10: Risks Responses for a star Resource MGT4202: Project Risk Management "May I have a word" Alysha Stark popped her head in at the corner office of the Managing Director Mike O' Connor. It's early on a Monday morning. When Alysha, his star Director, starts something this early, it probably meant its about her thoughts from the weekend. Mike turned out from his computer and smiled. He was uneasy but hoped he did not show it. "Sure Alysha, I've time now, come in". Alysha stepped in and closed his glass door gently. Mike laced his fingers and braced himself. He knew the signs. She sat down across from him, "I might as well come right out", she said, "I am resigning". Mike's heart sank. He knew that their company, Pattern Tech, in cannot maintain its profit margins without Alysha. She was popular and she knew the intricacies of the semi-conductor industries, not only in the Ontario but across Canada and the US. Her timing was not good: Pattern Tech was completing a response to the Federal Government worth $30 Million. Alysha was named as the Product Director in that proposal. The Ottawa company was a favourite to win this 10-year project. Bad timing. "I am very sorry to hear that, Alyssa. Where are you going?" he asked trying to keep his voice calm, though he felt angry and deceived. "I am taking a job at Randall", she replied, "in San Francisco". "Their HQ?" Mike took this as slap in the face although, this was not a surprise. This was nothing personal against him, but this is a massive leap for his star employee. "They're offering me 20% more base pay, plus a higher bonus range", she was easing the blow, Mike thought, but perhaps she was setting up for a possible path to negotiate. "Who else knows this?" Mike asked, his hands forming a steeple under his lower lip. He wanted to appear calm and unconcerned, but he was rapidly calculating figures in case she wanted to throw a figure. He has asked her about career aspirations 2 months ago and had joked if there was any truth in the rumors about her being scouted. She had dismissed it by saying "Come on, Mike, everyone gets offers these days, nothing I am considering!" This offer from Randall must have been happening all along. "Just my family", she said, quickly, "and John St-Germain, of course". John was an up and coming associate in her team. Mike realised that Alysha had been preparing for her departure by transferring knowledge to John. Mike also knew that John could never appear as a suitable substitute in the $30M proposal. "I know this is not a right time to leave, Mike". "It's not, Alysha, it's not about the company, this is about you", said Mike, "we are at the peak of our performance these days, we're expanding all over Canada; we're doing well, you are doing well here. Why do you want to leave? Is it about money?" "That's part of it", Alysha was still calm and collected, obviously she was very well prepared and was at an advantage, "It's time for change in my life and career. I am intrigued by the culture at Randall's. This is a place that is changing the quality in semi-conductor production." She paused. "And of course, I loved the city when I was there last year on holiday". Yes, holiday, thought Mike, disdainfully, and possible job interviews. Alysha had spent her 4 of her 5-week annual vacation allotment at San Francisco, a year ago. Since then Randall may have sent their executives to wine and dine here in Ottawa. "You know Randall Canada is bidding on the same proposal. And you were the principle project manager in this bid. What can I do to change your mind: can you give me a shot at keeping you?" Alysha started shaking her head. Mike fended that off, "At least, give me until the end of the day, Alysha, we don't do counter offers, but give me a chance. I am sad at having to lose you." Mike's genuine feelings for her softened Alysha's expression. "Okay, Mike, I'll give you till 4:30 today, how's that?" Mike nodded. He was still tense. As soon as she left, he reached for the headset and dialed his friend and HR Associate Director. "Victoria, I've a situation, do you have time for coffee, closed doors?". "Mike!" she exclaimed, "of course, I'll clear my schedule. Sounds big!". Victoria was a subject expert in human resources and a good company friend of Mike's. Mike waited a few minutes as he did not want Alysha to see him bound up stairs to see the head of HR. He took a casual walk down the call then bounded up the two floors, his mind racing. There were several risks at play, one of which involved facing his boss, VP of Operations, Eric Kennedy. Kennedy would question why he did not see this coming sooner and if Mike even had the skills to manage crucial talent like Alysha. And there was the possible impact on morale: a team leader destined for greater heights leaving Pattern Tech for a monster company at the Bay Area, SF. Not nice. "Victoria", Mike said as soon as he entered her office, "We have a problem!" His voice lowered:" Alysha is resigning. Going to Randall. U.S.A". "Mike! This is huge problem! You've forgotten the coffee!" Victoria piped, smiling, pretending to be alarmed at the missing beverages. Mike relaxed, and smiled, "Manic Monday, Vicky, Anyway, the real problem. I have until 4:00 pm to convince her to stay. She's getting 20% more. How can we keep her?" Victoria was well used to this. "Relax, Mike, and sit down", she got up and closed her door, "Now, you know you budgeted a 10% raise for her plus an incentive of $100K starting next year. You did not predict this last year, did you? She's extremely talented, knows the business, the people and the finances in this business. Of course, she is going to get offers!" "She was doing interviews behind my back, Vicky!" "I know you feel betrayed, Mike, but that's not the point. You as her Managing Director were not prepared", she whispered, pausing at every word, "Didn't you see this coming? Mike knew Kennedy would bring this up his own annual performance with HR. "She probably held interviews with Randall while we were bidding on this contract, but I am not worried about her ethics here. Plus, she has a non-disclosure agreement if she leaves us." "Mike, did you get the email end of day, Friday? Randall Canada has withdrawn from the Federal Government proposal. They are not competing against us. She personally cannot be engaged with our clients for a year, but that does not prevent her from talking about Canada! You know how it goes: employees bring in competitive intelligence" "How can we sweeten the deal, Vicky, I want her to stay". "Let's do damage control first. First, does Eric know yet? John, her sidekick, will he be able to take over?" Mike realised that he was so focused on Alysha that he was not even focusing on his own responsibilities. Vicky was reminding him on what he should be doing. He cursed himself silently for reacting without thinking this through. Thankfully, Vicky was a friend. "No, Eric does not know yet and No, John is too junior to take over her duties. I had not even thought about the risks of her rejecting our offer." "Does she feel that she is not supported?" Vicky asked herself, "that should be in her last performance review: I'll have that, even if she did not tell you. What projects is has she finished recently, what is she working on and to whom are these being delegated?" "No clue. I just came up to you, Vicky, hoping to get a counteroffer we can afford" Mike stammered. "Okay, Mike! You go downstairs, find out all the details and talk to John. We need data before we can come up with options. And data in case Alysha cannot be convinced. Who else can take over? Who will replace John? In the meantime, I will investigate the figures and see what we can do with money matters. Set up a meeting with me at 14:00 hours and for Pete's sake, remember this: mocha coffee, no sugar, with a dash of cinnamon. That's key. Now go!" Mike smiled and left the office. His mind was racing through something from his College days. He was happy that he remembered his risk management classes and that very tough professor he had a long time ago. How can he analyse these unknowns and present options to the management team? Mike searched his memory from a time gone by. What was that prof's name? MGT4202 - Project Risk Management Group Assignment #2 Group Assignment #2 (10 points) The questions for this assignment are based on the case study "Risk Responses for a Star Resource". 1. Who is the risk owner? (1 point) 2. Identify a current risk to the situation faced by Mike. Remember to formulate a proper risk statement. (2 points) 3. Formulate a primary risk response for the risk you identified in Question 2. What treatment type is it? (2 points) 4. Is there any residual risk after applying the response from question 3? (1 point) 5. What are secondary risks related to applying this risk response from Question 3? (2 points) 6. Formulate a contingency risk response for the risk you identified in Question 2. What treatment type is it? (2 points)