Change Management-Walker and Walker.

Barger, Bonita

CASE DESCRIPTION

Change Management-Walker and Walker (W & W) is designed to be used in a Human Resource Management and/or Organizational Behavior class at the senior undergraduate level or entry MBA level, and has a difficulty level of 4/5. The purpose of the case is three-fold:

* to increase student awareness of the issues involved in managing organizational change;

* to raise issues relating to organizational design, culture, and interpersonal alliances in managing human capital;

* to provide comprehensive teaching notes and citations for educators to enhance discussion.

CASE SYNOPSIS

This case provides a realistic scenario encountered by senior management in managing organizational change from the old to the new economy. Walker and Walker is a Southern family owned manufacturing firm struggling to expand into a global marketplace. The tensions involved in organizational change are played out in multiple arenas. The student is challenged to analyze these arenas. The instructor is provided with extensive supporting literature to facilitate this analysis.

CASE STUDY-WALKER AND WALKER

GROUNDING

Walker and Walker (W & W) is a North American leader in the manufacturing of rail ballbearings. W&W, founded in 1950, has grown from a small, family owned business in Macon, Georgia, to a billion dollar operation servicing external customers world-wide. They have grown and thrived on a central tent: Service to customers by building the best technically advanced product in the marketplace. This tradition has deep roots.

BACKGROUND

W & W believed in people. It was started by the "Walker Brothers," John and James Walker. It was built on the labor of family and community members from Macon, Georgia. Everyone knew each other, pitched in, and helped when needed. There was no need for a union, as the Walkers "took care of their own." There were commonalities that bound the employees together. They were related by blood, religion, and generations of growing up in the same neighborhoods. They shared similar values, beliefs, and ways of working. They were "family," with strong father figures providing direction, security, and a good place to work.

With a strong market demand for their products, a focused and dedicated labor force ready to follow the orders of their founders, John and James, grew W & W from 100 to 1,000 employees working in two manufacturing units located in southern Georgia. W & W had changed remarkably over what appeared to be a long history but was, in fact, quite a short period of time. W & W increased its workforce, doubled its manufacturing facilities, tripled its customer base and profits. Sales were $900,000 by 1980. W & W appeared to be well positioned to enter the year 2005.

The early 1980s were difficult for W & W. With the untimely death of James Walker, the recession, and new competitors entering the marketplace, John and the Board were faced with the possibility of laying off part of its workforce. In this small town where loyalty to employee and employer were the givens of life, this had never occurred. A difficult decision had to be made. John made it. W & W decided not to lay off employees, rather start a large-scale cost reduction effort and decrease corporate and executive salaries. This strategy worked. The recession ended, demand for products and services started to "turn around." Now John Walker and the Board realized that it could not be "business as usual."

The external environment had changed, while the internal work environment of W & W appeared to stay the same. Externally, new customers were demanding products quicker, global competitors were entering the marketplace, technology advances in the manufacturingof ballbearings were rapidly changing, and government guidelines on affirmative action and other policies were requiring new approaches to old practices. Internally, the workforce appeared to be the same. Business was the same as usual. The rules were known. The power bases were established. The resources and access to them were there. The pathway to promotion and success had been charted by seniority, loyalty, and protection. "Do your job. Keep your head down. Your time will come for the next step up the ladder," was the unspoken emotional contractual agreement between the predominately male labor force.

John Walker knew things had to change for this young company that was quickly "growing up" and maturing in the marketplace if it wanted to reach the year 2005. What had worked in the past would still work today, but not tomorrow. He was growing tired. Silently, he acknowledged that the company had outgrown him. If it was to survive, a transfusion of new blood, vision, and direction were needed.

John Walker consulted with the elders in the Walker family and a trusted business associate from the Bank of Georgia. He received their counsel and made the second toughest decision of his life to step down and pass on the management of W & W to the next generation of leadership. But he did not see that leadership among the current ranks. He and Jack Walker had focused on building the business. Succession planning was not part of that plan. In looking at the line of executives under his charge, they were very much "like him"--Southern white males from Macon, Georgia, who grew and grew up in the business. They were unable to take W & W where it needed to go.

W & W conducted an extensive search for a new CEO, using an executive search firm. It was costly, but worth the results. Roger Pulley, a young, energetic white male with international experience from New York, was hired. In spite of his youth, he had extensive education and experience in the industry. The board of directors, Walker family, and particularly John Walker were pleased with the selection. Even the vice presidents of W & W appeared to accept the new CEO. There seemed to be few reservations as to the choice made.

Roger's entry into the organization was thoughtful, observant, and filled with insights. It was immediately apparent to all that Roger was an individual of vision and knowledge. What he lacked in relationship building skills, he made up for with an understanding of the future needs of the business.

After twelve months on the job, results of incremental changes in marketing and sales strategies were beginning to be seen in the bottom line. Employees' initial "questioning observations" were beginning to form into "trust statements" as bonuses increased in their paychecks. Roger recognized that these incremental changes were not sufficient to move W & W to the next plateau. From his 12-month analysis of the organization, he realized that the company was dated in technology and manufacturing capability. The workforce was homogenous with similar work-related behaviors. There was a deep cultural aversion to change. The human resource staff performed administrative functions. They did not have the staff who could create, foster, and facilitate change. Overall, the information, financial, and logistic functions were composed of insufficient systems, processes, and procedures to take W & W to a two billion dollar company playing in a global arena. How could he bring about significant change within the cultural without rupturing the bottom line?

FOREGROUND

Roger chose a multilevel approach: (1) replacement of two positions on his staff created by retirement (VP of Human Resources and Marketing); and (2) a change management strategy involving the formation of a new vision for W & W.

A new VP of Human Resources, Richard Green, and Marketing, Sara Ferguson, were hired. They, in conjunction with Roger and his staff, created a change management strategy.

A change management strategy took on the following activities:

* Creation and communication of a vision and mission statement for the company;

* Acquisitions of new companies and the formation of international joint ventures;

* Creation of succession planning for mid-level management and above, hiring 25% of open positions from outside the company to staff the new ventures;

* Hiring of a Human Resource Development professional to staff the Human Resource function. (The person was to work with the CEO and his staff to create a succession planning process, in addition to work with the training staff to design and implement training models.);

* Creation of training programs for the entire workforce on multi-culturalism, globalization, diversity, and ethics;

* Extensive training programs on multiple topics and above average salary raises to position all employees at the 55%tile for the work they performed.

The strategy was put in place. Roger presented the mission statement to small groups throughout the company and welcomed dialogue. The acquisitions and joint venture agreements had been signed. Employees were being trained in the vision and mission of W & W. A cultural change module highlighting empowerment and diversity were presented to all levels within the company. New employees were hired and placed in various parts of the company. These people were hired from outside of the traditional business environment. They had experience with international private and public organizations. They brought fresh new ideas. By some, they were perceived as a threat to the "way things always have been done at W & W." By others, they were seen as the "new hope for the future."

CASE GROUNDING

The Human Resource Development Director, Jo Anna Sam was one of those new people excited about the opportunity to work in business as a "change agent." Not quite sure what the charter of "change agent" meant, she spent the first six months doing a Human Resource analysis. The findings were clear. Human Resource practices and policies were selectively being applied. Based on these findings, she created and presented a succession planning proposal to Roger and Richard. They accepted the concepts and implementation strategy. It was communicated to the management staff who were not as accepting.

Opportunities existed in the new joint ventures that required the technical expertise and knowledge of W & W Vice Presidents to "get the business off the ground." In addition, new perspectives were needed from outside the company at the management levels to foster the new direction. Senior and mid-level managers would not move and take on functional or cross-functional work outside of Macon, Georgia. An impasse had occurred. Critical positions were vacant, requiring company expertise. Management would not relocate. The succession plan was intended to create a process for movement and relocation. What was not considered was the fundamental belief that employment security was an entitlement and rooted in the culture.

A critical incident had occurred. Roger had asked several staff members to take on new roles. They silently or overtly resisted. The final straw came when Roger asked Jake Crandal, a senior management team member, to take on a new position in a newly formed joint venture in Norway.Jake refused, stating that he would not "move to that freezer where they did not speak English, and, by the way, this whole stuff around succession planning was not the way to run a small family business like W & W." Roger was shocked and not willing to accept insubordination from his staff. Roger and Jake shared little in common. They did not like each other. A business, as well as a personality, conflict existed. Roger recognized this and called in Richard (the new VP of HR) to facilitate a series of meetings with the purpose of reaching agreement about Jake's next move. It was agreed that Jake would stay in his current role for two years but would then move to Norway once the new plant was built.

Although Jake agreed to move, he never intended to move. He had stated to one of the senior management team that "I'll not move my family to that forsaken place. They don't even speak English there." "I would rather fight than switch." Initially, the implications of this were unclear, but within several weeks, the impact of this statement began to unfold. About a month later, reports were coming back through senior management that the training programs were violating the religious beliefs of certain employees. Some of the concepts and principles were perceived as "New Age." It was reported that segments of the workforce believed that W & W was possessed by evil forces, and the devil was at work. Prayer sessions were being conducted for W & W in local community churches.

Jo Anna, the Human Resource Development Director, was an outsider. She had created the cultural change model and succession planning process. She was different. She did not know or understand what was occurring during these management sessions.

She continued to do her work--training the cultural change model. As she boarded a plane for England to present the model to their European operations, she phoned the office. My supervisor said that, "Jake is stating that you are training New Age ideas and trying to brainwash the company." She was silent. Her head was spinning. Her heart was beating and she could hear it throughout the phone. She was shocked, confused, and scared. She said, "What?? What is New Age? What is going on here?" He said, "You have become a target." She responded, "A target? What does that mean?" The only thing she could envision was a cartoon from Gary Larsen of a moose with a bulls eye. The caption read: "It's difficult to be born with this on your back."

She boarded the plane in shock and confusion. What she could not see at that moment was the impasse that had occurred between Roger and Jake and the management team, nor could she see that a culture that had been supportive, protective, and nurturing was transforming, not into the vision of a globally diverse customer-focused organization of the future, rather into splintered groups possessing either primitive fears of centuries ago or visions of futures yet to be lived.

Bonita Barger, Tennessee Technological University