ORGANIZATIONAL DESIGN & DEVELOPMENT

PROJECT ASSIGNMENT

ORGANIZATIONAL DESIGN ANALYSIS

ON
ERNST & YOUNG

Submitted To:

Submitted By: Group 2

Prof. Richa Awasthy

Aastha Aggarwal (15PGDMHR02)

Abhyuday Gupta (15PGDMHR04)
Dishari Banerjee (15PGDMHR14)
Mansi Jain (15PGDMHR26)
Utkarsh Gupta (15PGDMHR46)

EXECUTIVE SUMMARY
This report provides an analysis of the organizational design of Ernst and Young. It discusses
the vision, mission and history of the organization and explains about its services. The report
also shed slight on the growth and development through the ages. It also talk about the
internal physical and structural design of the organization and the challenges encountered in
these interventions. It goes ahead to analyse the structure of organization, differentiating
between mechanistic and organic and discussing the contextual alignment with culture, size,
technology, mission, positioning and strategy in the face of upcoming challenges. The
method employed in this analysis are interviews and online research. The report concludes
with a recommendation for synchronization and integration of divisions, re-orientation of
employees and redefining reporting structure.

INDEX

S.NO.

PARTICULARS

PAGE NO.

Executive Summary

Acknowledgement

About The Organisation

Organisation Structure

Organisation Model

12

Contextual Dimensions

13

Structural Dimensions

14

Growth Path

17

Internal Ambience and Office Space

18

10

Vision 2020

18

11

Organisation Politics

20

12

Challenges and Recommendations

20

13

Conclusion

21

14

References

22

15

Bibliography

23

ACKNOWLEDGEMENT
Working on the Project on analysing the Internal Organization Structure of EY India was a
source of immense learning for me and my colleagues. We would like to express our sincere
gratitude to Ms Sathya S, Mr Nipun Vinayak and Mr Anurag Mallik from the EY India
Advisory Team, for taking time out from their busy schedule and providing us valuable
insights into their organization. We would also like to thank our professor, Dr. Richa
Awasthy for her constant support and valuable guidance throughout the course of the project.
Lastly we would like to acknowledge with deep sense of gratitude the encouragement and
inspiration from our institute, International Management Institute, New Delhi for providing
us with such a platform to learn and gain an understanding of the corporate world.

ABOUT THE ORGANIZATION

Ernst Young, EY is a multinational organization that has its headquarters in London. It is
one of the Big Four firms of the world. As of 2014, it is at the third position in terms of
aggregated revenue after PowerwaterhouseCoopers and Deloitte. The organizational structure
of Ernst and Young can be described as a network of member firms. These firms have their
individual legal identity in different countries. The Company has a huge global presence with
more than 200,000 employees in around 150 countries.
History
EY has a long history of mergers. In 1849, the original partnership was founded in England.
It was called Harding & Pullein. In the same year, Frederick Whinney joined the firm. He
was made a partner in 1859 and with his sons in the business it was renamed Whinney Smith
& Whinney in 1894. In the year 1903, Alwin C. Ernst and his brother Theodore set up the
firm, Ernst & Ernst. In Chicago, Arthur Young established Arthur Young & Co in 1906.
As early as 1924, these American firms allied with prominent British firms, Young with
Broads Paterson & Co. and Ernst with Whinney Smith & Whinney. In the year 1979, this led
to the formation of Anglo-American Ernst & Whinney, creating the fourth largest
accountancy firm in the world. Also in 1979, the European offices of Arthur Young merged
with several large local European firms, which became member firms of Arthur Young
International.
Finally, in 1989, the number four firm Ernst & Whinney merged with the then number five,
Arthur Young, on a global basis to create Ernst & Young.
Services
Ernst and Young is major organization in the tertiary sector. It has four main service lines
according to share of revenue:
Assurance Services (41%) This comprises one of the most important services that
EY specialises in, i.e. Financial Audit. It also includes Financial Accounting Advisory
Services, Fraud Investigation & Dispute Services, and Climate Change &
Sustainability Services.

 Tax Services (26%) - This includes Transfer pricing, International Tax Services,
Business Tax Compliance, Human Capital, Customs, Indirect Tax, Tax Accounting &
Risk Advisory Services, Transaction Tax
Advisory Services (24%) This can be further divided into four parts, i.e. Actuarial,
IT Risk and Assurance, Risk, and Performance Improvement.
Transaction Advisory Services (9%) - This deals with the capital motives of the
member companies, i.e. preserving, optimizing, investing and raising capital.
The service lines are present across the following verticals namely,
1) IIC Industry, Infrastructure and Consumer (Includes auto, power, manufacturing,
FMCG, FMCD and Pharmaceutical Industry)
2) BFSI Banking and Financial Institutions
3) TMT Telecom, Media and Technology( Includes Education and IT)
4) GPSC Government and Public Sector
Support Function
1) PES Internal Project Management
2) HR
3) Finance
4) Admin & Accounts
5) IT
6) Knowledge Team

Growth and Development

During the 1980s and 1990s, EY made significant progress towards investing in consultancy
services. The major factor that has led to its huge growth is knowledge. The organization
believes that it is their most important asset and the major reason for an expanding customer
base. The collective intelligence of 190,000 professionals around the world is described as
the main source of strength for EY and it is expected to grow every day. It results into a
service that is driven by fresh, actionable insights and the power of a truly connected
organization. This knowledge base has been built by collecting diverse experiences of the
professionals and closely monitoring the latest trends and regulations in various industries.
6

Out of the all the Big Four firms, EY is the most globally managed. It sets stringent global
standards and all the members firms are required to adhere to it. This generates consistency in
its services. Broadly, all the countries in which it has a presence are divided into four zones.
It has a decentralized structure which is different from other organizations in the same
domain. The four zones are:
EMEIA Europe, Middle East, India and Africa
Americas
Asia-Pacific
Japan
Each area has an identical business structure and a management team, which is led by an
Area Managing Partner who is part of the Global Executive board. The aim of this structure
is to effectively cater for an increasingly global clientele, who have multinational interests.

ORGANIZATION STRUCTURE
Organizational structure is a kind of framework utilized as a part of businesses. Its aim is to
locate the best approach to delegate roles, power, and responsibilities to its employees and
offices. It additionally controls and facilitates how data streams between various offices and
levels of administration in an organization. Two imperative structures incorporate
Mechanistic and Organic structures.
Mechanistic structures are primarily for organizations that work in a steady domain, utilize a
concentrated methodology of power, and keep up solid reliability for administration.
Organizations that utilization a Mechanistic sort of structure for the most part don't have to
change or adjust their structure. Organic structures are utilized as a part of organizations
confronting unstable situations and must be receptive to communication and change. They
can handle, break down, and appropriate data and information rapidly. This guarantees they
stay focused against different organizations. Organizations utilizing Organic structures need
to convey successfully and rapidly by spreading data. This is done by departments and
different functional areas being closely integrated with one another. Additionally, by
executing decentralized decision making, employees of lower positioning will be able to
settle on imperative decisions. This will enable workers prompting more noteworthy
innovativeness and better critical thinking.
7

Global Managing Partner Business

Enablement

Global Vice Chair Corporate

Development

Chairman of the Global Emerging

Markets Committee

Global Vice Chair Finance

Mark Weinberger

CEO

Global Vice Chair Tax

Global Vice Chair Talent

Global Vice Chair Markets and Chair of

Global Accounts Committee

Global Vice Chair Public Policy

Global Vice Chair Industry

Global Managing Partner Client Service

Global Assurance
Innovation Leader
Global Automotive and
Transportation Leader
Global Banking and
Capital Market Leader

Global Consumer
Products and Retail
Leader
Global Government and
Public Leader

Global Vice Chair Industry

Global Health Sector

Leader
Global Insurance Leader
Global Life Sciences
Leader
Global Mining and Metal
Leader
Global Oil Gas Leader
Global Power and
Utilities Leader
Global Real estate and
Hospitality Leader
Global Media and
Entertainment Leader
Global Technology
Leader
Global
Telecommunications
Leader

Area Managing Partner,

Americas

Global Managing Partner Client Service

Global Assurance Leader

Area Managing Partner,

Asia Pacific
Area Managing Partner,
EMEAI
Area Managing Partner,
Japan
Global Vice Chair of
Transaction Advisory

Global Advisory Leader

Advantages and Benefit of Mechanistic Organization

Benefit Of Specialization
In mechanistic organization, activities are isolated into various departments on the basis of
basic nature. Works are separated among the subordinates on the basis of their aptitudes and
productivity. The utilization of specialization aides for legitimate usage of assets and
augmentation of profitability.
Proper Discipline
In this organization structure top level administration has centralized force. There is system
of chain of command from top level to subordinate levels. Subordinates are in charge of their
immediate bosses. In this manner, every one of the subordinates perform activities as
indicated by best of their capacity.

10

 Minimize Supervision Cost

In mechanistic organization, work is divided among the employees on the basis of their
specialization. It implies right job is doled out to the correct individual. It minimizes
supervision cost as every one of the subordinates perform activities as per best their abilities.
Quick Decision And Implementation
In this organization just top level administration includes in decision making process. It
doesn't counsel with subordinates in decision making process. In this manner, fast decision
and its execution get to be possible. Furthermore, in this aggressive business sector
environment, fast decision and its usage is key for business achievement.
Network Position
There is the procurement of system of position in administration chain of command. Top
level administration gives direction to centre level supervisors, centre level managers to
lower level directors and again bring down level administrators to working level employees.
This network is taken into consideration while communicating information. It helps for
timely flow of information.
Fixation Of Responsibility
In this organizational structure, every individual has been given particular responsibility on
the basis of capacity. He can neither exchange job to others nor keep away from it.
Consequently, the concerned representative needs to perform given job himself. It builds up
the feeling of self-responsibility among the employees.
Effective Management
It is a bureaucratic type of organization structure. In this organization, there are particular
guidelines, regulation, arrangements and working framework. The top level administration
has sole power in decision making process. There is arrangement of hierarchy of leadership
from top level to subordinate levels. In this manner, manager can deal with the organization
in successful way.

11

Mechanistic
Individual

Organic
specialization: Joint

Employees

work

separately Employees

and specialize in one task

Simple

integrating

Specialization:
work

together

and

coordinate tasks
mechanisms: Complex

Hierarchy of authority well-defined

task

integrating

forces

and

mechanisms:

teams

are

primary

integrating mechanisms
Centralization:

Decentralization:

Decision-making kept as high as possible. Authority to control tasks is delegated.

Most communication is vertical.

Most communication lateral

Standardization:

Mutual

Adjustment:

Extensive use made of rules & Standard Face-to-face

contact

for

coordination.

Operating Procedures

Work process tends to be unpredictable

Much written communication

Much verbal communication

Informal status in org based on size of

Informal

empire

brilliance

Organization is a network of positions,

Organization is network of persons or

corresponding to tasks. Typically each

teams. People work in different capacities

person corresponds to one task

simultaneously and over time

status

based

on

perceived

RECENT CHANGES
The recent change in 2015 September was Global Mobility Solution Division under the Tax
team and the People and Organization Team under Advisory were combined into a synergy
as People Advisory Services.

ORGANIZATION MODEL
Nadler and Tushman, a General Diagnostic Model for Organizational Behaviour talks about
the organisation as an open social system which interacts with individuals, diverse groups and
the environment.

12

It diagnoses the organisation on the basis of the:

Organisation Strategy, structure, culture, people and technology
Group Group dynamics, Group performance
Individual Employee satisfaction and performance
Design effective organisation intervention

CONTEXTUAL DIMENSIONS
Culture
Ernst and Young harbour very efficient working relationships. The employees are very
friendly and interactive. First name culture is propagated. The work place consists of open
cubicles. Closed room culture is discouraged. Also the work pressure is intense. According to
one of the employees of EY, it is a little difficult to maintain work-life balance. There are
regular town hall meetings at the service level or sub-service level. This ensures better
communication amongst teams.
Environment
EY does not support a hierarchal design. The organization strives for a flat structure. EY has
an open systems approach. The level of organizational politics is very minimal. The work
output is given the most importance. It has a decentralized structure which is different from
other organizations in the same domain. The four zones are:
13

EMEIA Europe, Middle East, India and Africa

Americas

Asia-Pacific

Japan

Goal and Strategy

To be a US$50 billion distinctive professional services organization; to be the most-favoured
employer, to have the number one or number two market share in chosen services and
geographic markets; to enjoy market-leading growth with competitive earnings; and to have
the best relationships with all their stakeholders.
Size
The organization operates as a network of member firms which are separate legal entities in
individual countries. It has 212,000 employees in over 700 offices around 150 countries in
the world. It provides assurance (including financial audit), tax, consulting and advisory
services to companies.

STRUCTURAL DIMENSIONS
1) Formalization The company adopts high degree of formalization with well defined
roles for individuals. Goals are set in the beginning of Appraisal year after discussion
with the individuals. The rules and regulations in process are well defined and clearly
communicated to each one to follow.
2) Specialization - allows people to develop their individual abilities and knowledge,
which are ultimate source of an organizations core competences
3) Span of Management - Relatively Flat Structure with fewer hierarchical levels and
wide span of control. Number of employees reporting to a supervisor: Average 3-4
4) Professionalism The culture in the organization is informal. Individuals address
each other by 1st name. This has more to do with the age of the working group.
Partners are in their mid-40. The hierarchy is respected and followed, however the
managers are approachable. The dress code followed is strictly formal.
14

5) Horizontal Differentiation There are groups of organizational tasks divided into

roles and roles into subunits I.e. functions and divisions, It establishes the division of
labor, i.e. more specialized and productive and increase the organizations ability to
create value
6) High Degree of Differentiation Specialist Consultants in their area of work,
Complex organization in customer focussed service line Industry
7) Centralization Authority Require Approvals and in place because of the criticality
of the data and the nature of advisory services requires a centralized structure.
8) New ideas are however encouraged and support provided by the management in
execution.
9) Standardization Processes are in place and are required to be strictly followed by
individuals. However in the scope of a project innovative ideas are encouraged and
innovation rewarded.
10) Inter business interaction at the Consultant level is relatively low; the interaction s
happen usually in the partner level. The individuals discuss market updates about the
recent happenings. Managers encourage and share insights as and when possible to
help knowledge transfer among the teams. Two way communication is encouraged
and widely followed.

STAR MODEL
The company has implemented and adopted the Star Model for its organization design
1) Structure The Company follows a hybrid structure Vertical and Horizontal Vertical
for the Business Functions, Horizontal for Support Function. This ensures that specialists are
available to deal with customers to enhance customer value
2) Strategy The company adopts strategy to remain viable and valuable to its customers
and its stakeholders.
1. Industry
a) Analysing Industry Domains The business is divided across specialized
verticals and sectors
b) Analysing Industry Trends In depth knowledge and understanding of the
business of the clients and the industry as a whole
15

2. Customers
a) Adopting to Changing Customer Needs
b) Keeping up the Changing Customer Groups and Target Segments
3. Competitors
a) Potential Competitors
b) Analysing Competitors Organizational Structure, Culture and Strategic
Intent Keep updated with the changes across the big 4 Consulting Firms
4. Organization
a) Managerial Cognition The Company looks at managers who can deliver
the core values and provide customised solution to its clients
b) Organizational Culture The Company has a high performing culture and
the culture is
c) Organization Structure Combination of a vertical and horizontal
structure to enable and facilitate smooth functioning and better data
dissemination
d) Brand Positioning Capitalize on the brand strength and the knowledge of
consultants and specialists to create a niche

5. Reward - The Company aims to create a sustainable reward system to encourage a

high performing culture. The performance management and appraisal is Bell curve
3 rating 15%
5 rating 40%
The variable salary component is around 20-30%
The rating system followed is self-rating and then managers rating for the appraisal.
There is a mid-year review and then yearly appraisal. In some cases feedback of
peers, other teams and clients are also considered, but the process isnt formalized.
6. Process The organization has strict norms in place regarding the working and
structured processes are implemented in every working area. This enables a smooth
knowledge flow and proper information dissemination.

16

7. People/Human Resource Being a consulting organization, the company focusses

on developing and nurturing the specialists and the subject matter experts. The
Benefits and facilities are provided to attract the best of the talent and retain them. As
a part of induction process the individuals are made to go through a rigorous onboarding process spread across the duration of 6 months of probation period. This
aims towards aligning the new hires to get acquainted to EYs way of working and
their core values. The process includes:

2 day orientation and 2 day induction

Post 1 month: 3 day residential technical training

Buddy Program where a mentor is assigned from the same department

555 Feedback System Feedback after 5 days, 5 weeks and 5 months

The flexi work is available but not very advanced takers for it. As a culture

individuals prefer working from office rather from home. There are regular town hall
meetings at the service level or sub-service level. Ensures better communication
amongst teams

GROWTH PATH

Partner
Director
Manager
Consultant
Analyst

Sr.
Manager

Executive
Director

Sr.
Consultant

Associate
Consultant

Partner Revenue Sharing Model

Executive Director Head Functional, working in the capacity of Solution Expert (Salary
and Pay band same, not revenue sharing)

17

INTERNAL AMBIENCE AND OFFICE SPACE

The organization has a fluid and transient work culture. Up to Manager Level, the individuals
are not assigned permanent seats. There is a concept of hot desking i.e. they do not have
any permanent seats. They are required to visit client offices regularly and when not required
they have temporary seats from where they work. Only Partners have cabins and rest all sit in
rows. Looking at EYs internal decor, it can be said that it has an open systems approach. The
work place consists of open cubicles. Closed room culture is discouraged. Even senior
managers and assistant managers are required to work in the same area as other employees.

VISION 2020
Due to fundamental changes driven by globalization and technology, consulting business is
profoundly different in todays era. Increased globalization has led to new markets for goods
and services and thereby, increasing pressure on emerging market companies to compete on
innovation as well as price. This is consequently followed by major shifts in consumer
markets, tax policy and workforce diversity. Technology has made geographies redundant,
saving time and freeing up resources.

As EY's new Chairman and CEO, Mark Weinberger, assumed his role in July 2013, he
concurrently formed bold vision and strategy for the firm to achieve significant growth
18

globally by 2020 and offering its stakeholders more benefits. This plan has been termed as
Vision 2020, and its objective is to make EY the leading global professional services
organization by 2020.With the stated goal of being the pre-eminent professional services firm
in the world, this strategy has been executed across the firm's lines of business and business
units alike.

Ambition
By 2020, Ernst & Young aims to be a US$50 billion distinctive professional services
organization
Ernst and Young has created an ambition to be distinctive; to be the best brand; to be the
most-favoured employer, to have the number one or number two market share in chosen
services and geographic markets; to enjoy market-leading growth with competitive earnings;
and to have the best relationships with all their stakeholders.
Strategy
Built on three pillars:

Focus On Winning
In The Market By
Delivering
Exceptional Client
Service And
Maximizing
Opportunities In
Markets And
Services

Create The Highest

Performing Teams
By Attracting,
Developing And
Inspiring The Best
People And
Committing To A
Culture Of Worldclass Teaming

Strengthen Global,
Empower Local By
Pressing Our Global
Advantage And
Empowering Local
Teams

19

Positioning
The company believes in developing highest performing teams, delivering exceptional client
service, worldwide.
EYs positioning is a reflection of its difference from the competitors in the minds of their
stakeholders. At EY, teams deliver exceptional client service. So its positioning is known for
having the highest-performing teams that deliver exceptional client service worldwide.
Through Vision 2020 as EY grows, the careers of its employees will also grow. Recruits who
join EY will be a part of high-performing teams that deliver exceptional client service. As the
organization strengthens its global structure, employees of EY will also become true global
professionals with a global mind-set and have the opportunity to work with team across
borders and service lines.

ORGANIZATION POLITICS
All organizations have work related politics and EY is no exception. But what sets it apart
from others is that the level of organizational politics is very minimal. The work output is
given the most importance. An employees performance is all that matters. If one is good at
their job then he/she need not be bothered about politics.
The advice that they would like to give to the budding managers is that they are expected to
be interactive with other employees. Also the work pressure is intense. According to one of
the employees of EY, it is a little difficult to maintain work-life balance.

CHALLENGES AND RECOMMENDATION

The recent change in 2015 September was Global Mobility Solution Division under which
the Tax team and People and Organization Team were combined into a synergy as People
Advisory Services.
Presently they are following a matrix structure post the synergy. However the MIS and the
reports have to be shared with the Leader of both the Advisory and the Tax Team.
However the working and the structuring of the teams were kept separate
20

 Knowledge Database is separate.

There are restrictions on the knowledge sharing
Approval Process are separate
Escalation Matrix is different
Communication channels are not well-defined
Our Suggestion is to create a better consolidated structure for the People Advisory Services.

The
department
needs to be
properly
synchronized
and integrated
as a separate
division.

Proper division
of roles for the
individuals

Re-orientation
of the
employees of
different teams

Redefining of
Reporting
Structure and
channels of
communication

CONCLUSION
Thus Organisational Development is an on-going process which changes with the change in
the demand and the requirements of the external and internal factors.
As organisation and economy become more global and more complex the requirement of
organisational development interventions further increases and Ernst and Young on the same
lines are incorporating such changes in its organisation also like they moved to matrix
structure post their synergy.
According to the Kotlers eight stage process for managing organisational change
organisation has to create a urgency, form a powerful coalition, create a vision for change,
communicate the vision, remove obstacles, create short-term wins, build on the change and
anchor the changes in corporate culture thus Ernst and young has been successful to a certain
limit in implementing this.
Thus a great organisation is one which realise this importance and know what is happening
and make things happen accordingly

21

REFERENCES
1. Ms Sathya S

2. Mr Nipun Vinayak

3. Mr Anurag Mallik

22

BIBLIOGRAPHY
[1] Advisory, Assurance, Tax, Transaction Services - EY - Global. (n.d.). Retrieved from
http://www.ey.com/
[2] EY - Advisory, Auditing & Business Consulting Firm in India - EY - India. (n.d.).
Retrieved from http://www.ey.com/IN/en/Home
[3] Org

Chart

EY

TheOfficialBoard.

(n.d.).

Retrieved

from

http://www.theofficialboard.com/org-chart/ey
[4] EY. (2013, October 11). Our Vision, Values and Impact. Retrieved from
http://www.ey.com/Publication/vwLUAssets/Our_vision,_values_and_impact:_UN_
Global_Compact_2013/$FILE/Our%20vision,%20values%20and%20impact%20%20UN%20Global%20Compact%202013.pdf

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