Book Report Paper: “The Nature of Management and Organizations: Challenges in the Canadian Context” written by Len Karakowsky

Question 1: The intention was that the People Insurance Company of Canada would have an organic organizational structure. Using the six elements of organizational structure, would you classify its present structure as organic or mechanistic?

On analyzing the intention of the administration of the People Insurance Company of Canada in the development of the company and its current position, it is necessary to agree that initially the intentions were focused on the development of an organic organizational structure. In fact, what was initially proposed implied an organic integration of all units of the company and its employees into one solid organization and a team of people working for one and the same goal. To put it more precisely, the company’s CEO, David Dunningan initially aimed at the creation of a democratic organizational structure and his approach may be characterized as quite liberal. Notably, he “wanted an open, honest, non-bureaucratic and non-hierarchial organization” (2:2). What he suggests may be briefly described as follows. Firstly, he hired four senior team members all of them were highly qualified professionals who should actually assist in the building the company up. The basic goals of the company were defined as the creation of a customer-focused company, innovative, the personnel of the company should be strategically competent while the relations within the team should be developed on the basis of good interpersonal and team building skills of all people working within the company. Basically, the CEO attempted to avoid bureaucratization of the company and he totally rejected the idea of the creation of some rigid hierarchy, instead he insisted on the development of democratic professional relations within the team and what is more it was supposed that there should be not a single person privilege compared to any employee working at PICC. In such a way it is possible to estimate that initially the company was intended to develop an organic organizational structure where all structural elements and all members of the team would be organically integrated and working for the main purpose of the customer-oriented company defined at the beginning by the company’s administration.

Unfortunately, in actuality the development of the company turned to be quite different from the initial expectations of its creator and administration as well as employees. Basically, the initial intentions declared by David Dunningan faced a number of obstacles which were to a significant extent caused by the lack of funding which was limited dramatically. As a result it was needed that the company worked possibly more efficient and the means to achieve such efficiency were not very important. On the other hand, the lack of funding retarded the implementation of experiments and limited significantly implementation of innovations. To put it more precisely, “the necessary funding promised, they found that the amount was drastically reduced” (2:2). Moreover, the permanent lack of time gradually led to the decrease of the share of time the CEO paid to the employees and his direct communication with them was minimized. Naturally, instead the rigid hierarchical structure was developed in which the decisions and communication was realized from employees to the chief executives through a number of managers and other mediators. As a result, there was build up a purely mechanical organizational structure which actually minimized the possibility of an average employee to participate in the decision making process that was initially promised by David Dunningan. Basically, the company was divided into specialized departments, with a developed chain of command, apparent hierarchy of authority and in general the company functioning was characterized by high degree of centralization and formalization.

Question 2: What rationale would you present for the ‘campus environment’ of the facilities? What are the implications on motivational issues of the ‘campus environment’?

One of the most noteworthy innovations of the PICC was the development of the ‘campus environment’ facilities. Initially, their development was motivated by the lack of facilities the company already possessed and consequently the enlargement of the company was considered to be essential. To put it more precisely, the company “outgrew the space” and was “forced to find suitable facilities outside the parent [bank]” (2:2). In such circumstances, the administration of the company decided to enlarge its facilities and attempted to do it possibly more efficient with a significant benefit for the functioning of the PICC.
Basically, the realization of the ‘campus environment’ strategy implied the creation of such an environment where employees would feel comfortably enough and what is probably more important they would realize that they are members of one team. For this purpose “employees were given street addresses for mailing purposes” (2:3) that should contribute to the improvement of communication within the company. In fact, this step could contribute to the creation of a positive ambiance due to the fact that such an approach contributed to the improvement of relations between employees making them more interpersonal. Obviously, this decision also implied that the relations between employees as well as employers would be less formal and more personal.

Basically, this was the result of the fact that the development of ‘campus environment’ implied that the company’s facilities would resemble a separate organization that was very important for the PICC because the pressure from the bank was very serious and practically the permanent changes of the personnel of the company resulting in often changes of the workplace of employees from the bank to the company and vice versa threatened to the stable and efficient work of the PICC. Consequently, the creation of highly individual facilities emphasizing the uniqueness and difference of the company from the bank were supposed to improve the ambiance within the company and create a strong feeling of the unity of the company’s employees and their difference from those of the bank.

At the same time, it was also a strong motivational factor because ‘campus environment’ stimulated employees to build up not simply professional relations but rather develop interpersonal ones instead because they were intended to feel more comfortable and could perceive as not simply as employees of the PICC but as the members of one solid community. As a result, the psychological ambiance within the company could be improved as well human resource management could be significantly changed for better but what is probably even more important that would eventually produce a positive impact on productivity and efficiency of the functioning of the company and its personnel.

Question 3: In order to assist Dunnigan to realize his original concept of presenting an innovative structure and operational plan and using the six stages of the rational decision making model explain what recommendations could you offer him?

Obviously the experience of David Dunnigan of the implementation of his innovative structure and at first glance an efficient operation plan show the extent to which the mistakes made in the decision making process may be serious. In fact, his ideas and plans were not practically realized and eventually the current situation in the PICC compared to the initial purposes and intended results may be characterized as the failure of David Dunnigan ideas and plans. This is why it is really important to thoroughly analyze the actions of the CEO, reveal his mistakes and find possible recommendations that could really contribute to the efficient implementation of his innovative ideas and plans.

Unquestionably, in order to provide a high efficiency of innovations it is necessary to pay a particular attention to the decision making process. In this respect, it is worthy to refer to the rational decision making model offered by Karakowsky (1). To put it more precisely David Dunnigan should initially carefully analyzed and clearly define the purposes of the innovations and plans he offered to the company. To put it more precisely, he should initially clearly define the problems and opportunities the company had at the moment when he started his work and initiated the innovations. This is why he should primarily define what the problems within the company are, notably what are the gaps between the employees and the company’s administration in order to implement efficient steps to eliminate them since his basic goal was to avoid bureaucracy and rigid hierarchy within the company. Finally he should clearly identify the potential of the company to successfully implement the innovations suggested.

Secondly, when the problems and opportunities of the company were identified, David Dunnigan should choose the best decision making style that would contribute to the clear and efficient plan of actions and the way of implementation of innovations (1). Notably, he should clearly define what members of his team could assist him in his work, how he would collect essential data concerning the situation within the company, and, finally, how he would determine his choice of actions that should be clearly structured in order to achieve higher efficiency.

Thirdly, it is obvious that it is practically impossible to develop a plan of actions and take decisions without the potential threat of the commitment a mistake. This is why, taking into consideration the possibility of potential errors, David Dunnigan should develop alternative solutions and the ways of implementation of innovation and realization of his plans (1). In other words, he should have an alternative way of actions that could help him to cope with unexpected problems that could be actually either ready-made solutions or, in contrast, potential solutions or even the combination of both.
Fourthly, on analyzing the number of actual and potential solutions, the following step David Dunnigan should undertake could be the choice of the best solution among the variety of those he initially took into considerations and reflected on (1). In such a way, he should carefully figure out the advantages and disadvantages of the decisions, innovations and plans he was going to implement as well as the alternative way of actions. At the same time, it is very important to point out that in order to make the right choice he should develop criteria which could help him to make the most efficient choice.

After this stage, David Dunnigan should actually implement the innovations and plans he carefully selected (1). Practically, it means that he should realize the plans and innovations he had already defined by means he had chose. At this point it is also important that while implementing the changes he suggested, David Dunnigan should implement alternatives when they were necessary. For instance, it was possible to presuppose that the company personnel could be simply not ready for the changes, or that funding of the company could be insufficient, consequently he should think over alternative ways of implementing the innovations which required less funding and naturally involved employees as well as chief executives in the strategic changes offered by the CEO.

Finally, the last but not the least step should be the proper evaluation of the possible outcome of the innovations and decisions David Dunnigan was actually implementing (1). In this respect, it is worthy to note that it was extremely important to foresee potential problems and the perspectives of the negative outcome of the implementation of the changes. In such a situation, it is possible to recommend using the alternative ways and solutions developed at the previous stages in order not to reject the innovations completely as it was practically done by David Dunnigan. For instance, he could insist on certain priorities which could contribute to the improvement of interpersonal relations within the company and eliminate the gap between chief executives and employees. Notably he could support Thorne in her opposition to having parking spot for chief executives and instead made them accessible for employees, for instance.

Question 4: Referring to ‘Top Ten List’ for business, select choose two topics and explain how external environmental factors are important to be organization’s strategic business cycle. Provide specific examples of specific industries, for example, the automobile industry, construction industry, etc., to illustrate your answer.

Speaking about the current situation in Canada, it is necessary to take into consideration a variety of external environmental factors that produce a significant impact on organizations’ strategic business cycle. In this respect, it is worthy to refer to the automobile industry in Canada. It is obvious that this industry is dramatically influenced by different external environmental factors that play a key role in the normal functioning of any company operating in this industry. First of all, it is necessary to take into consideration the proximity of Canada to the US that is one of the world leaders in the automobile industry and this country is Canadian “major trade partner” (1:33). In such a situation, it is quite natural that Canadian automobile industry has to compete with American one or actually find the ways of possible cooperation with American companies since they are significantly more technologically and economically advanced than Canadian ones. In this respect, it is worthy to remember about another factor, such as globalization that could also contribute to the increasing dependence of Canadian companies on American market and American automobile industry. In fact it is obvious that the elimination of financial barriers contribute to economic globalization (1). In practice, it often leads to expansion of American automobile companies on Canadian market, to the extent that only the strongest one survives. In such a situation mergers and acquisition become a norm of the development of automobile industry of Canada as well as many other countries worldwide. Also, it is very important to pay attention to the situation in the world market (1) since its main trends produce a dramatic impact on Canadian market which, as it has been just pointed out is highly dependable on American one, and consequently the general trends should be taken into consideration in order not to remain in rearguard of the development of the automobile industry.

However, the external environmental factors are also significant even for such traditionally strong areas as agriculture. For instance, Canadian agriculture is also highly dependable on the situation in the international market since being export-oriented it is very important to properly react on recent economic trends in the world market since agriculture as other branches of economy are “sensitive to changes in the global market” (1:34). At the same time, this sector also faces such problems as constantly decreasing share of population involved in agriculture that, in its turn, needs the higher mechanization of agriculture.

Thus, it is obvious that external environmental factors play an extremely important role in organizations’ strategic business cycle.

Question 5: Often associated with the restructuring of an organization is downsizing. Referring to the potential benefits and potential risks, what are the motivational implications of downsizing?

Basically, downsizing is focused on the attainment of several short- and long-term goals. Traditionally, short-term goals are to “reduce costs, increase profitability, and increase profitability” (1:155. As for long-term goals are to “improve product quality, imporve customer service, and improve competitiveness (1:155). Naturally, there are certain benefits the company may get from downsizing such as possible reduction of costs, decentralization of decision making, flattering hierarchy etc. as well as risks which actually are more numerous, for instance, the loss of corporate memory, the potential hurting of efficient parts of an organization, the potential ;overload’ of top management, outsourcing, loss of control. At the same time, downsizing still remains quite attractive basically due to the attractiveness of its goals and the perspective benefits a company expects to receive from this process. In fact, it is really motivating to expect an immediate costs reduction in the result of contracting-out (1), for instance. Naturally, in the period of crisis it is practically essential for the company to reduce costs and possibly increase the productivity and profitability which are short-term goals of downsizing. Nonetheless, such motivational implications are hardly worthy the risks a company may face during downsizing and the recent researches reveal that often downsizing turns to be inefficient in attaining the basic goals which serve as the main reasons for this process.

Sources:

1. Karakowsky, Len. The Nature of Management and Organizations: Challenges in the Canadian Context, Captus Press, 2002.
2. The People’s Insurance Company of Canada. Retrieved Oct. 17, 2006 from http://webstudentsit.captus.com/introadmin2/pdf/F06MidtermCase.pdf
3. Wilkins, A. L. Developing corporate character : How to successfully change an organization without destroying it. San Francisco: Jossey-Bass, 1999.