Organisational Behaviour The Old Cleveland Confectionary Company Case study Written in 2010 Jack Jamieson Samantha Richards David Chan Paul Jamieson Naveed F. Zeffane The Old Cleveland Confectionary Company is a consumables manufacturing and distribution firm that produces and packages an assortment of sugar-based sweets and candy. The company's product range has expanded since its inception. In 1970, the confectionery factory was founded by 28 year old Jack Jamieson, and produced just six products; lollipops, fruit-gums, cotton-candy, bubble-gum, candy-canes and fruit-mints. By 2003, the company, commonly referred to simply as Old Cleveland, had grown considerably, producing 23 confectionery products, most of which are sold at supermarket outlets and gas stations throughout the US. The confectionery has long been regarded by consumers as good quality, made available at an affordable price, with colourful eye-catching packaging. The production and packaging has always occurred on site at the company's factory in the industrial precinct of Chester, Orange County, New York State. In 2006, the company had 163 full-time employees, including 140 factory workers, many of whom had been with the company for more than 15 years and considered the firm to be a great place to work. Employee loyalty was very strong, and had been built up over many years by Jack Jamieson who delighted in throwing generous staff parties at Easter and at Christmas on the sprawling lawns at his Colonial-style home overlooking Tomahawk Lake. All employees eagerly attended these functions along with their families, where corporate awards and prizes were handed out to acknowledge commitment, persistence, dedication and performance. Pony rides, a jumping castle and a Ferris wheel were regular features at these get-togethers, and magicians and clowns were often hired to provide additional entertainment. At Christmas, every employee received a substantial cash bonus, and the children of all employees received presents personally gift-wrapped by Jack's wife, Matha. Mr. Jamieson, now in his sixties, was greatly admired as the CEO and founding President of the Company. He was well known for his rousing speeches to employees, and for his warmth, inclusiveness and ease of manner at work and at company functions. In early December 2006, as the cold winter chill set in, and as the snow fell throughout New York, Mr. Jamieson became quite ill with pneumonia. He had just celebrated his 64th birthday. He received ongoing medical attention at St. Luke's Hospital for almost two months and was forced to stay in bed for a further 8 months in a bid to recover his health. He remained quite unwell for several years and never regained sufficient strength to return to work. On December 14th, 2006, Paul Jamieson returned to New York after a month-long holiday in Tahiti, and took over as CEO from his father. He had previously worked as a marketing executive at a large corporate advertising firm in Manhattan, and had recently completed his MBA at the State University of New York. He was 28 years old. Jack Jamieson had wanted his 36 year old daughter to step into the CEO role, but she had moved to London almost 2 years earlier and now had an established career and a family over there, and couldn't be persuaded to return permanently to the US at this time. Under Paul, there were 22 managers and professional specialists at The Old Cleveland Confectionary Co., located in executive offices across the car-park from the factory and warehouses in Chester, including 2 accountants, 3 general administrators, a marketing manager and 6 sales specialists, a team of 3 human resources professionals, an information technology expert, and 3 industrial engineers. Three senior executives reported directly to Paul; Naveed F. Zeffane – Director of Finance and Accounting; Samantha Richards – Head of Operations; and David Chan – Director of Packaging and Distribution. Both Samantha and David had separate glass-enclosed offices on the original factory floor, as did the three industrial engineers. All of them preferred to be close to the operations that they oversaw. At the time that Paul stepped into the role as CEO, the organisation had only recently expanded its production capacity by increasing its factory floor-space and installing new machinery and equipment. The new equipment had cost the company $32 million, but after some careful analysis, Jack Jamieson had considered this modernisation drive to be a worthwhile and timely investment at Old Cleveland. Production workers had been enormously encouraged by a promise from Jack Jamieson in October 2006 to introduce a profit-sharing scheme for all workers throughout the organisation. Over several months, they had dedicated themselves to the task of tooling up and assembling the new machinery, ironing out the bugs, and commencing operations to schedule. The entire workforce harnessed all their collective effort to ensure that the heavy investment in the new equipment resulted in higher productivity levels. Samantha, David, the engineers, the maintenance crew and the machine operators all put in many extra hours at the plant over several weeks and weekends. As a result, operations were running smoothly, and the new equipment was now fully operational. Paul Jamieson was impressed with all the energy and enthusiasm he saw around him, and in early February 2007, he decided to seize the opportunity to further boost the company's fortunes by introducing a brand new range of confectionery and other related products. He used external consultants from Manhattan to develop the range, and selected the ingredients personally from a number of cheaper interstate providers that he had located himself through an internet search one afternoon. Fudge, toffee, liquorice and Turkish delight were added to the Old Cleveland Confectionary Company's product range, along with caramel-covered popcorn and four flavours of potato chips; California Honey, Mexican Chilli, Texas Ranch and Hawaiian Pineapple. As Head of Operations, Samantha Richards was barely consulted about these new developments. The marketing manager at The Old Cleveland Confectionary Company was ignored altogether, and was never asked for his input concerning the viability of these new products. Paul seemed to spend all his time in meetings with the consultants and with Naveed F. Zeffane, the Director of Finance and Accounting. None of the sales specialists were included in any of these meetings. Once production of the new product range commenced, workers and equipment maintenance crew began to experience problems with several of the newly introduced ingredients, some of which became very sticky causing the recently purchased processing equipment to break down. When the consultants' bill finally arrived at the offices of Old Cleveland, Paul was a bit shocked by the high-end fees that had been charged for the advice, particularly since he felt that he himself had led the consultancy team and had provided most of the ideas himself. Nevertheless he calmed down when Naveed F. Zeffane reassured him that the company could well afford these fees, and that the quality of advice would result in much higher revenues over the next few years anyway. Paul and Naveed then decided to reduce expenses in other areas, and promptly directed the HR unit to issue a memorandum to all employees, notifying them that the profit–sharing arrangement announced by Jack Jamieson in October of the previous year, had been suspended indefinitely. With these projected savings in place, Paul then decided to embark upon a lavish refurbishment of the executive office suites. In April of 2007, he hired some expensive office design experts from up-town New York to give the Old Cleveland corporate headquarters a more up-market look and feel. Naveed took the opportunity to order a state-of-the art LCD wall-screen map of the world for his office, and Paul ordered the installation of iris recognition technology throughout the office precinct to limit access to the soon-to-be constructed dining facilities, gymnasium, solarium and executive bar. Upon completion, the bar area was an exact replica of the Oasis Bar at his favourite resort in Mauritius, complete with an indoor landscaped pool surrounding the bar itself. The corporate facelift ultimately cost the company just over $78 million. The Summer of 2007 Unfortunately for The Old Cleveland Confectionary Company, many of the new items that survived the troublesome production process failed to sell well and the products had to be heavily discounted. The range of potato chips was initially priced too highly and was unable to compete with the more established rival brands. Consumer surveys conducted many months later showed almost no interest in the new fudge, toffee and Turkish delight products that the consultants had suggested would be among the company's best-sellers. The cheap packaging on the caramel-covered popcorn repeatedly melted and stuck to the product, ruining batch after batch before Samantha finally intervened to halt production, despite vehement objections from Paul and Naveed. The factory's warehouse space became congested with excess stock and broken machinery, and the sales team fell under enormous pressure to find new outlets for unfamiliar products in a saturated and highly competitive consumables market. David Chan came under fire from Naveed for his inability to distribute the new products to supermarkets during the summer holiday season when the demand for confectionery and savoury snacks was at its peak. Workers continued to experience machinery problems as more of the new cheaper ingredients jammed the processors. Several divisions in the processing plant had to be shut down while operations specialists worked frantically to clean, re-fit and re-tune equipment. Samantha Richards was criticised by Paul for failing to maintain equipment and run operations smoothly. Samantha resented this criticism and openly rebuked Paul for his "lack of executive ability" and his "inexcusable failure" to understand operational complexities. Naveed F. Zeffane was angered by the waste in several areas of the plant, and frequently walked the floors shouting at the workers, urging them to pay attention to their equipment, and to do their jobs. Mr. Zeffane also criticised Samantha for the "undisciplined and out-dated roster system" at the factory, and chastised David Chan for his "total inability to coordinate his distribution efforts" with the firm's marketing manager. Samantha responded by ordering Mr. Zeffane off the factory floor and warned him to stop interfering in operational concerns which he knew absolutely nothing about. As Naveed walked across the parking lot approaching the newly refurbished executive offices, he heard Paul yelling uncontrollably at the sales team. The sales executives already felt a growing frustration at their repeated failure to find satisfactory outlets for the new range of products, and their stress levels mounted when Paul suggested sacking them all and hiring a new more capable team from his corporate connections in Manhattan. By November 2007, morale at the plant plummeted to an all-time low. The year before, in December 2006, for the first time in the company's history, there was no Christmas party at Tomahawk Lake, and no Christmas bonuses issued. By September of 2007 Samantha Richards had resigned as Head of Operations, citing her frustration with the serious strategic errors committed by Paul and the grossly negligent interference in the firm's operations by Naveed. Paul responded by appointing Mr. Zeffane to the position of Head of Operations, and stepped into the role of Director of Finance and Accounting himself, in addition to remaining in his position as CEO of Old Cleveland. Into the Vortex Against the economic backdrop of the Global Financial Crisis, Old Cleveland's revenues fell steadily. By the beginning of 2008, production had halved at the processing plant as errors and equipment failures continued to escalate. By the middle of 2009 profits had fallen by almost 70%. Quality control issues emerged for the first time in the production of some of the well-established, high-selling items; a situation which was exacerbated by Mr. Zeffane, who accused some of the workers of deliberately tampering with the equipment. Shortly after these accusations were made, defects occurred in the packaging and sealing process. David Chan felt the heat as Naveed turned his wrath upon the Director of Packaging and Distribution. David defended his actions by explaining that the defects were the result of the new less reliable synthesised plastics that were ordered by Paul in a bid to cut costs on packaging materials. The severe economic downturn throughout the United States meant that consumer demand for confectionery and related products had dipped noticeably between 2007 and 2009, adding to the company's internal woes. Paul Jamieson reacted in November 2009 by slashing the workforce by nearly 40%. The remaining factory workers decided that they had had enough. Several supervisors resigned in disgust, while those remaining called a stop-work meeting to discuss legal action against management for unfair dismissals, unprovoked coercion, bullying, and general negligence. A two-minute digital clip showing Mr. Zeffane pacing the factory floor ranting and cursing at several machine operators was produced by one of the workers who had filmed it on his cell-phone several months earlier. Law suits were filed, and the antagonism and resentment among the employees grew. Collectively the workers decided to join the Laborer's International Union of North America (LIUNA). Most had never been union members before, and there was no history of any union presence at Old Cleveland before this. Naveed became concerned by the open hostility towards him at the factory and went on stress leave in September 2009, after he found that black paint has been poured onto the windshield of his Ferrari. He resigned before Christmas to take up another position at a pet-food processing plant in Chicago. The factory shut down entirely for an extended period over Christmas 2009 and New Year 2010. Suspected acts of sabotage had ruined several of the large industrial vats where the confectionery was mixed, and production had ground to a halt. Estimated replacement costs for the damaged equipment ran into millions of dollars. Paul Jamieson sat at his desk in mid-January 2010, shortly after returning from a 2 week vacation in the Maldives. He wondering what had gone wrong at Old Cleveland. This was once a highly profitable enterprise, he remembered, with loyal employees and high morale. He decided it was time to call on some more expert advice – this time he emailed his older sister, Francine Jaeger, a 39 year old senior corporate turnaround consultant with McKinsey & Co., who had spent the last 5 years of her professional and married life in London. Just fifteen minutes after sending his email message, Paul's office phone rang . . . it was Francine on the line from her office in Piccadilly Circus. Francine Jaeger Questions: 1. What are the key problems evident in this organisation? 2. What recommendations would you make to Paul Jamieson in order to revive the fortunes of this organisation? 3. Develop an implementation plan to restore this organisation to a satisfactory operational level. Provide a timeline for suggested actions and initiatives. Please consider : For this assignment, you are required to develop an analysis of a case study, following the five step process introduced throughout this course. findings and recommendations relating to your designated case. 1. identifies the key issue or problem evident in your case study, and provides a reasoned justification for this. 2. identifies a range of sub-issues or problems (minimum of 6, maximum of 15) and explains why these issues are relevant and of concern. 3. indicates between 6 and 12 relevant theories, and explains how these theories relate to the case, and why they are relevant. 4. outlines a broad range of possible solutions or intervention strategies, and explains each one briefly (minimum of 4 possible solutions or intervention strategies, maximum of 6). 5. presents a succinct and focused preferred solution and brief implementation plan, along with a timeline - what you will do on day one, week one, over the first month, the first six months, the first year, for example.