Case # 1 Sunflower Incorporated
Topic: Managing change in a turbulent environment
Sunflower Incorporated
Over 5000 employees are working in Sunflower Incorporation and its gross sales are over $700 till (1991). Sunflower is a distribution company and details in snack foods and liquor. The financial management system that was used earlier by the company was malfunctioning and the profits were varying. Sunflower Inc. decided to standardize the system and because of this, a new position was created in the company to monitor pricing and purchasing practices. Agnes Albanese was hired for that and she was given total autonomy to implement any policies or procedures that would be feasible in these circumstances. She was encouraged to gather information from all regional managers and she decided to standardize pricing and purchasing decisions across all the regions. The financial executives of every region should notify her if a change occurs in prices of more than 3% and purchase more than $5000 should be cleared through her office. Albanese stressed a lot on standardizing operations and discussed her proposal with Mr. Mobley (VP finance). Mobley forwarded the proposal to the senior management and all the board of directors approved the plan. Albanese implemented the change the right way and sent an email to all the financial and purchasing executives. Mobley liked the idea of sending emails but commented that it isn’t sufficient. He requested Albanese to visit the regions and talk to executives directly but Albanese refused the offer by saying that it would be time-consuming and expensive. Albanese wanted to implement the change as soon as possible and an email was sent to the executives and they replied that they loved the idea and they will cooperate with her policies. Unfortunately, after 8 weeks Albanese didn’t receive any emails regarding price or purchase issues and the executives follow the conventional procedure.
Statement of the problem
In the initial stages the companies aim was to standardize reporting systems because the profits were varying and actual figures were difficult to obtain. Similarly, higher profitable regions were using low cost items which were lower in quality to experience a boost in profits margin. Other regions were facing severe price competition and it was becoming difficult to retain the market share. Market leaders were immensely cutting their prices and they were also launching newer products to enhance their market share. Agnes Albanese was employed to take care of this situation but the financial and production executives resisting change. They responded positively by confirming that they would cooperate with her but they never cooperated and the situation was getting worst.
The consequences of these problems would be severe and the organization would lose its market share and its integrity would be questioned in the long run. The reluctant attitude of the employees might produce negative results in both the long and short run.
Solution
This difficult situation is just because employees are resisting change. Training and development of executives might help the situation (Cameron & Green, 2004). Sending an email to the executives might not be a proper approach and it’s a bit informal approach. A proper presentation would be arranged on how this policy will work and what benefits the company would attain if the executives would share information on pricing and purchase with Agnes Albanese. Similarly, the organization must set certain objectives for the executives that are directly related to this policy and employees would be motivated intrinsically by change agents to coordinate with the director of pricing and purchasing (Cameron & Green, 2004).
Learning Application
Managing change is a necessary element for every organization and implementing effective change management strategies can be beneficial for an organization that is in a disruptive mode. Through this case we can learn that how employees in the organization resist change and how conventional methods are embraced by employees. Moreover, senior executives must be formally addressed in the organization.
Thus, we can conclude that training and development of employees is necessary and it will educate them and it’s highly possible that after seeing the benefits of the program they won’t resist it. Similarly, motivation is an essential factor and it can improve the performance of employees.
Case # 2 Gulf States Metals, Inc
Topic: Importance of Organizational Development
Gulf States Metals, Inc
Gulf States Metals is a company that refines nickel and it was created by its parent company International Metals Inc (IMI). GSM also deals is copper, cobalt and ammonia sulfate and it’s in the operation for 8 years. GSM’s performance is getting worst day by day and it lost $1 million last year. Company haven’t experienced positive trends and the reason for this slump are factors like diminishing demand for copper and nickel, condition of the equipment and labor problems. The cost of raw materials is increasing so it’s quite difficult to show profitable trends. Different changes occur in GSM’s policy because they want the company on right tracks. IMI hired a consulting company for GSM but the result was the same and GSM experienced downsizing. The organizational structure is quite similar to other production companies and the senior executive of GSM is the general manager who reports to the Group VP. After that there are Plant Managers, Director of operations, Director of Engineering and the Director of Administration. The production process is quite complicated and it can be stopped and the plant operates on 24/7 basis. The plant environment is rough and rusty in nature. IMI has promoted the plant manager to general manager and they are relying on him to change the current scenario. HR manager is interested in organizational development policies and he believes that this slum is due to poor management by the previous manager. The employees of GSM are unfamiliar with training and development and all the training they have was on the job. A series of interviews were conducted in order to get aware about the actual problem and how organizational development and restructuring is possible. The interviews resulted in wide and varied responses and all the employees are blaming other for this slump. The general manager has two years to fix the issue because IMI would close GSM if the same trend goes on.
Statement of the Problem
GSM is facing a number of problems and these problems have created chaos and havoc in the organization. Lack of training and development, prejudicial attitude of employees over other employees, lack of charismatic leadership and employee motivation, autocratic behavior of the senior employees, ineffective equipment, inefficient management style, lack of autonomy etc are the basic problems employees are experiencing. Similarly company is experiencing losses from day one and GSM haven’t experienced positive trends.
The outcomes of these problems are quite crystal clear that is if these problems can’t be solved then the company would continue its negative trends and it’s highly possible that IMI would shut down its sister concern.
Solution
There are a number of problems and it can’t be solved easily but what best the general manager can do is to train the employees. The lack of training and development leads to uncertain situations. Down the line workers must be motivated and a decentralized environment should prevail in the company in which a worker can also brainstorm for the betterment of the company (McLean, 2005). Management should trust their workers and motivate workers that are working directly on plants and on the equipments. The Middle managers and the supervisors must be motivated to take decisions and they must highlight key issues in the productions process. Thus, we can say that every department of the organization is facing this uncertain chaotic situation and in the initial stage organizational development and restructuring the entire organization is the only remedy to this problem.
Learning Application
Organizations that don’t spend on organizational development suffer in the long run. Elements of training and development within the organization are quite essential and those organizations that consider organizational development, training, motivation as just theoretical terms would face these circumstances. Similarly organization must work according to its mission and integration among all the departments is the key to success. Organizations that create disparity among employees or among departments face difficult circumstances and they can even wipe out from the industry. The ultimate objective of this case is that organizations and employees are integrated with each other and when certain employees are not working well due to certain situations the whole organization suffers. Management is the key concern of every organization and it will only work properly when communication will flow in the organization in a proper channelized manner.
Case # 3 Sharpe BMW
Topic: Disparity in the compensation plan
Sharpe BMW
Sharpe BMW is one of the dealers of Serra Automotive Group and it’s the only BMW dealership in the group. Tom Dunn was appointed as a new service manager for Sharpe BMW. He was appointed to increase the revenues and the customer satisfaction index. The director of service dealership Bob Deshane submitted a plan to correct this issue and that plan was handed to Dunn and he was required to implement it. This plan would initiate a massive change in the entire organization. Sharpe BMW was considered as a leader in the dealership industry and its competitors Lansing and Kalamazoo were not as big as Sharpe BMW. The company offers Virtual service department and cars of certain customers are picked and brought back and they don’t have to worry about that. Company generates hefty amount of revenues through this. Service departments of BMW are growing rapidly and two types of jobs are performed in Sharpe BMW’s service department the customer pay and the warranty pay. The customer pay is charged when the customer pay for the repair after the warranty is expired. Similarly, the warranty pay is charged when the vehicle is still in the warranty period and hen BMW pays the charges to the dealers. The compensation plan of service technicians are dependent on whether they are working on customer pay or warranty pay. Customer satisfaction index was developed by BMW in order to check whether the customers are satisfied or not. The higher the score is the better it is for the dealer. Financial incentives are given to the dealer and an industry average is set for that. CSI for Sharpe BMW was below the national industry average. As the previous manager left both the revenues and the CSI were declining. The problem was the differential rate of compensation for the two jobs offered by the technicians. Good technicians are difficult to recruit in the industry and job switching is in full swing in this industry. Sharpe offers training and development and provides top notch equipment to them. But the technicians are facing problems of wage disparity and that’s why CSI is going down. A new plan was initiated by Deshane in which monthly bonus would be offered to a service technician is his individual CSI is above 91%. It’s a radical change in the dealership industry and experienced technicians liked this approach of the company. However, Dunn was worried that plan might not work properly and CSI might not increase.
Statement of problem
The organization is working quite well and the only problem they are facing is related to the compensation plan. They are facing a disparity between the customer pay and the warranty pay wages for technicians. Repair shops aren’t facing this that’s why their technicians are happily working on standard hourly rate. Sharpe BMW is facing this issue its revenues re and CSI are also declining.
Effects of these problems would be huge in the long term and technicians might switch to other sectors on standard pays. Similarly, Sharpe BMW wouldn’t make more money as it’s not compensated more by the BMW because the CSI is dropping.
Solution
Extrinsic and intrinsic both the rewards are necessary for the employees. Down the line workers are tilted more towards extrinsic rewards that are illustrated in this scenario. Giving a bonus and relating it to the CSI factor is an effective plan. But the plan would satisfy the needs of technicians when the amount of bonus is increased. Moreover, company can break a single bonus on quarterly basis and quarterly bonuses can also be disturbed to the technicians in this way they would feel motivated and a sense of commitment might evolve in them.
Learning Application
Effective management and developing proper compensation plan is the utmost need of every employee whether he/she is manager of a down the line worker. Extrinsic rewards can be very beneficial for workers and they can produce results if a compensation plan is properly managed (Sttetner, 2000). Workers should be treated as assets in organizations and organizations should invest in them in order to retain them.
Case # 4 Black and Decker International
Topic: Globalization –Changing the working methodology
Black and Decker
Black and Decker was a struggling company in the initial phases but it has transformed into a powerful company and has progressed through leaps and bounds. Mr. Grunewald was the vice president of the international group (Power tools and Home Improvement Group). His job is to act as a catalyst for the group and he is responsible for developing company’s business from local or regional entries. Black and Decker recently acquired Emhart Corporation and they entered into the business of locks and locksets. His job is facing a challenging phase as he has to develop a strategic vision and a proper road map for the company. In phase of early 1900’s the company was experiencing fluid change phenomenon and it stressed on global issues rather than the local ones. The organization was a mixture of three forms these were functional units, SBU’s (strategic business units) and geo-graphic units. Mr. Grunewald was responsible for product and development but his areas were North America and European businesses. Mr. Grunewald is responsible for globalization issues and his job responsibilities include developing strategic plans, coordinating with field managers and researching markets. Similarly, he was working to developing a positive brand name and strategizing the brand name on global basis. Since the organization is entering into newer countries therefore proper strategy development and cultural requirements must be fulfilled by the organization. Diversification has to be managed by the company as its entering into countries like Japan and the Pacific Rim. Product –road bashing took place in the company as the product managers are interested in reducing the product lines. Since a lot of companies were integrated and the group was becoming bigger and stronger on the other hand it has to face the challenges of global marketing for their various regions. Since Emhart was in their group therefore they have to take care of their issues too. After entering into the lock business the international group has diversified its approach. The approach of Mr. Grunewald is to develop a local champion who would centralize the issues for that company and would report to the top manager. Mr. Grunewald believes that establishing proper communication channels between employees must be essential to ensure proper working between the employees.
Statement of the problem
The company is expanding and entering newer markets. It’s acquiring companies and expanding its operations. The brand is in the extension phase and the original company of hardware is entering into locks and locksets as well. Companies operations are expanding from one company to another and so do its employees. Black and Decker is experiencing growth but the only issue it might face is mismanagement of cultural issues related to employees and the globalization scenario.
The effects of this would affect the overall growth of the company and the company might lose its stand if it would be unable to manage these issues.
Solution
The most apt solution of this is to manage the company on strategic basis. The best strategy for these large organizations would be to develop a learning culture in the entire organization in which every employee can easily change its methodology of working if it’s needed (Drucker, 2008). Globalization should be handled with extreme care and the operations must be simplified by senior management.
Learning Application
Issues related to globalization and complexities can give us an idea about how companies enter into newer countries and what problems they face.
References
- Cameron, E., & Green, M. (2004). Making Sense of Change Management: A Complete Guide to the Models, Tools & Techniques of Organizational Change. Kogan Page.
- Drucker, P. (2008). Management. Collins Business.
- McLean, G. (2005). Organization Development: Principles, Processes, Performance. Berrett-Koehler Publishers.
- Sttetner, M. (2000). Skills for New Managers. McGraw-Hill.