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Case Study: Three Keys To "cultural" Change In Your Organization

Much has been written about Company Culture, every consultant in the world has the training program, book you need to read, or DVD you need to watch so you can shift the culture of your company to yield amazing results. However, the term "Corporate Culture" is an ambiguous one at best and will be different in every organization. The way to effect change in organizations is more about making changes to key personnel and procedures and less about having weekend team building sessions in the wilderness. Changing a company's "culture" requires making changes to leadership or the way the company functions as a unit.

 

Check out this case study below based on a real company:

We will call the company Precision Manufacturing. John was head hunted to work for a company in decline. They were a manufacturer of a diverse group of products and an established nationwide and international dealer network, despite these facts the company had not seen growth in years. John was facing a monumental task; firstly, the situation of the company was far worse than management had made it out to be. The fact of the matter was that the company had been in a state of rapid decline for over four years.

 

Precision Manufacturing was on the brink of bankruptcy, overstaffed, overspending, and under the direction of visionless leader. The company was in need of major restructuring so it can move into the 21st century in terms of best practice, pricing, and technology. John spends his first few weeks finding out where the company is and begins to formulate a plan of attack. John looks at addressing Leadership within the company, Company Culture, and Job Descriptions.

Leadership:

 

John's assessment of Precision Manufacturing shows a major gap in leadership and vision. The company has several layers of management, however, since the departure of the previous sales and general managers. No qualified replacement had been found and the company had consolidated those positions into a single job. The owner of Precision Manufacturing had little interest in the structure of the family business and was oblivious to the costs and profits the company operated under. In his mind the lights were on, he had an army of employees, and a group of managers that simply told him what he wanted to hear. John approached the situation lightly, "Hey Rob, I was just going over these numbers and I just wanted to know if the Mr. Jones was aware that our budget is way out of whack" John said. "Shhhh…we know that things are tight, but if Mr. Jones gets stressed he flips out, we don't need him all worked up. Besides that's why we have you, you're supposed to turn it around," said Rob. This troubled John how could the company move forward when it could not pay its vendors, had to float massive personal projects for the owner, and none of the senior staff would address it frankly.

 

John started to look at the reason behind this strange corporate culture. The answer would be found in the break room where the owner had posted discouraging signs that promoted the culture of mediocrity. Even with the ambivalence of the owner, he could seldom be found in the office, the yoke of leadership rested on the shoulders of the General Manager. Rob the GM had incredible flexibility in his position and held the final say if Mr. Jones was out of the office. Rob was in over his head, the former shipping clerk had worked his way up through the company, but had little experience running multimillion dollar companies. Looking at the historical data (something that had not been done in over 5 years), the decline in sales and revenue under his leadership was staggering.

 

The chart above shows the point where the new General Manager took over and the actual sales from 2003-2008 with the projected sales based on the average rate of decline through 2015. The company had seen amazing growth before shift in power, growing as much as 22% in sales from year to year, however, the leadership behind that explosive growth had been lured away to a competitor. Acting in response to this Mr. Jones decided to look inward and find a leader that would work with the culture and would remain loyal to the company. He found a perfect fit in an inexperienced but amenable employee that was willing to take the reins and tell Mr. Jones what he wanted to hear.

The problem with finding a mediocre person to lead a company of the size of Precision Manufacturing is that they produce mediocre results. The first year under the new leadership sales only grew by 4%, 14% less than the yearly average for the previous 5 years. Over the 4 years that followed, the company's sales would decline on average 16% a year. Dumbfounded by this Mr. Jones and Rob sought to find the cause of the decline. Their answer would be found not in their policy, but they concluded that their sales department was indolent. While the company had taken a massive cut in revenue the Rob had not adjusted staffing to reflect the decline in volume, instead he had hired people. John entered at this point in the story to find that the companies purchasing department had not updated costs of goods in over two years, while wholesale prices had been increased as much as 300% without consideration for the cost, market, or sales history. It was no wonder that the company had profit issues. John had to find a way to work around the situation, attempting to change the culture head on would only put the current leadership in a defensive position. John needed to be the force behind the change, but he could not act as the change agent himself.

Understanding The Culture:

John attempted to learn more about the company culture. Many things, Mission Statements, Vision Statements, Directives, or Goals can form the culture of a company. All of those things are great and should be the force behind a company culture. However, the people within the organization will have the biggest impact on culture. No Book-on-Tape can magically fix a company's broken culture. If the warehouse is a mess, inventory is off, and employees only get sick on Fridays and Mondays, it is not because that behavior is in the company Mission Statement.

Precision Manufacturing had an incredible mission statement, it spoke of pride, customer service, vision, and always doing what is right by the customer. However, most of the staff had never read it, so how could they abide by it? The culture that formed over the years was one of protectionism where each employee was more concerned about protecting his or her position, power, or self-importance within the organization, to the point that it spilled over to the customers.

Going through the records and assessing the business, John discovered that one of the largest customers in the industry had not signed up to be a dealer and there was no answer as to why. John decided to visit the customer at their business and see why they had were not a Precision Manufacturing dealer. The answer? Customer service. John assured the customer he would personally oversee their account. Orders were flowing in from and many times they were large, and one day they just stopped. John picked up the phone and was told that the sales rep that would have been assigned to that account, but had failed to earn their business had called. The salesperson told the dealer "You're my account and you have to only place orders through me". The dealer explained this was the reason he did not deal with the company last time, and he has already shifted his business elsewhere. John was in shock; the salesperson had never discussed the account with him, and ended up costing the company thousands of dollars in business. Just to be clear these sales people are not on commission. This came from the protectionist culture within the company where the employees were more interested in their own numbers than the overall health of the company.

This is a great time to look at your company. Does your company's culture create a place where employees feel they are part of the team or are they only focused on protecting their own job at all costs?

Job Descriptions:

Job descriptions can be one of the leading factors in poor company culture. John discovered that his sales team would spend a large portion of the day working on other tasks. Rob the general manager became obsessed with the concept of "cross-training" after the loss of a few employees. He required that sales people "cross-train" in accounting, that the graphic designers bring the purchasing department "up to speed" in graphic design software, and so on. Once the team had finished their cross training, Rob decided the sales people would take over accounts payable. The janitor would spend part of the day pulling and packing orders, a shipping clerk would work part time in purchasing, and the purchasing manager would serve as the delivery driver. His rationale behind the structure of this was that if someone in one department quit, someone else would already know how to perform their position. In concept, it sounds like a good idea, in practice it created mass confusion. The entire team was so busy doing so many different jobs, that none of them were being done well.

Changing the "culture" of an organization requires that people know what is expected of them, what they are to do, and how they are to do it. Again, we are not seeking to change the actual core values of the employee, as that takes years of careful grooming, leadership, and being willing to cut loose employees that are not willing to work within the framework of a company. John began to submit job descriptions for each employee to Rob, once approved employees with job descriptions began increase their productivity. New marketing programs and a focused and energized team began to produce results. The company had gone from a project decline of 14% to an increase of 4% in sales over the previous year, in less than 9 months. The culture can be modified a company does not need to continue down the road of destruction.

Three Keys:

Leadership
Understanding The Culture
Job Descriptions

About the Author

Michael Satterfield has worked in the automotive aftermarket for over 10 years, with a focus on internet sales and marketing. Michael holds a degree in Organizational Leadership with minors in Political Science and History. He also holds certifications in Internet Sales and Marketing from Ford Motor Company, Kia Motors North America, and Nichols, Campbell & Marrow. Michael founded Satterfield Group to help small businesses in the automotive aftermarket better brand themselves and build their corporate identities using both traditional and internet marketing. Michael is also a regular contributor to many automotive and marketing publications.