This report seeks to offer a clear point of view on the most favorable managerial structure that would be appropriate for the Redell Company and some extra organizational structures to reach the company’s main objectives.
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Here in this report, the responsibilities, functions and tasks of a controller in an organization will be discussed in a deeper approach to be able to determine whether or not the Redell Company requires a change of system.
In the report I shall be assessing the different angles whether positive or negative of both the Martex and the Redell methods of management to determine which is more appropriate and which conforms better to the organization’s objectives. Also in this paper, methods and ways to implement the Martex method in the Redell Company will be highlighted and discussed.
Personal issues can be tragic in respect to the performance and development of a company. In this case study, there are two different points of controllership which are; the corporate controller whose responsibility is to overlook all the financial processes involved in the organization.
Chain of command
Movement of funds in and out of the company and the way money is spent is solely the responsibility of the corporate controllers of the company. However, the divisional controller reports to the divisional manager who then reports to the corporate controller. From here, information received by the corporate controller is then directed to the organization’s directors (Ashton 49).
The structure as described above has many challenges and mishaps in between and it is for this reason the controller is raising his concerns. The fact that the divisional controller reports to the divisional manager is causing concerns that there is a possibility that the divisional manager may be given biased information since he does not get the information first had from the ground.
In this particular case, the Redell Company is the main focus and it is clearly seen that the sour relationship between the divisional controller and the corporate controller is affecting the development of this company.
As Bevins laments the responsibilities of the two departments are the major surce of the current dispute in the organization. Bevins suggests that a control structure similar to Martex be applied to bring this matter to rest. His main interest in this company is to make changes that would place the corporate control in a better position to effect reasonable budgets and analyze its performance.
However, this effect is watered down by the division controllers as their loyalty is in the division managers and as Bevin’s laments; they have been maliciously submitting inaccurate and biased information about their performance. Reports on budgets are biased and inaccurate and this has raised concerns about the adequacy of the information offered from the division department.
Bevins is suggesting that the best solution towards this problem would be implementing the Martex Company’s method (Banik). The Redell Company like any other business venture’s aim and main objective is to be profitable and increase in growth. The major issue in the case of the Rendell Company is the conflict of interest between the two departments.
A corporate controller’s responsibility is to ensure that minimum funds are in the budgetary allocations in order to ensure the maximum profitability of a company. The divisional general managerial responsibilities on the other hand include utilization of the company’s resources in a profitable manner with minimal instances of making losses.
The conflict arises as a result of the controller trying to minimize the amount of funds or resources that the manager is asking for (Ashton 49). The management in its own wisdom comes up with a budget but it is the responsibility of the corporate controller to ensure minimum use of funds to realize more profits.
This conflict is about different point of views where the manager feels he or she needs more funds to run his or her department and on the other hand the controller sees no need to use such large amounts of the company’s resource in a single department.
Strengths and weaknesses
The Martex method has both weak sides and strong sides. One of the strengths in the matrix method is the fact that the divisional controllers are free to perform actions without consulting. Goal congruence is achieved through sharing of benefits. Unlike the Redell Company’s method, the Martex method allows for reliable and authentic information sharing.
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However, this method has a number of limitations that can be disastrous to the general performance of the Redell Company. Goal similarities between the divisional controllers and the divisional general managers may be limiting the ultimate objectives of the division (Ashton 49). The divisional controllers may be seen as traitors and not part of the company’s working team.
Therefore, they can not work adequately and effectively while they face discrimination and are sidelined by the rest of the team. Having control measures clearly spelt out discourages the managers from making effective and desired budgets. The managers already aware of the possibilities that their requests may be turned down they will refrain from any budgetary submissions that would raise issues.
This is very dangerous as the departments may not be well furnished financially hence compromise on its productivity (Anthony). The ultimate consequence is that the working drive goes down and the workers are discouraged hence a high probability of making losses is more (Ashton 49).
Workers need to be motivated and driven by favorable working environment and contentment in the working stations. Allocation of resources according to the recommended budgets by the responsible heads is important to follow in order to reach the departmental goals which collectively lead to the greater goal of the company, which is growth and profitability.
Control points therefore have a direct influence on the budgetary decisions whether or not they may hamper the function ability of the company.
Comparison of the two methods
Compared to the Rendell method, the Martex is far much better to go with as will be discussed below (Banik). Some of the strengths in this method include the fact that there is a warm relationship between the division controller and the division general manager. The advantage accrued from this is that information is effectively shared internally.
The division controller and his subjects share a common gal as they function as a team. This by extension gives the method the advantage of immediate budget approval due to the direct mutual interaction between the departments. Nonetheless, the method has a number of limitations.
One of the major limitations is the fact that the divisional general manager can easily influence the financial reports and hide and cover instances of misappropriations in the department. This can have adverse implications on the financial well being of the company as embezzlement of funds my lead the company to bankruptcy (Ashton 49).
Divisional controller as opposed to the Martex method is not really empowered. This means that while budgetary exaggerations can occur, the relevant authorities to regulate these allocations are not well empowered to stop such a fraudulent actions in the event that one occurs. Another limitation as the corporate controller is complaining is that the flow of information may not be as honest as supposed.
There can be cases of irregularities while submitting financial reports to the corporate controller. There stands a greater chance for the division controller and the division general manager to collude to embezzle funds or misuse resources. The Martex Company is notably inclined on the functional organization structure as opposed to the Rendell’s business unit structure.
Organization structure is a business structure that puts into accounts things like job distribution, management and regulation. However, organizations are differently structured according to their objectives.
The Martex structure of organization shows clearly that the company is more inclined with the central organizational objectives rather than the managerial goals. With the Rendell Company, the general manager’s objectives are the main source of concern.
The Martex method allows for the use of the controller. To achieve goal congruence in the Rendell Company, the only alternative there is might be this only way, to apply the Martex method in their system. Goal congruence is only possible when the Martex method is assumed into the organization.
It very possible to find that division managers may be tempted to work towards protecting their own interests as opposed to the central objectives of the entire organization (Ashton 49). The division controllers should remain under the corporate controllers if goal congruence is to be achieved.
The purpose of management is to plan, organize, lead, and control, functions that are fundamental if achieving an organization’s vision is to be realized. Every aspect of management is dependent on the other and no part of management can function without the other. Planning come prior to organizing, planning, leading and controlling.
Planning necessitates the evaluation the company’s current performance and the future expectations in regards to the goals set. Good managerial policies will include fruitful decisions on how to reach the stipulated goals and effectively achieve the organizations objectives.
Solving the problem
Determining the goals and objectives that can effectively help the organization to reach its goals is what good and efficient managerial skills are al about. The Rendell Company for example has discovered some policies that are working in other companies to be effectively useful to their administration. The Martex method is a good example in this case.
The company wants to implement these methods to avoid the biasness in its flow of information. Seeing a problem is one thing but implementing policies and ways to shield the company from such activities is a whole different issue.
Planning is a constant process to ensure that the company keeps its objectives right and constantly evaluating the situation to be able to know when to make a move and most importantly which move to make (Anthony). Development plans are important to have as they help the company to determine the course of direction to take in response to the objectives set and goals prospected.
Every company has their own philosophy or way of doing things that make them unique and things that work to their advantage putting them ahead of the competition. Demonstrating teamwork and achieving results are the only way to tell how well managerial strategies are being effective and to establish whether or not they are working towards the organization’s objectives or otherwise.
In the case of Rendell Company, the strategies laid in the managerial level are bringing the company to a conflict hence the differences between the division manager and the corporate controller. Planning as the foundation of managerial strategies includes the identification and selection of the companies priorities and putting them into perspective to deal with the first things first.
Accomplishing the results again is a managerial responsibility and how well this is achieved shows the effectiveness of the strategy. The alternative as discussed above in this paper is more associated with the company’s objectives and organizational system. The suggestion after examining the system followed by the Rendell Company shows that the existing system is more efficient.
Better relationship between division managers and the division controllers gives a solution to the problem of biasness and this enables the division controllers to communicate directly to their superiors (Ashton 49). Tactical issues with this kind of a system in place are dealt with so easily, very conveniently and in a faster way. Corporate controller is more certain in information provided by the division controllers.
Loyalty problems are arising because division managers feel undermined and watched and held in suspicion a factor that may lead to more problems in the ultimate end. Maintaining the power system in the divisions can be a good move in this case where a conflict of interest is the main bone of contention.
To solve the conflict between the departments, the organization should consider stipulating clearly the roles and mandates of each and every department. The conflict is basically based on miss understanding and unclear information on the organizational power structures. It is very crucial for an organization to have his demarcations regarding the powers and responsibilities ironed out properly to avoid such circumstances.
The case in Rendell is a clear example of what such uncertainties can create (Verbeeten 123). The organization can clearly highlight changes of departmental powers and make sure these rule are clearly understood and well appreciated. It should be clearly articulated that there is a change in the responsibilities and powers of the corporate controller, the division controller as well as the division manager.
These changes are inevitable as the conflict revolve around the same. The unclear circumstances under which the corporate controller can not influence the budgetary proposals from the divisional managers are in questionable. There are other factors that can be considered however to ensure goal congruency in the organization.
With the current advancement in the technological world, IT based data should be given priority. In such circumstances where information can be influenced and misrepresented to facilitate personal gain and to benefit self at the expense of the common collective good of the organization then IT could come in handy.
Technology in the business world and administrative functions is sufficient to provide effective and efficient information without biasness. This can go along way in averting some of the situations as seen in the case of the Rendell Company. In this case therefore, initiating the Martex method needs a careful approach one that would lead to a peaceful and effective transition from the current system into the new found way.
Formalizing the new job descriptions for the division controllers should be the first step in this overhaul. All departments shall be served with description letters showing and describing their mandate and positions in the decision making process. Process, procedure and methods should be made public to the members of the organization.
Having a centralized goal that focuses on the organizational objectives is should be seen as the main agenda in the organization. Focusing on individual managerial objectives with the expectations that it may yield the ultimate common goal can be disappointing at times as there can raise issues of selfishness within the various departments.
It should be clearly put that the managerial goals are subsidiary to those of the organization to avoid instance of people pushing for their own selfish agendas. Through out the study, clearly the Rendell Company requires urgent changes to revive its ability reach the set goals.
For a company to achieve its goals and objectives, there has to be well laid structures that support the intention to reach these goals. This therefore means that the company should always review its policies to ensure that no records of incompetence can be tracked or seen in their activities.
Maintaining a good working environment and a clear system especially in the levels of hierarchy and power is of paramount importance as it is through workers satisfaction that can get the job done effectively.
Workers need to feel protected to give them a sense of belonging to the company and hence to give them motivation to work (Charles Sturt University). Management in every organization is a determining factor on the profitability and the value of the company. Poor management strategies can really have severe implications on the company’s performance and productivity.
The reason why the two controllers in case above is because one feels undermined and like he is not part of the team as discussed earlier. This feeling hampers his ability to deliver properly in terms of offering services to the organization. This has brought so much tension and is making the two have a conflict.
Such conflicts can rise in all levels of the administration and calls for more sober implementation of policies that would avoid such instances. In the case we have just studied it is apparent that the Rendell Company requires a more sane structure that would separate the power of the controllers and stipulate each controller with their own position.
This would help if the goal congruence is something that a company wishes to achieve whether on the long or short term. Having policies that favor goal congruence is beneficial to the company survival. So as to achieve this though, a good and perfect example has been offered by the Martex company method of management.
The corporate controller had already seen this and was suggesting the same be done in the Redell Company to allow for better results and enhance congruence of goals and objectives. In this paper, the advantages and disadvantages of the Martex method as well as the merits and demerits of the Rendell method have been clearly discuses.
Ashton, David. “The impact of organizational structure and practices on learning in the workplace.” International Journal of Training and Development. 8.1(2004): 43–53. Web.
Anthony, Robert, and Vijay Govindarajan, Management Control Systems, New York: NY, 2000. Print.
Banik, Aviroop. Management control system- Rendell Company case. 2012. Web.
Charles Sturt University. Organizational Structure. 2012. Web.
Verbeeten. “The Impact of Business Unit strategy, Structure and Technical Innovativeness on Change in Management Accounting and Control Systems at the Business Unit Level: An Empirical Analysis.” International Journal of Management. 27.1(2010): 123-143. Web.