This is a London School organizational Behaviour Assignment in which we discuss organizational structure, behaviour and theory of organization with management practice of KBR's case study.
LO 1: UNDERSTAND THE RELATIONSHIP BETWEEN ORGANISATIONAL STRUCTURE AND CULTURE
Q1.1 Compare and contrast KBR’s organisational structure and culture to that of a similar organisation.
The organizational structure of KBR has been one of the reasons for the success of the company. The company is divided into various groups depending upon the skill and expertise of individuals inside the group. This type of functional organizational structure, where each group manages different functional aspect of the organization has helped KBR to create more market opportunities throughout the world. The company has segmented its business into engineering and construction business unit, refining and coal business unit, construction and maintenance service, financial investment and management business unit, government and infrastructure business unit, etc. (Hill, 2008).
KBR has been relatively flat as it has very few layers inside the organization. KBR is now gradually moving towards matrix type of organizational structure where the organization focus on division of project based teams which involve the managers and the staff working together. Thus, the specialist and the skilled people are grouped together in a team for better results within the organization.
On the other hand, other organizations like Mitsubishi Corporation, which is one of the biggest competitors of KBR these days, has a hierarchical type of effective organizational structure. There are more number of layers with Shareholder, Board of Directors and Corporate Auditors sitting on the top, followed by President, Executive Committee, Corporate Staff and Business Service Group at the lower level. The structure at Mitsubishi is more divisional oriented with the their business being divided into
various fields like Environmental and Infrastructure Group, Industrial Finance and Logistic Group, Energy business Group, Metal and Machinery Group, Chemical Group, etc. (Parkhe, 1991).
The organizational culture that is followed inside KBR highly complements their structure. The values of KBR which is building good relationships between employees and managers along with delivering high quality of product, clearly states that the company cares about their employees and the management tries their best to provide better working conditions which increases motivation among employees. KBR also maintain transparency in their decision making within the organization which helps them build effective relations with their employees during their time of separation in 2006 with Halliburton.
On the other hand in company like Mitsubishi underwent high level of changes during 1980s when it collaborated with Australian company Chrysler Australian Ltd. which used to follow autocratic style of leadership and always look for downsizing by firing its employees during recession. Though Mitsubishi was eventually able to succeed in changing the culture that prevails in Australia, but the changes took years and thus Mitsubishi had to struggle a lot in bringing the change.
The difference between the behavior in terms of organization structure and culture of KBR and Mitsubishi can be easily analyzed. In the 1980s when Mitsubishi was struggling to establish a common cultural environment across the globe, KBR was much stable in their approach and was successful. However, the recent separation of KBR and gradual progress in Mitsubishi has resulted in the success of the latter.
Q 1.2 Explain how KBR’s organisational structure and culture affects the performance of the business.
The main motive of KBR is to deliver high quality product on time for the betterment of their customer, the environment, their employees and their stakeholders.
Thus, it can be seen that KBR values have played an important role in maintaining a good culture within the organization. The employees inside the organization feel much secure as company is focused on providing good medical facilities in order to keep its employees healthy and safe(Hanges, 2004).
Thus, it can be seen that the matrix type of organizational structure along with the working values incorporated by KBR in its work culture has been vital as far increasing the performance of the KBR is concerned.
Another important value followed within KBR is maintaining integrity and transparency in their work. The company was successful to convince its employees because of their transparent decision making during their split with Halliburton. The employees did not feel insecure and stick with the company during that phase. Thus, it can be seen that the values and culture of KBR has played a vital role in not only delivering high quality product, but also in building good and healthy relations with its employees which is essential for better performance of the company.
Q1.3 Give examples and discuss factors that influence individual behaviour at work.
Every individual is different from each other, thus it makes it very difficult to understand the human behavior and the complexity involved in it.
It becomes manager’s job to understand the factors that influence the individual behavior at work so that the manager can channelize these factors to attain a positive behavior from the workforce. Some of these factors are discussed below:
- Diversity: The wide diversity in terms of race, culture, location, age, sex and education results in different type of opinion. It is important for an organization to have employees coming from different backgrounds, caste and culture. It is important to understand different cultures and their importance so that offensive behavior is avoided at workplace. It is often observed that people from same place holds same kind of opinion, however people from different places holds different opinions and solutions for same issue. This may lead to conflict and hampers individual behavior at work. It is important for any organization to manage their resources wisely and teaching them important of diverse population at work.
- Skills and Abilities: Skill of a person can be defined as his ability to act in a particular situation or circumstances. Abilities can be defined as the capacity of a person, mental and physical, to do a task. Individual behavior is highly dependent on the skills and abilities of an individual. It is very important for any manager to understand the abilities and skills of each individual in a team so as to assign him or her with task which complements his attributes. Self-awareness about his own abilities helps in determining the behavior of an individual towards a task (Furnham, 2012)
LO 2: UNDERSTAND DIFFERENT APPROACHES TO MANAGEMENT AND LEADERSHIP
Q 2.1 Using the case study provided, identify which leadership style is used by KBR and compare the effectiveness of KBR’s leadership style to a similar organisation.
Leadership can be classified into various categories such as autocratic leadership style, Laissez Faire leadership style, Democratic leadership style, etc . The flat organizational structure supports KBR to follow participative style of leadership, where the employees within a team play an important role in the decision making related to their task or project. There is proper flow of communication between the staff, the management and the senior members of the team (Yukl, 1989).
The leadership style followed in KBR can easily be compared with its rival Fluor Corporation which has more layers and follows hierarchical organizational structure. Fluor follows adhocracy leadership style, as the decision making lies in the hand of the senior most people, who are present at the top layer of the organization. These people are more skilled and are specially trained people and thus can make quick and instant decisions whenever required. But, this kind of leadership style has many drawbacks because the employees especially the staffs feel insecure as he or she does not share the power and responsibilities of taking decisions for the company. The passage of information also takes lot of time to pass from the lower layer to the highest layer and vice versa as it needs to pass through several intermediate layers. A participative leadership style as followed in KBR is quick in sharing information as any employee can feel free to communicate even with the most senior person of the organization.
Q 2.2 Explain how organisational theory including the work of F.W. Taylor underpins management practice.
The most famous theory also known as the Scientific Management theory or approach was given by F.W Taylor. According to the theory the workers of any organization are driven by their salary. The most important and the driving motivational factor in any individual’s like is money. Employees will avoid working if they are not properly rewarded. Taylor’s scientific management came as replacement for thumb rule which was followed earlier. According to Taylor, all the available methods should be analyzed scientifically in order to attain better results. Taylor talked about providing training and coaching to employees to increase their skills. Therefore, the approach that a company should follow is to identify the scientific methods to solve a particular task, define the goals associated with that task, motivate the employees by offering proper rewards for that task, and train the employees about the new methods for solving those tasks. For example: if an employee engaged in planning activities founds that a task can be done economically with help of subdivision of labors, then more labors should be appointed and should be trained accordingly and rewarded based on their goals. This will motivate the employees not just because of the rewards but also because each time the employee has to work using different approach which keeps the work interesting. (Whitston, 1996).
There were many theories that were formulated later on, but it should be seen that Taylor’s scientific theory still holds true as pay or salary is one of the biggest motivator which motivates an individual to work. Though, management realize that there are other factors which should be taken care of, salary is one big factor which each management team works on and pay according to the capability and skill of an employee in the company.
Q 2.3 Evaluate different approaches to management used by KBR and one of its competitors.
KBR has always used neo-classical also known as human relation approach. KBR has been a flat organization and thus has always encouraged participation from all the employees. It has offered great responsibilities and independence to their employees, which has been heartening to the employees of the company. As it can be seen from the values, the management gives high importance to social aspects at workplace.
One of the biggest rivals of KBR, Fluor Corporation, on the other hand has used classical approach to management. As discussed above, Fluor Corporation is a hierarchical type of organization, thus it pays less attention to increasing relationship with employees and sharing power and responsibilities with employees who are part of lower layer.
Thus, it can be seen that the organizational structure acts as the governing force to decide which type of management approach should be followed within the organization. It should be noted that the flatter the organization is i.e. the lesser the number of layers in an organization, the employees will enjoy more power and more responsibilities. As a result the employees are more involved with the company results and thus their concern leads to more commitment from the employee which is highly beneficial to the whole organization.
LO3: UNDERSTAND WAYS OF USING MOTIVATIONAL THEORIES IN ORGANISATIONS
Q 3.1 Discuss the impact that different leadership styles may have on motivation in KBR and on one of its competitors during an economic depression.
KBR has undergone various changes in its structure over the years. KBR was acquired by Halliburton in 1980s and then it was again got separated and became independent in 2006. All this time, it was important for the management to be flexible in their leadership style so that they can quickly adapt to the changes.
It shall be understood that, KBR was changed from a hierarchical type of organization to more of flat organizational structure. Therefore, KBR use to follow autocratic leadership style in the beginning where only the senior members use to make decisions about the company. Slowly the organization changed to Democratic leadership and started sharing more power and control with all its employees. This change in the leadership style was important as it became more important for the leaders to involve their employees during their split and phases like economic depression. Earlier, the company’s decisions were taken by the senior members, but gradually, the company realizes that it is important to involve all the employees while taking big decision. It is important for the company to maintain transparency in its decision making during times of economic crisis. Transparency leads to building of trust, which helped the organization to have committed employees who remain the part of the organization even during the periods of economic crisis, merger or separation with other companies. Employees were aware of the situation of the company and felt responsible for the change that was taking place.
The main difference between autocratic and Democratic leadership style is that autocratic leadership style is successful when the business requires quick business decisions making. Thus, in such organizations, it is important to have skilled and specially trained leaders who could lead the organizations. However, the major drawback of autocratic leadership style is that the main workforce of the organization is not involved in decision making and is only expected to do what is asked by the manager. This leads to insecurity and de-motivation among employees. Thus, democratic leadership style comes into picture, which helps individual to not only share the information, but also takes feedback and suggestions about a particular problem or issue. The employees are appreciated and rewarded for their participation and thus feel part of the organization. This increases their motivation towards the work and helps them and the organization to perform better. However, for a big organization, it is difficult and time consuming to take suggestions from each employee and so autocratic approach should be preferred (Luthar, 1996).
Q 3.2 Compare the application of Maslow’s Hierarchy of Needs to Hertzberg’s hygiene and motivational factors within the workplace.
Abraham Maslow gave a theory which is known as Maslow’s Hierarchy of Needs. Maslow first segmented the needs of an individual into five categories. They are:
- Physiological needs i.e. food, clothing and shelter.
- Safety needs like health and medical facilities.
- Social needs like love and affection.
- Self-esteem needs like status.
- Self-actualization needs.
According to Maslow, an individual is motivated to fulfil the first level or the base level of need viz. physiological need. After the fulfilment of this need, the individual is motivated to fulfil the next level of need and this continues till the person reaches to the top level. Maslow also gave a pyramidal pictorial representation of these needs with physiological needs at the bottom and self-actualization needs at the top (Simons, 1987).
On the contrary, Herzberg gave a dual factor theory. According to Herzberg, there are two types of factors which influence and motivate the individual in any organization. The first type of factors also known as the motivational factors are: Responsibilities, decision making power, recognition, etc. Motivational factors are ones whose presence motivates the employees to work hard. The second type of factors is the Hygiene Factors such as salary, job security, hikes, etc. These factors do not contribute to the motivation of an employee, but their absence will result in demotivation among the employees. Thus, according to the theory, the opposite of satisfaction is no- satisfaction and not dissatisfaction (House, 1967).
Let us understand the importance of two theories with help of an example. If a company is following Maslow’s hierarchy of needs theory, it is essential for the management to have a close relation with all the employees. Thus, the company will be able to understand the priority of each employee and then can offer those needs as reward for certain work to those employees, which will motivate them to produce good results. A company will give different rewards for labour workforce, engineers, managers, accountants, etc. The company will also differentiate between the rewards depending upon the financial requirement, work experience and commitment to the company.
In case a company follows Herzberg motivational theory, it will offer good salary to a new employee. The company will also give various benefits to the person to cover up for all the hygiene factors. The company will also provide various training programs and coaching to the person to improve his or her skills. The company’s CEO will meet the person which will help him special part of the company. The person’s views and ideas are considered while taking importance decisions which will motivate the person to work even harder for the company. These are the motivational factors.
Q 3.3 Evaluate how useful motivational theory is for managers in the 21st Century.
Gradually, the companies realize the importance of health and social factors and the importance of other theories that should be followed by the organization. Companies realized that salary does not contribute to motivation, but its factors like type of work, respect, recognition of work, working conditions, effective teamwork, etc. that plays an important role in motivating the employees. Earlier, organizations used to follow hierarchical structure which does not provide employees complete freedom and thus they use to feel less valued, which resulted in less productivity. Companies soon realize the importance of Hertzberg Motivational theory. Companies realized the importance of taking opinions, suggestions and feedbacks from each and every employee not only to make the employee feel more valued but it was beneficial to companies also as it would allow them to have more ideas and opinions at their vicinity to choose from. Organizations of the 21st century also realized that it is important for them to bring changes with passage of time, thus they should be flexible in their approach and cannot follow any particular theory completely. For better results, company has to bring modification to their current structure as and when required (Drucker, 2007).
LO4: UNDERSTAND MECHANISMS FOR DEVELOPING EFFECTIVE TEAMWORK IN ORGANISATIONS
Q 4.1 Explain the nature of groups and group behaviour within KBR and one of its competitors.
KBR has matrix type of organizational structure which has helped it to make groups based on the task or project that is required to be done. This helps the organization to have the most skilled people for a particular task. The manager or the leader of the team has a small team to look after. This helps the manager to interact more with each individual, understands the concern of each individual, brings harmony in the team, defines the goals of each individual and makes the team understand their common objective, motivates the team to deliver quality product. The companies like KBR have been quick to identify the drawbacks of ineffective team. The main reason which hampers team performance is diversity. If diversity is properly managed, it can lead to generation of new ideas and innovation in the team; however the conflicts in the ideas may also degrade the performance of the team. Thus, it became important for companies to work along with their competitors and not against them. Competitors have now become collaborators, which help an organization to work as team externally too. The companies have been highly benefited by collaborating and working together with their competitors. The biggest competitor of KBR Fluor has been for this reason been awarded as the most Ethical Company for the year 2014. Fluor Corporation has their office in all the continents across the globe. The success of the company has been their effective teamwork which required great leaders and trust and integrity in their working.
Q4.2 Discuss factors that may promote or inhibit effective teamwork within KBR and one of its competitors.
Factors that help in the development of the teamwork:
- Communication: The most important factor that increases effective teamwork in an organization like KBR is communication. It is always important and necessary for each individual to communicate with the other members of the team in order to clear their doubts, share their thoughts and ideas. Communication helps in knowing and understanding each other which brings harmony in the team.
- Leadership style: Another important factor that promotes effective teamwork is the leadership style. The leader of a team should be such who knows each and every member of the team not only professionally but also personally. A good leader brings trust among the team members by leading from his example.
Factors that inhibits development of teamwork:
- Diversity: There are some factors which if not properly managed can lead to conflicts among the team. When a company enters global market, it becomes essential to have diversity in its workforce. However, diversity leads to difference in interest, motive, opinion or idea which leads to conflict and disharmony among the team members. At this point of time it is the leader or the manager of the team who should define the goals of each individual of the team and make the team understand their common motive and motivates them to work as part of the team (Hyrkäs, 2002).
- Lack of managing resources: As discussed, it is important for any organization to understand the behavior of each individual for better performance. Lack of quality management in business of its resource can inhibit team work. It is essential for the management to understand the skills, abilities, interest, etc. of each individual and use it in such a way that they complement the task assigned to them. Employees should understand the importance of diversified people in a team rather than having a conflict in their ideas which hampers team performance.
KBR as well Fluor Corporation has been successful in global market as they were able understand the importance of having diversity in a team and were able to manage it properly. Both KBR and Fluor have produced great leaders who have led their team from the front and have been successful throughout the world.
Q 4.3 Evaluate how technology affects team functioning within KBR.
Technology has been one of the most influencing factors in modifying the functioning of an organization. As an engineering and construction company, KBR has always been ahead of other companies in making full use of technology. It is essential for any organization to be updated with the current and emerging technology in order to have a competitive advantage over other companies. As discussed above, an effective team requires proper communication. Technology has completely revolutionized the communication sector by introducing mobile phones and emails. The new and emerging tools for video conferencing and has been very effective for a team as location is no more a constraint for a team to function properly (Martins, 2004). The documents can easily be transmitted from one place to another electronically via internet. However, excessive use of mobile phones is not encouraging as it interrupts when a person is not at work, which can be irritating, burden and have a negative impact on the individual, which hinders his performance.