EXECUTIVE SUMMARY

This case is a classic example of difficulties and differences of opinion that a manager has to deal
with in the face of a massive change in the organizational structure. Ken Winston, the regional
sales manager at Campbell & Bailyn’s Boston office has introduced two major changes in the
organization: (i) Key Accounts Team (KAT); and (ii) a new performance management system
against the backdrop of the subprime collapse.
The rationale behind the KAT was that they were losing business to their competitors who offered
specialized service to clients due to detailed product expertise, while C & B mostly housed
generalists. These new and specialized products had higher margins and were becoming more and
more desirable in the market. So, Winston combined five of his top sales generalists and assigned
each one a specialty sub-segment of the firm’s product offerings. As for the new management
system, it was focussed more on soft performance measures, rather than sales and profit.
Both changes received positive and negative feedback. On one hand, Winston knew they were
having an impact. On the other, he was worried about lower employee morale, confusion among
customers about the new sales team. The recommendation is to continue with KAT model with
minor changes in allocating different project and introducing the idea of primary and secondary
product. Also it is recommended to remove the PMS so as to regain the lost employee confidence

SITUATION ANALYSIS

There had been a meltdown in the mortgage-backed securities market. It had rocked the financial
world for over six months, pushing C&B’s sales force to the limit. The international crisis, which
can be attributed to the collapse of billions of dollars worth of mortgage-backed securities, had
left Winston’s sales force scrambling to help customers to minimize losses on their bond
portfolios. Winston had announced new sales assignments halfway through 2007, which were
testing the skills of his staff and patience of their customers.
Winston, at the annual year-end meeting of the bond division’s leadership team in Manhattan ,
was assigned with the task of updating the group on two important changes that had taken place
in the Boston office of C&B. The first update was to be given on the new “Key Accounts Team”
(KAT), created in June 2007 in the taxable bond group in Boston. This was created because
generalists were finding it difficult in mastering the steady stream of new and increasingly
complicated debt instruments introduced by the firm, which was also forcing the firm’s customers
to have a hard time keeping pace.
The second topic was addressing the group on a new division wide performance management
system for regional sales people introduced in January 2007. This was done to encourage regional
sales offices to work more closely with product managers and researchers in New York, who would
themselves carry out the evaluation of each salesperson’s performance, which would help decide
their compensation package. The independent minded sales team of Winston had expressed some
frustration with the new arrangement.
PROBLEM STATEMENT

Based in New York, Campbell and Bailyn was one of the fifth largest investment banks in the
world. They had a strong growing fixed income division offering products such as tax-free
securities, money market securities and taxable bonds. But in recent years, industry dynamics had
changed. There was a steady increase in competition and the emergence of new products with
higher margins. These products required investment firm managers to be more specialized with
expertise in said securities.
To cope with the changes in the market and industry, Winston came up with two major changes
that would restructure the organization. The first was to set up a Key Account Team (KAT) that
would focus on providing specialized expertise of securities to the largest 60 customers of the firm
in terms of value. The second change was in the Performance Management System which would
now require the sales force to work closely with traders, product managers and researchers in
New York. The compensation for the sales force would now not be solely based on annual volume
but on other ‘softer skills’ as well
These two changes had opposition within the organization. The first being that the sales force who
are now part of KAT lack specialized expertise towards any security and were merely generalists.
The introduction of this new team and created skepticism in the minds of a few customers as well
but they trusted the organization and were ready to give it a try. The second major problem was
the decrease in employee satisfaction due to the change in compensation structure and a decrease
in autonomy due to more coordination with the New York Headquarters.

OPTIONS

Based on the Problem Statement identified, the options that Winston can consider are as follows:
● Ignore the skepticism of the changes within the organization and go ahead with the
decided course of action
● Revoke all the decisions made and let the organization function as before
● Have meetings with key stakeholders of the changes, understand their expectations and
make changes in the organization taking those into account

CRITERIA FOR EVALUATION OF OPTIONS

The set of criteria that can be used to evaluate the mentioned options or alternatives are:
● Employee Satisfaction
● Customer Retention
● Cost and Time savings

As the Key Accounts Team (KAT) and New Performance Management System was introduced,
the main issue that was generated among the employees, was regarding the bonus earned and the
career prospects. So we give employee satisfaction the highest weightage of 50%. As the new
changes had been introduced, the business impact should also be taken into consideration. So, we
give customer retention 30% weightage. Lastly, since Cost & Time Savings do not seem to be of
critical importance, it has been given a weightage of 20%.
EVALUATION

Option 1: Ignore the skepticism of the changes within the organization and go ahead with the
decided course of action.
The KAT approach has proven to be successful in providing in-depth technical advice to the
clients. Few of them pointed out the problem of having to deal with multiple salespeople.
retention hasn’t been affected much by this change. There was slight resistance from within the
organization, specialists had a concern of being forced into a role that would limit their career
prospects.
The new performance management system takes into account softer aspects and this seems to be
a more vague approach to determine the salesperson’s bonus. This also didn’t solve the issue of
loss of customers.

Option2: Revoke all the decisions made and let the organization function as before
The KAT approach has proven to be successful and clients have appreciated the in-depth advice
provided to them. Revoking this decision would further worsen the current situation of losing the
customers.

Option3: Have meetings with key stakeholders of the changes, understand their expectations and make
changes in the organization taking those into account
The KAT approach has proven to be successful in providing in-depth technical advice to the
clients. Some of the clients have responded negatively as under this new system they had to deal
with multiple salespeople. Winston could address this problem by convincing these clients the
benefits of such a team. Winston will also have to talk to the employees regarding their concern
of being forced into a specialized role. Minor changes in allocating different project and
introducing the idea of primary and secondary product could address this concern. Winston needs
to show them the data that shows the Boston Office having a “major uptick” in profit and convince
them to work in teams.

The new performance management system needs to be revised as most of the employees weren’t
satisfied with it. Winston himself was not sure how this change would help in dealing with the
current problem. The bonuses also depended on peer evaluation which was a softer measure than
just focusing on sales volume. With most of the employees already concerned with reduced
commissions due to KAT structure, the new performance management system would further
decrease their morale.

RECOMMENDATION

In the light 0f information given in case and after evaluating all the options, Ken Winston should
go ahead with the plan of having Key Account Team (KAT) so that C&B will be able to retain its
high margin customers in the times of dwindling sales who need more commitment from the firm.
Also as the key success factors of the Investment Banking industry are moving more towards
specialist role, it is important to have a specialist team with high commissions, By this C&B we
will be able to reduce the increasing dissatisfaction among employees. Also autonomy should be
granted to all the members of KAT team so that they can function more freely.
PLAN OF ACTION AND IMPLEMENTATION

Ken Winston should go about continuing with the idea of KAT while taking into confidence the
employees about how important it is to have specialist in changing Investment Banking space. To
ensure the career progression, the firm can introduce primary and secondary product to every
employee working in KAT thereby addressing their career progress worries as well. Also ken
should convince the New York office to discontinue the idea of Performance Management System
(PMS) implemented in jan 2007, so that the KAT team members would be able to work without
worrying about the compensation. As boston office is a bellwether for many new initiative such
type of measures can be adopted to maintain the employees moral and retaining high margin
clients.