Delta Plantations Sdn. Bhd. is an oil palm plantation located in Malaysia. It consists of an oil palm estate and one palm oil mill. It is a wholly owned subsidiary of a British multinational company and was founded with the purpose of supplying crude palm oil for its parent company’s detergent manufacturing business. Since its formation, most of the managers have been recruited from the United Kingdom, with many British ex-soldiers and police officers employed there.

Mr. Chua Wen Zhuo first joined Delta mill at the age of 15 as a laborer, and rose through the ranks to his current position as the senior production supervisor in Delta’s palm oil mill. Two junior supervisors report to Mr. Chua, who reports to the mill manager. The mill operates on a threeshift cycle of 25 operators each and each supervisor (including Mr. Chua) is in charge of one shift. Mr. Chua is responsible for the smooth daily palm oil processing operations.

He coordinates the activities of all three shifts with the two junior supervisors, prepares the daily production reports, deals with short-term human resource planning issues and minor discipline issues, and sets and evaluates short-term performance targets for all three shifts. In addition, he acts as the “gatekeeper,” which means that any mill personnel who wish to see the mill manager must first see Mr. Chua, who tries to solve the problem first, which may be anything from house repairs to a request for an advance on wages. Only in rare cases when Mr. Chua cannot resolve the issue is the matter brought to the mill manager.

Mr. Chua ran a tight ship, and never let anyone forget it.

His superb technical competency helped him keep the mill in top shape. He was accustomed to receiving the highest appraisal ratings from the mill manager, who appreciated his firm, methodical, and almost militarily efficient way of running the mill. The palm oil industry in Malaysia faced many challenges in recent years. World oil prices plunged and, with it, palm oil prices hit a 15-year low. This cut profit margins of all palm oil producers and caused Delta mill to post losses.

Mr. Rex Lawson, the 54-year-old mill manager and former British Royal Engineer, didn’t know how to improve performance. “We are doing nothing wrong, and have met all our efficiency targets. It’s this market that is killing us!”

he exasperatedly explained during the annual year-end visit of the directors from London. With insufficient improvement, the board gave Mr. Lawson his marching orders.

The new mill manager was very different from all his predecessors.

Mr. Ian MacKenzie, a 32-year-old who hailed from Aberdeen, Scotland, was not a career plantation engineer and had never managed an agricultural productprocessing mill before. He was actually an electronics engineer with an Ivy League MBA on the fast track to a top management position. His previous appointment was as factory manager of a detergent factory in Egypt where he streamlined and modernized operations, which resulted in significantly better financial performance. The executives in London had high hopes that Mr. MacKenzie would be able to do the same with Delta mill and return it to profitability.

Mr. MacKenzie’s first action was to analyze operations at Alpha mill and look for ways to reduce production costs and increase profits. He arrived at the following conclusions:

• Current performance standards allowed too much machine breakdown and changeover time. Better standards were achievable with the latest technology.

• Wastage could be reduced and yield significantly improved by installing machinery with new technology.

• Personnel numbers were too high—they could be reduced with technology and multitasking and unleashing the full potential of workers.

• Personnel were just “cruising along”—they were not fully committed to achieving better performance.

• Hygiene needs were not being met.

• The old colonial and hierarchical company culture was not conducive to performance improvement.

• Information was not shared across the mill. Operators only knew about their own little area in the mill and almost nothing about the company as a whole.

Mr. MacKenzie proposed to remedy the situation with the following initiatives:

• Empower operators by reorganizing the shifts into self-directed production teams where the supervisors would now play the role of “facilitators,” and thereby gain commitment.

• Install new technology and automation.

• Adopt more stringent performance measures.

Mr. MacKenzie implemented and executed these initiatives by first organizing an excursion to a local picnic spot for the entire factory. After the icebreakers, games, and lunch, he held a briefing session on the beach, where he explained the situation Delta mill was in and the need to make changes. He then unveiled his plan for the first time.

The response was enthusiastic, although some operators privately confessed to not understanding some of the terminology Mr. MacKenzie used. At the end of the excursion, when there was some time allocated for feedback, Mr. Chua expressed his full support for Mr. MacKenzie’s plan. “We in Delta mill have full confidence in you, our new leader, and we assure you of our 110% support to make your plan a success!”

he said at the end of his speech.

The plan was put into motion when the new machinery had been installed and each shift had been reorganized into self-directed work teams. Whenever the team faced a problem during processing and tried to find a solution using the techniques that had been taught, Mr. Chua would step in after some time, issue instructions and take over the process. “This is a simple problem, no need to waste time over it. Just do it . . .” His instructions were always followed and the immediate problem was always solved. However, the production team reverted to the old ways of working, and none of the expected benefits of teaming were realized.

Given the new tighter performance standards and reduced manpower, the team consistently underperformed. Team meetings were one-way affairs where Mr. Chua would tell everyone else what had gone wrong.

Mr. Chua’s response to this was to push himself harder.

He was always the first to arrive and the last to leave. He would spend a lot of time troubleshooting process problems.

He pushed his operators even harder, but he felt that he had less of a “handle” on his operators now that they had direct access to the mill manager and most of their minor needs were seen to by him. Sometimes Mr. Chua became annoyed with his operators’ mistakes and would resort to shouting and cursing, which had the immediate but short-term effect of having employees do what he wanted. This was in contrast to the mere glare that would have sufficed previously.

The continued poor performance of Delta mill affected Mr. Chua’s mid-year appraisal rating, which fell down from

“excellent” to merely “adequate.” During the appraisal interview, an annoyed Mr. MacKenzie bluntly told Mr. Chua that he needed to understand clearly what the initiatives were all about, and that he had to let the team take some responsibility, make mistakes and learn from them. “With your knowledge of this mill, you should be able to provide them with all the technical input they need,” he said.

Mr. MacKenzie also added. “It might help if you treated our people with a little more respect. We aren’t living in the 1950s any more you know.” Mr. Chua was thunderstruck by the appraisal but did not raise any objections on the spot.

He silently deferred to Mr. MacKenzie’s judgment and promised to do better. He also reiterated his utmost support for Mr. MacKenzie and his plan.

After the mid-year appraisal, there was a noticeable change in Mr. Chua’s demeanor. He became very quiet and began to take a less active role in the daily running of the mill. He was superficially polite to the operators and answered most requests for help with, “Get the team together and discuss it amongst yourselves. Show the boss that you can solve it for yourselves.” At first, the teams were at a loss and mill performance suffered badly, but within two weeks the team had found its feet and performance began to improve.

One of Mr. Chua’s junior supervisors, Mr. Varma, was able to coordinate between production teams to ensure that the performance gains were maintained. The effect on Mr. Chua was devastating. He became withdrawn and began to drink more than usual. His presence at team meetings became a mere formality and he contributed next to nothing, taking a back seat to other team members. He spoke very little to mill personnel and became a mere shadow of his former self. Mr. MacKenzie was very aware of the changes taking place on the mill floor. He decided that it was time to have Mr. Chua removed from his position. He began to plan for a reshuffle of Delta mill’s organization chart where Mr. Chua would be promoted to the new position of mill executive, a staff position with a small pay raise. His responsibility would be to advise the mill manager on technical, quality, and efficiency problems faced by the mill. He would be assigned to carry out minor improvement projects and performance audits from time to time. Mr. Varma would be promoted to supervisor and report directly to the mill manager. Mr. Chua would no longer have any line authority over the production team. This reorganization was quickly approved by head office and Mr. MacKenzie proceeded to lay the groundwork for the announcements and the necessary paperwork. Little did he foresee what was to follow.

Mr. Chua was in the head office one morning when the personnel executive’s clerk congratulated him on his imminent promotion. A surprised Mr. Chua enquired further and learned of the plans that Mr. MacKenzie had in store for him. It was the final straw. He rushed back to Delta mill just as Mr. MacKenzie was about to conduct his noon mill inspection. The confrontation was very loud, acrimonious, and public. It ended with Mr. Chua being terminated for insubordination and gross misconduct.

After Mr. Chua had left, Mr. MacKenzie felt that the obstacle to better commitment and morale was gone and that performance would improve greatly. He was very wrong. Team performance began to deteriorate and no amount of pep talks could improve it. He began to wonder what had gone wrong.

Discussion Questions 1 What are the main symptoms indicating that there are problems with Mr. MacKenzie’s change initiative?

2 What are the main causes of these symptoms?

3 Has Mr. MacKenzie managed the change process adequately? Why or why not?

4 Do you think the departure of Mr. Chua will benefit the company in the long run?

5 What actions should the company take to improve the changes needed at Delta mill?