Metro Bank Marsha Brown was the new manager of a suburban office of Metro Bank. The branch office was experiencing low morale and lower productivity than expected. One of the difficulties was that the office served as an informal training center for young managers. New hires who needed experience as loan officers or assistant branch managers were assigned here for training. When they reached a certain level of competence, they were promoted out of the branch office. This practice was demoralizing to the less mobile tellers and other assistants, who felt exploited and saw no personal reward in "training their boss." After some checking with her boss and other people at corporate headquarters, Marsha concluded that it would be impossible to change this program. Her branch was one of those considered to be essential for executive development in Metro Bank. During her first few months on the job, Marsha got to know her employees quite well. She reviewed performance records and met with each employee in the branch to talk about the person's career aspirations. She learned that many of her employees were quite capable and could do much more than they were presently doing. However, they had never seen themselves as "going anywhere" in the organization. Marsha searched for a unique vision for the branch office that would integrate the needs of her employees with the objectives of the executive development program, and in the process better serve the bank's customers. She formulated the following strategic objective: "To be the branch that best develops managerial talent while still offering quality customer service." From this decision flowed a series of actions. First, Marsha declared that development opportunities for growth would be open to all, and she initiated a career development program for her employees. For those who wanted career advancement, she negotiated with the central training department for spaces in some of its programs. She persuaded the personnel department to inform her regularly about job openings that might interest her employees, including those not involved in the executive development program. Next, she built rewards into the appraisal system for employees who helped others learn, so that even those who did not aspire to advance would get some benefit from contributing to the new objective. To provide adequate backup in service functions, she instituted cross-training. Not only did this training provide a reserve of assistance when one function was experiencing peak workloads, it also contributed to a better understanding of the policies and procedures in other functions. Marsha also used developmental assignments with her own subordinate managers. She frequently had the assistant managers run staff meetings, represent the branch office at corporate meetings, or carry out some of her other managerial responsibilities. The changes made by Marsha resulted in major gains. By repeatedly stressing the strategic objectives in her words and actions, she gave the branch office a distinctive character. Employees felt increased pride and morale improved. Some of the old-timers acquired new aspirations and, after developing their skills, advanced into higher positions in the bank. Even those who remained at the branch office felt good about the advancement of others, because now they saw their role as crucial for individual and organizational success rather than as a thankless task. The new spirit carried over to the treatment of customers, and together with the increased competence provided by cross-training, it resulted in faster and better service to customers QUESTIONS: 1. Describe how Marsha utilized the four leadership roles (Visionary/Strategist, Organization Builder, Communicator/Motivator, and Decision Maker) after identifying the issues at Metro Bank. (10 points) 2. How did Marsha effectively utilize empowerment? Were these methods successful? Explain. (5 points) 3. What were some of the conflicts that existed at Metro Bank and how did Marsha help resolve these conflicts? (5 points) 4. Define employee engagement and provide details how Marsha took disengaged employees and made them engaged employees. (5 points) 5. Would you describe Marsha as a Charismatic Leader or Transformational Leader, or both? Support your answer with details from the case. (5 points) CASE 2 Turnaround at Nissan In 1999, Nissan was in a state of serious decline and had lost money in all but one of the previous eight years. Only Renault's willingness to assume part of Nissan's debt saved the Japanese company from going bankrupt. As part of the deal, the French auto maker appointed Carlos Ghosn to become Nissan's chief operating officer. However, there was widespread skepticism that the alliance between Renault and Nissan could succeed, or that someone who was not Japanese could provide effective leadership at Nissan. During the three months prior to assuming the position of COO at Nissan, Ghosn met with hundreds of people, including employees, union officials, suppliers, and customers, to learn more about the company and its strengths and weaknesses. From these meetings and earlier experiences with turnaround assignments, Ghosn understood that major changes would not be successful if they were dictated by him and the experts he brought with him from Renault. Soon after assuming his new position at Nissan in June 1999, Ghosn created nine cross-functional teams and gave them responsibility for determining what needed to be done to revive the company. Such teams had never been used before at Nissan, and it was unusual in a Japanese company to involve a broad cross-section of managers in determining major changes. The cross-functional teams examined different aspects of company operations to identify problems and recommend solutions to Ghosn and the executive committee. Several interrelated problems were identified, and they were mostly consistent with Ghosn's initial impressions. The poor financial performance at Nissan was a joint result of declining sales and excessive costs, and weak management was the primary reason for the failure to resolve these problems. Management lacked a coherent strategy, a strong profit orientation, and a clear focus on customers. There was little cooperation across functions, and there was no urgency about the need for major change. One reason for excessive costs at Nissan was that only half of the available capacity in the company's factories was being used; production capacity was sufficient to build almost a million more cars a year than the company could sell. To reduce costs, Ghosn decided to close five factories in Japan and eliminate more than 21,000 jobs, which was 14 percent of Nissan's global workforce. To simplify production operations at the remaining factories and make them more efficient, Ghosn planned to reduce the number of car platforms by half and the number of powertrain combinations by a third. Plant closings can undermine relations with employees, and Ghosn took steps to ensure that employees knew why they were necessary and who would be affected. In general, he understood that most employees prefer to learn what would happen to them and prepare for it, rather than remaining in a state of uncertainty and anxiety. Ghosn attempted to minimize adverse effects on employees by selling subsidiaries and using natural attrition, early retirements, and opportunities for part-time work at other company facilities. Purchasing costs represent 60 percent of the operating costs for an automaker, and Nissan was paying much more than necessary for the parts and supplies used to build its cars. After comparing expenses at Nissan and Renault, Ghosn discovered that Nissan's purchasing costs were 25 percent higher. One reason was the practice of purchasing small orders from many suppliers instead of larger orders from a smaller number of global sources. It would be necessary to reduce the number of suppliers, even though this action was unprecedented in a country where supplier relationships were considered sacrosanct. Higher purchasing costs were also a result of overly exacting specifications imposed on suppliers by Nissan engineers. The engineers who worked with the cross-functional team on purchasing initially defended their specifications, but when they finally realized that they were wrong, the team was able to achieve greater savings than expected. Excessive purchasing costs are not the type of problem that can be solved quickly, but after three years of persistent effort it was possible to achieve Ghosn's goal of a 20 percent reduction. Years of declining sales at Nissan were caused by a lack of customer appeal for most of the company's cars. When Ghosn made a detailed analysis of sales data he discovered that only 4 of the 43 different Nissan models had sufficient sales to be profitable. Final decisions about the design of new models were made by the head of engineering. Designers were taking orders from engineers who focused completely on performance, and there was little effort to determine what types of cars customers really wanted. To increase the customer appeal of Nissan vehicles, Ghosn hired the innovative designer Shiro Nakamura, who became another key leader in the turnaround effort. The designers would now have more authority over design decisions, and Ghosn encouraged them to be innovative rather than merely copying competitors. For the first time in over a decade, Nissan began coming up with cars that excited customers both in Japan and abroad. Ghosn planned to introduce 12 new models over a three-year period, but the time necessary to bring a new model into production meant that few would be available until 2002. Another reason for declining sales was Nissan's weak distribution network. In Japan strong brand loyalty is reinforced by efforts to maintain close relationships with customers, and it is essential for the dealerships to be managed by people who can build customer loyalty and convert it into repeat sales. In 1999, many Nissan dealerships in Japan were subsidiaries managed by Nissan executives nearing retirement, and they viewed their role more in social terms than as an entrepreneur responsible for helping the company to increase market share and profits. Ghosn reduced the number of company-owned dealerships (10 percent were closed or sold), and he took steps to improve management at the remaining dealerships. Saving Nissan would also require major changes in human resource practices, such as guaranteed lifetime employment and pay and promotion based on seniority. Transforming these strongly embedded aspects of the company culture without engendering resentment and demoralizing employees was perhaps the most difficult challenge. The changes would primarily affect nonunionized employees at Nissan, including the managers. A merit pay plan was established, and instead of being rewarded for seniority, employees were now expected to earn their promotions and salary increases through effective performance. Areas of accountability were sharply defined so that performance could be measured in relation to specific goals. New bonuses provided employees an opportunity to earn up to a third of their annual salary for effective performance, and hundreds of upper-level managers could also earn stock options. These and other changes in human resource practiceswould make it possible for Ghosn to gradually replace weak middle and upper-level managers with more competent successors. In October 1999, Ghosn announced the plan for revitalizing Nissan. He had been careful to avoid any earlier leaks about individual changes that would be criticized without understanding why they were necessary and how they fit into the overall plan. The announcement included a pledge that Ghosn and the executive committee would resign if Nissan failed to show a profit by the end of 2000. It was an impressive demonstration of his sincerity and commitment, and it made what he was asking of others seem more acceptable. Fortunately, the primary objectives of the change were all achieved on schedule, and by 2001 earnings were at a record high for the company. That year Ghosn was appointed as the chief executive officer at Nissan, and in 2005, he would become the CEO of Renault as well. QUESTIONS: 1. Detail how Ghosn demonstrated the three basic leadership competencies (Personal, Team and Operational) in his rehabilitation of Nissan. What leadership styles (or combination of styles) did Ghosn use at Nissan? (Charismatic, Transformational or Transactional) Support your answer with examples. (10 points) 2. Explain how Carlos Ghosn utilized participative management to drive change in the organization? In what ways did he show strategic leadership? Provide examples. (10 points) 3. What were some of the cross-cultural issues Ghosn faced in driving the new change initiatives? What changes would generate the most resistance from employees and why? What leadership methods were used to overcome this resistance?(10 points) 4. Utilizing Lewin's Three Step Organizational Planned Change Framework (Unfreeze, Movement, Refreeze) detail the change process at Nissan according to each step of the Lewin model. (10 points)