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Free «Organization Theory and Design, and Outsourcing» Essay Sample

Due to the fast growth, the company should seek the services of an outsourcing company, which would use the hybrid organizational structure, which combines functional organization structure and geographical organization structure. Functional organizational structure divides the organization into different functional unit (Walesh 2000 p 282), where each functional unit is responsible for the performance of a certain duty within the organization and is headed by a single person. On the other hand, the geographical organization structure manages the affairs of the business based on the locality of the business (Walesh 2000 p 286). Here, the main office will serve as the hub of the business with the other branches serving as satellite offices.

The latter form of organization structure would be suitable to the company as the system factors in the fact that the organization has several other branches; hence, necessitating the need for geographical organization structure. The functional organizational structure will ensure better management of the outsourced work. This will give a close supervision of the work of the outsourcing company due to the fact that they are accountable to one person in the organization. The functional organizational structure ensures that the outsourcing company does not get access to information rather than that which relates to their working. This protects the company’s information and secrets from being pirated by the outsourcing company. Due to the fact that outsourcing is for only one department in the organization, the outsourcing company is likely to perform better work than the individual employees who used to work in the departments because the outsourcing company specializes in only IT and hence has a vast knowledge of the field.



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The management is faced with many challenges due to the fast growth and the changes in technology. One of the main problems that the company faces due to the expansion is the lack of efficient recordkeeping of the documents on the activities of the company. This has been brought about by the increase in the volume of the documents that the company handles due to the diversification of the services that the company offers.

 The company is also faced with personnel issues with the available personnel being overwhelmed by the workload presented by the rapid growth of the company. This has necessitated the need for the company to either acquire new personnel or outsource to enable the company handle its activities effectively.

The manager as an ethical decision maker

To: the CEO, Triad Insurance Company of Indianapolis (TICI)

From: the company adviser

Date: December 6, 2010

Subject: Ethics of outsourcing

The main reason for writing this memo is to inform you on the possible implications of outsourcing the information systems to India. The memo will define the ethical issues of outsourcing and therefore help you to make the right decision on whether to outsource and if you outsource the staff that should be laid off to pave way for the implementation of outsourcing as a method of administration of the information systems.

Ethical pros

Financial benefits to TICI: Outsourcing to India would enable TICI to cope with the management of the information of the company. This would enable the company to effectively handle its data and therefore improve the quality of work of the company. The better management will ultimately have financial implications on the company.    

Outsourcing to India would benefit the company. It would enable the company to save money used in paying for the staff. This would have long-term financial implications to the company. The

Ethical cons of outsourcing

Loss of jobs: The outsourcing to India will also have negative effects on the company. The outsourcing will lead to laying off of staff. Some of who have helped in the development of the company during its early stages of development. The employees would feel betrayed by the company due to their laying off even after they have helped in developing the company to its present status

Reduced innovation: outsourcing will also lead to reduced innovation of the employees as the outsourced employees will have reduced innovation as they will mainly be concentrated on fulfilling their contractual agreements with the company.

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Job insecurity: the outsourcing will make the workers who remain at the TICI to have a sense of job insecurity especially after the laying of employees who were perceived to be influential to the company.

Should you decide to implement the outsourcing program, a clear understanding of who to lay off to pave way for the implementation of the idea is necessary. 

Outsourcing would lead to reduced innovation of the employees.

In determining the employee to lay off, the CEO should first determine the basic kind of right versus right situations that the situation poses (Badaracco 1997 p 6). Though Eric is financially stable, he has helped the company to grow and the current success of the company as partly due to his efforts. By loosing Eric, the company may loose a very valuable aspect of the company: A person who understands the company’s history and can therefore effectively work towards the achievement of its long-term goals. Therefore, the CEO would be taking the right decision in retaining Eric. Eric is also financially stable and he would not be adversely affected by being laid off like the other employees. The company should therefore lay him off as he would be least affected.

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Tara is academically capable of fueling the growth of the company. Among all the three, she is the one who is most academically capable of helping in solving the problems, which the companies face. Therefore, by retaining him the CEO would be making a right decision. Tara is also a single mother and is most likely to be affected financially by her laying off. Laying off Tara will have long-term implications on her family; TICI, having been initiated as a family run business, therefore respects the family values. Therefore, by not sacking him the CEO would be performing the right decision. However, the CEO may also be performing the right decision to lay off Tara considering the fact that she does get along very well with other employees. The outsourcing company being a new company, which will form relations with TICI, requires the presence of someone who can get along well with the employees of the company to enable the effective integration of its employees in the activities of TICI.

Jason is a talented young man; he is very creative and easily gets along with the other employees. Therefore, by retaining him he would be capable of associating with the new employees to ensure that they understand the company values and therefore help them to work effectively towards achieving the company’s objectives. Therefore, retaining Jason would be a right decision; however, Jason has shown that he sometimes cannot meet the deadlines of his work due to poor time management. This vice is likely to be transferred to the outsourced company’s employees. Jason can also get another job easily if he is laid off. Therefore, by laying off Jason the CEO would be performing the right action.

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Analyzing of the above factors shows that the company should retain Tara as the head of the operations of the company. TICI being a company, which was started as a family venture, strongly upholds the family values of its employees and the laying off Tara would be contrary to the company values. Among the three, Tara is the hardest working employee; this important attribute will help the company to achieve its goals. she is also the one who is most well placed to manage the company in the future when it is more developed than its current position due to her academic qualifications. By taking this decision the CEO would be considering not only the effect of the lay off on Tara but also the long-term implications (Jennings, 2008, p 21)  


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