Organizational Development: Sprockets Cycles Case Study

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Background

Sprockets Cycles represents a business that has been stuck in a highly conservative and non-innovative culture and organisational structure. Despite being only a local repair shop, this management and organisational approach has left it uncompetitive likely due to lack of efficiency and not being able to meet the demands of modern consumers. The success of a business stems not only from its products or business model, but the organizational formation and workplace that is behind it as well. This paper will examine how the internal structure of Sprockets Cycles can be reformed to generate better outcomes for the business under new ownership.

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Organisational Development Overview

At its core, organisational development (OD) is a systematic and planned process to enabling sustainable performance and building the capacity for change and improved effectiveness. This is done in two ways, by developing and reinforcing strategies, structure, and process as well as making that there is an alignment within its strategy, people, management processes and structural parameters. Goals for organisational development may vary by the business itself, but it is important to consider that OD is an ongoing and systematic change process that seeks to improve performance, with one central goal being almost universal, to increase competitiveness. It is important to differentiate OD from ad hoc change or change management projects, rather it is a system change for organisations which allows to build and sustain a new status quo (Rothwell, Imroz & Bakhshandeh, 2021).

Organisational development is an inherently complex process. In its simplest form it consists of five phases (seen in graphic below): entry, diagnosis, feedback, solution, evaluation (Association for Talent Development, n.d.). Other models may add or skip phases, but this is the most fundamental approach to OD. Using this systemic change mindset of comprehensively analysing an organization, interventions and initiatives are development to address elements in the business which are missing. Interventions in OD can be classified as 1) human processes (team building, group), 2) human resource management (employee management, engagement, succession planning), 3) techno-structural initiatives (structural change, work design) and 4) strategic (culture, leadership, transformation). Using systems theory, OD can use various models of organisational change to generate the necessary shifts, these can include Lewin’s three-phase model, Burke-Litwin model, the Nadler-Tushman congruence model, and others (Anderson, 2017).

Organisation Development Strategy

Sprockets is a business inherently in crisis, including in its performance indicators, management structure, and workplace environment. OD presents an opportunity for change at organisational, group, and individual development on the four levels described earlier. The OD interventions are vital for Sprockets to enter crisis management mode and survive as a business (Lalonde, 2010). It is evident that the company needs to adapt or face decline. The various elements which shape organisational adaptation stem from both internal (structure, management) and external (competition, innovation) environments. Organisations need to shift focus, restructure roles or management, develop and modify goals, and generally redesign themselves (National Research Council, 1997). Since organisational change is commonly difficult to navigate competently, the process of organisational development should be implemented with its systemic approach that can mitigate pitfalls while helping the company reach its best potential in difficult and risky market conditions.

At its core, organisational development focuses on broad concepts: organisational structure and employee development. These are the underlying issues facing Sprockets which generally has a good brand image and services but struggles in other aspects of performance and management. This is due to the vertical bureaucratic structure which limits decision-making and input from employees at various levels. The HR department is largely irrelevant while employees have little potential to develop in their respective roles or contribute to organisational change processes. That is why OD is a good fit for Sprockets. It will help to define the structure and formal division of responsibilities, establishing how and who is making the decisions and how various parts of the company are grouped and coordinate with each other. Furthermore, OD opens up the potential for HR and employees to participate in the change processes, expressing their needs, and creating an environment in the company where employees can learn, develop and contribute at all levels (Moore, 2008).

New Structure

Sprockets is a bicycle repair shop small business; therefore, its main output is the service of fixing bicycles. Service organisations exist to market services rather than products. The best organisational structure for a service business is one where employees can take on different roles if needed and collaborate with each other using interpersonal and technical skills to work with consumers and members of the organisation. A suggested new structure for Sprockets is a semi-decentralised flat structure that maintains a unitary organisational architecture. There is still one person in the executive position as CEO/executive manager. Then there are divisions within the company, each responsible for their respective business function. For example, Sprockets can have sales/customer service, HR, technical/repair, and marketing departments respectively.

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Administrative s visualised below:

New Structure

As evident, there will still be an executive position, and some level of hierarchy. However, the CEO will be responsible for providing direction, setting objectives, and overseeing performance. The final decision-making on major company-wide decisions will be up to the CEO, but the company will employ a participative, democratic style of culture and leadership in the workplace where employees will participate and voice opinions on major decisions affecting them. Meanwhile, each respective unit department will oversee their own operations. Since this is a small business, it not likely that any department will need a manager, as the 1-3 people working there can cooperate on their own with the CEO available for any managerial insight if necessary. Since it is a decentralized structure, employees will have the opportunity or may be asked to work between in between these units, both to gain experience and establish a line of communication. HR will be the only department that will remain unchanged and separate as it has sensitive responsibilities that requires it to remain impartial and distant from other employees.

One company that maintains a similar structure is Netflix, which is unique for a corporation of that size. However, it has made significant breakthroughs in promoting this type of flat organizational structure which provides for much flexibility. There is executive control stemming from the CEO and headquarters, but departments are given free reign to work on the company-wide projects or their own developments as they desire using methods that are effective for them. Both at the individual and at the department level, employees are provided freedom and little oversight, but are evaluated strictly on their performance and capabilities. The organisational structure allows for support of strategic management and the ability to accommodate new units as the business evolves, eliminating many of the bureaucratic hurdles that corporations face with vertical hierarchical structures (Hastings &Meyer, 2020).

The proposed organisational structure can be best described as functional, where the hierarchy is based on the job role of each employee, with groups of employees such as HR personnel, or technicians working in their respective departments towards a common goal for the business. However, the decentralized approach with blurred boundaries provides some flexibility for the business. It offers more flexibility as unlike large organizations, small businesses may be reliant on a few number of employees, and sometimes they may be absent or simply lack the capacity to perform the task. The collaboration and interchangeability of specialty skills give the company much more adaptability and resilience. If then a company cannot fulfil something in-house, it outsources the work as necessary. Overall, the proposed structure would be easy to implement with a relatively minimum amount of training. The flexibility will also highly likely to produce cost-saving measures for the business in the long-term and ensure greater efficiency as departments would communication and understand all steps of the process of the service provision that Sprockets offers. Employees are aware of each other’s roles, can contribute to interdepartmental productivity, and there is much more cooperative and friendlier workplace atmosphere in this type of structure.

Organisational Development Methods

OD offers three different strategies to large-scale interventions – behavioural, structural, and technological. The best applicable OD strategy for Sprockets is structural, focused on structural and design change as the primary response. As a result, new relationships and connections are formed within the company that lead to improved performance. Rothwell et al. (2021) propose four unique structures to organising change efforts on a large-scale. The best approach for Sprockets would be ‘The Shadow Organisation.’ Here, the change effort requires organisations to create a separate organisational chart of specialized teams, and teams engage in the change effort based on set milestones, focused on their specialisations and operating within their existing respective divisions targeting milestone for their specific areas (Rothwell et al., 2021). Since Sprockets is a small business that has been and will be largely a unit-based functional division, this change effort approach would be best suited for it as it does not focus too much on the individual or create separate structures like other approaches.

Another OD method that could be highly effective is the Whole System Transformational Change or WSA. It seeks to coordinate and plan multiple change initiatives into one structured collaborative change aspect. The system focuses on engaging both internal and external stakeholders including management, employees, vendors, customers, contractors to have them invested or contributing to change. WSA is a method focused on employee engagement to generate key performance. As a result of this approach, the speed of change is accelerated. Cooperation is stimulated, there is built commitment, and reinforcement of teamwork, generating organisation-wide ownership of all the change efforts. At the same time, organisational self-reliance and resilience is built for future sustainability and optimal performance. This is also the best way to achieve fundamental change and ‘reinvention’ of a company at the structural and cultural levels (Rothwell et al., 2021).

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Restructuring as part of organizational development does not occur often, it is more commonly targeted measures such as team training, revamping the product line, diversity and inclusion trainings. However, when a business faces serious issues such as Sprockets with a structure and management that is not working, it is necessary to reinvent the company. One great example of such OD intervention is by Microsoft in the mid-2010s. After naming a new CEO, the company undertook major restructuring efforts after stagnating performances and falling behind competitors alongside having a toxic environment, highly ineffective management, and a highly divisive work environment. The CEO Satya Nadella undertook major restructuring aimed at bringing the company together through common objectives. New functions were introduced to reinvent productivity and business processes. A new mission was established as a guidance and the organisation sought to focus innovation on product lines where Microsoft is successful. Nadella made sure that the major departments no longer viewed each other as competitors but rather as partners for the greater benefit of the company (Dhillon & Gupta, 2015).

Just as Microsoft implemented OD on a systematic level, restructuring its departments, shifting the company culture, and reinstating cooperation, similar measures should be undertaken at Sprockets. The strategy for Sprockets consists of implementing technostructural interventions. The organisational structure will change, with an appointed CEO and the flat hierarchy and unitary architecture. Work design will be shifted, with responsibilities assigned to each department and establishing a common company-wide, step-by-step and efficient process for each type of service. As part of work design, job enrichment will occur where personnel will receive additional training and new responsibilities working with new tools, technologies, techniques, as well as flexibility of working in other positions around the company if appropriate. The quality management initiative will be integrated for continuous improvement of lean and efficient results, with a high emphasis on quality control and customer satisfaction which is vital to the success of the local organisation. Finally, some human process interventions may be viable as well, aimed at team building, cooperation, and effective communication, focused on improving both the working and the culture of the workplace where stakeholders can now voice opinions and contribute openly for the best outcomes.

Role of HR in Change Process

Many of OD interventions are associated with human resource management functions. Various policies in terms of structure, performance management, goal setting, talent management, team building and communication are inherently HR functions. However, while HR is a people-focused approach, OD takes on a more systemic and holistic perspective, operating at all levels of the organisation including individual, group, and the company as a whole. At the same time, modern HR functions have shifted, with the contemporary talent management and interpersonal interactions components being aligned and implemented into synergistic systems for optimal connectivity and reinforcement. Many times OD starts through HR and OD units are located in the HR function. While that is not always the case, company leadership can take advantage of HR functions and insight when conducting OD interventions, particularly large-scale interventions on a structural level (Douglas, 2018).

Staff and human resources are an organisations most valuable strategic assets and what make up the core of the business, particularly for small companies (Anderson, 2017). For Sprockets Cycles, the OD entails new management, work design and organisational structure. However, it is the employees with their knowledge, specialisations, and customer connections over the years that have built the reputation of the shop. All other changes are aimed at aspects to improve performance, profitability, and other business-related elements. HR can serve a critical role in this OD process by preserving the vital contributions that employees brought to the company and orienting them to effectively do their jobs within a new structure and work design. It will be a long-term and continuous process, but HR which has the ability of understanding employee needs and connecting them with organisational needs and functions will serve a leading role in that regard. The objective of the reforms is to preserve the spirit and reputation of Sprockets Cycles which stems significantly from its employees and family that has owned it, while improving the company’s functionality, operations, and efficiency – to effectively remain competitive.

Reference List

Anderson, D.L. (2017) Organization development. The process of leading organizational change (4th ed). Thousand Oaks: Sage.

Association for Talent Development. (n.d.) What is organization development? Web.

Dhillon, I. & Gupta, S. (2015) ‘Organizational Restructuring and Collaborative Creativity: The Case of Microsoft and Sony.’, IUP Journal of Business Strategy, 12(1), pp.53–65.

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Douglas, E. (2018) ‘The rise of OD: How does it impact HR?’, Human Resources Director. Web.

Hastings, R. & Meyer, E. 2020 No rules rules: Netflix and culture of reinvention. London: Ebury Publishing.

Lalonde, C. (2010) ‘Managing crises through organisational development: a conceptual framework’, Disasters, 35(2), pp.443–464.

Moore, K. (2008) Companies can benefit from OD-infused HR departments. Web.

National Research Council. (1997) Enhancing Organizational Performance. Washington, DC: The National Academies Press.

Rothwell, W.J., Imroz, S.M. & Bakhshandeh, B. (2021) Organization development interventions. Boca Raton: Routledge.

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BusinessEssay. 2022. "Organizational Development: Sprockets Cycles Case Study." December 6, 2022. https://business-essay.com/organizational-development-sprockets-cycles-case-study/.

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