Organization Behavior II

Vistra Motor Corporation:

Dilemma in achieving targets in Matrix
Organization

By
Ashutosh K Tripathy
Roll No. MP13017
BM (E) 13-16

XLRI Jamshedpur

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Vistra Motor Corporation has often been referred to as a company which has always set
the standards for other to be followed. The company has manufacturing facility in 4
different locations with the corporate office in Mumbai. The company has faced a higher
attrition rates in the past two years. The top management has decided to have a new
matrix reporting structure in place of the current pure hierarchical, mechanistic and
vertical structure. The top management took the inputs from external consultant also in
this regard. Finally the company has decided to have different verticals in the
organization. The majors were Supply chain, project planning, NPI and manufacturing.
There were some new concepts which were introduced in the proposed organization
structure. E.g. the procurement of parts for all plants locations was with the central
supply chain department and not with the plant as in past. The current changes gave a
lot of positive results to the organization in terms of financials. This change was
discussed and was proving a boon for the company as it was done amidst the recession
period. Due to intermingling of departments across different manufacturing locations the
company got an upper hand in the bargaining power from the suppliers. Apart from this
there were other benefits in terms of reducing extra manpower due to the centralization
of different activities across multiple manufacturing locations.
On other hand as we know every good thing come at certain cost, this change was not
an exception. There was lots of ambiguity in the mind of employees. The procurement
group was in topsy-turvy of obeying their vertical boss or to the plant head of the current
location. The middle management and the lower management group were unable to
understand the dynamics of appraisal system in the changed scenario. The company
has to decide the further course of action in terms of bringing the clarity and removing
the ambiguity which has entered into the roots.

Vistra Motors Corporation

Vistra Motor Corporation is Indias one of the leading automobile company, with
consolidated revenues of INR 2, 32,834 crores (USD 38.9 billion) in 2013-14. Through
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subsidiaries and associate companies, Vistra Motor Corporation has operations in the
UK, South Korea, Thailand, South Africa and Indonesia. It also has an industrial joint
venture with one of the Italian company in India. The company claims to be the
countrys market leader in commercial vehicles and among the top in passenger
vehicles. The products of the company are being marketed in several countries in
Europe, Africa, the Middle East, South Asia, South East Asia, South America and
Russia.
Vistra Motor Corporation is having employee base of approximately 28000. The
company adopts an innovative HR practices. It helps its employees by its best HR
practices. The company provides employees good career paths in accordance to its
corporate objectives.
.

Organization structure
The company witnesses most marked turnarounds in 2008. It was a unique
phenomenon for any Indian manufacturing company in India. The 5 billion rupee loss in
2008 triggered a major change in the organization structure in the company. The
proposed change in the organization structure was one of the major strategies towards
a better future. The change was being planned in a phase manner keeping in mind the
cost reduction. This was going to be a huge challenge as the company was following
beaurocratic organization structure.

The change in structure was being planned by prioritizing the knowledge management.
In the case of company, the organization has understood the importance of interactions
between employers and workers. The process could be both formal and informal and
the objective is to make employees feel more bound to the organization. Gathering and

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sharing knowledge is another way. At present the company has a relatively flat
structure.

Listed below are the old and proposed organization structures in the company along
with its pro and cons.

Current organization structure

Currently the organization is dominated by the beurocracy at almost all levels. It has a
mechanistic Organization structure. As a result it is rigid and controlled tightly. It has a
rigid departmentalization, narrow periods of control, high formalization and there is
limited information network across locations.
There were lot many verticals and without any relation among the verticals. All
employees were responsible for their vertical structure. There was hardly any interaction
among the departments. There was a lack of liaising in between the departments.
This has led loss in term of implementation of new projects. The program management
was the most hit by this .As a result of this the company stared lagging behind in term
so introduction of new products as compared to its competitors. There were some
advantages and some disadvantages of the current structure.

Advantages

A stable environment is created.

Managers at a lower-level are not enabled in the decision-making process as
managers at the upper-level
Decisions are relatively minor and often managers at a lower-level do not want to
have a say in the decision-making process.

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Disadvantages

The environment becomes static and complex.

Late introduction of New products
Lack of urgency
Late decision on pity issues.
Lack of interaction among different levels.
Manpower dedicated toward its hierarchy and not toward the immediate
requirements.
Lack of Work beyond boundary
Rigid and static organization.
Sows and resists adaptation to change in environmental situations
No planning for high competitive environment.

Proposed organization structure

Vistra Motor Corporation has formulated a strategy for the next phase implementation of
the changed organization structure. The organization is focusing on bringing a good
leadership for the future. Along with it also want to increase the employee engagement
by bringing changes in the organization structure. This change was being planned
keeping cost as one of the major driver. The company has planned to go for a matrix
reporting structure. It has also engaged an external consultant. The company has
managed to quantify the cost advantage by adopting the matrix organization. In addition
to this it was also convinced about the increase in employee engagement and use of
good talent all across the plant.
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This case talks about the after math of the implementation of the matrix organization.
There were lot of ambiguity among the employees, especially in the middle and lower
level. The case focuses on the supply chain department. The conversation between
Varun and his immediate administrative boss is cited below. This is one of the
examples. There were many cases where the employees were getting disengaged in
spite of engaged.

The Dilemma:
On the day Varun returned from Kolhapur, his immediate administrative reporting boss
Anupam initiated a discussion about the benefits out of his current visit to the supplier.

Varun: I am unable to understand the benefits out of my supplier visit. I do not think I
have done any justice by visiting to the supplier.
Anupam: Why do you think so. You were send there with some purpose. I think you will
appreciate that the visit was to safeguard our self from the forth coming manufacturing
planning.

Varun: I think a viable solution could have been done centrally.

Anupam: But that move would have given us the late result.

Varun: Have we ever calculated the project cost of such move.

Anupam: That may be irrelevant as of now.

Varun: As we all know we are passing by recession and we must try our level best for
cost cutting

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Anupam: You are right. But why are you thinking so.

Varun: I want to convey the message that the current clash of egos of the top
management is due to the vague and clashing job responsibilities.
Anupam: But we all are having our goal documents. Is not it!!

Varun: I mean to say that the problem has erupted due to the current changes made in
the organization structure.
Anupam: I may agree up to some extent with you. But Hmm..

At the end Varun and his boss were in dole drum situation. They were unable to
conclude the discussion. Both persons were realizing with intuition that the problem
which persist is primarily due to wrong distribution of duties, which was an outcome of
wrong organization structure. And somehow the organization as a whole was losing
heavily in spite of gaining.
This type of ambiguity was in lot many departments and every one was unable to solve
or address the issue. All such discussions were happening in either lower or middle
management; the senior leadership was unaware of the situation. The situation was
expected to get worsen with the forth coming appraisals coming into the pipeline. Some
employees were unable to understand whom to abide either the administrative boss of
the functional reporting boss. Many persons were visualizing the drain out of money out
of conflict in the reporting structure but were totally helpless in terms of deciding as it
were directed by the top leadership. There was clash of ego clash among administrative
and functional bosses.

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Conclusion and Suggestion:

The roles clarity documents must be made for all in the organization and must be
signed off by the boss and his subordinate. This will help the company to eliminate the
delicacy of work. The company should brainstorm about the adoption of matrix reporting
structure. The appraisal of a person should be with the nearest or functional reporting
boss. The importance of an administrative boss should be limited up to some agreed
limit and that limit should be decided by the organization a whole. It should move
towards Organic Organization. It should adopt a structure which is flexible and suitable
for non-standardized jobs. It can think of adopting fluid team-based structure. The direct
supervision from two points should be reduced to minimal limits.
This will help to prevent the peeping out of vertical organization. Overall, the summary
should not be interpreted as an undermining for the thoughts of Working beyond
boundary. In any case and all scenarios this type of thought will prevail for the leaders
and followers who are far ahead in a race.

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