Transformational process, Social Changes, Economic Changes, Organizational And Technological Changes in Organisation, Human Resource Planning, MS-23

Explain the transformational process through social, economic, organizational and technological changes in the present day organization. As a HR manger, how you will deal with the transformation process? Discuss.

Transforming work organization is to change the structure and behavior system from one form to another. The concepts and the results presented hereafter are designed to improve the organization of work, but also the mindset of the managers, of the trade unions, and even of the employees. Concerning this last point, two observations struck us. First, there is a very strong ideological attachment to splitting up the work process, while at the same time we have shown its destructive effects on a socio-economic level. Second, pragmatic realities of the field, on a daily basis are incompatible with intellectual recognition, and increased participation.

The principles of socio-economic organization of work
The four primary principles of "the socio-economic organization" of work (Savall, 1975) are:
1. entrust a workgroup/team with the production of a good or service, as complete as possible (from A toZ);
2.    allocate, on all hierarchical levels, responsibility and autonomy, which are sources of job satisfaction for state of the art work;
3.    create customer oriented teams; and
4.    develop multiskilling within all teams.

These four principles are based on the lessons learned from criticisms addressed to scientific management organizational practices, as well as from the STS (Emery and Trist, 1969; Davis, 1957). However, the socio-economic design of the organization of work highlights the following key points:
•     Two categories of actors - two targets - are simultaneously targeted in any organization. First, internal, the company members, be they executives, middle management, garden workers or clerks, and second the external actors, customers and other partners. A socio-economic organization thus seeks to simultaneously improve the company's performance, to the benefit of the firm itself, its personnel, and its external partners (stakeholders as a whole).
•     The economic performance is studied as much as the social performance. Thus the responsibility and autonomy are considered as a type of tool to control the performance of the people and the teams, through management reports, with indicators relating to productivity and quality.
•     The hierarchy preserves a legitimacy in this form of organization. In essence, the delegation of authority, decision making, loan approval, and sign-offs are devices to facilitate discussions or coordination between the employees and management, and to a certain extent a form of external control on the team to ensure periodically, that the company's strategy is being implemented and that the results in terms of economy, marketing, human resources etc. have been reached. However, the pedagogical role of supervisors is much more developed compared with supervisors' traditional role.
•     The economic performance of such an organization, since it increases, does not benefit exclusively the company and its shareholders, but also the personnel, on all the levels, in the form of additional compensation.
•     All work groups have customers (external or internal) with whom they develop a marketing oriented relationship, thus allowing a break with the task oriented organizations, where the actor no longer knows for whom, or why they work.

Concrete applications on the evolution of organizations
Reduce the functional specialization via collective responsibilities. Company D has consistently progressed and not just experienced one remarkable year. Each year the marketing performance has dramatically improved (it has increased five times since 1987). One notices at the same time, a significant increase in the payroll; it has more than doubled in ten years. Within this framework, and after studying its most profitable activities, the company wanted to take a closer look at the increase in the general sales administration and overhead costs (non-billable expenses with external customers) particularly focusing on the financial management function. It proved that the financial management was, over the years, more and more isolated from the firm's operations. In order to reduce this functional and operational gap, work was re-allocated, the missions and the responsibilities were redefined, enabling everyone to "clean-up" their act:
•     Finance management must support top management and the operations managers by creating four financial indicators: revenue per person; net income per person; cash-flow per person; and the standard cost for one hour of work. For the first time since 1987 (in 2002), the company obtained for each subsidiary and their related services, these four indicators. This result enabled management to dramatically reduce the number of production indicators and to broaden its business portfolio at the same time. In addition to the production indicators, they conducted audits to help operations management in their missions. In addition, they were able to make the operations management more aware of the economic impact, starting with the new collaborators evaluating the workgroup disorganization, the unprofitable training (i.e. more than Euro40,000 at the beginning).
•     Operations managers are the prescribers of costs and margins, and they must therefore support finance managers by becoming internal financial (cost and revenue) controllers (Savall and Zardet, 1992). They are responsible for the reliability of the information transmitted to finance managers, respecting the costs for each project and must make decisions using socio-economic analysis.
Reducing site specialization and restraining headquarter's role. Company A grew quickly in 15 years: from 300 people in 1984 with only one site, to over 3,500 people in 2001, with nine sites and a headquarters office. However, the company was structured on the basis of several principles implemented to counteract specialization dysfunctions:
•     Renunciation of the economies of scale principle: each site has a limited size of 350 workers. When this threshold is reached, the company develops, repurchases or creates another site, in order not to incur additional costs related to an increased complexity.
•     Renunciation of the principle of minimization of the costs by the series effect: all the bakery factories are multiskilled to produce all the products, in the same way for all the pastry making factories. The objective is to give to each site-subsidiary company complete autonomy and responsibility for all its activities, production, marketing, accounting, social and logistic.
•     Renunciation of the principle of specialization of the sites on the only function of production: the sites are "full exercise sites", i.e. they cover the whole gamut of functions. Thus, each subsidiary company has complete autonomy, but the company defined a standard structure for the sites. Each site has, whatever its size (even 50 people), all the vital functions: purchasing, manufacturing, marketing, research and development, quality, finance, data processing, and human resources. When a site is created from scratch, it includes all the departments; the executives are recruited two years before the opening when hiving off a new site, and the technical staff is recruited and trained four months before. In addition, each site has its own national or international marketing area.ln corollary, this synchronized decentralization between the group and the sites leads to a weakening of the specialized functions at headquarters. They have a primary inter-site communication role and are responsible for all strategic projects. Headquarters are relatively small: approximately 40 people for 3,500 employees; this is approximately 1 percent.Each manufacturing facility is managed by a two-person team made up of the managing director (marketing or production manager) and a co-director (who has complementary skills and experience to the managing director). The company expects them to manage the business, whether they held degrees or not.
•     Renunciation of the principle of centralized trade negotiations. Although the distribution customers impose a centralized annual negotiation (a purchaser of each key customer negotiates all the general conditions of sale with the suppliers), Company A decided to decentralize the negotiation with the customers and the suppliers to the production facilities. Thus each plant manager is responsible for one or two key client accounts (Carrefour-Promodes and Leclerc) and one or two key suppliers (chocolate, flour, butter, etc.) and he does this for the whole group. Therefore, headquarters do not handle these negotiations, but someone from each site.

Reduction in work specialization through the implementation of production lines integrating different professions. When the specialization of work harms the cohesion and the performance of the company, "the integration" of the separate elements constitutes a fertile path.

Company A has applied this principle to all of its services. Thus, the production was formerly separated into four sections: kneading, cooking, packing, and equipment maintenance; each was managed by a supervisor. The hidden costs were evaluated at Eurol0,000 per person per year. These costs came from absenteeism in packing, the lack of responsibility and accountability of the cooking sector regarding finished product quality, chronic preventive maintenance delays, and breakdown service repair delays (Pasquier, 1993).

The integration of the four sectors consisted of setting up production line teams. Each team is managed by just one supervisor who is responsible for all of the different production functions from A to Z (from kneading to packing). The maintenance staff is also integrated into the teams and each has a technician in charge of the regular preventive equipment maintenance, breakdown services, and training of the operators on the basic maintenance operations.

Every morning management reports display the results of the day before: line productivity; quality; and product losses. The greatest resistance, which management had to overcome came from the engineering department, made up of people with more training and expertise than the production personnel. They did not want to report hierarchically to a line manager. But the objections were finally overcome when the technicians understood their new training role for line operators. A similar example in company A relates to sales management: territories existed for the sales people, but the customer dealt with various people depending on whether it was an invoice, a claim, or a credit etc. An administrative person was responsible for each sales territory, interfacing with the secretaries, communicating between the customers and the sales representatives, keeping and budgeting travel expenses. It took three years for the transition to become effective: the secretaries had to learn accounting; the technicians with a two-year university degree did not want to use a word processing system at the beginning. The company is successful today - not an easy feat with 3,500 workers, and not a single secretary in the company. Indeed, the secretarial activities are integrated into each workstation.

Socio-economic evaluation of new organization forms
The socio-economic organization of work involves measurable impacts on performance evolution:
•     Economic performance: integration involves a drop in absenteeism and staff turnover, fewer and less severe industrial accidents, increased direct productivity, due to a reduction in time wasted on material handling and on tedious or routine tasks. With respect to the customers, the improvement in the service quality is noticeable, the response to customers is faster, and the reception and handling of customers is personalized. Lastly, the marketing image of the company is improved.
•     Personnel satisfaction: functional integration develops qualified jobs, enriches jobs of workers, employees and the middle and higher management, increases compensation due to higher qualifications, while entailing a greater implication and interest in the work, as well as improved communication-coordination-conciliation. The human resources image of the company is thus improved, enabling the company to better attract employees.
•     Transformation of the supervisors' and middle managers' role: contrary to the STS school which forecasted a progressive abolition of Supervisors, our research interventions show the importance of a revitalization of the control role through the transfer of personnel of tasks of execution and through the addition of new tasks of facilitation, training and informing the personnel and technical assistance. One observes as well that a vertical push of blue and white collars workers' job enrichment and employee leads to that of the supervisors, which involves in its turn that of the middle management then of the top executives.

"Functional slipping" indeed is a universal dysfunction which involves many hidden costs: an activity or task that should have been dealt with on level "N", is actually taken on by the higher hierarchical level n + 1. Thus the entire organization "implodes" resulting in a weakening of work at all levels (time 1). The socio-economic organization leads to a vertical push of the work on all hierarchical levels, which changes the organizational structure over time.