CaseAnalysis: Ponsonby Pies
CaseAnalysis: Ponsonby Pies
PonsonbyPies is a private firm that is owned by a group of six familymembers. The company was started in the year 1986 and its mainproduct is pie. The company has been growing gradually, and itstarted by producing about 200 pies per day before reaching aproduction level of 8,000 pies per week in the year 1994. The growthand the safety of the going concern for Ponsonby Pie are based onfour factors. First, its leadership team is comprised of directorswith relevant specialties. Secondly, the company’s small size hasallowed the management to maintain a strong relationship withemployees, which has created the sense of belonging and madeemployees feel as part of the company. Third, the business takespride in the quality of its pies, where the management considers thehigh level of quality as the key determinant of the company’ssuccess and growth that has been achieved over the years. Fourth,Ponsonby Pies has been sensitive to the specific needs of its diverseclientele, which is confirmed by production of healthy pies forcustomers with medical conditions.
Themain problem that Ponsonby Pies is currently facing is the need tochange the organizational structure. The company has been using aflat organizational structure coupled with the open door policystrategy, which has been favored by its small size. The companyintends to enter into the international market by export toAustralia. The business owners are concerned about quality concernswhile the management understands that the organizational structurehas to be changed in order to facilitate delegation ofresponsibilities. This case analysis will provide the analysis of thecurrent situation, analyze options that can be used to address thecurrent situation, recommend the most appropriate option, and providea brief discussion of the implementation of the recommended option.
Organizationalstructure refers to the definition of how labor is divided within theorganization, patterns of communication, coordination, and the typeof formal power that direct different organizational activities(Twiname, 2004). Although Ponsonby Pies has an established hierarchythat is comprised of the top directors, middle management, and juniormembers of staff the directors have allowed the junior employees toreport and communicate directly to them, instead of going through themiddle management. Therefore, Ponsonby Pies has a formal hierarchy,but it does not use it to facilitate the flow of orders andresponsibilities.
Organizationsconsider three major factors when selecting the type oforganizational structure. The first factor is the span of control,which involves the number of people who are expected to reportdirectly to the next level of management. The second factor is thelevel of centralization that the organization intends to adopt.Third, the level of formalization, which includes the extent ofstandardization of processes and rules, determines the type oforganizational structure that is suitable for the firm. As theorganization grow, the need to decentralize its operations increasessince the top management may no longer be able to control ormicromanage all activities. Decentralization involves the spread ofdifferent functions and decision making roles to other individuals ordepartments (Scheneider, 2013). In other words, decentralization isachieved when power is dispersed from the central authority. Forexample, Ponsonby Pies is highly centralized where the two directorsretain the power to resolve issues that faced by the junior membersof staff. The need to delegate these roles to the middle managementand other units will increase as the organization grows since it willbe difficult for the two directors to resolve all issues alone.
Thetype of environment and the desired level of flexibility that isdesired by the management determine whether the organization willadopt a mechanistic or an organic type of organizational structure. Amechanistic structure is characterized by a narrow span of control,high formalization, and centralization, all of which are opposite tothe key feature of the organic type of organization (Lunenburg,2012). In the case of Ponsonby Pies the organization operates in acompetitive sector and a dynamic environment where customerpreferences keep on changing, which creates the need for an organictype of structure to allow the organization respond well to chancesin its environment.
Theorganization may also its operations through departmentalization. Asimple structure without departmentalization is preferred for a smallorganization (such as Ponsonby Pies), which does not require ton bedivided into departments. Departmentalization may also be achievedthrough the functional structure (division of employees intoknowledge groups), divisional structure (division of employeesdepending on geographical areas, team-based structure (self-directedteams), and matrix structure (requiring employees to report to thedirectors). The growth achieved by Ponsonby Pies is gradually forcingthe management to shift from a simple structure to an alternativeorganizational structure.
Everyorganization has a set of values, beliefs, and practices that make itdistinct from other organizations. A set of these values and beliefsdetermine the type of corporate culture adopted by the organization(Elsaid, Okasha & Abdelghaly, 2013). There are two majordimensions of organizational culture in the Ponsonby Pies’ culture.The first dimension is respect for people. From the case study, thedirectors hold that they wish to ensure that each employees feel aspart of the organization, but not too important than other employees(Twiname, 2004). This dimension helps the stakeholders treat eachother fairly and demonstrate tolerance in all situations. The seconddimension of organizational culture is team orientation. PonsonbyPies claims to practice teamwork, which is confirmed by thedirector’s statement, “We are all a team” (p. 3). Team work ishighly encouraged because it creates an opportunity for employees toshare ideas and educate each other through cross-learning (Glassop,2002).
Thereare several strategies that organizations can use to achieve changeand strengthen the organizational culture, but three of them arerelevant to Ponsonby Pies. The first strategy involves the use ofactions of the founders drive change in the organization’s culture.For example, a transformational leader is able to work with theemployees in the process of finding the need for change anddeveloping a vision that will help the organization achieve thechange (Voet, 2013). In the case of Ponsonby Pies, Katrina andAnthony should collaborate with employees in determining the need tochange the current organizational structure and culture and theninclude their opinions in the development of strategies that willresult in the successful implementation of the changes. Secondly, theintroduction of rewards and recognition that are culturallyconsistent can strengthen the organizational culture and motivateemployees to implement changes successfully (Voet, 2013). The thirdstrategy involves the management’s support to the workforcecommunication and stability. For example, the management at PonsonbyPies needs to communicate the need for changing the current structureand culture, in order to ensure that employees understand their rolein the process of change. An effective communication of changereduces confusion and facilitates an effective implementation ofchange (Malek & Yazdanifard, 2012).
Organizationalchange describes the process through which an organization shiftsfrom its current state to another state that is described by anincrease in performance, sensitivity to address the specific needs ofclients, productivity, and competitiveness (Malek & Yazdanifard,2012). An organization may use different models to guide its changeprocess. Lewin’s model of managing change is among the most commonframeworks, and it has three phases, including unfreezing, actualchange, and freezing (Manktelow, 2015). For example, the managementof Ponsonby Pies needs to unfreeze the organization by challengingemployees’ behavior of reporting directly to the directors beforeadopting another structure that will force them to report to a lowerlevel of authority. The unfreezing stage prepares employees and theorganization for change. Once the change has been adopted, themanagement of Ponsonby Pies will then focus on developing a new senseof stability and will help employees work by the new organizationalstructure.
Effectivemanagement of change requires the management to show the stakeholdersthe urgency of change. In the case of Ponsonby Pies, the urgency forchange can be communicated by showing the stakeholders the need toreduce the restraining force that results from the growth of thecompany. The growth in the organization implies that thecommunication channels will have to increase in length and employeesget engaged at different levels, instead of interacting directly withthe directors (Manktelow, 2015).
Resistanceto change is quite a common phenomenon that occurs when employeesdemonstrate their reluctance to change. Resistance is caused bydifferent factors (such as the lack of staff engagement) that mayvary from one organization to another (Smollan, 2014). For example,employees at Ponsonby Pies have been operating under a flatorganizational structure, which gives them a high level ofinteraction with the top management. A fear that a new structure willdeny them this interaction and require them to report to insensitivemid-level managers may stimulate resistance to change. A successfulmanagement of change requires the input and adequate support of thetop management in order to give assurance and confidence to thejunior employees that the change will not affect them negatively.Therefore, the two directors (Anthony and Katrina) should spearheadthe process of change at Ponsonby Pies.
Fromthe case study, the Ponsonby Pies intends to change its flatorganizational structure by developing a structure and a system thatis simple, effective, and gives the company a separate existence fromits directors, while maintain the level of quality that it hasenjoyed over the years. The need for change is attributed to anincrease in the company’s growth, which indicated by the newopportunity to export pies to Australia. Ponsonby Pies as threeoptions that can help it develop the desires structure as consideredbelow
Team-basedstructure: A team based structure is developed by grouping ororganizing employees at the same level into teams that pursue uniquegoals (Devaney, 2014). These teams are given the authority to makecertain decisions, instead of waiting for the top management to makeevery decision for them.
Pros of team-based structure
Decisions are made faster.
Employees feel empowered
Top executives get time to deal with critical issues instead of micromanaging employees.
Communication skills of employee improve with time.
Employees learn interpersonal skills and share ideas.
Consof team-based structure
Each tends to focus on its tasks, which limits exposure to the functions carried out by other teams.
Independence of teams may jeopardize the organization’s consistency.
Functionalorganizational structure: A functional organizational structure isdeveloped by organizing employees into specific resources, such asknowledge and production (Devaney, 2014).
Prosof a functional structure
Employees are managed by someone with experience in the field of their specialization, which makes it possible to review their work.
Employee becomes loyal because there is an opportunity to move up in their functional areas, which reduce turnover rates.
Sharing of valuable resources coupled with employee specialization increases performance.
Suitable for small organizations working in a stable environment
Consof functional structure
Communication between functional units may be jeopardized.
Functional areas become difficult to manage as the organization increase in size.
Functional areas may focus more on their respective goals and forget to pursue organizational goals, especially when coordination is inadequate.
Divisionalorganizational structure: Divisional structure is established byorganizing employees on the basis of geographical areas, clients, oroutputs (Devaney, 2014). This allows the organization to segregateits large sections into semi-autonomous divisions.
Prosof divisional structure
Allows the group of employees to focus on a single aspect of the product, which promotes specialization and performance
Each division is able to develop its culture that guides all members.
Consof divisional structure
Competition among divisions may result in politics that replace sound strategic thinking.
Some divisions are likely to implement compartmentalization that results in incompatibility.
Outof the three available options, the management of Ponsonby Piesshould select the team-based organizational structure to replace itscurrent flat structure. A team-based structure is preferred becauseit will allow the company to capitalize on the strengths of itscurrent workforce, while minimizing their weaknesses at the sametime. In addition, employees working for Ponsonby Pies have beensubjected to a teamwork environment, which will limit the amount ofshock that they will experience when the new structure isimplemented. The directors of Ponsonby Pies all the issues raised byemployees by allowing them to by-pass the middle management. However,the recommended team-structure will authorize employees to makedecisions at the team level, which will relieve the directors andgive them ample time to handle issues that affect the organization asa whole (Glassop, 2002).
Inaddition, Ponsonby Pies’ employees are used to a social workingenvironment, where the directors have been taking time to worktogether and interact with them (Twiname, 2004). This makes theteam-based structure the most appropriate framework to replace thecurrent working structure. This is because employees will still havetime to socialize, share ideas, and learn from each other at the teamlevel.
Fromthe case study, owners of Ponsonby Pies are concerned about theeffect of changes on the quality of pies since the company considersthe high quality to be its major source of competitiveness (Twiname,2004). However, studies show that team-based organizational structureincreases creativity as well as innovation in the organization, whichin turn enhances the level of quality of services and products(Glassop, 2002). This implies that the new structure is more likelyto help Ponsonby Pies increase the level of quality than reduce it.
Themanagement will organize meetings with employees in order to collecttheir views about the anticipated changes in organizational structure(March 15-March 25).
Ateam will be formed to define the new structure and develop a plan ofimplementation (April 1-April 3).
Theteam will organize employee at each level into teams of five members(April 6-April 15).
Rolesand obligations of each team will be written down and communicated toeach team (April 17-April 20).
Measuresof success (such as employee satisfaction with the new teams,increase in productivity, and improvement in levels of workingrelations) will be defined to help in reviewing the success ofimplementation of the new plan (April 21-April 28).
Areward system will be defined to motivate employees who demonstrateexemplary ability to implement the new changes. May 1-May 3).
Thenewly formed teams will be included in the organizational structurein order to make the changes become part of the organization’sculture and structure and ensure that they influence the day-to-dayoperations of the company May 4-May 7).
Theflat organizations structure has suitable for Ponsonby Pies, but theincrease in size of the organization will render it ineffective. Thiscreates the need for the adoption of an organizational structure thatwill help the company move from a small organization to medium, andthen to a large company. The most appropriate organizationalstructure at the moment is the team-based structure, which will helpthe company deal with management issues associated with the increasein organization’s size and maintain the level of quality of pies.
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