MANAGING THE HUMAN RESOURCE

INTRODUCTION

Organisational structure is the study of the different hierarchies adopted by

companies in different sectors to collaborate and contribute to achieve the goal(s) of
the organisation. A number of writers have pointed out the importance of an
organisation’s structure and the relationship between it and an organisation’s size,
strategy, technology, environment and culture. Mintzberg (1989) has written
extensively and contributed significantly towards providing an understanding on the
subject of organisational structure and its importance. Miller (1989) has explained
the importance of configurations of strategy and structure. Burns and Stalker (1961)
have concluded that any organisation which wishes to achieve best performance
must be able to adapt the organisation structure to fit the demands of the
environment it operates in. As can be seen from the above there have different
opinions at different points of time on the structure of an organisation and the
importance of the same on the performance or the growth that the organisation
would be able to achieve in this regard.

In relation to the above arguments I will be carrying out a critical analysis of

the organisational structure adopted by the Container Company and the effects of its
flat organisation structure on two issues i) leadership development and ii) the
management of employee performance.

Let us now try to understand the definition of organisation structure as defined

by various authors.

Definitions of Organisation Structure

Mabey, Salaman & Storey (2001) and Mullins (1993) described the
organisation structure as relationship that exists between the different roles and the
different departments of the organisation. They state that the purpose of this
structure is to enable the distribution of work and the responsibilities to achieve the
goals and aims of the organisation in a systematic and organised process. This kind
of structure enables the managers to plan, direct, control and organise the activities
of the organisation which are the basics of management. This is considered to be a
traditional practice and which uses the principles derived from the classical and
scientific school of management.

A non-traditional approach is considered by some authors who considered

the organisational structure with architecture of buildings which is similar in nature
and is related to more ways than one like the support systems and the other aspect
is representing the organisational structure in the form of a organisational chart
which generally depicts the relationship that exists among the different people in the
organisation.
 The development of new and latest technologies and improvement in
communication methodologies has forced the organisations to improve their
businesses to meet the concurrent demand in the market place. That was the time
when the non material structures were not considered important (McMaster, 1996).
The machines were all important and most workers became machine operators or
hands and individual skills were neglected or were replaced with machines and in
time were lost in the all consuming mechanisation.

Then in the 20th century the management structures were redefined which
led to was led by the early understanding about management provided Mintzberg
(1979) where he discusses about the span of control and the variations that it has
over different levels in the organisation. There are four basic forms of organisational
structure. The bureaucratic structure is characterised by formality and rigidity. With
the bureaucratic structure, rules and procedures are used to ensure uniformity. The
matrix structure may be visualised as product departmentalisation superimposed on
functional departmentalisation. The span of management is the number of workers
who report directly to a manager. Spans generally are characterised as wide (many
workers per manager) or narrow (few workers per manager). Wide spans generally
result in flat organisations (few layers of management), narrow spans generally
result in tall organisations (many layers of management).

Noe, R.A et al (2004) explains about the development of employees and the
care taken by the human resource department of Container Store. The employees
when they join the organisation are put under intensive training for a period of one
week which is called the Foundation Week. During the Foundation Week, the
employees learn about the company’s philosophy and spend the most of their time
with the store manager. Which is followed with the new employees learn about how
the merchandise is arranged, various selling techniques, roles of employees in
different positions would be taught, and different ways to provide customer service.
Only when the employees are through with this kind of rigorous training do they
undertake the job and receive the apron which is used while they work in the floor.
The employees are handed over their apron in a ceremony which is held to motivate
the employees. According to Barbara Anderson, the company’s director of
community services and staff development “The psychological effect of having to
wait for that apron is incredible”. Anderson says that the induction programme which
was initiated has benefitted the organisation with the employees being more self-
confident and motivated. The staff turnover has reduced due to this activity.

This kind of training, continuous motivation and working with the

management enables the Container Store to identify future talent who would be
groomed to attain further roles in the organisation. The flat structure of the
organisation enables the company to interact with their employees more frequently
as there are fewer barriers and the feedback and communication flow is easy and
faster in a flat structure organisation.

As per the above discussions it can be seen that there are certain
advantages and disadvantages of having a flat structure the advantages being that
the organisation would be able to better connect with the employees as there are
fewer barriers, growth is faster, innovative companies adopt this structure. The
disadvantages being that the company would be losing out on future leaders as
there would little options for promotion as the opportunities at the top are very few
and hence the real chance for growth is minimal.

There have been different considerations, suggestions and articles written

on this topic, the advantages of flat structure are that they would enable the
organisation to develop talent within the organisation as there is a lot of
independence and option for innovation in the company to the new employees.

In a tall structure there would be lot of problems of coordination as

communications take longer due to lengthy chain of command, which causes a lot of
hurdles in the communication flow. There would be issues with regards to
miscommunication as well in the organisation. The other disadvantage is that of the
distortion of communication which happens due to fact there are lots of levels
through which the communication has to pass through.

The other factor is that of the centralisation and decentralisation aspects as

the company would have to consider this aspect as in a centralised concept of
structure there are little innovations that can happen due to the integration of all
divisions at the headquarters. However, in a decentralised structure the
disadvantage the company faces is of the fact that there are little chances of loss in
innovation and at the same time the company would be able to motivate different
employees without investing much on other aspects. This kind of structure is more
used in the knowledge based companies. Since, Container Store is an organisation
which is involved in the sale of goods it had adopted the structure of flat structure
and has integrated all the aspects of the innovation divisions into the corporate level
to ensure that the company would be able to derive the desired advantage from this
structure and at a store level also they have enabled the manager to lead a large
team to ensure that the command structure is retained and maintained without any
issues.

Let us have an understanding of the Container Store’s human resource

management policies which have great impact on the employee performance factor.

Employee Performance Management

The management of human resource is of critical importance to an

organisations success. But the way that an organisation manages human resources
has an impact on the company’s performance in the market place. With regards to
this the company’s human resource unit is relatively small as the company expects
the managers of operations to participate in human resource activities such as
recruiting. The company has been rated as the best organisation in United States of
America to work for by Fortune and has been achieving considerable rewards for its
outstanding people management strategies, which included the workforce magazine
Optimas award in 2001. The company has been able to maintain a 15 to 20 percent
turnover rate in an industry where the average is at 100 percent employee attrition.
The culture in the organisation has been the driving force which was able to achieve
such a feat in the organisation which had such kind of attrition ratio.

The main role of people management and Human Resource Management

activities are undertaken by the managers in the operations departments as they
have regular interaction with the employees and they are better placed to carry out
the performance management of the employees who report to them. The company
has a rigorous people management methodology which starts from the recruitment
stage where they a lot of emphasis on the concept of three for one which states that
they would ideally hire one employee instead of three as the best in the market
would be able to provide an output of three people and the relative costs involved in
this strategy had provided the organisation a competitive advantage where the cost
of recruitment has come down considerably and the per square foot cost of the store
in comparison to the employees would be relatively less. With this the company
would be able to provide better and comprehensive training, offer better pay and
support to ensure long term benefits to the employees which help the organisation to
retain the right manpower.

The company invests a lot on the employees and provides a substantial

amount of training amounting to a total of 235 hours per year per employee where
the other companies in the industry average just over 7 hours per year per
employee. Along with this the company has been able to recruit most of its new
employees through referral schemes or the friends of existing employees which is
considered to provide the company additional support in terms of overall employee
retention in the organisation.

The companies in this sector have their focus based on the merchandise
that they offer. At the other end Container Store has focussed their efforts on the
employees which they considered to be of primal importance as good and satisfied
employees would automatically result in the satisfied customers. This profound
ideology has enabled the organisation to achieve greater success and at the same
time ensured that the employee performance management is given the right
importance. The Container Store has placed the employees as stakeholders and
shares the company’s performance details with them to ensure that their success as
well as the company’s success is attained in the long term.

References

Burns, T. & Stalker, G.M. (1961) The management of Innovation. Tavistock

Coulson-Thomas, C. and Coe, T. (1991) The flat organisation: Philosophy and

practice. British Institute of Management

Mabey, C., Salaman, G., Storey, J. (2001) Organisational Structuring and

Restructuring’ Understanding Business Organisations. London. Routledge.

McMaster, M.D., (1996) The Intelligence Advantage. Organisation for Complexity.

Newton

Mintzberg, H., (1989) The structuring of Organisations; Readings in Strategic

Management

Noe, R.A., Hollenbeck, J.R., Gerhart, B., Wright, P.M (2004), Fundamentals of
Human Resource Management. McGraw Hill Publication