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Final Artifact

Jon Guerrero

South Texas College

Management Theory I

Esmeralda Adame

October 5, 2022
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Final Artifact

WeWork is a commercial real estate company that allowed tenants to share office space in

their buildings. It was a very popular idea that gained massive attention and their valuation of the

project was in the billions of dollars. SoftBank was their lead investor, but they also attracted

other major financial institutions. The CEO Adam Neumann, however, lacked the skills to

organize his business and his leadership style seemed to lack focus. He often invested in other

ideas such as an elementary school and an indoor wave pool. He was able to scale the business

successfully, but his decision-making skills were not the best. If he had a counsel to advise him

with members who have ran huge firms like his, it could have gone better for them. It seems that

all was going well up until it was time to go public and they had to show their books to the

Securities and Exchange Committee (SEC). Once their financials were public, analyst and

experts began to realize their valuation might be inflated. After that, Neumann resigned from his

position, the IPO was delayed indefinitely, and their board of directors voted on two others to be

co-CEOs. These to individuals, Sebastian Cunningham and Artie Minson, were tasked to

restructure the business. Their efforts were ineffective and even they seemed inadequate for the

job. Employees were not trusting the leaders anymore and they felt unsure of the future of the

company. (Bloomberg Quicktake: Originals , 2019)

Organizational Structure

The organizational structure that WeWork used would be considered an organic structure.

These types of structures are “flexible and decentralized, with low levels of formalization”

(Course Hero, n.d.). WeWork definitely seemed to lack a basic core foundation. Under

Neumann, they just seemed to have this great idea and were going with the flow. There was no

sense of urgency to structure the firm. With organic structures, it is said employees find the
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freedom from management to be their favorite part of the job. However, when management lets

their employees have freedom and management themselves have no sense of direction is a huge

red flag. The lack of foundation this company had was astounding. What was more alarming

were these financial institutions funneling billions of dollars into the project with only an idea

and no results over a series of years.

Controls

The organizational controls refer to the development of organizational objectives and its

members performance that led to the accomplishment of these desired goals and objectives. The

types of organizational controls that WeWork had were relatively nonexistent. There are two

levels of control which are strategic controls and operational controls. With strategic controls,

the organization has a set vision for their desired outcomes and where they need to be. With

operational controls, it is managing different divisions of the organization and making sure

everything is ready to go to achieve their desired objectives. For operational controls, it is

essential to point out that each department or division of the organization can work on different

goals and objectives, but collective work towards the company’s vision.

There are also different types of controls such as feedback controls, concurrent controls, and

feedforward controls. Feedback controls are controls set in place after getting a response of how

well an activity or assignment was done the previous time. From there we can assess the type of

maintenance we must conduct to enhance the process, or if it is working well leave it be.

Concurrent controls are controls that happen as you are working on the project or task at hand.

This could be something like adapting to a situation that arises out of the blue and you have to

take care of it as you go. Lastly, we have feedforward control, which is essentially looking into
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the foreseeable future and notice if anything might need to be enhanced before it becomes a

setback.

Behavioral controls and financial controls would have helped WeWork become the

organization that they were on paper. Setting behavioral controls would have made it easier to

manage and evaluate decision making among the leaders and the members of the organization.

These controls would have been probably caught some of the rash investments that Neumann

was making. Financial controls would have also helped as they could see how well they were

actually doing as compared to looking at their account balance and just spending. Like we

mentioned before, Neumann took the money invested in WeWork and bought up properties,

furnished them, and tried to lease them. Which according to their business idea it sounds

suitable, but there have to be behavioral and financial controls in place.

If they had any or all of these controls in place, they could set a budget and stick to it, that

could have been beneficial for them to actually make a profit. Perhaps setting a ceiling price for

the purchase of property or not going over a certain amount when purchasing furniture and

equipment. After setting their standards for the company, they have to measure the performance.

They can look at how well they did with the budget that they set. Then, they can compare the

budget in accordance with their standards. Perhaps going over the budget and figuring out how

much they saved in different projects. Then they could put that money to use else were. Lastly,

they can make adjustments as they see fit and probably restructure certain controls that might not

be working out or add new ones that might be more beneficial.

Instead, “WeWork invested heavily in technology to enhance the experience of its members.

It acquired more than 20 tech start-ups in the years since 2015” (Satish, 2021, p. 498). If they

focused on the little things starting with setting controls, maybe their organization would have
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been profitable a from the beginning. What hurt them is that they over promised and kept going

until they could no longer deliver. Neumann and other leaders who made the decisions did not

take into consideration many things, as simples as controls, and that is what ultimately bashed

their organization.

Leadership Styles

Neumann would be categorized as a charismatic leader. Charismatic leaders are

“energetic and passionate about their ideas [and they like to] solve current problems by radically

rethinking the way things are done and suggesting alternatives that are risky, novel, and

unconventional” (Course Hero, n.d.). His actions also could be seen as dishonest and malicious.

He did believe in his company and talked highly of their endeavors, but his actions are careless

and without justification other than buying properties and different companies to justify the

business model. He seems to miss the point of a company being profitable and just keeps

funneling investors’ capital into these projects. I would suggest an authentic leadership style for

Neumann. An authentic leadership style would benefit Neumann by looking within and looking

for his strengths and weaknesses. Using this information, he could form a group of individuals

that can help him assess situations where he probably would need help when making decisions.

He could also go to the board and ask for their advice when making decisions that may seems to

be in a gray area. Authentic leaders take pride in their integrity and have the firm’s best interest

in mind.

Decision-Making Styles

WeWork CEO Neumann has an authoritarian decision-making skill. He usually made

decisions on his own or within his group of leaders. That is usually not enough to bring the

company down, many businesses actually run with an authoritarian style of leadership. However,
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Neumann and his fellow leaders would go and make decisions that benefitted them personally.

There was an instance, “while changing the name from WeWork to The We Company, it had

paid $5.9 mn to license the word “We” from We Holdings owned by Neumann and other

WeWork founders” (Satish, 2021, p. 503). These types of decisions make the company look

fraudulent and unethical. These situations are why we have controls in place to minimize the risk

of potential loss due to immoral decision making. The decision-making style that I would have

recommended they use would be democratic. With a democratic style of decision making,

important decisions are put to a vote. With multiple people leading the way there could be more

ideas brought about dealing with issues the company can foresee. A democratic decision-making

style is what the employees want, as “a group of employees presented management with a letter

asking for changes such as salary transparency, more employee involvement in management

decisions and an end to forced arbitration” (Tan & Huet, 2019). Although it might seem faster

decision making from an authoritarian style, fast decision making is not always what is best for a

company. Especially when that company is up and coming, having a sound structure where the

developing company can grow is extremely crucial.

Strategic Human Resource Management

There are four questions regarding Strategic Human Resource Management, and they include

competence, consequence, governance, and learning and leadership. The first question asks, to

what extend does a company have the knowledge, skills, and abilities to lead the organization to

success and meet and exceed their goals? I would have to say that WeWork definitely had the

ability to deliver results and could have been profitable way early on if they had the right people

or the right strategy in place. They had a magnificent idea, business plan, and even the capital to

do great things and thrive in a new market. I believe they also had the skills to do such things as
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they were able to close deals on properties, design and furnish their office space, and scale the

business relatively fast to include multiple countries and hundreds of thousands of subscribers

around the globe. The one thing they lacked was the knowledge to do so. They were not great

with the way they did their spending. If they had advisors on the board from the beginning like

SoftBank did after Neumann left, I believe the company would be in a totally different place

right now.

The second question deals with consequence. Consequence deals with having the right

people, encouragements, and rewards in place. This could be like receiving a bonus every time

someone brings in a new lessee or when closing down a deal that will benefit the company.

These types of incentives will lead to members working to achieve the organizational goals more

often.

The third question revolves around governance. What this ultimately entails are, does our

organization have the right structure, policy, and communications in order to run as efficiently

and effectively as possible? WeWork seemed to lack all of these aspects of governance. They

were just all over the place when it came to running a multi-billion-dollar company and they

seemed to be running it like a small business. They should have structured the business correctly

form the beginning instead of paying the price of their IPO getting ultimately delayed and their

valuation dropping significantly.

The fourth question relates to learning and leadership. Relating to learning and

leadership, WeWork had a lot of learning to do. Their leadership style was wrong for the

company and the way they ran things raised a lot of red flags before eventually had to restructure

the organization, and Neumann had to step down. “It was also revealed that Neumann wielded

enormous power with his voting rights and his wife had a say in who would lead the company if
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Neumann died” (Satish, 2021, p. 503). This type of leadership style is too controlling over a

company that is essentially billions of dollars’ worth. There needs to be certain processes voting

rights within the organization to safeguard the well-being of the firm.

Conclusion

All in all, WeWork had an amazing idea. They could have changed the game of office

leasing as they were projected to be and could have probably had huge success with people

working remotely during the pandemic. If they could have structured correctly and remodeled to

have pod like stations for individuals that could have benefitted the organization. Unfavorable

conditions and leadership style from the founders ultimately led to the demise of a company with

huge potential.
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References:

Bloomberg Quicktake: Originals . (2019, November 7). The Spectacular Rise and Fall of

WeWork. Retrieved from YouTube: https://www.youtube.com/watch?v=X2LwIiKhczo

Course Hero. (n.d.). Course Hero. Retrieved from Developing Your Leadership Skills:
https://www.coursehero.com/study-guides/principlesmanagement/10-6-developing-your-
leadership-skills/
Course Hero. (n.d.). Organizational Structure. Retrieved from Course Hero:

https://www.coursehero.com/study-guides/principlesmanagement/7-2-organizational-

structure/

Satish, D. (2021). Financial Statement Analysis and Valuation Dilemma of WeWork (The We

Company). IUP Journal of Accounting Research & Audit Practices, 20(4), 496–514. 

Tan, G., & Huet, E. (2019). WeWork Says Job Cuts to Begin “In Earnest” This Week in

U.S. Bloomberg.Com, N.PAG.