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Hatch and Cuncliffe, defines organizational design as the mechanisms through which the organization undergoes some structural changes as well as in its roles. The purpose of carrying out an organizational design is to uplift the organization position in the market. It is usually characterized with making vital strategic decisions which will in turn ensure new ideas and capabilities of competing in the market.
Some of the factors that might influence organizational design include the environment, the product being sold, geographic location and the behavior of employees and management. There are several strategic decisions that were undertaken by the top management at BP and which influenced the recent BP spill that was realized at the Gulf of Mexico. The study evaluates some of the vital decision in structural design and how it influenced the Gulf of Mexico spill. Furthermore Kolk and Levy, 2001; Siddall, Willey and Tavares, 1992; Stoneham, Grant and Cibin, 1996; and White, 2002 provide some useful insights into BP’s organizational design.
In the early 1990’s as well as early 2000’s there were some organizational design that took place at BP. The main aim of undertaking this process was to ensure that Bp retained its market position in terms of competitive advantage. Some of the changes that took place revolved under an upstream gas as well as oil exploration and production. There was as well downstream of petroleum refining and marketing and petrochemicals. The three dynamic decisions were independent of each other.
The corporate structure underwent a complete overhaul in terms of decision making being directed to the centre of the three business entities. Furthermore, the organization undertook a change of guard through decreasing the number of employees. As a result, British Petroleum promoted an environment where the employees were to observe a culture of being open to one another and promote cooperation between them.
The Upstream Strategy
One of the strategies employed by the organization included the location of large amounts of hydrocarbon deposits. As a result of this initiative, the organization increased its outsourcing mechanism which reflected an effective method towards cost efficiency and quick response. The top management at BP viewed this strategy as having an impact on the long term productivity and profit of the company. However, this initiative failed to take rot within the ranks of the organization due to employees and top management not having a common understanding of the goals and as a result, limited the standards of performance.
Limitations brought by the Organizational Design
The changes in organizational design had its drawbacks. One aspect related to organizational design is that it is bound to fail if the corporate goals and objectives of the organization are understood differently. The organizational design that was created as a result was a wrong impression to the business environment. It was evident through its organizational design, which BP was starting to encounter some difficulties. Some of the challenges that were presented by the organizational design included overconfidence within employees and management as well as not taking into account the wrong signs that were being directed to them.
The management did not respond to the impending challenges that were now facing them. For instance, the problems led to excessive cost cutting as well as reflecting on its own profitability. BP organizational strategy did not take into account environmental responsibility and the culture being cultivated within the organization meant that employees and managements did not take any step forward towards environmental conservation.
The organizational strategy offered an opportunity for more productivity within a short time while ignoring the long term effects of the structure in terms of financial costs. In the ultimate long run, the organizational strategy was never to sustain long term financial cost of the organization. In initiating this new model of organizational design, the management at BP did not reflect upon the consequences that could be caused to the environment in terms of safety measures. In order to achieve some mileage in business, an organization has to make some sacrifices and this was not the case at British Petroleum. As a result of this situation, many people described BP as a risky organization that should not be involved in the conservation of the environment.
For instance, the case at Texas City in Texas where there was an explosion claimed the lives of several people led to the organization being placed under scrutiny in terms of its performance. The lack of proper management attributed to the board of management might have led to death of 15 workers at Texas City. Despite BP acting in creating more profitable margins within the industry, little did it know that it was heading for a catastrophic situation such as the one that was experience at Texas and at the Gulf of Mexico. The link between employees and the organizations did not give top priority to environmental issues an indication that their success strategy was heavily dented. The strategy and culture at BP is what generated the several difficulties that it found itself in and which led to great financial loses. The management was not ready to promote awareness on safety conditions. For instance, BP continued to invest heavily in Alaska and Tibet and ignored other areas of interest. The project 1990 was another strategy that did not work well in the organizational design and which later led to problems at BP.
The company made a strategic decision on an active climate policy that took into account the already existing environmental as well as safety activities. One of the perfect examples from which difficulties originated was the change of BP logo to Beyond Petroleum. There are several people who viewed the new logo as ridicule to the industry.
The new slogan brought a lot of confusion and dissatisfaction within the organization. The resulting environment almost created tension of the company’s activities. Further the difficulties that later led to the oil spill can be associated with the failure with BP to address the last minute changes that were presented with the change of the logo. The continuous change of plans within the organization led to confusion and a lot of frustration within the management and employees. The management was also not ready to provide the needed support to the rig personnel and as a result, those who came to help provided limited information.
The top management also allowed the measures taken by the new strategy to adversely affect its overall risk management. It is also apparent to indicate that British Petroleum management did not take the initiative to adequately train its employees in terms of emergency procedures and the ways through which they can avoid catastrophes. The change in several strategies at the organization can be linked with the several errors by the management who had failed to handle the technical difficulties that were evident by the new emblem.
As a result of the oil spill that characterized BP, Mother Jones magazine named it one of the worst organizations in 2001 and 2005 respectively. The magazine stipulated that its record in terms of human rights and environment matters had been wanting. The management at BP had failed to administer effective measures that resulted to its systems releasing EPA toxic gases into the environment. The management had not yet learnt with the experience of burning polluted gases into the environment, something that led to worst explosions that were later realized.
Environmental Contingency Theory
In the case of British Petroleum (BP), the decisions that were made by the top management were dependant on its external as well as internal situations. For instance, the decision taken by BP in its organizational design was not reflective of the environment but it was prompted by a desire for financial gain. Furthermore, the management at BP had neglected their management duties and focused on the financial success of the organization without taking into account the impact on the environment.
The technological space emerging as a result of the changing world uplifted the organizations status in its bid to develop is technological power. In this case, there was no careful management system at BP that was able to satisfy the business needs as well as taking care of the environment. Environmental contingency theory states that the management must at all times be concerned with the well being of the environment. The organizational design must therefore have reflected on the ways through which the environment can be preserved. It is therefore true to state that lack of guidance in terms of leadership styles and skills were lacking at BP as they were not able to control the environment.
There are four basic elements which are illustrated by environmental contingency theory and which includes the existence of an effective way to manage. This aspect was lacking at BP. The organizational design implemented by BP was not able to fit within the environment and the various subsystems were not in a position of supporting the environment. BP lacked the expertise in terms of administration and the management style and so they were in effective in the several tasks they undertook.
The theory defines how the social setting and structure within an organization can be bale to effectively define the social behavior of its employees and the management in general. BP organizational design did not generate cognitive as well as cultural explanations in its strategies. Institutional strategy defines that the indicated set of rules and regulations must be in line with the surrounding environment. BP failed in its mandate to preserve the environment by the oil spill, which led to the death of marine life as well as loss of human life.
Organizational framework at BP was mandated to preserve the environment in both its procedural and structural setting. Lack of institutional support from the board of management resulted in the poor performance in BP’s effort to preserve the environment. Lack of communication within the organization can lead to misunderstanding and hence constrain the perfect working relation between different parties. The organizational strategy offered an opportunity for more productivity within a short time while ignoring the long term effects of the structure in terms of financial costs. In the ultimate long run, the organizational strategy was never to sustain long term financial cost of the organization. In initiating this new model of organizational design, the management at BP did not reflect upon the consequences that could be caused to the environment in terms of safety measures. In order to achieve some mileage in business, an organization has to make some sacrifices and this was not the case at British Petroleum. As a result of this situation, many people described BP as a risky organization that should not be involved in the conservation of the environment.
It is worth stating that the structural change and the cultural setting at BP initiated with the changes should have been in a good position to uplift the organizations marketing strategy. Despite efforts by BP organizational design to cultivate a profitable environment, the results obtained were disastrous. The only solution that remained in terms of controlling the situation was to change the cultural setting. The reflection has illustrated how the management did not respond to the impending challenges that were now facing them. For instance, the problems led to excessive cost cutting as well as reflecting on its own profitability. BP organizational strategy did not take into account environmental responsibility and the culture being cultivated within the organization meant that employees and managements did not take any step forward towards environmental conservation. Furthermore, BP strategy towards the environment resulted to the organization being listed as one of the worst organizations in terms of human rights and environment conservation.