Re-evaluting Descon’s Organizational Structure

Symptom : Rapid business growth and the need to improve coordination among various managers in different units .

Problem : Inflexible structure and lack of operational efficiency.

Razak S. Dawood begins it’s operations in 1977 who wanted to establish a well integrated engineering company offering a large number of products for the customers.He wanted to provide almost all the engineering services under one roof. By 1990 descon had a clear scope of services they wanted to provide. engineering services which designed equipments,pipings,pressure vessels,and steel structures.Electrical and instrumental services supplied products and services for electrical and instrumentation industry,WETS( water and effluent treatment services) which would focus on supplying water softeners,demineralizers,industrial waste treatment plants,construction services which woud offer mechanical civil construction servies,DEW ( descon engineering works) which would provide fabricated industrial equipments,pressure vessels,heat exchangers boilers,tanks,stainless steel equipments etc.And lastly descon plant services which would provide operational and maintaneance services for varios industrial projects.

Estimation of business prospects :

Descon contirbuted it’s effort on three main industries :

a) Powerb) Cementc) Hydrocarbon

Descon’s main concern for business attributed to the above mentioned industries.Descon’s business prospects used to vary according to the industrial dynamics of the three mentioned industry.Their main concern was to generate maximum business from power,cement and hydrocarbon industries.Razak S. Dawood was sharp enough to mointor the ongoing business trends and was efficent enough to align his business with the ongoing needs and business requirments.He always had a know-how about how well to utilize an opportunity.

Human Resource Pool : 1978

Need for Human Resource Department :

A growing organization’s strength can always be attributed to it’s resources.The more inputs an organziation puts in,the better it’s processes would be which further result in greater output.Descon’s model at first was initiated with the sole purpose of providing integrated engineering services whoes scope was very well clear in Razak’s mind,but that scope required support from organization’s internal environment.

Challenge: Descon’s HR like other companies has the major impediment finding the right person for the right job

Solution: Proper Job analysis and heavy investments in training of employees were considered the major success for meeting perfomance criteria.

Departmentalization and business advancements :

As descon’s business was rapidly growing it’s assets mostly employees were necessary to commence operations.For that purpose Descon started it’s operations by hiring one mechanical engineer,an electrical engineer,two chemical engineers and a finance manager.These personals direclty reported to Razak.

During 1978, rapid growth in business required a vast human resource department.Descon won contract from a sugar mill and also initiated small projects on oil refinery,fertilizers and building a construction unit for karachi steel mills.These all business propositions required diversity of employees.Different employees were to be recruited for fulfilling the business purpose.

Era of 1978 already resulted in departmentalization from Razak’s behalf,since to commence operations Razak hired different engineer’s who had a distinct business purpose to accomplish.Since then,the departments were made into : Corporate offices,engineering division,manufacturing division and associated companies.This clearly was an initiation to give Descon a structure.

Culture Orientation :

Razak characterized Descon by workforce diversity.Irrespective of gender, Descon’s CEO hired female engineers to work in the design section rather than field work.Razak believed that females had a greater sense of creativity which maybe more fruitful than assigning clerical duties to them.Also,Razak had been looking forward in creating an innovative culture based on involvement,commuication,creativity and diversity.Furthermore Razak had a strong belief for communicating ethics into the work environment.Culture that supports ethical standards can very well be supported by Razak’s appreciation for employees in terms of respect,fairness,equity and justice.

Organization Structure :

Descon at first had a formal organizational structure only for name where jobs were standardized to the extend that Razak was controlling employee behavior through rules and procedures there was still a need for highly formalized organizational structure as Descon’s business was expanding over a periods of years.Eventhough targets were being achieved,still Descon required a highly formalized structure distingushed with explicit job descriptions,organizational rules and clearly defined procedures covering work processes.This became evident before the end of 1986 when Razak was facing new organizational challenges.Before looking into the 86’ era,a couple of other era’s require attention as restructing was required due them.

During 1982 : A separate marketing Department was established.

During 1983 :Designs,fabrication and technical functions were added.Also a post for technical director was created to serve as a coordinator between the chief executive and the department heads.

During 1985 : The need for a technical director was necessary as Descon’s workload,size and number of contracts kept expanding during this era.This era also added an overseas operations department head as Razak had diversified it’s operations in saudi arabi,UAE and iraq.

It was untill 1986 that the company already operating functionally required a highly formal functional departmentalization.This was because Descon had added descon mechanical products( DMP),descon electro-system (DES),and water and effluent treatment srvice ( WETS )in its activities and it was getting difficult for Razak to handle everything by himself.Razak from 1977 till 1986 had been following centralized organizational design where most of the decisions were taken by him.In such a centralized organizational design it would get difficult for Razak to manage a wider or larger span of control.A wider or larger span of control was bein evident from the ongoing business expansion.In such situation it was untill 1987 when he decided to shift the organizations design to a decentralized organizational design where the lower-level employees would provide input or actually make decisions.Allowing such liberty to employees Razak also communicated a message of supervision stating that centralized policy and control,where he made sure that policy and

financial decisions were to be made by the high level administration.This policy gave birth to a new organizational structure :

Such an elaborative organizational structure instead of enhancing decision-making power among different functional departments became a matter of controvery for Razak to take over.It was during a project KOT ADU when the coordination between mechanical and civil department was observed as a failure.On the other hand other departments like procurement couldn’t keep a proper inventory record.Such chaotic situations led to Razak’s decision for taking back the operational powers from the unit managers and untitled them as divison managers.

During 1988 work specialization was considered the solution to the among mentioned problems.Two new department heads were created i.e engineering and manufacturing.

Evolution of new culture emerging from new restructuring round :

During 1990 coordination at the corporate level was still a concern of talk between Razak and his operational heads.Coordination between manufacturing and engineering divison improved.

Control in the units was a major problem.A control system was made which was further sub-divided into profit and cost centres.This was the division of business units from service units.All the business units would be categorized into profit centres and all the service units would be categorized into cost centres.

Conclusion :

Razak’s vision for a future oriented organization had an utmost potential from the time of it’s establishment.Razak had already envisioned it as a long-term profit maximizing venture.What Razak lacked was a strong sense of organizational structure in terms of decentralization.Decentralization would never had been an issue for Descon if Razak over time commuicated a sense of more workplace spirtuality among it’s employees.Over the span of time,no doubt that Descon kept growing it’s employees required a more sense of practicality for living a flexible enviornment which is evident to change over time.Nothing is static,and an organizations success relies on multi-tasking resulting from changes in the environment.Eventhough centralization has been Descon’s success and Razak’s efficiency

in dealing with the matter is a benchmark,still Descon required a highly formalized organizational design from the start.