Onetel Case Study

Background

One.Tel was launched by Jodee Rich and Brad Keeling in 1995 (Cook, 2001). At first, it looked to get the advantages from deregulation of telecommunication industry by reselling other network’s capacity and making money through stock market speculation. Rich and Keeling tried to increase the company’s shares rather than to profit the company (Cook, 2001). Initially, One.Tel used to develop the culture of strong teamwork and togetherness. There was no hierarchy in the structure of the company. However, the dissonance of its culture and system is the main factor that led to One Tel decline.

One.Tel failure had been indicated since there was a sharp fall in its share price in 1999 (Cook, 2001). In 2001, OneTel had no cash left to pay the expenses and it had huge debt. The company expanses too fast so that the billing system cannot handle it and the customers did not receive their accounts. Jodee Rich, as the main founder of the company, did not pay attention to any problem reported. All these factors made One.Tel could not stand in the crisis time.

Major Issues

Major issues face by OneTel is that the company structure was not developed, in which lead to ineffective communication. In its operation, One.Tel run high centralization as the managers only do what Jody told them. He creates the leadership turnover since he liked promoting the yes man and humiliated managers who brought problems to his attention, therefore, there are high staff turnover. He also did not accept any opinions from others and used his authority to manage the company. Furthermore, he focused too much on advertisement in taking in the new customers. He was too autocratic which made the employees unable to exercise their ability in solving problem.

In addition, One.Tel had low complexity that is determined by having unclear job tasks and responsibilities. As there is no organizational chart, the relationship between the employees could not be determined and the job descriptions were ambiguous. Understaffing, which often happens, and many called from customers were left unanswered, led to the long-term decline in sales, as there was frustration among the customers. No rules and procedures in handling account and customers complaint shown that One.Tel was lack of formalization in operation. One.Tel also did not run its divisions’ function properly. There was no right procedure in training staff and it recruited young inexperienced staffs. It also had disorganized billing system and financial account. Lastly, there was no clear planning of staff training, advertising, and product availability, which made the technology wasted.

Theories

1. Organizational culture

Organizational culture is a system of shared meaning within an organization, which composed beliefs and assumptions (Robbins & Barnwell, 2006). Besides, there are common values that facilitate understanding among members (Robbins & Barnwell, 2006). There are terminal values and instrumental values. Terminal value is the outcomes that want to be obtained. Instrumental value is the degree of formalization to achieve certain desired behavior modes in achieving terminal goals (Robbins & Barnwell, 2006).

There are four forces is sustaining the culture in the company (Robbins & Barnwell, 2006). First, it is selection practices, which is the process of selecting and hiring the best candidates who have the abilities, skills, and knowledge to do the job successfully in the organization. Second, it is actions of top management, which has influence to bring the organization culture. The top management plays an important part in decision making, planning, and controlling the organization. Third, it is socialization, which is the process of the new employee to adapt and learn the organization’s culture, rules, and beliefs, and to socialize with their fellow staff. It can be done by induction courses and training programs. Lastly, it is use of appropriate reward and punishments, which has function to send the powerful message to all the organization’s members.

Some unique characteristics of One.Tel is they tried to build good relationship between the employees. It aimed to make fun and friendly environment for people who are working there. There were all in one partitions without office and organization chart was banned. It tried to create the strong culture of sense of belonging to the company.

2. Size structure relationship

The organizational structure has a major role in daily operation of organization. It facilitates the delegation of authority and operation of control and communication systems (Organisation Structure, 2003). There are different criteria for determine the