RICHARD PIERIS AND COMPANY

People and Organization

MBA-7000 -01-UWIC-MBA-20038123
UWIC/MBA/MT/18/33

Individual Report

People and Organization

Individual Report

Executive Summary
The main purpose of this study is to evaluate certain aspects of management practices that are in place at Richard Pieris and Company, with particular reference to change management. It also examined as to how Richard Pieris and Co managed certain changes introduced in the course of its evolution, and how it managed conflicts, the company culture and the organizational learning process towards achieving development and the growth targets of the company. In conclusion based on our observations we have forwarded a set of recommendations which would be worth consideration by the company for further improvement of the management practices of the company .

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People and Organization Contents

Individual Report

Executive Summary ........................................................................................................................ 1 Company Introduction .................................................................................................................... 4 Selection for Richard Pieris and company ...................................................................................... 5 Family owned company change to SBU ...................................................................................... 6 Kurt Levins stages of change process ........................................................................................ 7 The second change in the company ................................................................................................ 8 Culture change ................................................................................................................................ 9 Growth of the company ................................................................................................................ 10 Observation ................................................................................................................................... 11 Recommendation .......................................................................................................................... 12

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Company Introduction
With a history spanning over 80 years, Richard Pieris & Company is the holding

company of a highly diversified group of subsidiaries numbering 42, which provides both products and services to the local and international markets. It is one of the most successful diversified business conglomerate based in Sri Lanka. As stated in the vision statement its aim is to be a market driven, technologically oriented group with a mission of continually exceeding the expectations of their customers. Currently the groups turn over remains at US$ 300 million recording a profit over 30 Million US $. It is ranked as the 13th among the Sri Lanka listed companies. Group employs over 30000 people at

different level.

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Selection for Richard Pieris and company.

The group decided to select Richard Pieris and company for the study mainly taking into consideration several factors which we found to be align with the given parameters of the assignment. Firstly it is a public quoted company with a share capital of ...and .it is ranked as the 13th of the top twenty company's in Sri Lanka. When studied the past history we observed that the company has gone through a major transformation in its evolutionary process from a family owned business venture to a highly diversified business conglomerate with approximately 42 subsidiaries, operational both locally and overseas . Most importantly we observed that the company has effected at least two major changes in the organizational structure in its evolutionary course and caused a transformation in its organizational culture with the objective of achieving growth and development. As we observed the structural

changes have taken the form of transformation from a single entity managed by a family, firstly to a SBU based organizational structure and secondly clustering of SBUU under

major economic sectors as a part of a reorganization process. Parallel to this structural reorganization we also found the company experiencing a culture change significant enough to study its impact on the performance of the organization. What we could see was the company experiencing a transformation process

from a Power culture which is akin to a family oriented company to a Role culture with SBU formation and decentralized operation and currently poised to move in to a Task culture to face the environmental dynamics. This can be considered a logical sequence of culture change underpinning the gro wth objectives of the company . With in that context we were interested in finding out as to how the company management handled the whole process of change, and how they approached the consequent issues and with what impact on the growth and development of the company . In our study we found that the organization has positively responded to the changes thus effected. This factor is clearly reflected both in the top line and the bottom line of the balance sheet. However we are also of the opinion that with due consideration to the nature of the business operation, and the size and the magnitude of the company, and the potential for further growth , the company needs to take a serious look at the present management style. If necessary the company should be prepared effect changes to make it a more dynamic, risk taking, task and innovative oriented organization. Although the company has achieved
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success in terms of turnover and profits due to the changes it has so far effected, we are of the opinion that much need to done in the future if its to forge ahead in a complex

business environment in the 21st.century

Family owned company change to SBU

Started as a family owned company, Richard Pieriss core business had been in the rubber based manufacturing industry. The company from its inception had been

functioning as a single entity with departments.

several businesses grouped under different the management of the parent

This department had been coming under

company. There had been few associate companies such as Richard Pieris Distributors, Richard Pieris exports , Dip products etc . In line with the power culture that was in place the management decision making had been made at the any consultation from down the line. Negative culture was board level without

consequence of such a management

quiet evident in the way they handled a change that was necessary in

the interest of the company. In 1993 the management had decided to decentralization of the operation, by

creating separate companies. Richard Pieris rubber products LTD, RP rubber compounds Ltd., RP Tyre Retarded Ltd, and RP Distributors etc. Through our interview with senior

managers who were then with of the Richard Pieris company we found that this major structural change was done based on a top management decision and there had been no consultative process what so ever. This resulted in a major industrial

dispute leading to a total work stoppage. The workers downed their tools and there had been a total work stoppage leading to a major conflict with the management. The major concerns of the workforce had been fear of losing jobs, job insecurity in the future, loss of benefits which they were ex: under the new restructuring enjoying under the parent company. For

workers faced reduction in their leave entitlement

from 42 days to 28 days. Five days working week was increased to five and half. 13% salary increased proposed by the management was totally unacceptable by the workers. As a result of the work stoppage the company so far they have had incurred huge loss, goodwill , and On the basis of post

smooth labor relations

in the past.

conflict negotiations the company decided to roll out a package with 30% wage

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increase and other benefits and get the workers to cooperate with management

the planned change. As we gathered information from the senior mangers the conflict resolution mode by the parent company had been one of force down solution rather than beneficial to the a negotiated settlement which Moreover we found that issue through mangers would have been they have not made more any

company.

slightest attempt to approach the management. We were

a scientific

process of change that the

informed by the

whom we interviewed

change was sudden and even they were unaware of the reason for the change and the desired outcome. However we find at later stage as labor unrest got intensified with consequent losses the company moved into a accommodation mode of

conflict resolution by rolling out a salary and leave package on compromise. We feel that if the company had followed a step by step process of change would

management as outlined have been

by Levins theory this major industrial dispute

avoided and there would have been a smooth transition of the change

program.

Kurt Levins stages of change process

Unfreezing

Change

Refreezing
Identify success Eliminate barriers Training

Change in Changing the mind set Communicating with staff Dress code Changing the attitudes Organizational structure Systems Regular meetings Discipline codes.

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The second change in the company

The next major change that the company has gone through had been in 2001/ 2002 with the takeover of the management of the company by the incumbent chairman gained

Dr:Sena Yaddehige, A srilankan Born Swiss businessmen. Dr Yaddehige controlled over the company as a result of a share transaction.

After his take over one could witness a directional change in the company. It is interesting to note company the vision he propagated after taking the management control of the

in 2001. As the CEO and the Dy Chairman of the company he outlined

his vision for the company as follows. Probingly he states Where we are now? Richard Pieris currently celebrate its 70 year. People call it a sleeping Giant. I agree. Where are we going? Our goal is to be a technologically driven , market oriented and diverse, global company capable of competing with the best in the world He goes on to answer the questions. Richard Pieris Company has a new vision. This is to transform it from an insular enterprise in to a profitable global company bringing the Arpico name in to the global market place Sena Yaddehige .(2002/ 2003 annual report) Having articulated his new vision and direction for the company we a transformation in the organizational structure of the has taken place in found that order to

rationalize the operations

company . The companies that were scattered were

brought strictly under relevant sectors. groupings of the total number of companies Rubber Sector, Tyre Sector, Plastic sector, Retail sector, Plantation sector, Service Sector Consequent to this restructuring each sector is headed by a CEO and each main purpose of this

company is by GM and supported by associated staff. The

grouping had been to allow the senior management to look at the business potential of a sector as a whole both narrower view on individual locally and business. internationally, as opposed to having a

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Culture change
The next major change change at Richard Pieris after the change of management is the

in management culture which has put in place is new set of values, and of annual

way of doing business. Below we give excerpts extracted from the series reports.

No dream is ordinary, no target is unachievable, and nothing is impossible. We have proved this by having the most successful year brought about by exceptional

strategy and performance. We believe that thinking positive opens new horizons and inspires our team to reach further. By setting goals high we have achieved big and having strengthened our core business expansion is our next goal. Our scope for growth is endless and possibility is everything2010/2011 What we saw at Richard Pieris, is a gradual stabilization to a new entrepreneurial

culture which encourage, innovation, risk taking, target orientation, profit orientation, cost efficiency, self sustenance and finally a global orientation.

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Growth of the company

As evident by the company balance sheet information as a result of the management changes company that had been effected and the entrepreneurial culture that has put in place had been able to achieve a significant transformation in growth and

stability. Within 12 years of takeover by the

current

management it has grown

into a highly diversified business entity with a global posture. The following figures extracted from its
Top - Line Year Revenue Rs in Mn 4,351 5,237 10,119 13,094 15,628 20,143 21,103 22,339 27,242 31,498 Bottom - Line Year Profit/(loss) Rs in Mn 126 481 870 529 306 (215) (329) 580 1,681 2,340 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

published annual reports evidence the above fact.

It is evident from the above chart the growth trend in turn over and the net profits for a within a period of 10 years. We believe that this growth was possible due to the

acceptance of culture change which paved the way to implement new techniques/best practices required by a diversified business.

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Observation
The most evident draw back was the centralized decision making process that take place within the company participatory approach. leaving very little space for a consultative and outlined

This we feel run contrary to the expectations

by the company vision. While such an centralized approach would have been acceptable at a given time , taking in to account of the current size of the

company and nature of a highly diversified business operation, we believe that such an approach will not be feasible in the future. Also found that changes are introduced based on a top down approach observed that in the

minus any

consultative

or communication process We also about

although the company vision speaks

a learning culture

organization in actual fact this remains a neglected area which needs to be given serious thought. We did not see any serious program in place by the HR department towards this end . The organizational internal communication process is more down ward directed thus depriving centralized and

vast majority of the organization of We found that even the much the upper levels of

information those relevant to them. For Ex articulated vision of the company has

reached only

the hierarchy leaving the majority of the workforce ignorant. Furthermore we resulted the found that company the over emphasis losing sight on profits and turnover has of

of other

important aspects

organizational development.

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Recommendation
Based on the above observations I would like to forward the following

recommendation for consideration by the company. Re1: The Company In The Future should adopt a more scientific approach in introducing any change program. Therefore I recommend that the company put in place a

permanent mechanism. I think that they should practice the kurt levins process to facilitate consultative and educative process in change management. Rec2: Taking note of the scale of operation, the size of the organization and its

future growth potential I recommend that decision making to be decentralized with accountability and responsibility in place . Rec3: The company should unfold specific programs to propagate a learning culture in the organization which can lead to consolidate the innovation and risk taking

culture propagated by the company leadership. Rec 4: I recommend that the company do a communication satisfaction survey in order to ascertain the problems related to internal communication within the

organization and organization.

make improvement

to the internal

communication systems in the

Rec 5: Finally I recommend that the company take serious note on the vast human resource base its in command and make a concerted effort in order to increase

value of the human capital, which is vital for its future growth.

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