Organizational Theory and Design Case Study Analysis Rondell Data Corporation Case Analysis Abstract: The analysis of Rondell Data Corporation situation and discrepancies that were experienced throughout the company life cycle will help understanding the theory and design of organizations . By exploring the background of the problem, organization’s functioning, the impact of organizational culture on the strategy and success of the company and problem identification, recommendations can be offered.
Proposed solutions to the current discrepancies at Rondell Data Corporation will provide an increased understanding of the role of organizational structure related to the improvement and overall performance of a company.
Rondell Data Corporation History: Bob Rondell who was the owner established the Rondell Data Corporation in 1920. The basis for its inception was the invention of several electrical testing devices. In 1947, the company entered into the radio broadcasting equipment market. By the early 1960’s, the company had increased its business to include data transmission equipment.
The company had a reputation of being a source of high quality innovative designs and described itself as being able to “convert problems to solutions” in their sales brochures.
By 1978, two major lines were recognized: broadcast equipment and data transmission. Broadcast equipment accounted for 35% of the company sales. Data transmission was also blossoming with increased demand for highly specialized and innovative designs. In 1920 the organization size was not known as it is a new in the market. However, by 1947, Rondell Corporation had reached 100 employees.
By 1978, the time of the current dilemma, the employee count had reached to 800.
The organizational structure of the Rondell Corporation is fairly flat with few layers for communication to flow. There was a lack of an integrated information structure within the company. An integrated information structure would have facilitated cross communication necessary to achieve the common goal. Key Personnel Bill Hunt, the current President. Bill Hunt has been with the firm since 1946. He was a student of Bob Rondell’s, and joined the company as an engineer.
He became the assistant to the president in 1956 and president in 1960. Bill Hunt, along with Ralph Simon, Executive Vice President, holds enough stock to command effective control of the company. Dave Schwab, Production Manager, joined the company in 1955. Upon joining the company, he was instrumental in exposing widespread irregularities in the production and control departments. Following this, Dave was promoted to production manager, and brought in a new group of production specialists to the company. His exact education level is unknown, other than the fact that he does not have a degree.
Ed “doc” Reeves is employed as Director of Research. He joined Rondell in 1960 and worked directly with Bill Hunt in developing major innovations in the data transmission equipment. He became director of research in 1967 and is widely respected in the Company. In fact, he is referred to as a creative genius. In the past, he had been offered the Director of Engineering position, but turned it down. Ron Porter, Vice President of Sales, has been with the company since 1957. Ron has a B. S. in engineering and has always worked in sales.
He was made sales manager in 1967 and appointed Vice President of sales in 1974. Frank Forbus is the most recent hire. He joined the company in 1977 as Director of Engineering, replacing an employee who had been dismissed. Frank’s educational background includes a Master’s degree in engineering. His duties include administrative responsibility for research, as well as complete responsibility for engineering services. Prior to coming to Rondell, Frank Forbus worked as the division director of engineering in a large industrial firm. Current Situation
Currently, the year is 1978 at the Rondell Data Corporation. There has been a gradual increase in disputes between research, engineering, sales, and production staff over the last 2-3 years. The disputes seem to center on the problem of new product introduction, and are focused on the engineering department. The engineering department is seen as being to blame for the etiology of the problems. The original Director of Engineering had held the position for 30 years. The current Director of Engineering, Frank Forbus, has only been in his position for 8 months.
He has identified some communication issues between departments and upper management. In an attempt to rectify the communication problems, Forbus has instituted a new communication strategy with the production manager and the president concerning the latest product, the “802 Modulator. ” During one of the meetings with the president and the production manager, the president interjects that a new “filtering design” will be added to the product with the expectation that engineering and production will solve any potential delays caused by this revision.
Subsequently, the “802” design is shuttled back and forth between engineering and productionat least 4 times with the result of production staff assigned to another “rush” job. The company is faced with both internal dissatisfaction of employees and external dissatisfaction of their customers. Structure of the Engineering Function The outdated organizational structure of Rondell Data Corporation has contributed to much of the growing dissatisfaction . The organizational structure at Rondell follows a strictly functional approach. The functional areas are divided as Production, Sales, and Engineering.
This model served it well in its beginnings as a small entity at that time. However, as Rondell has experienced major expansion, this structure is now seriously inhibiting Rondell’s future growth. Relying on personal relations, Rondell lacks the cohesive and clearly organized structure required of a larger company. As the company has grown, the different departments have grown at different rates and interactions have changed disproportionately. The engineering, research and development departments at Rondell are the major casualties of this irregular expansion.
Although the overall organization theme at Rondell is along functional lines, engineering services seems to be the exception. Much of its workforce is distributed among the other departments. This distribution of personnel leaves engineering services without a clear mission or purpose and further blurs the lines of authority. The displacement of engineering personnel lacks integration and hinders the engineering services’ effective interaction and cooperation with other departments. The role of engineering services becomes amorphous and undefined.
Ambiguity between Engineering Services Departement and and research role was still a matter of concern. Upper management describes the engineering services department (ESD) as being “responsible for maintaining cooperation with other departments, providing services to the development engineers, and freeing more valuable people in research and development (R&D) from essential activities that are diversions from and beneath their main competence”. Obviously, R&D is seen as the star of the organization, even though it appears to have the least interaction with the rest of ESD and the organization.
The “division” of the ESD prohibits effective interaction with the other departments. Management had defined the role of engineering services as a cross-disciplinary, cross-functional group acting as the intermediary in allowing the rest of the organization to produce efficiently. However, the clear lack of authority of engineering services has rendered it essentially weakness. Interdepartmental friction arises from too much centralized control and an emphasis on staff positions over line positions. Organizational Culture
Rondell corporation has a strong well established culture , but was now being replaced with subcultures. The subculture’s behaviors were incongruent with the overall organization’s previous values. This incongruency gives rise to many conflicts and decreasing productivity of the organization. The Length of employment process was highly valued and in some cases was the basis for selection of key individuals. Informal relationships were the means used to communicate and accomplish the goals of the organization.
There was very little formal structure within the company and little respect for the hierarchical structure by most members. Each department was held responsible to take care of its members regardless of the impact on the overall organization. “For several years, the firm had experienced a steadily increasing number of disputes between research, engineering, sales, and production people” (Seeger, J. , “Rondell Data Corporation). Each department, using a high external locus of control, found reasons to blame the other departments for Rondell’s decline in profitability. When originally founded in 1920 as Rondell Equipment Co. the organization’s values based on a tradition of “a long-standing reputation as a source of high-quality, innovative designs” led to an elitist mentality. This Traditional-Elitist model made it hard for the organization to adapt to growth and rapid change. “The real test of the effectiveness of a corporate culture comes when the organization’s environment changes. Bill Hunt gave little leadership in growing the organization and was not visionary in diagnosing the changes that would besiege Rondell. With the new generation of employees, a more formalized structure was needed.
The strong “family” culture had become dysfunctional, giving way to divergent subcultures. As the differences between the individuals became more and more apparent, the members began to identify more with their own profession or department and less with the organization as a whole. These subcultures began to function as countercultures and pitted one member against the other. Organizational Descrepancies and Changes for Success Rondell has a typical organization by Function. The functional design works for companies with few products because all functions are working toward the same goal; develop, build and ship the product.
Additionally, this design is most efficient when departmental tasks are relatively independent of each other. Ideally this design is suited to encourage specialization, but problems develop when people develop tunnel vision and tend to perceive multifunctional problems from the vantage point of their narrow area of expertise. One of the most significant issues facing the Rondell Corporation in relationship to the structure of the company is the fact that the entire performance system enabled, and indeed seemed to encourage, individuals to see their own performance as separable from the enterprise as a whole (Ott, J. 1996). In an organization with many product lines, functionally structured organizations can loose track of the importance of individual products or new product development efforts and fail to provide the functional integration needed. Rondell’s external environment has changed and their product breath has grown to two major lines with an increasing number of orders calling out unique specifications. New product introductions at Rondell require timely, integrated efforts. In the model 802 project, new changes have been introduced by Doc Reeves .
However, an integrated team would be better equipped to make such a call versus an individual Director. An integrated team would consist of representation from design, purchasing and manufacturing. Instead, the “wrong call” made by Doc Reeves has put a heavy workload on Engineering and Drafting employees. Another example of the problems caused by functional design and centralized decision making is Dave Schwab’s Thanksgiving review of the 802 prints. Dave Schwab reviews the prints and makes decisions that are not within his scope. And without involving the concerned parties.
Frank Forbus and Engineering Services appear to be taking the brunt of the blame. The actual blame lies within the organizational structure and design of the Rondell Data Corporation and its segregated departments. The organizational culture of Rondell Corporation is one that values age, experience, and seniority. All key management personnel have been with the company over 15 years. There has been minimal turnover, except for the Engineering Department. There have been references made to past failures of personnel, secondary to being “too young. Maintaining “family spirit” is important to the company in the sense that a more “high tech” manner of communication was never implemented, even with the growth of the company over time. Management seems to highly value the “personal touch” and sees this as the most effective method for communication to facilitate business practices. Since culture is the focus for an organization’s strategies, Frank Forbes failed to see that before he would be able to have any affect on the strategies at Rondell, he would need to change the culture.
Frank was not able to empower himself or obtain management’s empowerment to begin the process of changing the culture at Rondell. Formal structures were needed along with a breaking down of the silos that had been formed by the functional groups. For Rondell to improve their productivity and increase their chances of survival in the changing industry, a cross-sectional team model, combining the inputs from sales, research, engineering, and production, would have assisted in enabling Rondell achieving its goals.
Because of the centralized and functional scheme, resources are being diverted with engineers being called away to production to deal with problems. Additionally, design needs to be aligned more with sales and with research. Recommendations: The organizational structure of Rondell should be changed to resolve the issues of poor communication and inefficient development processes and forget their past organizational structure. In addition, Rondell needs to find a better way of developing products, communicating information and making timely decisions.
It appears that in the short term, a change to a Product Line focused Organization structure would help bring focus to new product development and push down decision making to the people most involved with the product line. A realignment of how people, tasks and tools are assigned to projects or product lines needs to be looked at and rectified. The current centralized management structure is making ineffective decisions and reducing the effectiveness and responsiveness of the company. The company needs to make a shift from vertical decision making to managing cross-departmental work processes.
A relationship map for Rondell showing the systems view of the organization, including the customer, product and flow of work will highlight the deficiencies in the organization. In summary, we recommend the following major changes: 1. Retain the services of a qualified consulting team to help the management team. 2. An Organizational Design process should be initiated to determine the best organizational structure for the company. Our assumption is the new organizational structure will be product line focused. 3. A cross-functional approach should be taken to accomplish key company tasks such as new product development. . Decisions be pushed down into cross-functional teams who have the responsibility for delivering a timely, quality and manufacturable product. 5. Teambuilding should be a priority at Roundel with the stoppage of the constant finger. Organizational wide efforts should be made at breaking down functional barriers and creating an environment of team participation and decision making. 6. Engineering Services should add a project management function to aid the team in coordination, planning and monitoring project progress.