Abstract
The focal organization for this article is the leading engineering service company in Thailand hereinafter called ‘Thai CLV’. The company is well known for the good quality of its maintenance projects for oil tanks with a long period of service for the customers. Due to the rapidly changing engineering and technological landscape and the robust competition of the external environment and competitors, the management of the company believes that the utilization of team structure could deliver a flexible working environment and better outcomes for the project. Therefore, its field operations have utilized a team structure for its tank maintenance process. The focus of this article is Thai CLV’s effort to further organize itself around high-performance teams by exploring the opportunities of external functions towards a high-performing entrepreneurial team.
Organizing Around Team at Thai CLV
Among the 10 teams within the maintenance department, two of them always deliver good performance with high customer satisfaction. 1 Therefore, this article starts with the focus on the characteristics and nature of these two teams. These teams are assigned to manage and conduct the tank maintenance process on a contract basis. Their specification of the contract figures out the scope of the project, service specification, budget and delivery time. Due to the different locations of the customers, the company assigns a project to each team based on a geographic classification fitting well with the customer’s factory. According to the nature of its task, performance of the project is generally measured through three key indicators: on-time delivery, within budget as planned and with fewer customer complaints.
Each maintenance team at Thai CLV comprised 10 staffs including one lead engineer as the team leader who has two engineers and seven technicians under his supervision as depicts in Figure 1. The lead engineer is responsible for managing the project through delivery. Tasks as mentioned in the service contract are translated into the job description of each individual. An initial meeting with the key persons on the team is held so that everyone understands the customer requirements. Each engineer will be assigned to take responsibility of part of the service contract and then deploy each individual goal for his subordinates. Raw material will be then planned for the amount and the time of delivery by meeting with the team members. During this discussion, lessons learned from previous projects are discussed to avoid any repetitive errors or the recurrence of customer complaints. This leads to the precise planning of the material to be used and alignment with the planned budget. This is the preparation stage prior to the real implementation of their field operation.
Moving to their field operation, the maintenance process for the oil tank includes four major steps starting from the desludging process in order to remove the thick oily sludge at the bottom of the tank, and then cleaning the bottom and tank surface by abrasive blasting through copper slag. After this process is complete, the tank surface is clean and ready for the mechanical repair. Then, the mechanical repair process takes place to fix any damage if found. Finally, painting and calibration are done prior to the project delivery. The customer conducts an acceptance inspection prior to the final instalment. Based on the experience of the company, most of maintenance projects can be typically completed within one month. However, the main problem of project delay stems from the scope of mechanical repair. If the damage can be found early through well-managed repair equipment and process then the project can be delivered on time.
Once the field maintenance starts daily, weekly meetings are held to check and balance the progress of the project. In the meeting the lead engineer is the key person to follow-up the progress and will be the person responsible for conflict reconciliation. If a technical problem occurs or the raw material is delivered late, most of the team members will join a ‘pop-up’ meeting to help reallocate their subordinates and resources to keep the tasks as per plan.
Apart from the project scope, these team members delivered their work to exceed customer expectations such as introducing further cost reduction activities (machine rescheduling for lower rental fee, temporary worker allocation among team members, outsourcing some specific task for external expertise), shortening project duration (eliminating some of repetitive process, better task rescheduling for shorter critical path of the project duration), and conducting joint Kaizen activities. If the project could be delivered ahead the plan, the customer would profit from early usage of the tank. If this occurs then the customer would feel more attached to the team, more confident and have higher satisfaction due to the good track record. Moreover, they would request for the team’s service in the next project. After the delivery period of the project the lead engineer calls a meeting with his members to summarize the lessons learned and gain experience from the recent project. This sharing session could equip the member to get ready for the next project.
Background and the Business of the Focal Organization
Thai CLV was established more than 10 years ago as a subsidiary of a Singaporean family-owned business. Its operation and service is mainly located in the eastern part of Thailand where most of the customers are oil refinery companies. It became a well-known player for its expertise in technology, operations and consultancy for tank maintenance.
Oil tank maintenance processes consists of four major sequential steps: desludging process, cleaning process, mechanical repair process and painting and calibration process. These maintenance activities are done on a periodic basis, most of these activities used to be done by the oil companies themselves. However, since these activities are not their core business activities, most of the oil firms outsource these activities to external parties. This provides the opportunity for engineering service players like Thai CLV to fulfil this tank maintenance opportunity.
An Overview of Thai CLV’s Guiding Philosophy
Vision: To be the trusted engineering partner committed to delivering high-performance maintenance service for our customer.
Mission: To provide the tank solution services with our expertise and a well-developed technical team.
The corporate strategy focuses on sustainable growth with technical expertise and trusted alliances. The following discussion presents its competitive and cooperative strategies based on proposed vision, mission, and strategy.
Technical excellence: Focus on the latest technology and machinery expertise to offer appropriate technology and maintenance methods for the customer at a competitive cost.
Service excellence: Focus on superior work quality with good service-minded staff, proven track records, good working process flow and human development towards higher market share and customer satisfaction.
Team development and strong alliance partnership: Develop the strength of our engineering service team to deliver high-performance and high-commitment projects for our customers.
Organization Structure
The company is divided into four departments, as shown in Figure 2, including the business planning department, the engineering department, the maintenance department and the human resources (HR) and administration department. Within the maintenance department, the staff is grouped into 10 teams aligned by their tasks and customer demographic. For some specific projects, cross-functional teams are established to serve for a specific engineering purpose. However, the organization chart does not reveal everything about the company. Related components such as people, rewards and processes will be discussed in the following organization assessment.
Organizational Assessment through the STAR Framework
Organizational assessment is the process of understanding on how the focal organization is currently functioning. Moreover, it provides the necessary information for designing an appropriate strategy and change intervention. To complete the understanding of the focal company, the STAR framework was utilized as a tool for the assessment.
The STAR assessment, developed by Jay Galbraith in the 1960s, consists of the five major categories of design policies which are governable by management and influence employee behaviour. This section will conduct an organizational analysis focusing on the selected organization through the STAR model as shown in Figure 3.
Strategy refers to the formula for success. It sets out the direction of the company. Strategy specifies the guiding philosophy of the company including the sources of competitive advantage, missions, values, objectives and goals. Strategy is the first component of the model to be addressed because it will establish the criteria for the following elements (Kates & Galbraith, 2007).
Thai CLV focuses on delivering quality tank maintenance projects for the customer. The company is well known for its strong technical knowledge and the experience of its engineering service team. Most customers have long-term trusted relationships with the company. While this is stable business, it has not grown in a number of years.
With the status of a family-owned company, Thai CLV has not had a very solid strategic and business planning process. The company strategy focuses only on technical aspects to deliver the quality project for the customer. In its maintenance service operation, project performance is generally measured by time, cost and the number of customer complaints.
As Thailand joins the Association of South East Asian Nations (ASEAN) industrial competition has increased as companies from the other member nations are now competing on an even footing with CLV in Thailand. In addition, there are new opportunities in the other member nations as these markets are opened to external competitors.
Structure determines the formal power and authority. It sets out reporting relationships, power distribution and communication channels. Four primary organization structures are functional structure, product structure, geographic structure and customer structure (Kates & Galbraith, 2007).
The company has had a functional structure since its establishment. It is clear that common activities are grouped together to promote an economy of scale through the specialization of skills and resources.
The maintenance department utilizes a team structure as their internal structure. Each team is comprised of a lead engineer as the team leader; engineers, technicians and temporary workers.
Processes refer to a series of connected activities that transfer information upward, downward and across the organization including work processes and management processes (Kates & Galbraith, 2007).
Internal work processes for CLV rely on personal relationships without a formal coordination process.
Decisions are usually made by the owner with a strong centralization of decision-making. Each department manager and team leader follow the managing director’s direction and policy communicated through monthly meetings.
Rewards such as promotions, bonuses, profit sharing and stock options aim to build an incentive for the employees to align their individual goals with those of the organization (Kates & Galbraith, 2007). The reward system must be consistent with other elements of the framework to influence the people towards a proposed vision.
The company divides employees into two categories with a different rate of compensation: (1) technical people such as engineers and technicians and (2) non-technical people such as salespeople, HR, business development and information technology (IT).
The current compensation system pays non-technical people lower than technical people, and motivates them by profit sharing of each project that they win in contract bidding.
People covers human resource policy including recruitment, rotation, training and employee development. This policy aims to develop employee talent with suitable skills and a mindset that is required for organizational capabilities to execute the strategic activities (Kates & Galbraith, 2007).
The current HR policy covers recruitment, compensations and regulations for the employees. There is no roadmap or long-term plan for employee development. Most of the development activities have been done by on-the-job-training.
The STAR model provides an effective tool for both assessment of the existing situation and decision framework for an organization design. The model assists the researcher and the management of the company to understand more about the focal organization. The company has a strong engineering knowledge and experience ground with a long period for the customer. The overall assessment via the STAR can be summarized in the Figure 4:
To become a high-performance team (HPT), it is suggested that further team structure could be utilized for decision-making supplanting reliance solely on the hierarchy. This would require the development of reciprocal communication processes both within the team and between the team and their clients in the oil companies. The company does currently include some profit sharing, but this could be enhanced to promote even greater commitment to the goals and outcomes of the project teams. This would also encourage great utilization of other company resources outside the team. In order to do this, they would both need greater training in interpersonal skills, and perhaps greater attention to these skills when recruiting and hiring new personnel.
The utilization of the organizational assessment through the STAR model reveals a clear understanding of how the focal organization is presently functioned. The company has a strong technical background with a good track record for the customers. Most of the employees are loyal to the company with a low turnover rate due to a family-like and a warm working environment. However, internal work processes rely on personal relationships and lack of solid communication and coordination process.
What emerges from the recent economic development issue in the region is the opportunity of the regional economic integration through the ASEAN Economic Community (AEC). In order to respond to this opportunity, it is suggested that the company will need to develop a more decentralized structure, more entrepreneurial mindset employee based on HPTs seeking for new projects and business opportunities. At the same time, this new regional status can bring in greater competition for work in Thailand, and Thai CLV has to step up its game to ensure their competitive advantage through great customer responsiveness.
Potential Challenges for Change and Exploring the Opportunities of External Perspective Towards High-performing Entrepreneurial Team in Thailand
Recent literature from Tayko (2015) drew that rapid change in today business has created new challenges for the management to drive their businesses sustainably. Such robust changes call for the new ways to develop employee competencies toward high performing teams. Tayko (2015) defines HPTs as teams highly focused on their goals and achieving superior business results. HPTs usually deliver higher expected results and outperform all other similar teams. Boulden (2012) asserts that HPTs show high levels of innovation and collaboration that deliver superior team results. During the past decade, several academics have provided needs attributes for HPTs. Thiel (2009), as cited in Tayko (2015), see six important characteristics in HPTs: (1) excellent communication, (2) solid relationships, (3) effective processes, (4) accepted leadership, (5) clear roles and (6) common purpose. Through these recent literatures, Tayko (2015) concludes that HPTs exceed the normal expectation of performance which results with a strong bond of relationship among the members, commitment to common goals and cohesively performing towards extraordinary results.
Focusing on team member’s functioning, team members are expected to perform the appropriate functions for each given positions and tasks. Benne and Sheats (1948) provide an early meaning on how internal perspective of team function looks like. Kreitner, Kinicki and Cole (2007) further explained that functions within teams can be generally categorized into two types: maintenance functions and task functions. In order to achieve specific team purpose and goals, certain task functions such as brainstorming, gathering information and decision-making should be performed (Hobbs & Powers, 1981). To support team task, maintenance functions gear the team towards smooth interpersonal communication and relationships in a supportive manner while maintaining a sense of cohesion. Whardwick (2012) suggests that maintenance functions serve as a glue to bond the members so they it along well together during the team period. These literatures support the significant of internal functions of team members.
Looking at the development of industry and external environment of team, Miles, Snow, Mathews, Miles and Coleman (1997) summarize the evolution of the organization structure that suit for each era of industrial development since the beginning of the industrial revolution. Industry has shifted its focus from the capital-intensive period in the early machine-driven age to an information intensive period for service-driven generation then to the current innovative driven industry. Therefore, modern organizations need an appropriate vehicle that offers flexibility to capture these value-added business opportunities. Due to this rapidly changing business and social environment, the internal perspective of a team is not enough to move teams to success. Another viewpoint of team demonstrates how external stakeholders and environmental factors affect and interact with team efforts as they accomplish assigned tasks. Therefore, external perspectives of teams should be reviewed in this literature.
Choi (2002) and DeChurch and Mathieu (2009) state that appropriate interactions with external partnerships are required for team success. These interactions include the exchange of knowledge, experience, information and resources. Ancona and Caldwell (1992) explain that ‘Team boundary spanning’ refers to the scope of action that the team implements in order to connect their internal processes with related external stakeholders. Within the complex business environment, teams should account for and accommodate the detail of external related parties and environment beyond the team boundary (Ancona, 1991). Related literatures from Ancona and Caldwell (1987), Ancona (1991), Ancona and Caldwell (1992) and Miles et al. (1997) discuss the significance of the external perspective of teams.
Ancona and Caldwell (1987, 1992) examine how team members collaborate with external parties in new product development teams of selected technology companies. It can be observed that these members utilized a mixture interaction of strategy when dealing with their external stakeholders includes exchange and control the appropriate level of information and resource between team and external environment, and group boundary defining. Ancona (1991) further supports that teams should account for and accommodate the detail of external-related parties and environment beyond team boundary. Miles et al. (1997) introduce the concept of cellular team-based organization as depicted in Figure 5. This cellular-based organization refers to the clusters of self-organizing teams that operate both solely and collaboratively towards a more competent business mechanism. The combination of cellular teams offers opportunities to generate and share their know-how and experience. Each team needs a unique set of skills to perform their functions such as collaborative skills to establish the linkage and governance skills to manage their own activities. Moreover, each cell must be treated entrepreneurially as a single profit centre of the company.
Concentrate on the focal industry, engineering has become an integrated discipline that links technical development to solve human needs during the past two decades (Lamancusa, Zayas, Soyster, Morell & Jorgensen, 2008; Melsa, Rajala & Mohsen, 2009). This revolution has positioned a new paradigm for engineering industry that requires more entrepreneurial thinking in order to capture the opportunities based on their technical knowledge. To capture this opportunity of becoming the cellular team-based organization, entrepreneurial mindset should be intentionally developed for the engineering people of the focal company. Entrepreneurial mindset refers to a way of thinking in an innovative and creative manner in order to capture the opportunities in an uncertain business environment seeking organization success and wealth (Dhliwayo & Vuuren, 2007). Wennekers and Thurik (1999), Ireland, Hitt & Sirman (2003) and Senges (2007) support that entrepreneurship mindset is an essential behaviourism to maintain the competitiveness of economic growth through a value creation process. Such a mindset occurs and can be applied in both established organizations and a start-up firm (Stevenson & Jarillo, 1990).
Kriewell and Mekemson (2010) explain the characteristic of entrepreneurial engineer including (1) customer awareness (concern on product benefits for the customer and ability to ask the probing questions and proactive listen manner); (2) business acumen (understanding of the business concept such as marketing, communication and finance and ability to work effectively in the organization roles and functions) and (3) societal values at the top of the pyramid (responsibility for the impact of the operation on people, social and environment with a high standard of ethic and engineering) should be emphasize towards entrepreneurial engineer.
Further challenging the task of developing an entrepreneurial mindset is the Thai cultural biases for hierarchical authority and conflict avoidance. Referring to the studies of Hofstede during 1967 and 1973 on national cultural dimension (The Hofstede Center, 2015), the Thai cultural dimensions can be considered as having a high power distance, uncertainty avoidance, collectivism, femininity and a strong long-term orientation. Thai people place a great value on a strong traditional and hierarchical system with differential communication to people according to social status and the maintenance of good relationships. Similarly, the Thai society is highly motivated by affiliation in McClelland’s need for achievement theory. These cultural characteristics of Thai society transfer to the nature of teams in Thai organizations.
Conclusion and Future Research Recommendation
This article presented the example of a HPT in the selected engineering service company in Thailand. Mapping with the six important characteristics of HPT as mentioned by Thiel (2009), it can be concluded that the requirement for HPT members to pay attention to smooth relationship and collaborative communication is in the nature of the Thai people. The team leader also appropriately leads the team by assigning clear roles and tasks with a clear individual and team goal. Most of members seek maintaining of good relationships and are dedicated to helping each other through verbal and non-verbal action. It can be observed that the members tend to avoid verbally expressing their ideas, making decisions, taking responsibility or raising new ideas. We have some work to do in these areas! As suggested in McClelland’s theory of motivation, the Thai teams are highly motivated and skilful in affiliation. However, due to the high power distance in Thai culture, it will be important to train and support the team leaders. Highly motivated and committed members working towards exceeding customer expectation could support the team toward HPT in Thailand. The challenge will be to not only develop strong internal leadership, but external relations with key customers and related stakeholders as depicts the related linkages in Figure 6. Regarding to the related literatures from Ancona and Caldwell (1987), Ancona (1991), Ancona and Caldwell (1992) and Miles et al. (1997), the company should take into account the awareness and interests of their external-related stakeholders with appropriate interaction and communication. At the same time, CLV needs to develop the entrepreneurial mindset of their technical leadership to guide their cellular entrepreneurial teams. Due to the Thai cultural setting, it is expected that some hierarchical authority will be retained by the teams, but it can hopefully start at a lower level in the organization, being distributed to the field operations.
Since most of the literatures on team and team performance are from the western context, the Thai team characteristic and performance could be a potential area for the future research to complete the academic and industry voids. This article provides an initial view of what a high-performing Thai team might look like with a linkage to an external perspective, and suggests that there is a lot of work yet to be done in developing this opportunity of the developing the ASEAN Economic Community. How can the advantage of high affiliation motivation, and at the same time high power distance, fashion a distributed and entrepreneurial company?
Footnotes
Acknowledgements
The authors place on record their sincere thanks to the management of Clavon Pte. Ltd. (CLV) for their support in developing this case and their permission to present the original version of this case presented and published at International Conference on Management Cases, 2015 (ICMC 2015) held at Birla Institute of Management Technology, Greater Noida, India on 3–4 December 2015.