Case Analysis: Going to X-Stream
The case relates to an company named X-steam which assembles computer parts and sell them to retailers, as well as, provide consultancy services for development of electronic business. The company is a recent start-up by an entrepreneur Riehana, who is also Chief Executive Officer of the organization. The company has grown rapidly during previous few years and, at present, is undergoing pains associated with organizational-growth. Dennis Commins, Don Head, Jason Palu and Heather are head of various functions of the company possessing highly divergent personality traits, management approach and work habits. This factor leads to increased challenges for Riehana to steer the company towards further growth. At present, the company is facing a stand-off between different team members about the decision for starting a new software division of the company.
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There are various aspects pertaining to organizational management at
Informality within Workplace – even thought the size of organization has increased several folds, the degree of formalization within the organizational functions is very low. In smaller organizations, low formalization is tolerable because members of the team know each other personally and contribution of each member towards organizational objective is highly evident and known to the other members of the organization. For this reason, there is a lack of information to other members of the organization about each others’ contribution. This leads to a increased level blaming and finger-pointing within the organization.
Management theory states that when the size of organization becomes larger, then formal procedures and job descriptions should be created within the organization. This is essential in larger workplaces to maintain a system of management control. Also, adoption of formal procedures and hierarchical levels tend to create reporting relationships within the organization which minimizes potential disagreements over authority and responsibility. This formalization requires conscious effort and will at the top management level. So far CEO has not exhibited any concern for inculcation of formalization within workplace. This negligence of CEO is creating differences among employees and producing frustration and different hierarchical levels. Heather seldom arrives to work on time, which can lead other members of the staff to suspect nepotism taking place in the workplace. It is not necessary that Heather’s creativity should be suppressed by forcing her to work during the day. This would be inappropriate. Rather, formal rules should be defined within the organization that will communicate that any employee can avail the leniency of distance working provided certain perimeters are met.
Lack of Training of Staff – training of the staff is a norm in technology firms because the rapid pace of change in such workplace. However, staff at X-stream has little exposure to changing market dynamics and developments in the industry because of absence of training avenues. This investment in human resource is not carried out X-stream possibly due to cost incurred with this initiative. This is one potential reason for low productivity of employees. Training is not only essential for industry informational purposes but it also leads to higher levels of
Poor Recruitment Selection Criteria – the selection criteria at X-steam was predominantly based on knowledge and skills of the candidates rather than the fit of the person with the organizational culture. It is important to understand organizational culture and find person-organization fit at the time of recruitment. The knowledge and skill set of an employee is only useful for the organization when the employee finds himself comfortable in the organizational culture. For this reason, it is essential for the human resource department to include measures of personality assessment in the recruitment process. This practice is not found to be in place at X-stream and this has created a scenario where management decisions are not acceptable for the employees to create a new division. Employees do not share the risk-taking attitude of the start-up team, that made the organization as successful as it is today.
Casual Working Environment – the working environment at X-stream has remained casual despite growth of the organization. This correlates very strongly with the lack of formalization in the workplace. The net impact of this behavior is that it is communicated to new team members of the organization that they can get away with lousy behavior at work. These negative perceptions of the employees are exhibited as low regard for meeting timings and goals of the organization. Another, practice which is condoned by the top management of the organization is to use all means for attaining sales irrespective of ethical considerations. When the sales head of the organization condones unethical practices then employees of the organization are also likely to adopt unethical practices towards the organization itself.
CEO not Involved Directly – the CEO of the company Reihana is not involved in the support function of the organization rather he is comfortable with trusting his immediate team members to the fullest. This practice creates inefficiencies within organization and leads to formation of sub-groups and nepotism within workplace. One evident example of this behavior is Don Head, who keep his department closely guarded from the rest of the organization. This is a highly unethical practice because personal benefits and gains are never superior to organizational benefits and gains. Likewise, the business must not hold any head of department unaccountable to other organizational members of the same rank. If the CEO would look into the matters of functional units intermittently, it will convey a sense of accountability within the workplace.
Lack of Staff Participation – decision making within the organization is restricted to the group immediately close to Reihana – those members of the staff who were part of the start-up team of the company. X-stream is at present facing an issue of alienation of employees from the vision of the top management. This problem is a natural outcome of lack of employee participation in decision making of the organization or defining any rules or procedures in the workplace.
Employee participation can have dual benefits for X-stream. When employees contribute towards decision making by offering their input, they tend to have a feeling of involvement in the goal setting and they will strive to attain stated goals, even if it requires staying late at work. Secondly, employee participation is likely to improve the quality of decision making within the organization because such decisions will be based on information from grass-root level of the organization rather than on summarized reports.
The immediate solution for the business pertaining to decision making about creation of a new business division for software applications is to seek opinions from heads of finance function, sales function and production function. Heather’s opinion has little relevance to this particular issue because her function has little connection with the new proposed function. Riehana should base the decision on the opinions of the heads of the above mentioned functions because their buy-in is essential to make the proposed function a success.
As for the long-run management of the company, Riehana must implement key structural changes in the organization and alter the way business is carried out at X-stream. Firstly, formal rules and procedures must be drafted and implemented at all levels of the organization. Even Riehana must be accountable to the HR function regarding compliance with the policies. Secondly, decision making process must be made transparent and must include participation from all hierarchical levels in the organization. Riehana must look into the matters of different functions intermittently. Also, organizational staff must receive training on personal effectiveness and on functional skills.
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