Individual Behavioral Case Analysis of a furniture store.

University Degree Business and Administrative studies

MGTO 523

Individual Behavioral Case Analysis

Topic: Phyllis and Barnes

Furniture Store

April 5, 2003

WONG Chak-Nam, Jeff (02864577)

Background

Phyllis and Barnes specializes in office furniture and interior furnishings; it has been in the industry for about eighty years and is still expanding amid strong competition. One problem they faced time and time again was the lack of an efficient workflow within a network of 500 dealers. The long traditions, which remained unchallenged and obviously obsolete, required that dealers write up customer orders, most often by hand, and submit them by phone or fax. Some orders were sent using a DOS-based program that was crudely designed back in the 1980’s. To make matters worse, the batch processing capability of the program was in lack of consistency and prone to confusion. After orders were entered into a corporate order-management system, they were relayed to a centralized database, which had been poorly managed over the years. Worse still, when customer orders were made incorrectly, someone has to bear the responsibilities or risk an unhappy customer. In one instance, a product line manager omitted a new furniture item while he was updating the central catalogue. As a result, customer representatives throughout the country were unable to place orders for enthusiastic customers in the first week. Employees grew particularly frustrated after Phyllis and Barnes began distributing furniture from a new European furniture wholesaler. The increasing confusion in the ordering process and escalation in workload have gradually deteriorated their morale.

In June 1997, the remarkable drop in business turnover has finally provoked anxiety in the management team, which decided to confront the problem of poor collaboration network within the company. The Senior Operation Manager, Barry Searle, was called upon and asked to resolve what seemed to be every senior manager’s concern: “How do we streamline the order process and make it easier for employees - especially those working from remote facilities – to enter ordering information?”

Barry put together a new development team in an effort to improve the existing workflow. To the three new team members, the assignment was no easy task even in the beginning. The original designer of the existing order placement software was long gone, and the system administrator who performed weekly maintenance had never studied the workflow logic. The development team ended up studying the original software design and formulated a set of new system specifications with the help of several customer representatives. The new system, known as EFOS or “Electronic Furniture Ordering System”, was deployed in December 1997.
To Barry’s dismay, the deployment of EFOS turned out to be an unexpected disappointment. While EFOS was fully tested during development and was technically flawless, several user issues began to surface shortly after EFOS was launched. These issues are elaborated below:

First of all, customer representatives showed a great deal of reluctance when asked to learn how to use the new system. They had difficulty understanding why their managers wanted to divert their attention to a new training program, on top of their mounting workload.
Secondly, for those who were willing to learn the new system, they found several important features missing and some unnecessary routines continuing to be present – even though they could be simplied. The problem arose because the development did not expand their consultation effort when drafting the system specification. There was a poor communication between the developers and customer representatives who actually used the system on a daily basis. This is especially true to those representative who work at remote locations.
Thirdly, employees suffered from a loss of motivation in face of mounting workload and constant adjustment to their work rountines. They felt that the effort of restructuring the business was largely disorganized and incoherent. The discontent among the employees has grown into a collective unwillingness to cooperate with the development team.

The above issues became even more relevant as the management team decided that they would expand their workforce in the first quarter of 1998. They were urgently in search of an organizational framework in which employees can add values to the company in the most productive manner, while providing more job satisfaction to them at the same time.

Stakeholder Analysis

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Stakeholder Analysis

The senior management team has shown great concern over the remarkable drop in sales in 1997. The core strategy of the company is always to provide customers with furniture of the finest quality. The CEO of Phyllis and Barnes believes that the products they sell should speak for themselves. He realized that a piece of well-made home furniture, when properly chosen and placed in a house, would not only serve its functional purpose, but also instill a sense of warmth for people who live in there. As a result of his vision, the management team focussed heavily on selecting first-class furniture manufacturers in both North America and Europe. If the management team failed to specialize in this niche, the company would not be able to stand out among its peers and might lose its market share.

The primary goal of the Department of Operations, headed by Senior Operations Manager Barry Searle, is to ensure that inventory control and distribution channels are properly maintained and balanced. Since the sales figures fell, the senior management team requested that all departments have their procedures reviewed. In this way, they hoped to pinpoint what were the key factors that caused the shrinking sales. Shortly after the request was made, Barry began interviewing inventory managers, logistics officers, and customer representatives. What alerted Barry most was the ordering process, which was intensely disputed among customer representatives in different branch locations. Barry immediately recognized the urgency and reported several highlighted issues to the management team. If Barry failed to address the bottleneck issues in the ordering procedures, Phyllis and Barnes might continue to fade in the market and his career would be at risk.

Customer representatives over dozens of locations in North America is the largest group of stakeholders in this situation. In fact, their group behavior is crucial to understanding the state of the company culture. The recent introduction of a new electronic furniture ordering system has complicated their already demanding daily work. They have great difficulty reconciling the existing paper work and archives with the electronic systems. Training lessons were provided for them, but some of the workflow features they had always wanted were never relayed to the development team. Gradually, they felt that their concerns were of little significance to the senior management team. Such lack of motivation has further produced a negative impact to the restructuring of the ordering process. If their reluctance to cooperate continued to delay the restructuring effort, more hinderance would be caused in the distribution channels.

Statement of key problems

Resistance to adjust to the new way of doing business seems to be major threat in the organizational culture at Phyllis and Barnes. Such unwillingness to cooperate could undermine the company’s business and risk losing more customers. Specially, the missing link of communication between senior management and customer representatives should be rebuilt. Failure in doing so would adversely affect furniture sales in the short term, and would worsen the trust and the chance of any future cooperation between the two parties.

Possible Solutions

Dissolving the resistance to change is a gradual process. Nevertheless, the senior management team has to be committed to carrying out such a change program for the organization to continue its operations. Several possible solutions are summarised below:

Conduct a comprehensive Organizational Development (OD) program
Form a cross-functional team to collect inputs from managers and employees
Design a reward program to motivate employees to adopt the new changes
Provide organizational behavior training for employees and explain to them the necessity of the new changes.

The pros and cons of the four options above are listed below:

Identification and Discussion of Relevant Organizational Behavior Theory

The solutions proposed above are based on a combination of organizational behavior theories. These theories can be largely organized into two groups, and they will be discussed in the context of our case below:

Group 1: Resistance to change

Kurt Lewin’s three-step description of the Change process

Many researchers have contributed to the study of individuals’ resistance to large-scale corporation changes. According to O’Connor (1993), managing employee resistance is a significant challenge for the initiator of corporate changes, and is also the single most important aspect of the entire change process. The nature of such resistance is based on going from the known to the unknown (Coghlan 1993, Steinberg 1992) and individuals tend to have a built-in mechanism to resist changes. It is not, however, impossible for the collective resistance to soften or be neutralized. Kurt Lewin’s model describes a successful change taking place in just that manner.

Kurt Lewin observed that, successful changes requires unfreezing of the status quo, changing to a new state, and refreezing the new change to make it permanent. In our analysis, Kurt Lewin’s model best serve as a checkpoint for the progress. What should have happened in the change process should thus take place in three stages. Employees must first discard their traditional ways of handling customer orders. Then a change agent, be it internal or external, should come in and effect the necessary changes. After learning to use the new system, employees should familiarize themselves with the system and become productive with it.

Robbins three-step socialization model

In light of Phyllis and Barnes’s decision to hire more new workers, Robbin’s three-step socialization model could help the management team visualize how new workers should cope with the new process. In this adaptation model, the new worker would first establish a set of internal values and expectation from the company (the prearrival stage). Then he would challenge his expectations with reality (the encouter stage) and reconcile the differences. In the last stage, he would find solution to the problems he encountered and adapt to the company values (the metamorphosis stage). When designing training programs, the management team could put new workers on the right track by monitoring their development in each stage.

Group 2: Motivation Theories

Goal-setting theory and equity theory

The goal-setting theory is based on the observation that employees perform at a much higher level when given tasks that challenge their limits. On the contrary, if given mundane work or rountine activities, their level of motivation would fall and their productivity will decline way below what they are truly capable of. The implication of this theory is that, when teaching the employees how to adapt to the new business logic, emphasis must be placed on how much more they can accomplish with the new system. By showing them their productivity at work can improve beyond their traditional limits, the employees would feel that they are being challenged by the new business model. In the long term, their sense of accomplishment would rekindle and their motivation regained.

The equity theory is based on employee’s inner belief that their amount of contribution should commensurate with the rewards they deserve. If the rewards they receive is much less than their innermost expectation, they would negatively influence their motivation. When designing any reward program, therefore, the management team should request the employees explicitly state what would be fair rewards for them. Negotiation would be necessary to attain a sound and reasonable reward system.

Herzberg’s two-factor theory

The current loss of motivation among employees in Phyllis and Barnes can be explained by the “hygiene factors”, which are elements in the work environment that could degrade motivation. In our case, the existing chaotic business logic in the ordering system and the rapid changes in work requirements are regarded as the major hygiene factors. When deciding how to motivate employees, the management team can consider several typical “motivation factors”, which are elements that could boost employees’ motivation such as salary raise, bonus and other financial rewards, a new promotional scheme, increased medical benefits, etc.

Recommendations and Implementation Plan

After comparing the pros and cons of four different approaches, conducting the organizational development (OD) program is our key recommendation in this case analysis. Our reason is based on a belief that the most comprehensive and systematic solution is most effective at resolving organizational issues. Here we elaborate what techniques would be used to implement such an OD program.

Sensitivity training - A facilitator is present in a small group of employees, which would receive intense counseling on interpersonal communication. Special attention is paid to learning each individual’s perceptual filter. A perceptual filter is a set of internal rules each of us uses to interpret the external world, particular people we interact with. By understanding how the inner mechanism works, employees would find it easier to understand what other people mean. This kind of training would help the senior management team, middle management, and employees understand one another and eventually smoothen the change activities.
Team building – In this type of group exercise, trust and openness are promoted through high interaction among team members. Activities used most often in team building include goal setting, development of interpersonal relations among team members, and role analysis to clarify each member’s role. This type of exercise can even be extended to inter-group training.
Process consultation – The facilitator in this part of the program would provide on-the-spot counseling to managers and instruct them immediately how to express themselves better.
Organizational confrontation meeting – Managers from different functional teams are brought together to confront a specific issue. This type of cross-functional approach is best at solving problems whose root cause is hard to identify – such as the problem faced by Phyllis in Barnes in this case.

Conclusion

The drop in sales in Phyllis and Barnes was found to be caused by an outdated business workflow. By following the above recommendations, the Department of Operations can gather a set of comprehensive inputs from the employees and build an ordering system that would be welcomed by all the users. In the long run, the company will also benefit enormously from a restructuring of the organizational culture.