XYZ: Leading and Managing People

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Introduction

Organizational culture is an essential element that allows companies to achieve their goals and deliver the best quality products or services to withstand challenges and changes. The organization used for this analysis is a family-owned business that creates custom furniture. XYZ was established in 1995 as a family business by spouses, who have been in charge of operations for the last twenty-five years.

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There are approximately 100 employees, including part-time and seasonal workers, out of them, 80 work in manufacturing and 20 are administrative staff. XYZ specializes in manufacturing custom furniture and luxury furniture. As a custom furniture manufacturer, the XYZ Company has gained a reputation as a business that creates high-quality furniture based on the client’s drawings.

The author of this paper is oriented with the organization’s culture and the environment through family connections and through the personal experience of interning at XYZ for several months. Hence, this analysis is based on personal experience, Laloux, Scharmer, and other scholars’ theories. Several challenges lay before the leaders and managers of small family-owned businesses, however, in terms of culture, this type of business implies that employees have informal ties and connections that help develop the shared values, visions, and beliefs. This paper will present the analysis of XYZ’s environment and culture and offer recommendations for improvement.

Analysis

The Organization’s Environment

As Fuller argues, changing something by fighting the existing systems is invalid, instead, one has to build a new model that will show the old one’s obsolescence (cited in Laloux, 2014). An organization’s environment can be defined as any forces that affect this company’s performance and its ability to achieve goals. In the 21st century, businesses in varied industries face the challenge of adapting to technological innovations.

For instance, the use of robots and automation helps simplify the manufacturing process as the tasks are performed faster, and fewer people are needed. However, the employees have to have higher qualifications to oversee the work of these machineries.

Although at the moment, the widespread use of robots and automation is not a pressing issue for XYZ as not many of its competitors choose to transfer to automated manufacturing, in ten years or less likely, man-led assembling of furniture will not be used. This creates a human resource policy challenge for an organization since XYZ will have to hire individuals capable of servicing these machines and overseeing their work, which is labor different from what its workers are engaged in now—manual assembling.

To keep up with the changes, XYZ’s management created a plan for a gradual transition towards automated furniture manufacturing. Each year, XYZ invests in a new machine for its production. Hence, some of its employees are no longer engaged in manual manufacturing and assembling, and they work with machinery.

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A challenge from the perspective of human resources is finding people capable of working with this machinery. Previously, XYZ hired individuals without specific qualifications, and many teachings had to be done within the organization. Currently, the task is more complicated because the personnel has to understand how the machinery works and how to use computer-aided design (CAD). Another challenge is the salary that the workers with skills in CAD and machinery work request, which is higher than the compensation paid to workers engaged in manual assembly.

The engineers and designers the company works with have to have a Master’s degree or higher, but currently, XYZ has two specialists who have been with XYZ for ten years. Occasionally, XYZ hires freelancers to work on sketches. Also, there is some seasonality associated with XYZ’s work, which results in the company having to hire temporary employees for its manufacturing facility. The challenge with temporary employees is that they have little motivation to adapt to the company’s culture since they are only working for it for several weeks.

The Organization’s Culture

XYZ is a family-owned business, the CEO of the organization has been leading it for over twenty-five years, which undoubtedly shaped the internal culture. According to Shein (1996), culture is a set of tacit assumptions about how the world functions that a group of people shares. The Appendix presents an assessment of the three levels of values within XYZ based on Schein’s theory. Culture should not be simplified as it is a complex interconnection between varied elements, so it is best to review it at several levels.

At each of the three levels, the fact that XYZ is a family business impacts the implicit and explicit elements of culture. According to Shein (1996), three levels of culture, the aspects one should review are artifacts, espoused values, and underlying assumptions. At the level of the artifact, the prominent elements that contribute to XYZ’s culture should be analyzed. For example, the company’s logo, which the company has had since its establishment in 1995.

Thus, XYZ’s primary artifacts are its logo and other attributes that remind of the history of this family-owned business. Next, the underlying assumptions include the mission and strategy that XYZ’s leadership declares, as well as its employee development practices. Analyzing the underlying assumptions is perhaps the most challenging task since this level involves the beliefs and values that the employees share (Shein, 1991). These tacit assumptions are typically implicit and unconscious. For XYZ’s, these are connected to the shared beliefs about the development of this family business.

From the viewpoint of development, the employees that have worked at XYZ for a long time have always been keen on sharing their knowledge with new workers, which has served as the basis of organizational learning. The current challenges with innovation and automation, however, require XYZ’s management to use outside learning resources, such as training from the machinery’s education, which changes the structure of organizational learning.

Another critical factor that is implicit and affects XYZ’s environment is that it is a family-owned business. According to Marin et al. (2016), family-owned businesses are associated with a group orientation. The importance of personalist and emotional values is more evident when compared to other types of companies. Moreover, the authors use the term “clan culture” when referring to these family businesses (Marin et al., 2016, p. 99). Hence, the interpersonal connections within these businesses are essential since communications and management are based on the employees’ relationships. Moreover, this implies that shared values and vision are central for XYZ.

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The Organizational Development

Central to XYZ’s ability to survive is its commitment to integrating machinery and automation into their operations. Shein (1996) argues that innovating, both technically and organizationally is essential for retaining the firm’s competitiveness. This requires leaders to engage in organizational learning and to adapt new forms of learning, and to look at other companies in the same industry. XYZ’s leadership has initiated the process of innovation, however, the domain of human resource development is lacking.

Another issue with development relevant to XYZ is the CEO’s intentions to retire after twenty-five years of managing this firm. According to Alshaikh and Robinson (2019, para. 1), a common feature of most family-owned businesses is their “progressively slowing growth after the founder steps down.” Hence, XYZ’s development is under threat if its leader fails to find a CEO who will be able to integrate into XYZ’s culture instead of trying to modify it.

The Organization’s Employee Development

As mentioned, employee development has always been a problem for XYZ. Previously, they hired people with little experience and taught them the basics of assembling furniture and creating parts for it. Now, with the use of machinery and automation, XYZ has to find people with CAD experience capable of operating these machines, invest in teaching the existing employees how to do it, or teach new employees necessary CAD skills.

According to Schein’s theory, there are three levels within every organization that define its culture. These are “artifacts, espoused values, and basic assumptions” (Shein, 1996, p. 10). At the espoused values level, XYZ’s leadership encourages the experienced employees to help younger ones learn. However, the lack of a formal training program is an issue considering that the firm faces a technology challenge. Apart from the courses offered by the manufacturers of the machinery, XYZ does not provide guidance to the employees, although the management has declared that they will finance the skill development courses for their employees.

Conclusions

An organization’s culture is the core element of resistance to changes within any industry and the defining aspect of the company’s dynamics. Hence, if one wants to understand how XYZ furniture company operates and how it can adapt to changes, such as new consumer demands, it is essential to pay attention to the type of culture that this company has. XYZ is a family-based business where the owners and managers are relatives or have been working together for over ten or twenty years. This, undoubtedly, impacts the culture of the company, for example, human resource management and development are mostly informal.

In summary, XYZ’s culture is based on the family-like values and approach to leading people that the owners have adopted. Despite the success it has had, there are some improvements one can make to ensure that the staff of XYZ is better adapted to the challenges that this company faces. Hence, the current approach that the leadership has selected is appropriate, but some improvements can be made.

As Talgam (2015) argues, anyone can be a leader and a follower, these are not exclusive categories of people. Yet, a truly remarkable leader has to possess not only expert knowledge but the ability to go beyond this knowledge to innovate and create new things. This approach should guide the founders of XYZ when they choose a candidate for the CEO position once the current CEO retires.

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Key Recommendations

In his book, Laloux (2014) focuses on exploring the benefits of a Teal Organization, which is a concept of management and leadership, where the autonomy of the employees is the focal point. For XYZ, the transition to this model may become vital in the face of innovation challenges because the current employees have the knowledge and experience that make them highly qualified for their jobs. However, the threat of the CEO retiring and a new CEO being appointed may contribute negatively to the organization’s development, and a structure that allows for more autonomy can address this problem.

These experienced employees carry the implicit culture of XYZ and can transfer it to others. Moreover, one of the three concepts Laloux (2014) developed is evolutionary progress, where companies should develop naturally. Considering that XYZ has been a family-owned business, with the CEO retiring, it appears that the organization is following its natural evolution. Supporting this by allowing for more self-management and promoting wholeness can help retain the family business culture at XYZ.

For XYZ, it is best if the company helps the existing employees develop and improve, instead of focusing on hiring new workers. Hence, allowing these people to learn how to work with new machinery or CAD should be the top priority. According to Argyris (1991), for modern businesses, their success depends on the ability to learn. Hence, the focus of development programs should be on incentivizing the employees, for example, a higher salary for working with machinery as opposed to manual work.

Argyris (1991) also emphasizes the need to help the employees learn, which would be among the most critical tasks for the HR manager. Apart from workers at the plant, the management has to learn as well, and the learning should be double-loop or not explicitly related to solving one organizational problem. This will help enhance the competence of the management.

Another issue is the future of XYZ and the ability of the company to retain its “big family” values after the retirement of its leader. According to the U theory developed by Sharmer (2018), there are five structures of the company’s culture. In a U-shape, a company moves from the outside values, such as industry changes, to the inner world of the organization, and to the top of the “U,” where both elements should merge. The first step is co-initiating, which involves initiating a common intent.

The final step within this theory is co-evolving, which means evolving at the macro-level. Based on this theory, Sharmer (2018) offered seven leadership capacities for leaders. In the case of XYZ, out of the seven, observing and sensing are the capacities that future leaders should focus on the most.

This is because after the current leaders of XYZ retire, the new leadership will have to adapt to the XYZ’s existing culture instead of trying to modify it. When adopting these recommendations following the U-theory, XYZ’s leadership will be able to merge the current culture with the new values, appropriate for the unique environment of the furniture business.

Finally, considering that XYZ has to introduce new training courses for its employees, it is advised that XYZ’s human resource management creates a formal employee development program. A proper development program will communicate a message that XYZ wants the current employees to evolve and develop, instead of only hiring new employees for the positions connected to automation. Snell and Bohlander (2014) state that building the company’s human capital is the core task of leadership, and it is essential to ensure that this valuable knowledge is not left unused. In this way, the company will preserve its culture and show that the leadership values the workers.

Reference List

Alshaikh, A. and Robinson, J. (2019) ‘Company culture: the catalyst or killer of a family business’, Gallup. Web.

Argyris, C. (1991) ‘Teaching smart people how to learn’, Harvard Business Review, p. 10.

Laloux, F. (2014) Reinventing organizations. 16th edn. Brussels, Belgium: Nelson Parker.

Marín, G. et al. (2016) ‘Organizational culture and family business: a configurational approach’, European Journal of Family Business, 6(2), pp. 99-107.

Sharmer, O. (2018) The essentials of theory U. Oakland, CA: Berrett-Koehler Publishers.

Shein, E. H. (1996) ‘Three cultures of management: the key to organizational learning’, Sloan Management Review, 38, pp. 9-21.

Snell, S. and Bohlander, G. W. (2014) Managing human resources. 16th edn. Mason, OH: Cengage Learning.

Talgam, I. (2015) The ignorant maestro: how great leaders inspire unpredictable brilliance. New York, NY: Penguin.

Appendix

Table 1. Three levels of the organization’s culture for XYZ (created by the author).

Artifacts
  • XYZ’s logo is a symbol of the company’s 25 years of operations. It is placed on the clothes employees wear in the manufacturing facilities.
  • Safety is essential, and XYZ has undergone several certification checkups for its manufacturing facility to ensure that it is safe. This includes both safety systems, such as fire alarms and work protocols.
Espoused Values
  • Family-owned business—many administrative employees are related. This mainly affects the communication between the staff, which is typically informal.
  • Strategy: XYZ aims to transfer to automated manufacturing and focus on luxury furniture only.
  • The learning and development of the employees have become central, and the staff is encouraged to engage in training, such as CAD and other programs that will help them upgrade their skills so that they can work in an automated factory. The company pays for this training.
  • The experienced staff members share their knowledge with the new employees.
  • Mission: create high-quality custom furniture
Underlying Assumptions
  • Over the 25 years that XYZ has been in operations, it was managed by the same person—the owner. This implies that the values, culture, and management styles all remained relatively unchanged.
  • The company has developed without any outside investments.
  • Since most of the employees have been with the company for ten or more years and because it is family-owned, the informal communication and shared vision are what unifies XYZ.
  • It is unclear who will manage the company after its establishers retire, which creates a general uncertainty—the employees are unsure about XYZ’s future direction.

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