Organizational Changes in Structure, Decision-Making Process and Control Mechanisms: A Case study on Olivier Surveying Company

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Organizational Changes in Structure, Decision-Making Process and Control Mechanisms: A Case study on Olivier Surveying Company

Introduction

OSC, based in Prahran, in Melbourne’s inner south-east, was founded in 1995 by Larry Olivier who is also the owner and the managing director of the company. The company started with a single employee and it has managed to grow into a business with 19 employees. OSC’s success is based on its culture and reputation for high-quality work and reliability. Larry handles almost every aspect of the organization, including client relationships to contractual negotiations, staffing, work assessment, employee performance reviews, pay allocation, discretionary bonus decisions, administrative arrangements, frequent site visits, and almost every other aspect of the company. Al-Romeedy (2019) found that it is essential for the growth of any company from its inception to offer quality and be reliable and have an organized structure of working, decision making, and control mechanisms that ensure all the qualities needed by the client. The objective of this case study is to apply theories to analyze the company’s organizational structure, its decision-making processes, and control mechanisms applied. Specifically, the report is interested in comparing both the pre-2015 and the post-2015 organization, looking at the reorganization that led to company-wide changes. The changes will then be observed against theories relating to the company’s organizational structure, its decision-making processes, and control mechanisms applied.

Overview of Roles

Larry Olivier is a competent surveyor, one whose name is well known in the construction sector. His skills in the field have made the company grow gradually from a startup to a well reputable firm. He is assisted by his wife in decision making and all other employees report directly to him.

Organizational Structure Pre- and Post-2015

Organizational structures are one of the most important elements of an organization in its quest to achieve its objectives and goals. San Cristóbal, Fernández, and Diaz (2018) define an organizational structure as a framework outlining the way different activities are directed so as to attain the organizational goals including responsibilities, rules, and roles, and the reporting format. Essentially, an organizational structure enables the flow of information between various levels of the company. OSC, by 2015, had 19 employees. Özşahin and Yürür (2018) found that an organizational structure is put in place to ensure that an organization retains focus and efficiency. Successful structures define the job of every employee and describe how it fits within the whole organization’s system.

Organizational structure basically takes either a centralized or a decentralized overall structure. Conventionally, organizations use a centralized leadership system that defines the chain of command (Kaufmann, Borry, & DeHart‐Davis, 2019), for example the military as an organization where every role is clearly stipulated and a hierarchy of subordinates and superiors being very specific and well enforced. The roles of each organizational member is clearly defined and the subordinates responsibilities default to a guiding structure from the superiors. In contrast, a decentralized system delegates decision-making and daily operations decisions amongst the top, middle, and lower-level management. The role of such a structure is to help an organization’s top executive to focus on major decisions. The systems approach, as presented in Tronvoll, Barile, and Caputo (2018), considers an organization as a system composed of a set of interrelated and mutually dependent sub-systems. This means that the organization consists of components linking processes and goals. This is very important in linking all the processes of the company for the greater good of the organization.

Organizational Structure Pre-2015

Except for the administration assistant, every other employee (including the senior registered surveyor, two senior project surveyors, CAD specialist, three junior surveyors) reported directly to Larry. Ideally, the company was run as a small company. According to Özşahin and Yürür (2018), the organizational structure chosen by a business creates a reporting hierarchy that aids in the increasing of effectiveness and efficiency of business operations, including decision-making, daily running, customer relations, and every other job related to an organization. While different small organizations operate in variant methods, research conducted by Kaufmann, Borry, and DeHart‐Davis (2019) found that there is no one-size-fit-all strategy that can be applied to create efficiency and effectiveness. OSC’s organizational structure runs through Larry as the focal point of every activity, decision making, and includes some technical aspects that would traditionally be left out to niche experts.

In the administrative theory by Henry Fayol, several principles of management are mentioned including planning, organizing, and training, commanding, and coordinating functions (Edwards, 2018). The theory asserts that coordination through structure and decision making ensure that every process of the organization is conducted as per the overall shareholder expectations. OSC’s structure aligns with a centralized functional organizational structure. In this structure, Waruwu et al. (2020) mention that a more bureaucratic framework is employed to break up an organization based on the workforce and its specialization. This system applies to a majority of the small and medium sized companies. The firm, in the functional/bureaucratic framework, is divided into small departments based on specialization. The functional structure is intended to create focus for employees since they have a common goal to work towards. Larry’s leadership uses a centralized and bureaucratic system of decision making that divides employees according to their specialization and role. Due to the small size of the company with a total of 19 employees, the structure is yet to be fully defined. However, it is already clear that every decision is run through Larry, including issues that could easily be solved by senior surveyors in the firm.

Post-2015 Reorganized Structure

After the 2015 reorganization, Larry changed from having all the 19 employees directly reporting to him to have on 5 direct reports. As part of the reorganization, two new roles of supervising surveyors were formed in order to assist in overseeing daily surveying work. All surveyors in the field reported directly to the supervising surveyors. Additionally, each supervising surveyor had a responsibility to schedule junior surveyors to projects, handling emerging enquiries from the staff and liaising with clients. They also continued with their technical work on their projects. Noel, a senior licensed surveyor’s role was shifted to the provision of technical support to the supervising surveyors and the junior surveyors. He also gained a new advisory role with Larry in decision making regarding the new markets. The new structure chosen by OSC is as presented in the chart below.

After the reorganization, OSC employed a hierarchical organizational structure. In this structure, employees were grouped and assigned to a supervisor. OSC’s new structure grouped employees together using their functions and roles and the services they provided. Han and Ko (2019) term this structure as a pyramid because of the multiple levels it has and the authority levels displayed. The pyramid thins the higher it goes as more employees report to only a few managers at various levels. The benefits of this structure to the top management is that authority was more clearly defined, enabled Larry to free up more time to work on other projects, and solved the issue of reduced delegation caused by Larry’s involvement in every major firm activity. The new structure changed the reporting format at OSC leading to better teamwork and increasing trust on employees to do the right thing. The reorganized structure changed how employees handled problems, reducing the need to always consult Larry in every situation to foster the development of other employees and increased promotion opportunities.

Decision-Making Processes and Control Mechanisms Pre- and Post-2015

The social-technical approach highlights the role of an effective decision-making structure. In this approach, the organization is seen to be a whole composed of social systems, the technical system, and its environment (Gibreel & Hong, 2017). The theory models how the firm interacts with these elements through its structure, culture, control mechanisms, and the decision-making structure to create a balance.

Pre-2015

Pre-2015, Larry made all the decisions in the company including technical and the non-technical aspects of work. He interacted with clients and made all decisions in a very closed centralized and highly bureaucratic structure. His control mechanism was firmly held on bureaucratic control mechanism involving direct influence of the top management on actions of all sub units. Again, Larry practiced cybernetic control by focusing on outputs to measure up to his culture of reliability and top quality. In his capacity as the founder and senior management, he performed long term strategic decision making. Reid and Sanders (2019) describe strategic decisions as those that are complex, made by senior decision makers in an organization, and involves directing the long term direction of an organization. For example, the decisions on staffing, employee roles, customer relations, strategic firm direction, and the type of culture to adopt were all a part of Larry’s mandate as the CEO.

Post-2015

Post-2015, decision making took on a different stance. A lot changed in terms of the power Larry had on daily activities. He now delegated some of the medium-term and short-term decisions to his managers 1 level lower than him. The control mechanism remained unchanged. It was still held on bureaucratic control mechanism involving direct influence of the top management on actions of all sub units and a cybernetic control that focused on outputs to measure up to his culture of reliability and top quality. The new process included a more tactical and operational decision-making structure. After the reorganization of the organization to delegate more tasks to middle managers, Larry was only left to make the long-term strategic decisions. Tactical decisions including medium term, les complex tasks were left to the five managers reporting to Larry. Additionally, the new structure modified the decision-making structure to have the five assisting Larry make all day-to-day decisions on simple processes and routines. This new decision-making structure allowed Larry to make less decisions and to free up more time to focus on the strategic direction of the organization.

Changes in the Organizational Structure, Decision-Making Processes and Control Mechanisms after AGAS Acquisition of OSC

Now that OSC is part of a larger national organization, AGAS, new changes are expected. After being acquired by the Australian Geospatial and Surveying Company (AGAS), a new organizational structure emerged. In a divisional structure, every geographical zone and region reported to a regional manager. Different operations reported to leadership roles that were made up of regional managers headed by a CFO. On top of the already existing hierarchical structure at OSC, the new AGAS now required Larry to report to the regional heads. These changes are reflective of a growing organization. According to Lagstedt and Dahlberg (2018), the contingency or the situational approach theory recognizes that organizational systems are interrelated as seen in the acquisition of OSC by AGAS and how the process of structuring, decision-making, and controlling are all interrelated. This explains that a particular environment requires a particular system while a different environment also required different organizational relationships for the effective working of the organization, as seen in the way the changes occur pre- and post-2015 and later after the acquisition.

After the acquisition, the same structure was adopted, with Larry moving lower on the decision-making ladder to become part of the middle management for AGAS. However, there were critical changes as Larry no longer held the power to make long term decisions. He moved to making medium- and short-term decisions on behalf of the company. His supervisors were now only required to make operational decisions. Directive directions from the regional heads were the new senior management making strategic decisions on behalf of the CEO who would give approvals. Larry moved into middle management in line with other branch heads, making tactical and medium-term decisions. Other individuals reporting to Larry would only make operational decisions. This structure is very effective in facilitating better and informed decision-making in organizations. It allows the input of employees on the ground and enables information to flow both ways from bottom to top and vice versa.

The acquisition freed up Larry’s busy schedule allowing him to focus on contributing more ideas to the firm regarding how to capture the market in Tasmania and Victoria. The control mechanism adopted after the acquisition involved a go/no-go structure. In this structure of control and decision making, every decision was tested before implementation to ensure that it conformed to the preconditions set by the parent company AGAS. Additionally, a post-performance control mechanism was adopted with a focus on ensuring that effective practices were adopted where applicable.

Conclusion

From the above discussion, pre- and post-2015 changes saw Larry’s OSC change significantly in terms of the structure, decision-making processes, and control mechanisms. Larry gave up a lot of decision-making power after 2015 to free up more time and to allow his company to grow. The previous structure of the business was working though it required a lot of time from Larry. The company growth increased responsibilities which called for the re-organization of the company. After the acquisition, the same happened, leading to a new organizational structure, a more effective decision-making process and control mechanism. Overall, all these changes worked positively enabling both individual and professional development of employees against the internal changes in the organization.

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