It's a bright April morning and Bill Maron smiles towards the sun shining into his office. " Finally', he thinks to himself, " the missing piece to the puzzle that's going to have us move forward. " But before Bill has long to dwell on this moment of satisfaction, the phone rings. It's his secretary Monic, " Nancy Meyers has arrived for your 9.am. meeting." Monica chants. After a brief moment, Bill turns his attention back to the issue at hand. "Thanks, Monica. Show her in."

Nany is Bill's newest employee at the corporate head office of family Medical. She was hired less than two weeks ago to be the director of human resources. Nancy has several years of human resources experience and particular expertise in human resource planning. Nancy has worked for major companies in the transportation industry throughout Canada and has gained a reputation for her energy and practical attitude. Bill needs Nancy to develop a comprehensive human resource plan for his two divisions (distribution and manufacturing). Continuing problems with morale, turnover, succession planning, and training have kept Bill from concentrating on his next endeavour, a new division that would provide home-nursing services.

Bill has just finished his daydreaming when Monica brings Nancy into the office, " Good Morning, Nancy," Bill offers cheerfully with a firm handshake, " Have a seat," he says as he motions to the leather chairs in front of him, " I understand you are just the person to solve our HR problems."

Although Nancy was given selected information about the company and the challenges during her interviews, there is key information that Bill wants to share with her before she plunges into her new responsibilities. Nancy will also need to speak to the vice-presidents of each division. But, nevertheless, the appropriate place to start is at the beginning. Bill begins by giving Nancy a brief history of the company.

Family Medical Distribution

The original company, Family Medical Distribution, was created by the grandfather of Bill's wife, Helen. The company began operations in 1924 selling medical supplies, such as syringed and bandages to local hospitals in the Kingston region. For 45 years, the company maintained its quiet but consistent presence in the local medical community. Over this time, the company built a solid reputation for quality products and reliable service, which the owner credited to his dedicated employees. Probably as a result of the company's small size, employees often felt like family members and stayed with the company until retirement.

Customer service was largely responsible for the company's early direction. The owner's philosophy was to satisfy the needs of the customer regardless of what it might entail. Bill can't help but smile to himself when he recalls one of his favourite stories Helen's grandfather, Mr. Halton, spent considerable time and energy to find and import a number of special religious articles from Europe as a favour to the nuns at St. Joseph's Hospital. It was these extraordinary business decisions that convinced Bill that Mr. Halton was as interested in building a socially useful organization as in making a reasonable income-evidenced by the modest bottom line each year on the income statements.

Bill shakes his head now when he thinks back to 1969 and how he came to purchase Family Medical Distribution. At the time, Bill was 30 years old and had a promising career as a Chartered Accountant with Ernst & Young. He worked long hours and enjoyed the challenges and perks of public accounting. Bill thought he'd be an accountant for Life. Looking back now though, Bill is thankful for the bullish style of his father-in-law. When Mr. Halton became ill and passed away suddenly in 1968, It had been Helen's father who convinced him to take the risk and purchase the business. Helen's father believed that Bill had the youthful energy and determination to take control of the foundering company.

BILL'S EARLY YEARS

In the first few years, Bill had no choice but to learn about his company by rolling up his sleeves and getting involved. With only eight employees, Bill's role was far from glamourous. Bill would often take customer orders, speak to vendors and hunt for products in the warehouse- all within the same hour. Bill also spent countless hours on the road talking to customers and suppliers.

Bill's new surroundings had also been a bit of a letdown. The plush modern facilities of Ernst & Young were out of reach for Family Medical. In fact, Family Medical Distribution consisted of a 1672 m warehouse and a single open-concept office for all staff to work in-including Bill. The office space was full of assorted old furniture that needed to be shunted around to allow staff enough room to manoeuvre from the coffee station back to the warehouse.

Despite the humble initial stages of ownership, Bill was driven to make his investment a success. Bill spent countless hours at Family Medical Distribution. He was determined to make the company grow beyond the boundaries of the Kingston region.

Thankfully, the efforts began to pay off. In the 15 years following 1969, Bill began to realize measured success. Family Medical Distribution had grown out of its original facilities when the company expanded into the rest of Ontario (especially Toronto) and later into the rest of the country through strategic acquisitions. By 1984, the company had become a true "national entity" with a distribution network that stretched from coast to coast. Branch offices in Vancouver, Winnipeg, Montreal, Fredericton, and St. John's were now supplying hundreds of Canada's leading hospitals with quality medical products and systems. Family Medical Distribution's reputation for service and quality had also grown nationally.

NEED FOR CHANGE

But Bill wasn't satisfied. By 1984, he craved a new entrepreneurial challenge. He had grown passionate about the medical business and the new technologies that were making significant improvements to medical treatments. Among the many changes, surgeries were becoming less invasive and hospital stays shorter. Bill's fervour for new technologies was not a secret. Family Medical Distribution has become a known supporter of leading-edge technology.

A few years earlier, Bill received a frantic call from the emergency room supervisor at Toronto Hospital. Although it was quite late in the day, Bill, as usual, was in the office. A young accident victim was being transferred to Toronto Hospital and was in desperate need of a special non-invasive ventilator. Although considered new technology, the equipment was the young girl's best chance for a full recovery. Bill immediately ran back to the warehouse to gather the required equipment and accessories and headed to Toronto. Bill recalls the night vividly, it was 7:20pm. The sky was black with snow clouds, and Bill was determined to get to Toronto and make a difference.

He did. The girl survived. That special trip to Toronto had a lasting effect on Bill and strengthened his desire to make a difference in the medical community. As a distributor, Family Medical was limited in its ability to significantly advance technology. That trip to Toronto had given Bill the vision and desire to create a new division of Family Medical: a company responsible for developing and manufacturing innovative new medical products.

ADDITION OF FAMILY MEDICAL MANUFACTURING

Over the years, Bill had been approached by physicians many times to consider partnering in the manufacture and distribution of a particular invention. Bill was always careful to balance his interest and excitement against the potential risks. Such ventures typically require a substantial capital investment and particular expertise that was at the tie, not available in Family Medical Distribution.

Nearly two years after Bill's memorable trip to Toronto, an invention caught his attention and the timing was right. Family Medical Distribution was operating smoothly and generating a reasonable income. Bill was presented with an idea that would help asthmatic patients, by more effectively delivering their medication through puffers, Like many great inventions, the principle behind the product actually appeared rather simple: a plastic holding chamber attached to the patient's puffer. The chamber would hold the medication until the patient was ready to inhale. Bill immediately funded the additional research necessary to perfect the prototypes and further analyze the market opportunities. After two years of laboratory research, the simple little product had become a complex, but nonetheless successful, innovation. In 1986, the AeroTube was launched and the new business division formalized under the name Family Medical Manufacturing.

NEED FOR HELP

By 1996, Bill was exhausted. The drastic funding cuts to the health-care community by both the federal and provincial governments in the 1990s had been squeezing the profits out of Family Medical Distribution. The company reacted to the industry chaos and drastic sales slump by recognizing internal operations and refocusing the overall corporate direction. The company needed to make some radical changes in order to reverse the negative sales trends. (See Exhibit 2.3).

Meanwhile Family Medical Manufacturing continued to grow at an almost uncontrollable rate. The sales and marketing departments were aggressively promoting the AeroTube internationally. Within the past six years, the AeroTube had expanded its sales network to over 50 countries. New product-line extensions had been developed, but the resources were not available to begin producing and promoting the products. Although profits were significantly ahead of projections (see Exhibit 2.3), the growing pains within the company were becoming increasingly more obvious.

The demands of both companies were taking their toll on Bill. The pace was relentless, and despite working seven days a week, he could no longer keep up the responsibilities of each company. After careful consideration, Bill decided he had no choice but to hire a vice-president for each company. Bill needed to relieve himself of many of the day-to-day tasks of each company to allow him time to manage the enterprise's overall direction.

NEW VICE-PRESIDENTS

Early in 1997, Sam Collins was promoted to vice-president of Family Medical Distribution, Sam had joined the company 15years earlier and had successfully risen through the ranks. Sam was first hired as a sales representative for the province of New Brunswick and was a natural at building rapport with his customers. Sam had an easygoing personality and a sharp wit that customers loved. After eight years in the field, and some coaxing, Sam agreed to join head office in Kingston to become a marketing manager. Although leaving his roots in Maritime Canada was difficult. Same made a successful transition into his new position. After this initial move, Same continued to progress through the company, accepting opportunities senior marketing manager, district sales manager, and director of marketing. Sam has always been considered a trusted and loyal employee. When Bill needed to create the vice-president's role in Family Medical Distribution, Sam was his obvious choice.

A few months later, Bill hired Mark Olsen to become the vice-president of Family Medical Manufacturing. Finding the right person for this position had been a bit more of a challenge. Bill needed to find someone with the experience and vision to continue expanding the markets for the AeroTube product line, yet who also possessed the technical ability to manage both production and R& D departments. Mark's previous employer had been a related manufacturing company in the Kingston area. Mark had been quite successful as that company's director of the manufacturing and engineering operations. Although Mark is a relatively young vice president at 45 years of age, his charm and approach to business have earned him respect. Mark studied engineering while at university, which has been helpful in overseeing the activities of the R&D division. Bill has been counting on Mark to grow the AeroTube line and expand the markets for new products.

"This is where I need your help, Nancy," offers Bill, " Family Medical Distribution is starting to make a financial turnaround but really needs some HR help to deal with the change process and the resulting fallout of staff. As well, Family Medical Manufacturing really needs your help to develop an appropriate structure to cope with the growth. Both companies have made some strategic mistakes recently, which have resulted in the loss of some key staff to the competition. The environmental changes and our lack of organization have been stressful for the staff. I think some staff have simply grown tired of waiting for top management to work out the problems. I really think addressing our human resource issues will help each of the companies gain control. I want to feel confident that both companies are on solid ground before we enter the home-nursing market". Bill stopped for just a moment before proceeding, " Before I get ahead of myself, I really should give some background on our human resources department.

NEED FOR HUMAN RESOURCES EXPERTISE

"In addition to hiring Sam and Mark in I997. I also realized there was a need to formally establish a human resources department. The human resource issues in each of the companies had become increasingly more time-consuming and complex. It had become obvious that the need for human resources management had grown beyond an amateur's role and required a professional."

Bill stopped for a moment, and Nancy could see a cloud come over his eyes. Bill shook his head. "Unfortunately, the HR department has been a bit of a disaster. The HR manager we hired has been on leave for the past 13months. The human resources associate, Claire Jackson, has done wonderful job and taken charge of the department, but the issues the department needs to address are just too much for her. In the past year, Claire has been spending almost all her time interviewing for vacant positions and handling the orientation and paperwork of the new employees. At any given time, she has a minimum of ten vacancies that she sis working to fill. The growth in the manufacturing division has kept steady pressure on Claire to find quality staff, FAST. Although Claire has a clerk to help with the day-to-day paperwork, she really has not been able to deal with all the issues in the department. The training and development programs have really suffered. As well, we have not done any strategic planning or forecasting for either of the companies."

"You can now understand how delighted I was when you accepted the challenge and joined Family Medical. We certainly need your expertise in developing a human resource plan for the companies. We promoted Claire recently to the manager's position so that she would be ready to help you. I know you will find her a tremendous asset. The bottom line is, Nancy, the department is in desperate need of your leadership, and the company is in desperate need of your expertise. We need a solid human resource plan in order to move forward. I need the current problems addressed before I can create the home-nursing division.

"I'd like to give you a chance to prepare some preliminary information for the human resource plan before we meet again. I also know that you need to meet with Mark and Sam to gather their perspectives on thins. Would it be okay to meet in two weeks to discuss the plan?"

NANCY'S INITIAL ACTIONS

Bill had been very clear, he wanted Nancy to develop a human resource plan to encompass both the manufacturing and distribution divisions. Nancy had to get moving- she just did not have the luxury of time to painstakingly review her option. Bill wanted to meet with her in two weeks. She decided that the obvious place to begin was by finding out what her human resources manager and the two vice presidents thought. Nancy asked Claire to write a brief memo to her outlining the pertinent issues in the human resources department (see Exhibit 2.4) and kept notes of the extensive interviews she had the Sam and Mark (see Exhibits 2.5 and 2.6).

With less than 10 days to go until her meeting with the president, Nancy closed her office door, turned off her phone, and began work on her strategy for the Family Medical Group of companies.

EXHIBIT 2.2

Timeline- Family Medical Distribution

1924Family Medical Distribution created by Herbert Halton, a former stock keeper for the Kingston General Hospital.

1968Herbert Halton dies after a brief illness at the age of 70.

1969Bill Maron purchases the company with a bank loan and the family house as collateral.

1971Family Medical successfully expands the Ontario market with key customers in Toronto, Ottawa, London, Windsor.

1975Family Medical Distribution purchases a local distribution business in Montreal, Quebec. Under the purchase agreement, the 12 staff members in Montreal become the newest employees of Family Medical.

1977 Kirkland Medical purchased in Vancouver, British Columbia. The business and staff become the western branch for Family Medical Distribution.

1978A small operation in Winnipeg, Manitoba, is converted to Family Medical Distribution. Few customers are gained through the acquisition, but Family Medical Distribution is now able to comfortable supply all the western provinces.

1982 MCArthur Medical Supplies is purchased. Both branches (Fredericton, New Brunswick, and St. John's, Newfoundland) are converted to Family Medical Distribution.

1986 Family Medical Manufacturing is created, Family Medical Group of Companies name is established to represent the corporate company.

EXHIBIT 2.4

Notes to File:

Sam Collins Interview

Date: April 28, 1999

BCC: Bill Maron

RE: Interview with Sam Collins (Family Medical Distribution)

Company has not grown to about 145 employees with most working in the sales, marketing, and operations departments, Many of the employees hired during Bill's early years continue to enjoy successful careers with the distribution business.

Family Medical Distribution still has a solid reputation in the medical community but has been faltering in past 5 years due to government cutbacks in the medical industry. The restructuring has meant that hundreds of hospitals across the country have closed, while others have been forced to significantly reduce their number of beds.

Same feels the company has lacked a strategic focus and become "lazy" in the years leading up to the budget cuts.

Sam is committed to returning Family Distribution to its former profitability. Sam feels personally responsible to deliver the bottom line to Bill.

Family Medical Distribution has had to reposition itself as specialty distributor of high-end medical products and systems in order to survive. The goal is to represent only key suppliers in Canada in the key areas of Critical Care, Anaesthesia, Respiratory Care and Surgery.

As a result of these industry stresses, there has been a significant change in the company's corporate culture. The new atmosphere is one of the cost restraint and continuous change. The company has had to reduce its inventory and improve its processes to remain competitive in the increasingly smaller market.

Sam has spent considerable effort evaluating the operations, sales, and marketing departments. He feels these areas will be the keys to turning the company around. He thinks the staff needs to work "smarter" and not "harder".

Until recently, the company had operated for many years with relatively few changes. Many of the employees had a considerable amount of seniority, had risen through the ranks, and had hoped to retire from Family Medical. In the past two years, however, the external forces have created a need for change in the organizational mix and structure of the company. About five or six long-term employees have been terminated. Some of the vacancies have been filed from within the company, but the staff is still generally feeling nervous and uncertain. Same has been pushing hard to focus the company and turn the company around.

Sam is a bit hesitant about the role and value of an HR department. His past two years have been very disappointing with problems around hiring methods, confidentiality, knowledge/expertise, and lack of support for the new company vision.

Sam is willing to consider an HRP for Family Distribution but is more concerned with making the company profitable again.

Exhibit 2.5

Notes to File:

Mark Olsen Interview

DateApril 27, 1999

BCCBill Maron

RE: Interview with Mark Olsen (Family Medical Manufacturing)

The pace has been hectic since Mark joined Family Medical Manufacturing two years ago. The company is very successful having continuously exceeded its growth and profit projections each year.

The Aero Tube is currently marketed in over 50 countries and secures about 47 percent of the market for valved holding chambers worldwide. The lab has also completed successful prototypes for two new products to be launched in the next year. One product will allow intubated patients in a hospital to receive their medications orally through puffers. The company is close to receiving approval from Canada's Health Protection Branch. The other product is a much larger version of the Aero Tube and will soon be launched to veterinarians for use on animals with breathing problems.

Bill still remains fairly involved in the day-to day operations of Family Medical Manufacturing.This is the company that has brought him international recognition. Bill still approved all research projects that take place in our laboratory.

The company has just moved into its "state-of-the -art" manufacturing facility in the past year. The building has been a showcase for other such companies in the region and boasts all the modern amenities including a programmable pass-card entry system, contemporary cafeteria with home cooked meals, and a research & development lab worth over $3 million.

The company now employs approximately 180 people (55 percent on the production line who work one of two shifts per day). The company also employs over 12 engineers and six laboratory technicians.

Mark believes that staff is generally happy and that the company is positioned for yet another "better-than-expected" year.

Exhibit 2.6

Memo from Claire Jackson

INTEROFFICE MEMO

Date. April 23, 1999

To Nancy Meyers

From: CLAIRE JACKSON

RE: Human Resource Issues

CONFIDENTIAL

The following list is a summary of the urgent/priority Human Resources issues that I have been working on in the past two months:

Family Medical Group (Corporate)

Our request for a part-time HR Assistant has been declined once again, and the purchase requisition for the HRIS has been put on hold until Mr. Maron gives further authorization.

Family Distribution

The staff at Family Distribution seems to be unsettled. Several staff members have left the company through terminations and voluntary resignations within the past two years. Most recently, Dorothy Haffrey was terminated after 16 years of service. Dorothy has had several formal complaints in her permanent record over the years of inappropriate behavior and language. Despite several warnings her behaviour has not changed. Three weeks ago she swore at the Director of Marketing in the presence of a supplier. Although the staff does not generally condone Dorothy's behaviour. I believe they are genuinely concerned about their own futures.

The staff at Family Distribution has also been applying aggressively for posted openings at Family Manufacturing.

Family Manufacturing

Four formal complaints have been submitted about the hiring practices at Family Manufacturing. These employees feel that they have been overworked for key openings despite being able to fulfill the education and skills required for the positions. In all cases, the positions were filled by former employees of King Manufacturing (Mark Olsen's former employer). I completed the entire first round interviews and have reviewed the files carefully. The positions have all been filled with incumbents who can "hit the ground running," Mark felt Family Manufacturing did not have the time of luxury of training an internal employee.

Laura Davies, Senior Administrator , has tendered her resignation effective June 11^th after not being successful in her application for the new office Manager position. She has been a strong contributor to the overall administration of the company and has steadily been accepting increasing responsibility. During an informal meeting, Laura shared the source of her unhappiness. Barb Brimner, the new Manager of Administration, inadvertently mentioned that Mark had promised her the position before the opening was posted. Laura has obviously perceived the hiring process to be unjust.

1. What is the business strategy of the Family Medical Group ?