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Organization Behaviour Case Study
Organization Behaviour Case Study
Table of Contents............................................................................................................................ 1
Background..................................................................................................................................... 2
Organization structure ................................................................................................................2
Financial figures........................................................................................................................... 3
Situation Assessment......................................................................................................................3
XYZ Assessment ............................................................................................................................. 4
Group Development perspective ................................................................................................4
Growth Phases Framework ..........................................................................................................5
SWAT Analysis..............................................................................................................................6
What to do next?............................................................................................................................. 8
Self mindset ................................................................................................................................8
Organization mindset................................................................................................................... 8
Plan and Approach.......................................................................................................................8
Strategy Level ..........................................................................................................................8
Dynamic stability as a change approach..................................................................................9
Communication.........................................................................................................................9
Organization Structure Level ................................................................................................. 10
Rational Behind the structure ................................................................................................11
Organization Structure description for Key positions..............................................................12
Systems .................................................................................................................................13
Detailed analysis..................................................................................................................... 14
Human Capital .......................................................................................................................15
Conclusion .................................................................................................................................... 16
Background
Company XYZ is a family owned IT system integrator that was founded in 1978 with one branch
and head office in Kuwait. XYZ owners run real estate, automotive and other business lines. XYZ
represent 5% of owners portfolio.
With headcount of one hundred employees XYZ focused on sales and support of hardware
products including high end servers, storage solutions and end user equipment like laptops,
personal computers and accessories. In addition to that XYZ established a business unit to sell
engineering design products with focus on AUTODESK products. On opportunity basis, XYZ
extended its offerings to include professional services and software implementation projects.
XYZ sustained its revenue results with fluctuated profit margins during the last years.
Organization structure
General Manager
Assistant General
Manager
Sales and
Operations Manager
Customer support
Manager
Financial and
administration
manager
Sales operations
Assistants
Engineering and
Autodesk Sales
Department
PC Sales
Department
Enterprise Sales
Department
Project Basis
Employees
Project
Management Team
Logistics and
Inventory
Department
XYZ main product lines were represented in the organization structure as a separate sales
department for each product line, with sales assistance to help in preparing sales quotations,
tender documents and coordinate with accounting department processing of required bank
guarantees and performance bonds.
In addition to different sales teams, logistics, project management as well as project-basis
employees are reporting to Sales and Operations Manager who is reporting to XYZ general
manager.
Customer support and financial and administration functions are also directly reporting to the
general manager.
2
Financial figures
Diagram Below illustrates XYZ financial results for the last years
$7,000,000
8%
$6,000,000
7%
6%
$5,000,000
5%
$4,000,000
4%
$3,000,000
Revenue
Profitability
3%
$2,000,000
2%
$1,000,000
1%
$0
0%
FY02
FY03
FY04
FY05
FY06
FY07
Although XYZ managed to sustain an average revenue result of $5M, profit margins have been
fluctuation during last five years. Entertained profit margins still below 10% and were not
encouraging for additional investment.
Situation Assessment
XYZ general manager who is reporting to the board of directors is resigning due to sever health
problems. I have been appointed to be an interim replacement for three months minimum to run
the firm until the board decided on a new replacement.
Multiple factors are affecting my decision for next course of actions. These factors include:
I regret the health problems that happened to our CEO; however I have to seize the
opportunity to show XYZ board that I am capable of running the firm with a clear strategy
towards more successful future.
The situation is challenging as the board declared their intention to search for another
CEO and the assignment is only temporary for three months. This situation will make it
even harder to introduce major changes in the organization.
Some of my colleagues and peers might not be so happy of this situation, and I should not
expect full cooperation from all members.
XYZ previous CEO managed the company for the last seven years and he stayed with the
company for twelve years climbing different positions in the company, so that he got
enough credit from the board as well as from XYZ staff. This in turn will make it harder to
change the style of management he deployed all these years.
It might be a good opportunity to hear a different point of view of running the business. In
addition to that if Myname managed to drive the business during this transition period,
then no need to introduce new CEO who may and may not achieve our strategic goals.
In addition to that XYZ board will be willing to encourage loyalty and belongings by
promoting XYZ employees to higher management levels.
Given that I had a peer relationship with some department managers and manager
relationship with others, I do expect that some of them will cooperate while others might
not be encouraged to entertain that approach.
For other staff members, introducing me to this position might be in their favor in their
perception.
XYZ Assessment
Group Development perspective
a. Given the fair old age of XYZ (around 30 years), the organization as a group have
went through several stages from initiation, into exploration and stabilization. XYZ
operating financial results encourages a change. Since this change was enforced by
the health conditions of the CEO, a Re-assessment stage is recommended.1
b. Reassessment stage of XYZ as a group has the following characteristics as
illustrated in Table 1.
Table 1
Reassessment
Sta
ge
Most observable
characteristics
- No assessment is
enforced unless
compelling reason
- When reason happens ,
some of them tend to
be stubborn
- Some will feel betrayed
- Some will feel more
enthusiasm to change
- Confusion or disbelief
might happen to some
others
- Others may be
depressed and
withdraw
Tasks
Problems
Evaluate the
necessity for
change.
Group must
decide if they
are going to
change the
purpose, the
ground rules
and the
authority
structure or not
Management
implications
Balance several
attitudes and
behaviors
Force might be the
best tool
Understand and
expect defense and
criticism
Considering the above listed characteristics, problems that will arise, a collaborative approach
might be a suitable approach to resolve the listed conflicts.
Seeking board support in some situations will be a must.
Stage 2
Stage 3
Stage 4
Stage 5
Organization Size
Crisis of ?
X
Y
Z
Crisis of
Leadership
Crisis of
Control
Crisis of
autonomy
Growth
through
Direction
Growth
through
Delegation
Crisis of
red tape
Growth
through
Coordination
Growth
through
Collaboration
Growth
through
Creativity
Young
Organization Age
Mature
Neil C. Churchill and Virginia L. Lewis in Five Stages of Small Business Growth defined Stage 2
as survival stage.
Survival stage characteristics that can be observed in XYZ case are:
-
The organization stayed in survival stage for the last five years.
To move from this stage into Stage 3 (Success Stage), some changes could be implemented
including:
-
Structural changes that allow multiple divisions act on their own behalf.
SWAT Analysis
On a high level, the following SWAT analysis can be observed.
Strengths
-
Skilled manpower
Logistics arm
Opportunities
Weaknesses
Threats
Market Growth
Competition
Government initiatives
Ability to invest
What to do next?
Parallel moves in different tracks should be planned and carried out. These parallel moves will
consider two mindsets and perceptions.
Self mindset
One of the important preparation steps required for newly appointed managers is letting go of
the past and embracing the imperative of the new situation to get a running start. This will
require a necessary change in perspective.
I recognize that I have been promoted because I might did well in my previous assignment,
however keep doing and thinking the same way I used to do will not grant success in the new
one.3
I also recognize that I am in a transition period and overriding goal in a transition is to build
momentum by creating virtuous cycles that build credibility and by avoiding getting caught in
vicious cycles that damage credibility.4
Organization mindset
For each individual who transitions, there also are many others- direct reports, bosses, and
peers- whose performance is negatively affected. In a survey of company presidents and CEOs,
done by Michael Watkins, their best estimate of the number of people whose performance was
significantly compromised by the arrival of a new midlevel manager, on average was 12 people.
In effect, all the people in the impact network of the transitioning manager are in transition
too.5
Strategy Level
In a very competitive market, XYZ experienced difficulties entertaining same profit margins on
hardware and software product sales. Since the market have dramatically changed during last
five years and now many players have been penetrating the market with very competitive prices
and slim margins, XYZ should move into different market segments, product and service
offerings.
Introducing different products or services will require several organization structure changes,
systems to follow up and control the expected change of operation mode as well as skills to run
this show.
The Strategy will focus on four main pillars:6
-
Customer focused strategy that accommodates doubling revenues from current business
lines within next three years and introduces new business line that can generate as much
revenue as todays revenues after three years.
Performance oriented culture by introducing new reward schema that encourage good
performers and accommodate for relating employees salaries to companys performance
and objectives.
Fast and flexible organization that encourage front liners to take immediate customer
satisfaction decisions.
Communication
Formal communication:
I will initiate a series of formal meetings with different stakeholders to discuss the strategy as
follows:
1- Short term and immediate meetings:
Board meeting to secure a common understanding for the long term objectives.
During these intensive meetings and business reviews I will open discussions for the following
topics:
What is the best organization structure to run the business now and in future?
To start from somewhere, I will be ready with some proposals to be discussed in these
meetings.
Once we framed a strategy I will call for a board meeting to review and approve team
findings.
Social and informal communication
Informal communication can turn into gossip and rumors hurting the company and can as well
used as a parallel communication channel to ease working environment, raise the moral and
declare strategies.
Recognizing the effect of informal communication, I will encourage social gatherings, speak-up
policy and I will create the events to collect feedbacks regarding the future.
10
CEO
Assist
ant
CEO
Sales
Manage
r
Enterpr
ise
Sales
Manager
Engineeri
ng
Solutio
ns
Sales
Manager
End User
Equipmen
t
Profess
ional
Service
s
Manage
r
Sales
operatio
n&
Executio
n
Sales
Operation
and
Execution
assistant
Project
Managem
ent
Presale
s
Logistic
s
Manage
r
Custom
er
Suppor
t
Invento
ry
Control
Financi
al
Manage
r
Procurem
ent
11
Separate sales functions from delivery and logistics tasks to maximize their customer
focus.
Separate sales function per product line (different customer base, different offering cycle,
and different competitive advantage)
Professional service department will be responsible for presales and pricing, project
management and execution, as well as after delivery customer support. This will create a
pool of technical competencies that can be used in presales support as well as in delivery
and customer support.
Check and balance is created between different department will create a sort of functional
conflict8 as follows:
Sales departments will focus into getting more business and customers based on
XYZ value proposition rather than price competition since pricing is professional
services responsibilities.
Other functions including business development and marketing were not introduced at this
stage in order to maintain the cost, however will be introduced in later stages.
Human resources function and treasury functions were omitted as it was a shared service
granted at the group level.
Major Responsibilities
Major KPIs
CEO
Net operating
profit
Sales Managers
Sales target of
core business
line.
Contracted Gross
Profit
Obsolete stock
value
Professional
Services
Operational
Revenue
Operational Gross
Profit
Number of
processed
quotations per
month
Logistics
Number of late
deliveries
Stock taking
variations
Discount levels
granted from
suppliers.
Systems
Planning, reporting and reward systems are important tools that should be elected and
implemented carefully.
For planning and follow up I would suggest introducing and improving the following reporting
instruments:
-
13
Revenue forecasts
In addition to the listed, I would discuss and introduce having a reward system that assure target
setting at quarter level and tie part of employees benefits or salaries to target achievement.
Although this system is as important as or even more important than other systems, the
introduction and implementation of this system will not be practical on the short term.
Detailed analysis
Other strategy meetings openers that will be used in meetings will be the Portfolio analysis of
existing products and services, as well as Fit vs. Attractiveness - new business9
Market
attractiven
ess
High
Protect
Position
Medium
Low
Build
Selectivel
y
Build
selectivel
y
Selectivel
y Manage
for
Earnings
Limited
expansio
n or
harvest
Protect
and
refocus
Manage
for
earnings
Divest
Strong
Medium
Weak
Market share,
share growth,
sustainable
profit, returns
on assets,
service
quality,
operations
efficiency
Business
Strength
14
Market
attractiven
ess
High
Develop
Capabilit
y
Diversify
Controlle
d
Exposure
Leverage
Opportun
ity
Leverage
Opportun
ity
Avoid
Hold
Hotwatch
Medium
Low
Strong
Medium
Expand
Weak
Synergize,
Management
Capabilities,
Financial
Strength,
Past
Experience,
Business Fit
Human Capital
Recognizing that all the above plans and initiatives will only come to reality by encouraged,
dedicated and skilled human capital, I will propose a program to collect current knowledge assets
and analyze the required gap to fulfill required business growth; accordingly a continuous
training and development plan will be developed to fill this gap.
This continuous development will not only address technical skills, but will also include
management skills for departments manager.
15
Conclusion
This is an opportunity and a challenge that may not happen too often in ones career so I will
make sure to seize the opportunity to maximize the return. I will invest more time planning and
learning details, communicating formally and informally with companys staff as well as
companys board.
I will capitalize on the enforced change due to former CEOs health conditions and initiate series
of small changes.
I will make sure that these changes will be well studied with all departments and stakeholders
and approved by the board. These changes will address Human capital skills and morale, current
and future business, systems, organization structure, and I will communicate clearly with peers,
subordinates and bosses about this vision.
References
16
The Five stages of small business growth by Neil C. Churchill and Virginia L. Lewis Harvard
Business Review
3
Critical Success Strategies for New Leaders at All Levels, by Michael Watkins ISBN 1591391105.
Critical Success Strategies for New Leaders at All Levels, by Michael Watkins ISBN 1591391105.
Critical Success Strategies for New Leaders at All Levels, by Michael Watkins ISBN 1591391105.
What Really works, the 4+2 formula for sustained business success by William Joyce and Nitin
Nohria.
7