case study memo

Date: February 5, 2017

To: All Employees

From: Ricky

Subject: Organizational Culture

The impact of a company’s organizational culture cannot be overstated; it can drive workers to be motivated and do more, thus increasing their happiness in the work environment, and the right culture achieves the needed end-result: an increase in sales. In this memo, we discuss Ford Motors’ disastrous organization culture and analyze the impact it had on the conglomerate giant. Thereafter, possible solutions to overturn Ford and right them on a profitable path are given. Finally, a conclusion highlighting key points and a list of recommendations are given.

Issues/Problems

After facing a staggering loss of $13 billion in ‘06, it became obvious that the most important component any successful company needs were severely lacking at Ford: a company-first, communicative organizational culture. Rarely were any of the top managers willing to admit that Ford had made mistakes, rather wanting to cast such issues aside and instead blame component and labor costs for losses of sales. Moreover, they were content to form their own alliances in which they had prestige and power, ruling in a strict manner. When a division manager was asked a question, they knew not, ignorance was not tolerated; instead opting to try and evade the question because at Ford, unfamiliarity to a question was a weakness.

Communication. It is the key to any successful relationship and when a multi-billion-dollar corporation is unable to successfully adhere to this golden rule, blindness and myopia prevail. Without a doubt, it can be assumed that when management refuses to meet with an employee and the reasoning is that ‘a subordinate never asks a superior to lunch’, that is a management failing on every aspect. At Ford, playing the blame game took precedent over dissecting and understanding the loss of sales, meaning trust was not easily established. Managers believed the best way to ensure they maintained their positions was to hide reasons for losses in their divisions, and trusted almost no one with such information, let alone their bosses.

Analysis of Issues/Problems

A culture where the heads of a company, be it the CEO, president, or any manager, refuse to put the company before themselves invites greed and mistrust to sow discord amongst the leadership. More than that, they are presenting an image to their own employees that these are the values and norms needed at Ford; those that require you to hold secrets from your own boss, to present any negative information in such a way that factors out of your control are blamed, and that not knowing crucial information and questions about your own department was just fine. Thus, so satisfied were the leaders of Ford with their power and rank that they sacrificed a 113-year old corporation's image and value for their own personal self-interests.

To be blunt, the communication amongst managers at Ford was simply horrendous. Going division by division, they each tried to hide that their vehicles faced problems through both poor design and quality issues. They were unable to- or rather, unwilling to- admit where the true problems laid, and as such, the focus of trying to drive down costs was steered in the wrong direction. On top of that, upper-level managers felt no need to interact and hear the concerns of lower-level managers, confident in their own superiority and self-written hierarchy that ‘subordinates’ had no right to request a meeting. In the words of Mulally, “Ford’s top executives had an inward-looking, destructive mind-set that doomed them”.

Proposed Solutions

To ensure that the mentality of Ford undergoes a shift towards the two key components of an organization culture (company-first, communicative), several changes can be made. First, Mulally must meet with each individual divisional head and have an expulsion of all secrets related to the company’s success. However, as this is no easy task, he must assure that no harm is meant towards the head and that he will act as their confidant. Doubtlessly, many will still feel reluctant to any secrets, which is why individual managers inside each division must also meet with Mulally. Even the smallest of information from a person in power may prove critical to Mulally and could be the building block to solving the problems at Ford.

Additionally, a new human resource function will be added to demonstrate the commitment of both employees and managers. This includes ongoing training for employees that will create new skills for them, increasing their value to the company, and leads to an increase in supportive behavior from employees. If employees can demonstrate said-new skills in working environment, there were will be a reward system linked to such performance to promote motivation and happiness. Finally, managers must make a commitment to ethical values and uphold these values. In turn, these ethical values are transmitted to employees and incentives must be readily available to those that comply, while punishing those that don’t.

Conclusion and Recommendation

Organizational culture should focus on making employees work together as a unit to solve problems that the organization faces to succeed in its endeavors. Rather than keeping secrets from one’s own boss and hiding key information, a company-first approach and communicative organization is one that will wholly succeed at all levels. Ford is a living example that failed to have this mindset and the results were disastrous, with the consequences reverberating for years to come. Trust and relationships shattered, with the leadership unwilling to take blame for the downward spiral. However, change is always possible. Despite the fact progress would no doubt be delayed, a transformation for any organization is possible.

We recommend that a more hands-on approach is needed at Ford. Mulally must be involved in meetings on a one-on-one basis and create trust between not only himself and those that report to him, but also amongst management itself. The culture will shift to motivate employees to learn new skills, rewarding them when they succeed, and promote an ethical program to encourage righteous behavior while deterring anyone from partaking in unethical behavior. The most important function that will open is the flow of communication. No longer will managers ignore their subordinates’ concerns or lie and harm the company; rather, the dam will be opened, marking the shift of culture at Ford.

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