- The problems in the organization structure of the company
Under the planning economy system, and the fact that the corporation was established with many administration interventions, compared to other excellent construction company, the Sinohydro Corporation Group has a lot of problems. The organization structure of the company remains on a relative level which could not support the formal modern enterprise system. The problems are as follows
3.1 Business similarities of various engineering bureau
The corporation group has 17 wholly owned subsidiary companies and 8 holding companies. But he company was established the administration department. It lack of the process of evolve development in the market environment. The member of the enterprise does the work in their own ways. The members of the enterprise all has a huge team with similar business. The distribution of resources in the company is in a mess and stage. The main members of the corporation group were established in a early time. They are developed by the project of hydro power stations.
3.2 Multiple management levels
Sinohydro Corporation Group has subordinates of all engineering bureau( company and manufacture); Engineering bureau( company and manufacture) has subordinates of integrated lower office; integrated lower office in charge of all the subjects. It forms the four layer management system from Corporation Group to engineering bureau to integrated lower office to subjects. Some big project has several subordinate small scale projects, it will has multiple management departments. There will be wasting of human resources and low efficiency of management. Therefore, unreasonable management levels should be canceled to achieve information free flow in the company and high efficiency of management.
3.3 Redundant department setting
Whatever the scale of a member of the corporation group is, it all developed its secondary unit. Some engineering bureau only has one billion production, the employees of it are no more than several thousand people. But it has dozens of sub unit and other secondary companies. This will lead to resources wasting, high cost of management as well as low operation efficiency.
3.4 The Corporate Governance Structure did not fully established yet
According to Cadbury Report(1992), corporate governance is the system by which companies are direct and controlled. Sinohydro Corporation Group is a state owned enterprise. It has not been through shareholding reform. The whole corporation group has 17 wholly owned subsidiary company. Its property structure is unitary. The principle of the company is appointed by the State-owned Assets Supervision and Administration Commission. It applies the general manager responsibility system. Each bureau applies director responsibility system. It has not formed the moder corporate governance structure which has shareholders, board of directors, managers.
3.5 Industrial structures singleness
The corporation group occupies 65% to 70% of market share in the domestic hydro power market. Hydro power construction occupies 80%-90% of the market share. The share of rail road constriction, municipal administration and other non hydro power project is pretty low. The relationship between parent company of enterprise group and the subsidiary company is owning and be owned. Sinohydro Corporation Group was established by lots of peer companies under the administration order. Eighty percent to ninety percent of every year production is from hydro power projects. The industrial structure is single. It still use the traditional line function management organization structure. Since the establishment of the group has its special history background, it is not developed under the market situation. The structure organization of the company has many problems. It has not formed an organic whole. The structure of the organization needs adjustments and improvements.