Suppose you are an MBA graduate from UIU having 10+ years of managerial experience,

and have just been appointed as the Chief Executive Officer (CEO) of a manufacturing
company. The company has existed since the 1950s, but tariff reductions since the 1970s
have placed it under increasing pressure. In recent years the company has been on the
edge of closing down and your task is to turn it back into a viable enterprise. You were
reluctant to take on the obviously difficult job and had a number of other options, but the
board convinced you by offering a very lucrative offer and undertaking to support your
decision fully, provided that you would deliver results within a year.
 
The senior management team consists of five people, all of whom were appointed by the
previous CEO when he took up his job seven years ago. The former CEO’s background
was in finance and his approach to dealing with the company’s difficulties could best be
described as ‘cost minimization’ - he sought to rescue falling profits by reducing costs
wherever possible. He was, moreover, what he described as an ‘old fashioned manager’
which in practice meant being a strict disciplinarian and asserting his right to make
decisions without consulting staff. The approach to encouraging staff performance has been
the threat of dismissal. The senior management teams were in agreement with him on this
strategy and this remains their preferred option.
 
As a result of this approach, the company’s plant and machinery has not been upgraded for
some years. The production process is an assembly line and workers are rarely rotated
among different jobs. Further, most staff are employed on individual contracts and paid
poorly by industry standards. The only assessment of performance is based on production
output (which is low by industry standards), and no staff are formally appraised. In spite of a
lack of manufacturing jobs in the area, voluntary turnover – employees resigning – is high
and this is compounded by the fact that staff are routinely dismissed for minor errors or
breaches of procedure. This is justified by the other managers on the basis that ‘there are
plenty more where he came from!’ due to high unemployment in the area. The company has
already faced a number of formal complaints about unfair dismissal, some of which have
ended up in court.
 
Questions
a)      In your role as the CEO, outline how you would change the people management
practices in the company.
b)      What do you see as the major barriers to change and how would you overcome
them?
Answer to a)

1. Make a strong introduction

On the first day, I would make my presence visible not only to the senior management of the
company but also to all the workers and would assure them that a change was required and a
change is being made and this is the time where it all begin.

2. Adopt participating approach

 During the era of the previous CEO, his appeared to have had adopted dictatorship approach, where
I will ensure that present and future strategy will always be participatory approach. This approach
will facilitate employees and workers to own the job as he/ she being heard by the management and
he will consider himself/ herself an important part of the company. This will make the employees
more dedicated and will be striving for a result.

3. Request to change other manager’s behavioral approach

I will sit with the managers of all the departments separately and would request them to respect the
workers and not to punish them immediately and always to escalate to me on every issues for the
time being till they have an idea of my likely decisions on the matter. Once they will be used to with
my decisions of dealing with a matter, they would be starting to act accordingly.

4. Make announcement that high unemployment in the area must not be taken granted
I will announce to all the managers and the management people, that high employment in the area
must not mean that any workers could be laid off from the work without any major cause as this will
result the company more vulnerable to be closing down. When a worker leaves, he leaves with all
his training and expertise, so a new recruit will take time to achieve the learning curve he had
already achieved. We must not gamble by terminating any employee now without any major causes.

5. Hold regular meetings with department heads

I will not sit down in my office room and following up in daily emails as this is not a regular
functioning company. There is a crisis period and it has to be handled accordingly. I will hold regular
meetings with the heads and supervisors to learn about the day’s or week’s progress, whether
targets being met, if not, what were the causes, and discuss about addressing the causes in order to
achieve the target at the next batch or production.

6. Change current strategy to profit maximization

The previous CEO was more concerned about cost minimization at the expenses of the company’s
overall sustainability. This approach appeared to have backfired as he failed to comprehend that
cost minimizing must not be undertaken at every points. This wrong strategical approach refrained
him in taking appropriate risks and expanding the business. Therefore, the objective and goal must
be now to maximize profit for the shareholders and this will also send an overwhelming message to
all the stakeholders being concerned.

7. Form a five employees group for a complete production process to ensure proper rotation

8. Enquire about industry benchmark about remuneration

9. Acquire new equipment to meet up the budgeted production demand and sales

10. Change performance metrics in accordance with the respective task

11. Assure deserving appraisal and benefits

12. Hire quality assurance supervisor

So that detections of faulty products can be early made and cost minimized in repairing

13. Set a tolerable error

14. Settle ongoing court cases outside of the court

15. Sit with ex-employees and assure them in compensating for unfair dismissal

Answer to b)

The following happens to be the major barriers to change:

1. Making a position in the company among the five existing management people

2. Conflict management being CEO’s salary being lucrative

3. Setting correct performance metrics and measuring them with appropriate drivers

4. Dealing with staff morale and making them belief in to change management

5. Big expectation from the management

6. Dealing with financial crisis and managing within constraints

7. Change existing strategy of cost minimization to profit maximization