Business Development Strategy for Salfordia Construction
Culture and People Gaurav Jhunjhunwala Student ID - @00373099 M Sc Project Management in Construction (2013 – 2014)
SALFORDIA CONSTRUCTION “Salfordia Construction will supersede our client's expectations on quality, budget and service; thus ensuring that Salfordia is always our client’s first choice for future projects”.
INDEX 1.0 Executive Summary ..……………………………………………………………………………………… 01 2.0 Introduction ..………………………………………………………………………………………………… 02 3.0 Sub Task 1 ……………………………………………………………………….….…………………………. 03 Critical, Strategic Analysis of Salfordia Organization and Culture
3.1 Analysis of Current Culture ………………………………………………………………………...…………...………..... 03 3.2 Analysis of Current Organization ……………………………………………………………………….…………….…… 04 3.3 SWOT Analysis of Culture and Organization ………….………………………………………….………………….. 07 3.4 Proposal for change; Culture and Organization …………………………………….…………………….…...….. 09
4.0 Sub Task 2……………………………………………………………………….….……….…………………. 13 Critical, Strategic Analysis of Salfordia Team Dynamics; Leadership and Organizational Learning
4.1 Analysis of Team Dynamics ……………………….....……………………...……………………………………………… 13 4.2 Analysis of Current Leadership ……………………………………………………………...……………...…………..… 15 4.3 Analysis of Current Organizational Learning ………………………..………….………………….………………… 16 4.4 SWOT Analysis of Team Dynamics; Leadership and Organizational Learning ……...……...……..… 17 4.5 Proposal for change; Team Dynamics; Leadership and Organizational Learning …....…...…...…. 19
5.0 Conclusion ….………………………………………………………………….….……………….…………. 23 Annual Targets
6.0 Sub Task 3……………………………………………………………………….….……………….…………. 24 Presentation of Proposals to the Board
7.0 References……………………………………………………………………….….…………………………. 34
Salfordia Construction 2013 1.0 Executive Summary Global recession is having an impact in the construction industry worldwide; so is it in UK and Salfordia Construction is one of the many companies that have had an impact in its business. The company has reported a loss of 80,000 £ and has appointed a Business Development Manager to prepare a business development strategy for the company so that it can increase its market share, be profitable and survive. Salfordia follows very traditional procedures and processes; the work carried out is in the same way as it was more than a decade ago. There is a need for the company to realize that the industry has become far more advanced and to become successful it needs to implement a few strategic changes which would help the company to be profitable. The following report analysis the company’s culture, organization, team dynamics, leadership and organizational learning. Salfordia is a very normative company and there is a need for it to be pragmatic. It mainly works on commercial and industrial projects where as the residential and infrastructure industry is on the rise even in the global recession. The company needs to reorganize itself and diversify in order to increase their market share and be successful. The report proposes Salfordia Construction to change its structure and introduce managers who are the communicators between the top management and the workers. This would help the board to provide a vision for the company and the middle managers would be responsible to implement them. The report suggests that the project teams are broken down to smaller teams to make them more efficient and responsible. The new teams formed would focus on other areas in the construction industry. The introduction of middle management would build a hierarchy which would motivate and make employees responsible. The employees would work hard in the teams for promotions and appraisals. Salfordia is very traditional in its approach; there is a need for it to transform into modern era by the means of organizational learning. It would help the company gain new heights and also guide Salfordia into the future. It helps in creating a vision. We stay in an environment that keeps changing; with the introduction of organization learning we become a part of the processing change.
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Salfordia Construction 2013 2.0 Introduction Business Environment in today’s world is on change and at a very rapid pace especially in the construction industry. It is important to know various factors such as culture and structure of the organization for it to function efficiently. The intent of this report is to analyse and critically examine Salfordia’s current performance and produce proposals on how Salfordia’s organization, culture, team dynamics and organizational learning could be improved. The following report is prepared by the Business Development Manager for Salfordia Construction. Salfordia is a medium-sized construction management / contracting organization established 38 years ago in the year 1975. It is based in Salford and works on construction projects in the North West Region for both public and private sector clients primarily on commercial and industrial facilities. Salfordia’s fortunes have been declining in the recent years and the company has reported a loss in the year 2013. The report is mainly categorised in two parts: First part of the report critically analysis the current culture and organization of Salfordia and proposes the changes it may have to undergo through. Second part of the report critically analysis the team dynamics, leadership and organizational learning of Salfordia and proposes ways to improve them. The conclusion puts forward a proposal for 5 years of Salfordia’s future business strategy with the annual targets.
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Salfordia Construction 2013 3.0 Sub Task 1 Critical, Strategic Analysis of Salfordia Organization and Culture 3.1 Analysis of Current Culture Organizations have personalities just like individuals. We call these personalities organization cultures (Robbins, 1990). Culture of an organisation can be defined as “collective programming of the mind which distinguishes one organization from another� (Hofstede, 1991 p.180). Organisation culture refers to a team who have the same objectives and they work together to achieve it. On the basis of the company history and performance the current culture could be analysed on the basis of 6 dimensions of organizational culture as seen in Table 1 (Hofstede, 1991). Process vs. result oriented Dimension 1 opposes a concern over how the things are done to a concern with how things are achieved. Salfordia is a process oriented company and has very established procedures and processes some going back 10 to 15 years. Employee vs. job oriented Dimension 2 opposes a concern for people to a concern for completion of task. Salfordia believes in surpassing client satisfaction and is therefore job oriented. The company believes in exceeding client's expectations on quality, budget and service. Parochial vs. professional Dimension 3 opposes a concern over identity taken from the organization by an employee to a concern for an employee being identified over the job they do. Salfordia was established 38 years ago, most of its employees have been a part of the company since a long time and identify themselves as a part of the company hence its more towards parochial. Open vs. closed system Dimension 4 opposes a concern for some people being easily accepted in the organization to a concern for some people who find it difficult to fit in the organization. Since most of the employees have been working since a very long time the company has developed a closed system and is resistant in welcoming new employees. Loose vs. tight control Dimension 5 opposes a concern over an employee attitude being casual to a concern with an attitude of employee being serious and punctual. Most of the company employees consider it as a second family as they have been working with the company since a long time and as a result the management has a loose control. Normative vs. pragmatic Dimension 6 opposes a concern over the company being ideologically driven to a concern being market driven. The company has strong ethics and has defined set of rules to complete a task. It is very rigid in terms of its process and procedures and can be said to be normative rather than pragmatic.
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Salfordia Construction 2013 Table 1 – 6 Dimensions of Organizational Culture of Salfordia
3.2 Analysis of Current Organization “Organization structure defines how task are to be allocated, who reports to whom, and the formal coordinating mechanisms and interaction patterns that will be followed� (Robbins, 1990). Mintzberg (1979) suggests that organizations can be differentiated in 3 basic dimensions (see Table 2). First: The key part of the organization which determines the success and failure of the organization. Second: Prime Coordinating Mechanism which defines the method which the organization uses to coordinate its activities. Third: Type of Decentralization which determines the extent of subordinates used in the decision making process. Mintzberg suggests that the extent to which an organization adopts and practices its strategy can be determined on the basis of its five structural configurations. Simple Structure The key part of the simple structure is its strategic apex. It uses direct supervision, and there is no technostructure, the support staff is small and workers perform overlapping tasks. The organization structure is flat and therefore lot of horizontal coordination required. Machine Bureaucracy Technostructure is a key part of Machine Bureaucracy. It uses standardization of work processes and has a high level of formalization and specialization. The structure of such organization is tall as many levels exist within the organization and horizontal coordination is little. Machine bureaucracy has a large technostructure and support staff.
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Salfordia Construction 2013 Professional Bureaucracy Operating Core is the key part of Professional bureaucracy. The organization is relatively formalized but decentralized to provide autonomy to professionals. Divisionalized Form The middle line forms the key part of divisionalized form. Decision making is decentralized and there is little coordination among the separate divisions. Adhocracy The support staffs form the key part of adhocracy. Coordination is mutually adjusted, and maintains selective patterns of decentralization. The structure tends to be low in formalization and decentralization.
Table 2 – Structural Configurations Proposed by Mintzberg
Salfordia follows a simple structure (see figure 3.2.1) type of configuration (Mintzberg, 1979).
Figure 3.2.1 – The Simple Structure Source: Mintzberg, 1979
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Salfordia Construction 2013 Reason - Salfordia is grouped in units on functional basis. The CEO is responsible for the coordination between units and the communication flows are informal. The CEO has a wide span of control and forms the strategic apex. There are no middle lines and all teams are under his direct supervision. The decisions which need to be taken for Salfordia regarding its operations and strategies are together centralized by the CEO. “Centralization has important advantage of ensuring that strategic response reflects full knowledge of operating core” (Mintzberg, 1979 p. 311). Organization structure of a company is important for it to work efficiently and effectively to achieve the targets. It allocates work responsibilities and draws patterns of management to control work. It establishes responsibility, authority, accountability and also defines the patterns of communication. Figure 3.2.2 illustrates the current structure of Salfordia as an organization. Board Of Directors
CEO
Industrial Division
Project
Contracts Manager
HR / Accounts and Finance
Project
Commercial Division
IT Division
Project
Project
Figure 3.2.2 – The Structure of Salfordia as an Organization
The above figure 3.2.2 shows the basic structure of Salfordia as an organization. There are six board of directors of which four are family members. The board of directors along with the CEO form the strategic apex of the company. The rest of the members form the operating core and are responsible to for production and execution of work. The company has two major team i.e. commercial and industrial teams to carry out its various projects in the North West part of UK. The organization is has a flat structure and is functional based. Each department is responsible for its function which is under the direct supervision of the CEO who is head of the company. Together they form the structure of Salfordia and are responsible for the company to function.
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Salfordia Construction 2013 3.3 SWOT Analysis of Culture and Organization SWOT analysis is a useful framework to analyze the strengths and weaknesses of an organization and also deals with the opportunities and threats an organization may face. It helps focus on strengths, minimize threats and take advantage of the opportunities available. Table 3 shows the SWOT analysis of Salfordia.
Table 3 – SWOT analysis for Salfordia Construction (1)
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Salfordia Construction 2013 Strengths of Salfordia Construction S1- Salfordia was established in 1975 and most of its employees have been working with the company since more than 10 years. They have great knowledge and expertise and are completely aware of the way Salfordia functions. S2- Salfordia primarily works on industrial and commercial projects in the North West part of UK. Since it has been working in the same region over a period of 38 years the company has good reputation in the market.
Weaknesses of Salfordia Construction W1- Salfordia primarily works on commercial and industrial projects. The construction industry is too diverse and Salfordia has no experience in other fields which is having an adverse effect on the company’s strategy. W2- Salfordia is a family run company and as a result it is affecting its business strategies as most of the decisions are taken within the family. It is following conventional processes and procedures and is resistant to change.
Opportunities for Salfordia Construction O1- The business of Construction has been on the rise in the UK. It contributes to nearly 8% of GDP of UK. As a result Salfordia has a lot of opportunities to expand into other parts of UK apart from concentrating in one area. O2- There may be decline in the construction industry but the housing sector has been on the constant rise and will contribute to more than 40% of the market in the future of the construction industry. Salfordia has an opportunity to diversify itself in other disciplines apart from industrial and commercial projects. The company needs to look at the potential market and needs to increase their market share.
Threats for Salfordia Construction T1- The construction industry in the UK is growing and as a result Salfordia may face stiff competition from other companies. If Salfordia decides to adopt a strategy to diversify it may need to compete with other companies in the same region who are working in other fields of construction. T2- Salfordia has reported a loss of 80000 pounds in the year 2013. There are risks involved in partnership as the company may have to go through various changes and Salfordia is a risk adverse company and is resistant to cultural and organization change. Keeping the recession in mind Salfordia may find it difficult in finding partners who are reliable.
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Salfordia Construction 2013 3.4 Proposal for change; Culture and Organization Salfordia as a company has been on the decline in the last few years. The company has reported a loss of 80,000£ (refer Table – 4). There is urgency and the external forces i.e. the market pressure is forcing the company to amend its strategy in order to sustain in the existing crisis. The construction industry in the UK has been on the decline since 2007 and that has added the burden on company’s current situation.
Table 4 – Salfordia Construction Annual Turnover Report
From the SWOT analysis various inferences can be drawn. Salfordia is a medium sized organization and needs to grow in order to increase its market share. There is a lot of scope in the construction industry which has not been explored by the company. It needs to diversify in other projects apart from Industrial and Commercial facilities. A diversifying strategy will help the company to propagate and also increase the overall market share. A set of Objectives, Actions and Targets need to be established for the company’s 5 year business strategy (see table 5).
Table 5 – Salfordia Objectives Actions Targets (1)
OBJECTIVES
ACTIONS
TARGETS
1. The main objective of Salfordia is to increase market share, be profitable and survive.
- In order to increase market share the company needs to diversify in other fields. - It has experience in commercial and industrial areas but there is a lot of scope in residential and infrastructure projects which the company needs to explore.
2. The structure of Salfordia needs to be changed for improving the work output.
- The proposed structural configuration will be machine bureaucracy. - The strategic apex will remain stable but hierarchy would develop which will be helpful for supervision. - The experience employees would be divided in new teams and additional teams would be formed for it to expand in residential and infrastructure.
- Salfordia needs to procure a few projects in the six months after the structure is reconfigured. - Salfordia will train its employees in the first year to familiarise them in the new fields the company will be exploring. - Salfordia needs to reconfigure its structure in the first year of the strategic implementation. - More time needs to be given to reconfigure as there would be new teams set up and they need to familiarise the patterns of working with each other.
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Salfordia Construction 2013 3. Motivate its employees for better work output and more efficiency.
- Decentralization of power keeps employees motivated. - Making hierarchy’s and leaders would make people more responsible.
- The decentralization of power will happen simultaneously along with the structural change which will take a period of about one year.
4. There is a need for cultural change as Salfordia has rigid processes and procedures since more than a decade.
- Training new and old employees about the latest technology. - Feedback from its long term employees to improve the functioning of the company. - Need for Support staff for the welfare of the employees. - Needs to be more professional and should be market driven.
- Setting up support staff to receive feedback in the first 3 months of the strategic proposal. - Organization will undergo cultural change in the first year on the proposal along with the structural change.
The main objective of the company is to increase market share, be profitable and survive. Salfordia primarily works on Industrial and Commercial projects. There is a need for it to diversify. One of the major factors in the growth of an organization is diversification in new domains (Robbins, 1990). This will be the first step towards change. The commercial sector has been on a decline by 30% in the last few years and is one of the major reasons for Salfordia’s dismissal turnovers. There has been continuous growth in the private residential sector and Salfordia should consider diversification in other areas too as infrastructure and public non-residential continue to grow even when the construction market is affected by the Global recession (HM Government, 2013). In order to diversify the company needs to grow in its existing areas of function i.e. North West part of UK. Diversification would lead to responses to the local demands. In order to diversify the company must adopt a new organizational structure. The proposed structural configuration will be machine bureaucracy as seen in figure 3.4.1 (Mintzberg, 1979).
Figure 3.2.1 – The Machine Bureaucracy Source: Mintzberg, 1979
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Salfordia Construction 2013 The proposed structure introduces the middle line, the support staff and the technostructure. Salfordia as a company has set of formal rules and regulations and operates on high routine tasks. The tasks are grouped into functional departments. The strategic apex has the main authority and decisions taken follow a chain of command. It has a sophisticated administrative structure with a clear division between the line and staff activities. The board of directors and CEO take decisions and implements them with the help of his managers. The managers are responsible for the functioning of the company and form the middle line of Salfordia (see figure 3.2.2).
Figure 3.2.2 – Proposed Structure for Salfordia Construction
The strength of machine bureaucracy lies in the manner it performs its activities efficiently (see figure 3.2.3). Putting together people with common goals results in better outcome and the people working together have an advantage of learning from their experienced peers. Salfordia needs to decentralize its powers in order to make its employees motivated and responsible. The general managers form the company’s middle line and help in making decisions and implementing them. The administration staffs help the company in getting feedback from its employees.
Figure 3.2.3 – Proposed Structural Configuration of Salfordia ource: Mintzberg, 1979
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Salfordia Construction 2013 “Cultures are founded and built over the years by the dominant groups in an organization. What suits them and the organization at one stage is not necessarily appropriate for ever – strong though that culture may be” (Handy, 1993 p.183). Change constantly takes place as economic, social and cultural pressures impacting on both building development and infrastructural needs. Society is never static; human civilization has an integral tendency towards change. Salfordia new organization structure will have an impact on its organization culture (figure 3.2.4). Since Salfordia is resistance to change various training programs need to be set up for the company employees. The training would be helpful as it would build an understanding of the need for change. It would help in communicate the changes in an effective way and would also be helpful to build confidence in an individual. Training would be helpful for individuals to cope with the new requirements and also provide help in areas of weakness (Hussey, 1995). The changes could be compared with the 6 dimensions of organizational culture (Hofstede, 1991) as it was earlier analysed in Table 1. Salfordia is very process oriented and needs to generate results. With the machine bureaucracy Salfordia will be more result oriented but driven by process. The new support staff would help the company in understanding its employee and in order to increase the work efficiency it would be employee oriented. The company would make use of its experienced employees and would want the new employees too to be recognized as part of the company and therefore continue to be parochial. Since the company will be going through an organizational change it needs to adapt a very open system and welcome new people. The company must have a tight control over its staff in order to achieve its objectives. The overall proposal results in making Salfordia have more of a pragmatic approach rather than normative.
Figure 3.2.3 – Proposed Cultural Change of Salfordia Source: Cultures and Organizations, Geert Hofstede
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Salfordia Construction 2013 4.0 Sub Task 2 Critical, Strategic Analysis of Salfordia Team Dynamics, Leadership and Organizational Learning The earlier section of the report studied the macro level i.e. the organization structure and culture of Salfordia. This section deals with the micro details i.e. the team working and leadership affects the company’s strategy.
4.1 Analysis of Current Team Dynamics of Salfordia “A team is a group of people who are interdependent with respect to information, resources and skills and who seek to combine their efforts to achieve a common goal” (Thompson, 2000 p.2). Teams are collectively responsible to achieve a common goal. They survive to achieve a shared objective. They are bound together and get stable over time as they start to understand each individual within the team. It is the team who is responsible for an individual task given to it and not any particular individual. Putting the best individuals together may not put together the best team as explained in the Apollo syndrome theory by Belbin, 2004. A team should comprise of a mix of individuals who can work together and give the best result. Salfordia Construction majorly works on commercial and industrial projects and is divided in major teams comprising a group of individuals. Salfordia Construction as team could be described as a work team as explained by Cameron and Green, 2012. They form a part of the management structure and it has a leader selected by the team who is responsible to deliver the aims and objectives of the company. The CEO and the board of directors form the top management structure and have all the teams under their direct supervision (as seen in figure 4.1.1).
Figure 4.1.1 – Organization hierarchy/pyramid of Salfordia Source: Gregson and Livesey, 1993
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Salfordia Construction 2013 Salfordia’s major teams comprise of a large number of individuals which affects the company’s functioning. Having large teams leads to more time in discussions and may rise to conflicts between dominant individuals. Having a large assembly does divide the work between individuals but it also requires lot of communication and understanding. In large teams there could be a lot of repetition of work if the team does not communicate effectively. It could be Figure 4.1.2 – Social Loafing Effect seen as per figure 4.1.2 that the average Source: Greenberg, J. 1996 work generated per person in a large group is much less when compare to the average work generated per person in small group. Having large groups results in minimizing the work pressure but also makes an individual lazy. “People in groups often do not work as hard as they do when alone. This is called social loafing” (Thompson, 2000 p.23). The change in Salfordia’s organization structure would impact on its team dynamics which proves beneficiary for the company. Role of each member of Salfordia could be described on the basis of Belbin’s nine team roles as seen in figure 4.1.3. Belbin’s team roles is designed to define management teams and recognises the various roles required to make a strong team. One gains insight about the working team and could be helpful for identifying the strengths and weakness of a team.
Figure 4.1.3 – The nine team Roles Source: Belbin, 1993
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Salfordia Construction 2013 Salfordia being a flat organization has no hierarchy and most of the people perform multiple roles. Salfordia could be broadly categorised in two kinds of role which are formed due to the organization hierarchy. The first being the cerebral roles which comprises of the top management and the second being action oriented roles comprised by the workers / operating core. The board of directors form the monitor evaluator and the CEO performs his role as a plant as well as a specialist as all the work is carried out under his direct supervision. The workers in Salfordia perform multiple roles i.e. the shaper, implementer, completer/finisher to achieve the objectives and goals set by the top management. They workers work together as a team and are also good team workers. Salfordia needs a hierarchy which would add layers to the organization structure. It would be helpful for the company as new roles would emerge and would be helpful to reduce work pressure on individuals, resulting in better and efficient work output. The task of each member would be divided and many individuals need not perform multiple tasks.
4.2 Analysis of Current Leadership Skills of Salfordia Some people believe that leaders are born while some believe that people equipped with better knowledge and experiences deserve to be leader. However a leader must possess certain skills for one to function efficiently (see Figure 4.2.1). Leader must be capable of building and managing his/her team; should know the goals and objectives and must be able to achieve them and must be responsible in developing an individual within the team.
Developing the Individual
Building and Managing the Team
Achieving the Task
In case of Salfordia it follows a Style theory - autocratic (authoritarian) style as described by Handy, 1993. The power resides with the CEO of the company and he has the authority to make decisions. The CEO has total control over the company and the reward or punishment decision is vested in him. As a leader he leads all the teams from the front and has a vision for the company. He is responsible for all the decisions taken by the company and all the powers are vested with him. The team members see him as a role model and the one who is the soul of the company.
The CEO of Salfordia is responsible for the overall planning, initiating, controlling, supporting, informing Figure 4.2.1 – Task of a Leader and evaluating the performance of the company. He Source: Adair, 1989 seeks all information, defines the group tasks and takes all the decisions to implement the strategy of the company. The CEO briefs all the teams about the aims and plan of action of the company and sets the tasks and objectives for each team. He has the main power and controls the whole functioning of Salfordia. He is the only decision maker of the company. He evaluates each teams work and on the basis of their performance decides on the reward systems. For Salfordia the CEO is the only leader who has full authority and is responsible for the company’s success as well as failure.
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Salfordia Construction 2013 The power in Salfordia is centralized and controlled by the top management. There is a need for decentralization of power. The company needs to reward employees for their achievements and new leaders must emerge. The company must give them certain powers of decision making which would motivate them and making them more responsible. This would lead to emergence of new leaders with different perspective within the company and the company may get multiple visions/directions which may be beneficial for the company’s future.
4.3 Analysis of Current Organizational Learning of Salfordia “Organizational learning is a process by which an organization’s knowledge-and-value base changes, leading to improved problem-solving ability and capacity for action” (Ellis and Dick, 2000 p.209). Salfordia was established in the year 1975. Most of the company’s processes and procedures date back 10-15 years old. It can be assumed that the company is not undergoing any organizational learning. Salfordia needs to be more competitive as the construction industry is on the rise. In order to increase the competitiveness and make Salfordia market driven they need to establish organizational learning as a part of the organization. This would not only keep the company be technology driven but would also being in the competitive spirit within itself and the individuals. Salfordia is very traditional in its approach; there is a need for it to transform into modern era by the means of organizational learning. It would help the company gain new heights and also guide Salfordia into the future. It helps in creating a vision. “Change is inevitable; so is resistance to change” (Moorhead and Griffin, 2004 p.538). We stay in an environment that keeps changing; we are not resistant to change as things around us keep transforming. With the introduction of organization learning we become a part of the processing change.
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Salfordia Construction 2013 4.4 SWOT Analysis of Team Dynamics, Leadership and Organizational Learning SWOT analysis is a useful framework to analyze the strengths and weaknesses of an organization and also deals with the opportunities and threats an organization may face. It helps focus on strengths, minimize threats and take advantage of the opportunities available. Table 6 shows the SWOT analysis of Salfordia for its team dynamics, Leadership and Organizational Learning.
Table 6 – SWOT analysis for Salfordia Construction (2)
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Salfordia Construction 2013 Strengths of Salfordia Construction S1- Salfordia has a simple structure as all teams work under the direct supervision of the CEO. The CEO is the head of the company and has all teams working under him. He is responsible for all the decisions and decides all team tasks and supervises their work. S2- Salfordia being a construction company majorly works on industrial and commercial projects. The company is driven by these two teams and the teams working are large and have many individuals working on the same projects. The work is divided in all members and no individual member is responsible and stressed.
Weaknesses of Salfordia Construction W1- Salfordia has large number of employees in each team which is also its weakness. Many people working in the team are not working as much as other team members. As a result there is social loafing. W2- Salfordia is a family run company and most of the processes and procedures adopted by the company are very traditional. The working systems have not upgraded and the people working in the company continue to follow old tools and techniques.
Opportunities for Salfordia Construction O1- Salfordia Construction is resistance to change which is affecting the company’s strategies. There is a need to introduce organizational learning by the means of training for the benefits of the employees and the company in this fast transforming construction environment so that it easily adapts to change. O2- Salfordia is run by the CEO and all the teams are working under him. There is no hierarchy structure in the company as a result all employees form an operating core. There is need for change in structure and bring a hierarchy for new leaders to emerge within the team. This will motivate the employees and bring in better work output for the company as the employees will work hard to get appraisals and promotions.
Threats for Salfordia Construction T1- The CEO is responsible for all the work carried out by all teams in the company. As only one man runs the company and he is responsible for all teams there could be a few details which have been overlooked in some circumstances which may be essential at times. T2- Salfordia follows traditional processes and the company is looking for some strategic changes. Since there is no organizational learning in Salfordia there might be some resistance by the employees as well as the organization.
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Salfordia Construction 2013 4.5 Proposal for change; Team Dynamics, Leadership and Organizational Learning A set of Objectives, Actions and Targets need to be established for the company’s 5 year business strategy (see table 7).
Table 7 – Salfordia Objectives Actions Targets (2)
Improve Team Dynamics - At present many members at Salfordia perform multiple activities. A hierarchy would reduce the work load on the top management and make supervising easy. There will be a shift in power from centralization to a more decentralized way which would be beneficial in terms of motivation and responsibility. It would be reduce work pressure on individuals, resulting in better and efficient work output. Salfordia’s machine bureaucracy configuration proposed by Mintzberg, 1979 proves to be beneficial for the company; it results in formation of a middle line as seen in figure 4.5.1. There are new and smaller teams built from the existing large teams which would be effective for the organization in terms of work output and would be a manager-lead team as explained by Cameron and Green, 2012. “Management teams coordinate and provide direction to the sub-units under their jurisdiction, laterally integrating independent sub-units across key business procedures” (Mohrman et al, 1995 p. 80). The new teams will be led by a manger and he would be responsible for defining the goals. Manager-led teams provide great control over team members and their performance. The leader takes charge and has an overall control over the process and tasks.
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Salfordia Construction 2013
Figure 4.5.1 – Proposed Organization hierarchy/pyramid of Salfordia Source: Gregson and Livesey, 1993
In management team the number of people working in a team would be less and would be more efficient. The team’s area of focus would be task completion and communication to the senior authority. There will be two new teams formed for the residential and infrastructure projects by breaking the larger teams of industrial and commercial teams. The teams will be lead by new leaders from the experience employees in the company. The work output will be greater than the earlier formation as each member establishes his own scope of work and there is no repetition; also supported by concept of social loafing (see figure 4.1.2). Each member in the team will have defined tasks. The communication will be more effective and as a result be helpful for the company dynamics. The teams must be aware of the company’s strategy and policies to get the best outcome. Apart from these responsibilities the headquarters will also be responsible in educating its teams across all its divisions. Additional training should be provided to all the teams so that they are aware of the latest technologies for maximum output and efficiency. At the end of each year the top management needs to prepare an annual report and give a feedback to all teams based on the data received. This would be helpful in determining the performance of each team across all divisions. With the addition of middle management the role of the CEO reduces. The middle management i.e. the managers become the co-ordinator and see to it that the company works aims and objectives are achieved. “In order to provide the support that is necessary for team effectiveness, the Human Resource Management department of organizations must play a powerful role” (West, 2012 p.209). The HRM would be responsible to develop the support systems to ensure that the company succeeds. Their skills and expertise would be needed to appoint the managers as the manager would be overall responsible for a particular division and as a result the company may need to have an
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Salfordia Construction 2013 additional HR team as currently it just has one HR manager. The HRM department would be mainly responsible for the feedback of the teams on the basis of the “team’s performance; team member growth and well being; team innovation and inter-team relations” (West, 2012 p.210). Leadership - As Salfordia plans to grow as a company one can observe that the proposed structure is following a policy of decentralisation of power and machine bureaucracy form of standardization. This means that the company will move on to a Style theory – democratic style as described by Handy, 1993. It could be observed that with the addition of new roles Salfordia would have new managers forming the middle management of the company. No single individual would be responsible for the company’s decision. Each manager would be responsible for his/her division and could prefer in order to achieve Salfordia’s goals and objectives. The managers would have different teams working under him. Within each team there would be a team leader who would be responsible for the teams function. “A good leader evokes or draws forth leadership from the team. He works’ as a senior partner with other members to achieve the task” (Adair, 1998 p.51). Salfordia would have a more democratic approach as the decisions would be shared and responsibilities would be divided to each individual division. It is commonly assumed that people will produce more in democratic style as they would feel more responsible and would make them feel motivated. The company give the managers the power to take decision making them feel motivated and responsible. The CEO would have the final authority as he continues to be the head of the company; but he would also be an advisor and his main focus would be to provide a vision for Salfordia. Introduction to Organization learning - For the overall growth of Salfordia there is a need for it to introduce organizational learning. It adds value to the company and increases the knowledge and skills of its employees. Organizational learning would help an individual and also Salfordia to be competitive in this economic driven world. It helps one realise his strengths and weaknesses and teaches new skills and expertise which people are unaware of. It would teach Salfordia to learn from its mistakes so that it is not repeated. It not only benefits employees but also the company. Individuals evolve and transform with the company. With every evolution there is a change in the learning curve. The employees must be aware of it and organization learning helps individuals to grow along with the company. Construction is a competitive industry which is driven by economy. The only competitive advantage is the development and implementation of new technology and skills. In order to gain advantage a company should develop a knowledge chain as proposed by Johnson (2003). Proposed model of Salfordia should be based on the HP model but before the company follows this model it is necessary for it to know the needs and ability of the company. This model as explained in figure 4.5.2 shows the supply chain of knowledge and the application of it. The model explains us the continuous flow of information as well as the means of knowledge distribution. The company shall bring in expertise and gain from their knowledge. Through the means of training they would transfer such skills to the employees which would help them in practical application.
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Salfordia Construction 2013
Figure 4.5.2 – Proposed Organization Learning Model for Salfordia (HP Model) Source: Carl, A., Martin, S., Veronica, J. and Shu-Ling, 2007
Salfordia Construction can emerge to new heights but only with the support of their employees. In order to gain their faith and support the company must reward teams and individuals on achieving their targets; this would motivate its employees and also develop a sense of commitment within the individuals. Individuals must be identified within the team and be praised and rewarded for their hard work. This would be helpful to get the best out of each member within the team and also encourage individuals to give their best. Rewards and appraisals form a part of motivation and the company recognizing the efforts of each division and individuals would result in advancement of the overall performance of Salfordia and also encourage the teams to improve. Change is ever present and we should all expect and plan for it.
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Salfordia Construction 2013 5.0 Conclusion Annual Targets
Annual targets will be set up and monitored once the divisions are independently functional. Figure 3.4.5 shows the company’s next 5 year profit/loss targets with respect to the earlier years. 350 320
300 250
250
200
190
150
140
100
80
50 0 2009 -50 -100
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Reported Loss of 80,000 £
Figure 3.4.5 – Salfordia Construction Annual Targets (Profits/Loss)
all figures in thousand £
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Salfordia Construction 2013 6.0 Sub Task 3 Presentation of Proposal to the Board
• Salfordia is a medium-sized construction management / contracting organization established 38 years ago in the year 1975. • It is based in Salford and works on construction projects in the North West Region for both public and private sector clients primarily on commercial and industrial facilities. • Salfordia’s fortunes have been declining in the recent years and the company has reported a loss in the year 2013.
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Salfordia Construction 2013
• Global recession and Salfordia’s traditional procedures and processes which are more than a decade old are affecting the business strategy. • There is a need for change as the industry has become far more advanced. • Process to result oriented but driven by process • The new support staff would help the company in understanding its employee and in order to increase the work efficiency it would be employee oriented. • The company would make use of its experienced employees and would want the new employees too to be recognized as part of the company and therefore continue to be parochial. • The overall proposal results in making Salfordia have more of a pragmatic approach rather than normative.
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Salfordia Construction 2013
• The main objective of Salfordia is to increase market share, be profitable and survive. • Motivate its employees for better work output and more efficiency. • Salfordia team dynamics needs to improve. • In order to increase the competitiveness and make Salfordia market driven they need to establish organizational learning as a part of the organization. This would not only keep the company be technology driven but would also being in the competitive spirit within itself and the individuals. With the introduction of organization learning we become a part of the processing change.
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Salfordia Construction 2013
• Salfordia is a family run organization and the CEO is also a family member. All teams are under direct supervision of the top management. Flat structure. The CEO is the head of all teams. Assigns tasks to each team. No appraisals and promotions for employees. • Introduction of middle management brings hierarchy. Minute details which may not have been looked upon by the Top management may be observed. Employees work hard for promotions. Responsibility is divided and people are motivated to perform well. • Top management focus on the vision for the company and the middle management helps in executing.
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Salfordia Construction 2013
• Salfordia flat organization has no hierarchy and most of the people perform multiple roles. • Classified in 3 types - The first being the cerebral roles which comprises of the top management second – people oriented and third being action oriented roles comprised by the workers / operating core. • Introduction of hierarchy – clear distinction between rolls and well defined tasks.
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Salfordia Construction 2013
• To increase market share the company needs to diversify into other sectors. • The large teams are reconfigured in smaller and new teams to concentrate on projects in other sectors. Avoids social loafing. • Introduction of hierarchy to make employees responsible and motivate the juniors for appraisals and promotions. • Need to introduce organizational learning within the organization to increase the competitive spirit and reduce resistance to change.
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Salfordia Construction 2013
• Proposed structure introduces the middle management i.e. the managers. • The HR management is strengthened for evaluating and supporting the staff. • New teams formed and the proposed sectors are residential and infrastructure. • Predicted growth of 40% in the residential sector alone and infrastructure to contribute 12% as even in recession it continues to grow.
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Salfordia Construction 2013
• Proposed model of Salfordia based on the HP model. • This model shows the supply chain of knowledge and the application of it. The model explains us the continuous flow of information as well as the means of knowledge distribution. • The company brings in expertise and gain from their knowledge. Through the means of training they would transfer such skills to the employees which would help them in practical application. • It is a continuous process and will help the company grow along with its employees. Will help company change with time and adapt to modern tools and techniques. • Change is ever present and we should all expect and plan for it.
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Salfordia Construction 2013
• Annual targets will be set up and monitored once the divisions are independently functional.
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Salfordia Construction 2013
• Salfordia Construction can emerge to new heights but only with the support of their employees. • In order to gain their faith and support the company must reward teams and individuals on achieving their targets; this would motivate its employees and also develop a sense of commitment within the individuals. • Rewards and appraisals form a part of motivation and the company recognizing the efforts of each division and individuals would result in advancement of the overall performance of Salfordia and also encourage the teams to improve.
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Salfordia Construction 2013 7.0 References - Adair, J. (1998) The Skills of Leadership Wildwood House Ltd., Hampshire (UK) - Adair, J. (1998) Effective Leadership: How to develop leadership skills Macmillan Publishers Ltd., London (UK) - Belbin, R. (1993) Team Roles at Work Butterworth-Heinemann Ltd., Oxford (UK) - Belbin, R. (2004) Management Teams: Why they succeed or fail (2nd Edition) Elsevier Ltd., Oxford (UK) - Cameron, E. And Green, M. (2012) Management Sense of Change Management (3rd Edition) Kogan Page Ltd., London (UK) - Ellis, S. and Dick, P. (2000) Introduction to Organizational Behaviour McGraw-Hill International, London (UK) - Gregson, S. And Livesey, F. (1993) Organization and Management Butterworth-Heinemann Ltd., Oxford (UK) - Handy, C. (1993) Understanding Organizations (4th Edition) Penguin Books Ltd., London (UK) - Hayes, N. (1997) Successful Team Management International Thomson Business Press, London (UK) - Hofstede, G. (1991) Cultures and Organizations: Software of the Mind McGraw-Hill International, London (UK) - Hussey, D. (1995) How to Manage Organizational Change Kogan Page Ltd., London (UK) - HM Government (2013) Construction_2025 Industrial Strategy: Government and Industry in Partnership HM Government, UK - Johnson, W. C. (2003) University Relations: The HP Model, Industry and Higher Education, Cited in RICS Research paper series Volume 7 Number 16 October 2007 Action learning as an enabler for successful technology transfer with construction SMEs Carl, A., Martin, S., Veronica, J. and Shu-Ling; The University of Salford (UK) - Mintzberg, H. (1979) The Structuring of Organizations: A Synthesis of the Research Prentice-Hall, Inc., New Jersey (US)
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Salfordia Construction 2013 - Mohrman, S., Cohen, S., Morhman, A. (1995) Designing Team-Based Organizations Jossey-Bass, San Francisco, CA - Moorhead G. and Griffin, R. (2004) Organizational Behaviour: Managing People and Organization Houghton Mifflin Company, Boston, MA - Robbins, S. (1990) Organization Theory: Structure, Design, and Applications (3rd Edition) Prentice-Hall, Inc., New Jersey (US) - Thompson, L. (2000) Making the Team: A Guide for Managers Prentice-Hall, Inc., New Jersey (US) - West, M. (2012) Effective Teamwork: Practical Lessons from Organizational Research (3rd Edition) John Wiley & Sons, Ltd., West Sussex (UK) - Williams, A., Dobson, P., Mike, W. (1993) Changing Culture: New Organizational Approaches (2nd Edition) Institute of Personnel Management, London (UK)
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