The telecom industry has established itself to be one which has, perhaps, the highest growth in South Africa – but technological advancements and various user centred packages and options haveincreased the competition between the players in the industry. One such player is the Neotel.
This study aims to act as a stern scrutiny of Neotel’s organizational structure, from anorganizational behaviour point of view. Key hierarchical reforms have been identified and taken into account for the development of marked changes in the hierarchy to boost company’s performance. Through these,recommendations have been devised, which would no doubt boost the current standing of the company.
It begins with a detailed note on the very core of the company – Its current hierarchical formation and proposal of the required departmental changes in the organization chart. Also included is the mission statement of Neotel which is followed by the identificationand inter-linkage between the goals of the company and its hierarchical framework – all leading to the final conclusion which denotes exactly what is required by Neotel to improve and attain a better standing in the telecom market.
Table of Contents
EXECUTIVE SUMMARY: 1
Aims and Equity Strata: 4
Human Resource Pool: 4
NEOTEL ORGANIZATION CHART. 5
ORGANIZATION CHART ANALYSIS: 6
ORGANIZATIONAL BEHAVIOUR OF NEOTEL: 6
Human Resource: 6
Develop deep industry knowledge: 7
Enhance Brand Visibility: 7
Functional Departmentalization: 7
Expected Benefits: 9
MISSION STATEMENT: 10
CONTINGENCY APPROACH: 11
THE EXTERNAL ENVIRONMENT. 12
Economic Forces. 12
Social, Cultural, Demographics and Environment Forces. 12
Technological Forces. 13
Competitive Forces. 13
THE INTERNAL ENVIRONMENT: 13
Finance and Accounting: 14
According to the African consumer survey of 2007, South Africa has the most developed telecommunications network in Africa which includes fixed-line, wireless and satellite communications. Neotel was founded in Johannesburg in 2006 and its headquarters are situated in Midrand, South Africa. It offers a wide coverage all over the country and is valued as the 2nd
national operator after Telkom.
Primary research in the EDGE and Next generation technologies meet the requirement of a wider customer base and allowed to gain a better response time accompanying affordability and flexible options. It also offers diverse national and international connectivity. Besides, Neotel understands the environmental aspects of wireless communication and maintains the normal radiation balances critically.
Right now, Neotel is catering to all wholesale and business sectors of the region. Various solutions accustomed to large, medium and small business’s different usage requirements are being offered at modest rates. Two major services comprising of voice and data are adapted with four major product lines to adjust to customer needs. These packages are as follows:
- NeoConnect Lite
- NeoConnect prime
- NeoFlex Data
- NeoGo Data card
Each NeoConnect package outlines fixed-wireless home phone and basic or hi-speed internet with different user preference while NeoFlex offers a multiple user, hi speed data capability for home offices and SME’s. Whereas, NeoGo offers a portable solution to those users who want internet on the go.
Neotel intends cost reduction for both business users as well as home users while maintaining and enhancing the functional proficiency at the same time. Currently, Neotel has a vast system of consumer services and it aims to caterto around 80% of the country’s population base in a short span of time. Presently, major equity holder for Neotel is India based Tata Indicom which previously had 26% share in the company’s equity and now has increased it to 56%. This 115% increase in the Indian invested equity has caused some shifts in the hierarchy as well and a global interest in South African industry’s contemporary stance, hence benefitting the economy actively. (Worldstats, 2010)
The company has around a thousand employees working at various levels of hierarchy positioned at different regions. The number of men working in the company is 73% approximately as compared to women that stand at a mere 27%.However, a roughly estimated median age of employees working at Neotel is 33 years. This represents that the majority of workforce is young and is capable of supporting the pace of work at which the company foresees itself in the early phases of its growth. Also, that Neotel is an equal opportunity employer which means that it encourages real talent despite of any weaknesses, disabilities or gender.
Currently the organizational hierarchy, which Neotel operates under, reveals that the highest in authority is the Chief Executive Officer who is reported by a number of managing executives and managers directly. These include Chief Financial Officer, Chief Network Officer, Chief Marketing Officer, Chief Sales & Customer Services Officer, Chief Information Officer, Managing Executive Human Resource, Managing Executive Legal & Secretariat affairs, Managing Executive Regulatory department.
According to Neotel leadership team, excellence is based on a far reaching vision and proper grooming of the personnel. A greater stress is upon cultivating guided managementtalents among the workforce. Higher hierarchyaccentuates on an open door policy which facilitates the process of communication thus reducing any unwanted barriers to growth.
Neotel believes in a relaxed environment where Employee-Boss relation is friendly and comfortable for the work environment.At the very basic level of hiring, it is pre-highlightedthatthe candidate is required to possess a competitive academic record, required technical skills and an elevated level of learning ability. Orientations and training are provided to the newly hired as well as existing employees on a continual basis. The company also has a good rewarding system and constantly monitors the routine chores according to the pre-set performance standards.
Neotel has specialized industry expertise in the telecommunications and data service industries. The top management from TATA Indicom has not only brought experience of the telecom industry but also a keen telecom business understanding with them.
Neotel invests in the development of its premium brand identity in the marketplace by participating in media and industry events, sponsorships and participation in targeted industry conferences, trade shows, recruiting efforts, community outreach programs and investor relations. It also has alliances with leading technology providers in order to take advantage of emerging technologies in a mutually beneficial and cost-competitive manner. (BC, 2010)
According to organizational chart it can be inferred that hierarchy is fairly structured. It entails a chain of command and information flow. It is clearly visible that the CEO is directly reported by eight other managers and executives. Since the company started its operations around four years ago it’s almost new to the market.And this is why it needs to concentrate more on the market and product or service it provides to its customers rather than following an already established company’s hierarchical structure. It ought to cut short the extraneous human capital and form a leaner hierarchy. It is recommended that:
- The Marketing department and Sales & Customer Services department be merged to make one department under the name of Sales and Marketing department.
- The Information and IT division be placed under Operations department and
- The Legal department be fused under Human Resource department
This is recommended so in order to cut any extraneous Human Resource costs by merging the aforesaid departments outlining only the functional and required procedures. This will help the organization reduce its valuable revenue spent on the resource that has been misallocated. This saved revenue can further be utilised in many ways like
- Introduction of new and sophisticated technology
- Consumer centred bundle offers
- Better services at the consumer end
- User friendly customer care etc.
By this internal merger, a better inter-departmental coordination will take place as there will be a fewer departments to coordinate with. With the related expertise, the managers will be able to measure performance standards more easily and effectively and report it to the CEO directly through their respected heads. In this way, more authority will be delegated, organizational atmosphere will be more employee friendlier and comments and suggestion will be easier to reach the higher hierarchy.
Furthermore, this will lead to a better and more diverse reporting system from the lowest management to the highest. An ideal two way communication channel will be formulated from lower to higher chain of command and vice versa. Information will be more concise and organized thus helping the higher hierarchy identify any current or potential problems more accurately.
This will also result in a clear trickle down delegation of authority from the Chief Executive Officerand the corresponding managers that will experience over how far their authority is extended.Overall, the organizationis structured and the departments are harmoniously coordinating with each other.
Through the measures mentioned above, the Network department will better be able to tackle any IT related issues or hold-ups rather than conducting a cross-departmental query handling to ensure free flow of communication. Similarly, the Marketing Executive will better be able to analyse the marketing efforts and areas which need to be displayed most and which to be shown least. (ITC, 2010)
Likewise, which ones need more attention and which ones do not?Thiswill all be done under the essence and comparison to increasing sales volume in areas where a slow or stagnant growth has been reported at fixed periodic intervals of time.Channelizing the related information to the MarketingManager will help him analyse that marketing efforts should be administered and implemented in a better way to those areas where the market share or sales volume is dwindling. Correspondingly, marketing actions be executed there where the demographic audience is centred most.
The role of Human Resource and Legal department is to increase efficiency of the firm by employing a number of ways.One of the ways to exercise this is by conducting employee training sessions periodically including quarterly, semi-annually and annually. This includes both management as well as technical trainings with technical training conducted at greater frequency according to the needs and requirements of the company.Another method to keep the employees motivated is by introducing time to time healthy reward schemes. These may comprise of monetary incentives as well as growth options. Under the Human Resource department is the Legal Department whose job is to coordinate with the national labour and man power laws. The Legal Department will update the company about any legislative changes taking place related to the telecom industry while keeping our strategies in line according to the company’s goals.
“Neotel is a telecommunications network operator that aims to cater for wholesale, business and home customer needs. It intendsto deliver services that reduce the cost of doing business through the optimal use of advanced technologies. Neotelaspires to become South Africa's first converged telecommunications network operator. This means that voice, data and Internet will be offered over a single connection. Neotel covers all major metropolitan areas of South Africa. Our coverage expands on a regular basis.”
Customers, Products and Services, Technology, Markets and Self-Concept has clearly been mentioned in the statement above butIt lacks Self-concept, Concern for Survival, Growth and Profitability, Concern for Public Image and Concern for Employees.
The main goals and objectives mentioned in the mission statement comprises of the outreach to its target market in an efficient way and to ensure the availability of service to the end user. These include the wholesalers who want their links to stay customary with a ready access to high speed data. Small, large and medium business is getting voice services with enhanced and managed IP solutions. Home users also get services accustomed to their budget.
The Operations Department will make sure that the service coverage and connectivity is deliveredproperly. Along with that, the network and systems are up and working as planned. The IT staff will confirm the right execution of any current or potential issues that a customer faces.
The Finance Department will validate the cost management for the company. Also, that it will analyse ifthe current costing system is consistent with the company’s allotted fiscal budget. Whether, reduction in national or international tariff rate has an effect on the total returns and revenues of the company or not? The elementary purpose is to enhance customer satisfaction while staying profitable at the same time. Besides, making certain that the business model is implemented well and is working flawlessly in the generation of revenues for the company. This goes hand in hand with the company mission statement and is possible through following this hierarchical structure of the company.
The Human Resource will make sure that the motivation and performance level of an employee is up to the required mark. To keep a check and balance if the evaluation and reward system is working in the favour of employee because, if the employee is happy with his/her work, eventually, his/her efficiency will increase and the company will have better chances of growth in the industry. This being the main objective mentioned in the mission statement is made possible through following the proposed company structure. Moreover, the Human Resource Department will advertise the goals and objectives in the company to keep the workforce encouraged and enthused regarding the direct relation of company prosperity and employee incentives, which is also in line with the mission statement and implemented through present organizational structure.
The Marketing Department in collaboration with the Operations Department will entail company’s aim of becoming the first and with largest coverage telecommunications network operator of South Africa. This will be done in proportion to the extensive network coverage and proper marketing strategies targeting diverse geographic locations and proper audience.
This approach indicates that the most appropriate organizational structure depends not only on the organizational objectives but also on the situation, which includes the environment, the technology employed, the rate and pace of change, the managerial style, the size of the organization, and other dynamic forces.
There is no steadfast rule to standardize contingency planning. The two factors governing the contingency approach include the external and the internal forces. Following are these factors explained in essence to Neotel.
The external environment of Neotel and its fellow competitors in the region is most unique due largely because of the economic, social, cultural, and political forces that contribute to the external environment.
Economic forces effect an organization directly as it is operating inside the economy. So, if it gets better, the company will have better chance to show its performance and vice versa. Currently, the major user chunk comes from the home wireless phones and cell phones used by youth. However, due to rising inflation rates, devaluation of the rupee, less availability of credit, and in general the recession the disposable income has shrunk to the point that it is declining at a steady pace of percentage of the population. As such the number of potential consumers has fallen. This has directly hit the customer base of Neotel. However, Neotel has countered the decreasing disposable income of the middle class by keeping their tariff lower than its competitors.
The population growth rate and age profile in the country is favourable as currently, there are more youngsters in the economy as compared to the old people. And the major chunk of users comprise of the young generation, hence benefitting the company positively. The social and cultural environment is largely influenced by the employment patterns, education and social mobility. As it is the demographics of South Africa are such that the majority of young adults belong to social economic class B&Candalso that the population of the country is on the rise, thus causing the consumer base to broaden. (ILS, 2010)
Neotel continually upgrades its facilities and technical capabilities in light of the technological advances that occur so as it maintain the quality of its facilities and services for its customers. Furthermore, Neotel has embraced the modern era has it has created a highly user friendly yet informative customer care centres and portal that allows the existing as well as the potential customers to communicate and interact effectively with the representatives.
Neotel is in perpetual competition both regionally and nationally as it strives to increase the value and quality of its service. As Neoteltargets a diverse customer base and provides various options to them. This, in turn, gives it a competitive advantage over the rest of the operators and ISP’s.Major competitors include Telkom, MTN, Vodacom and Virgin Mobile.
The management of Neotel includes highly qualified staff of around1000individuals who are actively involved in their respective fields. They do not believe in the concept of “If it aint broke, don’t fix it”. They have the strategy of maintaining check and balance over the systems to ensure faultless voice and data transmission. A proper training is provided to them in order to compete with the latest technological and business related trends. Furthermore, they pursue equal employment opportunity making sure no one gets ignored or be a victim of any sort of bias.
The management is well motivated and inspiring. A handsome salary package and other benefits ensure the job satisfaction and the employee morale. Moreover, they are exposed to more related but different tasks to individuals guaranteeing job enrichment. All the tasks involve greater level of autonomous decision making and personal control.
Neotel, as a network provider, is a service based organization. In essence to that, it incorporates to the customers, caters to their needs, desires and wants, while making sure they are provided with the highest standard of service (Neotel, 2010).
In addition to that, they advertise in various ATL and BTL mediums mainly the newspapers, Television, Billboards, youth magazines and on the web. They also conduct events to enhance market presence and word of mouth advertising.
The Finance Executives alongside the upper echelons of management and the administration decides upon viable financing and investment decisions which are then presented to the CEO and the board of governors who ultimately decide upon the course of action through the options provided which is then carried out by the personnel of the organisation.
During the course of our thorough research and analysis, it was determined that Neotel indeed has a decent standing in the telecommunication market. It has somewhat established its name as a good service provider which offers quality services at a fraction of price – but there exist some organizational structural weakness which have been analysed in detail. Detailed recommendations have been developed to address the prevailing situation and hierarchical recommendations and suggestions have been provided.
Major areas that have been discussed are Customer Service Department, Information Department and Legal Department. Through first hand insight gained through the analysis, it was found that there were quite a fewthings that could be worked about. Neotel must concentrate on results and gaining market share instead of bearing the expense of high class human resource infrastructure.
Keeping this in mind, and after evaluating in detail the external and internal factors, we concluded that a diverse customer oriented product development was required for Nortel to further improve its standing while maintaining the quality of services.
Moreover, improving Neotel’s organizational culture has become mandatory to cope with today’s dynamic telecom arena. Providing the workforce with proper training will prove to be beneficial for the whole organization. To do so, Neotel must compare and contrast the expectations and perceptions.Neotel must also keep reminding its employees about the organization’s vision and values.
Neotel (2010), [online] http://neotel.co.za/
ILS (2010), [online] www.ils.unc.edu/daniel/405/Montana11.pdf
Mintzburg, H, (2006) The Structuring of Organization.
Prentice Hall. New York.
BC (2010), [online] http://thebigchange.com/internet/
Worldstats (2010), [online] http://www.internetworldstats.com/af/za.htm
ITC (2010), [online] http://www.itnewsafrica.com/?p=1849