ORGANIZATIONAL DESIGN & DEVELOPMENT

PROJECT ASSIGNMENT

ORGANIZATIONAL DESIGN ANALYSIS
ON
ERNST & YOUNG

Submitted To:

Submitted By: Group 2

Prof. Richa Awasthy

Aastha Aggarwal (15PGDMHR02)
Abhyuday Gupta (15PGDMHR04)
Dishari Banerjee (15PGDMHR14)
Mansi Jain (15PGDMHR26)
Utkarsh Gupta (15PGDMHR46)

EXECUTIVE SUMMARY
This report provides an analysis of the organizational design of Ernst and Young. It discusses
the vision, mission and history of the organization and explains about its services. The report
also shed slight on the growth and development through the ages. It also talk about the
internal physical and structural design of the organization and the challenges encountered in
these interventions. It goes ahead to analyse the structure of organization, differentiating
between mechanistic and organic and discussing the contextual alignment with culture, size,
technology, mission, positioning and strategy in the face of upcoming challenges. The
method employed in this analysis are interviews and online research. The report concludes
with a recommendation for synchronization and integration of divisions, re-orientation of
employees and redefining reporting structure.

2

NO.INDEX S. PARTICULARS PAGE NO. 1 Executive Summary 2 2 Acknowledgement 4 3 About The Organisation 5 4 Organisation Structure 7 5 Organisation Model 12 6 Contextual Dimensions 13 7 Structural Dimensions 14 8 Growth Path 17 9 Internal Ambience and Office Space 18 10 Vision 2020 18 11 Organisation Politics 20 12 Challenges and Recommendations 20 13 Conclusion 21 14 References 22 15 Bibliography 23 3 .

New Delhi for providing us with such a platform to learn and gain an understanding of the corporate world. Dr. Mr Nipun Vinayak and Mr Anurag Mallik from the EY India Advisory Team.ACKNOWLEDGEMENT Working on the Project on analysing the Internal Organization Structure of EY India was a source of immense learning for me and my colleagues. Lastly we would like to acknowledge with deep sense of gratitude the encouragement and inspiration from our institute. We would like to express our sincere gratitude to Ms Sathya S. International Management Institute. 4 . Richa Awasthy for her constant support and valuable guidance throughout the course of the project. for taking time out from their busy schedule and providing us valuable insights into their organization. We would also like to thank our professor.

creating the fourth largest accountancy firm in the world. It is one of the “Big Four” firms of the world. It has four main service lines according to share of revenue:  Assurance Services (41%) – This comprises one of the most important services that EY specialises in. The Company has a huge global presence with more than 200. the original partnership was founded in England. and Ernst with Whinney Smith & Whinney. Financial Audit. i. the European offices of Arthur Young merged with several large local European firms. this led to the formation of Anglo-American Ernst & Whinney. Alwin C. Arthur Young. In the year 1903. It also includes Financial Accounting Advisory Services. In 1849. He was made a partner in 1859 and with his sons in the business it was renamed Whinney Smith & Whinney in 1894. In the year 1979. EY is a multinational organization that has its headquarters in London. Finally. History EY has a long history of mergers. The organizational structure of Ernst and Young can be described as a network of member firms.ABOUT THE ORGANIZATION Ernst Young.000 employees in around 150 countries. in 1989. the number four firm Ernst & Whinney merged with the then number five.e. Ernst & Ernst. on a global basis to create Ernst & Young. it is at the third position in terms of aggregated revenue after PowerwaterhouseCoopers and Deloitte. Arthur Young established Arthur Young & Co in 1906. It was called Harding & Pullein. As of 2014. Fraud Investigation & Dispute Services. Frederick Whinney joined the firm. These firms have their individual legal identity in different countries. In Chicago. Ernst and his brother Theodore set up the firm. As early as 1924. 5 . Services Ernst and Young is major organization in the tertiary sector. Young with Broads Paterson & Co. In the same year. and Climate Change & Sustainability Services. Also in 1979. these American firms allied with prominent British firms. which became member firms of Arthur Young International.

Indirect Tax. FMCD and Pharmaceutical Industry) 2) BFSI – Banking and Financial Institutions 3) TMT – Telecom. manufacturing. FMCG. Tax Accounting & Risk Advisory Services. This knowledge base has been built by collecting diverse experiences of the professionals and closely monitoring the latest trends and regulations in various industries. International Tax Services. i.000 professionals around the world is described as the main source of strength for EY and it is expected to grow every day.This includes Transfer pricing. IT Risk and Assurance. The major factor that has led to its huge growth is knowledge. Tax Services (26%) . Media and Technology( Includes Education and IT) 4) GPSC – Government and Public Sector Support Function 1) PES – Internal Project Management 2) HR 3) Finance 4) Admin & Accounts 5) IT 6) Knowledge Team Growth and Development During the 1980s and 1990s. Human Capital. The organization believes that it is their most important asset and the major reason for an expanding customer base. Customs. i. The collective intelligence of 190. Infrastructure and Consumer (Includes auto. 1) IIC – Industry. Transaction Tax  Advisory Services (24%) – This can be further divided into four parts. investing and raising capital.e. optimizing. power. Business Tax Compliance. EY made significant progress towards investing in consultancy services.e. The service lines are present across the following verticals namely. Actuarial. Risk. and Performance Improvement. 6 .  Transaction Advisory Services (9%) .This deals with the capital motives of the member companies. It results into a service that is driven by fresh. preserving. actionable insights and the power of a truly connected organization.

ORGANIZATION STRUCTURE Organizational structure is a kind of framework utilized as a part of businesses. and appropriate data and information rapidly. EY is the most globally managed. 7 . by executing decentralized decision making. Organizations utilizing Organic structures need to convey successfully and rapidly by spreading data. It additionally controls and facilitates how data streams between various offices and levels of administration in an organization. Two imperative structures incorporate Mechanistic and Organic structures. and keep up solid reliability for administration. This generates consistency in its services. Organic structures are utilized as a part of organizations confronting unstable situations and must be receptive to communication and change. Broadly. The aim of this structure is to effectively cater for an increasingly global clientele. They can handle. utilize a concentrated methodology of power. power. which is led by an Area Managing Partner who is part of the Global Executive board. break down. India and Africa  Americas  Asia-Pacific  Japan Each area has an identical business structure and a management team. This guarantees they stay focused against different organizations. This will enable workers prompting more noteworthy innovativeness and better critical thinking. It has a decentralized structure which is different from other organizations in the same domain. Organizations that utilization a Mechanistic sort of structure for the most part don't have to change or adjust their structure. all the countries in which it has a presence are divided into four zones. This is done by departments and different functional areas being closely integrated with one another.Out of the all the Big Four firms. and responsibilities to its employees and offices. who have multinational interests. employees of lower positioning will be able to settle on imperative decisions. Additionally. Middle East. The four zones are:  EMEIA – Europe. Mechanistic structures are primarily for organizations that work in a steady domain. Its aim is to locate the best approach to delegate roles. It sets stringent global standards and all the members firms are required to adhere to it.

Global Managing Partner Business Enablement Global Vice Chair Corporate Development Chairman of the Global Emerging Markets Committee Global Vice Chair Finance Mark Weinberger CEO Global Vice Chair Tax Global Vice Chair Talent Global Vice Chair Markets and Chair of Global Accounts Committee Global Vice Chair Public Policy Global Vice Chair Industry Global Managing Partner Client Service 8 .

Global Assurance Innovation Leader Global Automotive and Transportation Leader Global Banking and Capital Market Leader Global Consumer Products and Retail Leader Global Government and Public Leader Global Vice Chair Industry Global Health Sector Leader Global Insurance Leader Global Life Sciences Leader Global Mining and Metal Leader Global Oil Gas Leader Global Power and Utilities Leader Global Real estate and Hospitality Leader Global Media and Entertainment Leader Global Technology Leader Global Telecommunications Leader 9 .

every one of the subordinates perform activities as indicated by best of their capacity. Asia Pacific Area Managing Partner.Area Managing Partner. activities are isolated into various departments on the basis of basic nature. There is system of chain of command from top level to subordinate levels. Works are separated among the subordinates on the basis of their aptitudes and productivity. In this manner. Subordinates are in charge of their immediate bosses. EMEAI Area Managing Partner. Americas Global Managing Partner Client Service Global Assurance Leader Area Managing Partner. The utilization of specialization aides for legitimate usage of assets and augmentation of profitability. Japan Global Vice Chair of Transaction Advisory Global Advisory Leader Advantages and Benefit of Mechanistic Organization  Benefit Of Specialization In mechanistic organization. 10 .  Proper Discipline In this organization structure top level administration has centralized force.

11 . He can neither exchange job to others nor keep away from it. It minimizes supervision cost as every one of the subordinates perform activities as per best their abilities. there are particular guidelines.  Fixation Of Responsibility In this organizational structure. in this aggressive business sector environment. Top level administration gives direction to centre level supervisors. work is divided among the employees on the basis of their specialization. Furthermore. regulation. This network is taken into consideration while communicating information. In this manner. centre level managers to lower level directors and again bring down level administrators to working level employees. It implies right job is doled out to the correct individual. the concerned representative needs to perform given job himself. In this manner.  Effective Management It is a bureaucratic type of organization structure. Consequently. fast decision and its execution get to be possible. fast decision and its usage is key for business achievement. arrangements and working framework.  Quick Decision And Implementation In this organization just top level administration includes in decision making process. In this organization. It doesn't counsel with subordinates in decision making process. every individual has been given particular responsibility on the basis of capacity. The top level administration has sole power in decision making process. It builds up the feeling of self-responsibility among the employees. Minimize Supervision Cost In mechanistic organization. There is arrangement of hierarchy of leadership from top level to subordinate levels. manager can deal with the organization in successful way.  Network Position There is the procurement of system of position in administration chain of command. It helps for timely flow of information.

Mechanistic Individual Organic specialization: Joint Employees work separately Employees and specialize in one task Simple integrating Specialization: work together and coordinate tasks mechanisms: Complex Hierarchy of authority well-defined task integrating forces and mechanisms: teams are primary integrating mechanisms Centralization: Decentralization: Decision-making kept as high as possible. Authority to control tasks is delegated. Most communication is vertical. Typically each teams. diverse groups and the environment. Most communication lateral Standardization: Mutual Adjustment: Extensive use made of rules & Standard Face-to-face contact for coordination. 12 . People work in different capacities person corresponds to one task simultaneously and over time status based on perceived RECENT CHANGES The recent change in 2015 September was Global Mobility Solution Division under the Tax team and the People and Organization Team under Advisory were combined into a synergy as “People Advisory Services”. a General Diagnostic Model for Organizational Behaviour talks about the organisation as an open social system which interacts with individuals. Operating Procedures Work process tends to be unpredictable Much written communication Much verbal communication Informal status in org based on size of Informal empire brilliance Organization is a network of positions. Organization is network of persons or corresponding to tasks. ORGANIZATION MODEL Nadler and Tushman.

The four zones are: 13 . culture. First name culture is propagated. it is a little difficult to maintain work-life balance. There are regular town hall meetings at the service level or sub-service level. The work output is given the most importance. The level of organizational politics is very minimal. The organization strives for a flat structure. Also the work pressure is intense. people and technology  Group – Group dynamics.  Environment EY does not support a hierarchal design. Group performance  Individual – Employee satisfaction and performance Design effective organisation intervention CONTEXTUAL DIMENSIONS  Culture Ernst and Young harbour very efficient working relationships. The employees are very friendly and interactive. structure. According to one of the employees of EY. It has a decentralized structure which is different from other organizations in the same domain. Closed room culture is discouraged. EY has an open systems approach.It diagnoses the organisation on the basis of the:  Organisation – Strategy. This ensures better communication amongst teams. The work place consists of open cubicles.

 Size The organization operates as a network of member firms which are separate legal entities in individual countries. to be the most-favoured employer. Partners are in their mid-40. consulting and advisory services to companies. however the managers are approachable.allows people to develop their individual abilities and knowledge. It provides assurance (including financial audit). This has more to do with the age of the working group. 2) Specialization . The hierarchy is respected and followed.Relatively Flat Structure with fewer hierarchical levels and wide span of control. Individuals address each other by 1st name.000 employees in over 700 offices around 150 countries in the world. Number of employees reporting to a supervisor: Average 3-4 4) Professionalism – The culture in the organization is informal. The rules and regulations in process are well defined and clearly communicated to each one to follow. tax. EMEIA – Europe. The dress code followed is strictly formal. Goals are set in the beginning of Appraisal year after discussion with the individuals. and to have the best relationships with all their stakeholders. which are ultimate source of an organization’s core competences 3) Span of Management . It has 212. 14 . to enjoy market-leading growth with competitive earnings. STRUCTURAL DIMENSIONS 1) Formalization – The company adopts high degree of formalization with well defined roles for individuals. Middle East. to have the number one or number two market share in chosen services and geographic markets. India and Africa  Americas  Asia-Pacific  Japan  Goal and Strategy To be a US$50 billion distinctive professional services organization.

It establishes the division of labor. However in the scope of a project innovative ideas are encouraged and innovation rewarded. Managers encourage and share insights as and when possible to help knowledge transfer among the teams. 10) Inter business interaction at the Consultant level is relatively low. Complex organization in customer focussed service line Industry 7) Centralization Authority – Require Approvals and in place because of the criticality of the data and the nature of advisory services requires a centralized structure. STAR MODEL The company has implemented and adopted the Star Model for its organization design 1) Structure –The Company follows a hybrid structure – Vertical and Horizontal – Vertical for the Business Functions. This ensures that specialists are available to deal with customers to enhance customer value 2) Strategy – The company adopts strategy to remain viable and valuable to its customers and its stakeholders. The individuals discuss market updates about the recent happenings. more specialized and productive and increase the organization’s ability to create value 6) High Degree of Differentiation – Specialist Consultants in their area of work.5) Horizontal Differentiation – There are groups of organizational tasks divided into roles and roles into subunits I.e. 9) Standardization – Processes are in place and are required to be strictly followed by individuals. 1. Industry a) Analysing Industry Domains – The business is divided across specialized verticals and sectors b) Analysing Industry Trends – In depth knowledge and understanding of the business of the clients and the industry as a whole 15 . 8) New ideas are however encouraged and support provided by the management in execution. i. Two way communication is encouraged and widely followed. functions and divisions. Horizontal for Support Function.e. the interaction s happen usually in the partner level.

Organization a) Managerial Cognition – The Company looks at managers who can deliver the core values and provide customised solution to its clients b) Organizational Culture – The Company has a high performing culture and the culture is c) Organization Structure – Combination of a vertical and horizontal structure to enable and facilitate smooth functioning and better data dissemination d) Brand Positioning – Capitalize on the brand strength and the knowledge of consultants and specialists to create a niche 5.2.The Company aims to create a sustainable reward system to encourage a high performing culture. This enables a smooth knowledge flow and proper information dissemination. 16 . but the process isn’t formalized. Competitors a) Potential Competitors b) Analysing Competitors Organizational Structure. Culture and Strategic Intent – Keep updated with the changes across the big 4 Consulting Firms 4. Process – The organization has strict norms in place regarding the working and structured processes are implemented in every working area. There is a mid-year review and then yearly appraisal. Customers a) Adopting to Changing Customer Needs b) Keeping up the Changing Customer Groups and Target Segments 3. In some cases feedback of peers. The performance management and appraisal is Bell curve 3 rating – 15% 5 rating – 40% The variable salary component is around 20-30% The rating system followed is self-rating and then manager’s rating for the appraisal. Reward . other teams and clients are also considered. 6.

5 weeks and 5 months The flexi work is available but not very advanced takers for it. Manager Executive Director Sr. Consultant Associate Consultant Partner – Revenue Sharing Model Executive Director – Head – Functional.7. The process includes:  2 day orientation and 2 day induction  Post 1 month: 3 day residential – technical training  Buddy Program – where a mentor is assigned from the same department  555 Feedback System – Feedback after 5 days. Ensures better communication amongst teams GROWTH PATH Partner Director Manager Consultant Analyst Sr. This aims towards aligning the new hires to get acquainted to EY’s way of working and their core values. the company focusses on developing and nurturing the specialists and the subject matter experts. The Benefits and facilities are provided to attract the best of the talent and retain them. not revenue sharing) 17 . People/Human Resource – Being a consulting organization. There are regular town hall meetings at the service level or sub-service level. working in the capacity of Solution Expert (Salary and Pay band same. As a culture individuals prefer working from office rather from home. As a part of induction process the individuals are made to go through a rigorous onboarding process spread across the duration of 6 months of probation period.

This is consequently followed by major shifts in consumer markets. Only Partners have cabins and rest all sit in rows. Up to Manager Level. VISION 2020 Due to fundamental changes driven by globalization and technology. tax policy and workforce diversity. Mark Weinberger. consulting business is profoundly different in today’s era. Technology has made geographies redundant. They are required to visit client offices regularly and when not required they have temporary seats from where they work. Looking at EY’s internal decor. Increased globalization has led to new markets for goods and services and thereby. As EY's new Chairman and CEO.e. Even senior managers and assistant managers are required to work in the same area as other employees. The work place consists of open cubicles. There is a concept of “hot desking” i. Closed room culture is discouraged. it can be said that it has an open systems approach. increasing pressure on emerging market companies to compete on innovation as well as price. they do not have any permanent seats.INTERNAL AMBIENCE AND OFFICE SPACE The organization has a fluid and transient work culture. the individuals are not assigned permanent seats. assumed his role in July 2013. he concurrently formed bold vision and strategy for the firm to achieve significant growth 18 . saving time and freeing up resources.

Empower Local By Pressing Our Global Advantage And Empowering Local Teams 19 . this strategy has been executed across the firm's lines of business and business units alike. and to have the best relationships with all their stakeholders. to be the most-favoured employer. Ernst & Young aims to be a US$50 billion distinctive professional services organization Ernst and Young has created an ambition to be distinctive.globally by 2020 and offering its stakeholders more benefits. to have the number one or number two market share in chosen services and geographic markets. to enjoy market-leading growth with competitive earnings. Developing And Inspiring The Best People And Committing To A Culture Of Worldclass Teaming Strengthen Global.With the stated goal of being the pre-eminent professional services firm in the world. Strategy Built on three pillars: Focus On Winning In The Market By Delivering Exceptional Client Service And Maximizing Opportunities In Markets And Services Create The Highest Performing Teams By Attracting. to be the best brand. Ambition By 2020. and its objective is to make EY the leading global professional services organization by 2020. This plan has been termed as Vision 2020.

If one is good at their job then he/she need not be bothered about politics. Presently they are following a matrix structure post the synergy. According to one of the employees of EY. An employee’s performance is all that matters. The work output is given the most importance. worldwide. CHALLENGES AND RECOMMENDATION The recent change in 2015 September was Global Mobility Solution Division under which the Tax team and People and Organization Team were combined into a synergy as “People Advisory Services”. EY’s positioning is a reflection of its difference from the competitors in the minds of their stakeholders. But what sets it apart from others is that the level of organizational politics is very minimal. The advice that they would like to give to the budding managers is that they are expected to be interactive with other employees. employees of EY will also become true global professionals with a global mind-set and have the opportunity to work with team across borders and service lines. Recruits who join EY will be a part of high-performing teams that deliver exceptional client service. Through Vision 2020 as EY grows. it is a little difficult to maintain work-life balance. At EY. However the MIS and the reports have to be shared with the Leader of both the Advisory and the Tax Team.Positioning The company believes in developing highest performing teams. ORGANIZATION POLITICS All organizations have work related politics and EY is no exception. the careers of its employees will also grow. So its positioning is known for having the highest-performing teams that deliver exceptional client service worldwide. However the working and the structuring of the teams were kept separate 20 . teams deliver exceptional client service. delivering exceptional client service. As the organization strengthens its global structure. Also the work pressure is intense.

form a powerful coalition. create a vision for change. Proper division of roles for the individuals Re-orientation of the employees of different teams Redefining of Reporting Structure and channels of communication CONCLUSION Thus Organisational Development is an on-going process which changes with the change in the demand and the requirements of the external and internal factors.  There are restrictions on the knowledge sharing  Approval Process are separate  Escalation Matrix is different  Communication channels are not well-defined Our Suggestion is to create a better consolidated structure for the People Advisory Services. communicate the vision. Knowledge Database is separate. According to the Kotler’s eight stage process for managing organisational change organisation has to create a urgency. create short-term wins. Thus a great organisation is one which realise this importance and know what is happening and make things happen accordingly 21 . The department needs to be properly synchronized and integrated as a separate division. As organisation and economy become more global and more complex the requirement of organisational development interventions further increases and Ernst and Young on the same lines are incorporating such changes in its organisation also like they moved to matrix structure post their synergy. build on the change and anchor the changes in corporate culture thus Ernst and young has been successful to a certain limit in implementing this. remove obstacles.

Mr Anurag Mallik 22 . Mr Nipun Vinayak 3. Ms Sathya S 2.REFERENCES 1.

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