Background
Tanglin Polymers is a large supplier of petroleum products to different industrial customers. The company has a vast operational field with 30 production plants and refineries in China, Veitnam, Indonesia, Singapore, New Zealand, and Australia. In response to the issue of coordination with regard to purchasing order, the CEO MR. Patrick Ang decentralised the organisational structure through delegation. Manager of each unit was allowed to deal with all the business matters relating to its unit with full authority (The Case, n.d.).
The CEO created a new position to handle purchasing procedure having identified issues with that. He hired an experienced and qualified individual Chan Kee Tong as the Manager of Resource Procurement and made Clara Ng his assistant. One month before the peak selling season, he devised to go with centralisation making it obligatory for all the managers to report to the head office two weeks in advance before signing any contract in excess of HK $800,000. He negotiated it through memos sent to different managers and got engaged in making preparation for the launch of a computerised system for this purpose, which was expected to be installed very soon after that. Though the managers showed written agreement, but the head office did not receive even a single notification in that period of time. It put question mark on the Tong’s decision and raised concerns for the CEO. This paper aims to answer few critical questions emerging from this scenario (The Case, n.d.).
Question 1: Why do you think so few requests were received?
Basing on understanding to the given situation, it is not out of place to state that Chan Kee Tong has made many blunders while going with his idea of centralisation. It is very likely that one or more of his mistakes are at the bottom of negative outcomes. For example, he imposed the plan of decentralisation when the peak business season was only one month away. At such time, it is very unlikely for the managers to get indulged into any kind of experimental activities, as one suggested by Tang. This can be a potential reason why they did not responded appropriately to his new strategy.
Then, there was a huge time lag (i.e. two weeks) between receiving and processing a new order after getting it approved from the head office. It might have created a fear among the managers that they would lose the contract if they kept it in queue for such a long period of time. Another factor contributing to this scenario can be the resistance to change shown by the managers due to certain risks associated to that. There can be either rational (as one discussed above) or irrational (psychological, sentimental, or any other non-monetary) cause behind this resistance. While brining any changes either in form of reform or new development, it is the responsibility of top management to come up with a proper change management strategy (Hervey, and Broyles, 2010). And it was missing in case of Chan Kee Tong.
Furthermore, it is also essential to define penalties or punishment in the event of non-adherence to any notification by the top management, as different types of punishments contribute handsomely towards the organisational discipline and job behaviour of employees (Nelson, and Quick, 2009). However, neither the resource manager has defined the proper procedure of submission of approval request, nor has he associated any kinds of penalties to the managers’ disobedience. Therefore, the managers may not have taken it seriously.
Question 2: What would you have done differently?
If I were the Manager of Resource Procurement in place of Tong, my approach to this position would have been totally different. The first issue that I could identify is over-delegation that can lead to certain issues on organisational level i.e. lack of coordination, lack of harmonisation between different operational tasks, and gap in communication. Furthermore, the managers are free to make whatever decisions they like. So they can adopt highly experimental approach and any big decision taken wrongly can spoil the whole reputation of organisation (Mookherjee, and Tsumagri, 2004).
Therefore, the very first initiative taken by me would have been to request the CEO to change his approach to empowerment by limiting it to decent extent. He should announce penalties for the managers who are found indulged into wrongfully using their authorities or if their decisions bring about any bad outcomes. The fear of accountability would have added to the discipline of job behaviour at all levels.
I would have also considered centralization to be a suitable plan, but would have delayed my decision till the peak business month was over, which was going to start after a month of my taking the charge of my job. Till then, I, in assistance of Clara NG would be trying to arrange meetings with managers to give them presentation about my plan to take everyone into confidence. Furthermore, it would have also given me reasonable time to make all arrangements for the installation of required IT setup for this purpose.
Question 3: What advice would you give Chan Kee Tong about how to now proceed with the project?
Keeping in view the given scenario, given below are some practical recommendations for Chan Kee Tong to help him reform his devised course of action to make it strategically more viable and effective:
Utilise latest technology and arrange video-conferences that can be far more effective as compared to keep reminding through conventional sources i.e. memos.
Call the stock by clearing all the products in the working process and raw material to be consumed before proceeding with the idea of centralisation, so the process of record-keeping may remain simple.
Extend the implementation of current plan till three months, so that the routine business activities in the peak business season may not get disturbed.
Take every manager into confidence to mitigate the risk of “resistance to change” though the approval from the CEO is of primary importance.
Collect the data with regard to the density of purchased material in each unit to assess certain patterns of purchase.
Cut the limit of minimum amount to be reported (to the head-office) with reference to contracts from HK &80,000 to HK $40,000, as it may be rare for the managers to win contracts of such an extra ordinary worth.
Conclusion
List of References
Harvey, T. R., and Broyles, T. A. (2010). Resistance to Change: A Guide to Harnessing Its Positive Powe. Plymouth: Roman and Littlefield Publishers
Mookherjee, D., & Tsumagari, M. (2004). The Organization of Supplier Networks: Effects of Delegation and Intermediation. Econometrica, vol. 72, no. 4, pp. 1179-1219. doi:10.1111/j.1468-0262.2004.00529.x
Nelson, D. L., & Quick, J. C. (2009).Organizational behavior: Science, the real world, and you. Mason, OH: South-Western Cengage Learning.
