Introduction
Organizations are complex mechanisms, where individual values and personality traits are challenged by the interpersonal communication and often clashes of interest with other members. The reality shows, however, that each organization works in a manner, which cannot prevent them from building on team work and the system of group and intergroup activities, relevant for organizational effectiveness and productivity (Peng, 2014). Various factors affect the activities, productivity and effectiveness of the groups, and these factors are both, internal and external. The objective of this document is to analyze the activities and group work at the coffee manufacturer, involved in direct sales through a chain of its stores. The company works in the international environment with the production plants majorly located in Guatemala and Ethiopia and the chain of own coffee shops and franchised establishments in 25 countries. The company has adapted functional organizational structure, with the core department involving procurement, processing, marketing, sales, logistics and customer service. Under the current organizational design, all the departments respond to their respective regional managers, who report to the Global functional directors, making part of the Board of Directors. With this structure, it is possible to argue that each department should be seen as a group and intergroup communication is based on interdependencies between each of the departments.
In the course of the analysis of the internal environment, it was identified that several intragroup and intergroup issues prevent the organization from improving its productivity and drag back the effectiveness of the operations. These issues were analyzed and this document will share the core findings and provide a set of recommendations on the ways to improve the group productivity and benefit the organization.
Problem Identification
Role Conflicts
Each group member has several roles in the group. First of all, each of them is a member of a social group, where he fulfills his social role. Additionally, given the formal structure of the teams at the company each of the team members has an assigned set of job functions and responsibilities, which build on his business role within the organization. As such the complexity of the groups is reasonably low as the company adapted lean structure, where each department has working teams, responsible for the regions and reporting to the team leader and the team leaders communicate the team progress directly to the regional managers (Losh, 2011). It is evident; however, that personal differences and behavioral patterns of the individuals within sales and marketing teams create serious intragroup conflicts, where the teams face with clashes of interests on s personal level.
Additional issue was identified in the analysis of the work roles, where it is evidenced that some of the team members within the processing and logistics department have duplicate responsibilities, which results in interdepartmental conflicts and inefficiency of the processes.
Based on the identified role conflicts, it is possible to conclude that the company´s productivity is affected by the above issues in several ways. First of all, conflict of interest, based on the personal differences between the group members creates unnecessary stressful situations and encourages competition and silo thinking. This silo thinking on the departmental level prevents information flow and negatively affects the communication process and work of the department. The issues, identified within the logistics and processing department result in internal competition and double job, which reduces productivity of the operations and increases operational “waste” of the departments. In both cases, negative working environment reduces work satisfaction and motivation of the employees, which may not be seen in a short run, but can have significant consequences in a long run.
Communication
Communication is extremely important for the companies, especially in the situation, when the supply chain is based upon the geographically and functionally disperse activities. In the current situation, failure to communicate between the departments reduces the internal capabilities of forecasting and planning and increases the errors on both, upstream and downstream of the supply chain. The insight into the group dynamics at the company helped identifying the following communication issue. Procurement department works in close cooperation with the sales team, which provides a weekly forecast and helps controlling the procurement activities on the upstream. The communication is done through the team leaders, which have to update the internal Store Stock Control System (SSCS) with the actual volumes and the long term forecast. The issue is the lack of trust between the departments, where sales team believes that procurement department will fail to meet the demand, if the figures, provided by them will be accurate. With that, team leaders tend to increase the forecasted volume by some percentage to have safety stock. Procurement department regularly meets the demand, which creates unnecessary safety stock and drives their cost figures up, negatively affecting performance measures. As a result of this communication issue, the performance objectives of both departments are not met, while procurement department fails to meet the procurement accuracy goals, sales department is “punished” for underperforming in terms of forecasted sales.
Lack of Cohesiveness
As it was previously mentioned, each department works under the supervision of the functional manager. An analysis of the cohesiveness and harmonization of the team work revealed that the groups lack cohesiveness as each of them works under different set of goals. As such, while the performance of the procurement and logistics departments are measured on profitability, sales and marketing functions are evaluated on the basis of the gross revenue, generated from sales. This drives significant misalignment between the departmental goals and its respective leadership. During the trimestral meetings, the regional management enters in regular conflict, related to the operational strategies.
It is important to mention that each of the regional managers plays specific facilitator´s role within his team while, at the same time, his core responsibility is to represent the interests of the department among his regional colleagues. Given the internal conflicts and obvious misalignment of functional goals, the regional managers tend to compete rather than cooperate, when it comes to the discussion of the progress and performance against the targets. The above illustrated lack of self-identification in the group results in the situation, where department members see regional managers as autocratic leaders and approach the communication and reporting progress with strong resistance.
Additional pressure on group cohesiveness is seen in the necessity of virtual communication as procurement, logistics and sales teams are often geographical disperse, following the locations of the distribution centers, suppliers and the customers. The dynamics of the virtual groups are very different as the time zones, and cultural diversity play a significant role in building on internal communication process (Lipnack and Stamps, 2000). Cultural issues and differences of the approach to the business is evidenced not only on intergroup, but intragroup level. The lack of focus on this aspect can deepen the issue of harmonization and work alignment (Hofstede, 2001).
Intergroup Conflicts
One of the major conflicts in the company is related to the same lack of coherency and alignment in performance management process. The company has announced its ambitions to grow through organic mechanisms, which will involve a strong focus on sales efforts and cost-reduction to improve profitability. The reality, however, shows that the company fails to delegate the goals formulated in the business level strategy down the organizational hierarchy, resulting in contradicting goals of the department. As such, procurement department strives for cost-cutting and reduction of procurement lot volume while logistics department has to deliver 100% vehicle utilization, which demands high volume and low variety purchases. Another intergroup conflict exists between marketing and processing divisions, where the decisions on the packaging, taken by marketing department contradict with the cost targets of processing division as marketing is driven by the impact of the merchandizing on sales, while processing division is measured exclusively on the total cost of unit production. Similar conflicts can be evidenced almost in each area of the supply chain.
The outcome of the above outlined intergroup conflicts result in a significant reduction of the effectiveness of each of the divisions and, consequent, failure to meet the strategic level goals of the organization. There is a clear need to approach this question structurally and re-evaluate current performance measurement strategy.
Recommendations
Addressing the Problems
Based on the above analysis, it is possible to summarize the strategic issues of the company, related to the group work in the following elements:
- Poor performance appraisal and management strategy;
- Confusing reporting structure;
- Personality conflicts.
It is evidenced that several factor affect the attractiveness of the group: working environment, belonging, inspiration, loyalty and similarities between the team members (Losh, 2011). Nohria Net al. (2008) argues that the above elements can be explained by four individual drives: drive to comprehend the job, drive to bond with the corporate culture and shared values, drive to defend and express personal opinion and drive to acquire new knowledge. The recommendations for the current situation are based on addressing the above drives.
First of all, it is evidenced that the company has formulated its high level goals and a strategy, which focused on the sales and marketing efforts. On the other side, the company aims to improve its profitability by reducing logistics and procurement goals. At the moment, divisional goals, however, contradict one another, and it is possible to argue that departments enter in rivalry, rather than work in cooperation to achieve each of the objectives (Sadler, 2003). With that in mind, it is important that the company develops and implements a Balanced Scorecard, which will delegate the strategic goals into specific operational and tactical goals to each of the departments. This system will allow establish profitability and sales goals to each of the department and align their ultimate objectives. Additionally, Balanced Scorecard approach allows developing performance appraisal system which allows developing and personal growth of individuals, building on individual motivation and empowering each group member, while keeping group performance on the high level. The implementation of the system will help to build on the drive to comprehend and drive to bond.
Secondly, it is recommended to eliminate the role of the regional supervisor within the team and appoint a manager, which will report to the regional director. This change in the organizational structure will make the reporting structure easier and will eliminate unnecessary intragroup competition. This action will ensure that employees have more responsibility and freedom to express their opinion and, consequently, will build on the drive to defend.
Finally, it is recommended that each of the team members is enrolled at a minimum of ten annual hours of training on group dynamics and personality profiles, which will help improving diversity and cultural awareness in the teams and facilitate the internal communication process. Training, provided to the employees will not only improve their performance by better comprehension of their job, but will help to build on their drive to acquire.
Training for Group Productivity
An analysis of the group dynamics and cohesiveness at the company outlines the need for construction and implementation of specific training programs which will address the following elements:
- Distribution of power and the role of leadership in the team;
- Performance management and feedback culture creation;
- Cooperative working environment;
- Basic understanding of emotional and conflict management techniques;
- Improvement of internal communication process.
With the above in mind, it is recommended that the company develops a set f special trainings which will include the following. First of all, international teambuilding activity, which will address the distribution of power, communication process guidelines and expectations and the role of leadership in the company. Secondly, specific performance management and Balanced Scorecard training should be made available to the employees with people management responsibilities. Finally, each employee should be assigned for at least ten annual hours of emotional management, teamwork and conflict management training (Losh, 2011).
Conclusion
The company is a large international corporation, which works in a very cultural and functionally diverse environment. It was identified that current organizational design and approach to performance management do not meet the requirements of the company and create barriers on the way to achievement of the high level strategic goals.
The document provides a set of recommendations, which aim to enact a set of measures to build on the four drives of the employees, improving organizational and individual performance. These drives include drive to comprehend, to acquire, to bond and to defend. With the suggested measures it is expected that the company will be able to improve its team dynamics and create cooperative working environment, which it currently lacks.
Additionally, the company works in geographically disperse environment, which places emphasis on the diversity management capabilities and cultural awareness. Part of the teams has to work in virtual setting which increases the impact of personal differences and communication skills within the team (Lipnack and Stamps, 2000). It is important that the training, which is recommended for the organization addresses these issues and helps the employees, involved in the culturally diverse group activities deal with the challenges, which they, otherwise, would not face in their regular working environment.
References
Hofstede G. (2001). Culture's Consequences: Comparing Values, Behaviors, Institutions and Organizations across Nations. Thousand Oaks: Sage Publications. Print
Lipnack, J., and Stamps, J. (2000). Virtual Teams: People Working Across Boundaries With Technology. New York: John Wiley & Sons publishing. Print.
Losh S. (2011). Group Behavior in Organizations. New York, NY: Bridgepoint Education. Print.
Nohria N., Groysberg B., and Lee L.-E. (2008, July). Employee Motivation. The Powerful New Model. Harvard Business Review, July-August, 2008. Retrieved 23 May 2014. http://www.stanford.edu/group/designx_lab/wikiupload/b/bb/HBR_Employee_Motivation.pdf
Peng M. (2014). Global Strategy. 3rd Edition. Mason, OH: South-Western Publishing. Print.
Sadler Ph (2003). Strategic Management. 2nd Edition. London: Kogan Page Limited
