302 Case Study 5 Pages
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302 Case Study
Please make sure that you carefully address each question including details to support your answers. Each answer should connect back to information from the book or discussion videos. Please use detail from the class to answer each question. The strongest answers will have specific detail regarding topics from the book and lectures.
You will use the 2 case studies from Harvard Business Publishing to complete the paper. Please note that there are strict copyright rules for the use of this case.
Please address each question separately. Label the question with the number below, and organize your document by question.
Questions for “The Team that Wasn’t”
- How effective has this team been?
- What norms have emerged?
- What is the culture of the group? How would you evaluate their interpersonal processes using concepts from the book?
- What leadership theories apply either as leadership you see as present or leadership concepts that are not present, but you feel would be useful?
Questions for “Can you fix a toxic culture”
- Create a fishbone diagram to analyze possible root causes of problems in the organization. Include an actual diagram.
- What is the culture of the organization? What type of work attitudes are relevant to this case?
- What leadership elements (or lack of) and theories do you see operating in this case?
- What plan of action would you create in this scenario?
- What ethical issues are raised by this case?
- What elements of psychological contracts may exist for employees in this case?
This is your culminating project in place of a final exam. All work should be completed independently, without consulting other students, faculty, or others. The work must be your own, do not copy material from the internet. More thorough answers will receive more points.
ARTICLE HBR CASE STUDY Can You Fix a Toxic Culture Without Firing People? A CFO wonders how to turn around a struggling division. by Francesca Gino
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“Oh, sorry—water, no ice, please,” said Noelle Freeman, the CFO of Franklin Climate Systems. Watching the clouds out her window at 30,000 feet, she’d been deep in thought. She was on her way home from two days in Arkansas visiting her company’s largest facility. Franklin was in the business of designing, engineering, and manufac- turing climate control systems for cars and SUVs. It was a division of FB Holdings, a manufacturing company based in Aurora, Illinois, and it had the unfortunate distinction of having been the group’s poorest-performing unit for nearly a decade.
As CFO, Noelle was, of course, concerned about the numbers. But after spending time in Little Rock, she worried they might be facing a bigger problem. She’d gone to Arkansas to review operational plans and financial projections for the rest of the year with the team on the ground. FB Holdings had made it through the financial crisis of 2008 without losing money—but the climate control systems divisions, a Tier 1 automotive
supplier, had not fared as well. Franklin had finally returned to profitability, but she and Cameron Koren, a turnaround specialist who’d been brought in as CEO five years earlier to right the ship, were still working hard to keep the busi- ness on track. She knew the Little Rock plant had been through years of belt-tightening and turn- over, so she hadn’t expected a warm welcome, but the negative vibe she’d felt from the employees had been even worse than she’d expected. The word that kept popping into her mind was “toxic.”1
Doug Lee, the company’s head of HR, had warned her and Cameron about the plant’s “bad mood,” as he called it. He’d been very vocal about his concerns that although Franklin was now on stable financial ground, a less quantifiable prob- lem was still dampening performance: extremely low morale and widespread disengagement,2 especially in Little Rock.
Noelle had listened to Doug’s concerns, but as a numbers person, she’d assumed that once the
The flight attendant had to ask her twice, “Anything to drink, ma’am?”
FRANCESCA GINO is a behavioral scientist
and the Tandon Family Professor of Business Administration at Harvard Business School.
HBR’s fictionalized case studies present problems faced by leaders in real companies and offer solutions from experts. This one is based on the HBS Case Study “Webasto Roof Systems Americas: Leadership Through Change” (case no. 917015-PDF-ENG), by Francesca Gino and Paul Green, which is available at HBR.org.
CASE STUDY CAN YOU FIX A TOXIC CULTURE WITHOUT FIRING PEOPLE? A CFO WONDERS HOW TO TURN AROUND A STRUGGLING DIVISION. BY FRANCESCA GINO
Harvard Business Review November–December 2018 2
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division was out of the red, the people problems would go away. As the plane descended into Aurora, Noelle won- dered if she was wrong. This may be a problem a spreadsheet just can’t fix, she thought.
TWO DAYS EARLIER It was Noelle’s third scheduled meeting to review financials, and again she was alone in a conference room waiting for people to show up.
When one of the plant supervisors popped his head into the room, she asked, “Are you joining?”
“I guess so,” he said noncommittally and took a seat at the opposite end of the table.
Noelle leaned toward him, hoping to demonstrate her eagerness to engage.
He leaned back. “I don’t even know if I’m supposed to be here,” he said. “I got an invite, but it was forwarded to me by someone else.”
Noelle had been hearing things like that all day. It was clear that people weren’t communicating across depart- ments or even with colleagues on their own teams. No one seemed interested in hearing a financial update—the few who had shown up in previous meetings were just short of hostile. When she’d walked into the building earlier that day, it had been dead silent. On the plant floor and in the offices people kept to themselves; when she walked by, no one even looked up. There was no bustle, no camaraderie.
“Can I ask you a favor, Marshall?” Noelle asked. “It is Marshall, right?”
He nodded.
“It doesn’t look like anyone else is coming to this meeting,” she said, look- ing at the clock, which now read 11:20. “Can you tell me what’s going on here?”
Marshall sat quietly for a minute and then shrugged. “I guess I have nothing to lose at this point,” he said. “This just isn’t a good place to work anymore. I have people quitting or threatening to quit all the time.3 People don’t like coming to work. They clock in and clock out. I’ve been here for 18 years, and it hasn’t always been like this. We used to have fun at work, and we’d hang out together after. Now all I hear is ‘I just want to do my job and get out of here.’ There’s no sense of community.”
“Because of the cuts?” she asked, knowing the answer before she even finished the question.
“Yes, exactly. Everyone knows that the company hit hard times. But all the ‘belt-tightening’”—he used air quotes here, and Noelle winced, realizing how stupid the euphemism sounded—“has taken a toll. The perks that used to bring teams together—on-site lunches and dinners; bonuses, even small ones—they meant a lot to our people. Now we don’t do anything for them. And making $15 an hour isn’t cutting it for them.”
“I appreciate your being candid
with me,” Noelle said. “I imagine it can’t be easy.”
“Like I said, nothing to lose.” Marshall smiled ruefully. “But it’s sad. I remember when it felt like the company noticed me, even cared about me. But now it’s like nobody trusts anybody.”
“Is there any way the company can regain your faith?”
“Honestly, I’m not sure. The feeling is that Aurora is focused on the bottom line. Everything that’s been done over the past few years has been about the penny, not the people. The message has become ‘Just be glad you have a job.’ And I haven’t seen any signs that things will be changing anytime soon.”
BACK IN AURORA The morning after Noelle returned from Little Rock, she found herself in another empty conference room, this time waiting for Cameron and Doug. A few minutes later, they walked in together.
“How was your trip?” Cam asked. “Bleak,” she said. She recounted her
meeting with Marshall. Cam shook his head impatiently.
“These are tough times for everyone. Our other sites have felt the pinch, but none has turned as sour as Little Rock.”
CLASSROOM NOTES
1. When is calling a culture “toxic” appropriate? How bad do things need to be to earn that label?
2. This is not uncommon. Gallup’s 2017 State of the Global Workplace report found that 67% of employees are
“not engaged” and 18% are “actively disengaged” at work.
3. Downsizing a workforce by 1% leads to a 31% increase in voluntary turnover the next year, research shows.
4. Studies show that when employees feel valued by their companies, they are more committed and satisfied in their jobs and show fewer signs of stress and burnout.
“The feeling is that Aurora is focused on the bottom line. Everything that’s been done over the past few years has been about the penny, not the people.”
3 Harvard Business ReviewNovember–December 2018
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He paused. “You know we’re still under intense scrutiny from FB. Layoffs might be our best option to keep things moving in the right direction.”
Noelle exchanged a quick glance with Doug. She knew he was adamantly against more layoffs now that they were on better financial footing.
“I realize that personnel cuts are not necessary from a financial perspective. But culturally, it might be time for a purge,” Cam continued. “We can’t have people like Marshall—a supervisor— spreading doom and gloom across the entire facility. We need people who are positive about the company’s future, not holding on to an unattainable past.”
Doug spoke up. “Respectfully, I dis- agree with you, Cam.” He had never been one to tell the CEO only what he wanted to hear. “These employees have stuck with us through the worst of it, and with the right initiatives, we can bring them back around. Additional layoffs—especially now that we’re making money again— would just make things worse. And who wants to join a company that treats its peo- ple like that?4 How would we find enough people to replace the experienced—albeit disengaged—staff we’d be letting go? And remember the research I showed you: Companies that lay off large numbers of employees are twice as likely to file for bankruptcy as companies that don’t.”
“But your engagement surveys—not to mention the anecdotal stories like Noelle’s—show that things are just getting worse,” Cam responded. “So I’m struggling to find a way to make this work. We’re still not where we need to be operationally and
financially, and maybe that’s because we have too many people holding us back.5 It’s like we’re surgeons who have a patient bleeding out on the operating table. Do we join hands and sing ‘Kumbaya’? Or pull out our scalpels?”
Doug stood firm. “I think—and correct me if I’m wrong, Noelle—that the bleeding has stopped. So now it’s more like we have a patient in the ICU who needs help getting better.”
He and Cam sat back and looked at her, waiting for her response.
“You’re right that we’ve stabilized, Doug,” she said. “But given what I saw in Arkansas, the patient is definitely not out of the woods.”
HIT THE RESET BUTTON The following Saturday, Noelle met her friend Joss at the reservoir near their houses. The two women had gone to business school together and had both ended up in Aurora, so they often turned to each other for work advice. Having executed a successful turnaround as COO of a construction company, Joss had been especially helpful to Noelle during her time at Franklin.
Now, as they started out on their five-mile loop, Noelle described the situation in Little Rock and Cameron and Doug’s most recent debate. “We talked a lot about ‘excising the bad seeds,’ and as you know, we’ve already laid off a lot of people. But the crazy thing is that even once the worst offenders were gone, morale stayed just as low.”
“It’s not the people who are toxic,” Joss said, “it’s the culture.6 So even
though it’s hard, you have to fix that first. I gave you the name of the consul- tants we worked with, right?”
“Yes, Doug and I even had an explor- atory call with them. But whenever we’ve floated the idea of working with them to Cameron, he has shot it down, saying we can’t afford it right now. And he’s right. Our bottom line will look better if we keep reducing overhead7 rather than spending more money to try to fix the problem.”
“For our company, it was the best money we ever spent,” Joss said. “Ardu- ous, yes. Time-consuming, yes. Most of the time it felt like I was living in a Dilbert parody. But employees’ attitudes have really improved, and so have the numbers.”
“I’ve got more than enough to do with the financials—I don’t know why I’m even getting involved.8 But I hate feeling that the executive team is letting our people down—and using my num- bers to justify it.”
“Bringing the company back to a high level of operational performance will take the focus and energy of hundreds of employees,” Joss said. “Cameron is kidding himself if he thinks he can rely on a few good people who somehow—miraculously—manage to stay engaged through another round of cuts.”
“I just keep looking around for the reset button,” Noelle said.
“Unfortunately, when it comes to culture, no such thing exists.”
5. In the U.S. layoffs are straightforward from a legal standpoint. In other countries they are highly regulated, and in some regions companies are required to justify the reductions to authorities.
6. Is Joss right in saying that getting rid of toxic people won’t change the culture?
7. Is this viewpoint too narrow? In a 2012 review of 20 studies of companies that had conducted layoffs, Deepak Datta of the University of Texas at Arlington found that staff reductions had a neutral to negative effect on stock prices in the days after the announcement and that most of the companies eventually suffered declines in profitability.
8. Should a CFO be getting involved in HR issues?
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SHOULD NOELLE SUPPORT THE LAYOFFS OR ADVOCATE FOR CULTURE CHANGE?
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HBR CA SE S TUD Y
The Team That Wasn’t by Suzy Wetlaufer
Why doesn’t this team work?
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HBR CAS E ST UD Y
The Team That Wasn’t
by Suzy Wetlaufer
harvard business review • november–december 1994 page 1
HBR’s cases, which are fictional, present common managerial dilemmas and offer concrete solutions from experts.
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With a group of talented, hardworking people, why isn’t this team working?
The last thing Eric Holt had expected to miss about New York City was its sunrises. Seeing one usually meant he had pulled another all- nighter at the consulting firm where, as a vice president, he had managed three teams of manufacturing specialists. But as he stood on the balcony of his new apartment in the small Indiana city that was now his home, Eric sud- denly felt a pang of nostalgia for the way the dawn plays off the skyscrapers of Manhattan. In the next moment, though, he let out a sar- donic laugh. The dawn light was not what he missed about New York, he realized. What he missed was the feeling of accomplishment that usually accompanied those sunrises.
An all-nighter in New York had meant hours of intense work with a cadre of committed, en- thusiastic colleagues. Give and take. Humor. Progress. Here, so far anyway, that was unthink- able. As the director of strategy at FireArt, Inc., a regional glass manufacturer, Eric spent all his
time trying to get his new team to make it through a meeting without the tension level be- coming unbearable. Six of the top-level manag- ers involved seemed determined to turn the company around, but the seventh seemed equally determined to sabotage the process. Forget camaraderie. There had been three meetings so far, and Eric hadn’t even been able to get everyone on the same side of an issue.
Eric stepped inside his apartment and checked the clock: only three more hours be- fore he had to watch as Randy Louderback, FireArt’s charismatic director of sales and mar- keting, either dominated the group’s discussion or withdrew entirely, tapping his pen on the table to indicate his boredom. Sometimes he withheld information vital to the group’s de- bate; other times he coolly denigrated people’s comments. Still, Eric realized, Randy held the group in such thrall because of his dynamic per- sonality, his almost legendary past, and his close
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The Team That Wasn’tHBR CASE STUDY
harvard business review • november–december 1994 page 2
Suzy Wetlaufer is a Boston-based writer. Formerly, she was with Bain & Company, where she worked with manufacturing clients on strategy formulation.
relationship with FireArt’s CEO that he could not be ignored. And at least once during each meeting, he offered an insight about the indus- try or the company that was so perceptive that Eric knew he shouldn’t be ignored.
As he prepared to leave for the office, Eric felt the familiar frustration that had started building during the team’s first meeting a month earlier. It was then that Randy had first insinuated, with what sounded like a joke, that he wasn’t cut out to be a team player. “Leaders lead, followers…please pipe down!” had been his exact words, although he had smiled win- ningly as he spoke, and the rest of the group had laughed heartily in response. No one in the group was laughing now, though, least of all Eric.
FireArt, Inc., was in trouble—not deep trou- ble, but enough for its CEO, Jack Derry, to make strategic repositioning Eric’s top and only task. The company, a family-owned maker of wine goblets, beer steins, ashtrays, and other glass novelties had succeeded for nearly 80 years as a high-quality, high-price producer, catering to hundreds of Midwestern clients. It traditionally did big business every football season, selling commemorative knick- knacks to the fans of teams such as the Fight- ing Irish, the Wolverines, and the Golden Gophers. In the spring, there was always a rush of demand for senior prom items—champagne goblets emblazoned with a school’s name or beer mugs with a school’s crest, for example. Fraternities and sororities were steady custom- ers. Year after year, FireArt showed respectable increases at the top and bottom lines, posting $86 million in revenues and $3 million in earn- ings three years before Eric arrived.
In the last 18 months, though, sales and earnings had flattened. Jack, a grandnephew of the company’s founder, thought he knew what was happening. Until recently, large na- tional glass companies had been able to make money only through mass production. Now, however, thanks to new technologies in the glassmaking industry, those companies could execute short runs profitably. They had begun to enter FireArt’s niche, Jack had told Eric, and, with their superior resources, it was just a matter of time before they would own it.
“You have one responsibility as FireArt’s new director of strategy,” Jack had said to Eric on his first day. “That’s to put together a team of our top people, one person from each divi-
sion, and have a comprehensive plan for the company’s strategic realignment up, running, and winning within six months.”
Eric had immediately compiled a list of the senior managers from human resources, man- ufacturing, finance, distribution, design, and marketing, and had set a date for the first meeting. Then, drawing on his years as a con- sultant who had worked almost solely in team environments, Eric had carefully prepared a structure and guidelines for the group’s discus- sions, disagreements, and decisions, which he planned to propose to the members for their input before they began working together.
Successful groups are part art, part science, Eric knew, but he also believed that with every member’s full commitment, a team proved the adage that the whole is greater than the sum of its parts. Knowing that managers at FireArt were unaccustomed to the team process, how- ever, Eric imagined he might get some resis- tance from one or two members.
For one, he had been worried about Ray LaPierre of manufacturing. Ray was a giant of a man who had run the furnaces for some 35 years, following in his father’s footsteps. Al- though he was a former high school football star who was known among workers in the fac- tory for his hearty laugh and his love of practi- cal jokes, Ray usually didn’t say much around FireArt’s executives, citing his lack of higher education as the reason. Eric had thought the team atmosphere might intimidate him.
Eric had also anticipated a bit of a fight from Maureen Turner of the design division, who was known to complain that FireArt didn’t appreciate its six artists. Eric had ex- pected that Maureen might have a chip on her shoulder about collaborating with people who didn’t understand the design process.
Ironically, both those fears had proved groundless, but another, more difficult prob- lem had arisen. The wild card had turned out to be Randy. Eric had met Randy once before the team started its work and had found him to be enormously intelligent, energetic, and good-humored. What’s more, Jack Derry had confirmed his impressions, telling him that Randy “had the best mind” at FireArt. It was also from Jack that Eric had first learned of Randy’s hardscrabble yet inspirational per- sonal history.
Poor as a child, he had worked as a security guard and short-order cook to put himself
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The Team That Wasn’tHBR CASE STUDY
harvard business review • november–december 1994 page 3
through the state college, from which he grad- uated with top honors. Soon after, he started his own advertising and market research firm in Indianapolis, and within the decade, he had built it into a company employing 50 people to service some of the region’s most prestigious accounts. His success brought with it a measure of fame: articles in the local media, invitations to the statehouse, even an honorary degree from an Indiana business college. But in the late 1980s, Randy’s firm suffered the same fate as many other advertising shops, and he was forced to declare bankruptcy. FireArt consid- ered it a coup when it landed him as director of marketing, since he had let it be known that he was offered at least two dozen other jobs. “Randy is the future of this company,” Jack Derry had told Eric. “If he can’t help you, no one can. I look forward to hearing what a team with his kind of horsepower can come up with to steer us away from the mess we’re in.”
Those words echoed in Eric’s mind as he sat, with increasing anxiety, through the team’s first and second meetings. Though Eric had and planned an agenda for each meeting and tried to keep the discussions on track, Randy always seemed to find a way to disrupt the pro- cess. Time and time again, he shot down other people’s ideas, or he simply didn’t pay atten- tion. He also answered most questions put to him with maddening vagueness. “I’ll have my assistant look into it when he gets a moment,” he replied when one team member asked him to list FireArt’s five largest customers. “Some days you eat the the bear, and other days the bear eats you,” he joked another time, when asked why sales to fraternities had recently nose-dived.
Randy’s negativism, however, was coun- tered by occasional comments so insightful that they stopped the conversation cold or turned it around entirely—comments that demonstrated extraordinary knowledge about competitors or glass technology or customers’ buying patterns. The help wouldn’t last, though; Randy would quickly revert to his role as team renegade.
The third meeting, last week, had ended in chaos. Ray LaPierre, Maureen Turner, and the distribution director, Carl Simmons, had each planned to present cost-cutting proposals, and at first it looked as though the group were making good progress.
Ray opened the meeting, proposing a plan
for FireArt to cut throughput time by 3% and raw-materials costs by 2%, thereby positioning the company to compete better on price. It was obvious from his detailed presentation that he had put a lot of thought into his com- ments, and it was evident that he was fighting a certain amount of nervousness as he made them.
“I know I don’t have the book smarts of most of you in this room,” he had begun, “but here goes anyway.” During his presentation, Ray stopped several times to answer questions from the team, and as he went on, his nervous- ness transformed into his usual ebullience. “That wasn’t so bad!” he laughed to himself as he sat down at the end, flashing a grin at Eric. “Maybe we can turn this old ship around.”
Maureen Turner had followed Ray. While not disagreeing with him—she praised his comments, in fact—she argued that FireArt also needed to invest in new artists, pitching its competitive advantage in better design and wider variety. Unlike Ray, Maureen had made this case to FireArt’s top executives many times, only to be rebuffed, and some of her frustration seeped through as she explained her reasoning yet again. At one point, her voice almost broke as she described how hard she had worked in her first ten years at FireArt, hoping that someone in management would recognize the creativity of her designs. “But no one did,” she recalled with a sad shake of her head. “That’s why when I was made director of the department, I made sure all the artists were respected for what they are—artists, not worker ants. There’s a difference, you know.” However, just as with Ray LaPierre, Maureen’s comments lost their defensiveness as the group members, with the exception of Randy, who remained impassive, greeted her words with nods of encouragement.
By the time Carl Simmons of distribution started to speak, the mood in the room was ap- proaching buoyant. Carl, a quiet and meticu- lous man, jumped from his seat and practically paced the room as he described his ideas. FireArt, he said, should play to its strength as a service-oriented company and restructure its trucking system to increase the speed of deliv- ery. He described how a similar strategy had been adopted with excellent results at his last job at a ceramics plant. Carl had joined FireArt just six months earlier. It was when Carl began to describe those results in detail that Randy
“If Randy can’t help you, no one can,” CEO Jack Derry had told Eric.
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harvard business review • november–december 1994 page 4
brought the meeting to an unpleasant halt by letting out a loud groan. “Let’s just do every- thing, why don’t we, including redesign the kitchen sink!” he cried with mock enthusiasm. That remark sent Carl back quickly to his seat, where he halfheartedly summed up his com- ments. A few minutes later, he excused him- self, saying he had another meeting. Soon the others made excuses to leave, too, and the room became empty.
No wonder Eric was apprehensive about the fourth meeting. He was therefore surprised when he entered the room and found the whole group, save Randy, already assembled.
Ten minutes passed in awkward small talk, and, looking from face to face, Eric could see his own frustration reflected. He also detected an edge of panic—just what he had hoped to avoid. He decided he had to raise the topic of Randy’s attitude openly, but just as he started, Randy ambled into the room, smiling. “Sorry, folks,” he said lightly, holding up a cup of cof- fee as if it were explanation enough for his tardiness.
“Randy, I’m glad you’re here,” Eric began, “because I think today we should begin by talking about the group itself—”
Randy cut Eric off with a small, sarcastic laugh. “Uh-oh, I knew this was going to hap- pen,” he said.
Before Eric could answer, Ray LaPierre stood up and walked over to Randy, bending over to look him in the eye.
“You just don’t care, do you?” he began, his voice so angry it startled everyone in the room.
Everyone except Randy. “Quite the contrary— I care very much,” he answered breezily. “I just don’t believe this is how change should be made. A brilliant idea never came out of a team. Brilliant ideas come from brilliant indi- viduals, who then inspire others in the organi- zation to implement them.”
“That’s a lot of bull,” Ray shot back. “You just want all the credit for the success, and you don’t want to share it with anyone.”
“That’s absurd,” Randy laughed again. “I’m
not trying to impress anyone here at FireArt. I don’t need to. I want this company to succeed as much as you do, but I believe, and I believe passionately, that groups are useless. Consen- sus means mediocrity. I’m sorry, but it does.”
“But you haven’t even tried to reach consen- sus with us,” Maureen interjected. “It’s as if you don’t care what we all have to say. We can’t work alone for a solution—we need to understand each other. Don’t you see that?”
The room was silent as Randy shrugged his shoulders noncommittally. He stared at the table, a blank expression on his face.
It was Eric who broke the silence. “Randy, this is a team. You are part of it,” he said, trying to catch Randy’s eye without success. “Perhaps we should start again—”
Randy stopped him by holding up his cup, as if making a toast. “Okay, look, I’ll behave from now on,” he said. The words held prom- ise, but he was smirking as he spoke them— something no one at the table missed. Eric took a deep breath before he answered; as much as he wanted and needed Randy Louder- back’s help, he was suddenly struck by the thought that perhaps Randy’s personality and his past experiences simply made it impossible for him to participate in the delicate process of ego surrender that any kind of teamwork requires.
“Listen, everyone, I know this is a chal- lenge,” Eric began, but he was cut short by Randy’s pencil-tapping on the table. A mo- ment later, Ray LaPierre was standing again.
“Forget it. This is never going to work. It’s just a waste of time for all of us,” he said, more resigned than gruff. “We’re all in this together, or there’s no point.” He headed for the door, and before Eric could stop him, two others were at his heels.
Why doesn’t this team work?
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For the exclusive use of H. Hu, 2019.
This document is authorized for use only by Haixin Hu in Psyc 302 taught by JANELLE GILBERT, California State University – San Bernardino from Jun 2019 to Dec 2019.
http://harvardbusinessonline.hbsp.harvard.edu/relay.jhtml?name=itemdetail&referral=4320&id=94612X
