Page 159 - Managing Change in Organizations

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Chapter 8 ■ Sustaining organizational effectiveness

CASE
STUDY International Engineering

This company engages in engineering design, consultancy and project management
work worldwide. It is wholly owned by a US-based multinational. It employs 2000 peo-
ple, of which 1500 are based in the UK, 1000 in central London. This company had
enjoyed almost a monopoly position in the 1950s and 1960s and then had benefited
from the rapid growth of North Sea oil exploration engineering work in the 1970s. The
1980s had brought growing competition and a declining market in the North Sea.
Growing markets required new technology. Overall the company was structured in a rel-
atively ad hoc way. Within the engineering departments, and within specific projects, the
company was structured as a professional bureaucracy. By the early 1990s the board was
concerned that it was losing competitive edge and therefore being unsuccessful in any
important bids for new business.
To develop a more adaptive organization, various main threads of organizational
change were needed. First, the organization needed to be structured to achieve clearer
accountability. Various measures were required, as can be seen from Figures 8.6, 8.7 and
8.8. The establishment of business units at regional level was designed to strengthen
general management, improve efficiency and focus effort to meet market needs.
Organizational changes aimed at elevating the role of projects, engineering and mar-
keting were designed to improve coordination, strengthen operations/project manage-
ment and improve efficiency. Under the old structure, too much depended on the
operations director. The changes created a more balanced allocation of responsibility
and authority between the various functions. The business unit approach involved the
adoption of market mechanisms. For accountability, each general manager was to be
responsible for profit, and was to be left to be relatively autonomous, as long as profit
and market objectives were attained. It was intended that business units buy in services
from both group and other business units, or from elsewhere, thus strengthening the
market approach.

Chairman

Finance Personnel Operations Legal On-shore Off-shore
director manager director director director
Marketing Sales
and sales

Southern Northern Scottish International Director of Director of
region region region engineering engineering projects
India
US
engineering
Figure 8.6 Corporate structure, Pre-change

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