Organizational Structure...a Look at the "People" or Not

Construction was rampant in Arizona during 2004-2007. Housing developments were springing up in every Valley neighborhood…and buyers couldn’t buy fast enough.  The turbulent industry bred fierce competition for product, talent, and customers.  The industry was besieged with high turnover, substandard product quality, and low employee loyalty and morale.  Leaving home builders and ancillary construction companies powerless to the callous environmental changes. 

The home builder for whom I worked for during this time was what Henry Mitzenberg called the “machine bureaucracy” organizational structure, ill equipped to deal with a turbulent environment.  T.W. Lewis, a locally owned, semi-customer luxury homebuilder was plagued with sinking product quality, decreasing customer satisfaction, and high turnover.

Hoarding decision-making power, T.W. Lewis functioned as an inflexible and closed system following a mechanistic process approach.  Every construction manager, sales associate, and office associate followed a specific doctrine. “People in the organization knew precisely what was expected of them and attended to their job responsibilities in a narrow yet efficient way…” (Morgan, p. 13).  In essence, many positions were simply “for show.” On more than one occasion the VP of Sales was required to obtain approval for selling a home or negotiating certain sales contract factors. Quite the opposite of a built to change organization whereby companies seek employees who “encouraged to find out what needs to be done” (Worley, p. 19).

Under this organizational structure and limited vertical distribution of power, the company failed on many fronts.  As the Star Model explains, company strategy “dictates what’s necessary.” (Galbraith, 2011, p.  1). The company wanted to differentiate itself by hiring college graduates for construction management positions . The idea was to fill the talent pipeline with “A players”.  So in this light, T.W. Lewis was on the cusp of a built to change organization filling the pipeline with quick learners embracing change. The company was brilliant at recruiting such employees, but unsuccessful in training and developing them (and that’s where the story turns). T.W. Lewis and their organizational structure failed to acknowledge and plan for was how to keep and motivate these employees. The reward structure was insufficient in providing sustainable motivation and incentives for achievement of company goals.  The company’s structure and processes did not account for people as a means to create efficiency and long-term growth, although it didn’t preclude them from trying.

T.W. Lewis created the Management Development Training Program aimed at providing a career path for employees. The executive team handpicked 15 employees to participate in this educational program aimed at developing future leaders of the company. Typically, these employees college educated, in the beginning of their career, and “favored” by upper management. This propagated contention amongst the ranks of those hardworking, tenured employees and the company lost several highly skilled and knowledgeable workers to the arms of competitors.  Here again, the Star Model comes into play. T.W. Lewis failed to “align the goals of the employee with the goals of the organization” (Galbraith, 2011, p. 5). 

T.W. Lewis lacked a clear communication process. As with decision-making, information was stockpiled and provided only on a “need to know” basis. The company attempted to offset the tempestuous external environment by stabilizing and controlling processes internally (i.e. withholding information).  Why? Why not take advantage of creating a reconfigurable organization designed to deal with change? (Galbraith 2002, p. 75). Why not share information, allow employees to “think outside the box,” create cross-functional teams, and work together to grow the company’s success? If the organization would have developed and used such a structure, it may have experienced its biggest competitive advantage…its people.

As the housing market began to crash, T.W. Lewis found itself in another turbulent environment with massive lay-offs and organizational restructuring.  This unprecedented housing boom left company fatalities, unemployment, and buyers’ remorse well beyond the borders of Arizona.  The competition for talent and houses ceased.  This time T.W. Lewis was not faced with rapid growth but rapid decline and the wild ride of growth, competition, and profits was over.  The once, almost built to change organization now focused on exiting stage left.