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    Case 2: Analysis Descon Engineering: Submitted To: Prof. F. A. Fareedy Ta: Hadiyah Qaiser Submitted by

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    Adnan Us Sadiq
    The document summarizes the evolution of Descon Engineering's organizational structure from 1978 to 1990 as the company grew substantially. It notes that Descon changed its structure frequently without proper planning, which led to issues with coordination between divisions. As new employees with different expectations joined, it created tensions with older employees accustomed to a decentralized system. The core problem was that the organizational structure lacked flexibility to adapt to Descon's fast growth, and the management team lacked business experience to effectively manage the widening span of control. Recommendations include formalizing HR processes, training to shift company culture, and adopting a matrix structure to improve coordination across functions.

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    Case 2: Analysis Descon Engineering: Submitted To: Prof. F. A. Fareedy Ta: Hadiyah Qaiser Submitted by

    Uploaded by

    Adnan Us Sadiq
    173 views6 pages
    The document summarizes the evolution of Descon Engineering's organizational structure from 1978 to 1990 as the company grew substantially. It notes that Descon changed its structure frequently without proper planning, which led to issues with coordination between divisions. As new employees with different expectations joined, it created tensions with older employees accustomed to a decentralized system. The core problem was that the organizational structure lacked flexibility to adapt to Descon's fast growth, and the management team lacked business experience to effectively manage the widening span of control. Recommendations include formalizing HR processes, training to shift company culture, and adopting a matrix structure to improve coordination across functions.

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    The document summarizes the evolution of Descon Engineering's organizational structure from 1978 to 1990 as the company grew substantially. It notes that Descon changed its structure frequently without proper planning, which led to issues with coordination between divisions. As new employees with different expectations joined, it created tensions with older employees accustomed to a decentralized system. The core problem was that the organizational structure lacked flexibility to adapt to Descon's fast growth, and the management team lacked business experience to effectively manage the widening span of control. Recommendations include formalizing HR processes, training to shift company culture, and adopting a matrix structure to improve coordination across functions.

    Copyright:

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    173 views6 pages

    Case 2: Analysis Descon Engineering: Submitted To: Prof. F. A. Fareedy Ta: Hadiyah Qaiser Submitted by

    Uploaded by

    Adnan Us Sadiq
    The document summarizes the evolution of Descon Engineering's organizational structure from 1978 to 1990 as the company grew substantially. It notes that Descon changed its structure frequently without proper planning, which led to issues with coordination between divisions. As new employees with different expectations joined, it created tensions with older employees accustomed to a decentralized system. The core problem was that the organizational structure lacked flexibility to adapt to Descon's fast growth, and the management team lacked business experience to effectively manage the widening span of control. Recommendations include formalizing HR processes, training to shift company culture, and adopting a matrix structure to improve coordination across functions.

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    of 6

    BUSINESS POLICY

    MBA II SEC A
    SUMMER SEMESTER

    CASE 2: ANALYSIS
    DESCON ENGINEERING

    SUBMITTED TO: PROF. F. A. FAREEDY


    TA: HADIYAH QAISER

    SUBMITTED BY:
    HAMMAD MAZHAR (09P1116)
    MONIBA JAVAID (09P0038)

    LAHORE SCHOOL OF ECONOMICS


    5/16/2011
    Quantitative Statements

    1. At present engineering service and construction provided most of the company’s


    revenues, contributing 80% since 1978, manufacturing provided the remaining revenues.
    2. Descon started its operation with 5 personnel drawn from Dawood Hercules. And 4 of
    these reported to Razak.
    3. The strength of the engineering employees was 56.6% of the total permanent manpower
    of Descon whereas the Professionals were only 9.4% of the total manpower strength.
    4. 96.75% of Total manpower including permanent and contractual employees was in the
    Engineering Division whereas 2.6% were in manufacturing Division and 0.37% was in
    Corporate Office.
    5. Exhibit 7 shows that 2% of the permanent staff is comprised of Corporate as compared to
    58% for Engineering and 20% for Manufacturing and 20% for others.
    6. At the end of 1989, Descon’s permanent man power strength was 350 and the total
    manpower of the company had reached 3756.
    7. Before the end of 1986 Razak was facing new organizational challenges
    8. In 1990 the management adopted a control system based on the concept of “ Profit and
    cost center”
    9. In 1990 Razak projected major growth potential in the business areas of Project
    Management, Engineering services especially designing, and Boiler Manufacturing.

    Qualitative Statements
     There was no lay-off of engineering personnel.
     The ‘open door’ policy adopted in 1982 became difficult to maintain.
     According to ‘decentralized administration and centralized policy and control’ all
    operational decisions would be taken at the unit level whereas policy and financial
    decisions would be prerogative of the corporate office.
     The company ran in to almost chaotic conditions due to untimely and too much
    decentralization.
     Shouqat who had earned a good reputation as a mechanical engineer found it hard to
    effectively manage the expanded span of control.
     Co-ordination meetings were ineffective since most of the participants spent most of the
    time socializing.
     Documentation required to implement the new procedures was cumbersome. This at
    times resulted in people not making the necessary changes in the records.
     The professionals in the company wanted accountability culture to take roots in the
    company. But the older employees had thriven under a system of personal loyalty and in
    formalism.
    Evolution of Organization

    1997

     Their was a Skeleton Structure


     Their were 3 project managers and a finance guy
     Highly decentralized everyone was expected to keep their doors open for each other.

    1982

     Company grew in size; additional hierarchical layers had to be added. Making the open
    doors policy difficult.
     There were no rigid principles of functional departments. Due to which the finance guy
    looked after the finance, procurement, personal etc.

    1983-4

     More business growth


     Separate department established to look after marketing in 1982
     Fabrication and technical function were added in 1983.

    1986

     Continued growth, increase in work load, increase in size and no of contracts.


     Company was formally split into functional units and departments.
     Each unit was looked by a separate GM and each department was looked by a separate
    manager.

    1987

     Company became highly diverse, new offices were being developed even in IRAQ.
     Business in Karachi was growing
     Introduction of Mechanical products, Descon electro system and water and effluent
    treatment.
     Therefore opted for decentralized admin and centralized policy making.
     Problem due to decentralization were:
    o Lack of coordination between civil and mechanical department of construction
    unit.
    o Additional purchases of items that were already available at other units.
    o More strain on technical director (Shoukat Rasool) due to into to 3 new products.
    o Difficult to manage span of control.
    1988

     Operational powers were taken back from the unit managers and transferred them to the
    newly created position of divisional mangers.
     Two divisions to enhance control were created engineering and manufacturing because
    there were great growth potential their

    1990

     Shoukat Retired. Syed Tahir Jan (GM business development) took his place.
     Mazhar post was upgraded to Deputy managing director.
     Increase in coordination of manufacturing and engineering division.
     Coordination at corporate office still a concern

    Problems

     Lack of control at the corporate office due to which coordination between various
    business units and departments across division lacked coordination. The employees were
    used to the informal control systems that were prevalent in the company in its initial
    phase. It was a complicated process as result of which the employees did not make
    necessary changes in the records.
     There was lack of integration between departments and as a result it led to poor
    operational efficiency due to inefficient and ineffective decision making especially in the
    case of formalizing a appropriate organizational structure.
     Engineering posts were given more importance than the Corporate and manufacturing
    Division employees and neglecting the Managerial posts.
     New professionals wanted accountability culture in the company where as old
    employee’s was thriven under a system of personal loyalty and informalism that
    characterized the traditional Seth culture. This led to a mismatch between the interests
    and they way of working between the old and new employees which was causing many
    coordination problems with the organization.
     The company was not flexible enough to cope up with the immense growth coming their
    way especially in the boiler manufacturing long and WETS. Organizational structure
    went through many changes from 1977 till 1990. Though the organizational structure was
    a formal structure but it had no departmentalization till 1984. In 1987 the structure was
    once again revised and adopted the structure of decentralization which worsened the
    management problems due to lack of coordination among departments. Moreover, the
    structure was also leading to duplication & wastage of company resources.
     Due to a lack of proper HR department there was no formal hiring and recruitment
    procedure in the company and the director, Razak, was hiring people and creating posts
    on his own judgment without consulting the manger personnel.

    Core Problem

    Every time company grew there was a problem, Descon Changed their organizational Structure
    quite often, which clearly shows that the organizational structure was not flexible at all and as a
    result Descon was reactive to growth instead of being proactive. Due to this inflexibility the
    changes that were being made had their consequences such as to meet new demand new
    employees were hired, who wanted accountability where as the old employees were in favor of
    the old decentralized system. The company required a planned evolvement to cope with its fast
    pace of growth. It wanted a structure that would be flexible yet formal. But in reality, this was
    not happening. The management could not handle the widening span of control. The process of
    decentralization added to worsening conditions of the company. The reason was that the
    management itself had no managerial experience as they were mostly engineers who were
    masters in their technical fields but did not possess any business skills. Hence there was lack of
    coordination between the corporate office and different divisional areas

    Recommendations

     Improve relationship between various functional divisions.


     Give ability to take decisions.
     Formalized Human Resource Department which should vigorously work on setting up
    proper HR policies, practices and procedures. This department should have the
    responsibility for hiring & firing, compensation, evaluation and appraisal and training of the
    employees.
     Training, Workshops and Seminars should be conducted within the organization to
    manipulate the mindset of the old employees who were used to the Seth culture and train
    them to deal with and become accustomed with changes in the organization. Training and
    development activities should be designed to help employees adapt the organizational
    culture. Those who are already aligned with the corporate culture can be trained to accept
    additional responsibilities. All these activities require an active participation from the HR
    department, which will conduct such programs.
     Organizational structure used should follow a matrix structure. The matrix organizational
    structure divides authority both by functional area and by project. In a matrix structure, each
    employee answers to two immediate supervisors: a functional supervisor and a project
    supervisor. Matrix structure is a highly flexible form that is readily adaptable to changing
    circumstances. Using this structure will provide better cooperation across functions. This
    would avoid the issues like duplication of resources and lack of communication. It will
    further improve flow of information between the departments handling projects of the same
    clients. There will be improved decision making and increased flexibility. The matrix
    structure allows for human resources to be shared flexibly across different projects or
    products. Functional areas maintain a stock of talented employees to meet projects'
    requirements. Using this structure will result in better performance accountability. This is a
    crucial recommendation because applying this will reduce most of the problems of the
    organization which include: lack of integration, lack of control, lack of coordination and
    flexibility.

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