Organizational architecture

Venter and Louw (2006, pg 394) describes organizational architecture is an integrated strategic response, which draws together key dimensions of the organization (such as organizational structure, leadership, organizational culture, policies and strategies and the to guide strategic formulation, alignment and implementation. This report will seek to critically discuss organizational architecture as a cohesive framework that will bring about change within PPC.

Venter and Louw (2006, pg 394) says that the ability of an organization to facilitate the effective and efficient implementation of strategy is almost entirely dependent on its internal functioning, for it is the internal organization which is seen to comprise those elements that are pivotal in translating the strategy into tangible outcomes and actions. We will do this by exploring the notions of PPC’s alignment and implementation with particular reference to the architecture developed by Lee et al (2004).

1. Stakeholders

The main driver of PPC strategy as described in the case study is to enhance stakeholder’s relationships. PPC Stakeholders are shareholders, customers’ suppliers, the broader community and its employees. These different employees are affected differently by PPC strategy. During the strategy formulation phase, PPC was able to establish that the main hindrance to achieving consistency was that their 4000 employees were demotivated. So PPC embarked on a strategy to motivate its employees.

Cameron (2003) defines motivation as the force that drives behaviour in a particular direction. Mitchell (1982) defines motivation as “those psychological processes that cause the arousal, direction and persistence of voluntary actions that are goal oriented”. Both Cameron and Mitchell point out that motivation is goal oriented however Mitchell (1982) further defines this force as a “psychological processes” in his definition of motivation. This distinction by Mitchell is important in that it realizes motivation as a process (i.e. consisting of a number of steps) and psychological. This distinction reveals that for a manager to be able to motivate he has to identify the psychological needs of his employees and then devise a process of meeting those needs.

PPC was able to identify that motivation of employees was one of the factors that it needed to improve in order to improve its goals. So it looked at how this can be achieved.

2. Capabilities

Louw and Venter (2006) describe capabilities as those different deliverables provided to the stakeholders by the organization and dependent on the nature of the organization. From the case study PPC seems to be following a low cost structure for its cement business and a differentiation strategy for its PPC Lime and Afripack business. These different capabilities have implications on PPC stakeholders. For example, for shareholders, the low cost strategy has high returns through streamlined, more cost effective operations and proved by the increase in share price from R78 to R122 by the end of September 2003. So the above combination of strategies has the benefit of drawing elements from both capabilities.

3. Processes

Processes can be seen as drivers of capability. Veasey (2001, pg 423) cited on Louw and Venter (2006) categorizes processes as management, operational and support.

Management Processes:

Describes the role of PPC managers, their work methods, goals and tasks that they aim to achieve and lastly knowledge, skills and level of performance required by the job. The Kumbuku project seemed to be aimed at reducing the performance as the responsibility of only the managers but to spread it amongst all employees.

Operational Processes:

This is merely concerned with the conversion of inputs into outputs. Heizer and Render (1999, pg 228) cited on Louw and Venter says most goods are produced using one of three strategies, namely, process focus, repetitive process and product focus. PPC produces many units of cement a year with very low degree of variety, so it follows the continuous process.

Support processes:

These are the processes that support the core business e.g., HR, marketing, sales. These processes are still very important in ensuring efficient and effective running of the business.

4. Organisational structure/systems

The main purpose of an organizational structure is to clear and precise roles and responsibilities for all employees as per their department and hierarchy in the structure. This ensures order and maintains a systematic procedure of doing things, which ensures performance and efficiency. At PPC, the strategy is aimed at flattening the structure and shortens the decision making hierarchy. This in turn can improve efficiency and motivate employees.

5. Systems, Policies and procedure

Policies and procedures are useful in guiding and aligning the organization’s members in their activities and their behaviors at work.

1. Reward Systems.
2. Performance management systems

Performance management includes activities that ensure that goals are consistently being met in an effective and efficient manner. These could include:

• Ongoing observation and measurements to track performance conducted by supervisor.
• Ongoing feedback about the performance to be given.
• Quarterly formal performance reviews. This could entails a formal documentation of the progress towards achieving expected results, comments on how these were achieved and suggestions on how to improve performance.
• If performance meets the desired performance standards, rewards should be given.

With the Kumbuku project, one of the main aims of the project is to achieve a good match between the requirements of the job and natural capabilities of individual employees. This could also have the impact of motivating the employees and lead to job satisfaction and loyalty.

Technology is the key to implementation of processes that lead to outputs at PPC. PPC has evaluated its manufacturing technologies and is similar to the best in the industry. However it also must ensure that its office technologies and service technologies are also of a benchmark standard. For PPC this has meant a big investment in order to achieve highly skilled employees.

Collins and Porras (1994 in Clegg et al 1996) showed that it is strikingly evident that organizational culture lies at the centre of what differentiates visionary companies from comparison companies (and significantly greater economic performance over the long-term). Culture, how we do things around here in order to succeed (Schneider, 1994, 1997), is an organization’s way, identity, pattern of dynamic relationships, reality.

Nel et al (2001, p.397) on Harris and Moran (1979, p.32) describes culture as “a communicable knowledge for human coping within a particular environment that is passed on for the benefit of subsequent generations”, whilst Wilson and Rosenfeld (1990, p.229) defines culture as the basic values, ideologies and assumptions which guide and fashion individual and business behavior. The above definitions both speak to me about the “communicable knowledge” which Wilson and Rosenfeld explains it to be basic values, ideologies and assumptions. Stapleton (2003) on Trice and Beyer (1984) identifies 4 symbol categories in which this “communicable knowledge” manifests itself namely; practices, communications, physical forms and common language. These categories are best summarized to prove Deal and Kennedy (1982) definition of “the way things get done around here”. “The way things get done around here” can be seen through these 4 categories.

1. Practices

This refers to common practices at PPC e.g. Awards etc.

2. Communications

Common stories that are generally heard at PPC.

3. Physical forms

Some of the notable physical forms could be for example different dress manner between operators and professionals. Other examples include allocated parking spaces and offices.

4. Common Language

Refers to the common language during meetings, notice boards, procedure and policies.

QUESTION 2

Employees are at the center of organizational change initiatives (Tetenbaum 1998).For PPC’s Kumbuku project to be successful, employees need to be able to realize that a good organizational culture and climate would as McNabb and Sepic (1995) says bring about lasting change though the developing of working conditions in which employees can operate more effectively. Should the reason for change be not understood, the following sources of resistance to change could be experienced:

Resistance due to organizational culture: Some of the difficulties with change initiatives may be attributed to deeper, more critical sources, such as the pervasive culture of the organization and the operating climate (McNabb and Sepic 1995). An organization’s culture is the deep-rooted set of values and beliefs that provide norms for behavior (Deshpande and Webster 1989; Schein 1992). An organization’s climate refers to the ways organizations operationalize routine behaviors and the actions that are expected, supported, and rewarded (Schneider and Rentsch 1988). These two characteristics combine to determine organizational readiness for change (McNabb and Sepic 1995).

Resistance due to a lack of a holistic perspective: Another long-known reason for lack of change success is the propensity for organizations to implement piece-meal solutions rather than taking a systems perspective (Ackoff 1974). Stakeholders may be resistance to the Kumbuku project due to the fact that they might not have a clear understanding of the direction and holistic implication of the strategy the company is pursuing.

Resistance by managers: People have a natural fear of change and when change is mandated they feel a loss of control (Evans 2001). For many people in an organization, change initiatives imply a loss of the security that goes with a specific job. Senge and Kaeufer (2000) note that change efforts can induce fear. The management team at PPC could be threatened by the introduction the allowance of employees in decision making processes. They might feel redundant and not adding value. Also the change in the PPC management structure putting management at the bottom might result in demotivated management team who does not take pride in its role.

Resistance by white employees and managers: The fast promotion of black employees could be resisted by white employees, who might feel unfairly discriminated and not valued. Existing white managers might also feel unsecured and can also undermine the newly appointed black managers, who they might not attribute their promotion to good performance.

Resistance due to poor communication: Should the Kambuku project not be properly communicated to relevant stakeholders, it could result in poor buy in and failure in implementation. Dawson (1994) discusses the idea of communication and employee involvement being central to the process of change as a crucial consideration in overcoming the natural resistance that most employees feel.

QUESTION 3

Johnson (1988) cited on Signal-Horn (2004), defines strategic drift as when gradually, perhaps imperceptibly; the strategy of the company will become less and less in line with the environment in which the organization operates. This definition is the same as that of Charles Handy (1989) which describes strategic drift as the subtle changes of the organisations strategy that leads the organization away from its intended destination to a destination that is unintended. This means that an organization must continuously review its environment and change its strategy in relation to the change in environment as has PPC in the past five years.

The organization’s response to the changing environment is often associated with its culture. Culture in this instance is seen as a contributor to resisting change (keeping the organization in equilibrium as suggested by Lewin force field model) as it stifles innovation and performance, leading to a drift in strategy. This means that for organization to properly implement change they must undergo an appropriate cultural change.

For PPC, it might take many more years for it to start experiencing strategic drift but it is important for PPC Chief Executive to look out for the symptoms of strategic drift which could include:

1. Declining performance.
2. Highly homogenous culture.
3. Little toleration for questioning and challenging of status quo.
4. Reliance on price/cost /competition.
5. Strong power blockages to change.

When some of the above mentioned symptoms are identifies Lewin three stage process of change could be used as interventions to prevent the danger of strategic drift:

Unfreezing current attitudes

This means that old behaviours and ways of doing things must be seen to be unsatisfactory by the organisation and changed and prohibited. Also the need and the benefits for change must be well communicated. Those resisting change must be confronted and addressed. This could be done by involving them to participate and communicating the value of change.

Change to a new level

This is a period of shifting the equilibrium. Here PPC could embark on a search for new solutions which could include information on new values, organisational culture and structure.

Refreezing attitudes at the new level

When the organisation has found a solution, it can embark on reinforcing and supporting the new strategy through it structure, policies and systems.

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