Organizational Behavior Issues in Aussieco Essay

Aussieco, an Australian company established as a small manufacturing and service operation company in 1962 is now a fully expanded company with 600 employees. The company built its reputation on a single product holding 90 per cent of the Australian market in the 1980. Over the years the market holding has gone down by 30 percent in spite of the product being unique and company facing little competition in the market (Jones,Gal, n. d) The downturn in Aussieco’s performance is mainly due to issues with the company’s management and organizational behavior. Organizational Behavior refers to ‘the understanding, prediction and management of human behavior in organizations’ (Luthans,2010). It is the study of individuals and their behavior in a work place. A company’s performance and outcome largely depends on its organizational behavior as it is an interdisciplinary field that includes sociology, psychology, communication and management. Aussieco’s organizational behavior issues can be explained through Henri Fayol’s 14 management principles. Henri Fayol’s theory of administration and organizational behavior focuses on the personal duties of management and managerial effectiveness which aussieco lacked. (Fayol,1971). The company has inexperienced staff and no specialization as major high authority staff is friends and family without skilled knowledge. The executive managing director is the owner’s nephew with no practical or industrial experience. The production supervisor is the production manager’s best friend who has little knowledge of the daily production tasks as he is a carpet fitter by qualification. Employees at the operative level are migrant labor mostly lacking formal qualification. On diversification, management failed to understand the changing market needs. Aussieco follows the power culture where control is centralized. The major motivational or driving force is fear (Luthans,2011). Suggestions and personal preferences are not welcomed. The owner-chairman reacts in a strong negative way if any manager’s opinion differentiates from his. This lack of consultation leads to staff feeling de motivated and undervalued. Though there has been division of labor and departmentalization in the company but the managers lack authority and responsibility. On the instance of owner accepting order from a bad debt customer without consulting the general manager shows lack of authority for the manager. Owner’s dictatorial attitude and ignorance of modern trends hold back the dedicated managers to improve and bring changes in the company’s working, as they are either fired from the job or become his instant enemies. The company lacks discipline and employee commitment. Lack of loyalty, no willingness to put high levels of effort, no belief in the company’s goals and vales and lack of faith in the management all together leads to all the issues of Aussieco. During lunch hours the senior management and sales staff have access to unlimited alcohol in the workplace. Assembly line workers underperform and hold back production with vague excuses. Subordination of individual interest over the company’s interest and goal is one of the major problems of Aussieco Employees overtime to get paid extra and not for productive outcomes. Also the senior programmer in spite of completing his work order uses his work holiday for personal matters. There is lack of equity and justice among the employees. The rule being everyone must vacate office during lunch break but exceptions for the senior management and sales staff that eat in the work place, operatives and other staff are allowed no food or drinks in the workplace. The migrant staff is treated well and better than its own internal staff. There are less internal promotions. High employee turnover, no stability of tenure of personnel is another major issue with Aussieco. To attain maximum productivity of personnel it is essential to have a stable workforce, which Aussieco lacks. There are frequent mass resignations in the company. No production manager lasts for more than 3 years in the company. The post of personnel manager is vacant since 2 months. Employees have no job security and thus are not fully committed to their work. This further increases the company’s costs of recruitment,selection and training. There is lack of motivation and initiative by the management for the welfare of the employees. There is lack of rewards, appraisal and bonus. The workshop roofs are without insulation and leak during heavy rain, no doors and filthy windows point toward bad and unhealthy working conditions. This even gave a loss of $AUS 500,000 when water leakage blew a computerized robot. No parking area provided for the employees, who reach frustrated to the office,which in turn shows in their slow performance. Lack of structured work, irregularity in work and no proper accounts and records maintained by the managers is another organizational issue for Aussieco. Though the record showed a stock of 4700 resistors but none could be located. A welder forgotten by the company after fitting of new automat is idle and has no contribution in the company. Reasons why these problems occur. One of the major reason for the organizational issues of aussieco is the employee attitude. Job satisfaction focuses on employee attitude and organizational commitment focuses on their attitude towards the organization. Job satisfaction is determined by how well the expectations of employees are met in return of their output (Luthans,2011). The aspects of job satisfication are not met by Aussieco. Employees of Aussieco are unsatisfied with the kind of work they get, the job provides less opportunities for learning and less responsibility. There is lack of remuneration and pay, less promotional opportunities, bad working conditions. This high level of job dissatisfaction of employees reflects in their low performance, company’s low profits, high employee turnover, high absenteeism and low level of commitment towards the company. The attitude of employees in an organization is largely influenced by the kind of environment the organization posses and further the attitude of employees affects their efficiency and performance at the organizational level. The environment of aussieco is not employee friendly thus employees have a negative attitude. Employee traits can be best explained by the Five factor model. Job performance is highly dependent on an individual’s conscientiousness (i. e dutifulness, persistence, industriousness) and emotional stability (i. anxiety, security, suspiciousness). In Aussieco employees had low conscientiousness and low emotional stability which affected their overall task performance and contextual performance. Organizational commitment is an important attitude toward the employers and the company. It is the extent to which we identify with them. Most of the employees, posses’ continuance organizational commitment, which is a calculative approach, where they chose to continue working in the company because they ‘have to’ rather than their want or obligation. This attitude is influenced by perceived costs of leaving the company, lack of opportunities, age, peer pressure, society expectations etc. Employees of Aussieco developed this attitude because of the mechanistic treatment they receive and lack of empathy from management. Autocracy is the concentration of power and authority in hands of one person. The management of Aussieco has an autocratic structure with the owner having unlimited power and absolute authority. There is a strict hierarchical structure; orders are sent from top level to bottom level. Ideas, personal opinions and suggestions are unwelcomed. In this management style managers believe workers must be controlled to ensure maximum productivity (Luthans,2011). Aussieco’s structure can be best explained by Douglas McGregor’s theory X. This theory represents an assumption of conflicting and negative working attitudes. The managers assume an average person dislikes work and will avoid it if possible, thus must be forced with threat of punishment to achieve organizational goals. An average person prefers to be directed and avoids responsibility. This approach encourages deadline and ultimatums, arrogant and demanding managers, mechanistic approach, no concern toward staff and one way communication (Jeremiah,2009). In Aussieco this approach resulted in a negative attitude by the employees, made them insecure and unhappy. Lack of Taylor’s scientific management. Frederik winslow taylor’s key idea was to improve industrial efficiency scientifically. He encouraged scientifically selecting and training workers and regularly monitoring their work to improve efficiency which also improves work man happiness and positivity (Lynch,1984). Aussieco lacked scientific selection, training and development of workmen and passively left them to train themselves. Managers did not supervise and provide instructions to the employees and there was no division of work between managers and workers. There was lack of specialization, standardized and systematic approach. The company continuously changed its suppliers for cheapest material available, a supplier providing 99. 5% quality level charging $20 per unit was replaced with a supplier charging $12per unit. The quality of the product suffered, increasing customer complaints and affecting the goodwill of the company negatively. There is lack of communication between departments, department managers and workers and senior management and managers. The senior management is unapproachable and not interested in the issues of the company and workers. Though Taylorism has faced criticism of exploitation, mechanistic approach etc but in relation to Aussieco, the company needs to adapt certain principles of Taylorism for a better organizational working. To conclude Ausseico’s major issue is organizational and management structure. The company should have a more humanistic and realistic approach with a right balance of authority and responsibility.