Organizational design problems in the Empire Plastics case study

Organization Theory Design

Daft, (2010) defines organization as a diverse corporate affair, a bank or a government agency that make up of people setting policies and procedures and interact with one another to perform essential functions in order to attain organization goals. Daft, (2010) further ague that organizations cannot exist without external stakeholders like customers, suppliers and competitors. Thus, organizations are very important because they create values for customers, owners and employees. Moreover, modern organization facilitate innovation and produce goods and services as well as bringing together resources to achieve desired goals. Despite the benefits that organizations create to society, different organizations face both internal and external problems that require effective organizational design.

The paper analyzes the integrated case of Empire Plastics, identify the problems that the organization is facing and suggest effective organization design for the company in order to resolve the problem.

Key Fact

The Empire Plastics was facing challenges in successfully completing the latest project that will deliver profitability for the company. The latest project was aimed to increase production rate of oleic acid and Ian Jones, the production manager of the company was pondering on the strategy to implement in improving productivity with the latest project. While the installation of the project was successful, however, the "Wet End" machine did not work for practical a year after the installation. Although, Jones had known all along that a new project such as "wet ends" might prove challenging to implement, however procurement department recommended its use.

Jones had been appointed as commissioning manager of the project and Henry Holdsworth was appointed as site project manager and John Marshall was appointed as construction engineer. While the project team seems very good and ambitious with sign of progress from the beginning, however, Marshal lacks enthusiasm on the project. Traditionally, Empire Consultant assumed the role of directly organizing, managing, and discipline contractors; however, this project involved two management contractors. There has been a considerable issue of the management not clearly defining the role of each of the employees in the management and selection of contractors. For example, management did not clearly define the role Marshall and Holdsworth in the project making both of them unhappy.

There is also an issue of inefficient management of contract fund because the project was being managed by two contractors making the cost of the project to increase. Typically, "wet end" construction costs £3.1 million while "dry end" contract costs £6.0 million, and the role of Empire Consultant was to act as construction policeman to see that the process diagram was being followed and safety requirements are maintained.

There was also the issue of role confusion because the organization did not clearly define job of each employee within the organization. For example, selection and management of contractors had been done entirely by Jones and Holdsworth. Moreover, over 50% of total of materials procured had been done by Jones and Holdsworth. However, John Marshal, the construction engineer was not included in the selection and management of contractors.

External Issues

The external issue has been the fundamental problem facing the company. The company has not been able to manage its external contractors effectively, and there are conflicts between the contractors. As being discussed earlier on, the Empire Plastics was using multiple contactors to implement its project. For example, Sultan Engineering was a supplier of materials that the company would use for the project, however, Teknibuild, who was the management contractor faced challenges in collecting necessary information from the Sultan Engineering in order to design the steelwork. The issue was that Sultan Engineering identified Teknbuild as inefficient organization that did not have enough data to design a project properly. The issue led to a conflict between the management of Sultan Engineering and Teknibuild. As Marshall had remarked, the discipline of Sultan Engineering was always against the discipline of Teknibuild.

Symptoms

Organizations always face challenges when introducing a new project. Problem of information sharing has been one of the major symptoms when introducing a new project. In the case of the Empire Plastics, the technology at the dry end was very new and could prove challenging during the implementation.

Moreover, there is no formalized job description for each head of the department and the company does not well define the specific role to be performed by each head of the department. Moreover, the company is facing external conflict with its supplier. For example, Empire Consultant (EC) is supposed to procure the materials such as cooler, dryers and other more than 300 parts from Sultan Engineering, the company suppliers of materials. Unfortunately, Teknibuild who was the management contractor of the company who was supposed to design and build the necessary plant was facing challenges to get necessary information from the Sultan Engineering in order to design the foundations and steelwork.

Lack of effective communication from the company management with external contractors had also been another symptom, Teknibuld site men always faced difficulty in having direct communication with the head office, which made Tecknibuild to face difficulty in getting direct answers from the Head Office.

Problem Statement

Empire Plastics is very ambitious with its latest project in order to increase production rate of the company oleic acid, while the project seems to be very profitable if effectively managed, the company lacks effective project management technique to implement the project. The issue has led to both internal and external rivalries among the stakeholders, and these rivalries if not properly managed could lead to a setback in the successful completion of the project. Moreover, there is a lack of cooperation among the contractors such as Sultan Engineering and Tecknibuild and the issues could cause the project delay and cost escalation of the project. The Empire Plastics should implement project management model to manage the project conflict among the contractors.

Analysis: Task Environment

The Empire Plastics does not have a formalized method of implementing a project. The company is currently assigning the role of project management to two different management at the same time. For example, Empire Consultant was in charge of the project management while John Marshall is a construction engineer. Although both stakeholders form a good team, however, Marshall lacks enthusiasm in the project. Moreover, Empire Plastics does not effective define the role of Empire Consultant because Empire Consultant is traditionally assuming both the role of management contractor and organizing the trade contractor. The Empire Contractor also serves as discipline contactor. Typically, assigning multiple functions to one department within the organization could lead to inefficiency in the project implementation.

Analysis: External opportunities

The case reveals that Empire Plastics is using different contractors to implement the projects. Using different contractors with different specializations will provide different inputs to the project which will enhance successful implementation of the project. For example, the Teknibuild will use its expertise in designing and build plant. Moreover, Empire Plastics will derive opportunities to procure quality materials from Sultan Engineering. Using different external stakeholders in the project will enhance the quality implementation of the project. Despite the external opportunities that the company will derive from the external stakeholders, there is still rivalry among the external contractors, which could impede the success of the project.

Analysis: External threats

Major external threats that Empire Plastics is facing with the project is the lack of cooperation between Sultan Engineering and Teknibuild. The project manager does not seem to do a good job in this issue because the project manager should be responsible to define the role and task of each external contractor. Analysis of the case reveals there are no formal rules and regulations that each contractor should follow before signing the contract. Typically, the contract document of the project for both the Sultan and Technibuild do not contain formal contract procedures that each of them must follow. The issue has led to lack of cooperation between the two stakeholders. For example, Sultan Engineering is suspicious of the Technibuild; however, Technibuild is not ready to spend its man- hours unless it is able to collect complete data from Sultan Engineering. Lack of cooperation between the two companies is a threat to the success of the project.

Current organizational design

The current organizational design of the Empire Plastics reveals that the role of Empire Consultant is to appoint and supervise the Site Project Manager and Construction Manager. Moreover, Empire Consultant is charge of appointing and supervising West Construction Management and Teknibuild Management as well as the Site Manager of both companies. From the organizational structural design, the Empire Plastics Northern is only in charge of lighter responsibilities of supervising Commissioning Manager.

From the company organizational design, Empire Consultant is given large responsibilities which could affect the efficiency of the project. Jones remarks that "The trouble with management contractors, he surmised, is that you create an extra link in the communications chain -- a large link that can easily break down, and, in his experience, did break down" (Daft, 2010 p 551).. Moreover, the Empire Plastics could raise the costs of the project by allowing two management contractors to manage the project simultaneous. To implement a successful project, Empire Plastics should have effective planning culture where the company should assign equal responsibilities to each department to enhance effective project completion.

Alternative 1

Change the Organizational Structure -- Empire Plastics should change the organizational structure. The West End and Dry End should be given equal level of responsibilities. For example, Construction Management should be under the Empire Plastics Northern. Moreover, Western Construction should be removed from Empire Consultants and placed under the supervision of Empire Plastics Northern.

Pros?

The strategy will reduce the responsibility of Empire Consultants thereby enhancing the efficiency of Empire Consultant.

It will enhance more efficient and effective management.

The alternative will eliminate wrong decision from both the Dry End and West End since both ends will have equal level of responsibilities.

Cons:

It may take time for the West End to adapt with new structure because of the new responsibilities.

Employees at the West Ends may not satisfy with system thereby cause negative opinion.

May cause negative opinions from employees

Alternative 2

The company should undergo a training program for Henry Holdsworth, the Site Project

Manager. The project manager is very important in the overall project performances and success. Thus, the project manager should undergo a training project management in order to manage the risks associated with the project. The training will also assist in coordinating the entire project effectively. The paper suggests that external training program will be ideal because Empire Plastics do not have adequate training facilities to conduct in internal training program.

Pros:

Will improve efficiency of project manager.

Better method of managing and coordinating the project

Cons:

The training costs will increase project costs.

Alternative 3- Defining the roles and responsibilities of All Employees and Contractors

Empire Plastics should clearly define the roles and responsibilities of employee and contractors. The company should redesign the project contracts of both Sultan Engineering and Teknibuild and reveal the roles of each contractor in detail. The document should reveal whether each of the contractors should share information from one another. Role define is very essential so that all employees and contractors will better understand their roles and responsibilities.

Pros:

Will eliminate the rivalries between Sultan Engineering and Teknibuild.

Will enhance smooth operation of the project.

Will eliminate internal rivalries.

Cons:

Designing the roles and responsibilities of contractors and employees may take time and involve costs.

Alternative 4- Using latest information and communication systems for managers

Empire Plastics should use latest communication to assist management to communicate with one another to reach better platform. For example, the company could use video conference, email message and internal communication system using the Ethernet system. The communication system will facilitate mutual understanding among employees.

Pros:

Enhancing effective communication among project management

Internal problems will be resolved quickly.

Cons:

It may increase the administrative costs.

Some managers may face challenges to learn new skills

Recommendation and Action Plan

The alternative 3 is the most pressing recommendation that the management should implement. The organization needs to define the roles of all employees and contractors. Defining the roles of all the stakeholder will eliminate the rivalries that is impeding the progress of the project and will facilitate cooperation among the contractors. In the contemporary business environment, organizations are cooperating with their competitors such as sharing information technology to achieve mutual advantages.

Alternative 4 is the next important recommendation for the company to implement. The need for effective communication system is very important. At present, the company has not put in place effective communication system where all employees could communicate will one another and with contractors. The company should put modern communication in place to enhance mutual understanding among the stakeholders.

Alternative 1 is another important option for the Empire Plastics. The company should redesign its organizational structure and divide equal responsibilities to both West Ends and Dry End.

Training is also very important in the success of the project. The company should conduct a training program for all important project management. For example, the project manager should undergo a training program to understand the modern method of managing a project.

Reference

Daft, R.L. (2010). Organization Theory and Design. (10 Edition ). UK. Cengage Learning.