Introduction : Henry R.
Luce, Creator of Time-Life Magazine Empire once quoted, “ Business, more than any other occupation, is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight”. (Henry R. Luce Quotes 2010). Fluidity is pertinent for any corporation’s business survival in order to keep competition in check and continue to remain profitable especially in the current global market where competition and increasing consumer demands are a challenge. The main objective of this proposal is to provide an appropriate analysis pertaining the operational challenges faced by Cisco Systems, an Internet networking icon in their business environment towards achieving their strategic goals.
The analysis would include suitable recommendations to manage these challenges based upon concepts and theories from the planning and organizing component with attention to management by objectives and information systems. Cisco is a renowned company possessing one of the biggest market capitalizations in the world , they were quoted as ‘ one of the most astounding success stories of modern times’ in a book titled INSIDE CISCO – THE REAL STORY OF SUSTAINED M&A GROWTH by Ed Paulson. (Paulson 2001) Their list of products and services are seemingly endless and ranges from networking systems (i. e. routers and switches), collaboration, voice and video (i.
e. telepresence), data center (i. e. nified computing), small businesses (i.
e. wireless), home (i. e. home networking) and services such as technical services and advanced services.
(Cisco Systems, Inc 2010) However despite this success story, Cisco has also its fair share of setbacks and challenges. As an illustration, Cisco went through a series of stumbling blocks due to the dotcom bubble burst which took place in 2001, a global phenomenon which changed the company’s perspective and strategy towards their business organization. ‘ The world according to Chambers’, in Economist 2009, Issue 8646, Vol 392, pp 59-62) After the dotcom bubble burst, Cisco changed their organizational structure from a functional structure where criteria’s such as skills and speciality of an employee bore the emphasis of the formation of teams to a matrix structure which focuses up upon a concoction of functional and divisional structures, where the formation of teams of these specialists are based upon the focus of their particular environment (i. e. products serviced/provided, market nature, geographical setting etc. (‘ The world according to Chambers’, in Economist 2009, Issue 8646, Vol 392, pp 59-62 and Bartol et al.
p 323)Cisco’s new strategy, albeit a positive one still posed a series of challenges and issues that needs to be addressed to ensure maximum profitability and sustainable growth using its available resources and opportunities. Cisco’s Environment: Cisco clearly stresses on their visions, missions and goals to their employees and took various steps to emphasize these in order to spur compliance and motivation. (i. e.
he enforcement of carrying a card which boldly states these visions, missions and goals along with their primary identification card which are clearly displayed at their workplace) (Waters 2002) Their visions, missions and goals are stated in Appendix A of this proposal. (Networked at Cisco 2001, p 32) Initially, while dotcom businesses were still striving, Cisco’s organizational structure consisted of a functional structure (please refer Appendix B) where criteria’s such as skills and specialty of an employee bore the emphasis of the formation of their work teams. Bartol et al. p 323) However, the matrix structure was adopted. (‘ The world according to Chambers’, in Economist 2009, Issue 8646, Vol 392, pp 59-62) during their process of restructuring their organization.
This structure consists of a union of specialists from different divisions/departments (i. e. engineering, marketing etc) into specific teams to work on special projects on a temporary basis. (CRF Online Classrooms 2010) This in turn creates the possible need for an employee to have more than one superior to whom they would have to report to. Global Security Glossary 2010) The matrix structure focuses upon a concoction of functional and divisional structures, where the formations of teams of these specialists are based upon the focus of their particular environment (i. e.
products serviced/provided, market nature, geographical setting etc. ) (Bartol et al. p 323) Cisco divided their workforce of approximately 68, 574 employees (Cisco Systems, Inc 2010) into boards and councils and thus formed 50 boards and councils with approximately 750 members. Each board and councils were supported by working groups (please refer Appendix C), a vast change in comparison of their previous organization comprised of three lines of businesses, geared for telecom operators, large enterprises and smaller businesses. (‘ The world according to Chambers’, in Economist 2009, Issue 8646, Vol 392, pp 59-62) These working groups are set up based upon a set of rules which also governs how decisions should be made and evaluation of work should be carried out. John Chambers, CEO of Cisco advocates “ aggressive stretch goals” , however the matrix approach resulted in fatigue and decreased motivation among many employees who had to attend endless meetings especially senior executives , who are members of multiple working groups.
(‘ The world according to Chambers’, in Economist 2009, Issue 8646, Vol 392, pp 59-62) This may lead to lack of commitment towards achieving organizational goals. In reality, there is a need for Cisco to possess a structure which is able to make timely decisions to grasp opportunities as well as tackle issues and challenges should they arise. Management concepts and what they mean for a business: 1) Planning component : Organisation There are several notions towards what an organization represents. According to Howard E. Aldrich, “ An organization can be conceptualized as a collection of individuals deliberately structured within identifiable boundaries to achieve predetermined goals (Barnat 2007) In literal terms , it is a group of individuals working together to achieve a common goal . Each goal draws attention towards the path or strategy one has to take to achieve these goals.
WordNet Glossary 2010) Strategic Goals This proposal would be based upon Management By Objectives (MBO) to provide an appropriate analysis and key recommendations that could aid in achieving certain attainable goals. This method is crafted effectively to provide assistance to management in gaining accurate results through the maximization of available resources. MBO associates goals and subordinate objectives of an organization as well as provide performance evaluations which in turn could further prove beneficial in improving an organization’s performance. In a perfect world, employees would be driven to define their own time lines, motivations, objectives etc Steps in the MBO process: 2) Establish specific goals for various departments, subunits and individuals. Goals are developed by upper level managers to set a target for their respective departments to achieve the organizational goals, they communicate with their next lower level managers in the process of goal setting.
Goals are set in each level of the organization to aid or facilitate organization’s success. (Bartol et al. 008, p 221 – 222) 3) Formulate action plan This step defines the means or methods of achieving goals. These include planning the activities or measures that will be taken, areas of concern, individual responsibilities towards goal attainment, the resources and help needed, the time lines for achieving these goals and facilitate in looking for efficient and effective ways to reach objectives.
These methods are usually developed by subordinates and their supervisors. (Bartol et al. 2008, p 222) 4) Implement and maintain self controlIndividuals work towards goal attainment using the methods that they formulate in step 3, which allows them to evaluate their progress by referring to the goals that they have set. Managers and supervisors should communicate effectively with regards to progress and any glitch that may arise, provide guidance and support to subordinates experiencing problems and allow individuals to work more independently based on the action plans that were formulated. (Bartol et al. 2008, p 222) 5) Review progress periodicallyThis is essential to establish implementation of plans and achievement of goals.
They can be used to check individual progress, solve any problems that arise and alter action plans accordingly. (Bartol et al. 2008, p 222) 6) Appraise performance Performed annually by managers, to evaluate individual performance based on how close they are to achieving their goals, areas in which they can improve on, methods used to improve on these areas and actions to be taken to prevent the mistakes they made from recurring. (Bartol et al. 008, p 222) Each appraisal uses results as it’s key focus to evaluate performance. Management by Objectives (MBO) was chosen to support this proposal as the theory provides many advantages.
MBO was quoted as “ One of the rational school of management’s successful products” by the Economist. It focuses on actions that needs to be put into place in order to achieve organizational goals. (Rahman 2009). MBO strives for managers to develop methods that produce positive results rather than merely coordinating activities for work. Pro’s and Con’s of Management By Objective 2010) It also facilitates vertical and horizontal coordination by promoting effective communication among subordinates, supervisors and managers.
(Bartol et al. 2008 p 222) Another advantage of MBO is that it increases employee motivation and commitment towards attainment of goals as they are involved in the process of goal setting and formulating action plans and allowed to work more independently. (Rahman 2009) Involving them in the process pf goal setting also makes them have a better picture and creates awareness on the goals of their organisation. Through MBO, the SMART goals concept was introduced. SMART goals are defined as goals that are : Specific (describes desired outcomes), Measurable (Can be clearly described), Achievable (feasible and realistic), Relevant (to individual departments or division and organization’s mission with the common target of achieving organizational goals) and Time bound (has a target date) (Rahman 2009) Organizing Component : Organizing is defined as the actions taken by managers, using available resources in their operational environment to produce methods, aid in decision making process and achieve targets. Bartol et al.
2008, p 322) An organization structure, is “ the sum total of the ways in which it divides its labour into distinct tasks and then achieves coordination among them” (Mintzberg 1989) A good organization structure is important as good performance is not attainable in a poor organizational structure. (Bartol et al. 2008, p 322) The organizing theories that are used to aid this proposal are Centralization Versus Decentralization and Information Systems. Both these theories are applicable to Cisco’s matrix organizational structure as they have elements of vertical and horizontal coordination.
Centralization Versus Decentralization : Vertical coordination is defined as linking activities at the top of the organization with those at middle and lower levels. Centralization versus decentralization is one of the method that can be used for effective vertical coordination. (Bartol et al. 2008, p 328 – 329) Centralization is defined as extent to which power and authority are retained at the top organization levels, (Bartol et al. 2008, p 328 – 329) whereby only top managers are involved in decision making processes with negligible consideration towards their subordinate’s opinions. This is usually done by leaders who choose to maximize control over their organizations.
This method could prove useful in providing stabilization of certain corporations and needs a leader to provide key solutions especially in time of crisis. (Pieniazek 2007) Centralization can be an advantage to employees that prefer to be part of an organization where their leaders are bold in making decisions. As opposed to centralization, decentralization is the degree to which employees are given empowerment to make decisions and solve problems in their area of work. Decentralization gives organizations the advantage of dividing and sharing responsibilities related to decision making. Employees are able to improve their performance by taking corrective measures or act upon areas of work that need attention or their methods of performing certain duties without seeking prior approval from the higher management. Decentralization also gives managers the advantage of using their experiences and knowledge to make positive changes to their areas of responsibility.
Organizational Structure 2010) There are four criterias that are taken into consideration by managers when deciding on the balance of centralization and decentralization are large size – top level managers lack the time and knowledge to get involved in all major decision making processes, geographic dispersion – it is not very feasible for top managers to keep tab of operational details at multiple locations, technological complexity – it can be challenging for higher level management to keep up with the rapidly changing technology and Environmental uncertainty – Higher management is not able to make quick judgement calls in a rapidly changing environment. (Bartol et al. 2008, p 329) Many organizations face challenges in terms of balancing centralization and decentralization. (Organizational Structure 2010) Information SystemsHorizontal coordination is linking of activities across departments at similar levels and information systems is one of the methods of horizontal coordination. Information systems is defined as a system or process that provides the information necessary to manage an organization effectively. It is considered to be an important tool for business decisions and should support the strategic goals and objectives of its organization.
(Management Information Systems 1005) Information systems aids in disseminating accurate information to dedicated individuals within a stipulated time period. It is vital for an organization to have effective information systems due to the fluidity and intricacy of the current business environment. This can be illustrated in a situation where certain managers require pertinent information in a timely manner from another department to analyse certain trends and provide analytical solutions , and this can be achieved via Information System which can act as a communication tool between these departments. (i.
e. emails , internet telephony , telepresence, etc) (Various Advantages of Information Management Systems 2010) Information Systems was selected to aid this proposal due to its ability to provide important information quickly and effectively to facilitate decision making processes. Important decisions can then be made through effective planning by managers through pertinent information disseminated through Information Systems. It also assist managers to be kept in the loop of the operational situations of their respective areas of responsibilities in large and increasingly complex organizations. It also advocates Decentralization by giving empowerment to employees while being able to monitor their daily activities and decisions via access to information systems where employees update their progress and actions taken in handling certain situations via submission of online reports. (Various Advantages of Information Management Systems 2010) # analysis of Cisco from each management conceptual area and recommendations on what they should be doing : 1.
From Planning Component : Cisco’s strategic goals have been put into place and employees have been made known of the goals. Every employee in Cisco needs to have ONE understanding of Cisco’s goals and be able to relate the goals to their work so that they can be achieved. The importance of knowing and understanding the objective of Cisco’s goals should be stressed upon as Peter Drucker once quoted “ management by objectives works – if you know the objectives. Ninety percent of the time, you don’t” ( Peter F. Drucker Quotes 2010) Once employees understand the objectives, they will have a direction which leads them to work towards achieving Cisco’s goals and objectives.
Currently, Cisco requires each working group to develop a statement that includes a five year vision, a two year strategy and a ten- point execution plan. (‘ The world according to Chambers’, in Economist 2009, Issue 8646, Vol 392, pp 59-62). In a book titled “ JOHN CHAMBERS AND THE CISCO WAY – NAVIGATING THROUGH VOLATILITY” by John K. Waters, it was stated that Cisco’s employees were given the liberty to providing adequate solutions to problems and solving them without the necessity of seeking prior approval from their superiors, however “ with great power comes great responsibility” and they would have to justify their course of action should the need arises if applied solutions does not provide the right outcomes, a task which could prove time consuming. (Waters 2002) Cisco’s managers are also tasked to set “ stretch goals”, a smaller number of goals which are achievable by their employees in a stipulated time period.
An illustration of this would be if the goal is to complete a project within a month, a stretch goal is to complete it within 3 weeks. The employee would then be commended if those goals are met, and no penalty will be given to them if the latter occurs and these goals are not achieved in the allocated period of time. (Waters 2002) Working groups in Cisco are set up based upon a set of rules which also governs how decisions should be made and evaluation of work should be carried out. Managers and senior executives in Cisco have huge responsibilities and are often very involved in these working groups not allowing employees to work independently.
An employee from Cisco quoted “ Advice to Senior Management – give us more work” (Cisco Systems Reviews) In addition to that, they are required to attend endless meetings resulting in fatigue. (‘ The world according to Chambers’, in Economist 2009, Issue 8646, Vol 392, pp 59-62)With regards to evaluation of work , a Senior Manager in Cisco quoted that, “ Attempt at a fair rating rankings process – Every attempt is made to assure that the twice a year ratings/rankings process is done fairly. In my organization every manager is required to be able to justify in detail their stack ranking of employees. ” (Cisco Systems Reviews) however, another review from a past employee (financial analyst, Cisco Systems) stated that the senior management should improve their system of recognizing employee work and promotions (Cisco Systems Reviews) both these statements contradict each other as the first statement came from a manager and the latter an employee. Recommendation From the analysis undertaken, the following recommendations are provided to aid in achieving Cisco’s goals and visions. As an alternative to the provision of power to the employees where situations may arise towards them not being able to meet objectives or having a proper direction towards certain tasks, they are recommended to involve employees in individual goal setting, where employees will be able to focus on Cisco’s strategic goals.
(ie : employees from the customer service departments can set their goals around the Cisco’s first goal as fore mentioned above : Customer partner status – Success, satisfaction and trust. An example for the type of goals they can set is:- answering e-mails from customers within the same day, not putting customer’s on hold for more than 2 minutes etc. This example is also analogous to Specific and Relevant goals (SMART) – Specific to department or division and Relevant to Cisco’s goals. The rationale here is to provide a better understanding of the company’s goals and let employees set individual targets in the department within which they operate towards achieving Cisco’s Goals.
Employees involvement in the goal setting process would result in a higher level of commitment and elevated possibility of goal attainment as goals that are set are more likely to be within their ability. This exemplifies Achievable goals (SMART) and can foster teamwork where employees within the department work together towards setting targets for their department. Teamwork is one of Cisco’s goals. Motivation, a current issue that Cisco is facing (‘ The world according to Chambers’, in Economist 2009, Issue 8646, Vol 392, pp 59-62), could be significantly amplified as they will feel more important when involved in goal setting and feel a sense of achievement when goals are attained.
Implementation on methods needed to achieve those goals can be set in place, thus employees would be able to work independently using the plans they collectively strategized. This would create a sense of belongingness and avoid negative statements as stated above to be voiced out. Supervisors and managers can be less involved and spend more time on mentoring and motivating employees. This could also address the fatigue issue faced by managers and senior executives in Cisco. Guidelines can be put in place on how decisions should be made and implementation of evaluation of work performance.
However, employees and managers in Cisco should be given the flexibility to come up with plans that are conducive to their operational environment as well as suited to their department/ individual goals and targets towards achieving the common goals of Cisco . Allowing employees to set targets gives them the opportunity to set realistic targets. Individuals at different levels of hierarchy may look at things differently and have a different understanding on how the appraisal of their performance is carried out. Therefore communication between them is important and can be established by using a more personalised approach when doing appraisals( ie: making time to discuss with the employee issues pertaining their performance with regards to whether goals have been achieved within planned time frame, identifying the reasons for their inefficiencies and helping them to work on it to avoid it from recurring). 2. From Organising Component : Centralization versus Decentralization and Information Systems are relevant to Cisco’s matrix organization because they contain the elements of vertical (Centralization versus Decentralization) and horizontal (Information Systems) coordination.
• Centralization versus decentralization : Cisco currently practices empowerment to employees in taking corrective actions when they see something is not right. However, employees need to attend endless meetings to ensure what they are empowered to do is agreed by others and reasons to course of action to be taken explained to avoid misunderstandings and inconvenience to others. (Waters 2002) A better approach would be to give empowerment to employees to make necessary amendments and decisions to matters that can be resolved using their expertise within stipulated guidelines to facilitate in quick decision making. (‘ The world according to Chambers’, in Economist 2009, Issue 8646, Vol 392, pp 59-62) A certain degree of empowerment is important in a big corporation like Cisco to avoid delays in decision making and this can be facilitated by balancing centralization versus decentralization. The need to seek prior approval or leaving decisions to be made by higher management levels can be maintained when major issues such as decisions involving financial matters arise. • Information Systems : Karen Horn, the Director of Culture, quoted, “ Going to the web is natural at Cisco.
The Internet is the answer to everything. ” (Networked at Cisco 2001, p 3) Information Systems is very widely used in Cisco to communicate globally ( i. e. telepresence (‘ The world according to Chambers’, in Economist 2009, Issue 8646, Vol 392, pp 59-62) , Cisco’s has a website that contains information on their products and services, provides support – for customer’s queries, has links for existing customer’s to update their details and place orders to purchase their products online. Cisco Systems, Inc 2010) This proves beneficial to Cisco as having such facilities on their website reduces the cost of hiring manpowers, telepresence reduces travel costs (‘ The world according to Chambers’, in Economist 2009, Issue 8646, Vol 392, pp 59-62), and saves time on traveling thus aids in quick decision making, within Cisco, their information systems has staff directory – which is helpful for employees to contact the right person on a timely manner , they also use e-mails to correspond within their company, their internal website even contains information on employees reporting system, facilitates scheduling of meetings online and the list goes on.
((Networked at Cisco 2001, p 3 – 5). Information Systems is very convenient to both employees and clients of Cisco. It is recommended that Cisco continually updates their information systems in order to maintain the current state of convenience for consumers and employees and to rectify any problems related to their information systems as their daily activities of work is largely dependent on it. #Conclusion : The application of theories and concepts from Management by Objectives can assist Cisco towards achieving their organizational goals and tackle the current issues that they are facing. Drucker wrote in his book, The Practice of Management, “ MBO helps to give full scope to individual strength and responsibility, and at the same time give common direction of vision and effort, establish teamwork and harmonize the goals of the individual with the common weal.
The only principle that can do this is management by objectives and self control”. (Drucker 1954). Management By Objectives would further facilitate the Cisco’s “ coordinate and cultivate” structure (‘ The world according to Chambers’, in Economist 2009, Issue 8646, Vol 392, pp 59-62) Together, merged with the theories from Centralization versus decentralization , Cisco would be able to strike a balance in terms of planning and organizing their corporation to give the right amount of empowerment to their employees with the focus of achieving goals. Ideally, this would allow them to reach their optimum potential and essentially increase productivity of the corporation . Information Systems is equally vital to facilitate their success especially in Cisco’s nature of business.