In December 1995, Maureen Frye was given the mandate to device a mechanism that would improve the numbers of the salespeople selling extruded titanium alloyed products. However, although she has statistically modeled and proved her recommendation could bring incremental sales of~30%, “the recommended shifts in sales effort did not take place. The sales reps apparently did not acceptthe recommendations, and a great imbalance in sales effort still exists”. Frey’s situation is aggravated by two reasons: First, the fact that she was asked to have a deployment plan completed by March 30, 1996, so that it could be fully implemented before the following business plan. Second, the fact that she had failed on an earlier attempt to change the call patterns.
There are 3 mayor underlyingreasons that could explain Frey’s observed lack of success: Quaker’s organizational structure, employee’s perception towards Frey, incentives misalignment. The following paragraphs will outline the rationale behind each of these criteria and will surface the real underlying problem that Frey should tackle looking forward.
Quaker’s organizational structure
Quaker’s strategy had been tospecialize in high-margin, high quality metal alloys while providing customers with the best technical service and assistance available. This strategy is reinforced by the company’s practices and culture. Everyone in the company lives by its norms in an atmosphere of informality and friendliness, openness in discussing differences, influencing through persuasion rather than authority, leading by exampleand a deep commitment to quality and customer service. In addition, Quaker was organized along “fairly strict functional lines” operating under “responsibility lines”. Granting the fact that the structure above mentioned has inherent benefits, it carries two problems: lack of hierarchy and overlapping accountability.
The lack of hierarchy problem refers to the additional time and effort requiredto pass/implement an initiative across the company. The current organizational structure and the lack of formal authority implies higher transaction costs as it would require Frey to convince not only her boss (vertical), but also her peers/salesman (horizontal). She must build consensus bottoms up, instead of the top down approach. He problem associated with this mechanisms are longer lead times,less empowerment of the idea as it is extremely reliable on the person’s ability to push for it, among others.
The second problem is that Frey’s responsibilities (developing product strategy; making market and financial projections; provide product liaison with technical support services, manufacturing, R&D and controller’s office; provide marketing coordination with sale representatives; andheld accountable for product profitability and volume) were out of her control and relied upon the sale representatives performance and willingness to listen and execute her recommendations. She is evaluated based on something that she has little control on.
These two problems are summarized in the case when stated: I don’t have a direct autocratic control over the DSMs or their salespeople. Ido have a high degree of influence, but there is a certain amount of persuasion that has to be used, especially with some of them who are more concerned with their prerogatives at times than with getting the job done”.
Although these two problems post a relative challenging environment, there is little to be done about it, given the fact that these problems are rooted on the company’s culture andwe learn from the case that this is such an important piece of the company that it won’t be changed. Quaker’s culture is its differentiator, an indirect reason of why they charge a premium and have a privileged competitive stand. This is their personal seal. It is ratified by the fact that turnover among blue-collar and white-collar employees is a quarter of the industry average, and that labor...