Russo Construction, Inc. Business Case

A Dynamic Construction Company

Russo Construction, Inc. is a company that has been in business since 1985. Our company has a structure set up from the former owners that did not change until recently. Business structure is important for many reasons. We will evaluate the current status of our organization and why it is formed in the manner it is currently. There are ways in which we see the management by objectives model being applied to my company now. We will look at how they apply and their everyday uses. Russo Construction has a group of leaders selected for very specific reasons. Our leaders have been chosen for many reasons and we hope to use the same approach going forward. Our group has used, and will continue to use the team concept in our company. We rely on everyone carrying their wait to improve the lives of everyone in the company.

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Company Business Structure

Russo Construction Inc. is an S corporation. An S corporation “is a special type of corporation created through an IRS tax election. An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation (SBA.gov, 2017).” The S corporation has some advantages and some disadvantages. One of the most favorable advantages to this structure is that it can give you tax savings. “While members of an LLC are subject to employment tax on the entire net income of the business, only the wages of the S corporation shareholder who is an employee are subject to employment tax. The remaining income is paid to the owner as a “distribution,” which is taxed at a lower rate, if at all.” The next advantage is the business expense tax credits. There are expenses that a shareholder/employee will incur that can be a write off as a business expense. Another advantage is the S corp. can exist as an independent life, “separate from its shareholders.” If one of the shareholders happens to exit the company, it can continue “relatively undisturbed.” The S corp. does have a few disadvantages as well. The corporation is required to conform with having scheduled meetings, with minutes covering “adoptions, any updates to the by-laws, stock transfers and records.” Another disadvantage is a shareholder “must receive reasonable compensation” from the corporation. If this compensation is not made, it will red flag the IRS if this is not done.

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Management by Objectives Model

Management by objective “in the sense that it requires all managers to set specific objectives to be achieved in the future and encourages them to continually ask what more can be done, is offered as a partial answer to this question of organizational vitality and creativity (Thomas, 1998).” The MBO is used in our organization through mostly the first three processes in the MBO model. We are working towards completing this model, but we have to start somewhere and then we can complete this model. The first step in the process is “setting up employee’s objectives (Ciutiene & Petrauskas, 2012).” This is done mostly in the employee job description, but also in a challenge to exceed that description too. The “process of monitoring” is the ongoing management of each employee. Every day is a chance to evaluate the progress of each and every employee. This leads us into the next process, which is “performance evaluation.” Evaluations are a key part in this process. It gives the management and owners a chance to evaluate how expectation are being met and exceeded. I have learned a lot from a high achiever. They can tell you how to improve and how to discontinue something that is not working. The last three in the process need to be done more in the future. The next step is “achievers rewarding, MBO for the next operating period, and organizational objectives review.”

Leadership

Leadership is one of the most important aspects of a business, if not the most important. “Maccoby (1979) concluded from his observations that the need of firms to survive and prosper in a world of increasing competition, of technological advances, of changing governmental regulations, of changing worker attitudes, requires “a higher level of leadership than ever before” (p. 313).” Leadership can wreck a business or keep a business moving forward. Most companies have to sell their employees the why of the business before they will buy into what the mission or vision of the business happens to be. Why people do what they do is more powerful than any other motivation. Leadership is spread throughout our company. We are going through growing pains now, but we are putting the leadership in place that will grow our company to the next level. We start with the president who had started the company from nothing. He has the ability to be a pusher and an encourager to people who work hard for him. He can see every step of the way with a project. We also have true leadership in our general superintendant. He manages the field operations. He supports the guys in the field with anything that they need.

Team Concept

Teams are critical to our success in a company, especially in our company. We are relatively small in numbers, but we do a lot of work. We group four to five guys together and work them on different jobs. We group these teams together based on their skills and knowledge. We want them to work well with each other’s personality and help motivate each other. These teams have to have the ability to increase in numbers on some day and work in a smaller crowd the next day. We very rarely have anyone work alone. We have found that this is a waste of our efforts.

Our company has thrived since 2003. The structure of the company has help make the company profitable. We are able to continue to seek the advantages we need to by keeping the company where we are at now. We will have a little growth coming up, but the structure will stay the same. Our company will be able to take the next step by really buying into the management by objectives model. We will need to completely buy into this concept. Following its steps will ensure our success. Then we follow up our structure and MBO with great leadership. Many battles have been won and lost with leadership. The final step to complete success in my mind is being inclusive with our team. No man can run a company on their own efforts. We look forward to working towards the process of these big steps going forward.

References

sba.gov  2017 Starting & Managing

https://www.sba.gov/starting-business/choose-your-business-structure/s-corporation

Thomas M. Thomson 1998 Management by Objectives

http://home.snu.edu/~jsmith/library/body/v20.pdf

Ruta Ciutiene & Povilas Petrauskas 2012 Management by Objectives Using Coaching

http://eds.a.ebscohost.com.

Eric A. Landis, Deborah Hill, & Maurice R. Harvey 2014 A Synthesis of Leadership Theories and Styles

http://na-businesspress.homestead.com/JMPP/LandisEA_Web15_2_.pdf

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Daniel Fortune

Daniel Fortune is a successful business professional, entrepreneur, father, and lover of travel.

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