As the newly appointed Chief Executive Officer to the Winterquilts Private Limited, the purpose of undertaking this case study is to analyze the current organizational structure of Winterquilts and to review its drawbacks and presenting suggestions for enhancing organizational productivity as well as employees’ productivity.
Among all other resources, human resource vital for Winterquilts, since there is a high competition in Sri Lankan labour market for the well qualified people and Winterquilts is competing with Brandix, MAS, Hirdaramani, Timex Garments, Hela Clothing, Jay Jay Mills, Paradigm Clothing, Orit Apparel etc as a competitive apparel manufacturer and exporter. Winterquilts produces women’s clothing, women’s nightwear and children’s clothing; and now it has further expanded to men’s clothing and nightwear and it can be identified as the pioneer in the apparel manufacturing industry.
The First chapter of this report presents a brief introduction about the company. Moving on to the second chapter, current organizational structure of Winterquilts and its characteristics are evaluated followed by a theoretical summary on organizational structure. Chapter 3 of the report elaborates the issues and challenges incorporated with organizational structure and their impacts on the productivity and effectiveness. Chapter 4 and 5 are focusing on providing necessary suggestions for the improvement of the system.
Thus, this report will assist Winterquilts to analyze the issues of the structure while providing several developmental insights.
Winterquilts can be identified as one of the leading manufacturers, suppliers and exporters of apparel products to the Europe, UK and Australia markets. The industry that Winterquilts operates in can be observed as the highest competitive industry in Sri Lanka for employees, products, customers and suppliers as well, where several number of apparel manufacturers such as Brandix, MAS, Hirdaramani, Timex Garments, Hela Clothing, Jay Jay Mills, Paradigm Clothing, Orit Apparel etc are competitively operated in.
Among all the competitors, Winterquilts is been identified as the pioneer in the apparel manufacturing industry. The product range of Winterquilts consists of women’s clothing, women’s nightwear and children’s clothing; and now it has further expanded to men’s clothing and nightwear. The brand portfolio consists of Marks & Spencer, Calvin Klein, Maggy London, Bonmarch, C&A, etc, for which, high quality products are supplied with its unique value added services including,
- Fully fledged centralized planning unit
- LECTRA system for pattern making and marker making
- Strong fabric and accessory sourcing capability
- Fully equipped sample room with specialized machinery which is capable of quick turnarounds for buyers’ specifications
- Internal Quality Manual etc.
The ultimate vision of Winterquilts is,
“To be a preferred supplier to world class brands adapting sustainable production methods and maintaining high standards of integrity and business ethics” (Winterquilts Official Website).
And the mission is,
“To manufacture high quality garments to client specifications of competitive prices whilst being responsible to all other stakeholders including employees” (Winterquilts Official Website).
The corporate head office of Winterquilts is located in Dehiwala, where all the support services functions (such as Finance, IT, Merchandising, Import/Export and Warehouse etc) are centralized; and primary business operations are carried out in three production factories situated in Kalutara, Hingurakgoda and Lankapura with over 3000 employees.
As Montana and Charnov (1993) express, an organization is formed when two or more people start working towards a common goal. After determining one common goal, specific objectives and functions are determined and subsequently the requirements of physical resources are assessed and coordinated while assigning separate roles and responsibilities under a particular structural design (Montana & Charnov, 1993).
Thus, the organizational structure demonstrates the way that organizational activities are arranged, organized and categorized in order to coordinate all the day to day operations (Drumaux, n.d). According to Galbraith (as cited in Lunenburg, 2012, page 1), the organizational structure can be defined as “the formal configuration between individuals and groups regarding the allocation of tasks, responsibilities, and authority within the organization”.
Organizational structures vary in several forms including functional structure (which is based on job roles and duties of employees), divisional structure (which is based on separate business units), geographical structure (which is based on organizational location), matrix (which is a combination of several structures), strategic business unit (SBU) etc (Distelzweig, n.d). Along with the organizational structure, the authority of an organization is decentralized which assist in determining the gravity of delegation, chain of command, span of control, job descriptions, salary level of employees etc (Friend, n.d).
Chain of command means the continuous line of the expansion of the authority from the top management level to the lower level of the company (Robbins, Cenzo & Coulter, 2011). There are three main categories of authority levels which include strategic apex (i.e. top management and its supportive staff), middle line (i.e. middle and lower level management) and operative core (i.e. the worker grade employees) which is summarized in figure 2.1. Further, middle line includes techno-structure (where analysts such as engineers, accountants, planners etc are incorporated in) and support staff (where indirect service providers such as maintenance, transport, legal authorities are incorporated in).
Figure 2.1: Authority Levels of an Organization
Source: Lunenburg, FC 2012, Organizational Structure: Mintzberg’s Framework, International Journal of Scholarly, Academic, Intellectual Diversity, Volume 14, No 1, pp 1-8
Robbins et. al (2011) state that each organizational level consists with authority that refers to the power through which the resources can be coordinated in order to fulfill the assigned responsibilities and the responsibilities refers to the obligations which need to be completed by individuals under their authority levels. Further the responsibilities are attached with accountability where the particular responsible person needs to justify and verify the duties carried on under his/ her capacity. However, it is vital to emphasize that the chain of command needs to be designed by aligning the unity of command concept, by which it assures that for one employee, there is only one superior to be reported to. In addition, span of control refers to the number of subordinates that one superior can manage.
After determining the chain of command, authority level, related responsibilities and area of accountability with the span of control; the job descriptions for all the individuals can be designed, which reflects an overview about the job, its duties and interacting parties. Once the job descriptions are finalized, relevant salary grade of the employee and related benefits are determined.
The organization structure of Winterquilts demonstrates the features of matrix structure, where at some occasions the authority is highly centralized but in contrast, at some occasions it is decentralized according to the functions and locations of each team, which is drafted below in figure 2.2.
Figure 2.2: Current Organizational Structure of Winterquilts
Source: Developed by the Author (based on the organizational reports and data)
According to figure 2.2, the organizational structure of Winterquilts can be categorized under matrix structure category, which includes both functional and geographical structural characteristics. The functional characteristics are highlighted by the authority delegation from Group GM (Finance & Admin) to other Group Level Managers and their subordinates, by which the separate expertise areas are considered as HR, Finance, Marketing & Merchandising, Technical etc. On the other hand, geographical characteristics are highlighted by the formation of factory hierarchies as stores locations.
The Group GM (Finance & Administration) is overlooking all the operations of Winterquilts followed by the Board of Directors and the chain of command expands from Group GM to Group Level Managers, Factory Managers or Assistant Managers, Executives and finally Staff Assistants or Worker Grade Assistants/Employees respectively.
However, some of the Group level managers are ought to be reported to the Managing Director indirectly regardless of the general chain of command. Similarly, Factory HR Managers are supposed to be reported indirectly to the Group General Manager and relevant Factory General Managers beyond the structural reporting hierarchy. Moreover, Compliance Executives at factory levels are reporting indirectly to the Group HR Manager and factory HR Managers as well.
For top level managers (i.e. group level managers) span of control may vary from three to five subordinates but for Group GM, it may vary from twelve direct subordinates (i.e. the group level managers) to fifteen or more subordinates (including other factory level managers) due to the indirect reporting chain. Similarly for some top level managers such as Group HR Manager, Factory General Managers etc span of control increases which in contrary for some managers such as Group Compliance Manager, the span of control decreases. For managerial employees, span of control may consists with two or three assistant managers and five to ten executives or assistants and it increases for supervisory level employees, since a larger number of worker grade employees (may be twenty to fifty) are covered under their authority.
Thus, several disparities are highlighted in the current organizational structure of Winterquilts, which have resulted in generating challenges for the effective and efficient management of the employees.
As Distelzweig (n.d) has mentioned, the increasing growth and increasing complexity caused for the emergent need of comprehensible business structures which can promote creativity, innovation and motivation of the employees. However, as discussed in above section 2, the structure of Winterquilts consists with several discrepancies in relation to the chain of command, span of control, unity of command, issues relate with the superior (leadership issues), accountability issues, responsibility issues, performance issues, inequalities etc.
It is apparent that even though a comprehensible chain of command from top to bottom layers of management has established in Winterquilts, some disturbances to the general hierarchy are occurred due to the indirect and sometimes informal reporting patterns. For instance, under the general reporting circumstances, all three Factory HR Managers and Head Office HR Manager are ought to be reported to the Group HR Manager; but at times they are monitored and administered by the Group GM (Finance & Admin). As a result, some of the people management policies, especially the welfare policies, salary and benefit policies are obstructed for factory levels. Most importantly, since Group GM is based on the Finance field, the importance of training and development functions and non monetary motivational functions are rejected as cost based zero value projects with the autocratic capacities.
Similarly, Factory HR Managers are reported to the Factory General Managers as well. As a result, some of the formalized group policies (such as performance evaluation, grading and succession planning, rewarding & benefits, training & development etc) get changed at the implementation stage at factory levels in accordance with the preferences of the Factory General Managers. It has resulted in eradicating the uniformity of organizational policies which affects negatively on group level decision making process and creates multiple errors and inequalities.
Both these issues finally have an effect on employees’ performance and motivation, which can be clearly explained through the ‘equity theory of motivation’. As Ghanbarpour and Najmolhoda (2013) explain, individuals compare the relative worth of his/her inputs and outputs with the relative worth inputs and outputs of the others working with him/her and change the behaviour accordingly. Thus, when the company policies get differ for different operation teams and different individuals according to the preferences of Group GM and Factory GMs, the employees attempt to compare and change their performances in five main aspects by changing inputs, changing outputs, destroying perceptions on themselves, destroying perceptions on others and finally quitting the jobs.
On the other hand, it can be observed that the Compliance Executives at factory levels are reporting to the Group HR Manager and relevant Factory HR Managers. It has resulted in creating conflicts among their job roles and reducing the accountability of Group Compliance Manager regarding his/her subordinates. Therefore, important compliance matters are neglected by the Group Compliance Manager which further results in increasing the job scope and duties of the Factory HR Managers as well. It ultimately affect negatively on the production quality and confidence of the customers on the company, which may threaten future business opportunities and market share.
Span of Control vary among different layers of the organization, which can be summarized as below in figure 3.3.
Figure 3.3: Formal Span of Control
Technical Level Manager
Source: Developed by the Author (based on approximate statistics)
As demonstrated, the span of control for top layers is comparatively lesser than the lower layers; but in Winterquilts, Group GM is having a significant higher amount of span of control, and its critical impact is due to the specialized filed of the Group GM he is specialized in Finance field where the technical knowledge and expertise is lack to overlook all the technical and production related functions. It has resulted maintaining lower productivity level due to the lower focus on productivity. Further, wrong decisions may taken by the Group GM due to his lesser knowledge on the field by which the subordinates get the opportunity to mislead the superior and move towards system abusing and wrong management decisions. In addition, the direct production related subordinates may demotivate according to the less expertise of the immediate superior, which may result in reducing their performances as well.
On the other hand, lower level managers and supervisory employees are having comparatively a higher number of subordinates as span of control and sometimes due to the lack of leadership characteristics of those employees, the conflicts and grievances of worker and other staff grade employees have increased.
One major people management issue in Winterquilts is some unclear circumstances of the job roles and superiors for some individuals which are notably differ from the agreed Job Description (JD). As a result, the concept of unity of command is absent from the hierarchy for some employees, which ultimately result in generating dissatisfaction on the job and assigned duties. For instances, Factory HR Managers may informed by the Group HR Manager for arranging a welfare scheme for pregnant female employees, which may be changed or cancelled by the Group GM only by advising Factory HR Managers without following the formal chain of command. It creates conflicts among the job roles of Group GM, Group HR Manager and Factory HR Managers and creates uncertainties about the exact superior and job role of the HR Managers. Same scenario can be applied to the Compliance Executives.
The eventual result of these issues is the non-compliance to the JD by the employees. Once the disparity arise on the job roles, individual performance may drastically decrease which later generates the need for recruiting another talented people by expending higher unnecessary costs for recruitment and training & development. But, it may also lead towards the same dissatisfaction and conflicting situation in the future.
On the other hand, when there are two or more superiors for one employee, the performance evaluation process become more complex; since one superior may review the performance as high or excellent while the other may review as poor. In addition, due to the urgency of both superiors, several issues may occur for the individual due to the difficulty in prioritizing the duties and finally it will lead to poor performances in the both ends.
Apart from it, those individuals who are reporting and who are working for two superiors may demand higher rewards by highlighting the heavy work load and difficulty in handling, which if not addresses may direct towards the reduction of performance of an excellent performer and or to reduce motivation. In contrast, if the demand is addressed in a satisfactory manner, it again creates changes and inequalities of the formal grading systems of employees that finally create in rewards and benefits equalities among all the employees and it may cause for severe negative impacts on the production, efficiency and turnover of the employees.
As discussed all the above sub sections, the organizational structure has changed beyond its formal design while creating numerous disproportions. Due to all above changes in chain of command, span of control and unity of command, individuals may get frustrated and their responsibilities may not completely achieved according to the expected level. In addition, when the employees are not consistent about their role, exact duties and the reporting hierarchy, they may automatically deceive on the assigned duties. Thus, the employees neglect their liability towards the superiors, by which the management become unable to measure the actual organizational and individual performances. Its final results negatively influence on the individual upgrading, rewarding and development.
Additionally, the superiors become frustrated about their exact power area, which results in lowering the accountability of superiors (top managers) even for his/her own specialized filed while creating considerable power conflicts. In addition, since all the Key Performance Indicators (KPIs) are interconnected and assigned from top management to lower level management in a sequential manner, the performances of top level managers also get reduced. Hence, the important management decisions may delay or ignored by which the smoothness of the entire people management function of the company gets disturbed and performances get reduced.
In order to evade the challenges and issues of people management discussed under chapter 3, several changes to the organizational structure have been suggested in this chapter (as demonstrated in figure 3.4), while decisively stressing the appointment of the CEO to the organizational hierarchy.
Figure 3.4: Proposed Organizational Structure for Winterquilts
Source: Developed by the Author
Accordingly, some new positions are been introduced to the structure in a way that productivity can be improved through specialization and expertise. Since, a new position as the Chief Executive Officer (CEO) is created, the CEO position is able to place followed by the Directors. Thus, the span of control for the CEO can be recognized as six direct subordinates. Instead of the old chain of command of reporting all the group level and factory level managers to the Group GM, the reporting structure can make more decentralized while allocating specific duties to specific roles, which can be stressed as;
- Group GM is to be assigned as a reporting person to the CEO and Group Finance Manager and Group Accountant has included under the supervision of Group GM (Finance), which will be resulted in reducing the span of control of the Group GM from twelve to two.
- The Compliance Team can be directed to the Group HR Manager and his/her span of control needs to increase from four to five direct managerial subordinates and the responsibility and accountability of the Compliance Head and the team have to be clearly defined and assigned. Thus, Compliance Head is supposed to be reported to the Group HR Manager.
- The roles and job scopes of the Group Manager – Marketing, Merchandising & Planning and Group Manager – IT can be remained as same, but the mere difference is the reporting person, where they all now have to report to the CEO.
- However, the scope of the job of Group Import/ Export Manager ought to be increased, while allocating responsibilities of Group Stores management related activities. Since the Import/ Export Manager is handling all the goods receivables and deliverables, it will be more convenient and productive to assign the Stores Manager under the Group Import/ Export Manager.
- Most importantly, it was observed through the figure 3.2 that there is an absence of an Operations Manager for Winterquilts, who can manage and handle the entire operational processes. Accordingly, it is proposed to introduce a General Manager- Operations, who is reporting to the CEO. Since Group Operations Manager needs to manage all the operational functions; operational related top managers including Group Manager – Technical, Group Manager – Industrial Engineering, Group Manager Sample Room etc. can be assigned under the supervision of General Manager – Operations.
- In addition, Factory GMs positions can be removed, since they are adding unnecessary expenses for the company and be replaced by the Factory Manager positions. All the factory production teams, including production, quality checking, cutting, warehouse etc are assigned to be reported under factory managers. Thus, the span of the control of General Manager – Operations can be ranged to four direct subordinates.
- Furthermore, the proposed structure contains the features of a matrix structure as similar to the current structure, but it has improved with the changes of the chain of command, span of control and unity of command.
It is apparent that the success of any organization depends on the people working in it to achieve the set goals and objectives of the organization. One primary approach to employee people in the most appropriate manner is to design an appropriate organizational structure, which will clearly define the job roles of separate individuals. However, the prevailing structure of Winterquilts contains several hindrances as per the elaborations in chapter 2 and 3. Therefore, a proposal for a new structure was designed, through which the hindrances are expected to address and eradicate.
In order to ensure a healthy chain of command, the hierarchy can be designed in a way that relevant experts are allocated under appropriate separate fields with minimal distractions. Thus, the main change that is proposed to formulate is to assign the CEO subsequent to the Directors and all other functional Heads can be assigned to report to the CEO. Most importantly, the Group GM (Finance & Admin) can be allotted to the relevant specialized filed. As a result, the designed chain of command can be smoothly operated in, which will create several benefits to the organization such as,
- Ensuring the formalities and formal relationships of the business, this will make it more convenient for all the individuals to perform their duties and responsibilities without any disturbances and frustrations
- Unnecessary restrictions for the organizational policies and suggestions may not arise, which creates the opportunities for organizing more training & development sessions, welfare & motivational functions and other non monetary rewards and benefits can be offered for the employees
- The errors, delays and limitations which are occurred due to involvement non- HR personnel for the group level people related policies can eliminated and equal policies can be followed through the whole group
- Since there will be one formality throughout the entire organization, the dissimilarity issues and their impact on individual motivation and satisfaction (in accordance with the equity theory of motivation) can be reduced
However, as stressed in the McClelland’s Theory of Needs, there are three types of needs that different people prioritize in different ways including, need for achievement (who are satisfied by reaching goals), need for power (who are satisfied by the ability to control others, where goal reaching is secondary) and need for affiliation (who are satisfied by the social relationships) (Akshat, 2014). Therefore, power assigning and tasks assigning needs to perform with much care, to improve the satisfaction of all different employees.
The concept of span of control stresses that a sound number of subordinates should be there under each managerial or supervisory level employee. Most importantly, the goal setting theory can be applied in determining the span of control for each managerial employee, since it explains that challenging objectives can improve the performance but the objectives need to be achievable and perceived. Thus, with the newly proposed structure for Winterquilts, each managerial level deals with maximum six numbers of subordinates which will improve the productivity of the relationship as well as productivity of the performances. In addition, goals for each employee can be easily determined by the superior and closely supervise the success of achievement.
In addition, the ‘job design theory’ needs to be followed when determining the employee to the correct place of the structure in accordance with the skill variety, task identity, task significance, autonomy and feedback.
One of main that carried on with the prevailing organizational structure is the absence of unity of command, which has solved through the proposed structure. As highlighted in self efficacy theory employees are always assessing their ability to perform the tasks. Therefore, unnecessary burdens should be removed from low self efficacy personnel, while providing challenging opportunities high self efficacy personnel. Thus, it is vital to ensure the unity of command in their reporting structure, which on the other hand focuses on measuring the completion of assigned tasks.
Unity of command will finally assist the organization to measure the performance of the employees in a more accurate manner, since the performance records can be easily reviewed through the single assigned superior.
Accountability is a key element that determines the goal achievement and leadership qualities of the personnel. By each JD, it is can make essential to measure the performances of the employees through the set KPIs, which are certainly liable by the particular employee. Once the chain of command, span of control and unity of command is ensured, it is convenient to measure and determine the accountability of each employee, which then can link for the performance ratings, grading, salary and rewards upgrading etc.
Further, the accountability of the employee can be linked with the reinforcement theory and applied in Winterquilts, by which the outcomes of behaviour links with the future performances. Thus, it is inevitable that employees get motivated to perform better for better outcomes and the management can easily review the performances and direct the employees for better performances, in a way that organizational effectiveness can be increased.
The organizational structure demonstrates the formal allocation of people, tasks, responsibilities and authorities in order to achieve expected organizational goals and objectives (Lunenburg, 2012). This report was focused on analyzing the prevailing organizational structure of Winterquilts Private Limited, with the aim of identifying challenges and proposing suggestions for those challenges in order to achieve superior organizational and personnel productivity and effectiveness.
The organizational structure of Winterquilts was observed as a matrix structure, which includes both functional and geographical structural characteristics. The authority is delegated to the Group GM (Finance & Administration) from the Board of Directors and the chain of command expands from Group GM to Group Level Managers, Factory Managers or Assistant Managers, Executives and finally Staff Assistants or Worker Grade Assistants/Employees respectively.
The main issues relating to the structure which have resulted in reducing the performances and effectiveness of the company were identified under four main sub categories as the challenges in relation to chain of command, challenges in relation to span of control, challenges in relation to unity of command and challenges in relation to accountability.
Those challenges were addressed through a new proposed structure with the hiring of a Chief Executive Officer to the company and the solutions include the overall authority taken by the well qualified CEO from a single area specialized Group GM, hiring of General Manager – Operations, arranging functional areas properly, clearing discrepancies of chain of command etc. These solutions were further discussed, in aligning with several leadership and motivational theories, through which the organizational productivity and effectiveness of the people are supposed to be enhanced.
Akshat, 2014, Management Process and Organization Behaviour (online), available at http://smu-mb0038-mpob.blogspot.com/2014/09/discuss-contemporary-theories-of.html (viewed on 24th January 2017)
Distelzweig, H, n.d, Organizational Structure (online), available at http://www.referenceforbusiness.com/management/Ob-Or/Organizational-Structure.html (viewed on 24th January 2017)
Drumaux, A, n.d, Management & Organization – Chapter 3 Organizational Structure (online), available at http://www.ulb.ac.be/soco/adrumaux/pdf/ManOrg32007.pdf (viewed on 24th January 2017)
Friend, L n.d, Organizational Structure (online), available at http://smallbusiness.chron.com/meaning-organizational-structure-3803.html (viewed on 24th january 2017)
Ghanbarpour, Z and Najmolhoda, FS 2013, Contemporary theories of Motivation in Organizational Leadership and Behaviour, International Research Journal of Applied and Basic Sciences, volume 6, No 1, pp 1-7
Lunenburg, FC 2012, Organizational Structure: Mintzberg’s Framework, International Journal of Scholarly, Academic, Intellectual Diversity, Volume 14, No 1, pp 1-8
Montana, P and Charnov, B 1993, Management: A Streamlined Course for Students and Business People, Hauppauge, New York: Barron’s Business Review Series, pp. 155-169
Robbins, SP, Cenzo, DAD & Coulter, MK 2011, Fundamentals of Management, Essential Concepts and Applications (7th Ed), Upper Saddle River, N.J. : Prentice Hall,
Winterquilts Official Website, available at http://www.winterquilts.com/index.php/about-us/ (viewed on 24th January 2017)