Economic class performance evaluation and rewards: a case study

Kodak Case Study

The primary factor that motivated Kodak to change its organizational architecture was a decrease in performance, or at the very least a decrease in relative performance when compared to other companies in the industry (Case, n.d.). More specifically, the falling stock price that the company experienced from 1982 to 1984, which was certain to be displeasing to the board of directors in and of itself and which also marked a drop in stockholder and investor confidence in the company, prompted the changes the organization undertook (Case, n.d.). The increased pace of innovation and of bringing new products to market was also an impetus fror the company in designing and adopting the changes to organizational architecture that the company deemed necessary (Case, n.d.). Taken as a whole, it is safe to say that increased competition and a fall for the company from the safe and secure pinnacle of the industry in which they operated prompted the move for change within Kodak.

Though the impetus for change was clear and even well-established, the company made several mistakes in its attempts to turn the organization around through its architectural redesign. First, fragmenting the company into different business divisions is not enough in and of itself to ensure greater innovation or to improve overall performance, yet this was what the company did, effectively abolishing (or significantly reducing) oversight rather than increasing departmental accountability (Case, n.d.). The changes in compensation structure attempted to address this to some degree, however it did not actually change the reward structure at the organization nor increase accountability (Case, n.d.).

Instead of the specific changes that Kodak implemented, there are some alternative actions the company could have taken in its restructuring that would have led to a more positive outcome for the organization. Increasing the independence of each department such that decision-making was more closely related in the hierarchy to the knowledge base and direct operational capabilities necessary for innovation was a good idea, but making each unit's manager essentially the sole direct responsibility was not. Clear performance targets, regular communication with company executives and between managers of different business units, and a greater organizational cohesion could have been implemented without negatively impact innovation. More effective changes to the reward structures for business manager could also have helped, with stock options possibly included, or more direct incentives for time-to-market for each unit's products or tying compensation more directly to the individual unit's performance might have helped in this situation. Greater communication promoting greater cohesion is truly the most essential missing aspect of organizational change represented in this description of the company, though (Case, n.d.).