Declining Productivity in a Technically Oriented Service Company

Visible signs:

Morale in a technical department was low, as was productivity and creativity. Absentism was increasing.

The apparent cause:

The department head was not "inspiring and leading" the group effectively.

The actual root cause:

The interaction between three things:

• a gradual decline in the performance of the computer systems used by the group;
• a competitive, personality based split between two key technical team leaders, which forced others in the group to "take sides" on issues;
• the inability of the group leader to deal with all of these issues at the same time, and continue to make his personal contributions to the group's technical work

The fix:

3 concurrent actions:

• Direct negotiations with the outsourced IT service provider to improve the response time of the IT applications used by the group.
• Work with an external HR specialist to run a quick, effective 360° feedback program for the two team leaders which clarified the disruption caused by their personal styles, along with coaching to the department leader to carrying out the tough performance management sessions that used this feedback to address the issue;
• Personal coaching of the department leader to improve his own personal ability to delegate technical work, and improve his focus on managing the group.
  

Visible signs:

Customers were complaining about the decreasing quality of a product that they had been purchasing for years. Repeat sales were dropping steadily. New sales were impacted by negative references ont the Internet and in customer's reference networks.

The apparent cause:

The production line used to manufacture the equipment was older compared to industry standards.

The actual root cause:

Two sequential external changes which resulted in dramatically reduced quality on the production line, combined with an internal staffing issue.

• The external supplier responsible for maintaining the equipment on the production line had been sold to a larger conglomerate whose business priorities were focused on cost reduction. As a result, a number of its staff who were familiar with the production line and its older equipment were let go. The replacement staff had did not have the technical ability or experience to maintain the production line to the same standard as the previous individuals.
• An external supplier providing about 50% of the raw material for the production line has experienced severe business pressures, and was sourcing cheaper quality goods in an effort to decrease its supply costs and increase its profitability.
• The executive in charge of the production facility was used to working with external individuals with whom she had a long relationship and did not have the personal skills needed to confront appropriate individuals in either external company.

The fix:

• "Involuntary retirement" of the executive in charge of the production facility. A concurrent a "quiet search" for a new more appropriate individual to head the facility using local "networking" groups and the Linked In job boards.
• Collection of statistics on the poorer quality maintenance by the external supplier to confront and eventually terminate the maintenance contract. The new executive created an internal maintenance group headed by a former employee of the external supplier who had been terminated by them as part of their cost cutting.
• The new production executive led a supply bid process which replaced the raw material supplier with one who met material quality standards consistently.
  
  Once these efforts were well underway, the new production executive met with all of the sales and marketing staff to brief them completely on these issues. They then reached out to their customer contacts to explain what has been happening, and indicate the steps that had been taken to address the quality problem. This combined with a one time "special incentive sales program" slowly but steadily recouped the sales volume. Some part of this came from recapturing older customers. The rest came from effectively competing for new ones.

The external consultant was as an advisor during the quiet search. All other parts of the fix were handled by internal staff.

Declining Performance Reviews for a Senior Sales Leader

Visible signs:

Decreasing sales volumes, increasing turnover in the sales force, including defections of two long standing top sales performers to a competitor.

The apparent cause:

The sales leader was not doing his job effectively, after years of delivering consistently increasing sales.

The actual root cause:

• The sales leader was no longer motivated by his compensation scheme, given a dramatic change in his personal circumstances, following the departure of his children from "the next" and the subsequent breakdown of his marriage.
• New competitors has explicitly targeted the company's customers with products that were equivalent in quality and functionality, but cheaper in price.

The fix:

• Departure of the sales leader was negotiated through the mediation of the external consultant, who structured it in such a way that a new sales leader was found using network based recruiting while the existing sales leader was still in place. This individual took on the role while the current sales leader was still employed in a special project capacity, but had announced his departure date to set up a personal consulting business.
• The CEO imitated a special task force to address the competitive issues. Facilitated by the external consultant, this process not only addressed the price, quality and functionality issues of the existing products, but formulated plans for the development of a number of new, more competitive products.