Management Principles: Organizational Structure

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S.K.M Air Conditioning LLC Company

S.K.M. Air Conditioning L.L.C. is a large organization situated in the Middle East, which specializes in the production of indoor heating, ventilation, and air conditioning products. The company has undergone significant technological and machinery developments, which enabled it to grow from an outsourcing manufacturing company to one of the biggest manufactures in the Gulf region (“S.K.M. Company Profile,” 2020). The primary goods produced by the firm include air handling units, chillers, packaged air units, condensing, split, decorative units, swim pools, and ducted mini-split systems. The establishment has over fifteen hundred employees working across eight different countries. It also supplies its products to over 30 countries located in the Middle East, Africa, and Asia.

Vision, Mission, and Core Values of the Organization

Vision

“To grow internationally with competent products and employees to provide consistent quality and customer satisfaction” (“S.K.M. Company Profile,” 2020).

The company’s vision provides the firm with a sense of purpose and direction for its business strategies. For example, since its inception, the establishment has been expanding its production facilities to meet the needs of its market base. This has seen the organization grow from a local business in an industrial area situated in Sharjah into an internationally-recognized manufacturing company.

Mission

“Total Customer Satisfaction” (“S.K.M. Company Profile,” 2020).

The company strives to achieve total customer satisfaction by providing premium quality products to its customers in all geographic locations. It also offers a product portfolio each tailored towards achieving an optimal indoor environmental quality.

Core Values

The company does not have any explicit core values

Slogan

“You name it …We cool it” (“S.K.M. Company Profile,” 2020).

The slogan serves as a brief representation of the company’s goal. It tells its consumers that the company can provide cooling solutions for their household or commercial needs.

Importance of Social Responsibility and Ethical Behavior in an Organization

Business ethics constitute the moral principles that guide the decisions and conduct of a company. Ethics steer various organizational operations, for instance, corporate governance, advertising, product safety and liabilities, pricing, and human resources practices. Business ethics and social responsibility can help a firm protect the interests of key stakeholders, build a positive brand image, and promote a company’s profitability. Furthermore, moral behaviors also play a crucial role in protecting and safeguarding customers’ interests and rights by preventing malpractices such as adulteration, unfair pricing, and artificial duplication of products. Consumers have the right to safety, informed consent, and the right to redress.

A company’s compliance with consumer protection laws and regulations will facilitate the safeguarding of its clients’ overall health and safety. However, business ethicists argue that compliance with consumer protection laws is distinct from organizational ethical behaviors. A firm’s adherence to regulatory statutes may be motivated by fear of the repercussions associated with violating the legislation (Byars & Stanberry, 2018). On the other hand, ethical compliance underscores the extent to which individual leaders can conduct themselves in the absence of law. Therefore, an ethical organization will establish and enforce policies that protect consumers’ rights and interests regardless of the legal provisions.

Ethical behaviors can also protect the rights of employees within the company. Human resource managers are mandated by the law to foster positive working environments through ethical leadership. They are expected to develop policies that promote and enhance fairness, justice, and equitable treatment for all workers. Professional organizations advocate for workplace environments that are free from unlawful discrimination and harassment. Adhering to these ethical guidelines will promote a trusting and conducive working surrounding for all staff members within a firm.

Social responsibility and ethical behavior can help the company build positive relations with the public and develop a positive brand identity. Toyota is an impressive example of an organization that successfully made a positive corporate image by engaging in fair and honest pricing of their products (Byars & Stanberry, 2018). In response to the public’s perception that Japanese cars were cheap and unreliable, Toyota decided to reduce its prices to alleviate the price discrimination faced by its customer base in the U.S. The outcome of this decision was a long-standing relationship and trust between the firm and the public.

Social responsibility and ethical practices can also facilitate the profitability of a company. A business’s lucrativeness can be determined by several reasons, including its business management practices, the value of its product or services, and its human capital, commitment, and productivity. Profitability cannot be measured by short-term outcomes but rather a balanced long-term perspective of profit maximization. Funding charities, investing in employees’ social well-being, and going green can boost consumers’ and workers’ commitment, resulting in long-term business profits (Byars & Stanberry, 2018). A famous example of an organization whose social responsibility is deeply embedded in ethics is the Merck Company.

In 1970, Merck decided to manufacture a drug for treating River Blindness for free since millions of people afflicted with the condition could not afford the medicine. Today, Merck Company is one of the largest drug manufacturers worldwide (Byars & Stanberry, 2018). The organization’s practices naturally attracted loyal customers and stakeholders, which, in turn, facilitated its success. An establishment engaging the public in its businesses or affairs has a reciprocal obligation to protect it from any negative malpractices. Although implicit, all firms have a social contract to provide indirect or direct benefits to society. Within the context of pursuing profitability, an organization must generate wealth in a manner that adds positive value to society.

Importance of Effective Leadership for the Success of the Organization

Leadership is a combination of skills, attitudes, and competencies, which can sustainably influence others. It is pivotal in the attainment of organizational outcomes, effectiveness, and efficiency. Modern businesses are characterized by instability in the socio-economic and political environments of the company. Consequently, firms have to adjust to the rapid changes to increase the probability of surviving in a highly competitive business surrounding. The complexities of such dynamic environments demand that an organization has productive management to direct them through the changes seamlessly. Effectual leadership can trigger a company’s success through three mechanisms: effective change management, shaping organizational culture, and facilitating learning.

Manage Organizational Change

One of the essential roles of a leader is to initiate and manage organizational change. Influential leaders develop a clear vision for their companies and direct the workforce towards achieving that vision through influence. Changes can occur at three levels in the organization: individual, team, and organizational (Hao, & Yazdanifard, 2015). The process mentioned above involves identifying an area of improvement, developing a vision for the project, helping employees adapt to the change, and finally sustaining the organization’s implemented project (Hao & Yazdanifard, 2015). John Kotter developed an eight-step process for planning and implementing changes within an organization. The procedure involves creating a sense of urgency for change, consolidating a team that will spearhead the action plan, building a vision, communicating the changes to employees, removing barriers to change implementation, and finally empowering employees by incentivizing small wins.

To sustain the implemented changes, leaders have to develop and apply quality improvement initiatives to evaluate the progress and impact of the executed changes in the institution. By always spearheading and managing this process, the leader will help the firm gain a competitive advantage. The productivity and effectiveness of a team within an organization directly impact the performance of the organization (Hao & Yazdanifard, 2015). A leader’s purpose is to ensure that he or she promotes the team’s success or accomplishment by fostering effective collaboration, communication, and teamwork. At the individual level, influential managers can help the workforce optimize their achievement and contribution to the firm through capacity building. For example, transformational leaders use intellectual stimulation strategies to motivate employees to tap into their creativity and independently solve their day-to-day problems.

Shaping Organizational Culture

Organizational culture plays a significant role in shaping the behaviors of employees. It reflects workers’ values, attitudes, actions, and norms in an organization. Ineffective cultures are characterized by toxic work environments, interpersonal conflicts, poor communication, and ineffective collaboration, which, according to Hao and Yazdanifard (2015), can negatively affect the company. A poor organizational culture can result in job dissatisfaction, low commitment levels, and decreased employee performance (Hao & Yazdanifard, 2015). With effective leadership skills, a firm can foster a positive work environment and culture. The nature of leadership behaviors in a company will influence staff practices, perceptions, and attitudes about their work. The efficacy of organizational leadership can be judged by the social control of workers’ behaviors and beliefs within that organization.

Facilitate Learning and Professional Development

Various studies have established the relationship between professional advancement and organizational outcomes. Evidence indicates that career development can improve job satisfaction, employee self-efficacy, motivation, and job performance (Mourão, 2018). The education level, skills, and competencies of a company’s workforce directly influence its performance. Advanced skillset is associated with the sophistication of processes and innovative solutions to organizational problems. Effective leadership in a firm promotes and maintains employees’ expertise for optimal performance of the organization. Kolb’s experiential learning theory asserts that learning can be achieved through experience, observation, experimentation, and abstract conceptualization (Mourão, 2018). Therefore, leadership should create an environment that nurtures a culture of learning and subordinates’ positive skill development.

The Role of Management in Modern Organizations

Management refers to the use of positional authority to obtain compliance from employees. Typically, leaders single-handedly direct the company towards the desired goal without the need for organizational participation. Managers are responsible for organizing production processes and accumulating and allocating resources adequately to ensure the workforce achieves its goals. Henry Mintzberg identified ten managerial roles, which he categorized into three major groups: informational, interpersonal, and decisional (Toymasyan, 2017). The interpersonal roles of managers include figurehead, leader, and liaison. The figurehead has ceremonial and social responsibilities such as meeting dignitaries or attending events. The leader motivates and encourages employees through the use of authority. The liaison creates links and contacts with external sources, including trade and governmental organizations and peer managers from other companies (Tovmasyan, 2017). The informational roles of leaders include monitoring, disseminator, and spokesperson. The monitor examines the internal and external environment of the business. They also assess business practices and processes to establish the company’s productivity.

The disseminator shares information with subordinates and superiors. The spokesperson works as a representative of the company to external entities. The third category, the decisional roles, involves making critical decisions regarding the company (Tovmasyan, 2017). For example, the entrepreneur creates and controls conditions that will promote the successful initiation and implementation of projects at the company. A disturbance handler responds to pressures and conflicts that may be disruptive to the business environment. The resource allocator decides the type and quantity of resources that should be allotted to each project. The negotiator handles essential discussions within the organization’s teams and between the company and external entities (Tovmasyan, 2017). Planning, organization, delegation, and motivational managerial roles require managers to possess good communication, decision-making, collaborative, and critical thinking skills.

Organizational Structure and the Job Specialization Used

Mr. Abdul Karim Al Saleh, the Chief Executive Officer of S.K.M. Company, is the firm’s administrative head. He reports to the chairman of the Board of Directors and is accountable for the company’s performance to all stakeholders and partners (“S.K.M. Company Profile,” 2020). The company adopted the divisional organizational structure because it is categorized into small sections which operate in different geographic regions. The divisions run in Asia, Africa, and the Middle East, with each branch running its business operations and resources. Despite the geographical compartmentalization, the divisions assume the parent company’s brand name and identity in Sharjah.

The geographical divisions of the company adopted a departmental hierarchical organizational structure. At the top of the hierarchy is the division manager, followed by departmental managers, and lastly, the general employees. Hierarchical departmentalization helps the organization to effectively coordinate its operations as it depicts the degree of role differentiation within the organization (“S.K.M. Company Profile,” 2020). Each geographical division consists of six central departments, including production, sales, marketing, business development, accounting and finance, and the H.R. & Administration department.

All employees at the company work within the departments mentioned above and are committed to achieving their respective division’s outcomes. The leadership and management of these departments are hierarchical- the chain of command in the organization runs from senior executive management to general employees (“S.K.M. Company Profile,” 2020). The departmental leaders in each division are subordinates who report to the C.E.O. of the parent company. Furthermore, the employees in each geographical division are grouped functionally depending on their specialties. The department leaders in each have delegation authorities and are responsible for developing the job design, tasks, activities, and job requirements within their divisions.

Conclusion & Recommendation

The organizational structure of a company helps to define the power hierarchy within an organization and job specialization. The S.K.M. Air Conditioning L.L.C. is a major manufacturing company in the Gulf that specializes in the manufacture of indoor heating, ventilation, and air conditioning products. The company has adopted the divisional organizational structure, which is characterized by geographical divisions headed by managers. The segment (company branches) assumes a hierarchical leadership/management style with the executive manager at the top of the hierarchy and general employees at the bottom of the rank. Managers’ roles include leadership, monitoring, liaising, figurehead, disseminator, spokesperson, entrepreneur, disturbance handler, and entrepreneurship. The primary function of a leader in regards to increasing organizational performance and outcomes include facilitating learning and professional development, fostering positive corporate culture, and spearhead changes within the organization. Managers should always use critical thinking skills, communication, and decision-making skills to improve organizational outcomes.

References

Byars, S. M., & Stanberry, K. (2018). Business ethics. Openstax.

Hao, M. J., & Yazdanifard, R. (2015). How effective leadership can facilitate change in organizations through improvement and innovation. Global Journal of Management and Business Research (Administration and Management), 15(9), 1 – 5.

Mourão, L. (2018). The role of leadership in the professional development of subordinates. In S. D. Goker (E.d.), Leadership (pp. 124 – 138). IntechOpen.

S.K.M company profile: About us (2020). SKM Air Conditioning. Web.

Tovmasyan, G. (2017). The role of managers in organizations: Psychological aspects. Business Ethics and Leadership, 1(3), 20 – 26. Web.

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