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MEMORANDUM

To: Bill Hunt, CEO Resonus Corporation From: Gator Consulting Date: May 17, 20XX Subject: Reducing Product Delays within Resonus Corporation

I. Introduction

Resonus Corporation is an international manufacturer and designer of hearing aids. Over the last three years, Resonus has experienced on several occasions product delays that resulted in missed deadlines for customer shipments. These have been attributed predominantly to the shortcomings of the Engineering Services Department (ESD) due to completeness of the manufacturing specifications for the production department, but research and production also contribute to filling each customer’s order on time. Figure 1 shows the organizational chart for Resonus Corporation and the directors that lead each department.

Figure 1: Organizational Chart for Resonus Corporation

We investigated the different functional groups within Resonus to understand each department’s role in the organization and determine the underlying cause of the production delays. We present our analysis in terms of the dependence model of power and influence at the director’s level, state the current consequences of the organizational structure, and conclude with our recommendations for improving communication and change management within the organization to support on time and consistent product delivery.

II. Power and Influence within the Executive Team

Our team began by applying the dependence model of power to each executive member within Resonus to understand current forms of influence and how each person accomplishes goals. Figure 2 illustrates the dependence model of power and highlights the asymmetric dependence of Doctor Kalandry on Director of Engineering, Frank Choy. We then identify each director’s sources of power and discussed the contingency factors that affect their ability to exercise that power.

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Figure 2: Dependence Model of Power

A. Director of Engineering, Frank Choy i. Sources of Power

We observed Frank Choy to hold all the “hard” sources of power of legitimate, reward, and coercive over Doctor Kalandry. As a new employee with no experience in the organization and very little industry experience, Frank holds none of the “soft” sources of expert and referent power.

ii. Contingencies of Power In his current role, Frank qualifies for three contingencies of power which puts him in an important role within the organization. He is the third person in his position in the last three years, where his two predecessors were either dismissed or quit. Frank is very substitutable and is seen as easily replaced in the organization. In addition, Frank has all the normal discretion of an executive director, but the company culture allows for very little conflict and as a new employee, it is understandable that Frank does not want to ruffle feathers within the organization. Finally, Frank and his Departments are very visible, especially to Production and Sales. Unfortunately, he receives more blame than credit for missed shipment and delivery dates.

B. Chief Executive Officer, Bill Hunt

i. Sources of Power

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As the Chief Executive officer, we observed Bill Hunt to have all the hard sources of power as well as referent power due to his position and history as the heir of the company from its infancy. He is entirely dependent on the assistance of his engineering team, however, which we found to create some conflict within the organization.

ii. Contingencies of Power Upon further analysis, we found the CEO to be the holder of centrality, since all decisions revolve around his role in the organization. Although he is distant from production the organization is dependent on his attitude towards work from delivery to research and development, and it is often his attitude that creates the laid back, non-confrontational company culture. Additionally, he has total discretion, which is evident by the overriding development effort four weeks before production. Hunt has the authority to make last minute calls on new technology development. Finally, as CEO of the organization he is highly visible.

C. Director of Research, “Doc” Kalandry i. Sources of Power

As Director of Research, Doc technically hold no hard sources of power, since he reports directly to Frank Choy. He does have all of the “soft” sources of power of expert and referent. Doc is openly praised by CEO Hunt as a “genius” for his accomplishments. In addition, he has referent power and charisma to inspire the CEO to action on an ambitious new product.

ii. Contingencies of Power We found Doc to be an influential role in the organization who carried an interesting analysis upon our review. Doc is believed to be not substitutable, to the point that he won’t let go of his designs once they move into production which causes communication break downs and causes bumps internally in the flow of the departments in the organization. Doc is centrally located in terms of betweenness. He spans relationships with the Research Department, Engineering, Production, and the CEO. He controls information connecting all three departments together. In addition, his previous work experience closely connects him to the CEO. Additionally, Doc has more discretion than other Engineering Department members do. So much more discretion, no permission is required from the Engineering Director Frank or any other director to propose product specification changes to CEO Hunt. Finally, Doc is very visible, since he’s highly praised publicly by the CEO. In addition, his long length at the company means many employees will default to his view over new engineering services directors.

D. Director of Production, Jacqui Blanc

i. Sources of Power

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She has the “hard” legitimate source of power, because she reports to the CEO and not to Choy. It’s hard to say whether she’s considered an expert but she does have Referent power because of her unearthing and correcting fraudulent activity with the two production managers and suppliers.

ii. Contingencies of Power We found Jacqui to be easily substitutable, not visible, and not very centrally located. However, she is able to use that as an excuse because she requires all the preceding information to be received before she can produce, so she uses that to her advantage to attribute schedule delays or production misses on the engineering information she’s received. She has discretion over production decisions. She has the ability to halt production due to manufacturing specification complexity or cost. In addition, she can change production priorities effecting delivery dates. She effectively made a decision that made two orders late.

We have incorporated all of the key organizational players into a table for review of employee sources and contingencies of power in Figure 3:

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Figure 3: Key Employee Sources and Contingencies of Power

III. Influence Tactics and the Presence of Organizational Politics

Figure 4 shows the idealized social network within Resonus and the information and communications flow. In this case, Frank Choy is empowered by bridging the structural hole between the technical departments and production group.

Figure 4: Intended Social Network of Resonus that reflects Frank Choy’s centrality.

However, the current informal communication and information flow in Resonus has “Doc” Kalandry as the centrally located individual. He controls vital information needed by all departments. In addition, he is over empowered by the CEO to introduce product specification changes late in development. Figure 4 shows the additional connection between Dr. Kalandry and Bill Hunt representing his ability to introduce modified product specifications. Last, he has a connection to Jacqui Blanc through his Research engineers that support her Production engineers. The connection bypasses the experienced Engineering Services technicians.

Sources of power and social connections translate into the ability to exert influence on others. With each of the director’s sources and contingencies of power having been discussed, we’ll look at the actual forms of influence present within the organization and the consequences for the production schedule.

• Upward Appeal – Doc’s relationship with the CEO allows him to feel he can go straight to Hunt to get product specification changes authorized.

• Information Control – Doc controls the information delivered to Hunt by only giving the optimistic viewpoint without detailing potential impacts.

• Coalition Formation – Blanc, Kalandry, and Hunt may have an informal coalition allowing each of them to attribute their production delays on ESD each time and their respective director instead identifying the core causes.

CEO: Bill Hunt

Director of Engineering: Frank Choy

Engineering Services (ESD) Department

Research and Development (R&D)

Department

Research Director: Doctor Kalandry

Director of Production: Jacqui Blanc

Director of Sales

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• Exchange – When the research engineers directly support the production team, there’s an implied reciprocal understanding that production will not attribute the problems their having on frequent product specification changes from the research team. Instead Production attributes delays on ESD’s manufacturing specification.

• Persuasive – Doc’s over-hyping appeal to Hunt on the merits of changing the hearing aid specifications represent a persuasive appeal to Hunt’s emotions and don’t fully reflect all of the consequences of adopting the new product specification.

Each of these forms of influence, while not necessarily negative, reflect the over- empowerment of the research department and contribute to the frequent product specification changes. Dr. Kalandry’s team is effectively unchecked in their ability to exercise discretion over what and how the product is made. A reason for the current power structure may be the need to keep Dr. Kalandry engaged and employed at Resonus. Allowing the Doctor creative authority to present ideas and drive the company’s product-line may be very profitable. Resonus needs to keep valuable members in the organization. However, the company must account for the cost of introducing his changes. While Dr. Kalandry may not be deliberately doing so, his elevated level of influence effectively represents a form of organizational politics because the frequent changes are not always in the best interest of the company, although they serve to reinforce Dr. Kalandry’s reputation as a “genius” and his indispensability to the organization.

IV. Past References

One of our previous clients, Rayonier Advanced Materials, represents a similar manufacturing organization that produces engineered products with technical specifications. They experienced similar problems in struggling to meet scheduled product shipment dates. However, they were successfully able to reduce late shipments by adopting controls for the manufacturing specification for producing new products.

The product development process begins with the research department identifying new product specifications that customers want within the market. The marketing and sales team communicate customer issues and requests to the research group. Next, the research department formalizes the product specification, the executive team approves the product specification, and they submit them to the manufacturing technical department. Then, the manufacturing technical department develops the required manufacturing specifications for the production team. Finally, production rigorously follows the manufacturing specifications.

Only the technical department is authorizes changes to the manufacturing specifications and controls the information exchange between research’s wishes and production’s actual capabilities. By strictly controlling this information exchange, the technical department minimizes specification changes to the production schedule by preventing introduction of extraneous or unfeasible products at the last minute. The executive team’s deliberate support and empowerment of the technical department ensure that the information exchange is controlled, and production stays focused on producing only appropriate products.

V. Recommendations

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We present the following recommendations based off our analysis and real-world Rayonier Advanced Materials example for improving communication and change management within the production process.

A. Frank Choy needs to be at a minimum present in all of Doc’s research presentations to Hunt to ensure pros, cons, and schedule impacts are considered. Either formally, where all proposed ideas can go to Hunt through Choy or informally through a discussed with Choy and Doc. If possible, all impacted Directors should attend. Production Director, Jacqui should be present at these meetings to speak for impacts to production in terms of cost or complexity. If the product specification changes occur frequently, they can hold a reoccurring meeting to assess impacts. If that’s too much of a time commitment, then a system for managing product specification change can be introduced to obtain engineering and production approval before being presented to Hunt for adoption or scheduling.

B. Empower Frank Choy. A clean break from attributing all delays on the ESD. Instead all schedule impacts need to have an investigation to determine the core causes for the production delay.

• Was it a sole decision from Production Director to change the schedule? • Was it the result of an incompatible manufacturing specification? • Was the result of a specification change where the specification wasn’t

received with enough time to update the manufacturing specification?

It may be a combination of them all. Diligently tracking these causes will ensure each director’s department can be accountable and corrective action taken.

VI. Conclusion

Resonus Corporation is a successful manufacturing company that produces sophisticated hearing aid products. However, in recent year’s customer delivery performance has shown inability to meet the required shipment dates for customer orders. Our analysis reveals engineering services may not be the core cause of delays. The engineering department does not currently have the powers in place to control manufacturing specification changes needed for the production department to maintain customer deliveries. These changes stem from an over empowerment of the research department and their ability to over-influence product decisions without fully reflecting the impact and time requirements for adopting the new specification. Based off our analysis and real world example we recommended placing a check and balance on these new specification changes, the directors can review proposed specification changes, assess impacts, and make realistic delivery commitments. Finally, we recommended that the company investigate schedule impacts going forward and find the core causes of production delay to correct them.