The Diemen Car Interiors Firm’s Organizational Design

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Table of Contents

Introduction
Bureaucratic Design Types
Situational Analysis
Diagnosis and Recommendations
Conclusion
References

Introduction

Diemen Car Interiors is a company that has problems with the ornamentation of operations. This is due to the fact that the business owners adhered to hierarchical management principles and family values. As a consequence, this strategy resulted in rank-and-file employees working under instructions and not being able to voice their own opinions. External factors, though, demonstrated the importance of changing the management approach and paying significant attention to Diemen Car Interiors’ employees.

Bureaucratic Design Types

The organizational structure of a company can have a bureaucratic design with many levels of management. That is, from senior management to regional executives and department store supervisors. A bureaucratic organization has rigid procedures, policies, and restrictions (Crozier & Friedberg, 2017). Businesses using this type do not desire to adapt or change what they have been operating since the inception of the company. Organizational charts exist for each department designed to regulate their work. Decisions are made through organized bureaucracies, power is at the top, and information flows from the highest to the lowest level restrictions (Crozier & Friedberg, 2017). This creates more rules and standards for the company, whose operational process is monitored carefully.

It is significant to emphasize that bureaucracy design has considerable theoretical support. According to Weber, the dominant form of virtually all organizational systems is the rational-legal type of power, in other words, bureaucracy (Cochrane, 2018). The reason for the effectiveness of bureaucracy is the use of the instruments that best produce the desired goal. Although, the negative side is that the power of bureaucrats is based on order, and therefore obedience to them is not voluntary. Identifying a type of administrative bureaucracy that corresponds to Weber’s model is possible (Cochrane, 2018). It should be noted that management workers in this type of bureaucracy utilize little professional knowledge since their primary duty is to perform general managerial functions. The significant advantage of apparatus bureaucracy is the stability of the functioning of the organization and the work of its governing body. Meanwhile, the administrative bureaucracy has rather substantial drawbacks, the principal of which is the danger of such a negative phenomenon as “bureaucratism” (Cochrane, 2018). In addition, bureaucracy tends to organize work insufficiently motivating and fully utilizing employees’ mental abilities and psychological characteristics.

The next type is the professional bureaucracy, which has managers with deep theoretical and practical knowledge in narrow areas of activity and limited role requirements. Such bureaucrats’ main points of activity should be considered a high degree of specialization and competence. As a rule, such managers focus not only on the management process but also on the conditions of this process. As a result, professional bureaucracy is less formalized, and managers have more freedom in management decisions within the framework of their role (Cochrane, 2018). As in administrative bureaucracy, jobs are grouped according to functional and hierarchical principles, and managerial decisions are made at a central level. The advantages of professional bureaucracy should include the ability to perform extraordinary assignments that require applying professional knowledge (Cochrane, 2018). In addition, a higher motivation of employees to achieve the organization’s goals. Nevertheless, it should be recognized that the effectiveness of professional bureaucracy sharply decreases when the organization operates under stable conditions.

Finally, the third type is adhocracy, a form of bureaucratic management that emerged relatively recently. This form of bureaucracy is fundamentally different from Weber’s ideal model (Mouzelis, 2017). At least the managers do not have a strict division of labor, clear hierarchy, or minimal formalization of activities. One of the significant features of adhocracy is a high degree of vertical differentiation. In this case, the central managers are professionals in extremely narrow areas. However, as a rule, the organization that uses this form of management has a low degree of vertical differentiation (Mouzelis, 2017). Adhocracy provides a quick response to changes in all components of the organization and the external environment. This type is most effective in modern conditions and has a promising future.

It is significant to mention that Diemen Car Seat Covers (DSCS) attempted to conform to family values. The peculiarity of the company’s management was that only the closest relatives of Thomas van Diemen could occupy managerial positions (Anderson, 2017). Thus, the closest relatives of the owner of the company had administrative functions and were educated accordingly. However, their knowledge and experience were not sufficient for productive operations. This indicates that Thomas van Diemen had a bureaucratic management style, and the family’s involvement was to provide stability in the firm (Anderson, 2017). After the sale of the company, Jan Ommens became the owner, who also believed that family values should be promoted in the business. Nevertheless, the impact of the market and competition demonstrated the significance of communicating with employees and creating a comfortable environment for all workers. In 1994 Jan and Hank Ommens decided to split the business to develop it separately (Anderson, 2017). During this, the company was named Diemen Car Interiors, and Jan invited experienced professionals, not family members, into management positions. Thus, the owner gradually started to give up the bureaucratic management style.

The change in the company’s management style was that each worker had a voice, and in this way, it motivated them. However, Jan remained a supporter of the bureaucratic management style. For example, when the company was trying to obtain certifications, Jan suggested that a quality management system profession be developed. Thus, these were detailed descriptions of practices and protocols typical of bureaucratic design (Kanter, 2019). In my opinion, business in today’s world cannot grow if managers practice bureaucracy. That is because it restricts workers and prevents them from expressing their ideas (Kanter, 2019). Standard procedures and practices cannot replace motivation. Moreover, the head of Diemen Car Interiors gradually attempted to escape this style, but the desire for new opportunities in the marketplace contributed to creating new rules. Thus, it led to the fact that employees did not propose their initiatives.

Situational Analysis

Modern organizations are open systems, the internal stability of which depends on the conditions of the external environment. This determines, firstly, the importance of the external environment for the successful operation of enterprises and companies (Ansoff et al., 2018). Secondly, the role of a properly developed and established interaction mechanism between the enterprise and the external environment. This is significantly facilitated by considering and analyzing external environmental factors in management activities (Ansoff et al., 2018). Therefore, the external environment of the company is a set of forces and factors that affect the activities of the organization and its performance.

It is significant to mention that Diemen Car Interiors operates in a market with many competitors. The competitor-filled external environment influenced the internal functioning of the company. For example, the leadership aimed to obtain ISO/TS certifications to become top players in the industry (Anderson, 2017). As a consequence, this intensified the bureaucratic style of management. Another aspect of the company’s external environment is that competition in the sector was high due to overcapacity and constant search for innovations. The leading companies such as Ford and General Motors were attempting to comply with modern environmental standards and enhance the safety of cars. Accordingly, Diemen Car Interiors has been increasing the costs of textiles for automotive applications to ensure that leading automotive companies would work with Diemen Car Interiors.

In addition to external factors, internal and cultural factors also significantly influence. According to Hofstede’s theory, there is a hierarchical distance at Diemen Car Interiors (Beugelsdijk et al., 2017). This is because the company follows family values, and relatives of the owner form the basis of management. This reflects the focus on the power and authority of the managers. Meanwhile, the organization has standards and rules, followed by the rank-and-file employees, which means an orientation towards collectivism. Although, in response to external changes, the company owner began to focus on each employee and listen to their opinions (Anderson, 2017). This policy in the company was short-lived because Jan decided that uniform standards would enable the organization to become a leader in the marketplace.

The company has a low-risk appetite since a request for approval of a new product can take months or even years. Accordingly, this suggests that Diemen Car Interiors tends to avoid change (Beugelsdijk et al., 2017). According to Hofstede’s theory, the next factor is the superiority of masculinity or femininity. In Diemen Car Interiors, the owners of the company were men. Therefore, it indicates the level of importance to the culture of traditionally masculine values, such as assertiveness, ambition, desire for power, and materialism (Beugelsdijk et al., 2017). Moreover, Diemen Car Interiors has a long-term orientation of using bureaucratic leadership design to generate sustainable economic benefits in the future. Thus, the analysis under Hofstede’s theories of cultural dimensions indicates that the culture at Diemen Car Interiors has a closed and traditional character.

In contrast to Hofstede’s theory, a more popular model explaining the structure of organizational culture is Schein’s three-level model. According to Schein, institutional culture has three stages: the level of artifacts, the degree of proclaimed values, and the level of underlying assumptions, which differs significantly from the characteristics that Hofstede uses (Denison et al., 2004). It is essential to emphasize that the first level includes the organizational customs and rituals in the company. Accordingly, at Diemen Car Interiors, managers do not present events with a high degree of emotional involvement of employees. According to Schein’s model, the second level has values, perceptions, and beliefs shared by members of the organization (Denison et al., 2004). Thus, considering family connections bind the organization’s management, they share common values. However, ordinary employees do not always transfer and understand them, which leads to their automatic fulfillment.

The third, deep level includes basic assumptions that are difficult to realize even for the organization’s members without focusing specifically on this issue. That is, Shane proposes to explore the common mentality of employees and perception of the world in the organization (Gelard & Samadzadeh, 2017). In Diemen Car Interiors, senior family members held leadership positions who did not always agree with the main views of the employees. Therefore, this did not allow the company to form a single mentality that can be considered at every level of workers.

Hence, comparing the theory of Schein and Hofstede, it can be concluded that the cultural factors in Diemen Car Interiors are heterogeneous. This indicates that the bureaucratic management style the company owners applies is aimed at the external environment and gaining advantages over competitors in the market (Gelard & Samadzadeh, 2017). Instead, both theories conclude that the internal culture needs to develop and change the management style. To ensure that staff are united by common values and have the opportunity to propose their ideas to the company’s management openly.

In my opinion, Shane’s theory is not adapted to the internal culture of Diemen Car Interiors. This is because the author of the theory focused mainly on concepts such as shared values, mentality, and the emotional connection between employees (Gelard & Samadzadeh, 2017). Considering that Diemen Car Interiors is a family-led company that promotes family values, this leads to their dissemination at the senior management level. In contrast, regular employees do not share the same value system because they do not belong to the executive family. Consequently, the company faithfully follows management’s orders, but workers lack general motivation. Nevertheless, Hofstede’s theory better describes the company’s internal characteristics than Shane’s three-level model (Beugelsdijk et al., 2017). I believe this is due to the fact that Hofstede focuses on various factors, ranging from hierarchy to gender distribution. Accordingly, Hofstede’s theory describes the main internal cultural characteristics of Diemen Car Interiors.

Diagnosis and Recommendations

The first factor requiring change is the coordination of efforts around interesting opportunities. In bureaucratic systems, coordination is based on rules, procedures, and regulations (Ramadani et al., 2017). In order for Diemen Car Interiors to satisfy market demands, it is essential to propose quick and innovative solutions to customers. Thus, the company’s first stage of organizational system reform should focus on personnel changes and training. Accordingly, employees should be enabled to launch new projects and choose independently which ones to work on. Working groups are formed spontaneously to implement more exciting abilities without any strategic plan or product development scheme (Ramadani et al., 2017). This approach will stimulate the creative ideas of the staff. However, additional training should be arranged for the employees, and communication and interaction skills of staff and management have to be an essential part of the course syllabus. To implement this, the business can request professional trainers who will simulate certain situations and demonstrate effective methods of their solution.

Alternatively, during the first phase of the Diemen Car Interiors internal environment reform, the owner can organize a meeting of all employees. In this way, the manager will immediately present the company’s new strategic vision and explain the fundamental changes to the workers (Ramadani et al., 2017). Accordingly, it is possible to attempt on an experimental basis to organize effective communication between different levels of the workforce and provide them with the freedom to express ideas. In this way, if the organization’s staff can successfully perform their work in the new format, then the coach’s intervention is not required (Ramadani et al., 2017). This strategy can immediately be implemented during the usual activities of Diemen Car Interiors.

The next stage of the first phase is to change the decision-making process in the organization. In a bureaucratic structure, decisions are made according to the hierarchy: superiors tell their subordinates what to do, which is repeated at all levels (Algaba et al., 2018). A more effective method is when decisions are made through reasoned discussion, and everyone has the right to express their opinion. Thus, employees must gather information to convince their colleagues that they are right (Algaba et al., 2018). Meanwhile, Diemen Car Interiors management should not express negative opinions when staff members present new ideas. This is because such a way enables them to stimulate the development of innovativeness in the firm.

As an alternative way to improve the decision-making process at Diemen Car Interiors, one could suggest the creation of a department to coordinate. Employees of the department would be capable of analyzing all employees’ ideas and suggestions and providing them to the management. Meanwhile, they would also provide feedback from management to employees (Algaba et al., 2018). Thus, such a well-functioning system will demonstrate to ordinary workers that their ideas are valuable. In addition, the feedback will provide employees with a view of the opinions of the general managers and the basic expectations of the business.

Nevertheless, the management of Diemen Car Interiors has already started to undergo personnel changes. Jan gradually began to replace his relatives with other professional employees. When implementing a succession strategy, it is essential to assess the ability of people in leadership positions to adapt to change. Hence, if the relatives of the owner of Diemen Car Interiors cannot change their own standards of management and communication with employees, they should be replaced with new and professional leaders. This will ensure productive activities at all levels of the business.

The next phase of changes must be implemented after the previous stage has been successfully completed. The main element is motivating employees by expressing appreciation for their results. Bureaucratic systems tend to prefer external motivation; it is primarily money (Herzberg, 2017). However, it is also important to rely on internal incentives, that is, the desire of people to achieve success and recognition. Thus, the emphasis is necessary to create an interesting job for employees and opportunities to become a recognized masters of a particular field (Herzberg, 2017). Moreover, the corporation’s management can use Herzberg’s theory, which is proposed to use external and internal methods to enhance the performance of the enterprise.

External methods imply the creation of comfortable working conditions. In contrast, internal is the emergence of employee satisfaction from working in the organization. According to Herzberg, those employers trying to increase their employees’ motivation by raising wages will be disappointed in the end (Herzberg, 2017). This is because after the employees get used to the new salary level, they most likely consider the salary a hygienic factor. Moreover, from the moment when the increased payments become a standard component of the wage, they will immediately cease to motivate people. Therefore, Diemen Car Interiors managers should provide successful employees with recognition in the company. It provides a person with a sense of self-respect and dignity. In addition, career growth and additional responsibility are excellent motivators for many individuals (Baran et al., 2018). This motivator can be considered in conjunction with the replacement of management personnel who cannot adapt to the new management style.

Companies often have difficulties with restructuring during a crisis. In the third phase of reframing, two alternative options should be considered. In many cases, the first measure to be taken in an emergency is to de-bureaucratize. In this situation, managers should mobilize themselves and start reducing redundant bureaucracy. This helps save money and understand how to improve the company’s work, which frameworks and rules are excessive (Baran et al., 2018). Therefore, it is possible to attract hired top managers who have significant success in solving crisis issues. Accordingly, they will create an action plan based on the external environment and provide priority strategies for implementation. In Diemen Car Interiors, the transition to ecological raw materials requires the involvement of professionals who have already implemented it (Gao et al., 2014). Therefore, they can be offered advisory positions in departments that will deal with the environmental sustainability of textiles. This will attract experienced staff to a particular issue, accelerating the solution of the crisis situation.

Alternatively, it can be suggested to solve the problem with the help of existing employees. Therefore, the owner of Diemen Car Interiors needs to set the overall goal of transforming the business processes. Accordingly, it is essential to launch lean production and modernize work processes to switch to environmentally friendly raw materials cost-effectively (Gao et al., 2014). In this way, employees will understand the ultimate objective and the challenges that the organization faces. This will allow them to mobilize their forces and work overtime at their request to unite the team. Therefore, Diemen Car Interiors improve the standards of seat covers production (Gao et al., 2016). Moreover, such crises can unite the team and contribute to the creation of an effective team.

Therefore, the recommendations provided identify and solve existing problems at Diemen Car Interiors. At the same time, they aim to improve team relations and the distribution of shared values between management and regular employees. As a result, the business can gain significant competitive advantages in the external environment, including flexibility and innovativeness (Gao et al., 2016). Accordingly, Diemen Car Interiors has the opportunity to become a leading player in the market and to cooperate on a permanent basis with renowned car manufacturers.

Conclusion

Therefore, the business executives from the beginning respected the principle of management, according to which family values and connections were in the first place. Thus, the company formed a model of bureaucratic control, as external actors adopted liberal forms under the influence. However, the basic tenets of the bureaucratic theory were adhered to by business leaders. Later, Jan Ommens, the owner of Diemen Car Interiors, began adapting the business to the new market requirements. The owner started appointing experienced employees to management positions rather than relatives. Although these variables were insignificant, the strategy did not allow the company to adjust quickly to the requirements of the leading car companies. Thus, the main problem, specifically the management hierarchy, is the provision of instructions to perform tasks. Moreover, the absence of motivation and the inability of employees to express their ideas led to the need for organizational changes.

Accordingly, the manager of Diemen Car Interiors should communicate directly with the subordinates and provide them with feedback through the new department. This will allow workers to appreciate the significance of their ideas to the company and increase employee motivation. Moreover, changing the hierarchical structure and appointing successful employees to administration positions helps to spread shared values among the entire staff. At the same time, encouraging the workers to express their innovative ideas is a prerequisite for overcoming crises at Diemen Car Interiors.

References

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