The coping processes related to change in firms

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Change is the coping process of moving from the present state to a desired state that individuals, groups and organizations undertake in response to dynamic internal and external factors that alter current realities. 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.

Background for Change

In modern world, change agents are no longer considered as 'trouble makers' as in earlier times. Moreover, change is no longer just the privilege of senior management, but must be taken up by all responsible members of the organization. Buildco plc is Construction Company involved in the design and building of variety of different types of building. It also prides itself wining the contracts to building a shopping centre in one of the leading cities. It is famous for its imaginative designs and the construction of a range of commercial type of buildings. Later it has taken over the small building company which it specialised in home building for middle to higher income families. So the Buildco would like to develop further into the area of industrial buildings. Change is believed to be caused and it is made happen not in isolation. The process of change requires a competent management that could guide and control the execution of change actions.

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:

Internal factors

Buildco plc has to first of all find out the problems in the organization i.e. why they need to change/whether current organizational structure is suitable or needs to adapt another organisational structure. Buildco plc has taken over a small building company specialising in home building. So this may affect its business which is known for imaginative designs and the commercial type building. It has also need to consider the machinery which it is using in the construction of building comparing with its competitors. Company has been growing since it has started and able to secure the contracts outside the UK i.e. South Africa and New Zealand. Increasing diverse workforce also 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. It has to even take care of facilities and pattern of the work because it has been operating its business to the different countries like South Africa and New Zealand. For instance, organization comprising of large number female employee needs to make changes in facilities and pattern of the work to allow women to reconcile home and work responsibilities. In addition, some employees' only wishes to work as part-time basis and this could also bring changes in working arrangements.

Coming to external factors, Buildco plc has to consider the following issues in order to implement the change.

External factors

PEST analysis of Buildco plc:

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 health of the economy and interest rates affect the demand for any commercial and residential property. 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 changes in the birth and divorce rate and the average numbers of people living in a household affect the demand for housing. Other social dimension like increasing crimes, ageing population and people's 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 constructing more component systems in factories rather than on the building site

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.

Analysis of Bureaucratic structure of 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. Let's discuss the strengths and weakness of the bureaucratic structure of the company.

Strengths:

Functional economies of scale

Minimum duplication of personnel and equipment

Enhanced communication

Centralised decision making

Bureaucratic organization has always been its purely technical superiority over any form of organization. This structure can effectively help to scale its business and cut costs per unit basis. This often gives flexibility to the company to drop its prices attracting more customers and charge same amount but pocket more profit and finally helps company significantly to gain more competitive advantage. 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. There is a hierarchical arrangement of positions so there is strong control and responsibility can be seen by top executive. Top level manager hold the responsibility and control. Top management could be sure that the organization would be controlled by their decisions so no arbitrary judgement was introduced into operation to make things consistent. We can see consistency in the organization. Specialization of sub-units promised accountability, control and expertise. Being of impersonal promises objectivity, consistency and equality i.e. everyone is treated identically which ensure fairness. There is equal opportunity and protection from arbitrary dismissal promises job security to those who can pass test and follow the rules which ensure the stability and productive output.

Weakness:

Subunit conflicts with organization goal

Obsessive concern with rules and regulation

Lack of employee discretion to deal with problems

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. It is damaging the Buildco plc effectiveness. It weakens employee morale and commitment. It divides people within the organization against each other and misdirects their energy into conflicts or competition with each other instead of mission achievement. Any organization which has rigid policies and procedures customer calls an organization 'bureaucratic' and also describe as 'red tape'. This may affect the Buildco plc negatively and results in losing the customer/clients. Customer also links this structure with the idea of not being not innovative as bureaucratic organization are slow to innovate and seem reluctant to change as times change or events dictate. 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.

Organizational 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 Buildco plc's task is to create an organizational structure and culture that encourages employees to work hard and to develop supportive attitudes firstly and secondly allows people and groups to cooperate and work together effectively. It has to understand the fact that, any effective organizational structure shall facilitate working relationship between various entities in the organization and may improve the working efficiency within the organizational units. 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.

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. Employees within this organization tend to perform a specialized set of tasks, for instance the engineering department would be staffed only with software engineers.

Pros:

Lead to operational efficiencies within that group.

More efficiency within the organization will leads to more product selling and distributing quickly at low cost.

Low cost coordination and specialization of task are centralized.

Cons:

Lack of communication between the functional group within the organization, leads to the organization slow and inflexible.

It also makes producing a limited amount of products or services efficient and predictable.

(See appendix 1)

Divisional Organizational Structure

It is one in which a set of relatively autonomous units, or divisions, and each division contains all the necessary resources and functions within it. Division can be categorized from different point of view such as on geographical basis i.e. EU / US division or could be on product/service basis i.e. different product for different customer.

Pros:

It allows for flexibility and quick response to the environment because this structure is decentralized.

It also enhances innovation and differentiation strategy.

Cons:

This structure results on duplication of resources because, for instance, we need to have warehouse for each division.

It also does not support the exchange of knowledge between employees working in the same profession because parts of them are working in one division and others are in another division.

(See appendix 2)

Matrix Organizational Structure

It is one in which functional and staff personnel are assigned to both a basic functional area and to a project or product manager. It frequently uses teams of employees to accomplish work, in order to take advantage of strengths, as well as make up the weaknesses, of functional and decentralized in nature. It is intended to make the best use of talented people within the firm.

Pros:

A matrix organization increases the assurance that employee and other resources i.e. time and money are being used most efficiently and effectively.

It also helps to facilitates greater use of staff in general and increases the morale of employee who enjoy the variety of challenges and exposures

It also improves the employee cohesiveness within the organization.

Cons:

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.

Limited opportunities for promotion because most movement is lateral form team to team, not vertical to upper management positions.

(See appendix 3)

Buildco plc has been adopting typical bureaucratic structure which it needs to alter this structure in order to implement the change effectively.

I would like to suggest the management of Buildco plc to adopt the divisional structure which is also called a 'product structure'. This structure groups each organizational function into a division. Each division contains all the necessary resources and functions within it. Division can be categorized from different points of view like geographical basis and product or services basis. Under geographical basis Buildco plc can set the UK division as one and other divisions like South Africa, New Zealand and other EU countries. It also can set different division on product or service basis like public buildings, industrial building, house/homes, office and other commercial types and each of these product areas is governed by different sets of customer expectations, research & design problems. So the each division is responsible for certain product and has its own resources such as finance, marketing, warehouse and maintenance etc. Accordingly, this structure is decentralized structure and thus allows flexibility and quick response to environmental changes. It has also enhances innovation and differentiation strategy.

This structure is advantageous for the Buildco plc because of following reasons:

Buildco plc can focus their activities on specific kind of good, service or customer. This narrow focus helps a division to create high-quality products and provide quality customer service. This structure facilitates the communication between functions which improves decision making where as in bureaucratic decision making process is slow which comes from top level. This structure shows clear connection between performance and reward and also facilities team work. Employees close's identification with their division can increase their commitment, loyalty, and job satisfaction. Therefore, Buildco plc can introduce the divisional structure so that it can achieve its goal and able to come up new design and buildings in the market.

Conclusion

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. It has a major role not only in the use of the environment but also in the development of the quality of life for humankind. Therefore, enhancing this era can make a major contribution to the development of society. Meeting this need becomes the primary objective of this Buildco plc thus change structure is presented, believed to be offer a new way of analysing, managing and optimising the Buildco plc's productive performance. Existing structure is bureaucratic which is not so effective. What has been devised is a structure that will provide Buildco plc with all necessary information to enable them to implement change management team which in association with the head, George Lampton will oversee the full implementation and monitoring the change structure. In conclusion, 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.

Appendices

Appendix 1. Function 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

Adapted from http://www.colourtex.com/organisation.htm

Appendix 2. Divisional Structure

CEO/ Managing Director

General Management

Country Head Europe

Country Head Ireland

Head South Africa

Country Head UK

Zone 1

Zone 1

Zone 1

Zone 1

Zone 2

Zone 2

Zone 2

Zone 2

Zone 3

Zone 3

Zone 3

Zone 3

Appendix 3 Matrix Structure

President

VP (Project A)

VP (Project B)

VP (Project C)

VP Operations

P

R

E

S

I

D

E

N

T

VP HR

VP Marketing Manager

VP Finance

Adapted from 'Matrix' ing your operations - A lesson in organisational structure, <http://www.prophix.com/pdfs/The_Matrix_Model.pdf>

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