Fixing
What’s Broken: H.P’s Structural Challenges
Case
Synopsis:
To analyze the role of organizational structure in
an organization’s efficiency and effectiveness.
Case
Facts:
1) Hewlett-Packard
Company (H.P) is best known for printers, cameras, calculators and computers.
2) Carly
Florina was named the organization’s CEO in 1999, who made a $25 billion
controversial acquisition of rival Compaq computers.
3) She
was fired by the BOD in 2005 A.D, and Mark Hurd was named the new CEO of H.P.
4)
In the beginning he found H-P was facing
the problems about company’s sales forces.
5)
He had to address towards solving the
fundamental problems.
6)
He took various steps towards remedy
such as firing underperformers and eliminating on sales group entirely.
7)
After he brought some changes in the
organization, the managers were in position to make speedy decisions.
8)
Sales persons were also in position to
spend 40 % of their time with their customers.
Case
Analysis:
After Carly florin was fired by the BOD of H.P, Mark
Hurd was named the new CEO of H.P. When Mark Hurd analyzed carefully, he
figured out that 11 layers of management between him and the customers were the
main basis for company’s structural problems. He also figured out that the top
corporate customers of the company have no clue what so ever about whom to
contact at H.P to respond to their questions. The company’s head of corporate
technology reported to Mr. Hurd that she had to wait three months to secure
approval to hire 100 sales specialists. Also the sales person of the
organization reported that they were only able to spend one third of their time
with the customers, the remainder time they spend in negotiating bureaucracy
inside of HP.
After mark Hurd identified the problem of the organization,
he decided to take appropriate measures to solve the problem. He first
terminated the employment of underperformers who were not working to their full
efficiency and who were responsible for organization’s lower productivity. Then
he eliminated three layers of sales management and eliminated one sales group
entirely and merged those sales representatives into the remaining sales
groups.
Since there were eleven layers of management between
the company and its customers, decisions implementation was a slow process and
H.P lost many deals in between at those times. As Mark Hurd implemented various
decisions to eradicate the problem, company executives and members of the sales
force were likely to be pleased because the increased efficiency in the
organization will enable them to make decisions more quickly and they will get
more time to spend interacting with their customers so that H.P don’t lose too
many bids. It is important in every organization to prioritize the customers as
a sole one, as they are the basis for every organization to flourish. So H.P
must not forget that customers must be more satisfied and see that their needs
and concerns are being met more effectively and efficiently.
A mechanistic organization is a rigid and tightly
controlled structure characterized by high specialization, rigid
departmentalization, narrow spans of control, high formalization, a limited
information network, and little participation in decision making by lower level
employees whereas organic structure is a structure that’s highly adaptive and
flexible. Organic organizations may have specialized jobs, but those jobs are
not standardized and can change as needs require.
Organic Structure looks to be more appropriate for
H.P considering the rapidly changing nature of the products, and the services.
As there is intense competition within the industry, H.P must be responsive and
proactive in its corporate strategy, so organic structure looks to be more
conductive and appealing.
In this modern era, organizational structure plays a
key role in enabling a company to function smoothly. It also remains responsive
to its internal and external stakeholders and helps to adapt to changes in the
marketplace. The managers of the organization should consider the fact that the
organization is not always stable and they should try their best in choosing
the appropriate organizational structure. Their decision should take consideration into number of
employees, internal environment, external environment, size, nature of business
and so on so that proper relationship between individuals, workers, groups and
departments is maintained and task is assigned to the employees and responsibility
is clearly defined to them.
Conclusion
and Recommendations
The case explains about the importance of the
organizational structure which engages the organizational design. Some of them
are explained below:
1) Proper
hierarchy must be defined.
2) Organization
must adapt to the changing environment.
3) Span
of control should differ according to the size of organization, i.e. narrow in large organization and wide
in small type of organization.
4) Before choosing any organizational design,
the basic factor affecting the organization’s efficiency must be taken into
consideration.
5) Decentralization, departmentalization, chain
of command, formalization, work specialization, should be analyzed properly.
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