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Renewal of the conventionally structured medium-sized manufacturing organization / by Marvin L. Schiedermayer.

by Schiedermayer, Marvin L.

Organizational change

Strategic planning

Industrial management.

v, 179 leaves : ill. ; 29 cm.

Introduction -- The conventionally structured manufacturing organization: evolution, present condition and areas requiring change -- The need for change -- The role of leadership in renewal of the medium-sized organization -- The change process -- An activity centered organizational structure -- A change oriented culture -- Potential barriers to restructuring -- A change sustaining culture -- Financial ramifications of organizational restructuring -- Conclusion -- Areas of possible future study.

A medium-sized manufacturing organization is defined as having 200 to 2,000 employees and having annual sales revenue of $20 to 400 million dollars.

Conventional structure is defined as that of the hierarchy in which activities are functionally divided and the typical mind-set is one of segmentation and isolation. The mode of operation within this structure tends to be mechanistic, command and control.

The hierarchal, dictatorial structure served organizations well in past decades. The operating environment of today's organization, however, is radically different that that in which the hierarchal structure was established. The forces acting upon the organization today prevent it from adequately meeting the needs of its stakeholders with such an impeding, barrier ridden, structure. Societal, globalized business and intra-organizational interrelationships demand that the conventional manufacturing organization undergo radical changes -- or perish.

Applying localized, band-aid type fixes to such a dysfunctional system is not the answer to achieving long term viability. Indiscriminate use of programs such as JIT, TQM, or QFD will have minimal effect without the proper organizational foundation.

The key element needed for success is strong, cohesive leadership. Leadership has always been important but it is crucial in the ever turbulent environment of the future. Organizational leaders must understand the fundamental concepts of the organization; the four needs which underlie its reason for existence; the core functions of the manufacturing organization, the network of activities which support these functions and the theories of human nature which influence how individuals interact to achieve organizational objectives.

The number one priority of leaders is to effectively align the people recourse of the organization with the efficient accomplishment of its core functions. The energy of these resources must also be unleashed and directed toward continuous, change producing organizational renewal. To have this happen the organizational leaders much formulate and communicate the organizational vision and must provide the direction, culture, and structure most conducive to achievement of the vision.

The structure of the successful, continuously renewing, medium-sized manufacturing organization of the future must be oriented around integrated, value adding activity centers rather than discrete, isolated and self-serving functions. These activity centers must have access to all information needed to make strategic decisions along with the required support resources.

The culture of the manufacturing organization of the future must be one of product and process innovation; both teams and individuals must be challenged and empowered to achieve greater competitiveness in both of these areas. People must be made to feel a sense of ownership in the organization; they must experience satisfaction from their entrepreneurial activities and must be recognized, rewarded, and compensated accordingly.

There are numerous barriers within a conventional organization which inhibit or prevent the organization from achieving a structural and cultural oriented renewal. For those organizations which are privately owned, the owners themselves could present the greatest barrier. If change is deemed to be unnecessary or unwanted by the owners, little can be accomplished – regardless of the effort. The higher the position in the organization, the greater the need for change related support and the greater the possible barrier to such change. The two most critical elements to enhancing or impeding change are the owners and CEO. A strong CEO, with owner or shareholder backing, can achieve the desired transformation in spite of the difficulty encountered at lower levels.

A restructuring renewal is a financially sound strategy. Companies which have restructured for better organizational performance have achieved an attractive financial return on investment. To maintain control of the restructuring process from a time, resource expenditure and cash flow standpoint; it is imperative that the product be led by competent people using project management tools.

Renewal of the medium-sized manufacturing organization via the structural and cultural changes as proposed will be traumatic and difficult but are mandatory if the organization is to successfully meet the future needs of its stakeholders.

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