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Submitted By Sumeet Pai (ePGP-02-081) Tushar Govalkar (ePGP-02-086) Sandhya Vidhyasagar (ePGP-02-065)
Organization Behavior - II
Table of Contents
Abstract ................................................................................................................................................ 2 Introduction......................................................................................................................................... 2 Key Concepts ..................................................................................................................................... 3 Organizational Theory ............................................................................................................. 3 Organizational Structure ......................................................................................................... 3 Organizational Culture............................................................................................................. 3 Organizational Design ............................................................................................................. 3 Organizational Change ............................................................................................................ 3 Relationships among Organizational Theory, ................................................................... 4 Structure, Culture, Design and Change ............................................................................... 4 Importance of Organizational Design and Change .......................................................... 4 Consequences of Poor Organizational Design and Change Process ........................... 5 BIDW ........................................................................................................................................... 5 About The Company ........................................................................................................................ 7 Current Organizational Design and Change at IDG ................................................................ 9 Authority and Control .............................................................................................................. 9 Specialization and Coordination ......................................................................................... 10 Culture ........................................................................................................................................ 11 Strategy ...................................................................................................................................... 12 Competence and Technology............................................................................................... 14 Decision Making Process...................................................................................................... 15 Innovation.................................................................................................................................. 16 Conflict Management, Power and Politics ....................................................................... 16 Challenges for ABC due to High Employee Turnover ......................................................... 17 Low Project Win Ratio .......................................................................................................... 17 Partnership Value .................................................................................................................... 18 Low Moral of the Employees .............................................................................................. 18 Low Quality Hiring ................................................................................................................ 19 Influence of Organizational Design and Change in light of Personal Growth............... 20 Low Brand Image.................................................................................................................... 20 Fragile Organization Structure ............................................................................................ 21 Low Emphasis on Organization Culture........................................................................... 21 Less Focus on Innovation ..................................................................................................... 21 Reactive HR Group ................................................................................................................ 21 Proposed Employee Retention Framework for IDG ............................................................. 21 Brand Building......................................................................................................................... 21 Alliances .................................................................................................................................... 22 Standardization ........................................................................................................................ 22 Beneficial Stakeholder Relation.......................................................................................... 22 Inculcate Organization Culture at all Levels ................................................................... 23 Organization Re-structure ..................................................................................................... 23 Productive Human Resource................................................................................................ 23 Inculcate Innovation at all levels......................................................................................... 24 Building Customer Relationship ......................................................................................... 24 Conclusion 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Organization Behavior - II
Abstract
Like all other industries, IT industry has also come a long way to establish itself as an important sector which contributes substantially in the economical growth of many countries. Led by the intellectual power, the IT industry is the market where-in world class companies are competing with each other to provide world class services to its customers. Although the year 2009 was not so good for this industry and it is expected to recover fast from the recession. IDC (International Data Centre) predicts 3.2 percent growth for the year 2010, returning the industry to 2008 spending levels of about U$1.5 trillion. It is imperative that the companies have to be aligned to the ever changing technological challenges with an eye on providing cost-effective solutions to the customers. In addition to this, to stay ahead in the competition, the company needs to aggressively look at organizational design and change which will assist in creating better value for the customers and for the shareholders which in turn will allow the economy to grow as whole. In this paper various aspects of organization design and change are discussed in relation to its impact on one of major IT Company ABC1 and a business unit in particular Business Intelligence and Data warehousing (BIDW) from India Delivery Group (IDG). At present IDG is facing very high attrition in its BIDW group and would like to understand the reason for the same. In arriving at the reason for high attrition rate, we will focus on understanding the kind of organizational design and change process, ABC has. We will also look at the fact that the influence of organizational factors, in anyway, contributing to the high attrition rate for ABC or the employees are taking advantage of market situation and willing to compromise on professional ethics for personal growth.
Introduction
Being a major IT company in the world, ABC; it is expected that the processes and the policies will be a major driving factor for its business growth and market expansion. But rapidly changing technological environment and very fiercely competitive IT market made it impossible for any company to stay at the same level forever. The current scenario in IT industry is such that every company is more or less capable to deliver a solution expected by the customer so how to differentiate which one is the best and optimal solution, which provides value and long term benefits to the customer. The differentiator factor has made all the companies to look at the way it projects itself as one stop solution shop and gain confidence of the customer that it is more than capable to provide the solution. Some of the major IT companies including MNCs have aggressively worked on differentiator factor and are able to achieve good success but companies like ABC , even though, a very much respected for the solution it provides in US and Canada, is
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not able to substantiate that is capability in IDG is good as well. One of the major reason for this is being the high attrition rate. Being a profit center of IDG, IDG has to do its own efforts to bid for IT assignments and subsequently provide solutions once the assignments are delivered by one of its internal team. IDG is managed to sustain the growth in some of its core areas but one of the areas called BIDW, it is facing major challenges in establishing itself at par with other major IT service provider. We will examine various aspect of organization design and change in relation with high employee turnaround in this area for IDG and evaluate the workable employee retention framework.
Key Concepts
Let us look at some of the key concepts of organization design and change
Organizational Theory
The study of how organizations function and how they affect and are affected by the environment in which they operate
Organizational Structure
The formal system of task and authority relationships that control how people coordinate their actions and use resources to achieve organizational goals
Organizational Culture
The set of shared values and norms that control organizational members interactions with each other and with suppliers, customers, and other people outside the organization
Organizational Design
The process by which managers select and manage aspects of structure and culture so that an organization can control the activities necessary to achieve its goals
Organizational Change
The process by which organizations move from their present state to some desired future state to increase their effectiveness
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Figure 1: Relationship between Organization theory, structure, culture, design and change
Organization Behavior - II
Differences in the race, gender, and national origin of organizational members have important implications for organizational culture and effectiveness Promoting efficiency, speed, and innovation The better organizations function, the more value they create
BIDW
Business intelligence is a term which refers to an assortment of software applications system which helps to analyze an organization's data, giving inputs to make successful business decisions. This category of applications programs is concerned about transforming the raw data of organization into easily accessible, high-value information. Data warehousing is the process of collecting data from multi-varied sources of an organization and consolidating it into one comprehensive and easily manipulated database. The term Data Warehouse was coined by Bill Inmon in 1990. The definition from Inmon is: "A warehouse is a subject-oriented, integrated, time-variant and non-volatile collection of data in support of management's decision making process". Data warehousing is not the be-all and end-all for storing all of a company's data. Rather, data warehousing is used to house the necessary data for specific analysis. More comprehensive data storage requires different capacities that are more static and less easily manipulated than those used for data warehousing. A 2009 Gartner Group paper predicted these developments in business intelligence/data warehousing market. Because of lack of information, processes, and tools, through 2012, more than 35 percent of the top 5,000 global companies will regularly fail to make insightful decisions about significant changes in their business and markets. By 2012, business units will control at least 40 percent of the total budget for business intelligence. By 2010, 20 percent of organizations will have an industry-specific analytic application delivered via software as a service as a standard component of their business intelligence portfolio.
Organization Behavior - II
In 2009, collaborative decision making will emerge as a new product category that combines social software with business intelligence platform capabilities. By 2012, one-third of analytic applications applied to business processes will be delivered through coarse-grained application mashups.
Organization Behavior - II
Figure 2: Core Processes at IDG The company provides focused industry expertise in following areas Financial services Government and healthcare Telecommunications and utilities Retail and distribution Manufacturing
Industry Wise Break-Up
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The geographical market for IDG is limited to following combination of regions US and Canada Europe and Asia Geographical Market
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100 80 60 40 20 0
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US & Canada
Figure 4: Revenue from different geographical areas for IDG The company provides End-To-End services in following areas Consulting Systems integration Management of IT and business functions
SOW Types
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The BIDW unit comes under Advance Technology group. At present there is no dedicated structure which takes care of BIDW needs for the IDG unit. The BIDW resources are scattered across different projects IDG is handling. The hiring and assignments are aligned to project requirements only. There is very minimal visibility as such for BIDW unit within the IDG even its peers in the market have dedicated BIDW units to cater for demands in this area.
Organization Behavior - II
President and CEO CFO CIO SVP Technology Infrastructure and SVP US South Central and SVP US Northeast President US, Europe and Asia President Federal Govt.
SVP US Enterprise
VP Mature Technology
VP New Technology
VP KPO
Director Engagement 1
Director Engagement 2
Program Manager 1
Program Manager 2
Project Manager 1
Project Manager 2
Project Team
Figure 6: Organization chart for IDG The organization structure is a having both vertical & horizontal component at its core. The vertical component is having higher influence on overall organization. The reaon for this is that the technological areas are not grown to the extent in IDG that it can be treated at par with the vertical component. The organization represents more of a tall structure with a sufficiently defined hierarchy from CEO to a team member. The span of control varies depending upon the engagement and the importance of the assignment delivered by the respective manager.
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Organization Behavior - II
The BIDW unit comes under Advance Technology group. At present there is no dedicated structure which takes care of BIDW needs for the IDG unit. The BIDW resources are scattered across different projects IDG is handling. The hiring and assignments are aligned to project requirements only. There is very minimal visibility as such for BIDW unit within the IDG even its peers in the market have dedicated BIDW units to cater for demands in this area. The integration between these different categories is done at VP level. This means that the groups are working independently and there is no resource sharing between these groups as such.
Culture
ABC believes in participative approach where in each of its member is treated as owner of the company. In spite of the geographical challenges the fundamental of the sharing common values remains at the heart of organizations heart. The common values include an inspiring dream, integrity, a caring, humane management philosophy and solid values is better able to attract and respond to the profound aspirations of high-caliber, competent member. The expectation is that these values will be part of a employees day to day life at the organization and same will help them in selecting clientele, one aware of the company's values, and delivering high-quality services at a competitive price, while meeting the company's profitability objectives. The growth and profitability generated as a result will allow ABC to offer its shareholders a superior and sustained return on their investment. To support dream and to create such an environment, ABC has adhered to a number of principles or governing ideas: Sharing the same values Embracing the objectives of clients Adopting a caring, humane approach towards our members Focusing on synergy and the strength of teamwork Participating in the development of our company as its owner shareholders, and sharing in its wealth Promoting robust, healthy and sustainable growth to the benefit of all stakeholders Implementing a management model aligned with our dream and values
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Strategy
The strategy planning process is illustrated in following diagram
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Figure 8: Strategy Framework ABC believes in both organic and inorganic growth.
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ABC has long and focused practices in all of its core industries, providing clients with a partner that is not only expert in IT, but expert in their industries. This combination of business knowledge and technology expertise allows the organization to help its clients 14
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adapt as their industries change, and in the process, allows self to evolve the industries in which self operate. BANKING AND FINANCIAL MARKETS DISTRIBUTION GOVERNMENT HEALTHCARE INSURANCE MANUFACTURING OIL AND GAS RETAIL TELECOMMUNICATIONS UTILITIES The service delivery process is illustrated in following diagram
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Innovation
Innovation is driven by dedicated groups in different areas of technology and process. ABC members to collaborate with each other using these group connections. Following are the different group connections Technology Group Connection Industry Group Connection Process Group Connection
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In ABC Managers are assigned with powers which are in line with the role they are playing within the organization. The balance of power does encourage allocation of resources to where value is created and the give managers better control on the resources. ABC encourage healthy organizational politics to gain its benefits by establishing a balance of power in which alternative views and solutions can be offered and considered by all parties and dissenting views can be heard. Balance of power is allowed to shift over time toward the group that can best manage the uncertainty and contingencies confronting the organization.
No. of Proposals
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Partnership Value
IDGs resourcing issue gives advantage to both for the companies who would like to collaborate with IDG on certain contracts and for the customers who would like to engage IDG to provide IT solutions for them. Both collaborator and customers would like to benefit from the low brand image by negotiating contract terms with IDG in their favor. This aspect is illustrated in the following graph where-in the IDG has to compromise on the total value for it gets for services it provides from its customers or collaborators in comparison to the other established companies.
Others
IDG
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Skill Level
4 3 2 1 0 Others IDG
Tr an sf or m at io n
es s
Bu sin
Bu sin
Skills
Figure 14: Skill Factor Overall, IDG is not able to win any significant assignments in recent times. Even after submitting good proposals for the assignments pertaining to some of the large customers. It is not able to make much of a progress in BIDW space. Its dependency on the onsite assignments is significant and even after more & more offshoring; it is still not able to highlight the significance of Indian development center for BIDW related work. Also the company has to compromise on the quality of the resources and collaborators who can help them to grow faster than what they are able to in the current scenario.
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Da ta ba se
Da ta
Ad m
es s
in st ar at or
ep or tin
Ar ch ite
An al
Te st in g
ct
ys t
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Time
Figure 15: Commitment Factor The high attrition rate among the new joiners is observed due to following reasons
Organization Behavior - II
Reactive HR Group
The HR group is not established itself as key player within the organization. It is driven by the profit center management rather than its own instinct. They are more align to what project demands rather than what employee wants. This also leaves employees looking for better options in relation to power and political influence in other organization.
Brand Building
First and foremost action, IDG should take is to start looking at is its brand value in IT market and understand clearly that how it should proceed towards building a successful brand. IDG can leverage the experience of US market and look at placing the IDC at par with the top Indian companies and accordingly plan on the promotion & advertisement to increase its brand value. The better brand more will be the awareness which eventually help in demanding fair value for the work, IDG do in BIDW space.
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Very High
Innovative
Matured Established
M a r k e t P r e s e n c e
Good
Competent
Adequate
Explorer
Starter
Negligible
Level of Company
Figure 16: Impact of Brand
Alliances
IDG should enter into strategic alliances with some of the major vendors of BIDW space like Informatica, Datastage, Business Objects, and SAS etc. This will help the company in establish itself better from technological stand point. Also this will help in spreading companys capability and achievements to all the stakeholders.
Standardization
The company should look at standardizing its core process in BIDW across the organization so that only one version of truth is shared with all internal as well as external customers. Well structured and effective processes like Quality, Human Resources, IT infrastructure will be always an added advantage. This also gives a good signal to the potential employees about the robustness and effectiveness of internal processes of the company.
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to contribute in participating mode and use both internal and external information pertaining to the company for the growth of the company. The employees should be made aware of the fact that if company is growing, they will be growing both financially and professionally.
Organization Re-structure
Since there is no separate BIDW group within IDG; we need to look at an option of establishing BIDW as one of the Horizontal. This Horizontal unit will be aligned to technology aspect and Vertical unit should look at specific business/industry Domain. This will help the company to focus on BIDW as a unit with clearly defined achievable goals. Vertical Business Units Retail Manufacturing Telecom
Center of Excellence
Resource Mgt
Training
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Productive human capital is always a very good signal to the market about the capability of the company.
Conclusion
The study examined various aspects of organizational design and change in relation to IDGs BIDW unit of a major IT company of the world and looked at the proposed framework for this unit to retain its human resource. It has been observed during the study that high employee turnover happens is not only due to personal aspiration but at the same time organizational design and change also plays a major role.. The more streamlined and robust organizational design and change processes a company has more market advantage it got by retaining the skilled resources. By improving and establishing its operations from design and change perspective, the IDGs BIDW unit can definitely improve its market presence and will be able to contribute substantially better in IDGs revenue & profit.
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References IDC IT revenue figures http://gigaom.com/2009/12/03/idc-2010-forecast-apples-ipad-arrives-frenetic-tech-ma/ Wikipedia Definitions in Key Concepts section www.wikipedia.org Book Organizational Theory, Design, and Change - Fifth Edition Gareth R. Jones
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