Case Study of an enterprise
In 1976, two entrepreneurs, Edward Keogh and Ernie Mayne began making low-cost furniture in a small factory in Brisbane, Australia. In subsequent years it grew into a nation-wide retail chain (over 80 stores) that sells its own low-cost/self-assemble products (desks, beds, chairs etc). However, in the past 3 years growth has slowed and even though EKEM is one of the largest manufacturers of budget furniture in Australia it has continually failed to produce innovative new products. There are currently three plants operating in Australia with the head office in Brisbane. The Brisbane plant is representative of the Sydney and Melbourne operations with each employing around 400 people.
Key Things To Note;
Structure of the company. Very likely to be tall structure since it started from entrepreneurship. Entrepreneurship likes to have control, which is evidence by the lack of innovation- it fail to produce innovative new products. Everything must be decided and authorized by the two entrepreneurs.
Three plants operating with head office in Brisbane is another indication of centralized control operation. Span of control is too wide as each plant is employing 400 people. Operations is likely to be bureaucratic in style with lots of red tape, thus stiffing the innovation and response of their operations.
The Board of Directors of the company is currently considering either closing down or moving operations offshore where labour is significantly cheaper. However, the Board would prefer to maintain operations in Australia and are prepared to invest another 12 -18 months before going off-shore and downsizing the Australian workforce. You are employed/contracted by the Board to develop a strategy that would allow them to improve operations and keep the plant open.
Key Things To Note
Their operation expenses must be high because of the wide span of control for each plant. They should do an analysis of their expenses and find out which factors contribute to the most expenses or highest expenses. Looking for off shore cheaper labour is one options but with the culture issues and expatriate relocations, the expenses is not small either. Besides you may have to deal with the tradeoffs such as giving shares to the local government of the country you are going into.
Furniture is a labour intensive industry. Down sizing may not be a good options as you may have to invest in heavy capital machinery to replace the human labour.
On arrival you find the factory itself is in very good condition and while some equipment is outdated for the most part these employees enjoy very good conditions. The current management explains that they have an employee bonus scheme based on group-level performance goals (paid weekly). Although they explain that they take it away (or reduce it) if an employee misbehaves. On the whole the performance management system is unimpressive.
Key points
Look at the motivation scheme and suggest alternative motivational incentive scheme for group. Punishing the whole team because of one employee mistakes may be demotivating in the long run.
The management style of this organisation would best be described as very autocratic. Decisions are highly centralised and employees have very little discretion over their work procedures and processes.
Key Points
Autocratic style has many disadvantages. Name them here and explain why they stifled the innovation part of the company.
The environment is Tayloristic. The management explains this is to ensure reliable product quality and allow them to employ cheaper staff with relatively low-level skills. Consequently, high levels of control are imposed on staff and employees are required to clock in and out of work and are punished (by deduction in bonus) when they are late. Work times are strictly monitored and at the lower levels of employment there is almost no commitment to the organisation and it appears that in general most employees are unsatisfied with their jobs. There are problems of absenteeism, turnover, low productivity, poor quality, and injuries and there have been incidents of employees defacing company equipment. There is constant tension and very little trust between management and line workers.
Key Points
Explain the disadvantages of Taylor principles. Taylorism is a bit outdated in today’s high tech environment. It is good for mass production and where production can be standardized. But furniture industry are now changing to customized needs and preferences and there cannot be standardization in this industry any more if they want to compete globally.
They have to look into the job satisfaction factors. This is again the area of motivation and how to keep the workers committed to the work and company.
You also notice that around the factory people are generally tense and cold, there is a strong sense of resentment and you feel the employees as well as other managers are extremely wary of you.
Key points
There is no team work here at all. Change is not welcome here and the management has not introduce much training courses, otherwise, they would not be like this.
You have also found the structure of the organisation difficult to follow; the organisational chart did not bear much relationship to what happened in the company. There are tight spans of control and 4 levels of management between the CEO and the production workers. Consequently, it was difficult to determine who actually had power. You report directly to the CEO of the plant, however other members of the senior management team also had the expectation you should answer to them. Further, you were finding they expected you to take on responsibilities that were not listed in the job description. When you raised the matter with them, they just laughed it off by saying that was just they way things were done in this part of the company.
Key Points
Structure of the company need to be change or revamped. The support of the top management is important here, without their support, this change cannot occur
You should advocate for a flatter structure with more accountability from each manager. Empowerment must be practiced..
It is not long before you become aware of the dysfunctional politics in the organisation. You are responsible for instigating change in the organisation, but staff members are not directly accountable to you so you were having difficulty gaining their support. Further, as a newcomer, you lack the knowledge and relationship base to integrate yourself into this system that seemed to operate through a great deal of informal reporting.
Key points
No proper induction for new employee. HRM need to be improved.
Need new direction, a vision and mission direction must be implemented throughout the organization. The LMX theory of leadership comes into play. You have to identify the supporters of your ‘in’ group and the key leaders of your oppositions. You need to use the participative style of leadership to get the support of your ‘out’ group in order to make the change a success.
You are required to write a “preliminary” report/memorandum to present to the company’s board of directors and CEO. Your report should outline recommendations that include a specific strategy to manage the necessary change to improve this organisation. The strategy should have a timeline that will show results within 12 months. In “real-time” you have about 3 days to complete the assignment.
