X Foods - People and Organization

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Mission

X Foods mission is to promote a healthier lifestyle by supplying international markets with food products that conform to the highest quality standards and are nutritionally superior made from the best naturally grown ingredients.

Though it has been 10 years from the company’s incorporation and been pioneer to the industry, the financials of the company shows a little growth. Comparing to other competitors in the industry, there is a huge slow down in terms of business process validation and innovation. Customer retention, satisfaction and over all quality maintenance is in very catastrophic level with in the company. Employee satisfaction and efficiency levels are disastrous comparing to industry benchmarks.

Comprehensive analysis of above behaviors of people and organization is done and identified perilous factors are described in the next chapter.

The company name is not disclosed in this report due to the confidentiality. Hence, the nominated company is termed as “X Foods” over this report.

- The Crisis

3.1 Organization Structure & Chain of Command

The company doesn’t have a proper organization structure and chain of command in place which extinguishes communication and flow of information top to bottom and bottom to up levels. This generates many problems and those are described in Section 04.

X Foods operates its business in two different locations. Marketing division, Legal Division and Finance & Administration Division are located at head office (Nugegoda). Operational Division, Factory Finance & Administration Division, Quality Assurance Division and logistics are positioned at the factory. The coordination among each division is at very near to the ground level. Hence customer satisfaction and on time delivery of cargo is heavily affected. There is no specific position designed to coordinate the operations of each division direct them to achieve a common objective. The chairman and Managing Director have to communicate with each and every division to gather information and make decisions. There is dotted line as graphed below; each and every department has to report Finance and Administration Manager as well. She is the most senior and most experienced employee of the company as she joined to the company from the incorporation.

Current organization structure of the company is as follows.

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The division of work among each division is not done appropriately. As an example some of tasks relating to obtaining quality certifications from control union are done by Admin and finance manager even though company has qualified Quality Assurance Manager. Duplication of tasks, unbalanced work load for employees, unclear reporting relationships and lack of unity of command are unfilled gaps in prevailing organization structure. The division of overall workload into smaller jobs is not successful because it was not based on specialized qualification got by employee.

The basic purposes of an organization structure are to have division of responsibilities and authority to perform responsibilities among employees, coordination of their activities and direction towards a common objective. This is violating with this structure because although the responsibilities are prearranged, authority to perform the jobs are not properly distributed. The managerial level employees have to seek the approvals from board of directors to perform each and every task with this centralized controlling environment.

“Good organization structure does not by itself produce good performance, but a poor organization structure makes a good performance impossible, no matter how good the individual managers may be.”[pic 12]

Drucker

As drown above, the organization structure is very complex and no liner association with each other. Each department is isolated from one another. There is no formal flow of information and decision making is more critical with this structure. The chain of command cannot be identified and employees may mislead.

This has been identified as a precarious issue as it creates large impact on People & Organization which will describe in Section 04.

3.2 Human Resources Management

The company does not have separate HR function even though it currently roofing more than 150 employees. Out of that 20 employees are above executive grade. The company is currently practicing Personnel Management elements rather to Strategic HR which is the latest version of managing HR. X Foods is a manufacturing based company. It has to follow so many labor rules and regulations imposed by Sri Lanka Government. HR and labor relations are handling by Finance and Administration Manager. Recruitment, Incentives, OT Approvals, Salary increments, Salary processing, Leave approvals and other personnel management tasks are under her authority. [pic 13]

The company doesn’t have induction programs or training and development for the newly recruited employees. Appointment letters are given on request only. There is no exclusively adopted company policy for each and every employee on appointment, probationary period etc.

Currently company is facing high labor turnover and absenteeism. Most of the operational level staff is on contract basis. There is no proper leave procedure for them. Prior approvals for leaves are not earmarked. The operation schedules planned ahead based on available labor hours could not be accomplished due to unnoticed absenteeism. Hence efficiency level of the organization is in very low level.

High labor turnover is triumphed across all levels of the organization. There is no retention strategy in place in order to retain skilled employees. The company has to incur cost on hire and train unskilled employees again and again.

There are huge disparities in salary scales. Some executives of the company are getting more salary than some of the managers. No proper procedures for salary increments and staff promotions are in place.

There is no proper policy adopted on performance management and rewarding.