The Wallace Group Case Study

The Wallace Group Case Study

Introduction

This paper will address the most important problems facing The Wallace Group. Recommendations to Harold Wallace, President and Chairman of the organization will be formulated, in an effort to begin the process of restructuring the company for development and growth. Finally, a description of how to educate a manager to manage an organization as it evolves over time from an entrepreneurial structure to a more complex structure will be discussed.

The Most Important Problem Facing the Wallace Group

The Wallace Group continues to operate as three independent companies...Plastics, Chemicals and Electronics. In addition, Harold Wallace serves as the Chairman and President of the Wallace Group and appears to be controlling all of the three entities. Mr. Wallace thinks the issues within the organization revolve around a personnel problem and how people are managed.

While his assumption is partially correct, there are other factors contributing to this problem. First of all, Mr. Wallace is not a well thought of individual. There are employees who want to see him fired. The top managers are not listening to each other in terms of the issues they are facing within their individual departments, and in turn Mr. Wallace has not listened to his managers and does not appear to take any of the employees seriously. The complaints from the Engineers lack validity in Harold Wallace's perception because of the potential contract for $56 million over the next five years with Lombard.

Most importantly, the company is not being managed for or open to change and growth. This is reflected in Wallace's dependency on defense-related contracts, in the financial highlights listed in the study for the last two years, and in the focus on cost concerns when ideas are presented for changes to the organization. Additionally, the organization lacks a human resources management structure and suffers from managers who have not been trained, poor recruitment and retention programs, inadequately defined hiring practices, insufficient union negotiating representation, and a number of other issues. There appears to be very little flexibility in the organizational strategy.

Recommendations to Mr. Wallace

The Wallace Group needs to have its organizational structure that is changed inside out to create an environment that will attract, motivate and retain top-quality employees. The plan for change should provide strong evidence that the change will make a very significant improvement in the company's competitive position. The recommended strategy for Mr. Wallace to achieve this goal is listed below in order of priority:

* Examine his personal management style, priorities, direction for the company, and future goals for growth and development.

* Conduct meetings at each level to get feedback regarding the concerns of the employees, their ideas, strengths and weaknesses and any other issues. This should begin with the VPs, then the Directors, and so forth for each department.

* Encourage a continuous flow for the exchange of information.

* Establish a mission statement, goals and objectives with input put from the VPs and Directors.

* Complete a strategic analysis and develop a strategic plan, to include everything from each area within the organization and any other external and internal issues.

* Define the company's existing structure. Is it functional, departmental or matrix?

* Does that structure work well, or does it need to be changed? Examine market reports and competitors' 10-k reports to determine:

1. Is the company's product and its marketing superior or inferior to that of competitors?

2. Is the production of the organization more or less cost-effective?

3. What competitive strengths and weaknesses can be identified in the existing system? How much of each is dependent on structure, and how much is dependent on procedures and policies, not structure?

* Involve the entire staff in every stage of the evaluation project. The lowest-level employees not only have a different perspective on the strengths and weaknesses of the present system, their team membership and support will make or break the present system, as well as any new one. The management-labor relationship is by far the most important element in the success or failure of any organizational structure.

* Utilize Rampar Associates to evaluate the strengths and weaknesses of the existing operation. The outsiders will have fewer reasons to pull punches than staff members that can be promoted or fired. Valuable criticism may come from specialized consultants, owners or board members other than the president or CEO, and even customers.

* Change and develop the personnel services department into a fully operational a HR department.

* Restructure the departments based upon the needs of the new organizational structure and the company goals.

Educating a Manager to Manage an Organization through its Evolution

Aside from educating a manager through formal training in managing an organization through change, there are many ongoing activities that will increase a manager's awareness and aid them in supporting a more complex organizational structure as it develops. A company's organizational structure is a road map of its communication patterns. A well-designed structure can also make it easier to identify inefficiencies and new problems as the organization grows. Reviewing the organizational structure on a regular basis will help ensure that the organization set up for optimal growth well into the future.

The biggest factor in any organizational structure is communication. In fact, that's really what an organizational structure is all about: creating formal paths of communication. Managers should think about how they want employees to communicate, and then create a structure that reinforces this vision. This can be achieved by answering the following questions:

* Does your organizational structure inhibit change and place the company at a competitive disadvantage?

* Should management consider changing it? If yes, how?

There is no single organizational structure that fits every company. Management has to