Management paper

MGMT 4420 F16 Course Project Guideline V. Setzer - Instructor

Business Case (Candlelight, Inc.) Business Overview

The Company

• Candlelight, Inc. is a specialty telecom components manufacturing business. The company is headquartered in Denver, Colorado with manufacturing and sales in North America, Europe and China. The company is publicly traded. The company is 35 years old. It grew significantly in the 70s, 80s, and mid 90s with new and innovative products, becoming the premier telecom components supplier globally. Since late 1997 the company has struggled to maintain market share, innovate in its product line, and retain talent. Several Senior Management Leadership changes have been made over the past ten years along with several major workforce reductions. Although the CEO has advocated the need for a collaborative approach across the company, the leadership style and approach has continued to be very autocratic (command and control). The younger generation of leaders and managers have been working to build a more collaborative approach, but haves been met with strong resistance from the more senior and longer-term leaders. In a relative short time the new CEO has determined that the company’s ability to attract, engage, and retain talent at all levels is clearly ineffective. He is very concerned that given the future strategic plan and opportunities that the company will not have the needed talent to compete effectively.

• Two months ago the Board of Directors made a decision to make a change in the CEO. As the new CEO has assumed his responsibilities he has made a few leadership changes, however, the very long service CHRO, who also is responsible for Legal, and Facilities Management continues in his role. The new CEO however has mandated that a new Talent Management Team be hired and put in place to develop a

MGMT 4420 F16 Course Project Guideline V. Setzer - Instructor

comprehensive Talent Management Strategic Plan to address the serious concern of talent acquisition, engagement, and retention. His mandate has been driven by his recent announcement of a new global partnership with a European company and a major acquisition in South America that will greatly accelerate sales and in turn the manufacturing demand.

The Organization

• The company has Manufacturing facilities in: o Boulder, Colorado o San Jose, California o Toledo, Ohio o Austin, Texas o Hong Kong, PRC o Manchester UK o Prague, CR o Madrid Spain

• It has Sales offices in: o London o Barcelona o Abu Dhabi o Denver o Toronto o New York City o Hong Kong

• The total workforce is approximately 8200 o 3200 in North America o 1900 in Europe o 1500 in UAE o 1600 in China

• The Senior Leadership Consists of several C Level leaders – the primary Leaders are: o CEO o COO o CFO o CHRO

• Comments about each of these leaders: o The COO recently hired a Senior Director of Marketing, and a Senior Director

of Sales. Both were brought in to help drive product innovation and increase sales and marketing efforts.

o The R&D VP (who reports to the CMO) is very creative, but has difficulty holding his people accountable and driving results. Turnover in his organization has been very high for the past several years. The new CMO is very driven and

MGMT 4420 F16 Course Project Guideline V. Setzer - Instructor

she works in a very collaborative way with her direct team and organization. She is known for encouraging her managers to provide coaching and feedback to their people. Her people view her style and approach as a refreshing change over the past.

o The CRHO has been in his position for 23 years and with company since the beginning. He is very well connected to two of the Board Members. He has a go along, get along approach and has a very difficult time making decisions. He has a legal background and has a “why you can’t” versus a “how you can” philosophy on almost all issues. That philosophy and approach has been reinforced by his board member supporters over the years. Turnover in his organization has never been good and in the last two years has been increasingly worse. His greatest weakness has been his inability to put in place and effectively lead an effective Talent Management strategy. Additionally he has consistently failed to effective put in place and lead a Labor Relations strategy. Work stoppage, slow downs, and a very high level of grievances and unfair labor practices has continued to negatively impact operational effectiveness across North America. Two of the four manufacturing facilities in NA are union organized, while the company has been successful in maintaining union free status in the other two. Implementing needed operational changes to increase productivity in all manufacturing facilities has been a key imperative, but strong union resistance to change in the union plants has greatly limited improvements in productivity and product quality. Accidents in all facilities are at an all time high and must be addressed. Cost to produce the product is the highest in the two NA Union plants, although productivity improvements are needed in all operations. The CHRO and his team appear to be very limited in their knowledge with international operations and employment practices.

o The COO has been with the company for 16 years in operations and was promoted to his position about 1 year ago. His style is very much that of command and control, but he does produce strong manufacturing results, although people generally do not like working in his organization. He is considered an industry expert in the manufacturing of the specialty telecom products. His expertise has clearly provided the company with competitive advantages in the past.

Organizational Strengths

• Financials – Although the company has gone through very difficult times in the past 10 years, it has managed to significantly reduce cost and maintain sufficient market share to remain financially sound. The recent new partnership agreement further supports the future viability of the company.

• Global Footprint - Candlelight has a strong global presence in all the major telecom markets

• Innovative CEO Leadership – The Board of Directors made a decision two months ago to hire and bring into the company a new very innovative CEO with a track record of results.

MGMT 4420 F16 Course Project Guideline V. Setzer - Instructor

• Product Credibility - The product line remains strong, however continued innovation is essential to meet the changing demands of the market place. Global Sales Explosion – With the new European Partnership, and South American acquisition, the global sales projections over the next 7 years are projected to quadruple the current level of sales.

Organizational Challenges

• Business Unit Acquisition – The Company is currently in the process of acquiring a key business unit from a competitor. The addition of the business unit will increase the company’s presence and market share in South America. The unit includes approximately 750 employees and a manufacturing facility.

• Depleted talent – Downsizings and a high level of turnover in recent years with limited hiring and replacements have significantly impacted the level of strong talent across the company. The areas hit the hardest are R&D, Operations, and Sales & Marketing.

• Employee Morale - Morale is considered to be very low, in fact according to the former CEO, it is the worst he had ever seen in his business career.

• Growth Projection – The industry growth projection for the next 10 years is very strong. The expanding markets in Asia and South America will place a great demand on telecom capabilities, which will provide significant growth opportunities for Candlelight, Inc.

• Human Resources Function – the Company’s HR function has continued to lose key talent over the last several years. A few replacements have generally been at the clerical/administration level. Competent HR leadership is greatly lacking and there has been no attention or effort made by the CHRO to make any changes. The HR people in place have operated in a very reactive and generally non-responsive way. The credibility of HR with leaders and employees is considered negative.

• Leadership Misalignment – the Company’s Senior Leadership has not functioned in an aligned and effective way in the last several years. The new CEO is fully aware of the leadership dysfunction and is working to make necessary changes with his Senior Team.

• Marketing – The Company has placed only limited investment in marketing it products during the past several years, which as contributed to limited market share growth.

• Public Image – The Company’s public image has been seriously tarnished in the last several years. Once viewed as a great place to work, the company is now viewed as a company with major problems, poor management, and significant risk.

• Resistance to change – The new CEO is challenged with resistance to change among some of his Senior Leadership team, as well as leaders down within the business. He continues to emphasize and communicate that significant change is essential in order for the company to survive, grow and become profitable.

• Talent acquisition, engagement, and retention have been managed in a decentralized and inconsistent manner across the various business units for the past 10 years. Generally the only attention has been to recruiting talent when critical openings occurred. Little or no attention to engagement and retention. The acquisition process could be described as weak at best and in some instances very poorly managed.

• Training and Development – With the emphasis on cost reduction and workforce reductions over the last several years, the company has not invested in training and

MGMT 4420 F16 Course Project Guideline V. Setzer - Instructor

development of its people – this lack of investment in developing people has contributed to the depletion of talent.

• Turnover – The rate of turnover has steady increased over the past five years in all NA and European operations. Turnover in China has remained low. In 2013 the NA turnover rate among the exempt workforce was 37% annually. Turnover in the manufacturing plants has averaged 18% in the last three years and this has happened during a downturn in the economy.

• Union Management Relations – Union/Management relations in North America is strained at best. The company was unable to negotiate a labor contract that expired in September of 2012, and after reaching impasse, took action to replace the workforce – this action resulted in a significant reaction by the union leadership and in turn violence and property damage occurred. After many months of discussion, the company and the union finally reached an agreement in May of 2013. The unionized plants are again producing product, but the union is extremely non cooperative and resistant to any operational changes. Union/Management relations in the European countries are very positive and historically relations have been good. The NA Union has attempted to organize the two union free plants without success. The Plant Managers in both non- union plants are very strong in their people leadership skills and have created strong positive work environments.

• CEO Request - The new CEO has made a request of the CHRO to hire an external consulting group of Talent Management Experts (your team) to build a Talent Management Strategic Plan and once approved by Senior Leadership that a team be put in place to implement that strategy. He has placed this as a very high priority and expects a comprehensive plan approved and the start of implementation within 60 days. His recent statement to the Senior Leadership team was, “if we don’t fix our talent situation immediately we will not have a business within 6 months”