The case study on S-S Technologies Inc. portrays the importance of an effective organizational design for a continuously changing environment. SST, though was experiencing excellent growth in a period of recession, was plagued with problems that haunt fast-growing organizations. The case brings forth the dilemmas that SST top management faces as the organization grows from a small unit of 30 employees to an expected 120 employees. Facing a growth rate of 33 percent, the company plans to expand, but the top brass is apprehensive that the present structure will not support the growth. This essay aims at diagnosing the facts and providing a probable solution to the problem that SST faces.
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SST Inc., founded in 1992, had gone through various changes over the years and the current ownership rested with Rick Brock, former president of Sutherland-Schultz and the president of the company was Keith Pritchard. Since SST had a unique offering in factory automation, it enjoyed growth even during the nineties when the North American economy was in recession. The organizational chart as given in the case, though seems simple, was prone to confusion and ambiguity regarding the chain of command. For instance, there were basic differences in identifying the two departmental heads viz. Product Group (PG) and Integrated Systems Group (ISG).
Though Pritchard identified Suttie as the head PG, the employees saw him as heading the marketing team. Again in ISG, there was an unclear situation regarding Ojala (to whom did she report?). Moreover, the interview conducted by the consultant clearly shows that employees were not aware of the future goals and strategies of the company. Only the top management was aware, and there too were differences in their thinking. The consultant’s interview showed brewing dissatisfaction among employees regarding the bonus plan and performance appraisals. Though SST had an open and transparent culture it had misconceptions and uncertainties among employees which made the whole point of a transparent organization futile.
After a detailed study and analysis of the case the following requirements arise:
- New organization structure.
- Compensation and/or Bonus plan.
- Partnering policy.
The present structure needs to be changed but the top management wants to retain the culture and the atmosphere of innovation intact. So we need to devise a structure that is flexible and has the added departments which would fulfill the arising requirements of the human resources department or marketing/ business development team. The present problems clearly show that the company requires a separate HR department and an integrated Marketing department that can provide support to the core departments of the organization i.e. PG and ISG. The proposed organizational structure is given in Figure 2.
The new structure introduces two support verticals viz. HR and Marketing. Moreover, the structure retains its simplistic format. The two departments are still PG and ISG, but PG has a product-based departmentalization and the structure is a simple one. But ISG has an interactive departmentalization as all the teams work in close coordination with each other in a project environment. So the departmentalization is not based on products rather the processes involved in handling the project. Moreover as far as the issue with the chain of command is concerned, there needs to be a clear statement by the top management regarding who reports to whom, and this needs to be stated during the HR induction program for all new recruits.
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So the following recommendations can be given:
- The new organizational structure (Figure 1).
- Proper performance management system based on KRAs (Key Result Areas)
- HR to formalize policies regarding compensation, bonus, and performance appraisal. The job descriptions need to be written and the KRAs for a particular job is to be fixed after doing a proper job evaluation.