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Organization Study: Total Environment Building Systems Private Ltd.

Submitted to: Prof. Sourav Mukherji Group members: Arvind Ranjan Kartik Yeleswaram (1111348) Priyanka Soni (1111364) Shashank Naik Vhishnu Vardhan PGP 2011- 13, IIM Bangalore

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Acknowledgements
We thank Ms. Vinthi, Manager (HR) - TEBSPL, for her wholesome support and for familiarizing us with the company. She has been instrumental in bringing the companys organizational features into the context of the report. We also appreciate her assistance in setting up meetings with the companys key personnel.

We also thank Mr. Ashok Dwarknath and Mr. Sumith for their enthusiasm and eagerness in engaging with students and sharing their unparalleled knowledge.

We are very thankful to our dear professor, Dr Sourav Mukherjee, for giving us this opportunity to put our knowledge of Managing Organizations to test and understand real-life scenarios in industry.

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Contents
ACKNOWLEDGEMENT ............................................................................................................2 ABSTRACT..............................................................................................................................4 INTRODUCTION TO TOTAL ENVIRONMENT BUILDING SYSTEMS PVT LTD .................................6 EVOLUTION OF ORGANIZATION .............................................................................................6 TRANSFORMATION OF TEBSPL ............................................................................................. 10 BUSINESS MODEL................................................................................................................. 10 ORGANIZATION STRUCTURE................................................................................................. 11 ORGANISATION CHART .............................................................................................................. 14 WORK LEVELS.......................................................................................................................... 14 SUBSIDIARY COMPANIES ............................................................................................................ 14 BUSINESS VERTICAL .................................................................................................................. 14 ORGANIZATION ENVIRONMENT .......................................... ERROR! BOOKMARK NOT DEFINED. NATURE OF ENVIRONMENT ........................................................................................................ 14 INNOVATION ...................................................................... ERROR! BOOKMARK NOT DEFINED. ORGANIZATIONAL CONTROL AND CULTURE ........................ ERROR! BOOKMARK NOT DEFINED. CULTURE IN TEBSPL ........................................................................ ERROR! BOOKMARK NOT DEFINED. CONTROL MECHANISMS ................................................................... ERROR! BOOKMARK NOT DEFINED. REWARDS & RECONGNITION ...................................................................................................... 20 CONFLICT MANAGEMENT & DECISION MAKING.................................................................... 20 KNOWLEDGE MANAGEMENT ............................................................................................... 20 ORGANIZATIONAL CHALLENGES ........................................................................................... 20 RECOMMENDATIONS & CONCLUSION .................................................................................. 20 INTER-ORGANIZATIONAL RELATIONSHIPS............................................................................. 21

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Abstract
Total Environment Building Systems Private Limited (TEBSPL or TE in short) was founded in 1996 by Mr. Kamal Sagar & Mrs Shibani Sagar as an organization which aimed to provide unsurpassed living experiences through sensitively designed home spaces. The organization was founded in Bangalore by four architects from IIT (including Mrs. & Mr. Sagar) with a capital of Rs 10,000. Today, the company has grown to the extent of gaining Rs 135 crores from HDFC asset Management Company for acquiring land for projects alone. TEBSPLs focus is on the construction business; more specifically, designing and building customized living spaces. The company was started as a home segment construction business, which then transformed into a niche segment power-house the idea of backward integration into the core business modules of the construction like carpentry (TE wood works), tiles (TE Quitzel), metal works (TE Form works), painters, In-house service engineers, marble craftsmen and so on TEBSPL has successfully executed a number of projects and has many more in the pipeline; their success being a consequence of their commitment to growth and excellence which can be attributed in part to a magical concept termed Masscustomization. One might wonder what the concept of customization is doing in a construction business, particularly in relation to a realty player. This relation is brought out in clarity and splendor when one enters the model house located inside their campus Imagine situated in the ITPL area, we were mind struck to think ourselves nothing but ignorant. TEs level of dedication to excellence is evident from the uniqueness and methods used in crafting the 6000 sq ft marvel. The memory of the wows and awesome which came from our heart is still relishing the experience. The prime focus of this report is to study and understand the various factors; both internal like culture and organizational strategy and external like the environment; and how these factors interact and play a role in determining the organizational structure of TEBSPL. Also the report portrays and reflects how the decision making and knowledge management is carried out at the organization.

Organization Study We have also tried to list a few major challenges that the organization would be likely to deal with in the near future. Some of them are a result of their strategy and hence would have a direct bearing on the structure of the organization. The report concludes with our observations on how E-build could do well for itself by moving towards a self sustainable model and by developing capabilities to take strategic decisions, thereby moving up the value chain in TEBSPLs scheme of things.

Note: This study has been conducted purely for academic purposes- to understand how the organizations structure has helped its business and to address the correct / incorrect management practices that in the authors view are prevalent in the organization. Reproduction of this report in any form should not be done without prior consent from the professor or the authors.

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Introduction to Total Environment Building Systems Private Ltd.

Total Environment is a construction company that operates in the niche segment by building homes that cater primarily to high net-worth individuals. The key competency of the company is creativity in design and utilization of spaces that provides an unsurpassed living experience to customers. It uses its professional expertise, cutting-edge technology and an out-of-the-box approach to make living more comfortable, productive and joyous. The company has completed 15 projects in Bangalore and Pune and currently has 4 ongoing projects. It is the only firm in the country that allows home owners to determine every little detail of their homes in order to match their distinct tastes and lifestyles with the help of it propriety tool that helps customize every aspect of a home. It also provides instant information on costs and feasibility along with guidance and assistance in the form of an in-house consultant. By executing most or all activities in-house from start to handover and after, Total Environment is able to ensure quality and control costs and these benefits are passed on to its customers. It also provides cost-effective maintenance services for a period of approximately fifteen years. Apart from undertaking residential projects, TE also takes-up commercial projects and has completed 8 such projects and 2 ongoing projects. TE also has invested in other businesses such as resorts, a micro-brewery and hospitality. In this report, we are going to focus on the evolution of TE, its external environment, strategy and the various aspects of the organization structure that are linked its strategy.

Evolution of organization
Total Environment was started by Kamal Sagar and his three classmates from IIT Kharagpur . His wife Shibanee, a fellow architect, started offering buyers the ability to customize almost all aspects of their apartment interiors, including the walls. After a few projects, they decided that they would cater to the niche segment of high class buyers and thus began the journey of TE. In the following years, they increased their size by hiring a few employees. They also introduced some elements of formalization by assigning designations and job responsibilities. In spite of these, the overall working-style of the company remains largely entrepreneurial with major decision making powers still vested solely upon Kamal Sagar. Located in Bangalore this task was not very difficult to implement. Given below is a figure describing TEs growth so far along with its expected growth and associated challenges in the near future.

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However Te is now looking to expand its opearations in other cities and it will be difficult for it to maintain such high level of centralization. Hence it is planning to make its organization more decentralized and delegate its decision making power to new employees. The folowing table represents the various phases or organization development in Total Environment. Year Milestone 1996 10th July 1996 Incorporated 1997 Doka formwork purchased for which the training was provided at Chennai -Introduced concept of terrace garden for every apartment -Introduced customizable apartments Projects Cirrus Minor started Green's a colour Ashwanathaswamy Reddy Residence Interesting events Shibanee & Kamal Architects formed New workforce in the form of 7 engineers hired Introduced the concept of lunch in office to improve interaction between team

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1998 First Project(Cirrus Minor) Handed over -Ipomea caepas plant used which grows well under shade -1st commercial project(mall) started 1999 In House structural department formed Formation of in-house metal works dept & fabrication formwork -Ion Idea phase 1 completed 2000 In house maintenance team for handling maintenance issues in all buildings -Decided to start campus recruitment -TE wins the project to construct HAL museum among stiff competition -Starts building lifestyle & Large apartments 2001 Started a marketing drive with a photo-shoot (by Rau Rehman) and designing a TE logo(Ray & Keshavan) Also started advertizing in Billboards 2002 Signed a deal to acquire office space which resulted in stretching the cash flow of the company Started Internal flooring division and structure Won several awards for its projects Signed agreement for Windmills 2003 Registered the Office Campus location Launched the first TE Calendar Green is a colour Block 2 completed Ion Idea In house servicing team hired for handling construction problems

Green is a colour Block 3 completed Reach for sky

Uncle joined the business Alexander Kurian & Vishal Sureka joined Abraar starts structural work Malay & Ashok started structural dept. Company size grows to 30

Life is beautiful Richard Gale Apartments Webb India Ion Idea Phase 2

Time Eterna

Organized a party on terrace as a get together for the entire team

Foot Prints Free birds Starlet Begonias Shine On 1,2 & 3

Arranged a Conoor trip as a team building activity Problems faced in Webb India project and won the legal battle Design Innovations in the project

Wings

Acquired a 51% stake in a tile company

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2004 Imagine started E build conceptualized 2005 Lifestyle doe Windmills registration done AML & Erasmic sign off Ebuild Acquired 1000 acre land in Mysore for developing a project TMFT project 2006 Completed 10 years Ventured into construction in Hospitality industry and contracted Preeti Construction in OBS Pune to construct (Greenshoe) Mysore project approved by government. Joe Fernandes hired as the CEO. 2007 Windmill Prototype completed Shine On Project in Hyderabad started Orange Blossom Spec Rain Drops won an award Organized team building activities such as Goa trip and also celebrated Holi on Campus Company size grows to 96

Celebrated 10th anniversary Automated the welding process Company Size grows to 136

2008 Completed the Hyderabad Project Quetzel, a furniture company was acquired Future Projects in JP Nagar Windmills

Wind beneath my wings

Started importing Raw Materials & Machines from China Introduced grades and designations in the company structure Went on a major recruitment drive Trip to Italy organized to get Italian marbles from the source Also procured porous marbles from Colombo

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Transformation of TEBSPL

Business model
The business model of an organization can be defined as the rationale through which it creates, delivers and captures value. TEBS is a real estate firm building completely furnished and customized homes with a focus on good design and detailing. Evidently, the quality TEBS strives to deliver comes at a price premium and High Net-worth Individuals are the target segment for TE homes. This makes TEBS a niche player in the real estate market.
Offer high quality customized spaces Product differentiator
High value spaces; backward integration helps cut costs

Innovator in product, processes & technology

Engage with customers; in-house CRM

Niche player

Long term relationship: Offer building & maintenance

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Organization structure
The teamThe organization employs ~65 personnel in the design team (Shibanee & Kamal Architects) and ~160 others in the construction team (Total Environment Building Systems, TEBS). Currently, the eBuild team comprises ~15 executives and is a part of TEBS. The management plans to develop eBuild into a service it offers to clients, instead of running it as an in-house technology only. The Customer Relationship Management team comprises ~10 executives and the remaining corporate functions employ ~120 people. Structural GroupingTotal Environment has a hybrid organization structure: The core team is functionally separated into design, construction and corporate roles. Within each vertical, job roles are often overlapping and undifferentiated; typical of an entrepreneurial setup. Teams such as Customer Relationship Management (CRM) work across the structure while interacting with the design, sales and technology teams. Within the architectural design team, there are often teams that formed for a particular project (say, Windmills of Your Mind) which are disbanded later, suggestive of a need-based temporary divisional structure.

Centralization Kamal Sagar heads the design, architecture and project teams. The level of centralization within the organization has always been high. However, the organization needs to gradually shift towards an increasing level of decentralization as functional roles and project teams become more pronounced. This will result in TE evolving into a more horizontal organization from the highly vertical setup that exists currently. Communication Vertical Linkages Reporting Relationships: There exist clear hierarchy levels within each functional department. But for the architecture design team, the span of control is high (~20), which may not be desirable.

Organization Study Rules & Plans: The level of formalization is high and teams are required to adhere to guidelines pertaining to their own role as well as the overarching role of the company. Horizontal linkages Information systems: Horizontal information flow is highly desired in the organization, especially as CRM and Sales team have to coordinate with the core architecture team very often, given the underlying stress on customization. Information also needs to be communicated between the architecture, structures and services team on the one hand, and construction team on the other hand, reiterating the need for horizontal linkages. Direct Contact: CRM personnel perform a liaison role between the teams and the customers. Virtual Cross-Functional Teams: The main structure of the organization is based on the functional model. But the organizational setup for the execution of the projects (both small and in large scale) demands a pooled interdependency between the experts of different genre. In case of a project getting kick started, the people from different functional groups are brought to a common project head with dual reporting to their functional head and the project head. During the project, the conceptualization of the project, technical specifications, drawing, designing are all done in the respective departments. During the execution of the project, each of the contributors is brought forward as shown below. o Senior architect along with 2-4 junior architects, draftsman o Structural engineer, with 2 junior engineers, o Service engineer, with MEP personnel o CRM personnel, o Legal & land personnel (concerned with all required approvals) o Purchase division personnel o Estimators designated for the project During the execution of the project, after certain levels of progress few of the designated personnel are removed and sent back to the functional department. There is a high level of co-ordination between the project groups. Project based structure Structural Characteristic Number of management Usually 5 - 6 levels Supervisor span of control Middle level 7-8 Top management 4-5 Head - 10 Direct/ indirect labor ratio Not applicable

Organization Study Manager/ Total personnel 1: 40 (Manager designation ratio not mentioned AVP taken as level mentioned) Workers skill level High Formalized procedures High Centralization Low & complex Amount of verbal High communication Amount of written Moderate communication Overall Structure Highly Organic

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Organisation chart Work levels Subsidiary companies Business vertical

Nature of External Environment

The real estate industry has a lot of competing firms and a largely dependency on government regulations. Also, the success of firms operating within the industry is dependent on satisfying the taste and needs of the customers, while keeping costs low. Hence, it has to make the optimal use of the skilled manpower and technology available to get the maximum benefit. In order to maintain the highest possible quality, Total Environment insists on doing all of its building construction in-house, whereas the industry standard is to outsource it to contractors. In-line with its requirements, TE hires the best architects and structural engineers from across the country. It also depends on a set of specialized suppliers who supply high quality and specific raw materials and machinery needed for the construction projects. Considering the niche segment of market it focuses on and amount of money it charges, the customers tend to be highly demanding which makes the job more demanding thereby making it more complex. Working in the real estate environment, TEs success is highly dependent on the everchanging tastes on the customer and the amount of money which a customer is willing to put in depending on the economy which is also frequently changing. Also the industry is highly dependent on the availability of suitable locations to build the projects and restrictions from the environmental/government perspective. Thus we can say that the operating environment of TE is fairly complex.

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TE's operating environment

Simple Stable

Simple Unstable

Complex Stable

Complex Unstable

Technology
Raw material to end process and its effect on organizational design Processes & their relationship to organization design: HR, Accounting, R&D, marketing Core Processes Design o Architectural Design o Structural Design o Services & MEP Construction o Quantity Survey and Estimation o Core Engineering & Fabrication o Purchase o Quality Assurance o Project Management

Non-core Processes Human Resources Accounting Sales & Marketing Customer Relationship Management Finance IT

Organization Study Administration Structural implications on the organization Structural Characteristic Number of management levels Supervisor span of control Workers skill level Formalized procedures Centralization Amount of verbal communication Amount of written communication Overall Structure Total Enqvironment 3-4 Low to Moderate High High High High Moderate Largely mechanistic

Chart 409, 415 Routine-non routine chart Sequential interdependence among departments The principal architects lay down the concept and design: Shibani & Kamal Sagar The design team (architectural and structural) builds on the concept by developing detailed working drawings and simulations The surveying and estimating (BOQ) team work on cost and material estimates for the drawing The core engineering team along with the services and MEP team begins construction The construction is managed by the quality assurance team and supported by the design team Once the construction is near the stage of customization, the role of the CRM team becomes dominant to aid in defining the specifications of the apartment

Between the departments, plans, schedules, feedback, vertical communication and task forces assume importance for the functioning of each team and the organization as a whole. These units work in close conjunction with each other. Technology as a part of strategy: handling mass scale customization

Organization Study TE is perhaps the only firm in the country that allows homeowners to customize every little detail of their homes to match their distinct lifestyles and tastes. Customization is an integral part of the company business model. Nearly 30% of the customization of the home happens by sales executives; a level of customization is required at sales stage to determine tentative costs. CRM team handles most of the customization to the extent of architectural details, and this is incorporated through a tool called eBuild. eBuild is TEs online proprietary tool (patent pending) used for customizing homes. Homeowners are provided options to choose from a wide range of space layout options, styles, colours and themes. eBuild even provides instant information on costs and feasibility. Technology in product/ output Our projects come with a host of technological features that have been introduced to truly enhance the quality of life of people who live in them. From the quality of finish to our RCC work, to the use of eBuild - our online tool to help customise your home, to the state-of-the-art home automation systems that make interaction with your home seamless and a pleasurable experience, technology is helping us deliver advanced homes of high quality, long life and efficency.
Internal CRM, MIS,

Culture
The culture of entrepreneurial organizations is often a reflection of the philosophy and beliefs of their founders/leaders. Total Environment is a shining example of this fact. A lot of TEs culture revolves around its charismatic founder, director and principal architect Kamal Sagar. Ref: http://business.in.com/column/zen-garden/total-focus-absolute-intent/5602/1 A story often told to new recruits and people interacting with the organization for the first time relates to the events which resulted in the creation of TE. The story goes like this: When Kamal Sagar had just graduated from the Indian Institute of Technology at Kharagpur with a degree in architecture, he got hired by a rather unusual man who wanted to build a stud farm near Pune. His employer, Zavaray Poonawala, wanted to employ someone who would stand there and build. However, when he reported to work, he found Poonawala a man who drove around in a thirty foot car in no hurry

Organization Study to build anything. Instead, he made the young graduate do odd jobs, until one day, the restless youth forced the project on his employer. He showed Poonawala a cathedral shaped design that flabbergasted the horse breeder. What are you thinking? he asked, This is my building. I want to build something nice here. He drove off in a huff in his thirty foot car. The next morning, when the young architect was called in, instead of being shown the door, his eccentric employer asked him to go ahead. I do not necessarily agree with what you propose, but I will take the chance, he said. Do not try to save me money, I want the absolute best. A year later, Poonawala was simply delighted. In executing his very first project, the young man had found his calling: To use the power of design not just to make artefacts for, but to create an entire environment for his clients. This story firmly reinforces TEs vision of providing an unsurpassed living experience through the creation of sensitively designed spaces. It also impresses upon employees the values of creativity, conviction of judgement and pursuit of excellence which are central to the organizations core belief-system. TEs work culture is largely informal, with the notable exception of its interactions with clients. Part of this is due to the fact that TE has a primarily young workforce in terms of the average age of its employees. This factor is also evident in the generally high levels of energy and enthusiasm witnessed at the workplace. The other important reason for the informal culture is TEs strategic focus coupled with the environment it operates in. Being a company which services high net-worth clients and provides highly customized products, TE operates in a relatively stable environment and place a lot of emphasis on external focus (client relations). Thus, TE has adopted an Mission Culture (ref Daft pg 250) which emphasizes a clear vision of the organizations objectives and achievement of goals, while keeping its niche customers satisfied. The informal work-culture is seen in the dress-code, language and interactions among employees. When it comes to language, for example, all TE employees are encouraged to refer to one-another on a first-name basis regardless of designation. Even the director is referred to as Kamal; the only exception to the rule being the directors father who is lovingly called Uncle. While spaces designed by TE are often symbolic of the tastes and desires of their individual owners, there is another subtle symbolism associated with them. Many of their projects such as Cirrus Manor, Scarlet Begonias and Reach for the Sky are named after songs of renowned rock bands like Pink Floyd, Grateful Dead and Social Distortion. These happen to be a consequence of the director Kamal Sagars passion for music. More

Organization Study importantly, rock music is a metaphor for values such as creativity, authenticity and nonconformance to tradition which TE practices and promotes. While creativity and authenticity of work have played an obvious role in carving out a niche for TE in the residential spaces market, their departure from traditional architectural norms by designing living spaces that are in harmony with the environment has revolutionized high-end living. Another interesting aspect of TEs culture is the familial relationship present between different staff members as opposed to a business-like relationship. This can be attributed to the still largely entrepreneurial setup existing within the company and is likely to change in the near future as the company plans to expand and increase its workforce. Bonding between employees is all the more important for TE considering its high dependency on human capital and the extent of creativity & innovation required for executing its projects. To this end, TE periodically organizes office parties & outstation trips apart from festival celebrations for all employees and their families at the TE campus.

HR and Training
Human Resource ManagementTotal Environment has had a full-fledged HR department since the year 2000. It consists of about 350 employees headed by a HR manager and manages traditional HR functions like recruitment, training, personnel issues and payroll. Since the past year, HRM has been actively involved in restructuring and revamping the companys personnel practices to deal with the sharp increase in the scale of projects it is undertaking. Also, since 2007, the company has launched a massive recruitment drive from the countrys premier engineering and architecture institutes to meet its increasing skilled man-power needs. A special mention needs to be made of TEs firing (plz help rephrase!) policy. TE strongly refrains from laying-off any of its employees except in the direst of circumstances. Even during the recession of 2008-09, although the company was going through a rough time, TEs top management decided not to lay-off any of its staff and instead cut costs by enforcing differential salary cuts with the top management taking the largest percentage cuts (about 35%) and the junior employees taking minimum cuts (about 5%). Training programmesTE provides extensive formal training to all full-time employees recruited into the architecture and structural design departments before training them on-the-job. These

Organization Study sessions are spanned over 2-3 weeks and include training on design software and IT systems, familiarisation with company design standards, field trips to project sites and team-building exercises. The training programme also emphasizes TEs core values through previous work instances; for example,relating an instance where Kamal Sagar ordered the replacement of an entire batch of materials on noticing a single unit from the batch used in construction to be of low quality, to stress the importance of adherence to the highest quality standards in TE projects.

Rewards & Recognition

Conflict management & Decision making

Knowledge management Organizational challenges

Recommendations & Conclusion

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Inter-organizational Relationships
Timeline Development in Effect on organization Manufacturing / Core structure Technology TE started with a team of 2 architects and 2 engineers Effect on Interorganizational relationships - All stages of construction work sub-contracted - Inputs such as formwork, furniture etc. sourced through vendors 1) TE expands the core 1) TE builds relationships architecture & engineering with suppliers. Ex: Doka team formwork sourced from 2) TE adds specialized L&T construction workforce such as carpenters

1996

1997

1998-2005

1) Technology in Formwork 2) Signature elements of terrace garden & Wire-cut bricks 3) Concept of customization in apartment buildings 1) Increase in scale 2) Innovation in design, materials, form

1) New Core departments such as In-house surveying, structural design, metal works, fabrication, maintenance works, landscape etc. are added 2) Non-core and support teams such as HR developed

1) TE builds internal competencies and the vendors that earlier supplied specialized services are no longer required 2) TE buys out 51% share in Quetzal Tiles, that was earlier a major supplier to the company

2006

2007

Geographic expansion, diversification into hospitality sector (serviced apartments) Increasing focus on costs

TE acquired Priti Constructions, Pune, the company that managed serviced apartments for TE TE begins sourcing of formwork & industrial cranes from China, marble from Italy & Colombo and introduces its in-house furniture line

What the main areas in which you use outside agencies (suppliers and dealers)?

Organization Study The above chart suggests that as Total Environment expanded its scale of operations and grew financially, the company has gradually brought core competencies in-house. This was done mainly for three reasons: 1) Control costs 2) Ensure quality in work, given that TE builds lifestyle apartments serving the high end customer segment 3) Control on value chain, resources (through backward & forward integration) and reduce uncertainty Resource Dependence: As suggested, Total Environment has continually strived to reduce its resource dependency, especially in areas critical to its adherence to quality standards. Developing an in-house team instead of sub-contracting to a third party vendor has helped achieve this. Resource Strategies: TE has altered the interdependent relationships with its suppliers by acquiring them (ex. Quetzal tiles), establishing long term contracts (ex. L&T doka formwork) or setting up an in-house team for the same. For some works such as drainage and sewage treatment plants, the company is dependent on a third party. What are the areas in which they have Inter Organizational Relationships (suppliers, dealers, others)? Why are they formed? What are some of the major issues in managing IORs?

Analysis High span of control Highly centralized at Kamal Sagar; decision making is slow Clear rules leading to higher efficiency STRENGTHS & WEAKNESSES OF FUNCTIONAL: PG 210

http://business.in.com/article/work-in-progress/total-architecture-different-kind-ofbuilders/24422/1

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http://www.gvpedia.com/Bangalore/Total-Environment-Top-Property.aspx http://www.mindtree.com/subrotobagchi/downloads/Kamal%20and%20Shibanee%20Sagar.pdf http://www.totalenvironment.com/img/news/2010/Q&A%20%E2%80%93%20CEO%20TALK.pdf

http://www.total-environment.com/img/news/2011/HomeTrends.pdf