Rondell Case Study



The Rondell Data Corporation Case Study Russ Joseph Ricky Sethi Bonnie VanKampen Michelle Woodley University of Southern California

the time of the current dilemma. recommendations can be offered. by 1978. Rondell Corporation had reached 100 employees. By 1978. By exploring the background of the problem. Broadcast equipment accounted for 35% of the company sales. the impact of organizational culture on the strategy and success of the company. two major lines were recognized: broadcast equipment and data transmission. but as of 1947. the company had increased its business to include data transmission equipment. Data transmission was also blossoming with increased demand for highly specialized and innovative designs. The basis for its inception was Rondell’s invention of several electrical testing devices. while on staff as an engineering faculty member of a large university. and problem identification. In contrast. In 1947. information regarding organizational functioning. the employee . The company had a reputation of being a source of high quality innovative designs and described itself as being able to “convert problems to solutions” in their sales brochures. Background Bob Rondell started the Rondell Data Corporation in 1920. the company entered into the radio broadcasting equipment market.Rondell Case Study The Rondell Data Corporation Case Study 2 The importance of both organizational design and culture are evident in analyzing the case study of the Rondell Data Corporation. Possible solutions to the current dilemma at Rondell Data Corporation will provide an increased understanding of the role of organizational structure related to the improvement and overall performance of a company. By the early 1960’s. The size of the original payroll in 1920 is unknown.

Upon joining the company. Key Personnel One of the key players in the Rondell Data Corporation is Bill Hunt. He became the assistant to the president in 1956 and president in 1960. Bill Hunt. He was a student of Bob Rondell’s. Dave was promoted to production manager. he was instrumental in exposing widespread irregularities in the production and control departments. He joined Rondell in 1960 and worked directly with Bill Hunt in developing major innovations in the data transmission equipment. The organizational structure of the Rondell Corporation is fairly flat with minimal layers for communication flow. along with Ralph Simon. other than the fact that he does not have a degree. and brought in a new group of production specialists to the company. the current President. His exact education level is unknown. Ed “doc” Reeves is employed as Director of Research. Executive Vice President. Bill Hunt has been with the firm since 1946. there was a lack of an integrated information structure within the company. In fact. joined the company in 1955. but turned it down. Following this. he is referred to as a creative genius. . and joined the company as an engineer. He became director of research in 1967 and is widely respected in the Company. Dave Schwab. Although multiple layers of management did not exist. An integrated information structure would have facilitated cross communication necessary to achieve the common goal. holds enough stock to command effective control of the company. he had been offered the Director of Engineering position.Rondell Case Study 3 count had risen to 800. Production Manager. In the past.

The engineering department is seen as being to blame for the etiology of the problems. The current Director of Engineering. Ron has a B. In an attempt to rectify the communication problems. Prior to coming to Rondell. and production staff over the last 2-3 years. He joined the company in 1977 as Director of Engineering. Vice President of Sales.” During one of these meetings with the president and the production manager. and are focused on the engineering department. replacing an employee who had been dismissed. Current Situation Currently. Frank Forbus is the most recent hire. His duties include administrative responsibility for research. The disputes seem to center on the problem of new product introduction. has been with the company since 1957. the year is 1978 at the Rondell Data Corporation. in engineering and has always worked in sales. the “802. The Director of Engineering position has been a “revolving door” since the retirement of the longtime Director approximately 3 years previously. This original Director of Engineering had held the position for 30 years. sales. the . Frank Forbus. He was made sales manager in 1967 and appointed Vice President of sales in 1974. engineering.Rondell Case Study 4 Ron Porter.S. Frank Forbus worked as the division director of engineering in a large industrial firm. as well as complete responsibility for engineering services. There has been a gradual increase in disputes between research. Frank’s educational background includes a Master’s degree in engineering. has only been in his position for 8 months. Frank has instituted a new communication strategy with the production manager and the president concerning the latest product. He has identified some communication issues between departments and upper management.

The displacement of engineering personnel . as Rondell has experienced major expansion. engineering services seems to be the exception. Subsequently.Rondell Case Study 5 president interjects that a new “filtering design” will be added to the product with the expectation that engineering and production will solve any potential delays caused by this revision. and Engineering. This distribution of personnel leaves engineering services without a clear mission or purpose and further blurs the lines of authority. this model served it well in its initial period. Sales. The engineering. However. The organizational structure at Rondell follows a strictly functional approach. Although the overall organization theme at Rondell is along functional lines. Structure of the Engineering Function Much of the growing dissatisfaction at Rondell Data Corporation can be traced back to the inefficiencies that arise from Rondell's outdated organizational structure. Relying on personal relations. The company is faced with both internal dissatisfaction of employees and external dissatisfaction of their customers. the “802” design is shuttled back and forth between engineering and production at least 4 times with the result of production staff assigned to another “rush” job. this same structure is now seriously inhibiting Rondell's future growth. research and development departments at Rondell are the major casualties of this irregular expansion. Rondell lacks the cohesive and clearly organized structure required of a larger company. Much of its workforce is distributed among the other departments. As the company has grown. the different departments have grown at different rates and interactions have changed disproportionately. The functional areas are divided as Production. Since Rondell started out as a small firm that worked on custom solutions.

Obviously. Instead of increasing the product line under the direction of engineering services (e. Instead of being tightly integrated with sales and production. cross-functional group acting as the intermediary in allowing the rest of the organization to produce efficiently. Although this creative input is vital to Rondell's continued growth. The role of engineering services becomes amorphous and undefined. engineering services is bogged down by the details of managing its disparate components and employees. confusion and frustration arises from the role of research and how research interweaves with engineering services.. even though it appears to have the least interaction with the rest of ESD and the organization.g. make more standard products for volume sales). the organizational structure is dragging on the potential of the company. . Upper management describes the engineering services department (ESD) as being "responsible for maintaining cooperation with other departments.g. and freeing more valuable people in research and development (R&D) from essential activities that are diversions from and beneath their main competence". R&D is seen as the star of the organization. Although management defines the role of engineering services as a cross-disciplinary. The "division" of the ESD prohibits effective interaction with the other departments. Because engineering continues to be organized along a narrow. Dave Schwab's line workers grabbing engineers for help on the floor 4 days after their conversation) and it's deadlines go not met. Additionally. specialized line of thinking.. ESD’s suggestions go unheeded (e.Rondell Case Study 6 lacks integration and hinders the engineering services' effective interaction and cooperation with other departments. providing services to the development engineers. the clear lack of authority of engineering services has rendered it essentially powerless. design is floundering under the auspices of genius.

Rondell was faced with a culture of uncooperativeness among its different departments. Hunsaker. a strong culture had existed. and myths-all the expressive elements that give meaning to organizational membership and are accepted as guides to behavior (Cook. language. The cultural system at Rondell was based on several beliefs.112). a turf. There was very little formal structure within the company and little respect for the hierarchical structure by most members. Organizational Culture Organizational culture is defined as the fundamental assumptions shared about an organization’s values. The department was held responsible to take care of its members regardless of the impact on the overall organization. symbols.Rondell Case Study 7 interdepartmental friction arises from too much centralized control and an emphasis on staff positions over line positions. This incongruency gives rise to many conflicts and decreasing productivity of the organization. beliefs. Each department had a particular niche. The conflict between the founding values and the values that had developed were very visible in the behavior of the staff at Rondell. 1997. and Coffey. Not only was there little cooperation. but blame was placed on others for the current . The subculture’s behaviors were incongruent with the overall organization’s previous values. Informal relationships were the means used to communicate and accomplish the goals of the organization. p. a function and the belief was that any other department should not invade this space. but was now being replaced with subcultures. rituals. Length of employment was highly valued and in some cases was the basis for selection of key individuals. norms. In the Rondell case. Rondell prided itself on a close family tradition and yet.

1988). the organization’s values based on a tradition of “a long-standing reputation as a source of high-quality. using a high external locus of control. Bill Hunt gave little leadership in growing the organization and was not visionary in diagnosing the changes that would besiege Rondell. and production people” (Seeger... engineering. As the differences between the individuals became more and more apparent. a more formalized structure was needed. found reasons to blame the other departments for Rondell’s decline in profitability. The strong “family” culture had become dysfunctional. “The real test of the effectiveness of a corporate culture comes when the organization’s environment changes…Sometimes a strong culture can be like a millstone around the neck of a firm that is trying to respond to environmental changes” (Reimann and Wiener. As the company grew and added second generation employees. sales. the firm had experienced a steadily increasing number of disputes between research.Rondell Case Study 8 lack of success. Bill Hunt. However. the current CEO prided himself on not needing the red tape of bureaucracy and appeared to highly value a company’s ability to function without conflict. This TraditionalElitist model made it hard for the organization to adapt to growth and rapid change. “For several years. When originally founded in 1920 as Rondell Equipment Co. innovative designs” led to an elitist mentality. the members began to identify more with their own profession or department and less . Rondell’s employees boasted that they were the best and performed so well because of the family spirit within the old organization. J. “Rondell Data Corporation). The first generation employees had been able to conduct business within the organization on the basis of more personal relationships and an informal structure. giving way to divergent subcultures. Each department.

1997. 1996). p. develop. 87). In an organization with many product lines. 1997. Rondell’s external environment has changed and their product breath has grown to two major lines with an increasing number of orders calling out unique specifications. One of the most significant issues facing the Rondell Corporation in relationship to the structure of the company is the fact that the entire performance system enabled. build and ship the product. but problems develop when people develop tunnel vision and tend to perceive multifunctional problems from the vantagepoint of their narrow area of expertise. In the model 802 project. Hunsaker and Coffey. and indeed seemed to encourage. Hunsaker & Coffey. but depends on managerial control and coordination (Cook. These subcultures began to function as countercultures and pitted one member against the other. Organizational Problems and Changes for Success Rondell has a typical organization by Function. This structure works best in a company with relatively few and similar products. New product introductions at Rondell require timely. J. this design is most efficient when departmental tasks are relatively independent of each other. p. The functional design works for companies with few products because all functions are working toward the same goal.87). Ideally this design is suited to encourage specialization. straining the process of communication and coordination in the absence of a decisive leader (Cook. integrated efforts. functionally structured organizations can loose track of the importance of individual products or new product development efforts and fail to provide the functional integration needed. This can lead to conflict and turf protecting.. individuals to see their own performance as separable from the enterprise as a whole (Ott.Rondell Case Study 9 with the organization as a whole. Additionally. Doc Reeves .

Rondell Case Study 10 said. Another example of the problems caused by functional design and centralized decision making is Dave Schwab’s Thanksgiving review of the 802 prints. There has been minimal turnover. the “wrong call” made by Doc Reeves has put a heavy workload on Engineering and Drafting employees. . Frank Forbus and Engineering Services appear to be taking the brunt of the blame. Since a design engineer doesn’t fully understand the manufacturing capabilities. Instead. Doc Reeves wrongly assumed the scope of the effort needed for Engineering Services. The organizational culture of Rondell Corporation is one that values age. secondary to being “too young. experience. However. as well as manufacturing needs. A statement from Dave Schwab about “tolerance crazy engineers” indicates that people in the wrong function are making the decisions. There have been references made to past failures of personnel. “this won’t affect the other modules of the 802 much”. Dave Schwab reviews the prints and makes decisions that are not within his scope. purchasing and manufacturing. involving a manufacturing representative on a project team would improve the process by taking into account both design needs. The actual blame lies within the organizational structure and design of the Rondell Data Corporation and its segregated departments. An integrated team would consist of representation from design. and seniority. Because the decisions are being made in the wrong place without the input from all of the involved parties. an integrated team would be better equipped to make such a call versus an individual Director. evidenced by the role Doc Reeves plays within the company and his relationship with his superiors.” Creative genius is revered. All key management personnel have been with the company over 15 years. except for the Engineering Department.

. Formal structures were needed along with a breaking down of the silos that had been formed by the functional groups. and production. It would not be recommended that Rondell goes through this process by themselves and a qualified consulting practice with emphasis in Organizational Design should be brought in to help Rondell. Because culture is the focus for an organization’s strategies. Rondell is experiencing the current problems of poor communication and inefficient development processes because they are living in the past. have to be unfrozen to be improved” (Weick. “Classic machine bureaucracies. design needs to be aligned more with sales and with research. & Quinn. A cross-sectional team model. K. resources are being diverted with engineers being called away to production to deal with problems. Management seems to highly value the “personal touch” and sees this as the most effective method for communication to facilitate business practices. even with the growth of the company over time. Because of the centralized and functional scheme. Rondell would benefit from revisiting their organizational structure by going through an Organizational Design process. Frank was not able to empower himself or obtain management’s empowerment to begin the process of changing the culture at Rondell.Rondell Case Study 11 Preserving “family spirit” is important to the company in the sense that a more “high tech” manner of communication was never implemented. engineering. would have assisted in enabling Rondell to improve their productivity and increase their chances of survival in the changing industry. Frank Forbes failed to see that before he would be able to have any affect on the strategies at Rondell. combining the inputs from sales. 1999). he would need to change the culture. R. research. Additionally. with their reporting structures too rigid to adapt to faster-paced change..

a change to a Product Line focused Organization structure would help bring focus to new product development and push down decision making to the people most involved with the product line. Decisions be pushed down into cross-functional teams who have the responsibility for delivering a timely. The current centralized management structure is making ineffective decisions and reducing the effectiveness and responsiveness of the company. The management team needs to focus on company direction and resources and provide the teams a degree of autonomy to make the day to day decisions. 2. communicating information and making timely decisions. 1995). we recommend the following major changes: 1. the relationship map will show how work crosses functional boundaries and show the relationships through which products are produced (Rummler. An Organizational Design process should be initiated to determine the best organizational structure for the company. Our assumption is the new organizational structure will be product line focused. A relationship map for Rondell showing the systems view of the organization. A cross-functional approach should be taken to accomplish key company tasks such as new product development. The company needs to make a shift from vertical decision making to managing cross-departmental work processes. Rondell needs to find a better way of developing products. . In developing a new organization structure. it appears that in the short term. 3. Retain the services of a qualified consulting team to help the management team. quality and manufacturable product. product and flow of work will highlight the deficiencies in the organization. 4. A realignment of how people. including the customer. tasks and tools are assigned to projects or product lines needs to happen.Rondell Case Study 12 In addition. In summary. Although a thorough review of the personnel and current practices at Rondell is critical and a long term goal.

6. . Organizational wide efforts should be made at breaking down functional barriers and creating an environment of team participation and decision making. Teambuilding should be a priority at Roundel with the stoppage of the constant finger. planning and monitoring project progress.Rondell Case Study 13 5. Engineering Services should add a project management function to aid the team in coordination.

Albany. New York.... & Brache. 5th edition. 361-386. W..50. 1994. K. R. Annual Review of Psychology. Improving performance. A. 2nd Edition.Classic Readings in Organizational Behavior. Organizational Behavior. (1997). . San Francisco: Jossey-Bass Publishers. J. Inc. (1999). G. Seeger. Steers. p. Reimann and Wiener.40. Wadsworth Publishing Company. Chicago. Weick. 1996. Ott. McGraw-Hill Companies. (1995).. Harper Collins College Publishers. “Corporate Culture: Avoiding the Elitist Trap”. R.265-271.& Black. v. and Coffey. J.Rondell Case Study References 14 Cook. & Quinn..9. p. Management and Organizational Behavior. “Organizational change and development”. P. p. R. “Rondell Data Corporation” Rummler. J. Hunsaker. p.

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