Question

Organisation Structure of Saxe Realty Company

Saxe Realty Company, Inc,. located in the San Francisco bay area, was founded in 1938 by Jules and Marion Saxe. For most of its history, the company was a single office agency run by its history, the company was a single-office agency run by its founders. Over time, the company grew in size and sales revenue, which increased from 41 million in 1973 to over 10 million in 1979. Rather than a single office, the company had six branches in the San Francisco and Marin County areas. The firm grew for many reasons. An important reason was the founders’ ability to do certain things very well. They knew how to select location, time moves, and design offices. They recruited and hired people with above-average ability and trained them to be effective salespeople. The rewards of growth were enjoyed by the Saxe family and employees of their firm. But with growth came problems stemming from the mismatch between the firm’s organization structure, management practices, and the requirements of a large firm compared to a small one. In the early days, Saxe Realty could handle its business matters in simple and informal ways. After all, its business matters in simple and informal ways. After all, it was a family corporation, and family members ran it as a family, not as a business. Some of the problems that surfaced with growth included the absence of clearly defined roles and areas of responsibility. People were in jobs because of family relationship rather than skills. Important decisions were made by relatively few people, who often did not have knowledge of all available information. The firm, moreover, had no strategic plan. It responded. The firm, moreover, had no strategic plan. It responded and reacted to opportunities rather than being responded. In a sense, the firm’s success had simply outgrown its organization. Saxe consequently had to make many changes in its operations and organization structure, the overriding goal being to move Saxe away from an entrepreneurial style firm toward a professionally managed one. The change itself involved a process of preparation and implementation. The organization structure that Saxe adopted relies on geography as the basis for departmentalization. There is a central office and the branch offices report to it. Geographic departmentalization encourages decentralization. One of the outcomes sought by Saxe’s top management. Branch management are responsible for the day to day activities of their offices. The central office maintains overall direction through planning and controlling processes. For example, all branch offices participate in the annual planning process, during which objective for each branch are developed. These objectives are then the targets and the responsibility of branch managers. Saxe’s top management developed formal descriptions for all key positions, defining the responsibilities of each job with special attention to avoiding overlap and duplication of effort. The company’s experience during its entreneurial stage was that things were often left undone because everyone assumed that someone else was doing them. In other instances, several people would assume responsibility for a task when it required the attension of only one person. A key consideration in the new organization structure was to define explicitly and formally the work expected from each individual job. The new structure provides for reporting channels from each branch associate to the chief executive officer. The chain of command is the channel for progress reports on planned objectives, financial and sales reports, and other informational needs. In comparison with the previous organization, the chain of command is much more explicit and formal. Individuals are encouraged to go through channels. The entire change at Saxe has been both extensive and time consuming. Nearly every aspect of the firm’s operations has been affected, and the changes took two years or more to fully implement.

Requirement

Make an analysis of the case study and find problems and  solutions for it.

Answer 1

The firm did the correct thing to go for organizational restructuring given the demand of its growth. The organization structure is also commendable offering decentralization, role clarity, working in participative style by deciding goals in consultation with geographical branches.

Problem is formalization. In the contemporary times, decisions need to be made faster and if one follows chain of command for everything then agility of firm will get affected as in the case. This would result in loss of revenue and customer. Frequent meetings can be fixed rather annual for personal touch and clarifications.

The people in firm are capable and trained as mentioned thus company should make policies so that the branch managers only resort help from CEO on crucial issues. This will give them more autonomy and their motivation will be high.

Management information system could solve the problem of reporting as it can be accessed by head office as per its requirements. A knowledge management system can overcome the informational needs of personnel at branches.