Rondell Data Corporation, Case Study Example

Rondell Data Corporation (RDC) grew in size to become more complex which necessitated the need for high differentiation levels. Thus, it is no surprise that the organizational chart shows an organization with high division of labor even within the same departments, for e.g. six different roles exist within the production department which are fabricating, assembly, toolmaking, maintenance, traffic, and planning and scheduling. In terms of organizational hierarchy, RDC employs horizontal differentiation and we have seen that the working relationship between different departments is weak and employees have developed subunit orientation. This is not good news for RDC because different units have become more protective of their own interests and engage in power politics. As a result, they have weak working relationships with each other and this hurts the progress towards organizational goals.

RDC’s different functional departments are not effectively integrated with each other and each department performs its functions without any regard for the impact of their actions on other departments. Thus, it is no surprise that changes in product design lead to huge delays because they rarely communicate with each other, exchange information, or seek feedback. Most of the employees only interact with their work mates in the same department and inter-departmental communication usually takes place at the managerial level and even then is often one-way.

As far as decision making mechanisms are concerned, RDC has a centralized organizational structure and all departmental decision making authority resides with the departmental directors or supervisors. Departmental workers exhibit high levels of loyalty towards their superiors in order to protect status quo and departmental influence. This behavior is especiallyvisible in the Engineering Research Department where “Doc” Reeves has become the department’s de-facto voice.

By now it is obvious that RDC has a mechanical organizational structure since it has a centralized decision making authority, vertical information channels, and employees with defined roles and responsibilities. RDC also has bureaucratic elements in its organizational structure. Almost all the power and decision making power lies within few individuals and their inability to work together effectively hurts the performance of the entire organization. The departmental directors and supervisors make all the decisions at RDC with little or no input from their subordinates. The departmental heads also engage in power politics and display no concern for the problems created for other departments by last minute changes. This inefficient bureaucratic structure is responsible for RDC’s declining performance and its inability to carry out its operational activities as planned and meeting customers’ expectations.

As far as relationships are concerned, Doc is the most powerful individual within the organization due to his creative talents that are behind the company’s innovative products. In terms of formal rank, Doc’s position lies even below Director of Engineering Frank Forbus but in terms of influence he ranks even above the company’s President Bill Hunt. Doc has friendly relations with President Bill Hunt because President Hunt gives more attention to him than anyone else in the firm and rarely denies his requests. Doc’s relationship with Frank is formal though Doc doesn’t acknowledge Frank’s authority despite being lower in formal rank than him.

Doc is aware of his expert power within the firm as well as his influence over his subordinates who all admire him and blindly follow his every call. Even Forbus doesn’t deny Doc’s importance to the company but is not happy with Doc’s role in operational inefficiency that sometimes results in last minute design changes. On the surface, Forbus has good working relationship with Factory Superintendent Dave Schwab but Forbus believes that Dave and his followers are not committed to the company and are highly inflexible. Even when they can incorporate design changes with little modifications to machinery setup, they insist on design changes instead of accommodating the Engineering Department.

Forbus realizes that the company needs to become more flexible in order to stay competitive. Forbus wants the departments to work with each other throughout the whole production process instead of working independently which often results in last minute conflicts. But Forbus is also aware of the status quo within the factory and the determination of influential people like Doc to maintain their power which resulted in the termination of his predecessor Jim Kilmann’s employment. This is why Forbus is hesitating to push forward with his idea even though there are those in the company such as John Oates, head of the radio electronic design section, who agree with Forbus’ opinions.

As far as President Hunt is concerned he gives more importance to Doc than anyone else which may be due to his own Engineering Design background. Thus, President Hunt doesn’t consider efficient operations as important to company’s success as Doc’s inventions which is why he hesitates to support those who push for drastic cultural change within the company. Forbus is content in his job but that is because he has the freedom to pursue his creative interests and so are his many subordinates. Doc doesn’t care about the impact of last minute changes on other departments as well as the product’s overall schedule because he believes that everything outside his department should not be his concern. A similar attitude is also displayed by Vice President of Sales Ron Porter who puts pressure on the design and production departments to speed up in order to meet customers’ demands even though hurrying up things may result in higher quality defects and customer dissatisfaction later. Mr. Porter is not wrong for wanting to meet dates given to the customers but he needs to work closely with design and production departments and understand the constraints being faced by Forbus. Thus, it is obvious that RDC’s current structure inhibits interaction among departments and its organizational culture protects status quo and results in inflexible management and workforce. In addition, the current organizational structure shows that the communication within departments is vertical which doesn’t give much saying power to subordinates and thus, concentrates all power within their superiors and the management.

RDC can modify its structure in various ways in order to achieve a balance of power among departments and individuals.First of all, RDC should adopt leaner organizational structure in which there will be both vertical and horizontal communication channels. This will increase interaction among the employees from different departments instead of just department directors/supervisors. In addition, the employees will be able to provide ideas and feedback to the upper management directly and the improved operational efficiency will soon improve profitability. As the management, especially President Hunt will discover the benefits of giving greater voice to the employees, they will feel less reliable on key individuals such as Doc and this will balance power among departments and individuals.

The management can also implement compensation plans and incentive systems that will be dependent upon the department’s ability to work with each other and achieve certain performance targets. This will also increase the stake of department directors/supervisors in the success of the company as well as transfer some of the power to the employees whose performance will be critical in meeting the company’s objectives. The management may also make cross-departmental teams an important part of the organizational structure and these teams will be responsible for the product from initial concept to the final production and marketing. This will also ensure that the departments will continue to collaborate with each other to address any problems quickly instead of waiting for the last moment and delaying production schedules. Cross-departmental teams’ members will also gain a better understanding of the other department’s challenges which will make departments more cooperative and understanding of each other.

In short, RDC will have to move from a mechanistic structure to an organic structure so that it becomes more flexible and better prepared for dynamic competitive environment. As employees will interact more with each other, they will have greater commitment to the organizational objectives rather than their respective departments’ objectives, resulting in a shift of power away from the current department directors/supervisors. The management should decentralized decision making process so that the employees have greater involvement in organizational strategy. Encouraging employees to provide ideas and challenge management’s plans will also help employees rid of the groupthink mentality. Another option available to the management is to create divisions around products instead of functions so that everyone involved with a specific product is forced to work together and has equal stake in the success of the product.