Significant changes at Semco
Discuss about the Assessment of Transformational Plan at Semco.
Management is an art used by businesses to ensure that efforts of various personnel are well coordinated to achieve Organizational goals and objectives. Active management is a critical input that enhances the success of the firm. There are various strategies that organizations utilize to enhance integration of human and other resources.
In the case study, the transformational approach is used to align the organization to the changing technological and economic environment. It involves establishing a drastic and significant change within a business to enhance its performance in various economic conditions. The radical adjustment of complete employee empowerment initiated by Richard Semler is an example of the transformational leadership style of management. This style incorporates various principles of management such as division of work, equity, initiative and unity of direction. It also enhances the job performance and morale of the subordinates leading to improved motivation (Ferguson, et al. 2011).
Indeed, such changes in return ensure high competitiveness, efficiency, flexible scheduling and effective team building. Further, if the owners of a company follow the laid down principles, they can implement various modification plans they feel suits their business (Kamalian, et al. 2010, p. 165-171). Currently, the universal application of this method is quite difficult due to different cultural imperatives. The hierarchy in management greatly matters to ensure there is accountability, guidance, a clear career path for each employee and efficient communication between employees, departments and divisions of the company (Ford, 2007, p. 78-140). Additionally, there is a culture of ensuring that sensitive internal information of a firm is kept secret for competitive advantages. Many organizations in the universe do not prefer sharing their data on the new products, production process and marketing plans. They only give out general information when forming partnerships and alliances with other companies in different industries. It is because they do not want their competitors to use such information to identify their strengths, weaknesses, opportunities and threats.
However, the placement of all the responsibilities to the employees without any top management tasked with the control of their progress can result to difficulty in achieving set objectives and goals. Radical rotation of job titles after a short period creates confusion in industries, and one cannot enhance his skills and experience in a given academic field. Also, dismissal of managers for purposes of transformation can cause chaos to the firm. The establishment of the universal organizational structure is in a way that there is the minimization of total employee participation in all the business activities (Abdollahi, et al. 2006). When enacting radical change in an organization the owner and managers have to apply appropriate tools that will ensure the strategies are worthwhile and efficient. Therefore, to some extent, the Semco transformational plan may not be universally accepted.
Sources of tension in the structure
The occurrence of the recession in Brazil forced Richard Semler to implement various changes that enhanced employee motivation. They include: First, elimination of job titles. This kind of modification makes employees feel free to challenge the status quo of the company and also share ideas without fear of the top managers. Rotation of the Chief Operating Officer title will improve workers skills test and also extend their boundaries. Also dealing with uncertainties and strengthening organization’s position is easy. It helps employees focus on job performance rather than coming up with ways to suck their superiors. They are sure of getting a given position since it rotates to all individuals after a short period (Ugboro & Obeng, 2009).
Secondly, there is complete transparency in salaries among employees and equipping them with the role of wages and bonuses management. Salary transparency enhances equality, reduces turnovers and also builds trust in the organization’s culture (RasoulDasht, 2008). The suspicions associated with discrimination and general unfairness decreases. There is improved communication between coworkers on salary payments, and thus potential conflicts that arise from high or low payments are thwarted. Moreover, workers have the authority to set their working hours. This shift involves having a flexible working schedule. It allows them to work when they are fresh and think that they can perform the outlined tasks efficiently. Choosing managers in a democratic manner is an important change that Semco establish to enhance worker motivation. They vote for the leader whom they trust and believe that he can guide them to achieve their set targets and goals.
There is entrepreneurial spirit improvement as they work with their minds set on what they can do to achieve success in the area selected. Coordination between work hours and public transport improves due to the ability to plan for oneself on the daily activities. Setting and control of budgets are the significant radical changes established by the owner of the firm. When subordinates set their budgets, there will be waste elimination, reduction in bureaucracy, and tough time spending on assigned duties. They will always focus on achieving their targets compared to when managers set for them. Profit sharing among the divisions of Semco is a significant step taken that most companies are failing to deliver. This change will motivate the workers to put more effort in ensuring the outputs increase and the costs associated with the production process goes down (Tietjen & Myers, 2008, p.226-231). Their morale and productivity levels improve and also create a strong bond between the management and the subordinates. It is a strong incentive that encourages them to put more efforts towards achieving better end results (Mc Gregory, et al. 2006, p. 77-120). It will motivate them to focus on the company’s profitability and also enhancement of their commitment towards the common goal. There is also employee empowerment in hiring and firing people. This kind of change gives room for them to choose managers and coworkers whom they will be comfortable working with to achieve their targets. Although it has many disadvantages, the strategy works well in Semco. The responsibility of overseeing the whole process of machine manufacturing is in the hands of workers. As a result, accountability among the individuals improves. Consultation on hard tasks is enhanced as they know their poor performance affect the organization (Wilkinson and Brown, 2009). The establishment of small groups with common aims of achieving their targets promotes sharing of ideas. Hence the result will be coming up with innovation-oriented teams. Such a modification can contribute to the development of new products and services and also the advancement of the technology methods used in production (Boddy, 2008). An industrial machine manufacturing company needs to ensure that their ICT infrastructure is reliable and up-to-date. As a result, the networking and collaboration between the workers will enhance. Improved system performance also facilitates quality communication from the executives down to the last level of personnel in an organization (Mayfield, 2002, 41-49).
A slowdown in industrial production and manufacturing in Semco creates tension as it results in low-level of performance. The question on whether the associates, partners and counselors will work together with a common aim of identifying various opportunities that will benefit the organization raise significant tension. There is considerable importance to quickly identify beneficial areas that require adjustment so as to cope with the recession periods. The flexibility of the structure to respond as fast as possible to the changing economic conditions is a source of rigidity in the machine manufacturing company. Next is the pressure on how to achieve effectiveness in the implementation of the radical transformational overhaul. Given that management of a business that is recording poor performance is difficult and there is anxiety about what to do to implement the changes that are appropriate. Radical modifications need the consultation of different stakeholders but will take time, and the company will continue to diminish before making the best decision (Frank and Chris, 2011). The plan to adjust the structure of Semco is a decision made by only the owner who may not fully understand the challenges and causes of the performance. The anxiety on how to structure the firm to gain more competitive advantage brings about radical modifications. Ineffective evaluation of such changes can cause more problems than before.
The cultural shift to implementing in the organizational structure to achieve the plans formulated is the next source. Most employees have the characteristic of resistance to change on their norms and beliefs. New policies and measures established to change their social behavior is an enormous task that involves the ideas of different minds (Huczynski, and Buchanan, 2008, p. 48-98). However, the business owner ignored the idea of participation of all people in coming up with a solution to the poor performance. The next source is that the structure does not fit into the traditional organizational designs of management. It aims at the associates tasked with running all the activities of the company. It needs to flexible to cope with the radical technological and economic changes. Rotations of COOs of each small group after six months raise tension in the company (Mullins, 2010). It is because they are not sure as to whether the person selected for a given period has the skills and abilities to perform the managerial tasks as expected.
The management has to take the initiative of training the staff on the new tasks and ensure the documentation of the job rotation policy. The costs of training will increase from time to time resulting in more expenses than revenues. It is a strategy that gives workers an opportunity to earn more promotions and become more valuable in the job market. Therefore, tension in a company creates more problems and the managers should try to avoid it for the smooth running of the daily business activities (Okanya, 2007, p. 56-89).
Being a high-risk taker shows confidence and helps business owners and managers to overcome the fear of failure. It is a characteristic of successful entrepreneurs. Therefore, Semler had to undertake the following risks to ensure improvement in performance. First, the dismissal of top management tasked with the responsibility of ensuring that the achievement of the organizational goals is a significant risk (Mayntz, 2009). Here he wanted to implement the idea of managing without managers found in his business review article. This kind of realignment will lead to a reduction in the establishment of corporate policies that enhance the daily programs of the company (Mayfield, 2002, 41-49). Also, some of the impacts of such adjustment include; poor asset management and support and low creative problem-solving. The quality of the functions of management will be weak because of the dismissal of the top management that is tasked with planning, coordinating, organizing, staffing and controlling.
The second risk is placing all of the responsibilities to workers who are the principal mission of the top level managers. This strategy has various impacts such as increased ignorance, lack of appropriate experience in performing different tasks and a hostile working environment may result. Exposing the company’s sensitive information on the website and notice boards shows the risk of reducing the competitive strength. The competitors will access such data and will understand all your production processes and the payroll system. Competitors may duplicate the same system and even improve to pouch the hardworking employees (Adair, 2009). The implementation of unlimited empowerment strategy that in future will increase resistance to change by employees. When workers are used to such kind of transformational plan, it will be difficult for them to stop performing such activities. Lastly is, the disposal of manuals that explained the factory life and contain the set rules and regulations governing activities of the firm. Companies use such manuals as a guide to developing and sustaining productivity. They also use them in the documentation of the enterprise’s policies and procedures on the financial management. Such materials serve as references for questions and problems facing the organization (Adair, 2009). Their disposal creates a great challenge to the company’s structure.
In conclusion, economic conditions such as recession force the management to establish basic transformational plans. Therefore it is important to understand the pros and cons associated with such steps. As per the evaluated discussion above, there is a need for the incorporation of various changes in the company structure before its implementation. Total employee empowerment is a technique where firms aim at faster attainment of business goals and objectives. It is a strategy that enhances motivation and morale of the workers. Before undertaking any risk to solve a problem affecting a company’s performance, there is need to involve all the key stakeholders. It will help to reduce tension among individuals. Therefore managers should aim at making better decisions so as to improve on profitability in both short and long term.
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