Coloplast A/S is a Danish multinational company which operates in the global medical devices industry and focuses primarily on five business areas that require the development of ostomy and continence health care, breast care, epidermis health and wound maintenance systems. It also provides associated, medical services that aim to contribute to people's better standard of living.
In order to improve its capabilities for getting together with the increasing global demand as achieving its growth and profit targets, Coloplast undertook a significant offshoring process which concerned relocation of volume production for adult products to Hungary. Moving area of the volume production to Hungary would enable the Company to access low-cost resources (e. g. individual labour, favourable corporate taxes of 16%), take benefit of the economies of scale and increase productivity. Even though the relocation improved Coloplast's opportunities to accomplish its strategic goals, it generated a number of conditions that had to do with the inner environment of the business and also helped bring serious organizational challenges into target.
One of the main issues which Coloplast got to deal with was the reconsideration and marketing of its organizational structure. As George & Jones (2005, p. 538) recommended, "organizational composition is the formal system of job reporting associations that handles, coordinates, and motivates employees in order that they cooperate and interact to achieve the organization's goals". A correct organizational structure decides the way the decision-making is applied at all degrees of the business enterprise, allows the effective allocation of obligations for all jobs and functions to the employees, helps working romantic relationships between different sections of the organization, keeps order and command while at exactly the same time promotes versatility and creativeness. Thus, it is crucial for an organization to have an efficient organizational framework in order to perform its strategic goals.
Coloplast, like several other global organizations, had a decentralized organizational structure which means that decision-making vitality was delegated from higher to lower levels, relatively away from the central specialist. In this kind of organizational framework, there's a high degree of autonomy and subordinates are expected to demonstrate initiative and managerial efficiency while in a highly centralized authority framework, only a few powerful individuals or groupings retain decision-making vitality and subordinates are likely to operate within relatively narrow latitudes.
The optimal degree of centralization of authority depends after a complex array of interrelated factors (Wexley and Yukl, 1977). Generally, keeping a decentralized composition enables decisions closer to the operational degree of work, enhances responsiveness to local circumstances (Mullins, 2005), stimulates managerial efficiency and improves employee satisfaction (the consequence of giving people increased opportunities to take responsibility for their own actions) (Delta Publishing, 2006). However, problems in coordination of specific entities and lack of control may occur.
On the other hands, centralization gets the features of easier implementation of any common policy, more steady strategy, upgraded economies of range, better and faster decision making and greater use of field of expertise (Butler, 2008). According to Connors et. al (2005), centralized constructions are more advisable to the degree that "(1) there were good marketing communications with subunits; (2) higher-level professionals get access to staff specialists or other information sources that are not easily available to lower-level professionals; (3) higher-level professionals have the same knowledge of local conditions as do lower-level managers; and (4) decision rate is only a minor consideration". However, the actual fact that it induces the authoritative management style, its use may limit the response of a business to an exterior environment is the primary disadvantage of a high.
Figure 2: Centralized vs. Decentralized Organizational structure
The reason why Coloplast encountered organizational structure issues was the large distance between the new creation facilities in Hungary and the other plant life located in Denmark. The fact that Coloplast possessed a decentralized organizational structure worked perfectly for its Danish development facilities (the length between them is short and the communication is not too difficult), but when the Hungarian place was added, major problems happened in terms of control and communication between the several production models and the management. Decentralization of the production facilities, combined with lack of resolved procedures and organized interfaces, complicated the jobs of documents of planning and standardization of production systems. Furthermore, having less documentation of the company's development techniques and equipment operation (because of the fact that the Danish process providers knew the way to handle inconsistencies in procedure of equipment but this knowledge had not been documented in manuals) experienced serious effects on the operational performance of the Hungarian unit and needed to be tackled.
Another inside organizational issue that Coloplast had to cope with was the effective transfer of knowledge from the Danish to the Hungarian employees. Transferring knowledge regarding the Company's creation systems and ways to new employees was a very challenging and complex procedure that required great deal of human interaction and lots of time specialized in training. Nevertheless, it was especially important for the business's management to build strategies for exchanging knowledge, so that it was accessible and useable by everyone in a way that it would favorably affect the overall organizational performance.
Although, Coloplast fixed the condition of transferring knowledge by mailing Danish operators to Tatabanya to teach their Hungarian co-workers, it faced a new task, which thus threatened the business's future growth. In particular, the situation was that there have been inherent geographical differences between your organizational culture of the Danish employees - which experienced evolved and efficiently served the business as time passes - and the organizational culture of the Hungarian employees. The unsympathetic methodology of these distinctions by the Danish workers combined with insufficient communication (due to the language hurdle) created misunderstandings plus some underestimation of the Hungarian staff' skills, even though they were technically proficient. Due to this obstacle, the Danish workers also didn't learn new, useful skills off their Hungarian counterparts.
Organizational culture, relating to Schein (1985-2005), is defined as "a routine of shared basic assumptions that the group discovered as it resolved its problems of external version and inside integration, that spent some time working well enough to be looked at valid and for that reason, to be taught to new associates as the correct way to understand, think, and feel in relation to those problems".
Coloplast management sought to prevent discord from happening through possessing a discussion board where all employees distributed and reviewed their views. This is a very effective strategy since all employees had an opportunity to give their views and therefore understand the other person better. The management also had a chance of becoming aware of the issues which faced employees and may therefore formulate solutions to the problems. It is important to carry regular community forums with employees especially in organizations with decentralized set ups to be remembered as aware of the issues facing them and to maintain control over the various branches or subsidiaries.
Critical analysis of the employees' desire and commitment
When Coloplast needed the decision to offshore area of the volume production to Hungary, this posed a significant threat to worker motivation and a significant challenge for the company's management, because so many employees were not familiar with the consequences of such change. Being conscious of this fact and to be able to eliminate the uncertainty one of the employees, the Coloplast management carefully engaged them along the way and ensured that of them got access to an increased level of information right away. Communicating straight and clearly while being honest and open, the management also made certain so it obtained responses from employees on their views and questions for the forthcoming relocation. This is very important in avoiding a negative effect on employee drive and dedication, which would adversely influence their performance and the overall productivity of the company.
It is extensively acknowledged that companies find it hard to modify to any organizational change due to the fact that many employees become de-motivated and for that reason resistant to change. This behaviour of scepticism, hesitation and resistance to adjust to new work conditions is typically based on worries of increased responsibilities, demotion or even loss of jobs and often causes stress between management and employees. These tensions, if allowed to continue, usually have therefore decreased company output and loss of competitive gain.
Employees' behaviour towards change are decisive to whether an organization's work for change are either successful or unsuccessful. "When employees own a strong, good attitude towards change, they are likely to behave in targeted, continual, and effortful techniques support and aid the change effort being integrated. However, when employees own a strong, negative attitude towards change, they will resist, oppose, scorn, thwart, and try to sabotage the change effort" (Lines, 2005). Therefore, it becomes clear that to be able to ensure an effective organizational change, an organization must give attention to the human part of change, by influencing the employees' behaviour, keeping their motivation and commitment high, giving them the drive to improve, and aligning their goals with those of the business.
Motivation does not have any standard definition. It has been thought as: "the subconscious process that provides behaviour purpose and path" (Kreitner, 1995) ; "those subconscious procedures that cause an arousal, course and persistency of voluntary activities that are goal focused" (Mitchell, 1982) ; "a person's unique set of needs in relation to particular situations. These needs make clear what drives a person, what his or her reaction is to various stimuli, and the effectiveness of behaviour, its persistence and persistency based on conscious decisions" (Winfield et. al. , 2004). Employees' drive is a key concept for any business since it strongly influences the organizational performance and, thus, the success and success of the business enterprise. Understanding what motivates employees and what increases their morale can not only help their individual goals to be performed but it will finally help the organizational objectives to be achieved.
Communication plays a essential role in keeping or even increasing the employees' motivation. Sharing the decision making and allowing real contribution in the situation resolving, heightens the employees' determination and reinforces their assurance. With regards to change, effective communication involves gathering important information in relation to the change process and distributing these details to everyone influenced. Clear, frequent, honest and well-timed communication is vital since it allows the employees to understand how these changes will influence them in person. Furthermore, the development of an efficient reviews system that measures the success of transition not only through the sight of management, but also through the eyes of employees, is one of the most crucial components in the motivation cycle.
From the aforementioned evaluation it is clear that with regards to the impact of offshoring on its employees' determination, Coloplast handled the challenge correctly. The management used communication very effectively by providing all the required information to its employees, developed an efficient feedback system where they could point out their thoughts and questions, and generally ensured the involvement of most employees in the change process. Furthermore, it lessened their sensible concerns over layoffs by offering new positions and additional training to people who were going to be afflicted by the relocation. This process, increased the employees' morale, strengthened their determination and managed their inspiration at a high level.
The fact that Coloplast contacted this problem effectively, identifying staff motivation and determination as key factors to the successful execution of organizational change, can help the business achieve its future plans for growth. Getting the view that staff commitment, and so performance, comes via steadiness in communication, desire and leadership is a power that will most likely lead to success.
Recommendations
In order to cope with the issues of communication and control, the Coloplast management needs to turn to a far more centralized organizational composition where duty of the management to use measures which will ensure that the entire control and communication of different vegetation works well and successful. The Coloplast management can achieve control through linking all development plants using IT technology as well as organizing frequent meetings between the managers of the several plants also to management. This will allow the management maintain control of Coloplast.
