Table of Contents

Introduction...................................................................................................................2

Overview of the Organization - Dilmah Ceylon Tea Company PLC............................3

Overview of the existing structure - Dilmah Ceylon Tea Company PLC.....................4

Organizational design theory is important in the context of Organizational structure

and fulfilling Organization strategy – P1.......................................................................6

Critically evaluate the importance of Organizational design using suitable

theory/model using specific organizational examples – M1.........................................8

Introduction to Change Management.........................................................................13

Organizational design should respond and adopt to change management – P4......14

Evaluate how the Organization managed the transformational & psychological

change & How it affected the Organizational design – M4........................................15

References.................................................................................................................17
Introduction
This report is mainly focused on Organization Design and Development. It covers 2
learning outcomes which are evaluate the importance of Organizational design to the
delivery of sustainable performance and evaluate the relationship between
Organizational design and Change Management.

Naomi Stanford explains the importance of Organization design in the modern

organizational context as, “Organization design is one of the key areas of expertise
through which HR professionals can significantly add value to their organization.
Often narrowly interpreted to mean ‘restructuring’, organization design remains one
of the secret levers of significant positive culture change.” (Stanford, 2011)

Dilmah Ceylon Tea Company PLC is the chosen organization for the discussion of
the above learning outcomes.
Overview of the Organization - Dilmah Ceylon Tea Company PLC
“Dilmah Ceylon Tea Company PLC is a public listed tea company founded by Merrill
J. Fernando in the 1980’s. Today Dilmah has grown into an international brand that
is enjoyed in over 100 countries.” (www.dilmahtea.com, 2020) However Dilmah was
first launched as ‘Brew’ in 1867 as a contemporary reunion of Ceylon tea and Ceylon
coffee, to revitalize coffee farming in Sri Lanka.

Vision – “We strive to offer our customers the finest tea on earth, in the most
sustainable way.” (www.dilmahtea.com, 2020)

Mission – “To achieve our vision through our physical stores and digital channels,
we reach customers around the world. Our customer proximity is amplified by our
global distribution network.” (www.dilmahtea.com, 2020)
Overview of the existing structure - Dilmah Ceylon Tea Company
PLC

Chairman

Board of
Directors

CEO (Dilmah
Tea)

Research & Human Corporate

Marketing Production Finance
Development Resource Solutions

Managers Managers Managers Managers Managers Managers

Executives Executives Executives Executives Executives Executives

Above is the existing structure of the organization. More descriptive functions of each
department are as follows:

Production Department

 Planning
 Technical/Industrial design
 Production
 Quality assurance
 Maintenance
Marketing Department

 Digital Marketing
 Promotions
 Market Analysis

Research & Development Department

 Research
 Planning
 Product engineering

Human Resource Department

 Field operations
 Talent Acquisition
 Learning & Development

Corporate Solutions Department

 IT
 Logistics
 Procurement
 Facilities management

Dilmah Ceylon Tea Company PLC is an organization that can be identified as an

organization with a Machine Bureaucracy of the Mintzberg’s types of organizations.
It follows a structure between the tall and flat structures. However, in the present
they are consistently improving to flat structured organizational design and culture.
Organizational design theory is important in the context of
Organizational structure and fulfilling Organization strategy – P1
In Dilmah they have now shifted 60% to an agile organization structure although they
haven’t completely designed Dilmah as an agile organization. They clearly
restructured their firms to follow agile characteristics.

The core concept of an agile organization can be explained as, “They include scrum,
which emphasizes creative and adaptive teamwork in solving complex problems.
The fundamentals of scrum are relatively simple. To tackle an opportunity, the
organization forms and empowers a small team, usually three to nine people, most
of whom are assigned full-time. The team is cross-functional and includes all the
skills necessary to complete its tasks.” (Rigby and Sutherland, 2019)

As it explains in the above paragraph, the core concept of agile organizations is

forming creative and adaptive teams to work on tasks and equip those with the
facilities that they require. Dilmah has formed this type of cross-functional teams up
to a certain extent in the operational and tactical levels where the junior and senior
executives, middle-level managers teamed up to get complete tasks. For their team
discussions of less than 1-hour, tactical level managers who are responsible to get a
particular task done are called to be a part of that discussion. For example, the
digital marketing division of the marketing department is opening up positions as
they need more work force and the team discussion to plan the new recruitment the
Business Partner – Talent Acquisition will be asked to be a part of the discussion. As
a result, shifting to this agile organization style the organizational culture have got
flatten that despite the hierarchy of the job positions, everyone teams up to get a
particular task done efficiently.

Dilmah has a unique strategy of shared purpose and vision for all teams and
departments of the organization. Their mindset is shifted to a more agile and flat
culture where everyone works for common goal which they call it “the value creating
processes”. Primary advantage of this shared purpose and vision is that everyone
works towards adding value to the brand name of Dilmah Ceylon Tea.
“We leverage the talent, commitment and expertise of our self-motivated team to
drive innovation, facilitate the customer experience and to achieve our strategic
aspirations.” (www.dilmahtea.com, 2020) as stated in one of their slogans they have
focused on shifting the mindset to work as teams resulting in an agile organization
design rather than just merely shifting the structure and expecting performance.

Dilmah follows a strategy of flexible resource allocation for each team within the
departments. For example, teams in the R&D department which are Research,
Planning and Product engineering teams flexibly share their recourses of the
meeting rooms and projectors to hold their team discussions on the current
challenges and tasks they are working for.

They also follow information transparency and action-oriented decision making as

processes when completing allocated tasks. For example, in Dilmah employees are
empowered to make fast decisions up to their span of control and very fewer
approval layers are required as tactical level managers are also part of their teams.
In Dilmah people as a result of working in teams have embraced team cohesiveness
and an entrepreneurial drive. For example, improved participation in team
discussions and decision making is a key practice they follow.

As for above specific organization examples of Dilmah, we can observe that

organization design theory is important in the context of organizational structure and
fulfilling organization strategy. Organization design approach has worked as strong
point for Dilmah as they have initiated the agile organizational approach.

Critically evaluate the importance of Organizational design using

suitable theory/model using specific organizational examples – M1

When we consider theories about organization design the Star Model of Jay
Galbraith is significant. “In the Star Model, design policies fall into five categories.
The first is strategy, which determines direction. The second is structure, which
determines the location of decision-making power. The third is processes, which
have to do with the flow of information; they are the means of responding to
information technologies. The fourth is rewards and reward systems, which influence
the motivation of people to perform and address organizational goals. The fifth
category of the model is made up of policies relating to people (human resource
policies), which influence and frequently define the employees’ mind-sets and skills.”
(Galbraith, 2018)

According to the above explanation there are 5 categories which are as follows:

1. Strategy
2. Structure
3. Processes
4. Rewards
5. Policies

1. Strategy
“The company’s strategy specifies the goals and objectives to be achieved as well as
the values and missions to be pursued; it sets out the basic direction of the
company.” (Galbraith, 2018). As for the above definition strategy refers to specific
corporate vision, mission and objectives of Dilmah.

Dilmah focuses on few corporate strategies which is stated in their annual report
such as; earnings growth, focus on quality and an inspired team. Earnings growth is
specifically focused on launching 65 new products to the market which brought
revenue growth of 16% and focusing on expanding the premium segment.

Their next corporate strategy is to focus on quality; mainly on 3 brand attributes of

taste, goodness and purpose. Dilmah has also achieved full compliance to systems
and product quality certifications (ISO 9001:2015, FSSC 22,000)

An inspired team strategy Dilmah has invested Rs. 36 million on training and skills
development, organizing over 450 training programmes in the last financial year.
Multiple engagement mechanisms and an open-door policy is also an initiation of the
above corporate strategy which has resulted in an improved new employee retention
rate of 82%.

2. Structure

“The structure of the organization determines the placement of power and authority
in the organization.” (Galbraith, 2018) When we focus on structure of the
organization few categories are vital when implementing the structure policies of
Dilmah. For example, span of control, distribution of power and departmentalization.

The range of employees who to report to a managerial position, can be explained as

span of control. In Dilmah, the span of control of operational level employees are
roughly 3-5 junior employees such as junior executives and interns. For tactical level
managers the span of control can range from 6-10 operational level employees and
junior managers. Unlike tactical and operational level employees, strategic level
directors, vice presidents and senior managers have wide span of control ranging
from 6-40 employees.

The lines of authority in an organization, is who reports to whom. The authority flow
from top to bottom. This reflects the distribution of power in Dilmah, as the
organization is converting to an Agile organization structure and culture their
distribution of power is 80% decentralized and they follow a very flat culture. Forming
teams in the Agile culture has initiated this flat culture within the organization where
strategic and tactical level managers interact together during team meet-ups.

“Departmentalization is the basis for forming departments at each level of the

structure. The standard dimensions on which departments are formed are functions,
products, workflow processes, markets, customers and geography” (Galbraith, 2018)
As the paragraph explains departments can be formed in many standard dimensions
in order to carry out the operations and functions in a systematic way. In Dilmah,
departments or rather teams are formed based on the functions and products mainly.

3. Processes

“Information and decision processes cut across the organization’s structure; if

structure is thought of as the anatomy of the organization, processes are its
physiology or functioning.” (Galbraith, 2018) As for the explanation processes are the
functioning element of the existing structure in the organization.

We can identify 2 types of processes in organizations;

1. Vertical
2. Lateral

Vertical: “Vertical processes, as shown in Figure 2 allocate the scarce resources of

funds and talent. Vertical processes are usually business planning and budgeting
processes.” (Galbraith, 2018) According to this explanation vertical processes
consist of mainly resource allocation and tasks allocation. As explained in the
previous section, Dilmah follows a strategy of flexible resource allocation for each
team within the departments. Their vertical processes are smooth and efficient
majority of the time even though these processes flow according to hierarchy as a
result of the Agile culture these processes have become smooth.

Lateral: “Horizontal–also known as lateral–processes, as shown in Figure 3, are

designed around the workflow, such as new product development or the entry and
fulfilment of a customer order.” (Galbraith, 2018) According to this explanation these
processes are handled within departments and proceeds around the workflow. For
example, digital marketing team and promotions team launching a new marketing
campaign in social media and other digital media.

4. Rewards

“The purpose of the reward system is to align the goals of the employee with the
goals of the organization. It provides motivation and incentive for the completion of
the strategic direction.” (Galbraith, 2018) As for the above explanation rewards is
one of the main ways to motivate the employees which pushes them to achieve
goals. Dilmah has reward policies as regulating salaries, promotions, bonuses, etc.

Dilmah also follows modern HR trends of skill-based pay and team bonuses. “Skill‐
based pay (SBP) is a compensation system that rewards employees with additional
pay in exchange for formal certification of the employee’s mastery of skills,
knowledge, and/or competencies. In SBP systems, employees receive additional pay
only after they demonstrate the skills, knowledge, and/or competencies that the
system rewards (Shrm.org, 2020) This modern HR trend is implemented in every
department and employees are rewarded for their skills they possess when they
complete tasks and achieve higher performance.

Presenting team bonuses are also a modern HR trend Dilmah follows. This
motivates employees to achieve more as a team in the agile structure.

As a recommendation, to influence the strategic direction of Dilmah achieving

corporate objectives, the reward system must be matching with the structure and
processes of the organization.

5. People
“This area governs the human resource policies of recruiting, selection, rotation,
training, and development. Human resource policies – in the appropriate
combinations – produce the talent required by the strategy and structure of the
organization, generating the skills and mind-sets necessary to implement the chosen
direction.” (Galbraith, 2018) According to this explanation it refers to the HR policies
in the organization. Dilmah has built a set of policies which have higher standards as
they consider human capital as one of the six pillars of their sustainability strategy.
Dilmah’s Human Resource governance framework is as follows, “Our Human
Resource governance framework consists of robust HR, Grievance and Ethics
policies centered on attracting, stimulating, developing and retaining our human
capital. Our governance policies focus on capitalizing and augmenting employee
interest based on stakeholder and organizational goals.” (www.dilmahtea.com, 2020)
Introduction to Change Management
“When organizations undertake initiative to improve performance, seize opportunities
or address key issues, they often require changes − changes to processes, job roles,
organizational structure, and types and use of technology.” (Tutorialspoint.com,
2020) According to the above introduction, change is the transition from state to
another. Changes can occur planned and unplanned and change management is the
initiative the organization takes to manage the change and improve performance.

Characteristics of Change Management:

 It is the discipline that guides, prepares, and equips organizations to

successfully adopt change in order to drive organizational success.
 It provides a structured approach for supporting the employees in moving
forward from their current state to desirable and progressive future state.

“Change management is a systematic approach to supporting employees and teams

as an organization transitions to new processes, tools, or initiatives.

Making even a small change in an organization can lead to anxiety, fear, and
frustration among the affected staff if not rolled out properly. A well-thought-out
change management process can help a company make needed adjustments
smoothly and successfully.” (Productplan.com, 2020)

According to the above explanation change management is a systematic approach

which supports employees in the organization when its going through change.
Change management can be also met with different negative reactions if not
implemented properly.

We can identify 3 types of organizational change:

1. Developmental change - Any organizational change that improves and

optimizes on previously established processes, strategies and procedures.
2. Transitional change - Change that moves an organization away from its
current state to a new state in order to solve a problem, such as mergers and
acquisitions and automation.
3. Transformational change - Change that radically and fundamentally alters the
culture, core values and operations.
Organizational design should respond and adapt to change
management – P4
“The purpose of every change management initiative is to successfully implement
strategies and methods for effecting change and helping people to accept and adapt
to change.” (Blog.smarp.com, 2020) As explained above the purpose of change
management is to helping the employees to respond and adapt to the change
company is going through.

Best example for Organizational Design of Dilmah responding and adapting to

changes made to face and keep the business operations continuing when the
COVID-19 outbreak happened. As the pandemic continues to spread, Dilmah had to
review their short-term and long-term strategies.

Dilmah changed the way their employees are working to remote work and also
restructured the way their teams are functioning and collaborating. They mainly
switched to digital and virtual communication platforms like Zoom, Skype, etc. to hold
team meetings and to communicate to complete their tasks.

Another example and a situation Dilmah had to adapt to change management is

when implementing a new technology (modification to the existing HR recruiting
system). The HR system was remodified to automate some stages in the recruiting
process and gather more information on candidates applying for job positions in
order to hire the best candidates. The HR department was challenged to adapt by
getting used to the modifications done and also meeting deadlines.

The transitional change in organizational culture when initiated the Agile culture, it
was a change that the whole organization had to adapt to positively. Flattening the
culture, efficient team meetings, restructuring as teams and many more changes in
the organization culture was made. Dilmah successfully implemented Agile
organization structure and currently 80% of the organization is following that concept
of Organizational design.
Evaluate how the Organization managed the transformational &
psychological change & How it affected the Organizational design –
M4
In order to evaluate how the organization managed the transformational &
psychological change Kurt Lewin’s change management model is important.
“According to Lewin, 3 steps are essential to make change successful. Recognition
of these distinct stages of change enable the leaders to effectively plan the execution
of desired change:

1. Unfreeze

2. Change (or Transition)

3. Freeze (or Refreeze)” (Medium, 2020)

In the Unfreeze stage organization needs to identify the need for change. For
example, due to the COVID-19 pandemic spreading rapidly Dilmah identifying the
change to switch to remote work and virtual communication as the country went to
lockdown.

In the period of ‘Transition’ effective communication is very important. Good leaders

are also effective communicators. “Throughout the planning and implementation of
the transition stage, leadership needs to clearly articulate and share the influence,
effects, and benefits of transformation across the organization, and prepare
everyone for the future.” (Medium, 2020)

For example, Dilmah management took steps to communicate the tasks,

responsibilities and also the possible challenges that employees would face due to
this pandemic.

“The senior management needs to role model the desired behaviors and mindsets,
plan and deliver quick wins to keep the stakeholders motivated, and empower
people to come up with solutions to tackle new issues and routine matters.”
(Medium, 2020) As explained above Dilmah management encouraged quickly
adapting teams and set them as role models to the other teams and departments in
the organization.
In the final stage of ‘Refreezing’ Lewins explains, “By freezing or refreezing, Kurt
Lewin means reinforcing and institutionalizing the desired changes, ensuring they
are widely accepted, utilized all the time, and incorporated into the business and the
organizational culture.” (Medium, 2020)

In order to embed change Dilmah addressed employee concerns and fears

regarding this change. The management was truly concerned about the employees
and addressed and dealt with the concerns of the employees first by giving them
confidence and assuring that the change will bring positive results and then led them
to focus on the organizational benefits. This helped massively for Dilmah employees
to manage psychological change as the employees were pleased to see the
management concerning about them despite a time of crisis.

Dilmah implemented plans on exercising teambuilding, trust-building and open

communication with the employees prior to the introduction of change. This step
helped them to create an atmosphere of trust. Dilmah management also involved
employees in the change process and required their inputs which helped the staff to
accept the changes implemented without fear.

The above steps and practices taken and implemented by the management of
Dilmah excelled them in managing transformational and psychological change in the
organization. Through this excellent change management Dilmah has been able to
increase business outcomes of changed initiatives and also to increase the brand
value of the company. It also led to better-coordinated teams and secure employees
with increased job satisfaction. Dilmah truly have initiated change management to
their human capital in the organization which is one of the pillars of their
sustainability strategy.

“Companies that can't adapt and grab growth opportunities are most likely to be
outcompeted by agile competitors and even disappear. That's why preparing for
change should be one of your top priorities.” (Blog.smarp.com, 2020)
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