Optimization Strategy for EchoStar Communications Corporation

Optimal operations methodology requires a studied recognition of the constantly evolving, inextricably intertwined nature of organizational behavior (OB) practices and operations issues in the new global economy within which business functions. In reaching that studied recognition, paying attention to the manner by which national and cultural differences affect the operation and management of human resources is important. Implementing changes requires that management apply OB principles and leadership models; however, making such changes can be challenging in the midst of economic recession, especially for companies such as EchoStar Communications Corporation (Datamonitor, 2007).

The purpose of this essay is to provide an operational report for EchoStar that now looks to optimizing operations in the reality of the changed and changing domestic employee constituency. First, this essay discusses some of the operational organizational behavior issues facing EchoStar. The circumstances that the company now faces in light of the frequent changes in economy are then considered, and it will be noted whether there is, in fact, anyone in the company who is monitoring economic events and how they could have an impact on the operational plans for the future. A list of suggestions will be prepared for the company to prepare for combating the impact on operations of any sudden downturn in the economy, as well as a means to ameliorate any serious effects of any such downturn. Operational/organization behavior issues that are serious at the selected workplace will also be addressed. Finally, a plan to advise key personnel how to implement these recommendations in light of the fact that, in a depressed economy, finance professionals are reluctant to spend money.

About EchoStar Communications Corporation

EchoStar Communications Corporation (ECC) was founded in 1980 with Charles Ergen, Candy Ergen, and James De Franco (Dish Network, 2006; Dish Network, 2008; Marketline, 2007). In 1996, ECC began providing direct broadcast service under the DISH Network name. The same year, ECC became a publicly traded company (Marketline, 2007). In 2002, “EchoStar started offering DISH Network bundled DSL internet Service, Digital Satellite Television” (Marketline, 2007, par. 7), began offering high definition satellite television service two years later, and offered on-demand service in 2005 (Marketline, 2007).

Headquartered in Englewood, Colorado, ECC employs approximately 21,000 people (Marketline, 2008), and is “one of the leading providers of satellite delivered digital television services. The company's services include video, audio and data channels; interactive television channels; digital video recording; high definition television; international programming, professional installation and 24-hour customer service” (Marketline, 2008, par. 1).

As the company has grown, a hierarchical organization has formed to include executive, technical, research and development, corporate, international, sales, marketing, investment, accounting, human resources, and business development divisions; each consisting of their own hierarchy and structure. With the horizontal growth of an internal hierarchy, EchoStar has grown vertically as well, dividing into a hybrid organization consisting of nine separate functional organizations which are legal subsidiaries of the overall group (SEC, 2005). Figure 1 shows the organizational structure of ECC.

Organizational behavior issues facing ECC

EchoStar’s growth in an uncharted technological industry has created a need for diverse, unique employees who can assist in the process of growth at all levels of the organization.

As a result, ECC actively seeks out individuals who can appreciate the constantly changing and unique environment encouraging those who can offer their own perspective and innovative approach to solutions. In return, employees can expect to successfully shape their career according to their goals in relation to the organization (Hogan, 2006).

ECC has established educational programs in an effort to instruct employees in an industry without established guidelines and rules (Hogan, M. 2006). The organization is in a constantly changing mode of operations in order to keep pace with technology and competition (Datamonitor, 2007); hence all team members must remain flexible with the ability to move with the organization (Feurer, Chaharbaghi, Weber, et al, 2000; Jones, 2004).

The challenge of ECC is to continue the company’s growth while maintaining and expanding their employee and management teams. The organization needs to ensure the organizational system adjusts and realigns itself in order to keep pace with the environment (Feurer, Chaharbaghi, Weber, et al, 2000; Jones, 2004). Also, the firm’s executives to periodically assess the existing organizational structure to determine if the design is still applicable and can keep operations at an optimal level (Scott, 2003).

The problem that comes out when reading the various SEC and other business reports on the state of company affairs appears to lie in formulating a plan that is flexible yet definitive in meeting ECC’s goals of growth in an ever changing, competitive market (Davis, 2006; Farrell, 2006; Hogan, 2006; Powell, 1987; SEC, 2005). EchoStar has seemingly grown without a plan; however, the pressure of competition and technology may force management to create and follow a path.

Economic issues facing ECC

Adaptive ability of an organization, which is due in part to its organizational design, to meet the requirements of the environment is critical (Scott, 2003, p. 96), particularly when facing specific economic conditions, such as higher gas prices, economic slowdown, the lowering value of the US dollar and heavy debt.

Rising gas prices in the US is forcing many employees who have longer commutes to seek job opportunities closer to home in an effort to save money (Zuckerman, 2008). This can translate to employee turnover for ECC.

The primary market for ECC primarily is the US (Marketline, 2008). A continued economic slowdown and weak economic forecasts in the US could have a negative impact on the company’s revenues (Datamonitor, 2007).

Even though ECC is not a truly global company, the organization has contracts with foreign firms (Marketline, 2008). The lowering value of the US dollar can cause the prices of future contracts to increase (Grosse, 2000).

According to the EchoStar annual report, potential threats to the company include heavy debt (Dishnetwork.com). Higher debt, compared to other organizations in the industry, may negatively impact the organization’s liquidity position (Datamonitor, 2007).

Since the organization operates in an environment that is in a constant state of flux, having someone in the company who is monitoring economic events and how they could have an impact on the operational plans for the future would be presumed. However, no documentation could be located to indicate that such a position exists within ECC.

Recommendations

In an effort to optimize operations while facing economic changes, the following changes are recommended for ECC with respect to OB:

Executive management should increase the frequency of the organization’s situational analysis.

Focus on enterprise-wide planning, particularly in areas of human resource planning.

Offer (more) employees the option to telecommute.

Expand services into other forays of the world, and use a geocentric approach (Permutter, 1969).

Create a position within the company to monitor economic events.

Continue to foster an environment where leadership is promoted at all levels within an organization.

As discussed in previous sections, a concern for ECC is the perception that the company fails to conduct proper planning techniques. By conducting a periodic situational analysis, the organization can gauge environmental factors that may impact the direction of the company as well as plan for potential changes (Robbins & Coulter, 2007). The need for a plan, particularly in the area of human resources, is to determine whether the future economic outlook requires changes in manpower (Peter & Donnelly, 2005). Further, offering the ability for employees to telecommute may mitigate the risk that turnover will occur due to higher gas prices.

Expanding into other areas of the world will allow ECC to increase its customer base and its profitability (Gupta & Govindarajan, 2004), and using a geocentric approach will provide ECC the opportunity to recruit quality personnel beyond its borders (Permutter, 1969).

Lastly, having someone in place to monitor economic events and advise senior management how to proceed can help ECC in adjusting to the ever-changing environment.

OB issues

ECC is entrepreneurial and is characterized by high innovation and extreme risk taking. When it comes to people, ECC appears to emphasize diversity and capability and appears to be more closely guided by a creative, entrepreneurial leadership, which is also its ownership (Hogan, 2006). Ergen and DeFranco appear to directly influence their teams of engineering and sales to achieve through a desire to compete (Farrell, 2006). Ergen and DeFranco appear have successfully instilled a competitive, thrifty, and entrepreneurial spirit within ECC.

Along with written corporate governance and code of ethics, to a large extent the behavior of ECC is set by the ethical and hard working leadership (Hogan, 2006). ECC proves to be a community participator, and proves to be a model for individuals who like to see a rags-to-riches story. None of the literature reviewed surrounding ECC suggests that any significant OB issues exist that would adversely impact the organization’s performance, with the exception that executive management does not want to use its resources unless it adds value to the company’s customers (Hogan, 2006).

Implementation

Keeping in mind that the organization does not want to invest in additional resources unless they add value to the company and the customers, implementation of recommendations can be accomplished without adding a huge burden to ECC. Existing employees may be used to create additional teams or broaden the scope of teams already in place.

For example, the current members of executive management can either develop a planning team or add the aspect of enterprise-wide planning to its existing responsibilities. The benefit to frequent planning is that the organization can gauge environmental factors that may impact the direction of the company as well as plan for potential changes (Robbins & Coulter, 2007). By foreseeing issues before they occur, the organization, with its entrepreneurial mindset, can find innovative ways to cut or absorb costs without passing on costs, which could have been avoided, to the consumer. This is also why it is important to have someone in place to monitor economic events.

Offering telecommuting as an option to employees not only reduces turnover but also can reduce costs for the organization, as fewer resources are needed. It is recommended that a small percentage of customer support and technical support employees be allowed to telecommute as a measure to test the option. Success of implementation can yield the possibility to allow a higher percentage of employees to work from home.

Prior to expanding into the global economy, market research must be conducted to determine which countries would be most profitable while balancing risk. Management needs to acquire knowledge about the market conditions, as well as business and political infrastructures, of the countries ECC chooses to explore expanding into.

Conclusion

ECC operates in an environment that is in a constant state of flux. Its organizational design and culture foster and environment where leadership and innovation can adapt to changes quickly. In the midst of an economic downturn in the US, ECC must find new ways to optimize operations while continuing to seek ways to grow. The proposed recommendations for ECC will allow the organization to better pinpoint future threats to the company, as well as increase its customer base by entering the global economy. Further, the option to allow customer service and technical support staff to telecommute will reduce costs to offset possible future loss in revenues.

References

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Davis, J. (2006). Telecom’s back, and so are jobs wages, opportunity grow in metro area as pay TV thrives. Rocky Mountain News, July 24, p. 1B. Downloaded from galenet.galegroup.com, on August 26, 2006.

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Jones, G. R. (2004). Organizational theory, design, and change (4^th ed.). New York: Prentice-Hall, Inc. Downloaded from galenet.galegroup.com, on August 26, 2006.

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Permutter, H. V. (1969). Some management problems in spaceship earth: the magafirm and the global industrial estate. Academy of Management Journal. 12. 59. Retrieved from the ProQuest database on August 1, 2006.

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Powell, W. W. (1987, Fall). Hybrid organizational arrangements: New form or transitional development? California Management Review, 30(1), 67.

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SEC (2005). EchoStar DBS Corporations and Subsidiaries: List of subsidiaries [(SEC) Form S-4, Registration Statement Under The Securities Act Of 1933, Exhibit 21,. Securities and Exchange Commission]. Retrieved August 14, 2006 from the World Wide Web: http://www.sec.gov/Archives/edgar/data/920431/000095013402007646/

d97763exv21.txt.

Zuckerman, S. (June 29, 2008). Costs are changing commutes: high gas prices cause workers to consider distances to jobs as well as salary when deciding on positions. San Francisco Chronicle online. Retrieved July 25, 2008 from: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/06/29/BUTU11FMOS.DTL.