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The Way Forward: Arden Racing Company
SWOT Analysis
Strengths
1. Good Reputation – Arden Racing Company has been in the business for many years. The company has built a good reputation for building sports car. The company has many loyal customers.
2. Strong Brand – Arden Racing Company has a brand name that is famous all over the world.
Weaknesses
1. High Price and Poor Reliability – The company’s reputation is declining because of high price and poor reliability.
2. Insecure Workforce – The employees are uncertain about future job prospects. Career planning programs are inadequate as well as mentoring and coaching. The employees are not aware of different career opportunities in the company.
3. Weak Relationships – Because of different challenges that the company is facing, the relationship between the managers and employees is weak. In addition, different projects and programs that aimed to improve the company’s performance failed.
4. Poor Communication – The employees are complaining about the ineffective communication systems.
Opportunities
1. Growing Products – the revamped version of ARC-03, the ARC-04 and ARC-06 are selling quite well. These products are promising.
2. Acquisition by GAL – ARC has been acquired by Grace Autos Limited, one of the world’s largest automotive group that is known for quality luxury cars.
Threats
1. Aging Product – one of the sports cars, the ARC-03 is reaching the peak of its maturity and is close to decline.
2. Low Quality Commitment – aside form the ISO 9001:2000, there are no other quality systems in the company. Most of the employees and managers see quality management system as a nuisance.
Structure and Culture
The organizational structure is hierarchical with different functional departments. According to Quinn (1988) organizational structure systematizes the interaction between the people in an organization (cited in Prasad and Thorn 1999). It defines the power relationships and the flow of communications. The company has a hierarchical structure wherein management control is strengthened through the centralization of decision-making. The top management has total control over the company and the employees have little discretion and flexibility. The employees have limited understanding of the business process and they are dependent on the top management when it comes to decision-making and problem solving. Communication and control is vertical, meaning the employees are dependent on their superiors.
Organizational culture is the set of beliefs and assumptions held relatively commonly throughout the organization (Bate 1984). These beliefs are embedded in the minds of the members of the organization. These beliefs are also shared (Hofstede, 1980).
Leadership
Evaluation
Leadership is centralized. The top management controls every aspect of the organization. Decision-making and planning occurs on the top level of the organizational hierarchy. Because of the hierarchical structure and culture of the organization, both the team leaders and the team members are finding it hard to adjust to team-based work. The relationships between members are weak and both managers and employees display low commitment. We can say that the leadership style is ineffective and inefficient. Employees complain about the lack of involvement and participation.
Improving through Transformational Leadership
Leaders must be Charismatic
One component of transformational leadership is charismatic leadership. In order to encourage change, cooperation, commitment, development and loyalty among employees, the leader must be charismatic; he must be a role model. The leader must earn the admiration, respect and trust of the followers. The leader must do the right thing, demonstrate high standards of ethical and moral conduct (Bass 1998).
Leaders must Inspire and Motivate
Leaders must be able to inspire and motivate employees. This is done by giving them challenging yet rewarding and meaningful work. Inspired and motivated employees are the key to success.
Leaders must Stimulate the minds of the Followers
Effective leadership requires leaders to stimulate the minds of their followers. An effective leader encourages innovation and creativity. Followers are encouraged to try new approaches, and are allowed to share their ideas.
Leaders must be Considerate
Leaders must act as mentors and coaches. They must pay attention to the followers’ development and growth needs. Leaders must support their followers. They must facilitate continuous learning and development. An effective leader recognizes that every one has special needs.
Team Relationships and Teamwork
A team is defined as a distinct set of two or more people interacting dynamically, interdependently, and adaptively toward a common and valued goal or mission. Each member in a team has a specific role or function (Salas et al 1992).
Evaluation
Because of different challenges and problems, the relationship between employees and managers is weak. Efforts to improve the organization have failed because the employees are not committed. The operations and personnel department promotes team working but there are departments that are not committed. The senior management wants to move from individual-based work structure to a team-based structure. Team relationships according to Fairholm (1994) help groups identify and create a positive culture that is identified by high trust levels, broad communications and enhanced opportunities (p. 155). The hierarchical structure and nature of the organization hinders active participation from employees. Because decision-making are centralized and the power rests almost entirely at the top, problems in motivation and commitment arise. The hierarchical structure of the organization has encouraged a dependent attitude among the employees.
Stages of Team Development
Teams in organizations undergo a maturation process called the life cycle. In order to build effective teams and facilitate teamwork, a leader must first understand the stages of team development.
1. Forming – during the forming stage, the members are introduced to each other. on this stage of development ground rules are established. During the forming stage, members are usually uncertain on how to act and how being a member of the team will benefit them. The forming stage will be completed once the members accept their team membership.
2. Storming
During the storming stage, conflicts arise in the team. Members are usually hostile toward each other. The control of the team leader is also resisted. The storming stage is complete once the issues and conflicts have been resolved and the leader’s control has been accepted.
3. Norming
During this stage, cohesion is strong in the team. Members develop string relationships and shared feelings. The storming stage is complete when the members accept a common set of expectations forming a satisfactory way of doing things.
4. Performing
When the team reach this stage of development, the issues and problems have been resolved. The team is now ready to work. The team is able to perform the tasks at hand effectively because the members have good relations and the control of the leader is accepted.
5. Adjourning
The team may adjourn abruptly or gradually once its goals are already met (Sims 2002a).
Building Effective Teams
1. Diversify Team Membership
Effective teams are composed of a diversity of individuals with varying skills and experiences. Having a diverse membership can be an effective strategy.
2. Keep the Team Small
In order to be effective, teams must be kept small. Small numbers of people are easier to manage and coordinate.
3. Select the Right Team Members
It is important to understand that people have different personalities. Some people take pleasure in working in teams, other on the other hand prefer to work individually. It is also important that team members are selected based on their skills. The skills of the members must be complementary.
4. Train Members
Effective teams have members that possess the necessary skills needed for them to perform their tasks.
5. Clarify Goals
A well-defined mission and goal is a prerequisite for a team to function effectively. Team goals must be articulated clearly.
6. Use Appropriate Performance Measures
In order to function effectively, teams must develop their own success metrics. These measures must be process-based.
7. Encourage Participation
The more team members participate in the decision-making process, the more likely they are to feel committed to those decisions. Every team member must be involved in order for them to feel committed.
8. Foster Communication and Cooperation
Team members must communicate and cooperate with each other so they can coordinate their efforts toward the common goal (Sims 2002a).
Employee Empowerment
Employee empowerment requires commitment from the top management. The company must provide means for employees to participate not only in production but at the office and higher levels of the organization as well.Empowering employees is popular in organizations today. Employee empowerment means giving employees the ability, means, and information needed in order for them to have greater autonomy over their jobs. Empowerment also builds the employees’ confidence to perform new jobs. Empowerment is an approach in employee motivation. The aim of empowerment is to make employees feel self-efficient. Empowerment allows employees to realize their full potential. Satisfaction of needs for achievement, recognition and self-actualization are among the aims of employee empowerment. Empowerment also changes beliefs and behaviors. Through empowerment, employees feel effective and efficient. Through empowerment both the goals of the individual employees and the organization as a whole are achieved (Sims 2002).
Evaluation
Empowering employees is one way of motivating them. Employee empowerment and participation are low. Employees have little opportunity to decide about the nature of their work and how to accomplish their tasks. The employees are not empowered because they are restricted to realize their full potential. Employees have little authority. The opportunity for employees to develop and acquire new skills and knowledge is limited.
Employee Motivation and Performance
Because of low motivation and because the company fails to motivate its employees, the organizational performance is suffering. Low motivation results in low commitment, absenteeism and high turnover. The absence of programs and schemes that motivate employees has caused different problems. There is a high turnover rate and employees are dissatisfied. Employee motivation affects performance. Motivated employees improve their performance. They work harder, longer and more efficiently. In order to improve employee performance, the company needs to motivate employees first.
Motivating Employees
Below are different programs and schemes that the company can use to motivate employees. It ranges from simple award and recognition schemes to job redesign.
1. Spot Awards
A spot award is given to an employee who rendered a commendable performance. Spot awards are good motivators. When the rewards are dependent on excellent performance and are given immediately, they are consistent with the expectancy approach and provide the recognition that humans want to achieve (Sims 2002a).
2. Recognition
Feeling appreciated is what most people like. Being recognized for a job well done, financially or otherwise is a source of employee motivation. Immediate recognition strengthens motivation and can provide some immediate outcomes to counterbalance the employees’ inputs and efforts. Recognition also underscores the performance-reward-expectancy link, and it helps appeal to and satisfy the need people have to achieve and be recognized for their achievement. LeBoeuf (1991) gave eleven types of employee behavior that must be recognized by organizations and individual managers. These are:
- Aiming at solid solutions rather than quick repairs
- Readiness to take risks
- Being ingenuous instead of complying mindlessly
- Decisive action rather than paralysis by analysis
- Smart work rather than busywork
- Simplification of complicated tasks
- Quietly effective behavior instead of squeaky wheels
- Quality work instead of fast work
- Loyalty instead of turnover
- Working together instead of working against
- Lack of absenteeism and tardiness (cited in Sims 2002a p. 70).
3. Pay for Performance
Pay for performance is a method of tying pay to the level of a person’s productivity. In order to ensure the success of a pay-for-performance plan, the organization must:
1. Ensure that effort and rewards are directly related
The incentive plan should reward employees directly as their production increase. Employees must also believe that the task is achievable. The employees must view the standard as attainable. The organization and the management must provide the necessary tools, equipment, and training to enable the employees to meet the standards. The plan must also be understandable and the easily quantifiable by the employees. It should be easy for employees to calculate the rewards they will receive for various levels of effort. The organization must set standards that will aid in the achievement of its performance goals. The standards must be viewed as fair by employees. They should be high but reasonable; that is, there should be about a 50–50 chance of success. The organization must set specific goals. Guarantee the program. The rewards offered for a particular level of work should be viewed as a contract
between the organization and the employees. Once the plan is operational, great caution should be used before decreasing the size of the incentive in any way. The base rate must also be guaranteed. It is often advisable to give employees a safety net by providing them with a base pay. They will know that no matter what happens, they can at least earn a guaranteed minimum amount (Sims 2002a).
4. Merit Pay
Most employees, when they do a good job, expect to be rewarded with at least a merit raised at the end of the year. A merit raise is a salary increase – usually permanent – that is based on the employee’s individual performance. It is different from a bonus in that it represents a continuing increment, whereas the bonus represents a one-time payment. To the extent that it is actually tied to performance, the prospect for a merit raise may focus the employee’s attention on the link between performance and rewards, which is in line with the expectancy approach to motivation (Sims 2002a).
5. Job Redesign
Managers have long been concerned about the monotonous and boring qualities of highly specialized, short-cycle, assembly-line jobs. In an effort to respond to these concerns, many employers set up programs aimed at redesigning their workers’ job. Job design refers to the number and nature of activities in a job; the basic issue in job design is whether jobs should be more specialized or, at the other extreme, more “enriched” and no routine. Job enrichment means building motivators like opportunities for achievement into the job by making it more interesting and challenging. This is often accomplished by giving employees more autonomy and allowing them to do much of the planning and inspection normally done by their managers (Sims 2002a).
6. Performance Management
Performance management is important in employee motivation and performance improvement as it helps organizations maintain or improve performance, facilitate consistent performance evaluation and promotes the provision of high-quality feedback. Performance management serves as the basis for coaching and coaching (Gilley and Maycunich 2000).
Management of Change
Organizational change needs commitment from both the employee and management. Managing change is not a simple task. The management needs to make sure, above anything, that the employees understand the reasons for change. The employees must realize the importance of change and how they can contribute to the success of organizational change. Below are some strategies that can help the organization to be successful in its change efforts.
1. Build a Climate for Change
Successful change in the new economy will result from a climate that welcomes, initiates, and manages change. In such a climate, risk is accepted as a natural part of doing business. A premium must be placed on innovation and creativity. Employees have to be encouraged to try new and different approaches to the job and other work processes (Sims 2002a).
2. Improve Communication
Improving organizational communication is one of the most important strategy an organization can employ. Effective organizational communication is important as it aids in overcoming resistance and maximizes employee participation. The employees need to understand the whole change process and the reason behind such a strategic move. The organization must make sure that the right kind and amount of information is gathered and communicated throughout the organization in a clear and easy to understand manner (Sims 2002a).
3. Encourage Employee Involvement
Today more than ever, employees are more active in issues that affect the organization and they seek to be more involved in decisions that affect their job and well-being. Employees are now more assertive. They are confident that they know the critical operational problems, and they want to share their insights (Sims 2002a).
Recruitment and Selection
The fierce competition between firms to attract qualified job applicants and the increasing skills shortage has a tremendous impact on recruitment and selection. Moreover, the problems and issues as well as the management inadequacy in the organization have led to increase employee turnover. In order to cope with skills shortage and to attract qualified applicants more effectively, the organization needs to develop strategic recruitment and selection methods and policies.
Recruitment
The organization must develop new recruitment methods that will support its goals and objectives. The organization’s policy must also reflect the organization’s desire to employ female workers. The recruitment method of the organization needs to be restructured.
Selection
In order to make organizational change successful, the selection method must also be restructured. The organization needs to design new selection methods that adhere to its new business objectives and goals. The selection method must also be aligned with the new business strategy.
Training and Development
Training and development is an important consideration. The aim of training and development is learning. Let us consider different learning principles.
Learning is a change in behavior that results from direct or indirect experience. Training and development aims to make employees learn more effective behaviors. One learning principle that must be considered is motivation. In order to learn a person must want to learn. In the context of training and development, motivation influences a person’s enthusiasm for training and development, keeps attention focused on the training and development activities, and reinforces what is learned. Reinforcement is also important. The learning that occurs during training and development must be reinforced in the organization. Employees learn best with immediate reinforcement of appropriate behavior. In addition, the behaviors that the individual is attempting to learn must be meaningful. The individual who is undergoing the training and development must recognize that behavior and its associated information as being important and relevant to the job situation (Sims 2002b).
What Should ARC Do?
Facilitate an Environment that Values Continuous Learning
Organizational learning is considered as a source of competitive advantage. Organizational learning happens when the employees of an organization is learning in a continuous manner. Continuous learning as defined by Tannenbaum (1997) is a method of fostering learning on a continuous basis.
The organization needs to establish a culture that promotes continuous learning. An organization’s culture includes its values, beliefs, attitudes, practices, procedures and customs. A learning organization’s culture emphasizes the significance of continuous learning. The management must encourage continuous learning at all levels, functions and divisions throughout the firm. The organization must make learning everyone’s responsibility. A culture of learning encourages individual and team growth and development by valuing creativity, teamwork, continuous improvement and self-management (Gilley and Maycunich 2000).
Career Development
One of the problems of Arden Racing Company is the lack of effective Career Planning and Development Programs. Because employees are not properly trained and because they do not possess the necessary knowledge, skills and abilities to perform their jobs, the organizational performance is affected. The employees also feel uncertain about the career opportunities that are available for them in the organization. In addition, the organization fails to train the employees in order to prepare them for future job assignments.
What should ARC Do?
The company needs to restructure its career development programs. Career development involves both the organization and the employee. The employee is the one that is responsible for career planning while the organization handles career management (Eggland and Giley 1998).
Mentoring
In mentoring, the ‘mentor’ coaches, advices and encourages, employees of lesser rank. In mentoring, the mentor and the person being mentored builds a relationship wherein relationship is built. Under a good mentor, learning focuses on goals, opportunities, expectations, standards, and assistance in fulfilling the employee’s potential (Sims 2002b). The mentor is described as a manager who is experienced, productive and able to relate well to a less experienced employees (Kram 1985). The mentoring relationship is intended to be supportive and non-threatening. The mentor provides advice related the protégé’s job, career aspirations and development, clarifies misunderstandings and ambiguities the less experienced employee might encounter, builds confidence in the protégé and encourages him or her to take developmental steps (Rudman 2003).
Coaching
Coaching is a one-to-one process. The coach may be the manager, a more experienced colleague or a specialist. Communication in coaching is two-way and focuses on discussion, discovery and understanding. Coaching also aims to solve problems. Coaching is essentially an on-the-job supplement for training and development. It aids in the application of the skills and knowledge that the employees gain on or off the job. Because coaching uses everyday incidents as the occasion for learning, the new skill or knowledge can be applied immediately, observed and checked by the manager and correct feedback given. In order for coaching to be successful, the coach must:
- Show interest in people
- Look for potential
- Be aware of the interests, desires and capabilities of their people
- Show person-centered interests instead of work-centered
- Demonstrate confidence and trust in subordinates
- Allow the subordinate to decide for themselves (Rudman 2003)
Work-Life Balance
Part of the parent company’s policy is to recruit female employees. However, there are different concerns that must be considered. One of the issues that must be considered is work-family balance. Many people, especially women, choose not to be promoted to a more time consuming job because they value their home life. Introducing a flexible work plan can be beneficial to both the organization and the employees. In order to make the integration of female workers successful and rewarding for female employees and in order to make them more productive, the organization must set family-friendly (work-life) programs. Some of these programs are:
Job Sharing
Job sharing enables two employees to share a full-time position. The salary and benefits become prorated. The two employees participating in job sharing are called ‘partners’. In job sharing, the partners share the tasks and responsibilities. Job sharing is principally intended for women with young children (Avery and Zabel 2001).
The employees can be given job-sharing options. This option must be intended toward those employees who are having a hard time balancing their work and family lives. Job sharing enables sharers to balance work and home responsibilities. Both partners can also learn from each other through job sharing.
Flexi-Time
Flextime (flexi-time) is a scheduling option that allows workers to select their starting and quitting times within limits established by management. There are generally core hours when all employees must be present. Although starting and quitting times vary, employee are required to work a standard number of hours within a given time period (Avery and Zabel 2001). There are several variations on the use of flextime such as fixed starting and quitting times that vary daily, variations in the length of day with required core hours, and variations in the length of day without mandatory core hours. Some flextime programs allow workers to bank hours for the future (Olmstead and Smith 1994).
Quality Management
Six Sigma
The parent company is devoted to Six Sigma. Six Sigma is a set of powerful tools for improving processes and products. It is also an approach for improving both the process and people-related aspects of business performance. Six Sigma is used to link people, processes, customer and culture.
Six Sigma Tactics
Define – The first step in Six Sigma tactics is Define. In the define step, the project team is formed, a character is created, customers, their needs and requirements are determined and verified, and a high-level map of the current process is created (Eckes 2003).
Measure – In the Measure step, the current sigma performance is calculated (Eckes 2003).
Analysis – During the Analysis step, the team analyzes data and the process itself, finally leading to determining the root causes of the poor sigma performance of the process (Eckes 2003).
Improve – In the Improve step, the team generates and selects a set of solutions to improve sigma performance (Eckes 2003).
Control – In the Control step, a set of tools and techniques are applied to the newly improved process so that the improved sigma performance holds up over time (Eckes 2003).
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