Case Study Slastyona Confectionary

Case Study Slastyona Confectionary

CASE ANALYSIS 14

Underlying business issue

The fundamental business issue concerns the implementation of a paysystem, which will provide needed support to Slastyona’s businessapproach of aggressive development. In addition, the payment systemmust be one that makes it possible to attract, retain as well asencourage Slastyona’s personnel that are high performers, despiteworking in a difficult and changing business environment. In orderfor the company to put into action a business approach that willfacilitate Slastyona’s business approach of rapid development, itmust make changes to Factory A (McGuire, 2008).

Slastyona anticipates to make Factory A their flagship manufacturinglocation in Russia, as well as other global areas. This would mandatealterations in the benefits and compensation policies currently inuse. The pay and associated human resource policies must put intoconsideration the objective of creating a high-tech flagship forFactory A. Despite the need to manage payment properly, theunderlying problem entails preparing the flagship factory. Thisrefers to staffing, system and organization policy alterations. Twomajor restrictions impede the changes to Factory A. These are theflux in the nation environment, labor market and absence ofinformation concerning what human resource guidelines will perfectlysupport the advent technology. The restriction makes planningcomplex.

The other barrier to change is the lack of vision, support as well asthe fact that Factory A’s manager, Wilton Winchester resists theproposed change. There is a bleak possibility for success for anychange program in Factory A owing to lack of support fromWinchester’s support and leadership. Winchester is somewhatuncooperative, shortsighted and opposes the planned factory changes.Generally, while it is necessary to manage pay, the underlying issueinvolves preparing a flagship factory. This calls for visionaryleadership, alterations to staffing, structure and new managementguiding principles.

Change needed

There are numerous drivers of change in an organization, based onthe relationship amid a company and its setting. These includechanges in competitors, globalization and acquisition threats(Malopinsky &amp Osman, 2006). Currently, organizations are underimmense pressure to perform despite operating in greatly unstablepolitical, economic as well as social settings. Advancingtechnological growth, increasingly expensive natural resources, therise of new global financial spheres, and a population that is agingare amid the aspects that result in process innovation andorganizational changes (Malopinsky &amp Osman, 2006). Althoughchanges in the business environment result in advent businessopportunities for companies, risk also emerge. Thus, organizationshave to react fast to change in order to continue being competitive,which explains the need for change at Slastyona.

According to Malopinsky and Osman (2006), organizational changedepends on the level, mode and control of change. Level of change –it is either transformational or incremental. Transformational changederives from a major change in an organization’s strategy involvingmission and vision, fundamental ideals and transformation of the maincomponents of an organization. Incremental change results in theintroducing of advent technology, products and procedures. Itstrategically evaluates new directions without basic changes in thestructure or culture of an organization. Progressive processdevelopment via incremental change is a vital capability of companiesoperating in a competitive environment.

Mode of change – it is either reactive or proactive. Reactivechange happens when an organization is responding to advent strategicinitiatives of competing firms, changes in customer demands, or whendealing with internal needs for transformation because of a crisis.Proactive change occurs due to the need for product and processdevelopments. Change agents seek opportunities to enhance theperformance of an organization and come up with needs amidorganizational members. Proactive change also happens when there areno apparent and instant threats from external and internalsurroundings (Malopinsky &amp Osman, 2006).

Control of change – it is either planned or unplanned. Plannedchange derives from the concentration of efforts to change agents,individuals that lead and provide backing to change processes. Itderives from the evaluation of performance differences,inconsistencies amid the real and desired organizational procedures,in addition to the behaviors of members in an organization.Performance evaluation gaps depict either issues that need instantaddress or opportunities to explore. Performance analysis specialistsdeal with planned change procedures for the objective ofsystematically enhancing company effectiveness and performance of anorganization’s members (Malopinsky &amp Osman, 2006). Contrary,unplanned change happens unexpectedly. Any organization thatencounters unplanned change must act fast towards reducing negativeaftermaths, while increasing any possible gains.

In reference to the case study, the type of change needed atSlastyona is incremental and planned change. Slastyona’s businessstrategy is that of rapid development. The company has four factoriesoperating in Russia and has plans to open a fifth factory. Slastyonafunctions in an unstable environment, where there are limited numbersof professionals as well as managers. The company realized the needto amend its compensation guidelines to continue being competitive(McGuire, 2008). Hence, to draw and retain the much-needed competentpersonnel, and bearing in mind the anticipated prospect growth,incremental change is required. At the company level, incrementalchange will apply when making changes to the compensation policies.

At Factory A, the type of change needed is planned, which means thatthere is a need for a visionary leader to ensure that the changebecomes successful. Information from the case demonstrates the needfor proper planning to make Factory A the flagship factory asenvisioned by Slastyona’s management (McGuire, 2008). Plannedchange in this case refers to examination of the strategy,questioning the existing values, cultures and behavior expectationsof the members in the organization. It is apparent that communistworking policies progress to be in use in Factory A. This is acomplete contrast from the cultural practices in use at INTERCHOC.Changing the attitudes and conducts of individuals is ratherdifficult and mandates a lot of time as well as patience. It isespecially applicable in Russia, which is a nation that has beengoverned by communists for numerous years and initiated practices andbeliefs that progress to be deeply entrenched in the minds and valuesof people.

As a result, any changes implemented in Factory A cannot take placeovernight. Considerable endeavors must be implemented in form oftraining programs. Successful planned change calls for enthusiasm,energy and visionary leadership. The leader ought to be one that hasa long-term vision and is capable creating teams and involvingindividuals. Planning will have to begin with ensuring that theleaders support the proposed changes. Planned change is the outcomeof focused endeavors of the change agents, who are the individualsthat direct and back change procedures. For instance, WiltonWinchester is a major barrier to change in the factory. This isbecause he lacks the needed traits to lead in making strategicchanges in the company. He lacks interest in planning for the futureof the company and his concern rests on the production of chocolates.Winchester has a narrow focus and is unaware of the challenges thefactory will encounter, unless thoughtful changes happen.

Culture and compensation policies

The case provides Hofstede’s analysis of Russia’s culture. Theculture comprises of high power distance, uncertainty avoidance ishigh, and there is individualism and masculinity as well asshort-term orientation. Power distance refers to the extreme towhich people that have less power in an organization accept andanticipate unfair power distribution. Individualism is the extreme towhich persons are incorporated in groups. Personal ties are loose, aspeople look out for themselves (Hofstede, 2001).

In a highly masculine society, there are differences between thevalues supported by men and women. Additionally, in a masculinesociety, there is high assertiveness and competition. Uncertaintyavoidance refers to the level of a society to tolerate uncertaintyand ambiguity. It mirrors the extreme to which a culture positionsits members to become comfortable or uncomfortable in unstructuredcircumstances. Short-term orientation links to association withcultures that range from respecting traditions and gratifying socialcommitments (Hofstede, 2001).

Managers and other professionals in Russia are scarce. Hence, thepositions are highly competitive, which explains the high powerdistance. In order to progress with the changes the company intendedto make, it ought to ensure that it has the right personnel, and alsoretains them. Russia is highly capitalistic, and for Slastyona tocompete, its compensation policy had to continue to be competitive atdifferent work levels. As a result, the power distance betweenmanagers and professionals is high when compared to relations withother personnel.

The case demonstrates that Russia has a changing market. Uncertaintyavoidance is high because it is not possible to plan past two tothree years. Russia is a highly competitive market, which explainsits high masculinity. There are other companies operating in the samemarket and competing for the same professionals and managers.Communist working practices progress to be in use among employees inRussia, which explains their short-term orientation.

The consultants employ a traditional job-based strategy, whichresembles the systems employed by shareholders. Such a strategy suitsSlastyona’s circumstances as well as the Russian culture. Thecompensation structure that was suggested is consistent and can besimply updated in the diverse regions as well as pay markets inRussia. Nevertheless, there is need for extra changes that will becrucial in supporting Factory A’s rapid development. These changesinclude the rewards for skill growth, which impacts new hires anddeals with the re-training of current employees on how to handle newequipment.

President’s ability

The president is highly capable of leading change in the company. Hehas a long term vision, is motivated and does not depict deficiencyin emotional intelligence capability. Walker has a long term visionfor the company, which is demonstrated by his reaction to thefeedback provided by consultants. The case notes that he listensalertly as the consultants make their presentation, specifically therecommendations suggested. Walker thoughtfully evaluates how therecommendations will fit with plans to make Factory A the flagshipmanufacturing location. The president is capable of leading changebecause he envisions the need for more investments in ensuringFactory A becomes modern and effective.

There are five components of emotional intelligence, which make itpossible to assess the capability of a leader in leading change.These are self awareness, which refers to the capability to detectand comprehend one’s moods, feelings and their impacts on otherindividuals. After the presentation, thoughts go through Walker’shead. He is specifically concerned with Factory A’s condition. Heremains silent for a moment, but realizes the impact of his silenceon other individuals present during the presentation. Hence, hebreaks the silence by commending the consultants.

Second is self regulation. It is the capability to regulatedisruptive impulses. Self regulation refers to the ability to thinkprior to acting. Slastyona’s president has the ability toself-regulate. He does not instantly dismiss the suggestions made bythe consultancy team, as is the case with Winchester. Instead, hetakes time to contemplate on how the recommendations will assist indeveloping Factory A. Motivation is a different component. It refersto having a passion for work, which does not derive from money orsocial status gained. The president is more concerned about ensuringthat Slastyona becomes successful. Walker is highly motivated becausehis passion is not influence by money or his position in the company.Rather, he sees the need to pursue objectives energetically andpersistently.

The fourth component is empathy. It regards to the capability tocomprehend other individual’s emotional makeup. Walker understandshow important his feedback is in influencing the decisions that willbe made by other managers and professionals. Hence, he notes the needto implement the recommendations, after making some adjustments.Walker is also keen to note what areas in the company require morefocus. The last component is social skills. Walker effectivelymanages relationships, builds networks and establishes a commonground concerning the development of Factory A into a flagship forSlastyona.

Recommendations

There are eight levers of change. In order for any changeimplemented in an organization to become effective, then at minimumthree levers of change must work together (McGuire, 2001). Accordingto the case study, strategy, culture and leadership are the mostdifficult levers of change at Slastyona. They have a high capabilityof influencing organizational performance. Hence, in order forSlastyona to put in place the suggested compensation system, thecompany must assess the impact of these levers of change.

Strategies – the company manufactures and sells products byemploying INTERCHOC’s brand, in addition to brands that have beencreated locally. The company’s strategy involves using complexwestern business approaches to establish itself as a leader inRussia’s market. This is possible through the introduction of atotal brand portfolio, forceful marketing and creating production aswell as distribution ability for the whole nation. It is not possiblefor the company to advance with the implementation of the strategywhen it lacks high performing workers.

Hence, it is recommended that Factory A commits to the strategy. Thismeans Factory A’s manager ought to support the strategy. FactoryA’s manager, Winchester is a major barrier to implementing change.This is because he is not visionary. Winchester does not consider theproblems Factory A will encounter if it fails to adjust to changingmarket practices in Russia. It is advisable that the presidentreplaces Winchester with a visionary manager.

Culture – Factory A progresses to utilize “communist workpractices”. The practices are a complete contrast to those appliedat INTERCHOC. It is apparent that culture is a major barrier toimplementing any change at Slastyona. Hence, it is recommended thatthe president begins by making changes that adapt to the workingpractices. It is not possible to change the working culture andbeliefs of people by changing compensation policies. As a result,Slastyona has to contemplate how the compensation system will becomeadapted in a manner that is endorses the existing culture andpeople’s beliefs.

An illustration is combining team and personal reward structures.Such a move is possible to produce greater factory performance ascompared to giving rewards to individuals. Cultural change can onlyhappen when there is intensive training. Winchester notes that theworkers at Nizhniy Novgorod are merely interested in continuingworking practices associated with the soviet era. It demonstratesthat there have been no efforts taken in training employees on newchanges to be implemented in the company. Hence, it is necessary towork on building a culture that promotes responsibility, sharedvalues and one that endorses teamwork in Factory A.

Leadership – to ensure that the suggested compensation policybecomes implemented at Slastyona, the leadership must support thepolicy. Successful implementation requires the support of Winchester.However, it is apparent that with Winchester’s leadership approach,it is highly unlikely that Slastyona will implement the proposedchanges. The feedback he provides from the interview in Case Bdepicts that he has a temporary management focus. He alsodemonstrates minimal interest in teamwork and is sexist. The manageris merely interested in supporting just a few employees, whichquestions his capability to develop competent managers. With suchleadership, it is highly likely that Factory A will not havesufficient and competent managers and personnel.

Bearing in mind that it is difficult to attract and retain competentworkers in Russia, Winchester must cooperate with his employees.Increased employee turnover and ensuing gaps in competence willseriously weaken the measures taken in ensuring Factory A becomes aflagship in Russia. Thus, Winchester needs to be advised on why andhow to support the suggested changes. In case he progresses toresist, then the company must find another individual to take over asthe new Factory A’s manager.

Other levers of change to put into consideration when implementingthe compensation policy are tools and the environment. Tools – thechanges suggested at Factory A are driven by technology. The toolscurrently being utilized at the plant level are basicallymanufacturing procedures as well as equipment. It is recommended thatthe factory adapts automated equipment and progresses to trainpersonnel on how to use the new equipment.

Environment – the case study depicts that Russia is adapting tocapitalism. This means that the markets have become competitiveresulting in the scarcity of competent managers. In addition, thereis a scarcity of competent technicians in some towns in Russia, whichmakes it impossible for Slastyona to continue relying on graduatesfrom technical learning institutions. Hence, it is recommended thatSlastyona considers hiring less traditional personnel. These includefemale managers from different countries.

Talent management issues

The training as well as learning correlated talent management issuesto address includes job evaluation, labor market analysis, creatingregional pay scales, and directives for making promotions. This isbecause the policies suggested by the consultants at Slastyona can beemployed as a basis for determining personnel expertise. It isimportant that the workers are competent in order for proposed changeto be effectively implemented.

Job evaluation – it refers to the procedure of validating thesignificance of an employment position in a company. Job evaluationis conducted through evaluation a job using various compensableaspects. When properly implemented, job evaluation entails ensuringthat employees are capable of describing their jobs, which makes itpossible to assess their significance in the company. Such anapproach to job evaluation is apparent in the case study. Theconsultants were involved in the training as well as facilitation ofjob evaluation groups. The basis for the evaluations wasresponsibilities at work and the needed knowhow, expertise andcapabilities. It is important to address job evaluation to ensurethat personnel are aware of their responsibilities in the company.Hence, they are in a better position to adapt to implemented changesin the company.

Labor market analysis – this involves conducting research todetermine how employees from Russia are paid. In addition, theanalysis identifies the factors that influence pay values within thedifferent work grades. Such an analysis has a great impact on thecompensation policy developed by Slastyona. This is because thecompany must ensure that it meets current market demands, which willin turn ensure that it retains and attracts competent personnel toSlastyona. It will also ensure that the company comes up with a paystructure that does not discriminate and one that pays personneldepending on their competence.

Creating regional pay scales – Russia is a large geographic nationglobally. It has immeasurable disparities in pay, which depends oncities and districts. In the case study, the consultants create amarket-based payment system for Moscow, which they use as a basis formaking suggestions on possible payment ranges in other cities. Thisis done by applying cost of living differences in the differentcities and districts. This is a talent management issue because it isdeals with the most appropriate compensation approach that thecompany will employ. The pay scales from different cities anddistricts make it possible to Slastyona to create pay scales foremployees in its company. It also acts as a basis for determining howto create a compensation policy that does not discriminate. Hence,motivates and attracts more employees.

Directives for making promotions – Job promotion is a talentmanagement issue that enables an organization to come up withcriteria for making promotions, who to promote and reasons forpromotions. It is important that any promotion policy demonstratesfairness and is based on expertise. The suggested promotion policy isin line with Russia’s culture. Additionally, the promotion policyputs into consideration the individual achievements of employees aswell as level of employment. Directives for making promotions are animportant issue to address at Slastyona. This is because promotionsact as an effective way of attracting and retaining personnel, whichis what the company endeavors to achieve by implementing thesuggested compensation policy. In order to attract competentprofessionals, the company must have in place a promotion policy thatis fair, which will also work to retain the managers at Slastyona,despite operating in a highly competitive market.

References

Hofstede, G. (2001). Culture’s consequences. London: Sage.

Malopinsky, L. V &amp Osman, G. (2006). Chapter 12. Dimensions ororganizational change. Handbook of Human Performance Technology,262-267.

McGuire, S. J. (2008). Slastyona confectionary. Journal of theInternational Academy for Case Studies, 14(1), 71-82.