, and in many instances, insignificant. Perhaps the perspective to investigate if there is a best structure or culture to be followed by companies is misleading.

            It is more reasonable to point out that the best organizational structure is dependent on a company's external business conditions, size, technological factors, and the pursuing strategy. Precisely, the environmental factors include the question if the business landscape is dynamic or stable, simple or complex, integrated or diverse, and etc. In short, the best structure for every business is different, and managers and leaders should consider the formation of structure in accordance to the company's goals and industry characteristics.


4.     Case Study

There are striking differences between NST Logistic to Caring Pharmacy in terms of organizational structure and culture. As NST Logistic is a relatively larger company, bureaucratic management style with red tapes is widely used to control the workforce. In contrast, the Caring pharmacy is a small company, there is little control system and everyone is working on a trust and self-effort basis. The only control guidelines in the small company are a set of values statement and a list of principles to be followed by the employees. For example, the values embraced by the company are customer satisfaction, caring, quality, and calculated risk taking. In the daily operations and decision making, the employees are assumed and expected to base their actions in accordance to these values.

            Apparently, red tapes and excess-control over the workforce will stifle growth. As too many red tapes, rules and regulations are to be followed, and employees are expected to follow a certain set of rules and reporting mechanism, paperwork and non-productive works must be done. The employees apparently have less time to involve seriously in performing their job seriously. The end result is that the company needs to hire more staffs to handle the increasing job demand. Besides, as there is too much control over the workforce, the company is less responsive to the marketplace. For example, a marketing executive may receive meaningful information from the customers, but his proposal to change the company's value offering to the market place may not be approved by the senior manager, because the senior manager does not understand the rationales in-depth.

            In contrast, the small size allows Caring Pharmacy to be agile, responsive, adaptive and fast. The company able to achieve good growth in the recent years is because works and decision making are largely delegated to the employees, and the employees are empowered to make educated and calculated risks. This enables the company to capture business opportunity in a very fast pace as compared to other larger market players in the industry.



1.     Organizational Theories on Management

The word 'management' is widely used, but the definition of management varies according to the particular researcher's perspective. However, generally speaking, management can be viewed as the process of getting work done through others. It is the task of an effective manager to create a supportive environment for the workers to perform their daily task, by working on the right things, at the right situation, in the correct timing. This can be done by performing the various types of management functions effectively.

            It is often commented that there are four basic functions a manager should perform, namely, planning, controlling, organizing and leading. Planning is the first stage of management - where a manager should firstly determine organizational goals and investigate and decide on the methods to achieve them. Controlling is also important, as it is the process of monitoring the progress of goals achievement and to take corrective actions and changes when it is discovered that the actions taken is insufficient or inappropriate to achieve the goals. Organizing however is about deciding the allocation of resources and tasks on the subject of who will perform a particular job functions, and who will be working in the company or project. Lastly, an effective manager should also involve in leading the employees, where he must be able to inspire and motivate the workers to work hard and to achieve the organizational goals.


2.     A Review of the Different Leadership Styles and its Effectiveness

One of the greatest assets of an organization is that strong managers create an environment to encourage members and motivate their high energy (Taggart, 1989). Effective leadership has drawn great attention from organization management in recent years due to its contribution to organizations' competitive advantage and sustainable profitability. Leadership is as a critical management skill in various organizations, which influences and motivates a group toward the achievement of organizational goals (Rafferty & Griffin 2004).

            However, there are management gurus arguing that leadership must be differentiated from management. Some commentators propose the view that management function includes leadership, that it is possible to be a good manager without being a good leader. In contrast, other commentators argued that leadership is different from the "managership". The difference is obvious, that the leader shows incremental influence beyond his or her authority, he or her will influence instead of purely performing planning, organising, and controlling activities. It is possible, therefore, for an individual to be a good manager without being an effective leader. There are some overlaps between leadership task and management task, and the distinction is not always clear, Davidson and Griffin (2006) summaries the differences between the roles are often difference of degree rather than of kind. "Managers and leaders differ in how they go about creating an agenda, developing a rationale for achieving the agenda and executing plans, and in the types of outcome they achieve".

            There are abundant books and articles on leadership styles and also 'Leadership Experts' who have made careers out of testing and coaching of leaders. At the end of it all, one may not be wiser still. The author Daniel Goleman - who is well known for his two books 'Emotional Intelligence' and 'Working with Emotional Intelligence' - in an article titled "Leadership That Get Results" in Harvard Business Review dated March-April 2000 attributes this reason for lack of quantitative research that demonstrates which precise leadership behavior yield which type of organizational results. He points out the research of consulting firm Hay/McBer on random sample of 3871 executives selected from a database of more than 20,000 executives worldwide which has demystified the effective leadership. The research found six distinct leadership styles, each springing different components of emotional intelligence. It offers a fine understanding of how six different styles affect which type of organizational performance and results. It also offers guidance how an effective leader switches between these styles seamlessly and also uses a combination of these styles depending on the business situation. As such, in the context of the effective leadership, we will discuss it in the following sections. The six distinctive styles of leadership are: coercive, authoritative, affiliative, democratic, pacesetting, and lastly, coaching style.

            The Coercive Style. Leader is one who demands immediate compliance to his dictates. His style is 'Do What I Tell You'. He creates a reign of terror, bullying and demeaning his executives, roaring his displeasure at the slightest missteps in achieving the business goals. This style is the least effective, because of top-down decision making; it snuffs the ideas and the creativity from the bottom rung of employees. And, high-performing employees who are motivated by more than money, this style erode their performance. But it has its use. It can break failed business habits, shock people into new ways of working. And in turning around a company or when a hostile takeover is looming.

            The Authoritative Style. Leader is a visionary; he motivates people by making clear to them how their work fits into a larger vision of the organization. This style maximizes commitment to the organization's goals and strategy. By framing the individual tasks within a grand vision, this leader defines standards - giving performance feedback positive and negative - which revolves around that vision. This style works well in almost any business situation, particularly, when a business is adrift. But while working with a team of experts or peers, who are more, experienced than the authoritative leader, it gives an impression that the leader is being pompous and out-of-touch. If this leader becomes overbearing, he also undermines the egalitarian spirit of an effective team.

            The Affiliative Style. Revolves around its people - its proponents value individuals and their emotions more than tasks and goals. The leader keeps his employees happy and creates harmony among them, which has positive effect on communication leading to sharing ideas, inspiration and building trust. Because of this style, flexibility also rises among employees giving employees freedom to do their job in the way they think is most effective. This leader gives ample positive feedback on their day-to-day efforts, which is all the more motivating. These leaders are natural relationship builders. This style should not be used alone. Its exclusive focus on praise can allow poor performance to go uncorrected, employees may perceive that mediocrity is tolerated. If one uses this style in close conjunction with the authoritative style, he would have a potent combination.

            The Democratic Style. Leader builds trust, respect and commitment by spending time, getting his people's ideas and buy-in. By letting his employees themselves have a say in decisions that affect their goals and how they do their work, this leader drive up flexibility and responsibility. He also by listening to employees learns to what to do, to keep morale high. In this democratic set-up, his followers are realistic what can and cannot be accomplished. This approach is ideal when a leader is himself uncertain about the best direction to take and needs ideas and guidance. The drawback of this system is, it can lead to endless meetings where ideas are mulled over, consensus remains elusive, and the only visible result is more meetings, particularly when crucial decision have to be taken. In times such as this people end up confused and leaderless. This style also makes much less sense when employees are not competent or informed enough to offer sound advice.

            The Pacesetting Style. Leader sets extremely high performance standards and exemplifies them himself. He is obsessive about doing things better and faster. He pinpoints poor performers and demands more from them. If they don't raise to the occasion, they will be replaced who can. This destroys the organization climate, as employees feel overwhelmed by pacesetter's demand for excellence and their morale drops. Guidelines for working may be clear in the leader's head, but he/she does not state them clearly; he/she expects employees to know what to do. The pacesetter either gives no feedback on how people are doing or jumps in to take over when he/she thinks they're lagging. And if the pacesetter leaves, his flock suddenly becomes directionless. This style should be sparingly used, and works best when all the employees are self-motivated professionals, highly competent and need little direction and coordination, like in R&D and legal firms.

            The Coaching Style. Leader helps employees identify their unique strengths and weaknesses and tie them to their personal and career aspirations, encouraging them to establish long-term development goals and help them to conceptualize a plan for attaining them. They give plenty of feedback and instruction. Coaching leaders excel at delegating, even if it meant the tasks would not be accomplished. Their prime motive is long-term learning of their followers. Although this style works best, it is seldom used, because many leaders don't have time in this high-pressure economy for the slow and tedious work of teaching employees to grow. This style works well in many business situations and works particularly well when employees are already aware of their weaknesses and would like to improve their performance. In contrast, the coaching style makes little sense when employees, for whatever reason, are resistant to learning or changing their ways. The other danger of this style is when the leader lacks the expertise to help the employees to grow.


3.     Case Study

An analysis of the leadership style in NST Logistic will be a daunting task, as there are levels of mangers and leaders in the company. Apparently, all managers have their own styles, to get the work done. In contrast, the leadership style in Caring Pharmacy is a democratic one. The founder, and is also the spiritual leader of the company, is attentive to feedbacks and suggestions to the employees. The effects are astounding. The workforce in Caring Pharmacy is more readily to embrace the suggestions from the leader in return, and is more motivated to work harder. In many instances, the workers willingly to go for the extra mile and voluntarily take up the responsibility to solve problems in the organization. In contrast, many of the employees in NST Logistics are found to avoid problem solving, and instead, may engage aggressively to push problems around.



1.     Motivational Theories and its Application

Motivation is a widely studies subject in management and organizational behaviors as it is the source of passion, inspiration and drive for a person to work and excel. It will affect someone's direction, intensity, and persistence in the workplace. It is not hard to understand that motivated workforce can implement any plans and strategies better for a firm, and such a situation and requirement is the foundation of a successful and high performing organization in the competitive business environment today. In the section below, a few theories concerning the subject of motivation will be presented.

            Maslow's Needs Hierarchy Theory. According to the Maslow's theory, human needs can be categorized into a hierarchy of five levels and states that as the lowest needs are being satisfied, the higher level needs become increasingly important and people will be motivated to satisfy these upper level needs when the lower level needs are being satisfied. The five levels are physiological, safety, belongingness or love, esteem, and self-actualization.

            ERG Theory. ERG theory is similar to Maslow's needs theory, where it assumes that there are three groups of needs, namely, existence, relatedness and growth. However, the issue with such a needs hierarchy is that the models assume everyone has the same hierarchy, but there are empirical evidences suggesting that the needs hierarchy often varies from one person to the others.

            McClelland's Three Needs Theory. McClelland argued that the needs can be intensified by the learning process. Three needs are being postulated, namely, the need for achievement, the need for power and the need for affiliation.

            Four-Drive Theory. Under the four drive theory, it is asserted that everyone has four innate drives, namely, the drives to acquire, to bond, to learn and to defend. In this theory, these drives will invoke emotions. The emotions however, will be regulated by someone's social norms, past experience, and personal values. According to this theory, it is very important that the managers should ensure that the design of individual jobs and workplace able to deliver a balanced methods in fulfillment of the four needs.

            Expectancy Theory. This theory assert that work effort is influenced by the perception that a particular effort will result in a particular level of performance (E-to-P expectancy), the perception that a specific behavior or performance level will lead to specific outcomes (P-to-O expectancy), and the valances that the person feels for those outcomes. The implications from this theory is this: the E-to-P expectancy increase by improving the employee's ability and confidence to perform the job, while the P-O expectancy increases by accurate performance measurement, and a fair performance-based reward system.

            Goal Setting as Motivational Process. While goal setting is not a theory in nature, it is a process that can motivate employees and clarify the employees' job scope and roles through the establishment of performance objectives. In the goal setting process, an effective goal must be specific, relevant, challenging, have employee commitment, and is accompanied with meaningful feedback. Apart from that, participative goal setting is also important to motivate workforce, where the employees are asked to participate and involve in the goal setting process.

            Equity Theory. The concept of equity theory is deal the subject of fairness and justice. Equity theory has four elements, namely: outcome to input ratio, comparison other, equity evaluation, and consequences of inequity. The implications from this theory are that company must take into account the subject of equity of the distribution of resources and the fairness in the process of allocating resources.


2.     Case Study

The striking contrast on how both the organizations motivate employees is the methods used by the senior managers. In NST Logistics, money and financial rewards are primarily used to motivate employees to work harder. In contrast, self- actualization and meaningful accomplishment of a task is often used by Caring Pharmacy to motivate the employees. Nonetheless, the financial rewards for employees in Caring Pharmacy are also attractive and competitive. Apparently, both methods work sufficiently well to growth the company, although the growth rate for Caring Pharmacy is much faster and explosive. However, using money as the means to motivate people may have many side effects. The loyalty among the employees in NST Logistics is loose as compared to the case in Caring Pharmacy. The employee retention rate in NST Logistic is also lower. When the competitors able to offer more attractive remuneration package to the employees, many of the workers, mangers included, will resign to join the other companies. They are highly and seemingly solely motivated and attracted by financial rewards.



1.     The Nature of Group

The importance of a group within the broader topic of organizational behavior is well recognized by researchers. A group can be defined as a collection of interacting individuals who have common objectives, similar values, and share a certain structure of relationships. In the workplace, the word 'team' is more broadly used. Team can be defined as a group of two or more people who interact and influence one another, and members of the team are mutually responsible for attainment of shared and common goals under the organizational missions and objectives. An important point worth mentioning here is that the members in the team must perceive themselves as a social entity within an organization.

            To clarify the concept of group and team further, it is important to point out that all teams are groups, because they consist of people with a unifying relationship; but not all groups are teams, because some groups do not exist to serve organizational objectives.


2.     Factors Leading to Effective Teamwork

High performing team, effective team work and team effectiveness are subjects widely investigated in the context of organizational behaviors. All of these terms have similar concept, that is: an effective team is characterized by the team's ability to achieve its objectives, fulfill the needs of its members and maintain its survival.

            Various factors can influence the effectiveness and success of a team. However, all these factors can be categorized into three dimensions, namely, the organizational environment, team design, and team processes. There are three team design elements essential for formation of effective team - the task characteristics, team size, and team composition. The design of a team should be large enough to perform the work assigned, but on the other hand, small enough so that meaningful involvement exists among team members. Team composition is also a highly critical element towards effective team. Specifically, effective teams are composed of people with the competencies and motivation to perform task in a team environment. In fact, if managed properly, team diversity will present advantages towards improving team performance.


3.     Case Study

In NST Logistics, the people just perform what they are assigned. People work in a team according to the job design planned by the senior managers. In the team, members rely heavily on the job scope and duty or responsibilities assigned to them. The team work culture in Caring is different. The people selected to work together are of complementary and diverse skill sets. The founder smartly employs the right people in the right place. The results are striking. When people are put at the place most conducive for success, they can perform exceedingly well, in a committed and passionate manner. The case in Caring Pharmacy is an excellent example of how diversity in a team can be managed to achieve success in the marketplace.



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