Leading and Managing in Organizations Robert Bontempo

Handout ‘Chris Cunningham and Stover Industries’ was given out for the students to read. They were asked, “What would you do as a manager to fix the problem?”. Bontempo stressed ‘do’ rather than rephrase the problem.

The problem is a sales manager called Chris who is taking it upon himself to instruct production to fill his orders regardless of their other tasks.

A discussion followed in which students suggested various actions that a consultant might suggest the company takes:

1. Keep Chris, but constrain his undesirable activities. He has good qualities. This could be done by refusing him new clients, giving him a performance review, making public high level disapproval of his tactics. Tie production to consumption. Make it clear to Chris that his income will be affected if he continues.

Following this point, Bontempo urged consideration of why Chris finds it so easy to influence production. He has close personal ties to Mrs. Stover. Staff are probably gossiping about favoritism, adding to resentment.

2. Mention a possible career path to sales director, and the need to change his behavior if he wants such promotion.

Some students perceived this as apparently rewarding undesirable behavior. Bontempo pointed out that, as Chris works on commission, his behavior is already rewarding him.

3. In tackling this herself Mrs. Stover is undermining the sales director. There’s a problem with the organisational structure. 360 degree feedback should be employed to get other people’s perceptions of Chris’s behavior. We want Chris to honor lines of authority.

4. Focus on head of production. Give him more prestige, perhaps Chris should report to him.

5. Problem with production - maybe not enough, so build up inventory, and production capacity, outsource.

6. Problem with sales director, only a figure head. Give him the power to solve problem.

7. Fire Chris.

Bontempo made the point that all of these actions would destroy Chris’s productivity! However, Chris’s sales are not the same thing as the company’s profitability, even if he thinks they are the same.

What is his behavior costing the company? Not only in money, but in human relationships.

Citing a toy company he had advised in LA, Bontempo said that this question may not be one that the accounting department could answer.

He also mentioned the Japanese solution to this problem, which would be to job-rotate Chris to work in production. However, all his experience is in sales, due to the divided structure of the company.

Another set of actions was proposed by the students:

1. Bring in ‘just-in-time’ so that production will be flexible enough to meet Chris’s needs. Change organisation to support Chris-type salespeople.

2. Rank customers by profit they bring and prioritize production accordingly.

Therefore, 2 main options: Restrain Chris, and change organisation to do that; or use him as he is and change organization to support him.

Bontempo raised issue of assumptions that consultants (students) were making. Couldn’t Chris be a woman? Don’t assume look for evidence to support your theory but go in with an open mind.

In diagnosing problems look beyond symptoms to causes. Is the problem with people, resources or processes?

Components of the system are:

Formal organizational arrangements. Ie. Career system, pay structure, location etc. This might be shown in an organizational chart.

Informal organizational arrangements. Ie. Roles, communication networks (see overhead). How many people talk to you is an indicator of power of a sort.

Culture, values, traditions, myths (which may be invented and deliberately kept alive as at Saloman, Smith and Barney )etc. - values matter, and people matter, not only numbers.

There are three types of tasks. (see overhead)

Pooled, sequential, reciprocal.

Stover is pooled and sequential, it has no feedback loops. Is there good ‘congruence’ (see reading) or fit between part of the organisation?

There are two contradictory solutions.

A Chris is the problem; constrain him with a tight organizational structure that stresses respecting lines of power and cost-effective production.

B Chris is the solution. Introduce a culture of breaking the rules and a reciprocal task arrangement.

To decide which to use, ask, “ What’s the basis of our competitive advantage?”

If it’s low cost - get rid of Chris. If it’s customer focus and attracting new clients, use him.

You can’t change only the informal organizational arrangements. A complete overhaul will be necessary.