BSQA530 Essay: Organisation And Management.

The aim of this report is to enhance understanding of the organizations and change management. The organization chosen for the group work is Fonterra. Background information of Fonterra and dairy industry is provided. The word Fonterra is derived from the Latin fons de terra that means ‘spring from the land’ (Fonterra.com, 2017). Fonterra is a New Zealand multinational dairy co-operative that is responsible for 25% of the NZ dairy export (Fonterra.com, 2017). The company has 22,000 employees working under them manufacturing and selling milk, cheese, butter and ice-cream (Fonterra.com, 2017). From the time of its inception in 2001, thousands of farmers are responsible for making the organization a global success (Fonterra.com, 2017). They contribute approximately $8 billion into provincial and rural towns. The co-operative operates in more than 100 countries serving billions of people regularly (Fonterra.com, 2017).

New Zealand has a close political relationship with UK that was a great opportunity for the organization. The company had become highly bureaucratic and they were slow to respond to the market conditions. Therefore, to improve coordination among people, a dairy board was established. With the merger of the two biggest companies, New Zealand Dairy Group and Kiwi Co-operative Dairies, Fonterra was come into market along with the New Zealand Dairy Board. Fonterra went through a difficult process of consolidation while they entered new markets (Fonterra.com, 2017).

Organizational structure can be defined as the network of relationships among various positions in the organization. The main considerations of the organizational structure at Fonterra are described as under.

The main export markets are Japan, USA, South East Asia and Australia. Fonterra is divided into different departments based on the business units or subsidiaries- Fonterra Brands, NZMP Ingredients, Fonterra Group Manufacturing, Fonterra Global Dairy Trade, Fonterra Milk Supply and Shared Services. The hierarchical structure has up to 13 directors in the Board who are approved by the shareholders (Fonterra.com, 2017). The Milk Commissioner is appointed by the shareholders’ council. The Board manages and controls the operating division of different subsidiaries (Fonterra.com, 2017).

Centralization refers to the degree of control and decision making power in an organization. According to Pavlovich, Sinha and Rodrigues (2016, the organization is spread out in several geographical regions such as New Zealand, Australia, Sri Lanka, Saudi Arabia and many others. These geographical regions produce different products based on the demands or strategic needs. Therefore, the power is decentralized where the different geographical locations can control the flow over their products and services (Fonterra.com, 2017).

The organizational structure depends on environment, size and technological factors. The structure is organic in nature rather than being highly mechanistic. There is less hierarchical level and the workers at Fonterra possess great responsibility. The decision making and control are not highly rigid that requires only vertical mode of communication (Dee, 2016).

The span of control refers to the number of employees of subordinates supervised by a manager. The span of control is flat or horizontal as there are few levels of middle management between executives and employees. Fonterra experiences better communication speed and quality as there are fewer norms for reporting. However, it may lead to distrust of management (Fonterra.com, 2017).

The existing structural design can be described as a conglomerate divisional form as every division of the organization has its own investments, senior management and global alliances. The main strengths of this organizational structure are that it empowers the employees as they have autonomy in decision making. In case of business emergencies, this structure is beneficial as the employees and managers work autonomously. However, less control is a deficiency in the structural design. Also, there is a risk of fragmentation. The decentralized units at Fonterra may suffer from low productivity as the new ideas and innovative techniques may stay limited to individual business units (Siddiqui & Ahmed, 2016).

The modified or changed structural design is suggested as adhocracy as stated by Mintzberg. The main strength of this structure is that it helps in solving routine problems that are experienced at Fonterra on a daily basis. As there are a variety of experts working in a flexible manner, this structure responds quickly to change. Fonterra’s superstructure can be improved and a closer relation between customers and operations can be developed. However, the main disadvantage is that it is difficult to maintain clear communication. There is lack in planning or risk management techniques that can distort Fonterra’s economic condition (Deschamps & Nelson, 2014).

Firstly, it is recommended that Fonterra can switch to machine bureaucracy where there is standardization of work processes with limited horizontal decentralization. As Fonterra has wide business networks, the decisions taken need to be centralized. The span of control needs to be made narrow and there needs to be different levels between lower and top management (Fonterra.com, 2017).

Secondly, a modified matrix structure can be implemented where the staff members assemble from various departments or subsidiary units. The modified matrix structure shall be beneficial in uncertain environments. The techno-structures can be flattened for streamlining processes and resources. Better synergy can be created between the operational units (Hornstein, 2015).

My contribution made in this section was to find out the main considerations. To outline the main considerations of organizational structure, I studied about the different forms and types. I analyzed Fonterra thoroughly by reviewing the corporate structure reports. The different concepts and forms of structures were reviewed. As the structure of an organization reflects the division of work, it was crucial to understand the key components of Fonterra (Hayes, 2014). I looked into the product segments of Fonterra and the countries in which the products are exported. The nature of organic and mechanistic structure was studied in great depth. The other team members had to determine the advantages and deficiencies of different organizational structure. The knowledge gathered by me was passed onto them as and when required. As I had the thorough idea of the degree of centralization or decentralization, span of control or structural forms, it was better as we worked in a team (Galegher, Kraut & Egido, 2014).

According to the above analysis and discussion, organizational structure at Fonterra needs a change. The following frameworks of change can be applied:

The first framework of change is identified as John Kotter’s Change Model. There are eight steps in leading change using this model. Firstly, the managers need to create urgency. The reasons why Fonterra needs to switch from a highly decentralized business to a limited horizontal decentralization structure needs to be urgently developed. Second, a powerful coalition needs to be formed with the shareholders council at Fonterra as they elect Board members and Milk Commissioner. An emotional commitment is required from them. Thirdly, a vision for change needs to be created as Fonterra wants to be the natural source of daily nutrition for all consumer groups. The vision statement needs to be communicated to the employees so that they strive to work for that vision (Khundrakpam et al., 2013).

Fourthly, the above vision needs to be communicated frequently with the employees so that it is applied at all functions from training to performance reviews. Fifthly, the people who try to resist change must be brainstormed or rewarded for letting the organizational structure change happen at Fonterra (Kempster, Higgs & Wuerz, 2014). Sixthly, Fonterra management can create short-term wins by rewarding the employees who contribute in changing the organizational structure. Seventhly, the change at Fonterra must be built by analyzing the change at every step. This shall help in analysing the improvements required. Lastly, the changes must be anchored by publicly recognizing the members of Fonterra who would contribute significantly (Bijman, Hendrikse & Oijen, 2013).

The second framework of change is Lewin’s change management problem. According to Goodwin (2013), this model has three stages that allow an organization to prepare itself for the change and manage transition. In the first stage, Fonterra can unfreeze by preparing the employees to accept organization structure change. Satisfaction surveys can be conducted where the perception of employees can be well understood. Strong reactions among the employees need to be well managed. In the next step, uncertainty among employees at Fonterra needs to be resolved. The employees at Fonterra need to be supported so that they can follow the new direction. The managers at Fonterra must communicate timely with their employees so that change can be managed effectively. The last stage is Refreeze in which changes take shape and organization is ready to refreeze. The employees at Fonterra can internalize or institutionalize change. The employees need to be stable and confident with the new methods of reporting or working in the organization (Rest, Kandanelli & Fernández, 2015).

According to Conchie (2013), the Kotter Model is simple to follow as there are several steps involved. It is more about the preparedness of the change rather than the change itself that makes transition simpler. This model adapts well in the traditional hierarchies. An organization structural change at Fonterra will not be easy as the business is widespread in different subsidiaries and geographical locations, it shall be simpler to follow step by step process. However, it shall be difficult to change the direction one the process of change begins. If the individual needs of employees are not taken into account, they might be frustrated.

The Lewin model is relevant in the case scenario as it simple in nature and easy to understand. The number of steps is less and change can be implemented easily. The model is relevant as it can be successful with the active participation of all employees. As there are thousands of employees working for the co-operative group Fonterra, the participation of every employee is crucial in the change management process (Hu & Liden, 2015).

According to Cummings and Worley (2014), the employees are the core reason of success behind Fonterra. The employees possess certain values that make change capability stronger. Firstly, the employees at Fonterra possess competitive spirit that makes them compete with the other organizations. They put the whole and strategic goals first before their individual ones. Secondly, they have a tendency to challenge boundaries and always want to achieve the maximum and cross limits. While challenging boundaries they strive for continuous improvement (Boies, Fiset & Gill, 2015).

For this section of the paper, my contribution was limited to gathering relevant data. I did the research on corporate website, academic journals and books to investigate the core concepts required for the paper. I suggested a few ideas and points that could be used to prepare this section so that it results in the best information for Fonterra. Apart from research, my contribution was also determining the strengths that enable Fonterra employees to embrace change. I helped the other team members in managing their content by using the least but impactful content.

This section is a group reflection for our experiences in leading and motivating displayed by members in our team or other teams. It also describes the process of delegation for the work in our team.

According to Price and Weiss (2013), leadership is the process of managing other people to achieve common goals. The two approaches to leadership that were displayed in our team were situational management and transformational approach. As studied by Blanchard and Hersey, situational leadership approach is when the leader adjusts his style to fit the level of followers he tries to influence. A similar case was seen while preparing this group report. One of the members in our team was selected as the leader and he played the role of delegating tasks. The tasks were chosen that had to be performed by each team member and directions that had to be taken. Further, as seen in the case of transformative leadership, the team leader encouraged innovation and creativity so that we could focus on our problems and not blame each other. Therefore, high performance could be generated (Hon & Chan, 2013).

Motivation is the label we give to processes that energize (activate) and direct behaviour toward particular goals. The two approaches of motivation that were displayed in our team were opponent process and incentive models. In case of incentive models our team leader emphasized on the attractiveness of the goal. Our team leader provided us with incentives and encouraged towards finishing the report successfully. Our team leader emphasized on opponent process model that helped us gain competitive spirit. By constantly reminding how other teams and their members were working hard to provide the best report gave us the drive to focus more on quality. Such motivation helped each one of us in working hard and gathering as much information as we could before we started penning it down (Maruping et al., 2015).

For delegation of work, our team followed a series of steps. Firstly, our leader prepared us by creating discipline as the results cannot e effective if the work is not delegated properly. The timing and context of understanding was developed. Each one of us set frequency of updates and communicated in person or exchanging emails. We confirmed understanding as each one of us read the content written by others. This helped in maintaining the flow of content in report. The greatest strength in our team was that none of us delegated back the tasks assigned to them. Each one of us was committed towards finding the best possible information. Communication in delegation is key.  Finding out that a deliverable wasn’t completed or wasn’t done satisfactorily after the completion date is the nightmare scenario of delegating. Therefore, we fostered creativity and grew opportunities for growth (Armstrong, 2016).

This section is a reflection of my individual capability of leading and motivating. Taking to Myers Briggs personality test, I evaluated that I am an enthusiastic communicator and love to interact with high amount of self-confidence. I value honesty and have good communication skills. I am an extrovert with intellectual freedom to think and speak. These factors helped me in leading my team better. I was focused in my group report and was in charge to make things happen. I prefer working in group rather than working alone as I believe I can lead people. I tend to move up the ladder real quick in general life or while joining a company. I value the position given to me and the task delegated to others. I understand the difficulties that can arise in the work and motivate my peers accordingly.

According to Daft (2014), motivation is an equally important responsibility of management. It translates directly into productivity and team effectiveness. People working together with energy and enthusiasm are far more effective and productive than a group lacking that spark because of job dissatisfaction or boredom. However, one of my weaknesses is that I got frustrated if someone in the team failed to meet deadline. I might have ended up being blunt while providing criticism. When deadlines were not meant, I did not give enough chance to let the other person speak. I need to balance my leadership skills by improving on the above factors.

Fonterra is a New Zealand multinational dairy co-operative that is responsible for 25% of the NZ dairy export. The main export markets are Japan, USA, South East Asia and Australia. Fonterra is divided into different departments based on the business units or subsidiaries. The Milk Commissioner is appointed by the shareholders’ council. The span of control is flat or horizontal as there are few levels of middle management between executives and employees. In case of business emergencies, this structure is beneficial as the employees and managers work autonomously. Fonterra’s superstructure can be improved and a closer relation between customers and operations can be developed. The techno-structures can be flattened for streamlining processes and resources.

The first framework of change is identified as John Kotter’s Change Model. The second framework of change is Lewin’s change management problem. It is more about the preparedness of the change rather than the change itself that makes transition simpler. This model adapts well in the traditional hierarchies. The model is relevant as it can be successful with the active participation of all employees. The employees possess certain values that make change capability stronger. Apart from research, my contribution was also determining the strengths that enable Fonterra employees to embrace change.

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