The analysis of the PT. Timah case has revealed to us the importance of organizational structures, as Ill as management systems such as the internal environment which is so important and crucial while coping with the rapidly changing external environment. Before proceeding further, I would like to provide a brief account to the case. The first crisis in 1985 was triggered by an over-supply of tin, which resulted in the enormous fall in the price of tin. Due to the above proceedings, PT. Timah went into debt, a scenario that led the company to undergo extensive re-structuring pressure. The resulting effects meant that the sudden change in the structure of the industry had a drastic impact over the company to change its internal structure. As if that wasn’t enough pain, the over-stuffed, highly bureaucratic, and mechanistic organizational structure of the company disallowed taking necessary actions hence responding back to the change call immediately.
Our assumption is that if the company had been less hierarchical, more flexible and in the hands of professional managers, the impact of the crisis would have been of little effect to the company. Yet despite the company’s inability to manage the crisis under the new CEO, the company underwent large-scale re-formation movement which proved successful in the following years. Nevertheless, some fundamental changes had taken place as follows;
Rethinking hierarchy to increase responsiveness to external changes
Reducing the number of hierarchical layers
Decentralizing decision making
Shrinking headquarters staffs
Emphasizing horizontal rather than vertical communication
Shifting the emphasis of control from supervision to accountability
Can the destructive changes in the structure of the industry create constructive impacts over the companies? Recommendations to re-organize the structure and the management system of the company
According to Mccallaster’s (2004) article titled “The 5 P’s of Change: Leading Change by Effectively Utilizing Leverage Points within an Organization”, it is argued that if the 5 P’s are used constructively, they can help organizations and their members to accept and cope with change. The author lists the 5 P’s as Pain, Process, Politics, Payoff and Persistence. In relation to the case therefore, the deduction is that PT. Timah had no intentions whatsoever to initiate a move from being over-stuffed, highly bureaucratic and mechanistic organizational structure, towards being decentralized, more organic and contemporary organizational structure in terms of executive management, re-focusing into long term indicators and having systematic financial reports. This did not happen not until the time PT. Timah was forced by an external change and faced with a high level of pain that left the company with no options but employing the 5 P’s and re-structuring the organization in order to survive.
In regard to these facts, the destructive changes in the structure of the industry can create constructive impacts over the companies. Yet recognizing the pain and executing the necessary change by professional hands can only lead to success. I hence provide a road map which is essential for the companies to turn destructive impacts of the external change into constructive pain of change.
• Strategic Planning Systems
• Statement of the goals
Setting up a goal involves establishing specific, measurable and time targeted objectives Goal setting is an effective tool for making progress by ensuring that participants (both employer and the employees) are clearly aware of what is expected from them, if an objective is to be achieved.
• Specific action steps
In order to pursue the stated goals, organizations must set specific action steps. These are to stir the organization in line with the goals, moreover not to lose the track in the course of diffusing the alterations throughout the organizational body.
• Corporate Culture
Beliefs, values, behavioral norms of the company that influence how employees think and behave. Leader’s have a vital role in changing work attitudes, and instituting a strong corporate by injecting a new mind-set, values, behavioral roles and making sure that these alterations pass through the organization. In his article ‘Goal setting: A five-step Approach to Behavior Change’ Latham (2003) stresses how leaders must model their subordinates. Similarly, Mcallaster (2004, 326) opines that no change will occur ‘if it is not constantly reinforced and monitored by the people at the top and then repeated throughout the management chain of command.’
References
MCallaster, C.M. (2004) “The 5 P’s of Change. Leading Change by Effectively Utilizing Leverage Points within an Organization”. Organizational Dynamics. Vol 33, no 3, 318-328.
Gary P.Latham (2003) Goal setting: A five-step Approach to Behavior Change, Organizational Dynamic, Vol.32, No.3, pp.309-318
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