ANSWER THE QUESTIONS FROM THE CASE STUDY BELOW List at least 5 of the situations calling for leadership that you find in the case The need re-prioritize the many divergent acquisitions that have been made by the firm in the past 2. The need to engage and refocus a culture that has developed unique traits over a period of many years 3. The need to develop a clear focus and a plan to allow the different divisions to cooperate for a common and discernible set of goals 4. The need to engage the separate divisions and components in order to gain valuable share-holder feedback prior to forging ahead with a bold new plan 5.
The need to work carefully with marketing departments and focus on what strengths to accentuate and what weaknesses to work to diminish 2. Based on what you concluded are the issues calling for leadership in question #2, what skills and competencies should the GM of RBD have? Awareness that past success does not define future gains Superior listening ability in order to analyze current and past information to determine future actions Keen sense of strategy in order to maximize inherent strengths of the firm 3.
If the General Manager of RBD mounts a change management effort to fulfill the vision of XYZs CEO would you recommend that he be the leader or name someone else - and why? If the decision were up to me, I would opt for another CEO than the one that has been selected. The reasons for this are multiple but are more or less concentric around the fact that the recently named CEO brings a radical approach that is likely to have disastrous effects on the firm’s profitability and mission.
Although it is appreciated that a CEO can bring a renewed sense of vision and a fresh outlook to the company, setting about to induce a sudden and radical set of changes without further understanding the unique components of this very complex and mature entity can have a disastrous effect on its profitability and/or the continued survival of the firm. In this way, acquainting oneself with the nuances of the firm’s strengths and unique opportunities, as well as the fact that the firm has a well appreciated and storied name within the communities it has engaged should give any new CEO pause before working to rapidly reorient and redefine the firm.
Although such efforts may be laudable, the effects of which has the possibility to undo all that firm has come to be known for. In this way, it is the recommendation of this author that the firm name another individual who is more suited to understanding the nuances of this mature firm and offering experienced leadership plans which would work to benefit all components involved as well as reshape them without losing specific key strengths that help to define the company in the eyes of its consumers.
4. Outline the organization structure (traditional org, team, etc) -if any -that you believe would be best to achieve the vision in question #3 and briefly defend your choice. Due to the nature of the way this author has chosen to answer Question #3, it is also the recommendation of the author that the firm should be organized in the form of a traditional organization.
Although the group has experienced a great deal of growth and has incorporated disparate entities throughout the course of its operation, the firm is no less still best suited to maintaining a traditional organization where division directors continue to brief and report to a CEO who is able to track and manage the broader vision of the firm as it continues to evolve and develop. 5. List the functions/skills you think that person or organization would need to get the job done.
Explain your choice. Although there are many functions/skills that would benefit a leader who wishes to “get the job done”, perhaps the most important one is a caring manner with respect to the employees that have for so long given of themselves in order to ensure the continued survival and profitability of this firm. Without this, the fear of unionization and further employee turnover will doubtless become a reality. Further, in order to ensure that each of the component parts realizes its full potential, the leader must also have the skill of determining legitimate complaint from white noise.
Although it will be discussed at some length later in this analysis, the firm’s component parts exhibit a high degree of jealousy and are prone to complain somehow they have been discriminated against with regards to the “handouts” that have been given in the past. Similarly, the leader must have a keen ability to differentiate the unique needs that the component parts of the firm must accomplish. 6.
Outline the steps you believe are necessary to achieve XYZ CEOs vision for RBD. Although certain elements of the firm are profitable and help to identify the firm with relation to its customers, other aspects of the firm are underperforming. As such, rather than take a chainsaw approach to the situation the leader should perform the following steps: 1: a careful analysis of each section to determine a SWOT analysis 2: reaffirm the longstanding respect for the employees that work for the firm while laying out a very rigid and strict anti-union platform in order to keep those that are still employed working and minimize further losses associated with unionization. 3: reassert to all shareholders that unionization at such a critical stage of redevelopment/reorganization will be detrimental to any positive efforts that leadership hopes to obtain. 7.
Do you believe RBD should collaborate and cooperate as much as possible with the Union Rep? Give reasons for your decision and describe any estimated consequences (good and/or bad) from that decision. It is the belief of this author that union collaboration would be a net negative with respect to the firm.
Although union membership is a key component of certain aspects of the firm, further unionization can lead to drastically negative effects on the profit margin during especially during the tentative transitional period that the CEO and owners are about to embark upon. Turning a cold shoulder to the union can necessarily lead to a host of negative implications as well; however, within the scope of the problems that the firm is already suffering from and the fact that it is about to undergo key and specific re-integration/reorganization, a successful attempt by a union to unionize the workforce will only have the effect of further increasing already high personnel costs.
As the brief indicated, these personnel costs area already 20% above the industry standard; therefore, further increases by a union will likely lead to the firm either being forced to close certain aspects of the business or move them overseas to avoid higher costs. Such a move would also strike at the very heart of the mission and goals that the firm has espoused in providing electronic solutions to a “down home” group of consumers with a regionalized focus.
Furthermore, if unionization served to shutter any of the warehouses, the key repairs and services that locals depend on would have to be outsourced vastly increasing turn around times and invariably dismaying the customer base. 8. Use the material about motivation and leadership theory to describe the issues surfaced at the Managers Club. It is abundantly clear from the details concerns voiced at the “Manager’s Club” that the organization suffers from many concerns; however, the greatest among these is a fundamental feeling of uncertainty and unease that oftentimes accompanies any efforts to reorganize and/or redefine a culturally intractable firm.
Accordingly, it will be incumbent upon leadership to provide clear directives that also incorporate a calming effect with regards to the fears that many key shareholders exhibit. It should be tangentially noted that without such a clear sense of leadership and motivation, it is highly unlikely that any of these shareholders will engage with their respective divisions/stores/branches to realize the missions and goals that high leadership has lain out.
In this way, the primary focus of any plan involving change should start with these shareholders; weighing their concerns, listening to the advice offered, analyzing the needs based approaches they utilize, and determining a course of action based upon these. 9. Would you recommend that the RBD GM accept, reject(resist) or play the role of uninvolved follower with respect the XYZ CEOs vision. How should he proceed to carry out his decision? With regards to whether the GM of RBD should involve himself in the process or simply allow XYZ’s CEO to manage the scope and speed of the vision he/she has determined, it is the belief of this author that the GM should be closely involved with this process.
Micromanagement of the vision that the CEO of XYZ brings to the table is not necessary; however, involvement, support, and attachment with the process will yield a far more positive result than the alternative. With relation to the specific change mechanism that the CEO has proffered, it is the further belief of this author that the GM of RBD should refocus and refine these initially, and then allow the CEO the latitude to effect the desired changes in the way he/she sees fit.
Although there exists the right level of corresponding involvement for each and every course of action, it is the GM’s role to work to initially tweak the directives under which the CEO will be operating. Once this has been achieved, the GM can then take a step back without being detached or aloof to allow the CEO to accomplish these within the expectation of an ethical and reasonable approach.
10. Are there morale or "people issues" among the managers? If so list them and briefly tell how you know this to be true. Are they interfering with the managers performance and leadership? Explain. As with any company culture, there are most certainly morale and “people issues” exhibited among the component branches of the firm. This is clearly exhibited in the many snide remarks that managers have made with respect to the “Manager’s Club” meeting that was referenced briefly above.
Certain key shareholders feel that they have been left out, ignored, and/or minimized with respect to the way that the company has formerly been run. Although this may or may not be true, it is not the responsibility of current management or leadership to insert themselves into such inter-departmental strife. Rather, it should be the concern of leadership to assure that each of the component parts are treated fairly and with equal measures of concern and respect. You are an executive of a company (XYZ Corporation) that makes high tech devices – large scale integrated electronic circuits for defense (missiles, submarines) and industry (autos, heating/ventilating/air conditioning, aircraft and boating) and more recently - PC components.
Over the years the company acquired some retail and industrial supply businesses that sell HVAC for residences and to builders, electronic components supply that compete with Radio Shack and some financial services companies to provide funding for all products (retail, wholesale, manufactured/OEM). This includes a limited charter bank and finance operations with a large consumer and business finance component.
The company’s products overall have a good reputation for quality and reliability in the markets to which it sells but it is not known as an "industry leader", that is, its products are not "leading edge". Its sales and service organizations are not considered very strong, but adequate for its customers needs. Although it has considerable engineering skills to meet its customer needs at relatively low cost - which has contributed to long term relationships with its primary customers - It has generally followed the lead of others in terms of technology, copied it and adapted it to its primary customers quickly and imaginatively.
You have recently been named General Manager of this company’s Retail & Banking division (RBD). Pressure is on you to increase sales and profits of the division to offset declines in defense-related manufacturing. As General Manager your vision is to raise sales in retail so annual growth is 5%, which is about average for the industries in which you compete but is a number you have been able to deliver for your previous employers. .
You also want to reduce costs by 3%, which is the initial amount you have been able to reduce in the positions you’ve held before. The new CEO of the parent company, XYZ, who joined the company a months ago after a successful career at high tech, high innovation companies has indicated she wants to "give competition a run for its money" by increasing sales by 12% in the next year and increasing profits by 10%.
This is to be done by updating and modernizing what RBD sells, "uptraining" its staff and generally "lighting a fire under that sleepy division". She said (in confidence) that managers who "play ball with her" will reap a "super bowl" of personal rewards. "I want results - not recriminations. RETAIL & BANKING DIVISION (RBD) The division operates 110 retail stores (down from 150) located throughout the Northeast, mostly New England, in small towns and cities, away from major electronics stores and malls. It is known as "Your Hometown Electronics & Appliance Store.
Its sales and service organizations are not considered very strong, just "low key, friendly, Middle-America" convenience retailers. It runs periodic promotions that are collaborative marketing efforts with its suppliers, usually arranged by the parent company. This is probably its strongest suit. Other retail firms (Radio Shack, Sears, and Circuit City) have much better reputations for aggressive selling and customer service. It performs its own service on what it sells in a facility at the single warehouse it operates.
That warehouse supports all the retail stores. RBD operates as a wholesaler from this warehouse, too. An industrial sales force calls on other retailers (mostly "mom and pop" type stores) offering spare parts and even appliances at a small discount so such retailers can widen their offerings. The industrial sales force also calls on repair shops, other appliance and electronics retailers and wholesalers and manufacturers who need smaller quantities of components often on short notice. This necessarily requires a large inventory of "in-stock" items of many different items.
From time to time the RBD fills components orders for smaller quantities for shipment to OEM customers. In order to offer extra service and so build sales volume, XYZ formed a limited charter bank to offer loans, consumer financing and inventory "floor plan" services all its customers - OEM and RBD. The bank has helped XYZ to finance its own operations at times with lines of credit, preferential borrowing, etc. For its retail and wholesale customers RBD finances inventories and sales of its own products and other products sold by retailers, wholesalers and manufacturers.
It has built a reputation as the "lender of choice" for such customers because of its understanding of the industry and its sympathy for the industrys unique problems. Division Information: the HR director has told you that wages are about 20% above average for retail and banking. Turnover has been inching up from about 8% annually in 1994 to about 13% today. Vacant positions are replaced by outside hiring. Because of the lack of growth, promotions have been limited and few bonuses have been paid.
The parent company has a ‘no layoff’’ job protection policy that extends to RBD. Labor Management Relations: The Teamsters union represents the wholesale (warehouse) employees and about ½ the clerks in the retail stores. Employees in RBD consider themselves ‘professionals’ and have repeatedly voted against the union representing them. Other unions, e.g. , IBEW, Machinists (IAM), etc, represent the employees in other divisions. As of now there is one warehouse and 110 retail stores (down from 150) in the Northeast. Because of a ‘no layoff’ policy those employees who were willing to relocate have been absorbed in the warehouse unit.
Those who were unwilling to relocate were ‘packaged off’. Union Membership has been ‘flat’. Some change in membership occurs because of retirements, store closing and voluntary resignations. The union bargaining agent (business rep) has been in her job for about a year. She replaced a person who was rep for over 15 years before his retirement. The Parent Company has offered relocation to employees displaced by store closings: $1000 for moving costs and a job in the warehouse at the same pay the employee was earning.
Over ½ of the employees offered this have chosen to be laid off. Requests to transfer out to other divisions (even with union endorsement) are met by company claims that the employee does not have the right skills. Average tenure of union membership is over 12 years (about the same length of time the company has had a ‘Retail Division’. Most of the members are high school grads with some added schooling or vocational training.
Wages have increased about 3% per year for the work force. This cost has been offset by the lower cost of hiring new employees at entry level wages to replace those who leave so it has not cost the company any more. Overall, employees wage increases have barely kept pace with inflation. The benefit program is ‘standard’: medical, dental and life insurance that is 80% company-paid; a defined benefit retirement program that provides ½ of average wages (including Social Security) after 30 years of service at age 65.
Additional benefits and coverage are available to employees at actual cost from the union. Each division is regarded as a single bargaining unit. That is, there is no exchange of seniority, employees, etc. between bargaining units. While relations among unions are cordial and information is exchanged, there is no other cooperation among them. The union business rep is a college graduate with good business skills as well as a concern for her members. She has an open "all-cards-on-the-table" style and so has told you many things that another rep might not.
For example she has reported that the International Union leadership has targeted this company to get moving. They feel it is small and diversified enough to reflect changes in products, operations, size and profitability that they believe will be typical well into the 21st century. They want to use XYZ Corporation and its RBD as a model and ‘test bed’ to develop programs that address stagnation, lack of growth and limited opportunity.
The Union leadership believes that there is an opportunity to build membership and restore the union’s power in the years just ahead when the current economic boom ends. The rep says she has been told to increase membership by 20% per year and to organize the banking division. She has been told by the union strategists she is to work towards increasing wages annually by a factor equal to inflation plus 2%. In addition they want ‘absolutely no layoff’ job protection and economic protection including guaranteed employment and lifetime retraining.
The rep told you she has been given broad powers to negotiate innovative programs for this: job sharing, tiered wages (lower wages for new hires), productivity improvement projects, employee participation and self directed teams. The union is willing to participate with the company in job retraining and employee selection, skills upgrade and other actions. In fact the Union has put at her disposal all the economics, consulting and managerial talent it has. If she succeeds she will be in line for a high level International Union position and perhaps even the presidency.
If she fails the Union has said it will find ‘the right rep to get the job done. ’ She, of course will return to her ‘real’ job as ‘ Group Leader of Retail Support in Store # 67 in the states 4th largest city. The union rep believes that adversarial union-management relations are a thing of the past. In fact she believes that unions must "partner" with companies, especially smaller companies and divisions, if both are to survive.
She is confiding in you without having fully informed her union of this, but has assured you that "whatever she does to achieve the objectives given to her are OK with the union. " Management Views: The company sponsors a "Managers’ Club", a voluntary membership organization open to all supervisors, managers and executives. Its purpose is to provide ‘networking’, support and education for managers. The Company uses it as a way to communicate with managers, and through them, to all employees. From time to time the management will ask for opinions, advice and help about upcoming programs, changes and events. This is what you learned at a recent meeting of the club that you attended. In general the managers and supervisors have grave concerns about the future. It is apparent to them that ‘retail is not where its at’.
As stores continue to be closed there is less opportunity to be a manager, district executive or higher. The warehouse unit is growing, but the growth is in blue-collar jobs. They are concerned about ‘automation’.
There isn’t very much of it in the warehouse, almost none in retail, although several say that much more is needed to ‘stay abreast of the industry’. There seem to be no prospects for ‘up-training’. Even though they see "automation" as necessary for survival, they fear it will mean fewer jobs that arent as good. Along the same lines they complain that Banking gets all of the new stuff: computers, training, communications, procedures. The Banking managers are concerned because all they are allowed to do is ‘run a finance company’ that seems to underwrite the sales by retail and wholesale units.
They have a base of 10,000 customers for the Credit Union operation they run for all employees. Under state banking laws these services can be offered to the general public. Several of the banking managers feel there is a real ‘niche’ for a ‘friendly, personal bank’ amidst the super banks. The Accounting and Finance members are concerned about low return on sales and inventory turnover numbers. They are concerned that ‘unless we “get with the program” and compete with the big boys, this company won’t be around very long. ’ A large number of members are concerned that there are no opportunities to transfer to other divisions.
The parent company electronics and PC units seem to be going great guns. They also seem to hire from the outside while we just tread water in this division. They complained they have received really low wage increases and almost no bonuses. They say they have been told in the past that “things will get better”, but they’re still waiting. They feel that communications to them have been "filtered" so they are not hearing "the full story".
Many of the members would like more opportunity to meet with parent company management. The annual “state of the company” talk that is given by the president at the Management Clubs January meeting is not enough. The couple of ‘planted & prepared’ questions they say they are allowed to ask are not enough either. Some of the more radical members, mostly low-level warehouse and store shift supervisors even talked of joining the Teamster Union’s supervisory unit. Several managers said they heard rumors that the Retail and Banking Division is going to be broken up: the retail stores sold to a larger chain, the banking merged with a ‘real’ bank and the warehouse unit folded into the parent company warehouses.
They wanted to know whether this is true. They wanted to know if this is going to happen and if it were, would they be told in enough time to "protect their careers and their families. " Division Marketing: a long-service employee heads Marketing from the parent company.
He has been on the job as VP RBD Marketing for 4 years and is reported to be "well-connected" with the "guys at the top". It does not seem to be his style to publish reports or do critical analyses. He told you in his meeting that he "leaves that stuff to the bean counters. Hes just an old fashioned peddler who moves the iron. " This is a summary of what he told you in his meeting. 1.
Retail unit continued to lose ground against increasing competition from Radio Shack, Circuit City and newer more aggressive chains. Even though total sales fell, the average purchases per customer increased. We need a fresh set of products to re-attack this market. 2. Industrial wholesale products continued their rise. We are serving fewer customers who buy much more on average. This allows us to spend much more time with each one and we hope will make some time for our customer service initiative – CARE – Customers Are Really Everything.
We see the CARE program as the key to us holding – then growing – our markets. The staff planners are still working out the details of the CARE program so he couldnt provide too much about it at this time. 3. As a result of tight G&A budgets advertising remained at the same levels as last year. RBD absorbed almost 40 of the staff displaced by the store closings into the industrial/wholesale sales force. Training time remains high – 6 to 12 months – but we are working on that.
This retraining is part of the company’s ‘full employment’ policy. 4. We have started to meet with the banking unit to build a plan for selling their ‘products’. Of course we will have to license and certify our reps under state and federal regulations when we build the marketing plan. He believes that stability and dedication to our multi-market strategy are the keys to future success: provide a complete set of products to retail and industrial customers along with the financing before and after to retain the relationship.
With the CARE program in the hands of the hands of the staff, whose loyalty and dedication are assured by the full employment and no-layoff policies, the division is poised for real results. Human Resources: The HR Director is an MBA in her mid-thirties. This is her first HR executive position. You have heard from other of your staff that she is a no-nonsense businessperson who still "shows a lot of heart" for the work force. Heres what she told you: Just about ½ of the staff displaced by store closings were re-deployed to other positions in the Retail & Banking division.
The remainder chose to leave to work elsewhere. The majority of those who chose to stay are in an extensive set of training and development programs created and fully staffed for this purpose. Employment remained flat but all staff needs were met through a combination of redeployment and outside hiring. The HR/Employee Development Task Force from Corporate probed the division’s staffing and employee relations and came up with a list of issues which we are evaluating: Turnover has been increasing due to increased store closings and voluntary resignations by people claiming no opportunity. The number of promotions remained unchanged from last year.
We are trying to work out a program for exchange with other divisions, but we don’t want to give up the good and loyal people who’ve given us many good years and who would have to re-establish themselves and their seniority in other divisions. Management and staff development programs have been curtailed because of little or no growth in the division.
Needs are well met by our usual skills training programs. Absence is up, primarily among the younger, newly married employees. We are exploring a day care program. Industrial accidents were up 3% last year (for the 2nd year in a row). A subcommittee is working with the Safety Department of our insurance carrier to address this. On the whole, employment is quite stable. Over 250 long service awards (10-25 years) were awarded last year. About the same number are expected to be given this year if we can overcome the turnover problem. Most important she remains dedicated to supporting a stable, trained, loyal work force capable of high quality and productivity for our products and markets.