Case Study Asea Brown Boveri from Bureaucratic to Matrix: The saga two centurion multinationals Asea Brown

n Boveri Limited (ABB) is a Switzerland based multinational company. ABB was formed on January 5, 1988, as a result of the merger between Sweden-based engineering group, Asea AB, and Switzerland-based Brown Boveri Limited. Both the companies had a history of around 100 years and were major competitors in the electrical equipment market in Europe. Mr. Barnevik took over as the CEO of ABB w.e.f. January 5, 1988, i.e., after the new entity, i.e., ABB was emerged. The post consolidation journey of ABB was not smooth and it started reporting losses from the year 2001. Compared to other two multinationals, i.e., Schneider of France and Invensys of U.K.; ABBs performance was poor. Poor strategic decisions and other HR related problems due to frequent changes in the organization, ultimately resulted to poor performances of ABB. After trying out customer-centric and product-based structuring of the organization, Barnevik introduced the matrix structure to integrate worldwide activities of ABB. Decentralization with central control was the essence of ABBs matrix structure. With four management levels and clearly defined duties and responsibilities, ABBs matrix structure on the top consisted of the group executive management, i.e., President and CEO, Deputy CEO and eleven ABBs Executive Vice Presidents. Group executive management level used to devise global strategies and periodically review the performance of ABB's eight business segments spread over 28 business regions. The members belonged to different nationalities and met once in every three weeks to discuss business developments. Corporate staff support extended to the Executive Vice Presidents based on the requirements of business segment headed by them. The idea behind the matrix structure was to develop global strategies, accounting the local conditions and issues to increase the proximity with the customers and hasten the decision making process. The dual reporting system ensured that both geographical interests as well as productspecific interests were taken care of. Further, it also ensured that there was proper information flow within the organization. Regional managers as well as business area managers could track the operations of individual companies. In implementing the matrix structure, the challenge for ABB was to integrate the work cultures of two massive organizations - Asea and Brown Boveri. The company had to induce a change in the attitude of employees who were used to a bureaucratic culture... By creating a matrix organizational structure and establishing global and regional management, ABB reaped many benefits. The operations of frontline operating companies were integrated with ABB's worldwide operations through the matrix

structure. ABBs such initiative gave them the international identity and subsequent growth in business results. Questions for Discussions: 1. 2. After reading the case, do you think matrix organization structure can always bring success? Identify some companies, which have failed subsequent to introduction of matrix structure. List the reasons for failure and suggest what could be the appropriate structure for them?

Case Study Advanced Micro Devices (AMD) Advanced Micro Devices (AMD) is located in Dresden of East Germany and a composite of three cultures American, West German and East German. The Americans are go-getters who believe in shooting first and aiming later. West Germans are analytical, thorough and correct, whereas the East Germans have mastered the art of innovation with limited resources. AMD became an ideal convergent point for Americans and West Germans to make computer chips, after the Berlin Wall fell. However, soon it became evident that culture clashes hindered success. Americans believed that everyone would want to follow their best practices and Germans found the Americans patronising. West Germans viewed the plant as an opportunity to help their East German brethren. East Germans felt that their unique talents for ingenious solutions were being ignored. These feelings were reflected everywhere even in the way meetings were conducted. American managers preferred free form brainstorming sessions in English, wherein ideas could be developed spontaneously. The Germans did not want to present their thoughts without any preparation. The Dresden start-up team designed a meeting format, which opened with American-style brainstorming sessions. However, a formal reflective process would take place between meetings and ideas to improvise for the next meeting. Language barriers came down during these meetings, where a member could switch to either English or German, depending on his comfort level. Posters were placed for those who had reservations in communicating, orally. At the outset, this may seem like a compromise, with each side yielding for the others comfort. However, the truth is the dilemma process works only when both sides change. In this case, the Americans learnt the art of deliberation and the Germans off-the-cuff dynamism. As a result, this multicultural style gave AMD the much-needed competitive edge. AMDs Dresden factory broke production speed records, in less than two years and went through three generations of chip redesign without major errors in a year. The AMD dilemma suggests that success depends on the willingness of employees to let down their defences and talk about ethnic and national personalities and the way they learn from each other. AMDs case has developed Dilemma Theory (Trompenaars, F., Hampden-Turner, C., 1998) a much discussed theory now worldwide and commonly known as THT Theory. According to this theory, insidious culture clashes and most

management problems are a result of the human habit of viewing life in terms of all-ornothing choices. It is always winning versus losing strategies, right versus wrong answers and good versus bad values. Business issues must not be approached as a contest between good and evil, or the potential benefits of evil might be lost. It is better to interpret clashes as a reconcilable dilemma. Growth through people the mantra of Microsoft India Microsofts footprint in India was in the year 1990. Microsofts presence was first in New Delhi, and then gradually, Microsoft extended its presence to other places; including the second largest development centre in the country at Hyderabad. Microsofts vibrant presence in India is evident in all its six business verticals. Being in knowledge intensive sector, Microsoft India's HR strategy particularly focuses on capacity building through employee development. Every employee of Microsoft is competent enough to achieve the business goals. Microsoft considers HR as the key drivers for bringing change and so also in achieving business goals. To sustain in a globally competitive IT business, Microsoft always excels in talent management and employee retention. For this Microsoft makes extensive use of various HR metrics. Systematically Microsoft accounts for the stock and flow of manpower, reviewing the succession plans, employee development plans, and career moves. Each employee is groomed as a future leader. Strategically Microsoft embraces three HR philosophy. Those are; People first Transparency Opportunities to grow

Microsofts such HR practices have been applauded by Mercer and Taylor Nelson Sofres (TBS), and in the year 2008, Microsoft India became one of the best employers of the country. The survey results have made Microsoft the ultimate destination for IT professionals. However, Microsoft started feeling the pinch of global meltdown from early 2009. The heat was also felt in their India operations, forcing the company to lay off one percent of their total workforce in India. This was against Microsofts global layoff of 5% manpower. Through manpower pruning, Microsoft did try to adjust to the changing economic environment. This prompted Microsoft to adopt strategic HR practices in alignment with the renewed business goals and objectives. In the post recovery phase from the global meltdown, Microsoft however started facing the crisis of talents. Manpower pruning reduced the Microsofts brand value, and unlike earlier, Microsoft could make them less attractive to top IT talents of the country. To reduce the talent gap, Microsoft introduced recruitment of fresh graduates from the campuses along with the recruitment of experienced IT professionals. The campus recruitment process, apart from the written test for initial short listing, emphasises on successive rounds of personal interviews to judge the potentialities of prospective job seekers. Every new recruit goes through Microsofts Leap Engineer Acceleration Programme (LEAP) to shun their job related technical and personal skills. Each employee gets the opportunity to grow both vertically and laterally among all

business verticals. With flexi-time, Microsoft gives the employees the opportunity to maintain the work-life-balance. Likewise Microsoft also offers most competitive compensation packages along with the standardised benefits. Performance management process is also transparent enough to make the employee understand where they stand in the performance scale. Microsoft truly value diversity maintaining female-male ratio in the workforce. To improve the work life balance, particularly for the female employees Microsoft extends the facility of crche for the children. With all these strategic HR moves, Microsoft maximizes the value of human capital and achieves the business growth. The mantra of Microsofts people management is to achieve talent acquisition and development, management development and the leadership development. Growth through people!