This is an informal report, addressed to Regal Insurance Operations Director, which gives reasons for the lack of morale within the company, following the takeover of HOWMUCH? and the reorganisation that followed.
One approach to management and theory of organisations used by Regal is Bureaucracy. This is because there is a hierarchy of authority, which is the different levels of management, a system of rules and impersonality, which means privileges and authority, should be in accordance with the system of rules (Mullins, page 74).
This approach is good at keeping the company on track and in a forward moving direction but it lacks the ability to quick change. It also reduces the opportunity for staff to grow and show initiative, which will de-motivate staff, in turn reducing the effectively. If staff are not used to using their initiative and a situation arises that is not covered in the rules, then they not be able to deal with it, which will have a negative effect on Regal.
Due to the rules and regulations that Regal follow another approach they use is contingency theory, which states there is “one best way” to structure a company (Brooks, page 133). This is apparent when Regal buy HOWMUCH? and integrate them into the organisation just adding them onto a department/function area. This can be a very dangerous theory because Regal could loose sight of all the other import factors involved in running a successful business. HOWMUCH? was a business and if Regal treat it as another department it could fail. This theory approach is all bad, Regal have a clearly defined one best way of running their organisation then everyone will know their place and there will be no confusion of who’s in charge of whom.
An approach that HOWMUCH? have use is the decision-making approach. This is because of the way in which Spence Davis runs his business. Although he has a board of directors, he is still very much in charge and gets involve with his workers. By doing this he should have a great understanding of how his business works allowing him to make decisions to solve problems or prevent them in the future. This can be a very effective way of managing a business, but if the business was to grow it would become increasingly harder to monitor the business alone.
Due to Regal’s age the leadership styles would of changed over the years, but some old traditions would mean that not everything could change. When Regal started the managers would have been more theory x and would of adopted a coercive leadership style which is highly de-motivating for staff. But in those days motivations wasn’t that much of an issue. Although this was the case for most businesses in the past, Regal appear to have had a coaching leadership style too, because they managers of the business were people that worked their way up and earned it through good performance; which in itself is a motivating tool. A coaching leadership style is still in use now and managers are sent on courses to learn how to ‘adopt the paternal style of developing and controlling staff. Although this is the case it seems that the exclusive council are still running with a coercive leadership style, because they make decisions in the manual and managers have to follow them.
HOWMUCH?’s owner and founder, dominates the organisation despite the presence of a Board of directors. He does not exert one style of leadership but displays a variety of different aspects from different styles. He seems quite coercive, because he is in charge and seems to make all decisions, but because he uses aspects of other leadership styles, it is apparent that it works for HOWMUCH?. The way in which he sets growth targets for all employs and sets a minimum requirement for the first two weeks of employment is a pacesetting leadership style, this can also be very dangerous but because of the democratic attitude he has towards his sales supervisors it seems that the staff are motivated enough for this leadership style to work. Spencer Davis is very much apart of HOWMUCH’s day to day running and seems to be in very close contact with his staff eradicating the “them and us” mentality, which enables him to adopt these leadership styles and maintain a motivated workforce; his balance between task and people, and trust and control appear to be adequate.
Regal’s structure is centralised and structures itself around both function areas and product/activity areas. Due to the size of this business and the amount of members in the council it is possible to run the business in this way, but it may produce confusion, especially in terms of communication. This is why the written manual is a good idea, because it allows all managers and staff, if allowed to read the decisions made by head office.
HOWMUCH?’s structure is very different in this way, although it appears to be centralised, Spencer Davis is involved directly with all parts of the organisation so it almost takes on the form of a decentralised or matrix structure. In terms of the takeover, HOWMUCH? Has lost its structure and have had to adopt Regal’s way of operating.
The culture within each business will be very different making it a difficult task to merge both companies. Regal’s culture will be a role culture, which has high levels of bureaucracy and formality. Rules and job descriptions are the norm and they may find it difficult to cope with change which is why the new managers are seen as outsiders (Handy’s cultural types sourced in Brooks, page 252). Their culture will also be segmentalist, which has weak coordination mechanisms and is inward-looking (Kanter 1983 sourced in Brooks, page 256), which is apparent in their unwillingness to adopt the telephone quotes.
HOWMUCH? on the other hand has a task culture where the employees have joint responsibilities. Although normally this means there is less authority and more individual control (Handy’s culture types sourced in Brooks, page252), which there is, Spencer Davis is still very much in control in the decision making. But by giving his trust to the supervisors, it does mean that minor sales decisions are made faster. Their integrated culture “views problems and responsibilities as shared and connected” (Kanter 1983 sourced in Brooks, page 256) which allows them to find solutions as a team due to their good coordination.
There is a big relationship between culture and structure, because the culture of a business forms from the structure. This is why is so difficult for business to undertake dramatic change to their structure. Small change is manageable because the culture can adapt but keep their basic form but in the case of Regal taking control over HOWMUCH?, the change may be very difficult for HOWMUCH?. They will have to change the way in which they work because of the new rules and regulations they will have to follow. This could hinder the performance of HOWMUCH? due to the de-motivation of staff. The merger will not only have an effect on HOWMUCH?’s staff but also on Regal’s, not in the same way though. Regal’s staff will not have to deal with the change in rules, but they might get de-motivated if they feel that Regal has bought HOWMUCH? because they are not could enough. It is also apparent that the do not like the new managers and staff, which suggests their culture is like a tight community. This will make it even harder for HOWMUCH?’s staff to adapt.
Maslow’s hierarchy of needs suggests that all humans have five basic needs, which are:
> Physiological needs – these are the very basic needs, such as food and shelter, which you get from earning money through work.
> Safety needs – this security, predictability and safety from threat, which also comes purely just from have a steady job. This would have been a threat for some staff when the takeover happened because they might of felt like they were going to loose their jobs.
> Social Needs – this is the need of social interaction, friendship, affection or a sense of belonging. This is apparent in HOWMUCH?’s culture with the way in which teams work together to meet targets. This is not the case with Regal seeing as people are leaving and outside workers are now coming in making it harder to make lasting bonds with others; although with the long term staff it could be possible that there was a very strong bond between workers before the changes
> Esteem needs – this is the need to be recognised, to have status and respect from others. This is apparent in both businesses. Regal has had a scheme which meant staff who worked hard enough could make it up to management level and even though it says that regal are hiring from outside the business, most businesses still prefer managers with experience in their field. HOWMUCH? Set targets for each member of staff and if they meet that target they get rewarded, and I’m sure that if they constantly hit their target they will get plenty of reorganisation and respect from their peers and managers.
> Self actualisation – this is the fulfilment of personal potential. This could be met through work, but generally speaking it is a personal life target and if that for instance involves becoming a manager then it seems that it might be easier in company like Regal because of their training scheme
Hertzberg’s two-factor theory suggests that there two factors that if absent cause dissatisfaction (Mullins, page 485). These factors are hygiene factors, which relate a good job environment and motivator or growth factors, which relate to the job content itself, such as being able to work up to high levels. In both businesses the hygiene factors appear to be met, because they both seem to have decent working environments, however with the takeover a lot of people will fell like their jobs a threaten which could de-motivated them or make them work harder to try keep their job. Regal seem to have more evidence supporting the growth factors because of the more apparent way of being able to move up in the business although HOWMUCH? Does offer the reward scheme for meeting targets which is a motivating factor.
Vroom’s theory of expectancy (BPP, page206) relates to both businesses because both business have a desired outcome that will come from hard work. Workers are motivated to work hard in Regal because of the opportunity to move up in rankings and workers are motivated to work hard in HOWMUCH? Because of the reward scheme for meeting targets. HOWMUCH?’s tactic may prove to be better because it is a certainty that hard work will be rewarded, whereas in Regal’s case there is only a chance to move up and gain more responsibility.
The staff bonus bond is a good idea because it is a short term goal that keeps both the company and staff happy if met. Because it is short term, staff see the benefits sooner meaning psychologically it seems more beneficial.
The original long term hamper is also a good idea because it gives staff something measurable to work towards for the future, but because it is a long term goal staff might loose sight of the benefits of hard work in the early stage of the career, seeing as it will only be beneficial to them in the future.
The team work approach at HOWMUCH? is good, because it has many benefits for the staff and for the company, if managed correctly. Teams are good because it fulfils one of mankind’s needs of being accepted in society i.e. being needed/part of a team. This will keep the staff motivated and help them meet their targets and work harder. Not only does it have psychological benefits but physical benefits too. If a person in the team has a problem then they can ask one of there team members for help, which means that people the staff can learn off each other. The reason it has to be well managed is because teams can have negative effects too, such a bullying and some team members not meeting the potential because other team members do most of the work. This is why having individual targets is a good idea instead of having just team targets.
Bass and Ryterband’s four stages of group development explains the reasons why new managers are being seen as outsiders. The first stage is developing mutual trust, the second is communication and decision making and some norms are being established, third is motivation and productivity; workers are cooperating with each other instead of competing, and the fourth is control and organisation (Brooks, page 92). These stages can take a while to develop and once developed group members will feel comfortable. With people leaving and new managers entering the business, the groups would have been torn apart many the remains of the groups left over will have to start at stage one with the new managers and if the managers aren’t willing to take their time and try enter the group then there could communication and coordination failure. A way to get around this problem is for the new managers and staff to interact on a social level, to gain trust and a common ground for communication.
Belbin’s Team role theory could explain possible reasons for factors that threaten team success. Belbin states that to have an effective team eight roles should be met, the coordinator, the shaper, the monitor-evaluator, the resource investigator the implementer, the team worker, and the finisher (BPP, page 245). If for instance a team that had all these characteristics before the takeover existed, and then the implementer and the finisher left, the team would be incomplete. Then the new members of staff that arrived were a monitor-evaluator and a shaper, not only would the team be incomplete, but the members would clash, causing the new members to be as not welcome and ‘outsiders’. A way around this problem is for Regal to ensure they hire people that will suit the roles of the already existing teams, instead of trying to force people in causing conflicts, which cold lead to an inefficient workforce.
Another possible reason for the problems being face by Regal is the formality of the group. If the group is used to being informal; where they are all ‘mates’ and get satisfaction out of the social aspect, and the new manager wants to run the group in a formal way, the staff are not going to like the change and will resent the new manager. A possible way around this is for Regal to ensure that all changes made by managers need to be done slowly to ensure a smoother transition period for the staff.
The use of technology across the organisation could help team functioning by allowing groups of the organisation to communicate easier with other groups allowing all members of the business to know what is happening. This may speed up decision making and which help the business and benefit the customers. Anything that speeds up processes in a company, cuts prices which will benefit customers. Not only will technology speed up communication it may also give staff a new way of interacting with each other, maybe with staff members they have never interacted with before, such as through intranets. Although technology could help team functioning, it could also hinder it. It could reduce the amount of close contact staff have with each other reduce the chance of making bonds with each other, which will reduce the effectiveness of teamwork, because staff wont know how to work with each other. This could reduce productivity meaning customers will not benefit in anyway.
Anon, (2004), HND/HNC Mandatory Unit 3 Organisations and Behaviour, London, BPP Professional Education
Brooks I, (2006), Organisational Behaviour Individuals, Groups and Organisation Third Edition, Essex, Pearson Education Limited
Mullins L J, (2005), Management and Organisational Behaviour Seventh Edition, Essex, Pearson Education Limited