The race for securing dominance in the global market is heavily affecting the major agricultural, construction, and turf care companies such as Deere & Company. In an effort to leverage resources and institute cost-saving measures, John Deere released approximately 800 salaried employees and revised its organizational structure. There are several interventions that can be applied to structural design. This paper will examine the interrelated application stages of reengineering and downsizing as well as execution concepts .
Reengineering – Downsizing
1. Clarifying the Organization’s Strategy
According to Zedong (2011), downsizing is “typically an ill-conceived attempt by people in power to pander to shareholders or the public to reduce costs. It is an admission of failure” (p. 1). In 2009 Sam Allen, the CEO of Deere & Company along with senior executives introduced a strategic plan to reduce costs and expand business interests globally. First, in order to reduce costs John Deere offered a voluntary separation program for all salaried employees. As a result, approximately 800 employees left the company. Thus, the program provided John Deere with a cost saving of $75 million.
Moreover, in order to compete globally, John Deere introduced a global operating model (GOM) that merged two formerly distinct divisions, agriculture equipment and commercial & consumer equipment into one division: Worldwide Agriculture and Turf (Golden, 2009). According to Golden (2009), strategic public relations director for Deere, “the voluntary separation program was designed to help Deere immediately leverage the efficiencies of the merged divisions. The company expects the new operating model will enhance the company’s competitive position around the world” (para. 3). Consequently, the two interventions was a restructuring process for achieving strategic objectives: reduce workforce levels, streamline processes by merging two equipment divisions, and position the company to compete globally.
2. Assess Downsizing Options and Make Relevant Choices.
The continued process of reengineering John Deere’s organizational structure required additional quality improvement and cost savings measures at the department level. According to Zedong (2011), “re-engineering is about examining work processes and finding innovative ways to eliminate waste, duplication, and non-value-added activities. It can result in significant quality improvement, as well as time and cost reduction. But often it requires changes in organization and work habits” (p. 1). Thus, departments need to “rethink how the work gets done” (Cummings & Worley, 2009, p. 341). Therefore in order to assess downsizing options an overview of the diagnosis organizational system model process is necessary with particular concentration on the group level and individual level to ensure changes are aligned with organizational objectives.
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