Milk powder is the biggest export earner for New Zealand. It brings in billions of dollars each year, more than lamb, more than wool, and more than tourism. When you realise that milk powder mainly goes into the manufacture of baby formula, you can appreciate the magnitude of the market. The vast majority of that income is generated by one company, the giant co-operative “DairyCorp”.
Greg works for DairyCorp. His job is to negotiate sales contracts for the supply of milk powder to customers around the world. Greg is a master negotiator, even though he is officially tagged as a “marketer” in the “sales” section of the organisational structure. He was headhunted for the position from Australia.
DairyCorp also has large holdings in Australia, which makes it another genuinely Australasian company, and Greg spends time at home regularly.
Greg enjoys the cut and thrust of negotiating sales deals. As he waited in the airport lounge for his next flight to Taiwan to stitch up another billion-dollar deal, he thought back on his childhood, as he often did.
His parents would always give Greg rewards for doing well. If he got a good report card from school, they would buy him a treat. If his report card was not up to scratch, they would express their disappointment. When he was playing sport, his parents would always be enthusiastic about him winning, and would be visibly disappointed if he lost. Every win earned a treat. Every loss meant sad faces at the family dinner table. In his first year of high school, the reward for an extra “A” on the report card was a new bicycle at Christmas time. He got the A; he got the shiny new bicycle. One year, it was a new PlayStation, another a holiday at the Gold Coast with his friends. On the other hand, if he did not do so well at school his parents admonished him in no uncertain terms and reminded him of the sacrifices they had made to give him a good education. Family talks always revolved around expectations, obligations, rewards, or disappointment and regret.
His upbringing seemed to work. He usually did well at school. His science degree earned a high GPA, and a new car at graduation. His MBA was in the top half of the class, and he enjoyed marketing. The combination of science and marketing meant that he gravitated toward sales roles in food technology industries.
Now, as he waited in the airport lounge, Greg thought about his ageing parents who still lived in Sydney, a city he visited every month with work. Since his graduation he had grown steadily away from them. Now he saw them barely once a year.
As he reflected on his upbringing, he started thinking about the parallels with problems he was having with some staff. Greg had six subordinates in New Zealand but worked closely with many others in production at various sites around the country, as well as in sibling operations in Australia. He just could not get the extra effort from them that he wanted. Greg found he was doing their work more than he should. He had to keep looking over their shoulders to ensure that the details of supply contracts were finalised. Because of this, he found he could not implement the innovations he wanted.
Greg was on an individual employment contract, as were his subordinates. Four of them were existing employees, and he had recruited two others. They all seemed to pose the same problems for him.
Greg kept emphasising the expectations that their employment contracts placed on them. He kept identifying the areas in which they were deficient, and reiterating the need to rectify those shortcomings. But every time they took remedial action, they checked the details with him first. They just never seemed to learn.
They kept going back to the employment contract to see what they should do, because their contracts were specific in requiring them to adhere to standard procedures for consulting with production engineering, with the international office, and getting sign-off from the international product manager for all supply contracts.
They were always going to the manual to find out how to put together the contracts for clients, even though each client had cultural idiosyncrasies that meant there was really no one standard format for putting together contracts. They all knew how to individualise the supply contracts, but for some reason they waited until Greg pointed out the details that had to be added, or asked his permission to do it. There was active resistance to adopting new criteria for determining the appropriate supply of product to clients.
Bonus and commission
Greg had an uneasy sense that they would do only the minimum that they had to do and were loath to undertake any tasks at their own discretion, unless there was some bonus in it for them. Therefore, Greg was always having to do things himself or they simply did not get done.
DairyCorp seemed to be run on bonuses, commissions and contracts. Since the economic and political reforms of the 1980s and 1990s, this format seemed to be endemic in New Zealand.
The bonus system was individual-based, so the staff were encouraged to maintain confidentiality about the details of their deals. Sometimes, staff actually hindered the sharing of information that would help another colleague to put together a better supply contract. Greg was sick and tired of reminding them of the benefits that would accrue to the organisation of helping each other with their supply contracts. As much as he wanted them to expedite contracts and speed up the relationship with clients, they kept asking production engineers for their approval on details, rather than merely advising them of the details. When Greg pestered them for quick turnaround, they would come back with a reminder that one other time when they bypassed those channels, they were soundly ticked off by the production people for not getting their imprimatur for the supply contract.
The staff were always complaining that they had to fill out requisitions and applications to justify the receipt of new equipment they needed or to get permission to alter standard conditions on supply contracts. Greg kept reminding them that he was the one who had to “front up” to the customers, so he had to check the details, and moreover that each innovation had to pay for itself.
As a result, he could not trust them to do what was right. They always wanted to get permission beforehand. They seemed to be motivated by self-interest rather than the good of the company. They did not look for ways of improving operations; they just wanted to adhere to tried and true methods. In fact, the whole company seemed to be dogged by competition rather than co-operation between engineering, marketing, sales, and milk supply.
Greg was feeling uneasy. The performance of his product and client portfolio was not improving. He was always tired when meeting customers. His health was getting worse. He was getting short with his wife and children. His main internal competitor, a woman who managed the European clientele, was registering ever-improving budgets. He was a worried man.
Why is Greg finding it so difficult to break old habits and make the changes needed? What should he now do to rectify this worsening situation? Why will he find this difficult? What needs to change in the company?
PROPOSED SOLUTION #1
SHARYN SHERRINGTON is the Northern Territory State Manager for Corporate Express Australia, a supplier of office and computer products to business.
She previously owned and operated her own office-products company, Modern Office Design & Equipment (MODE), for 25 years before selling to Corporate Express five years ago. Sharyn now manages a team of 52 people in Darwin and Alice Springs.
She is a Fellow of AIM.
Greg is important to the organisation. His skills lie in sales and he was probably headhunted for this reason rather than his management experience, there being no indication that he has had any such experience.
Not only does Greg have six subordinates reporting to him, he has to obtain co-operation from production staff in several other sites in New Zealand and Australia. He is having difficulty getting everybody’s co-operation. This problem is typical of people who are elevated to management positions without the necessary skills to manage and lead people. Greg has been brought up in an environment of being rewarded for his success and admonished when underperforming, and he has carried this transactional style of management through into the workplace.
He does not seem to have been exposed to the encouragement of motivation or working in a successful team environment and consequently does not have the experience to get his group working together as a team. Greg’s type of personality will usually be demanding of results rather than concentrating on working with others to gain co-operation.
He must seek assistance but this will be difficult for him because he has always just “got on and done it”. He knows things are not working efficiently, he is working harder but things are not improving, and this causes him to feel frustrated and stressed.
The company’s management style seems to have a transactional/contractual basis, and Greg needs to break this mould by developing some leadership in his team. He probably feels he cannot share these concerns with his immediate manager. DairyCorp does not seem to have any reporting structure in place that encourages managers to openly discuss and solve problems.
Greg’s team members are encountering problems dealing with production. If he could solve these problems for them he could gain their confidence and make them receptive to other changes that he may want to make. Greg could consult with his female counterpart and find out whether she has the same problems with production that he has. He will probably find that she gets a good level of co-operation from production. Greg can then adopt her model and introduce it to his team.
Once he has gained the confidence of team members, this will open the door to introduce discussion on other things that can be improved.
There are several steps that Greg can take to get his people working as a team rather than as individuals:
- Introduce regular meetings for team members to freely discuss current projects. This move will open up the lines of communication.
- Involve the entire team each time he is negotiating a new contract. He should seek input from the group and perhaps appoint a team leader and two or three other people to work on putting the contract together. This would allow each member of his team to share team-leader responsibility from time to time and give all members a sense of ownership.
- Empower his group by introducing a process to allow them to report back to him to obtain his input and final sign-off.
- Introduce a bonus and incentive scheme based on team results rather than individual performance.
- Give his people responsibility for being the internal liaison with the client, thereby providing them with a greater sense of ownership and achievement.
DairyCorp seems to lack the leadership that encourages a team environment. If Greg cannot solve his problems, the company risks losing a manager who contributes a large percentage of its income.
Like Greg, the company has to bring all sections together to introduce a shared vision or revisit their existing vision statement. All departmental heads need to know they are each working towards the same goals.
Planning regular management meetings for departmental heads to review and develop strategies and performance will identify problem areas that can be rectified quickly.
The company does not seem to have any succession plans. It urgently needs to devise and introduce a management structure that ensures continuing success in the event of losing key personnel.
Leadership must permeate from the top down: the company needs to develop a management style and remuneration packages that will encourage total team performance rather than individual task management.
Creating an environment that will allow people to progress through the organisation will provide greater satisfaction for employees and will further promote team effort.
PROPOSED SOLUTION #2
Derek Andrews had 17 years as chief executive of manufacturing, importing and distribution businesses at the Ports Corporation of Queensland. He is federal president of the Institute of Industrial Engineers and convenor of the International Bulk Panel of the International Cargo-Handling Co-ordination Association (ICHCA). His contract work during retirement has involved developing management capabilities for six manufacturing and distribution business units.
He is a Fellow of AICD, a member of the Institute of Industrial Engineers and a Fellow of AIM.
Greg’s worry about his performance is highlighted by concern about his internal competitor’s success and is magnified by the way his management style affects the people who are able to contribute to his improved performance.
It is possible that the way he manages magnifies the opportunities for success when things are going well, but also magnifies the down side when the going gets tough.
Greg needs to realise that he is at a decisive point in his career. He may not make it as a manager unless he changes although, either way, he will probably remain a competent negotiator and an effective deal maker, and will probably be successful in the pursuit of sales.
Unless Greg changes his behavior and his relationships with people, he will remain unable to succeed at tasks that involve the management of others. This will probably limit the value of his contribution to any organisation to what he can achieve on his own.
One hopes that Greg will work on his worries rather than sink into them.
The evidence indicates that Greg is ready to accept that changes are necessary. But he needs to realise that he has to change his own values, beliefs and behavior. It is possible that someone could guide him to this realisation, but he must come to believe it for himself. It is difficult to accept that you must change. It is even more difficult to bring that change about.
If Greg resolves this central problem, a wide range of possibilities will open up:
- He can ask for help; from his boss, the people he works with, the people who work for him, or a mentor. He should realise that the success of his internal competitor does not preclude him from being successful too. He should consider asking her for help.
- He should introduce his own strengths into the human dynamics. If he moves away from the “command and control” model of transactions, he can negotiate plans and outcomes with the people he works with. He can probably “sell” them a shared course of action so that people buy the objective and strive for it without needing to be kept under close supervision.
- Greg needs to understand that leadership by example is a powerful force. Part of the problem may be that the people working for him are, in part, following his example and behaving as he does. If he is to make his team more effective, the key human dynamic is what Greg actually does.
- Greg needs to seek information about leadership, management and human dynamics. Based on the examination of that information, Greg should work out a new set of values that he believes in, and that are relevant to his situation. He will need to share these values with others and to act on them. He will also need to augment his management skills based on his own dispassionate assessment of his new management needs.
Greg’s crisis is actually an opportunity for him to become an effective manager. He needs to make a transformational change in his “owned” segment of the organisation. To do that, he needs to transform himself. When it is successful, it is called “experience” and “character building”.
Greg seems to be smart enough and determined enough to follow through and change himself. Later, after he has been successful, he may realise that he will need to make the same kind of change a number of times through his career. He may also realise that this kind of change does not have to be triggered by crisis. But that is probably an entirely different case study.