The case explores the challenges of managing a large-scale organizational change at Simmons, an old and established company that manufactures and distributes mattresses. The new CEO, Charlie Eitel, hired to turn the organization’s performance around, considers whether to implement an untraditional training program that includes outdoor experiential team-building activities as a central element of his change strategy. It gives us opportunity to consider the decision of investing in the expensive training program following the loss of the three largest customers — retailers that together had contributed a third of Simmons’ revenues. One central theme is the role of leadership in engaging and motivating employees to implement changes that improve product quality and operational efficiency and cost.
The Company and its new leadership:
Simmons Inc is a 130 year old mattress manufacturing company based in Atlanta. The company has changed many hands since it was founded in 1870 by Zalmon Gilbert Simmons. The recent acquirers Fenway Partners have appointed Charlie Eitel has been appointed the CEO of the company as he has the track record of turning companies around. Charlie has brought about a number of changes in the organization since he has assumed office. His endeavor is to making the companies a place were people like to work and with whom customers like to deal with.
What changes are brought by Charlie Eitel and how his leadership has affected the company during the first six months as CEO?
Heading into 2002 what should be the management team’s top priorities?
Should Simmons roll out the GGOL program? If so, how, and how would you justify the $7.2 million investment to Fenway Partners?
What approach should Charlie Eitel take to bring about change in the organization: conventional or unconventional?
Simmons Culture and Values:
The Company had established a core set of values since its inception which were:
1. Using history of the company to learn from and inform future decisions
2. Maximizing the opportunities to think creatively about how to solve business problems
3. Embracing innovation
4. Keeping customers needs at the top of the priority list
5. Caring about the associates
6. Empowering people within certain boundaries
7. Supporting one another
These values have been coined as the acronym CHOICES. The last three set of values have been added on by Charlie to build employee morale and to foster the spirit of teambuilding among the employees. The “code of ethics” at Simmons focused heavily on fairness, respect, integrity and fostering growth and development in others. Charlie also added the leadership vision which focused on leadership as team’s obligations and responsibilities to themselves and other constituents. Finally Simmons workforce vision was a statement about associates right and responsibilities. All these things were aimed at creating and maintaining operational excellence.
The organization was plagued by its culture of dictatorship where there was no sense of team accountability. None of the 18 units were integrated; in fact, even in times of crises, the units did not lend support to bolster the one another. Considering the situation where the company has faced a major loss in terms of three of its best clients and inventory loss due to poor quality foam, it is all the more necessary to salvage the company by injecting a motivating team spirit amongst the employees. The employees lack team spirit, people skills, communication skills (both at a horizontal as well as vertical level), and good leaders. This deficit is required to be addressed and the primary objective should be to determine whether the benefits of implementing a culture change program that will offset the huge capital expenditure involved.
As we look into the problems that prevail in the organization the content has to be such that it focuses on team building skills, reducing power distance, augment motivation among employees and uniting various units that are competing instead of working in collaboration. Various components to achieve this objective could be Outbound Activity, Inspirational movie, Management Games, Motivational lecture to encourage change.
At this point the company needs some changes to survive the financial crisis prevailed in the US economy. In this regard, Eitel was expecting to bring about a cultural and structural change in the organization to encounter the same, as there was internal competition started among its plants.
The Great Game of Life (GGOL) was the step taken in this regard. The GGOL was a program that was designed to encourage team work and enhance team performance. Teams were made to perform tasks that would have individually, so far, been impossible to do. The purpose was to reiterate the virtues of interdependence, coordination and coexistence. Tasks that seemed daunting were made simple by team work and encouragement. The employees were motivated by these experiences and extend it to their work as well. The purpose was to enhance inter-team and intra-team interaction in order to facilitate improved customer satisfaction. It was more like a team-training exercise that aimed at developing interpersonal skills and cohesion and thus aimed more at group processes than content tasks. The process was thus targeted to provide development to the employees than just training.
However, this approach faced stiff resistance since its implementation because of completely revamping the company’s dictatorial form. Further, several plant managers resigned since they did not wish to participate in the program. Also, Eitel knew that it would be extremely difficult to convince Fenway partners that the company wanted to incur a $7.2 million expense over three years in order to implement the training program.
It was finally decided to initiate the process at the Charlotte plant- infamous for its poor culture and dictatorial practices. Thus, GGOL was implemented at the senior leadership level of the plant at the end of 2000 with its successful reception by plant manager Bill Wagner, and his team continued rolling it out to the rest of the employees. It brought about positive changes in the middle management’s outlook and was thus perceived as a fruitful change- trusting, openness among employee and productive working milieu. Also, this program helped in developing team culture which was missing and necessary in present situation.
At middle level, the program inspired workers to work together as team and be united towards a common goal. However maximum resistance is expected at this level as the changes brought by GGOL will be maximum. People at this level are working for a very long time and they have embedded values which will be difficult to change all of a sudden.
The way ahead:
The training programs at Simmons have been very successful as we can see from its success at the Charlotte plant. Not only was there an increase in employee motivation but also an overall improvement in plants productivity. The Charlotte plant won the Plant of the year for its progress. Eitel needs to explain the benefits of training and development to Fenway Partners particularly when the economy is in recession, since at the time of recession there is low turnover hence the trained people won’t leave the company. It has been seen that the companies who invest more in the times of recession are the ones who gain more when the economy takes an upturn.