The effectiveness of Camilleri Group organizational structure

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In the second part the development of organization theory is analyzed and a walk through of its evolution by explaining how it was influenced from scientific (Taylor), administrative (Fayol) and bureaucratic (Weber) management. Reference is constantly made on how Camilleri Group is formed today using the current setup as a practical.

In the third part the assignment will also discuss the current management matrix structure and its influence on the organizational processes and goals. Then the assignment will also discuss the various situational factors that influence the team development. This assignment is not based only on the theory but on personal experience in the company, questionnaires and self involved research.

Overview

Camilleri Group of Companies' inception dates back to 1843 when Mr. Calcedonio Camilleri "opened a small shop at 50 Merchants Street, Valletta" as stated in the company website (http://www.camillerigroup.com/history.htm). It goes on by saying that "He was the first to import English and French confectionery. It was simply a popular local sweetshop in Malta" and "It appears that the Valletta people and the Maltese in general, appreciated what Calcedonio Camilleri represented to them. His surname 'Camilleri' and the word 'Confectionery' became synonymous". The family business kept being sold to the successive generations until in the recent history (1980) it was purchased by the current generation of brothers. In 1981 a limited liability company with the name C. Camilleri and Sons Ltd was formed and at the time used to employ 5 workers. In 1983 the company diversified and ventured in the Catering sector. From then onwards the group never looked back and established itself in various other sectors both locally and abroad. According to superbrandsmalta.com today "C. Camilleri & Sons Catering is one of the leading caterers on the island. Although the company started operation in 1983, a purpose-built factory to EU specifications was opened in 2003". The other companies within the group are "Camilleri Establishments owns the popular BHS, including Tammy and lately Burton's franchise while Camilleri Trading owns the Mothercare franchise, both of which are well patronised". In Malta "The Camilleri Group is one of the few companies to be involved in wholesale and retail, distribution, manufacture and service." (http://www.superbrandsmalta.com/pdf_sito/camilleri_group.pdf , Pg 30-31). Other brands worth mentioning which are locally represented by Camilleri Group are Goldenpoint, Perugina, Motta, Ritter Sport and Bristow's of Devon. In 2004 the Group moved to centralised premises which included back office and warehouses in a local industrial area in Qormi. The two large franchises represented by Camilleri group (i.e. BHS and Mothercare) operate over 3000 m2 of shop area in three of the most popular local commercial centres. An additional Bhs outlet in Libya operates 3500 m2 of shop area. Camilleri Group employs 280 workers divided between all seven companies both locally and in the North African market, all of which operate under separate economic entities but with a common Board of Directors and a unified Senior Executive management team. Being a family business all the directors are also the shareholders for every company.

Organizational Structure

"Organization Structure is defined as

(1) the set of formal tasks assigned to individuals and departments;

(2) formal relationships, including line of authority, decision responsibility, number of hierarchical levels, and span of managers' control; and

(3) the design of systems to ensure effective coordination of employees across departments." (Daft (2003), Pg 313)

The history of Camilleri group suggests that the organization structure has been influenced from the fact that it is a family business where culture and tradition are values which are very much treasured by the directors. As a proof one will notice that a number of employees are recruited through acquaintances and most of them happen to be Valletta co-habitants, which is the location where the roots of the family come from. Directors are not only strategy makers, but they tend to participate hands-on in the actual operations of the organization. It is not a rare view to see a director carrying a tray of food and hand it to customers. Due to the history and probably the family nature of the business, directors tend to be possessive on the company and have little trust in their employees as they always feel the need to have full control. A typical example would be the main door key of the office premises. It is an unwritten rule that only a Camilleri can have the key of the office and they must be the first person to open in the morning and the last person to close in the evening. Based on such evidence one can deduct that the directors come from the traditional school of thought which resulted in an extensive use of the Classical and scientific management theories. As a practical example, upon opening the new catering premises in 2003 the main focus in the design (and rightly so) was on employee productivity and efficiency. The production areas' design and layout are a clear influence of Scientific Management from Frederick Taylor and Henry Ford's teachings. Frederick Taylor is considered as the father of Scientific Management as he always sought "The One Best Way" to perform a task. The manufacture process was broken down into small parts of standardised jobs and every one of these jobs had its own set of rules. Every job resulted in a separate but interconnected room with its specific equipment. Such layout was built around the concept of the assembly line. Tolliday (1992) noted that Ford's success was based on Ford's conception of fitting everything together and this seems to have been the concept which influenced Camilleri group. Such concepts keep on re-emerging whenever new lines of business were introduced during the years. Scientific management in principle focuses mainly on the employee, however it does not take in consideration the employee human and social needs.

Henry Fayol's Administrative Management

Administrative management focuses mainly on organizational management whereby it deals with organizational planning, leadership and control. Henry Fayol (considered as the founder) tries to achieve this by putting a focus on the managers' roles. Camilleri group (like many other organizations) have also followed part of Fayol's 14 principles of management, however it must be stated that Fayol himself had admitted that the 14 principles were by no means exhaustive, and wished for them to be interpreted in a flexible manner. Rodrigues suggests that 'many modern organizations do not apply all 14 contemporary principles, and that many organizations apply some principles more intensively than others' (Rodrigues 2001, 885-6). This was precisely the case for Camilleri Group and in fact not all of Fayol's concepts have been utilised, but only those listed hereunder were considered as relevant for the organization :

- Division of Labour - Employees are specialised for the job roles they cover and there is flexibility within administration to place people in the department where they can perform at their best. A typical example would be the recent case of an Accounts Clerk who was studying for an IT diploma and was relocated in the IT department. Camilleri Group's CEO stated "We are giving this employee the opportunity to improve his performance and by doing so we are accomplishing the company's goal of placing the right people in the right departments".

- Discipline - is very well defined by using standard clear procedures which are communicated to every employee upon recruitment

- Subordination of individuals to the common good - The individual's priorities must clearly be the organizational objectives and not the personal objectives. It is communicated to all employees that whatever is done within the organization must bear the underlying argument "for the benefit of the organization".

Remuneration - Salaries are adjusted based on performance but also according to studies and surveys conducted by independent companies who establish what the national average wages are according to the position occupied and qualifications. Additionally on an annual basis incentives in the form of bonuses are given to employees provided they meet pre established targets.

- Centralization - Centralization of authority is distributed from main Head office.

- Order - All the organization's norms, standards and rules are clearly communicated through a common companywide guide book which contains guidelines each employee must follow for efficient working of an organization.

- Equity - Grades and positions are predefined when it comes to remuneration. All employees are treated equally and Camilleri Group has an outstanding example as it offers the same conditions of work to all regardless of age and gender. In order to lead by example, even the sons and daughters of company directors are offered equal conditions as any other employees. Administrative Management in principle focuses on the Manager but it loses focus on the business unit as part of a whole organization.

Max Weber Bureaucratic Theories

Bureaucracy has been defined as " The important decisions are made at the top, while at the bottom standardised procedures are used to exercise control" by (Huczynski and Buchanan, 2001) while Collins dictionary of Sociology defines bureaucracy as "A type of organization which administration is based upon impersonal, written rules and a hierarchy of offices. Domination based upon written rules, recruitment based upon qualification and offices that are impersonal and clearly distinguished from incumbents." (Jary and Jary,2000). Within Camilleri Group such characteristics do exist and hereunder it is explained how they are applied in practice:

Specialization : Weber sees bureaucracy as having a fixed area of work for each employee. In this context every employee has a different, specialized job to do, such as inputting invoices, replenishing outlets or management. Each member of staff gets a formal and defined job role and duties to be covered upon recruitment.

Bureaucracy : The typical pyramid of management is used as a vertical chain of command.

Hierarchy : Camilleri Group has a traditional hierarchy, where top management establishes strategy and overall business direction, whilst lower management and employees are responsible for operations.

Regulation - Camilleri Group is quite strict on rules and regulations. There are clearly defined boundaries in the Staff Handbook which goes in all details such as Internet usage, dress codes, timeliness etc..

Impersonality - All workers are treated uniformly ... i.e. even director's relatives and family members have to abide to all the company's regulations.

Career structure - there are clearly defined career paths for all new recruits.

All of the above mentioned theories fall under the umbrella of Classical management. Many theorists have criticised the classical approaches with George Ritzer (Professor of Sociology) using the term "McDonaldization". Ritzer defined McDonaldization as "...the process by which the principles of the fast-food restaurant are coming to dominate more and more sectors of American society as well as the rest of the world." Ritzer calls the McDonaldized society a system of "iron cages" (a term created by Weber himself to describe bureaucracy). Although many theorists have criticised Classical management, it is a fact that most of its teachings are still being used in today's business world. There seems to be a tendency that the more stable companies such as Camilleri Group tend to utilise Fayol's and Weber's work in management nowadays. Another reason might be that Fayol's five principles of management are very generic in nature.

Management Structure

CG structure management structure is however based on matrix management which is the total opposite to Fayol's Administrative principle of management theory which states "Unity of Command" implying that authority is coming from one central point. The brands for CG are the fulcrum of its revenue and therefore the strategy was to use the matrix strategy, which by Daft's definition is a "structure that uses functional and divisional chains of command simultaneously in the same part of the organization". Camilleri Group must have shifted to this structure because they realised that "Organizational structure is the framework within which brands are managed successfully or otherwise" (Philippa Hankinson, 1999 (pp. 402 - 415). In fact during that year's annual staff dinner, the CEO of Camilleri Group in his speech had stated "We have shifted from the old tall structure which had too many hierarchical levels to a more modern matrix structure which will help develop more synergy between the various brands and the functional units through the sharing of resources."

To better understand the Matrix mechanism and how it applied to Camilleri the depiction on Appendix A is to be explained hereunder :

There exist two lines of authority, one is functional (on a horizontal level in yellow) and the other is brands (on the vertical level in blue). The brand manager coordinates the functional requirements with the functional manager in charge, who in turn allocates staff to the brand. The main advantage of this structure are (using this example):

Functional units would have expertise available for all brands through less staff (i.e. no need to have a member of staff trained per brand)

Adaptability to changing environment - as an example, if a new brand is introduced, the IT integration will be easier and less expensive

Standardisation - can be achieved easier if the same persons are doing the same jobs across the brands.

For Camilleri Group the new matrix structure resulted in a more efficient departmentalization and a cost cutting exercise simultaneously.

The main disadvantages of this structure is having dual bosses (one from the vertical and one from the horizontal chain) which results in

more meetings (more time wasted),

reduces the opportunities for promotion and higher status

ambiguous situations due to the possibility of conflicts between an employee's two line managers

Camilleri Group creates an additional disadvantage to this scenario since every one of its directors is assigned to take care of a brand and in many times there is the perception that if functional unit staff is doing work for Brand A it automatically implies that he is not doing work for Brand B. In fact often employees (while executing tasks requested by one of their managers) find themselves in ambiguous situations where they are told off by another member of top management because "you are giving more priority to them (not to us)". This is more evident when a functional unit head or a brand manager is actually a Director (who in certain cases occupies a dual role). Therefore a situation might arise where a brand manager (who is ranked as a senior manager) on the vertical axes might conflict with a functional support unit manager whose role is theoretically on his same authority level on the horizontal axis, but is in fact his own director.

"The complexity of today's environment and uncertainty about the future overwhelm many managers and lead them to focus on operational issues and short-term results rather than long-term goals and plans". (Daft:2003, P211). To ascertain the validity of this statement with Camilleri Group, a questionnaire (Appendix B) was distributed among senior managers (excluding those who are also directors to avoid conflict of interest), to assess the level of awareness of organizational goals, vision, strategy and mission statements. This would help us evaluate the effectiveness of the current mission statement and how it has been communicated. It must be mentioned that all the eight senior managers responded to the questionnaire. The answers to the questionnaire were as follows:

Question No

100% of participants were aware of their brand' s mission statement (where applicable)

100% of brand managers' staff were aware of the brand' s mission statement

50% of respondents believe a mission statement (Appendix C) has an impact on staff performance

0% of respondents were aware of the organization's corporate mission statement

100% of respondents agreed with the current matrix structure

This most significant statistic in this survey is the fact that no senior manager was aware of the existence of a corporate mission statement. One may ask oneself how effective the matrix structure in this context is. Even though it has been stated that it is aimed to increase communication between brands and functional units, however it is evident that it does not address the communication gap that exists between CEO/directors and senior managers. This could also be a direct result due to the fact that Camilleri Group lacks an HR and a marketing department. The organization shifts the HR responsibilities on the brand managers, hence creating a somewhat ambiguous situation where an employee could potentially be managed by two matrix managers, thus making it unclear which communication paths are to be followed in HR matters. The survey also demonstrates Camilleri Group senior managers are in agreement that "A clear thoughtful mission statement provides employees with a shared sense of purpose, direction and opportunity"(Kottler and Keller, 2009 P 82), as they are all aware of the brand's mission statement and are duly communicated to their staff. In the questionnaire, one particular manager was also proactive and went on to suggest a possible corporate mission statement to be used by the organization.

Contingency Theory

The classical management theories all recommended a single solution to management problems. Contingency theory is a new contemporary theory perspective which in contrast to the traditional thinking of Taylor, Weber and Fayol and states that "there is no one best way" to manage an organization. What works for a particular organization is not necessarily relevant for another one. In today's highly dynamic and competitive environment one should have a contingency plan in place to tackle new challenges presented by the market. Managers should fully aware of such contingencies and be able to identify the key management practice and have to ability to implement the right contingency plan for any changing circumstances. A good manager "diagnoses the characteristics of the individuals and groups involved in the organizational structure, and his own leadership style, before deciding on a solution." (Gibson:2008,6)

Camilleri Group is certainly lacking in the area of 'fit' when dealing with structure and goals. In today's challenging times the organizational structure is mechanistic. Currently Camilleri Group fits the description of a large company (by local standards) with a centralised decision making process. The 'family' and 'tradition' culture coupled with the communication gap problems might in the future create problems in such a dynamic business environment. Top management has older generation hands-on people who are accustomed to the skills learnt in past years, which gives them a false impression that they know exactly the skills of today's employee. However times change and with it this brings new mentality. The centralisation of decision-making could create problems in times where these persons in top management would take decisions based on their personal experience when in reality they wouldn't know what's really going on at ground level of the company and in the external environment that is competing against them. Fresh blood needs to be mixed with experience at top level management in order to give room for innovation. Flexibility must beat traditional views and employees must be given space to be more creative rather than fitting in a structure where "we do it this way because that is how it has always been done" culture. Due to this 'traditional' culture, innovative tools such as technology are hardly ever involved and contemporary tools like company websites and online marketing are neglected. The structure needs to be modified to allow the new breed of innovation, however being a family run business it is understood that this can only happen naturally with the retirement of a top level member who would be replaced by a member of the newer generation.

Conclusion and Recommendations

One may ask oneself how crucial is it to have an effective organizational structure but no clear communication process in the organization. Paradoxically, Camilleri group senior managers have shown satisfaction at the structure but at the same time are unaware of the organizational mission statement. The conceptual management structure alone is not enough for the success of an organization, you need good managers who can support it and in the case of Camilleri Group you need all the appropriate functional units. My final recommendation is the addition of a human resources department and a marketing department with a clear marketing plan which would reflect the vision and goals of the organization.

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