Organization Design and Development

(Unit 36)

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Table of Contents
Introduction...................................................................................................................3

1.0 Overview of Hayleys PLC.......................................................................................4

2.0 Agile Organization..................................................................................................5

3.0 Importance of Organizational Design.....................................................................6

3.1 Star Model...........................................................................................................6

3.2 McKinsey 7s Model.............................................................................................7

4.0 Sustainability Policy of Hayleys PLC......................................................................9

4.1 Recommendations............................................................................................11

5.0 Change Management...........................................................................................12

6.0 The Relationship between Organizational Design and Change Management....13

7.0 Organizational Design should Respond and Adapt to Change Management.....14

7.1 Lewin’s Change Management Model...............................................................14

8.0 How the Organization Managed the Transformational and Psychological Change
and how it affected the Organizational Design...........................................................15

9.0 Conclusion............................................................................................................16

10.0 References.........................................................................................................17

List of Tables

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Introduction
The purpose of this report is to evaluate the importance of organizational design for
an organization to deliver sustainable performance as well as to evaluate the
relationship between organizational design and change management, to do this the
researcher will write from the perspective of a newly appointed Human Resource
Analyst for Hayleys PLC who has been tasked with leading the restructuring of the
HR department as a part of organizational change, the primary aim of the analyst is
to provide a report to aid the human resource director in restructuring the
department.

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1.0 Overview of Hayleys PLC
Hayleys PLC is a Sri Lankan Multinational conglomerate and accounts for around
3.29% of Sri Lanka’s export income (Hayleys PLC, 2018). The company was
established by Chas. P. Hayley in 1878 in Galle, to import particular luxury items
such as Claret and to export local spices, oils, and yarn, since then company has
grown exponentially diversifying into various industries such as service,
manufacturing, transport, and agriculture (www.hayleys.com,2020). The company
has a strong presence in 17 nations around the world and is the first company listed
in Sri Lanka to earn 1bn USD in revenue during the fiscal year of 2017/18 (Hayleys
PLC, 2018).

As per Thompson (2019) organizational structure is the foundation of a business,

this involves the hierarchy, roles, and rules. The current structure of Hayleys PLC is
a hierarchical organizational structure with the board of directors responsible for the
governance of all the companies under Hayleys (Hayleys, 2020) due to the vastness
of the organization, collective decision making is the most reasonable option.

Hayleys PLC seeks to

restructure its HR
department because it is flat
with no clear lines of
communication or authority,
Since Hayleys is a
conglomerate and controls
Figure 1: Hayleys Reporting Structure
many different companies it
is vital to have uniform HR
policies across all
subsidiaries. The HR
department of the company
requires division into
separate departments to
ensure an increase in productivity and quality.

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2.0 Agile Organization
An agile organization is a term used to describe organizations that are quick in
adapting to changes in the business climate (Holbeche, 2016). An agile organization,
as opposed to a traditional one, has a network of teams with a centred culture which
takes quick decisions; agile organizations are guided by a common aim to create
value for all stakeholders of the organization (Aghina et al., 2018). As per Erts
(2018), some of the main characteristics of an agile organization are having teams
and networks who have more decision making responsibilities, presence of teams
which are assembled and disassembled quickly to complete projects, having
employees work on multiple projects based on their skills, giving rewards based on
the outcome of tasks, and management leading projects rather than just overseeing
them. Erts (2018) also states that an agile organization exhibits trademarks such as
shared vision which makes people feel emotionally invested in the organization's
goals, a network of teams that deliver exceptional results, quick decision making, a
dynamic model that engages the workforce and the integration of next-gen
technology.

Due to the vastness of Hayleys PLC and the constant growth, the organization
experiences the company is more inclined towards being an agile organization.
Although the company primarily is seen as having a hierarchical structure, it does
have various teams specialized in completing specific tasks. As per the 2017
Hayleys annual report, the company has adopted an approach that empowers
sectors to manage their performance within a common policy framework and risk
appetite, the executive committee of Hayleys PLC is key in the organization's agility
as the committee facilitates collaboration, discussion, and debate on matters
considered critical for the group's operations. Most of the companies under Hayley’s
PLC are encouraged to make their own decisions to increase efficiency and very few
approval layers are required, only decisions that have the potential to leave a large
impact on Hayleys are sent up the hierarchical structure, where the board members
will decide. Each team that is assembled by the company on projects has a shared
vision and drive which leads to the successful completion of projects most of the
time.

As for the above specific organization examples of Hayleys PLC, it can be stated
that organization design theory is important in the context of organizational structure

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and fulfilling organization strategy. The organizational design approach has helped
Hayleys PLC to grow in each sector the business is involved in since they have
focused on an agile organizational approach.

3.0 Importance of Organizational Design

As per Miles (2012) organizational design is the process in which an organization
manages the elements of its structure and controls its operations. A poor
organizational design can result in confusion of roles, lack of coordination, slow
decision making, stress, and conflict (Corkindale, 2011). The organizational design
has to align with the business strategy and market environment to be effective, it
also has to be flexible and have the right incentives depending on the business.
(Luebke, 2011) It can be observed that Hayleys PLC has a competent organizational
structure with a clear role definition; the executive committee of Hayleys has control
of the operations of the organization and ensure that the business operations run
smoothly.

3.1 Star Model

The star model is an organization
design framework developed by Jay R.
Galbraith. This framework consists of a
series of design policies that can be
controlled by management and can
influence the behavior of employees
(Galbraith, 1995). The design policies
Figure 2: Star Model
fall into 5 different categories: strategy,
structure, processes, rewards, and people. By applying the star model to Hayleys
PLC we can obtain valuable insight into the organizational design of the company.

 Strategy
The strategy involves the vision, mission, and values of the organization. The
vision of Hayleys PLC is to be Sri Lanka’s corporate inspiration at all times
and the mission is to deliver superior shareholder value by unleashing the full
potential of the people and achieving leadership in all domestic and global

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 businesses (www.hayleys.com, 2020). The company focuses on values such
as integrity, customer value, teamwork, and accountability.
 Structure
As per Garner (2015), the structure of an organization determines the
placement and movement of authority as well as the type and number of job
specialties needed, henceforth decided the number of departments within an
organization. As mentioned earlier Hayleys has a hierarchical structure with
an emphasis on agility in the mid and lower levels.
 Processes
Processes are defined by the flow of information and decisions within an
organization (Garner, 2016). Information and decisions in Hayleys PLC flow
vertically at the top levels of management and both vertically and horizontally
in lower levels.
 Rewards
The reward system in an organization is vital in motivating employees to
achieve high levels of productivity. Hayleys PLC consists of 30,000
employees and has a performance management system in place to reward
employees.
 People
This relates to the human resource policies of an organization. As stated
earlier the company requires further specialization in the HR department to
maximize productivity.

3.2 McKinsey 7s Model

As per Jurevicius (2013) the McKinsey 7s model
is a tool in business management that analyses
the organizational design of a firm by examining
7 crucial internal elements which are: strategy,
structure, systems, shared values, style, staff,
and skills. By analysing these 7 elements, it is
possible to identify if they are aligned and will
help the organization achieve its goals and
objectives. The 7 models are categorized as Figure 3: Mckinsey 7s Model

either "hard" or "soft". Hard elements include strategy, structure, and systems; these

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can be easily influenced by management, soft elements include shared values, skills,
style, and staff which cannot be influenced as much (Ravanfar, 2015)

Following is an application for the McKinsey 7s model on Hayleys PLC:

 Strategy
As per Ravanfar (2015) the strategy element in this model is the plan
developed by the firm to maintain a sustained competitive advantage in the
industry and stay ahead of the competitors. Hayleys PLC enjoys success due
to its diversified products across many industries as well as capturing both
local and international markets while maintaining relationships with industry
giants.
 Structure
Structure refers to the organizational chart of the company. As mentioned in
the Star model, Hayleys PLC has a hierarchical structure with the vertical flow
at top levels of management and a combination of vertical and horizontal flow
in the middle and lower levels.
 Systems
Systems refer to the processes and procedures of the firm, which reveal the
daily activities of the organization and how decisions are made (Shaqrah,
2018). Hayleys PLC Apple business operations rely on a wide range of
systems that include employee selection and recruitment, employee
performance appraisal, team development, orientation as well as performance
management systems. The company also uses knowledge management and
business intelligence system.
 Skills
Skills include the abilities of the firm's employees. With regards to Hayleys
PLC since it is a prestigious company, there is high competition among
candidates for vacancies in the company, due to this competitive nature,
employees perform at a high level and improve the productivity of the
company.
 Staff
This element includes how many employees an organization will need and
what skills they should possess (Ravanfar, 2015). Hayleys PLC employees

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 30,000 individuals across a wide variety of businesses, the company
generally looks for young individuals with high energy and motivation.
 Style
This refers to the management style of the organization. Hayleys primarily
incorporates a democratic management style and takes collective decisions.
 Shared values
This is the core of the 7s model, they are the norms and values within the
organization that guide the behaviour of employees and the management, this
is the foundation of the organization (Ravanfar, 2015). Hayleys PLC prides
itself on being one of the biggest and oldest companies in Sri Lanka and thus
has a prestigious identity.

4.0 Sustainability Policy of Hayleys PLC

Sustainability is an extremely important concept in the current business environment.
It means having green or friendly organization practices, products, and operations,
sustainability also relates to leaving a positive impact on the community (Galpin,
Whittington and Bell, 2012). As per Spiliakos (2018) the goal of a sustainable
business strategy is to leave a positive impact on the environment as well as society.
The sustainability policy of a public limited company is especially important since
investors look at the company’s water usage, carbon footprint, efforts to develop
community, and board diversity before purchasing shares. Research indicates that
companies with effective sustainability policies have better financial performance.

The company website of Hayleys PLC states that the organization remains
unwavering in its commitment to continue to strengthen, widen and deepen its
positive Economic, Social and Environmental Impact and all company actions come
from the heart, spurring them on to deliver change, create smiles and add value to
the lives of all their stakeholders. Regarding environmental impact, the organization
complies with domestic and international environmental standards, and its raw
material usage policy is focused on responsible product stewardship and the
practices of the 3R concept- reduce, reuse, and recycle for all raw materials that are
procured (www.hayleys.com, 2020).

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According to the Hayleys sustainability report of 2010 some of the methods in which
the company reduces its carbon footprint are listed below:

 The company recycles many products such as scrap brass, PVC tubing, and
coir fibre.
 The organization had also taken initiatives to reduce energy consumptions
with the following initiative: use of fuel wood-fired gasification unit instead of
fossil fuels at HJS condiments, development of hydro plants in We Oya
plantation, use of efficient fluorescent lightings at Hayleys Advantis which
reduces 8% of electricity consumption and use of translucent roofing material
in sections of Hayleys MGT's factory maximizes the use of natural lighting
 Use of environmentally friendly crop protection products and the use of
bamboo floored containers for certain shipping operations.

Hayleys PLC has also organized many events and programs to improve community
awareness; the Hayleys approach to community impact is one of unilateral
engagement to promote business sustainability while building a strong foundation of
economic and social development of communities, the community engagement
projects initiated by the Group help in forming strong links with the local communities
(www.hayleys.com, 2020). One example of this is the program conducted by
Hayleys to raise workplace awareness on HIV/AIDS which aims to reduce the stigma
and discrimination towards those living with the disease.

Some of the other CSR projects are listed below:

 Hayleys initiated the “home for every

plantation worker” program with a view
of uplifting the living standards of its
plantation employees as well as the
estate community. Through this
program the company provides
plantation workers with improvements
in Housing, Water, Sanitation,
Figure 4: Plantation initiative
Recreation and Learning Facilities, and
healthcare facilities.

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  The company also initiated the
“Sathdiyawara” program with the
motivation of combating the rise of
Chronic Kidney Disease. The company
did this by providing purified water to
affected areas through commissioning
central Reverse Osmosis water
Figure 5: Sathdiyawara project
treatment systems and water
distribution networks (www.hayleys.com, 2020).
 The Hayleys “Jeevadara” project was launched with the motivation of
improving rural livelihood and nutrition through sustainable agricultural
development. The project aims to create
a sustainable supply of Drumstick
(Moringa Oleifera) for consumption and
value-added exports. The project
intends to reach 100,000 households in
Jaffna, Killinochchi, Mullaitivu, Mannar,
and Vavuniya (www.hayleys.com,
2020). Figure 6: Jeevadara project
 The Hayleys “First light” program is a
multi-faceted initiative that aims to address a wide range of economic and
social issues faced by rubber smallholders. The project currently supports 830
rubber smallholders and over 6000 family members in the districts of
Monaragela, Bibile, and Mathugama.

4.1 Recommendations
The Hayleys sustainability policy appears to be up to date with the current business
climate; however, further initiative could be taken to promote gender equality in the
workplace in Sri Lanka. According to the Hayleys 2018 annual report the staff
turnover rate among women is 5% higher than among men, this could be attributed
to a workplace that is lesser accommodating to women than men. The HR
department of the company could take steps to find out the reason for this and begin
an initiative to promote gender equality in the workplace.

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5.0 Change Management
As per Pugh (2009), change management is the discipline that guides an
organization regarding preparation, equipment, and support to successfully adapt to
changes in the business environment. Change management can be categorized into
3 levels: individual, organizational, and enterprise change management capability.
As per Rouse (2019), change management helps an organization to implement
strategies to adapt to change.

Figure 7: Organizational change management

Organizational change management provides many benefits such as reducing the

risks associated with introducing a new system, increasing teamwork needed to
adapt to change, and operate with high efficiency (Perkins, 2018). The most
common changes an organization can face are mergers, acquisitions, downsizing,
and rebranding. The key characteristic of organizational change management is a
systematic approach to move the company from the current to the envisioned state
(Simon, 2020).

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6.0 The Relationship between Organizational Design and Change Management
Every organization has a mission and vision when change such as an acquisition or
merger happens within an organization, it has an impact on how employees view
these already established vision and mission statements. Almost every time a major
change occurs within an organization there is a drop in productivity, therefore an
organization must focus on minimizing the drop. An organizational design can help to
facilitate proper change management. For example if the organization has clear and
defined lines of communication then management could communicate information
regarding the change more effectively. (Boschken, 1989).Organizational change
occurs in 2 broad dimensions: structural change and behavioural change. The
structural change relates to modifications in a structure such as an assembly or
disassembly of departments and positions, and behavioural change changes of
employee behaviour (Boschken, 1989).

Hayleys PLC has adapted its organizational design over the years to be prepared for
organizational change. The company faces changes quite frequently since it
regularly acquires different companies. Some of the characteristics of the company
which facilitates change are horizontal integration, cross-functional work teams,
extensive training, and value chain team focused job design. This type of structure is
essential to a conglomerate such as Hayleys to facilitate changes which they
experience frequently. In September 2017 Hayleys PLC acquired Singer PLC for
LKR 10.9 billion, the chairman of Hayleys PLC Mr. Mohan Pandithage stated that the
acquisition of Singer PLC was in alignment with the business strategy of Hayleys
PLC as one of the main aims of Hayleys is to diversify the products of the company
(www.hayleys.com, 2020) ever since then both companies have integrated
seamlessly which indicates that the organizational design of Hayleys PLC facilitates
and drives the change management process which reduces the impact of changes
the company experiences.

A restructuring of the HR department could cause distress among current employees

working in the department. A restructuring of the department could cause employees
to fear that they are being terminated to hire individuals with a more specific skillset
or could mean that employees are transferred to different departments. To facilitate
this change the HR director would have to reassure employees that certain workers
would be transferred to departments that fit their skill set. Furthermore an HR

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structure with more defined lines of communication would have to be implemented
and this also has to be communicated to the employees, so that when it is
implemented there is a smooth integration of the change.

7.0 Organizational Design should Respond and Adapt to Change Management

The organizational design has to facilitate change; however, the organizational
design needs to constantly keep evolving to further facilitate change in the future.
The relationship between organizational design and change management can be
further understood with the help of the Lewin's model.

7.1 Lewin’s Change Management Model

This model was created by Kurt Lewin and is known as The Kurt Lewin Change
Management Model or as Unfreeze, Change, Refreeze; this model is a method used
to manage change within an organization (Rouse, 2019). The Lewin's model involves
preparing employees for a change, executing the change, and then integrating the
changes within the organization. As per Cummings, Bridgman, and Brown, the name
of the model comes from the idea of transferring the ice block into a new shape, the
ice has to unfreeze, poured into a new shape, and then refrozen.

The following is an application of the model for Hayleys PLC

 Unfreeze stage:
As per Rouse (2019) in this stage events occur which causes the need for
change, in this particular case, there have been certain issues regarding the
human resource of Hayleys such as a higher staff turnover rate among female
employees, and certain employees being overworked. Certain employees are
dissatisfied with the amount of stress related to their job. After deciding that a
change has to be implemented, which in this case is a restructuring of the HR
department; this information has to be communicated to the employees to
avoid panic and confusion.
 Change stage
In this stage the changes are implemented, the changes could be large or
small depending on company needs, in this case employee feedback should
be considered and the restructuring of the HR department should be
implemented.

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  Refreeze stage
In this stage the changes have to be normalized in the organization's day-to-
day activities. Since the changes that Hayleys are about to implement are
quite significant it could take a long time to be normalized. The company has
to focus on employees being comfortable with the change.

8.0 How the Organization Managed the Transformational and Psychological

Change and how it affected the Organizational Design.
There are different types of organizational changes and this could affect the
organizational design and the employees in various ways.

Some of the types of change are listed below:

1. Transformational Change: this involves a change in the strategy of an

organization. Strategies to guide transformational change have to be based
on the current situation and the direction a company plans on taking. Some of
the factors that have to be considered include social climate, technology, and
cultural trends.
2. Evolutionary change: this involves a change that takes place gradually over
some time. The change occurs in small chunks, and every person is to
understand the change and embrace it. (Stern, 2015).
3. Revolutionary change: this involves completely overhauling, renovating, or
reconstructing something important within the organization. Revolutionary
changes when aligned with strategic goals could often lead to radical
breakthroughs within an organization (Shani and Noumair, 2019).

The change of restructuring the HR department of Hayleys PLC could be considered

as a revolutionary change since it is a complete renovation of a critical department. It
could also be seen as a transformational change since the objective of the change
was aligned with strategic goals. The company could also face a negative
psychological change among its employees in the short term as; an entire
department is being overhauled. However, the long term objective of this change is
to improve employee satisfaction and co-ordination and if the restructuring is done
correctly then it could integrate seamlessly into the organization.

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9.0 Conclusion
The primary issues identified in the human resource department of Hayleys PLC
include the absence of clear lines of authority and the failure to recognize the cause
of high staff turnover rate among female employees and the cause of high stress
among staff. The recommendations for the restructured department would be to
improve lines of communication and divide the department into units which focus on
different tasks, to do this it is recommended that employees with skills which
perfectly match the job are either hired or transferred from other departments, and
employees who are currently in the department with skills that do not match are
transferred to departments which would be better suited to them. By doing this
Hayleys PLC can maximize productivity and efficiency contributing towards
achieving organizational goals.

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