Sodexho HC Consultant Report Essay Example

is no information about the actual quality of services delivered. Images in the sterilization service have been a problem.

Change in government legislation has seen a consolidation of small clinics into larger organizations. Multi-service offerings has become important for SSH to increases its revenue by increasing its sales volume per client. However, larger hospitals have greater bargaining power which means less loyalty to SSH. Public sector clients have been late in making payments or not pay at all.

Improving Cash flow is a high priority and Codex's HCI is trying to develop direct payment systems for better cash flow.

Hospital employees are an essential service however they are becoming a scarce resource. Visitors to the hospitals are becoming increasingly important, hospital reception service and round-the-clock food availability becomes particularly important service elements. The length of an average patient stay (APS) is decreasing.

The number of hospital beds in France will be reduced by 100,000 in the next four years. Hospital outsourcing was estimated to grow by 20% over the next few years. There has been a slow but steady increase in the number of competitors.

Codex's main competitors are Penance and Compass. Executives seem to have inconsistent views and understanding on "multi-service" offers (See Appendix 1 & 2), including conflicting views on cost management for public sector, and different expectations on the company's sales growth for next year Services provided to clients do not always correspond to the reality of today's hospital's needs. IT has been perceived as adding little value compared with the time it consumed.

Managers perceive performance measurements to be a waste of time. One of the regional directors has identified employees' resentment to changes.

Codex's HCI

has become somewhat complacent and hasn't responded quickly to the changing environment.

Problem Statement

Mr.. Dutchmen, CEO has identified the main goal for Codex's HCI is to develop a common view on how the company should go about achieving its strategic goals. He believes SSH should try to deliver multi-service offerings that clients perceive as adding value to the delivery of efficient and effective health care.

Is the current organization design of Codex's HCI sufficient to create alignment with its multi- service strategy and which objectives should be included into the Balanced Scorecard (BBS) in order to continue to perform and grow in the years to come?

Analysis Symptoms to the Problems

The concern on Job delegation to site managers, incapability of some site managers to sell the offering, and the ignorance of performance measurement suggests HER management practices may be insufficient.

The misconception that IT is time consuming suggests there may be low technical capabilities of site managers. Opposing and sometimes conflicting views of the company's growth and understanding on "multi-service" offers suggest ineffectiveness in organizational structure design. All executives appear to agree on the "need" to improve HER and IT culture, however, hey don't seem to have a solid and consistent understanding of "multi-service".

For example the Marketing Director believes in modular design with its suppliers "Multi- service on what adds value in the eyes of the hospital CEO, concentrate our efforts on Two of the Regional Directors have raised concern over the fine tuning multi-service and the sales manager is clueless on what needs to be done. Therefore, before SSH delivers 'multi-service' offers to their clients, they should evaluate if their organizational design is

ready in terms of structure, information systems, HER management and overall culture to support the execution of its strategy.

Causes to the Problems

Structure Codex's HCI has a hybrid organizational structure design which combines functional at the central office in Paris and geographical divisions in Operation/Service unit all over France.

By having a functional design at head office, SSH not only gains efficiencies but high quality work. The downside is that each functional area may become concerned exclusively with its own responsibilities. Coordination between functions can therefore be a problem. Geographical structure at the operation level involves delegation of decision-making responsibility to the divisions.

She's success has been driven by a strong entrepreneurial culture. Each site manager has its own power over their decision, however, this means each regional department may have its own management style and this can create great degree of differentiation between departments. Dutchmen has suggested the business unit is lacking coherence. This suggests Codex's HCI has not obtained the horizontal and vertical linkages to react efficiently between the regional offices that are scattered all over France and the head office in Paris.

Therefore, it is essential for SSH to adopt the appropriate range of integration mechanisms in order to secure coordination. As regional director- Vincent Ramirez highlighted "our managers are known to be very entrepreneurial.

They treat the firm's resources as their own and manage them with great care, enthusiasm and innovative drive. " That said however, Public Sector Sales Manager - Thomas Lee, is concerned that the entrepreneurial culture results in "managers having a tendency to see themselves as pioneers and have a way of operating that is messy by nature. As

such, he suggests more structure and order is essayer given the size SSH has reached notwithstanding the company must retain and foster the existing entrepreneurial spirit which has been a successful growth driver for the company. Sales manager of public sector has shared the concern of needing a direction on what they should do- 'expend greater effort on sales, modify offering, shrink the sales force, capture interest of those hospitals that have not opened the door to outsourcing.

Regional director- Benjamin Simon has also highlighted an issue of managers need to and should feel they are part of an organization that shares a common set of values.

In the current management recess, employees don't feel empowered likely due to lack of employee development as identified by Chief Financial Controller (CUFF)- 'need to improve SSH process for identifying and developing talented individuals, sufficient attention to the process of integrating new recruits, clarify people's responsibilities and link rewards to achieved results'.

She's sales department is separated into Private and Public. Each characteristic because each department is dealing with the same type of customers, work can probably be reduced to mechanical step and participants can follow an objective, computational procedure to solve problems. The Chief Financial Controller seems to understand the nature of this technology characteristic and has identified the need of creating standard offerings that sector mangers can market to She's clients and these standards should be honored by sales and operational people.

She's operation/service department is separated into Regions.

Each region then has different sites. Communication within the organization is difficult due to the separation between the regional offices and the central Paris location. It seems they don't

have regular organizational meetings or communications between these offices. This structural deficiency also includes but not limit to: delay in decision making; objectives conflict as indicated in Appendix 1 & 2; declined employee performance; lack strong leadership and each region is more autonomous.

Information System/ Process Information processes in functional design focuses on tracking the costs of activities in each functional department.

In geographical design at operational level, control and monitoring the performance of each division is also important. By having a strong IT system to help provide meaningful data in each design is essential. However Codex's HCI is lacking an effective information system currently, which is taking managers away from their Jobs as they are required to focus more on administrative tasks instead of operations.

The management also cannot access the performance of current service offerings.

Decision-making is also delayed as no information is shared across the regions. Furthermore, financial reports cannot be adequately measured by the finance department, the marketing department cannot make adjustments to current offerings, and operations managers cannot evaluate whether the services need to be modified to meet client's needs. As the CEO has shown his interest in Balanced Scorecard project to measure and manage organizational performance, IT plays a crucial role.

As both the Chief Financial Controller and Marketing Director highlight the need of improvement on information process to improve reliability of financial figures so it can conduct reliable performance measurement, it can also help evaluating services offered and this is a relevant performance indicator. Pleasantries, Nonunion, Protracts, Quietist, (2005) indicate a significant amount of time is spent on the design of BBS however little to o time is spent on

the soft issues that do not show up on the balance sheet.

These soft issues such as project management, IT development, quality assurance and risk management greatly affect the successful implementation off BBS. Given the symptoms indicated above this suggests Dutchmen should spend more time and create a budget dedicated to training and implementation of IT and other BBS requirements. Supporting activities to implement a BBS are key. (See Appendix 4 for a suggested implementation format) HER Management Practices There is no cohesive framework for the process of hiring, development and retaining f talented individuals.

One difficulty with the geographical design at operational level is the risk that divisional managers might pursue divisional goals rather than Financial Controller has been focusing on maintaining good cash flow, the CEO and regional directors are focusing on investing in start-up on site services. One of the regional directors wants to execute contract clauses to protect profit margins while the sales managers may not see that as good for maintaining a client.

By designing incentive systems that link divisional performance to corporate performance, the interests of divisional managers are aligned with those of the company. However, performance measurement has not been an effective and popular tool among managers and due to the IT issue identified earlier, without reliable financial data, performance measurement system will not be as effective, then bonus issues and recognitions will not be ready to be executed fairly. Balanced Scorecard The BBS is a popular operational instrument for performance management and measurement.

It offers possibilities to measure the efficiency of strategic business units (Subs), departments and employees more precisely so the management may main a better

insight into the contributions of each employee. The best BPCS are those that contain a linked series of objectives and measures that are both consistent and mutually reinforcing rather than a collection of critical indicators or key success factors. (Norton & Kaplan, 1996) Financial: In 2000, Codex's HCI achieved a turnover of 200 million Euro.

Net Income increased 40% since 1995, which indicates the organization appears have done well.

However, there are some potential issues in the financial perspective. First, the private hospital growth is expected to be no more than 10%. Second, public sector hospitals tend to pay very late or not at all. Thirdly, a large public sector market share presents inherent financial risk or "concentration risk" in having limited number of very big customers. Therefore, Codex's is facing various challenges regarding cash flow, concentration risk and sales growth.

Codex's HCI is nearing the "maturity" stage of the business cycle, given its strong position in the market place.

This is not saying that growth has halted, but is bound to slow at some point given the market position currently held unless the company strategy is re-evaluated. The CEO has extremely sigh expectations to strive for more to stay on top. He sets stretch goals as targets which is one of their competitive advantages.

That being said, if expectations are set too low staff will only perform to that level. Setting expectations high along with the right motivators and by putting the right people in the right places the company excels as Codex's has done.

Customers: One of the greatest differentiating factors SSH provides is they gave their clients a significant amount of attention. Client retention is

approximately 95% which is a positive sign. However, based on recent discussions with hospital Coo's, it appears revise are not providing the required value due to lack of adequate financial and operational information needed. In addition, the current structure doesn't have clear service streams to focus on different sectors and tailor services to ensure added value to the clients.

For example, Codex's HCI serves two different sectors: private and public sectors.

Each of sectors has different requirements, though individual regional directors are responsible for both sectors. This creates a difficulty for the directors to understand what services are required to meet the needs of each customer. Internal Business Processes: customers both expertly and efficiently. To effectively build on what is already known within the organization, an organization has to systematically find, organize and make available a company's intellectual capital, which will foster a culture of continuous learning and knowledge (Daft, 2010).

Codex's HCI has failed to effectively implement and utilize IT tools to facilitate collaboration and coordination across the company and has not effectively managed the knowledge sharing process.

Furthermore, the company has not standardized employment practices relating to hiring, integrating and training. As such, management is not properly equipped to deal with the changing market. Learning and Growth: Learning and growth are associated with how resources and human capital are utilized. It appears that Codex's HCI has not placed enough emphasis on the learning and growth perspective.

The interviews concerned with non-current training materials, inconsistently applied training, and poor employee engagement in training due to a perception that things will not change within the organization, employees are not provided with career development opportunities and managers have

recognized the need for improvement with respect to the career management recess. Codex's HCI managers reported some HER concerns during the interviews, such as lack of clarifications in defining responsibilities; compensation not linked to performance; external hiring being provided superior compensation to internal employees.

Management recognize they need to attract talent from outside the company. However, according to Biddable results show that external hires have worse performance than internal movers, while being paid substantially more. More specifically, "compared with workers entering a Job through simple promotion, the most common form of internal mobility, external hires receive significantly lower reference evaluations for their first two years in the Job yet are paid around 18% more " (Biddable 2011, pig. 396).

Moreover, the study suggests that external hires generally have more education and experience, suggesting they will provide new and innovative ideas, albeit also have a higher exit rate (Biddable 2011, pig.396). Culture She's culture is regarded as "over-focused" on operations and could improve its customer service and sales offering which presents a major cultural challenge. As SSH is transforming, resistance has been noticed. The change would not happen if forces for the status quo are larger than forces for the change.

As Dutchmen identified "we know that nothing will actually change; people will still keep doing what they do, in the way they are used to doing it.

" The reasons behind this include management have become somewhat complacent and individual resists changing. She's success has been driven by a strong entrepreneurial culture, so it's easy for managers to keep working in this culture. Some are worried change will have negative repercussions on their Jobs. Therefore, many

executives have identified the need to reinforce team spirit and to maintain the right balance between professional activities and ones private life.

Paper in his case study of 'managing radical transformation at Fannies Mae' (2003) has identified the importance of human element. One of his propositions proven by the practice at Fannies Mae is holistic management culture.

'Top management becomes leaders and establishes the vision and soft structures such as culture, habits, beliefs, and understanding of core Therefore, for SSH to undergo change, executives should consider a strategic commitment in terms of resources and leadership.

Conclusion Functional design is most effective when environment is stable, there should be one or only a small number of products or services. By having functional design in the head office when the company is moving towards delivering multi-service offerings may not seem to be effective in terms of communicating shared values and direction across functions and delivering innovative services or products. Therefore the current organizational structure does not seem to be a good fit for the new direction.

It is essential for SSH to adopt an appropriate range of integration mechanisms in order to secure coordination. Lack of a solid information technology system along with insufficient and inappropriate financial data collection can prevent SSH from implementing performance measurement that ties to incentives or bonus', which would in turn help with coordination mechanisms between departments.

It can also prevent SSH from receiving valuable feedback on decision outcomes that are of direct relevance to organizational effectiveness.

Finally, the tendency for employees to resort to proven recipes of success and individual concerns has brought out a resistant force in SSH. Maintaining a good team

spirit, providing effective leadership and management, and sharing the same set of company values and recognition methods becomes important to sustain a culture.

Alternatives

In review of the interview responses with Codex's senior management, it appears the current organization structure is misaligned to their strategies and goals.

As such, the following alternatives should be considered to support Codex's planned strategic outcome.

Alternative 1: Maintain the horizontal organizational structure that retains functional HER and Finance departments but consolidates all other departments under either private sector or public sector to bring end-to-end work, information and material flows that provide value directly to customers (Appendix 3 Slide 3) while also, implementing a Balanced Score Card as the central means of ensuring that all managers have a common understanding of what the organizational strategy is and what the goals are. Pros: Provides quicker response to changes in an unstable external environment.

Provides flexibility to better meet the changing needs of customers in each sector for high quality and custom offerings.

Improves collaboration among the departments and horizontal information sharing. Allows growth while minimizing the risk of overextending the organization. Increases market share and operation profit for its stakeholders. Offers employees the ability to expand on their individual skill sets with internal training and support.

Measures both financial and non-financial outputs of each department and division. Can be designed the way to align She's strategy of multi-service and the goal of shared value.

Promotes less apprehension from Cons: Will be challenging to shift focus from the current food service culture to a marketing and sales focused culture on finding ways to add value and increase prices. By providing multi-service will potentially increase cash

flow impact to Codex's if the clients do not pay on time or not at all. May be difficult to implement organizational change as people have a tendency keep doing what they do and in the way they are used to doing it.

Need employees to have necessary skills to meet the requirements under the new structure and new environment.

There are still too many new service offerings for regional directors and sales directors to manage. This means they may continue to focus on operations rather than sales. Harder to determine which performance indicators are critical.

Alternative 2: Concentrate on food service and enter into modular organization design to create collaborative networks with other impasses for new service offerings such as sterilization service, maintenance with Altos while also, implementing a Balanced Score Card as the central means of ensuring that all managers have a common understanding of what the organizational strategy is and what the goals are.

Pros: Partnered companies are exceptionally good on the technical side. By drawing a network of specialized companies that excel in what they do SSH will add value to its clients. The specialized company is able to perform tasks more efficiently because they are specialized and can take advantage of available economies of scale. Excellence across all functional areas can provide competitive advantage in an environment undergoing radical change.

By choosing the best partner SSH can improve overall quality of service offered to their clients.

Modular arrangements provide greater flexibility which improves the time it takes to get new ideas to market. By retaining in-house only those activities at which the company excels, resources can be focused on those activities and SSH

can then focus less on operation and more on sales. Cons: Partnered companies have little if any knowledge of the health care business. Modular organization arrangements work best where there is frequent interaction between partners.

Given current She's IT system, frequent interaction between partners may be a problem. SSH has already invested in some new service offerings.

SSH may lose return on investments by scraping those new service offerings. Supplier partnerships are risky for both sides and there can be conflict related to sharing the risks and rewards of the partnership.

Alternative 3: M-form organizational structure design all the way from the top: divisions based on 'service type'- public sector and private sector, under each sector, Codex's HCI can have geographical divisions while also, implementing a Balanced Score Card as the central means of ensuring that all managers have a common understanding of what the organizational strategy is and what the goals are.

Remove functional designs at headquarter so all positions under the CEO go directly to the Director of Private Sector or the Director of Public Sector. Separate the two distinct markets of Codex's which would afford high service visibility and improved customer service. Would free up capacity for corporate headquarter whereby management can focus more on directly on corporate strategy. Allocating resources among the divisions in order to achieve that long-term positioning.

The segments are strategic business units, with decentralized decision making, which allow for increased customer satisfaction.

Adapt to differences in products, regions, and customers. Can be implemented quickly without significant cost increases. Could be high-risk due to the size of the undertaking. The functional managers may resist change as they are moved to lower

divisional levels.

Chance of losing quality employees, as some of functional employees may need to be reallocated and employees may be reluctant to change.

Recommendations

In order to achieve their financial goals and align with the corporate strategy, immediate steps Codex's HCI should take is to further develop their multi-services offering.

Their current product/service offering no longer effectively meets the demand from today's hospitals. Cash flow has become another issue due to smaller clinics merging and consolidating in the public sector, which reduces the number of clients they will be able to serve in the future. Moreover, even some of the larger public sector clients are slow payers which can strain the company's cash flow on a mutinous basis.

However, SSH is currently unable to create a multi-service offering that meets clients' needs on their own with their current organizational structure.

By entering into network collaboration with other service companies, SSH can concentrate on what they do best (the core) - food service. Codex's can solve the issue of inconsistent understanding of service offers between directors. It would also be easier for the company to change its corporate culture from operational minded to sales focused. After SSH has set their focus, then, by having horizontal organizational structure sign, SSH can improve coordination issues between departments to promote flexibility and to address the issue of shared value.