Reference no: EM132307050

Designing and Implementing a Rewards System at Disk Drives, Inc.

Learning Outcomes:

1. Identify the different elements and issues of organizations development and creating the need for change. (Lo 1.2 & 2.4)

2. Define the human, structural and strategic dimensions of the organizational development (Lo 1.5 & 3.1)

3. Analyze the strategic role of change in the organization and its impact on organizational performance(Lo 2.9)

Objectives of the Case:

1. To illustrate the importance of corporate decentralized decision-making within highly competitive and highly technical industries in order to boost innovation, operate with speed, and decrease the margin for technical error

2. To understand the effect that organizational structure has on all other aspects of a business, including external aspects like the ability to successfully compete in the market, and internal aspects like the effectiveness of the company’s performance management system

Overview of the Case:

Disk Drives, Inc. (DDI) was a company originally started to produce large-format disk drives and then decided to move strategically in a different direction. DDI began to produce smaller disk drives with a lower cost and a lower price in order to break into a new market. However, they were late to the market, fell behind on the experience curve, and failed to achieve the market share they had predicted. The new, smaller product line faltered. In order to regain capital and recoup sales, the company outsourced manufacturing to Japan and initiated a focus market strategy with an aim towards the personal computer, or PC, industry.

Manufacturing disk drives for companies that built PCs promised a profitable future if DDI could maintain technological relevancy within the industry and could handle the demand of both the short product life-style, the competitive bid process, and the logistical demand of distribution. Keeping all this in mind, DDI’s CEO decided that the company could be more efficient, and more able to handle and maintain growth, if the Executive Committee released control of daily functional and operational decision-making in order to focus on the more strategic aspects of the company. In order to best align the abilities of the company with the needs of the market, DDI created a matrix structure in which functional managers from multiple departments, all highly skilled in their particular line of work, would form teams assigned to disk drive projects. This cross-functional teams would ensure that the individual business units within the company worked closely together to flawlessly execute each disk drive from inception to completion and all the way through to customer response management. The new structure would also allow daily decision-making to be carried out by managers who had more expertise regarding the DDI product line and a more in-depth understanding of how the daily operations were carried out.

The operational model overhaul of DDI was a bold and intelligent move on the part of the CEO and his team. However, the case ends with a decision still needing to be made: how to alter the internal performance management system in order to best motivate and reward managers within the new corporate structure.

Questions:

1. Does DDI need a new performance system to account for the structural and management process changes they are contemplating? Why or why not?

2. Assuming a modification to the performance management system is necessary; describe the features of a system you would recommend. What changes need to be made in the goal setting, feedback/appraisal, and reward systems at DDI?

3. Describe the change management process you would use to design and implement the new system. What roles and responsibilities should the executive team take on? How fast should the system be implemented?