Organizational Culture

Ms. Denise Danford

Strategic Review Committee Head

November 29, 2005

Re: Implementing changes to increase success

Dear Ms. Danford,

Upon reviewing your case, it is evident that, while a very successful company, many changes must occur in order to continue MACHO’s success into the future. There are three main issues that are the basis for all underlying problems. There is a lack of communication at MACHO both vertically and horizontally. Additionally, it appears that there is a focus on cost reduction which is hampering innovation and, at times, the quality of products produced. Finally, there have been increased demands made by senior management to step up production levels and to manufacture multiple products simultaneously; however, these requests have not been accompanied with increases in available resources.

As a result of these issues, MACHO must change their culture, focus on being innovative while remaining efficient and must update the skills that their workforces possess. It is also important that employees’ performance is more appropriately measured, thus I have outlined a solution to better measure performance so that progress toward greater success can be made visible and demonstrated on an ongoing basis. Please refer to Appendix I for an overview of the solutions and the underlying issues.

Culture Change

The culture that is currently embedded in MACHO is one which inhibits communication, both vertically between head office, managers and subordinates and horizontally amongst peers. The lack of communication brings rise to a scarcity of resources which should not exist. According to one manager, there is not “a universal strategy for new products” (MACHO, 1998) and as a result, new projects are introduced without concern regarding their impacts on existing projects. It is vital to the success of the organization that they produce superior products, however, without realizing the multitude of projects each unit has, and their ability to handle them, management is inadvertently encouraging the manufacturing of mediocre products. As one manager stated, “there is a need to stand back and look at what we have on our plate and determine what we really want to get done, … rather than try to do a hundred things on an inferior level” (MACHO, 1998). Through the lack of communication and the resulting resource shortages, three areas of the organizational culture are currently impeding innovation and growth. The informal communication networks, top-down management style and the unwillingness of employees to discuss problems are hindering the ability of MACHO to sustain their market position.

Since MACHO provides lifelong employment for much of Springton, it is reasonable that many informal lines of communication have developed. These relationships have constructed an environment in which the goals of the production, engineering and manufacturing departments are not necessarily aligned with managements’. Instead of going through formal means of communications to speed up a process, employees rely on “day-to-day deal making and negotiating” (MACHO, 1998) to fulfill their requests. These unofficial concessions often affect several facets of the organization as time and resources are not being used efficiently or effectively. In order to counter this problem, it is necessary to alter available communication lines and develop more accurate methods of compensating individuals so their goals become aligned with those of the organization.

The organizational structure of MACHO allows for a top-down control system in which senior managers determine production levels and product lines to be developed. While normally this may not be extremely detrimental, as a result of broken communication lines, management often asks the impossible of their employees. Driven by a cost reduction mentality from above, bottom-line workers are reluctant to be innovative and experiment with new ideas for fear of repercussions from management. Instead, employees “look for cost reductions on products without thinking of the final affect on the product” (MACHO, 1998). This is a risky approach when dealing with an industry in which innovation is vital for a sustained competitive advantage.

The final cultural hindrance MACHO is experiencing is their employees’ hesitance to discuss issues with management. Underdeveloped communication links and weak relationships with managers have led to employees covering up problems, or failing to mention the full magnitude of the issues. As a result, senior management continues to make unreasonable demands of their employees since they are unaware of the issues that currently exist.