All companies today have internal and external forces that impact organizational behavior. The purpose of this paper is to explore the impact of internal and external forces on organizational behavior. The four forces we will discuss are, customer demands relating to Sinclair Oil, economic forces outside of Select Portfolio Servicing, restructuring within Nestle, and globalization factors relating to Northrop Grumman.
Customer demands have a large impact on organizational behavior (OB) of the Sinclair Oil Corporation (SOC). SOC owns and operates three oil refineries, a trucking division, a pipeline division, the retail service stations, and eight hotels and resorts. The diverse nature of the company leads to many different customer demands.
The oil refineries have two types of customers. The first is the retail service stations. The refineries must produce enough finished product each day to supply the service stations in 17 different states. The second type of customer is the federal government. Over the last eight years SOC has held the contract to provide jet fuel to Hill Air Force base. The average amount of finished product produced at the refineries is 600 hundred thousand barrels a day. This output is usually enough to supply the service stations needs and have some oil to put into reserve. Working conditions within the refinery are inherently dangerous, if production cannot keep up with demands operators often begin to feel additional pressure to keep pace; this distress can lead to additional dangers.
There are three different types of hotels and resorts within the SOC/Little America organization. There are roadside properties, which cater to travelers and tourists, the elegant hotels and the ski resorts. Each type of property gears itself and its organizational behavior towards the customer base. The roadside properties, such as Little America Cheyenne, have a more casual approach to the customers; due to the affluent nature at the Grand America the environment is formal. The resorts are highly influenced with a European flair. This help the customers feel a sense of adventure.
While customer demands are one of the primary forces on SOC, economic forces greatly impact the OB of Select Portfolio Servicing (SPS). SPS is a mortgage servicing company. The resource group or hardship group is within the loan resolution department. Loan resolution assists borrowers who have fallen delinquent on their mortgage. The resource group assists customers that have hardship, such as, illness, death, loss of employment for extended periods of time, and property damage. When the economy falters the activities of loan resolution are in higher demand.
Loan resolution and the resource group profit off the economic hardship of their customers. The purpose of loan resolution is to turn loss into profit for their investors. Loan resolution limits or prevents the loss which the investor experiences when a customer defaults.
Loan resolution is paid based off of the percentage of delinquent accounts that they get re-performing, get paid in full, or liquidate for a loss.
With the faulty economy there is more a more work that loan resolution must perform. Loan resolution is understaffed and overworked. The influx of high phone call volumes has caused little time for the resource group to complete their administrative duties. Morale is low department wide, largely due to the administration feeling they are performing two jobs daily. Answering phone calls and trying to complete the work the inbound calls generate cannot be completed eight hours a day. While loan resolution’s numbers still satisfy the investors giving them business, the administrative departments, such as, the resource group are becoming stressed and overwhelmed with a never-ending workload.
Economic factors affect companies like SPS and Nestlé alike, but Nestle has chosen restructuring as the answer to its dilemma. Nestle is suffering from the “big elephant” syndrome. In the old market diversifying and buying up the competition allowed it to survive and prosper, but in the new economy which is consumer driven the “big elephant” has been asked “to dance” for the customer. Nestle must rise to the challenge of change or it will be driven into extinction. The strategic decision makers at Nestle are trying to “trim the fat” on the elephant, and they have turned to organizational behavior to restructure their workforce.
Globalization and technology have evened out the playing field for Nestle and its competition. Nestle as well as the competition is able to obtain the same raw materials at the same prices, and technology has allowed each company quick and efficient ways to process information. So, where will Nestle find its sustainable competitive advantage for the future? The innovation and the motivation of its employees will be the source of its sustainable advantage. Nestle needs to find a way of unlocking this source of intellectual capital. The corporate leaders feel restructuring is the key.
This restructuring process has changed the organizational behavior of the company from a rigid hierarchical structure to a facilitator driven, empowered employee structure. The organization believes improving speed at the point of execution will make the business more successful, and it is the front line employees that are at the point of execution. To develop empowered employees organizational behavioral changes needed to be made. Monthly training has taken place on subjects like: change, communication, one hundred percent responsibility, situational leadership, and teamwork so far. Layers of supervision have been cut, and reincorporated into the workforce. Supervisors are being groomed as coaches and facilitators, instead micromanaging. Equipment operators are learning mechanical “first aid” to fix small problems and improve efficiency. A mentoring program has been instituted, so that empowered employees with positive attitudes are the role models for new workers.
Northrop Grumman Corporation (NGC) considers itself a world class leader in the production of military defense products. Many of these products are created for, and consumed by, customers in the United States, but many are also created and sold to companies and or countries all over the world.
The company’s current position has not been easy to reach. Maintaining and growing this position requires constant vigilance in an ever expanding global market place. In fact, global factors in today’s economy have forced the company to make constant internal improvements to remain competitive in the global market. Exportation of intellectual property and gains in technological advances and capabilities of companies in countries abroad have resulted in more foreign competition. The entry of additional competitors in the defense business market has forced companies like NGC to look closely at internal business processes to find ways to gain or maintain a competitive edge.
NGC has learned to modify the organizations overall behavior by training individuals in the use of business methods such as LEAN, Six Sigma and Training Within Industry (TWI). The following is a simplified description of what each of these business methods is intended to do. LEAN is specifically used to improve processes, manage inventory and manage movement of product throughout the production phase as well as eliminate practices which don’t add value. Six Sigma is applied as a tool to measure critical processes in a way that insures they stay under control.
This is essentially done by setting control limits and then collecting data and analyzing the trends or movement of data as it relates to the control limits. TWI is being employed to ensure that every employee has the proper skill set to function within their specified job requirements. This training process employs a regiment of training that teaches, measures what has been learned, as well as maintains critical training information and/or tricks of the trade. This training method also provides the company with details of each employee’s specific capabilities and certifications.
These internal changes have proven themselves invaluable to the company, saving NGC time, money, and valuable recourses as well as assist them in monitoring the company’s daily business. Most of all, changes in NGC’s OBhas been noticed by a number of the company’s customers who have noted the positive impact.